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EXHIBIT 10.8
EXECUTION COPY
$200,000,000
CREDIT AGREEMENT
Dated as of March 12, 1999
among
TEAM HEALTH, INC.,
as Borrower,
THE BANKS, FINANCIAL INSTITUTIONS AND
OTHER INSTITUTIONAL LENDERS NAMED HEREIN,
as Initial Lenders,
FLEET NATIONAL BANK,
as Issuing Bank,
as Swing Line Bank,
as Co-Arranger,
and
as Administrative Agent,
NATIONSBANK, N.A.,
as Issuing Bank,
and
as Co-Arranger,
NATIONSBANC MONTGOMERY SECURITIES LLC,
as Syndication Agent,
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
as Documentation Agent
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TABLE OF CONTENTS
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS.............................................................. 2
SECTION 1.1 Certain Defined Terms.......................................................... 2
SECTION 1.2 Computation of Time Periods.................................................... 36
SECTION 1.3 Accounting Terms............................................................... 36
ARTICLE 2
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT..................................................................... 37
SECTION 2.1 The Advances................................................................... 37
SECTION 2.2 Making the Advances............................................................ 39
SECTION 2.3 Issuance of and Drawings and Reimbursement
Under Letters of Credit.............................................. 42
SECTION 2.4 Repayment of Advances.......................................................... 44
SECTION 2.5 Termination or Reduction of the Commitments.................................... 46
SECTION 2.6 Prepayments.................................................................... 47
SECTION 2.7 Interest....................................................................... 50
SECTION 2.8 Fees........................................................................... 51
SECTION 2.9 Conversion of Advances......................................................... 52
SECTION 2.10 Increased Costs, Etc........................................................... 53
SECTION 2.11 Payments and Computations...................................................... 55
SECTION 2.12 Taxes.......................................................................... 56
SECTION 2.13 Sharing of Payments, Etc....................................................... 59
SECTION 2.14 Use of Proceeds................................................................ 60
SECTION 2.15 Defaulting Lenders............................................................. 60
SECTION 2.16 Removal of Lender.............................................................. 62
ARTICLE 3
CONDITIONS OF LENDING......................................................................... 63
SECTION 3.1 Conditions Precedent to Initial Extension of Credit............................ 63
SECTION 3.2 Conditions Precedent to Each Borrowing and Issuance............................ 71
SECTION 3.3 Determinations Under Section 3.1............................................... 72
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BORROWER................................................ 73
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SECTION 4.1 Organization................................................................... 73
SECTION 4.2 Subsidiaries................................................................... 73
SECTION 4.3 Corporate Power, Authorization................................................. 73
SECTION 4.4 Governmental Authorizations, Approvals......................................... 74
SECTION 4.5 Due Execution, Validity, Enforceability........................................ 74
SECTION 4.6 Financial Statements........................................................... 75
SECTION 4.7 Pro Forma Financial Statements................................................. 75
SECTION 4.8 True and Complete Disclosure................................................... 75
SECTION 4.9 Litigation..................................................................... 76
SECTION 4.10 Regulation U................................................................... 76
SECTION 4.11 ERISA.......................................................................... 76
SECTION 4.12 Casualty....................................................................... 77
SECTION 4.13 Environmental Matters.......................................................... 77
SECTION 4.14 Collateral Documents........................................................... 78
SECTION 4.15 Taxes.......................................................................... 79
SECTION 4.16 Compliance with Securities Laws................................................ 79
SECTION 4.17 Solvency....................................................................... 80
SECTION 4.18 Debt........................................................................... 80
SECTION 4.19 No Defaults, Compliance with Laws.............................................. 80
SECTION 4.20 Owned Real Property............................................................ 80
SECTION 4.21 Leased Real Property........................................................... 81
SECTION 4.22 Material Contracts............................................................. 81
SECTION 4.23 Investments.................................................................... 81
SECTION 4.24 Intellectual Property.......................................................... 81
SECTION 4.25 Recapitalization Documents..................................................... 81
SECTION 4.26 Fees........................................................................... 82
SECTION 4.27 Government Consents for Conduct of Business.................................... 82
SECTION 4.28 Labor Disputes; Collective Bargaining Agreement;
Employee Grievances ................................................. 83
SECTION 4.29 Senior Debt.................................................................... 83
ARTICLE 5
AFFIRMATIVE COVENANTS......................................................................... 83
SECTION 5.1 Compliance with Law............................................................ 84
SECTION 5.2 Payment of Taxes, Etc.......................................................... 84
SECTION 5.3 Compliance with Environmental Laws............................................. 84
SECTION 5.4 Maintenance of Insurance....................................................... 84
SECTION 5.5 Preservation of Corporate Existence, Etc....................................... 85
SECTION 5.6 Visitation Rights.............................................................. 85
SECTION 5.7 Keeping of Books............................................................... 85
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SECTION 5.8 Maintenance of Properties, Etc................................................. 85
SECTION 5.9 Performance of Material Contracts.............................................. 85
SECTION 5.10 Transactions with Affiliates................................................... 86
SECTION 5.11 Agreement to Grant Additional Security......................................... 86
SECTION 5.12 Interest Rate Protection....................................................... 88
SECTION 5.13 Performance of Recapitalization Documents...................................... 89
SECTION 5.14 Year 2000 Compatibility........................................................ 89
SECTION 5.15 Assignment of Claims........................................................... 89
SECTION 5.16 Cash Concentration Account..................................................... 89
ARTICLE 6
NEGATIVE COVENANTS............................................................................ 90
SECTION 6.1 Liens, Etc..................................................................... 90
SECTION 6.2 Debt........................................................................... 91
SECTION 6.3 Fundamental Changes; Acquisitions.............................................. 93
SECTION 6.4 Sales, Etc. of Assets.......................................................... 94
SECTION 6.5 Investments.................................................................... 95
SECTION 6.6 Dividends, Etc................................................................. 97
SECTION 6.7 Change in Nature of Business................................................... 98
SECTION 6.8 Charter Amendments............................................................. 98
SECTION 6.9 Accounting Changes............................................................. 98
SECTION 6.10 Prepayments, Etc. of Debt...................................................... 98
SECTION 6.11 Amendment, Etc. of Recapitalization Documents.................................. 98
SECTION 6.12 Limitation on Certain Restrictions on Subsidiaries............................. 99
SECTION 6.13 Negative Pledge................................................................ 99
SECTION 6.14 Partnerships, New Subsidiaries................................................. 99
SECTION 6.15 Speculative Transactions....................................................... 100
SECTION 6.16 Capital Expenditures........................................................... 100
SECTION 6.17 Issuance of Stock.............................................................. 100
SECTION 6.18 Guaranteed Obligations......................................................... 101
SECTION 6.19 Management Fees................................................................ 102
ARTICLE 7
REPORTING REQUIREMENTS........................................................................ 102
SECTION 7.1 Default Notice................................................................. 102
SECTION 7.2 Monthly Financials............................................................. 102
SECTION 7.3 Quarterly Financials........................................................... 103
SECTION 7.4 Annual Financials.............................................................. 103
SECTION 7.5 Annual Forecasts............................................................... 104
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SECTION 7.6 ERISA Events and ERISA Reports................................................. 104
SECTION 7.7 Plan Terminations.............................................................. 105
SECTION 7.8 Actuarial Reports.............................................................. 105
SECTION 7.9 Plan Annual Reports............................................................ 105
SECTION 7.10 Multiemployer Plan Notices..................................................... 105
SECTION 7.11 Litigation..................................................................... 105
SECTION 7.12 Securities Reports............................................................. 105
SECTION 7.13 Creditor Reports............................................................... 106
SECTION 7.14 Agreement Notices.............................................................. 106
SECTION 7.15 Environmental Conditions....................................................... 106
SECTION 7.16 Real Property.................................................................. 106
SECTION 7.17 Insurance...................................................................... 106
SECTION 7.18 Management Letters............................................................. 106
SECTION 7.19 Other Information.............................................................. 107
ARTICLE 8
FINANCIAL COVENANTS........................................................................... 107
SECTION 8.1 Minimum EBITDA................................................................. 107
SECTION 8.2 Consolidated Funded Debt to EBITDA Ratio....................................... 108
SECTION 8.3 Interest Coverage Ratio........................................................ 108
SECTION 8.4 Fixed Charge Coverage Ratio.................................................... 109
ARTICLE 9
EVENTS OF DEFAULT............................................................................. 110
SECTION 9.1 Payment........................................................................ 110
SECTION 9.2 Representations and Warranties................................................. 110
SECTION 9.3 Certain Covenants.............................................................. 110
SECTION 9.4 Other Covenants................................................................ 110
SECTION 9.5 Other Defaults................................................................. 110
SECTION 9.6 Bankruptcy, Etc................................................................ 111
SECTION 9.7 Judgments...................................................................... 111
SECTION 9.8 Loan Documents................................................................. 111
SECTION 9.9 Liens.......................................................................... 111
SECTION 9.10 Change of Control.............................................................. 111
SECTION 9.11 ERISA Events................................................................... 112
SECTION 9.12 Subordination Provisions....................................................... 112
SECTION 9.13 Matters Relating to Regulatory Agencies........................................ 112
SECTION 9.14 Related Professional Corporation Termination................................... 113
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ARTICLE 10
THE ADMINISTRATIVE AGENT...................................................................... 114
SECTION 10.1 Authorization and Action....................................................... 114
SECTION 10.2 Agent's Reliance, Etc.......................................................... 114
SECTION 10.3 Fleet and Affiliates........................................................... 115
SECTION 10.4 Lender Party Credit Decision................................................... 115
SECTION 10.5 Indemnification................................................................ 115
SECTION 10.6 Successor Administrative Agents................................................ 117
SECTION 10.7 Events of Default.............................................................. 118
ARTICLE 11
MISCELLANEOUS................................................................................. 118
SECTION 11.1 Amendments, Etc................................................................ 118
SECTION 11.2 Notices Etc.................................................................... 119
SECTION 11.3 No Waiver; Remedies............................................................ 121
SECTION 11.4 Costs and Expenses............................................................. 121
SECTION 11.5 Right of Set-off............................................................... 123
SECTION 11.6 Binding Effect................................................................. 124
SECTION 11.7 Assignments and Participations................................................. 124
SECTION 11.8 Execution in Counterparts...................................................... 127
SECTION 11.9 No Liability of the Issuing Banks.............................................. 127
SECTION 11.10 Confidentiality................................................................ 128
SECTION 11.11 Further Assurances............................................................. 128
SECTION 11.12 JURISDICTION, ETC.............................................................. 128
SECTION 11.13 GOVERNING LAW.................................................................. 129
SECTION 11.14 WAIVER OF JURY TRIAL........................................................... 129
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EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Revolving Credit Note
Exhibit C - Form of Term A Note
Exhibit D - Form of Term B Note
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Security Agreement
Exhibit G - Form of Intellectual Property Security Agreement
Exhibit H - Form of Holdings Pledge Agreement
Exhibit I - Form of Holdings Guaranty
Exhibit J - Form of Subsidiary Guaranty
Exhibit K - Management Services Agreement
SCHEDULES
Schedule I Commitments and Applicable Lending Offices
Schedule 1.3 Changes in Accounting Methods
Schedule 3.1(a)(xi) States in which Loan Parties are Qualified to do
Business
Schedule 4.2 Subsidiaries
Schedule 4.4 Required Authorizations and Approvals
Schedule 4.9 Disclosed Litigation
Schedule 4.11 Welfare Plans
Schedule 4.13 Environmental Matters
Schedule 4.18(a) Existing Debt
Schedule 4.18(b) Surviving Debt
Schedule 4.19 No Defaults
Schedule 4.20 Owned Real Estate
Schedule 4.21 Leased Real Estate
Schedule 4.22 Material Contracts
Schedule 4.23 Investments
Schedule 4.24 Intellectual Property
Schedule 4.28 Labor Disputes; Collective Bargaining Agreement;
Employee Grievances
Schedule 5.10 Transactions with Affiliates
Schedule 6.1(c) Liens
Schedule 6.2(c) Debt
Schedule 6.5(a) Investments in Subsidiaries
Schedule 6.5(g) Existing Investments
Schedule 6.17 Existing Issuances, Etc. of Stock
Schedule 6.18 Guaranteed Obligations
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of March 12, 1999 by and among TEAM HEALTH,
INC., a Tennessee corporation (the "Borrower"), the banks, financial
institutions and other institutional lenders listed on the signature pages
hereof as the Initial Lenders (the "Initial Lenders"), FLEET NATIONAL BANK, as
an Issuing Bank (an "Issuing Bank"), as the Swing Line Bank (the "Swing Line
Bank"), as a co-arranger (in such capacity, a "Co-Arranger"), and as
administrative agent (together with any successor appointed pursuant to Article
10, the "Administrative Agent") for the Lender Parties (as hereinafter defined),
NATIONSBANK, N.A., as an Issuing Bank and as a Co-Arranger, NATIONSBANC
MONTGOMERY SECURITIES LLC, as syndication agent (the "Syndication Agent") and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, as documentation agent (the
"Documentation Agent").
PRELIMINARY STATEMENT:
(1) Pursuant to a Recapitalization Agreement, dated as of January 25,
1999 (as amended, modified and supplemented from time to time, the
"Recapitalization Agreement"), by and among the Borrower, Pacific Physician
Services, Inc., a Delaware corporation ("Pacific"), MedPartners, Inc., a
Delaware corporation and the parent of the Borrower ("MedPartners") and Team
Health Holdings, L.L.C., a Delaware limited liability company ("Holdings"), (a)
MedPartners has agreed to take such actions as are necessary to cause all the
entities that collectively constitute what is commonly known as the "Team Health
business" (a list of which is attached as Exhibit A to the Recapitalization
Agreement), to become subsidiaries of the Borrower prior to the consummation of
the Recapitalization (as defined below), (b) Pacific has agreed to contribute to
the Borrower 100 shares of the Borrower's existing common stock, constituting
all of the outstanding common stock of the Borrower, in exchange for 100,000
shares of the Borrower's class A preferred stock, par value $.01 per share (the
"Preferred Stock") and a number of shares of the Borrower's common stock, no par
value (the "Common Stock") equal to (i)(A) the Estimated Closing Common Value
(as defined in the Recapitalization Agreement) minus (B) $100,000,000, divided
by (ii) $1.50, (c) Pacific has agreed to sell to Holdings, and Holdings has
agreed to purchase from Pacific, 94,299.091 shares of Preferred Stock for a
purchase price of $1,000 per share and 9,267,273 shares of Common Stock for a
purchase price of $1.50 per share and (d) the Borrower has agreed to redeem and
purchase from Pacific, and Pacific has agreed to sell to the Borrower, all
shares of Common Stock held by Pacific (after taking into account the above
described transactions) other than 732,727 shares of Common Stock (which will be
retained by Pacific), for a purchase price of $1.50 per share (the transactions
described in clauses (a), (b), (c) and (d) being hereinafter collectively called
the "Recapitalization");
(2) The Borrower has requested that the Lender Parties (as hereinafter
defined) make loans to the Borrower and issue letters of credit having an
aggregate principal and face amount at any one time outstanding of up to Two
Hundred Million Dollars ($200,000,000), to be used by the
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Borrower (i) to finance a portion of the Recapitalization, (ii) to pay fees and
expenses incurred in connection with the Recapitalization in an amount not to
exceed $20,000,000, (iii) to provide working capital, (iv) to finance general
corporate purposes of the Borrower and its Subsidiaries, and (v) to finance
Permitted Acquisitions (as hereinafter defined), and the Lender Parties have
agreed to make such loans and issue such letters of credit all on and subject to
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquired EBITDA" means as of any date of determination, an amount
equal to (i) EBITDA (calculated excluding clause (x) of the definition of
EBITDA) attributable to each Permitted Acquisition consummated by the Borrower
or any of its Subsidiaries during the one (1) year period preceding the date of
determination (but only for a number of full fiscal quarters immediately
preceding the consummation of the applicable Permitted Acquisition equal to four
(4) less the number of fiscal quarters following the consummation of the
applicable Permitted Acquisition for which financial statements of the Borrower
covering one (1) or more full fiscal quarters have been delivered to the
Administrative Agent pursuant to Section 7.3) plus (ii) the Pro Forma Cost
Reductions, if any, applicable to each such Permitted Acquisition (but
reductions shall be computed (notwithstanding the definition of Pro Forma Cost
Reduction) only in respect of the same number of fiscal quarters as described in
the parenthetical in clause (i) above).
"Additional Collateral Documents" has the meaning specified in Section
5.11(e).
"Administrative Agent" has the meaning specified in the recital of
parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with Fleet at its
office at Fleet National Bank, One Federal Street, Boston, Massachusetts 02110,
Attention: Loan Administration.
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"Advance" means a Term A Advance, a Term B Advance, a Revolving Credit
Advance, a Swing Line Advance or a Letter of Credit Advance.
"Affected Lender" has the meaning specified in Section 2.16.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling," "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 10% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Agents" means the Administrative Agent, the Syndication Agent and the
Documentation Agent.
"Applicable Lending Office" means, with respect to each Lender Party,
such Lender Party's Domestic Lending Office in the case of a Prime Rate Advance
and such Lender Party's Eurodollar Lending Office in the case of a Eurodollar
Rate Advance.
"Applicable Margin" means at any time and from time to time a
percentage per annum determined pursuant to the last paragraph of this
definition by reference to the ratio of Consolidated Funded Debt to EBITDA at
such time, as set forth below:
Applicable Margin for Eurodollar Rate Advances
Ratio of Consolidated Revolving Credit Advances
Funded Debt to EBITDA and Term A Advances Term B Advances
- --------------------- ------------------------- ---------------
Greater than 4.00:1 3.250% 3.750%
Greater than 3.50:1 3.000% 3.750%
less than or equal to 4.00:1
Greater than 3.00:1 2.750% 3.750%
less than or equal to 3.50:1
Greater than 2.50:1 2.500% 3.750%
less than or equal to 3.00:1
Less than or equal to 2.50:1 2.250% 3.750%
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Applicable Margin for Prime Rate Advances
Ratio of Consolidated Revolving Credit Advances
Funded Debt to EBITDA and Term A Advances Term B Advances
- --------------------- ------------------------- ---------------
Greater than 4.00:1 2.250% 2.750%
Greater than 3.50:1 2.000% 2.750%
less than or equal to 4.00
Greater than 3.00:1 1.750% 2.750%
less than or equal to 3.50:1
Greater than 2.50:1 1.500% 2.750%
less than or equal to 3.00:1
Less than or equal to 2.50:1 1.250% 2.750%
Notwithstanding the above rates, prior to the date which is six (6)
months from the date hereof, the Applicable Margin for a Revolving Credit
Advance and a Term A Advance shall be 3.250% for a Eurodollar Rate Advance and
2.250% for a Prime Rate Advance.
The Applicable Margin for each Prime Rate Advance and each Eurodollar
Rate Advance shall be determined by reference to the ratio of Consolidated
Funded Debt to EBITDA which shall be determined and adjusted, if applicable,
three (3) Business Days after the date on which the Administrative Agent
receives financial statements pursuant to Section 7.3 or 7.4 and a certificate
of the Chief Financial Officer of the Borrower demonstrating the ratio of
Consolidated Funded Debt to EBITDA. If the Borrower has not submitted to the
Administrative Agent the information described above within ten (10) days
following the date required under Section 7.3 or 7.4, as the case may be, the
Applicable Margin shall result in an increase in the Applicable Margin to the
highest level set forth above, until the first day of the first month following
the delivery of such financial statements demonstrating that such an increase is
not required.
"Asset Disposition" shall mean the disposition (not involving an
Extraordinary Receipt) of any or all of the assets of the Borrower or any of its
Subsidiaries (including the capital stock of any of their Subsidiaries, but
excluding the sale by the Borrower of its own capital stock) whether by sale,
lease, transfer, or otherwise, including; provided, however, that for purposes
of Section 2.6(b)(ii), the term "Asset Disposition" shall not include any sale,
lease, transfer or other disposition (i) permitted pursuant to Section 6.4(a)
through (f) and (ii) of Equipment if the Net Proceeds therefrom are used to
reinvest in replacement Equipment within 180 days of such disposition;
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provided, that pending any purchase, any such Net Proceeds are used to repay
Revolving Credit Advances.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender Party and an Eligible Assignee, and accepted by the
Administrative Agent and by the Borrower, in accordance with Section 11.7 and in
substantially the form of Exhibit A hereto.
"Available Amount" of any Letter of Credit means, at any time, the
maximum amount available to be drawn under such Letter of Credit at such time
(assuming compliance at such time with all conditions to drawing).
"Bank Hedge Agreement" means any interest rate Hedge Agreement required
or permitted under Section 5.12 that is entered into by and between the Borrower
and any Hedge Bank.
"Benefit Arrangements" means any deferred compensation, bonus, stock
option, stock purchase or incentive plan, or any other agreement or arrangement,
whether written or oral, other than Plans, Multiemployer Plans, Welfare Plans
and defined contribution plans, that authorizes benefits to employees of the
Borrower or any of its Subsidiaries.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower's Account" means the account of the Borrower maintained by
the Borrower with Fleet National Bank at its office at One Federal Street,
Boston, Massachusetts 02110.
"Borrowing" means a Term A Borrowing, a Term B Borrowing, a Revolving
Credit Borrowing or a Swing Line Borrowing.
"Business Day" means a day of the year on which banks are not required
or authorized by law to close in Boston, Massachusetts, Charlotte, North
Carolina, Knoxville, Tennessee and New York, New York and, if the applicable
Business Day relates to any Eurodollar Rate Advances, on which dealings are
carried on in the London interbank market.
"Capital Expenditures" means, for any Person for any period, the sum of
all expenditures made by such Person or any of its Subsidiaries during such
period for Equipment, fixed assets, real property or improvements, or for
replacements or substitutions therefor or additions thereto, that should be, in
accordance with GAAP, reflected as additions to property, plant or Equipment on
a Consolidated balance sheet of such Person.
"Capitalized Leases" means all leases that should be, in accordance
with GAAP, recorded as capitalized leases.
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"Cash Equivalents" means any of the following, to the extent owned by
the Borrower or any of its Subsidiaries, free and clear of all Liens other than
Liens created under the Collateral Documents or as permitted under Section 6.1:
(a) marketable direct obligations of the Government of the United States or any
agency or instrumentality thereof or obligations unconditionally guaranteed by
the full faith and credit of the Government of the United States having a
maturity of not greater than 360 days from the date of issuance thereof, (b)
overnight bank deposits, bankers acceptances, certificates of deposit or time
deposits having a maturity of not greater than 360 days from the date of
issuance thereof with any commercial bank that is a Lender Party or a member of
the Federal Reserve System that issues (or the parent of which issues)
commercial paper rated as described in clause (c) and is organized under the
laws of the United States, any State thereof or the District of Columbia and has
combined capital and surplus of at least $500,000,000, (c) commercial paper
having a maturity of not greater than 180 days from the date of issuance thereof
in an aggregate amount of no more than $2,500,000 per issuer outstanding at any
time, issued by any corporation organized under the laws of any State of the
United States and rated at least "Prime-1" (or the then equivalent grade) by
Moody's Investors Service, Inc. or "A-1" (or the then equivalent grade) by
Standard & Poor's Ratings Group, (d) repurchase obligations and reverse
repurchase agreements of any Lender or of any commercial bank satisfying the
requirements of clause (b) of this definition, having a term of not more than
thirty (30) days with respect to marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or
instrumentality thereof, (e) securities with maturities of one (1) year or less
from the date of issuance thereof issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory, the securities of
which state, commonwealth, territory, political subdivision or taxing authority
(as the case may be) are rated at least AAA (or the equivalent thereof) by
Standard & Poor's Ratings Group or Aaa (or the equivalent thereof) by Moody's
Investors Service, Inc. or equivalent by another rating agency, (f) securities
with maturities of one (1) year or less from the date of issuance thereof backed
by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition, or (g) shares of
money market mutual or similar funds which invest only in assets satisfying the
requirements of clause (a) through (f) of this definition.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as amended from time
to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation
and Liability Information System maintained by the U.S. Environmental Protection
Agency.
"Change of Control" means any of the following events: (a) prior to an
Initial Public Offering, (i) Holdings shall at any time cease to collectively
own a majority of the capital stock of the Borrower, (ii) the Sponsors or
Related Parties are no longer collectively the "beneficial owners" (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, amended (the "Exchange
Act")) of at least fifty-one percent (51%) of the total voting power of all
Voting Stock of Holdings
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or (iii) the Sponsors or Related Parties no longer have the right to
collectively designate and cause to be elected a majority of the directors (or
their equivalent) of Holdings and thereby control the management of Holdings,
the Borrower and its Subsidiaries; (b) after an Initial Public Offering, (i) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
Exchange Act), other than Holdings, the Sponsors or Related Parties, is or
becomes the beneficial owner, directly or indirectly, of more than the lesser of
(x) thirty-five percent (35%) of the total voting power of all Voting Stock of
the Borrower and (y) the percentage of the total voting power of all Voting
Stock of the Borrower owned by Holdings, the Sponsors and Related Parties (after
giving effect to the Initial Public Offering) or (ii) Continuing Directors shall
cease to constitute at least a majority of the directors constituting the board
of directors of Borrower; or (c) a Change of Control (as defined in the
Subordinated Notes Indenture) shall have occurred.
"Closing Date" means the date on which all of the conditions precedent
set forth in Section 3.1 to the Initial Extension of Credit shall have been
satisfied or waived.
"Co-Arranger" has the meaning specified in the recital of parties to
this Agreement.
"Collateral" means all "Collateral" referred to in the Collateral
Documents and all other property that is or is intended to be subject to any
Lien in favor of the Administrative Agent for the benefit of the Secured
Parties.
"Collateral Documents" means the Security Agreement, the Intellectual
Property Security Agreement, the Mortgages, the Holdings Pledge Agreement and
any other agreement that creates or purports to create a Lien in favor of the
Administrative Agent for the benefit of the Secured Parties, including the
Additional Collateral Documents delivered pursuant to Section 5.11.
"Commitment" means a Term A Commitment, a Term B Commitment, a
Revolving Credit Commitment or a Letter of Credit Commitment.
"Commitment Letter" means the letter dated January 21, 1999 among
NationsBank, Fleet, DLJ Capital Funding, Inc., each of the Agents and each of
Madison Dearborn Partners, Inc., Cornerstone Equity Investors LLC and Healthcare
Equity Partners, L.P.
"Common Stock" has the meaning specified in the Preliminary Statements.
"Confidential Information" means information that the Borrower
furnishes to the Administrative Agent or any Lender Party in a writing
designated as confidential, but does not include any such information that is or
becomes generally available to the public (other than as a result of a breach by
the Administrative Agent or any Lender Party (or any party to which they
disclosed such information) of its obligations to keep such information
confidential under Section 11.10) or that is or becomes available to the
Administrative Agent or such Lender Party from a
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source other than the Borrower that is not, to the best of the Administrative
Agent's or such Lender Party's knowledge, acting in violation of a
confidentiality agreement with the Borrower.
"Consolidated" refers to the consolidation of accounts, in accordance
with GAAP, of any Person and all of its Subsidiaries, and if not specified, the
Borrower and all of its Subsidiaries.
"Consolidated Funded Debt to EBITDA" means, for any fiscal quarter of
the Borrower, a ratio of (a) Funded Debt of the Borrower and its Subsidiaries as
at the end of such fiscal quarter to (b) EBITDA for the most recently completed
four fiscal quarters of the Borrower and its Subsidiaries.
"Consolidated Senior Debt to EBITDA" means, for any fiscal quarter of
the Borrower, a ratio of (a) Senior Debt of the Borrower and its Subsidiaries as
at the end of such fiscal quarter to (b) EBITDA for the most recently completed
four fiscal quarters of the Borrower and its Subsidiaries.
"Conversion," "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.9 or
2.10.
"Continuing Directors" means, as of any date of determination, any
member of the board of directors of the Borrower who (i) was a member of such
board of directors on the date of this Agreement, (ii) was nominated for
election or elected to such board of directors with the approval of a majority
of the Continuing Directors who were members of such board of directors at the
time of such nomination or election, or (iii) were nominated by the Sponsors
pursuant to the Stockholders Agreement.
"Current Assets" of any Person means all assets of such Person that
would, in accordance with GAAP, be classified as current assets.
"Current Liabilities" of any Person means all indebtedness of such
Person that would, in accordance with GAAP, be classified as current
liabilities, but excluding the current portion of any Funded Debt (including
accrued but unpaid interest).
"Debt" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all Obligations of such Person for the
deferred purchase price of property or services (other than trade payables and
other accrued liabilities incurred in the ordinary course of business that are
not overdue by more than ninety (90) days unless being contested in good faith)
which would be shown as a liability on a balance sheet or are required to be set
forth in the footnotes to a year-end balance sheet, each prepared in accordance
with GAAP, (c) all Obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all Obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or
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lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Obligations of such Person as lessee under
Capitalized Leases to the extent classified as a liability on a balance sheet in
accordance with GAAP, (f) all Obligations, contingent or otherwise, of such
Person under acceptance, letter of credit or similar facilities, (g) all
Obligations of such Person in respect of Hedge Agreements, (h) all Debt of
others referred to in clauses (a) through (g) above or clause (i) below
guaranteed directly or indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an agreement (I) to pay
or purchase such Debt or to advance or supply funds for the payment or purchase
of such Debt, (II) to purchase, sell or lease (as lessee or lessor) property, or
to purchase or sell services, primarily for the purpose of enabling the debtor
to make payment of such Debt or to assure the holder of such Debt against loss,
(III) to supply funds to or in any other manner invest in the debtor (including
any agreement to pay for property or services irrespective of whether such
property is received or such services are rendered) or (IV) otherwise to assure
a creditor against loss, (i) all Debt referred to in clauses (a) through (h)
above of another Person secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Lien on property
(including, without limitation, accounts, contract rights or inventory) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Debt, (k) the principal balance outstanding under any synthetic
lease, tax retention operating lease, off-balance sheet loan or similar
off-balance sheet financing product to which such Person is a party, where such
transaction is considered borrowed money indebtedness for tax purposes but is
classified as an operating lease in accordance with GAAP and (l) all Earnout
Obligations; provided, that notwithstanding the foregoing, Earnout Obligations
up to an aggregate amount of $20,000,000 outstanding at any time shall not be
deemed to be Debt.
"Debt Issuance" means any issuance or sale or other incurrence by the
Borrower or any of its Subsidiaries of any Funded Debt; provided, however, that
for purposes of determination of Net Cash Proceeds under Section 2.6(b)(iii),
the term "Debt Issuance" shall not include the incurrence of Debt permitted
under Section 6.2 (other than as provided in the proviso to Section
6.2(c)(iii)).
"Default" means any Event of Default or any event that would constitute
an Event of Default but for the requirement that notice be given or time elapse
or both.
"Defaulted Advance" means, with respect to any Lender Party at any
time, the portion of any Advance required to be made by such Lender Party to the
Borrower pursuant to Section 2.1 or 2.2 at or prior to such time which has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.2(e) as of such time. In the event that
a portion of a Defaulted Advance shall be deemed made pursuant to Section
2.15(a), the remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section 2.1 on the
same date as the Defaulted Advance so deemed made in part.
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"Defaulted Amount" means, with respect to any Lender Party at any time,
any amount required to be paid by such Lender Party to the Administrative Agent
or any other Lender Party hereunder or under any other Loan Document at or prior
to such time which has not been so paid as of such time, including, without
limitation, any amount required to be paid by such Lender Party to (a) the Swing
Line Bank pursuant to Section 2.2(b) to purchase a portion of a Swing Line
Advance made by the Swing Line Bank, (b) any Issuing Bank pursuant to Section
2.3(c) to purchase a portion of a Letter of Credit Advance made by such Issuing
Bank, (c) the Administrative Agent pursuant to Section 2.2(e) to reimburse the
Administrative Agent for the amount of any Advance made by the Administrative
Agent for the account of such Lender Party, (d) any other Lender Party pursuant
to Section 2.13 to purchase any participation in Advances owing to such other
Lender Party and (e) the Administrative Agent or an Issuing Bank pursuant to
Section 10.5 to reimburse the Administrative Agent or such Issuing Bank for such
Lender Party's ratable share of any amount required to be paid by the Lender
Parties to the Administrative Agent or such Issuing Bank as provided therein. In
the event that a portion of a Defaulted Amount shall be deemed paid pursuant to
Section 2.15(b), the remaining portion of such Defaulted Amount shall be
considered a Defaulted Amount originally required to be paid hereunder or under
any other Loan Document on the same date as the Defaulted Amount so deemed paid
in part.
"Defaulting Lender" means, at any time, any Lender Party that, at such
time, (a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any
action or be the subject of any action or proceeding of a type described in
Section 9.6.
"Disclosed Litigation" has the meaning specified in Section 4.9.
"Disposal" means the discharge, deposit, injection, dumping, spilling,
leaking or placing of any solid waste or hazardous waste, as those terms are
defined by any federal, state, local or foreign law, into or on any land or
water so that such solid waste or hazardous waste or any hazardous constituents
thereof may enter the environment or be emitted into the air or discharged into
any waters, including ground waters.
"Documentation Agent" has the meaning specified in the recital of
parties to this Agreement.
"Domestic Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender Party, as the case may be, or such other office of such
Lender Party as such Lender Party may from time to time specify to the Borrower
and the Administrative Agent.
"Domestic Subsidiary" means any Subsidiary organized under the laws of
the United States of America or any State thereof.
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"Earnout Obligations" means (i) Existing Earnout Obligations and (ii)
those payment obligations of the Borrower and its Subsidiaries to former owners
of businesses which were acquired by the Borrower or one of its Subsidiaries
pursuant to a Permitted Acquisition which are in the nature of deferred purchase
price. The amount of Earnout Obligations shall equal the amount required to be
set forth with respect to such payment obligations on a balance sheet prepared
in accordance with GAAP applied consistent with past practices.
"EBITDA" means, for any period the sum, determined on a Consolidated
basis and without duplication, of (i) Net Income (or Net Loss), (ii) Interest
Expense (without deduction for interest income), (iii) income (and franchise
taxes in the nature of income taxes) and foreign withholding tax expense, (iv)
depreciation expense, (v) extraordinary and nonrecurring non-cash expenses,
charges and losses to the extent that no reserve has been or is required to be
established therefor on a balance sheet prepared in accordance with GAAP, (vi)
amortization expense, (vii) other non-cash charges (including, without
limitation, non-cash charges in connection with the granting of options,
warrants or other equity interests) to the extent that no reserve has been or is
required to be established therefor on a balance sheet prepared in accordance
with GAAP, (viii) expenses of the Borrower related to the Transaction which are
paid, taken or otherwise accounted for within ninety (90) days of the
consummation of the Transaction not to exceed $20,000,000 in the aggregate, (ix)
up to $8,600,000 in bonuses or other compensation paid to employees on or about
the Closing Date, (x) Acquired EBITDA for such period, (xi) Management Fees paid
in cash during such period in accordance with this Agreement in an amount not to
exceed $500,000 in any Fiscal Year, (xii) non-cash losses from asset sales, and
(xiii) expenses incurred to the extent reimbursed (or reasonably expected to be
reimbursed within ninety (90) days of incurrence thereof) by MedPartners
pursuant to the indemnification provisions of the Recapitalization Agreement;
provided, that with respect to each of clauses (ii) through (xiii), such amounts
shall be added to Net Income pursuant to this definition only to the extent such
amounts are deducted in determining Net Income, minus (A) extraordinary and
nonrecurring gains (in each case determined in accordance with GAAP) and (B)
amounts added pursuant to clause (xiii) above during this Fiscal Year or any
previous Fiscal Year which were not so reimbursed within the time period set
forth in the parenthetical in clause (xiii) above; provided, that for Fiscal
Year 1998, EBITDA shall be deemed to be $11,800,000 with respect to the first
quarter of such Fiscal Year, $14,300,000 with respect to the second quarter of
such Fiscal Year, $14,500,000 with respect to the third quarter of such Fiscal
Year, and $13,700,000 with respect to the fourth quarter of such Fiscal Year;
provided, further, that for the first fiscal quarter of Fiscal Year 1999, EBITDA
shall be calculated for such fiscal quarter on a pro forma adjusted basis
consistent with the adjustments for Fiscal Year 1998 and reasonably acceptable
to the Administrative Agent. In addition, EBITDA shall be calculated without
giving effect to (w) any gains or losses (other than as expressly provided in
clause (xii) above) from sales of assets other than from sales of inventory sold
in the ordinary course of business, (x) purchase accounting adjustments required
or permitted by Account Principles Board Opinion Nos. 16 (including non-cash
write-ups and non-cash charges relating to inventory and fixed assets, in each
case arising in connection with any Permitted Acquisition) and 17 (including
non-cash charges relating to intangibles and goodwill arising in
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connection with any Permitted Acquisition), (y) any gain or loss recognized in
determining Consolidated Net Income (or Net Loss) for such period in respect of
post-retirement benefits as a result of the application of FASB 106 and (z) any
gain or loss recognized in determining Consolidated Net Income (or Net Loss) for
such period resulting from the payment of Earnout Obligations.
"Eligible Assignee" means with respect to any Facility (other than the
Letter of Credit Facility), (a) a Lender; (b) an Affiliate (or fund with the
same investment advisor or that has an Affiliate of such investment advisor as
its investment advisor) of a Lender; and (c) subject to the prior approval of
the Administrative Agent and the Borrower, such approval by the Borrower not to
be unreasonably withheld or delayed, (i) a commercial bank organized under the
laws of the United States, or any State thereof, and having total assets in
excess of $500,000,000; (ii) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof, and having
total assets in excess of $500,000,000; (iii) a commercial bank organized under
the laws of any other country that is a member of the OECD or has concluded
special lending arrangements with the International Monetary Fund associated
with its General Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of
$500,000,000, so long as such bank is acting through a branch or agency located
in the United States; (iv) the central bank of any country that is a member of
the OECD; and (v) a finance company, insurance company or other financial
institution or fund (whether a corporation, partnership, trust or other entity)
that is engaged in making, purchasing or otherwise investing in commercial loans
in the ordinary course of its business and having total assets in excess of
$500,000,000; and, with respect to the Letter of Credit Facility, a Person that
is an Eligible Assignee under subclause (i) or (iii) of clause (c) of this
definition and is approved by the Administrative Agent and the Borrower, such
approval by the Borrower not to be unreasonably withheld or delayed; provided,
however, that no Loan Party or Affiliate of a Loan Party shall qualify as an
Eligible Assignee under this definition.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, any Environmental Permit or
Hazardous Material or arising from alleged injury or threat to public health and
safety or the environment, including, without limitation, (a) by any
governmental or regulatory authority or third party for enforcement, cleanup,
Removal, Response, Remedial or other actions or damages and (b) by any
governmental or regulatory authority or third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any international or transnational law,
federal, state, local or foreign statute, law, ordinance, rule, regulation,
code, order, writ, judgment, injunction, decree or judicial or agency
interpretation, policy or guidance having the force and effect of law, in each
case relating to pollution or protection of the environment or natural
resources, including, without
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13
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, threatened release, release or discharge of Hazardous
Materials.
"Environmental Permit" means any permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Equipment" has the meaning specified in Section 1(a) of the Security
Agreement.
"Equity Financing" means the purchase by Holdings and Pacific of (i)
Preferred Stock with a value on the date hereof of not less than $100,000,000
(including the retention by Pacific (a Wholly-Owned Subsidiary of MedPartners)
of Preferred Stock with a value on the date hereof of not more than $5,700,000)
and (ii) Common Stock with a value on the date hereof of not less than
$15,000,000 (including the retention by Pacific of Common Stock with a value on
the date hereof of not more than $1,100,000), all in accordance with the terms
of the Recapitalization Agreement.
"Equity Issuance" means any sale or issuance by the Borrower or any of
its Subsidiaries of any capital stock or other ownership or profit interest, any
securities convertible or exchangeable for capital stock or other ownership or
profit interest or any warrants, rights or options to acquire capital stock or
other ownership or profit interest; provided, however, that for purposes of
determination of Net Cash Proceeds under Section 2.6(b)(iii), the term "Equity
Issuance" shall not include any issuance or sale of (a) capital stock of the
Borrower issued on or before the Closing Date in connection with the
Recapitalization; (b) capital stock of the Borrower to any Person as
consideration paid or otherwise issued in connection with a Permitted
Acquisition; (c) common stock of the Borrower issued to any director of the
Borrower required by applicable law in connection with such Person acting in
such capacity; (d) common stock of the Borrower to management and employees of
the Borrower whether pursuant to stock options or otherwise, (e) common stock
issued by any Subsidiary of the Borrower to the Borrower, (f) issuances of
capital stock of the Borrower to any shareholder of the Borrower (and their
respective Affiliates) on the Closing Date and (g) issuances of capital stock of
the Borrower to any Sponsor or Related Party after the date hereof so long as
the Net Cash Proceeds from any such issuance are used in accordance with Section
6.5(s).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of
ERISA is a member of the controlled group of the Borrower, or under common
control with the Borrower, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Plan unless the
30-day notice requirement with respect to such event has been waived by the
PBGC, or (ii) the requirements of subsection (1) of Section
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4043(b) of ERISA (without regard to subsection (2) of such Section) are met with
respect to a contributing sponsor, as defined in Section 4001(a)(13) of ERISA,
of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of
Section 4043(c) of ERISA is reasonably expected to occur with respect to such
Plan within the following 30 days; (b) the application for a minimum funding
waiver with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan under ERISA Section 4041(c),
pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect
to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation
of operations at a facility of the Borrower or any ERISA Affiliate in the
circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the
Borrower or any ERISA Affiliate from a Multiple Employer Plan during a plan year
for which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (f) the conditions for imposition of a lien under Section 302(f) of ERISA
shall have been met with respect to any Plan; (g) the adoption of an amendment
to a Plan requiring the provision of security to such Plan pursuant to Section
307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a
Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in Regulation D of
the Board of Governors of the Federal Reserve System, as in effect from time to
time.
"Eurodollar Lending Office" means, with respect to any Lender Party,
the office of such Lender Party specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar
Rate Advances comprising part of the same Borrowing, an interest rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such Interest Period which appears on the Telerate Page 3750
as of 11:00 a.m. (London time) two Business Days before the first day of such
Interest Period; provided, however, that if the rate described above does not
appear on the Telerate System on any applicable interest determination date, the
Eurodollar Rate shall be the rate (rounded upward as described above, if
necessary) for deposits in U.S. dollars for a period substantially equal to the
interest period on the Reuters Page "LIBO" (or such other page as may replace
the LIBO page on that service for the purpose of displaying such rates), as of
11:00 a.m. (London time) two Business Days before the first day of such Interest
Period.
If both the Telerate and Reuters system are unavailable, then the rate
for that date will be determined on the basis of the offered rates for deposits
in U.S. dollars for a period of time comparable to such Interest Period which
are offered to first class banks by four major banks in the
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London interbank market at approximately 11:00 a.m. (New York time) two Business
Days before the first day of such Interest Period as selected by the
Administrative Agent. The principal London office of each of the four major
London banks will be requested to provide a quotation of its U.S. dollar deposit
offered rate. If at least two such quotations are provided, the rate for that
date will be the arithmetic mean of the quotations. If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rates quoted for loans in U.S. dollars to leading European banks
for a period of time comparable to such Interest Period offered by major banks
in New York City at approximately 11:00 a.m. (New York time) two Business Days
before the first day of such Interest Period. In the event that the
Administrative Agent is unable to obtain any such quotation as provided above,
it will be deemed that the Eurodollar Rate for such Interest Rate cannot be
determined.
In the event that the Board of Governors of the Federal Reserve System
shall impose a Eurodollar Rate Reserve Percentage with respect to Eurocurrency
Liabilities, the Eurodollar Rate for an Interest Period shall be equal to the
amount determined above for such Interest Period divided by a percentage equal
to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as
provided in Section 2.7(a)(ii).
"Eurodollar Rate Reserve Percentage" means, for any Interest Period for
all Eurodollar Rate Advances comprising part of the same Borrowing, the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
"Events of Default" has the meaning specified in Article 9.
"Excess Cash Flow" means for any period (without duplication) the sum
of (a) EBITDA of the Borrower and its Subsidiaries for such period plus (b) if
there was a net decrease in Working Capital during such period, the amount of
such net decrease less (c) if there was a net increase in Working Capital during
such period the amount of such net increase less (d) the aggregate amount of
mandatory and optional prepayments (other than optional prepayments of the Swing
Line Advances, Letter of Credit Advances or Revolving Credit Advances) or
repayments of principal made by the Borrower and its Subsidiaries on any Debt of
the Borrower and its Subsidiaries during such period less (e) Capital
Expenditures of the Borrower and its Subsidiaries paid in cash within
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such period or within 90 days of the end of such period (which, if so applied,
will not constitute a reduction in calculating Excess Cash Flow in the following
period) and not financed during such period less (f) the aggregate amount of all
federal, state, local and foreign taxes paid by the Borrower and its
Subsidiaries during such period less (g) the aggregate amount of interest paid
on any Debt of the Borrower and its Subsidiaries during such period less (h) the
aggregate amount of all non-cash credits included in arriving at such EBITDA
less (i) dividends or other distributions or redemptions paid by the Borrower to
the holders of its capital stock during such period to the extent that the
Borrower is expressly permitted to pay such dividends or other distributions or
redemptions under this Agreement less (j) extraordinary or nonrecurring cash
charges, expenses and losses during such period less (k) cash expenses paid
during such period in connection with the issuance pursuant to the Subordinated
Note Indenture of Subordinated Notes in exchange for such Subordinated Notes
plus (l) the increase during such period in reserves with respect to medical
malpractice insurance (except in the case of each of Fiscal Year 1999 and Fiscal
Year 2000, only that portion of the increase in such reserve during such Fiscal
Year in excess of $10,000,000) less (m) the decrease during such period in
reserves with respect to medical malpractice insurance less (n) the amount of
any payments in respect of Earnout Obligations and other payments made pursuant
to the Recapitalization Agreement less (o) up to $8,600,000 of bonuses and other
compensation paid to employees on or about the Closing Date less (p) the
unfinanced portion of cash purchase price for Permitted Acquisitions not to
exceed $3,000,000 in any Fiscal Year less (q) Acquired EBITDA less (r)
Management Fees paid in cash during such period in accordance with this
Agreement in an amount not to exceed $500,000 in any Fiscal Year less (s)
expenses of the Borrower related to the Transaction which are not financed and
which are paid, taken or otherwise accounted for within ninety (90) days of the
Transaction not to exceed $20,000,000 in the aggregate. With respect to each of
the deductions from EBITDA set forth above, each shall be made only to the
extent such amounts are not deducted in determining EBITDA.
"Existing Debt" has the meaning specified in Schedule 4.18(a).
"Existing Earnout Obligations" means those payment obligations of the
Borrower, its Subsidiaries and the Related Professional Corporations set forth
on Exhibit B to the Recapitalization Agreement to former owners of business
which were acquired by the Borrower, its Subsidiaries and the Related
Professional Corporations prior to the Closing Date which are in the nature of
deferred purchase prices for such businesses and are expressly contingent on the
financial or operating performance of such businesses for periods after the
Closing Date.
"Extraordinary Receipt" means any cash received by or paid to or for
the account of any Person from tax refunds (to the extent not included in EBITDA
for the period of receipt thereof), proceeds of insurance (other than proceeds
of business interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in lieu
thereof) and indemnity payments; provided, however, that an Extraordinary
Receipt shall not include cash receipts received from proceeds of insurance,
condemnation awards (and payments in lieu
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thereof) or indemnity payments to the extent that such proceeds, awards or
payments (a) in respect of loss or damage to Equipment, fixed assets or real
property are applied (or in respect of which expenditures were previously
incurred) to replace or repair the Equipment, fixed assets or real property in
respect of which such proceeds, awards or payments were received in accordance
with the terms of the Loan Documents, so long as such application is made within
one hundred eighty (180) days after such Person's receipt of such proceeds,
awards or payments; (b) are received by any Person in respect of any third party
claim against such Person and applied to pay (or to reimburse such Person for
its prior payment of) such claim and the costs and expenses of such Person with
respect thereto; or (c) in respect of indemnity payments have been or are
applied within twelve (12) months of receipt thereof to pay a reasonably
anticipated cost or expense of such Person not in excess of $10,000,000.
"Facility" means the Term A Facility, the Term B Facility, the
Revolving Credit Facility, the Letter of Credit Facility or the Swing Line
Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Fee Letter" means the letter dated January 21, 1999 among NationsBank,
Fleet, DLJ Capital Funding, Inc., each of the Agents and each of Madison
Dearborn Partners, Inc., Cornerstone Equity Investors LLC and Healthcare Equity
Partners, L.P.
"Fiscal Year" means a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on December 31 in any calendar year.
"Fleet" means Fleet National Bank in its capacity as a Lender, Issuing
Bank or Swing Line Bank.
"Foreign Subsidiary" means any Subsidiary organized under the laws of
any jurisdiction other than the United States of America or any State thereof.
"Funded Debt" means, with respect to the Borrower, the Advances, and
with respect to the Borrower and the other Loan Parties and any other Person,
all other Debt of such Person that by its terms matures more than one year after
the date of determination or matures within one year from such date but is
renewable or extendible, at the option of such Person, to a date more than one
year after such date or arises under a revolving credit or similar agreement
that obligates the lender or
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lenders to extend credit during a period of more than one year after such date,
including the current portion of all such Debt.
"GAAP" has the meaning specified in Section 1.3.
"Guaranteed Obligations" means, as to any Person, any obligation of
such Person guaranteeing any indebtedness, rent or any other payment or
obligation of the lessee under a lease of real or personal property, dividend,
or other obligation ("primary obligations") of any other Person (the "primary
obligor") in any manner, including any obligation or arrangement of such Person
(a) to purchase or repurchase any such primary obligation, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet condition
of the primary obligor, (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) to indemnify the owner of such primary obligation against
loss in respect thereof; provided, that the term Guaranteed Obligations shall
not include endorsements of instruments for deposit or collection or standard
contractual indemnitees entered into in the ordinary course of business. The
amount of any Guaranteed Obligation at any time shall be deemed to be an amount
equal to the lesser at such time of (x) the stated or determinable amount of the
primary obligation in respect of which such Guaranteed Obligation is made and
(y) the maximum amount for which such Person may be liable pursuant to the terms
of the instrument embodying such Guaranteed Obligation; or, if not stated or
determinable, the maximum reasonably anticipated liability (assuming full
performance) in respect thereof.
"Guarantors" means (a) each Subsidiary Guarantor and (b) Holdings.
"Guaranty" means each of the Holdings Guaranty and the Subsidiary
Guaranty.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other similar agreements.
"Hedge Bank" means any Lender Party or any of its Affiliates in its
capacity as a party to a Bank Hedge Agreement.
"Holdings" has the meaning specified in the Preliminary Statements.
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"Holdings Guaranty" has the meaning specified in Section 3.1(a).
"Holdings Pledge Agreement" has the meaning specified in Section
3.1(a).
"Immaterial Subsidiary" means each Subsidiary of the Borrower which (a)
for the most recent Fiscal Year of the Borrower had less than $100,000 of
revenues and (b) as of the end of such Fiscal Year was the owner of less than
$100,000 of assets, all as shown on the Consolidated financial statements of the
Borrower for such Fiscal Year.
"Indemnified Party" has the meaning specified in Section 11.4(b).
"Information Memorandum" means the information memorandum, dated
February 1999, delivered by the Syndication Agent and Fleet to the Lenders.
"Initial Extension of Credit" means the earlier to occur of the initial
Borrowing and the initial issuance of a Letter of Credit.
"Initial Lenders" has the meaning specified in the recital of parties
to this Agreement.
"Initial Public Offering" means the initial public offering of the
common stock of the Borrower.
"Insufficiency" means, with respect to any Plan, the amount, if any, of
its unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Intellectual Property Security Agreement" has the meaning specified in
Section 3.1(a).
"Interest Expense" means, with respect to any Person for any period,
interest expense on all Debt of such Person for such period net of interest
income for such period, whether paid or accrued, determined on a Consolidated
basis for such Person and its Subsidiaries and in accordance with GAAP, and
including, without limitation, (a) in the case of the Borrower, interest expense
in respect of Debt resulting from Advances, (b) the interest component of all
obligations under Capitalized Leases, (c) commissions, discounts and other fees
and charges payable in connection with letters of credit (including, without
limitation, Letters of Credit), (d) the net payment, if any, payable in
connection with Hedge Agreements less the net credit, if any, received in
connection with Hedge Agreements and (e) all fees paid by the Borrower pursuant
to Section 2.8(a). Interest Expense shall also include, regardless of treatment
of such amounts in accordance with GAAP, lease or other similar payments under
synthetic leases, tax retention operating leases, off-balance sheet loans or
similar off-balance sheet financing products to the extent that such payments
would be considered interest expense for tax purposes.
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"Interest Period" means, for each Eurodollar Rate Advance comprising
part of the same Borrowing, the period commencing on the date of such Eurodollar
Rate Advance or the date of the Conversion of any Prime Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may, upon notice received by the
Administrative Agent not later than 11:00 A.M. (New York time) on the third
Business Day prior to the first day of such Interest Period, select; provided,
however, that:
(a) The Borrower may not select any Interest Period with
respect to any Eurodollar Rate Advance under a Facility that ends after
any principal repayment installment date for such Facility unless,
after giving effect to such selection, the aggregate principal amount
of Prime Rate Advances and of Eurodollar Rate Advances having Interest
Periods that end on or prior to such principal repayment installment
date for such Facility shall be at least equal to the aggregate
principal amount of Advances under such Facility due and payable on or
prior to such date;
(b) Whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day of
such Interest Period shall be extended to occur on the next succeeding
Business Day, provided, however, that, if such extension would cause
the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the
next preceding Business Day; and
(c) Whenever the first day of any Interest Period occurs on a
day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial
calendar month, such Interest Period shall end on the last Business Day
of such succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" of any Person means all of such Person's now owned and
hereafter acquired inventory, goods, merchandise and other personal property,
wherever located, to be furnished under any contract of service or held for sale
or lease, all returned goods, raw materials, other materials and supplies of any
kind, nature or description which are or might be consumed in such Person's
business or used in connection with the packing, shipping, advertising, selling
or finishing of such goods, merchandise and such other personal property, and
all documents of title or other documents representing them.
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"Investment" in any Person means any loan or advance to such Person,
any purchase or other acquisition of any capital stock or other ownership or
profit interest, warrants, rights, options, obligations or other securities of
such Person, any capital contribution to such Person or any other investment in
such Person, including, without limitation, any arrangement pursuant to which
the investor incurs Debt of the types referred to in clause (i) or (j) of the
definition of "Debt" in respect of such Person. The amount of any Investment by
any Person on any date of determination shall be the acquisition price of the
gross assets acquired (including any liability assumed by such Person to the
extent such liability would be reflected on a balance sheet prepared in
accordance with GAAP) plus all additional capital contributions or purchase
price paid in respect thereof, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment minus the amount of all cash returns of principal or capital thereon,
cash dividends thereon and other cash returns on investment thereon or
liabilities expressly assumed by another Person (other than Borrower or another
Subsidiary of Borrower) in connection with the sale of such Investment. Whenever
the term "outstanding" is used in this Agreement with reference to an
Investment, it shall take into account the matters referred to in the preceding
sentence.
"Issuing Bank" means each of Fleet and NationsBank and each Eligible
Assignee to which a Letter of Credit Commitment hereunder has been assigned
pursuant to Section 11.7.
"L/C Cash Collateral Account" has the meaning specified in the Security
Agreement.
"L/C Related Documents" has the meaning specified in Section
2.4(f)(ii)(A).
"Lender Party" means any Lender, any Issuing Bank or the Swing Line
Bank.
"Lenders" means the Initial Lenders and each Person that shall become a
Lender hereunder pursuant to Section 11.7.
"Letter of Credit" means any Letter of Credit issued hereunder (as
specified in Section 2.3(a)).
"Letter of Credit Advance" means an advance made by any Issuing Bank or
any Revolving Credit Lender pursuant to Section 2.3(c).
"Letter of Credit Agreement" has the meaning specified in Section
2.3(a).
"Letter of Credit Commitment" means, with respect to any Issuing Bank,
the amount set forth opposite such Issuing Bank's name on Schedule I hereto
under the caption "Letter of Credit Commitment" or, if such Issuing Bank has
entered into one or more Assignments and Acceptances, set forth for such Issuing
Bank in the Register maintained by the Administrative Agent pursuant to
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22
Section 11.7(d) as such Issuing Bank's "Letter of Credit Commitment", as such
amount may be reduced at or prior to such time pursuant to Section 2.5.
"Letter of Credit Facility" means, at any time, an amount equal to the
amount of the Issuing Banks' Letter of Credit Commitments at such time, as such
amount may be reduced pursuant to Section 2.5.
"Lien" means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
"Loan Documents" means (a) this Agreement, (b) the Notes, (c) each
Guaranty, (d) the Collateral Documents, (e) each Letter of Credit Agreement, (f)
each Additional Collateral Document, and all other agreements, instruments and
documents executed in connection therewith, in each case as the same may at any
time be amended, supplemented, restated or otherwise modified and in effect.
"Loan Parties" means the Borrower and each Guarantor.
"Majority Lenders" of any Facility shall mean those Lenders (other than
Defaulting Lenders) which would constitute the Required Lenders under, and as
defined in, this Agreement if all outstanding Obligations of other Facilities
under this Agreement were repaid in full and all Commitments with respect
thereto were terminated.
"Management Fees" means for any period, all management fees, emoluments
or similar compensation paid to or incurred with respect to any Person (other
than any such fees, emoluments or similar compensation paid to or incurred and
payable to any Loan Party in respect of services rendered in connection with the
management or supervision of the management of any Loan Party), other than (a)
salaries, bonuses and other compensation paid to any full-time employee in
respect of such full-time employment and (b) fees, emoluments or similar
compensation paid or incurred in the ordinary course of business by any Loan
Party to any Person who is not an Affiliate thereof or to any Related
Professional Corporation in accordance with its contractual requirements.
"Management Services Agreement" means the Management Services Agreement
dated the date hereof between the Borrower and each of the Sponsors as in effect
on the date hereof, a copy of which is attached hereto as Exhibit K, as amended
to the extent permitted under this Agreement.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change (including
any event which, in the opinion of the Agents, is reasonably likely to result in
such a material adverse change) in (a)
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the business, assets, liabilities (actual or contingent), operations, condition
(financial or otherwise) or management of the Borrower and its Subsidiaries
(taken as a whole), (b) the ability of any Loan Party to perform its obligations
under the Loan Documents to which it is a party or (c) any material aspect of
the Transaction; provided, that the implementation or effectiveness of the final
rule entitled "Medicare Program: Revisions to Payment Policies and Adjustments
to the Relative Value Units under the Physician Fee Schedule for Calendar Year
1999" published at 63 Fed. Reg. 58814, et seq. (November 2, 1998) shall not be
deemed to cause a Material Adverse Change.
"Material Adverse Effect" has the meaning specified in Section 3.1(e).
"Material Contract" means, with respect to any Person, each contract or
group of similar contracts with the same or affiliated parties which account for
greater than 5% of the Consolidated revenue of the Borrower and its
Subsidiaries, each contract which is a replacement or a substitute for any
contract listed on such Schedule and each other contract to which such Person is
a party which is material to the business, condition (financial or otherwise),
operations, performance, properties or prospects of such Person.
"MedPartners" has the meaning specified in the Preliminary Statements.
"Mortgage" means each mortgage, deed of trust or other similar document
executed and delivered by the appropriate Loan Party, in form and substance
acceptable to the Administrative Agent and the Lenders in order (a) to provide
that such Loan Party is the mortgagor or grantor, (b) to comply with and/or
provide for specific laws of the jurisdictions in which the property to be
encumbered is located, and (c) to assure that the Administrative Agent for the
benefit of the Secured Parties has a perfected Lien on the Mortgaged Property.
"Mortgage Policies" has the meaning assigned to that term in Section
3.1(a)(iv)(B).
"Mortgaged Property" means any parcel (or adjoining parcels) of real
property acquired by the Borrower or any of is Subsidiaries after the Closing
Date which has a fair market value in excess of $1,000,000.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and at least one Person other than the Borrower
and the ERISA Affiliates or (b) was so maintained and in respect
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of which the Borrower or any ERISA Affiliate could have liability under Section
4064 or 4069 of ERISA in the event such plan has been or were to be terminated.
"NationsBank" means NationsBank, N.A. in its capacity as a Lender or an
Issuing Bank.
"Net Cash Proceeds" means, with respect to any Asset Disposition or any
Debt Issuance or Equity Issuance by any Person, or any Extraordinary Receipt
received by or paid to or for the account of any Person, the aggregate amount of
cash received from time to time (whether as initial consideration or through
payment or disposition of deferred consideration) by or on behalf of such Person
in connection with such transaction after deducting therefrom only (without
duplication) (a) reasonable commissions, underwriting fees and discounts, legal
fees, accountants' fees, investment banker's fees, finder's fees and other
out-of-pocket fees and expenses incurred in connection therewith, (b) the amount
of taxes payable in connection with or as a result of such transaction and (c)
with respect to any asset, the amount of any Debt secured by a Lien on such
asset that, by the terms of such transaction, is required to be repaid upon such
disposition, in the case of (a) or (c) above to the extent, but only to the
extent, that the amounts so deducted are, at the time of receipt of such cash,
actually paid to a Person that is not an Affiliate of such Person or the
Borrower or any Affiliate of the Borrower and are properly attributable to such
transaction or to the asset that is the subject thereof.
"Net Income" and "Net Loss" mean, respectively, with respect to any
period, the aggregate of the net income (loss) of the Person in question for
such period, determined in accordance with GAAP on a consolidated basis;
provided that (i) the net income (loss) of any Person which is not a
consolidated Subsidiary shall be included only to the extent of the amount of
cash dividends or distributions paid to the Person in question or to a
consolidated Subsidiary of such Person and (ii) the net income (loss) of any
Person acquired in a pooling of interests transaction for any period prior to
the date of such acquisition shall be excluded.
"Note" means a Term A Note, a Term B Note or a Revolving Credit Note.
"Notice of Borrowing" has the meaning specified in Section 2.2(a).
"Notice of Issuance" has the meaning specified in Section 2.3(a).
"Notice of Renewal" has the meaning specified in Section 2.1(f).
"Notice of Swing Line Borrowing" has the meaning specified in Section
2.2(b).
"Notice of Termination" has the meaning specified in Section 2.1(f).
"NPL" means the National Priorities List under CERCLA.
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"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including, without
limitation, any liability of such Person on any claim, whether or not the right
of any creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed,
legal, equitable, secured or unsecured, and whether or not such claim is
discharged, stayed or otherwise affected by any proceeding referred to in
Section 9.4. Without limiting the generality of the foregoing, the Obligations
of the Loan Parties under the Loan Documents include (a) the obligation to pay
principal, interest, Letter of Credit commissions, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other amounts payable by any
Loan Party under any Loan Document, (b) the obligation of any Loan Party to
reimburse any amount in respect of any of the foregoing that any Lender Party
may, after the occurrence and during the continuance of an Event of Default,
elect to pay or advance on behalf of such Loan Party in accordance with the
terms of this Agreement, and (c) any other obligations arising out of or under
the Loan Documents.
"OECD" means the Organization for Economic Cooperation and Development.
"Open Year" has the meaning specified in Section 4.16.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Pacific" has the meaning specified in the Preliminary Statements.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Acquisitions" means any acquisition by the Borrower or any
of its Subsidiaries of all or substantially all of the assets or the capital
stock of any Person or a division or branch of any Person which either (a) has
been consented to in writing by the Agents and the Required Lenders, or (b)
complies with each of the following: (i) such Person is engaged in substantially
the same or similar line of business as one or more businesses of the Borrower
or any of its Subsidiaries, (ii) the aggregate consideration (including for
purposes hereof, any Debt (including for purposes of this definition, Earnout
Obligations) assumed by the Borrower or any of its Subsidiaries in connection
with such acquisition, but excluding for purposes hereof, (A) any common stock
of the Borrower or Preferred Stock and (B) Qualified Debt Securities which do
not require payment of interest in cash until after the Termination Date, in
each case issued in connection with such acquisition) payable in respect of any
individual acquisition shall not exceed $10,000,000; provided, that on the date
which is twelve (12) months following the date hereof and thereafter, so long as
no Default or Event of Default is then existing and continuing (without giving
effect to any waivers hereunder with respect to compliance with the provisions
of Article 8 or amendments of the provisions of Article 8 after the date
hereof), then the amount set forth in this clause (ii) shall be increased from
$10,000,000 to $15,000,000; (iii) the aggregate consideration (including for
purposes hereof, any Debt (including for purposes of this definition, Earnout
Obligations) assumed by the
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Borrower or any of its Subsidiaries in connection with such acquisition, but
excluding for purposes hereof, (A) any common stock of the Borrower or Preferred
Stock and (B) Qualified Debt Securities which do not require payment of interest
in cash until after the Termination Date, in each case issued in connection with
such acquisition) payable in respect of acquisitions contemplated by this
definition shall not exceed for all such acquisitions $20,000,000 in any twelve
(12) month period ending on the last day of the calendar month immediately
preceding the closing of the proposed acquisition; provided, that on the date
which is twelve (12) months following the date hereof and thereafter, so long as
no Default or Event of Default is then existing and continuing (without giving
effect to any waivers hereunder with respect to compliance with the provisions
of Article 8 or amendments of the provisions of Article 8 after the date
hereof), then the amount set forth in this clause (iii) shall be increased from
$20,000,000 to $30,000,000; (iv) after giving effect to the proposed acquisition
on a pro forma basis for the period (the "Pro Forma Period") of four fiscal
quarters of the Borrower ending with the fiscal quarter for which financial
statements have most recently been delivered (or were required to be delivered)
under Section 7.3 or 7.4, as applicable (on the basis that (A) any Debt incurred
or assumed in connection with such acquisition was incurred or assumed at the
beginning of the Pro Forma Period, (B) if such Debt bears a floating interest
rate, such interest shall be paid over the Pro Forma Period at the rate in
effect on the date of such acquisition and (C) all income and expense associated
with the assets or entity acquired in connection with such acquisition for the
most recently ended four fiscal quarter period for which such income and expense
amounts are available (with good faith estimates thereof being permitted if
financial statements indicating such amounts are not available) shall be treated
as being earned or incurred by the Borrower over the Pro Forma Period on a pro
forma basis), the Borrower is in compliance with the financial covenants set
forth in Sections 8.2 and 8.3 and the Borrower shall deliver a certificate
setting forth in reasonable detail the basis for calculation of such financial
covenants; provided, that the Borrower shall not be required to deliver such
certificate for any individual acquisition the aggregate consideration
(calculated as set forth above) for which is less than $2,000,000 unless and
until the aggregate amount of acquisitions in any Fiscal Year exceeds
$4,000,000, (v) after giving effect to the proposed acquisition, the Revolving
Credit Commitments of all Lenders minus the sum of Revolving Advances plus
Letter of Credit Advances plus Swing Line Advances plus the aggregate Available
Amount of all Letters of Credit then outstanding shall equal at least
$5,000,000, (vi) the Borrower shall give the Agents and the Lenders not less
than ten (10) Business Days prior written notice of its intention to make a
Permitted Acquisition, such notice to include the proposed amounts, date and
form of the proposed transaction, a reasonable description of the stock or
assets to be acquired and the location of all assets, a description and
calculation in reasonable detail of the pro forma effect of such acquisition on
the financial covenants contained in Sections 8.2 and 8.3, (vii) concurrently
with the making of a Permitted Acquisition consisting of assets, the Borrower
shall, as additional collateral security for the Obligations, grant to the
Administrative Agent for the ratable benefit of the Lenders, prior Liens
(subject to Liens permitted pursuant to Section 6.1) on and security interests
in any of the acquired assets by the execution and delivery to the
Administrative Agent of such agreements, instruments and documents as shall be
reasonably satisfactory in form and substance to the Administrative Agent, and
(viii) the Borrower
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shall not make any acquisition at any time during which a Default or an Event of
Default shall exist and be continuing or would exist after giving effect to such
acquisition.
"Permitted Investment" has the meaning specified in Section 6.5.
"Permitted Liens" means the following (as to which any proceeding
commenced for the enforcement of any such Liens shall have been stayed or
suspended within thirty (30) days of the commencement thereof and only to the
extent that provisions for the payment of such Liens has been made on the books
of such Person to the extent required by GAAP): (a) Liens for taxes, assessments
and governmental charges or levies not yet due and payable or Liens for taxes,
assessments and governmental charges or levies which are being contested in good
faith or are overdue less than ninety (90) days; (b) Liens imposed by law, such
as lessor's, materialmen's, mechanics', carriers', workmen's, landlord's and
repairmen's Liens and other similar Liens arising in the ordinary course of
business which do not materially detract from the property or which are being
contested in good faith or securing obligations that are not overdue for a
period of more than 60 days; (c) pledges or deposits to secure obligations under
workers' compensation laws or similar legislation, to secure public or statutory
obligations or to secure the performance of tenders, bids, trade contracts,
leases, surety and appeal bonds, performance and return-of-money bonds and other
obligations of a like nature; and (d) Permitted Real Property Encumbrances.
"Permitted Real Property Encumbrances" means, with respect to any
particular Mortgaged Property, (i) those liens, encumbrances and other matters
affecting title to any Mortgaged Property listed in the Mortgage Policies in
respect thereof and as of the date of delivery of such Mortgage Policies to the
Administrative Agent in accordance with the terms hereof, reasonably acceptable
to the Lenders, (ii) such easements, encroachments, covenants, rights of way,
minor defects, irregularities or encumbrances on title which do not arise out of
the incurrence of any Debt and which do not materially impair the use of such
Mortgaged Property for the purpose for which it is held by the mortgagor
thereof, or the Lien granted to the Administrative Agent for the benefit of the
Secured Parties, and (iii) municipal and zoning ordinances; provided that no
violation exists thereunder that could materially impair the use of the existing
improvements and the present use made by the mortgagor thereof of the Premises
(as defined in the respective Mortgage).
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Post-Default Rate" means (a) in respect of any Advances a rate per
annum equal to: (i) if such Advances are Prime Rate Advances, 2% above the Prime
Rate as in effect from time to time plus the Applicable Margin for Prime Rate
Advances (but in no event less than the interest rate in
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effect on the due date), or (ii) if such Advances are Eurodollar Rate Advances,
2% above the rate of interest in effect thereon at the time of the Event of
Default that resulted in the Post-Default Rate being instituted until the end of
the then current Interest Period therefor and, thereafter, 2% above the Prime
Rate as in effect from time to time plus the Applicable Margin for Prime Rate
Advances (but in no event less than the interest rate in effect on the due
date); and (b) in respect of other amounts payable by the Borrower hereunder
(other than legal fees and other expenses) not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during the period
commencing on the due date until such other amounts are paid in full equal to 2%
above the Prime Rate as in effect from time to time plus the Applicable Margin
for Prime Rate Advances (but in no event less than the interest rate in effect
on the due date).
"Pre-Commitment Information" means the information, taken as a whole,
provided by or on behalf of the Borrower or any of its Subsidiaries to the Agent
and the Initial Lenders prior to their commitment in respect of the Facilities.
"Preferred Stock" means class A preferred stock of Borrower, par value
$.01 per share.
"Prime Rate" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by Fleet in
Boston, Massachusetts, from time to time, as Fleet's prime rate, which
is not necessarily the lowest rate made available by Fleet; or
(b) 1/2 of one percent per annum above the Federal Funds Rate.
"Prime Rate Advance" means an Advance that bears interest as provided
in Section 2.7(a)(i).
"Pro Forma Cost Reduction" means with respect to any Permitted
Acquisition, if requested by the Borrower pursuant to the succeeding sentence,
the amount of factually supportable and identifiable pro forma cost savings
directly attributable to operational efficiencies expected to be created by the
Borrower with respect to such Permitted Acquisition which efficiencies can be
reasonably computed (based on the four (4) fiscal quarters immediately preceding
the date of such proposed acquisition) and are approved by the Administrative
Agent in its sole discretion acting in good faith; provided, that cost savings
in connection with a Permitted Acquisition (together with cost savings in
connection with other Permitted Acquisitions consummated during the prior twelve
(12) months) shall not exceed ten percent (10%) of EBITDA of the Borrower and
its Subsidiaries for the most recently ended four (4) fiscal quarters of the
Borrower (inclusive of Pro Forma Cost Reductions) without the consent of the
Required Lenders. If the Borrower desires to have, with respect to any Permitted
Acquisition, the amount of pro forma cost savings directly attributable to the
aforementioned operational efficiencies treated as part of the term Pro Forma
Cost Reduction,
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then the Borrower shall so notify the Administrative Agent and provide written
detail with respect thereto not less than five (5) Business Days prior to the
proposed date of consummation of such Permitted Acquisition.
"Pro Rata Share" of any amount means, with respect to any Revolving
Credit Lender at any time, the product of such amount times a fraction the
numerator of which is the amount of such Lender's Revolving Credit Commitment at
such time and the denominator of which is the Revolving Credit Facility at such
time.
"Qualified Debt Securities" means unsecured notes issued by the
Borrower or any of its Subsidiaries in connection with a Permitted Acquisition
so long as the terms of any such note (i) do not provide any collateral
security, (ii) do not provide any guaranty or other support by the Borrower (if
such securities are issued by a Subsidiary of the Borrower) or any Subsidiaries
of the Borrower (if such securities are issued by the Borrower), (iii) do not
contain any mandatory put, redemption, sinking fund or other similar provision
occurring prior to the Termination Date, (iv) are no less favorable (including
the subordination provisions contained therein) to the Borrower or the Lenders
than the provisions of the Subordinated Notes and (v) do not provide for the
payment of principal prior to the date which is one (1) year following the
Termination Date.
"Recapitalization" has the meaning specified in the Preliminary
Statements.
"Recapitalization Agreement" has the meaning specified in the
Preliminary Statements.
"Recapitalization Date" means the date on which the Recapitalization
shall have been consummated in accordance with the Recapitalization Documents.
"Recapitalization Documents" means the Recapitalization Agreement and
all other agreements, instruments, certificates and other documents to be
entered into or delivered by any party to the Recapitalization Agreement in
connection with the consummation of the transactions contemplated by the
Recapitalization Agreement.
"Reduction Amount" has the meaning specified in Section 2.6(b)(vi).
"Register" has the meaning specified in Section 11.7(d).
"Registration Agreement" means the registration agreement dated the
date hereof among the Borrower, MedPartners, Holdings and Pacific.
"Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
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"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Regulatory Agency" means any federal, state, local or other U.S. or
foreign governmental authority, bureau or agency.
"Related Parties" means, with respect to any Sponsor, (i) any
controlling stockholder or partner, eighty percent (80%) (or more) owned
Subsidiary, or spouse or immediate family member (in the case of an individual)
of such Sponsor, or (ii) any trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or Persons beneficially
holding a fifty-one percent (51%) or more controlling interest of which consist
of such Sponsor and/or such other Persons referred to in the immediately
preceding clause (i).
"Related Professional Corporation" means each professional corporation
which has entered into a management agreement with the Borrower, any of its
Subsidiaries or any other Related Professional Corporation, other than a
professional corporation with respect to which (i) the Borrower does not have
the right to designate or replace the sole shareholder (or a majority of the
shareholders, if applicable) pursuant to an agreement between such professional
corporation and the Borrower, any of its Subsidiaries or any Related
Professional Corporation and (ii) the Borrower does not have the right to
participate, directly or indirectly, in the profits or losses of such
professional corporation in accordance with the applicable management agreement,
provided, that in any event, it includes as of the date hereof the entities
listed as a "Related Professional Corporation" on the Organization Schedule
included in the disclosure letter to the Recapitalization Agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment (including the abandonment or discarding of
barrels, containers and other closed receptacles containing any Hazardous
Materials) or into or from any property, including, without limitation, the
movement of any Hazardous Materials through the air, soil, surface waters or
ground water.
"Remedial" shall have the meaning as set forth in CERCLA at 42 U.S.C.
Section 9601(24) and/or any other applicable Environmental Laws.
"Removal" shall have the meaning as set forth in CERCLA at 42 U.S.C.
Section 9601(23) and/or any other applicable Environmental Laws.
"Required Lenders" means at any time Lenders (other than Defaulting
Lenders) the sum of whose outstanding Term A Advances, Term B Advances and
Revolving Credit Commitments (or,
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if after the Revolving Credit Facility has been terminated, outstanding
Revolving Credit Advances) constitute greater than 50% of the sum of (a) the
aggregate principal amount of the Term A Advances and Term B Advances (in each
case owing to Lenders which are not Defaulting Lenders) outstanding at such time
and (b) the Revolving Credit Facility less the aggregate Revolving Credit
Commitments of Defaulting Lenders (or, if after the Revolving Credit Facility
has been terminated, outstanding Revolving Credit Advances of Revolving Credit
Lenders (other than Defaulting Lenders)). For purposes of this definition, the
aggregate principal amount of Swing Line Advances owing to the Swing Line Bank,
Letter of Credit Advances owing to the Issuing Banks and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving Credit
Lenders ratably in accordance with their respective Revolving Credit
Commitments.
"Response" shall have the meaning as set forth in CERCLA at 42 U.S.C.
Section 9601(25) and/or any other applicable Environmental Laws.
"Responsible Officer" means, with respect to any Loan Party, the Chief
Executive Officer, the President, the Chief Financial Officer, the Chief
Operating Officer, any Executive Vice President, any Vice President, the
Controller or the Treasurer of such Loan Party.
"Revolving Credit Advance" has the meaning specified in Section 2.1(c).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the Revolving
Credit Lenders.
"Revolving Credit Commitment" means, with respect to any Revolving
Credit Lender at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Revolving Credit Commitment" or, if such
Lender has entered into one or more Assignments and Acceptances, set forth for
such Lender in the Register maintained by the Administrative Agent pursuant to
Section 11.7(d) as such Lender's "Revolving Credit Commitment," as such amount
may be reduced at or prior to such time pursuant to this Agreement.
"Revolving Credit Facility" means, at any time, the aggregate amount of
the Revolving Credit Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means any Lender that has a Revolving Credit
Commitment.
"Revolving Credit Note" means a promissory note of the Borrower payable
to the order of any Revolving Credit Lender, in substantially the form of
Exhibit B hereto, evidencing the aggregate indebtedness of the Borrower to such
Lender resulting from the Revolving Credit Advances made by such Lender.
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"Revolving Credit Termination Date" means the earlier of (a) the fifth
anniversary of the Closing Date, and (b) the Termination Date.
"Secured Obligations" has the meaning specified in the Security
Agreement.
"Secured Parties" means the Administrative Agent, the Lender Parties,
and the Hedge Banks and the other Persons the Obligations owing to which are or
are purported to be secured by the Collateral under the terms of the Collateral
Documents.
"Security Agreement" has the meaning specified in Section 3.1(a).
"Senior Debt" means, as at any date of determination thereof, the
aggregate outstanding principal balance of (a) all Term A Advances, Term B
Advances, Revolving Credit Advances, Swing Line Advances, Letter of Credit
Advances and the aggregate Available Amount of all Letters of Credit and (b) all
Debt for borrowed money and all Capitalized Leases, unless such Debt or
Capitalized Lease is expressly subordinate to the obligations of the Borrower
and its Subsidiaries to the Agents and the Lenders under the Loan Documents.
"Single Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the
Borrower or any ERISA Affiliate and no Person other than the Loan Parties and
the ERISA Affiliates or (b) was so maintained and in respect of which the
Borrower or any ERISA Affiliate could have liability under Section 4069 of ERISA
in the event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) 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, (b) the present fair
saleable 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, (c) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such Person's
ability to pay such debts and liabilities as they mature and (d) such Person is
not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would constitute an
unreasonably small capital as then presently conducted. The amount of contingent
liabilities at any time shall be computed as the amount that, in the 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" or "Sponsors" means any or all (as the context may require)
of Madison Dearborn Capital Partners II, LP, Cornerstone Equity Investors IV,
L.P., Healthcare Equity Partners, LP and each of their respective Related
Parties.
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"Standby Letter of Credit" means any Letter of Credit other than a
Trade Letter of Credit.
"Stockholders Agreement" means the stockholders agreement dated the
date hereof among the Borrower, MedPartners, Holdings and Pacific and other
parties thereto from time to time, as amended, modified and supplemented from
time to time to the extent permitted under this Agreement.
"Subordinated Debt" means (i) any Debt of the Borrower that is
subordinated to the Obligations of the Borrower under the Loan Documents on, and
that otherwise contains, terms and conditions satisfactory to the Administrative
Agent and Required Lenders and (ii) the Subordinated Notes.
"Subordinated Debt Financing" means Subordinated Debt of the Borrower
in an amount of not less than $100,000,000 evidenced by the Subordinated Notes.
"Subordinated Notes" means (i) the subordinated notes, if any, issued
by the Borrower pursuant to the Subordinated Notes Indenture and (ii) the
subordinated notes, if any, issued in exchange for such subordinated notes in an
exchange offer pursuant to the Subordinated Notes Indenture and on terms and
conditions reasonably satisfactory to the Administrative Agent.
"Subordinated Notes Indenture" means the Indenture dated as of the date
hereof between the Borrower and United States Trust Company of New York, as
trustee.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such partnership,
joint venture or limited liability company or (c) the beneficial interest in
such trust or estate, is at the time directly or indirectly owned or controlled
by such Person, by such Person and one or more of its other Subsidiaries or by
one or more of such Person's other Subsidiaries. Unless otherwise specified
herein, the term Subsidiary shall mean a Subsidiary of the Borrower.
"Subsidiary Guarantor" means each Domestic Subsidiary (other than
Immaterial Subsidiaries) of the Borrower and each Person who shall have executed
and delivered or become party to a Subsidiary Guaranty.
"Subsidiary Guaranty" has the meaning specified Section 3.1(a).
"Surviving Debt" shall have the meaning specified in Section 4.19(b).
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"Swing Line Advance" means an advance made by (a) the Swing Line Bank
pursuant to Section 2.1(e) or (b) any Revolving Credit Lender pursuant to
Section 2.2(b).
"Swing Line Bank" has the meaning specified in the recital of parties
to this Agreement.
"Swing Line Borrowing" means a borrowing consisting of a Swing Line
Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section 2.1(e).
"Syndication Agent" has the meaning specified in the recital of parties
to this Agreement.
"Taxes" has the meaning specified in Section 2.12(a).
"Term A Advance" has the meaning specified in Section 2.1(a).
"Term A Borrowing" means a borrowing consisting of simultaneous Term A
Advances of the same Type made by the Term A Lenders.
"Term A Commitment" means, with respect to any Term A Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term A Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 11.7(d) as such
Lender's "Term A Commitment," as such amount may be reduced at or prior to such
time pursuant to Section 2.5.
"Term A Facility" means, at any time, the aggregate amount of the Term
A Lenders' Term A Commitments at such time.
"Term A Lender" means any Lender that has a Term A Commitment.
"Term A Note" means a promissory note of the Borrower payable to the
order of any Term A Lender, in substantially the form of Exhibit C hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Term A Advance made by such Lender.
"Term B Advance" has the meaning specified in Section 2.1(b).
"Term B Borrowing" means a borrowing consisting of simultaneous Term B
Advances of the same Type made by the Term B Lenders.
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"Term B Commitment" means, with respect to any Term B Lender at any
time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Term B Commitment" or, if such Lender has entered into one or
more Assignments and Acceptances, set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 11.7 as such Lender's
"Term B Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.5.
"Term B Facility" means, at any time, the aggregate amount of the Term
B Lenders' Term B Commitments at such time.
"Term B Lender" means any Lender that has a Term B Commitment.
"Term B Note" means a promissory note of the Borrower payable to the
order of any Term B Lender, in substantially the form of Exhibit D hereto,
evidencing the indebtedness of the Borrower to such Lender resulting from the
Term B Advance made by such Lender.
"Term Facilities" means the Term A Facility and the Term B Facility.
"Termination Date" means the date of termination in whole of the
Commitments pursuant to Section 2.5 or Article 9.
"Trade Letter of Credit" means any Letter of Credit that is issued for
the benefit of a supplier of Inventory or Equipment to the Borrower or any of
its Subsidiaries to effect payment for such Inventory or Equipment, the
conditions to drawing under which include the presentation to the applicable
Issuing Bank of negotiable bills of lading, invoices and related documents
sufficient, in the judgment of such Issuing Bank, to create a valid and
perfected Lien on or security interest in such Inventory, bills of lading,
invoices and related documents in favor of such Issuing Bank.
"Transaction" means the transactions contemplated by the
Recapitalization Documents and the Loan Documents.
"Type" refers to the distinction between Advances bearing interest at
the Prime Rate and Advances bearing interest at the Eurodollar Rate.
"Unused Revolving Credit Availability" means, as of any date, the
amount by which the Revolving Credit Facility exceeds the sum of the aggregate
principal amount of all Revolving Credit Advances plus Swing Line Advances plus
Letter of Credit Advances plus the aggregate Available Amount of all Letters of
Credit, in each case outstanding at such time.
"Unused Revolving Credit Commitment" means, with respect to any
Revolving Credit Lender, at any time, (a) such Lender's Revolving Credit
Commitment at such time minus (without
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duplication) (b) the sum of (i) the aggregate principal amount of all Revolving
Credit Advances and Letter of Credit Advances made by such Lender (in its
capacity as a Lender) and outstanding at such time, plus (ii) such Lender's Pro
Rata Share of (A) the aggregate Available Amount of all Letters of Credit
outstanding at such time and (B) the aggregate principal amount of all Letter of
Credit Advances made by the Issuing Banks pursuant to Section 2.3(c) and
outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are ordinarily,
in the absence of contingencies, entitled to vote for the election of directors
(or persons performing similar functions) of such Person, even if the right so
to vote has been suspended by the happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of
ERISA, that is maintained for employees of the Borrower or in respect of which
any Loan Party could have liability.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person of which securities (except for directors' or other qualifying shares) or
other ownership interests representing 100% of the equity or 100% of the
ordinary voting power or 100% of the general partnership interests are, at the
time any determination is being made, owned, controlled or held by such Person
or one or more wholly owned Subsidiaries of such Person or by such Person and
one or more wholly owned Subsidiaries of such Person.
"Working Capital" means, for any period, Consolidated Current Assets
(excluding cash and Cash Equivalents) of the Borrower and its Subsidiaries
during such period minus Consolidated Current Liabilities of the Borrower and
its Subsidiaries (other than Consolidated Current Liabilities arising out of
Debt permitted pursuant to Section 6.2).
"Withdrawal Liabilities" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.2 Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding."
SECTION 1.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.6 or changes thereto described on
Schedule 1.3 ("GAAP"). Except as otherwise expressly provided herein, all
computations and determinations for purposes of determining compliance with the
financial requirements of this Agreement shall be made in accordance with GAAP
in effect in the United States of America on a basis consistent with the
presentation of the financial statements delivered pursuant to Section 4.6. It
being understood that all financial statements delivered pursuant to
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Section 7 shall be prepared in accordance with GAAP as in effect on the date of
their respective preparation. In the event that any "Accounting Change" (as
defined below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement, then
the Borrower and the Administrative Agent agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for evaluating the
Borrower's financial condition shall be the same after such Accounting Changes
as if such Accounting Changes had not been made. Until such time as such an
amendment shall have been executed and delivered by the Borrower, the
Administrative Agent and the Required Lenders, all financial covenants,
standards and terms in this Agreement shall continue to be calculated or
construed as if such Accounting Changes had not occurred. "Accounting Changes"
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the Securities and Exchange Commission (or successors thereto or
agencies with similar functions).
ARTICLE 2
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.1 The Advances.
(a) The Term A Advances. Each Term A Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (a "Term A
Advance") to the Borrower on the Closing Date in an amount not to exceed such
Lender's Term A Commitment at such time. The Term A Borrowing shall consist of
Term A Advances made simultaneously by the Term A Lenders ratably according to
their Term A Commitments. Amounts borrowed under this Section 2.1(a) and repaid
or prepaid may not be reborrowed.
(b) The Term B Advances. Each Term B Lender severally agrees, on the
terms and conditions hereinafter set forth, to make a single advance (a "Term B
Advance") to the Borrower on the Closing Date in an amount not to exceed such
Lender's Term B Commitment at such time. The Term B Borrowing shall consist of
Term B Advances made simultaneously by the Term B Lenders ratably according to
their Term B Commitments. Amounts borrowed under this Section 2.1(b) and repaid
or prepaid may not be reborrowed.
(c) The Revolving Credit Advances. Each Revolving Credit Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "Revolving Credit Advance") to the Borrower from time to time
on any Business Day during the period from the date
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hereof (other than on the Closing Date) until the Revolving Credit Termination
Date in an amount for each such Advance not to exceed such Lender's Unused
Revolving Credit Commitment at such time; provided, however, that no Revolving
Credit Lender shall have any obligation to make a Revolving Credit Advance under
this Section 2.1(c) to the extent such Revolving Credit Advance would (combined
with all other Revolving Credit Advances and after giving effect to any
immediate application of the proceeds thereof) exceed the Unused Revolving
Credit Availability at such time. Each Revolving Credit Borrowing shall be in an
aggregate amount of $1,000,000 or an integral multiple of $100,000 (other than,
in each case, a Borrowing the proceeds of which shall be used solely to repay or
prepay in full outstanding Swing Line Advances, outstanding Letter of Credit
Advances or Advances requested by the Administrative Agent to cover fees or
other amounts due under this Agreement) and shall consist of Revolving Credit
Advances made simultaneously by the Revolving Credit Lenders ratably according
to their Revolving Credit Commitments. Within the limits of each Revolving
Credit Lender's Unused Revolving Credit Commitment in effect from time to time,
the Borrower may borrow, repay and reborrow Revolving Credit Advances. No
Revolving Credit Advances shall be made to the Borrower on the Closing Date.
(d) The Swing Line Advances. The Borrower may request the Swing Line
Bank to make, and the Swing Line Bank agrees to make, on the terms and
conditions hereinafter set forth, Swing Line Advances to the Borrower from time
to time on any Business Day during the period from the date hereof until the
Revolving Credit Termination Date (i) in an aggregate amount not to exceed at
any time outstanding $5,000,000 (the "Swing Line Facility") and (ii) in an
amount for each such Swing Line Borrowing not to exceed (after giving effect to
any immediate application of the proceeds thereof) the Unused Revolving Credit
Availability at such time. No Swing Line Advance shall be used for the purpose
of funding the payment of principal of any other Swing Line Advance. Each Swing
Line Borrowing shall be made as a Prime Rate Advance. Within the limits of the
Swing Line Facility and within the limits referred to in clause (ii) above, the
Borrower may borrow and reborrow under this Section 2.1(d) and may repay or
prepay the Swing Line Advances at such times prior to the Termination Date, and
in such integral multiples, as the Borrower may elect.
(e) Letters of Credit. Each Issuing Bank agrees, on the terms and
conditions hereinafter set forth, to issue letters of credit for the account of
the Borrower from time to time on any Business Day during the period from the
Closing Date until thirty (30) days before the Revolving Credit Termination Date
(i) in an aggregate Available Amount for all Letters of Credit not to exceed at
any time the Issuing Banks' Letter of Credit Commitments at such time and (ii)
in an Available Amount for each such Letter of Credit not to exceed (after
giving effect to any immediate application of the proceeds thereof) the Unused
Revolving Credit Availability at such time. No Letter of Credit shall have an
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than the earlier of (A) thirty (30) days before the
Revolving Credit Termination Date, (B) in the case of a Standby Letter of
Credit, 365 days after the date of issuance thereof and (C) in the case of a
Trade Letter of Credit, 365 days after the date of issuance thereof. The
foregoing notwithstanding, any Standby Letter of Credit may, by its terms, be
renewable annually upon notice (a "Notice of
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Renewal") given to the applicable Issuing Bank and the Administrative Agent on
or prior to any date for notice of renewal set forth in such Letter of Credit
(but in any event at least five (5) Business Days prior to the date of the
proposed renewal of such Standby Letter of Credit) and upon fulfillment of the
applicable conditions set forth in Article 3 unless such Issuing Bank shall have
notified the Borrower (with a copy to the Administrative Agent) on or prior to
the date for notice of termination set forth in such Letter of Credit (but in
any event at least thirty (30) Business Days prior to the date of automatic
renewal) of its election not to renew such Standby Letter of Credit (a "Notice
of Termination"); provided that the terms of each Standby Letter of Credit that
is automatically renewable annually shall not permit the expiration date (after
giving effect to any renewal) of such Standby Letter of Credit in any event to
be extended to a date later than thirty (30) days before the Revolving Credit
Termination Date. If either a Notice of Renewal is not given by the Borrower or
a Notice of Termination is given by the applicable Issuing Bank pursuant to the
immediately preceding sentence, such Standby Letter of Credit shall expire on
the date on which it otherwise would have been automatically renewed; provided,
however, that even in the absence of receipt of a Notice of Renewal, the
applicable Issuing Bank may, in its discretion unless instructed to the contrary
by the Administrative Agent or the Borrower, deem that a Notice of Renewal had
been timely delivered and, in such case, a Notice of Renewal shall be deemed to
have been so delivered for all purposes under this Agreement. Within the limits
of the Letter of Credit Facility, and subject to the limits referred to above,
the Borrower may request the issuance of Letters of Credit under this Section
2.1(e), repay any Letter of Credit Advances resulting from drawings under
Letters of Credit pursuant to Section 2.3(c) and request the issuance of
additional Letters of Credit under this Section 2.1(e).
SECTION 2.2 Making the Advances. (a) Except as otherwise provided in
Section 2.3 or, with respect to Swing Line Advances, in Section 2.2(b), each
Borrowing shall be made on notice, given not later than 2:00 P.M. (New York
time) on the third Business Day prior to the date of the proposed Borrowing in
the case of Eurodollar Rate Advances and on the first Business Day prior to the
date of the proposed Borrowing in the case of Prime Rate Advances by the
Borrower to the Administrative Agent, which shall give to each appropriate
Lender prompt notice thereof by telex or telecopier. Each such notice of a
Borrowing (a "Notice of Borrowing") may be by telephone, confirmed promptly in
writing, or telex or telecopier in substantially the form of Exhibit E hereto,
specifying therein the requested (i) date of such Borrowing, (ii) Facility under
which such Borrowing is to be made, (iii) Type of Advances comprising such
Borrowing, (iv) aggregate amount of such Borrowing and (v) in the case of a
Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for
each such Advance. Each appropriate Lender shall, before 1:00 P.M. (New York
time) on the date of such Borrowing, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent's Account, in same day funds, such Lender's ratable portion of such
Borrowing in accordance with the respective Commitments under the applicable
Facility of such Lender and the other appropriate Lenders. After the
Administrative Agent's receipt of such funds and upon fulfillment of the
applicable conditions set forth in Article 3, the Administrative Agent will make
such funds available to the Borrower by crediting the
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Borrower's Account; provided, however, that in the case of any Revolving Credit
Borrowing, the Administrative Agent shall first make a portion of such funds
equal to the aggregate principal amount of Letter of Credit Advances made by the
applicable Issuing Bank and by any other Revolving Credit Lender and outstanding
on the date of such Revolving Credit Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the applicable Issuing Bank and
such other Revolving Credit Lenders for repayment of Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made either (x) on notice, given
not later than 2:00 P.M. (New York time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent
or (y) pursuant to other arrangements, including, by way of example and not of
limitation, arrangements for daily repayments and borrowings on each Business
Day, which are satisfactory in form and substance to the Swing Line Bank, the
Administrative Agent and the Borrower. Each notice of a Swing Line Borrowing
pursuant to clause (x) in the immediately preceding sentence (a "Notice of Swing
Line Borrowing") may be by telephone, confirmed promptly in writing, or telex or
telecopier, specifying therein the requested (i) date of such Borrowing, (ii)
amount of such Borrowing and (iii) maturity of such Borrowing (which maturity
shall be no later than the seventh day after the requested date of such
Borrowing). The Swing Line Bank will make the amount of a requested Swing Line
Advance available to the Administrative Agent at the Administrative Agent's
Account, in same day funds. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article 3,
the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account. Upon written demand by the Swing Line Bank,
with a copy of such demand to the Administrative Agent, each other Revolving
Credit Lender shall purchase from the Swing Line Bank, and the Swing Line Bank
shall sell and assign to each such other Revolving Credit Lender, such other
Lender's Pro Rata Share of all outstanding Swing Line Advances as of the date of
such demand, by deposit to the Administrative Agent's Account, in same day
funds, an amount equal to the portion of the outstanding principal amount of
Swing Line Advances to be purchased by such Lender. The Borrower hereby agrees
to each such sale and assignment. Each Revolving Credit Lender agrees to
purchase its Pro Rata Share of outstanding Swing Line Advances on (i) the
Business Day on which demand therefor is made by the Swing Line Bank; provided
that notice of such demand is given not later than 3:00 P.M. (New York time) on
such Business Day, or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by the
Swing Line Bank to any other Revolving Credit Lender of a portion of a Swing
Line Advance, the Swing Line Bank represents and warrants to such other Lender
that the Swing Line Bank is the legal and beneficial owner of such interest
being assigned by it, but makes no other representation or warranty and assumes
no responsibility with respect to such Swing Line Advance, the Loan Documents or
any Loan Party. If and to the extent that any Revolving Credit Lender shall not
have so made the amount of such Swing Line Advance available to the
Administrative Agent, such Revolving Credit Lender agrees to pay to the
Administrative Agent, for the account of the Swing Line Bank, forthwith on
demand such amount together with interest thereon, for each day from the date of
demand by the Swing Line Bank until the date such
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amount is paid to the Administrative Agent, at the Federal Funds Rate. If such
Lender shall pay to the Administrative Agent such amount for the account of the
Swing Line Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Swing Line Advance made by such Lender on such Business Day
for purposes of this Agreement, and the outstanding principal amount of the
Swing Line Advance made by the Swing Line Bank shall be reduced by such amount
on such Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding,
(i) the Borrower may not select Eurodollar Rate Advances if the obligation of
the appropriate Lenders to make Eurodollar Rate Advances shall then be suspended
pursuant to Section 2.9 or Section 2.10, and (ii) the Eurodollar Rate Advances
made on any date may not be outstanding as part of more than twelve (12)
separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on the Borrower. In the case of any Borrowing that
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each appropriate Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article 3, including, without limitation, any
loss (including, without limitation, a return on such liquidation or deployment
that would result in such Lender receiving less than it would have received had
such Advances remained outstanding until the last day of the Interest Period),
cost or expense incurred by reason of the liquidation or redeployment of
deposits or other funds acquired by such Lender to fund the Advance to be made
by such Lender as part of such Borrowing when such Advance, as a result of such
failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice from an
appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.2 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under Section
2.7 to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid shall constitute such Lender's
Advance as part of such Borrowing for all purposes.
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(f) The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.
SECTION 2.3 Issuance of and Drawings and Reimbursement Under Letters of
Credit.
(a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 3:00 P.M. (New York time) on the fifth Business Day
prior to the date of the proposed issuance of such Letter of Credit, by the
Borrower to an Issuing Bank, which shall give to the Administrative Agent and
each Revolving Credit Lender prompt notice thereof by telex or telecopier. Each
such notice of issuance of a Letter of Credit (a "Notice of Issuance") may be by
telephone, confirmed promptly in writing, or telex or telecopier, specifying
therein the requested (i) date of such issuance (which shall be a Business Day),
(ii) Available Amount of such Letter of Credit, (iii) expiration date of such
Letter of Credit, (iv) name and address of the beneficiary of such Letter of
Credit and (v) form of such Letter of Credit, and shall be accompanied by such
application and agreement for letter of credit as such Issuing Bank may specify
to the Borrower for use in connection with such requested Letter of Credit (a
"Letter of Credit Agreement"). If the requested form of such Letter of Credit is
acceptable to such Issuing Bank, in its sole discretion, such Issuing Bank will,
upon fulfillment of the applicable conditions set forth in Article 3, make such
Letter of Credit available to the Borrower at its office referred to in Section
11.2 or as otherwise agreed with the Borrower in connection with such issuance.
In the event and to the extent that the provisions of any such Letter of Credit
Agreement shall conflict with this Agreement or any other Loan Document, the
provisions of this Agreement shall govern.
(b) Letter of Credit Reports. Each Issuing Bank shall furnish (i) to
the Administrative Agent on the first Business Day of each week a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
previous week and drawings during such week under all Letters of Credit, (ii) to
the Administrative Agent, the Borrower and each Revolving Credit Lender on the
first Business Day of each month a written report summarizing issuance and
expiration dates of Letters of Credit issued during the preceding month and
drawings during such month under all Letters of Credit and (iii) to the
Administrative Agent, the Borrower and each Revolving Credit Lender on the first
Business Day of each calendar quarter a written report setting forth the average
daily aggregate Available Amount during the preceding calendar quarter of all
Letters of Credit.
(c) Drawing and Reimbursement. The payment by an Issuing Bank of a
draft drawn under any Letter of Credit shall constitute for all purposes of this
Agreement the making by such Issuing Bank of a Letter of Credit Advance which
shall be a Prime Rate Advance in the amount of such draft. Each of the Borrower,
the Administrative Agent and each Revolving Credit Lender hereby acknowledges
and agrees that Letter of Credit Advances may be made, or deemed made, by any
Issuing Bank in respect of any Letter of Credit and to participate in all Letter
of Credit Advances
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made hereunder as provided herein. The Borrower shall reimburse the applicable
Issuing Bank for each Letter of Credit Advance, using its own funds or the
proceeds of a Revolving Credit Borrowing or Swing Line Borrowing on the same
Business Day on which such Letter of Credit is drawn. To the extent the Borrower
does not so reimburse the applicable Issuing Bank, upon written demand by such
Issuing Bank, with a copy of such demand to the Administrative Agent, each
Revolving Credit Lender shall purchase from such Issuing Bank, and such Issuing
Bank shall sell and assign to each such Revolving Credit Lender, such Lender's
Pro Rata Share of such outstanding Letter of Credit Advance as of the date of
such purchase, by making available (for the account of its Applicable Lending
Office) to the Administrative Agent (for the account of such Issuing Bank), by
deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Letter of
Credit Advance to be purchased by such Lender. Promptly after receipt thereof,
the Administrative Agent shall transfer such funds to the applicable Issuing
Bank. The Borrower hereby agrees to each such sale and assignment. Each
Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding
Letter of Credit Advance on (i) the Business Day on which demand therefor is
made by the applicable Issuing Bank; provided that notice of such demand is
given not later than 11:00 A.M. (New York time) on such Business Day or (ii) the
first Business Day next succeeding such demand if notice of such demand is given
after such time. Upon any such assignment by the applicable Issuing Bank to any
other Revolving Credit Lender of a portion of a Letter of Credit Advance, such
Issuing Bank represents and warrants to such other Lender that such Issuing Bank
is the legal and beneficial owner of such interest being assigned by it, free
and clear of any Liens, but makes no other representation or warranty and
assumes no responsibility with respect to such Letter of Credit Advance, the
Loan Documents or any Loan Party. If and to the extent that any Revolving Credit
Lender shall not have so made the amount of such Letter of Credit Advance
available to the Administrative Agent, such Revolving Credit Lender agrees to
pay to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the applicable Issuing
Bank until the date such amount is paid to the Administrative Agent, at the
Federal Funds Rate for its account or the account of such Issuing Bank, as
applicable. If such Lender shall pay to the Administrative Agent such amount for
the account of the applicable Issuing Bank on any Business Day, such amount so
paid in respect of principal shall constitute a Letter of Credit Advance made by
such Lender on such Business Day for purposes of this Agreement, and the
outstanding principal amount of the Letter of Credit Advance made by such
Issuing Bank shall be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of any
Lender to make any Letter of Credit Advance to be made by it on the date
specified in Section 2.3(c) shall not relieve any other Lender of its obligation
hereunder to make its Letter of Credit Advance on such date, but no Lender shall
be responsible for the failure of any other Lender to make the Letter of Credit
Advance to be made by such other Lender on such date.
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SECTION 2.4 Repayment of Advances.
(a) Term A Advances. The Borrower shall repay to the Administrative
Agent for the ratable account of the Term A Lenders the aggregate outstanding
principal amount of the Term A Advances on the following dates in the amounts
indicated (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.6):
Date Amount
---- ------
September 30, 1999 $2,400,000
December 31, 1999 $2,400,000
March 31, 2000 $2,400,000
June 30, 2000 $2,400,000
September 30, 2000 $2,400,000
December 31, 2000 $2,400,000
March 31, 2001 $2,400,000
June 30, 2001 $3,000,000
September 30, 2001 $3,000,000
December 31, 2001 $3,000,000
March 31, 2002 $3,000,000
June 30, 2002 $3,900,000
September 30, 2002 $3,900,000
December 31, 2002 $3,900,000
March 31, 2003 $3,900,000
June 30, 2003 $3,900,000
September 30, 2003 $3,900,000
December 31, 2003 $3,900,000
March 12, 2004 $3,900,000
provided, however, that the final principal installment shall be in an amount
equal to the aggregate principal amount of the Term A Advances outstanding on
such date.
(b) Term B Advances. The Borrower shall repay to the Administrative
Agent for the ratable account of the Term B Lenders the aggregate outstanding
principal amount of the Term B Advances on the following dates in the amounts
indicated (which amounts shall be reduced as a result of the application of
prepayments in accordance with the order of priority set forth in Section 2.6):
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Date Amount
---- ------
December 31, 1999 $ 900,000
December 31, 2000 $ 900,000
December 31, 2001 $ 900,000
December 31, 2002 $ 900,000
December 31, 2003 $ 900,000
June 30, 2004 $21,375,000
September 30, 2004 $21,375,000
December 31, 2004 $21,375,000
March 12, 2005 $21,375,000
provided, however, that the final principal installment shall be equal to the
aggregate principal amount of the Term B Advances outstanding on such date.
(c) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Revolving Credit Termination Date the aggregate principal amount of the
Revolving Credit Advances then outstanding.
(d) Swing Line Advances. The Borrower shall repay to the Administrative
Agent for the account of the Swing Line Bank and each other Revolving Credit
Lender that has made a Swing Line Advance the outstanding principal amount of
each Swing Line Advance made by each of them on the earlier of the maturity date
for such Swing Line Advance (which maturity date shall be no later than the
seventh day after the requested date of such Swing Line Advance) and the
Revolving Credit Termination Date.
(e) Letter of Credit Advances. (i) The Borrower shall repay to the
Administrative Agent for the account of the applicable Issuing Bank and each
other Revolving Credit Lender that has made a Letter of Credit Advance on the
earlier of demand and the Revolving Credit Termination Date the outstanding
principal amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any
Loan Document, any Letter of Credit Agreement, any Letter of Credit or
any other agreement or instrument relating to any of the foregoing (all
of the foregoing being, collectively, the "L/C Related Documents");
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(B) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations of
the Borrower in respect of any L/C Related Document or any other
amendment or waiver of or any consent to departure from all or any of
the L/C Related Documents;
(C) the existence of any claim, set-off, defense
(other than payment) or other right that the Borrower may have at any
time against any beneficiary or any transferee of a Letter of Credit
(or any Persons for whom any such beneficiary or any such transferee
may be acting), any Issuing Bank, or any other Person, whether in
connection with the transactions contemplated by the L/C Related
Documents or any unrelated transaction;
(D) any statement or any other document presented
under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; or
(E) any exchange, release or non-perfection of any
Collateral or other collateral, or any release or amendment or waiver
of or consent to departure from any Guaranty or any other guarantee,
for all or any of the Obligations of the Borrower in respect of the L/C
Related Documents;
provided, however, that the Borrower (or any other Loan Party) or any other
Lender Party shall not be obligated to reimburse any Issuing Bank or other
Lender Party for any wrongful payment or indemnify any Issuing Bank or other
Lender Party for any wrongful dishonor or any other matter to the extent
resulting from acts or omissions constituting gross negligence, bad faith or
willful misconduct or an intentional violation of law by such Issuing Bank or
any other Lender Party.
SECTION 2.5 Termination or Reduction of the Commitments.
(a) Optional. The Borrower may, upon at least three Business Days'
notice to the Administrative Agent, terminate in whole or reduce in part the
unused portion of the Unused Revolving Credit Commitments; provided, however,
that each partial reduction of such Facility (i) shall be in an aggregate amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof, and (ii)
shall be made ratably among the appropriate Lenders in accordance with their
Commitments with respect to such Facility.
(b) Mandatory. (i) The Term A Commitments of the Term A Lenders shall
automatically and permanently terminate and shall be of no further force and
effect on the Closing Date after the Term A Borrowing has been made by the Term
A Lenders.
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(ii) The Term B Commitments of the Term B Lenders shall
automatically and permanently terminate and shall be of no further force and
effect on the Closing Date after the Term B Borrowing has been made by the Term
B Lenders.
(iii) On and after the date that all Term A Advances and Term
B Advances shall have been repaid in full, the Revolving Credit Facility shall
be automatically and permanently reduced on each date on which prepayment
thereof is required to be made pursuant to Section 2.6(b)(i), (ii), (iii) or
(iv) in an amount equal to the applicable Reduction Amount, provided that each
such reduction of the Revolving Credit Facility shall be made ratably among the
Revolving Credit Lenders in accordance with their Revolving Credit Commitments.
(iv) The Letter of Credit Facility shall be permanently
reduced from time to time on the date of each reduction in the Revolving Credit
Facility by the amount, if any, by which the amount of the Letter of Credit
Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.
(v) In the event the Closing Date shall not have occurred by
the close of business on March 16, 1999 then all of the Commitments shall be
automatically terminated and this Agreement shall be of no further force or
effect.
SECTION 2.6 Prepayments.
(a) Optional. The Borrower may, without premium or penalty, upon at
least one (1) Business Day's notice in the case of Prime Rate Advances and three
(3) Business Days' notice in the case of Eurodollar Rate Advances, in each case
to the Administrative Agent stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given, the Borrower shall,
prepay the outstanding aggregate principal amount of the Advances, in whole or
ratably in part, together, in the case of Term A Advances and Term B Advances,
with accrued interest to the date of such prepayment on the aggregate principal
amount prepaid; provided, however, that (i) each partial prepayment shall be in
an aggregate principal amount of $1,000,000 or an integral multiple of $100,000
in excess thereof and (ii) no such prepayment of a Eurodollar Rate Advance shall
be made other than on the last day of an Interest Period therefor without
payment by the Borrower of the amounts provided for in Section 11.4(c). Each
prepayment made pursuant to this Section 2.6(a) shall be applied to repay those
Facilities designated by the Borrower and unless otherwise designated by the
Borrower with respect to such Facilities, such prepayment shall be applied first
to the payment of Prime Rate Advances and second to the payment of Eurodollar
Rate Advances; provided, that if the Borrower designates that any prepayment
made pursuant to this Section 2.6(a) is to be applied to the Term Facilities,
such prepayment shall be applied ratably to the Term A Facility and the Term B
Facility, and ratably to each unpaid installment of principal of each of the
Term Facilities. Upon the drawing of any Letter of Credit for which funds are on
deposit in the L/C Cash
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Collateral Account, such funds shall be applied to reimburse the applicable
Issuing Bank or the Revolving Credit Lenders, as applicable.
(b) Mandatory. (i) Within one hundred twenty (120) days following the
end of each Fiscal Year in which the ratio of Consolidated Senior Debt to EBITDA
at the end of such Fiscal Year equals or is greater than 1.75:1, the Borrower
shall execute and deliver to the Administrative Agent a certificate of the
Borrower's Chief Executive Officer or Chief Financial Officer demonstrating its
calculation of Excess Cash Flow for such Fiscal Year (except that in the case of
Fiscal Year 1999, such calculation shall be made for the period from April 1,
1999 through the end of such Fiscal Year) along with a prepayment of the then
outstanding Advances equal to seventy-five percent (75%) of the annual Excess
Cash Flow; provided, however, that if the ratio of Consolidated Senior Debt to
EBITDA, measured at the end of such Fiscal Year of the Borrower, for such Fiscal
Year of the Borrower, is (x) less than 1.75:1 and greater than or equal to
1:00:1, then the required prepayment of the then outstanding Advances shall be
in the amount of fifty percent (50%) of the annual Excess Cash Flow and (y) less
than 1.00:1, then the required prepayment of the then outstanding Advances shall
be in the amount of zero (0%) of the annual Excess Cash Flow.
(ii) Within five (5) days after receipt by the Borrower or any
of its Subsidiaries of Net Cash Proceeds from Asset Dispositions, unless such
proceeds may be reinvested in accordance with the definition of "Asset
Disposition," the Borrower shall prepay the then outstanding Advances in an
amount equal to one-hundred percent (100%) of such Net Cash Proceeds in excess
of $2,000,000 in any Fiscal Year.
(iii) Within five (5) days after receipt by the Borrower or
any of its Subsidiaries of Net Cash Proceeds from any Debt Issuance or Equity
Issuance, the Borrower shall prepay the then outstanding Advances in an amount
equal to, with respect to any (x) Debt Issuance, one hundred percent (100%), and
(y) Equity Issuance, fifty percent (50%), of such Net Cash Proceeds.
(iv) Within five (5) days after receipt of Net Cash Proceeds
by the Borrower or any of its Subsidiaries from any Extraordinary Receipt
received by or paid to or for the account of the Borrower or any of its
Subsidiaries and not otherwise included in clause (i), (ii) or (iii) above,
unless the Borrower or such Subsidiary intends in good faith to reinvest such
proceeds in accordance with the definition of "Extraordinary Receipt," the
Borrower shall prepay the then outstanding Advances in an amount equal to one
hundred percent (100%) of such Net Cash Proceeds in excess of $1,000,000 in any
Fiscal Year.
(v) Each prepayment made pursuant to clause (i), (ii), (iii)
or (iv) shall be subject to the provisions of Section 11.4(c) and shall be
applied to prepay the Facilities in the following manner: first, ratably to the
Term A Facility and the Term B Facility, and ratably to each unpaid installment
of principal of each of the Term Facilities until such installments are paid in
full; second, to prepay Swing Line Advances then outstanding until such Advances
are paid in full; third, to
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prepay Revolving Credit Advances and Letter of Credit Advances then outstanding
(whereupon the Revolving Credit Facility shall be permanently reduced as set
forth in Section 2.5(b)(iv) in the amount of such prepayment) until such
Revolving Credit Advances are paid in full; and fourth, deposited in the L/C
Cash Collateral Account to cash collateralize 100% of the Available Amount of
the Letters of Credit then outstanding and within any of the foregoing
Facilities, unless otherwise designated by the Borrower, such prepayments shall
be applied first to the payment of Prime Rate Advances and second to the payment
of Eurodollar Rate Advances. Upon the drawing of any Letter of Credit for which
funds are on deposit in the L/C Cash Collateral Account, such funds shall be
applied to reimburse the applicable Issuing Bank or the Revolving Credit
Lenders, as applicable. The amount remaining (if any) after the required
prepayment of the Advances then outstanding and the 100% cash collateralization
of the aggregate Available Amount of Letters of Credit then outstanding (the sum
of such prepayment amounts, cash collateralization amounts and remaining amount
being referred to herein as the "Reduction Amount") may be retained by the
Borrower. Upon the termination of all of the Commitments and the final payment
in full of all Obligations, including, without limitation, termination or
expiration of all Letters of Credit and the final payment in full of all
Obligations in respect of all Letters of Credit, then all amounts remaining on
deposit in the L/C Cash Collateral Account shall be returned to the Borrower.
(vi) The Borrower shall, within fifteen (15) days following
the end of each month in each Fiscal Year, pay to the Administrative Agent for
deposit in the L/C Cash Collateral Account an amount sufficient to cause the
aggregate amount on deposit in such Account to equal the amount by which the
aggregate Available Amount of all Letters of Credit then outstanding exceeds the
Letter of Credit Facility on such Business Day.
(vii) At any time that the aggregate amount of Revolving
Credit Advances, Letter of Credit Advances, Swing Line Advances and the
aggregate Available Amount of all Letters of Credit, in each case outstanding,
exceeds the Revolving Credit Facility, the Borrower shall immediately repay
Revolving Credit Advances to the extent necessary to reduce the principal
balance of Revolving Credit Borrowings to an amount equal to or less than the
Revolving Credit Facility.
(viii) The foregoing notwithstanding, the provisions of this
Section 2.6(b) shall not be construed to permit any Equity Issuance, Debt
Issuance or Asset Disposition otherwise prohibited under the terms of this
Agreement.
(c) Application of Prepayments to the Term A Facility and the Term B
Facility. Upon receipt of any amounts to be applied to the prepayment in respect
of the Term A Facility and the Term B Facility pursuant to this Section 2.6, the
Administrative Agent shall apply such amounts to the prepayment of the Term A
Advances and Term B Advances ratably; provided, however, that the Borrower may,
by providing prompt notice to the Administrative Agent, offer the Term B Lenders
the option to decline to accept any prepayments made pursuant to Section 2.6(b),
and, if within five
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(5) Business Days of receiving a copy of such notice from the Administrative
Agent, any Term B Lender notifies the Administrative Agent that it elects to
refuse to accept the prepayment of its Term B Advances, the Administrative Agent
shall apply the portion of such prepayment that would have been allocated to the
repayment of such Lender's Term B Advances, to the prepayment of the Advances of
the Lenders under the Term A Facility (to the extent that there are Term A
Advances then outstanding) and of the Advances of the Term B Lenders which have
not so refused ratably to each unpaid installment of principal of each such
Facility (and, if all Lenders under the Term B Facility elect to refuse their
ratable share of such prepayment, only to the Advances of the Lenders under the
Term A Facility, to the extent that there are Term A Advances then outstanding).
If any Term B Lender shall not give notice to the Administrative Agent within
such five (5) Business Day period, the Administrative Agent shall assume that
such Lender shall have accepted such prepayment.
SECTION 2.7 Interest.
(a) Scheduled Interest. The Borrower shall pay to the Administrative
Agent, for the benefit of the Lenders, interest on the unpaid principal amount
of each Advance owing to each Lender from the date of such Advance until such
principal amount shall be paid in full, at the following rates per annum:
(i) Prime Rate Advances. During such periods as such Advance
is a Prime Rate Advance, a rate per annum equal at all times to the sum of (x)
the Prime Rate in effect from time to time plus (y) the Applicable Margin for
such Advance in effect from time to time, payable in arrears quarterly on the
last day of each fiscal quarter during such periods.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Advance to the sum of (x) the Eurodollar Rate for
such Interest Period for such Advance plus (y) the Applicable Margin for such
Advance in effect on the first day of such Interest Period, payable in arrears
on the last day of such Interest Period and, if such Interest Period has a
duration of more than three months, on each day that occurs during such Interest
Period every three months from the first day of such Interest Period and on the
date such Eurodollar Rate Advance shall be Converted or paid in full.
(b) Default Interest. Notwithstanding the foregoing, the Borrower shall
pay interest on any Advance and all other amounts then due and payable
outstanding under the Facilities at the applicable Post-Default Rate (to the
extent permitted by law) whenever an Event of Default has occurred and is
continuing (i) under Section 9.1 for the period commencing on the occurrence of
such Event of Default until such Event of Default has been cured or waived as
acknowledged in writing by the Administrative Agent and (ii) under any Section
contained in Article 9 (other than Section 9.1) for the period commencing on the
sixty-first day after the occurrence of such Event of
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Default (if not then cured or waived) until such Event of Default has been cured
or waived as acknowledged in writing by the Administrative Agent.
(c) Notice of Interest Rate. Promptly after receipt of a Notice of
Borrowing pursuant to Section 2.2(a), the Administrative Agent shall give notice
to the Borrower and each appropriate Lender of the applicable interest rate
determined by the Administrative Agent for purposes of clause (a)(i) or (ii).
SECTION 2.8 Fees.
(a) Commitment Fees. The Borrower shall pay to the Administrative
Agent, for the account of the Lenders (other than Defaulting Lenders),
commitment fees, from the Closing Date in the case of each Initial Lender and
from the effective date specified in the Assignment and Acceptance pursuant to
which it became a Lender in the case of each other Lender, until the Revolving
Credit Termination Date payable in arrears quarterly on the last Business Day of
each March, June, September and December, commencing June 30, 1999, and on the
Revolving Credit Termination Date at a rate per annum equal to 0.500% per annum
on the average daily Unused Revolving Credit Commitment of such Lender;
provided, however, that the commitment fee shall be decreased to 0.375% per
annum during any periods when the ratio of Consolidated Funded Debt to EBITDA is
less than or equal to 3.0:1 determined in the same manner as is the Applicable
Margin for the Term A Facility and the Revolving Credit Facility three (3)
Business Days after the date on which the Administrative Agent receives
financial statements pursuant to Section 7.3 or 7.4 and a certificate of the
Chief Financial Officer of the Borrower demonstrating the ratio of Consolidated
Funded Debt to EBITDA. For purposes of this subsection (a), Swing Line Advances
shall not constitute utilization of the Revolving Credit Commitments of the
Revolving Credit Lenders (other than the Lender Parties which have made the
Swing Line Advances). Notwithstanding the foregoing, prior to the date which is
six months from the date hereof, the rate per annum on the average daily Unused
Revolving Credit Commitment of such Lender shall be equal to 0.500%.
(b) Letter of Credit Fees. (i) The Borrower shall pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears quarterly on the last Business Day of each March,
June, September and December, commencing June 30, 1999 and on the earliest to
occur of the full drawing, expiration, termination or cancellation of any such
Letter of Credit and on the Revolving Credit Termination Date, on such Lender's
Pro Rata Share of the average daily aggregate Available Amount during such
quarter of all Letters of Credit outstanding from time to time at the rate per
annum equal to (x) the Applicable Margin then in effect for Eurodollar Advances
under the Revolving Credit Facility with respect to Standby Letters of Credit
and (y) 50% of the Applicable Margin then in effect for Eurodollar Advances
under the Revolving Credit Facility with respect to Trade Letters of Credit.
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(ii) In addition to the foregoing fees described in (i) above,
the Borrower shall pay to the applicable Issuing Bank, for its own account, (x)
on the Available Amount of each Letter of Credit, a fronting fee, for the period
from the date of issuance of such Letter of Credit to and including the
termination thereof, computed at a rate to be agreed upon between the Borrower
and the applicable Issuing Bank, which amount shall be payable in arrears
quarterly on the last Business Day of each March, June, September and December
of each year and on the date of termination thereof and (y) transfer fees and
other customary fees and charges in connection with the issuance or
administration of each Letter of Credit as the Borrower and the applicable
Issuing Bank shall agree.
(c) Administrative Agent's Fees. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent, including pursuant to
the Fee Letter.
SECTION 2.9 Conversion of Advances.
(a) Optional. The Borrower may on any Business Day, upon notice given
to the Administrative Agent not later than 2:00 P.M. (New York time) on the
third Business Day prior to the date of a proposed Conversion of Advances into
Eurodollar Rate Advances and on the Business Day prior to the date of a proposed
conversion of Eurodollar Rate Advances into Prime Rate Advances, and subject to
the provisions of Sections 2.7 and 2.10, Convert all or any portion of the
Advances of one Type comprising the same Borrowing into Advances of the other
Type; provided, however, that any Conversion of Eurodollar Rate Advances into
Prime Rate Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances unless the Borrower pays the amounts, if any,
provided for in Section 11.4(c), any Conversion of Prime Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount
specified in Section 2.1(c), no Conversion of any Advances shall result in more
separate Borrowings than permitted under Section 2.2(c) and each Conversion of
Advances comprising part of the same Borrowing under any Facility shall be made
ratably among the appropriate Lenders in accordance with their Commitments under
such Facility. Each such notice of Conversion shall, within the restrictions
specified above, specify (i) the date of such Conversion, (ii) the Advances to
be Converted and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for such Advances. Each notice of
Conversion shall be irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $500,000, such Advances shall
automatically Convert into Prime Rate Advances.
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(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.1, the
Administrative Agent will forthwith so notify the Borrower and the appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Prime
Rate Advance.
(iii) Upon the occurrence and during the continuance of any
Event of Default and the acceleration of the Notes, interest thereon and other
amounts payable by the Borrower under this Agreement and the other Loan
Documents pursuant to Article 9, (x) each Eurodollar Rate Advance will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Prime Rate Advance and (y) the obligation of the Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.10 Increased Costs, Etc.
(a) If, due to either (i) the introduction of or any change in reserve
requirements included in the Eurodollar Rate Reserve Percentage, or in the
interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender Party of agreeing to make or of making, funding or
maintaining Eurodollar Rate Advances (excluding for purposes of this Section
2.10 any such increased costs resulting from (x) Taxes or Other Taxes (as to
which Section 2.12 shall govern) and (y) changes in the basis of taxation of
overall net income or profit or overall gross income by the United States or by
the foreign jurisdiction or state under the laws of which such Lender Party is
organized or has its Applicable Lending Office or any political subdivision
thereof), then, subject to Section 11.4(f), the Borrower shall from time to
time, within five (5) days after demand by such Lender Party (with a copy of
such demand to the Administrative Agent), pay to the Administrative Agent for
the account of such Lender Party additional amounts sufficient to compensate
such Lender Party for such increased cost (except to the extent already
reflected in the definition of Eurodollar Rate); provided, however, that a
Lender Party claiming additional amounts under this Section 2.10(a) agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, such increased cost that may thereafter accrue and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party. A certificate as to the amount of such increased cost setting
forth in reasonable detail the basis for calculation of such increased cost,
submitted to the Borrower by such Lender Party, shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, due to the introduction of or any change in or in the
interpretation of any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law), there shall be any increase in the amount of capital required
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or reasonably expected to be maintained by any Lender Party or any corporation
controlling such Lender Party as a result of or based upon the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder or the
issuance or maintenance of the Letters of Credit (or similar contingent
obligations), then, within five (5) days after demand by such Lender Party (with
a copy of such demand to the Administrative Agent), the Borrower shall pay to
the Administrative Agent for the account of such Lender Party, from time to time
as specified by such Lender Party, additional amounts sufficient to compensate
such Lender Party in the light of such circumstances, to the extent that such
Lender Party reasonably determines such increase in capital to be allocable to
the existence of such Lender Party's commitment to lend or to issue Letters of
Credit hereunder or to the issuance or maintenance of any Letters of Credit. A
certificate as to such amounts setting forth in reasonable detail the basis for
calculation of such amounts submitted to the Borrower by such Lender Party shall
be conclusive and binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed greater than 50% of the then aggregate unpaid principal
amount thereof notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the appropriate Lenders, whereupon (i) each such Eurodollar Rate
Advance under any Facility will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Prime Rate Advance and (ii)
the obligation of the appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the circumstances
causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, at the end
of such applicable Interest Periods (or sooner if required by law), Convert into
a Prime Rate Advance and (ii) the obligation of the appropriate Lenders to make,
or to Convert Advances into, Eurodollar Rate Advances shall be suspended until
the Administrative Agent shall notify the Borrower that such Lender has
determined that the circumstances causing such suspension no longer exist;
provided, however, that before making any such demand, such Lender agrees to use
reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to designate a different Eurodollar Lending Office if the making
of such a designation would allow such Lender or its Eurodollar Lending Office
to continue to perform its obligations to make Eurodollar Rate Advances or to
continue to find or maintain Eurodollar Rate Advances and would
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not, in the judgment of such Lender, result in an economic, legal or regulatory
disadvantage to such Lender.
SECTION 2.11 Payments and Computations.
(a) The Borrower shall make each payment hereunder and under the Notes,
irrespective of any right of counterclaim or set-off (except as otherwise
provided in Section 2.15), not later than 12:00 P.M. (New York time) on the day
when due in U.S. dollars to the Administrative Agent at the Administrative
Agent's Account in same day funds. The Administrative Agent will promptly
thereafter cause like funds to be distributed (i) if such payment by the
Borrower is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder and under the Notes to more than one Lender
Party, to such Lender Parties for the account of their respective Applicable
Lending Offices ratably in accordance with the amounts of such respective
Obligations then payable to such Lender Parties and (ii) if such payment by the
Borrower is in respect of any Obligation then payable hereunder to one Lender
Party, to such Lender Party for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 11.7(d), from and after
the effective date of such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest
assigned thereby to the Lender Party assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) If the Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent shall distribute
such funds to each Lender Party ratably in accordance with such Lender Party's
proportionate share of the principal amount of all outstanding Advances and the
Available Amount of all Letters of Credit then outstanding in repayment or
prepayment of such of the outstanding Advances or other Obligations owed to such
Lender Party, and for application to such principal installments, as the
Administrative Agent shall direct.
(c) The Borrower hereby authorizes each Lender Party, if and to the
extent payment owed to such Lender Party is not made when due hereunder (after
giving effect to applicable grace periods, if any) or, in the case of a Lender,
under the Note held by such Lender, to charge from time to time against any or
all of the Borrower's accounts with such Lender Party any amount so due.
(d) Interest, fees and Letter of Credit commissions shall be computed
by the Administrative Agent on the basis of the actual number of days (including
the first day but excluding the last day) elapsed over a year of 360 days;
provided, that interest on all Prime Rate Advances shall be computed on the
basis of the actual number of days (including the first day but excluding the
last
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day) elapsed over a year of 365 or 366 days, as the case may be. Each
determination by the Administrative Agent of an interest rate, fee or commission
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
(e) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or commitment fee, as the
case may be; provided, however, that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12 Taxes.
(a) Any and all payments by the Borrower hereunder or under the Notes
shall be made, in accordance with Section 2.11, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender Party and the Administrative Agent, net income taxes
that are imposed by the United States and net income taxes (or franchise taxes
imposed in lieu thereof) that are imposed on such Lender Party or the
Administrative Agent by the state or foreign jurisdiction under the laws of
which such Lender Party or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Lender
Party, net income taxes (or franchise taxes imposed in lieu thereof) that are
imposed on such Lender Party by the state or foreign jurisdiction of such Lender
Party's Applicable Lending Office or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities in respect of payments hereunder or under the Notes being
hereinafter referred to as "Taxes"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender Party or the Administrative Agent, (i) the sum payable shall
be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Lender
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Party or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and the
Administrative Agent for the full amount of Taxes and Other Taxes, and for the
full amount of taxes imposed by any jurisdiction on amounts payable under this
Section 2.12, imposed on or paid by such Lender Party or the Administrative
Agent (as the case may be) and any liability (including penalties, additions to
tax, interest and expenses) arising therefrom or with respect thereto, except
with respect to any Lender Party or the Administrative Agent, as the case may
be, for such a liability arising from such Lender Party's or the Administrative
Agent's, as the case may be, willful misconduct or gross negligence. This
indemnification shall be made within thirty (30) days from the date such Lender
Party or the Administrative Agent, as the case may be, makes written demand
specifying in reasonable detail the basis therefor.
(d) Within thirty (30) days after the date of any payment by the
Borrower of Taxes, the Borrower shall furnish to the Administrative Agent, at
its address referred to in Section 11.2, the original receipt of payment thereof
or a certified copy of such receipt. For purposes of this subsection (d) and
subsection (e), the terms "United States" and "United States person" shall have
the meanings specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender Party that is not a United States Person shall, on or
prior to the date of its execution and delivery of this Agreement in the case of
each Initial Lender or Issuing Bank, as the case may be, and on the date of the
Assignment and Acceptance pursuant to which it became a Lender Party in the case
of each other Lender Party, and from time to time thereafter as requested in
writing by the Borrower or the Administrative Agent (but only so long thereafter
as such Lender Party remains lawfully able to do so), provide each of the
Administrative Agent and the Borrower with two (2) original Internal Revenue
Service forms 1001 or 4224, as appropriate, or any successor or other form
prescribed by the Internal Revenue Service, the Internal Revenue Code or the
Treasury Regulations thereunder, certifying that such Lender is exempt from or
entitled to a reduced rate of United States withholding tax on payments pursuant
to this Agreement or the Notes. In addition, each Lender Party shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Lender Party. Each Lender Party shall promptly notify the
Borrower at any time it determines that it is no longer in a position to provide
any previously delivered certificates to the Borrower (or any other form of
certification adopted by the United States taxing
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authorities for such purpose). If the forms provided by a Lender Party at the
time such Lender Party first becomes a party to this Agreement indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and until such
Lender Party provides the appropriate form certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such form; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender Party
becomes a party to this Agreement, the Lender Party assignor was entitled to
payments under subsection (a) in respect of United States withholding tax with
respect to interest paid at such date, then, to such extent, the term Taxes
shall include (in addition to withholding taxes that may be imposed in the
future or other amounts otherwise includable in Taxes) United States withholding
tax, if any, applicable with respect to the Lender Party assignee on such date.
If any form or document referred to in this subsection (e) requires the
disclosure of information, other than information necessary to compute the tax
payable and information required on the date hereof by Internal Revenue Service
form 1001 or 4224, that the Lender Party reasonably considers to be
confidential, the Lender Party shall give notice thereof to the Borrower and
shall not be obligated to include in such form or document such confidential
information.
(f) For any period with respect to which a Lender Party has failed to
provide the Borrower with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Lender Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Lender Party become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrower shall take such steps as such Lender Party
shall reasonably request to assist such Lender Party to recover such Taxes.
(g) Any Lender Party claiming any additional amounts payable pursuant
to this Section 2.12 agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party.
(h) Each Lender Party shall, to the extent it is legally entitled to do
so, deliver to the Borrower or the Administrative Agent (as the case may be)
such other forms or similar documentation as may be required from time to time
by any applicable law, treaty, rule or regulation in order to establish such
Lender Party's complete exemption from withholding on all payments under this
Agreement or the Notes.
SECTION 2.13 Sharing of Payments, Etc. If any Lender Party shall obtain
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise)
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(i) on account of Obligations due and payable to such Lender Party hereunder or
under the Notes at such time in excess of its ratable share (according to the
proportion of (x) the amount of such Obligations due and payable to such Lender
Party at such time to (y) the aggregate amount of the Obligations due and
payable to all Lender Parties hereunder and under the Notes at such time) of
payments on account of the Obligations due and payable to all Lender Parties
hereunder or under the Notes at such time obtained by all the Lender Parties at
such time or (ii) on account of Obligations owing (but not due and payable) to
such Lender Party hereunder and under the Notes at such time in excess of its
ratable share (according to the proportion of (x) the amount of such Obligations
owing to such Lender Party at such time to (y) the aggregate amount of the
Obligations owing (but not due and payable) to all Lender Parties hereunder and
under the Notes at such time) of payments on account of the Obligations owing
(but not due and payable) to all Lender Parties hereunder and under the Notes at
such time obtained by all of the Lender Parties at such time, such Lender Party
shall forthwith purchase from the other Lender Parties such participations in
the Obligations due and payable or owing to them, as the case may be, as shall
be necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and each such other
Lender Party shall repay to the purchasing Lender Party the purchase price to
the extent of such Lender Party's ratable share (according to the proportion of
(x) the purchase price paid to such Lender Party to (y) the aggregate purchase
price paid to all Lender Parties) of such recovery together with an amount equal
to such Lender Party's ratable share (according to the proportion of (x) the
amount of such other Lender Party's required repayment to (y) the total amount
of such required repayments to the purchasing Lender Party) of any interest or
other amount paid or payable by the purchasing Lender Party in respect of the
total amount so recovered.
The Borrower agrees that any Lender Party so purchasing a participation from
another Lender Party pursuant to this Section 2.13 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender Party
were the direct creditor of the Borrower in the amount of such participation.
SECTION 2.14 Use of Proceeds. The proceeds of the Advances and
issuances of Letters of Credit shall be available, and the Borrower shall use
such proceeds and Letters of Credit solely (a) with respect to the Term
Advances, to (i) finance in part the Recapitalization and (ii) pay fees and
expenses incurred in connection with the Recapitalization in an amount not to
exceed $20,000,000, and (b) with respect to the Revolving Credit Advances, to
finance (i) working capital, (ii) general corporate purposes of the Borrower and
its Subsidiaries and (iii) Permitted Acquisitions.
SECTION 2.15 Defaulting Lenders. (a) In the event that, at any one
time, (i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting
Lender shall owe a Defaulted Advance to the Borrower and (iii) the Borrower
shall be required to make any payment hereunder or under any other Loan Document
to or for the account of such Defaulting Lender, then the Borrower may, so
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long as no Default shall occur or be continuing at such time and to the fullest
extent permitted by applicable law, set off and otherwise apply the obligation
of the Borrower to make such payment to or for the account of such Defaulting
Lender against the obligation of such Defaulting Lender to make such Defaulted
Advance. In the event that, on any date, the Borrower shall so set off and
otherwise apply its obligation to make any such payment against the obligation
of such Defaulting Lender to make any such Defaulted Advance on or prior to such
date, the amount so set off and otherwise applied by the Borrower shall
constitute for all purposes of this Agreement and the other Loan Documents an
Advance by such Defaulting Lender made on the date under the Facility pursuant
to which such Defaulted Advance was originally required to have been made
pursuant to Section 2.1. Such Advance shall be a Prime Rate Advance and shall be
considered, for all purposes of this Agreement, to comprise part of the
Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.1, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). The Borrower shall
notify the Administrative Agent at any time the Borrower exercises its right of
set-off pursuant to this subsection (a) and shall set forth in such notice (i)
the name of the Defaulting Lender and the Defaulted Advance required to be made
by such Defaulting Lender and (ii) the amount set off and otherwise applied in
respect of such Defaulted Advance pursuant to this subsection (a). Any portion
of such payment otherwise required to be made by the Borrower to or for the
account of such Defaulting Lender which is paid by the Borrower, after giving
effect to the amount set off and otherwise applied by the Borrower pursuant to
this subsection (a), shall be applied by the Administrative Agent as specified
in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Administrative Agent or any of the other Lender Parties and (iii) the
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents, payment, to such
extent, of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
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(i) first, to the Administrative Agent for any Defaulted
Amount then owing to the Administrative Agent; and
(ii) second, to the Lender Parties for any Defaulted Amounts
then owing to such Lender Parties, ratably in accordance with such respective
Defaulted Amounts then owing to such Lender Parties.
Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Fleet, in the name and under the control of the Administrative Agent, but
subject to the provisions of this subsection (c). The terms applicable to such
account, including the rate of interest payable with respect to the credit
balance of such account from time to time, shall be Fleet's standard terms
applicable to escrow accounts maintained with it. Any interest credited to such
account from time to time shall be held by the Administrative Agent in escrow
under, and applied by the Administrative Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative Agent shall, to
the fullest extent permitted by applicable law, apply all funds so held in
escrow from time to time to the extent necessary to make any Advances required
to be made by such Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Lender Party, as and when such Advances or
amounts are required to be made or paid and, if the amount so held in escrow
shall at any time be insufficient to make and pay all such Advances and amounts
required to be made or paid at such time, in the following order of priority:
(i) first, to the Administrative Agent for any amount then due
and payable by such Defaulting Lender to the Administrative Agent hereunder;
(ii) second, to the Lender Parties for any amount then due and
payable by such Defaulting Lender to such Lender Parties hereunder, ratably in
accordance with such respective amounts then due and payable to such Lender
Parties; and
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(iii) third, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents in such manner as the Administrative
Agent shall reasonably direct.
(d) The rights and remedies against a Defaulting Lender under this
Section 2.15 are in addition to other rights and remedies that the Borrower may
have against such Defaulting Lender with respect to any Defaulted Advance and
that the Administrative Agent or any Lender Party may have against such
Defaulting Lender with respect to any Defaulted Amount.
SECTION 2.16 Removal of Lender. In the event that any Lender Party (an
"Affected Lender") (a) demands payment of costs or additional amounts pursuant
to Section 2.10 or Section 2.12 or (b) asserts, pursuant to Section 2.10(d) that
it is unlawful for such Affected Lender to make Eurodollar Rate Advances, then
(subject to such Affected Lender's right to rescind such demand or assertion
within 10 days after the notice from the Borrower referred to below and so long
as no Event of Default exists) the Borrower may, upon 20 days' prior written
notice to such Affected Lender and the Administrative Agent, with the reasonable
assistance of the Administrative Agent, elect to cause such Affected Lender to
assign all of its rights and obligations under the Agreement (including, without
limitation, all of its Commitment or Commitments, the Advances owing to it and
the Note or Notes held by it) to an Eligible Assignee selected by the Borrower
which is reasonably satisfactory to the Administrative Agent, so long as such
Affected Lender receives payment in full in cash of the outstanding principal
amount of all Advances made by it and all accrued and unpaid interest thereon
and all other amounts due and payable to such Affected Lender as of the
effective date of such assignment (including, without limitation, amounts owing
to such Affected Lender pursuant to Section 2.3, 2.4, 2.7, 2.8, 2.10 or 2.12)
and in such case such Affected Lender agrees to make such assignment, and such
assignee shall agree to accept such assignment and assume all the obligations of
such Affected Lender hereunder, in accordance with Section 11.7. Until the
consummation of an assignment in accordance with the foregoing provisions of
this Section 2.16, the Borrower shall continue to pay to the Affected Lender any
Obligations as they become due and payable.
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ARTICLE 3
CONDITIONS OF LENDING
SECTION 3.1 Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance or of each Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction or waiver of each of the following conditions
precedent before or concurrently with the Initial Extension of Credit:
(a) The Administrative Agent shall have received on or before the day
of the Initial Extension of Credit the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Administrative
Agent and the Lenders, and in sufficient copies (except for the Notes), for each
Lender Party:
(i) The Notes payable to the order of the Lenders duly
executed by the Borrower.
(ii) A security agreement in substantially the form of Exhibit
F granting to the Administrative Agent, for the ratable benefit of the Lenders,
a first priority security interest (subject only to Liens permitted under
Section 6.1) in the Collateral described therein (together with each other
security agreement delivered pursuant to Section 5.11, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms, each a "Security Agreement"), duly executed by the Borrower and each
Subsidiary Guarantor, together with:
(A) proper, duly executed financing statements under
the Uniform Commercial Code of all jurisdictions that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the first priority Liens and security interests
created under the Security Agreement (subject only to Liens permitted
under Section 6.1), covering the Collateral described in the Security
Agreement;
(B) completed requests for information, dated on or
before the date of the Initial Extension of Credit, listing all
effective financing statements filed that name the Borrower or any
Subsidiary Guarantor as debtor, together with copies of such financing
statements;
(C) evidence of the completion of (or provision for)
all other recordings and filings of or with respect to the Security
Agreement that the Administrative Agent may deem necessary or desirable
in order to perfect and protect the Liens created thereby;
(D) evidence of the insurance required by the terms
of the Security Agreement;
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(E) certificates representing the Pledged Shares
referred to in the Security Agreement, accompanied by undated stock
powers executed in blank and irrevocable proxies;
(F) in the case of the Borrower's Foreign
Subsidiaries, all action necessary to allow the Administrative Agent to
obtain a valid and enforceable, first priority, perfected security
interest in (x) 65% (or such greater percentage which would not result
in material adverse tax consequences) of the Voting Stock and (y) 100%
of the non-voting stock of each Foreign Subsidiary; and
(G) evidence that all other action that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the first priority Liens and security interests
(subject to Liens permitted pursuant to Section 6.1) created under the
Security Agreement has been taken.
(iii) (A) Mortgages duly executed by the Borrower or
applicable Subsidiary Guarantor for each parcel of real property listed on
Schedule 4.20, together with evidence that counterparts of the Mortgages have
been delivered to a title insurance company (reasonably acceptable to the
Agents) insuring the Lien of the Mortgages for recording in all places to the
extent necessary or desirable, in the reasonable judgment of the Agents, to
create a valid and enforceable first priority Lien on each parcel of real
property listed on Schedule 4.20 (subject only to Permitted Liens) in favor of
the Administrative Agent (or a trustee acting on behalf of the Administrative
Agent required or desired under local law) for the benefit of the Secured
Parties;
(B) Mortgagee title insurance policies (or binding
commitments to issue such title insurance policies) which shall (1) be
issued to the Administrative Agent for the benefit of the Secured
Parties by title insurance companies reasonably satisfactory to the
Administrative Agent (the "Mortgage Policies") in amounts reasonably
satisfactory to the Administrative Agent insuring that the Mortgages
are valid and enforceable first priority mortgage Liens on the
respective parcels of real property, free and clear of all defects,
encumbrances and other Liens except Permitted Liens, (2) be in form and
substance reasonably satisfactory to the Administrative Agent, (3)
include, as appropriate, and to the extent reasonably available, an
endorsement for future advances under this Agreement, the Notes and the
Mortgages and such other endorsements that the Administrative Agent in
its discretion may reasonably request, and (4) to the extent reasonably
available, provide for affirmative insurance and such reinsurance
(including direct access agreements) as the Administrative Agent in its
discretion may reasonably request; and
(C) Surveys, in form and substance satisfactory to
the Administrative Agent, of each parcel of real property listed on
Schedule 4.20, dated a recent date reasonably
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acceptable to the Administrative Agent, certified by a licensed
professional surveyor in a manner satisfactory to the Administrative
Agent for the benefit of the Lenders.
(iv) An intellectual property security agreement in
substantially the form of Exhibit G hereto granting to the Administrative Agent
for the ratable benefit of the Lenders a first priority security interest
(subject to Liens permitted pursuant to Section 6.1) in all of the Borrower's
and each Subsidiary Guarantor's intellectual property (together with each other
intellectual property security agreement delivered pursuant to Section 5.11, in
each case as amended, supplemented or otherwise modified from time to time in
accordance with its terms, each an "Intellectual Property Security Agreement"),
duly executed by the Borrower and each Subsidiary Guarantor, together with
evidence that all action that the Administrative Agent may deem necessary or
desirable in order to perfect and protect the first priority Liens (subject to
Liens permitted pursuant to Section 6.1) and security interests created under
the Intellectual Property Security Agreement has been taken.
(v) A pledge agreement substantially in the form of Exhibit H
hereto (as hereafter amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Holdings Pledge Agreement") pursuant to
which all of the issued and outstanding capital stock of the Borrower held by
Holdings shall be pledged to the Administrative Agent as security for the
Obligations, together with the certificates representing all shares pledged
thereunder, undated stock powers executed in blank and proxies with respect
thereto.
(vi) A guaranty in substantially the form of Exhibit I hereto
(as hereafter amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Holdings Guaranty"), duly executed by Holdings.
(vii) A guaranty in substantially the form of Exhibit J hereto
(as hereafter amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Subsidiary Guaranty"), duly executed by each
Subsidiary Guarantor.
(viii) Certified copies of resolutions of the Board of
Directors of each Loan Party approving the Recapitalization, this Agreement, the
Notes, and each other Loan Document and Recapitalization Document to which it is
or is to be a party, and of all documents evidencing other necessary corporate
action and governmental, shareholder and other third party approvals and
consents, if any, with respect to the Recapitalization, this Agreement, the
Notes, and each other Loan Document and Recapitalization Document.
(ix) A copy of the charter (or equivalent document) of each
Loan Party and each amendment thereto, certified (as of a date reasonably near
the date of the Initial Extension of Credit) by the Secretary of State of the
jurisdiction of its incorporation or organization as being a true and correct
copy thereof.
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(x) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation or organization, dated within ten (10)
Business Days of the date of the Initial Extension of Credit, listing the
charter (or equivalent document) of each Loan Party and each amendment thereto
on file in its office and certifying that (A) such amendments are the only
amendments to such Loan Party's charter (or equivalent document) on file in its
office, (B) such Loan Party has paid all franchise taxes to the date of such
certificate and (C) such Loan Party is duly incorporated or organized and in
good standing under the laws of the State of the jurisdiction of its
incorporation or organization.
(xi) A copy of a certificate of the Secretary of State of each
State listed on Schedule 3.1(a)(xi), dated reasonably near the date of the
Initial Extension of Credit, stating that the Borrower and each of its
Subsidiaries is duly qualified and in good standing as a foreign corporation or
limited liability company, as applicable, in such State and has filed all annual
reports required to be filed to the date of such certificate.
(xii) A certificate of each Loan Party signed on behalf of
such Loan Party by a Responsible Officer and the Secretary or an Assistant
Secretary of such Loan Party, dated the date of the Initial Extension of Credit
(the statements made in such certificate shall be true on and as of the date of
the Initial Extension of Credit), certifying as to (A) the absence of any
amendments to the charter (or equivalent document) of such Loan Party since the
date of the Secretary of State's certificate referred to in Section 3.1(a)(xii),
(B) a true and correct copy of the bylaws (or equivalent document) of such Loan
Party as in effect on the date of the Initial Extension of Credit, (C) the truth
in all material respects of the representations and warranties made by such Loan
Party contained in the Loan Documents as though made on and as of the date of
the Initial Extension of Credit and (D) the absence of any event occurring and
continuing, or resulting from the Initial Extension of Credit, that constitutes
a Default.
(xiii) A certificate of the Secretary or an Assistant
Secretary of each Loan Party certifying the names and true signatures of the
officers of such Loan Party authorized to sign this Agreement, the Notes, each
other Loan Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(xiv) Such financial, business and other information regarding
Holdings, the Borrower and each Subsidiary Guarantor and each such Person's
Subsidiaries as any of the Lenders shall have reasonably requested, including,
audited financial statements of the Borrower for its most recent three (3)
Fiscal Years, unaudited financial statements dated the end of the most recent
fiscal quarter, if any, for which financial statements are available, an
unaudited pro forma balance sheet of the Borrower and its Subsidiaries which
gives effect to the Transaction as if it had occurred on the last day of the
most recently completed fiscal quarter of the Borrower, an unaudited pro forma
income statement of the Borrower (including a calculation of EBITDA) which gives
effect to the Transaction for the trailing twelve (12) months of operations
ending on the most recently completed
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fiscal quarter of the Borrower and forecasts prepared by management of the
Borrower, all in form and substance reasonably satisfactory to the Lenders. All
pro forma financial statements shall be prepared in accordance in all material
respects with the requirements of Regulation S-X under the Securities Act of
1933, as amended, applicable to a Registration Statement under such Act on Form
S-1.
(xv) Notices of Borrowing with respect to each of the Term
Facilities pursuant to which the Borrower shall request an Initial Extension of
Credit in an aggregate amount of not more than $150,000,000.
(b) The Agents shall be satisfied with (i) the corporate, ownership and
legal structure and capitalization of the Borrower, each of its Subsidiaries and
each Related Professional Corporation after the Recapitalization, including,
without limitation, the terms and conditions of the charter, by-laws (or
equivalent documents), stockholder agreements and each class of capital stock or
membership interests of the Borrower, each such Subsidiary and each Related
Professional Corporation and of each agreement or instrument relating to such
structure or capitalization and (ii) the management of the Borrower, each of its
Subsidiaries and each Related Professional Corporation (after giving effect to
the Recapitalization).
(c) The Agents shall be satisfied that all Existing Debt has been (or,
upon consummation of the Recapitalization will be) prepaid, redeemed or defeased
in full or otherwise satisfied and extinguished concurrently with the funding of
the Initial Extension of Credit and that all Surviving Debt shall be on terms
and conditions satisfactory to the Agents.
(d) There shall have occurred no Material Adverse Change (including any
event which, in the opinion of the Agents, is reasonably likely to result in a
Material Adverse Change) in the business, assets, liabilities (actual and
contingent), operations, condition (financial or otherwise), management or
prospects of the Borrower and its Subsidiaries, taken as a whole, since the date
of the most recent audited financial statements of the Borrower delivered to the
Administrative Agent; provided, that the implementation or effectiveness of the
final rule entitled "Medicare Program: Revisions to Payment Policies and
Adjustments to the Relative Value Units under the Physician Fee Schedule for
Calendar Year 1999" published at 63 Fed. Reg. 58814, et seq. (November 2, 1998)
shall not be deemed to cause a Material Adverse Change; and no material
inaccuracy in such financial statements shall exist.
(e) There shall exist no action, suit, investigation, litigation or
proceeding pending or threatened in any court or before any arbitrator or
governmental or Regulatory Agency or authority that (i) could reasonably be
expected to (A) have a material adverse effect on the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) or management of the Borrower and its Subsidiaries, taken as a whole,
(B) materially and adversely affect the ability of the Borrower or any
Subsidiary Guarantor to perform its obligations under the Loan Documents to
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which it is a party or (C) materially and adversely affect the rights and
remedies of the Administrative Agent and the Lender Parties under the Loan
Documents or (ii) purports to materially and adversely affect any aspect of the
Transaction or the Facilities (collectively, a "Material Adverse Effect");
provided, that the implementation or effectiveness of the final rule entitled
"Medicare Program: Revisions to Payment Policies and Adjustments to the Relative
Value Units under the Physician Fee Schedule for Calendar Year 1999" published
at 63 Fed. Reg. 58814, et seq. (November 2, 1998) shall not be deemed to cause a
Material Adverse Effect; and there shall have been no Material Adverse Change in
the status, or financial effect on the Borrower or any of its Subsidiaries, of
the Disclosed Litigation from that described on Schedule 4.9.
(f) All governmental, shareholder and other third party consents
(except for third party consents with respect to contracts entered into in the
ordinary course of business which are not material) and approvals (including
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended)
necessary or desirable in connection with each aspect of the Transaction and the
other transactions contemplated hereby shall have been obtained (without the
imposition of any conditions that are not acceptable to the Agents) and shall
remain in full force and effect; all applicable waiting periods shall have
expired without any action being taken by any authority; and no law or
regulation shall be applicable in the reasonable judgment of the Agents that
could restrain, prevent or impose any materially adverse conditions upon any
aspect of the Transaction or such other transactions or that could seek or
threaten any of the foregoing.
(g) There shall not exist any order, decree, judgment, ruling or
injunction which restrains the consummation of the Transaction in the manner
contemplated by the Recapitalization Documents.
(h) The Agents and their counsel shall have completed their business,
legal, environmental, tax, pension, regulatory and accounting due diligence
investigation of the Borrower's, the other Loan Parties' and their respective
Subsidiaries' business, assets, liabilities (actual and contingent), operations,
condition (financial or otherwise), management and prospects and shall be
satisfied with the results thereof. This condition shall be deemed satisfied
unless any additional information is disclosed to or discovered by the Agents
which the Agents deem materially adverse in respect of the condition (financial
or otherwise), business, assets, liabilities, properties, results of operations
or prospects of the Borrower and its Subsidiaries. The Borrower and each of the
Guarantors shall have given the Administrative Agent such access to their
respective books and records as the Administrative Agent may have requested upon
reasonable notice in order to carry out its investigations, appraisals and
analyses and the Administrative Agent shall have received all additional
financial, business and other information regarding the Borrower and its
Subsidiaries and properties as they shall have reasonably requested.
(i) The Borrower shall have delivered either (i) a certificate, in form
and substance satisfactory to the Agents, attesting to the financial condition
and Solvency of the Borrower and the
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Subsidiary Guarantors, together with their Subsidiaries, taken as a whole,
immediately before and immediately after giving effect to the Transaction, from
its Chief Financial Officer or (ii) in the event that the Borrower receives a
third party Solvency opinion from an independent expert in connection with the
Transaction, such opinion shall (A) be addressed to the Agents and (B) provide
that the Agents shall be entitled to rely thereon.
(j) The Lenders shall be satisfied that (i) the Borrower and its
Subsidiaries will be able to meet in all material respects their respective
obligations under all employee and retiree welfare plans, (ii) the employee
benefit plans of the Borrower and its Subsidiaries are, in all material
respects, funded in accordance with the minimum statutory requirements, (iii) no
material "reportable event" (as defined in ERISA, but excluding events for
which reporting has been waived) has occurred as to any such employee benefit
plan and (iv) no termination of, or withdrawal from, any such employee benefit
plan has occurred or is contemplated that could reasonably be expected to result
in a material liability.
(k) The Administrative Agent shall be reasonably satisfied with the
amount, types and terms and conditions of all insurance maintained by the
Borrower and its Subsidiaries, and the Administrative Agent shall have received
endorsements naming the Administrative Agent, on behalf of the Lenders, as loss
payee or an additional insured, as applicable, under all insurance policies to
be maintained with respect to the properties of the Borrower and its
Subsidiaries forming any part of the Lenders' Collateral under the Security
Agreement and the other Loan Documents and Collateral Documents.
(l) The Administrative Agent shall have received (i) satisfactory
opinions of counsel to the Borrower and the Guarantors (which shall cover, among
other things, authority, legality, validity, binding effect and enforceability
of the Loan Documents) and local and special counsel to the extent requested by
the Administrative Agent, as to the Transaction and (ii) reliance letters
permitting the Agent and Lenders to rely on each of the opinions of counsel
delivered in connection with the Recapitalization, including the opinions of
counsel delivered to MedPartners.
(m) There shall exist no Default or Event of Default under any of the
Loan Documents, and all legal matters incident to the Initial Extension of
Credit shall be reasonably satisfactory to counsel for the Agents.
(n) All fees and expenses due and payable to the Agents, and Initial
Lenders and/or their affiliates pursuant to the Commitment Letter, Fee Letter or
otherwise (including the reasonable fees and expenses of counsel for the Agents
and local counsel for the Agents) shall have been paid in full as contemplated
therein and the Borrower and the Sponsors shall have complied with all of their
obligations under the Commitment Letter and the Fee Letter.
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(o) The Recapitalization shall have been consummated (contemporaneously
with the Initial Extension of Credit) pursuant to the terms and conditions of
the Recapitalization Agreement (and none of the material terms or conditions of
the Recapitalization Agreement or any other material Recapitalization Documents
(including, but not limited to, MedPartners' obligations with respect to the
indemnification of post-closing claims by the Borrower under the
Recapitalization Agreement including Medical Malpractice Claims (as defined in
the Recapitalization Agreement)) shall have been waived or modified except with
the prior approval of the Agents) and in compliance with all applicable laws and
with all necessary consents and approvals. The final terms and conditions of the
Recapitalization Documents shall be satisfactory in all respects to the Agents,
and the Administrative Agent shall have received certified copies of each of the
Recapitalization Documents, each of which shall be satisfactory to the Agents
and in full force and effect. Management or employment agreements with each of
Lynn Massingale, MD, Jeffrey Bettinger, David Jones and Michael Hatcher shall
have been entered into on terms and conditions satisfactory to the
Administrative Agent and the Lenders and the Borrower shall have delivered to
the Administrative Agent certified copies of each such agreement.
(p) The Administrative Agent shall be satisfied that there are no state
takeover laws and no supermajority charter provisions applicable to the
Recapitalization, or that any conditions to avoiding such restrictions have been
satisfied.
(q) The Equity Financing and the Subordinated Debt Financing shall have
been consummated on terms reasonably satisfactory to the Agents pursuant to
definitive documentation in form and substance reasonably satisfactory to the
Agents and all conditions precedent to the consummation of the Equity Financing
and the Subordinated Debt Financing shall have been satisfied or, with the prior
approval of the Agents, waived. The Agents shall be satisfied that (i) funds
from the Equity Financing, the Subordinated Debt Financing and the Facilities
are sufficient to consummate the Transaction, and (ii) there shall be no
drawdown under the Revolving Credit Facility on the Closing Date. The Agents
shall be satisfied that the Borrower shall have received funds from the Equity
Financing and the Subordinated Debt Financing.
(r) All Advances made under this Agreement shall be in full compliance
with all applicable requirements of law, including, without limitation, Federal
Reserve Regulations T, U, and X.
(s) The Administrative Agent shall also have received such bank consent
agreements, third party consents, intercreditor agreements or other agreements,
as deemed necessary or desirable in the Administrative Agent's sole discretion,
to preserve or otherwise in respect of the Administrative Agent's rights in the
Collateral.
(t) The Agents and the Lenders shall be satisfied that (i) the Borrower
is taking all necessary and appropriate steps to ascertain the extent of, and to
quantify and successfully address,
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business and financial risks facing the Borrower as a result of what is commonly
referred to as the "Year 2000 Problem" (i.e., the inability of certain computer
applications to recognize correctly and perform date-sensitive functions
involving certain dates prior to and after December 31, 1999), including risks
resulting from the failure of key vendors and customers of the Borrower to
successfully address the Year 2000 Problem, and (ii) the Borrower's material
computer applications will, on a timely basis, adequately address the Year 2000
Problem in all material respects.
(v) The Agents shall have received evidence satisfactory to them that
the Borrower's Ratio of Consolidated Funded Debt to EBITDA (calculated on a
basis satisfactory to the Agents) shall not exceed 4.8:1.0 on the Closing Date.
(w) The Administrative Agent shall have received such other approvals,
opinions or documents as any Lender through the Administrative Agent may
reasonably request, and all legal matters incident to such Borrowing shall be
satisfactory to counsel for the Administrative Agent.
SECTION 3.2 Conditions Precedent to Each Borrowing and Issuance. The
obligation of each appropriate Lender to make an Advance (other than a Letter of
Credit Advance made by an Issuing Bank or a Revolving Credit Lender pursuant to
Section 2.3(c) and a Swing Line Advance made by a Revolving Credit Lender
pursuant to Section 2.2(b)), and the obligation of an Issuing Bank to issue a
Letter of Credit (including the initial issuance thereof) or renew a Letter of
Credit and the right of the Borrower to request the issuance or renewal of a
Letter of Credit, shall each be subject to the further conditions precedent that
on the date of each such Borrowing or issuance or renewal:
(a) Each of the conditions precedent listed in Section 3.1 shall have
been previously or concurrently satisfied or waived in accordance with this
Agreement.
(b) The following statements shall be true (and each of the giving of
the applicable Notice of Borrowing, Notice of Swing Line Borrowing, or Notice of
Issuance or Notice of Renewal and the acceptance by the Borrower of the proceeds
of a Borrowing or of a Letter of Credit or the renewal of a Letter of Credit
shall constitute a representation and warranty by the Borrower that both on the
date of such notice and on the date of such Borrowing or issuance or renewal
such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of such date, before and
after giving effect to such Borrowing or issuance or renewal and to the
application of the proceeds therefrom, as though made on and as of such date,
other than any such representations or warranties that, by their terms, refer to
a specific date other than the date of such Borrowing, issuance or renewal, in
which case, as of such specific date;
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(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or renewal or from the application of the
proceeds therefrom, that constitutes a Default or Event of Default; and
(iii) for each Revolving Credit Advance, Swing Line Advance
made by the Swing Line Bank or issuance or renewal of any Letter of Credit, the
Revolving Credit Facility equals or exceeds the aggregate principal amount of
the Revolving Credit Advances plus Swing Line Advances plus Letter of Credit
Advances plus the aggregate Available Amount of all Letters of Credit then
outstanding after giving effect to such Advances or issuance or renewal,
respectively; and
(c) The Administrative Agent shall have received from the Borrower a
duly executed Notice of Borrowing, Notice of Swing Line Borrowing, Notice of
Issuance or Notice of Renewal as applicable.
SECTION 3.3 Determinations Under Section 3.1. For purposes of
determining compliance with the conditions specified in Section 3.1, each
Initial Lender shall be deemed to have consented to, approved or accepted or to
be satisfied with each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Initial Lenders
unless an officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received written notice from such
Initial Lender prior to the Initial Extension of Credit specifying its objection
thereto and, if the Initial Extension of Credit consists of a Borrowing, such
Initial Lender shall not have made available to the Administrative Agent such
Initial Lender's ratable portion of such Borrowing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants as follows:
SECTION 4.1 Organization. The Borrower and each of the Subsidiary
Guarantors (a) is a corporation, partnership or limited liability company, as
applicable, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization, (b) is duly qualified
and in good standing as a foreign corporation, partnership or limited liability
company, as applicable, in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed could not
reasonably be expected to have a Material Adverse Effect and (c) has all
requisite corporate or other power and authority (including, without limitation,
all
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governmental licenses, permits and other approvals) to own or lease and operate
its properties and to carry on its business as now conducted and as proposed to
be conducted, except where the failure to have such authority could not
reasonably be expected to result in a Material Adverse Effect. As of the date
hereof, Holdings and Pacific collectively beneficially own and control, directly
or indirectly, one hundred percent (100%) of the issued and outstanding shares
of each class of the capital stock of the Borrower.
SECTION 4.2 Subsidiaries. As of the date hereof, set forth on Schedule
4.2 hereto is a complete and accurate list of all Subsidiaries of the Borrower
and each Related Professional Corporation, showing as of the date hereof (as to
each such Subsidiary) the jurisdiction of its incorporation or organization, the
number of shares or membership interests of each class of capital stock
authorized, and the number outstanding, on the date hereof and the percentage of
the outstanding shares or membership interests of each such class owned
(directly or indirectly) by the Borrower or one of its Subsidiaries at the date
hereof. All of the outstanding capital stock or membership interests of all of
such Subsidiaries has been validly issued, is fully paid and non-assessable and
is owned by the Borrower or one or more of its Subsidiaries free and clear of
all Liens, except those created under the Collateral Documents or Liens
permitted under Section 6.1.
SECTION 4.3 Corporate Power, Authorization. The execution, delivery and
performance by the Borrower and each Subsidiary Guarantor of this Agreement, the
Notes and each other Loan Document to which it is or is to be a party, and the
consummation of the Transaction, are within such Loan Party's corporate powers,
have been duly authorized by all necessary corporate action, and do not (a)
contravene such Loan Party's charter or bylaws (or equivalent documents), (b)
violate any law (including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the Racketeer
Influenced and Corrupt Organizations Chapter of the Organized Crime Control Act
of 1970), rule, regulation (including, without limitation, Regulation T, U or X
of the Board of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination or award in each case binding on such Loan
Party, (c) conflict with or result in the breach of, or constitute a default
under, any loan agreement, indenture, mortgage, deed of trust, lease or other
material contract, instrument or agreement binding on or affecting any Loan
Party, any of its Subsidiaries or any of their respective properties, except
where such conflict, breach or default could not reasonably be expected to
result in a Material Adverse Effect or (d) except for the Liens created under
the Collateral Documents, result in or require the creation or imposition of any
Lien upon or with respect to any of the properties of any Loan Party or any of
its Subsidiaries.
SECTION 4.4 Governmental Authorizations, Approvals. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or any other third party is or was required for (a)
the due execution, delivery, recordation, filing or performance by the Borrower
or any Subsidiary Guarantor of this Agreement, the Notes, any other Loan
Document or any Recapitalization Document to which it is or is to be a party, or
for the
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consummation of the Transaction, (b) the grant by any Loan Party of the Liens
granted by it pursuant to the Collateral Documents, (c) the perfection or
maintenance of the Liens created by the Collateral Documents or (d) the exercise
by the Administrative Agent or any Lender Party of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the
Collateral Documents, except for the authorizations, approvals (other than
immaterial third party consents), actions, notices and filings obtained on or
prior to the date hereof listed on Schedule 4.4, all of which have been duly
obtained, taken, given or made (or provision has been provided for in a manner
satisfactory to the Administrative Agent) and are in full force and effect and
except for filings required to be made in connection with the perfection of the
security interests created under the Collateral Documents and compliance with
securities laws and other laws regarding dispositions of collateral. All
applicable waiting periods in connection with the Transaction have expired
without any action having been taken by any competent authority restraining,
preventing or imposing materially adverse conditions upon the Transaction or the
rights of the Loan Parties or their Subsidiaries freely to transfer or otherwise
dispose of, or to create any Lien on, any properties now owned or hereafter
acquired by any of them.
SECTION 4.5 Due Execution, Validity, Enforceability. This Agreement has
been, and each of the Notes and each other Loan Document has been or when
delivered hereunder will have been, duly executed and delivered by each of the
Borrower and each Subsidiary Guarantor party thereto. This Agreement is, and
each of the Notes and each other Loan Document has been or when delivered
hereunder will be, the legal, valid and binding obligation of each of the
Borrower and each Subsidiary Guarantor party thereto, enforceable against the
Borrower or such Subsidiary Guarantor in accordance with its terms, except to
the extent that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
SECTION 4.6 Financial Statements. The consolidated balance sheets of
the Borrower and its Subsidiaries as at December 31, 1998 and the related
consolidated statements of income and consolidated statements of cash flows of
the Borrower and its Subsidiaries for the Fiscal Year then ended, accompanied by
(in the case of such Consolidated financial statements) an opinion of Ernst &
Young LLP, independent public accountants, and the Consolidated balance sheet of
the Borrower and its Subsidiaries as at January 31, 1999 and the related
Consolidated statement of income and Consolidated statement of cash flows of the
Borrower and its Subsidiaries for the month then ended, duly certified by the
Chief Financial Officer of the Borrower, copies of which have been furnished to
each Lender Party, fairly present in all material respects, subject, in the case
of said balance sheet as at January 31, 1999 and said statements of income and
cash flows for the month then ended, to normal year-end audit adjustments, the
Consolidated financial condition of the Borrower and its Subsidiaries as at such
dates and the Consolidated results of the operations of the Borrower and its
Subsidiaries for the period ended on such date, all in accordance with GAAP
applied on a consistent basis, and, except for the incurrence of Debt in
connection with the Recapitalization and other
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transactions in connection therewith, since December 31, 1998, there has been no
Material Adverse Change.
SECTION 4.7 Pro Forma Financial Statements. The Consolidated pro forma
balance sheet of the Borrower and its Subsidiaries as at December 31, 1998, and
the related Consolidated pro forma statement of income and cash flows of the
Borrower and its Subsidiaries for the period then ended, certified by the Chief
Financial Officer of the Borrower, copies of which have been furnished to each
Initial Lender, (a) fairly present in all material respects the Consolidated pro
forma financial condition of the Borrower and its Subsidiaries as at such date
and the Consolidated pro forma results of operations of the Borrower and its
Subsidiaries for the period ended on such date, in each case after giving effect
to the Transaction, (and the financial statements utilized in preparing such pro
forma statements were prepared in accordance with GAAP) and (b) have been
prepared in accordance in all material respects with the requirements of
Regulation S-X under the Securities Act of 1933, as amended, applicable to a
Registration Statement under such Act on Form S-1.
SECTION 4.8 True and Complete Disclosure. All factual information
(taken as a whole) heretofore or contemporaneously furnished by or on behalf of
Borrower or any of its Subsidiaries in writing to any Lender (other than
projections) for purposes of or in connection with this Agreement or any
transaction contemplated herein or the syndication of the Facilities
contemplated hereby is, (and, solely with respect to any such information
furnished on behalf of Borrower or any Subsidiary by a third party, to the best
of Borrower's knowledge after due inquiry are and will be) true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.
SECTION 4.9 Litigation. Other than the litigation disclosed on Schedule
4.9 (the "Disclosed Litigation"), there is no action, suit, investigation,
litigation or proceeding affecting the Borrower or any of its Subsidiaries, any
Related Professional Corporation or any professional officer, director, employee
or contractor of any of the foregoing (in so far as related to services provided
in respect of the Borrower, any of its Subsidiaries or any Related Professional
Corporation), including, without limitation, any Environmental Action, pending
or, to the Borrower's knowledge, threatened before any court, governmental
agency or arbitrator that could reasonably be expected to have a Material
Adverse Effect, and there has been no Material Adverse Change in the status, or
financial effect on the Borrower or any of its Subsidiaries, of the Disclosed
Litigation from that described on Schedule 4.9.
SECTION 4.10 Regulation U. No part of the proceeds of any Advance will
be used to purchase or carry any Margin Stock, directly or indirectly, or to
extend credit for the purpose of purchasing or carrying any such Margin Stock
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other
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purpose which might cause any of the loans or extensions of credit under this
Agreement to be considered a "purpose credit" within the meaning of Regulation
T, U or X of the Board.
SECTION 4.11 ERISA.
(a) As of the Closing Date, except as set forth on Schedule 4.11
hereto, neither the Borrower nor any of its ERISA Affiliates maintains or has
maintained any Plans or Multiemployer Plans.
(b) As of the Closing Date, set forth on Schedule 4.11 is a complete
and accurate list of all Welfare Plans and all defined contribution plans to
which the Borrower or any of its Subsidiaries is a party, whether written or
oral. Each Welfare Plan, defined contribution plan and Benefit Arrangement
materially complies with, and has been operating in all material respects, in
accordance with, all applicable laws, including, without limitation, the
provisions of ERISA.
(c) Each defined contribution plan that is intended to be qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") has been determined by the Internal Revenue Service to be so qualified,
and each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code, and nothing has occurred or is reasonably expected
to occur that would adversely affect the qualified status of any of the defined
contribution plans or any related trust subsequent to the issuance of such
determination letter.
(d) No event has occurred in connection with any Welfare Plan, defined
contribution plan or Benefit Arrangement which has, or could reasonably be
expected to result in any fine, penalty, assessment or other similar liability
in excess of $5,000,000 for which the Borrower or any of its Subsidiaries may be
responsible, whether by reason of operation of law or contract.
(e) Except as set forth in the financial statements referred to in this
Section 4.6 and in Article 7, neither the Borrower nor any of its Subsidiaries
has any material liability with respect to "expected post retirement benefit
obligations" within the meaning of Statement of Financial Accounting Standards
No. 106.
SECTION 4.12 Casualty. Neither the business nor the properties of the
Borrower or any of its Subsidiaries are affected by any fire, explosion,
accident, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance) that could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.13 Environmental Matters.
(a) The operations and properties of the Borrower and each of its
Subsidiaries comply in all known material respects with all applicable
Environmental Laws and Environmental Permits, all known past non-compliance with
such Environmental Laws and Environmental Permits has been
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resolved without ongoing obligations or costs, except to the extent that the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect, and no circumstances exist that could reasonably be expected to (i) form
the basis of an Environmental Action against the Borrower or any of its
Subsidiaries or any of their properties that could reasonably be expected to
have a Material Adverse Effect or (ii) cause any such property to be subject to
any restrictions on ownership, occupancy, use or transferability under any
Environmental Law which could reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed on Schedule 4.13 hereto, (i) none of the
properties owned or operated as of the date hereof or formerly owned or operated
by the Borrower or any of its Subsidiaries is listed or, to the knowledge of the
Borrower, proposed for listing on the NPL or on the CERCLIS or any analogous
foreign, state or local list or is adjacent to any such property; (ii) to the
best of its knowledge, as of the date hereof, there are no and never have been
any underground or aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or, to the
best of its knowledge, have been treated, stored or disposed on any property
currently owned or operated by the Borrower or any of its Subsidiaries or on any
property formerly owned or operated by the Borrower or any of its Subsidiaries;
(iii) to the best of its knowledge, there is no material asbestos or
asbestos-containing material on any property owned or operated on the date
hereof by the Borrower or any of its Subsidiaries; and (iv) Hazardous Materials
have not been released, discharged or disposed of in violation in any material
respect of any Environmental Law on any property currently owned or operated by
the Borrower or any of its Subsidiaries, or any property formerly owned or
operated by the Borrower or any of its Subsidiaries.
(c) As of the date hereof, except as disclosed on Schedule 4.13 hereto,
(i) neither the Borrower nor any of its Subsidiaries is undertaking or has not
completed, either individually or together with other potentially responsible
parties, any investigation or assessment or Remedial, Response or Removal action
relating to any actual or threatened release, discharge or disposal of Hazardous
Materials at any site, location or operation, either voluntarily or pursuant to
the order of any governmental or regulatory authority or the requirements of any
Environmental Law; and (ii) all Hazardous Materials generated, used, treated,
handled or stored at, or transported to or from, any property currently owned or
operated by the Borrower or any of its Subsidiaries or any property formerly
owned or operated by the Borrower or any of its Subsidiaries have been disposed
of in a manner which complies in all material respects with Environmental Laws
or in a manner that could not be reasonably be expected to result in a Material
Adverse Effect.
SECTION 4.14 Collateral Documents.
(a) The provisions of the Collateral Documents are effective
to create in favor of the Administrative Agent for the ratable benefit of the
Lender Parties pursuant to the Security Agreement, a legal, valid and
enforceable security interest in the Collateral owned by such Loan Party, and
the Security Agreement, together with the filings of Form UCC-1 and assignment
of
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certain of such Form UCC-1's or Form UCC-3 in all relevant jurisdictions creates
a first Lien on, and security interest in all of the Collateral described
therein, subject to no other Liens other than Liens permitted under Section 6.1.
Except for titled vehicles, vessels and other collateral which may not be
perfected through the filing of financing statements under the Uniform
Commercial Code and which have an aggregate fair market value of less than
$1,000,000, all such Liens have been or, upon the filing of the financing
statements delivered on the Closing Date, will be fully perfected Liens except
for Liens permitted under Section 6.1. The Intellectual Property Security
Agreement creates (assuming all necessary filings with the United States Patent
and Trademark Office and the United States Copyright Office have been
appropriately and duly made), as security for the Obligations purported to be
secured thereby, a valid and enforceable, and upon the recordation in the United
States Patent and Trademark Office and in the United States Copyright Office of
assignments for security made pursuant to the Intellectual Property Security
Agreement, perfected security interest in and Lien on the trademarks, patents
and copyrights covered by the Intellectual Property Security Agreement in favor
of the Administrative Agent for the ratable benefit of the Secured Parties,
superior to and prior to the rights of all third Persons. The Borrower and its
Subsidiaries have good and marketable title to all Collateral, free and clear of
all Liens except Liens permitted under Section 6.1.
(b) The security interests created in favor of Administrative
Agent, as pledgee for the benefit of the Lenders under the Security Agreement
and the Holdings Pledge Agreement together with the delivery of the certificates
pursuant thereto and delivery of appropriate endorsements executed in blank,
constitute first perfected security interests in the Pledged Shares and Pledged
Debt (as such terms are defined in the Security Agreement and the Holdings
Pledge Agreement) pledged under such agreements, subject to no security
interests of any other Person other than Permitted Liens and unperfected Liens
permitted under Section 6.1(g). Except as set forth in the Security Agreement
and the Holdings Pledge Agreement, no filings, registrations or recordings which
have not been made or will not have been made (or submitted for recordation)
within ten (10) Business Days after the Closing Date are required in order to
perfect the security interests created in the Pledged Shares or Pledged Debt
under the Security Agreement or Holdings Pledge Agreement.
(c) Assuming the Mortgages are appropriately and duly filed
and recorded, the Mortgages create, as security for the obligations purported to
be secured thereby, a valid and enforceable perfected security interest in and
Lien on all of the real property listed on Schedule 4.20 subject to a Mortgage
and the Mortgaged Property (including, without limitation, all fixtures and
improvements relating to such Mortgaged Property and affixed or added thereto on
or after the Closing Date) in favor of the Administrative Agent (or such other
trustees that may be named therein) for the ratable benefit of the Lender
Parties, superior to and prior to the rights of all third Persons (except that
the security interest created in such real property and the Mortgaged Property
may be subject to the Permitted Liens related thereto) and subject to no other
Liens (other than Liens permitted under Section 6.1).
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SECTION 4.15 Taxes.
(a) The Borrower and each of its Subsidiaries has filed, has caused to
be filed or has been included in all material tax returns (Federal, state, local
and foreign) required to be filed and has paid (prior to the date on which
penalties attach thereto) all taxes shown thereon to be due, together with
applicable interest and penalties (other than de minimus taxes which are not
overdue more than thirty (30) days and any taxes the amount or validity of which
are being contested in good faith and with respect to which the Borrower or such
Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP).
(b) There is no unpaid amount of adjustments to the state, local and
foreign tax liability of the Borrower and each of its Subsidiaries proposed by
any state, local or foreign taxing authorities which could reasonably be
expected to result in a Material Adverse Effect (other than amounts arising from
adjustments to Federal income tax returns and other than adjustments the amount
or validity of which are being contested in good faith and with respect to which
the Borrower or such Subsidiary has set aside on its books adequate reserves
with respect thereto in accordance with GAAP).
SECTION 4.16 Compliance with Securities Laws. Neither the Borrower nor
any of its Subsidiaries is an "investment company," or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
Neither the making of any Advances, nor the issuance of any Letters of Credit,
nor the application of the proceeds or repayment thereof by the Borrower, nor
the consummation of the Transaction, will violate any provision of such Act or
any rule, regulation or order of the Securities and Exchange Commission
thereunder or any takeover, disclosure or other federal, state or foreign
securities law or Regulations T, U or X of the Federal Reserve Board. The
Borrower is not subject to regulation under any federal, state or foreign
statute or regulation which limits its ability to incur Debt.
SECTION 4.17 Solvency. Each Loan Party is, individually and together
with its Subsidiaries, Solvent.
SECTION 4.18 Debt.
(a) Set forth on Schedule 4.18(a) is a complete and accurate list of
all Debt which will be repaid by the Borrower on or prior to the Closing Date
(the "Existing Debt"), the principal amount of which is greater than $250,000,
showing as of the date hereof the principal amount outstanding thereunder and
the maturity date thereof.
(b) Set forth on Schedule 4.18(b) is a complete and accurate list of
all Debt which will not be repaid by the Borrower on or prior to the Closing
Date (the "Surviving Debt"), the principal
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amount of which is greater than $100,000, showing as of the date hereof the
principal amount outstanding thereunder, the maturity date thereof and the
amortization schedule therefor.
SECTION 4.19 No Defaults, Compliance with Laws.
(a) Except as set forth on Schedule 4.19 hereto, neither the Borrower
nor any of its Subsidiaries is in default under any agreement, ordinance,
resolution, decree, bond, note, indenture, order or judgment to which it is a
party or by which it is bound, or any other agreement or other instrument by
which any of the properties or assets owned by it or used in the conduct of its
business is affected, which default could reasonably be expected to have a
Material Adverse Effect.
(b) The Borrower, each of its Subsidiaries, each Related Professional
Corporation and each professional officer, director, employee or contractor of
any of the foregoing (in so far as related to services provided in respect of
the Borrower or any Subsidiary by any such officer, director, employee or
contractor) has complied and is in compliance in all respects with all
applicable laws, ordinances, regulations, resolutions, decrees and other similar
documents and instruments of all courts and governmental authorities, bureaus
and agencies, domestic and foreign and all applicable Environmental Laws and
Regulations, non-compliance with which could reasonably be expected to have a
Material Adverse Effect.
SECTION 4.20 Owned Real Property. As of the date hereof, set forth on
Schedule 4.20 is a complete and accurate list of all real property owned by any
Loan Party or any of its Subsidiaries, showing as of the date hereof the street
address, county or other relevant jurisdiction, state and record owner thereof.
Such Loan Party or such Subsidiary has good, marketable and insurable fee simple
title to such real property, free and clear of all Liens, other than Permitted
Liens.
SECTION 4.21 Leased Real Property. As of the date hereof, set forth on
Schedule 4.21 is a complete and accurate list of all leases of real property
with an annual rent in excess of $250,000 under which the Borrower or any of its
Subsidiaries is the lessee, showing as of the date hereof the street address,
county or other relevant jurisdiction, state, lessor, lessee, expiration date
and annual rental cost thereof.
SECTION 4.22 Material Contracts. Set forth on Schedule 4.22 is a
complete and accurate list of all Material Contracts of each Loan Party and its
Subsidiaries, showing as of the date hereof the parties, subject matter and term
thereof. Except as could not reasonably be expected to have a Material Adverse
Effect, each such Material Contract has been duly authorized, executed and
delivered by all parties thereto, has not been amended or otherwise modified, is
in full force and effect and, to the best knowledge of the Borrower with respect
to all parties other than the Loan Parties, is binding upon and enforceable
against all parties thereto in accordance with its terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights and by equitable
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principles (regardless of whether enforcement is sought in equity or at law).
There exists no material default under any Material Contract by the Borrower or
any of its Subsidiaries party thereto. To the best knowledge of each Loan Party,
there exists no default under any Material Contract by any other party thereto
which could reasonably be expected to result in a Material Adverse Effect.
SECTION 4.23 Investments. As of the date hereof, set forth on Schedule
4.23 is a complete and accurate list of all Investments in excess of $250,000
held by the Borrower or any of its Subsidiaries, showing as of the date hereof
the amount, obligor or issuer and maturity, if any, thereof.
SECTION 4.24 Intellectual Property. As of the date hereof, set forth on
Schedule 4.24 is a complete and accurate list of all patents, registered
trademarks, service marks and copyrights, and all applications therefor, all
material unregistered trademarks, service marks, trade names and copyrights, and
all licenses of any of the foregoing (except for licenses of commercially
available software), of the Borrower or any of its Subsidiaries. The Borrower
and each of its Subsidiaries owns or has rights to use all patents, trademarks,
trade names, service marks, copyrights and other intellectual property material
to the conduct of its business as now or heretofore conducted by it except to
the extent the failure to so own or have such rights could not reasonably be
expected to result in a Material Adverse Effect. The Borrower and each of its
Subsidiaries conducts its business and affairs without infringement of or
interference with any patent, trademark, trade name, service mark, copyright or
other intellectual property of any other Person except to the extent that could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 4.25 Recapitalization Documents. Each Recapitalization Document
to which the Borrower or any of its respective Subsidiaries is a party has been
duly executed and delivered by such Loan Party or such Subsidiary, as the case
may be, and, to the best knowledge of the Borrower, each Recapitalization
Document has been duly executed and delivered by the parties thereto other than
the Borrower and its Subsidiaries, and is in full force and effect. All
representations and warranties made in the Recapitalization Documents were true
and correct in all material respects at the time as of which such
representations and warranties were made; provided, however, that any
representation made relating to any party other than any Loan Party is made to
the best knowledge of the Borrower.
SECTION 4.26 Fees. No broker's or finder's fees or commissions or any
similar fees or commissions will be payable by the Borrower or any of its
Subsidiaries with respect to the incurrence and maintenance of the Obligations,
any other transaction contemplated by the Loan Documents or any services
rendered in connection with any such transactions. The Borrower hereby covenants
and agrees to indemnify the Administrative Agent and each Lender Party against
and hold the Administrative Agent and each Lender Party harmless from any claim,
demand or liability for broker's or finder's fees or similar fees or
commissions.
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SECTION 4.27 Government Consents for Conduct of Business.
(a) The Borrower and each Subsidiary Guarantor has, and is in good
standing with respect to, all approvals, permits, licenses, consents,
authorizations, franchises, certificates, and inspections of all Regulatory
Agencies and are otherwise necessary for such Loan Party to continue to conduct
business and own, use, operate, and maintain its property and assets as
heretofore conducted, owned, used, operated, and maintained which, if not
obtained (whether directly or by lawful and effective assignment) or not
maintained in good standing, would have a Material Adverse Effect. No such
approval, permit, license, consent, authorization, franchise, or certificate is
conditioned or limited (in any material respect) any more so than as is
generally the case with respect to Persons engaged in the same or similar lines
of business. Each such approval, permit, license, consent, authorization,
franchise, or certificate was duly and validly granted or issued, is in full
force and effect, and neither has been suspended, rescinded, revoked, forfeited,
or assigned to a party other than the Borrower or any of its Subsidiaries.
Further, no conditions exist or events have occurred that, with the giving of
notice or lapse of time or both, could result in the amendment, modification,
suspension, rescission, revocation, forfeiture, or non-renewal of any such
approval, permit, license, consent, authorization, franchise, or certificate.
(b) Each Related Professional Corporation and each of the Borrower's,
each of its Subsidiaries' and the Related Professional Corporations' employees,
officers, directors, and contractors providing professional medical services to
patients is, and has at all times been, while serving in such capacity (i) duly
licensed and certified (as and where required) by each regulatory body having
jurisdiction over services rendered by such Person, and (ii) eligible (as and
where required) to participate in Medicare, Medicaid, and other federal and
state funded health care reimbursement programs, where such failure to be
licensed, certified or eligible, as the case may be, could reasonably be
expected to have a Material Adverse Effect either individually or in the
aggregate.
SECTION 4.28 Labor Disputes; Collective Bargaining Agreement; Employee
Grievances. Except as set forth on Schedule 4.28 hereto: (a) as of the date
hereof, there are no collective bargaining agreements or other labor contracts
covering the Borrower or any other Loan Party; (b) as of the date hereof, no
such collective bargaining agreement or other labor contract will expire during
the term of this Agreement; (c) as of the date hereof, to the Borrower's
knowledge no union or other labor organization is seeking to organize, or to be
recognized as bargaining representative for, a bargaining unit of employees of
the Borrower or any other Loan Party; (d) to the Borrower's knowledge there is
no pending or threatened strike, work stoppage, material unfair labor practice
claim or charge, arbitration or other material labor dispute against or
affecting the Borrower or any of its Subsidiaries or their respective employees
which could reasonably be expected to have a Material Adverse Effect; (e) there
has not been, during the three (3) year period prior to the date hereof, a
strike, work stoppage, material unfair labor practice claim or charge,
arbitration or other material labor dispute against or affecting the Borrower or
any of its Subsidiaries or any of their
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respective employees, and (f) there are no actions, suits, charges, demands,
claims, counterclaims or proceedings pending or, to the Borrower's knowledge,
threatened against the Borrower or any of its Subsidiaries, by or on behalf of,
or with, its employees, other than employee grievances which could not
reasonably be expected to have a Material Adverse Effect.
SECTION 4.29 Senior Debt. All of the Obligations of the Borrower and
the Guarantors to the Agents and the Lenders under this Agreement and the other
Loan Documents constitute "Designated Senior Debt" as defined in the
Subordinated Notes Indenture and are permitted thereunder and there exists no
other "Designated Senior Debt."
The Borrower may, in addition to the reporting requirements set forth
in Section 7.18, at any time and from time to time, supplement or amend any one
or more of the other Schedules referred to in this Agreement (other than
Schedule I), and any representation or warranty contained herein which refers to
any such Schedule shall from and after the date of any such amendment refer to
such Schedule as so supplemented or amended; provided, however, that in no event
shall any such supplemented or amended disclosure cure any existing Default or
Event of Default.
ARTICLE 5
AFFIRMATIVE COVENANTS
So long as any Advance shall remain unpaid, any Letter of Credit shall
be outstanding or any Lender Party shall have any Commitment hereunder, the
Borrower will:
SECTION 5.1 Compliance with Law. Comply, cause each of its Subsidiaries
to comply and use its best efforts to cause the Related Professional
Corporations to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without limitation,
compliance with ERISA.
SECTION 5.2 Payment of Taxes, Etc. Timely pay and discharge, and cause
each of its Subsidiaries to timely pay and discharge, (a) all taxes, assessments
and governmental charges or levies imposed upon it or upon its property and (b)
all lawful claims that, if unpaid, might by law become a Lien upon its property
(other than a Permitted Lien); provided, however, that the Borrower and its
Subsidiaries shall not be required to pay or discharge any such tax, assessment,
charge or claim that is being contested in good faith and by proper proceedings
and as to which appropriate reserves are being maintained, unless and until any
Lien (other than a Permitted Lien) resulting therefrom attaches to its property
and becomes enforceable against the Borrower or any of its Subsidiaries.
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SECTION 5.3 Compliance with Environmental Laws. Comply, and cause each
of its Subsidiaries to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause each of
its Subsidiaries to obtain and renew all material Environmental Permits
reasonably necessary for its operations and properties; and conduct, and cause
each of its Subsidiaries to conduct, any investigation, study, sampling and
testing, and undertake any Removal, Remedial or other Response action necessary
to remove and clean up all Hazardous Materials from any of its properties, in
accordance with the requirements of all Environmental Laws; provided, however,
that the Borrower and its Subsidiaries shall not be required to undertake any
such cleanup, Removal, Remedial or Response action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and adequate reserves as determined by the Administrative Agent are being
maintained with respect to such circumstances.
SECTION 5.4 Maintenance of Insurance.
(a) Maintain, and cause each of its Subsidiaries to maintain, insurance
with responsible and reputable insurance companies or associations in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Borrower or such Subsidiary operates.
(b) In addition to, and without limiting the foregoing, the Borrower
and its Subsidiaries shall maintain or require the maintenance of medical
malpractice insurance with a responsible insurance company for or by and
covering each Related Professional Corporation and each of such Loan Party's or
Related Professional Corporation's respective employees, officers, directors or
contractors who provides professional medical services to patients, and naming
the relevant Loan Party as an additional insured. Such insurance shall cover
such casualties, risks and contingencies, shall be of the type and in amounts,
and may be subject to deductibles as are customarily maintained by Persons
employed or serving in the same or a similar capacity.
SECTION 5.5 Preservation of Corporate Existence, Etc. Except as
otherwise permitted hereunder, preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, its existence, legal structure, legal
name, material rights (charter and statutory), material permits, material
licenses, material approvals, material privileges and material franchises.
SECTION 5.6 Visitation Rights.
(a) At any reasonable time and from time to time during normal business
hours, upon reasonable notice, permit the Administrative Agent, or, during the
continuance of an Event of Default, the Lender Parties, or any agents or
representatives thereof, to examine and make copies of and abstracts from the
records and books of account of and visit the properties of the Borrower and its
Subsidiaries (and to the extent lawful, the Related Professional Corporations),
and to discuss
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the affairs, finances and accounts of the Borrower and any such Subsidiaries
with any of their officers or directors.
(b) Permit the Administrative Agent and the Lender Parties to conduct
such commercial finance examinations and/or Collateral audits of the Borrower
and its Subsidiaries during each calendar year as the Administrative Agent may
reasonably request; provided, that in the absence of the occurrence and
continuance of an Event of Default, the Administrative Agent and the Lender
Parties may conduct one (1) finance examination and one (1) collateral audit per
annum.
SECTION 5.7 Keeping of Books. Keep, and cause each of its Subsidiaries
and each of the Related Professional Corporations to keep, proper books of
record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower, each
Subsidiary and each Related Professional Corporation in accordance with GAAP.
SECTION 5.8 Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its properties
that are reasonably necessary in the conduct of its business in good working
order and condition, ordinary wear and tear and damage by casualty excepted and
except where the failure to so maintain and preserve could not be reasonably
expected to result in a Material Adverse Effect.
SECTION 5.9 Performance of Material Contracts. Perform and observe, and
cause each of its Subsidiaries to perform and observe, all of the terms and
provisions of each Material Contract to be performed or observed by it except
where the failure to so perform or observe could not be reasonably expected to
result in a Material Adverse Effect.
SECTION 5.10 Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under the Loan
Documents with any of their Affiliates (other than the Borrower or any of its
Wholly-Owned Subsidiaries) on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arms-length transaction with a Person not an Affiliate; provided,
that in any event the following shall be permitted: (i) the transactions
(including the payment of fees and expenses in connection therewith)
contemplated by the Recapitalization Documents, the Loan Documents and the
documents related to the Subordinated Debt, including without limitation the
payment of up to $8,600,000 of bonuses or other compensation to employees on or
about the Closing Date; (ii) the payment on the Closing Date, pursuant to a
management agreement in form and substance reasonably satisfactory to the
Agents, of one time consulting fees to the Sponsors and/or any of their
respective Affiliates in an amount not to exceed $3,700,000 in the aggregate
(plus out-of-pocket expenses incurred by the Sponsors and/or any of their
respective Affiliates in providing services to the Borrower); (iii) the payment
of Management Fees and expenses pursuant to and in accordance with the
Management Services Agreement; (iv) payments under any tax sharing agreement in
form and substance reasonably satisfactory to the Agents or arrangements
reasonably satisfactory to the
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Agents among the Borrower and other members of the affiliated group of
corporations of which the Borrower is the common parent; (v) reasonable and
customary directors' fees, indemnification of officers and directors and similar
arrangements and payments thereunder; (vi) dividends permitted to be paid
pursuant to and in accordance with Section 6.6; (vii) transactions pursuant to
management contracts with affiliated physicians entered into in the ordinary
course of business consistent with past practice; (viii) transactions pursuant
to any contract or agreement in effect on the date hereof and set forth on
Schedule 5.10, as amended modified or replaced so long as such amendment,
modification or replacement is not materially less favorable to the Borrower and
its Subsidiaries than the contract or agreement in effect on the date hereof.
SECTION 5.11 Agreement to Grant Additional Security.
(a) Promptly, and in any event within thirty (30) days after the
acquisition by the Borrower or any Subsidiary Guarantor of (i) assets of the
type that would have constituted Collateral at the date hereof and investments
of the type that would have constituted Collateral on the date hereof (other
than assets with a fair market value of less than $100,000), including the
capital stock of any direct or indirect Subsidiary of the Borrower or (ii) any
Mortgaged Property, notify the Administrative Agent of the acquisition of such
assets or investments or Mortgaged Property and, to the extent not already
Collateral in which the Administrative Agent has a perfected security interest
pursuant to the Collateral Documents, such assets and investments and Mortgaged
Property will become additional Collateral hereunder to the extent the
Administrative Agent deems the pledge of such assets or mortgage of such
Mortgaged Property practicable (the "Additional Collateral"), and the Borrower
will, and will cause each Subsidiary Guarantor to, take all necessary action,
including the filing of appropriate financing statements under the provisions of
the UCC, applicable foreign, domestic or local laws, rules or regulations in
each of the offices where such filing is necessary or appropriate to grant the
Administrative Agent a perfected Lien in such Collateral (or comparable interest
under foreign law in the case of foreign Collateral) or perfected mortgage on
such Mortgaged Property pursuant to and to the full extent required by the
Collateral Documents and this Agreement.
(b) Promptly, and in any event no later than thirty (30) days after a
request with respect thereto, cause each of the Borrower's direct and indirect
Domestic Subsidiaries (other than Immaterial Subsidiaries) as the Administrative
Agent shall request to become party to, or to execute and deliver a Subsidiary
Guaranty, guarantying to the Administrative Agent and the Lenders the prompt
payment, when and as due, of all Obligations of the Borrower and its
Subsidiaries under the Loan Documents, including all obligations under any Bank
Hedge Agreements.
(c) Promptly, and in any event no later than thirty (30) days after a
request with respect thereto, cause each Subsidiary Guarantor created or
established after the date hereof to grant to the Administrative Agent, for the
ratable benefit of the Lenders, a first priority Lien (subject to Liens
permitted pursuant to Section 6.1) on all property (tangible and intangible) of
such Subsidiary Guarantor, including, without limitation, all of the capital
stock of any of its Domestic Subsidiaries
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and (x) 65% (or such greater percentage which would not result in material
adverse tax consequences) of the Voting Stock and (y) 100% of the non-voting
stock of each Foreign Subsidiary, upon terms similar to those set forth in the
Collateral Documents and otherwise reasonably satisfactory in form and substance
to the Administrative Agent. The Borrower shall cause each Subsidiary Guarantor,
at its own expense, to become a party to a Security Agreement, an Intellectual
Property Security Agreement, a Mortgage (to the extent provided in clause (a)
above) and any other Collateral Document and to execute, acknowledge and
deliver, or cause the execution, acknowledgment and delivery of, and thereafter
register, file or record in any appropriate governmental office, any document or
instrument reasonably deemed by the Administrative Agent to be necessary or
desirable for the creation and perfection of the foregoing Liens (including
legal opinion, title insurance, consents, corporate documents and any additional
or substitute security agreements or mortgages or deeds of trust). The Borrower
will cause each such Subsidiary Guarantor to take all reasonable actions
requested by the Administrative Agent (including, without limitation, the filing
of UCC-1's) in connection with the granting of such security interests.
(d) Promptly, and in any event not later than thirty (30) days after a
request with respect thereto, (i) deliver to the Administrative Agent the
original of all instruments, documents and chattel paper, and all other
Collateral of which the Administrative Agent determines it should have physical
possession in order to perfect and protect its security interest therein, duly
pledged, endorsed or assigned to the Administrative Agent without restriction;
(ii) use reasonable efforts obtain landlord waivers, in form and substance
satisfactory to the Administrative Agent, with respect to any material Inventory
or other Collateral located at a location that is not owned by the Borrower or a
Subsidiary; (iii) deliver to the Administrative Agent warehouse receipts
covering any portion of the Inventory or other Collateral located in warehouses
and for which warehouse receipts are issued; (iv) when an Event of Default
exists, transfer Inventory to locations designated by the Administrative Agent;
(v) if any Collateral is at any time in the possession or control of any
warehousemen, bailee or the Borrower's agents or processors, notify the
Administrative Agent thereof and notify such person of the Administrative
Agent's security interest in such Collateral and to the extent requested by the
Administrative Agent and to the extent the value of such Collateral exceeds
$1,000,000 and use reasonable efforts to obtain a landlord waiver or bailee
letter, in form and substance satisfactory to the Administrative Agent, from
such person and instruct such person to hold all such Collateral for the
Administrative Agent's account subject to the Administrative Agent's
instructions; (vi) if at any time any Inventory or other Collateral with a value
individually in excess of $250,000 (or $1,000,000 in the aggregate with respect
to all such property) is located on any real property of the Borrower which is
subject to a mortgage or other Lien and to the extent requested by the
Administrative Agent, use reasonable efforts to obtain a mortgagee waiver, in
form and substance satisfactory to the Administrative Agent, from the holder of
each mortgage or other Lien on such real property; and (vii) to the extent not
inconsistent with the terms of this Agreement, take all such other actions and
obtain all such other agreements as the Administrative Agent may reasonably deem
necessary or desirable in respect of any Collateral.
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(e) The security interests required to be granted pursuant to this
Section shall be granted pursuant to the Collateral Documents or, in the
Administrative Agent's discretion, such other security documentation (which
shall be substantially similar to the Collateral Documents already executed and
delivered by the Borrower and the Guarantors) as is satisfactory in form and
substance to the Administrative Agent (the "Additional Collateral Documents")
and shall constitute valid and enforceable perfected security interests prior to
the rights of all third Persons and subject to no other Liens except Liens
permitted under Section 6.1. The Additional Collateral Documents and other
instruments related thereto shall be duly recorded or filed in such manner and
in such places and at such times as are required by law to establish, perfect,
preserve and protect the Liens, in favor of the Administrative Agent, for the
benefit of the Lender Parties, granted pursuant to the Additional Collateral
Documents and, all taxes, fees and other charges payable in connection therewith
shall be paid in full by the Borrower. At the time of the execution and delivery
of Additional Collateral Documents, the Borrower shall cause to be delivered to
the Administrative Agent such agreements, opinions of counsel, and other related
documents as may be reasonably requested by the Administrative Agent or the
Required Lenders to assure themselves that this Section has been complied with.
SECTION 5.12 Interest Rate Protection. In the event that the Borrower
has less than $150,000,000 of fixed rate Debt outstanding on the Closing Date,
then within ninety (90) days following the Closing Date, the Borrower shall
obtain and thereafter keep in effect one or more interest rate Hedge Agreements
(the terms and other provisions of all such Hedge Agreements to be subject to
the prior written consent of the Administrative Agent) covering an amount equal
to the difference between (a) $150,000,000 and (b) the amount of such fixed rate
Debt outstanding, for an aggregate period of not less than three (3) years
commencing on the Closing Date.
SECTION 5.13 Performance of Recapitalization Documents. Perform and
observe, or cause the relevant Subsidiary to perform and observe, all of the
terms and provisions of each Recapitalization Document to be performed or
observed by it or such Subsidiary, maintain each such Recapitalization Document
in full force and effect, enforce each such Recapitalization Document in
accordance with its terms, take all such action to such end as may be from time
to time requested by the Administrative Agent and, upon request of the
Administrative Agent, make such demands and requests for action or for
information and reports as the Borrower or any Subsidiary is entitled to make
under any Recapitalization Document.
SECTION 5.14 Year 2000 Compatibility. Take all commercially reasonable
action necessary to assure that its computer based systems, hardware and
software used in the Borrower's and its Subsidiaries' and the Related
Professional Corporations' business and operations will be able to operate and
effectively receive, transmit, process, store, retrieve or retransmit data
including dates on and after January 1, 2000, and, at the request of the
Administrative Agent, the Loan Parties shall provide evidence to the
satisfaction of the Administrative Agent of such year 2000 compatibility.
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SECTION 5.15 Assignment of Claims. If required by the Administrative
Agent, the Borrower shall, within a reasonable period of time as specified by
the Agent, deliver or cause to be delivered all documents necessary or desirable
in order to comply with all applicable federal and state assignment of claims
acts, statutes or regulations.
SECTION 5.16 Cash Concentration Account. Promptly, and in any event not
later than ninety (90) days after the Closing Date, the Borrower, at its own
expense, shall cause the institution or institutions (which shall be reasonably
acceptable to the Administrative Agent) (collectively, the "Lockbox Banks") with
which the Borrower and its Subsidiaries maintain lockbox arrangements and
accounts with respect to Receivables (collectively, the "Lockbox Accounts") to
enter into arrangements reasonably acceptable to the Administrative Agent
pursuant to which such Lockbox Banks shall transfer all funds from such Lockbox
Accounts as are agreed to between the Borrower and the Administrative Agent on a
basis reasonably acceptable to the Administrative Agent into a concentration
account or accounts(collectively, the "Cash Concentration Account") in the sole
control and dominion of the Administrative Agent, such Cash Concentration
Account to be governed by the terms of agreements in form and substance
satisfactory to the Administrative Agent. Prior to the occurrence of a Default
or Event of Default, amounts deposited in the Cash Concentration Account shall
be either made available to, or actually disbursed by the Administrative Agent
to, the Borrower on a daily basis into an account or accounts designated by the
Borrower or as otherwise directed by the Borrower. Following the Closing Date,
neither the Borrower nor any of its Subsidiaries shall establish any deposit
account relating to the accounts described in this Section 5.16 other than in
accordance with this Section 5.16.
ARTICLE 6
NEGATIVE COVENANTS
So long as any Advance shall remain unpaid, any Letter of Credit shall
be outstanding or any Lender Party shall have any Commitment hereunder, the
Borrower will not, at any time, without the prior consent of the Required
Lenders:
SECTION 6.1 Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character (including,
without limitation, Accounts, Inventory and other Collateral) whether now owned
or hereafter acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform Commercial
Code or any other statute of any jurisdiction, a financing statement that names
the Borrower or any of its Subsidiaries as debtor, or sign or suffer to exist,
or permit any of its Subsidiaries to sign or suffer to exist, any security
agreement authorizing any secured party thereunder to file any such financing
statement,
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or assign, or permit any of its Subsidiaries to assign, any accounts or other
right to receive income, excluding, however, from the operation of the foregoing
restrictions the following:
(a) Liens created under the Loan Documents;
(b) Permitted Liens;
(c) Liens existing on the date hereof and described on Schedule 6.1(c);
(d) Purchase money Liens securing Debt permitted under Section
6.2(c)(i) upon real property or Equipment acquired or held by the Borrower or
any of its Subsidiaries in the ordinary course of business to secure the
purchase price of such real property or Equipment or to secure Debt incurred
solely for the purpose of financing the acquisition, construction or improvement
of any such real property or Equipment to be subject to such Liens, or Liens
existing on any such real property or Equipment at the time of acquisition
(whether in a stock or asset transaction) (other than any such Liens created in
contemplation of such acquisition that do not secure the purchase price), or
extensions, renewals or replacements of any of the foregoing for the same or a
lesser amount; provided, however, that no such Lien shall extend to or cover any
property other than the real property or Equipment being acquired, constructed
or improved, and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the Lien being extended, renewed
or replaced;
(e) Liens arising in connection with Capitalized Leases permitted under
Section 6.2(c)(i); provided, that no such Lien shall extend to or cover any
Collateral or any assets other than the assets subject to such Capitalized
Leases;
(f) Liens securing Debt permitted under Section 6.2(c)(i) on property
or assets acquired pursuant to a Permitted Acquisition, or on property or assets
of a Subsidiary of the Borrower in existence at the time such Subsidiary is
acquired pursuant to a Permitted Acquisition, provided that such Liens are not
incurred in connection with or in anticipation of such Permitted Acquisition and
do not attach to any other asset of the Borrower or any of its Subsidiaries
(g) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.7;
(h) Licenses, leases or subleases granted to third Persons in the
ordinary course of business not interfering in any material respect with the
business of the Borrower or any of its Subsidiaries;
(i) Liens arising from precautionary UCC financing statements regarding
operating leases not constituting Debt or consignments;
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(j) Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto;
(k) Liens consisting of rights of set-off of a customary nature or
bankers' liens on amounts on deposit, whether arising by contract or operation
of law, incurred in the ordinary course of business so long as such deposits are
not intended to be collateral for any obligation;
(l) Liens incurred in the ordinary course of business of the Borrower
or any Subsidiary of the Borrower with respect to obligations (other than for
Debt for borrowed money) that do not exceed $5,000,000 at any one time
outstanding
(m) The replacement, extension or renewal of any Lien permitted by
clauses (b) through (l) above upon or in the same property theretofore subject
thereto in connection with the replacement, extension or renewal (without
increase in the amount or any change in any direct or contingent obligor) of the
Debt secured thereby.
SECTION 6.2 Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any Debt
other than:
(a) Debt incurred pursuant to the Loan Documents;
(b) In the case of any of the Subsidiaries of the Borrower, Debt owed
to the Borrower or to a Subsidiary of the Borrower; provided, that if such Debt
is owed by a Subsidiary of the Borrower which is not a Guarantor such Debt shall
be evidenced by a promissory note, such promissory note shall be pledged to the
Administrative Agent pursuant to the terms of the Security Agreement and there
shall be no restrictions whatsoever on the ability of such Subsidiary to repay
such Debt;
(c) In the case of the Borrower and any of its Subsidiaries:
(i) Debt (A) secured by Liens permitted by Section 6.1(d), (B)
Capitalized Leases and (C) of the Borrower or any Subsidiary acquired
pursuant to a Permitted Acquisition or permitted Investment (or Debt
assumed at the time of a Permitted Acquisition or permitted Investment
of any asset securing such Debt), provided that such Debt was not
incurred in connection with, or in anticipation or contemplation of,
such Permitted Acquisition or permitted Investment, collectively not to
exceed in the aggregate $5,000,000 at any time outstanding;
(ii) endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business;
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(iii) Subordinated Debt incurred pursuant to the Subordinated
Debt Financing; provided, that the Net Cash Proceeds of any such Subordinated
Debt issued after the Closing Date shall be used to prepay the Advances then
outstanding in accordance with Section 2.6(b)(iii), except that up to
$25,000,000 of such Net Cash Proceeds may be used to pay the purchase price of a
Permitted Acquisition;
(iv) Debt existing on the date hereof and described on
Schedule 6.2(c);
(v) Debt in respect of Hedge Agreements entered into in the
ordinary course of business to protect the Borrower or any of its
Subsidiaries against fluctuations in interest rates or currency values;
(vi) unsecured Debt consisting of promissory notes issued by
the Borrower to officers, directors and employees of the Borrower or
any Subsidiary of the Borrower issued to purchase or redeem capital
stock of the Borrower to the extent that payment of cash on such
promissory notes is permitted hereunder and so long as such promissory
notes are expressly subordinate to the Obligations of the Borrower and
the Subsidiary Guarantors under the Loan Documents on terms reasonably
acceptable to the Administrative Agent;
(vii) Debt consisting of Qualified Debt Securities of the
Borrower or any of its Subsidiaries incurred by it in connection with
Permitted Acquisitions plus the amount of interest on such Qualified
Debt Securities paid in kind or through accretion or capitalization to
the extent that incurrence thereof would not result in an Event of
Default under any of the financial covenants set forth in Article 8;
(viii) Debt incurred in connection with the financing of
insurance premiums (excluding tail medical malpractice insurance) in an
amount not to exceed lesser of $20,000,000 and the premiums with
respect to the applicable insurance policies;
(ix) Debt constituting Guaranteed Obligations permitted under
Section 6.18;
(x) Debt in respect of any of the Recapitalization Documents
as in effect on the date hereof, including, without limitation, the
Earnout Obligations;
(xi) Obligations in respect of the Preferred Stock;
(xii) refinancings of any Debt originally incurred as
permitted by this Section 6.2(c)(i), (iv), (vi), (vii) and (x);
provided, that the terms of any such refinancing of such Debt, and of
any agreement entered into and of any instrument issued in connection
therewith, shall be on substantially the same terms as the agreements
and instruments in existence on the date hereof and otherwise permitted
by this Agreement and the other Loan
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Documents; and, provided, further, that the principal amount of such
Debt shall not be increased above the principal amount thereof
outstanding on the date hereof and the direct and indirect obligors
therefor shall not be changed, as a result of or in connection with
such refinancing and any Debt which is subordinate to the Obligations
shall remain subordinate on substantially the same terms or on such
other terms as may be approved by the Administrative Agent;
(xiii) other Debt not expressly permitted above in an
aggregate amount together with the amount of Guaranteed Obligations
incurred pursuant to Section 6.18(k) not to exceed $15,000,000 at any
time outstanding.
SECTION 6.3 Fundamental Changes; Acquisitions.
(a) Merge into or consolidate with any Person or permit any Person to
merge into it, or permit any of its Subsidiaries to do so, except that so long
as no Default or Event of Default shall have occurred and be continuing and so
long as no Default or Event of Default would result therefrom, any Subsidiary of
the Borrower may merge into or consolidate with any other Subsidiary of the
Borrower or the Borrower, as the case may be, provided that in the case of any
such merger or consolidation, the Person resulting from such merger or
consolidation shall be the Borrower or a Wholly Owned Subsidiary of the
Borrower, as the case may be;
(b) Liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), convey, sell, assign, lease, transfer or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or substantially all of
its property, business or assets, or permit any of its Subsidiaries to do any of
the foregoing, except that so long as no Default or Event of Default shall have
occurred and be continuing and so long as no Default or Event of Default would
result therefrom, any Subsidiary of the Borrower may liquidate itself into any
other Subsidiary of the Borrower or the Borrower, as the case may be;
(c) Acquire or permit any Subsidiary to acquire all or substantially
all of the assets or any division or line of business of any other Person
(including capital stock), except that the Borrower and Subsidiary Guarantors
may consummate (i) Permitted Acquisitions and (ii) the transfers contemplated by
Sections 6.4(e) and (f).
SECTION 6.4 Sales, Etc. of Assets. Sell, lease (as lessor), transfer or
otherwise dispose of, or permit any of its Subsidiaries to sell, lease (as
lessor), transfer or otherwise dispose of, any assets or grant any option or
other right to purchase, lease or otherwise acquire any assets, except:
(a) Sales of Inventory and Cash Equivalents in the ordinary course of
business;
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(b) Sales of obsolete or worn-out Equipment and Intellectual Property
in the ordinary course of business;
(c) Sales or discounts of overdue accounts receivable in the ordinary
course of business on customary terms and conditions;
(d) Leases or subleases of real property or licenses or sublicenses of
Intellectual Property in each case in the ordinary course of business;
(e) The Borrower may transfer assets to any Subsidiary Guarantor and
may make Investment in other Subsidiaries to the extent permitted by Section
6.5(a);
(f) Any Subsidiary of the Borrower may transfer assets to the Borrower
or to any Subsidiary Guarantor or make an Investment in other Subsidiaries to
the extent permitted under Section 6.5(a);
(g) The sale of any asset by the Borrower or any of its Subsidiaries
(other than an asset included in Section 6.4(a) through (f)) so long as (i) the
purchase price paid to the Borrower or such Subsidiary for such asset shall be
no less than the fair market value of such asset at the time of such sale, (ii)
the purchase price for such asset shall be paid to the Borrower or such
Subsidiary at least seventy-five percent (75%) in cash and (iii) the aggregate
Net Proceeds received by the Borrower and all of its Subsidiaries for such asset
and all other assets sold by the Borrower and its Subsidiaries (other than an
asset included in Section 6.4(a) through (f)) in any Fiscal Year pursuant to
this clause (g) shall not exceed $7,500,000; provided, that the Borrower and its
Subsidiaries may sell or exchange specific items of Equipment, so long as the
purpose of each sale or exchange is to acquire (and results within 180 days of
such sale or exchange in the acquisition of) replacement items of Equipment
which are, in the reasonable business judgment of the Borrower and its
Subsidiaries, the functional equivalent of the item of Equipment so sold or
exchanged;
provided that (i) in the case of sales of assets pursuant to Section 6.4(g), the
Borrower shall apply the Net Cash Proceeds from such sale in accordance with
Section 2.6(b)(ii) and (ii) to the extent the Required Lenders waive the
provisions of this Section with respect to the sale or other disposition of any
Collateral, or any Collateral is sold or disposed of as permitted by this
Section, such Collateral in each case shall be sold or otherwise disposed of
free and clear of the Liens created by the Loan Documents and the Administrative
Agent shall take such actions as are appropriate in connection therewith.
SECTION 6.5 Investments. Make or hold, or permit any of its
Subsidiaries to make or hold, any Investment in any Person other than (each of
the following, a "Permitted Investment"):
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(a) Investments by the Borrower and its Subsidiaries in their
Subsidiaries outstanding on the date hereof and described on Schedule 6.5(a),
and additional investments in new or existing Wholly Owned Subsidiaries of the
Borrower; provided, however, that no more than an aggregate amount equal to
$2,000,000 shall be invested from the date hereof in Foreign Subsidiaries; and,
provided, further, that with respect to Investments in any newly acquired (to
the extent such acquisition is permitted hereunder) or created Wholly Owned
Subsidiary (other than a Foreign Subsidiary or an Immaterial Subsidiary), any
such Subsidiary shall become a Guarantor pursuant to the terms of the Subsidiary
Guaranty and an additional grantor pursuant to the terms of the Security
Agreement and Intellectual Property Security Agreement and otherwise comply with
Section 5.11;
(b) Loans and advances to officers, other employees and independent
contractor physicians in the ordinary course of the business of the Borrower and
its Subsidiaries in an aggregate principal amount not to exceed $2,000,000 at
any time outstanding;
(c) Advances of salary to independent contractor physicians in the
ordinary course of business of the Borrower and its Subsidiaries;
(d) Investments by the Borrower and its Subsidiaries in Cash
Equivalents;
(e) Investments by the Borrower and its Subsidiaries in Hedge
Agreements permitted under Section 5.12 and Section 6.2;
(f) Investments consisting of intercompany Debt permitted under Section
6.2(b) or 6.18(i) and (j);
(g) Investments existing on the date hereof and described on Schedule
6.5(g) hereto;
(h) Investments by the Borrower and its Subsidiaries in deposit
accounts opened and maintained in the ordinary course of business;
(i) Investments consisting of accounts receivable in the ordinary
course of business;
(j) Investments in the form of Permitted Acquisitions;
(k) Investments required to be made pursuant to the Recapitalization
Documents as in effect on the date hereof;
(l) The Borrower and its Subsidiaries may receive and own Investments
acquired as non-cash consideration received in connection with an Asset
Disposition permitted by Section 6.4(g);
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(m) The Borrower and its Subsidiaries may make pledges and deposits
permitted under Section 6.1;
(n) The Borrower and its Subsidiaries may acquire and own Investments
(including Debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in good faith settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business and past due accounts;
(o) The Borrower and its Subsidiaries may hold Investments to the
extent such Investments reflect an increase in the value of Investments and
would otherwise exceed the limitations of this Section 6.5;
(p) Transfers of assets to Related Professional Corporations to the
extent required under the express contractual terms of applicable management
contracts in the ordinary course of business;
(q) Investments consisting of notes payable from employees for the
purchase price of stock in connection with the issuance of such stock;
(r) Investments in the form of loans by the Borrower or any of its
Subsidiaries to Related Professional Corporations in the ordinary course of
business; provided, that such loans shall be evidenced by promissory notes and
such promissory notes shall be pledged to the Administrative Agent pursuant to
the terms of the Security Agreement;
(s) Investments made by the Borrower or any of its Subsidiaries solely
with the proceeds from issuances of capital stock of the Borrower to any Sponsor
or a Related Party after the date hereof; provided, that the capital
contribution made by such Sponsor or such Related Party in connection with such
issuance was made solely for the purpose of permitting the Borrower making of
such Investment; and
(t) Other Investments not expressly permitted above in an aggregate
amount outstanding at any time not in excess of $5,000,000.
SECTION 6.6 Dividends, Etc. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its capital stock
or any warrants, rights or options to acquire such capital stock, now or
hereafter outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options, obligations or
securities to its stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit any of its
Subsidiaries to do any of the foregoing or permit any of its Subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any capital
stock of the Borrower or any warrants, rights or options to acquire such capital
stock or to issue or sell any such capital stock or any warrants, rights or
options to acquire such capital stock, except:
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(a) The Borrower may declare and pay dividends and distributions
payable solely in common stock of the Borrower;
(b) A Subsidiary of the Borrower may declare and pay dividends and
distributions to its stockholders ratably in accordance with their interests;
(c) The Borrower may consummate the Recapitalization;
(d) For issuances of stock expressly permitted by Section 6.17;
(e) the repurchase, redemption or other acquisition or retirement for
value of any capital stock of the Borrower held by any members or former member
of the Borrower's (or any of its Subsidiaries') management; provided, however,
that the aggregate price paid shall not exceed (x) $2,000,000 in any Fiscal Year
and $5,000,000 in the aggregate during the term of this Agreement, plus (y) the
aggregate cash proceeds received by the Borrower from any issuance or reissuance
of capital stock by the Borrower to members of management of the Borrower and
its Subsidiaries and the net proceeds to the Borrower of any "key-man" life
insurance policies;
(f) The declaration or payment of dividends to satisfy any required
purchase price adjustment payment arising out of the Recapitalization;
(g) Repurchases of capital stock deemed to occur upon the exercise of
stock options to the extent the value of such capital stock represents all or a
portion of the exercise price thereof;
(h) The Borrower and its Subsidiaries may pay regularly scheduled
dividends on the Preferred Stock pursuant to the terms thereof solely through
the issuance of additional interests of such Preferred Stock, or by an increase
in the liquidation preference thereof; and
(i) The Borrower and its Subsidiaries may issue its common stock to
holders of Preferred Stock upon the conversion thereof in accordance with the
terms thereof.
SECTION 6.7 Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business (and
businesses reasonably related thereto) as carried on at the date hereof.
SECTION 6.8 Charter Amendments. Amend, or permit any of its
Subsidiaries to amend, its certificate or articles of incorporation or bylaws if
such amendment would adversely affect (i) The Borrower's or such Subsidiary's
capacity to perform its obligations under the Loan Documents to which it is a
party or (ii) the interests or rights of the Administrative Agent or any Lender
Party under the Loan Documents.
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SECTION 6.9 Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (a) accounting policies or
reporting practices, except as mandated by GAAP, or (b) its Fiscal Year.
SECTION 6.10 Prepayments, Etc. of Debt. (a) Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in any
manner, or make any payment in violation of any subordination terms of, any
Subordinated Debt or Qualified Debt Securities, other than the exchange of
Subordinated Notes with Subordinated Notes in accordance with the Subordinated
Note Indenture or (b) amend, modify or change in any manner any term or
condition of any Subordinated Debt or Qualified Debt Securities.
SECTION 6.11 Amendment, Etc. of Recapitalization Documents. Cancel or
terminate (other than in accordance with its terms) any Recapitalization
Document or consent to or accept any cancellation or termination thereof (other
than in accordance with its terms), amend, modify or change in any materially
adverse manner any term or condition of any Recapitalization Document or the
Management Services Agreement or give any consent, waiver or approval
thereunder, waive any default under or any breach of any term or condition of
any Recapitalization Document or take any other action in connection with any
Recapitalization Document or the Management Services Agreement that would, in
any such case, materially impair the value of the interests or rights of the
Borrower thereunder, or would materially impair the interests or rights of the
Administrative Agent or any Lender Party, or permit any of its Subsidiaries to
do any of the foregoing; provided, that in no event shall the Borrower or any of
its Subsidiaries amend, modify or change the Management Services Agreement so as
to increase the Management Fees payable thereunder.
SECTION 6.12 Limitation on Certain Restrictions on Subsidiaries. Create
or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends
or make any other distributions on its capital stock or pay any Debt or other
Obligations owed to the Borrower or any of its other Subsidiaries, (ii) make any
loans or advances to the Borrower or any of its other Subsidiaries or (iii)
transfer any of its property or assets to the Borrower or any of its other
Subsidiaries, except:
(a) those contained in the Loan Documents or the documents
related to the Subordinated Debt;
(b) any such encumbrance or restriction consisting of
customary non-assignment provisions in contractual obligations and are entered
into in the ordinary course of business to the extent such provisions restrict
the transfer of the lease or license or assignment of such agreement; and
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(c) in the case of clause (iii) above, Permitted Liens or
other restrictions contained in security agreements securing Debt permitted by
Section 6.2(c)(i) to the extent such restrictions restrict the transfer of such
asset;
SECTION 6.13 Negative Pledge. Enter into or suffer to exist, or permit
any of the Subsidiaries of the Borrower to enter into or suffer to exist, any
agreement prohibiting or conditioning the creation or assumption of any Lien
upon any of its properties or assets, other than as provided in the Loan
Documents, the documents related to the Subordinated Debt and other than
restrictions contained in security agreements securing Debt permitted by Section
6.2(c)(i) to the extent such restrictions restrict the transfer of such asset.
SECTION 6.14 Partnerships, New Subsidiaries.
(a) Become a general partner in any general or limited partnership or
joint venture (other than as expressly permitted pursuant to Section 6.5(a) and
(q)), or permit any of its Subsidiaries to do so, or
(b) Create any new Subsidiary, unless the Borrower and such Subsidiary
comply with Section 5.11, including, without limitation, by causing such newly
created Domestic Subsidiary (other than Immaterial Subsidiaries) to become a
Guarantor pursuant to the terms of the Subsidiary Guaranty and an additional
grantor pursuant to the terms of the Security Agreement and Intellectual
Property Security Agreement and the shares of the capital stock of such
Subsidiary to be pledged to the Administrative Agent pursuant to the Security
Agreement to the extent required thereunder.
SECTION 6.15 Speculative Transactions. Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options or
futures contracts or derivatives or any similar speculative transactions, except
for Hedge Agreements expressly permitted under Section 5.12 or Section
6.2(c)(v).
SECTION 6.16 Capital Expenditures. Make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the aggregate of
all such Capital Expenditures made by the Borrower and its Subsidiaries in any
period set forth below to exceed the amount set forth below for such period.
Period Amount
------ ------
Fiscal Year 1999 $17,000,000
Fiscal Year 2000 $12,000,000
Fiscal Year 2001 $12,000,000
Fiscal Year 2002 $13,000,000
Fiscal Year 2003 $13,000,000
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Fiscal Year 2004 $14,000,000
Fiscal Year 2005 $15,000,000
; provided, however, that amounts permitted to be expended in a Fiscal Year that
are not expended in such fiscal year, but not in excess of one hundred (100%)
percent of such prior year's unused amount (not including any amount permitted
to be carried forward from a prior year) shall be permitted to be expended in
(but only in) the subsequent fiscal year. For purposes of this Section 6.16,
Capital Expenditures shall not include (i) expenditures constituting the
purchase price for any Permitted Acquisition, (ii) expenditures from proceeds of
insurance settlements, condemnation awards and other settlements in respect of
lost, destroyed, damaged or condemned assets or property to the extent such
proceeds are used within 180 days of receipt to replace assets or property so
lost, destroyed, damages or condemned and (iii) expenditures to the extent that
such expenditures constitute a reinvestment of Net Cash Proceeds from any Asset
Disposition permitted under this Agreement, which reinvestment is made within
180 days after receipt of such Net Cash Proceeds.
SECTION 6.17 Issuance of Stock. The Borrower will not, and will not
permit any of its Subsidiaries to, directly or indirectly, issue, sell, assign,
pledge or otherwise encumber or dispose of any shares of capital stock of the
Borrower or any Subsidiary of the Borrower, except (a) to the Borrower, (b) to
qualify directors if required by applicable law, (c) as set forth in Schedule
6.17, (d) pursuant to the Recapitalization in accordance with the
Recapitalization Documents, (e) issuances of common stock of the Borrower to
management and employees of the Borrower, pursuant to a stock option or grant
plan or the exercise of options issued pursuant thereto and (f) other issuances
of common stock or Preferred Stock of the Borrower (i) in connection with a
Permitted Acquisition, (ii) to any other Person so long as such common stock is
pledged to the Administrative Agent for the ratable benefit of the Lender
Parties to secure the Obligations of the Borrower and the Subsidiary Guarantors
under the Loan Documents, provided, however, that common stock issued in
connection with an Initial Public Offering shall not be required to be so
pledged, or (iii) to MedPartners pursuant to its preemptive rights existing on
the date hereof.
SECTION 6.18 Guaranteed Obligations. Create, incur, assume or permit to
exist, or permit any of its Subsidiaries to create, incur, assume or permit to
exist, any Guaranteed Obligations except
(a) by endorsement of instruments or items of payment for deposit to
the general account of any Loan Party;
(b) for Guaranteed Obligations existing on the date hereof and set
forth on Schedule 6.18;
(c) guarantees by the Borrower or its Subsidiaries of Debt expressly
permitted under Section 6.2; provided, that guarantees of Subordinated Debt
shall be subordinated on substantially similar terms;
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(d) the Borrower and its Subsidiaries may become and remain liable with
respect to contingent obligations in the form of customary indemnifications for
agents, employees, consultants, officers and directors of such Loan Party;
(e) the Borrower and the Subsidiaries may become and remain liable with
respect to contingent obligations in the form of customary and reasonable
indemnification provisions or customary purchase price adjustments (based on
post-closing audit adjustments) incurred in connection with acquisitions or
sales or assets permitted hereunder to be made by the Borrower or any
Subsidiary;
(f) the Borrower and its Subsidiaries may become and remain liable with
respect to guarantees in favor of the Lenders and the Agent executed and
delivered pursuant hereto;
(g) for performance, surety, bid, appeal and other similar bonds as
expressly permitted under Section 6.1 or the definition of Permitted Liens;
(h) The Borrower and Subsidiaries may incur Guaranteed Obligations in
respect of employment arrangements and other compensation arrangements entered
into in connection with Permitted Acquisitions or otherwise in the ordinary
course of business;
(i) The Borrower may incur Guaranteed Obligations in respect of
obligations of Subsidiary Guarantors arising in the ordinary course of business;
(j) Subsidiary Guarantors may incur Guaranteed Obligations in respect
of obligations of the Borrower or other Subsidiary Guarantors arising in the
ordinary course of business;
(k) the Borrower and its Subsidiaries may incur Guaranteed Obligations
in an aggregate amount together with the Debt incurred pursuant to Section
6.2(c)(xiii) not to exceed $15,000,000 at any one time outstanding.
SECTION 6.19 Management Fees. Pay, or be or become obligated to pay,
any Management Fees to any Person, or any interest on any deferred obligation
therefor, including, without limitation, to any shareholder, director, officer
or employee of the Borrower or any Loan Party; provided, however, that so long
as no Event of Default has occurred and is continuing or would occur after
giving effect thereto, the Borrower and its Subsidiaries may make payments
pursuant to and in accordance with the Management Services Agreement; provided,
further, that notwithstanding the preceding proviso, the Borrower may pay the
out-of-pocket costs of the Sponsors incurred pursuant to and in accordance with
the Management Services Agreement during the existence and continuance of an
Event of Default.
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ARTICLE 7
REPORTING REQUIREMENTS
So long as any Advance shall remain unpaid, any Letter of Credit shall
be outstanding or any Lender Party shall have any Commitment hereunder, the
Borrower will furnish to the Administrative Agent and Lender Parties (for
purposes of this Article 7 and each of the defined terms used herein, references
to "Subsidiaries" and "Loan Parties" shall be deemed to include the Related
Professional Corporations):
SECTION 7.1 Default Notice. As soon as possible and in any event within
two (2) Business Days after a Responsible Officer of the Borrower obtains
knowledge of the occurrence of any Default or any event, development or
occurrence reasonably likely to have a Material Adverse Effect, a statement of
the Chief Financial Officer of the Borrower setting forth details of such
Default or event, development or occurrence and the action that the Borrower has
taken and proposes to take with respect thereto.
SECTION 7.2 Monthly Financials. As soon as available and in any event
within thirty (30) days after the end of each month which is not a fiscal
quarter end, a Consolidated balance sheet of the Borrower and its Subsidiaries,
as of the end of such month and a Consolidated statement of income and a
Consolidated statement of cash flows of the Borrower and its Subsidiaries, for
the period commencing at the end of the previous month and ending with the end
of such month and Consolidated statement of income and a Consolidated statement
of cash flows of the Borrower and its Subsidiaries, for the period commencing at
the end of the previous Fiscal Year and ending with the end of such month,
setting forth in each case in comparative form the corresponding figures for the
corresponding period of the prior Fiscal Year, all in reasonable detail and duly
certified by the chief financial officer of the Borrower.
SECTION 7.3 Quarterly Financials. As soon as available and in any event
within forty-five (45) days after the end of each fiscal quarter of each Fiscal
Year, a Consolidated balance sheet of the Borrower and its Subsidiaries, and
consolidating balance sheets of the Borrower and its Subsidiaries, as of the end
of such quarter and a Consolidated statement of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries, and consolidating
statements of income and consolidating statements of cash flows of the Borrower
and its Subsidiaries, for the period commencing at the end of the previous
fiscal quarter and ending with the end of such fiscal quarter and a Consolidated
statement of income and a Consolidated statement of cash flows of the Borrower
and its Subsidiaries and consolidating statements of income and consolidating
statements of cash flows of the Borrower and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending with the end of
such fiscal quarter, setting forth in each case in comparative
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form the corresponding figures for the corresponding period of the preceding
Fiscal Year (provided that with respect to the first four (4) quarters following
the Closing Date, such comparative financial statements shall be prepared on a
pro forma basis after giving effect to the Transaction) and the corresponding
figures from the budgets for such period and for the Fiscal Year which includes
such period, all in reasonable detail and duly certified by the Chief Financial
Officer of the Borrower as having been prepared (except for the pro forma
comparative financial statements) in accordance with GAAP (subject to normal
year-end audit adjustments and the absence of footnotes), together with (i) a
certificate of said officer stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the Borrower has taken and proposes to
take with respect thereto and (ii) a schedule in form and detail satisfactory to
the Administrative Agent of the computations used by the Borrower in determining
compliance with the financial covenants contained in Article 8, provided, that
in the event of any change in GAAP used in the preparation of such financial
statements, the Borrower shall also provide, if necessary for the determination
of compliance with Article 8, a statement of reconciliation conforming such
financial statements to GAAP.
SECTION 7.4 Annual Financials. As soon as available and in any event
within ninety (90) days after the end of each Fiscal Year, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries, including
therein a Consolidated balance sheet of the Borrower and its Subsidiaries, and
consolidating balance sheets of Borrower and its Subsidiaries, as of the end of
such Fiscal Year and a Consolidated statement of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries, and consolidating
statements of income and consolidating statements of cash flows of the Borrower
and its Subsidiaries, for such Fiscal Year, in each case setting forth in
comparative form the corresponding figures for the prior Fiscal Year (provided
that respect to the first Fiscal Year following the Closing Date, such
comparative financial statements shall be prepared on a pro forma basis after
giving effect to the Transaction) and the corresponding figures from the budget
for such Fiscal Year and in each case accompanied (in the case of such
Consolidated financial statements) by an opinion of Ernst & Young LLP or other
independent certified public accountants of recognized national standing
acceptable to the Administrative Agent, (which opinion shall contain no
qualification with respect to the continuance of the Borrower and its
Subsidiaries as going concerns and shall state that such financial statements
fairly present in all material respects the financial position of the Borrower
and its Subsidiaries as at the dates indicated and the results of their
operations and cash flow for the periods indicated, in each case in conformity
with GAAP), together with (a) a letter of such accounting firm to the
Administrative Agent and Lender Parties stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries, which audit
was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a
Default has occurred and is continuing, or if, in the opinion of such accounting
firm, a Default has occurred and is continuing, a statement as to the nature
thereof; provided, that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also provide, if
necessary for the determination of compliance with Article 8, a statement of
reconciliation conforming such
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financial statements to GAAP, (b) a certificate of the Chief Financial Officer
of the Borrower stating that no Default has occurred and is continuing or, if a
Default has occurred and is continuing, a statement as to the nature thereof and
the action that the Borrower has taken and proposes to take with respect thereto
and (c) a schedule in form and detail satisfactory to the Administrative Agent
of the computations used by the Borrower in determining compliance with the
financial covenants contained in Article 8, provided, that in the event of any
change in GAAP used in the preparation of such financial statements, the
Borrower shall also provide, if necessary for the determination of compliance
with Article 8, a statement of reconciliation conforming such financial
statements to GAAP.
SECTION 7.5 Annual Forecasts. As soon as available and in any event no
later than sixty (60) days after the end of each Fiscal Year, (i) forecasts
prepared by management of the Borrower, including balance sheets, income
statements and cash flow statements on a quarterly basis, and (ii) to the extent
prepared, a business plan, in each case for the Fiscal Year following such
Fiscal Year then ended and in form reasonably satisfactory to the Administrative
Agent.
SECTION 7.6 ERISA Events and ERISA Reports. (i) Promptly and in any
event within twenty (20) days after the Borrower or any ERISA Affiliate knows or
has reason to know that any ERISA Event has occurred, a statement of the Chief
Financial Officer of the Borrower describing such ERISA Event and the action, if
any, that the Borrower or such ERISA Affiliate has taken and proposes to take
with respect thereto and (ii) on the date any records, documents or other
information must be furnished to the PBGC with respect to any Plan pursuant to
Section 4010 of ERISA, a copy of such records, documents and information.
SECTION 7.7 Plan Terminations. Promptly and in any event within five
(5) Business Days after receipt thereof by the Borrower or any ERISA Affiliate,
copies of each notice from the PBGC stating its intention to terminate any Plan
or to have a trustee appointed to administer any Plan or correspondence from the
PBGC indicating it is considering termination of any Plan.
SECTION 7.8 Actuarial Reports. Promptly upon receipt thereof by the
Borrower or any ERISA Affiliate, a copy of the annual actuarial valuation report
for each Plan the funded current liability percentage (as defined in Section
302(d)(8)(B) of ERISA) of which is less than 90% or the unfunded current
liability (as defined in Section 302(d)(8)(A) of ERISA) of which exceeds
$500,000 or the present value of benefit liabilities as of the latest actuarial
valuation date for such Plan (but not prior to 12 months prior to the date
hereof), determined on the basis of a shut down of the company in accordance
with actuarial assumptions used by the PBGC in single-employer plan
terminations, exceeds the market value of assets exclusive of any contributions
due to the Plan by $500,000.
SECTION 7.9 Plan Annual Reports. Upon the request, from time to time,
of the Administrative Agent, promptly and in any event within thirty (30) days
after request, copies of each
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Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan.
SECTION 7.10 Multiemployer Plan Notices. Promptly and in any event
within five (5) Business Days after receipt thereof by the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, copies of each notice
concerning, or other correspondence with respect to, (i) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (ii) the reorganization or
termination, within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (iii) the amount of liability incurred, or that may be incurred, by the
Borrower or any ERISA Affiliate in connection with any event described in clause
(i) or (ii) if in excess of $2,500,000.
SECTION 7.11 Litigation. Promptly after the commencement thereof,
notice of all material actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission, board,
bureau, agency or instrumentality, Federal, state, local or foreign, affecting
the Borrower or any of its Subsidiaries and, promptly after the occurrence
thereof, notice of any Material Adverse Change in the status or the financial
effect on the Borrower or any of its Subsidiaries of the Disclosed Litigation
from that described on Schedule 4.9.
SECTION 7.12 Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and reports that
the Borrower or any of its Subsidiaries sends to its stockholders generally, and
copies of all regular, periodic and special reports, and all registration
statements, that the Borrower or any of its Subsidiaries files with the
Securities and Exchange Commission or with any national securities exchange.
SECTION 7.13 Creditor Reports. Promptly after the furnishing thereof,
copies of any statement, report or notice furnished to all holders of the
Subordinated Debt of the Borrower or of any of its Subsidiaries pursuant to the
terms of any agreement, instrument or other document related to the Subordinated
Debt and not otherwise required to be furnished to the Lender Parties pursuant
to any other clause of this Article 7.
SECTION 7.14 Agreement Notices. Promptly upon the sending or receipt
thereof, copies of all notices, requests and other documents sent or received by
the Borrower or any of its Subsidiaries under or pursuant to any indenture, loan
or credit agreement or similar agreement or instrument, in each case evidencing
indebtedness in excess of $5,000,000, regarding or related to any breach or
default by any party thereto or any event that could materially impair the value
of the interests or the rights of any Loan Party or any of its Subsidiaries or
otherwise have a Material Adverse Effect and, from time to time upon request by
the Administrative Agent, such information and reports regarding the foregoing
as the Administrative Agent may reasonably request.
SECTION 7.15 Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of any
noncompliance by the Borrower or
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any of its Subsidiaries with any Environmental Law or Environmental Permit that
could reasonably be expected to have a Material Adverse Effect.
SECTION 7.16 Real Property. Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within sixty (60) days after any
such request, a report supplementing Schedules 4.20 and 4.21 hereto, including
an identification of all real and leased property disposed of by the Borrower or
any of its Subsidiaries during such Fiscal Year, a list and description
(including the street address, county or other relevant jurisdiction, state,
record owner and, in the case of leases of property, lessor, lessee, expiration
date and annual rental cost thereof) of all real property acquired or leased
during such Fiscal Year and a description of such other changes in the
information included in such Schedules as may be necessary for such Schedules to
remain accurate and complete in all material respects.
SECTION 7.17 Insurance. Upon the request, from time to time, of the
Administrative Agent, promptly and in any event within forty-five (45) days
after any such request, a report summarizing the insurance coverage (specifying
type, amount and carrier) in effect for the Borrower and its Subsidiaries and
containing such additional information as the Administrative Agent may
reasonably request.
SECTION 7.18 Management Letters. As soon as available and in any event
within five (5) Business Days after the receipt thereof, copies of any
"management letter" or similar letter received by the Borrower or its Board of
Directors (or any Committee thereof) from its independent public accountants.
SECTION 7.19 Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or any of its Subsidiaries or the
Collateral as the Administrative Agent or any Lender Party (through the
Administrative Agent) may from time to time reasonably request.
ARTICLE 8
FINANCIAL COVENANTS
So long as any Advance shall remain unpaid, any Letter of Credit shall
be outstanding or any Lender Party shall have any Commitment hereunder, the
Borrower will (for purposes of this Article 8 and each of the defined terms used
herein, references to "Subsidiaries" and "Loan Parties" shall be deemed to
include the Related Professional Corporations):
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SECTION 8.1 Minimum EBITDA. Maintain for each period set forth below
EBITDA at not less than the respective amounts set forth below:
Four Fiscal Quarters ending on or about: Minimum EBITDA
---------------------------------------- --------------
June 30, 1999 $47,000,000
September 30, 1999 $47,000,000
December 31, 1999 $47,000,000
March 31, 2000 $48,000,000
June 30, 2000 $48,000,000
September 30, 2000 $48,000,000
December 31, 2000 $48,000,000
March 31, 2001 $48,000,000
June 30, 2001 $48,000,000
September 30, 2001 $48,000,000
December 31, 2001 $48,000,000
March 31, 2002 $50,000,000
June 30, 2002 $50,000,000
September 30, 2002 $50,000,000
December 31, 2002 $50,000,000
March 31, 2003 $52,000,000
June 30, 2003 $52,000,000
September 30, 2003 $52,000,000
December 31, 2003 $52,000,000
March 31, 2004 $54,000,000
June 30, 2004 $54,000,000
September 30, 2004 $54,000,000
December 31, 2004 $54,000,000
March 31, 2005 $56,000,000
SECTION 8.2 Consolidated Funded Debt to EBITDA Ratio. Maintain as of
the end of each fiscal quarter of the Borrower a ratio of Consolidated Funded
Debt to EBITDA for the most recently completed four fiscal quarters of the
Borrower of not more than the ratio set forth below:
Four Fiscal Quarters ending on or about: Ratio
---------------------------------------- -----
June 30, 1999 5.25:1
September 30, 1999 5.25:1
December 31, 1999 5.10:1
March 31, 2000 5.00:1
June 30, 2000 5.00:1
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September 30, 2000 5.00:1
December 31, 2000 4.90:1
March 31, 2001 4.90:1
June 30, 2001 4.75:1
September 30, 2001 4.75:1
December 31, 2001 4.75:1
March 31, 2002 4.50:1
June 30, 2002 4.50:1
September 30, 2002 4.50:1
December 31, 2002 4.50:1
March 31, 2003 4.00:1
June 30, 2003 4.00:1
September 30, 2003 4.00:1
December 31, 2003 4.00:1
March 31, 2004 and thereafter 3.75:1
SECTION 8.3 Interest Coverage Ratio. Maintain as of each date set forth
below, a ratio of (i) EBITDA for the most recently completed four fiscal
quarters of the Borrower to (ii) Consolidated cash Interest Expense for such
period (except that in respect of the first two (2) testing periods referred to
below, actual amounts expended for cash Interest Expense, in each case since
January 1, 1999, shall be computed on an annualized basis) of not less than the
ratio set forth below for such period:
Four Fiscal Quarters ending on or about: Ratio
---------------------------------------- -----
June 30, 1999 1.65:1
September 30, 1999 1.65:1
December 31, 1999 1.65:1
March 31, 2000 1.75:1
June 30, 2000 1.75:1
September 30, 2000 1.75:1
December 31, 2000 1.85:1
March 31, 2001 1.85:1
June 30, 2001 1.85:1
September 30, 2001 1.85:1
December 31, 2001 1.85:1
March 31, 2002 2.00:1
June 30, 2002 2.00:1
September 30, 2002 2.00:1
December 31, 2002 2.00:1
March 31, 2003 2.25:1
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June 30, 2003 2.25:1
September 30, 2003 2.25:1
December 31, 2003 2.25:1
March 31, 2004 2.75:1
June 30, 2004 2.75:1
September 30, 2004 2.75:1
December 31, 2004 2.75:1
March 31, 2005 and thereafter 3.00:1
SECTION 8.4 Fixed Charge Coverage Ratio. Maintain as of the end of each
fiscal quarter of the Borrower a ratio of (i) EBITDA for the most recently
completed four fiscal quarters of the Borrower, less Capital Expenditures (other
than Capital Expenditures financed with Debt permitted hereunder) made by the
Borrower and its Subsidiaries during such period, less the aggregate amount of
federal, state, local and foreign taxes paid by the Borrower and its
Subsidiaries in cash during such period, less cash dividends paid by the
Borrower to the holders of its common stock during such period, to the (ii) sum
of (x) cash interest payable by the Borrower and its Subsidiaries on all Debt
during such period (except that in respect of the first two (2) testing periods
referred to below, such interest amounts payable, in each case since January 1,
1999, shall be computed on an annualized basis), plus (y) scheduled principal
amounts of all Debt payable by the Borrower and its Subsidiaries during such
period, of not less than the ratio set forth below for such period:
Four Fiscal Quarters ending on or about: Ratio
---------------------------------------- -----
June 30, 1999 1.05:1
September 30, 1999 1.05:1
December 31, 1999 1.05:1
March 31, 2000 1.05:1
June 30, 2000 1.05:1
September 30, 2000 1.05:1
December 31, 2000 1.10:1
March 31, 2001 1.10:1
June 30, 2001 1.10:1
September 30, 2001 1.10:1
December 31, 2001 and thereafter 1.20:1
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ARTICLE 9
EVENTS OF DEFAULT
If any of the following ("Events of Default") shall occur and be
continuing:
SECTION 9.1 Payment. (a) The Borrower shall fail to pay any principal
of any Advance when the same shall become due and payable or (b) the Borrower
shall fail to pay any interest on any Advance, or any Loan Party shall fail to
make any other payment under any Loan Document, in each case under this clause
(b) within five (5) Business Days after the same becomes due and payable; or
SECTION 9.2 Representations and Warranties. Any representation or
warranty made by any Loan Party (or any of its officers) under or in connection
with any Loan Document shall prove to have been incorrect in any material
respect when made or confirmed; or
SECTION 9.3 Certain Covenants. The Borrower shall fail to perform or
observe any term, covenant or agreement contained in Section 2.14, 5.6, or 5.11,
Article 6 or Article 8; or
SECTION 9.4 Other Covenants. Any Loan Party shall fail to perform any
other term, covenant or agreement contained in any Loan Document on its part to
be performed or observed if such failure shall remain unremedied for thirty (30)
days after the date on which written notice thereof shall have been given to the
Borrower by the Administrative Agent; or
SECTION 9.5 Other Defaults. The Borrower or any of its Subsidiaries
shall fail to pay any principal of, premium or interest on or any other amount
payable in respect of any Debt that is outstanding in a principal or notional
amount of at least $5,000,000 either individually or in the aggregate (but
excluding Debt outstanding hereunder) of the Borrower or such Subsidiary (as the
case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise); or any other
event shall occur or condition shall exist under any agreement or instrument
relating to any such Debt, in each case if the effect of such event or condition
is to accelerate, or to permit the acceleration of, the maturity of such Debt or
otherwise to cause, or to permit the holder thereof to cause, such Debt to
mature; or any such Debt shall be declared to be due and payable or required to
be prepaid or redeemed (other than by a regularly scheduled required prepayment
or redemption), purchased or defeased, or an offer to prepay, redeem, purchase
or defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or
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SECTION 9.6 Bankruptcy, Etc. The Borrower or any of its Subsidiaries
(other than Immaterial Subsidiaries) shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against the Borrower or any of its
Subsidiaries (other than Immaterial Subsidiaries) seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of forty-five (45) days or any of the actions sought in
such proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur, or the
Borrower or any of its Subsidiaries (other than Immaterial Subsidiaries) shall
take any corporate action to authorize any of the actions set forth above in
this Section 9.6; or
SECTION 9.7 Judgments. Any judgment or order for the payment of money
in excess of $5,000,000 (other than such a judgment or order which is fully
covered by insurance for which the appropriate insurer has acknowledged
responsibility in writing) shall be rendered against the Borrower or any of its
Subsidiaries and either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) such judgments or orders shall
not have been vacated, discharged, satisfied or bonded pending appeal within
thirty (30) days of entry thereof; or
SECTION 9.8 Loan Documents. Any material provision of any Loan Document
after delivery thereof shall for any reason cease to be valid and binding on or
enforceable against any Loan Party which is party to it, or any such Loan Party
shall so state in writing; or
SECTION 9.9 Liens. Any Collateral Document after delivery thereof shall
for any reason cease (except in accordance with their terms) to or otherwise not
create a valid and perfected first priority Lien (subject to the Liens permitted
under Section 6.1) on and security interest in a material portion of the
Collateral purported to be covered thereby to the extent previously perfected;
or
SECTION 9.10 Change of Control. Any Change of Control shall occur; or
SECTION 9.11 ERISA Events.
(a) Any ERISA Event shall have occurred with respect to a Plan and the
sum (determined as of the date of occurrence of the last such ERISA Event) of
the Insufficiency of such Plan and the Insufficiency of any and all other Plans
with respect to which an ERISA Event shall have occurred
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and then exist (or the liability of the Borrower and the ERISA Affiliates
related to such ERISA Events) exceeds $5,000,000; or
(b) The Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Borrower and the ERISA
Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $5,000,000; or
(c) The Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
and as a result of such reorganization or termination the aggregate annual
contributions of the Borrower and the ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years of such Multiemployer Plans immediately preceding the plan year in which
such reorganization or termination occurs by an amount exceeding $5,000,000; or
SECTION 9.12 Subordination Provisions. The subordination provisions
contained in any instrument pursuant to which the Subordinated Debt permitted
under Section 6.2(c)(iii) was created or in any instrument evidencing such
Subordinated Debt shall cease, for any reason, to be in full force and effect or
enforceable in accordance with their terms (other than as the result of payment
or prepayment in accordance with the terms hereof); or
SECTION 9.13 Matters Relating to Regulatory Agencies.
(a) Any Regulatory Agency shall commence a hearing on the renewal of
any material license, consent, authorization, permit, certificate, franchise
held by any the Borrower, any of its Subsidiaries, Related Professional
Corporation, or professional employee, officer, director or contractor of any
the Borrower, any of its Subsidiaries or Related Professional Corporation if
there is a significant probability that result thereof will be the termination,
revocation, suspension or material adverse amendment of any such license,
consent, authorization, permit, certificate, franchise that would have a
Material Adverse Effect; or
(b) Any Regulatory Agency shall commence an action or proceeding
seeking the termination, suspension, revocation or material adverse amendment of
any license, consent, authorization, permit, certificate, franchise held by the
Borrower, any of its Subsidiaries, Related Professional Corporation, or
professional employee, officer, director or contractor of the Borrower, any
Subsidiary of the Borrower or Related Professional Corporation if the result
thereof is likely to be the termination, suspension, revocation or material
adverse amendment of any license, consent, authorization, permit, certificate,
franchise that would have a Material Adverse Effect; or
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SECTION 9.14 Related Professional Corporation Termination. The
Borrower's or any of its Subsidiaries' contractual arrangements with a material
portion of the Related Professional Corporations shall be terminated and not
replaced by other similar contractual arrangements unless the Borrower shall
have elected to terminate (or permit to expire) those of the Related
Professional Corporation contracts as being unnecessary to the future conduct of
its business.
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each appropriate Lender (other than the Commitment in
respect of Letter of Credit Advances by an Issuing Bank or a Revolving Credit
Lender pursuant to Section 2.3(c) and Swing Line Advances by a Revolving Credit
Lender pursuant to Section 2.2(b)) and of each Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders, (A) by
notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under this Agreement and the other Loan Documents to be
forthwith due and payable, whereupon the Notes, all such interest and all such
other amounts shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower and (B) by notice to each party required
under the terms of any agreement in support of which a Standby Letter of Credit
is issued, request that all Obligations under such agreement be declared to be
due and payable; provided, however, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower or any of its
Subsidiaries under the Federal Bankruptcy Code, (x) the obligation of each
Lender to make Advances (other than Letter of Credit Advances by an Issuing Bank
or a Revolving Credit Lender pursuant to Section 2.3(c) and Swing Line Advances
by a Revolving Credit Lender pursuant to Section 2.2(b)) and of each Issuing
Bank to issue Letters of Credit shall automatically be terminated and (y) the
Notes, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Article 9
or otherwise, make demand upon the Borrower to, and forthwith upon such demand
the Borrower will, pay to the Administrative Agent on behalf of the Lender
Parties in same day funds at the Administrative Agent's office designated in
such demand, for deposit in the L/C Cash Collateral Account, an amount equal to
the aggregate Available Amount of all Letters of Credit then outstanding. If at
any time the Administrative Agent determines that any funds held in the L/C Cash
Collateral Account are subject to any right or claim of any Person other than
the Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available
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Amount over (b) the total amount of funds, if any, then held in the L/C Cash
Collateral Account that the Administrative Agent determines to be free and clear
of any such right and claim.
ARTICLE 10
THE ADMINISTRATIVE AGENT
SECTION 10.1 Authorization and Action. Each Lender Party (in its
capacities as a Lender, each Issuing Bank, the Swing Line Bank and any Hedge
Bank) hereby appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof and thereof, together with such powers
and discretion as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), the Administrative 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 upon all Lender Parties and all holders of Notes;
provided, however, that the Administrative Agent shall not be required to take
any action that exposes the Administrative Agent to personal liability or that
is contrary to this Agreement, any other Loan Document or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement. The
Administrative Agent shall not be a trustee or fiduciary for any Lender.
SECTION 10.2 Agent's Reliance, Etc. Neither the Administrative Agent
nor any of its directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent: (a) may treat the payee of any Note as the holder thereof
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 11.7; (b) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts reasonably selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; (c) makes no warranty
or representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with the Loan Documents; (d) shall not have any
duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of any Loan Document on the part of any Loan
Party or to inspect the property (including
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the books and records) of any Loan Party; (e) shall not be responsible to any
Lender Party for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any Lien
or security interest created or purported to be created under or in connection
with, any Loan Document or any other instrument or document furnished pursuant
thereto; and (f) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopy or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
SECTION 10.3 Fleet and Affiliates. With respect to its Commitments, the
Advances made by it and the Notes issued to it, Fleet shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not the Administrative Agent; and the term "Lender
Party" or "Lender Parties" shall, unless otherwise expressly indicated, include
Fleet in its individual capacity. Fleet and its affiliates may accept deposits
from, lend money to, act as trustee under indentures of, accept investment
banking engagements from and generally engage in any kind of business with, any
Loan Party, any of its Subsidiaries and any Person who may do business with or
own securities of any Loan Party or any such Subsidiary, all as if Fleet were
not the Administrative Agent and without any duty to account therefor to the
Lender Parties.
SECTION 10.4 Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender Party and based on the financial
statements referred to in Section 4.6 and such other documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender Party also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other
Lender Party 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 this Agreement.
SECTION 10.5 Indemnification.
(a) Each Lender Party severally agrees to indemnify the Administrative
Agent (to the extent not promptly reimbursed by the Borrower) from and against
such Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of any of the Loan Documents or any action taken or
omitted by the Administrative Agent under any of the Loan Documents; provided,
however, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Lender Party agrees to reimburse the Administrative Agent promptly upon demand
for its ratable share of any costs and expenses
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(including, without limitation, fees and expenses of counsel) payable by the
Borrower under Section 11.4, to the extent that the Administrative Agent is not
promptly reimbursed for such costs and expenses by the Borrower.
(b) Each Lender Party severally agrees to indemnify each Issuing Bank
(to the extent not promptly reimbursed by the Borrower) from and against such
Lender Party's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Issuing Bank in any way
relating to or arising out of any of the Loan Documents or any action taken or
omitted by such Issuing Bank under any of the Loan Documents; provided, however,
that no Lender Party shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Issuing Bank's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse each Issuing Bank promptly upon demand for its ratable share
of any costs and expenses (including, without limitation, fees and expenses of
counsel) payable by the Borrower under Section 11.4, to the extent that such
Issuing Bank is not promptly reimbursed for such costs and expenses by the
Borrower.
(c) For purposes of Sections 10.5(a) and 10.5(b), the Lender Parties'
respective ratable shares of any amount shall be determined, at any time,
according to the sum of (i) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (ii) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (iii) the aggregate unused portions of their
respective Term A Commitments and Term B Commitments at such time, and (iv)
their respective Unused Revolving Credit Commitments at such time; provided,
that the aggregate principal amount of Swing Line Advances owing to the Swing
Line Bank and Letter of Credit Advances owing to the Issuing Banks shall be
considered to be owed to the Revolving Credit Lenders ratably in accordance with
their respective Revolving Credit Commitments. In the event that any Defaulted
Advance shall be owing by any Defaulting Lender at any time, such Lender Party's
Commitment with respect to the Facility under which such Defaulted Advance was
required to have been made shall be considered to be unused for purposes of this
Section 10.5 to the extent of the amount of such Defaulted Advance. The failure
of any Lender Party to reimburse the Administrative Agent or any Issuing Bank,
as the case may be, promptly upon demand for its ratable share of any amount
required to be paid by the Lender Parties to the Administrative Agent or such
Issuing Bank, as the case may be, as provided herein shall not relieve any other
Lender Party of its obligation hereunder to reimburse the Administrative Agent
or such Issuing Bank, as the case may be, for its ratable share of such amount,
but no Lender Party shall be responsible for the failure of any other Lender
Party to reimburse the Administrative Agent or such Issuing Bank, as the case
may be, for such other Lender Party's ratable share of such amount. Without
prejudice to the survival of any other agreements of any Lender Party hereunder,
the agreement and obligations of each Lender Party contained in this Section
10.5 shall survive the
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payment in full of principal, interest and all other amounts payable hereunder
and under the other Loan Documents.
SECTION 10.6 Successor Administrative Agents. The Administrative Agent
may resign as to any or all of the Facilities at any time by giving thirty (30)
days prior written notice thereof to the Lender Parties and the Borrower and may
be removed as to all of the Facilities at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent as to such of
the Facilities as to which the Administrative Agent has resigned or been removed
which shall be reasonably acceptable to the Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Lender Parties, appoint a successor Administrative
Agent, which shall be a Lender which shall be reasonably acceptable to the
Borrower and which is a commercial bank organized or licensed under the laws of
the United States or of any State thereof and having a combined capital and
surplus of at least $1,000,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent as to all of
the Facilities and upon the execution and filing or recording of such financing
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from all of its duties and obligations under this Agreement and
the other Loan Documents. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent as to less
than all of the Facilities and upon the execution and filing or recording of
such financing statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Administrative Agent
shall succeed to and become vested with all the rights, powers, discretion,
privileges and duties of the retiring Administrative Agent as to such
Facilities, other than with respect to funds transfers and other similar aspects
of the administration of Borrowings under such Facilities, issuances of Letters
of Credit (notwithstanding any resignation as Administrative Agent with respect
to the Letter of Credit Facility) and payments by the Borrower in respect of
such Facilities which functions shall continue to be performed by the
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement as to such Facilities,
other than as aforesaid. After any retiring Administrative Agent's resignation
or removal hereunder as Administrative Agent as to all of the Facilities, the
provisions of this Article 10 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent as to any
Facilities under this Agreement.
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SECTION 10.7 Events of Default. The Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default (other than the
non-payment of principal of or interest on Loans) unless the Administrative
Agent has received notice from a Lender or the Borrower specifying such Default
and stating that such notice is a "Notice of Default". In the event that the
Administrative Agent receives such a notice of the occurrence of a Default, the
Administrative Agent shall give notice thereof to the Lenders (and shall give
each Lender notice of each such non-payment). The Administrative Agent shall
(subject to Section 10.1(b) hereof) take such action with respect to such
Default as shall be directed by the Required Lenders.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 Amendments, Etc. No amendment, modification, supplement,
termination or waiver of or to any provision of this Agreement, nor consent to
any departure by the Borrower or any other Loan Party therefrom, shall be
effective unless the same shall be in writing and signed by or on behalf of the
Required Lenders and the Borrower; provided, however, that no such amendment,
modification, supplement, termination, waiver or consent, as the case may be,
shall, (i) reduce the rate of interest or extend the final scheduled maturity of
any Advance or Note, or the stated maturity of any Letter of Credit beyond the
Revolving Credit Termination Date, or the date for payment of any fees or
interest on any Advance, or waive or excuse any such payment or any part
thereof, or decrease the rate of interest on any Advance, or reduce the
principal amount thereof, without the prior written consent of each Lender
affected thereby, (ii) release all or substantially all of the Collateral
(except as expressly provided in the Collateral Documents) under the Collateral
Documents, without the prior written consent of each Lender, (iii) amend, modify
or waive any provision of this Section 11.1, without the prior written consent
of each Lender, (iv) reduce the percentage specified in the definition of
Required Lenders, without the prior written consent of each Lender, (v) consent
to the assignment or transfer by Borrower of any of its rights and obligations
under this Agreement, or (vi) release all or substantially all of the Guarantors
from their respective Guaranty, without the prior written consent of each
Lender; provided, further, that no such amendment, modification, supplement,
termination, waiver or consent shall (1) increase the Commitments of any Lender
over the amount thereof then in effect without the consent of such Lender (it
being understood that waivers or modifications of conditions precedent,
covenants, Defaults or Events of Default shall not constitute an increase of the
Commitment of any Lender, and that an increase in the available portion of any
Commitment of any Lender shall not constitute an increase in the Commitment of
such Lender), (2) amend, modify or waive any provision of this Agreement or any
other Loan Document which affects the rights or obligations of the Swing Line
Bank or the Issuing Banks, as the case may be, without the consent of the Swing
Line Bank or the Issuing Banks, as the case may be, (3) amend, modify or waive
any provision of Article 10 as same
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applies to the Administrative Agent or any other provisions as same relates to
the rights or obligations of the Administrative Agent, without the consent of
the Administrative Agent, (4) amend, modify or waive any provisions relating to
the rights or obligations of the Administrative Agent under the other Loan
Documents, without the consent of the Administrative Agent, (5) alter the
required application of any prepayments or repayments (or commitment reduction),
as between the various Facilities pursuant to Section 2.6(b) (although the
Required Lenders may waive in whole or in part, any such prepayment, repayment
or commitment reduction so long as the application, as amongst the various
Facilities, of any such prepayment, repayment or commitment reduction which is
still required to be made is not altered), without the consent of the Majority
Lenders of each Facility which is being allocated a lesser prepayment, repayment
or commitment reduction, (6) amend the definition of Majority Lenders, without
the consent of the Majority Lenders of each Facility, (7) amend the definition
of Pro Rata Share, without the consent of the Majority Lenders of the Revolving
Facility; (8) amend Section 2.4(a), without the consent of the Majority Lenders
of the Term A Facility or (9) amend Section 2.4(b), without the consent of the
Majority Lenders of the Term B Facility.
SECTION 11.2 Notices Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered,
(a) if to the Borrower:
Team Health, Inc.
1900 Winston Road
Knoxville, Tennessee 37919
Attention: President
Telephone No.: (423) 693-1000
Facsimile No.: (423) 539-8003
with a copy to:
Cornerstone Equity Investors
717 Fifth Avenue
Suite 1100
New York, New York 10022
Attention: Tyler Wolfram
Telephone No.: (212) 207-2383
Facsimile No.: (212) 826-6798
Madison Dearborn Partners
Three First National Plaza
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Suite 3800
Chicago, Illinois 60602
Attention: Nick Alexos
Telephone No.: (312) 895-1260
Facsimile No.: (312) 895-1256
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Christopher Butler, Esq.
Telephone No.: (312) 861-2298
Facsimile No.: (312) 861-2200
(b) if to the Administrative Agent:
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attention: Ginger Stolzenthaler
Telephone No.: (617) 346-4618
Facsimile No.: (617) 346-4699
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601-9703
Attention: Charles B. Boehrer, Esq.
Telephone No.: (312) 558-5989
Facsimile No.: (312) 558-5700
(c) if to any Initial Lender or any Issuing Bank, at its
Domestic Lending Office specified opposite its name on Schedule I
attached hereto.
(d) if to any other Lender Party, at its Domestic Lending
Office specified in the Assignment and Acceptance pursuant to which it
became a Lender Party;
or, as to the Borrower or the Administrative Agent, at such other address as
shall be designated by such party in a written notice to the other parties and,
as to each other party, at such other address as shall be designated by such
party in a written notice to the Borrower and the Administrative
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Agent. All such notices and communications shall, when mailed by certified mail,
return receipt requested, telegraphed, telecopied or telexed, be effective three
(3) Business Days after mailing, upon delivery to the telegraph company, upon
transmission by telecopier or upon confirmation by telex answerback,
respectively, except that notices and communications to the Administrative Agent
pursuant to Article 2, 3 or 10 shall not be effective until received by the
Administrative Agent. Delivery by telecopier of an executed counterpart of this
Agreement, the Notes or any other Loan Document or of any Exhibit hereto or
thereto or of any amendment or waiver of any provision thereof shall be as
effective as delivery of a manually executed counterpart thereof.
SECTION 11.3 No Waiver; Remedies. No failure on the part of any Lender
Party or the Administrative Agent to exercise, and no delay in exercising, any
right hereunder or under any Note or under any other Loan Document shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law or in equity.
SECTION 11.4 Costs and Expenses.
(a) The Borrower agrees to pay on demand (i) all reasonable
out-of-pocket costs and expenses of the Agents in connection with the
preparation, execution and delivery of the Loan Documents, and of the
Administrative Agent in connection with modification and amendment of the Loan
Documents (including, without limitation, (A) all reasonable due diligence,
collateral review, syndication (including printing, distribution and bank
meetings), transportation, computer, duplication, appraisal, audit, insurance,
consultant, search, filing and recording fees and expenses, and (B) the
reasonable fees and out-of-pocket expenses of counsel for the Agents with
respect thereto, with respect to advising the Agents as to their rights and
responsibilities, or the perfection, protection or preservation of rights or
interests under the Loan Documents, with respect to negotiations with any Loan
Party or with other creditors of any Loan Party or any of its Subsidiaries
arising out of any Default or any events or circumstances that may give rise to
a Default and with respect to presenting claims in or otherwise participating in
or monitoring any bankruptcy, insolvency or other similar proceeding involving
creditors' rights generally and any proceeding ancillary thereto) and (ii) all
reasonable out-of-pocket costs and expenses of the Agents and the Lender Parties
in connection with the enforcement of the Loan Documents, whether in any action,
suit or litigation or any bankruptcy, insolvency or other similar proceeding
affecting creditors' rights generally or otherwise (including, without
limitation, the reasonable fees and expenses of counsel for the Agents and each
Lender Party with respect thereto).
(b) The Borrower agrees to indemnify and hold harmless each Agent, each
Lender Party and each of their respective Affiliates and their respective
officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against any and all claims, damages, losses, liabilities and
expenses (including, without limitation, reasonable fees and expenses of counsel
and
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settlement costs) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Transaction, (ii) any acquisition or proposed
acquisition or similar business combination or proposed business combination by
the Borrower or any of its Subsidiaries of all or any portion of the shares of
capital stock or substantially all of the property and assets of any other
Person, (iii) the Facilities, the actual or proposed use of the proceeds of the
Advances or the Letters of Credit by the Borrower or any of its Subsidiaries and
any of the other transactions contemplated by the Loan Documents, or (iv) the
actual or alleged presence of Hazardous Materials on any property of the
Borrower or any of its Subsidiaries or any Environmental Action relating in any
way to the Borrower or any of its Subsidiaries, in each case whether or not such
investigation, litigation or proceeding is brought by the Borrower, its
directors, officers, employees, stockholders or creditors or an Indemnified
Party or any Indemnified Party is otherwise a party thereto and whether or not
the Transaction is consummated, except to the extent such claim, damage, loss,
liability or expense is found in a final judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence,
bad faith or willful misconduct. The Borrower also agrees not to assert any
claim against the Administrative Agent, any Lender Party or any of their
respective Affiliates, or any of their respective officers, directors,
employees, attorneys and agents, on any theory of liability, for special,
indirect, consequential or punitive damages arising out of or otherwise relating
to the Facilities, the actual or proposed use of the proceeds of the Advances or
the Letters of Credit, the Loan Documents or any of the Transaction, other than
claims for direct, as opposed to consequential, damages.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender Party
other than on the last day of the Interest Period for such Advance, as a result
of a payment or Conversion pursuant to Section 2.9(b)(i) or 2.10(d) or a
prepayment pursuant to Section 2.6(a) or (b), acceleration of the maturity of
the Notes pursuant to Article 9 or for any other reason, the Borrower shall,
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender Party any amounts required to compensate such Lender Party for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment, including, without limitation, any loss (including, without
limitation, a return on such liquidation or deployment that would result in such
Lender receiving less than it would have received had such Advances remained
outstanding until the last day of the Interest Period), cost or expense incurred
by reason of the liquidation or re-employment of deposits or other funds
required by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may be
paid on behalf of such Loan Party by the Administrative Agent, in its sole
discretion.
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(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section
11.4 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
(f) Notwithstanding anything to the contrary contained in this
Agreement, unless a Lender gives notice to the Borrower that it is obligated to
pay an amount under Section 2.10, 2.12 or 11.4(c) within 180 days after the date
the Lender Party incurs the respective increased costs, taxes, loss, expense or
liability, reduction in amounts received or receivable or reduction in return on
capital, then such Lender Party shall only be entitled to be compensated for
such amount by the Borrower or any other Loan Party pursuant to said Section
2.10, 2.12 or 11.4(c) to the extent the costs, taxes, loss, expense or
liability, reduction in amounts received or receivable or reduction in return on
capital are incurred or suffered on or after the date which occurs 180 days
prior to such Lender giving notice to the Borrower that it is obligated to pay
the respective amounts pursuant to said Section 2.10, 2.12 or 11.4(c). Each
Lender, in determining additional amounts owing under Section 2.10, 2.12 or
11.4(c), will act reasonably and in good faith and to the extent the increased
costs or reductions in amounts receivable or reduction in return on capital
relate to such Lender Party's loans, commitments or letters of credit in general
and not specifically attributable to the Advances or Letters of Credit
hereunder, use averaging and attribution methods which are reasonable and which
cover all advances and letters of credit similar to the Advances and Letters of
Credit made, issued or participated in by such Lender Party whether or not the
documentation for such other advances or letters of credit permit such Lender
Party to receive amounts of the type described in such Section 2.10, 2.12 and
11.4(c).
SECTION 11.5 Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Article 9 to authorize the Administrative
Agent to declare the Notes due and payable pursuant to the provisions of Article
9, each Lender Party and each of its respective Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and otherwise 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 Party or such Affiliate to or for the credit or the
account of the Borrower or any of its Subsidiaries against any and all of the
Obligations of the Borrower now or hereafter existing under this Agreement and
the Note or Notes (if any) held by such Lender Party, irrespective of whether
such Lender Party shall have made any demand under this Agreement or such Note
or Notes and although such obligations may be unmatured. Each Lender Party
agrees promptly to notify the Borrower and the Administrative Agent after any
such set-off and application; 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 Party and its respective Affiliates under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender Party and its respective Affiliates may have
at law, in equity or otherwise.
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SECTION 11.6 Binding Effect. This Agreement shall become effective when
it shall have been executed by the Borrower and the Administrative Agent and
when the Administrative Agent shall have been notified by each Initial Lender
and each Issuing Bank that each such Initial Lender and each such Issuing Bank
has executed it and thereafter shall be binding upon and inure to the benefit of
the Borrower, the Administrative Agent and each Lender Party and their
respective successors and assigns, except that the Borrower shall not have the
right to assign any of its rights hereunder or any interest herein without the
prior written consent of the Lender Parties.
SECTION 11.7 Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment or Commitments, the Advances
owing to it and the Note or Notes held by it); provided, however, that (i)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall in
no event be less than $5,000,000 (or $2,500,000 in the case of an assignment by
a Lender to an Affiliate of such Lender), (ii) no such assignments shall be
permitted without the prior consent of the Administrative Agent (which may be
withheld for any reason) until the Administrative Agent shall have notified the
Lender Parties that syndication of the Commitments hereunder has been completed,
but in any event not later than 90 days following the Closing Date, (iii) no
such assignment shall be permitted if, immediately after giving effect thereto,
the Borrower would be required to make payments to or on behalf of the assignee
Lender Party pursuant to Section 2.10(a) or (b) or 2.12 and the assignor Lender
Party was not, at the time of such assignment, entitled to receive any payment
pursuant to Section 2.10(a) or (b) or 2.12, and (iv) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Note or Notes subject to such assignment and a processing and
recordation fee of $3,500 (other that with respect to an assignment to a
Lender's Affiliate, in which event such fee shall be $1,500).
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender or Issuing Bank, as the
case may be, hereunder and (y) the Lender or Issuing Bank assignor thereunder
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's or Issuing Bank's rights and obligations under this Agreement, such
Lender or Issuing Bank shall cease to be a party hereto).
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(c) By executing and delivering an Assignment and Acceptance, the
Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.6 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such assigning Lender Party or
any other Lender Party 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 this Agreement; (v) such assignee confirms
that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and the other Loan Documents as
are delegated to the Administrative Agent by the terms hereof and thereof,
together with such powers and discretion as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender or Issuing Bank, as the case may be.
(d) The Administrative Agent shall maintain at its address referred to
in Section 11.2 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 Lender Parties and the Commitment under each Facility of, and principal
amount of the Advances owing under each Facility to, each Lender Party from time
to time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lender Parties may treat each Person whose name is
recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any
Lender Party at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes subject
to such assignment and the appropriate processing and reconciliation fee, the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit A hereto, (i) accept
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such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. In the case
of any assignment by a Lender, within ten (10) Business Days after its receipt
of such notice and the return of the old Notes (or a customary indemnity with
respect to any lost Notes), the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent in exchange for the surrendered Note or
Notes a new Note to the order of such Eligible Assignee in an amount equal to
the Commitment assumed by it under a Facility pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Commitment hereunder
under such Facility, a new Note to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit B, C or D hereto, as the case may be.
(f) Each Issuing Bank may assign to an Eligible Assignee all of its
rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time; provided, however, that (i) each such assignment shall
be to an Eligible Assignee and (ii) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,500.
(g) Each Lender Party may sell participations to one or more Persons
(other than any Loan Party or any of its Affiliates) in or to all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes, if any, held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) such Lender Party shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lender Parties shall continue to deal solely and directly with such Lender
Party in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have any
right to approve any amendment, waiver or other modification of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Loan Party therefrom, except to the extent that such amendment, waiver,
modification or consent would reduce the rate of interest or extend the final
scheduled maturity of any Advance or Note, or the date for payment of any fees
or other interest on any Advance, or waive or excuse any such payment or any
part thereof, or decrease the rate of interest on any Advance, or reduce the
principal amount thereof, in each case to the extent subject to such
participation, or release all or substantially all of the Collateral (except as
expressly provided in the Collateral Documents) under all of the Collateral
Documents.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
11.7, disclose to the assignee or
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participant or proposed assignee or participant, any information relating to the
Borrower furnished to such Lender Party by or on behalf of the Borrower;
provided, however, that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information received by it from such Lender
Party in accordance with the terms set forth in Section 11.10.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time create a security interest in all or any
portion of its rights under this Agreement (including, without limitation, the
Advances owing to it and the Note or Notes held by it) in favor of any Federal
Reserve Bank in accordance with Regulation A of the Board of Governors of the
Federal Reserve System without notice to, or the consent of, the Borrower or the
Administrative Agent and, with the consent of the Borrower and the
Administrative Agent, any Lender which is a fund may pledge all or any portion
of Advances owing to it or the Note or Notes held by it to its trustee in
support of its obligations to its trustee. No such pledge, assignment or
creation of security interest shall release the transferor Lender from its
obligations under this Agreement.
SECTION 11.8 Execution in Counterparts. This Agreement 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 a signature page to this Agreement by
telecopier shall be as effective as delivery of a manually executed counterpart
of this Agreement.
SECTION 11.9 No Liability of the Issuing Banks. The Borrower assumes
all risks of the acts or omissions of any beneficiary or transferee of any
Letter of Credit with respect to its use of such Letter of Credit. No Issuing
Bank nor any of its officers, directors, employees or agents shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by any Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against any Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential, damages suffered by the Borrower that the Borrower proves were
caused by (i) such Issuing Bank's willful misconduct or gross negligence or (ii)
such Issuing Bank's willful failure to make lawful payment under a Letter of
Credit after the presentation to it of a draft and certificates strictly
complying with the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, each Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
135
128
SECTION 11.10 Confidentiality. Neither the Administrative Agent nor any
Lender Party shall disclose any Confidential Information to any Person without
the consent of the Borrower, other than (a) to the Administrative Agent's or
such Lender Party's Affiliates and their officers, directors, employees, agents,
auditors and advisors and to actual or prospective Eligible Assignees and
participants, and then only on a confidential basis and subject to such Person's
agreement to be bound by the confidentiality provisions of this Agreement, (b)
as required by any law, rule or regulation or judicial process, (c) as required
by any state, federal or foreign authority or examiner regulating banks or
banking and (d) in any court action between any Loan Party and the
Administrative Agent or any Lender Party arising out of the transactions
contemplated by this Agreement.
SECTION 11.11 Further Assurances. (a) At any time and from time to
time, upon the request of the Administrative Agent, each Loan Party shall
execute, deliver and acknowledge or cause to be executed, delivered or
acknowledged, such further documents and instruments and do such further acts as
the Administrative Agent may reasonably request in order to fully affect the
purposes of this Agreement, the other Loan Documents and any other agreements,
instruments and documents delivered pursuant hereto or in connection with the
Facilities.
(b) Upon receipt of an affidavit of an officer of the
Administrative Agent or any Lender as to the loss, theft, destruction or
mutilation of any Note or Collateral Document which is not of public record and,
in the case of any such mutilation, upon the surrender and cancellation of such
Note or Collateral Document, the Borrower will issue, in lieu thereof, a
replacement Note or Collateral Document in the same principal amount thereof (in
the case of any Note) and otherwise of like tenor.
SECTION 11.12 JURISDICTION, ETC.
(a) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY
LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED
136
129
BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT ANY LENDER PARTY
MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY JURISDICTION.
(b) EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES,
TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS A PARTY IN ANY NEW YORK STATE OR FEDERAL COURT. EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
SECTION 11.13 GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS (OTHER THAN THE MORTGAGES WHICH SHALL BE GOVERNED BY THE LAW OF
THE JURISDICTION WHERE THE PROPERTY COVERED THEREBY IS LOCATED) SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ITS RULES PERTAINING TO CONFLICTS OF LAWS
OTHER THAN GENERAL OBLIGATIONS LAW SECTION 5-1401.
SECTION 11.14 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LOAN
PARTIES, THE ADMINISTRATIVE AGENT AND THE LENDER PARTIES IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, THE ADVANCES OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY LENDER PARTY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
137
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
TEAM HEALTH, INC.
By____________________________________
Title: President
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
138
FLEET NATIONAL BANK,
AS ADMINISTRATIVE AGENT,
AS ISSUING BANK
AS SWING LINE BANK AND
AS CO-ARRANGER
By:___________________________________
Title: Senior Vice President
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
139
NATIONSBANK, N.A.,
AS ISSUING BANK AND
AS CO-ARRANGER
By:___________________________________
Title: Senior Vice President
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
140
NATIONSBANC MONTGOMERY SECURITIES LLC,
AS SYNDICATION AGENT
By:___________________________________
Title: Managing Director
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
141
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
AS DOCUMENTATION AGENT
By:___________________________________
Title:________________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
142
INITIAL LENDERS
FLEET NATIONAL BANK
By:_________________________________
Title: Senior Vice President
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
143
NATIONSBANK, N.A.
By:_________________________________
Title: Senior Vice President
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
144
ANTARES CAPITAL CORP.
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
145
PARIBAS
By:_________________________________
Title:______________________________
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
146
BHF-BANK AKTIENGESELLSCHAFT
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
147
DRESDNER BANK AG (NEW YORK BRANCH AND
GRAND CAYMAN BRANCH)
By:__________________________________
Title:_______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
148
FINOVA CAPITAL CORPORATION
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
149
FIRST AMERICAN NATIONAL BANK
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
150
THE FIRST NATIONAL BANK OF CHICAGO
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
151
HELLER FINANCIAL, INC.
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
152
LASALLE NATIONAL BANK
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
153
MERCANTILE BANK NATIONAL ASSOCIATION
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
154
SRF TRADING, INC.
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
155
SCOTIABANC, INC.
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
156
U.S. BANK NATIONAL ASSOCIATION
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
157
UNION BANK OF CALIFORNIA, N.A.
By:_________________________________
Title:______________________________
[SIGNATURE PAGE TO TEAM HEALTH, INC. CREDIT AGREEMENT]
158
EXHIBIT A TO THE
CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of March 12, 1999
(as amended, supplemented, restated or otherwise modified from time to time, the
"Credit Agreement"; the terms defined therein being used herein as therein
defined) among Team Health, Inc., a Tennessee corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders named therein,
Fleet National Bank, as Issuing Bank, as Swing Line Bank, as Co-Arranger and as
Administrative Agent for the Lender Parties (the "Administrative Agent"),
NationsBank, N.A., as Issuing Bank and as Co-Arranger, NationsBanc Montgomery
Securities LLC, as Syndication Agent and Donaldson, Lufkin & Jenrette Securities
Corporation, as Documentation Agent.
[Name of Assignor] ("the "Assignor") and [Name of Assignee] (the
"Assignee") hereby agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, 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 as of the date
hereof equal to the percentage interest specified on Schedule I hereto of all
outstanding rights and obligations under the Credit Agreement Facility or
Facilities as specified on Schedule I hereto. After giving effect to such sale
and assignment, the Assignee's _______________/1/ Commitments and the amount of
the _______________/2/ Advances owing to the Assignee will be as set forth on
Schedule I hereto.
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 Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, the Loan
Documents or any other instrument, agreement or document furnished pursuant
thereto; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of its obligations under any Loan Document
or any other instrument, agreement or
______________________
/1/ Specify Term A Commitments, Term B Commitments or Revolving Credit
Commitments here.
/2/ Specify Term A Advances, Term B Advances or Revolving Credit Advances here.
159
document furnished pursuant thereto; and (iv) attaches the _______________/3/
Note or Notes held by the Assignor and requests that the Administrative Agent
exchange such Note or Notes for a new _______________/3/ Note or Notes payable
to the order of the Assignee in an amount equal to the _______________/1/
Commitments assumed by the Assignee pursuant hereto or new _______________/3/
Note or Notes payable to the order of the Assignee in an amount equal to the
_______________/1/ Commitments assumed by the Assignee pursuant hereto and to
the order of the Assignor in an amount equal to the _______________/1/
Commitments retained by the Assignor under the Credit Agreement, respectively,
as specified on Schedule I hereto.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to therein,
including, without limitation, those referred to in Section 4.6 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 Administrative
Agent, the Assignor or any other Lender Party 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
Administrative Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Loan Documents as are delegated to the
Administrative 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 and the other Loan Documents are required to be performed by it
as a Lender Party; and (vi) attaches any U.S. Internal Revenue Service forms or
other forms required under Section 2.12 of the Credit Agreement.
4. Following the execution of this Assignment and Acceptance, it will
be delivered to the Administrative Agent, together with the processing and
recordation fee specified in the Credit Agreement, for acceptance and recording
by the Administrative Agent. The effective date for this Assignment and
Acceptance (the "Effective Date") shall be the date of acceptance hereof by the
Administrative Agent, unless otherwise specified on Schedule I hereto.
5. Upon such acceptance and recording by the Administrative 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 Party 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 Administrative Agent, from
and after the Effective Date, the Administrative Agent shall make all payments
under the Credit Agreement and the _______________/3/ Notes in respect of the
interest assigned hereby (including,
- ------------
/3/ Specify Term A Note or Notes, Term B Note or Notes or Revolving Credit Note
or Notes here.
-2-
160
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
_______________/3/ 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 (without giving effect to
its conflicts of law principles).
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 I to this Assignment and Acceptance by telecopier shall
be as effective as delivery of a manually executed counterpart of this
Assignment and Acceptance.
-3-
161
IN WITNESS WHEREOF, the Assignor and the Assignee have executed this
Assignment and Acceptance by their officers thereunto duly authorized as of the
date specified below.
[NAME OF ASSIGNOR], as Assignor
By:______________________________
Title:___________________________
Dated:_______________, __________
[NAME OF ASSIGNEE], as Assignee
By:______________________________
Title:___________________________
Dated:_____________ ___, ________
Domestic Lending Office:
__________________________________________
__________________________________________
__________________________________________
Eurodollar Lending Office:
__________________________________________
__________________________________________
__________________________________________
Accepted this day of _____________, ________
FLEET NATIONAL BANK, as Administrative Agent
By:_________________________________________
Title:______________________________________
Consented to this ____ day of _________, ___
TEAM HEALTH, INC.
By:_________________________________________
-2-
162
Title:______________________________________
-3-
163
SCHEDULE I
TO
ASSIGNMENT AND ACCEPTANCE
As to the _______________/1/ Facility in respect of which an interest is being
assigned:
Percentage interest assigned: __________%
Assignee's _______________/2/ Commitment: $__________
Aggregate outstanding principal amount
of _______________/3/ Advances assigned: $__________
Principal amount of _______________/4/
Note payable to Assignee: $__________
Principal amount of _______________/4/
Note payable to Assignor: $__________
Effective Date (if other than date of
acceptance by Administrative Agent): _____, ___
- --------------
/1/ Specify Term A Commitments, Term B Commitments or Revolving Credit
Commitments here.
/2/ Specify Term A Advances, Term B Advances or Revolving Credit Advances here.
/3/ Specify Term A Advances, Term B Advances or Revolving Credit Advances here.
/4/ Specify Term A Note or Notes, Term B Note or Notes or Revolving Credit Note
or Notes here.
164
EXHIBIT B TO THE
CREDIT AGREEMENT
FORM OF REVOLVING CREDIT PROMISSORY NOTE
$_________________ Dated: ________, ____
FOR VALUE RECEIVED, the undersigned, TEAM HEALTH, INC., a Tennessee
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
________________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below) the
aggregate principal amount of the Revolving Credit Advances (as defined below)
owing to the Lender by the Borrower pursuant to the Credit Agreement, dated as
of March __, 1999 (as amended, supplemented, restated or otherwise modified, the
"Credit Agreement"; terms defined therein being used herein as therein defined),
among the Borrower, the Lender and certain other banks, financial institutions
and other institutional lenders named therein, Fleet National Bank, as Issuing
Bank, as Swing Line Bank, as Co-Arranger and as Administrative Agent for the
Lender Parties (the "Administrative Agent"), NationsBank, N.A., as Issuing Bank
and as Co-Arranger, NationsBanc Montgomery Securities LLC, as Syndication Agent
and Donaldson, Lufkin & Jenrette Securities Corporation, as Documentation Agent,
on the Revolving Credit Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet National Bank, as Administrative Agent for the Lender
Parties, at One Federal Street, Boston, MA 02110, Attention: Loan
Administration, in same day funds. Each Revolving Credit Advance owing to the
Lender by the Borrower and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto or any continuation
thereof, which is part of this Promissory Note; provided, however, that the
failure of such Lender to so record any such information or any error in so
recording any such information shall not, however, limit or otherwise affect the
obligations of the Borrower hereunder or under any other Loan Document.
This Promissory Note is one of the Revolving Credit Notes referred to
in, and is entitled to the benefits of, the Credit Agreement. The Credit
Agreement, among other things, (i)
165
provides for the making of Revolving Credit Advances by the Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Borrower resulting from each such Revolving Credit Advance being evidenced
by this Promissory Note, and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified. The obligations of the Borrower under
this Promissory Note, and the obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the Collateral
Documents.
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TEAM HEALTH, INC.
By:_________________________________
Name: ______________________________
Title: _______________________________
2
166
REVOLVING CREDIT ADVANCES AND PAYMENTS OF PRINCIPAL
- -----------------------------------------------------------------------------------------------------------------------------
AMOUNT OF AMOUNT OF UNPAID PRINCIPAL NOTATION MADE
DATE REVOLVING CREDIT PRINCIPAL PAID OR BALANCE BY
ADVANCE PREPAID
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
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- -----------------------------------------------------------------------------------------------------------------------------
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167
EXHIBIT C TO THE
CREDIT AGREEMENT
FORM OF TERM A PROMISSORY NOTE
$_______________ Dated: ________, ____
FOR VALUE RECEIVED, the undersigned, TEAM HEALTH, INC., a Tennessee
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below) the
principal amount of the Term A Advances owing to the Lender by the Borrower
pursuant to the Credit Agreement, dated as of March __, 1999 (as amended,
supplemented, restated or otherwise modified, the "Credit Agreement"; terms
defined therein being used herein as therein defined), among the Borrower, the
Lender and certain other banks, financial institutions and other institutional
lenders named therein, Fleet National Bank, as Issuing Bank, as Swing Line Bank,
as Co-Arranger and as Administrative Agent for the Lender Parties (the
"Administrative Agent"), NationsBank, N.A., as Issuing Bank and as Co-Arranger,
NationsBanc Montgomery Securities LLC, as Syndication Agent and Donaldson,
Lufkin & Jenrette Securities Corporation, as Documentation Agent, on the dates
and in the amounts specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
the Term A Advance from the date of such Term A Advance until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet National Bank, as Administrative Agent for the Lender
Parties, at One Federal Street, Boston, MA 02110, Attention: Loan
Administration, in same day funds.
This Promissory Note is one of the Term A Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of a Term A Advance by the Lender to
the Borrower in an amount not to exceed the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from such Term A Advance
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for
168
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified. The obligations of the Borrower under
this Promissory Note, and the obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the Loan Documents.
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TEAM HEALTH, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
2
169
EXHIBIT D TO THE
CREDIT AGREEMENT
FORM OF TERM B PROMISSORY NOTE
$_______________ Dated: ________, ____
FOR VALUE RECEIVED, the undersigned, TEAM HEALTH, INC., a Tennessee
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________________________ (the "Lender") for the account of its Applicable
Lending Office (as defined in the Credit Agreement referred to below) the
principal amount of the Term B Advances owing to the Lender by the Borrower
pursuant to the Credit Agreement, dated as of March __, 1999 (as amended,
supplemented, restated or otherwise modified, the "Credit Agreement"; terms
defined therein being used herein as therein defined), among the Borrower, the
Lender and certain other banks, financial institutions and other institutional
lenders named therein, Fleet National Bank, as Issuing Bank, as Swing Line Bank,
as Co-Arranger and as Administrative Agent for the Lender Parties (the
"Administrative Agent"), NationsBank, N.A., as Issuing Bank and as Co-Arranger,
NationsBanc Montgomery Securities LLC, as Syndication Agent and Donaldson,
Lufkin & Jenrette Securities Corporation, as Documentation Agent, on the dates
and in the amounts specified in the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
the Term B Advance from the date of such Term B Advance until such principal
amount is paid in full, at such interest rates, and payable at such times, as
are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Fleet National Bank, as Administrative Agent for the Lender
Parties, at One Federal Street, Boston, MA 02110, Attention: Loan
Administration, in same day funds.
This Promissory Note is one of the Term B Notes referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of a Term B Advance by the Lender to
the Borrower in an amount not to exceed the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from such Term B Advance
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for
170
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified. The obligations of the Borrower under
this Promissory Note, and the obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the Loan Documents.
This Promissory Note shall be governed by and construed in accordance
with the laws of the State of New York.
TEAM HEALTH, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
2
171
EXHIBIT E TO THE
CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING
[Date]
Fleet National Bank, as Administrative
Agent under the Credit Agreement
referred to below
One Federal Street
Boston, Massachusetts 02110
Attention: Loan Administration
Ladies and Gentlemen:
The undersigned, on behalf of Team Health, Inc. (the "Borrower"),
refers to the Credit Agreement, dated as of March __, 1999 (as amended,
supplemented, restated or otherwise modified, the "Credit Agreement"; the terms
defined therein being used herein as therein defined), among the Borrower, the
banks, financial institutions and other institutional lenders named therein,
Fleet National Bank, as Issuing Bank, as Swing Line Bank, as Co-Arranger and as
Administrative Agent for the Lender Parties (the "Administrative Agent"),
NationsBank, N.A., as Issuing Bank and as Co-Arranger, NationsBanc Montgomery
Securities LLC, as Syndication Agent and Donaldson, Lufkin & Jenrette Securities
Corporation, as Documentation Agent, and hereby gives the Administrative Agent
notice, irrevocably, pursuant to Section 2.2 of the Credit Agreement that the
undersigned hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing (the
"Proposed Borrowing") as required by Section 2.2 of the Credit Agreement:
(1) The Business Day of the Proposed Borrowing is _____________,
_____.
(2) The Facility under which the Proposed Borrowing is to be made
is the _______________ Facility.
(3) The Type of Advances comprising the Proposed Borrowing is
[Prime Rate Advances][Eurodollar Rate Advances].
172
(4) The aggregate amount of the Proposed Borrowing is $_________.
[(5) The initial Interest Period for each Eurodollar Rate Advance
made as part of the Proposed Borrowing is _______ month[s].]
The undersigned hereby certifies on behalf of the Borrower
that the following statements are true and correct on the date hereof, and will
be true on the borrowing date:
(a) the representations and warranties contained in each Loan
Document are correct in all material respects on and as of the
date of the Proposed Borrowing, both before and after giving
effect to the Proposed Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date,
other than any such representations or warranties that, by
their terms, refer to a specific date other than the date of
the Proposed Borrowing, in which case, as of such specific
date;
(b) no event has occurred and is continuing, or would result from
the Proposed Borrowing or from the application of the proceeds
therefrom, that constitutes a Default or Event of Default;
(c) for each Revolving Credit Advance, the Revolving Credit
Facility equals or exceeds the aggregate principal amount of
the Revolving Credit Advances plus Swing Line Advances plus
Letter of Credit Advances plus the aggregate Available Amount
of all Letters of Credit then outstanding after giving effect
to the Proposed Borrowing.
Very truly yours,
TEAM HEALTH, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
-2-
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EXHIBIT F TO THE
CREDIT AGREEMENT
SECURITY AGREEMENT
Dated March 12, 1999
From
TEAM HEALTH, INC., and
THE SUBSIDIARY GUARANTORS NAMED HEREIN
as Grantors
to
FLEET NATIONAL BANK,
as Administrative Agent
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TABLE OF CONTENTS
SECURITY AGREEMENT.............................................................................................. 1
PRELIMINARY STATEMENTS.......................................................................................... 1
Section 1. Grant of Security........................................................................ 2
Section 2. Security for Obligations................................................................. 5
Section 3. Grantors Remain Liable................................................................... 5
Section 4. Delivery of Security Collateral and Account Collateral................................... 5
Section 5. Maintaining the L/C Cash Collateral Account.............................................. 6
Section 6. Investing of Amounts in the L/C Cash Collateral Account.................................. 6
Section 7. Release of Amounts....................................................................... 6
Section 8. Representations and Warranties........................................................... 7
Section 9. Further Assurances....................................................................... 8
Section 10. As to Equipment and Inventory............................................................ 10
Section 11. Insurance................................................................................ 10
Section 12. Place of Perfection; Record; Collection of Receivables................................... 11
Section 13. Voting Rights; Dividends; Etc............................................................ 12
Section 14. Intentionally Omitted.................................................................... 14
Section 15. Intentionally Omitted.................................................................... 14
Section 16. Transfers and Other Liens; Additional Shares............................................. 14
Section 17. Administrative Agent Appointed Attorney-in-Fact.......................................... 14
Section 18. Administrative Agent May Perform......................................................... 15
Section 19. Administrative Agent's Duties............................................................ 15
Section 20. Remedies................................................................................. 15
Section 21. Registration Rights; Private Sale........................................................ 17
Section 22. Indemnity and Expenses................................................................... 18
Section 23. Security Interest Absolute............................................................... 18
Section 24. Amendments; Waivers; Etc................................................................. 19
Section 25. Addresses for Notices.................................................................... 20
Section 26. Continuing Security Interest; Assignments under the Credit Agreement..................... 20
Section 27. Release and Termination.................................................................. 20
Section 28. Governing Law; Terms..................................................................... 21
Section 29. Counterparts............................................................................. 21
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SCHEDULES
Schedule I Pledged Shares and Pledged Debt
Schedule II Assigned Agreements
Schedule III Locations of Equipment and Inventory
Schedule IV Trade Names
Schedule V Principal Places of Business
EXHIBITS
Exhibit A Form of Lockbox Letter
Exhibit B Form of Consent and Agreement
Exhibit C Form of Security Agreement Supplement
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SECURITY AGREEMENT
SECURITY AGREEMENT (this "Agreement"), dated March 12, 1999, by and
among Team Health, Inc., a Tennessee corporation having an office at the address
set forth on the signature page hereof (the "Borrower"), the Subsidiary
Guarantors listed on the signature pages hereof, each having an office at the
address set forth on the signature page hereof (the "Subsidiary Guarantors"),
the Additional Grantors (as defined in Section 24(c) hereof) (the Additional
Grantors, together with the Borrower and the Subsidiary Guarantors, the
"Grantors") and Fleet National Bank ("Fleet"), as administrative agent (in such
capacity, together with its successors in such capacity, the "Administrative
Agent") for the Secured Parties (as defined in the Credit Agreement referred to
below).
PRELIMINARY STATEMENTS
(1) The Borrower has entered into a Credit Agreement, dated as of even
date herewith (said Agreement, as it may hereafter be amended, restated,
supplemented, extended or otherwise modified from time to time, the "Credit
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined),with the banks, financial institutions and other
institutional lenders named therein, Fleet National Bank, as Issuing Bank, as
Swing Line Bank, as Co-Arranger and as Administrative Agent, NationsBank, N.A.,
as Issuing Bank and as Co-Arranger, NationsBanc Montgomery Securities LLC, as
Syndication Agent and Donaldson, Lufkin & Jenrette Securities Corporation, as
Documentation Agent.
(2) Each Grantor is the owner of the shares, partnership interests and
limited liability company interests (such shares being the "Pledged Shares") set
forth opposite such Grantor's name in Part I of Schedule I hereto and issued by
the corporations, partnerships and limited liability companies named therein and
of the indebtedness (the "Pledged Debt") set forth opposite such Grantor's name
in Part II of Schedule I and issued by the obligors named therein.
(3) The Administrative Agent will open a non-interest bearing cash
collateral account (the "L/C Cash Collateral Account") with Fleet at its office
at Fleet National Bank, One Federal Street, Boston, Massachusetts 02110, in the
name of the Borrower but under the sole control and dominion of the
Administrative Agent and subject to the terms of this Agreement.
(4) It is a condition precedent to the Lenders' making of Advances, the
Issuing Banks' issuing of Letters of Credit under the Credit Agreement and the
Hedge Banks' entering into Bank Hedge Agreements with the Borrower from time to
time that the Grantors shall have granted the assignment and security interest
and made the pledge and assignment contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Advances under the Credit Agreement, the Issuing Banks to
issue Letters of Credit
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under the Credit Agreement and the Hedge Banks to enter into Bank Hedge
Agreements with the Borrower from time to time, each of the Grantors hereby
agrees with the Administrative Agent, for the benefit of the Administrative
Agent and the ratable benefit of the Secured Parties, as follows:
Section 1. Grant of Security. Each of the Grantors hereby assigns and
pledges to the Administrative Agent, for the benefit of the Administrative Agent
and the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, a security interest in the following
(collectively, the "Collateral"):
(a) all of such Grantor's machinery and equipment in all of its forms,
whether now owned or hereafter acquired, wherever located, now or hereafter
existing, all fixtures and all parts thereof and all accessions thereto (any and
all such equipment, fixtures, parts and accessions, the "Equipment");
(b) all of such Grantor's inventory in all of its forms, whether now
owned or hereafter acquired, wherever located, now or hereafter existing
(including, without limitation, (i) raw materials and work in process, (ii)
finished goods, (iii) materials used or consumed in the manufacture or
production thereof, (iv) goods in which such Grantor has an interest in mass or
a joint or other interest or right of any kind (including, without limitation,
goods in which such Grantor has an interest or right as consignee) and (v) goods
that are returned to or repossessed by such Grantor), and all accessions
thereto, products thereof and documents therefor (any and all such inventory,
accessions, products and documents, the "Inventory");
(c) all of such Grantor's accounts, contract rights, chattel paper,
instruments, deposit accounts, lockbox accounts and other claims of any kind,
whether now owned or hereafter acquired, now or hereafter existing, whether or
not arising out of or in connection with the sale or lease of goods or the
rendering of services, and all rights now or hereafter existing in and to all
security agreements, leases and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper, instruments, deposit
accounts, lockbox accounts or claims (any and all such accounts, contract
rights, chattel paper, instruments, deposit accounts and claims, to the extent
not referred to in clause (d), (e) or (f) below, being the "Receivables", and
any and all such leases, security agreements and other contracts being the
"Related Contracts"); provided, however, that the Collateral shall not include
(i) those rights to payment under agreements with Medicare, Medicaid or CHAMPUS
to the extent, if any, that (and only for so long as) the grant of a lien or
security interest in, or an assignment thereof would cause an immediate, actual
forfeiture of such Grantor's rights thereunder or is prohibited by law and (ii)
contracts (but not excluding accounts receivable arising therefrom or related
thereto, except to the extent expressly consented to in writing by the
Administrative Agent) entered into by such Grantor to the extent, if any, that
(and only for so long as) the grant of a lien or a security interest in, or
assignment thereof would cause an immediate, actual forfeiture of any of such
Grantor's rights thereunder or an immediate default thereunder or is prohibited
by law;
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(d) all of the following (the "Security Collateral"), without
duplication:
(i) the Pledged Shares and the certificates representing the
Pledged Shares, including without limitation, the shares of capital
stock, partnership interests and limited liability company interests of
all of such Grantor's Subsidiaries, and the certificates representing
the Pledged Shares, provided, however, that only 65% (or such greater
percentage which would not result in material adverse tax consequences)
of the Voting Stock of such Grantor's Foreign Subsidiaries shall be
pledged, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such Pledged Shares;
(ii) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt;
(iii) all additional shares of stock of any issuer of the
Pledged Shares from time to time acquired by such Grantor in any
manner, provided, however, that only 65% (or such greater percentage
which would not result in material adverse tax consequences) of the
Voting Stock of such of such Grantor's Foreign Subsidiaries shall be
pledged pursuant to this Agreement, and the certificates representing
such additional shares, and all dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such shares;
(iv) all additional indebtedness from time to time owed to
such Grantor by any obligor of the Pledged Debt and the instruments
evidencing such indebtedness, and all interest, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
indebtedness;
(v) all additional "investment property" (as defined in the
UCC) now owned or hereafter acquired by such Grantor including, without
limitation, (A) all securities, whether certificated or uncertificated,
including, without limitation, stocks, bonds, interests in limited
liability companies, partnership interests, treasuries, certificates of
deposit, and mutual fund shares; (B) all security entitlements of such
Grantor including, without limitation, the rights of such Grantor to
any securities account and the financial assets held by a securities
intermediary in such securities account and any free credit balance or
other money owing by any securities intermediary with respect to that
account; (C) all securities accounts held by such Grantor;
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(D) all commodity contracts held by such Grantor; and (E) all commodity
accounts held by such Grantor.
(e) each of the agreements listed on Schedule II to which such Grantor
is now or may hereafter become a party, and each Hedge Agreement to which such
Grantor is now or may hereafter become a party, in each case as such agreements
may be amended, restated or otherwise modified from time to time (collectively,
the "Assigned Agreements"), including, without limitation, (i) all rights of
such Grantor to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of such Grantor for damages arising out of or for
breach of or default under the Assigned Agreements, and (iv) the right of such
Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder (all such
Collateral being the "Agreement Collateral");
(f) all of the following (collectively, the "Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein
and all certificates and instruments, if any, from time to time
representing or evidencing the L/C Cash Collateral Account;
(ii) all deposit accounts, including, without limitation, the
Cash Concentration Account, and lockbox accounts of such Grantor, all
funds held therein and all certificates and instruments, if any, from
time to time representing or evidencing such deposit accounts or
lockbox accounts;
(iii) all Collateral Investments (as hereinafter defined) from
time to time and all certificates and instruments, if any, from time to
time representing or evidencing the Collateral Investments;
(iv) all notes, certificates of deposit, deposit accounts,
lockbox accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by the Administrative
Agent for or on behalf of such Grantor in substitution for or in
addition to any or all of the then existing Account Collateral; and
(v) all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Account Collateral;
(g) all of such Grantor's corporate and business records, customer
lists, credit files, computer program printouts and other computer materials and
records;
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(h) without limitation of any of the foregoing, all of such Grantor's
general intangibles, including, without limitation, choses in action, claims and
causes of action or rights of recovery or set-off of every kind and character,
and the business of such Grantor as a going concern; and
(i) all proceeds of any and all of the foregoing Collateral (including,
without limitation, proceeds that constitute property of the types described in
clauses (a) - (h) of this Section 1) and, to the extent not otherwise included,
all (i) payments under insurance other than liability and medical malpractice
insurance (whether or not the Administrative Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral and (ii) cash.
Section 2. Security for Obligations. This Agreement secures the payment
of all Obligations of each Grantor now or hereafter existing under the Loan
Documents and the Bank Hedge Agreements, whether for principal, interest, fees,
expenses or otherwise (all such Obligations being the "Secured Obligations").
Without limiting the generality of the foregoing, this Agreement secures the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by such Grantor to the Administrative Agent or the Secured Parties under
the Loan Documents and the Bank Hedge Agreements but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
Section 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Collateral to which it is a party to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by the
Administrative Agent of any of the rights hereunder shall not release any
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral to which it is a party and (c) neither the
Administrative Agent nor any Secured Party shall have any obligation or
liability under the contracts and agreements included in the Collateral by
reason of this Agreement, nor shall the Administrative Agent or any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
under such contracts and agreements included in the Collateral to which it is a
party or to take any action to collect or enforce any claim for payment assigned
hereunder.
Section 4. Delivery of Security Collateral and Account Collateral. All
certificates or instruments representing or evidencing Security Collateral or
Account Collateral shall be delivered to and held by or on behalf of the
Administrative Agent pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to the
Administrative Agent. The Administrative Agent shall have the right, upon the
occurrence and during the continuation of an Event of Default and on five (5)
days' notice to the Borrower, to transfer to or to register in the name of the
Administrative Agent or any of its nominees any or all of the Security
Collateral and the Account Collateral, subject only to the revocable rights
specified in Section 13(a). In addition, the
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Administrative Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Security Collateral or Account
Collateral for certificates or instruments of smaller or larger denominations.
Section 5. Maintaining the L/C Cash Collateral Account. So long as any
Advance shall remain unpaid, any Letter of Credit shall be outstanding or any
Lender shall have any Commitment under the Credit Agreement or any Hedge Bank or
any Loan Party shall have any obligations under any Hedge Agreement:
(a) The Borrower will maintain the L/C Cash Collateral Account with
Fleet.
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account and, except as otherwise
provided by the provisions of Section 7 and Section 20, that no amount
(including interest on Collateral Investments) shall be paid or released to or
for the account of, or withdrawn by or for the account of, any Grantor or any
other Person from the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations, of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
Section 6. Investing of Amounts in the L/C Cash Collateral Account. If
requested by the Borrower, the Administrative Agent will, subject to the
provisions of Section 7 and Section 20, from time to time invest (a) amounts on
deposit in the L/C Cash Collateral Account in such Cash Equivalents as the
Borrower may select and the Administrative Agent may approve, in each case which
investments shall be made in the name of the Administrative Agent on behalf of
the Borrower, and (b) interest paid on the Cash Equivalents referred to in
clause (a) above, and reinvest other proceeds of any such Cash Equivalents that
may mature or be sold, in each case in such Cash Equivalents as the Borrower may
select and the Administrative Agent may approve in its reasonable discretion, in
each case which investments shall be made in the name of the Administrative
Agent on behalf of the Borrower (the Cash Equivalents referred to in clauses (a)
and (b) above being collectively "Collateral Investments"). Interest and
proceeds that are not invested or reinvested in Collateral Investments as
provided above shall be deposited and held in the L/C Cash Collateral Account.
Section 7. Release of Amounts. Upon the drawing of any Letter of Credit
for which funds are on deposit in the L/C Cash Collateral Account, such funds
shall be applied to reimburse the Issuing Bank or the Revolving Credit Lenders,
as applicable.
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Section 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) All of such Grantor's Equipment and Inventory, other than Equipment
and Inventory which is in transit, are located at the places specified for such
Grantor on Schedule III hereto. The chief place of business and chief executive
office of such Grantor and the office where such Grantor keeps its records
concerning the Receivables, and the original copies of each Assigned Agreement
and all originals of all chattel paper that evidence Receivables, are located at
the address or addresses specified for such Grantor on Schedule V hereto. None
of the Receivables or Agreement Collateral is evidenced by a promissory note or
other instrument.
(b) Such Grantor is the legal and beneficial owner of the Collateral
pledged by such Grantor hereunder free and clear of any Lien, except for
security interests created or permitted under the Loan Documents (including,
without limitation, any Liens disclosed on Schedule 6.1(c) to the Credit
Agreement). No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed: (i) in favor of the Administrative
Agent relating to this Agreement or (ii) with respect to Permitted Liens.
(c) Set forth below each Grantor's name on Schedule IV hereto is a
complete and accurate list of (i) all names under which such Grantor is or has
been doing business within the last five years (including, without limitation,
all trade names, division names and fictitious names), (ii) all trade names that
such Grantor owns or is licensed to use (including the expiration date of such
license) and (iii) all trade names that such Grantor has established the right
to use (collectively, the "Trade Names"). Such Grantor has not changed within
the past six months its name or identity, by reorganization or otherwise, or its
address set forth below the name of such Grantor on the signature pages hereof
or the Security Agreement Supplement executed and delivered by it, as the case
may be, except as set forth on Schedule IV hereto.
(d) Such Grantor has possession and control of the Equipment and
Inventory pledged by such Grantor hereunder.
(e) The Pledged Shares owned by such Grantor have been duly authorized
and validly issued and are fully paid and non-assessable. The Pledged Debt owed
to such Grantor has been duly authorized, authenticated or issued and delivered
and, to the best knowledge of such Grantor, is the legal, valid and binding
obligation of the issuers thereof and is not in default.
(f) The Pledged Shares constitute the percentage of the issued and
outstanding shares of stock of the issuers thereof indicated on Schedule I. The
Pledged Debt is outstanding in the principal amount indicated on Schedule I.
(g) The Assigned Agreements to which such Grantor is a party, true and
complete copies of which have been furnished to each Secured Party, have been
duly authorized, executed and
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delivered by such Grantor, have not been amended, restated or otherwise
modified, are in full force and effect and are binding upon and enforceable
against such Grantor and, to such Grantor's knowledge, all other parties thereto
in accordance with their terms. There exists no default by such Grantor or, to
such Grantor's knowledge, by any other parties thereto under any Assigned
Agreement to which such Grantor is a party. Each party to the Assigned
Agreements to which such Grantor is a party, other than such Grantor, has
executed and delivered to such Grantor a consent, in substantially the form of
Exhibit B hereto, to the assignment of the Agreement and Collateral to the
Administrative Agent pursuant to this Agreement unless the assignment
contemplated herein is permitted by the terms of such Assigned Agreement.
(h) Upon either the filing by the Administrative Agent or its
representatives of the proper financing statements referred to in Section
3.1(a)(ii) of the Credit Agreement or the taking of possession thereof, as
applicable, this Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant hereto
create a valid and perfected first and only priority security interest, subject
to Liens permitted under the Credit Agreement, in the Collateral of such
Grantor, securing the payment of the Secured Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest shall have been duly taken.
(i) Other than as disclosed on Schedule 4.4 to the Credit Agreement, no
consent of any other Person and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
or other third party is required either (i) for the grant by such Grantor of the
assignment and security interest granted hereby, for the pledge by such Grantor
of the Security Collateral pursuant hereto or for the execution, delivery or
performance of this Agreement by such Grantor, (ii) for the perfection or
maintenance of the pledge, assignment and security interest created hereby
(including the first and only priority nature of such pledge, assignment or
security interest), except for the filing of financing and continuation
statements under the Uniform Commercial Code, which financing statements are in
proper form and are duly executed, or (iii) for the exercise by the
Administrative Agent of its voting or other rights provided for in this
Agreement or the remedies in respect of the Collateral pursuant to this
Agreement, except as may be required in connection with the disposition of any
portion of the Security Collateral by laws affecting the offering and sale of
securities generally.
(j) The Inventory has been produced by such Grantor in compliance with
all requirements of the Fair Labor Standards Act.
Section 9. Further Assurances.
(a) Each of the Grantors agrees that from time to time, at the expense
of the Borrower, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Administrative Agent may reasonably request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Administrative Agent to exercise
and enforce its
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rights and remedies hereunder with respect to any Collateral. Without limiting
the generality of the foregoing, such Grantor will, upon any such request of the
Administrative Agent: (i) mark conspicuously each document included in the
Inventory pledged by such Grantor hereunder, each chattel paper included in the
Receivables pledged by such Grantor hereunder, each Related Contract pledged by
such Grantor hereunder, each Assigned Agreement pledged by such Grantor
hereunder and each of its records pertaining to the Collateral with a legend, in
form and substance satisfactory to the Administrative Agent, indicating that
such document, chattel paper, Related Contract, Assigned Agreement or Collateral
is subject to the security interest granted hereby; (ii) if any Collateral
pledged by such Grantor hereunder in excess of $25,000 shall be evidenced by a
promissory note or other instrument (other than checks received in the ordinary
course of business) or chattel paper, deliver and pledge to the Administrative
Agent hereunder such note or instrument or chattel paper duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to the Administrative Agent; and (iii)
execute such financing or continuation statements, or amendments thereto, and
such other instruments or notices as may be reasonably requested by the
Administrative Agent in order to perfect and preserve the pledge, assignment and
security interest granted or purported to be granted hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral pledged by such Grantor hereunder, without
the signature of such Grantor where permitted by law. A copy of each such
statement and amendment will be timely provided to such Grantor. A photocopy or
other reproduction of this Agreement or any financing statement covering its
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the Collateral
and such reports in connection with its Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(d) Each Grantor hereby agrees, upon the request of the Administrative
Agent at any time following the occurrence and during the continuance of an
Event of Default, and at the expense of the Borrower, (i) within twenty-one (21)
days after such request deliver to the Administrative Agent a letter agreement,
in substantially the form of Exhibit A hereto, in respect of each lockbox and
blocked deposit account of such Grantor, (ii) within thirty (30) days after such
request, take whatever action (including, without limitation, the filing of
Uniform Commercial Code financing statements) as may be necessary or reasonably
advisable in the sole discretion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent
designated by it), for the benefit of the Administrative Agent and the ratable
benefit of the Secured Parties, valid and subsisting Liens on the main cash
concentration accounts of the Borrower and each other Grantor and the lockboxes
and blocked deposit accounts of the Grantors, (iii) within forty-five (45) days
after such request, deliver to the Administrative Agent a signed copy of a
favorable opinion, addressed to the Administrative Agent, of counsel for the
Loan
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Parties acceptable to the Administrative Agent as to the matters contained in
clauses (i) and (ii) above and as to all such other matters as the
Administrative Agent may request, and (iv) at any time and from time to time,
promptly execute and deliver any and all further instruments and documents and
take all such other action as the Administrative Agent may deem desirable in
obtaining the full benefits of the Liens on, or in preserving the Liens in, such
main concentration accounts, lockboxes and blocked deposit accounts.
Section 10. As to Equipment and Inventory. (a) Each Grantor shall keep
the Equipment and Inventory (other than Inventory sold in the ordinary course of
business and Equipment the disposition of which is permitted under the Credit
Agreement) pledged by such Grantor hereunder at the places therefor specified in
Section 8(a) or, upon thirty (30) days' prior written notice to the
Administrative Agent, at such other places in a jurisdiction where all action
required by this Agreement to maintain the security interest of the
Administrative Agent in such Equipment and Inventory granted hereby shall have
been taken with respect to such Equipment and Inventory.
(b) Each Grantor shall cause the Equipment pledged by such Grantor
hereunder to be maintained and preserved in working condition, ordinary wear and
tear excepted, and shall forthwith, or in the case of any loss or damage to any
of such Equipment, as quickly as practicable after the occurrence thereof, make
or cause to be made all repairs, replacements and other improvements in
connection therewith that are necessary or desirable to such end, except to the
extent that such Grantor determines in its reasonable business judgment that
such Equipment is no longer necessary or useful in the conduct of its business.
Each Grantor shall promptly furnish to the Administrative Agent a statement
respecting any loss or damage to any of the Equipment pledged by such Grantor
hereunder.
(c) Each Grantor shall timely pay when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including claims for labor, materials and supplies) against, the
Equipment and Inventory pledged by such Grantor hereunder; provided, however,
that such Grantor shall not be required to pay any such tax, assessment, charge
or claim that is being contested in good faith and by proper proceedings and as
to which appropriate reserves are being maintained, unless and until any Lien
resulting therefrom attaches to its property and becomes enforceable against the
Borrower or any of its Subsidiaries. In producing the Inventory pledged by such
Grantor hereunder, each Grantor shall comply with all requirements of the Fair
Labor Standards Act.
Section 11. Insurance.
(a) Each Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory pledged by such Grantor hereunder in such
amounts, against such risks, in such form and with such insurers, as shall be
reasonably satisfactory to the Administrative Agent from time to time. Each
policy for liability insurance shall provide for all losses to be paid on behalf
of the Administrative Agent and each Grantor as their interests may appear and
each policy for
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property damage insurance shall provide for all losses (except so long as the
payor shall not have received notice from the Administrative Agent to the effect
that an Event of Default shall have occurred and is continuing for losses of
less than $500,000 per occurrence) to be paid directly to the Administrative
Agent. Each such policy shall in addition (i) name such Grantor and the
Administrative Agent as insured parties thereunder (without any representation
or warranty by or obligation upon the Administrative Agent) as their interests
may appear, (ii) contain the agreement by the insurer that any loss thereunder
shall be payable to the Administrative Agent notwithstanding any action,
inaction or breach of representation or warranty by such Grantor, (iii) provide
that there shall be no recourse against the Administrative Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that the insurer
shall endeavor to provide at least thirty (30) days' prior written notice of
cancellation or of lapse to the Administrative Agent. Each Grantor shall, if so
requested by the Administrative Agent, deliver to the Administrative Agent
original or duplicate policies of such insurance and, as often as the
Administrative Agent may request, a report of a reputable insurance broker with
respect to such insurance. Further, each Grantor shall, at the request of the
Administrative Agent, duly exercise and deliver instruments of assignment of its
insurance policies to comply with the requirements of Section 9 and cause the
insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss involving
damage to Equipment or Inventory when subsection (c) of this Section 11 is not
applicable, the Grantor that owns such Equipment or Inventory shall make or
cause to be made the necessary repairs to or replacements of such Equipment or
Inventory out of available proceeds of insurance maintained by such Grantor
pursuant to this Section 11.
(c) Subject to the provisions of the Credit Agreement, upon the
occurrence and during the continuance of any Event of Default or the loss (equal
to or in excess of $500,000 per occurrence) of any Equipment or Inventory, all
insurance payments in respect of such Equipment or Inventory shall be paid to
and applied by the Administrative Agent as specified in Section 20(b).
Section 12. Place of Perfection; Record; Collection of Receivables.
(a) Each of the Grantors shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Collateral, and the original copies of the Assigned Agreements and all originals
of all chattel paper that evidence Receivables, at the location therefor
specified in Section 8(a) or, upon thirty (30) days' prior written notice to the
Administrative Agent, at such other locations in a jurisdiction where all
actions required by this Agreement to maintain the security interest of the
Administrative Agent in such Collateral granted hereby shall have been taken
with respect to the Collateral. Each of the Grantors shall hold and preserve
such records, Assigned Agreements and chattel paper and shall permit
representatives of the Administrative Agent at any time during normal business
hours to inspect and make abstracts from such records and chattel paper.
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(b) Except as otherwise provided in this subsection (b), each of the
Grantors shall continue to collect, at its own expense, all amounts due or to
become due such Grantor under the Receivables pledged by such Grantor hereunder.
In connection with such collections, each Grantor may take (and, at the
Administrative Agent's direction, shall take) such action as such Grantor or the
Administrative Agent may deem necessary or advisable to enforce collection of
the Receivables pledged by such Grantor hereunder; provided, however, that the
Administrative Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default and upon five (5) days' written
notice to the Borrower of its intention to do so, to notify the obligors under
any Receivables of the assignment of such Receivables to the Administrative
Agent and to direct such Obligors to make payment of all amounts due or to
become due to such Grantor thereunder directly to the Administrative Agent and,
upon such notification and at the expense of such Grantor, to enforce collection
of any such Receivables, and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor might
have done. After receipt by any Grantor of the notice from the Administrative
Agent referred to in the proviso of the preceding sentence, (i) all amounts and
proceeds (including instruments) received by such Grantor in respect of the
Receivables pledged by such Grantor hereunder shall be received in trust for the
benefit of the Administrative Agent hereunder, shall be segregated from other
funds of such Grantor and shall be forthwith paid over to the Administrative
Agent in the same form as so received (with any necessary endorsement) to be
applied as provided by Section 20(b) and (ii) without the prior consent of the
Administrative Agent, such Grantor shall not adjust, settle or compromise the
amount or payment of any of its Receivables, release wholly or partly any
Obligor thereof, or allow any credit or discount thereon.
Section 13. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) The Grantors shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Security
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the other Loan Documents; provided,
however, that the Grantors shall not exercise or refrain from
exercising any such right if, in the Administrative Agent's judgment,
such action would have a material adverse effect on the value of the
Security Collateral or any part thereof.
(ii) The Grantors shall be entitled to receive and retain any
and all dividends and interest paid in respect of the Security
Collateral; provided, however, that any and all
(A) dividends and interest paid or payable other than
in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of,
or in exchange for, any Security Collateral,
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(B) dividends and other distributions paid or payable
in cash in respect of any Security Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in
respect of principal of, or in redemption of, or in exchange
for, any Security Collateral
shall be, and shall be forthwith, delivered to the Administrative Agent
to hold as Security Collateral and shall, if received by any of the
Grantors, be received in trust for the benefit of the Administrative
Agent, be segregated from the other property or funds of such Grantor
and be forthwith delivered to the Administrative Agent as Security
Collateral in the same form as so received (with any necessary
endorsement).
(iii) The Administrative Agent shall execute and deliver (or
cause to be executed and delivered) to each of the Grantors all such
proxies and other instruments as such Grantor may request for the
purpose of enabling such Grantor to exercise, after the occurrence and
during the continuance of an Event of Default, the voting and other
rights that it is entitled to exercise pursuant to paragraph (i) above
and to receive the dividends or interest payments that it is authorized
to receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an Event of
Default:
(i) All rights of each of the Grantors (x) to exercise or
refrain from exercising the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to Section 13(a)(i)
shall cease upon notice from the Administrative Agent and (y) to
receive the dividends and interest payments that it would otherwise be
authorized to receive and retain pursuant to Section 13(a)(ii) shall
automatically cease, and all such rights shall thereupon be vested
solely in the Administrative Agent, which shall thereupon have the sole
right to exercise or refrain from exercising such voting and other
consensual rights and to receive and hold as Security Collateral such
dividends and interest payments.
(ii) All dividends and interest payments that are received by
any of the Grantors contrary to the provisions of paragraph (i) of this
Section 13(b) shall be received in trust for the benefit of the
Administrative Agent, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Administrative Agent as
Security Collateral in the same form as so received (with any necessary
endorsement).
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Section 14. Intentionally Omitted.
Section 15. Intentionally Omitted.
Section 16. Transfers and Other Liens; Additional Shares.
(a) Each of the Grantors agrees that it shall not (i) sell, assign (by
operation of law or otherwise) or otherwise dispose of, or grant any option with
respect to, any of the Collateral, except sales of Inventory in the ordinary
course of business or sales or other dispositions of other assets permitted by
the Credit Agreement, or (ii) create or suffer to exist any Lien upon or with
respect to any of the Collateral except for (A) the pledge, assignment and
security interest created by this Agreement and (B) any other Liens expressly
permitted under Section 6.1 of the Credit Agreement.
(b) Each of the Grantors agrees that it shall (i) cause each issuer of
the Pledged Shares which it controls not to issue any stock, partnership
interests, membership interests or other securities in addition to or in
substitution for the Pledged Shares issued by such issuer, except to such
Grantor, and (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional shares of stock, partnership
interests, membership interests or other securities owned by such Grantor of
each issuer of the Pledged Shares; provided, however, that in no event shall
more than 65% (or such greater percentage which would not result in material
adverse tax consequences) of the Voting Stock of any Foreign Subsidiary of a
Grantor be pledged pursuant to this Agreement.
Section 17. Administrative Agent Appointed Attorney-in-Fact. Each of
the Grantors hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of the Borrower and
in the name of the Borrower or otherwise, upon the occurrence and during the
continuance of an Event of Default, to take any action and to execute any
instrument that the Administrative Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 11,
(b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of its Collateral,
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) or (b) above, and
(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the collection
of any of its Collateral or
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otherwise to enforce compliance with the terms and conditions of any Assigned
Agreement or the rights of the Administrative Agent with respect to any of its
Collateral.
Section 18. Administrative Agent May Perform. If any of the Grantors
fails to perform any agreement contained herein, the Administrative Agent may
itself, upon reasonable prior notice to such Grantor, perform, or cause
performance of, such agreement, and the reasonable and actual expenses of the
Administrative Agent incurred in connection therewith shall be payable by such
Grantor under Section 22(b).
Section 19. Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, the Administrative
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Security Collateral, whether or not the
Administrative Agent or any Secured Party has or is deemed to have knowledge of
such matters, or as to the taking of any necessary steps to preserve rights
against any parties or any other rights pertaining to any Collateral. The
Administrative Agent shall exercise reasonable care in the custody and
preservation of any Collateral in its possession and shall accord such
Collateral treatment equal to that which Fleet accords other similar property in
its possession.
Section 20. Remedies. If any Event of Default shall have occurred and
be continuing:
(a) The Administrative Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default
under the Uniform Commercial Code in effect in the State of New York at such
time (the "N.Y. Uniform Commercial Code") (whether or not the N.Y. Uniform
Commercial Code applies to the affected Collateral) and also may (i) require any
or all of the Grantors to, and each Grantor hereby agrees that it will at its
expense and upon request of the Administrative Agent forthwith, assemble all or
part of the Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be designated by the
Administrative Agent that is reasonably convenient to both parties and (ii)
without notice except as specified below and as required by law, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any of the Administrative Agent's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as the Administrative Agent
may deem commercially reasonable. Each Grantor agrees that, to the extent notice
of sale shall be required by law, at least ten (10) days' notice to such Grantor
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Administrative
Agent shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Administrative 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 except as required by law,
be made at the time and place to which it was so adjourned.
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(b) Any cash held by or on behalf of the Administrative Agent as
Collateral and all cash proceeds received by the Administrative Agent in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of the Administrative Agent, be held by
the Administrative Agent as Collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the Administrative
Agent pursuant to Section 22) in whole or in part by the Administrative Agent
for the ratable benefit of the Secured Parties against, all or any part of the
Secured Obligations in such order as is specified by the Credit Agreement and,
if the Credit Agreement does not so specify an order of application against the
Obligations, in such order as the Administrative Agent shall elect. Any surplus
of such cash or cash proceeds held by the Administrative Agent and remaining
after payment in full of all the Secured Obligations shall be paid over to the
applicable Grantors or to whomsoever may be lawfully entitled to receive such
surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of any of the Grantors under or in connection with the Assigned
Agreements or otherwise in respect of the Collateral, including, without
limitation, any and all rights of any Grantor to demand or otherwise require
payment of any amount under, or performance of any provision of, any Assigned
Agreement.
(d) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the Administrative Agent, shall be
segregated from other funds of such Grantor and shall be forthwith paid over to
the Administrative Agent in the same form as so received (with any necessary
endorsement or assignment).
(e) The Administrative Agent may, with reasonable notice to any of the
Grantors and at any time or from time to time, charge, set-off or otherwise
apply all or any part of the Secured Obligations against the L/C Cash Collateral
Account or any part thereof; provided, however, that the failure to give notice
shall not affect the validity of such charge, set-off or application.
(f) Each Grantor will furnish to the Administrative Agent correct and
complete customer lists and updates thereof as the Administrative Agent may
reasonably request, all in reasonable detail.
Section 21. Registration Rights; Private Sale. (a) If the
Administrative Agent shall determine to exercise its right to sell all or any of
the Security Collateral pursuant to Section 20 pursuant to a public offering (it
being understood by each of the Grantors that the Administrative Agent shall be
under no obligation to do so and may, in its sole discretion, dispose of the
Security Collateral in any manner permitted by law that the Administrative Agent
may select), each Grantor agrees that, upon request of the Administrative Agent,
such Grantor will, at its own expense:
(i) execute and deliver, and cause each issuer of the Security
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver all such instruments and documents, and do or cause to be
done all such other acts and things as may be
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necessary or, in the reasonable discretion of the Administrative Agent,
desirable to register its Security Collateral under the provisions of the
Securities Act of 1933, as amended (the "Securities Act"), to cause a
registration statement relating thereto to become effective and to remain
effective for such period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to the related prospectus
that, in the reasonable discretion of the Administrative Agent, are necessary or
desirable, all in conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission applicable
thereto;
(ii) use its best efforts to qualify its Security Collateral
under the state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Security Collateral, as requested by
the Administrative Agent in its sole discretion;
(iii) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement that will satisfy the
provisions of Section 10(a) of the Securities Act;
(iv) provide the Administrative Agent with such other
information and projections as may be necessary or, in the reasonable discretion
of the Administrative Agent, desirable to enable the Administrative Agent to
effect the sale of its Security Collateral; and
(v) do or cause to be done all such other acts and things as
may be necessary to make such sale of its Security Collateral or any part
thereof valid and binding and in compliance with applicable law.
The Administrative Agent is authorized, in connection with any sale of the
Security Collateral pursuant to Section 20, to deliver or otherwise disclose to
any prospective purchaser of the Security Collateral (A) any registration
statement or prospectus, and all supplements and amendments thereto, prepared
pursuant to clause (i) above, (B) any information and projections provided to it
pursuant to clause (iv) above and (C) any other information in its possession
relating to the Security Collateral.
(b) The Grantors recognize that the Administrative Agent may be unable
to effect a public sale of all or a part of the Security Collateral, and may be
compelled to resort to one or more private sales 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. The Grantors acknowledge that any such private
sales may be at places and on terms less favorable to the sellers than if sold
at public sales and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner, and that the Administrative Agent has
no obligation to delay the sale of any such securities for the period of time
necessary to permit any such securities to be registered for public sale.
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Section 22. Indemnity and Expenses.
(a) Each of the Grantors hereby agrees, jointly and severally, to
indemnify the Administrative Agent from and against any and all claims, losses
and liabilities arising out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses or
liabilities resulting from the Administrative Agent's gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(b) The Borrower will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Administrative Agent or the Secured
Parties hereunder or (iv) the failure by the Borrower or any other Grantor to
perform or observe any of the provisions hereof.
Section 23. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against each Grantor to enforce
this Agreement, irrespective of whether any action is brought against the
Borrower or any other Grantor or whether the Borrower or any other Grantor is
joined in any such action or actions. All rights of the Administrative Agent and
the pledge, assignment and security interest hereunder, and all obligations of
each Grantor hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment or
waiver of or any consent to any departure from any Loan Document, including,
without limitation, any increase in the Secured Obligations resulting from the
extension of additional credit to the Borrower or any Guarantor or any of their
subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or any
other assets of the Borrower or any Guarantor or any of their subsidiaries;
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(e) any change, restructuring or termination of the corporate structure
or existence of the Borrower or any Guarantor or any of their subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third party grantor of a
security interest.
Section 24. Amendments; Waivers; Etc.
(a) No amendment or waiver of any provision of this Agreement, and no
consent to any departure by any Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Administrative
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No failure on the part of the Administrative Agent to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(c) Upon the execution and delivery by any Person of a supplement to
this Agreement, in each case in substantially the form of Exhibit C hereto (each
a "Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor, and each reference in
this Agreement to an "Additional Grantor" or a "Grantor" shall also mean and be
a reference to such Additional Grantor and each reference in any other Loan
Document to a "Grantor" or a "Loan Party" shall also mean and be a reference to
such Additional Grantor, and (ii) the supplements attached to each Security
Agreement Supplement shall be incorporated into and become a part of and
supplement the Schedules to this Agreement, as appropriate, and the
Administrative Agent may attach such supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
Section 25. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
if to any Grantor addressed to it at the address set forth below its name on the
signature pages hereof; if to any Additional Grantor, addressed to it at the
address set forth below its name on the signature pages to the Security
Agreement Supplement executed and delivered by such Additional Grantor; if to
the Administrative Agent, addressed to it at its address set forth in Section
11.2 of the Credit Agreement or, as to each other party, at such other address
as shall be designated by such party in a written notice to the Grantors and the
Administrative Agent. All such notices and communications shall, when mailed by
certified mail, return receipt requested, telegraphed, telecopied or telexed, be
effective three (3) days after mailing, upon transmission to the telegraph
company, upon delivery by telecopier or upon confirmation by telex answerback,
respectively, addressed as aforesaid. Any party hereto may change the Person,
address or telecopier number to whom or which notices are to be given
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hereunder, by notice duly given hereunder; provided, however, that any such
notice shall be deemed to have been given hereunder only when actually received
by the party to which it is addressed.
Section 26. Continuing Security Interest; Assignments under the Credit
Agreement. This Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the the
indefeasible payment in full in cash of the Secured Obligations, (b) be binding
upon each Grantor, its successors and assigns and (c) inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent, the Lender Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 11.7 of the
Credit Agreement. Notwithstanding the foregoing, no Grantor may assign any of
its rights or obligations under this Agreement without the prior written consent
of the Administrative Agent, which consent may be withheld for any reason.
Section 27. Release and Termination.
(a) Upon any sale, lease, transfer or other disposition of any item of
Collateral in accordance with the express terms of the Loan Documents, the
Administrative Agent will, at the Grantors' expense, execute and deliver to each
Grantor such documents as such Grantor shall reasonably request to evidence the
release of such item of Collateral from the assignment and security interest
granted hereby; provided, however, that (i) at the time of such request and such
release no Default shall have occurred and be continuing, (ii) such Grantor
shall have delivered to the Administrative Agent, at least thirty (30) days
prior to the date of the proposed release, a written request for release
describing the item of Collateral and the terms of the sale, lease, transfer or
other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a form of release for execution
by the Administrative Agent and a certification by such Grantor to the effect
that the transaction is in compliance with the Loan Documents and as to such
other matters as the Administrative Agent may request, (iii) the proceeds of any
such sale, lease, transfer or other disposition required to be applied in
accordance with Section 2.6 or any other provision of the Credit Agreement shall
be paid to, or in accordance with the instructions of, the Administrative Agent
at the closing for application by the Administrative Agent as required by the
terms of the Credit Agreement and, if not so required to be applied, for
application in such manner as the Administrative Agent may determine, and (iv)
the Administrative Agent shall have approved (such approval not to be
unreasonably withheld) such sale, lease, transfer or other disposition in
writing.
(b) Upon the latest of (i) the indefeasible payment in full in cash of
the Secured Obligations, (ii) the expiration, termination or cancellation of all
of the Letters of Credit and (iii) the Termination Date, the pledge, assignment
and security interest granted by each of the Grantors hereby shall terminate and
all rights to the Collateral shall revert to the appropriate Grantor. Upon
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any such termination, the Administrative Agent will, at the Grantors' expense,
execute and deliver to the appropriate Grantor such documents as such Grantor
shall reasonably request to evidence such termination.
Section 28. Governing Law; Terms. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the N.Y.
Uniform Commercial Code are used herein as therein defined.
Section 29. Counterparts. This Agreement may be executed in any number
of several counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of the Grantors has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
TEAM HEALTH, INC.
By:_______________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
CLINIC MANAGEMENT SERVICES, INC.
EMERGICARE MANAGEMENT, INCORPORATED
HOSPITAL BASED PHYSICIAN SERVICES, INC.
TEAM RADIOLOGY, INC.
By:________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
ALLIANCE CORPORATION
CHARLES L. SPRINGFIELD, INC.
CLINIC MANAGEMENT SERVICES, INC.
DANIEL & YEAGER, INC.
DRS. SHEER, AHEARN AND ASSOCIATES, INC.
EMERGENCY COVERAGE CORPORATION
EMERGENCY MANAGEMENT SPECIALISTS, INC.
EMERGENCY PHYSICIAN ASSOCIATES, INC.
EMERGENCY PHYSICIANS OF MANATEE, INC.
EMERGENCY PROFESSIONAL SERVICES, INC.
INPHYNET CONTRACTING SERVICES, INC.
INPHYNET JOLIET, INC.
INPHYNET LOUISIANA, INC.
INPHYNET SOUTH BROWARD, INC.
HERSCHEL FISCHER, INC.
IMBS, INC.
INPHYNET ANESTHESIA OF WEST VIRGINIA, INC.
INPHYNET HOSPITAL SERVICES, INC.
INPHYNET MEDICAL MANAGEMENT INSTITUTE, INC.
[SIGNATURE PAGE TO SECURITY AGREEMENT]
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KARL G. MANGOLD, INC.
MED: ASSURE SYSTEMS, INC.
METROAMERICAN RADIOLOGY, INC.
NEO-MED, INC.
NORTHWEST EMERGENCY PHYSICIANS INCORPORATED
PARAGON ANESTHESIA, INC.
PARAGON CONTRACTING SERVICES, INC.
PARAGON IMAGING CONSULTANTS, INC.
QUANTUM PLUS, INC.
REICH, SEIDELMANN & JANICKI CO.
ROSENDORF MARGULIES BORUSHOK SCHOENBAUM
RADIOLOGY ASSOCIATES OF HOLLYWOOD, INC.
SARASOTA EMERGENCY MEDICAL CONSULTANTS, INC.
SOUTHEASTERN EMERGENCY PHYSICIANS OF MEMPHIS,
INC.
SOUTHEASTERN EMERGENCY PHYSICIANS, INC.
TEAM HEALTH FINANCIAL SERVICES, INC.
THBS, INC.
THE EMERGENCY ASSOCIATES FOR MEDICINE, INC.
VIRGINIA EMERGENCY PHYSICIANS, INC.
By:_________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
FISCHER MANGOLD PARTNERSHIP
By: Herschel Fischer, Inc., its general partner
Karl G. Mangold, Inc., its general partner
By:___________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
MT. DIABLO EMERGENCY PHYSICIANS, a California
General Partnership
By: Herschel Fischer, Inc., its general partner
[SIGNATURE PAGE TO SECURITY AGREEMENT]
199
Karl G. Mangold, Inc., its general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
PARAGON HEALTHCARE LIMITED PARTNERSHIP
By: InPhyNet Hospital Services, Inc.,
its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
TEAM HEALTH BILLING SERVICES, L.P.
By: Team Health, Inc., its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
TEAM HEALTH SOUTHWEST L.P.
By: Team Radiology, Inc., its sole general
partner
By:____________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
ACCEPTED:
[SIGNATURE PAGE TO SECURITY AGREEMENT]
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FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT
By: _____________________________________
Name: Ginger Stolzenthaler
Title: Senior Vice President
[SIGNATURE PAGE TO SECURITY AGREEMENT]
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EXHIBIT A TO
SECURITY AGREEMENT
FORM OF LOCKBOX LETTER
___________________, ______
[Name and address
of Lockbox Bank]
[Name of the Grantor]
Ladies and Gentlemen:
Reference is made to Lockbox no. __________ into which certain monies,
instruments and other properties are deposited from time to time and deposit
account no. _________ (collectively, the "Lockbox Account") maintained with you
by ______________ (the "Grantor"). Pursuant to a Security Agreement, dated March
__, 1999 (the "Security Agreement"), the Grantor has granted to Fleet National
Bank, as administrative agent (the "Administrative Agent") for the Lender
Parties referred to in the Credit Agreement, dated as of March __, 1999 (the
"Credit Agreement") with Team Health, Inc., as Borrower, a security interest in
certain property of the Grantor, including, among other things, the following
(the "Account Collateral"): the Lockbox Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the Lockbox Account, all interest, dividends, cash instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then existing Account
Collateral and all proceeds of any and all of the foregoing Account Collateral
and, to the extent not otherwise included, all (i) payments under insurance
(whether or not the Administrative Agent is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Account Collateral and (ii) cash.
It is a condition to the continued maintenance of the Lockbox Account with you
that you agree to this letter agreement.
By signing this letter agreement, you acknowledge notice of, and
consent to the terms and provisions of, the Security Agreement and confirm to
the Administrative Agent that you have received no notice of any other pledge or
assignment of the Lockbox Account. Further, you hereby agree with the
Administrative Agent that:
a. Notwithstanding anything to the contrary in any other
agreement relating to the Lockbox Account, the Lockbox Account is and
will be subject to the terms and conditions of the Security Agreement,
will be maintained solely for the benefit of the Administrative Agent,
will be entitled "Fleet Bank, as Administrative Agent, Re: [name
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of the Grantor]" and will be subject to written instructions only from
an officer of the Administrative Agent.
b. You will collect mail from the Lockbox Account on each of
your business days at times that coincide with the delivery of mail
thereto.
c. You will follow your usual operating procedures for the
handling of any remittance received in the Lockbox Account that
contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees, etc.
d. You will endorse and process all eligible checks and other
remittance items not covered by paragraph (c) and deposit such checks
and remittance items in the Lockbox Account.
e. You will maintain a record of all checks and other
remittance items received in the Lockbox Account and, in addition to
providing the Grantor with photostats, vouchers, enclosures, etc. of
such checks and remittance items on a daily basis, furnish to the
Administrative Agent (i) a monthly statement of the Lockbox Account and
(ii) a daily collection and check float report to be transmitted by
facsimile to the Administrative Agent at: Fleet National Bank, One
Federal Street, Boston, MA 02110, Attention: Loan Administration,
Facsimile No. , Telephone No. .
f. You will transfer, in same day funds, on each of your
business days, all amounts collected from the Lockbox Account on such
day to the following account (the "Cash Collateral Account"):
[Name of Borrower]
Account No.
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attention: Loan Administration
Each such transfer of funds shall neither comprise only part of a
remittance nor reflect the rounding off of any funds so transferred.
g. All transfers referred to in paragraph (vi) above shall be
made by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from the Administrative Agent
or any other Lender Party for any reason any such payment once made.
h. All service charges and fees with respect to the Lockbox
Account shall be payable by the Grantor, and deposited checks returned
for any reason shall not be charged
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to the Lockbox Account, but may be charged to another account
maintained by the Grantor with you.
i. The Administrative Agent shall be entitled to exercise any
and all rights of the Grantor in respect of the Lockbox Account, and
the undersigned shall comply in all respects with such exercise.
This letter agreement shall be binding upon you and your
successors and assigns and shall inure to the benefit of the Administrative
Agent, the Lender Parties and their respective successors, transferees and
assigns. You may terminate this letter agreement only upon thirty (30) days
prior written notice to the Grantor and the Administrative Agent. Upon such a
termination you shall close the Lockbox Account and transfer all funds in the
Lockbox Account to the Cash Collateral Account. After any such termination, you
shall nonetheless remain obligated promptly to transfer to the Cash Collateral
Account all funds and other property received in respect of the Lockbox Account.
This letter agreement shall be governed by and construed in
accordance with the laws of the State of New York.
Very truly yours,
[NAME OF GRANTOR]
By:_____________________________________
Title:
FLEET NATIONAL BANK, as
Administrative Agent
By:_____________________________________
Title:
Acknowledges and agreed to as of the date first above written:
[NAME OF LOCKBOX BANK]
By:_____________________________________
Title:
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EXHIBIT B TO
SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to
the terms and provisions of, the Security Agreement, dated March __, 1999 (the
"Security Agreement"; the terms defined therein being used herein as therein
defined), from _____________, (the "Grantor") to Fleet National Bank, as
administrative agent (the "Administrative Agent") for the Secured Parties
referred to therein, and hereby agrees with the Administrative Agent that:
(a) The undersigned will make all payments to be made by it
under or in connection with the ________ Agreement, dated _________,
19__ (the "Assigned Agreement"), between the undersigned and Grantor in
accordance with the instructions of the Administrative Agent.
(b) All payments referred to in paragraph (a) above shall be
made by the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and
the undersigned will not seek to recover from the Administrative Agent
or any Lender Party for any reason any such payment once made.
(c) The Administrative Agent shall be entitled to exercise any
and all rights and remedies of the Grantor under the Assigned Agreement
and the undersigned shall comply in all respects with any such
exercise.
(d) The undersigned shall not, without the prior written
consent of the Administrative Agent, (i) cancel or terminate the
Assigned Agreement or consent to or accept any cancellation or
termination thereof, (ii) amend, restate or otherwise modify the
Assigned Agreement or (iii) except as expressly provided therein, make
any prepayment of amounts to become due under or in connection with the
Assigned Agreement.
This Consent and Agreement shall be binding upon the
undersigned and its successors and assigns, and shall inure, together with the
rights and remedies of the Administrative Agent hereunder, to the benefit of the
Administrative Agent, the Lender Parties and their respective successors,
transferees and assigns. THIS CONSENT AND AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO ITS CONFLICTS OF LAWS PROVISIONS).
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IN WITNESS WHEREOF, the undersigned has duly executed this
Consent and Agreement as of the date set forth below.
Dated: ________, 1998 [NAME OF OBLIGOR]
By:_____________________________________
Title:__________________________________
206
EXHIBIT C TO
SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
____________, ____
Fleet Bank, as Administrative Agent
One Federal Street
Boston, MA 02110
Attention: Corporate Banking Group
Security Agreement, dated as of March __, 1999,
made by Team Health, Inc.,
and the other Grantors party thereto, to Fleet National Bank,
as Administrative Agent for the Secured Parties
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such
Security Agreement, as in effect on the date hereof and as it may hereafter be
amended, supplemented, restated, or otherwise modified from time to time, the
"Security Agreement"). Capitalized terms used and not otherwise defined herein
have the meanings ascribed to them in the Security Agreement.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Administrative Agent,
for the benefit of the Administrative Agent and the ratable benefit of the
Lenders, the Swing Line Bank and the Issuing Bank, and hereby grants to the
Administrative Agent, for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, as security for the Secured Obligations,
a lien on, and security interest in, all of the right, title and interest of the
undersigned, whether now owned or hereafter acquired, in and to the Collateral
owned by the undersigned, including, but not limited to, the property listed on
the attached supplements to Schedules I through IV to the Security Agreement.
The undersigned hereby certifies that such
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supplements have been prepared by the undersigned in substantially the form of
such Schedules and are true, accurate and complete as of the date hereof.
The undersigned hereby makes each representation and warranty set forth
in Section 8 of the Security Agreement (as modified by the attached supplements
to the Schedules to the Security Agreement) to the same extent as each other
Grantor and hereby agrees to be bound as a Grantor by all of the terms and
provisions of the Security Agreement to the same extent as each other Grantor.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAWS
PROVISIONS).
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF THE LOAN DOCUMENTS (AS DEFINED IN THE CREDIT
AGREEMENT), THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE ISSUING BANK IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Very truly yours,
[NAME OF ADDITIONAL GRANTOR]
[Address of chief executive office]
[Address of chief executive office]
By: ____________________________________
Title:__________________________________
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EXHIBIT G TO THE
CREDIT AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT
March 12, 1999
from
TEAM HEALTH, INC., and
THE SUBSIDIARY GUARANTORS NAMED HEREIN
as Grantors,
to
FLEET NATIONAL BANK,
as Administrative Agent
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TABLE OF CONTENTS
INTELLECTUAL PROPERTY SECURITY AGREEMENT................................................................. 1
PRELIMINARY STATEMENTS................................................................................... 1
SECTION 1. Grant of Security...................................................................... 1
SECTION 2. Security for Obligations............................................................... 3
SECTION 3. Grantors Remain Liable................................................................. 3
SECTION 4. Representations and Warranties......................................................... 3
SECTION 5. Further Assurances..................................................................... 5
SECTION 6. Transfers and Other Liens.............................................................. 7
SECTION 7. Administrative Agent Appointed Attorney-in-Fact........................................ 7
SECTION 8. Administrative Agent May Perform....................................................... 8
SECTION 9. The Administrative Agent's Duties...................................................... 8
SECTION 10. Remedies............................................................................... 8
SECTION 11. Indemnity and Expenses................................................................. 10
SECTION 12. Security Interest Absolute............................................................. 10
SECTION 13. Amendments; Waivers; Supplements; Etc.................................................. 11
SECTION 14. Addresses for Notices.................................................................. 11
SECTION 15. Continuing Security Interest, Assignments.............................................. 12
SECTION 16. Release and Termination................................................................ 12
SECTION 17. Execution in Counterparts.............................................................. 12
SECTION 18. Governing Law; Terms................................................................... 13
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SCHEDULES
Schedule I - Patents and Patent Applications
Schedule II - Trademark Registrations and Applications
Schedule III - Copyright Registrations and Applications
Schedule IV - Licenses
EXHIBIT
Exhibit A - Form of Intellectual Property Security Agreement
Supplement
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INTELLECTUAL PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT dated March 12, 1999, made by
Team Health, Inc., a Tennessee corporation having an office at the address set
forth on the signature page hereof (the "Borrower"), the Subsidiary Guarantors
listed on the signature pages hereof, each having an office at the address set
forth on the signature page hereof (the "Subsidiary Guarantors"), the Additional
Grantors (as defined in Section 13(c)) (the Additional Grantors, together with
the Borrower, the "Grantors") to FLEET NATIONAL BANK as administrative agent
(the "Administrative Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS:
(1) The Borrower has entered into a Credit Agreement, dated as of the
date hereof (said Agreement, as it may hereafter be amended, restated or
otherwise modified from time to time, being the "Credit Agreement"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined) with the banks, financial institutions and other institutional lenders
named therein, Fleet National Bank, as Issuing Bank, as Swing Line Bank, as
Co-Arranger and as Administrative Agent, NationsBank, N.A., as Issuing Bank and
as Co-Arranger, NationsBanc Montgomery Securities LLC, as Syndication Agent and
Donaldson, Lufkin & Jenrette Securities Corporation, as Documentation Agent.
(2) It is a condition precedent to the making of Advances by the
Lenders, the issuance of Letters of Credit by the Issuing Banks under the Credit
Agreement and the Hedge Banks entering into the Bank Hedge Agreements with the
Borrower from time to time that the Borrower shall have granted the security
interest and made the pledge and grant of the security interest contemplated by
this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Advances under the Credit Agreement, the Issuing Banks to
issue Letters of Credit under the Credit Agreement, and the Hedge Banks to enter
into Bank Hedge Agreements with the Borrower from time to time, each of the
Grantors hereby agrees with the Administrative Agent for its benefit and the
ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each of the Grantors hereby grants to the
Administrative Agent for its benefit and the ratable benefit of the Secured
Parties a security interest in the following, in each case, as to each type of
property described below, whether now owned or hereafter acquired by such
Grantor, and whether now or hereafter existing (collectively, the "Intellectual
Property Collateral"):
(a) all patents, patent applications and patentable inventions,
including, without limitation, each patent identified in Schedule I attached
hereto and made a part hereof and each patent application identified in such
Schedule I, and including, without limitation, (i) all inventions
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and improvements described and claimed therein and the right to make, use or
sell the same, (ii) the right to sue or otherwise recover for any
misappropriations thereof, (iii) all income, royalties, damages and other
payments now and hereafter due and/or payable with respect thereto (including,
without limitation, payments under all licenses entered into in connection
therewith, and damages and payments for past and future infringements thereof),
and (iv) all rights corresponding thereto throughout the world and all reissues,
divisions, continuations, continuations-in-part, substitutes, renewals and
extensions thereof, all improvements thereon and all other rights of any kind
whatsoever of each Grantor accruing thereunder or pertaining thereto (the
"Patents");
(b) all trademarks, service marks, trade names, trade dress or other
indicia of trade origin, trademark and service mark registrations, and
applications for trademark or service mark registrations and any renewals
thereof, including, without limitation, each registration and application
identified in Schedule II attached hereto and made a part hereof, and including,
without limitation, (i) the right to sue or otherwise recover for any and all
past, present and future infringements and misappropriations thereof, (ii) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for past
or future infringements thereof), and (iii) all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of the Grantor
accruing thereunder or pertaining thereto, together in each case with the
goodwill of the business connected with the use of, and symbolized by, each such
trademark, service mark, trade name, trade dress or other indicia of trade
origin (the "Trademarks");
(c) all copyrights, whether statutory or common law, and whether or not
the underlying works of authorship have been published, and all works of
authorship and other intellectual property rights therein, all copyrights of
works based on, incorporated in, derived from or relating to works covered by
such copyrights, all right, title and interest to make and exploit all
derivative works based on or adopted from works covered by such copyrights, and
all copyright registrations and copyright applications, and any renewals or
extensions thereof, including, without limitation, each copyright registration
and copyright application identified in Schedule III attached hereto and made a
part hereof, and including, without limitation, (i) the right to reproduce,
prepare derivative works, distribute copies, perform or display any of the
foregoing, (ii) the right to sue or otherwise recover for any and all past,
present and future infringements and misappropriations thereof, (iii) all
income, royalties, damages and other payments now and hereafter due and/or
payable with respect thereto (including, without limitation, payments under all
licenses entered into in connection therewith, and damages and payments for past
or future infringements thereof), and (iv) all rights corresponding thereto
throughout the world and all other rights of any kind whatsoever of the Grantor
accruing thereunder or pertaining thereto (the "Copyrights");
(d) all license agreements with any other Person in connection with any
of the Patents, Trademarks or Copyrights, or such other Person's patents, trade
names, trademarks,
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service marks, copyrights or works of authorship, or other intellectual
property, whether such Grantor is a licensor or licensee under any such license
agreement, including, without limitation, the license agreements listed on
Schedule IV attached hereto and made a part hereof (the "Licenses"); and
(e) all proceeds of any of the foregoing Patents, Trademarks,
Copyrights and Licenses, including, without limitation, any claims by such
Guarantor against third parties for infringement of the Patents, Trademarks,
Copyrights or Licenses.
SECTION 2. Security for Obligations. This Agreement secures the payment
of all Obligations of each Grantor now or hereafter existing under the Loan
Documents, whether for principal, interest, fees, expenses or otherwise (all
such Obligations secured being the "Secured Obligations").
SECTION 3. Grantors Remain Liable. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in the Intellectual Property Collateral to which it is a
party to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Administrative Agent of any of the rights or
remedies hereunder shall not release any Grantor from any of its duties or
obligations under any of the contracts and agreements included in the
Intellectual Property Collateral, and (c) neither the Administrative Agent nor
any Secured Party shall have any obligation or liability under any of the
contracts and agreements included in the Intellectual Property Collateral by
reason of this Agreement, nor shall the Administrative Agent or any Secured
Party be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
SECTION 4. Representations and Warranties. The Grantors jointly and
severally represent and warrant as follows:
(a) Each Grantor is the legal and beneficial owner of the Patents,
Trademarks and Copyrights pledged by such Grantor free and clear of any Lien,
claim, option or right of others, except for the liens and security interests
created under this Agreement or permitted under the Loan Documents (including,
without limitation, any Liens disclosed on Schedule 6.1(c) to the Credit
Agreement). No effective financing statement or other instrument similar in
effect covering all of any part of the Intellectual Property Collateral or
listing any Grantor or any of its Subsidiaries or any trade name of any Grantor
or any of its Subsidiaries as debtor is on file in any recording office
(including, without limitation, the United States Patent and Trademark Office
and the United States Copyright Office), except such as may have been filed in
favor of the Administrative Agent relating to this Agreement or one of the other
Loan Documents.
(b) Set forth in Schedule I is a complete and accurate list of all
patents owned by each Grantor. Set forth in Schedule II is a complete and
accurate list of all trademark and
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service mark registrations and all trademark and service mark applications owned
by each Grantor. Set forth in Schedule III is a complete and accurate list of
all copyright registrations and copyright applications owned by each Grantor.
Set forth in Schedule IV is a complete and accurate list of all Licenses that
are material to the conduct of each Grantor's business in which such Grantor is
(i) a licensor with respect to any of the Patents, Trademarks, or Copyrights or
(ii) a licensee of any other Person's patents, trade names, trademarks, service
marks, copyrights or works of authorship (other than licenses of commercially
available off-the-shelf computer software). Such Grantor has made all necessary
filings and recordations to protect and maintain its interest in the patents,
patent applications, trademark and service mark registrations, trademark and
service mark applications, copyright registrations and copyright applications
and Licenses set forth in Schedules I, II, III and IV hereto.
(c) Each patent, patent application, trademark or service mark
registration, trademark or service mark application, copyright registration, and
copyright application of each Grantor set forth in Schedule I, II or III hereto
is subsisting and has not been adjudged invalid, unregisterable or
unenforceable, in whole or in part, and, to such Grantor's knowledge, is valid,
registrable and enforceable. Each License of each Grantor identified in Schedule
IV is subsisting and has not been adjudged invalid or unenforceable, in whole or
in part, and, to such Grantor's knowledge, is valid and enforceable. No Grantor
is aware of any uses of any item of Intellectual Property Collateral which would
be expected to lead to such item becoming invalid or unenforceable, including
unauthorized uses by third parties and uses which were not supported by the
goodwill of the business connected with such Intellectual Property Collateral.
(d) No Grantor has made any previous assignment, transfer or agreement
constituting a present or future assignment, transfer or encumbrance of any of
the Intellectual Property Collateral. No Grantor has granted any license (other
than those listed on Schedule IV hereto), release, covenant not to sue, or
non-assertion assurance to any Person with respect to any part of the
Intellectual Property Collateral.
(e) Each Grantor has used proper statutory notice in connection with
its use of each patent, registered trademark and service mark and copyright
contained in Schedule I, II or III.
(f) Upon the filing by the Administrative Agent or its representatives
of the proper financing statements referred to in Section 3.1(a)(ii) of the
Credit Agreement and the filing and recording of this Agreement in the United
States Patent and Trademark Office against each patent, patent application,
trademark or service mark registration, trademark or service mark application,
and in the U.S. Copyright Office against each copyright registration, and
copyright application of each Grantor set forth in Schedule I, II or III hereto,
this Agreement creates in favor of the Administrative Agent, on behalf of itself
and the Lender Parties, a valid and perfected first and only priority security
interest, subject to Liens permitted under the Credit Agreement, in the
Intellectual Property Collateral of each Grantor, securing the payment of the
Secured Obligations.
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(g) Other than as disclosed on Schedule 4.4 to the Credit Agreement, no
consent of any Person and no authorization, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or other
Person is required (i) for the grant by any Grantor of the security interest
granted hereby, for the pledge by any Grantor of the Intellectual Property
Collateral pursuant hereto, or for the execution, delivery or performance of
this Agreement by each Grantor, (ii) for the perfection or maintenance of the
pledge and security interest created hereby (including the first and only
priority nature of such pledge and security interest), except for the filing of
financing and continuation statements under the Uniform Commercial Code, which
financing statements are in proper form and are duly executed, and the filing
and recording of this Agreement in the United States Patent and Trademark Office
against each patent, patent application, trademark or service mark registration,
trademark or service mark application, and in the U.S. Copyright Office against
each copyright registration, and copyright application of each Grantor set forth
in Schedule I, II or III hereto, or (iii) for the exercise by the Administrative
Agent of its rights provided for in this Agreement or the remedies in respect of
the Patents, Trademarks and Copyrights pursuant to this Agreement.
(h) There are no claims by any third party relating to any item of
Intellectual Property Collateral.
(i) No claim has been made and is continuing or threatened that any
item of Intellectual Property Collateral is invalid or unenforceable or that the
use by any Grantor of any Intellectual Property Collateral does or may violate
the rights of any Person. To the best of each Grantor's knowledge, there is
currently no infringement or unauthorized use of any item of Intellectual
Property Collateral.
(j) Each Grantor has taken all reasonably necessary steps to use
consistent standards of quality in the provision of all services provided under
or in connection with any of the Patents, Trademarks and Copyrights and has
taken all necessary steps to ensure that all licensed users of any of the
Patents, Trademarks and Copyrights use such consistent standards of quality.
SECTION 5. Further Assurances. (a) Each of the Grantors jointly and
severally agrees that from time to time, at the expense of the Borrower, such
Grantor shall promptly execute and deliver all further instruments and
documents, and take all further action, that the Administrative Agent believes
may be reasonably necessary or reasonably desirable, or that the Administrative
Agent may reasonably request, in order to perfect and protect any pledge or
security interest granted or purported to be granted hereby or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder
with respect to any part of the Intellectual Property Collateral. Without
limiting the generality of the foregoing, each Grantor will, upon the reasonable
request of the Administrative Agent, with respect to the Intellectual Property
Collateral owned by such Grantor, execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be reasonably
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216
necessary or desirable, or as the Administrative Agent may reasonably request,
in order to perfect and preserve the pledge and security interest granted or
purported to be granted hereby.
(b) Each Grantor hereby authorizes the Administrative Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Intellectual Property Collateral without the signature
of such Grantor where permitted by law. A photocopy or other reproduction of
this Agreement or any financing statement covering the Intellectual Property
Collateral or any part thereof will be sufficient as a financing statement where
permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from time to
time statements and schedules further identifying and describing the
Intellectual Property Collateral and such other reports in connection with the
Intellectual Property Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(d) Each Grantor agrees that, should it obtain an ownership interest in
any patent, patent application, patentable invention, trademark, service mark,
trade name, trade dress, other indicia of trade origin, trademark or service
mark registration, trademark or service mark application, copyright, copyright
registration, copyright application or work of authorship or become party to any
License, which is not now a part of the Intellectual Property Collateral, (i)
the provisions of Section 1 will automatically apply thereto, and (ii) any such
patent, patent application, patentable invention, trademark, service mark, trade
name, trade dress, indicia of trade origin, trademark or service mark
registration, trademark or service mark application (together with the goodwill
of the business connected with the use of same and symbolized by same),
copyright, copyright registration, copyright application, work of authorship or
License will automatically become part of the Intellectual Property Collateral.
Each Grantor further agrees that it shall deliver to the Administrative Agent a
written report, in reasonable detail, on a semi-annual basis (starting, for this
year, on June 30, 1999, and thereafter on December 31 and June 30 of each
succeeding year), setting forth each new patent, patent application, trademark
or service mark registration, trademark or service mark application, copyright
registration, copyright application or license that such Grantor has filed,
acquired or otherwise obtained in the preceding six month reporting period. Such
Grantor authorizes the Administrative Agent to modify this Agreement by amending
Schedules I, II, III and IV hereto (and shall cooperate with the Administrative
Agent in effecting any such amendment) to include any patent, patent
application, trademark or service mark registration, trademark or service mark
application, copyright registration, copyright application or License which
becomes part of the Intellectual Property Collateral.
(e) With respect to each patent, patent application, trademark or
service mark registration, trademark or service mark application, copyright
registration and copyright application set forth in Schedule I, II or III
hereto, each Grantor agrees to take all necessary or desirable steps in such
Grantor's reasonable business judgment, including, without limitation, in the
United States Patent and Trademark Office and the United States Copyright Office
or in any
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court, to (i) maintain each such patent, trademark or service mark registration,
and copyright registration, and (ii) pursue each such patent application,
trademark or service mark application and copyright application now or hereafter
included in the Intellectual Property Collateral, including, without limitation,
the filing of responses to office actions issued by the United States Patent and
Trademark Office, the filing of affidavits under Sections 8 and 15 of the United
States Trademark Act, the filing of divisional, continuation,
continuation-in-part and substitute applications, the filing of applications for
re-issue, renewal or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings. Each Grantor agrees to take
corresponding steps with respect to each new or acquired patent, patent
application, trademark or service mark registration, trademark or service mark
application, copyright registration, or copyright application to which it is now
or later becomes entitled. Any and all expenses incurred in connection with such
activities will be borne by such Grantor. No Grantor shall discontinue use of or
otherwise abandon any patent, patent application, trademark or service mark,
trademark or service mark registration, trademark or service mark application,
copyright registration, or copyright application now or hereafter included in
the Intellectual Property Collateral, unless the relevant Grantor shall have
first determined in its reasonable business judgment that such use or pursuit or
maintenance of same is no longer desirable in the conduct of such Grantor's
business, in which case, such Grantor shall give written notice of any such
abandonment or discontinuance to the Administrative Agent pursuant to the
semi-annual reporting requirement contained in Section 5(d) above.
(f) Each Grantor agrees to notify the Administrative Agent promptly and
in writing if it learns (i) that any item of the Intellectual Property
Collateral has been determined to have become abandoned or dedicated to the
public or (ii) of the institution of any proceeding (including, without
limitation, the institution of any proceeding in the United States Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral.
(g) In the event that a Grantor makes a determination in its reasonable
business judgment that any item of the Intellectual Property Collateral is
infringed or misappropriated by a third party, such Grantor shall promptly
notify the Administrative Agent and will take such actions as such Grantor or
the Administrative Agent deems appropriate under the circumstances to protect
such Intellectual Property Collateral, including, without limitation, suing for
infringement or misappropriation and for an injunction against such infringement
or misappropriation. Any expense in connection with such activities will be
borne by such Grantor.
(h) Each Grantor shall continue to use proper statutory notice in
connection with its use of each of its patents, registered trademarks and
service marks, and copyrights contained in Schedule I, II or III.
(i) Each Grantor shall take all steps which it or the Administrative
Agent deems appropriate in its reasonable business judgment under the
circumstances to preserve and protect its Intellectual Property Collateral,
including, without limitation, maintaining the quality of any
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and all services provided in connection with any of the Patents, Trademarks and
Copyrights, consistent with the quality of the products and services as of the
date hereof, and taking all steps necessary to ensure that all licensed users of
any of the Patents, Trademarks and Copyrights use such consistent standards of
quality.
SECTION 6. Transfers and Other Liens. Each of the Grantors agrees that
it shall not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of (except as provided in Section 5(e)) or grant any option with respect
to, any of the Intellectual Property Collateral, or (ii) create or suffer to
exist any Lien upon or with respect to any of the Intellectual Property
Collateral except for the pledge and security interest created by this Agreement
and Permitted Liens.
SECTION 7. Administrative Agent Appointed Attorney-in-Fact. Each of the
Grantors hereby irrevocably appoints the Administrative Agent such Grantor's
attorney-in-fact, with full authority in the place and stead of such Grantor and
in the name of such Grantor or otherwise, upon the occurrence and during the
continuance of an Event of Default and upon notice to such Grantor to take any
action and to execute any instrument that the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
(a) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or in
respect of any of the Intellectual Property Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; and
(c) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable to enforce the
rights of the Administrative Agent with respect to any of the Intellectual
Property Collateral.
SECTION 8. Administrative Agent May Perform. If any of the Grantors
fails to perform any agreement contained herein, the Administrative Agent may
itself, upon fifteen (15) days' notice to such Grantor, perform, or cause
performance of, such agreement, and the reasonable expenses of the
Administrative Agent incurred in connection therewith shall be borne by such
Grantor.
SECTION 9. The Administrative Agent's Duties. The powers conferred on
the Administrative Agent hereunder are solely to protect its interest in the
Intellectual Property Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Intellectual
Property Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Administrative Agent shall have no duty as to any
Intellectual Property Collateral, whether or not the Administrative Agent or any
other Secured
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Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights
pertaining to any Intellectual Property Collateral. The Administrative Agent
shall exercise reasonable care in the custody and preservation of any
Intellectual Property Collateral in its possession and shall accord such
Intellectual Property Collateral treatment equal to that which the
Administrative Agent accords its own property.
SECTION 10. Remedies. If any Event of Default shall have occurred and
be continuing:
(a) The Administrative Agent may exercise in respect of the
Intellectual Property Collateral, in addition to other rights and remedies
provided for herein or in any other Loan Document or otherwise available to it,
all the rights and remedies of a secured party upon default under the New York
Uniform Commercial Code in effect in the State of New York at such time (the
"N.Y. Uniform Commercial Code") (whether or not the N.Y. Uniform Commercial Code
applies to the affected Intellectual Property Collateral) and also may (i)
require any and all of the Grantors to, and each Grantor hereby agrees that it
will at its expense and upon request of the Administrative Agent forthwith,
assemble all or part of the documents and things embodying any part of the
Intellectual Property Collateral as directed by the Administrative Agent and
make them available to the Administrative Agent at a place and time to be
designated by the Administrative Agent; (ii) without notice except as specified
below and as required by law, sell the Intellectual Property Collateral or any
part thereof in one or more parcels at public or private sale, at any of the
Administrative Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Administrative Agent may deem
commercially reasonable; and (iii) occupy any premises owned or leased by any
Grantor where documents and things embodying the Intellectual Property
Collateral or any part thereof are assembled or located for a reasonable period
in order to effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation. In the event of any
sale, assignment, or other disposition of any of the Intellectual Property
Collateral, the goodwill of the business connected with and symbolized by any of
the Intellectual Property Collateral subject to such disposition will be
included, and such Grantor will supply to the Administrative Agent or its
designee such Grantor's know-how and expertise, and documents and things
embodying the same, relating to the manufacture, distribution, advertising and
sale of products or the provision of services relating to any Intellectual
Property Collateral subject to such disposition and, including, but not limited
to, such Grantor's customer lists and other records and documents relating to
such Intellectual Property Collateral and to the manufacture, distribution,
advertising and sale of such products and services. Each Grantor agrees that, to
the extent notice of sale shall be required by law, at least ten (10) days'
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made will constitute reasonable
notification. The Administrative Agent shall not be obligated to make any sale
of Intellectual Property Collateral regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private sale from time
to time by announcement at the time and place fixed
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therefor, and such sale may, without further notice except as required by law,
be made at the time and place to which it was so adjourned.
(b) All cash proceeds received by the Administrative Agent in respect
of any sale of, collection from, or other realization upon, all or any part of
the Intellectual Property Collateral may, in the discretion of the
Administrative Agent, be held by the Administrative Agent as collateral for,
and/or then or at any time thereafter applied (after payment of any amounts
payable to the Administrative Agent pursuant to Section 11(b)), in whole or in
part, by the Administrative Agent, for the ratable benefit of the Secured
Parties against all or any part of the Secured Obligations in such order as the
Credit Agreement may require and otherwise as the Administrative Agent may
elect. Any surplus of such cash or cash proceeds held by the Administrative
Agent and remaining after payment in full of all of the Secured Obligations
shall be paid over to the applicable Grantors or to whomever may be lawfully
entitled to receive such surplus.
(c) The Administrative Agent may exercise any and all rights and
remedies of any of the Grantors in respect of the Intellectual Property
Collateral.
(d) All payments received by any Grantor in respect of the Intellectual
Property Collateral shall be received in trust for the benefit of the
Administrative Agent, shall be segregated from other funds of such Grantor and
shall be forthwith paid over to the Administrative Agent in the same form as so
received (with any necessary or desirable endorsement or assignment).
SECTION 11. Indemnity and Expenses. (a) Each of the Grantors hereby
jointly or severally agrees to indemnify the Administrative Agent from and
against any and all claims, losses and liabilities arising out of or resulting
from this Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from the
Administrative Agent's gross negligence or willful misconduct as determined by a
final non-appealable judgment of a court of competent jurisdiction.
(b) The Borrower will, upon demand, pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use, or operation of, or the sale of, collection
from or other realization upon, any of the Intellectual Property Collateral,
(iii) the exercise or enforcement of any of the rights of the Administrative
Agent or the Lender Parties hereunder or (iv) the failure by any Grantor to
perform or observe any of the provisions hereof.
SECTION 12. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against any or all Grantors to
enforce this Agreement, irrespective of whether any action is brought against
the Borrower or whether the Borrower is joined in any such
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221
action or actions. All rights of the Administrative Agent and the pledge and
security interest created hereunder, and all obligations of each Grantor
hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of any Loan Document or any
other agreement, instrument or document relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations or any other amendment,
restatement or other modification or waiver of or any consent to any departure
from any Loan Document, including, without limitation, any increase in the
Secured Obligations resulting from the extension of additional credit to the
Borrower or any Guarantor or any of their Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any other
collateral, or any taking, release or amendment, restatement, other modification
or waiver of or consent to any departure from any guaranty, for all or any of
the Secured Obligations;
(d) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or any
other assets of the Borrower, any Guarantor or any of their Subsidiaries;
(e) any change, restructuring or termination of the corporate structure
or existence of the Borrower or any Guarantor or any of their Subsidiaries; or
(f) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, any Grantor or a third party grantor of a
security interest.
SECTION 13. Amendments; Waivers; Supplements; Etc. (a) No amendment or
waiver of any provision of this Agreement, and no consent to any departure by
any Grantor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Administrative Agent, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) No failure on the part of the Administrative Agent to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(c) Upon the execution and delivery by any Person of an intellectual
property security agreement supplement, in each case in substantially the form
of Exhibit A hereto (each an "Intellectual Property Security Agreement
Supplement"), (i) such Person shall be referred to as an "Additional Grantor"
and shall be and become a Grantor, and each reference in this
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Agreement to "Grantor" shall also mean and be a reference to such Additional
Grantor and each reference in any other Loan Document to a "Grantor" or a "Loan
Party" shall also mean and be a reference to such Additional Grantor, and (ii)
the annexes attached to each Intellectual Property Security Agreement Supplement
shall be incorporated into and become a part of and supplement Schedules I, II,
III and IV, as appropriate, hereto and the Administrative Agent may attach such
annexes as supplements to such Schedules, and each reference to such Schedules
shall mean and be a reference to such Schedules, as so supplemented.
SECTION 14. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered,
if to any Grantor, addressed to it at the address set forth below its name on
the signature pages hereof; if to any Additional Grantor, addressed to it at the
address set forth below its name on the signature page to the Intellectual
Property Security Agreement Supplement executed and delivered by such Additional
Grantor; if to the Administrative Agent, addressed to it at its address set
forth in Section 11.2 of the Credit Agreement; or, as to each other party, at
such other address as shall be designated by such party in a written notice to
the Grantors and the Administrative Agent. All such notices and communications
shall, when mailed by certified mail, return receipt requested, telegraphed,
telecopied or telexed, be effective three (3) days after mailing, upon delivery
to the telegraph company, upon transmission by telecopier or upon confirmation
by telex answerback, respectively, addressed as aforesaid. Any party hereto may
change the Person, address or telecopier number to whom or which notices are to
be given hereunder, by notice duly given hereunder; provided, however, that any
such notice shall be deemed to have been given hereunder only when actually
received by the party to which it is addressed.
SECTION 15. Continuing Security Interest, Assignments. This Agreement
shall create a continuing security interest in the Intellectual Property
Collateral and shall (a) remain in full force and effect until the latest of (i)
the indefeasible payment in full in cash of all of the Secured Obligations, (ii)
the expiration, termination or cancellation of all of the Letters of Credit and
(iii) the date of termination in whole of all Commitments under the Credit
Agreement, (b) be binding upon each Grantor, its successors and assigns and (c)
inure, together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Lender Parties and their respective successors,
transferees and assigns. Without limiting the generality of the foregoing clause
(c), any Lender may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement (including, without
limitation, all or any portion of its Commitment, the Advances owing to it and
the Note or Notes held by it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to such
Lender herein or otherwise, in each case as provided in Section 11.7 of the
Credit Agreement.
SECTION 16. Release and Termination. (a) Upon any sale, lease, transfer
or other disposition of any item of Intellectual Property Collateral in
accordance with the terms of the Loan Documents, the Administrative Agent will,
at the Grantors' expense, execute and deliver
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223
to such Grantor such documents as such Grantor shall reasonably request to
evidence the release of such item of Intellectual Property Collateral from the
security interest granted hereby; provided, however, that (i) at the time of
such request and such release, no Default shall have occurred and be continuing,
(ii) such Grantor shall have delivered to the Administrative Agent, at least
thirty (30) Business Days prior to the date of the proposed release, a written
request for release describing the item of Intellectual Property Collateral and
the terms of the sale, lease, transfer or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith,
together with a form of release for execution by the Administrative Agent and a
certification by such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.6 of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Administrative Agent at the closing and (v) the
Administrative Agent shall have approved such sale, lease, transfer or other
disposition in writing.
(b) Upon the latest of (i) the indefeasible payment in full in cash of
the Secured Obligations, (ii) the expiration, termination or cancellation of all
of the Letters of Credit and (iii) the date of termination in whole of all
Commitments under the Credit Agreement, the pledge and security interest granted
by each of the Grantors hereby shall terminate and all rights to the
Intellectual Property Collateral shall revert to the appropriate Grantor. Upon
any such termination, the Administrative Agent will, upon receipt of a written
request and at the Grantors' expense, execute and deliver to the appropriate
Grantor such documents as such Grantor shall reasonably request to evidence such
termination.
SECTION 17. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the 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 a signature page to this Agreement by
telecopier shall be as effective as delivery of a manually executed counterpart
of this Agreement.
SECTION 18. Governing Law; Terms. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York (without
giving effect to its conflicts of law principles), except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of the Intellectual Property Collateral are governed by
the laws of a jurisdiction other than the State of New York. Unless otherwise
defined herein or in the Credit Agreement, terms used in Article 9 of the N.Y.
Uniform Commercial Code are used herein as therein defined.
[SIGNATURE PAGE FOLLOWS]
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224
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer, thereunto duly authorized, as of the date
first above written.
TEAM HEALTH, INC.
By:_________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
CLINIC MANAGEMENT SERVICES, INC.
EMERGICARE MANAGEMENT, INCORPORATED
HOSPITAL BASED PHYSICIAN SERVICES, INC.
TEAM RADIOLOGY, INC.
By:________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
ALLIANCE CORPORATION
CHARLES L. SPRINGFIELD, INC.
CLINIC MANAGEMENT SERVICES, INC.
DANIEL & YEAGER, INC.
DRS. SHEER, AHEARN AND ASSOCIATES, INC.
EMERGENCY COVERAGE CORPORATION
EMERGENCY MANAGEMENT SPECIALISTS, INC.
EMERGENCY PHYSICIAN ASSOCIATES, INC.
EMERGENCY PHYSICIANS OF MANATEE, INC.
EMERGENCY PROFESSIONAL SERVICES, INC.
INPHYNET CONTRACTING SERVICES, INC.
INPHYNET JOLIET, INC.
INPHYNET LOUISIANA, INC.
INPHYNET SOUTH BROWARD, INC.
HERSCHEL FISCHER, INC.
IMBS, INC.
INPHYNET ANESTHESIA OF WEST VIRGINIA, INC.
INPHYNET HOSPITAL SERVICES, INC.
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT]
225
INPHYNET MEDICAL MANAGEMENT INSTITUTE, INC.
KARL G. MANGOLD, INC.
MED: ASSURE SYSTEMS, INC.
METROAMERICAN RADIOLOGY, INC.
NEO-MED, INC.
NORTHWEST EMERGENCY PHYSICIANS
INCORPORATED
PARAGON ANESTHESIA, INC.
PARAGON CONTRACTING SERVICES, INC.
PARAGON IMAGING CONSULTANTS, INC.
QUANTUM PLUS, INC.
REICH, SEIDELMANN & JANICKI CO.
ROSENDORF MARGULIES BORUSHOK SCHOENBAUM
RADIOLOGY ASSOCIATES OF HOLLYWOOD, INC.
SARASOTA EMERGENCY MEDICAL CONSULTANTS, INC.
SOUTHEASTERN EMERGENCY PHYSICIANS OF MEMPHIS, INC.
SOUTHEASTERN EMERGENCY PHYSICIANS, INC.
TEAM HEALTH FINANCIAL SERVICES, INC.
THBS, INC.
THE EMERGENCY ASSOCIATES FOR MEDICINE, INC.
VIRGINIA EMERGENCY PHYSICIANS, INC.
By:_________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
FISCHER MANGOLD PARTNERSHIP
By: Herschel Fischer, Inc., its general partner
Karl G. Mangold, Inc., its general partner
By:___________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT]
226
MT. DIABLO EMERGENCY PHYSICIANS, a California
General Partnership
By: Herschel Fischer, Inc., its general partner
Karl G. Mangold, Inc., its general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
PARAGON HEALTHCARE LIMITED PARTNERSHIP
By:InPhyNet Hospital Services, Inc.,
its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
TEAM HEALTH BILLING SERVICES, L.P.
By: Team Health, Inc., its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
TEAM HEALTH SOUTHWEST L.P.
By: Team Radiology, Inc., its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT]
227
ACCEPTED:
FLEET NATIONAL BANK, AS ADMINISTRATIVE AGENT
By: _____________________________________
Name: Ginger Stolzenthaler
Title: Senior Vice President
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT]
228
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
On the ____ day of March in the year 1999, before me, the undersigned, a Notary
Public in and for said state, personally appeared H. Lynn Massingale personally
known to me or proved to me on the basis of satisfactory evidence to be the
person whose name is subscribed to the within instrument and acknowledged to me
that he executed the same in his capacity, and that by his signature on the
instrument, the entities upon behalf of which he acted, executed the instrument.
________________________________
Notary Public
229
EXHIBIT A
to
Intellectual Property Security Agreement
FORM OF INTELLECTUAL PROPERTY
SECURITY AGREEMENT SUPPLEMENT
_______________, ____
Fleet National Bank, as Administrative Agent
under the Credit Agreement
referred to below
One Federal Street
Boston, Massachusetts 02110
Attention: Corporate Banking Group
Intellectual Property Security Agreement,
dated as of March __, 1999,
made by Team Health, Inc.,
and the other Grantors to
Fleet National Bank, as Administrative Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Intellectual Property
Security Agreement (such Intellectual Property Security Agreement, as in effect
on the date hereof and as it may hereafter be amended, supplemented, restated or
otherwise modified from time to time, being the "Intellectual Property Security
Agreement"). The terms defined in the Intellectual Property Security Agreement
(or in the Credit Agreement referred to therein) and not otherwise defined
herein are used herein as therein defined.
The undersigned hereby agrees, as of the date first above
written, to become a Grantor under the Intellectual Property Security Agreement
as if it were an original party thereto and agrees that each reference in the
Intellectual Property Security Agreement to "Grantor" shall also mean and be a
reference to the undersigned.
The undersigned hereby pledges to the Administrative Agent,
for the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent, for the ratable benefit of
230
the Secured Parties, as security for the Secured Obligations a lien on and
security interest in, all of the right, title and interest of the undersigned,
whether now owned or hereafter acquired, in and to Intellectual Property
Collateral owned by the undersigned, including, but not limited to, the property
listed on Annex I, II, III and IV hereto. Schedules I, II, III and IV to the
Intellectual Property Security Agreement are hereby supplemented by Annexes I,
II, III and IV hereto, respectively. The undersigned hereby certifies on behalf
of such Grantor that such Annexes have been prepared by the undersigned in
substantially the form of Schedules I, II, III and IV to the Intellectual
Property Security Agreement and are true, accurate and complete in all material
respects as of the date hereof.
The undersigned on behalf of such Grantor hereby makes each
representation and warranty set forth in Section 4 of the Intellectual Property
Security Agreement (as supplemented by the attached Annexes) to the same extent
as each other Grantor and hereby agrees to be bound as a Grantor by all of the
terms and provisions of the Intellectual Property Security Agreement to the same
extent as each other Grantor.
This Intellectual Property Security Agreement Supplement shall
be governed by and construed in accordance with the laws of the State of New
York.
Very truly yours,
[NAME OF ADDITIONAL INTELLECTUAL
PROPERTY GRANTOR]
By:_____________________________________
Name:___________________________________
Title:__________________________________
Address:________________________________
________________________________________
231
EXHIBIT H TO THE
CREDIT AGREEMENT
HOLDINGS PLEDGE AGREEMENT
March 12, 1999
between
TEAM HEALTH HOLDINGS, L.L.C.,
as Pledgor,
and
FLEET NATIONAL BANK,
as Administrative Agent
232
HOLDINGS PLEDGE AGREEMENT
HOLDINGS PLEDGE AGREEMENT ("Pledge Agreement") dated March 12, 1999 by
and between TEAM HEALTH HOLDINGS, L.L.C., a Delaware limited liability company,
having an office at the address set forth on the signature page hereof (the
"Pledgor") and FLEET NATIONAL BANK ("Fleet"), a national banking association,
having an office at the address set forth on the signature page hereof, as
administrative agent (in such capacity, together with its successors in such
capacity, the "Administrative Agent") for the Secured Parties (as defined in the
Credit Agreement referred to below).
PRELIMINARY STATEMENTS:
(1) Team Health, Inc., a Tennessee corporation, having an office at
[Address] (the "Borrower") has entered into a Credit Agreement, dated as of even
date herewith (said Agreement, as it may hereafter be amended, restated,
supplemented, extended or otherwise modified from time to time, the "Credit
Agreement"; the terms defined therein and not otherwise defined herein being
used herein as therein defined), with the banks, financial institutions and
other institutional lenders named therein, Fleet National Bank, as Issuing Bank,
as Swing Line Bank, as Co-Arranger and as Administrative Agent, NationsBank,
N.A., as Issuing Bank and as Co-Arranger, NationsBanc Montgomery Securities LLC,
as Syndication Agent and Donaldson, Lufkin & Jenrette Securities Corporation, as
Documentation Agent.
(2) As of the date hereof, the Pledgor is the owner of 9,267,273 shares
of the Borrower's Common Stock, no par value (the "Common Stock"), and
94,299.091 shares of the Borrower's class A Preferred Stock, $.01 par value (the
"Preferred Stock" and together with the Common Stock, the "Pledged Stock"),
which are 92.7% and 94.3%, respectively, of the issued and outstanding shares of
Common Stock and Preferred Stock of the Borrower.
(3) The Pledgor has guaranteed, on a limited basis, to the Lenders and
the Administrative Agent the full payment and performance by the Borrower of all
of the Borrower's Obligations under the Credit Agreement and the other Loan
Documents by the execution and delivery to the Administrative Agent of a
guaranty of even date herewith (hereinafter, as it may from time to time be
amended, modified or supplemented, the "Holdings Guaranty").
(4) It is a condition precedent to the Lenders' making of Advances, the
Issuing Banks' issuing of Letters of Credit under the Credit Agreement and the
Hedge Banks' entering into Bank Hedge Agreements with the Borrower from time to
time that the Pledgor shall have executed and delivered this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lenders to make Advances under the Credit Agreement, the Issuing Banks to
issue Letters of
233
Credit under the Credit Agreement and the Hedge Banks to enter into Bank Hedge
Agreements with the Borrower from time to time, the Pledgor hereby agrees with
the Administrative Agent, for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, as follows:
1. The term "Pledged Stock" as used herein shall mean and include the
shares of Common Stock of the Borrower referred to in Preliminary Statement (2)
above, and, also, any shares, stock certificates, options or rights issued by
the Borrower as an addition to, in substitution of, or in exchange for any such
shares, and any and all proceeds thereof, now or hereafter owned or acquired by
the Pledgor.
2. (a) As collateral security for the due payment and performance
of all indebtedness and other liabilities and obligations of the Pledgor to the
Administrative Agent and the Secured Parties, whether now existing or hereafter
arising, under or out of the Holdings Guaranty and this Pledge Agreement (all of
the foregoing indebtedness, liabilities and obligations are hereinafter referred
to collectively as the "Obligations"), the Pledgor hereby pledges, assigns,
hypothecates, delivers and sets over to the Administrative Agent, as collateral
security, all the Pledged Stock, and hereby grants to the Administrative Agent a
first security interest in all the Pledged Stock and in any and all proceeds
thereof and substitutions therefor.
(b) If the Pledgor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital), option or rights, whether
as an addition to, in substitution of, or in exchange for any shares of the
Pledged Stock, or otherwise, the Pledgor shall accept any such instruments as
the agent for the Administrative Agent, shall hold them in trust for the
Administrative Agent, and shall deliver them forthwith to the Administrative
Agent in the exact form received, with the Pledgor's endorsement when necessary
and/or appropriate stock powers duly executed in blank, to be held by the
Administrative Agent, subject to the terms hereof, as further collateral
security for the Obligations.
(c) Any or all shares of the Pledged Stock held by the
Administrative Agent hereunder may, at the option of the Administrative Agent or
its nominee be registered in the name of the Administrative Agent or its
nominee. The Administrative Agent or its nominee may, upon prior written notice
to the Pledgor, after the occurrence and during the continuation of any Event of
Default, exercise all voting and corporate rights at any meeting of the
shareholders of the Borrower including, without limitation, the right to amend
the by-laws, to remove the directors, with or without cause, and to nominate and
elect successor directors, and exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining to
any shares of the Pledged Stock as if it were the absolute owner thereof,
including, without limitation, the right to receive dividends payable thereon,
and the right to exchange, at its discretion, any and all of the Pledged Stock
upon the merger, consolidation, reorganization, recapitalization or other
readjustment of any corporation issuing any of such shares or upon the
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exercise by any such issuer of any right, privilege or option pertaining to any
shares of the Pledged Stock, and in connection therewith, to deposit and deliver
any and all of the Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine, all without liability except to account for property actually
received by it, but the Administrative Agent shall have no duty to exercise any
of the aforesaid rights, privileges or options and shall not be responsible for
any failure to do so or delay in so doing.
(d) Upon prior written notice to the Pledgor, in the event of
the occurrence and continuation of any Event of Default, the Administrative
Agent shall have the right to require that all cash dividends payable with
respect to any part of the Pledged Stock be paid to the Administrative Agent to
be held by the Administrative Agent as additional security hereunder until
applied to the Obligations.
(e) In the event of the occurrence and continuation of any
Event of Default, the Administrative Agent without demand of performance or
other demand, advertisement or notice of any kind (except the notice specified
below of time and place of public or private sale) to or upon the Pledgor or any
other Person (all and each of which demands, advertisements and/or notices are,
to the extent permitted by law, hereby expressly waived), may forthwith collect,
receive, appropriate and realize upon the Pledged Stock, or any part thereof,
and/or may forthwith sell, assign, give an option or options to purchase,
contract to sell or otherwise dispose of and deliver the Pledged Stock, or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange, broker's board or at any of the Administrative Agent's offices or
elsewhere at such prices and on such terms (including, without limitation, a
requirement that any purchaser of all or any part of the Pledged Stock shall be
required to purchase the shares constituting the Pledged Stock for investment
and without any intention to make a distribution thereof) as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk, with the right to the Administrative Agent or any purchaser upon any such
sale or sales, whether public or private, to purchase the whole or any part of
the Pledged Stock so sold, free of any right or equity of redemption in the
Pledgor, which right or equity is hereby expressly waived and released.
(f) The proceeds of any collection, recovery, receipt,
appropriation, realization or sale as aforesaid, shall be applied as follows:
(i) First, to the costs and expenses of every kind
incurred in connection therewith or incidental to the care, safekeeping or
otherwise of any and all of the Pledged Stock or in any way relating to the
rights of the Administrative Agent hereunder, including reasonable attorneys'
fees and legal expenses;
(ii) Second, to the satisfaction of the Obligations;
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(iii) Third, to the payment of any other amounts
required by applicable law (including, without limitation, Section 9-504(1)(c)
of the Uniform Commercial Code); and
(iv) Fourth, to the Pledgor to the extent of the
surplus proceeds, if any.
(g) The Administrative Agent need not give more than five (5)
Business Days' notice to the Pledgor of the time and place of any public sale or
of the time after which a private sale may take place and such notice shall be
deemed to be reasonable notification of such matters.
(h) The Pledgor hereby grants to the Administrative Agent full
power, without notice to the Pledgor, and without in any way affecting the
obligations of the Pledgor hereunder, to deal in any manner with the Borrower or
the Obligations or the collateral (other than the Pledged Stock, as to which the
other provisions of this Agreement shall govern) securing any of the Obligations
(hereinafter called the "Collateral") and the Pledgor hereby irrevocably waives
to the fullest extent permitted by applicable law any defenses it may now or
hereafter have in any way relating to, any or all of the following: (i) any lack
of validity or enforceability of any Loan Document or any agreement or
instrument relating thereto; (ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations or any other
obligations of any other Loan Party under the Loan Documents, or any amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Obligations resulting from the extension
of additional credit to the Borrower or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or non-perfection of any Collateral, or any
taking, release or amendment or waiver of or consent to departure from any other
guaranty, for all or any of the Obligations; (iv) any manner of application of
Collateral, or proceeds thereof, to all or any of the Obligations, or any manner
of sale or other disposition of any Collateral for all or any of the Obligations
or any other obligations of any other Loan Party under the Loan Documents or any
other assets of the Borrower or any of its Subsidiaries; (v) any change,
restructuring or termination of the corporate structure or existence of the
Borrower or any of its Subsidiaries; (vi) any failure of any Secured Party to
disclose to the Borrower or the Pledgor any information relating to the
financial condition, operations, properties or prospects of any other Loan Party
now or in the future known to any Secured Party (the Pledgor waiving any duty on
the part of the Secured Parties to disclose such information); or (vii) any
other circumstance (including, without limitation, any statute of limitations)
or any existence of or reliance on any representation by the Administrative
Agent or any other Secured Party that might otherwise constitute a defense
available to, or a discharge of, the Borrower, the Pledgor or any other
guarantor or surety (other than payment). The Pledgor hereby waives presentment,
demand for payment, protest and notice of dishonor or nonpayment of or with
respect to the Obligations. The obligations of the Pledgor under this Pledge
Agreement are independent of the Obligations of the Borrower or of any other
obligations of any Loan Party or pledgor under the Loan Documents, and a
separate action or actions may be brought and prosecuted against the Pledgor to
enforce this Pledge Agreement, without joining the Borrower, any Loan Party or
any other pledgor under the Loan Documents. The Administrative Agent may enforce
its rights and remedies under this Pledge Agreement without being obligated to
resort first to the Borrower or the Collateral or to
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236
any other security or to any other remedy or remedies and may pursue all or any
of its remedies at one or at different times.
(i) In the event that the proceeds of any collection,
recovery, receipt, appropriation, realization, or sale as aforesaid are
insufficient to pay all amounts to which the Administrative Agent is legally
entitled, the Pledgor will not be liable for any deficiency.
3. The Pledgor represents and warrants that:
(a) The Pledged Stock is owned directly and beneficially and
of record by the Pledgor, has been duly authorized and validly issued and is
fully paid and non-assessable;
(b) All of the shares of the Pledged Stock are owned by the
Pledgor free and clear of any pledge, mortgage, hypothecation, lien, charge,
encumbrance or any security interest in such shares or the proceeds thereof,
except for the security interest granted to the Administrative Agent hereunder,
Permitted Liens and unperfected Liens under Section 6.1(g) of the Credit
Agreement; and
(c) Upon delivery of the Pledged Stock to the Administrative
Agent for the benefit of the Secured Parties, this Pledge Agreement creates and
grants a valid first lien on and perfected security interest in the shares of
the Pledged Stock and the proceeds thereof, subject to no prior security
interest, lien, charge or encumbrance or to any agreement purporting to grant to
any third party a security interest in the property or assets of the Pledgor
that would include the Pledged Stock.
4. (a) Except as expressly permitted by the Credit Agreement, the
Pledgor hereby covenants that so long as this Agreement shall be in effect, in
whole or in part, the Pledgor will not:
(i) sell, convey or otherwise dispose of any shares
of the Pledged Stock or any interest therein, nor will the Pledgor create, incur
or permit to exist any pledge, mortgage, lien, charge, encumbrance or any
security interest whatsoever with respect to any of the Pledged Stock or the
proceeds thereof other than that created hereby, except for the security
interest granted to the Administrative Agent hereunder, Permitted Liens and
unperfected Liens under Section 6.1(g) of the Credit Agreement unless any such
sale, conveyance or disposition is subject to this Agreement; or
(ii) consent to or approve the issuance of any
additional shares of any class of the issuer of the Pledged Stock.
(b) The Pledgor warrants and will defend the Administrative
Agent's right, title, special property and security interest in and to the
Pledged Stock against the claims of any Person, firm, corporation or other
entity.
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5. The Pledgor recognizes that the Administrative Agent may be unable
to effect a public sale of all or a part of the Pledged Stock, and may be
compelled to resort to one or more private sales 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. The Pledgor acknowledges that any such private
sales may be at places and on terms less favorable to the seller than if sold at
public sales and agrees that such private sales shall be deemed to have been
made in a commercially reasonable manner, and that the Administrative Agent has
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.
6. The Pledgor shall at any time and from time to time upon the written
request of the Administrative Agent execute and deliver such further documents
and do such further acts and things as the Administrative Agent may reasonably
request in order to effect the purposes of this Pledge Agreement, including,
without limitation, delivering to the Administrative Agent on the date hereof or
at any time hereafter irrevocable proxies in respect of the Pledged Stock in the
form of Exhibit A hereto.
7. (a) Beyond the exercise of reasonable care to assure the safe
custody of the Pledged Stock while held hereunder, the Administrative Agent
shall have no duty or liability to preserve rights pertaining thereto, and shall
be relieved of all responsibility for the Pledged Stock upon surrendering it to
the Pledgor or in accordance with the Pledgor's instructions.
(b) No course of dealing between the Pledgor and the
Administrative Agent, nor any failure to exercise, nor any delay in exercising,
on the part of the Administrative Agent, any right, power or privilege hereunder
or under any of the Loan Documents shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder or
thereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
(c) The rights and remedies herein provided are cumulative and
are in addition to, and not exclusive of, any rights or remedies provided by law
including, without limitation, the rights and remedies of a secured party under
the Uniform Commercial Code.
(d) The provisions of this Pledge Agreement are severable, and
if any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision in this Pledge Agreement in any jurisdiction.
8. All notices and other communications pursuant to this Pledge
Agreement shall be in writing, either by letter (delivered by hand or commercial
messenger service or sent by
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238
registered or certified mail, return receipt requested) or telegram or telecopy,
addressed as follows:
(a) If to the Pledgor:
Team Health Holdings, L.L.C.
c/o Madison Dearborn Partners
Three First National Plaza
Suite 3800
Chicago, Illinois 60602
Attention: Nick Alexos
Telephone No.: (312) 895-1260
Facsimile No.: (312) 895-1256
with a copy to:
Cornerstone Equity Investors
717 Fifth Avenue
Suite 1100
New York, New York 10022
Attention: Tyler Wolfram
Telephone No.: (212) 207-2383
Facsimile No.: (212) 826-6798
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: Christopher Butler, Esq.
Telephone No.: (312) 861-2298
Facsimile No.: (312) 861-2200
(b) if to the Administrative Agent:
Fleet National Bank
One Federal Street
Boston, Massachusetts 02110
Attention: Ginger Stolzenthaler
Telephone No.: (617) 346-4618
Facsimile No.: (617) 346-4699
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239
with a copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601-9703
Attention: Charles B. Boehrer, Esq.
Telephone No.: (312) 558-5989
Facsimile No.: (312) 558-5700
Any notice or other communication hereunder shall be deemed to have been given
on the day on which it is telecopied to such party at its telecopier number
specified above or delivered by hand or such commercial messenger service to
such party at its address specified above, or, if sent by mail, on the third
Business Day after the day deposited in the mail, postage prepaid, or in the
case of telegraphic notice, when delivered to the telegraph company, addressed
as aforesaid. Any party hereto may change the Person, address or telecopier
number to whom or which notices are to be given hereunder, by notice duly given
hereunder; provided, however, that any such notice shall be deemed to have been
given hereunder only when actually received by the party to which it is
addressed.
10. This Pledge Agreement shall be binding upon the Pledgor and its
successors and assigns and shall inure to the benefit of the Administrative
Agent and its successors for the benefit of the Administrative Agent and the
ratable benefit of the Secured Parties, and their respective successors and
assigns.
11. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ITS RULES PERTAINING TO CONFLICTS OF LAWS (OTHER THAN GENERAL OBLIGATIONS LAW
SECTION 5-1401).
12. The Pledgor's obligations under this Pledge Agreement are limited
to the Pledgor's interest in the Pledged Stock, and notwithstanding any other
provision herein contained, the Administrative Agent shall have no remedy
against the Pledgor other than to realize upon the security interest in, pledge
of and assignment of the Pledged Stock provided for herein.
13. Upon the latest of (i) the indefeasible payment in full in cash of
the Secured Obligations, (ii) the expiration, termination or cancellation of all
of the Letters of Credit and (iii) the Termination Date, the pledge by the
Pledgor hereby shall terminate and all rights to the Pledged Stock shall revert
to the Pledgor. Upon any such termination, the Administrative Agent will, at the
Pledgor's expense, execute and deliver to the Pledgor such documents as the
Pledgor shall reasonably request to evidence such termination.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered the day and year first above written.
TEAM HEALTH HOLDINGS, L.L.C.
By: ______________________________
Name: H. Lynn Massingale
Title: President and Chief Executive Officer
Address: c/o Madison Dearborn Partners
Three First National Plaza
Suite 3800
Chicago, Illinois 60602
FLEET NATIONAL BANK, as Administrative Agent
By: ______________________________
Name: Ginger Stolzenthaler
Title: Senior Vice President
Address: One Federal Street
Boston, MA 02110
[SIGNATURE PAGE TO HOLDINGS PLEDGE AGREEMENT]
241
EXHIBIT A
TO
PLEDGE AGREEMENT
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS that, the undersigned does hereby make,
constitute and appoint FLEET NATIONAL BANK, as Administrative Agent (the
"Administrative Agent"), and each of the Administrative Agent's officers and
employees, its true and lawful attorneys, for it and in its name, place and
stead, to act as its proxy in respect of the shares of capital stock (including
Common Stock and Preferred Stock) of TEAM HEALTH, INC., a Tennessee corporation
(hereinafter referred to as the "Corporation"), that the undersigned now or
hereafter may own or hold, including, without limitation, the right, on its
behalf to demand the call by any proper officer of the Corporation pursuant to
the provisions of its Certificate of Incorporation or By-Laws and as permitted
by law of a meeting of its shareholders and at any such meeting of shareholders,
annual, general or special, to vote for the transaction of any and all business
that may come before such meeting, or at any adjournment thereof, including,
without limitation, the right to vote for the sale of all or any part of the
assets of the Corporation and/or the liquidation and dissolution of the
Corporation; giving and granting to its said attorneys full power and authority
to do and perform each and every act and thing whether necessary or desirable to
be done in and about the premises, as fully as it might or could do if
personally present with full power of substitution, appointment and revocation,
hereby ratifying and confirming all that its said attorneys shall do or cause to
be done by virtue hereof.
This Proxy is given to the Administrative Agent and to its officers and
employees in consideration of the credit to be extended to the Corporation by
the Lenders described in a certain Pledge Agreement of even date herewith
between the undersigned and the Administrative Agent (pursuant to which the
undersigned pledged the shares of stock referred to above to the Administrative
Agent as pledgee) and in order to carry out the covenant of the undersigned
contained in such Pledge Agreement, and this Proxy shall not be revocable or
revoked by the undersigned, shall be binding upon the undersigned and its
successors and assigns until the payment in full of all of the Obligations (as
defined in the aforesaid Pledge Agreement) and may be exercised only after the
occurrence and during the continuation of an Event of Default under the Credit
Agreement (as such terms are defined in the aforesaid Pledge Agreement).
IN WITNESS WHEREOF, the undersigned has executed this Irrevocable Proxy
this ___ day of __________.
TEAM HEALTH HOLDINGS, L.L.C.
By: _______________________________
Name:______________________________
Title:_____________________________
242
EXHIBIT I TO THE
CREDIT AGREEMENT
HOLDINGS GUARANTY
Dated March 12, 1999
From
TEAM HEALTH HOLDINGS, L.L.C.,
as Guarantor,
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
243
HOLDINGS GUARANTY
HOLDINGS GUARANTY (this "Guaranty"), dated March 12, 1999,
made by TEAM HEALTH HOLDINGS, L.L.C. (the "Guarantor") in favor of the Secured
Parties (as defined in the Credit Agreement referred to below) and Fleet
National Bank, as administrative agent (the "Administrative Agent").
PRELIMINARY STATEMENT. Team Health, Inc., a Tennessee
corporation (the "Borrower"), has entered into a Credit Agreement, dated as of
March 12, 1999 (said Credit Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms used and not otherwise defined herein have
the meanings ascribed to them in the Credit Agreement), with the banks,
financial institutions and other institutional lenders named therein, Fleet
National Bank, as Issuing Bank, as Swing Line Bank, as Co-Arranger and as
Administrative Agent for the Lender Parties (the "Administrative Agent"),
NationsBank, N.A., as Issuing Bank and as Co-Arranger, NationsBanc Montgomery
Securities LLC, as Syndication Agent and Donaldson, Lufkin & Jenrette Securities
Corporation, as Documentation Agent. It is a condition precedent to the making
of Advances by the Lender Parties and the issuance of Letters of Credit by the
Issuing Bank under the Credit Agreement, and to the entry by the Hedge Banks
into Bank Hedge Agreements with the Borrower, from time to time, that the
Guarantor shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lender Parties to make Advances and Issuing Banks to issue Letters
of Credit under the Credit Agreement, and the Hedge Banks to enter into Bank
Hedge Agreements with the Borrower, from time to time, the Guarantor hereby
agrees as follows:
Section 1. Guaranty; Limitation of Liability.
(a) The Guarantor hereby unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of the Borrower or any other Loan
Party now or hereafter existing under the Loan Documents or the Bank Hedge
Agreements, whether for principal, interest, fees, expenses or otherwise (such
Obligations being the "Guaranteed Obligations"), and agrees to pay any and all
reasonable expenses (including counsel fees and expenses) incurred by the
Administrative Agent or any other Secured Party in enforcing any rights under
this Guaranty. Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Borrower or any other Loan Party to the
Administrative Agent or any other Secured Party under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Borrower.
(b) The Guarantor, and by its acceptance of this Guaranty, the
Administrative Agent and each other Secured Party, hereby confirms that it is
the intention of all such parties that this Guaranty not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy
244
Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act
or any similar federal, state or foreign law which may be applicable to this
Guaranty. To effectuate the foregoing intention, the Administrative Agent, the
other Secured Parties and the Guarantor hereby irrevocably agree that the
Obligations of the Guarantor under this Guaranty shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of the 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 Guaranty, result
in the Obligations of such guarantor under this Guaranty not constituting a
fraudulent transfer or conveyance. For purposes hereof, "Bankruptcy Law" means
Title 11, U.S. Code, or any similar federal or state law for the relief of
debtors.
(c) Notwithstanding any other provision in this Guaranty to
the contrary, the Administrative Agent, the other Secured Parties and the
Guarantor hereby agree that the obligations of the Guarantor under this Guaranty
shall be limited to the proceeds of any collection, recovery, receipt,
appropriation, realization, or sale of the capital stock of the Borrower pledged
to the Administrative Agent pursuant to the Holdings Pledge Agreement, dated as
of the date hereof, by and between the Guarantor and the Administrative Agent.
In the event that the proceeds of such collection, recovery, receipt,
appropriation, realization, or sale as aforesaid are insufficient to pay all of
the obligations to which the Administrative Agent is legally entitled under this
Guaranty, the Guarantor will not be liable for any deficiency.
Section 2. Guaranty Absolute. The Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Secured Party with respect thereto. The
Obligations of the Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any other Loan Party under
the Loan Documents, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or any other Loan Party or
whether the Borrower or any other Loan Party is joined in any such action or
actions. The liability of the Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional, irrespective of, and the Guarantor
hereby irrevocably waives any defenses (other than payment) it may now or
hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any amendment
or waiver of or any consent to departure from any Loan
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245
Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to the Borrower or
any of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents or any
other assets of the Borrower or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to the
Borrower or the Guarantor any information relating to the financial condition,
operations, properties or prospects of any other Loan Party now or in the future
known to any Secured Party (the Guarantor waiving any duty on the part of the
Secured Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any other Secured Party that might otherwise
constitute a defense available to, or a discharge of, the Borrower, the
Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be refused by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments.
(a) The Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Administrative Agent
or any other Secured Party protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against the
Borrower, the Guarantor or any other Person or any Collateral.
(b) The Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
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(c) The Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in this
Section 3 are knowingly made in contemplation of such benefits.
Section 4. Subrogation. The Guarantor will not exercise any
rights that it may now or hereafter acquire against the Borrower or any other
guarantor that arise from the existence, payment, performance or enforcement of
the Guarantor's obligations under this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Administrative Agent or any other Secured Party against
the Borrower or any other guarantor or any Collateral, whether or not such
claim, remedy or right arises in equity or under contract, statute or common
law, including, without limitation, the right to take or receive from the
Borrower or any other guarantor, directly or indirectly, in cash or other
property or by setoff or in any other manner, payment or security on account of
such claim, remedy or right, unless and until all of the Guaranteed Obligations
and all other amounts payable under this Guaranty and the other Loan Documents
shall have been independently paid in full in cash, all Letters of Credit have
expired or have been terminated or canceled, all Bank Hedge Agreements shall
have expired or terminated and the Commitments shall have expired or terminated.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence at any time prior to the later of (i) the indefeasible payment in full
in cash of the Guaranteed Obligations and all other amounts payable under this
Guaranty and (ii) the later of (x) the Termination Date, (y) the expiration,
termination or cancellation or all Letters of Credit, and (z) the expiration or
termination of all Bank Hedge Agreements, such amount shall be held in trust for
the benefit of the Administrative Agent and the other Secured Parties and shall
forthwith be paid to the Administrative Agent to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this Guaranty,
whether matured or unmatured, in accordance with the terms of the Loan
Documents, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Guaranty thereafter arising. If (i) the Guarantor
shall make payment to the Administrative Agent or any other Secured Party of all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall be
indefeasibly paid in full in cash and (iii) the Termination Date shall have
occurred, all Letters of Credit have expired or have been terminated or canceled
and all Bank Hedge Agreements shall have expired or terminated, the
Administrative Agent and the other Secured Parties will promptly, at the
Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc.
(a) Any and all payments by the Guarantor hereunder shall be
made, in accordance with Section 2.11 of the Credit Agreement, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all
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liabilities with respect thereto, excluding, in the case of each Secured Party
and the Administrative Agent, net income taxes that are imposed by the United
States and net income taxes (or franchise taxes imposed in lieu thereof) that
are imposed on such Secured Party or the Administrative Agent by the state or
foreign jurisdiction under the laws of which such Secured Party or the
Administrative Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Secured Party, net income taxes (or
franchise taxes imposed in lieu thereof) that are imposed on such Secured Party
by the state or foreign jurisdiction of such Secured Party's Applicable Lending
Office or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities in respect of
payments hereunder being hereinafter referred to as "Taxes"). If the Guarantor
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Secured Party or the Administrative Agent, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 5) such Secured Party or the Administrative Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Guarantor shall make such deductions and (iii)
the Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) In addition, the Guarantor shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or from the execution, delivery or registration
of, performing under, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
(c) The Guarantor shall indemnify each Secured Party and the
Administrative Agent for the full amount of Taxes and Other Taxes, and for the
full amount of taxes imposed by any jurisdiction on amounts payable under this
Section 5, imposed on or paid by such Secured Party or the Administrative Agent
(as the case may be) and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto, except with
respect to any Secured Party or the Administrative Agent, as the case may be,
for such a liability arising from such Secured Party's or the Administrative
Agent's, as the case may be, willful misconduct or gross negligence. This
indemnification shall be made within thirty (30) days from the date on which
such Secured Party or the Administrative Agent, as the case may be, makes
written demand specifying in reasonable detail the basis therefor.
(d) Within thirty (30) days after the date of any payment of Taxes by
or on behalf of the Guarantor, the Guarantor shall furnish to the Administrative
Agent, at its address referred to in Section 11.2 of the Credit Agreement, the
original receipt of payment thereof or a certified copy of such receipt. For
purposes of this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.
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(e) Each Secured Party that is not a United States Person shall, on or
prior to the date of its execution and delivery of the Credit Agreement in the
case of each Initial Lender or Initial Issuing Bank, as the case may be, and on
the date of the Assignment and Acceptance or other agreement pursuant to which
it became a Secured Party in the case of each other Secured Party, and from time
to time thereafter as requested in writing by the Guarantor or the
Administrative Agent (but only so long thereafter as such Secured Party remains
lawfully able to do so), provide each of the Administrative Agent and the
Guarantor with two (2) original Internal Revenue Service forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, the Internal Revenue Code or the Treasury Regulations thereunder,
certifying that such Secured Party is exempt from or entitled to a reduced rate
of United States withholding tax on payments pursuant to this Agreement. In
addition, each Secured Party shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Secured
Party. Each Secured Party shall promptly notify the Guarantor at any time it
determines that it is no longer in a position to provide any previously
delivered certificates to the Guarantor (or any other form of certification
adopted by the United States taxing authorities for such purpose). If the forms
provided by a Secured Party at the time such Secured Party first becomes a party
to the Credit Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Secured Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Secured Party becomes a party to the Credit Agreement, the
Secured Party assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at such date,
then, to such extent, the term Taxes shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Secured Party assignee on such date. If any form or document referred to in this
subsection (e) and requested by the Guarantor pursuant to this subsection (e)
requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service form 1001 or 4224, that the Secured Party reasonably considers
to be confidential, the Secured Party shall give notice thereof to the Guarantor
and shall not be obligated to include in such form or document such confidential
information.
(f) For any period with respect to which a Secured Party has failed to
provide the Guarantor, following the Guarantor's request therefor pursuant to
subsection (e) above, with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Secured Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Secured Party become subject to Taxes because of its failure to deliver a form
required hereunder, the Guarantor shall take such steps as such Secured Party
shall reasonably request to assist such Secured Party to recover such Taxes.
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(g) Any Secured Party claiming any additional amounts payable pursuant
to this Section 5 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the judgment of such Secured Party, be otherwise
disadvantageous to such Secured Party.
(h) Each Secured Party shall, to the extent it is legally entitled to
do so, deliver to the Guarantor or the Administrative Agent (as the case may be)
such other forms or similar documentation as may be required from time to time
by any applicable law, treaty, rule or regulation in order to establish such
Secured Party's complete exemption from withholding on all payments under this
Agreement.
(i) Without prejudice to the survival of any other agreement of the
Guarantor hereunder or under any other Loan Document, the agreements and
obligations of the Guarantor contained in this Section 5 shall survive the
payment in full of the Guaranteed Obligations and all other amounts payable
under this Guaranty and the other Loan Documents.
Section 6. Representations and Warranties. The Guarantor hereby
represents and warrants as follows:
(a) There are no conditions precedent to the effectiveness of
this Guaranty that have not been satisfied or waived.
(b) The Guarantor has, independently and without reliance upon
the Administrative Agent or any other Secured Party and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty, and the Guarantor has established adequate
means of obtaining from any other Loan Parties on a continuing basis information
pertaining to (and is now, and on a continuing basis will be, completely
familiar with) the financial condition, operations, properties and prospects of
the Borrower and the other Loan Parties.
Section 7. Covenants. The Guarantor hereby covenants and
agrees that, so long as any part of the Guaranteed Obligations shall remain
unpaid, any Letter of Credit shall be outstanding, any Bank Hedge Agreement
shall not have expired or terminated or any Lender Party shall have any
Commitment, the Guarantor will, unless the Administrative Agent and Required
Lenders shall otherwise consent in writing, perform or observe all of the terms,
covenants and agreements that this Guaranty and the other Loan Documents state
that the Guarantor shall perform or observe.
Section 8. Amendments, Etc. No amendment or waiver of any
provision of this Guaranty, and no consent to any departure by the Guarantor
therefrom, shall in any event be
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effective unless the same shall be in writing and signed by the Administrative
Agent and Required Lenders, and then such waiver or consent shall be effective
only in the specific instance, and for the specific purpose for which given;
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by all of the Lenders (other than any Lender Party which is, at such
time, a Defaulting Lender), (a) further limit the liability of the Guarantor
hereunder or (b) postpone any date fixed for payment hereunder.
Section 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to the Guarantor, addressed to it at the address listed for the
Guarantor on the signature pages hereof, if to the Administrative Agent or any
Lender Party, at its address specified in Section 11.2 of the Credit Agreement,
if to any Hedge Bank, at its address specified in the Bank Hedge Agreement to
which it is a party, or, as to any party, at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed by certified mail, return
receipt requested, telegraphed, telecopied or telexed, be effective three (3)
Business Days after mailing, upon delivery to the telegraph company, upon
transmission by telecopier or upon confirmation by telex answerback,
respectively.
Section 10. No Waiver; Remedies. No failure on the part of the
Administrative Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 11. Intentionally Omitted
Section 12. Indemnification. Without limitation on any other
Obligations of any Guarantor or the remedies of the Secured Parties under this
Guaranty, the Guarantor shall indemnify, defend and save and hold harmless each
Secured Party from and against, and shall pay on demand, any and all losses,
liabilities, damages, reasonable costs, expenses and charges (including the
reasonable fees and disbursements of such Secured Party's legal counsel)
suffered or incurred by such Secured Party as a result of any failure of any
Guaranteed Obligations to be the legal, valid and binding obligations of the
Borrower or any other guarantor enforceable against the Borrower or such other
guarantor (as the case may be) in accordance with their terms.
Section 13. Continuing Guaranty; Assignments Under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the indefeasible payment in full in cash of all amounts
payable under this Guaranty, (b) be binding upon the Guarantor, its successors
and assigns and (c) inure to the benefit of and be enforceable by the
Administrative Agent and the other Secured Parties and their respective
successors, transferees and assigns. Without limiting the generality of the
foregoing clause (c), any Secured Party may assign
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or otherwise transfer all or any portion of its rights and obligations under the
Credit Agreement (including, without limitation, all or any portion of its
Commitment, the Advances owing to it and the Note or Notes held by it) to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party by this Guaranty or
otherwise, in each case to the maximum extent provided in Section 11.7 of the
Credit Agreement.
Section 14. Governing Law; Jurisdiction; Waiver of July Trial,
Etc.
(A) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS
CONFLICTS OF LAW PRINCIPLES OTHER THAN GENERAL OBLIGATIONS LAW SECTION 5-1401).
(B) THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS OR IS TO BE A PARTY, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH NEW YORK STATE COURT OR IN SUCH FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK. THE GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR
ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY IN THE COURTS OF ANY JURISDICTION.
(C) THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF, OR RELATING TO, THIS GUARANTY OR ANY OF THE OTHER
LOAN DOCUMENTS TO WHICH IT IS OR IS TO BE A PARTY, IN ANY NEW YORK STATE OR
FEDERAL COURT. THE GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
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(D) THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE, IN EQUITY OR AT LAW) ARISING OUT OF OR RELATING TO ANY OF THE
LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
TEAM HEALTH HOLDINGS, L.L.C.
By:____________________________________
Title: President and Chief Executive Officer
Address: c/o Madison Dearborn Partners
Three First National Plaza
Suite 3800
Chicago, Illinois 60602
[SIGNATURE PAGE TO HOLDINGS GUARANTY]
254
EXHIBIT J TO THE
CREDIT AGREEMENT
SUBSIDIARY GUARANTY
Dated March 12, 1999
From
THE SUBSIDIARY GUARANTORS NAMED HEREIN
as Guarantors,
in favor of
THE SECURED PARTIES REFERRED TO IN
THE CREDIT AGREEMENT REFERRED TO HEREIN
255
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY (this "Guaranty"), dated March 12, 1999,
made by each of the Persons listed on the signature pages hereof, and the
Additional Guarantors (as defined in Section 8(b)) (such Persons so listed and
the Additional Guarantors being, each, a "Guarantor", and collectively, the
"Guarantors") in favor of the Secured Parties (as defined in the Credit
Agreement referred to below) and Fleet National Bank, as administrative agent
(the "Administrative Agent").
PRELIMINARY STATEMENT. Team Health, Inc., a Tennessee
corporation (the "Borrower"), has entered into a Credit Agreement, dated as of
March 12, 1999 (said Credit Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
"Credit Agreement"; capitalized terms used and not otherwise defined herein have
the meanings ascribed to them in the Credit Agreement), with the banks,
financial institutions and other institutional lenders named therein, Fleet
National Bank, as Issuing Bank, as Swing Line Bank, as Co-Arranger and as
Administrative Agent for the Lender Parties (the "Administrative Agent"),
NationsBank, N.A., as Issuing Bank and as Co-Arranger, NationsBanc Montgomery
Securities LLC, as Syndication Agent and Donaldson, Lufkin & Jenrette Securities
Corporation, as Documentation Agent. It is a condition precedent to the making
of Advances by the Lender Parties and the issuance of Letters of Credit by the
Issuing Bank under the Credit Agreement, and to the entry by the Hedge Banks
into Bank Hedge Agreements with the Borrower, from time to time, that the
Guarantors shall have executed and delivered this Guaranty.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lender Parties to make Advances and Issuing Banks to issue Letters
of Credit under the Credit Agreement, and the Hedge Banks to enter into Bank
Hedge Agreements with the Borrower, from time to time, each Guarantor hereby
agrees as follows:
Section 1. Guaranty; Limitation of Liability.
(a) Each Guarantor hereby, jointly and severally,
unconditionally and irrevocably guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
the Borrower or any other Loan Party now or hereafter existing under the Loan
Documents or the Bank Hedge Agreements, whether for principal, interest, fees,
expenses or otherwise (such Obligations being the "Guaranteed Obligations"), and
agrees to pay any and all reasonable expenses (including counsel fees and
expenses) incurred by the Administrative Agent or any other Secured Party in
enforcing any rights under this Guaranty. Without limiting the generality of the
foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by the Borrower
or any other Loan Party to the Administrative Agent or any other Secured Party
under the Loan Documents but for the fact that they are unenforceable or not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving the Borrower.
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(b) Each Guarantor, and by its acceptance of this Guaranty,
the Administrative Agent and each other Secured Party, hereby confirms that it
is the intention of all such parties that this Guaranty not constitute a
fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the
Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal, state or foreign law which may be applicable to this Guaranty.
To effectuate the foregoing intention, the Administrative Agent, the other
Secured Parties and the Guarantors hereby irrevocably agree that the Obligations
of each Guarantor under this Guaranty 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 Guaranty, result in the
Obligations of such Guarantor under this Guaranty not constituting a fraudulent
transfer or conveyance. For purposes hereof, "Bankruptcy Law" means Title 11,
U.S. Code, or any similar federal or state law for the relief of debtors.
Section 2. Guaranty Absolute. Each Guarantor guarantees that
the Guaranteed Obligations will be paid strictly in accordance with the terms of
the Loan Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the
Administrative Agent or any other Secured Party with respect thereto. The
Obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any other Loan Party under
the Loan Documents, and a separate action or actions may be brought and
prosecuted against any Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or any other Loan Party or
whether the Borrower or any other Loan Party is joined in any such action or
actions. The liability of each Guarantor under this Guaranty shall be
irrevocable, absolute and unconditional, irrespective of, and each Guarantor
hereby irrevocably waives any defenses (other than payment) it may now or
hereafter have in any way relating to, any or all of the following:
(a) any lack of validity or enforceability of any Loan
Document or any agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any amendment
or waiver of or any consent to departure from any Loan Document, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to the Borrower or any of its Subsidiaries or
otherwise;
(c) any taking, exchange, release or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral for all or
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any of the Guaranteed Obligations or any other Obligations of any other Loan
Party under the Loan Documents or any other assets of the Borrower or any of its
Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of the Borrower or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to the
Borrower or any Guarantor any information relating to the financial condition,
operations, properties or prospects of any other Loan Party now or in the future
known to any Secured Party (each Guarantor waiving any duty on the part of the
Secured Parties to disclose such information); or
(g) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any other Secured Party that might otherwise
constitute a defense available to, or a discharge of, the Borrower, such
Guarantor or any other guarantor or surety.
This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be refused by any Secured Party or any other Person upon the
insolvency, bankruptcy or reorganization of the Borrower or any other Loan Party
or otherwise, all as though such payment had not been made.
Section 3. Waivers and Acknowledgments.
(a) Each Guarantor hereby waives promptness, diligence, notice
of acceptance and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that the Administrative Agent
or any other Secured Party protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against the
Borrower, any Guarantor or any other Person or any Collateral.
(b) Each Guarantor hereby waives any right to revoke this
Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.
(c) Each Guarantor acknowledges that it will receive
substantial direct and indirect benefits from the financing arrangements
contemplated by the Loan Documents and that the waivers set forth in this
Section 3 are knowingly made in contemplation of such benefits.
Section 4. Subrogation. Each Guarantor will not exercise any
rights that it may now or hereafter acquire against the Borrower or any other
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor's obligations under this Guaranty or any other Loan Document,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Administrative Agent or any other Secured Party against
the Borrower or any other guarantor
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or any Collateral, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law, including, without limitation, the
right to take or receive from the Borrower or any other guarantor, directly or
indirectly, in cash or other property or by setoff or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been independently paid in full in cash, all Letters of
Credit have expired or have been terminated or canceled, all Bank Hedge
Agreements shall have expired or terminated and the Commitments shall have
expired or terminated. If any amount shall be paid to a Guarantor in violation
of the preceding sentence at any time prior to the later of (i) the indefeasible
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty and (ii) the later of (x) the Termination Date, (y)
the expiration, termination or cancellation or all Letters of Credit, and (z)
the expiration or termination of all Bank Hedge Agreements, such amount shall be
held in trust for the benefit of the Administrative Agent and the other Secured
Parties and shall forthwith be paid to the Administrative Agent to be credited
and applied to the Guaranteed Obligations and all other amounts payable under
this Guaranty, whether matured or unmatured, in accordance with the terms of the
Loan Documents, or to be held as Collateral for any Guaranteed Obligations or
other amounts payable under this Guaranty thereafter arising. If (i) a Guarantor
shall make payment to the Administrative Agent or any other Secured Party of all
or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall be
indefeasibly paid in full in cash and (iii) the Termination Date shall have
occurred, all Letters of Credit have expired or have been terminated or canceled
and all Bank Hedge Agreements shall have expired or terminated, the
Administrative Agent and the other Secured Parties will promptly, at such
Guarantor's request and expense, execute and deliver to such Guarantor
appropriate documents, without recourse and without representation or warranty,
necessary to evidence the transfer by subrogation to such Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by such
Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc.
(a) Any and all payments by any Guarantor hereunder shall be
made, in accordance with Section 2.11 of the Credit Agreement, free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Secured Party and the Administrative Agent, net
income taxes that are imposed by the United States and net income taxes (or
franchise taxes imposed in lieu thereof) that are imposed on such Secured Party
or the Administrative Agent by the state or foreign jurisdiction under the laws
of which such Secured Party or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each Secured
Party, net income taxes (or franchise taxes imposed in lieu thereof) that are
imposed on such Secured Party by the state or foreign jurisdiction of such
Secured Party's Applicable Lending Office or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities in respect of payments hereunder being hereinafter referred to
as "Taxes"). If any Guarantor shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to any Secured Party or the
Administrative Agent, (i) the sum payable shall
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be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
5) such Secured Party or the Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) such Guarantor shall make such deductions and (iii) such Guarantor
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, each Guarantor shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or from the execution, delivery or registration
of, performing under, or otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
(c) Each Guarantor shall indemnify each Secured Party and the
Administrative Agent for the full amount of Taxes and Other Taxes, and for the
full amount of taxes imposed by any jurisdiction on amounts payable under this
Section 5, imposed on or paid by such Secured Party or the Administrative Agent
(as the case may be) and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto, except with
respect to any Secured Party or the Administrative Agent, as the case may be,
for such a liability arising from such Secured Party's or the Administrative
Agent's, as the case may be, willful misconduct or gross negligence. This
indemnification shall be made within thirty (30) days from the date on which
such Secured Party or the Administrative Agent, as the case may be, makes
written demand specifying in reasonable detail the basis therefor.
(d) Within thirty (30) days after the date of any payment of Taxes by
or on behalf of any Guarantor, such Guarantor shall furnish to the
Administrative Agent, at its address referred to in Section 11.2 of the Credit
Agreement, the original receipt of payment thereof or a certified copy of such
receipt. For purposes of this subsection (d) and subsection (e), the terms
"United States" and "United States person" shall have the meanings specified in
Section 7701 of the Internal Revenue Code.
(e) Each Secured Party that is not a United States Person shall, on or
prior to the date of its execution and delivery of the Credit Agreement in the
case of each Initial Lender or Initial Issuing Bank, as the case may be, and on
the date of the Assignment and Acceptance pursuant to which it became a Secured
Party in the case of each other Secured Party, and from time to time thereafter
as requested in writing by any Guarantor or the Administrative Agent (but only
so long thereafter as such Secured Party remains lawfully able to do so),
provide each of the Administrative Agent and Guarantors with two (2) original
Internal Revenue Service forms 1001 or 4224, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, the Internal Revenue Code
or the Treasury Regulations thereunder, certifying that such Secured Party is
exempt from or entitled to a reduced rate of United States withholding tax on
payments pursuant to this Agreement. In addition, each Secured Party shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Secured Party. Each Secured Party shall promptly
notify the Guarantors at any time it determines that it is no longer in a
position to provide any previously
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delivered certificates to the Guarantors (or any other form of certification
adopted by the United States taxing authorities for such purpose). If the forms
provided by a Secured Party at the time such Secured Party first becomes a party
to the Credit Agreement indicates a United States interest withholding tax rate
in excess of zero, withholding tax at such rate shall be considered excluded
from Taxes unless and until such Secured Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Secured Party becomes a party to the Credit Agreement, the
Secured Party assignor was entitled to payments under subsection (a) in respect
of United States withholding tax with respect to interest paid at such date,
then, to such extent, the term Taxes shall include (in addition to withholding
taxes that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Secured Party assignee on such date. If any form or document referred to in this
subsection (e) and requested by a Guarantor pursuant to this subsection (e)
requires the disclosure of information, other than information necessary to
compute the tax payable and information required on the date hereof by Internal
Revenue Service form 1001 or 4224, that the Secured Party reasonably considers
to be confidential, the Secured Party shall give notice thereof to such
Guarantor and shall not be obligated to include in such form or document such
confidential information.
(f) For any period with respect to which a Secured Party has failed to
provide any Guarantor, following such Guarantor's request therefor pursuant to
subsection (e) above, with the appropriate form described in subsection (e)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e)), such Secured Party shall not be entitled
to indemnification under subsection (a) or (c) with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should a
Secured Party become subject to Taxes because of its failure to deliver a form
required hereunder, such Guarantor shall take such steps as such Secured Party
shall reasonably request to assist such Secured Party to recover such Taxes.
(g) Any Secured Party claiming any additional amounts payable pursuant
to this Section 5 agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the judgment of such Secured Party, be otherwise
disadvantageous to such Secured Party.
(h) Each Secured Party shall, to the extent it is legally entitled to
do so, deliver to the Guarantors or the Administrative Agent (as the case may
be) such other forms or similar documentation as may be required from time to
time by any applicable law, treaty, rule or regulation in order to establish
such Secured Party's complete exemption from withholding on all payments under
this Agreement.
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(i) Without prejudice to the survival of any other agreement of each
Guarantor hereunder or under any other Loan Document, the agreements and
obligations of each Guarantor contained in this Section 5 shall survive the
payment in full of the Guaranteed Obligations and all other amounts payable
under this Guaranty and the other Loan Documents.
Section 6. Representations and Warranties. The Guarantors
hereby jointly and severally represent and warrant as follows:
(a) There are no conditions precedent to the effectiveness of
this Guaranty that have not been satisfied or waived.
(b) Each Guarantor has, independently and without reliance
upon the Administrative Agent or any other Secured Party and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and each Guarantor has
established adequate means of obtaining from any other Loan Parties on a
continuing basis information pertaining to (and is now, and on a continuing
basis will be, completely familiar with) the financial condition, operations,
properties and prospects of the Borrower and the other Loan Parties.
Section 7. Covenants. Each Guarantor hereby covenants and
agrees that, so long as any part of the Guaranteed Obligations shall remain
unpaid, any Letter of Credit shall be outstanding, any Bank Hedge Agreement
shall not have expired or terminated or any Lender Party shall have any
Commitment, such Guarantor will, unless the Administrative Agent and Required
Lenders shall otherwise consent in writing, perform or observe all of the terms,
covenants and agreements that this Guaranty and the other Loan Documents state
that such Guarantor shall perform or observe.
Section 8. Amendments, Etc. (a) No amendment or waiver of any
provision of this Guaranty, and no consent to any departure by any Guarantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent and Required Lenders, and then such
waiver or consent shall be effective only in the specific instance, and for the
specific purpose for which given; provided, however, that no amendment, waiver
or consent shall, unless in writing and signed by all of the Lenders (other than
any Lender Party which is, at such time, a Defaulting Lender), (a) limit the
liability of any Guarantor hereunder or (b) postpone any date fixed for payment
hereunder.
(b) Upon the execution and delivery by any Person of a
supplemental guaranty in substantially the form of Exhibit A hereto (each a
"Guaranty Supplement"), such Person shall be referred to as an "Additional
Guarantor" and shall be and become a Guarantor for all purposes hereunder and
each reference in this Guaranty to a "Guarantor" shall also mean and be a
reference to such Additional Guarantor and each reference in any other Loan
Document to a "Guarantor" or "Subsidiary Guarantor" shall also mean and be a
reference to such Additional Guarantor.
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Section 9. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic, telecopy or
telex communication) and mailed, telegraphed, telecopied, telexed or delivered
to it, if to a Guarantor, addressed to it at the address listed for such
Guarantor on the signature pages hereof (or in the applicable Guaranty
Supplement), if to the Administrative Agent or any Lender Party, at its address
specified in Section 11.2 of the Credit Agreement, if to any Hedge Bank, at its
address specified in the Bank Hedge Agreement to which it is a party, or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. All such notices and other communications
shall, when mailed by certified mail, return receipt requested, telegraphed,
telecopied or telexed, be effective three (3) Business Days after mailing, upon
delivery to the telegraph company, upon transmission by telecopier or upon
confirmation by telex answerback, respectively.
Section 10. No Waiver; Remedies. No failure on the part of the
Administrative Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 11. Right of Setoff. Upon the occurrence and during
the continuance of any Event of Default, each Lender Party 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 Party or such Affiliate to
or for the credit or the account of any Guarantor against any and all of the
Obligations of such Guarantor now or hereafter existing under this Guaranty,
whether or not such Lender Party shall have made any demand under this Guaranty
and although such Obligations may be unmatured. Each Lender Party agrees
promptly to notify such Guarantor after any such setoff and application;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of each Lender Party and its
Affiliates under this Section are in addition to the other rights and remedies
(including, without limitation, other rights of setoff) that such Lender Party
and its respective Affiliates has.
Section 12. Indemnification. Without limitation on any other
Obligations of any Guarantor or the remedies of the Secured Parties under this
Guaranty, each Guarantor shall indemnify, defend and save and hold harmless each
Secured Party from and against, and shall pay on demand, any and all losses,
liabilities, damages, reasonable costs, expenses and charges (including the
reasonable fees and disbursements of such Secured Party's legal counsel)
suffered or incurred by such Secured Party as a result of any failure of any
Guaranteed Obligations to be the legal, valid and binding obligations of the
Borrower or any other Guarantor enforceable against the Borrower or such other
Guarantor (as the case may be) in accordance with their terms.
Section 13. Continuing Guaranty; Assignments Under the Credit
Agreement. This Guaranty is a continuing guaranty and shall (a) remain in full
force and effect until the indefeasible payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this
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263
Guaranty, (b) be binding upon each Guarantor, its successors and assigns and (c)
inure to the benefit of and be enforceable by the Administrative Agent and the
other Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Secured Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitment, the Advances owing to it and the Note or Notes
held by it) to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to such Secured Party by
this Guaranty or otherwise, in each case to the maximum extent provided in
Section 11.7 of the Credit Agreement.
Section 14. Governing Law; Jurisdiction; Waiver of July Trial,
Etc.
(A) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS
CONFLICTS OF LAW PRINCIPLES OTHER THAN GENERAL OBLIGATIONS LAW SECTION 5-1401).
(B) EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN
NEW YORK CITY, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN
DOCUMENTS TO WHICH IT IS OR IS TO BE A PARTY, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN ANY SUCH NEW YORK STATE COURT OR IN SUCH FEDERAL COURT LOCATED
WITHIN THE STATE OF NEW YORK. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY
SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS GUARANTY SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR
ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS GUARANTY OR ANY OF THE OTHER LOAN DOCUMENTS TO WHICH IT IS OR
IS TO BE A PARTY IN THE COURTS OF ANY JURISDICTION.
(C) EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF, OR RELATING TO, THIS GUARANTY OR ANY OF THE OTHER
LOAN DOCUMENTS TO WHICH IT IS OR IS TO BE A PARTY, IN ANY NEW YORK STATE OR
FEDERAL COURT. EACH GUARANTOR
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264
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE
OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY
SUCH COURT.
(D) EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE, IN EQUITY OR AT LAW) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS
OF THE ADMINISTRATIVE AGENT OR ANY OTHER SECURED PARTY IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
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IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
CLINIC MANAGEMENT SERVICES, INC.
EMERGICARE MANAGEMENT, INCORPORATED
HOSPITAL BASED PHYSICIAN SERVICES, INC.
TEAM RADIOLOGY, INC.
By:________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
ALLIANCE CORPORATION
CHARLES L. SPRINGFIELD, INC.
CLINIC MANAGEMENT SERVICES, INC.
DANIEL & YEAGER, INC.
DRS. SHEER, AHEARN AND ASSOCIATES, INC.
EMERGENCY COVERAGE CORPORATION
EMERGENCY MANAGEMENT SPECIALISTS, INC.
EMERGENCY PHYSICIAN ASSOCIATES, INC.
EMERGENCY PHYSICIANS OF MANATEE, INC.
EMERGENCY PROFESSIONAL SERVICES, INC.
INPHYNET CONTRACTING SERVICES, INC.
INPHYNET JOLIET, INC.
INPHYNET LOUISIANA, INC.
INPHYNET SOUTH BROWARD, INC.
HERSCHEL FISCHER, INC.
IMBS, INC.
INPHYNET ANESTHESIA OF WEST VIRGINIA, INC.
INPHYNET HOSPITAL SERVICES, INC.
INPHYNET MEDICAL MANAGEMENT INSTITUTE,
INC.
KARL G. MANGOLD, INC.
MED: ASSURE SYSTEMS, INC.
METROAMERICAN RADIOLOGY, INC.
NEO-MED, INC.
NORTHWEST EMERGENCY PHYSICIANS
INCORPORATED
PARAGON ANESTHESIA, INC.
PARAGON CONTRACTING SERVICES, INC.
PARAGON IMAGING CONSULTANTS, INC.
QUANTUM PLUS, INC.
[SIGNATURE PAGE TO SUBSIDIARY GUARANTY]
266
REICH, SEIDELMANN & JANICKI CO.
ROSENDORF MARGULIES BORUSHOK SCHOENBAUM
RADIOLOGY ASSOCIATES OF HOLLYWOOD, INC.
SARASOTA EMERGENCY MEDICAL CONSULTANTS,
INC.
SOUTHEASTERN EMERGENCY PHYSICIANS OF
MEMPHIS, INC.
SOUTHEASTERN EMERGENCY PHYSICIANS, INC.
TEAM HEALTH FINANCIAL SERVICES, INC.
THBS, INC.
THE EMERGENCY ASSOCIATES FOR MEDICINE, INC.
VIRGINIA EMERGENCY PHYSICIANS, INC.
By:_________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
FISCHER MANGOLD PARTNERSHIP
By: Herschel Fischer, Inc., its general partner
Karl G. Mangold, Inc., its general partner
By:___________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
MT. DIABLO EMERGENCY PHYSICIANS, a California
General Partnership
By: Herschel Fischer, Inc., its general partner
Karl G. Mangold, Inc., its general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
PARAGON HEALTHCARE LIMITED PARTNERSHIP
By: InPhyNet Hospital Services, Inc.,
its sole general partner
[SIGNATURE PAGE TO SUBSIDIARY GUARANTY]
267
By:____________________________________________
Name: H. Lynn Massingale
Title: Vice President
Address: 1900 Winston Road
Knoxville, TN 37919
TEAM HEALTH BILLING SERVICES, L.P.
By: Team Health, Inc.,
its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
TEAM HEALTH SOUTHWEST L.P.
By: Team Radiology, Inc.,
its sole general partner
By:____________________________________________
Name: H. Lynn Massingale
Title: President
Address: 1900 Winston Road
Knoxville, TN 37919
[SIGNATURE PAGE TO SUBSIDIARY GUARANTY]
268
EXHIBIT A
FORM OF GUARANTY SUPPLEMENT
__________, _____
Fleet National Bank, as Administrative Agent
One Federal Street
Boston, Massachusetts 02110
Attention: Corporate Banking Group
Re: Credit Agreement, dated as of March __, 1999, among Team
Health Inc., a Tennessee corporation (the "Borrower"), the
banks, financial institutions and other institutional lenders
named therein, Fleet National Bank, as Issuing Bank, as Swing
Line Bank, as Co-Arranger and as Administrative Agent for the
Lender Parties (the "Administrative Agent"), Nationsbank,
N.A., as Issuing Bank and as Co-Arranger, Nationsbanc
Montgomery Securities LLC, as Syndication Agent and Donaldson,
Lufkin & Jenrette Securities Corporation, as Documentation
Agent (the "Credit Agreement").
Ladies and Gentlemen:
Reference is made to the above-defined Credit Agreement and to
the Guaranty referred to therein (such Guaranty, as in effect on the date hereof
and as it may hereafter be amended, modified, restated or supplemented from time
to time, (the "Guaranty"). Capitalized terms used and not otherwise defined
herein have the meanings ascribed to them in the Guaranty.
The undersigned hereby, jointly and severally, unconditionally
and irrevocably guarantees the punctual payment when due, whether at stated
maturity, by acceleration or otherwise, of all of the Guaranteed Obligations and
agrees to pay any and all reasonable expenses (including reasonable counsel fees
and expenses) incurred by the Administrative Agent or any other Secured Party on
the terms set forth in the Guaranty as if it were an original party thereto. On
and after the date hereof, each reference in the Guaranty to "Guarantor" shall
also mean and be a reference to the undersigned.
The undersigned hereby agrees to be bound as a Guarantor by
all of the terms and provisions of the Guaranty to the same extent as each other
Guarantor.
269
THIS GUARANTY SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
ITS CONFLICT OF LAWS PRINCIPLES).
THE UNDERSIGNED HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE, IN EQUITY OR AT LAW) ARISING OUT OF THE LOAN DOCUMENTS, THE
TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF ANY SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
Very truly yours,
[NAME OF ADDITIONAL
GUARANTOR]
By:_________________________________
Title: _____________________________
Address: ___________________________
___________________________