EXHIBIT 10(t)
SECOND AMENDMENT TO CREDIT AGREEMENT
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SECOND AMENDMENT (this "Amendment"), dated as of June 25, 1997, among
HANGER ORTHOPEDIC GROUP, INC., a Delaware corporation ("Holdings"), X.X.
XXXXXX, INC., a Georgia corporation (together with Holdings, the "Borrowers"),
the financial institutions listed on the signature pages hereto and Banque
Paribas, as Agent under the Credit Agreement referred to below. All capitalized
terms used herein and not otherwise defined shall have the respective meanings
provided such terms in the Credit Agreement referred to below.
W I T N E S S E T H :
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WHEREAS, the Borrowers, various lending institutions (the "Banks"),
and Banque Paribas, as Agent, are parties to a Credit Agreement dated as of
November 1, 1996 (the "Credit Agreement"); and
WHEREAS, Holdings desires to make a public underwritten offer of
Holdings Common Stock;
NOW, THEREFORE, in consideration of the mutual premises contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
I. AMENDMENTS TO THE CREDIT AGREEMENT
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1. Notwithstanding anything to the contrary contained in the Credit
Agreement, Holdings shall be entitled to make a public underwritten offer (a
"Public Offering") of Holdings Common Stock so long as
(i) the cash proceeds (net of the underwriting discounts and
commissions and all other reasonable costs associated with such
transaction) of such Public Offering shall exceed $35 million and the
Public Offering is completed on or prior to September 30, 1997; and
(ii) such cash proceeds shall be applied:
(a) first, to prepay the outstanding principal amount of Senior
Subordinated Notes at a pre-payment price equal to par plus
accrued interest;
(b) second, to prepay the principal of outstanding Acquisition
Loans and the principal of outstanding Revolving Loans (without
any corresponding reduction to the Acquisition Loan Commitment or
the Revolving Loan Commitment); and
(c) third, to prepay the principal of outstanding A Term Loans
and B Term Loans on a pro rata basis, with the A Term Loan
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Facility to receive the A TL Percentage and the B Term Loan
Facility to receive the B TL Percentage, in each case, of the
total amount of such cash proceeds remaining after the
prepayments required by paragraphs (a) and (b) above.
2. Section 4.02(A)(g) of the Credit Agreement shall be amended by
inserting the words "ending after the Acquisition Loan Termination Date"
immediately after the words "fiscal year of Holdings" appearing therein.
3. Section 8.01(f) of the Credit Agreement shall be amended by
inserting the words "(and, with respect to the calculations for Sections 9.09,
9.10, 9.11 and 9.14, separate calculations showing the Consolidated EBITDA of
any Person, business, division or product line acquired during the relevant
period pursuant to Section 8.15)" immediately after the words "through 9.15"
appearing therein.
4. Section 9.08 of the Credit Agreement shall be amended by (i)
deleting from clause (a) thereof the chart appearing therein in its entirety and
(ii) inserting in lieu thereof the following new chart:
"Fiscal Year Amount
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1997 $ 2,500,000
1998 $ 3,000,000
1999 $ 3,000,000
2000 $ 3,000,000
2001 $ 3,000,000
2002 $ 3,000,000
2003 $ 3,000,000"
5. The definition of "Applicable Margin" in Section 11 of the Credit
Agreement shall be deleted in its entirety and replaced with a new definition as
follows:
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"Applicable Margin" shall mean (A) (i) in the case of A Term Loans,
Acquisition Loans and Revolving Loans which are maintained as Base
Rate Loans, 1.50% less the then applicable Leverage Reduction
Discount, if any, and (ii) in the case of B Term Loans which are
maintained as Base Rate Loans, 1.75% less the then applicable Leverage
Reduction Discount, if any, and (B) (i) in the case of A Term Loans,
Acquisition Loans and Revolving Loans which are maintained as
Eurodollar Loans, 2.50% less the then applicable Leverage Reduction
Discount, if any, and (ii) in the case of B Term Loans which are
maintained as Eurodollar Loans, 2.75% less the then applicable
Leverage Reduction Discount, if any.
6. The definition of "Consolidated EBITDA" in Section 11 of the
Credit Agreement shall be amended by inserting the following new language
immediately after the words "provided that" appearing therein:
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"(I) all calculations of Consolidated EBITDA may include the
Consolidated EBITDA of any Person, business, division or product line
acquired during such period pursuant to Section 8.15, subject to such
calculations being made in accordance with clause (ii) of the
definition of "Pro Forma Basis", and the Consolidated EBITDA of such
Person, business, division or product line for the period being tested
by such covenants shall be included as Consolidated EBITDA of Holdings
even though such Person, business, division or product line was
acquired during such period and (II) provided further that".
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7. Section 11 of the Credit Agreement shall be amended by inserting
therein the following new definition immediately after the definition of "Letter
of Credit Request":
"Leverage Reduction Discount" shall mean as follows:
(i) during any period in which clause (ii) below does not apply,
the Leverage Reduction Discount shall be 0.00%; and
(ii) from and after the Start Date to and including the End Date:
(v) 0.25%, to the extent but only to the extent that as of
the last day of the most recent fiscal quarter ending immediately
prior to such Start Date for which a certificate has been
delivered to the Banks pursuant to the second succeeding sentence
hereinafter (the "Test Date") the ratio of Consolidated
Indebtedness of Holdings to EBITDA of
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Holdings for the immediately preceding four fiscal quarters
(including the quarter with respect to which the certificate
referred to below is being delivered) shall be less than 3.50x
but greater than or equal to 3.00x; or
(w) 0.50%, to the extent but only to the extent that as of
the Test Date the ratio of Consolidated Indebtedness of Holdings
to EBITDA of Holdings for the immediately preceding four fiscal
quarters (including the quarter with respect to which the
certificate referred to below is being delivered) shall be less
than 3.00x but greater than or equal to 2.50x;
(x) 0.75%, to the extent but only to the extent that as of
the Test Date the ratio of Consolidated Indebtedness of Holdings
to EBITDA of Holdings for the immediately preceding four fiscal
quarters (including the quarter with respect to which the
certificate referred to below is being delivered shall be less
than 2.50x but greater than or equal to 2.00x; or
(y) 1.00%, to the extent but only to the extent that as of
the Test Date the ratio of Consolidated Indebtedness of Holdings
to EBITDA of Holdings for the immediately preceding four fiscal
quarters (including the quarter with respect to which the
certificate referred to below is being delivered) shall be less
than 2.00x but greater than or equal to 1.50x; or
(z) 1.25%, to the extent but only to the extent that as of
the Test Date the ratio of Consolidated Indebtedness of Holdings
to EBITDA of Holdings for the immediately preceding four fiscal
quarters (including the quarter with respect to which the
certificate referred to below is being delivered) shall be less
than 1.50x;
provided, however, that (even if the relevant tests set forth above are met) if
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at any time a Default or an Event of Default shall exist, the Leverage Reduction
Discount shall be 0.00% until such Default or Event of Default shall no longer
be continuing. It is understood and agreed that the Leverage Reduction Discount
as provided above shall in no event be cumulative and only the Leverage
Reduction Discount available pursuant to either clause (v), (w), (x), (y) or
(z), if any, contained in this definition shall be applicable. The Leverage
Reduction Discount shall be determined by the delivery of a certificate of the
Borrowers, certified by the chief financial officer of the Borrowers, together
with the financial statements required to be delivered pursuant to Section
8.01(b) or (c), as the case may be, which certificate shall set forth the
Leverage
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Reduction Discount arising from the calculation of the ratio of Consolidated
Indebtedness to EBITDA of Holdings for the four fiscal quarters ending with the
fiscal quarter or fiscal year with respect to which such certificate is being
delivered and the basis for such calculations. The Leverage Reduction Discount
so determined shall apply, except as set forth above in the case of a Default or
an Event of Default, to the period beginning on the date such financial
statements are delivered (the date of delivery of such financial statements on
which such period commences being herein referred to as the "Start Date") and
ending on the earlier of (the "End Date") (i) the next date of actual delivery
of the financial statements required to be delivered pursuant to Section 8.01(b)
or (c) or (ii) the date on which such financial statements are required to be
delivered."
II. MISCELLANEOUS
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1. In order to induce the Banks to enter into this Amendment, the
Borrowers hereby (i) make each of the representations, warranties and agreements
contained in the Credit Agreement as though made on the Second Amendment
Effective Date (as hereinafter defined), unless stated to relate to a specific
earlier date, in which case such representations and warranties shall be true
and correct in all material respects as of such earlier date and (ii) represent
and warrant that there exists no Default or Event of Default, in each case on
the Second Amendment Effective Date both before and after giving effect to this
Amendment.
2. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement.
3. This Amendment may be executed in any number of counterparts and
by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrowers and the Agent.
4. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
5. This Amendment shall become effective on the date (the "Second
Amendment Effective Date") when the Borrowers, the Required Banks and the Agent
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shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered the same to the Agent at its New York
Office.
6. From and after the Second Amendment Effective Date, all
references in the Credit Agreement shall be deemed to be references to the
Credit Agreement as modified hereby.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be duly executed and delivered as of the date first above written.
Address:
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0000 Xxx Xxxxxxxxxx Xxxx HANGER ORTHOPEDIC GROUP, INC.
0xx Xxxxx
Xxxxxxxx, XX 00000 /s/ Xxxxxxx X. Xxxxx
Attention: Xxxx X. Xxxxx --------------------------------
Telephone: (000) 000-0000 By: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Title: Vice President
0000 Xxx Xxxxxxxxxx Xxxx X.X. XXXXXX, INC.
0xx Xxxxx
Xxxxxxxx, XX 00000 /s/ Xxxxxxx X. Xxxxx
Attention: Xxxx X. Xxxxx --------------------------------
Telephone: (000) 000-0000 By: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000 Title: Vice President
000 Xxxxxxx Xxxxxx XXXXXX XXXXXXX,
Xxx Xxxx, Xxx Xxxx 00000 Individually and as Agent
Attention: Xxx Xxxxxx
Telephone: (000) 000-0000 /s/ Xxx Xxxxxx
Facsimile: (000) 000-0000 --------------------------------
By: Xxx Xxxxxx
Title: Vice President
/s/ Xxxxxx Xxxxx
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By: Xxxxxx Xxxxx
Title:
BANK OF BOSTON
/s/ Xxxxx X. Alto
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By: Xxxxx X. Alto
Title: Vice President
FIRST SOURCE FINANCIAL, INC.
/s/ Xxxxx X. Xxxxxx
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By: Xxxxx X. Xxxxxx
Title: Vice President
FLEET NATIONAL BANK
/s/ Xxxxxxx X. Xxxxx
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By:
Title:
IMPERIAL BANK
/s/ X. X. Xxxxxxxx
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By: X. X. Xxxxxxxx
Title: Senior Vice President
LASALLE NATIONAL BANK
/s/ Xxxx Xxxxxxxx
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By: Xxxx Xxxxxxxx
Title: First Vice President
PARIBAS CAPITAL FUNDING LLC
/s/ Xxxx Xxxxx
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By: Xxxx Xxxxx
Title: Director
PILGRIM AMERICA PRIME
RATE TRUST
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
By: Xxxxxxx X. Xxxxxxxx
Title: Vice President
PRIME INCOME TRUST
/s/ Xxxxxx Xxxx
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By: Xxxxxx Xxxx
Title: Senior Vice President
