EXHIBIT 10.38
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of December 9, 1998 (this
"Second Amendment"), is entered into by and among RESPIRONICS, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Borrower"), the financial institutions listed on the signature pages hereto,
and each other financial institution which from time to time becomes a party
hereto in accordance with Subsection 9.6a of the Original Credit Agreement, as
defined below (individually a "Lender" and collectively the "Lenders"), PNC
BANK, NATIONAL ASSOCIATION as the issuer of Letters of Credit (in such capacity,
the "Issuing Bank"), PNC BANK, NATIONAL ASSOCIATION as the administrative agent
(in such capacities, the "Administrative Agent"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION as the syndication agent (in such capacity, the
"Syndication Agent") and FIRST UNION NATIONAL BANK as the documentation agent
(in such capacity, the "Documentation Agent") (the Administrative Agent, the
Syndication Agent and the Documentation Agent are herein collectively referred
as the "Agents") and amends that certain Credit Agreement dated as of May 8,
1998, as previously amended by the First Amendment to Credit Agreement dated as
of August 19, 1998 (the Credit Agreement, as amended by the First Amendment,
together with the exhibits and schedules thereto and all amendments,
supplements, extensions, renewals, modifications or replacements thereto or
thereof, is hereinafter referred to as the "Original Credit Agreement") entered
into by and among the Borrower, the Lenders, the Issuing Bank, the
Administrative Agent, PNC Bank, National Association as the syndication agent
and Bank of America National Trust and Savings Association as the documentation
agent.
WITNESSETH:
WHEREAS, the Borrower, the Lenders and the Agents entered into the Original
Credit Agreement whereby the Lenders made available to the Borrower certain
financial accommodations, including but not limited to a Revolving Credit
Commitment in an amount not to exceed $100,000,000 at any one time outstanding;
and
WHEREAS, the Borrower has requested that the Lenders agree to certain
modifications to the Original Credit Agreement.
NOW THEREFORE, in consideration of the foregoing recitals (each of which is
incorporated herein and made a material part hereof), the mutual covenants and
agreements contained herein and other valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and with the intent to be legally
bound hereby, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS TO ORIGINAL CREDIT AGREEMENT
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Section 1.01. Amendments to preamble to the Original Credit
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Agreement. The preamble to the Original Credit Agreement is hereby amended and
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restated to read as follows:
This CREDIT AGREEMENT, dated as of May 8, 1998 (as more fully defined
below, the "Agreement"), is entered into by and among RESPIRONICS,
INC., a Delaware corporation (the "Borrower"), the financial
institutions listed on the signature pages hereto, and each other
financial institution which, from time to time becomes a party hereto
in accordance with Subsection 9.6a (individually a "Lender" and
collectively the "Lenders") and PNC BANK, NATIONAL ASSOCIATION as the
issuer of Letters of Credit (in such capacity the "Issuing Bank"),
PNC BANK, NATIONAL ASSOCIATION as the administrative agent (in such
capacity the "Administrative Agent"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION as the syndication agent (in such capacity,
the "Syndication Agent") and FIRST UNION NATIONAL BANK as the
documentation agent (in such capacity, the "Documentation Agent").
Section 1.02. Amendments to Section 1.1 of the Original Credit
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Agreement. Section 1.1 of the Original Credit Agreement is hereby amended as
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follows:
(i) The following defined terms and the definitions therefor are hereby
added to Section 1.1 of the Original Credit Agreement and are inserted in
correct alphabetical order:
Recourse Purchase Agreements. Agreements entered into by the
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Borrower or a Subsidiary pursuant to which accounts or leases are
assigned to or originated by a third party with such third party
having full or partial recourse to the Borrower for nonpayment of the
underlying account or lease obligation, including but not limited to
(i) the Master Lease Purchase Agreement dated August 23, 1995 between
Healthdyne Technologies, Inc. and Copelco Capital Inc. as the same
has been or may be amended, (ii) the agreement dated May 17, 1991
between Healthdyne, Inc. and Sanwa Business Credit Corporation as the
same as been or may be further amended, and (iii) the Operating
Agreement dated September 24, 1998, between Rockford Industries, Inc.
and the Borrower, as the same may be amended.
Second Amendment: The Second Amendment to Credit Agreement and
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Waiver dated as of December 9, 1998.
Second Amendment Effective Date: The date on which the Lenders
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shall have determined that each of the conditions set forth in
Article III of the Second Amendment have either been satisfied by the
Borrower or waived by the Lenders.
Syndication Agent: Bank of America National Trust and Savings
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Association.
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(ii) The definitions of the following defined terms are hereby amended to
read as follows:
Administrative Agent: PNC Bank, National Association, in its
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capacity as the administrative agent.
Agents: Any of the Administrative Agent, the Documentation Agent
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or the Syndication Agent.
Commitment: As to each Lender, the obligation of such Lender to
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make Loans available to the Borrower pursuant to Section 2.1 in an
aggregate principal amount not to exceed the amount set forth
opposite such Lender's name on the signature pages to the Second
Amendment (as the same may be reduced at any time or from time to
time pursuant to Subsection 2.1f and Subsection 2.3a) and, as to all
Lenders, the obligation of the Lenders to make Loans available to the
Borrower in a maximum aggregate amount not to exceed $125,000,000 as
set forth in Section 2.1.
Compliance Certificate: A certificate substantially in the form of
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Exhibit C-1 attached to the Second Amendment which has been executed
by an Authorized Officer and delivered to the Administrative Agent.
Consolidated EBIT: For the relevant period, the sum of the
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Borrower's (i) Consolidated net income, (ii) Consolidated income tax
expense and (iii) Consolidated interest expense; provided, that
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except as adjusted by the following proviso, there shall be excluded
from Consolidated net income (a) any extraordinary or non-recurring
items of gain or loss (including, without limitation, those items
created by mandated changes in accounting treatment), and (b) any
gain or loss of any Person accounted for on the equity method, except
to the extent of cash distributions received during the relevant
period; and provided further that (a) the non-recurring charges
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directly related to the Healthdyne Acquisition and (b) non-recurring
charges related to the defense of the attempted hostile takeover of
Healthdyne by Invacare, Inc., to the extent such changes are not
otherwise included in items (ii) and (iii) immediately above, shall
be added to the Borrower's Consolidated Net Income for the Fiscal
Quarters ending March 31, 1998, June 30, 1998, September 30, 1998,
December 31, 1998 and March 31, 1999.
Consolidated EBITDA: For the relevant period, the sum of the
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Borrower's (i) Consolidated net income, (ii) Consolidated income tax
expense, (iii) Consolidated interest expense, (iv) Consolidated
depreciation and amortization expenses and (v) other Consolidated
non-cash expenses for the Borrower, all determined in accordance with
GAAP; provided that except as adjusted by the following proviso there
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shall be excluded from Consolidated net income (a) any extraordinary
or non-recurring items of gain or loss (including, without
limitation, those items created by mandated changes in accounting
treatment), and (b) any
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gain or loss of any Person accounted for on the equity method, except
to the extent of cash distributions received during the relevant
period; and provided further that (a) the non-recurring charges
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directly related to the Healthdyne Acquisition and (b) non-recurring
charges related to the defense of the attempted hostile takeover of
Healthdyne by Invacare, Inc., to the extent such changes are not
otherwise included in items (ii) and (iii) immediately above, shall
be added to the Borrower's Consolidated net income for the Fiscal
Quarters ending March 31, 1998, June 30, 1998, September 30, 1998,
December 31, 1998 and March 31, 1999.
Documentation Agent: First Union National Bank.
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Guaranty: As to any Person, any obligation, direct or indirect, by
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which such Person undertakes to guaranty, assume or remain liable for
the payment of a second Person's obligations, including but not
limited to (i) endorsements of negotiable instruments, (ii) discounts
with recourse, (iii) agreements to pay or perform upon a second
Person's failure to pay or perform, (iv) agreements to remain liable
on obligations assumed by a second Person, (v) agreements to maintain
the capital, working capital, solvency or general financial condition
of a second Person, (vi) the Recourse Purchase Obligations and (vii)
agreements for the purchase or other acquisition of products,
materials, supplies or services, if in any case payment therefor is
to be made regardless of the nondelivery of such products, materials
or supplies or the nonfurnishing of such services.
Section 1.03. Amendment to Section 2.1a of the Original Credit
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Agreement. Section 2.1a of the Original Credit Agreement is hereby amended and
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restated in its entirety to read as follows:
2.1a Loans. The Lenders hereby severally establish, upon the terms
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and conditions hereinafter set forth and relying upon the
representations and warranties herein set forth, a revolving credit
in favor of the Borrower in the maximum aggregate amount of ONE
HUNDRED TWENTY-FIVE MILLION AND NO/100 DOLLARS ($125,000,000.00) (the
"Revolving Credit"). The Borrower shall have the right to borrow,
repay and reborrow from the Lenders from the date hereof until the
Revolving Credit Termination Date pursuant to draws upon the
Revolving Credit the principal amount of which, together with the
Stated Amount of all then outstanding Letters of Credit, shall not
exceed $125,000,000 in the aggregate at any one time outstanding;
provided, however, solely for purposes of determining Revolving
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Credit availability under this Section 2.1a, the Westminster IRB
Letter of Credit issued by Norwest Bank of Colorado, N.A. and the
PEDFA Letter of Credit issued by PNC Bank, National Association, each
as more fully described under item 2 of Schedule 5.1 attached hereto,
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shall be excluded from the definition of outstanding Letters of
Credit.
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Section 1.04. Amendment to Section 2.3a of the Original Credit
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Agreement. Section 2.3a of the Original Credit Agreement is hereby amended and
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restated in its entirety to read as follows:
2.3a Issuance of Letters of Credit. Subject to the further terms
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and conditions of this Agreement and in reliance upon the
representations and warranties set forth herein, the Issuing Bank
agrees to issue upon the request of the Borrower to the Issuing Bank,
Letters of Credit for the account of the Borrower or a Subsidiary of
the Borrower in an aggregate Stated Amount not to exceed TWENTY
MILLION DOLLARS ($20,000,000) at any one time outstanding (as may be
increased or reduced and reinstated from time to time in accordance
with the terms and provisions hereof). The Stated Amount of each
Letter of Credit, while the same is issued and outstanding, shall be
deducted from the maximum amount otherwise available under the
Commitment. By way of illustration, if there are outstanding at any
one time Letters of Credit having an aggregate Stated Amount of
$5,000,000, the maximum availability under the Commitment, without
accounting for reductions which are a function of voluntary permanent
reductions, would be $120,000,000. No Letters of Credit may be issued
hereunder to the extent the Stated Amount thereof together with the
aggregate amount of Disbursements made under Subsection 2.1a, would
exceed the maximum availability under the Commitment (as may be
reduced pursuant to the terms of this Subsection 2.3a or Subsection
2.1f hereof). No Letter of Credit issued pursuant hereto shall have
an initial term which exceeds twelve (12) months from the date of
issuance (except the Existing Letters of Credit) nor have an
expiration date later than fifteen (15) days prior to the Revolving
Credit Termination Date. At least three (3) Business Days prior to
the issuance of any Letter of Credit hereunder the Borrower shall
complete and deliver to the Issuing Bank the Issuing Bank's then
current form of Application for Letter of Credit. The issuance of
each Letter of Credit in accordance with the provisions of this
Subsection 2.3a shall require the satisfaction of each condition set
forth in Sections 6.1 and 6.2 hereof. The foregoing not withstanding,
solely for the purposes of determining Letter of Credit availability
under this Section 2.3a, the Westminster IRB Letter of Credit issued
by Norwest Bank of Colorado, N.A. and the PEDFA Letter of Credit
issued by PNC Bank, National Association, each as more fully
described under item 2 of Schedule 5.1 attached hereto, shall be
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excluded from the definition of outstanding Letters of Credit
Section 1.05. Amendment to Section 4.2a of the Original Credit
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Agreement. Section 5.1 of the Original Credit Agreement is amended by deleting
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the phrase "Exhibit C" and inserting in its place the phrase "Exhibit C-1".
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Section 1.06. Amendment to Section 5.1 of the Original Credit
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Agreement. Section 5.1 of the Original Credit Agreement is hereby amended in its
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entirety to read as follows:
Indebtedness. The Borrower shall not and shall not permit its
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Subsidiaries to create, incur, assume or permit to exist or remain
outstanding any Indebtedness, except for:
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(i) The Indebtedness owed by the Borrower to the Lenders or the
Issuing Bank hereunder;
(ii) Consolidated Indebtedness of the Borrower and its Subsidiaries
existing on the Closing Date (exclusive of obligations under Recourse
Repurchase Agreements) to remain outstanding and unpaid after the
Closing Date and listed on Schedule 5.1 and any extensions, renewals
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or refinancings thereof, in outstanding principal amounts not greater
than those shown on Schedule 5.1;
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(iii) Consolidated Indebtedness represented by obligations, whether
contingent or actual, under Recourse Repurchase Agreements not to
exceed $25,000,000 at any one time outstanding;
(iv) Guarantees of the Borrower, guaranteeing the Indebtedness of
its Subsidiaries permitted pursuant to this Section 5.1; and
(v) Additional Consolidated Indebtedness, including without
limitation purchase money indebtedness and Capitalized Lease
Obligations, of the Borrower and its Subsidiaries in an amount not to
exceed $12,500,000 at any one time outstanding.
Section 1.07. Amendment to Title of Article 8 of the Original
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Credit Agreement. Article 8 of the Original Credit Agreement is hereby renamed
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to read as follows:
ARTICLE 8. ADMINISTRATIVE AGENT, DOCUMENTATION AGENT AND SYNDICATION
AGENT.
Section 1.08. Amendment to Section 8.1 of the Original Credit
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Agreement. Section 8.1 of the Original Credit Agreement is hereby amended and
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restated in its entirety to read as follows:
8.1 Appointment and Grant of Authority. Each of the Lenders
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hereby appoints PNC Bank, and PNC Bank hereby agrees to act as, the
Administrative Agent under this Agreement, the Revolving Credit Notes
and the other Loan Documents. Each of the Lenders hereby appoints
First Union National Bank, and First Union National Bank hereby
agrees to act as, the Documentation Agent under this Agreement, the
Revolving Credit Notes and the other Loan Documents. Each of the
Lenders hereby appoints Bank of America National Trust and Savings
Association, and Bank of America National Trust and Savings
Association hereby agrees to act as, the Syndication Agent under this
Agreement, the Revolving Credit Notes and the other Loan Documents.
As such Agents, the Agents shall have and may exercise such powers
under this Agreement as are specifically delegated to them in their
respective capacities, by the terms hereof, of the Revolving Credit
Notes or of the other Loan Documents,
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together with such other powers as are incidental thereto. Without
limiting the foregoing, the Administrative Agent, on behalf of the
Lenders, is authorized to execute all of the Loan Documents (other
than this Agreement) and to accept all of the Loan Documents and all
other agreements, documents or instruments reasonably required to
carry out the intent of the parties to this Agreement.
Section 1.09. Amendment to Section 8.9a of the Original Credit
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Agreement. Section 8.9a of the Original Credit Agreement is hereby amended by
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replacing the opening phrase "Either of the Agents..." with "Any of the
Agents...".
Section 1.10. No Other Amendments. The amendments to the
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Original Credit Agreement set forth in Sections 1.01 through 1.09 above do not
either implicitly or explicitly waive, alter or amend, except as expressly
provided in this Second Amendment, the provisions of the Original Credit
Agreement. The amendments set forth in Sections 1.01 through 1.09 hereof do not
waive, now or in the future, compliance with any other covenant, term or
condition to be performed or complied with nor do they impair any rights or
remedies of the Lenders and the Agents under the Original Credit Agreement with
respect to any such violation.
ARTICLE II
BORROWER'S SUPPLEMENTAL REPRESENTATIONS
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Section 2.01. Incorporation by Reference. As an inducement to
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the Lenders and the Agents to enter into this Second Amendment, except as
previously disclosed in writing by the Borrower to the Lenders and the Agents,
the Borrower hereby repeats herein for the benefit of the Lenders and the Agents
the representations and warranties made by the Borrower in Article 3 of the
Original Credit Agreement, except that for purposes hereof such representations
and warranties shall be deemed to extend to and cover this Second Amendment.
ARTICLE III
CONDITIONS PRECEDENT
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Section 3.01. Conditions Precedent. Each of the following shall
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be a condition precedent to the effectiveness of this Second Amendment:
(i) The Lenders and the Agents shall have received, on or before
the Second Amendment Effective Date, the following items, each, unless otherwise
indicated, dated on or before the Second Amendment Effective Date and in form
and substance satisfactory to the Lenders, the Agents and the Administrative
Agent's special counsel, Xxxxxx Xxxxxxxxx, P.C.:
(A) Duly executed counterpart originals of this Second
Amendment, executed by the Borrower, the Agents, and all of the Lenders;
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(B) Amended and Restated Revolving Credit Notes, one each
payable to each Lender in the principal amount of each Lender's increased
Commitment, executed by the Borrower;
(C) A certified copy of the corporate action of the Borrower
authorizing the execution and delivery of and the performance under this Second
Amendment;
(D) A certification from the Borrower that its certificate of
incorporation and its by-laws which were delivered to the Administrative Agent
on May 8, 1998 continue to remain complete and correct and in full force and
effect and have not been amended, supplemented or otherwise modified on or after
such date (except as set forth in such certificate), which certification states
the names of the Persons authorized to sign this Second Amendment and all other
documents, instruments and certificates delivered hereunder, together with the
true signatures of such Persons;
(E) A certificate signed by an Authorized Officer of the
Borrower, dated the Second Amendment Effective Date, certifying that:
(1) the representations and warranties made pursuant to
this Second Amendment and in the other Loan Documents
executed in connection with this Second Amendment are
true and correct on and as of the Second Amendment
Effective Date as though made on and as of such date;
(2) no petition by or against the Borrower has at any
time been filed under the United States Bankruptcy Code
or under any similar act;
(3) except which those matters which have previously been
disclosed to the Lenders, no Material Adverse Change in
the properties, business, operations, financial condition
or prospects of the Borrower has occurred; and
(4) the Borrower has in all material respects performed
all agreements, covenants and conditions required to be
performed on or prior to the date hereof under the
Original Credit Agreement and the other Loan Documents,
except to the extent waived by the Lenders on or before
the Second Amendment Effective Date; and
(F) Consents from each Guarantor existing as of the Second
Amendment Effective Date to the execution by the Borrower of the Second
Amendment;
(G) Payment to the Administrative Agent for the benefit of
the Lenders, pro rata in accordance with their respective increased Commitments,
of a fee of $31,250; and
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(H) Such other instruments, documents and opinions of counsel
as the Lenders and the Agents shall reasonably require, all of which shall be
satisfactory in form and substance to the Lenders and Agents and the
Administrative Agent's special counsel.
ARTICLE IV
GENERAL PROVISIONS
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Section 4.01. Ratification of Terms. Except as expressly amended by
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this Second Amendment, the Original Credit Agreement and each and every
representation, warranty, covenant, term and condition contained therein is
specifically ratified and confirmed. The Lenders are not obligated to make
further amendments, supplements, extensions or renewals thereto or thereof.
Section 4.02. References. All notices, communications, agreements,
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certificates, documents or other instruments executed and delivered after the
execution and delivery of this Second Amendment in connection with the Original
Credit Agreement, any other Loan Document or the transactions contemplated
thereby may refer to the Original Credit Agreement without making specific
reference to this Second Amendment, but nevertheless all such references shall
include this Second Amendment unless the context requires otherwise. From and
after the Second Amendment Effective Date, all references in the Original Credit
Agreement and each of the other Loan Documents to the "Agreement" shall be
deemed to be references to the Original Credit Agreement, as amended hereby.
Section 4.03. Counterparts. This Second Amendment may be executed
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in different counterparts, each of which when executed by the Borrower and the
Lenders shall be regarded as an original, and all such counterparts shall
constitute one Second Amendment.
Section 4.04. Capitalized Terms. Except for proper nouns and as
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otherwise defined herein, capitalized terms used herein as defined terms shall
have the meanings ascribed to them in the Original Credit Agreement, as amended
hereby.
Section 4.05. Taxes. The Borrower shall pay any and all stamp
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and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Second Amendment and such
other documents and instruments as are delivered in connection herewith and
agrees to save the Lenders harmless from and against any and all liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
Section 4.06. Costs and Expenses. The Borrower will pay all
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costs and expenses of the Lenders and the Agents (including, without limitation,
the reasonable fees and the disbursements of special counsel, Xxxxxx Xxxxxxxxx,
P.C.) in connection with the preparation, execution and delivery of this Second
Amendment and the other documents, instruments and certificates delivered in
connection herewith.
SECTION 4.07. GOVERNING LAW. THIS SECOND AMENDMENT AND THE RIGHTS
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AND OBLIGATIONS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE
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WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD
TO THE PROVISIONS THEREOF REGARDING CONFLICTS OF LAW.
Section 4.08. Headings. The headings of the sections in this
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Second Amendment are for purposes of reference only and shall not be deemed to
be a part hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have caused this Second Amendment to Credit Agreement to be executed by their
respective duly authorized officers as of the date first written above.
RESPIRONICS, INC.,
a Delaware corporation
By:________________________________ (SEAL)
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION,
as a Lender and in its capacities as
Commitment: $30,312,500 Administrative Agent and Issuing Bank
Commitment Percentage 24.25% By:________________________________ (SEAL)
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender and in
Commitment: $28,125,000 its capacity as Syndication Agent
Commitment Percentage 22.5% By:________________________________ (SEAL)
Name:
Title:
FIRST UNION NATIONAL BANK, as a Lender and
Commitment: $28,125,000 in its capacity as Documentation Agent
Commitment Percentage 22.5% By:________________________________ (SEAL)
Name:
Title:
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Commitment: $23,437,500 FLEET NATIONAL BANK
Commitment Percentage 18.75% By:________________________________ (SEAL)
Name:
Title:
Commitment: $15,000,000 NORWEST BANK COLORADO, NATIONAL
ASSOCIATION
Commitment Percentage 12.0% By:________________________________ (SEAL)
Name:
Title:
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