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EXHIBIT 10.2
SEVENTH AMENDMENT AND WAIVER UNDER
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SEVENTH AMENDMENT AND WAIVER (this "Amendment") to the Second Amended
and Restated Credit Agreement referred to below is made as of February 2, 2000
by and among NEW AMERICAN HEALTHCARE CORPORATION, a Delaware corporation (the
"Borrower"), TORONTO DOMINION (TEXAS), INC., as agent for the financial
institutions party hereto (in such capacity, the "Agent"), THE TORONTO-DOMINION
BANK, as Issuing Bank and THE FINANCIAL INSTITUTIONS PARTY HERETO (collectively,
the "Banks"; individually, a "Bank").
W I T N E S S E T H
WHEREAS, the Borrower, the Agent, the Issuing Bank and the Banks are party
to that certain Second Amended and Restated Credit Agreement, dated as of May
14,1999 (as amended, supplemented or otherwise modified from time to time, prior
to the date hereof, the "Credit Agreement"); and
WHEREAS, the Agent, the Issuing Bank and the Banks have agreed to amend the
Credit Agreement and to defer certain interest payments thereunder in the
manner, and on the terms and conditions, provided for herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.
2. AMENDMENT TO SECTION 2.1(A). Section 2.1(a) of the Credit
Agreement is hereby amended by deleting the last sentence thereof and inserting
the following new sentence in lieu thereof:
"Notwithstanding anything to the contrary, no Loan shall be made
hereunder at any time without the prior written consent of each
Bank."
3. DELIVERIES OF REQUIRED INFORMATION. On or before the dates set
forth on Schedule 1, the Borrower shall deliver to the Agent, in form and
substance satisfactory to the Agent, the information identified in Schedule I
(the "Required Information").
4. DEFERRAL OF INTEREST PAYMENTS. The Borrower hereby acknowledges
that, as of the date hereof, interest was payable by the Borrower under the
Credit Agreement and the Notes on the following dates and in the following
amounts:
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Payment Date Amount of Interest Payment
------------ --------------------------
December 13, 1999 $752,115.91
December 22, 1999 $ 16,041.67
December 29, 1999 $ 61,359.38
January 6, 2000 $ 18,083.33
January 13, 2000 $836,791.21
Notwithstanding anything to the contrary, the parties hereto agree
that the foregoing scheduled interest payments on the Loans, together with any
other fees, expenses and interest, due under the Credit Agreement shall be
deferred until February 10, 2000 on which date such amounts shall be due and
payable in full, provided, however, if the Required Information is not delivered
on or before the dates set forth in Schedule I, such deferral shall
automatically terminate on the date such Required Information was due. Any
failure to pay such amounts on February 10, 2000, or such earlier due date in
the event any Required Information is not delivered on or before the date such
Required Information is due, shall constitute an immediate Event of Default for
any and all purposes under the Credit Agreement and the other Loan Documents.
5. RATIFICATION OF CREDIT AGREEMENT. Except as expressly provided,
herein, the Credit Agreement and the other Loan Documents shall continue to be
in full force and effect in accordance with their respective terms and shall be
unmodified. In addition, except as expressly provided herein, this Amendment
shall not be deemed a waiver of any term or condition of any Loan Document by
the Agent or the Banks with respect to any right or remedy which the Agent or
the Banks may now or in the future have under the Loan Documents, at law or in
equity or otherwise or be deemed to prejudice any rights or remedies which the
Agent or the Banks may now have or may have in the future under or in connection
with any Loan Document or under or in connection with any Incipient Default or
Event of Default which may now exist or which may occur after the date hereof.
Except as expressly provided herein, the Credit Agreement and all other Loan
Documents are hereby in all respects ratified and confirmed.
6. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Banks that it is not aware of any Incipient Default or Event
of Default other than those expressly waived pursuant hereto or otherwise
disclosed in writing to the Agent. The Borrower acknowledges that the Banks are
relying on the foregoing representation and warranty in making their decision to
enter into this Amendment.
7. OUTSTANDING INDEBTEDNESS; WAIVER OF CLAIMS. The Borrower hereby
acknowledges and agrees that as of February 1, 2000 the outstanding principal
amount of the Loan is $107,057,121.15 and that such principal amount is payable
pursuant to the Credit Agreement without defense, offset, withholding,
counterclaim or deduction of any kind. The Borrower hereby further acknowledges
that it has no Claims (as hereinafter defined) against the Agent, the Issuing
Bank or the Banks and their respective employees, agents, representatives,
consultants, attorneys, fiduciaries, servants, officers, directors, partners,
predecessors,
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subsidiary corporations, parent corporations and related corporate divisions and
their respective successors and assigns (all of the foregoing being the
"Indemnified Persons") and hereby waives, releases, remises and forever
discharges Agent, the Issuing Bank, each Bank and each other Indemnified Person
from any and all Claims of any and every character, known or unknown, direct
and/or indirect, at law or in equity, of whatsoever kind or nature, whether
heretofore or hereafter arising, for or because of any matter or things done,
omitted or suffered to be done by any Indemnified Person prior to and including
the date hereof, and in any way directly or indirectly arising out of or in any
way connected to the Credit Agreement or any other Loan Document. For purposes
hereof, "Claims" shall mean all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits or claims which may be instituted or
asserted against or incurred by such Indemnified Person as the result of credit
having been extended under the Credit Agreement or any other Loan Document or
otherwise arising in connection with the transactions contemplated thereunder.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
9. EFFECTIVENESS. This Amendment shall become effective upon
receipt by the Agent of nine original copies of this Amendment duly executed and
delivered by the Borrower, the Agent, the Issuing Bank and the Banks and
acknowledged by the Guarantors listed on the signatures pages hereto.
10. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment
as of date and year first above written.
NEW AMERICAN HEALTHCARE CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
TORONTO DOMINION (TEXAS), INC.,
As Agent and a Bank
By:
--------------------------------------
Name:
Title:
THE TORONTO-DOMINION BANK,
as Issuing Bank
By:
--------------------------------------
Name:
Title:
BANK OF AMERICA., N.A. f/k/a
NATIONSBANK, N.A.
By:
---------------------------------------
Name:
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
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FIRST UNION NATIONAL BANK
By:
-----------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK
By:
------------------------------------
Name:
Title:
NATIONAL CITY BANK OF KENTUCKY
By:
------------------------------------
Name:
Title:
BANK ONE, N.A.
By:
------------------------------------
Name:
Title:
AMSOUTH BANK
By:
------------------------------------
Name:
Title:
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The undersigned Guarantors hereby (i) acknowledge and consent to the amendment
of the Credit Agreement and the waiver of payment default and deferral of
interest payments effected by this Amendment and (ii) confirm and agree that
their obligations under their respective Guaranties shall continue without any
diminution thereof and shall remain in full force and effect on and after the
effectiveness of this Amendment.
NAHC OF MISSOURI, INC.
NAHC OF TEXAS, INC.
NAHC II OF TEXAS, INC.
NAHC FINANCIAL, INC.
NAHC OF IOWA, INC.
NAHC OF OREGON, INC.
NAHC II OF OREGON, INC.
NAHC III OF OREGON, INC.
NAHC OF WYOMING INC.
NAHC COMPANY INC.
NAHC GEORGIA HOLDINGS, INC.
NAHC OF MISSISSIPPI, INC.
NAHC OF WASHINGTON INC.
MEMORIAL HOSPITAL OF ADEL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
NAHC LIMITED PARTNERSHIP
By: Now American Healthcare Corporation,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
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WELSH, CARSON, XXXXXXXX & XXXXX VII, L.P.
By: WCAS VII Partners,
as General Partner
By:
---------------------------------
Name:
Title:
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SCHEDULE I
INFORMATION DUE JANUARY 31, 2000
1. Management Contract. The Borrower shall deliver a term sheet regarding
management's proposal for managing and selling the Hospitals, including any
proposed compensation and commission terms.
2. Cash Flow Projections. The Borrower and its Subsidiaries shall deliver
thirteen (13) week rolling cash flow projections, broken down by each Hospital
and the corporate office and reconciled with the Borrower's long-term
projections. Updates of such cash flow projections shall be delivered on a
weekly basis, with each update providing an explanation of any variances with
the prior week.
3. Bank Accounts. The Borrower and its Subsidiaries shall supplement the
bank account information set forth in Schedule 7.20 to the Credit Agreement by
providing Agent with the current balance of each account set forth in such
Schedule. Upon request of Agent, the Borrower and its Subsidiaries shall update
such Schedule and account balance information and provide such supporting detail
and documentation as shall be requested by Agent.
4. Reimbursement/Government Claims. The Borrower and its Subsidiaries shall
identify and quantify all known and/or projected third party reimbursement
settlements (payables and receivables) or government claims by Hospital,
together with the expected date of payment or receipt of such payables and/or
receivables, as the case may be.
5. Reserves. The Borrower and its Subsidiaries shall provide an estimate of
reserves, on a Hospital by Hospital basis, expected to be required for third
party settlements insurance obligations and any other reserve items to be
retained subsequent to the sale of any Hospital.
6. Capital Expenditures. The Borrower and its Subsidiaries shall provide a
detailed budget of essential Capital Expenditures, on a Hospital by Hospital
basis, as well as an aggregate basis, for the six-month period ending June 30,
2000. Updates of such Capital Expenditures budget shall be delivered to the
Agent on the last Business Day of each Fiscal Quarter, commencing with the
Fiscal Quarter ending March 31, 2000.
7. Public Relations Plan. The Borrower and its Subsidiaries shall provide a
Plan describing the method and timing of communicating the plan described below
to all relevant parties, including trade creditors, doctors, employees,
community leaders and regulators.
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INFORMATION DUE FEBRUARY 3, 2000
1. Plan. The Agent acknowledges receipt from the Borrower and its
Subsidiaries of a comprehensive operating plan (the "Plan"), including time
frames for proposed sales of hospitals and healthcare facilities (collectively,
the "Hospitals"), staffing and expense projections, as well as management and
key employee retention and incentive proposals. The Borrower and its
Subsidiaries shall deliver to the Agent a revised copy of such plan,
incorporating all comments previously provided by the Agent.
2. Severance Agreements/Incentive Bonuses. The Agent acknowledges receipt
from the Borrower and its Subsidiaries of a plan proposing severance agreements,
stay bonuses and similar employee retention arrangements at the corporate and
local hospital levels. The Borrower and its Subsidiaries shall deliver to the
Agent a revised copy of such plan, incorporating all comments previously
provided by the Agent
ADDITIONAL REPORTING REQUIREMENTS
1. Monthly Financial Projections. On the first day of each calendar month,
the Borrower and its Subsidiaries shall deliver monthly financial projections,
including income statements, balance sheets and statements of cash flow,
together with appropriate supporting details and a statement of underlying
assumptions, for each month remaining in the estimated sale period. Such
projections shall be prepared for each Hospital, the corporate office and the
Borrower and its Subsidiaries on a consolidated basis.
2. Monthly Financials. The Borrower and its Subsidiaries shall deliver
monthly income statements, balance sheets and statements of cash flow within
thirty-five (35) days after each month's end for the period commencing on
January 1, 2000 through and including July 31, 2001. Such financials shall be
prepared for each Hospital, the corporate office and each Subsidiary.
3. Capital Expenditure Reconciliations. Upon request of Agent, and in no
event less frequently than Friday of each calendar week, the Borrower shall
provide a reconciliation of actual Capital Expenditures made by Borrower and its
Subsidiaries and Loans made to fund Capital Expenditures (which Capital
Expenditures have not yet been made) with the Capital Expenditures Budget, which
reconciliation shall be in form and substance satisfactory to Agent and
accompanied by such supporting detail and documentation as shall be requested by
Agent.
