EXHIBIT 10.20
AMENDMENT NO. 5 TO AND LIMITED WAIVER OF CERTAIN PROVISIONS OF CREDIT AGREEMENT
This AMENDMENT NO. 5 TO AND LIMITED WAIVER OF CERTAIN PROVISIONS OF
CREDIT AGREEMENT (this "Amendment and Waiver") is made and entered into as of
July 30, 2001, by and among XXXXXX RESPIRATORY CARE INC., a California
corporation (the "Borrower"), RIVER HOLDING CORP., a Delaware corporation
("Holding") and the Required Lenders (as defined in Article I of the Credit
Agreement).
RECITALS
A. The Borrower, Holding, the Lenders (as defined in Article I of the
Credit Agreement), Salomon Brothers Inc., as Arranger, Advisor and Syndication
Agent, and Bankers Trust Company, as Administrative Agent and Collateral Agent,
entered into a Credit Agreement dated as of April 7, 1998 (as amended and
otherwise modified to the date hereof, the "Credit Agreement"). Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
them in the Credit Agreement.
B. The Borrower requested certain changes to the Credit Agreement and
the waiver of certain provisions of the Credit Agreement.
C. The Required Lenders are willing to so amend the Credit Agreement
and waive certain provisions thereof on the terms and conditions set forth
herein.
D. The Borrower, Holding and the Required Lenders are entering this
Amendment and Waiver pursuant to Section 9.08(b) of the Credit Agreement.
AGREEMENTS
In consideration of the foregoing Recitals, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, Holding and the Required Lenders agree as follows:
1. Definitions.
(a) The definition of "Consolidated Interest Expense" is amended in
its entirety to read as follows:
"'Consolidated Interest Expense' means, for any period, the total
interest expense of the Borrower and its consolidated Restricted
Subsidiaries, other than any non-cash interest expense with respect to
the FS Convertible Senior Subordinated Debt, plus, to the extent not
included in such total interest expense, and to the extent Incurred by
the Borrower or its Restricted Subsidiaries, (a) interest expense
attributable to capital leases, (b) amortization of Indebtedness
discount and debt issuance cost, including commitment fees, (c)
capitalized interest, (d) non-cash
interest expenses other than any non-cash interest expense with
respect to the FS Convertible Senior Subordinated Debt, (e)
commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (f) net costs
associated with Hedging Obligations (including amortization of fees),
(g) dividends and other distributions on Disqualified Stock, (h)
Preferred Stock dividends in respect of all Preferred Stock of
Restricted Subsidiaries held by persons other than the Borrower or a
wholly owned Subsidiary (to the extent paid in cash), (i) interest
Incurred in connection with Investments in discontinued operations,
(j) interest accruing on any Indebtedness of any other person to the
extent such Indebtedness is Guaranteed by the Borrower or any
Restricted Subsidiary and (k) the cash contributions to any employee
stock ownership plan or similar trust to the extent such contributions
are used by such plan or trust to pay interest or fees to any person
(other than the Borrower) in connection with Indebtedness Incurred by
such plan or trust."
(b) The definition of "Debt/Adjusted EBITDA Ratio" is amended in its
entirety to read as follows:
"'Debt/Adjusted EBITDA Ratio' means, as of any date with respect to
the Borrower and its consolidated Restricted Subsidiaries, (a) the
total amount of Debt of the Borrower and its consolidated Restricted
Subsidiaries, excluding any FS Convertible Senior Subordinated Debt,
as of such date to (b) Adjusted EBITDA of the Borrower and its
consolidated Subsidiaries for the period of four fiscal quarters most
recently ended for which financial statements are available."
(c) The first sentence of the definition of "EBITDA" is amended in its
entirety to read as follows:
"'EBITDA' means, for any period, an amount equal to, for the Borrower
and its consolidated Restricted Subsidiaries, (a) the sum of
Consolidated Net Income for such period, plus the following to the
extent reducing Consolidated Net Income for such period: (i) the
provision for taxes based on income or profits or utilized in
computing net loss, (ii) Consolidated Interest Expense plus any
noncash interest expense with respect to the FS Convertible Senior
Subordinated Debt, (iii) depreciation, (iv) amortization, (v) any
other non-cash items (other than any such non-cash item to the extent
that it represents an accrual of or reserve for cash expenditures in
any future period), minus (b) all non-cash items increasing
Consolidated Net Income for such period (other than any such non-cash
item to the extent that it will result in the receipt of cash payments
in any future period)."
(d) The definition of "Equity Issuance" is amended in its entirety to
read as follows:
"'Equity Issuance' means the issuance by Holding or the Borrower of
any equity interests therein, or the issuance or sale by Holding or
the Borrower of any instrument or obligation convertible into or
exchangeable for, or giving any person any right, option or warrant to
acquire from Holding or the Borrower any
2
equity interests therein or any such convertible or exchangeable
instrument or obligation, but excluding (i) the Excluded Shares, (ii)
the issuance of shares of the Borrower to Holding pursuant to the
Gibeck AB Acquisition, (iii) the issuance of shares by Holding
pursuant to the Gibeck AB Acquisition, (iv) the Additional Equity, if
any, and (v) any shares issued by the Borrower to any of its
shareholders in exchange for the proceeds of the Additional Equity or
the FS Convertible Senior Subordinated Debt."
(e) The definition of "Excluded Shares" is amended in its entirety to
read as follows:
"'Excluded Shares' means Capital Stock of Holding, issued to an
employee of Holding, the Borrower or any Subsidiary of the Borrower
pursuant to any stock option, stock purchase, stock incentive or other
similar plan of Holding, the Borrower or any Subsidiary of the
Borrower established for the benefit of their employees (collectively,
an "Employee Stock Issuance"), or any Capital Stock of the Borrower
issued to Holding in consideration of the contribution by Holding to
Borrower of the cash proceeds of any such Employee Stock Issuance."
(f) The definition of "Permitted Acquisition" is amended by replacing
the figure "$45,000,000" in clause (e)(ii)(A) thereof with the figure
"$40,000,000" and by adding the following proviso at the end thereof:
"; provided that notwithstanding anything in this Agreement to the
contrary, without the prior written consent of Required Lenders, no
Asset Acquisitions or Stock Acquisitions shall be permitted on and
after the Fifth Amendment Effective Date."
(g) the definition of "Pricing Adjustment" is amended by deleting the
"and" at the end of clause (ii) thereof and by adding the following prior to the
period at the end of clause (iii) thereof:
"; and
(iv) the Pricing Adjustment shall be 0% during the period from the
Fifth Amendment Effective Date through June 30, 2002."
(h) The definition of "Revolving Credit Maturity Date" is amended in
its entirety to read as follows:
"'Revolving Credit Maturity Date' means June 30, 2003."
(i) The definition of "Subordinated Obligations" is amended by adding
the phrase "including, but not limited to the FS Convertible Senior Subordinated
Debt" at the end thereof.
3
(j) The definition of "Term Loan Maturity Date" is amended in its
entirety to read as follows:
"'Term Loan Maturity Date' means June 30, 2003."
(k) The following definitions are inserted in Section 1.01 of the
Credit Agreement in alphabetical order:
"'Acquisition Loans' has the meaning set forth in Section 3.13(e)(1).
'Additional Equity' means (a) Capital Stock of Holding or the Borrower
issued in exchange for up to $18,000,000 in cash proceeds paid by
Xxxxxxx Xxxxxx, an Affiliate of Xxxxxxx Xxxxxx, management of Holding
and/or the Borrower and other existing shareholders of Holding and/or
the Borrower so long as such cash proceeds are either contributed to
the Borrower or used to purchase Capital Stock of the Borrower on or
prior to the Fifth Amendment Effective Date plus (b) any Capital Stock
of Holding or the Borrower issued upon conversion of the FS
Convertible Senior Subordinated Debt which Capital Stock, to the
extent constituting Capital Stock of the Borrower, shall be pledged to
the Administrative Agent pursuant to a non-recourse Pledge Agreement,
satisfactory in form and substance to Administrative Agent, by the
holders thereof.
'Fifth Amendment' means that certain Amendment No. 5 and Limited
Waiver to this Agreement dated as of July 30, 2001.
'Fifth Amendment Effective Date' means the date on which the Fifth
Amendment becomes effective pursuant to paragraph 22 thereof.
'FS Convertible Senior Subordinated Debt' means up to $15,000,000 in
aggregate principal amount of unsecured convertible senior
subordinated notes of the Borrower owing to an Affiliate of Xxxxxxx
Xxxxxx, Xxxxxxx Xxxxxx, management of Holding and/or the Borrower
and/or other existing shareholders of Holding or the Borrower (which
may include up to $6,500,000 in FS Convertible Senior Subordinated
Debt issued in April and May 2001 and Indebtedness outstanding
pursuant to Section 6.01(j) hereof), and any unsecured convertible
senior subordinated notes issued in lieu of cash interest thereon, as
the same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof; provided that
(1) interest shall not be payable in cash on such notes but shall be
either accrued and compounded or shall be payable by the issuance of
additional unsecured convertible senior subordinated notes to the
extent such issuance is in compliance with the requirements of any
indenture governing Subordinated Obligations of the Borrower or any
Subsidiary; (2) such notes shall not mature earlier than March 31,
2005 and shall have no scheduled amortization or sinking fund payments
payable thereon; and (3) payments on or with respect to such notes
shall be subordinated on terms and conditions substantially in the
form attached as Annex A to the Fifth Amendment.
4
'Independent Consultant' means a consultant not affiliated with any
Credit Party or any Lender.
'Working Capital Loans' has the meaning set forth in Section
3.13(e)(2)."
2. Commitments. The second sentence in Section 2.01 shall be
amended in its entirety to read as follows:
"Within the limits set forth in clause (b) of the preceding sentence
and subject to the terms, conditions and limitations set forth herein,
the Borrower may borrow, pay or prepay and reborrow Revolving Loans;
provided however that on and after the Fifth Amendment Effective Date,
--------
Borrower may not borrow or reborrow Acquisition Loans (as defined in
Section 3.13(e)(1))."
3. Fees. Section 2.05 is amended by adding the following
subsections immediately after subsection (d) thereof:
"(e) The Borrower agrees to pay to each Lender, through the
Administrative Agent, on July 1, 2002, a fee equal to 0.075% of the
sum of such Lender's Revolving Credit Commitment and outstanding Term
Loans as of such date.
(f) If the compliance certificate filed by the Borrower with respect
to the fiscal period ended June 30, 2002 sets forth a Debt/Adjusted
EBITDA Ratio in excess of 4.90:1.00, or if such compliance certificate
is not filed by the deadline set forth in Section 5.04(b), the
Borrower agrees to immediately pay each Lender, through the
Administrative Agent, a fee equal to 0.025% of the sum of such
Lender's Revolving Credit Commitment and outstanding Term Loans as of
such deadline."
4. Interest on Loans.
(a) Section 2.06(a) is amended in its entirety to read as follows:
"(a) Subject to the provisions of Section 2.07, the Loans comprising
each ABR Borrowing, including each Swingline Loan, shall bear interest
(computed on the basis of the actual number of days elapsed over a
year of 365 or 366 days, as the case may be, when the Alternate Base
Rate is determined by reference to the Prime Rate and over a year of
360 days at all other times) at a rate per annum equal to the
Alternate Base Rate plus
(i) from the Fifth Amendment Effective Date through June 30,
2002, 3.00% less the applicable Pricing Adjustment in the case
of Term Loans and Working Capital Loans and 3.25% less the
applicable Pricing Adjustment in the case of Acquisition Loans;
(ii) from July 1, 2002 through March 31, 2003, 3.50% less the
applicable Pricing Adjustment in the case of Term Loans and
Working
5
Capital Loans and 3.75% less the applicable Pricing Adjustment
in the case of Acquisition Loans; and
(iii) from April 1, 2003, 4.00% less the applicable Pricing
Adjustment in the case of Term Loans and Working Capital Loans
and 4.25% less the Applicable Pricing Adjustment in the case of
Acquisition Loans."
(b) Section 2.06(b) is amended in its entirety to read as follows:
"(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal to the Adjusted Eurodollar Rate for the Interest
Period in effect for such Borrowing plus
(i) from the Fifth Amendment Effective Date through June 30,
2002, 4.00% less the applicable Pricing Adjustment in the case
of Term Loans and Working Capital Loans and 4.25% less the
applicable Pricing Adjustment in the case of Acquisition Loans;
(ii) from July 1, 2002 through March 31, 2003, 4.50% less the
applicable Pricing Adjustment in the case of Term Loans and
Working Capital Loans and 4.75% less the applicable Pricing
Adjustment in the case of Acquisition Loans; and
(iii) from April 1, 2003, 5.00% less the applicable Pricing
Adjustment in the case of Term Loans and Working Capital Loans
and 5.25% less the Applicable Pricing Adjustment in the case of
Acquisition Loans."
5. Default Interest. Section 2.07 is hereby amended in its entirety
as follows:
"Upon the occurrence and during the continuation of any Event of
Default, the Borrower shall on demand from time to time pay interest,
to the extent permitted by law, on the outstanding principal amount of
all Loans, any interest payments thereon not paid when due and any
fees and other amounts then due and payable hereunder on such Loans at
the rate otherwise applicable to such Loan pursuant to Section 2.06
without making the applicable Pricing Adjustment plus 2.00% per
annum."
6. Termination and Reduction of Commitments. Section 2.09(b) is
hereby amended by adding at the end thereof the following:
"The Borrower in making any voluntary reduction of the Revolving
Credit Commitments may designate whether such reduction applies to the
Revolving Credit Commitments available with respect to Acquisition
Loans pursuant to Section 3.13(e)(1) hereof, or to the Revolving
Credit Commitments available with respect to Working Capital Loans
pursuant to Section 3.13(e)(2) hereof."
6
7. Repayment of Term Borrowings. Section 2.11(a) is hereby amended
by deleting the figure "$3,000,000" each place it appears and by inserting in
lieu thereof in the table for June 30, 2003, the figure "$12,000,000".
8. Mandatory Prepayments.
(a) Section 2.13(a) is amended to add at the end thereof the
following:
"In the event that, as of any date of determination, the sum of (x)
cash on hand plus (y) Permitted Investments exceeds $5,000,000 for a
period of greater than 30 consecutive days, in each case as determined
for Borrower and its Restricted Subsidiaries on a consolidated basis
(the amount of such excess being hereinafter referred to as the
`Excess Liquidity'), Borrower shall repay or prepay its Swingline
Loans and its Revolving Credit Borrowings by an amount equal to such
Excess Liquidity, such Excess Liquidity being applied to repay or
prepay first Swingline Loans to the full extent thereof, second
Working Capital Loans and third Acquisition Loans, in the case of
Swingline Loans and Working Capital Loans without any related
reduction in the Revolving Credit Commitment."
(b) Section 2.13(c) is amended in its entirety to read as follows:
"(c) In the event and on each occasion that
(i) an Equity Issuance occurs as part of an initial public
offering of the Capital Stock of the Borrower or Holding, the Borrower
shall, substantially simultaneously with (and in any event not later
than the third Business Day next following) the occurrence of such
Equity Issuance, apply Net Cash Proceeds therefrom in an amount equal
to 50% of the net cash proceeds of the Capital Stock sold in such
initial public offering (whether or not all such Capital Stock is
offered by the Borrower or Holding) to prepay outstanding Term Loans
and/or reduce the Revolving Credit Commitment in accordance with
Section 2.13(g); provided, however, that the remaining portion of such
Net Cash Proceeds shall be applied either (A) pursuant to Section
6.05(a)(iii) for the redemption of Exchangeable Preferred Stock
(including accreted PIK liquidation preference) or (B) to prepay
outstanding Term Loans and/or reduce the Revolving Credit Commitment
in accordance with Section 2.13(g); and
(ii) an Equity Issuance occurs other than as part of an initial
public offering of the Capital Stock of the Borrower or Holding, the
Borrower shall, substantially simultaneously with (and in any event
not later than the third Business Day next following) the occurrence
of such Equity Issuance, apply 100% of the Net Cash Proceeds therefrom
to prepay outstanding Term Loans and/or reduce the Revolving Credit
Commitment in accordance with Section 2.13(g)."
9. Use of Proceeds. Section 3.13(e) is amended in its entirety to
read as follows:
7
"(e) Notwithstanding anything in this Agreement to the contrary, but
subject to Section 2.01(b) on and after the Fifth Amendment Effective
Date, (1) not more than $40,000,000 of the Aggregate Revolving Credit
Exposure outstanding at any time shall have been used by the Borrower
for purposes of Permitted Acquisitions pursuant to Section 6.04(c)
(the "Acquisition Loans"), (2) not more than $15,000,000 of the
Aggregate Revolving Credit Exposure outstanding at any time may be
used by the Borrower for any corporate purpose other than Permitted
Acquisitions (the "Working Capital Loans"), and (3) no further
Acquisition Loans will be made to the Borrower."
10. Maintaining Records; Access to Properties and Inspections.
Section 5.07 is amended by adding the following subsection (c) at the
end thereof:
"(c) Following an Event of Default resulting from a failure of the
Borrower to comply with Section 6.09, 6.10, 6.11 or 6.12 hereof and
upon the request of the Administrative Agent, each Credit Party will,
and will cause its subsidiaries to, cooperate with an Independent
Consultant hired on behalf of the Lenders to conduct such examinations
and inquiries with respect to the business, operations and prospects
of Borrower and its subsidiaries as may be requested by the
Administrative Agent in its discretion, the results of such
examinations and inquiries to be reported to the Lenders; provided
that such Independent Consultant shall be selected by the Borrower
from a list of three such Independent Consultants selected by the
Administrative Agent and that all costs and expenses of such
Independent Consultant shall be paid by the Borrower."
11. Indebtedness. Section 6.01 is amended in its entirety to read as
follows:
"SECTION 6.01 Indebtedness. The Borrower will not, and will not
permit any Restricted Subsidiary to, incur, create, assume or permit
to exist any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and
set forth in Schedule 6.01(a); provided, however, that such
Indebtedness shall be repaid concurrently with the incurrence of the
Borrowing of the Initial Credit Event hereunder ("Indebtedness to be
Paid");
(b) Indebtedness represented by the Notes and by the other Credit
Documents;
(c) Indebtedness under the Senior Subordinated Notes (as the same
may be amended from time to time, without increasing the committed
amount thereunder, except as otherwise permitted by this Section) and
any Refinancing Indebtedness of the Borrower with respect thereto in
an aggregate principal amount on the date of Incurrence that, when
added to all other Indebtedness Incurred pursuant to this clause and
then outstanding, shall not exceed the sum of the then outstanding
Indebtedness under the Senior Subordinated Notes;
8
(d) Indebtedness (i) of the Borrower to any wholly owned Restricted
Subsidiary or to any Guarantor and (ii) of any Restricted Subsidiary
to the Borrower or any wholly owned Restricted Subsidiary;
(e) Indebtedness represented by the Guarantees of Indebtedness
Incurred pursuant to clause (c) (provided, that any Guarantee with
respect to the Senior Subordinated Notes will be subordinated to the
same extent as the Senior Subordinated Notes) or clause (d);
(f) Indebtedness relating to Capital Lease Obligations,
Sale/Leaseback Transactions and Permitted Purchase Money Liens;
provided, that
(i) with respect to Capital Lease Obligations, Indebtedness
relating to Purchase Money Liens and Unrestricted Sale/Leaseback
Transactions, either (A) the Incurrence of such Indebtedness
relating to Capital Expenditures, Unrestricted Sale/Leaseback
Transactions and Permitted Purchase Money Liens would be
permitted pursuant to Section 6.08 in the fiscal year in which
it is Incurred, or (B) the aggregate principal amount of such
Indebtedness does not exceed $10,000,000 at any one time; and
(ii) with respect to Restricted Sale/Leaseback Transactions, if
the Net Cash Proceeds thereof are applied in accordance with
Section 2.13(b).
(g) Indebtedness under Hedging Obligations; provided, however, that
such Hedging Obligations are entered into for bona fide hedging
purposes of the Borrower or its Restricted Subsidiaries (as determined
in good faith by the Board of Directors or senior management of the
Borrower) and correspond in terms of notional amount, duration,
currencies and interest rates, as applicable, to Indebtedness of the
Borrower or its Restricted Subsidiaries Incurred without violation of
this Agreement or to business transactions of the Borrower or its
Restricted Subsidiaries on customary terms entered into in the
ordinary course of business;
(h) Indebtedness represented by Guarantees constituting Investments
permitted by Section 6.03(c)(iii)(B);
(i) The FS Convertible Senior Subordinated Debt; and
(j) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Borrower and the Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by clauses (a) through (g) and clause (i)) does
not exceed $5,000,000 at any one time outstanding;
provided that notwithstanding anything in this Agreement to the
contrary, the sum of the aggregate outstanding principal amount of all
Indebtedness permitted under clauses (i) and (j) of this Section 6.01
shall not exceed $15,000,000."
9
12. Mergers, Consolidations, Sales of Assets and Acquisitions.
Section 6.04(c) is amended to read in its entirety as follows:
"(c) The Borrower will not, and will not permit any Restricted
Subsidiary to, purchase, lease, or otherwise acquire (in one
transaction or a series of transactions) any Assets or capital stock
(or other equity interests) of any person other than as permitted
pursuant to Section 6.03 (provided that Investments pursuant to
Section 6.03(d) shall be limited to Restricted Subsidiaries existing
as of the Fifth Amendment Effective Date), Section 6.08 and, with the
consent of Required Lenders, Permitted Acquisitions."
13. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. Section 6.05(a) is amended by amending the text
preceding the first proviso contained in clause (a) thereof in its entirety to
read as follows:
"(a) Directly or indirectly, declare or pay any dividend or make any
distribution (whether in cash, securities or other Property) on or
with respect to the Capital Stock of the Borrower or any Restricted
Subsidiary (including any payment in connection with any merger or
consolidation with or into the Borrower or any Restricted Subsidiary)
except for any dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and except any dividend
or distribution which is made to the Borrower or a wholly owned
Restricted Subsidiary (provided that such Restricted Subsidiary is a
Wholly Owned Subsidiary), or any dividend or distribution payable
solely in shares of Capital Stock (other than Redeemable Stock) of the
Borrower, purchase, repurchase, redeem, retire or otherwise acquire
for value any Capital Stock of the Borrower or any Affiliate of the
Borrower held by persons other than the Borrower or a Restricted
Subsidiary or any Securities exchangeable for or convertible into any
such Capital Stock (other than for or into Capital Stock of the
Borrower that is not Disqualified Stock), purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund
payment any Subordinated Obligations (other than the purchase,
repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case due within one year of the
date of acquisition, or the refinancing of any Subordinated
Obligations with Refinancing Indebtedness), or make any Investment
(other than pursuant to Section 6.03) in any person or to pay cash
interest on the FS Convertible Senior Subordinated Debt (any such
dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement, Investment or payment being herein
referred to as a "Restricted Payment");"
and by deleting the "or" at the end of clause (a)(vii)(B) thereof and inserting
the following prior to the period at the end of clause (b) thereof:
"or
10
(c) Make any interest payment, or permit its subsidiaries to make any
interest payment on any Subordinated Obligations with the proceeds, in
whole or in part, of Loans if at any time during the five Business Day
period preceding the borrowing of such Loans, the outstanding
aggregate Revolving Credit Exposure used by the Borrower for any
purpose other than Permitted Acquisitions exceeds $8,000,000, unless
the Administrative Agent has consented in writing to such payment."
14. Capital Expenditures. Section 6.08 is amended to add the
following proviso at the end of the first sentence thereof:
"; provided further that during the four fiscal quarter period,
--------
commencing with the fourth fiscal quarter in fiscal year 2000 and
through the third fiscal quarter in fiscal year 2001, the Borrower may
exclude up to $750,000 in the aggregate in Capital Expenditures."
15. Debt/Adjusted EBITDA Ratio. Section 6.09 is amended in its
entirety to read as follows:
"SECTION 6.09. Debt/Adjusted EBITDA Ratio. The Debt/Adjusted EBITDA
Ratio shall not exceed the following amounts as of the ends of the
fiscal quarters of the Borrower ending nearest to the following dates:
Fiscal Quarter
Ending Nearest to Debt/Adjusted EBITDA Ratio
--------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------------------------------------
March 31 6.40:1.00 5.60:1.00 N/A 6.35:1.00 4.20:1.00
--------------------------------------------------------------------------------------------------------------
June 30 6.75:1:00 6.40:1.00 6.00:1.00 N/A 5.55:1.00 4.10:1.00
--------------------------------------------------------------------------------------------------------------
September 30 6.75:1.00 6.20:1.00 5.50:1.00 8.75:1.00 4.60:1.00
--------------------------------------------------------------------------------------------------------------
December 31 6.40:1.00 6.00:1.00 6.90:1.00 6.35:1.00 4.40:1.00
--------------------------------------------------------------------------------------------------------------
; provided that
(i) for the period of four fiscal quarters ending nearest to
September 30, 2001, the Debt/Adjusted EBITDA Ratio shall be calculated
by dividing (a) the Debt of the Borrower and its Restricted
Subsidiaries as of the last day of such period by (b) 2 times Adjusted
EBITDA for the two fiscal quarters ended nearest to September 30,
2001; and
(ii) for the period of four fiscal quarters ending nearest to December
31, 2001, the Debt/Adjusted EBITDA Ratio shall be calculated by
dividing (a) the Debt of the Borrower and its Restricted Subsidiaries
as of the last day of such period by
11
(b) 1.33 times Adjusted EBITDA for the three fiscal quarters ended
nearest to December 31, 2001."
16. Minimum EBITDA. Section 6.10 is amended to read in its entirety
as follows:
"SECTION 6.10. Minimum EBITDA. The Borrower's EBITDA for the four
fiscal quarters ending nearest to the following dates shall not be
less than the following amounts:
Fiscal Quarter
Ending Nearest to Minimum EBITDA
----------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------
March 31 $24,000,000 $26,500,000 N/A $29,000,000 $37,500,000
----------------------------------------------------------------------------------------------------
June 30 $24,000,000 $27,500,000 $ 2,750,000 $33,000,000 $38,000,000
----------------------------------------------------------------------------------------------------
September 30 $24,500,000 $28,000,000 $11,000,000 $36,000,000
----------------------------------------------------------------------------------------------------
December 31 $24,000,000 $25,000,000 $24,000,000 $22,500,000 $37,000,000
----------------------------------------------------------------------------------------------------
; provided that
(i) for the period of four quarters ending nearest to June 30,
2001, minimum EBITDA shall be calculated for the one fiscal quarter
ended nearest to June 30, 2001 only;
(ii) for the period of four quarters ending nearest to September 30,
2001, minimum EBITDA shall be calculated for the two fiscal quarters
ended nearest to September 30, 2001 only; and
(iii) for the period of four quarters ending nearest to December 31,
2001, minimum EBITDA shall be calculated for the three fiscal quarters
ended nearest to December 31, 2001 only."
17. Interest Coverage Ratio. Section 6.11(d) is amended in its
entirety as follows:
"(d) The ratio of EBITDA to Consolidated Interest Expense for the
period of four fiscal quarters ending nearest to each of the following
dates, shall not be less than the following ratios:
12
Fiscal Quarter
Ending Nearest to Consolidated Interest Coverage Ratio
--------------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
--------------------------------------------------------------------------------------
March 31 1.55:1.00 1.80:1.00 N/A 1.60:1.00 2.35:1:00
--------------------------------------------------------------------------------------
June 30 1.55:1.00 1.70:1.00 N/A 1.80:1.00 2.40:1:00
--------------------------------------------------------------------------------------
September 30 1.65:1.00 1.70:1.00 1.20:1.00 2.15:1.00
--------------------------------------------------------------------------------------
December 31 1.65:1.00 1.25:1.00 1.60:1.00 2.25:1.00
--------------------------------------------------------------------------------------
; provided that
(i) for the period of four fiscal quarters ending nearest to
September 30, 2001, the Consolidated Interest Coverage Ratio shall be
calculated for the two fiscal quarters ended nearest to September 30,
2001 only; and
(ii) for the period of four fiscal quarters ending nearest to December
31, 2001, the Consolidated Interest Coverage Ratio shall be calculated
for the three fiscal quarters ended nearest to December 31, 2001
only."
18. Fixed Charge Coverage Ratio. Section 6.12 is amended in its
entirety as follows:
"SECTION 6.12 Fixed Charge Coverage Ratio. The Fixed Charge Coverage
Ratio as of the end of the period of four fiscal quarters ending
nearest to the following dates shall not be less than the following
ratios, beginning with the fiscal quarter ending nearest to March 31,
1999:
Fiscal Quarter
Ending Nearest to Fixed Charge Coverage Ratio
------------------------------------------------------------------------------
1999 2000 2001 2002 2003 2004
------------------------------------------------------------------------------
March 31 1.05:1.00 1.00:1.00 N/A 0.85:1.00 1.15:1.00
------------------------------------------------------------------------------
June 30 1.00:1.00 1.00:1.00 N/A 0.95:1.00 1.15:1.00
------------------------------------------------------------------------------
September 30 1.00:1.00 1.00:1.00 0.65:1.00 1.10:1.00
------------------------------------------------------------------------------
December 31 1.00:1.00 0.70:1.00 0.85:1.00 1.10:1.00
------------------------------------------------------------------------------
; provided that
(i) for the period of four fiscal quarters ending nearest to
September 30, 2001, the Fixed Charge Coverage Ratio shall be
calculated for the two fiscal quarters ended nearest to September 30,
2001 only; and
(ii) for the period of four fiscal quarters ending nearest to December
31, 2001, the Fixed Charge Coverage Ratio shall be calculated for the
three fiscal quarters ended nearest to December 31, 2001 only."
13
19. Bank Accounts. Article VI is amended by adding the following
Section 6.15 at the end thereof:
"6.15 BANK ACCOUNTS. Neither Holding, the Borrower nor any
Restricted Subsidiary shall open or maintain any new bank account at
any financial institution that is not a Lender. Within 90 days of the
effectiveness of the Fifth Amendment, Borrower, Xxxxx Fargo Bank, N.A.
and the Administrative Agent shall enter into a blocked account
agreement providing that upon the occurrence of an Event of Default
and notice by the Administrative Agent, all collected amounts in such
account will be transferred to Administrative Agent for repayment of
the Revolving Loans but without any related commitment reduction."
20. Events of Default. Section 7.01 is amended by deleting the "or"
at the end of clause (l) thereof and by adding the following at the end of
clause (m) thereof:
"(n) the audited financial statements for the fiscal year ending on
or about December 31, 2000 delivered pursuant to Section 5.04(a) are
materially adversely different than the draft of such financial
statements delivered by the Borrower to the Lenders on May 25, 2001 or
are not accompanied by an opinion of the Borrower's accountants
complying with Section 5.04(a)(i) of the Credit Agreement and a
certificate of an officer complying with Section 5.04(d) of the Credit
Agreement; or
(o) the financial statements for the fiscal quarter ending on or
about March 31, 2001 delivered pursuant to Section 5.04(b) are
materially adversely different than the draft of such financial
statements delivered by the Borrower to the Lenders on June 18, 2001;"
21. Limited Waiver. The undersigned Lenders, constituting Required
Lenders under the Credit Agreement, hereby waive (A) compliance with Section
5.04(a) of the Credit Agreement with respect to the fiscal year ending on or
about December 31, 2000 until August 15, 2001, on which date such waiver will
expire without any further action; (B) the failure to deliver at the time
required the financial statements required under Section 5.04(b) of the Credit
Agreement with respect to the fiscal quarter ending on or about March 31, 2001;
(C) the failure to deliver at the time required the financial statements
required under Section 5.04(c) of the Credit Agreement with respect to the
fiscal months ending on or about January 31, 2001, February 28, 2001, April 30,
2001 and May 31, 2001; (D) the failure to deliver the certificates required
under Section 5.04(d) of the Credit Agreement with respect to the fiscal quarter
ended on or about March 31, 2001; and with respect to the fiscal months ending
on or about January 31, 2001, February 28, 2001, April 30, 2001 and May 31, 2001
until August 15, 2001, on which date such waiver will expire without any further
action, provided that Borrower need not provide the information set forth in
subsection (ii) of Section 5.04(d) in the certificates delivered for such
periods; and (E) compliance with Section 6.01 from April 1, 2001 through and
including the date on which this Amendment and Waiver becomes effective pursuant
to paragraph 22 hereof, but only to the extent noncompliance with such section
is as a result of the FS Convertible Senior Subordinated Debt incurred in April
2001. Further, the undersigned Lenders, constituting
14
Required Lenders under the Credit Agreement, waive any Defaults or Events of
Default under the financial covenants set forth in the Credit Agreement during
the period from and including December 29, 2000 through and including the date
on which this Amendment and Waiver becomes effective pursuant to paragraph 22
hereof. Without limiting the generality of the provisions of Sections 5.04(a),
5.04(b), 5.04(c), 5.04(d) and 6.01 of and the financial covenants set forth in
the Credit Agreement, pursuant to which this waiver is made, the waiver set
forth herein shall be limited precisely as written and relates solely to the
noncompliance by the Borrower with the provisions of Sections 5.04(a), 5.04(b),
5.04(c), 5.04(d) and 6.01 of and the financial covenants set forth in the Credit
Agreement in the manner and to the extent described in this paragraph, and
nothing in this paragraph shall be deemed to (a) constitute a waiver of
compliance by Borrower with respect to (i) Sections 5.04(a), 5.04(b), 5.04(c),
5.04(d) and 6.01 of and the financial covenants set forth in the Credit
Agreement in any other instance or (ii) any other term, provision or condition
of the Credit Agreement or any other instrument or agreement referred to therein
or (b) prejudice any right or remedy that the Syndication Agent, the Collateral
Agent or any Lender may now have (except to the extent such right or remedy was
based upon existing defaults that will not exist after giving effect to this
Limited Waiver) or may have in the future under or in connection with the Credit
Agreement or any other instrument or agreement referred to therein.
22. Binding Effect and Effectiveness. This Amendment and Waiver may
be executed in as many counterparts as may be convenient and shall become
binding when the Borrower, Holding and the Required Lenders have each executed
and delivered at least one counterpart, and shall become legally binding and
immediately effective upon satisfaction of the following conditions precedent:
(a) The Borrower shall have paid to each Consenting Lender an
amendment fee equal to 0.375% of the sum of such Lender's Revolving Credit
Commitment and outstanding Term Loans as of the date of this Amendment. A
"Consenting Lender" is any Lender that executes and delivers to the
Administrative Agent an executed signature page to this Amendment and Waiver at
or before 12:00 noon, Los Angeles time, on July 30, 2001.
(b) The Borrower shall have paid to the Administrative Agent all fees
which are due and payable to the Administrative Agent under the Credit Agreement
as amended. The Borrower shall have paid all legal expenses of counsel to
Administrative Agent with respect to periods prior to July 18, 2001.
(c) The Borrower shall have received, or shall receive concurrently
herewith, $18,000,000 in aggregate cash proceeds in connection with the issuance
of the Additional Equity, FS Convertible Senior Subordinated Debt or a
combination thereof (which may include up to $6,500,000 in FS Convertible Senior
Subordinated Debt issued in April and May 2001 and Indebtedness outstanding
pursuant to Section 6.01(j) of the Credit Agreement so long as such Indebtedness
satisfies the conditions set forth in the definition of "FS Convertible Senior
Subordinated Debt" included in this Amendment and Waiver) and shall have
applied, or shall apply concurrently herewith, such cash proceeds for working
capital purposes or with respect to such cash proceeds received on the Fifth
Amendment Effective Date, first to repay outstanding Revolving Loans made for
purposes other than Permitted Acquisitions to the full extent thereof
15
and thereafter to repay outstanding Revolving Loans made for the purpose of
funding Permitted Acquisitions to the full extent thereof but in either case
without any corresponding Revolving Credit Commitment reduction.
(d) The Administrative Agent and the Lenders shall have received the
quarterly financial statements for the quarter ended on or about March 31, 2001,
required pursuant to Section 5.04(b) of the Credit Agreement and the monthly
financial statements for the months of January, February, March, April and May
in Fiscal Year 2001 required pursuant to Section 5.04(c) of the Credit
Agreement.
23. Representations and Warranties. In order to induce Lenders to
enter into this Amendment and Waiver, the Borrower and Holding, by its execution
of a counterpart of this Amendment and Waiver, represents and warrants that
after giving effect to this Amendment and Waiver (a) no Default or Event of
Default exists under the Credit Agreement, (b) all representations and
warranties contained in the Credit Agreement and the instruments and agreements
referred to therein are true, correct and complete in all material respects on
and as of the date hereof except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date and
(c) the Borrower and Holding have performed all agreements to be performed on
its part as set forth in the Credit Agreement.
24. Governing Law. THIS AMENDMENT AND WAIVER AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
25. Reference to Credit Agreement. Except as amended and waived
hereby, the Credit Agreement shall remain in full force and effect and is hereby
ratified and confirmed in all respects. On and after the effectiveness of the
amendment to the Credit Agreement accomplished hereby, each reference in the
Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import, and each reference to the Credit Agreement shall be deemed a
reference to the Credit Agreement, as amended hereby.
[remainder of page intentionally left blank]
16
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed by their respective officers as of the date first
above written.
XXXXXX RESPIRATORY CARE INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer
RIVER HOLDING CORP.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx x. Xxxxx
Title: Chief Financial Officer
Acknowledged by:
BANKERS TRUST COMPANY, as Administrative Agent and
Collateral Agent
By: /s/ Xxxx Xx Xxxxx
----------------------------------------
Name: Xxxx Xx Xxxxx
Title: Assistant Vice President
SALOMON BROTHERS INC., as Arranger,
Advisor and Syndication Agent
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Attorney-in-Fact
LENDERS
-------
BANKERS TRUST COMPANY
By: /s/ Xxxx Xx Xxxxx
----------------------------------------
Name: Xxxx Xx Xxxxx
Title: Assistant Vice President
BANK OF AMERICA, N.A.
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Xxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President
BHF (USA) CAPITAL CORPORATION
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Associate
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
CITICORP USA, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
IMPERIAL BANK
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ Xxxxx Xxxx-Xxxxxx
----------------------------------------
Name: Xxxxx Xxxx-Xxxxxx
Title: Senior Manager
SOCIETE GENERALE
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Director, Corporate Banking
XXXXX FARGO BANK, N.A.
By: /s/ S. Xxxxxxx St. Geme
----------------------------------------
Name: S. Xxxxxxx St. Geme
Title: Vice President
BANK AUSRTIA CREDITANSTALT CORPORATE FINANCE, INC.
By: /s/ Deter Xxxxxx
----------------------------------------
Name: Deter Xxxxxx
Title: Executive Vice President
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
