AMENDMENT NO. 1 TO CREDIT AGREEMENT
EXHIBIT
10.2
AMENDMENT NO. 1
TO CREDIT AGREEMENT
TO CREDIT AGREEMENT
AMENDMENT NO. 1, dated as of March 7, 2005 (this “Amendment “) to the Credit Agreement, dated
as of January 28, 2005 (as amended, restated, modified or otherwise supplemented, from time to
time, the “Credit Agreement”), by and among NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. (the
“Borrower”), JPMORGAN CHASE BANK, N.A., as Administrative Agent and the LENDERS from time to time
party thereto (each, a “Lender” and, collectively, the “Lenders”).
WHEREAS, the Borrower has requested, and the Required Lenders have agreed, subject to the
terms and conditions of this Amendment, to amend certain provisions of the Credit Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
1. Amendments.
(a) A new definition entitled “Cal Optima Contract” shall be added to Section 1.01. of the
Credit Agreement in its proper alphabetical order, which new definition shall read in its entirety
as follows:
“Cal Optima Contract” means that certain contract, dated as of January 1,
2003, by and between PCN and Cal Optima Inc., a California corporation.
(b) A
new definition entitled “PCN” shall be added to Section 1.01. of the Credit
Agreement in its proper alphabetical order, which new definition shall read in its entirety as
follows:
“PCN” means Pharmaceutical Care Network, a California corporation.
(c) A new definition entitled “PCN Acquisition” shall be added to Section 1.01. of
the Credit Agreement in its proper alphabetical order, which new definition shall read in its
entirety as follows:
“PCN Acquisition” means the acquisition by PCN Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of the Borrower, of all of the
issued and outstanding capital stock of PCN.
(d) A new definition entitled “PCN Acquisition Closing Date” shall be added to
Section 1.01. of the Credit Agreement in its proper alphabetical order, which new definition
shall read in its entirety as follows:
“PCN Acquisition Closing Date” means March 7, 2005.
(e) A new definition entitled “ PCN Agency Arrangements” shall be added to Section
1.01. of the Credit Agreement in its proper alphabetical order, which new definition shall
read in
its entirety as follows:
“PCN Agency Arrangements” means those contracts of PCN which are
structured as Agency Arrangements (as such term is defined in Section 6.13(a)
hereof).
(f) A new definition entitled “PCN Maximum Gross Profit Earn-out Amount” shall
be added to Section 1.01. of the Credit Agreement in its proper alphabetical order, which new
definition shall read in its entirety as follows:
“PCN Maximum Gross Profit Earn-out Amount” means $15,000,000, which
represents the amount which may be payable by the Borrower pursuant to Section
2.6(b)l of the PCN Stock Purchase Agreement, made and entered into as of March 7,
2005, by and among the Borrower, PCN Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of the Borrower, Pharmaceutical Care Network, a California
corporation, and California Pharmacists Association, a California mutual benefit
corporation.
(g) The definition of “Consolidated Fixed Charge Ratio” in Section 1.01. of the
Credit Agreement is hereby amended and restated in its entirety to read as follows:
“Consolidated Fixed Charge Ratio” means the ratio of (1) Consolidated
EBITDA minus Consolidated Unfunded Capital Expenditures to (2) the sum of
(a) the current portion of Consolidated Debt (excluding any amounts constituting all
or a portion of the PCN Maximum Gross Profit Earn-out Amount), plus (b)
cash “earn-out” payments made by the Borrower and its Subsidiaries in the twelve
(12) months preceding the date of calculation, but solely with respect to those
payments which were not, at any time prior to their payment, reflected as debt, an
accrued liability or deferred purchase price on the consolidated balance sheets of
the Borrower and its Subsidiaries delivered pursuant to Section 5.01 hereof,
plus (c) interest expense, plus (d) dividends, plus (e) cash
taxes paid by the Borrower and its Subsidiaries. Each of the foregoing categories
shall be measured on a consolidated basis for the Borrower and its Subsidiaries and
shall calculated in accordance with GAAP. The Consolidated Fixed Charge Coverage
Ratio shall be tested quarterly, measured for the four (4) fiscal quarters then
ended, except for the current portion of Consolidated Debt, which shall each be
measured for the next succeeding four (4) fiscal quarters.
(h) The definition of “Consolidated Debt to Consolidated EBITDA Ratio” in Section 1.01. of
the Credit Agreement is hereby amended by adding a new sentence at the end of such definition
which sentence shall read in its entirety as follows:
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Solely for purposes of calculating compliance with Section 6.12(c) hereof and
not for purposes of determining the Applicable Rate, during the period from the PCN
Acquisition Closing Date through May 29, 2006, Consolidated Debt shall include the
PCN Maximum Gross Profit Earn-out Amount.
(i) Section 2.01. of the Credit Agreement is hereby amended by adding a new sentence at
the end of such Section which sentence shall read in its entirety as follows:
Notwithstanding the foregoing, during the period from the PCN Acquisition
Closing Date through May 29, 2006, the sum of the total Revolving Credit Exposures
plus the PCN Maximum Gross Profit Earn-out Amount (or such lesser amount as
agreed to in writing by the Required Lenders) shall not exceed the total
Commitments.
(j) Section 6.13(a) of the Credit Agreement is hereby amended by adding a new sentence
at the end of such sub-section which sentence shall read in its entirety as follows:
Notwithstanding the foregoing, for a period of sixty (60) days following the
PCN Acquisition Closing Date, the PCN Agency Arrangements shall not be included in
the calculation of compliance with this covenant.
(k) Section 6.13(b) of the Credit Agreement is hereby amended and restated in its
entirety to read as follows:
(b) Not more than five percent (5%) of the accounts receivable of the Borrower
and its Subsidiaries, on a consolidated basis, are (i) accounts receivable in which
the Administrative Agent, for the ratable benefit of the Lenders, cannot
obtain a perfected and/or enforceable security interest as determined by the
Administrative Agent on the basis of collateral audits of the Borrower and/or its
Subsidiaries, or (ii) accounts receivable arising under Agency Arrangements.
Notwithstanding the foregoing, for a period of sixty (60) days following the PCN
Acquisition Closing Date, the PCN Agency Arrangements shall not be included in the
calculation of compliance with this covenant. In addition, accounts receivable
arising under the Cal Optima Contract shall not at any time be included in the
calculation of compliance with this covenant.
(1) Subsection (o) of Article VII of the Credit Agreement is hereby amended and
restated in its entirety to read as follows:
(o) any of the Liens purported to be granted pursuant to any Security Document
shall fail or cease for any reason to be legal, valid and enforceable liens on a
“material portion” of the collateral purported to be covered thereby or shall fail
or cease to have the priority purported to be created thereby, where, for purposes
hereof, a “material portion” means collateral (other than accounts receivable
arising under the Cal Optima Contract) having a value in
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excess of five percent (5%) of the consolidated total accounts receivable and
inventory of the Borrower (without giving effect to accounts receivable arising
under the Cal Optima Contract), as reported on the asset side of the Borrower’s
consolidated balance sheet;
2. Conditions to Effectiveness.
This Amendment shall become effective upon receipt by the Administrative Agent this Amendment
duly executed by each of the parties hereto.
3. Miscellaneous.
The amendment herein contained is limited specifically to the matters set forth above and does
not constitute directly or by implication a waiver or amendment of any other provisions of the
Credit Agreement or a waiver of any Default or Event of Default which may occur or may have
occurred.
Capitalized terms used herein and not otherwise defined herein shall have the same meanings
as defined in the Credit Agreement.
Except as expressly amended hereby, or as may have been previously amended, the Credit
Agreement shall remain in full force and effect in accordance with the original terms thereof.
The Borrower hereby represents and warrants that (a) after giving effect to this Amendment,
the representations and warranties in the Credit Agreement and the other Loan Documents are true
and correct in all material respects as of the date hereof with the same effect
as though such representations and warranties have been made on and as of such date, unless
such representation is as of a specific date, in which case, as of such date, and (b) after giving
effect to this Amendment, no Default or Event of Default has occurred
and is continuing.
This Amendment may be executed in one or more counterparts, each of which shall constitute an
original, but all of which when taken together shall constitute but one amendment.
THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
This Amendment shall constitute a Loan Document.
4. Agreement with Respect to Undertaking.
The parties hereto acknowledge and agree that, with respect to Item 2 to the Undertaking
Letter dated as of January 28, 2005 delivered by the Borrower to the Administrative Agent
requiring delivery of certain original stock certificates to the Administrative Agent within
twenty
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(20) days of the Closing Date, the Required Lenders, effective as of February 16, 2005, have
granted an extension to the Borrower to permit the Borrower to deliver the original stock
certificates for NMHCRX Contracts, Inc. to the Administrative Agent on or prior to March 25, 2005.
[the next page is the signature page]
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IN WITNESS WHEREOF, the Borrower and the Administrative Agent, as authorized on behalf of the
Required Lenders, have caused this Amendment to be duly executed as of the day and year first above
written.
| NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | ||||||
| Title: | Chief Financial Officer | |||||
| JPMORGAN CHASE BANK, N.A., as | ||||||
| Administrative Agent | ||||||
| By: | /s/ Xxxxxxx Xxxxx | |||||
| Name: | ||||||
| Title: | Vice President | |||||
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CONSENT
Each of the undersigned, not parties to the Credit Agreement but each a Guarantor under a
Guaranty dated as of January 28, 2005, hereby consents to and acknowledges the terms of the
Amendment to which this consent is attached and confirms that its Guaranty is in full force and
effect and reaffirms its continuing liability under its Guaranty in respect of the Credit Agreement
as amended hereby and all the documents, instruments and agreements executed pursuant thereto or in
connection therewith, without offset, defense or counterclaim (any such offset, defense or
counterclaim as may exist being hereby irrevocably waived by such guarantor).
| NMHCRX MAIL ORDER, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | ||||||
| Title: | Treasurer | |||||
| INTEGRAIL, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| NMHC FUNDING, LLC | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| NMHCRX, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| INTEQ CORP. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
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| INTEQ TX CORP. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | ||||||
| Title: | Treasurer | |||||
| INTEQ PBM, L.P. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| PORTLAND PROFESSIONAL | ||||||
| PHARMACY | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| PORTLAND PROFESSIONAL | ||||||
| PHARMACY ASSOCIATES | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| SPECIALTY PHARMACY CARE, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| CENTRUS CORPORATION | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
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| NATIONAL MEDICAL HEALTH CARD IPA, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| NMHCRX CONTRACTS, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| PHARMACY ASSOCIATES, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
| INTERCHANGE PMP, INC. | ||||||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |||||
| Name: | Xxxxxx X. Xxxxxxxxx | |||||
| Title: | Treasurer | |||||
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