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Exhibit 10.3
FIRST AMENDMENT, FIRST CONSENT AND SECOND WAIVER dated as of
September 22, 1998 (this "Amendment"), among FPA MEDICAL MANAGEMENT, INC., a
Delaware corporation and debtor and debtor-in-possession (the "Borrower"), each
direct and indirect Subsidiary of the Borrower party to the Credit Agreement
referred to below (the "Guarantors"), each of which Guarantors is a debtor and
debtor-in-possession, the several banks and other financial institutions from
time to time parties to the Credit Agreement referred to below (the "Lenders")
and BANKBOSTON, N.A., as administrative agent for the Lenders (in such capacity,
the "Administrative Agent").
W I T N E S S E T H :
WHEREAS, the parties to this Amendment are parties to the
Revolving Credit and Guarantee Agreement dated as of July 20, 1998 (as
heretofore amended, supplemented or otherwise modified, the "Credit Agreement");
WHEREAS, pursuant to Section 6.4 of the Credit Agreement, no
Loan Party that is part of a Core Business may liquidate, wind up or dissolve
itself (or suffer any of the same to happen to it) except for certain limited
exceptions;
WHEREAS, Gateway Physicians Services, Inc. ("GPS"), Gateway
IPA, Inc. ("Gateway IPA") and Virginia Medical Associates, P.C. (together with
GPS and Gateway IPA, collectively, the "Gateway Debtors") are Subsidiaries of
HPI and, as such, are Loan Parties that are part of a Core Business;
WHEREAS, the Gateway Debtors operate three medical clinics in
northern Virginia (the "Virginia Clinics"), and the Borrower has advised the
Administrative Agent that if the Virginia Clinics cannot be sold promptly, the
Gateway Debtors will cease operating, and liquidate and wind up the businesses
conducted by, the Virginia Clinics;
WHEREAS, the Borrower and the Gateway Debtors have requested
that the Lenders consent under Section 6.4 of the Credit Agreement to the
liquidation and wind up of the Virginia Clinics;
WHEREAS, pursuant to Section 6.12 of the Credit Agreement, the
Borrower and the Guarantors are required to maintain a system of cash management
similar in all material respects to the cash management system the Borrower and
the Guarantors maintained prior to the Filing Date;
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WHEREAS, the Borrower and the Guarantors have advised the
Administrative Agent that they have transferred their cash management system
from Bank of America NT & SA to the First Union National Bank (including its
affiliates, "First Union"), and, in connection therewith, have granted a Lien in
favor of First Union with respect to such cash management system;
WHEREAS, the Borrower and the Guarantors have requested that
the Lenders waive (a) Section 6.12 of the Credit Agreement with respect to the
transfer of the cash management system and (b) Section 6.2 of the Credit
Agreement with respect to the grant of a Lien in favor of First Union in
connection with such transfer;
WHEREAS, pursuant to Section 6.20 of the Credit Agreement, the
Borrower and the Guarantors are required to maintain certain minimum aggregate
cash receipts;
WHEREAS, the Borrower and the Guarantors have requested that
the Administrative Agent and the Lenders agree to waive Section 6.20 of the
Credit Agreement in the manner provided in this Amendment;
WHEREAS, the Administrative Agent and the Lenders have agreed
to such amendments, consents and waivers, but only upon the terms and subject to
the conditions set forth herein.
NOW THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1. Defined Terms. Unless otherwise defined herein and except
as set forth in this Amendment, terms defined in the Credit Agreement are used
herein as therein defined.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT.
2.1. Amendment to Section 1.1 (Defined Terms) of the Credit
Agreement. Section 1.1 of the Credit Agreement is hereby amended by adding to
said Section the following definition in its appropriate alphabetical order:
""Assumption Agreement": an Assumption Agreement substantially
in the form of Exhibit G hereto.""
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2.2. Amendments to Section 5.9 (Further Assurances) of the
Credit Agreement. Section 5.9 of the Credit Agreement is hereby amended by (a)
adding immediately after the title of said Section "(a)" and (b) adding to the
end of said Section the following new paragraph:
"(b) Promptly, but in any event within five Business
Days, following the date that any Subsidiary of the Borrower
that is not a Guarantor hereunder as of the Closing Date
becomes a debtor in a case pending under chapter 11 of
the Bankruptcy Code, the Borrower shall cause each such
Subsidiary (each a "New Debtor") to become party to this
Agreement as a "Guarantor" by executing and delivering to the
Administrative Agent, with an original counterpart for each
Lender, an Assumption Agreement substantially in the form
attached hereto as Exhibit G. Promptly after the execution and
delivery of any such Assumption Agreement, the Borrower shall
take or cause to be taken all action necessary to ensure that
each New Debtor has the appropriate power and authority to
execute, deliver and perform such New Debtor's obligations
under the Assumption Agreement and this Agreement.".
SECTION 3. CONSENT. Subject to the terms and conditions
hereof, the Lenders hereby consent under Section 6.4 (Limitation on Fundamental
Changes to Core Businesses) of the Credit Agreement to the wind up of operations
at and the liquidation of the Virginia Clinics.
SECTION 4. WAIVER. Subject to the terms and conditions hereof,
the Lenders hereby waive application of, and any Default or Event of Default
that would otherwise occur under:
(a) Section 6.2 (Limitation on Liens) of the Credit
Agreement but solely as to the existence of the Liens and right of
set-off in favor of First Union pursuant to the "Deposit Agreement and
Disclosures for Non-Personal Accounts" between the Borrower and First
Union;
(b) Section 6.12 (Cash Concentration) of the Credit
Agreement but solely as to the transfer of the cash management system
of the Borrower and its Subsidiaries to First Union; and
(c) Section 6.20 (Minimum Receipts) of the Credit
Agreement but solely with respect to FPA Florida Medical Groups during
the period from the Filing Date through August 28, 1998;
provided that the waivers contained in clauses (a) and (b) above shall remain in
effect only through October 2, 1998.
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SECTION 5. MISCELLANEOUS.
5.1. Effectiveness. This Amendment shall become effective upon
the date on which the Administrative Agent shall have received, with
counterparts for each Lender, (a) this Amendment, duly executed and delivered by
the Borrower, the Guarantors and the Required Lenders and (b) an Assumption
Agreement in the form attached hereto as Exhibit A, executed by each of the New
Debtors.
5.2. Representations and Warranties. After giving effect to
this Amendment, each of the Borrower and the Guarantors hereby confirms,
reaffirms and restates the representations and warranties set forth in Section 3
of the Credit Agreement; provided that each reference in such Section 3 to "this
Agreement" shall be deemed to be a reference to the Credit Agreement, as amended
by this Amendment; provided further that solely for purposes of Section 3.5 of
the Credit Agreement, the Liens and right of set-off described in Section 4(a)
above shall constitute "Permitted Liens".
5.3. Continuing Effect; No Other Amendments, Consents or
Waivers. Except as expressly amended or waived hereby, all of the terms and
provisions of the Credit Agreement and the other Loan Documents are and shall
remain in full force and effect. The amendments, consents and waivers contained
herein shall not constitute an amendment or waiver of any other provision of the
Credit Agreement or the other Loan Documents or for any purpose except as
expressly set forth herein.
5.4. Counterparts. This Amendment may be executed in any
number of counterparts by the parties hereto, each of which counterparts when so
executed shall be an original, but all the counterparts shall together
constitute one and the same instrument.
5.5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
5.6. No Admission. The request of the Borrower and the
Guarantors for the foregoing amendments, consents and waivers shall not
constitute an admission, by the Borrower and the Guarantors, of the existence of
a Default or Event of Default.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BORROWER
FPA MEDICAL MANAGEMENT, INC.
By: _____________________________________
Name:
Title:
GUARANTORS
AHI HEALTHCARE SYSTEMS, INC.
AHI (TEXAS) HEALTHCARE SYSTEMS, INC.
AMG MANAGEMENT COMPANY
AMERICAN HEALTH MEDICAL GROUP, XXXXXX,
INC.
ARIZONA MANAGED CARE PROVIDERS, LTD.
AVANTI HEALTH SYSTEMS OF TEXAS, INC.
BHP IPA, INC.
XXXXXXX HILLS/WEST LOS ANGELES MEDICAL
NETWORK, A MEDICAL GROUP, INC.
CAROLINA HEALTH CARE GROUP, P.C.
CENTURY FAMILY MEDICAL GROUP, INC.
CINCINNATI HEALTH PARTNERS, INC.
COMPREHENSIVE PRIMARY CARE MSO, INC.
CONNEKT, LLC
CORNERSTONE PHYSICIANS CORPORATION
CORNERSTONE PHYSICIANS OF PHOENIX, INC.
FHC IPA, INC.
FHMG/TDMC MEDICAL GROUP, A PROFESSIONAL
CORPORATION
FAMILY PRACTICE ASSOCIATES OF SOUTHERN
CALIFORNIA, A MEDICAL CORP.
FPA ACQUISITION CORPORATION
FPA AXMINSTER MEDICAL GROUP, INC.
FPA HOLDING COMPANY OF CALIFORNIA, INC.
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FPA INDEPENDENT PRACTICE ASSOCIATION,
A MEDICAL CORP.
FPA MEDICAL FOUNDATION
FPA MEDICAL GROUP OF ARIZONA, P.C.
FPA MEDICAL GROUP OF CALIFORNIA, INC.
FPA MEDICAL GROUP OF DELAWARE, P.A.
FPA MEDICAL GROUP OF FLORIDA, INC.
FPA MEDICAL GROUP OF GEORGIA, P.C.
FPA MEDICAL GROUP OF KANSAS, P.A.
FPA MEDICAL GROUP OF KENTUCKY, INC.
FPA MEDICAL GROUP OF NEW JERSEY,
A PROFESSIONAL CORPORATION
FPA MEDICAL GROUP OF NORTHERN
CALIFORNIA, INC.
FPA MEDICAL GROUP OF PENNSYLVANIA,
A MEDICAL CORPORATION
FPA MEDICAL GROUP OF TEXAS, A TEXAS
PROFESSIONAL ASSOCIATION
FPA MEDICAL GROUP OF THE GREATER BAY
AREA, INC.
FPA MEDICAL GROUP, P.A.
FPA MEDICAL MANAGEMENT OF ARIZONA, INC.
FPA MEDICAL MANAGEMENT OF CALIFORNIA,
INC.
FPA MEDICAL MANAGEMENT OF FLORIDA, INC.
FPA MEDICAL MANAGEMENT OF GEORGIA, INC.
FPA MEDICAL MANAGEMENT OF ILLINOIS, INC.
FPA MEDICAL MANAGEMENT OF KENTUCKY,
INC.
FPA MEDICAL MANAGEMENT OF LOUISIANA,
INC.
FPA MEDICAL MANAGEMENT OF MISSOURI, INC.
FPA MEDICAL MANAGEMENT OF NORTH
CAROLINA, INC.
FPA MEDICAL MANAGEMENT OF SOUTH
CAROLINA, INC.
FPA MEDICAL MANAGEMENT OF TENNESSEE,
INC.
FPA MEDICAL MANAGEMENT OF TEXAS, INC.
FPA MEDICAL MANAGEMENT OF THE
MID-ATLANTIC, INC.
FPA OF GEORGIA, INC.
FPA SURGICAL CENTER, INC.
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FPA WOMEN'S CARE OF GEORGIA, INC.
FPA/XXXXXXX MEDICAL GROUP OF NEVADA,
LTD.
FOUNDATION HEALTH IPA, A PROFESSIONAL
MEDICAL CORPORATION
G.P.M. IPA, INC.
GATEWAY IPA, INC.
GATEWAY PHYSICIANS SERVICES, INC.
GOTHAM MANAGEMENT, INC.
GOTHAM MID-TOWN MANAGEMENT, INC.
XXXXXXX XXXXXX MEDICAL GROUP, INC.
HEALTH ONE ASSOCIATES, INC.
HEALTH PARTNERS, INC.
HEALTHCAP, INC.
HEALTHCAP-MISSOURI, INC.
HEALTHCAP-NEVADA, INC.
INTERGROUP IPA, P.C.
MID-LEVEL PRACTITIONERS, INC.
MONTEBELLO PHYSICIANS MEDICAL GROUP,
INC.
NOVA HEALTHCARE MEDICAL GROUP, INC.
NOVA PHYSICIANS MEDICAL CORPORATION, INC.
OB-GYN MANAGEMENT, INC.
PHYSICIAN NETWORK OF WHITTIER MEDICAL
ASSOCIATES, INC.
PHYSICIANS MEDICAL GROUP OF FLORIDA, INC.
PRIMARY CARE MEDICAL GROUP AT LITTLE
COMPANY OF XXXX HOSPITAL, INC.
PRIVATE PHYSICIANS GROUP AT STANFORD, A
MEDICAL GROUP, INC.
SAN ANTONIO HEALTH PARTNERS, INC.
ST. XXXXXXX CARE MEDICAL GROUP
STERLING ANESTHESIA, INC.
STERLING CREDENTIALS VERIFICATION
SERVICES, INC.
STERLING EMERGENCY MEDICAL CARE, INC.
STERLING EMERGENCY TREATMENT
ASSOCIATES, INC.
STERLING HEALTHCARE GROUP, INC.
STERLING HEALTHCARE MEDICAL CORP.
STERLING HEALTHCARE OF TEXAS, P.A.
STERLING MEDICAL GROUP OF MICHIGAN, INC.
STERLING MEDICAL GROUP OF MICHIGAN, P.C.
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STERLING MEDNET EMERGENCY SERVICES, INC.
STERLING MIAMI, INC.
STERLING MICHIGAN, P.C.
STERLING PROFESSIONAL EMERGENCY
PHYSICIANS, LLC
STERLING RADIOLOGY, INC.
STERLING REGIONAL EMERGENCY SERVICES,
INC.
STERLING SUB TEXAS, INC.
THE DOCTORS OFFICENTER MEDICAL GROUP OF
HOUSTON, P.A.
THE DOCTORS OFFICENTER MEDICAL GROUP OF
DALLAS, P.A.
XXXXXX-XXXXX MEDICAL CENTERS, P.C.
VIP IPA, A PROFESSIONAL MEDICAL
CORPORATION
VIRGINIA HEALTH PARTNERS, INC.
VMS MEDICAL IPA, INC.
By: ________________________________________
Name:
Title:
BANKBOSTON, N.A., as Administrative Agent and
as a Lender
By: ________________________________________
Name:
Title:
XXXXXXX XXXXX CREDIT PARTNERS L.P.
By: ________________________________________
Name:
Title:
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XXXXXX COMMERCIAL PAPER INC.
By: __________________________________
Name:
Title:
XXX XXXXXX AMERICAN CAPITAL PRIME RATE
INCOME TRUST
By: __________________________________
Name:
Title:
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Exhibit A
to the First Amendment
EXHIBIT G
to the Credit Agreement
ASSUMPTION AGREEMENT, dated as of ________________, 199_, made
by ______________________________, a ______________ corporation and debtor and
debtor in possession in a case pending under Chapter 11 of the Bankruptcy Code
(the "Additional Guarantor"), in favor of the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below
and BankBoston, N.A., as administrative agent for such Lenders (in such
capacity, the "Administrative Agent"). All capitalized terms not defined herein
shall have the meaning ascribed to them in such Credit Agreement.
W I T N E S S E T H :
WHEREAS, FPA Medical Management, Inc. (the "Borrower"),
certain of the Borrower's direct and indirect Subsidiaries (other than the
Additional Guarantor) (the "Existing Guarantors"), the Lenders and the
Administrative Agent have entered into a Revolving Credit and Guarantee
Agreement, dated as of July 20, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement");
WHEREAS, pursuant to the Credit Agreement, the Existing
Guarantors have guaranteed the Borrower's obligations under the Credit Agreement
and have granted liens and security interests in all of their currently owned
and after-acquired property to secure such guarantee obligations;
WHEREAS, the Credit Agreement requires the Additional
Guarantor to become a party to the Credit Agreement; and
WHEREAS, the Additional Guarantor has agreed to execute and
deliver this Assumption Agreement in order to become a party to the Credit
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Credit Agreement. By executing and delivering this
Assumption Agreement, the Additional Guarantor, as provided in Section 5.9(b) of
the Credit Agreement, hereby becomes a party to the Credit Agreement as a
Guarantor thereunder with the same force and effect as if originally named
therein as a Guarantor and, without limiting the generality of the foregoing,
hereby expressly assumes all obligations and liabilities of a Guarantor
thereunder.
2. Representations and Warranties. The Additional Guarantor
hereby represents and warrants that:
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2.1 Organization and Authority. The Additional Guarantor (a)
is a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation and is duly qualified as a foreign corporation
and is in good standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect; (b) has the requisite corporate power and
authority to effect the transactions contemplated hereby and by the other Loan
Documents, and (c) has all requisite corporate power and authority and the legal
right to own, pledge, mortgage and operate its properties, and to conduct its
business as now or currently proposed to be conducted.
2.2 Due Execution. The execution, delivery and performance by
the Additional Guarantor of each of the Loan Documents to which it is a party,
and the commencement of the Additional Guarantor's Case, (a) are within the
corporate power of the Additional Guarantor, have been duly authorized by all
necessary corporate action, including the consent of shareholders where
required, and do not (i) contravene the charter or by-laws of the Additional
Guarantor, (ii) violate any law (including, without limitation, the Securities
Exchange Act of 1934) or regulation (including, without limitation, Regulation
T, U or X of the Board of Governors), or any order or decree of any court or
governmental instrumentality, (iii) conflict with or result in a breach of, or
constitute a default under, any material indenture, mortgage or deed of trust
entered into after the Filing Date, any provision of any security issued by the
Additional Guarantor after the Filing Date or any material lease, agreement,
instrument or other undertaking entered into after the Filing Date binding on
the Additional Guarantor or any of its properties, or (iv) result in or require
the creation or imposition of any Lien upon any of the property of the
Additional Guarantor other than the Liens granted pursuant to this Agreement,
the other Loan Documents or the Orders; and do not require the consent,
authorization by or approval of or notice to or filing or registration with any
Governmental Authority (other than the entry of the Orders and the "Order
Directing Joint Administration of the Cases Pursuant to Bankruptcy Rule 1015(b)"
entered by the Bankruptcy Court on July 21, 1998 (the "Joint Administration
Order")). This Agreement has been duly executed and delivered by the Additional
Guarantor. This Agreement is, and each of the other Loan Documents to which the
Additional Guarantor is or will be a party, when delivered hereunder or
thereunder, will be, a legal, valid and binding obligation of the Additional
Guarantor enforceable against the Additional Guarantor in accordance with its
terms, the Orders and the Joint Administration Order.
2.3 Approvals. Except for the Orders and the Joint
Administration Order, no Authorizations of any Governmental Authority, or any
securities exchange, are necessary for the execution, delivery or performance by
the Additional Guarantor of the Loan Documents to which the Additional Guarantor
is a party, or for the legality, validity or enforceability hereof or thereof.
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2.4 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Additional Guarantor could reasonably be expected
to have a Material Adverse Effect.
3. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GUARANTOR]
By: __________________________________
Name:
Title:
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