AMENDMENT NO. 2
THIS AMENDMENT NO. 2 (the "Amendment") dated as of August 13, 1998, to the
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Credit Agreement referenced below, is by and among PEDIATRIC SERVICES OF
AMERICA, INC., a Georgia corporation, PEDIATRIC SERVICES OF AMERICA, INC., a
Delaware corporation, the subsidiaries and affiliates identified herein, the
lenders identified herein, and NATIONSBANK, N.A., as Administrative Agent.
Terms used but not otherwise defined shall have the meanings provided in the
Credit Agreement.
W I T N E S S E T H
WHEREAS, a $100 million credit facility has been established in favor of
Pediatric Services of America, Inc., a Georgia corporation (the "Borrower")
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pursuant to the terms of that Credit Agreement dated as of August 13, 1997 (as
amended and modified, the "Credit Agreement") among the Borrower, the Guarantors
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and Lenders identified therein, and NationsBank, N.A., as Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement, including, among other things, reduction of the Commitments and
adjustments to certain financial covenants;
WHEREAS, such modifications require the consent of the Required Lenders;
WHEREAS, the Required Lenders have consented to the requested modifications
on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. The Credit Agreement is amended in the following respects:
1.1 The following definitions in Section 1.1 are amended and
modified, or added, to read as follows:
"Aggregate Revolving Committed Amount" means the aggregate amount of
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Revolving Commitments in effect from time to time, being SEVENTY-FIVE
MILLION DOLLARS ($75,000,000).
"Applicable Percentage" means for any day, the rate per annum set
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forth below opposite the applicable Consolidated Leverage Ratio then in
effect, it being understood that the Applicable Percentage for (i) Base
Rate Loans shall be the percentage set forth under the column "Base Rate
Margin", (ii) Eurodollar Loans shall be the percentage set forth under the
column "Eurodollar Margin and Letter of Credit Fee", (iii) the Letter of
Credit Fee shall be the
percentage set forth under the column "Eurodollar Margin and Letter of
Credit Fee" and (iv) the Commitment Fee shall be the percentage set forth
under the column "Commitment Fee":
Eurodollar
Margin
Consolidated and
Pricing Leverage Base Rate Letter of Commitment
Level Ratio Margin Credit Fee Fee
-------------------------- -------------------------- ----------------- -------------------- -------------------
equal to or greater than
I 6.00 2.00% 3.000% .500%
equal to or greater than
II 5.50 but less than 6.00 1.75% 2.750% .500%
equal to or greater than
III 5.00 but less than 5.50 1.50% 2.500% .500%
equal to or greater than
IV 4.50 but less than 5.00 1.25% 2.250% .500%
equal to or greater than
V 4.00 but less than 4.50 0.75% 1.750% .450%
equal to or greater than
VI 3.50 but less than 4.00 0% 1.625% .375%
equal to or greater than
VII 3.00 but less than 3.50 0% 1.500% .325%
VIII less than 3.00 0% 1.375% .300%
The Applicable Percentage shall be determined and adjusted quarterly on the
date (each a "Rate Determination Date") five (5) Business Days after the
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date by which the annual and quarterly compliance certificates and related
financial statements and information are required in accordance with the
provisions of Sections 7.1(a) and (b) and Section 7.2(b), as appropriate;
provided that:
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(i) the Applicable Percentages from the effective date of
Amendment No. 2 shall be based on Pricing Level IV and shall remain in
effect at such Pricing Level until the first Rate Determination Date
to occur in connection with delivery of financial statements through
September 30, 1998, and
(ii) in the event an annual or quarterly compliance certificate
and related financial statements and information are not delivered
timely to the Agency Services Address by the date required by Sections
7.1(a) and (b) and Section 7.2(b), as appropriate, the Applicable
Percentages shall be based on Pricing Level I until such time as an
appropriate compliance certificate and related financial statements
and information are delivered, whereupon the applicable Pricing Level
shall be adjusted based on the information contained in such
compliance certificate and related financial statements and
information.
Each Applicable Percentage shall be effective from a Rate Determination
Date until the next such Rate Determination Date. The Administrative Agent
shall determine the appropriate Applicable Percentages in the pricing
matrix promptly upon receipt of the quarterly or annual compliance
certificate and related financial information and shall promptly notify the
Borrower and the Lenders of any change thereof. Such determinations by the
Administrative Agent shall be conclusive absent manifest error. Adjustments
in the Applicable Percentages shall be effective as to existing Extensions
of Credit as well as new Extensions of Credit made thereafter.
"ChoicePoint Obligation" means the obligation of the Company and
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Paramedical Services of America, Inc. to ChoicePoint Services, Inc. (the
"Seller") and ChoicePoint, Inc. under that certain Asset Purchase Agreement
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dated December 2, 1997 (the "Asset Purchase Agreement"), to reimburse the
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Seller for the difference in the average trading price below $20.20
on 495,050 shares of common stock of the Company (but in any event not to
exceed $10 million in the aggregate) acquired by the Seller pursuant to the
Asset Purchase Agreement.
"Consolidated Adjusted EBITDA" means for any period for the
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Consolidated Group on a consolidated basis,
(i) on or before September 30, 1999, the sum of EBITDA minus cash
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taxes paid (net of refunds),
(ii) after September 30, 1999, the sum of EBITDA minus capital
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expenditures made or incurred minus cash taxes paid (net of refunds),
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in each case determined in accordance with GAAP applied on a consistent
basis. Except as otherwise expressly provided, the applicable period shall
be for the four consecutive fiscal quarters ending as of the date of
determination.
"Consolidated Net Worth" means, as for any date for the Consolidated
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Group, shareholders' equity or net worth as determined in accordance with
GAAP, but, excluding, in any event, for purposes hereof, payments of
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ChoicePoint Obligation of up to $10,000,000 in the aggregate.
"Credit Documents" means a collective reference to this Credit
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Agreement, the Notes, the LOC Documents, the Security Agreement, the Pledge
Agreement, each Joinder Agreement, the Administrative Agent's Fee Letter,
and all other related agreements and documents issued or delivered
hereunder or thereunder or pursuant hereto or thereto.
"Days Sales Outstanding" means, for any Person or any line of
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business, the quotient of
(i) consolidated accounts receivable net of allowances taken in
accordance with GAAP as of the date of determination, divided by
(ii) the quotient of (A) net revenues or sales for the fiscal
quarter ending as of the date of determination multiplied by 4,
divided by (B) 365 or 366 days, as appropriate.
"EBITDA" means for any period, the sum of net income (exclusive of
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extraordinary gains and losses and related tax effects on any such excluded
gains and losses) plus interest expense (including amortization of debt
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discount and premium, the interest component under Capital Leases and the
implied interest component under Securitization Transactions) plus all
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provisions for Federal, state or other domestic and foreign income taxes
plus depreciation and amortization, in each case determined in accordance
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with GAAP applied on a consistent basis, but excluding, in any event, for
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purposes hereof, special charges of up to $15.25 million actually taken
against earnings in the third fiscal quarter of 1998.
"Restricted Payment" means (i) any dividend or other distribution,
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direct or indirect, on account of any shares of any class of stock now or
hereafter outstanding, except (A) a dividend payable solely in shares of
that class to the holders of that class and (B) dividends and other
distributions payable to a Credit Party, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value,
direct or indirect, of any shares of any class of
stock now or hereafter outstanding, but excluding, in any event, for
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purposes hereof, the repurchase of 495,050 shares of common stock of the
Company from the Seller during the fiscal quarter ending September 30, 1998
in an amount not to exceed $10 million in connection with the satisfaction
of the ChoicePoint Obligation and the subsequent retirement of such stock,
and (iii) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any
class of stock now or hereafter outstanding.
"Security Agreement" means the Security Agreement dated as of the date
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of Amendment No. 2 to Credit Agreement given by the Credit Parties to
NationsBank, N.A., as Administrative Agent, to secure the obligations
hereunder and under Hedge Agreements with Lenders and their affiliates
permitted hereunder, as amended and modified.
1.2 A new Section 6.17 is added to read as follows:
Section 6.17 Year 2000 Compliance.
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The Company has (i) initiated a review and assessment of all areas
within its and each of its Subsidiaries' business and operations (including
those affected by suppliers, vendors and customers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by the Company or any of its Subsidiaries (or suppliers,
vendors and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date
after December 31, 1999), (ii) developed a plan and timeline for addressing
the Year 2000 Problem on a timely basis, and (iii) to date, implemented
that plan in accordance with that timetable. Based solely on the
foregoing, and relying on representations made to the Borrower by its
suppliers, vendors and customers, to date the Company believes that all
computer applications (including those of its suppliers, vendors and
customers) that are material to its or any of its Subsidiaries' business
and operations are reasonably expected on a timely basis to be able to
perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 compliant"), except to the extent
that a failure to do so could not reasonably be expected to have a Material
Adverse Effect.
1.3 Section 7.1(b) is amended to read as follows:
(b) Company-Prepared Financial Statements. As soon as available, but
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in any event
(i) within 15 Business Days after the end of each fiscal month, a
company-prepared consolidated balance sheet of the Company and its
subsidiaries as of the end of the month and related company-prepared
consolidated balance sheets and statements of income for such monthly
period and for the fiscal year to date, and detailed cash reports on a
rolling basis and accounts receivables reports and agings (including
bad debt and days sales outstanding analysis by line of business) for
the Company and its subsidiaries in form and substance satisfactory to
the Administrative Agent and the Required Lenders;
(ii) within 45 days after the end of each of the first three
fiscal quarters, a company-prepared consolidated balance sheet of the
Company and its subsidiaries as of the end of the quarter and related
company-prepared consolidated statements of income,
retained earnings, shareholders' equity and cash flows for such
quarterly period and for the fiscal year to date;
(iii) within 60 days after the end of each fiscal year, an annual
business plan and budget for the Consolidated Group as is customarily
prepared by the Company, containing, among other things, pro forma
financial statements for the next fiscal year,
in each case setting forth in comparative form the consolidated figures for
the corresponding period or periods of the preceding fiscal year or the
portion of the fiscal year ending with such period, as applicable, in each
case subject to normal recurring year-end audit adjustments.
1.4 The financial covenants in Section 7.9 are amended in their
entirety to read as follows:
7.9 Financial Covenants.
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(a) Consolidated Leverage Ratio. As of the end of each fiscal
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reporting period to occur during the periods set forth below, the
Consolidated Leverage Ratio shall be not greater than:
September 30, 1998 through December 30, 1998 6.45:1.0
December 31, 1998 through March 30, 1999 5.00:1.0
March 31, 1999 through June 29, 1999 4.50:1.0
June 30, 1999 through September 29, 1999 4.25:1.0
September 30, 1999 through December 30, 1999 4.00:1.0
December 31, 1999 and thereafter 3.50:1.0
(b) Consolidated Fixed Charge Coverage Ratio. As of the end of each
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fiscal reporting period to occur during the periods set forth below, the
Consolidated Fixed Charge Coverage Ratio shall be not less than:
September 30, 1998 through December 30, 1998 1.75:1.0
December 31, 1998 through March 30, 1999 1.60:1.0
March 31, 1999 through June 29, 1999 1.60:1.0
June 30, 1999 through September 29, 1999 1.75:1.0
September 30, 1999 through December 30, 1999 1.75:1.0
December 31, 1999 and thereafter 1.60:1.0
(c) Consolidated Net Worth. As of the end of each fiscal reporting
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period, Consolidated Net Worth shall be not less than the sum of 85% of
Consolidated Net Worth as of the Closing Date plus on the last day of each
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fiscal quarter to occur after the Closing Date, 50% of Consolidated Net
Income for the fiscal quarter then ended (but not less than zero), such
increases to be cumulative, plus 75% of the net proceeds from Equity
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Transactions (including for purposes hereof, any increases in shareholder
equity on account of acquisitions made by issuance of stock or stock swap)
occurring after the Closing Date.
(d) Consolidated Senior Leverage Ratio. As of the end of each fiscal
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reporting period to occur during the periods set forth below, the
Consolidated Senior Leverage Ratio shall be not greater than:
September 30, 1998 through December 30, 1998 2.75:1.0
December 31, 1998 and thereafter 2.50:1.0
(e) Capital Expenditures. The aggregate amount of capital
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expenditures made or incurred by members of the Consolidated Group during
the fiscal quarters set forth below shall not exceed:
Fiscal Quarter ending on or about September 30, 1998 $3,600,000
Fiscal Quarter ending on or about December 31, 1998 $2,750,000
Fiscal Quarter ending on or about March 31, 1999 $2,250,000
Fiscal Quarter ending on or about June 30, 1999 $2,250,000
Fiscal Quarter ending on or about September 30, 1999 $2,250,000
The unused portion of capital expenditures permitted but not used in any
fiscal quarter may be carried over and used in the next fiscal quarter (one
quarter carry-over).
(f) Days Sales Outstanding. As of the end of each fiscal reporting
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period to occur during the periods set forth below, Days Sales Outstanding
of the Consolidated Group for the lines of business set forth below shall
not be greater than:
medical services business
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September 30, 1998 through December 30, 1998 130 days
December 31, 1998 through March 30, 1999 128 days
March 31, 1999 through September 29, 1999 125 days
September 30, 1999 and thereafter 122 days
paramedical testing business
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September 30, 1998 through December 30, 1998 71 days
December 31, 1998 through March 30, 1999 68 days
March 31, 1999 and thereafter 63 days
1.5 A new Section 7.13 is added to read as follows:
Section 7.13 Year 2000 Compliance.
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The Company will promptly notify the Bank in the event the Company
discovers or determines that any computer application (including those of
its suppliers, vendors and customers) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 compliant,
except to the extent that such failure could not reasonably be expected to
have a Material Adverse Effect.
1.6 In Section 8.4(b) immediately following the phrase in the first
parenthetical which reads "the sale or disposition of plant, property and
equipment" there shall be inserted the following:
"in the ordinary course of business"
1.7 Section 8.4(c)(ii) is amended to read as follows:
(ii) in the case of an acquisition of capital stock or other
ownership interest after giving effect thereto, such Person will be a
Subsidiary, or in the case of an acquisition of assets, property and/or
operations then
(A) no such acquisition shall occur prior to February 28,
1999 without the prior written consent of the Required Lenders;
(B) the Consolidated Leverage Ratio shall be less than
4.0:1.0 both as of the most recent fiscal quarter end and after giving
effect to the prospective acquisition on a Pro Forma Basis;
(C) the cost of any such acquisition (or series of related
acquisitions) shall not exceed $10,000,000 in any instance;
(D) the Board of Directors of the Person which is the
subject of the acquisition shall have approved the acquisition; and
(E) no Default or Event of Default would exist after giving
effect thereto on a Pro Forma Basis.
2. In accordance with the provisions of Section 3.4(a) of the Credit
Agreement, the Revolving Commitments are hereby reduced by TWENTY-FIVE MILLION
DOLLARS ($25,000,000) to a revised Aggregate Revolving Committed Amount of
SEVENTY-FIVE MILLION DOLLARS ($75,000,000).
3. The Credit Parties will grant a security interest in all personal
property, tangible and intangible (including accounts, inventory, equipment and
general intangibles), to the Administrative Agent to secure the loans and
obligations owing under the Credit Agreement (and obligations owing under Hedge
Agreements with Lenders or their affiliates) pursuant to the terms of the
Security Agreement entered into in connection with this Amendment. Further, the
Credit Parties will cooperate with and assist the Administrative Agent and the
Lenders in establishing and maintaining the liens and security interests granted
pursuant to the Security Agreement and the Pledge Agreement, including execution
of financing statements.
4. The Administrative Agent, on behalf of the Lenders, will, at the
Borrower's expense, engage independent consultants for a review and analysis of
the billing and accounts receivables systems, processes and controls. The
Administrative Agent will share the results of the analysis with the Lenders and
the Borrower. The Credit Parties will cooperate with the
Administrative Agent and the independent consultants in the conduct of the
review and analysis, and will promptly implement recommendations of the
independent consultants and recommendations of the Administrative Agent and the
Required Lenders based on the results of the review and analysis (including
follow-up reports on implementation of the recommendations). The agreements and
obligations set forth in this paragraph shall survive payment of the loans and
obligations, and termination of the commitments, under the Credit Agreement.
5. This Amendment shall be effective upon satisfaction of the following
conditions:
(a) execution of this Amendment by the Credit Parties and the Required
Lenders;
(b) receipt by the Administrative Agent of multiple counterparts of
the Security Agreement and the financing statements relating thereto;
(c) receipt by the Administrative Agent of legal opinions of counsel
to the Credit Parties relating to this Amendment; and
(d) receipt by the Administrative Agent for the ratable benefit of the
consenting Lenders of an Amendment Fee of 18.75 basis points on the
aggregate amount of Commitments held by each of the Lenders consenting to
this Amendment.
6. Based on preliminary financial statements and information for the
fiscal quarter ended June 30, 1998 provided to the Administrative Agent (and
provided that the final financial statements for such period do not differ in
any material respect), the Required Lenders hereby waive any Default or Event of
Default which existed or may have existed prior to the effective date of this
Amendment solely on account of noncompliance with the Consolidated Leverage
Ratio under Section 7.9(a) of the Credit Agreement and the Consolidated Fixed
Charge Coverage Ratio under Section 7.9(b) of the Credit Agreement.
7. The Required Lenders hereby consent to (i) the payment by the Company
of up to $10 million in the aggregate for purchase of 495,050 shares of common
stock of the Company from the Seller and satisfaction of the ChoicePoint
Obligation and (ii) sale of the assets and operations of [DESCRIBE ST. LOUIS
OPERATION] in cancellation of $70,000 in seller financing notes owing by the
Company and its Subsidiaries and return and redemption of approximately 2,400
shares of common stock of the Company in connection therewith (in consideration
of the sale and return of the assets and operations, without additional cash
consideration). The Company and the Borrower hereby agree to structure
satisfaction of the ChoicePoint Obligation as a repurchase and redemption of the
shares of common stock of the Company from the Seller.
8. The Required Lenders hereby consent to the purchase by the Borrower of
the Savannah home health agency owned by Visiting Nurse Health System for cash
consideration not to exceed $225,000 at closing.
9. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (including Schedules and Exhibits) shall remain in full force
and effect.
10. The Borrower agrees to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment, including without limitation the reasonable fees and expenses
of Xxxxx & Xxx Xxxxx, PLLC.
11. This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
12. This Amendment shall be deemed to be a contract made under, and for
all purposes shall be construed in accordance with the laws of the State of
North Carolina.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: PEDIATRIC SERVICES OF AMERICA, INC.
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a Georgia corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief Financial Officer
GUARANTORS: PEDIATRIC SERVICES OF AMERICA, INC.
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a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief Financial Officer
PSA LICENSING CORPORATION,
a Delaware corporation
PSA PROPERTIES CORPORATION,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: President
for each of the foregoing
PEDIATRIC SERVICES OF AMERICA (CONNECTICUT), INC.,
a Connecticut corporation
PREMIER MEDICAL SERVICES, INC.
a Nevada corporation
PEDIATRIC HOME NURSING SERVICES, INC.,
a New York corporation
PEDIATRIC PARTNERS, INC.,
a Delaware corporation
PARAMEDICAL SERVICES OF AMERICA, INC.,
a California corporation
PREMIER NURSE STAFFING, INC.,
a Nevada corporation
PREMIER CERTIFIED HOME HEALTH SERVICES, INC.,
a Nevada corporation
ARO HEALTH SERVICES, INC.,
a Washington corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
for each of the foregoing
LENDERS: NATIONSBANK, N.A.,
------- individually in its capacity as a
Lender and in its capacity as Administrative Agent
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
TORONTO DOMINION (TEXAS), INC.
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
SUNTRUST BANK, ATLANTA
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Vice President
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Banking Officer
MELLON BANK, N.A.
By:
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Name:
Title:
CREDITANSTALT AG
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Vice President
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Senior Associate
