FIRST AMENDMENT TO FOURTH AMENDED
AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED CREDIT AGREEMENT
(this "First Amendment"), dated as of December 2, 1996, is entered into among
Sun Healthcare Group, Inc., a Delaware corporation ("Sun"), The Mediplex
Group, Inc. a Massachusetts corporation ("Mediplex") (Sun and Mediplex are
collectively referred to herein as "Borrowers"), the banks listed on the
signature pages hereto (collectively, "Lenders"), the co-agents listed on the
signature pages hereto (collectively, the "Co-Agents"), and NationsBank of
Texas, N.A., as Administrative Lender (in said capacity, "Administrative
Lender").
BACKGROUND
Borrowers, Lenders, Co-Agents and Administrative Lender heretofore
entered into that certain Fourth Amended and Restated Credit Agreement, dated
as of October 29, 1996 (as amended, renewed, extended or modified, the
"Credit Agreement"; the terms defined in the Credit Agreement and not
otherwise defined herein shall be used herein as defined in the Credit
Agreement).
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are all hereby acknowledged,
Borrowers, Lenders and Administrative Lender covenant and agree as follows:
1. AMENDMENTS TO CREDIT AGREEMENT. Commencing upon the satisfaction of
the conditions of effectiveness set forth in Section 3 of this First
Amendment, the following Sections of the Credit Agreement shall be amended to
read as follows:
(a) The definition of "EBITDAR" set forth in Section 1.1 of the Credit
Agreement shall be amended to read in its entirety as follows:
"EBITDAR" shall mean, for any period, determined in accordance with
GAAP on a consolidated basis for the Parent on its Subsidiaries, the sum of
(a) pre-tax net income (excluding therefrom (i) any items of extraordinary
gain, including net gains on the sale of assets other than asset sales in
the ordinary course of business, (ii) any items of extraordinary loss,
including net losses on the sale of assets other than asset sales in the
ordinary course of business, (iii) payments after the Agreement Date to the
Convertible Bondholders as an inducement for the conversion of a portion of
the Convertible Bonds, such payments not to exceed $3,000,000 in aggregate
amount, and (iv) for the fiscal quarter and year ended December 31, 1995,
non-cash charges related to the write-off of goodwill and uncollectible
accounts receivable acquired with the acquisition of Mediplex and Honorcare
Healthcare Management, Inc., not to exceed $67,000,000 in aggregate
amount), plus (b) interest expense, whether or not capitalized (including
interest expense pursuant to Capitalized Lease Obligations), Depreciation,
amortization and lease expense pursuant to Operating Leases, in each case
for the four fiscal quarters immediately preceding the date of calculation,
plus (c) any insurance proceeds received or paid in connection with the
Parent's agreement to
settle certain securities class-action lawsuits filed
in 1995 relating to the Parent's disclosure of the Office of Inspector
General's investigations and the operating results of fiscal years 1994 and
1995 and related issues. For purpose of the calculation of EBITDAR with
respect to assets not owned at all times during the four fiscal quarters
immediately preceding the date of determination, EBITDAR shall be adjusted,
on a pro forma basis, to (i) include the EBITDAR attributable to an
Acquisition which occurred during any such fiscal quarter for the twelve
month period preceding the date of determination, provided the Acquisition
Consideration for such Acquisition in excess of $20,000,000 and (ii)
exclude the EBITDAR of any asset or group of related amounts disposed of in
one transaction or a series of related transactions during any such fiscal
quarter for the twelve month period preceding the date of determination,
provided the consideration received from the disposition of such asset or
group of related assets is in excess of $20,000,000.
(b) The following definitions shall be added to Section 1.1 of the
Credit Agreement:
"APTA" shall mean APTA Healthcare PLC, a United Kingdom corporation.
"APTA ACQUISITION" shall mean the Parent's Acquisition of APTA, as an
indirect Foreign Subsidiary.
"APTA OFFER" shall mean the offer by Exceler Health Care Group, PLC
for the outstanding shares of capital stock of APTA pursuant to the
Offer Document related thereto.
"ASHBOURNE ACQUISITION" shall mean the Parent's Acquisition of
Ashbourne PLC, a United Kingdom corporation, as an indirect Foreign
Subsidiary.
(c) The second sentence of Section 2.16(a) is hereby amended to read in
its entirety as follows:
No Letter of Credit shall have an expiration date (including all rights of
renewal) later than the earlier of (i) the Maturity Date or (ii) one year
after the date of issuance thereof; PROVIDED, HOWEVER, the Letters of
Credit issued in connection with the APTA Offer may have an expiration date
(including all rights of renewal) not later than the Maturity Date.
(d) Section 7.1(i) of the Credit Agreement shall be amended to read in
its entirety as set forth below:
(i) Guaranties by the Borrowers and Indebtedness pursuant to letters of
credit in respect of obligations of Foreign Subsidiaries as lessees under
Operating Leases (such Guaranty obligation to be calculated as an amount
equal to the product of rental expense for the four fiscal quarters
immediately preceding the date of calculation subject to the terms of the
Guaranty multiplied by six), provided (x) the aggregate amount of such
Guaranties and
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letters of credit incurred after December 2, 1996, together
with Investments made after December 2, 1996, pursuant to SECTION 7.3(j)
which are not in entities organized under the laws of the United States or
any state thereof and Acquisition Consideration for all Foreign
Subsidiaries acquired after December 2, 1996, pursuant to SECTION 7.5(c)
hereof (excluding, in each case, the APTA Acquisition and the Ashbourne
Acquisition), shall not exceed $35,000,000 and (y) the aggregate amount of
any such individual Guaranty incurred after December 2, 1996 shall not
exceed $20,000,000; and
(e) Section 7.3(j) of the Credit Agreement shall be amended to read in
its entirety as follows:
(j) other Investments made after the Agreement Date primarily related to
the business of providing healthcare services, including nursing care,
rehabilitation therapy and other specialized healthcare services, the
consideration for which does not exceed $35,000,000 in aggregate amount;
provided, however, to the extent that any Investments made pursuant to this
SECTION 7.3(j) are in entities which are not organized under the laws of
the United States or any state thereof, (x) the aggregate amount of such
Investments made after December 2, 1996, in entities not organized under
the laws of the United States or any State thereof, together with the
aggregate Acquisition Consideration for all Foreign Subsidiaries acquired
after December 2, 1996, pursuant to SECTION 7.5(c) hereof and obligations
incurred after December 2, 1996, in respect of Guaranties and letters of
credit pursuant to SECTION 7.1(i) hereof (excluding, in each case, the APTA
Acquisition and the Ashbourne Acquisition), shall not exceed $35,000,000
and (y) no individual Investment made after December 2, 1996, in entities
not organized under the laws of the United States or any State thereof
shall exceed $20,000,000.
(f) Section 7.5(c) of the Credit Agreement shall be amended to read in
its entirety as follows:
(c) Acquisition of a Foreign Subsidiary, unless (x) the Acquisition
Consideration for all such Acquisitions occurring after December 2, 1996,
together with the aggregate amount of obligations incurred after December
2, 1996, in respect of Guaranties and letter of credit pursuant to SECTION
7.1(i) hereof and Investments made after December 2, 1996, pursuant to
SECTION 7.3(j) which are not in entities organized under the laws of the
United States or any state thereof (excluding, in each case, the APTA
Acquisition and the Ashbourne Acquisition), does not exceed $35,000,000,
(y) the Acquisition Consideration for any single such Acquisition
(excluding the APTA Acquisition and the Ashbourne Acquisition) does not
exceed $20,000,000, and (z) to the extent such Foreign Subsidiary is not a
Subsidiary of a Foreign Subsidiary, an amount of the capital stock of such
Foreign Subsidiary necessary to cause the Administrative Lender to have a
security interest in and pledge of, all of the capital stock of, or other
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equity interest in, such Foreign Subsidiary owned by the pledgor or such
lesser amount such that in any case not more than 66% of all of the capital
stock of, or other equity interest in, such Foreign Subsidiary, shall be
pledged pursuant to a Foreign Subsidiary Pledge Agreement.
2. REPRESENTATIONS AND WARRANTIES TRUE: NO EVENT OF DEFAULT. By its
execution and delivery hereof, each Borrower represents and warrants that, as
of the date hereof and after giving effect to the amendments contemplated by
the foregoing Section 1:
(a) the representations and warranties contained in the Credit Agreement
are true and correct on and as of the date hereof as made on and as of such
date;
(b) no event has occurred and is continuing which constitutes a Default
or an Event of Default;
(c) Each Borrower has full power and authority to execute and deliver
this First Amendment, and this First Amendment and the Credit Agreement, as
amended hereby, constitute the legal, valid and binding obligations of such
Borrower, enforceable in accordance with their respective terms, except as
enforceability may be limited by applicable debtor relief laws and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and except as rights to indemnity may be
limited by federal or state securities laws; and
(d) no authorization, approval consent, or other action by, notice to,
or filing with, any governmental authority or other Person, is required for
the execution, delivery or performance by Borrowers of this First Amendment.
3. CONDITIONS OF EFFECTIVENESS. This First Amendment shall be
effective as of December 2, 1996, subject to the following:
(a) Administrative Lender shall have received counterparts of this First
Amendment executed by a number of Lenders sufficient to constitute the
Determining Lenders;
(b) Administrative Lender shall have received counterparts of this First
Amendment executed by each Borrower;
(c) Administrative Lender shall have received, for the ratable benefit
of the Lenders, an amendment fee equal to .05% of each Lender's Commitment;
and
(d) Administrative Lender shall have received, in form and substance
satisfactory to Administrative Lender and its counsel, such other documents,
certificates and instruments as Administrative Lender shall require.
4. REFERENCE TO THE CREDIT AGREEMENT.
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(a) Upon the effectiveness of this First Amendment, each reference in
the Credit Agreement to "this Agreement", "hereunder", or words of like
import shall mean and be a reference to the Credit Agreement, as affected and
amended by this First Amendment.
(b) This Credit Agreement, as amended by this First Amendment, and all
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
5. COSTS, EXPENSES AND TAXES. Borrowers jointly and severally agree to
pay on demand all costs and expenses of Administrative Lender in connection
with the preparation, reproduction, execution and delivery of this First
Amendment and the other instruments and documents to be delivered hereunder
(including the reasonable fees and out-of-pocket expenses of counsel for
Administrative Lender with respect thereto and with respect to advising
Administrative Lender as to its rights and responsibilities under the Credit
Agreement, as amended by this First Amendment).
6. EXECUTION IN COUNTERPARTS. This First Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
7. GOVERNING LAW: BINDING EFFECT. This First Amendment shall be
governed by and construed in accordance with the laws of the State of Texas
and shall be binding upon Borrowers and each Lender and their respective
successors and assigns.
8. HEADINGS. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of
this First Amendment for any other purpose.
9. ENTIRE AGREEMENT. THE CREDIT AGREEMENT, AS AMENDED BY THIS FIRST
AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as the date first above written.
BORROWERS: SUN HEALTHCARE GROUP, INC.
By: _________________________________________
Name: __________________________________
Title: _________________________________
THE MEDIPLEX GROUP, INC.
By: _________________________________________
Name: __________________________________
Title: _________________________________
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