FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), made and
entered into as of January 27, 1999, is by and between Health Risk Management,
Inc., a corporation organized under the laws of the State of Minnesota (the
"Borrower"), and U.S. Bank National Association, a national banking association
(the "Bank").
RECITALS
A. The Bank and the Borrower entered into an Amended and Restated
Revolving Credit and Term Loan Agreement dated as of May 1, 1998 (the "Credit
Agreement").
B. The Borrower desires to amend certain provisions of the Credit
Agreement, and the Bank has agreed to make such amendments, subject to the terms
and conditions set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby covenant
and agree to be bound as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement, unless the context shall otherwise require.
Section 2. Amendments. The Credit Agreement is hereby amended as
follows:
2.1 Amended Definitions. The definitions of "Advance," "Consolidated
Fixed Charge Coverage Ratio," "Interest Differential," "Loans," "Notes," "Quoted
Rate," "Quoted Rate Advance," "Revolving Credit Commitment," "Revolving
Termination Date," "Term Loans," and "Term Notes" contained in Section 1.1 of
the Credit Agreement are deleted in their respective entireties and the
following definitions are substituted in lieu thereof in the appropriate
alphabetical order:
"Advance": Any portion of the outstanding Revolving Loans or
Term Loan by the Bank as to which the Borrower has elected one of the
available interest rate options and, if applicable, an Interest Period.
An Advance constituting a Revolving Loan may be a Eurodollar Advance, a
CD Rate Advance or a Reference Rate Advance. An Advance constituting a
Term Loan may be a Eurodollar Advance, a CD Rate Advance or a Reference
Rate Advance, provided however, that, if, pursuant to Section 2.2(e),
the Borrower converts the Term Loan in its entirety to a Quoted Rate
Advance, then no portion of the Term Loan may thereafter be maintained
as or converted into Eurodollar Advances, CD Rate Advances or Reference
Rate Advances.
"Consolidated Fixed Charge Coverage Ratio": For any period of
determination, the ratio of:
(a) the remainder of (i) EBITDA for such period, less (ii)
consolidated Capital Expenditures during such period, and less
(iii) cash taxes paid during such period;
to
(b) the sum of (i) consolidated interest expense during such
period, plus (ii) scheduled payments of principal of
interest-bearing Indebtedness during such period.
"Interest Differential": As of the date of any full or partial
prepayment of Term Loan, the Quoted Rate minus the sum of the
Government Yield as of the date of prepayment and the Issuance Spread.
"Loans": The Revolving Loans and the Term Loan.
"Notes": The Revolving Note and the Term Note.
"Quoted Rate": The fixed rate of interest offered by the Bank
and accepted by the Borrower for the Term Loan, as provided in Section
2.2. The Bank shall, at its discretion, determine the offered rate with
reference to the amount and amortization schedule of the Term Loan,
funding rates available to the Bank, reserve requirements, premiums,
insurance costs, profit margin and other factors deemed relevant by the
Bank.
"Quoted Rate Advance": The Term Loan, provided that the
Borrower and the Bank agree that the Term Loan shall constitute a
Quoted Rate Advance, as described in Section 2.2(e).
"Revolving Credit Commitment": The maximum unpaid principal
amount of Loans which may from time to time be outstanding hereunder,
being initially $6,000,000, as the same may be reduced from time to
time pursuant to Section 2.2(a) and Section 4.3 and, as the context may
require, the agreement of the Bank to make Revolving Loans to the
Borrower subject to the terms and conditions of this Agreement.
"Revolving Termination Date": The earliest of (a) January 31,
2000; (b) the date on which the Revolving Loan Commitment is terminated
pursuant to Section 9.2 hereof; (c) the date on which the Revolving
Loan Commitment is reduced to zero pursuant to Section 4.3 hereof; or
(d) the date on which any Revolving Loan or any Term Loan is
accelerated.
"Term Loan": As defined in Section 2.2.
"Term Note": The promissory note of the Borrower described in
Section 2.2, substantially in the form of Exhibit B, as such promissory
note may be amended, modified or supplemented from time to time, and
such term shall include any substitutions for, or renewals of, such
promissory note.
2.2 Deleted Definitions. Section 1.1 of the Credit Agreement is further
amended by deleting the definitions of "Tranche A Term Loans," "Tranche B Term
Loan," and "Tranche C Term Loan" in their entireties.
2.3 New Definitions. Section 1.1 of the Credit Agreement is further
amended by adding the definitions of "Acquisition", "Acquisition Documents",
"Administrative Services Agreement," "Annual Statement," "Applicable Insurance
Code," "Applicable Margin," "Consolidated Leverage Ratio," "Healthchoices
Contract," "HRMPA," "Insurance Regulatory Authority," "Licenses," "Net Medical
Claims Payable," "Purchase Agreement," "Reinsurance Agreements," "SAP,"
"Security Agreement," "Software Capital Expenditures," "Statutory Net Worth,"
and "Surplus Reinsurance Agreements" thereto in correct alphabetical order:
"Acquisition": The purchase by the Borrower of all of the
outstanding stock of Oxford Health Plans (PA), Inc. pursuant to the
Purchase Agreement.
"Acquisition Documents": The Purchase Agreement and all other
agreements, instruments, certificates and other documents executed and
delivered pursuant to or in connection therewith, as the same may be
supplemented, amended or otherwise modified.
"Administrative Services Agreement": That certain
Administrative Services Agreement to be dated as of January 1, 1999
between the Borrower and HRMPA.
"Applicable Insurance Code": As to HRMPA, the insurance code
of any state where such company is domiciled or doing business and any
successor statute of similar import, together with the regulations
thereunder, as amended or otherwise modified and in effect from time to
time. References to sections of the Applicable Insurance Code shall be
construed to also refer to successor sections.
"Applicable Margin": With respect to:
(a) Reference Rate Advances -- 0%.
(b) CD Rate Advances -- 2.75%.
(c) Eurodollar Advances -- 2.75%.
"Consolidated Leverage Ratio": For any period of determination
the ratio of (a) consolidated total liabilities of the Borrower and the
Subsidiaries less Net Medical Services Claims Payable, to (b)
Consolidated Tangible Net Worth.
"Healthchoices Contract": shall mean that certain
Healthchoices Physical Health Agreement to be dated as of January 1,
1999 between the Commonwealth of Pennsylvania and HRMPA, as amended,
restated or otherwise modified from time to time.
"HRMPA": prior to the effectiveness of its name change in
manner contemplated by Section 7.12, Oxford Health Plans (PA), Inc., a
Pennsylvania corporation and, thereafter, HRM Health Plans (PA), Inc.
"Insurance Regulatory Authority": With respect to HRMPA, each
governmental or regulatory agency with which such company is required
to file its Annual Statement or which exercises regulatory authority
over the primary businesses being conducted by such company.
"Licenses": As defined in Section 6.18.
"Net Medical Services Claims Payable" shall mean, as of any
date of determination, the aggregate claims payable (reported and
unreported) stated by HRMPA in Part B of HRMPA's Statutory Financial
Statement for the applicable fiscal period minus the aggregate cash and
investments stated by HRMPA in Part A of HRMPA's Statutory Financial
Statement for the applicable fiscal period.
"Purchase Agreement": That certain Stock Purchase Agreement
dated as of October 14, 1998 between the Borrower, as purchaser, Oxford
Health Plans, Inc., as seller, as in effect on the date hereof and as
the same may be supplemented, amended or otherwise modified after the
date hereof with the prior written consent of the Bank.
"Reinsurance Agreements: Any agreement, contract, treaty,
certificate or other arrangement (other than a Surplus Reinsurance
Agreement) by which the Borrower or any Subsidiary agrees to transfer
or cede to another insurer all or part of the liability assumed or
assets held by the Borrower or any Subsidiary under a policy or
policies of insurance or under a reinsurance agreement assumed by the
Borrower or any Subsidiary. Reinsurance Agreements shall include, but
not be limited to, any agreement, contract, treaty or certificate or
other arrangement (other than a Surplus Reinsurance Agreement) which is
treated as such by the applicable Insurance Regulatory Authority.
"SAP": As to HRMPA, the statutory accounting practices
prescribed by the Insurance Regulatory Authority.
"Security Agreement": As defined in Section 10.11.
"Software Capital Expenditures": For any period of
determination, the aggregate amount of Capital Expenditures properly
attributable (according to GAAP) to research and development conducted
by Borrower or any Subsidiary, including without limitation,
development of computer software and databases.
"Statutory Financial Statements": As to HRMPA, the annual and
quarterly financial statements of such company as required to be filed
with the applicable Insurance Regulatory Authority, together with all
exhibits and schedules filed therewith, prepared in accordance with
SAP.
"Statutory Net Worth": As to HRMPA, as of any date of
determination, the total amount shown as its Total Net Worth in Part B
of HRMPA's Statutory Financial Statement for the applicable fiscal
period.
"Surplus Reinsurance Agreements" Any agreement whereby the
Borrower or any Subsidiary assumes or cedes business under a
reinsurance agreement that would be considered a "financing type"
reinsurance agreement as determined in accordance with the Statement of
Financial Accounting Standards 113 or any successor thereto.
2.4 Revolving Loans. Section 2.1(c) of the Credit Agreement is deleted
in its entirety and the following is substituted in lieu thereof:
(c) Advance Options and Increment. Revolving Loans may be
maintained, at the election of the Borrower, but subject to the
limitations hereof, as Reference Rate Advances, CD Rate Advances or
Eurodollar Advances. Each Revolving Loan shall be in a minimum amount
of $100,000 and in an integral multiple of $50,000.
2.5 Term Loan. Sections 2.2 (a), (b), (c), (d), (e) and (f)(i) of the
Credit Agreement are deleted in their entireties and the following is
substituted in lieu thereof:
(a) Term Loan. To make a single term loan (the "Term Loan")
available to Borrower in a single advance in the principal amount of
$6,294,916 made upon the consummation of the First Amendment hereto.
Payments or prepayments upon the Term Loan may not be reborrowed.
(b) Term Note. The Term Loan shall be further evidenced by the
Term Note.
(c) Advance Options. The Term Loan may be maintained, at the
election of the Borrower, but subject to the limitations hereof, as
Reference Rate Advances, Eurodollar Advances or CD Rate Advances,
provided, however, that, subject to the limitations hereof, pursuant to
Section 2.2(e), the Borrower may elect to convert the entire Term Loan
to a Quoted Rate Advance.
(d) Term Loan Procedures. Not later than 11:30 a.m.
(Minneapolis time) on January 27, 1999, the Borrower shall orally
notify the Bank of its intention to borrow the Term Loan on that date.
Such notice of borrowing shall be irrevocable and shall be deemed a
representation by the Borrower that on such date and after giving
effect to Term Loan the applicable conditions specified by the Banks
shall be satisfied. The Term Loan shall initially be made as Reference
Rate Advances. Unless the Bank determines that any applicable condition
specified by the Bank has not been satisfied, the Bank will make the
proceeds of the Term Loan available to the Borrower on the requested
date by disbursing $4,000,000 of the proceeds of such Term Loan to the
seller under the Acquisition Documents and using the remaining proceeds
of the Term Loan to refinance the Borrower's existing term loan
obligations to the Bank.
(e) Additional Procedures for Quoted Rate Advances. The
Borrower may from time to time request rate quotations from the Bank
for a Quoted Rate to apply to the Term Loan. The Borrower shall have a
one-time option to convert the Term Loan to a Quoted Rate Advance (in
its entirety), based on the Bank's quotation of an applicable Quoted
Rate and the Borrower's acceptance of such Quoted Rate for the Term
Loan. The Bank's records concerning the applicable Quoted Rate, and
concerning whether the Term Loan shall be a Quoted Rate Advance shall
be conclusive. In the absence of mutual agreement to a Quoted Rate to
apply to any Term Loan, the Term Loan may be maintained, continued or
converted as Reference Rate Advances, Eurodollar Advances or CD Rate
Advances, in the manner set forth in Section 2.2(f).
(f) Eurodollar and CD Advances.
(i) On the terms and subject to the limitations hereof, the
Borrower shall have the option at any time and from time to
time to convert all or any portion of the Advances other than
Quoted Rate Advances into Reference Rate Advances, Eurodollar
Advances or CD Rate Advances, or to continue Eurodollar
Advances or a CD Rate Advances as such; provided, however that
a Eurodollar Rate Advance or a CD Rate Advance may be
converted or continued only on the last day of the Interest
Period applicable thereto and no Advance may be converted or
continued as a Eurodollar Rate Advance or a CD Rate Advance if
a Default or Event of Default has occurred and is continuing
on the proposed date of continuation or conversion.
Notwithstanding this Section 2.2(f), if the Term Loan is
converted into a Quoted Rate Advance as provided in Section
2.2(e), it may not thereafter be converted into Reference Rate
Advances, CD Rate Advances or Eurodollar Advances.
2.6 Use of Proceeds. The following is added as new Section 2.5 of the
Credit Agreement:
Section 2.5 Use of Loan Proceeds. The proceeds of the Term
Loan shall be used to refinance $2,294,916 of the Borrower's existing
term loan obligations to the Bank and to fund not greater than
$4,000,000 of the purchase price in connection with the Acquisition.
The proceeds of the initial Revolving Loans shall be used to refinance
the Borrower's existing revolving obligations to the Bank and $807,500
of the Borrower's existing term loan obligations to the Bank. All other
Revolving Loans shall be used for the general business purposes of the
Borrower, in a manner not in conflict with any of the covenants in this
Agreement.
2.7 Interest. Sections 3.1(a) and (b) of the Credit Agreement are
deleted in their entireties and the following is substituted in lieu thereof:
(a) Quoted Rate Advances. Upon conversion of the Term Loan in
its entirety to a Quoted Rate Advance, the unpaid principal amount of
the Term Loan shall bear interest prior to maturity at the Quoted Rate
applicable to the Term Loan.
(b) Reference Rate Advances. The unpaid principal amount of
each Reference Rate Advance shall bear interest prior to maturity at a
rate per annum equal to the Reference Rate plus the Applicable Margin.
2.8 Commitment Fees. Section 3.2 of the Credit Agreement is deleted in
its entirety and the following is substituted in lieu thereof:
Section 3.2 Commitment Fees. The Borrower shall pay to the
Bank fees (the "Commitment Fees") in an amount determined by applying a
rate of 0.375% per annum to the sum of (a) the Revolving Commitment in
effect as of the due date of such payment plus (b) the aggregate unpaid
principal amount upon the Term Note as of the due date of such payment
for the period from the date hereof to the scheduled maturity date of
the Term Note. The Commitment Fees shall be payable quarterly in
arrears on the last day of each quarter of the Borrower's fiscal year.
2.9 Repayment. Section 4.1 of the Credit Agreement is deleted in its
entirety and the following is substituted in lieu thereof:
Section 4.1 Repayment.
(a) Revolving Loans. The outstanding principal upon the
Revolving Loans shall be due and payable on the Revolving
Termination Date.
(b) Term Loan. The Term Loan shall be payable in installments
of $175,000, payable on that last day of each month of each
year, commencing on January 31, 1999, and a final payment
equal to all outstanding principal on January 31, 2002.
2.10 New Representations and Warranties. The following is added as new
Sections 6.18, 6.19 and 6.20 of the Credit Agreement:
Section 6.18 Insurance Licenses. Exhibit I lists all of the
jurisdictions in which the Borrower or any Subsidiary holds licenses
(including, without limitation, licenses or certificates of authority
from applicable insurance departments), permits or authorizations to
transact insurance and reinsurance business (collectively, the
"Licenses"). Except as set forth on Exhibit I, to the Borrower's
knowledge, no License is the subject of a proceeding for suspension or
revocation or any similar proceedings, there is no sustainable basis
for such a suspension or revocation, and no such suspension or
revocation is threatened by any Insurance Regulatory Authority. Neither
the Borrower nor any Subsidiary transacts any insurance business,
reinsurance business or health maintenance organization business,
directly or indirectly, in any state or jurisdiction other than those
enumerated on Exhibit I hereto, where such business requires any
license, permit, governmental approval, consent or other authorization.
Section 6.19 Reinsurance. Exhibit J lists all Reinsurance
Agreements and Surplus Reinsurance Agreements of the Borrower or any
Subsidiary in effect on the date of consummation of the First Amendment
hereto. All persons with whom the Borrower or any Subsidiary have ceded
any obligations with respect to any Reinsurance Agreement or Surplus
Reinsurance Agreements have a rating a "A" or better by A.M. Best &
Company.
Section 6.20 Year 2000. The Borrower has reviewed and assessed
its, and each Subsidiary's, business operations and computer systems
and applications to address the "year 2000 problem" (that is, that
computer applications and equipment used by the Borrower or any
Subsidiary, directly or indirectly through third parties, may be unable
to properly perform date-sensitive functions before, during and after
January 1, 2000). The Borrower reasonably believes that the year 2000
problem will not result in a material adverse change in the Borrower's
or any Subsidiary's business condition (financial or otherwise),
operations, properties or prospects or ability to repay the Bank. The
Borrower is in the process of implementing a plan to remediate year
2000 problems and will complete implementation of such plan with
respect to any material year 2000 problems, and testing thereof, by
September 30, 1999. The Borrower agrees that this representation will
be true and correct on and shall be deemed made by the Borrower on each
date the Borrower requests any Advance under this Agreement or delivers
any information to the Bank. The Borrower will promptly deliver to the
Bank such information relating to this representation and covenant as
the Bank requests from time to time.
2.11 Additional Financial and Business Information. Section 7.1(j) of
the Credit Agreement is deleted in its entirety and the following is substituted
in lieu thereof:
(j) As soon as possible, but in any event within sixty (60) days after
the end of each fiscal year of HRMPA, a copy of the Statutory Financial
Statement of HRMPA, for such fiscal year prepared in accordance with
SAP and accompanied by the certification of the responsible officer of
HRMPA that such financial statements presents fairly, in accordance
with SAP, the financial position of HRMPA for the period then ended.
(k) As soon as possible, but in any event within sixty (60) days after
the end of each of the first three fiscal quarters of each fiscal year
of HRMPA, a copy of the Statutory Financial Statement of HRMPA for such
fiscal quarter, all prepared in accordance with SAP and accompanied by
the certification of the responsible officer of such company that all
such financial statements present fairly in accordance with SAP the
financial position of such company for the periods then ended (subject
to normal year-end and audit adjustments).
(l) Within fifteen (15) days after being delivered to HRMPA any draft
or final examination report issued from time to time by the applicable
Insurance Regulatory Authority.
(m) Copies of all material Insurance Holding Company System Act filings
with any governmental or regulatory authority by the Borrower or any
Subsidiary not later than ten (10) Business Days after such filings are
made, including, without limitation, filings which seek approval of any
governmental or regulatory authority with respect to transactions
between the Borrower and any Subsidiaries.
(n) Within five (5) Business Days of such notice, notice of actual
suspension, termination or revocation of any License or material
restriction thereon by any Insurance Regulatory Authority or of receipt
of notice from any Insurance Regulatory Authority notifying the
Borrower or any Subsidiary of a hearing (which is not withdrawn within
ten (10) days) relating to such a suspension, termination, revocation
or restriction, including any request by an Insurance Regulatory
Authority which commits the Borrower or any Subsidiary to take, or
refrain from taking, any action or which otherwise materially and
adversely affects the authority of the Borrower or any Subsidiary to
conduct their businesses.
(o) Within three (3) Business Days of such notice, notice of any
pending or threatened investigation or regulatory proceeding (other
than routine periodic investigations or reviews) by any Insurance
Regulatory Authority concerning the business, practices or operations
of the Borrower or any Subsidiary, including any agent or managing
general agent thereof.
(p) Promptly, upon knowledge of the Borrower or any Subsidiary, notice
of any actual or proposed changes in any Applicable Insurance Code, if
such changes could reasonably be expected to materially affect the
business of the Borrower or any Subsidiary.
(q) Promptly, notice of any written notice received by the Borrower or
any Subsidiary of any material denial of coverage, litigation or
arbitration arising out of any Surplus Reinsurance Agreement or any
material Reinsurance Agreement.
(r) From time to time, such other information regarding the business,
operation and financial condition of the Borrower or the Subsidiaries
as the Bank may reasonably request.
2.12 Acquisition Documents; Name Change. The following is added as new
Sections 7.11, 712 and 7.13 of the Credit Agreement:
Section 7.11 Acquisition Documents. Promptly deliver to the
Bank from time to time upon request by the Bank copies of any
Acquisition Documents specified in such request. The Borrower will
perform and comply in all material respects with all of its obligations
under all Acquisition Documents, and exercise promptly and diligently
their rights thereunder.
Section 7.12 Change of Name For HRMPA. On or before the
earlier of (a) the termination of any license to use any trade name of
the seller under the Acquisition Documents or (b) 180 days from the
date of consummation of the First Amendment hereto, Borrower shall file
all documents and instruments and take all other actions necessary to
duly and properly change the name of Oxford Health Plans (PA), Inc. to
HRM Health Plans (PA), Inc. The Borrower shall promptly furnish the
Bank with copies of all documents effecting the corporate name change
contemplated by the forgoing sentence.
Section 7.13 Supplemental Schedules and Secretary's
Certificate. As soon as available, but in no event greater than 30 days
after the date of consummation of the First Amendment hereto, the
Borrower will furnish the Bank with the following:
(a) Copies of the final executed versions of the
Administrative Services Agreement and Healthchoices Contract,
each in form and substance reasonably acceptable to the Bank.
(b) Reinsurance Agreements granting to HRMPA stop loss
coverage and insolvency coverage of a type and in an amount
sufficient to comply with the Healthchoices Contract and any
Applicable Insurance Code, each in form and substance
reasonably acceptable to the Bank, together with a form of a
supplemental Exhibit J hereto covering such new Reinsurance
Agreements.
(c) A Certificate of the Borrower's Chief Financial Officer
certifying that the agreements contemplated by the clauses (a)
and (b) are in full force and effect, without modification or
amendment.
2.13 Purchase of Assets. Section 8.3 of the Credit Agreement is deleted
in its entirety and the following is substituted in lieu thereof:
Section 8.3 Purchase of Assets. Except for the transactions
contemplated by the Acquisition Documents, purchase or lease or
otherwise acquire all or substantially all of the assets of any Person
(except for purchases or other transfers by the Borrower or a
wholly-owned Subsidiary from a wholly-owned Subsidiary) in an amount
not in excess of $1,000,000 for any such acquisition, and in an
aggregate amount which, together with Investments permitted under
Section 8.9, plus Capital Expenditures permitted under Section 8.16;
provided, that any such acquisition would not cause an Adverse Event.
2.14 Subsidiaries, Etc. Section 8.6 of the Credit Agreement is deleted
in its entirety and the following is substituted in lieu thereof:
Section 8.6 Subsidiaries. Partnerships. Joint Ventures and
Ownership of Stock. Do any of the following: (a) except for the
acquisitions contemplated by the Acquisition Documents, form or acquire
any corporation which would thereby become a Subsidiary; (b) form or
enter into any partnership as a limited or general partner or into any
joint venture; (c) permit any Subsidiary to purchase or otherwise
acquire any shares of the stock of the Borrower; or (d) take any
action, or permit any Subsidiary to take any action, which would result
in a decrease in the Borrower's or any Subsidiary's ownership interest
in any Subsidiary (including, without limitation, decrease in the
percentage of the shares of any class of stock owned).
2.15 Amended Financial Covenants. Sections 8.16, 8.17, 8.18, 8.19 and
8.20 of the Credit Agreement are deleted in their respective entireties and the
following sections are substituted in lieu thereof:
Section 8.16 Capital Expenditures. Make consolidated Capital
Expenditures in an amount in excess of (a) $14,500,000 at any time
during its fiscal year ending on or about June 30, 1999, (b)
$10,000,000 at any time during its fiscal year ending on or about June
30, 2000 and (b) $8,000,000 at any time during its fiscal year ending
on or about June 30, 2001 or during any fiscal year ending thereafter.
Section 8.17 Consolidated Tangible Net Worth. At any time
permit Consolidated Tangible Net Worth to be less than (a) at any time
during the period from and including January 1, 1999 to the date of
consummation of First Amendment hereto to but excluding June 30, 1999,
$8,750,000, (b) as at June 30, 1999, $11,500,000 and (c) from and after
June 30, 1999, the greater of (i) $11,500,000 or (b) 0.95 times the
actual Consolidated Tangible Net Worth as of the last day of the most
recently-ended fiscal year of the Borrower.
Section 8.18 Consolidated Leverage Ratio. At any time permit
the Consolidated Leverage Ratio to be greater than (a) 4.00 to 1.00 at
any time during the period from the date of consummation of the First
Amendment hereto to and including June 29, 1999, (b) 3.00 to 1.00 at
any time during the period from June 30, 1999 to and including June 29,
2000 and (c) 2.00 to 1.00 at any time from and after June 30, 2000.
Section 8.19 Operating Cash Flow Leverage. At any time permit
the ratio of the Borrower's consolidated interest-bearing Indebtedness
as of the last day of any quarter to its Consolidated Operating Income
for the period of four consecutive fiscal quarters to be greater than
(a) 5.00 to 1.00 as of January 1, 1999 and March 31, 1999 and (b) 2.00
to 1.00 as of June 30, 1999 and the last day of each fiscal quarter
occurring thereafter. With respect to months that end on or before
January 31, 1999, the relevant components of the forgoing ratio shall
be calculated on a pro forma basis.
Section 8.20 Fixed Charge Coverage Ratio. Permit the
Consolidated Fixed Charge Coverage Ratio for any period of four
consecutive fiscal quarters to be less than (a) 1.20 to 1.00 for the
four fiscal quarters ended on June 30, 1999 and (b) 1.50 to 1.00 for
the four fiscal quarters ended on the last day of any fiscal quarter
occurring from and after June 30, 1999. With respect to months that end
on or before January 31, 1999, the relevant components of the forgoing
ratio shall be calculated on a pro forma basis.
2.16 New Negative Covenants. The following is added as new Sections
8.21, 8.22, 8.23, 8.24 and 8.25 of the Credit Agreement:
Section 8.21 Software Capital Expenditures. Make aggregate
consolidated Software Capital Expenditures in an amount in excess of
(a) $9,500,000 at any time during its fiscal year ending on or about
June 30, 1999, (b) $8,000,000 at any time during its fiscal year ending
on or about June 30, 2000 and (c) $6,000,000 at any time during its
fiscal year ending on or about June 30, 2001 or during any fiscal year
ending thereafter.
Section 8.22 Minimum Statutory Net Worth. At any time permit
HRMPA to maintain Statutory Net Worth which is less than the minimum
net worth prescribed by any Insurance Regulatory Authority or any
Applicable Insurance Code.
Section 8.23 Reinsurance and Other Contracts.
(a) At any time enter into, nor permit any of its Subsidiaries
to enter into, Surplus Reinsurance Agreements except those
treaties existing on the date of this Agreement (which
treaties shall not be materially amended without the written
consent of the Bank).
(b) At any time permit, nor permit any of its Subsidiaries to,
materially default under or make any material change or
modification to the Healthchoices Contract, the Administrative
Services Agreement, any Surplus Reinsurance Agreement or any
Reinsurance Agreement.
Section 8.24 Acquisition Documents. Default under any of the
Acquisition Documents, nor agree to any amendment, modification,
cancellation, or termination of any Acquisition Document.
Section 8.25 Commercial Membership Requirements. At any time
fail to maintain, or cause any Subsidiary to fail to maintain, a valid
and enforceable waiver of the commercial membership requirements set
forth in the regulations of the Health Care Financing Administration,
if such waiver is required by such regulations.
2.17 Exhibit of Licenses. Exhibit I to the Credit Agreement is hereby
added to read as set forth on Exhibit A attached to this Amendment.
2.18 Exhibit of Reinsurance Agreements. Exhibit J to the Credit
Agreement is hereby added to read as set forth on Exhibit B attached to this
Amendment
2.19 New Revolving Note. Exhibit A to the Credit Agreement is hereby
amended to read as set forth on Exhibit C attached to this Amendment.
2.20 New Term Note. Exhibit B to the Credit Agreement is hereby added
to read as set forth on Exhibit D attached to this Amendment which Exhibit
amends and restates Exhibits B-1, 2 and 3 of the Credit Agreement.
Section 3. Effectiveness of Amendments. The amendments contained in
this Amendment shall become effective upon delivery by the Borrower of, and
compliance by the Borrower with, the following:
3.1 This Amendment, the Revolving Note and Term Note, each
duly executed by the Borrower.
3.2 A copy of the resolutions of the Board of Directors of the
Borrower authorizing the execution, delivery and performance of this
Amendment, the Revolving Note and the Term Note certified as true and
accurate by its Secretary or Assistant Secretary, along with a
certification by such Secretary or Assistant Secretary (i) certifying
that there has been no amendment to the Articles of Incorporation or
Bylaws of the Borrower since true and accurate copies of the same were
previously delivered to the Bank, and (ii) identifying each officer of
the Borrower authorized to execute this Amendment, the Revolving Note
and the Term Note and any other instrument or agreement executed by the
Borrower in connection with this Amendment (collectively, the
"Amendment Documents"), and certifying as to specimens of such
officer's signature and such officer's incumbency in such offices as
such officer holds.
3.3 Certified copies of all documents evidencing any necessary
corporate action, consent or governmental or regulatory approval (if
any) with respect to this Amendment, including without limitation,
copies of the Certificate of Good Standing and all Licenses for HRMPA
from the appropriate Insurance Regulatory Authority.
3.4 Reaffirmations of Security Agreement in the forms of
Exhibits E-1, E-2 and E-3, duly executed by the corporations indicated
therein.
3.5 An opinion of Xxxxxxxx Xxxxxxxxx, special Pennsylvania
regulatory counsel to the Borrower in form and substance acceptable to
the Bank, duly executed by said counsel.
3.6 An opinion of the Borrower's and Subsidiaries' in-house
General Counsel in form and substance acceptable to the Bank, duly
executed by such counsel.
3.7 Good standing certificates for the Borrower and
corporations executing Exhibits E-1, E-2 and E-3 from the State
Minnesota issued not more than 10 days prior to the date of this
Amendment.
3.8 UCC searches for the Borrower and the corporations
executing Exhibits E-1, E-2 and E-3 from the State of Minnesota issued
not more than 10 days prior to the date of this Amendment.
3.9 The Bank shall have received a non-refundable amendment
fee in the amount of $107,581.
3.10 Copies of the Acquisition Documents, including all
amendments thereof and supplements thereto, all of which shall be in
form and substance satisfactory to the Bank.
3.11 A Solvency Certificate of the Borrower in the form of
Exhibit F hereto, duly executed by the Secretary of the Borrower,
together with copies of the Projections and Closing Date Balance Sheet
referred to therein.
3.12 A certificate of the chief financial officer of the
Borrower certifying that:
(i) The Purchase Agreement, in the form delivered to
the Bank, remains in full force and effect, without
modification or amendment and embodies the entire Agreement
and understanding between the parties thereto with respect to
the matters therein;
(ii) All conditions to the closing of the Acquisition
and the Purchase Agreement shall be satisfied and the
Acquisition Agreement has not been terminated and remains in
full force and effect;
(iii) True and accurate copies of all outstanding
Reinsurance Agreements and Surplus Reinsurance Agreements have
been attached to such Certificate and previously supplied to
the Bank and remain in full force and effect.
3.13 HRMPA shall have received the net proceeds from an
advance ceding allowance by reinsurance companies to HRMPA in amounts
and containing terms and conditions in all respects satisfactory to the
Bank.
3.14 The Borrower shall have paid in cash $2,087,500 of the
purchase price in connection with the Acquisition from funds of the
Borrower other than the proceeds of any Loan.
3.15 The Borrower shall have satisfied such other conditions
as specified by the Bank, including payment of all unpaid legal fees
and expenses incurred by the Bank through the date of this Amendment in
connection with the Credit Agreement and the Amendment Documents.
Section 4 Defaults and Waivers.
4.1 Events of Default and Unmatured Events of Default.
(a) Consolidated Tangible Net Worth. The Borrower
defaulted under Section 8.17 of the Credit Agreement by
permitting its Consolidated Tangible Net Worth to be less than
the amounts set forth therein for the period ended December
31, 1998.
(b) Consolidated Leverage Ratio. The Borrower
defaulted under Section 8.18 of the Credit Agreement by
permitting the ratio of the Borrower's consolidated total
liabilities (as determined in accordance with GAAP) to
Consolidated Tangible Net Worth to be greater than 2.50 to
1.00 as at December 31, 1998.
(c) Consolidated Cash Flow Leverage. The Borrower
defaulted under Section 8.19 of the Credit Agreement by
permitting the ratio of the Borrower's consolidated
interest-bearing Indebtedness as of December 31, 1998 to its
Consolidated Operating Income for the period of four
consecutive fiscal quarters ending on that date to be greater
than 3.00 to 1.00.
(d) Fixed Charge Coverage Ratio. The Borrower
defaulted under Section 8.20 of the Credit Agreement by
permitting the Consolidated Fixed Charge Coverage Ratio for
the period of four consecutive fiscal quarters ended on
December 31, 1998 to be less than 1.50 to 1.00.
4.2 Waiver. Upon the date on which this Amendment becomes
effective, the Bank hereby waives the Borrower's Defaults and Events of
Default described in the preceding Sections 4.1(a) through 4.1(d) (the
"Existing Defaults"). The waiver of the Existing Defaults set forth
above is limited to the express terms thereof, and nothing herein shall
be deemed a waiver by the Bank of any other term, condition,
representation or covenant applicable to the Borrower under the Credit
Agreement (including but not limited to any future occurrence similar
to the Existing Defaults) or any of the other agreements, documents or
instruments executed and delivered in connection therewith, or of the
covenants described therein. The waivers set forth herein shall not
constitute a waiver by the Bank of any other Default or Event of
Default, if any, under the Credit Agreement, and shall not be, and
shall not be deemed to be, a course of action with respect thereto upon
which the Borrower may rely in the future, and the Borrower hereby
expressly waives any claim to such effect.
Section 5. Representations, Warranties, Authority, No Adverse Claim.
5.1 Reassertion of Representations and Warranties, No Default. The
Borrower hereby represents that on and as of the date hereof and after giving
effect to this Amendment (a) all of the representations and warranties contained
in the Credit Agreement are true, correct and complete in all respects as of the
date hereof as though made on and as of such date, except for changes permitted
by the terms of the Credit Agreement, and (b) there will exist no Default or
Event of Default under the Credit Agreement as amended by this Amendment on such
date which has not been waived by the Bank.
5.2 Authority, No Conflict, No Consent Required. The Borrower
represents and warrants that the Borrower has the power and legal right and
authority to enter into the Amendment Documents and has duly authorized as
appropriate the execution and delivery of the Amendment Documents and other
agreements and documents executed and delivered by the Borrower in connection
herewith or therewith by proper corporate, and none of the Amendment Documents
nor the agreements contained herein or therein contravene or constitute a
default under any agreement, instrument or indenture to which the Borrower is a
party or a signatory or a provision of the Borrower's Articles of Incorporation,
Bylaws or any other agreement or requirement of law, or result in the imposition
of any lien on any of its property under any agreement binding on or applicable
to the Borrower or any of its property except, if any, in favor of the Bank. The
Borrower represents and warrants that no consent, approval or authorization of
or registration or declaration with any person, including but not limited to any
governmental authority, is required in connection with the execution and
delivery by the Borrower of the Amendment Documents or other agreements and
documents executed and delivered by the Borrower in connection therewith or the
performance of obligations of the Borrower therein described, except for those
which the Borrower has obtained or provided and as to which the Borrower has
delivered certified copies of documents evidencing each such action to the Bank.
5.3 No Adverse Claim. The Borrower warrants, acknowledges and agrees
that no events have been taken place and no circumstances exist at the date
hereof which would give the Borrower a basis to assert a defense, offset or
counterclaim to any claim of the Bank with respect to the Borrower's obligations
under the Credit Agreement as amended by this Amendment.
Section 6. Affirmation of Credit Agreement, Further References,
Affirmation of Security Interest. The Bank and the Borrower each acknowledge and
affirm that the Credit Agreement, as hereby amended, is hereby ratified and
confirmed in all respects and all terms, conditions and provisions of the Credit
Agreement, except as amended by this Amendment, shall remain unmodified and in
full force and effect. All references in any document or instrument to the
Credit Agreement are hereby amended and shall refer to the Credit Agreement as
amended by this Amendment. The Borrower confirms to the Bank that the Borrower's
obligations under the Credit Agreement, as amended by this Amendment are and
continue to be secured by the security interest granted by the Borrower in favor
of the Bank under the Security Agreement, and all of the terms, conditions,
provisions, agreements, requirements, promises, obligations, duties, covenants
and representations of the Borrower under such documents and any and all other
documents and agreements entered into with respect to the obligations under the
Credit Agreement are incorporated herein by reference and are hereby ratified
and affirmed in all respects by the Borrower.
Section 7. Merger and Integration, Superseding Effect. This Amendment,
from and after the date hereof, embodies the entire agreement and understanding
between the parties hereto and supersedes and has merged into this Amendment all
prior oral and written agreements on the same subjects by and between the
parties hereto with the effect that this Amendment, shall control with respect
to the specific subjects hereof and thereof.
Section 8. Severability. Whenever possible, each provision of this
Amendment and the other Amendment Documents and any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto or thereto
shall be interpreted in such manner as to be effective, valid and enforceable
under the applicable law of any jurisdiction, but, if any provision of this
Amendment, the other Amendment Documents or any other statement, instrument or
transaction contemplated hereby or thereby or relating hereto or thereto shall
be held to be prohibited, invalid or unenforceable under the applicable law,
such provision shall be ineffective in such jurisdiction only to the extent of
such prohibition, invalidity or unenforceability, without invalidating or
rendering unenforceable the remainder of such provision or the remaining
provisions of this Amendment, the other Amendment Documents or any other
statement, instrument or transaction contemplated hereby or thereby or relating
hereto or thereto in such jurisdiction, or affecting the effectiveness, validity
or enforceability of such provision in any other jurisdiction.
Section 9. Successors. The Amendment Documents shall be binding upon
the Borrower and the Bank and their respective successors and assigns, and shall
inure to the benefit of the Borrower and the Bank and the successors and assigns
of the Bank.
Section 10. Legal Expenses. As provided in Section 10.2 of the Credit
Agreement, the Borrower agrees to reimburse the Bank, upon execution of this
Amendment, for all reasonable out-of-pocket expenses (including attorneys' fees
and legal expenses of Xxxxxx & Whitney LLP, counsel for the Bank) incurred in
connection with the Credit Agreement, including in connection with the
negotiation, preparation and execution of the Amendment Documents and all other
documents negotiated, prepared and executed in connection with the Amendment
Documents, and in enforcing the obligations of the Borrower under the Amendment
Documents, and to pay and save the Bank harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution or
delivery of the Amendment Documents, which obligations of the Borrower shall
survive any termination of the Credit Agreement.
Section 11. Headings. The headings of various sections of this
Amendment have been inserted for reference only and shall not be deemed to be a
part of this Amendment.
Section 12. Counterparts. The Amendment Documents may be executed in
several counterparts as deemed necessary or convenient, each of which, when so
executed, shall be deemed an original, provided that all such counterparts shall
be regarded as one and the same document, and either party to the Amendment
Documents may execute any such agreement by executing a counterpart of such
agreement.
Section 13. Governing Law. THE AMENDMENT DOCUMENTS SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAW PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS, THEIR HOLDING COMPANIES AND THEIR AFFILIATES.
[The remainder of this page has been intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date and year first above written.
BORROWER:
HEALTH RISK MANAGEMENT, INC.
By:
Title:
BANK:
U.S. BANK NATIONAL ASSOCIATION
By:
Title:
EXHIBIT A TO FIRST AMENDMENT
TO CREDIT AGREEMENT
EXHIBIT I
INSURANCE LICENSES
Oxford Health Plans (PA), Inc. f/k/a Oak Tree Health Plan of Pennsylvania, Inc.
Certificate of Authority to Operate a Health Maintenance Organization dated,
September 22, 1993.
EXHIBIT B TO FIRST AMENDMENT
TO CREDIT AGREEMENT
EXHIBIT J
REINSURANCE
Oxford Health Plans (PA), Inc.
1. Treaty Summary for Fully Insured MEDICAID Program effective January 1, 1999
between Oxford Health Plans (PA), Inc. and Reassurance Company of Hannover
signed January 19, 1999
1. Stop Loss and Insolvency Insurance to be provided upon finalization effective
January 1, 1999. Pennsylvania HRM, Inc./Health Risk Management, Inc.
1. HealthCare Excess Risk Insurance Policy - Schedule of Insurance - Aggregate
Policy #hc1001 between Pennsylvania HRM, Inc. (Health Risk Management, Inc.
and Kentucky Medical Insurance Company effective 4/13/98 and expiration
date January 1, 1999.
EXHIBIT C TO FIRST AMENDMENT
TO CREDIT AGREEMENT
AMENDED AND RESTATED REVOLVING NOTE
$6,000,000 Minneapolis, Minnesota: January 27, 1999
FOR VALUE RECEIVED, the undersigned HEALTH RISK MANAGEMENT, INC., a Minnesota
corporation (the "Borrower"), promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION, a national banking association (the "Bank"), on the Revolving
Termination Date, or other due date or dates determined under the Credit
Agreement hereinafter referred to, the principal sum of SIX MILLION DOLLARS
($6,000,000), or if less, the then aggregate unpaid principal amount of the
Revolving Loans (as such terms are defined in the Credit Agreement) as may be
borrowed by the Borrower under the Credit Agreement. All Loans and all payments
of principal shall be recorded by the holder in its records which records shall
be conclusive evidence of the subject matter thereof, absent manifest error.
The Borrower further promises to pay to the order of the Bank interest on the
aggregate unpaid principal amount hereof from time to time outstanding from the
date hereof until paid in full at the rates per annum which shall be determined
in accordance with the provisions of the Credit Agreement. Accrued interest
shall be payable on the dates specified in the Credit Agreement.
All payments of principal and interest under this Note shall be made in lawful
money of the United States of America in immediately available funds at the
Bank's office at 000 0xx Xxx. X., Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, or at such
other place as may be designated by the Bank to the Borrower in writing.
This Note (a) is the Revolving Note referred to in, and evidences indebtedness
incurred under, an Amended and Restated Revolving Credit and Term Loan Agreement
dated as of May 1, 1998 (herein, as it may be amended, modified or supplemented
from time to time, called the "Credit Agreement") between the Borrower and the
Bank, to which Credit Agreement reference is made for a statement of the terms
and provisions thereof, including those under which the Borrower is permitted
and required to make prepayments and repayments of principal of such
indebtedness and under which such indebtedness may be declared to be immediately
due and payable and (b) amends and restates, but does not constitute payment
upon or a novation of, (i) that certain Revolving Note dated May 1, 1998 from
the Borrower to the Bank in the amount of $10,000,000 and (ii) that certain
Revolving Note dated December 30, 1996 from the Borrower to the Bank in the
original principal amount of $1,275,000. All parties hereto, whether as makers,
endorsers or otherwise, severally waive presentment, demand, protest and notice
of dishonor in connection with this Note.
This Note is made under and governed by the internal laws of the State of
Minnesota.
HEALTH RISK MANAGEMENT, INC.
By:
Title:
EXHIBIT D TO FIRST AMENDMENT
TO CREDIT AGREEMENT
CONSOLIDATED AMENDED AND RESTATED TERM NOTE
$6,294,916 Minneapolis, Minnesota: January 27, 1999
FOR VALUE RECEIVED, the undersigned HEALTH RISK MANAGEMENT, INC., a Minnesota
corporation (the "Borrower"), promises to pay to the order of U.S. BANK NATIONAL
ASSOCIATION, a national banking association (the "Bank"), the principal sum of
SIX MILLION TWO HUNDRED NINETY FOUR THOUSAND NINE HUNDRED SIXTEEN AND NO/100
DOLLARS ($6,294,916), payable in consecutive installments of $175,000.00 each,
payable on the last day of each month of each year, commencing with the first
such date to occur after the date hereof, with the final such payment, equal to
all principal outstanding hereunder, payable on January 31, 2002.
The Borrower further promises to pay to the order of the Bank interest on the
aggregate unpaid principal amount hereof from time to time outstanding from the
date hereof until paid in full at the rates per annum which shall be determined
in accordance with the provisions of the Credit Agreement (as hereinafter
defined). Accrued interest shall be payable on the dates specified in the Credit
Agreement.
All payments of principal and interest under this Note shall be made in lawful
money of the United States of America in immediately available funds at the
Bank's office at 000 0xx Xxx. X., Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, or at such
other place as may be designated by the Bank to the Borrower in writing.
This Note (a) is the Term Note referred to in, and evidences indebtedness
incurred under, an Amended and Restated Credit and Term Loan Agreement dated as
of May 1, 1998 (herein, as it may be amended, modified or supplemented from time
to time, called the "Credit Agreement") between the Borrower and the Bank, to
which Credit Agreement reference is made for a statement of the terms and
provisions thereof, including those under which the Borrower is permitted and
required to make prepayments and repayments of principal of such indebtedness
and under which such indebtedness may be declared to be immediately due and
payable and (b) consolidates, amends and restates, but does not constitute
payment upon or a novation of (i) that certain Term Note (Tranche B Term Loans)
dated May 1, 1998 from the Borrower to the Bank in the amount of $654,999.85 and
(ii) that certain Term Note (Tranche C Term Loans) dated May 1, 1998 in the
amount of $2,566,666.66.
All parties hereto, whether as makers, endorsers or otherwise, severally waive
presentment, demand, protest and notice of dishonor in connection with this
Note.
This Note is made under and governed by the internal laws of the State of
Minnesota.
HEALTH RISK MANAGEMENT, INC.
By:
Title:
EXHIBIT E-1 TO FIRST AMENDMENT
TO CREDIT AGREEMENT
REAFFIRMATION OF SECURITY AGREEMENT
January 27, 1999
U.S. Bank National Association
U.S. Bank Place - MPFP0907
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Re: Security Agreement Executed by the Undersigned dated June 24, 1994,
(the "Security Agreement") Regarding the Liabilities (as defined in the
Security Agreement) of Health Risk Management, Inc. (the "Borrower") to
U.S. Bank National Association (the "Bank")
This will confirm (a) that the undersigned hereby consents to the terms of that
First Amendment to Credit Agreement dated concurrently herewith by and between
the Borrower and the Bank (the "Amendment") and to the execution and delivery of
the Amendment by the Borrower and (b) that the obligations of the Borrower to
the Bank under the Amended and Restated Revolving Credit and Term Loan Agreement
dated as of May 1, 1998, as amended by the Amendment, constitute "Liabilities"
of the Borrower to the Bank within the meaning of the above-referenced Security
Agreement. This will further confirm that as modified by clause (b) of the
immediately preceding sentence, all of the terms, covenants and conditions of
the Security Agreement remain in full force and effect.
INSTITUTE FOR HEALTHCARE QUALITY,
INC., a Minnesota corporation
By:
Its:
EXHIBIT E-2 TO FIRST AMENDMENT
TO CREDIT AGREEMENT
REAFFIRMATION OF SECURITY AGREEMENT
January 27, 1999
U.S. Bank National Association
U.S. Bank Place - MPFP0907
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Re: Security Agreement Executed by the Undersigned dated June 24, 1994,
(the "Security Agreement") Regarding the Liabilities (as defined in the
Security Agreement) of Health Risk Management, Inc. (the "Borrower") to
U.S. Bank National Association (the "Bank")
This will confirm (a) that the undersigned hereby consents to the terms of that
First Amendment to Credit Agreement dated concurrently herewith by and between
the Borrower and the Bank (the "Amendment") and to the execution and delivery of
the Amendment by the Borrower and (b) that the obligations of the Borrower to
the Bank under the Amended and Restated Revolving Credit and Term Loan Agreement
dated as of May 1, 1998, as amended by the Amendment, constitute "Liabilities"
of the Borrower to the Bank within the meaning of the above-referenced Security
Agreement. This will further confirm that as modified by clause (b) of the
immediately preceding sentence, all of the terms, covenants and conditions of
the Security Agreement remain in full force and effect.
HEALTH RESOURCE MANAGEMENT, LTD,
an Alberta, Canada corporation
By:
Its:
EXHIBIT E-3 TO FIRST AMENDMENT
TO CREDIT AGREEMENT
REAFFIRMATION OF SECURITY AGREEMENT
January 27, 1999
U.S. Bank National Association
U.S. Bank Place - MPFP0907
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Re: Security Agreement Executed by the Undersigned dated June 24, 1994,
(the "Security Agreement") Regarding the Liabilities (as defined in the
Security Agreement) of Health Risk Management, Inc. (the "Borrower") to
U.S. Bank National Association (the "Bank")
This will confirm (a) that the undersigned hereby consents to the terms of that
First Amendment to Credit Agreement dated concurrently herewith by and between
the Borrower and the Bank (the "Amendment") and to the execution and delivery of
the Amendment by the Borrower and (b) that the obligations of the Borrower to
the Bank under the Amended and Restated Revolving Credit and Term Loan Agreement
dated as of May 1, 1998, as amended by the Amendment, constitute "Liabilities"
of the Borrower to the Bank within the meaning of the above-referenced Security
Agreement. This will further confirm that as modified by clause (b) of the
immediately preceding sentence, all of the terms, covenants and conditions of
the Security Agreement remain in full force and effect.
HRM CLAIM MANAGEMENT, INC., a
Minnesota corporation
By:
Its:
