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EXHIBIT 10.35
FOURTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this
"Amendment") dated as of March 13, 1998 is made between APRIA HEALTHCARE GROUP
INC., a corporation organized and existing under the laws of the State of
Delaware ("Apria") and the Subsidiaries of Apria identified on the signature
pages of this Amendment and any Subsidiary of Apria that, subject to Section
9.13 of the Credit Agreement, shall have executed a Joinder Agreement (Apria and
such Subsidiaries are each referred to individually as a "Borrower" and,
collectively, as the "Borrowers"), each of the financial institutions listed on
Schedule I to the Credit Agreement or that, pursuant to Section 13.4 of the
Credit Agreement, shall become a "Bank" thereunder (individually, a "Bank" and,
collectively, the "Banks"), NATIONSBANK OF TEXAS, N.A., as the Syndication
Agent, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as the
Administrative and Collateral Agent ("Administrative and Collateral Agent").
RECITALS
I. The Borrowers, the Banks, the Syndication Agent and the
Administrative and Collateral Agent are parties to the Credit Agreement dated as
of August 9, 1996, as amended by the First Amendment to Credit Agreement dated
as of April 22, 1997 (the "First Amendment"), the Second Amendment to Credit
Amendment dated as of August 8, 1997 (the "Second Amendment") and the Third
Amendment to Credit Agreement and Waiver, dated as of January 30, 1998, as
modified by the Consent dated February 26, 1998 (the "Third Amendment"),
pursuant to which the Banks extended certain credit to the Borrowers (the
"Credit Agreement").
II. The Borrowers previously provided notice to the Administrative and
Collateral Agent and the Banks pursuant to Section 9.1(e) of the Credit
Agreement that an Event of Default has occurred and is continuing under the
Credit Agreement as a result of the Borrowers' breach of the provisions of
Sections 10.9, 10.10 and 10.11 of the Credit Agreement (the "Existing
Defaults").
III. The Borrowers and the Banks, at the Borrower's request, entered
into the Third Amendment pursuant to which the Banks agreed during the Waiver
Period (as defined in Section 6.1 of the Third Amendment) to (a) temporarily
waive, for limited purposes, the Defaults existing as a result of the breach of
Sections 10.9 and 10.10 of the Credit Agreement and (b) continue to permit
limited Borrowings under the Credit Agreement and allow the Borrowers to
continue Loans as, or convert Loans to, Eurodollar Loans during the Waiver
Period.
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IV. Subsequent to the execution and delivery of the Third Amendment,
Xxxxxx Xxxxxxxxxx & Xxxx ("JLL") and CIBC WG Argosy Merchant Fund 2 LLC ("CIBC")
agreed to make an equity investment in Apria (the "JLL/CIBC Investment")
pursuant to the Stock Purchase Agreement and the Stockholder Agreement, each
dated as of February 3, 1998, between, among others, JLL, CIBC and Apria.
V. The Borrowers have requested that the Banks agree to extend the
Waiver Period until June 30, 1998, to provide sufficient time to consummate the
JLL/CIBC Investment.
VI. The Borrowers have agreed in consideration of the extension of the
Waiver Period (and the initial Waiver Period as provided in the Third Amendment)
to (i) grant the Administrative and Collateral Agent, for the benefit of the
Banks, a security interest in all of their personal property assets to secure
the Obligations, (ii) amend certain provisions of the Credit Agreement and (iii)
use their best efforts and negotiate in good faith to resyndicate the credit
facilities in connection with the consummation of the JLL/CIBC Investment by
June 30, 1998 or, in the event the JLL/CIBC Investment is not consummated,
restructure the Credit Agreement as the Banks shall reasonably request by June
30, 1998.
VII. The Borrowers have advised the Agent that (a) Protocare of
Metropolitan New York, Inc., a Borrower under the Credit Agreement has merged
with and into Apria Healthcare, Inc., also a Borrower under the Credit
Agreement, (b) Apria Number One, Inc., has changed its name to ApriaCare
Management Systems, Inc., and (c) Homedco of New York State, Inc., has changed
its name to Apria Healthcare of New York State, Inc. and have requested that the
Credit Documents reflect the foregoing.
VIII. The Borrowers have requested that the Credit Agreement be
amended to reflect the foregoing.
IX. The Required Banks are willing to accommodate the requests of the
Borrowers on the terms and conditions specified in this Amendment.
AGREEMENT
In consideration of the foregoing premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrowers and the Banks agree as follows:
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1. Defined Terms. Capitalized terms used but not defined in this
Amendment shall have the respective meanings assigned to such terms in the
Credit Agreement. In addition, the following terms shall have the following
meanings:
"Extended Waiver Period" shall mean the period beginning on the date
of this Amendment and ending on the earlier of (i) June 30, 1998, (ii) the
occurrence or disclosure of any Default or Event of Default (other than the
Existing Defaults), (iii) Apria's knowledge that (a) the aggregate amount of the
0000 Xxxxxx Xxxxxxx Charges and Reserves is likely to be in excess of
$225,000,000, or (b) the tangible portion of the 0000 Xxxxxx Xxxxxxx Charges and
Reserves is or is likely to be in excess of $85,000,000, of which knowledge
Apria shall immediately notify the Administrative and Collateral Agent and (iv)
the termination of the JLL/CIBC Investment (provided that the Borrowers shall
have 30 days (but in no event later than June 30, 1998) to cure such default) or
the failure of the JLL/CIBC Investment to be consummated by June 30, 1998.
"1997 Fourth Quarter Charges and Reserves" shall mean any and all
reserves, charges and adjustments made or taken by Apria in the fourth quarter
of its 1997 fiscal year.
2. Amendment to Section 1.1.
(a) The following definitions are hereby added to Section 1.1 of the
Credit Agreement in the appropriate alphabetical order:
"Authorized Company Employees" shall mean employees of Apria
designated in writing to the Agent as such from time to time by the chief
financial officer or the treasurer of Apria, and as to whom the Company has
provided to the Administrative and Collateral Agent a certificate of the
Secretary or Assistant Secretary of Apria certifying that the Board of
Directors of Apria has delegated such authority to the chief financial
officer or the treasurer, as the case may be, of Apria.
"CIBC" shall mean CIBC WG Argosy Merchant Fund 2 LLC.
"Confirmation of Security Agreement" shall mean the Confirmation
of Security Agreement, dated as of March 13, 1998, by Apria, to be filed
with the Patent and Trademark Office.
"JLL" shall mean Xxxxxx Xxxxxxxxxx & Xxxx.
"JLL/CIBC Investment" shall mean the agreement by
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JLL and CIBC to make an equity investment in Apria in an amount not less
than $172,200,000 pursuant to the Stock Purchase Agreement and the
Stockholder Agreement.
"Security Agreement" shall mean the Security Agreement, dated as
of March 13, 1998, among the Borrowers and the Administrative and
Collateral Agent.
"Security Documents" shall mean, collectively, the Security
Agreement, the Confirmation of Security Agreement, all Uniform Commercial
Code financing statements and all other filings or recordings with any
Governmental Authority required by the Administrative and Collateral Agent
in connection with this Agreement or the Security Agreement.
"Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of February 3, 1998, between, among others, JLL, CIBC
and Apria.
"Stockholder Agreement" shall mean the Stockholder Agreement,
dated as of February 3, 1998, between, among others, JLL, CIBC and Apria.
(b) The defined term "Administrative Agent" is hereby replaced
throughout the Credit Agreement with the defined term "Administrative and
Collateral Agent" and shall read as follows:
"Administrative and Collateral Agent" shall mean BofA in its
capacity as Administrative and Collateral Agent for the Banks under this
Agreement, and shall include any successor to the Administrative and
Collateral Agent appointed pursuant to Section 12.9.
(c) The definition of "Credit Documents" in Section 1.1 of the Credit
Agreement is hereby amended by adding "the Security Documents," after the word
"Note," on the second line of such definition.
(d) The definition of "Permitted Senior Subordinated Notes" in Section
1.1 of the Credit Agreement is hereby deleted in its entirety.
3. Amendment to Article 2. Article 2 of the Credit Agreement is hereby
amended by adding at the end thereof the following new Section 2.15:
"2.15 Notices of Borrowing; Notices of
Conversion; Authorized Employees. Notices of Borrowing
and Notices of Conversion shall only be executed by
officers of Apria or Authorized Employees.
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4. Amendment to Section 8.3. Section 8.3 of the Credit Agreement is
hereby amended to add the following parenthetical at the end of the tenth line
of such section:
"(except for the Liens created pursuant to the Security Documents)"
5. Amendment to Section 8.4. Section 8.4 of the Credit Agreement is
hereby amended in its entirety to read as follows:
"Other than filings and recordings required to be made in respect
of the Liens created pursuant to the Security Documents, no material
order, consent, approval, license, authorization or validation of, or
filing, recording or registration with (except as have been obtained
or made prior to the Initial Borrowing Date), or exemption by, any
Governmental Authority is required (i) to authorize the execution,
delivery and performance of any Credit Document by any Credit Party or
(ii) to establish the legality, validity, binding effect or
enforceability of any such Credit Document against such Credit Party."
6. Amendment to Section 9.1. Section 9.1 of the Credit Agreement is
hereby amended by adding at the end thereof the following new paragraph:
(e) Monthly Financial Statements. Within 10 days after the close of
each monthly accounting period in each fiscal year of Apria, (i) the
consolidated balance sheet of Apria and its Subsidiaries as at the end of
such monthly period and the related consolidated statements of income,
retained earnings and cash flow, (ii) pro forma statements of cash flow,
including sources and uses of cash, for Apria and its Subsidiaries for the
next succeeding three month period, in form and substance reasonably
satisfactory to the Administrative and Collateral Agent and the Required
Banks and (iii) the percentage of Specified Assets located in the Filing
States.
7. Amendment to Section 10.1. Section 10.1 of the Credit Agreement is
hereby amended by deleting the word "and" at the end of clause (x), deleting the
period at the end of clause (xi) and replacing it with "; and" and inserting the
following as a new clause (xii):
"(xii) Liens created pursuant to the Security Documents."
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8. Amendment to Section 10.5. Section 10.5 of the Credit Agreement is
hereby amended by (a) deleting the parenthetical relating to refinancings of
Permitted Senior Subordinated Notes contained in Section 10.5(d), and (b)
deleting the term "Permitted Senior Subordinated Notes" contained in Section
10.5(h) and substituting the term "Senior Subordinated Notes" for such term.
9. Amendment to Article 11. Article 11 of the Credit Agreement is
hereby amended by adding at the end thereof the following new Sections 11.10 and
11.11.
"11.10 Security Documents. Except for an
expiration in accordance with its terms, any Security
Document shall be terminated or shall cease to be in
full force and effect, for whatever reason, or any of
the Credit Parties shall attempt to revoke any Security
Document."
"11.11 JLL/CIBC Investment. The termination of the JLL/CIBC
Investment (provided that the Borrowers shall have 30 days (but in no
event later than June 30, 1998) to cure such default) or the failure
of the JLL/CIBC Investment to be consummated by June 30, 1998."
10. Amendment to Section 13.13. Section 13.13(a) of the Credit
Agreement is hereby amended by adding the following words at the end of clause
(iv) of such section:
"or release any material portion of the Collateral (as defined in the
Security Agreement) other than the release of Collateral in connection with
any sale expressly permitted by the terms of any Credit Document".
11. Amendment to Notices. The address for notices to the
Administrative and Collateral Agent set forth on the signature pages to the
Credit Agreement is hereby deleted in its entirety, with the following
substituted therefor:
0000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxxxx Xxxxx
Agency Management Dept., 10831
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
12. Agreement Relating to Defaults.
(a) Temporary Waiver. Subject to the
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satisfaction of the conditions set forth in Section 17 of this Amendment
and so long as no Default or Event of Default (other than the Existing
Defaults) has occurred and is continuing, the Administrative and Collateral
Agent and the Banks agree that, except with respect to the provisions of
Sections 2.13, 9.13 (except as set forth in Section 10(e) of this
Amendment), 10.3, 10.12, 12.9 and 13.4, they shall waive their rights and
remedies with respect to the Existing Defaults during the Extended Waiver
Period, at the conclusion of which time such waiver shall terminate
automatically without any notice from or act by the Administrative and
Collateral Agent or the Banks, the Existing Defaults shall be reinstated
and the Administrative and Collateral Agent and the Banks shall be entitled
to exercise all rights and remedies with respect to the Existing Defaults.
Except to the extent expressly set forth in this Section 11, this Amendment
shall not limit or otherwise affect any rights that the Banks may have with
respect to any other or future Default or Event of Default by the Borrowers
and the Borrowers shall be bound to perform all their Obligations under the
Credit Agreement (other than with respect to the Existing Defaults during
the Extended Waiver Period), subject to the terms and conditions of the
Credit Agreement.
(b) Availability. The Banks hereby agree that during the Extended
Waiver Period, conditioned on (a) the Borrowers' compliance with all
provisions of the Credit Agreement (including Section 7.1, except with
respect to the Existing Defaults) and (b) the Administrative and Collateral
Agent's receipt of an opinion of counsel to the Borrowers, satisfactory in
form and substance to the Administrative and Collateral Agent, that the
incurrence of additional Indebtedness is permitted by the terms of the
Indenture, the Banks will make available to the Borrowers, in addition to
the Loans outstanding on the date of the Third Amendment, up to $20,000,000
(of which up to $3,000,000 may be used for Swingline Loans) of the
$450,000,000 Revolving Loan Commitment; provided that no new Letters of
Credit will be available.
(c) Default Interest. The Borrowers and the Banks hereby agree
that the amendment to Section 2.8(c) of the Credit Agreement set forth in
the Third Amendment shall not take effect until the expiration of the
Extended Waiver Period and shall only apply prospectively from such date.
(d) Eurodollar Loans. The Banks hereby agree that during the
Extended Waiver Period the Borrowers may (a) continue existing Eurodollar
Loans on the expiration of the Interest Period thereof to new Eurodollar
Loans or convert
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Base Rate Loans to Eurodollar Loans and (b) subject to Section 11(b) of
this Amendment make new Borrowings as Eurodollar Loans; provided that no
Interest Period may expire subsequent to June 30, 1998. The Banks hereby
agree that during the Extended Waiver Period, Interest Periods may be
shorter than the one month minimum set forth in the Credit Agreement, with
the duration of such Interest Periods to be agreed to by the Administrative
and Collateral Agent and the Borrowers.
(e) Permitted Transactions. During the Extended Waiver Period,
irrespective of the existence of the Existing Defaults, but conditioned
upon no other Default having occurred and being continuing, Apria may
effect Permitted Transactions in accordance with Section 9.13 of the Credit
Agreement; provided that (a) the aggregate consideration for all such
Permitted Transactions does not exceed $20,000,000 and (b) the aggregate
portion of the consideration consisting of cash or the assumption of
Indebtedness by Apria or any of its Subsidiaries does not exceed
$15,000,000.
13. Modification of Section 10.9 during the Extended Waiver Period.
During the Extended Waiver Period, compliance with Section 10.9 of the Credit
Agreement shall be determined as follows (provided that such calculations shall
not include the 0000 Xxxxxx Xxxxxxx Charges and Reserves):
Fiscal Quarter End Ratio
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March 31, 1998 2.10
June 30, 1998 1.75
14. Modification to Section 10.10 during the Extended Waiver Period.
During the Extended Waiver Period compliance with Section 10.10 of the Credit
Agreement shall be determined as follows:
"Apria will not permit its Consolidated Net Worth at the end of any fiscal
quarter (commencing with the fiscal quarter ending on March 31, 1998 ) to
be less than (a) an amount equal to 70% of its Consolidated Net Worth as of
December 31, 1997, plus (b) an amount equal to 50% of Consolidated Net
Income (in excess of zero) for each fiscal quarter commencing with the
fiscal quarter ending March 31, 1998, which amount shall be added to
Consolidated Net Worth as of the last day of each such fiscal quarter, plus
(c) 100% of the net proceeds of issuances of Apria Common Stock."
15. Modification to Section 10.11 during the Extended
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Waiver Period. During the Extended Waiver Period compliance with Section 10.11
of the Credit Agreement shall be determined as follows (provided that such
calculations shall not include the 0000 Xxxxxx Xxxxxxx Charges and Reserves):
"Apria will not permit the Consolidated Funded Indebtedness to Consolidated
EBITDA Ratio at the end of the fiscal quarter ended (a) March 31, 1998 to
be greater than 3.0 to 1 and (b) June 30, 1998 to be greater than 3.25 to
1."
16. Representations. Each of the Borrowers represents and warrants to
the Banks that:
(a) it has the corporate or partnership power to execute, deliver and
perform the terms and provisions of this Amendment and has taken all necessary
corporate or partnership action to authorize the execution, delivery and
performance by it of each of this Amendment and the Security Agreement;
(b) the representations and warranties contained in Section 8 of the
Credit Agreement are true and correct in all material respects as of the date of
this Amendment, except to the extent that a particular representation was made
as of a specific date, in which case such representation was true and correct as
of such date;
(c) except with respect to the Existing Defaults, no Default or Event
of Default has occurred and is continuing under the Credit Agreement; and
(d) the Accounts (as defined in the Security Agreement) of the
Borrowers, together with the tangible personal property assets of the Borrowers
located in California, Colorado, Connecticut, Florida, Indiana and Pennsylvania,
constitute not less than 60% (based on book value) of the total Accounts and
tangible personal property assets of the Borrowers (the "Specified Assets") of
the Borrowers.
(e) each of Apria and its Material Subsidiaries has duly executed and
delivered each of this Amendment and the Security Agreement and each of this
Amendment and the Security Agreement constitutes its legal, valid and binding
obligation enforceable in accordance with its respective terms, except as
enforceability may be limited by bankruptcy, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
17. Conditions Precedent. The effectiveness of this Amendment is
subject to the following:
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(a) the receipt by the Administrative and Collateral
Agent of the consent of the Required Banks;
(b) the receipt by the Administrative and Collateral Agent of this
Amendment, duly executed and delivered by each of the Borrowers;
(c) the receipt by the Administrative and Collateral Agent of a
Security Agreement substantially in the form of Exhibit A to this Amendment,
duly executed and delivered by each of the Credit Parties;
(d) the receipt by the Administrative and Collateral Agent of duly
executed UCC-1 financing statements naming the Borrowers as Debtors and the
Administrative and Collateral Agent as secured party for the states of
California, Colorado, Connecticut, Florida, Indiana and Pennsylvania;
(e) the receipt by the Administrative and Collateral Agent of the
Confirmation of Security Agreement, duly executed and delivered by Apria;
(f) the receipt by the Administrative and Collateral Agent of an
opinion of counsel to the Borrowers, satisfactory in form and substance to the
Administrative and Collateral Agent; and
(g) except with respect to the occurrence and continuance of the
Existing Defaults, each of the representations and warranties contained in
Section 8 of the Credit Agreement being true and correct in all material
respects as of the date of this Amendment with references to the Agreement being
references to the Agreement as amended by this Amendment.
18. Reference to and Effect on the Credit Agreement, Notes and
Guaranty.
(a) Except as specifically amended by this Amendment, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed.
(b) This Amendment shall be construed as one with the Credit
Agreement and the Credit Agreement shall, where the context requires, be read
and construed throughout so as to incorporate this Amendment.
(c) All documents executed in connection with the Credit
Agreement, including, but not limited to, the Notes and the Guaranty shall
remain in full force and effect and are hereby ratified and confirmed with
respect to the Credit Agreement, as amended hereby.
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(d) Notwithstanding anything to the contrary contained in this
Section 18, upon the expiration of the Extended Waiver Period, the text of the
provisions in this Amendment which were designated as amended only for the
duration of the Extended Waiver Period, shall read as originally set forth in
the Credit Agreement, as amended by the First Amendment, the Second Amendment
and the Third Amendment.
19. JLL/CIBC Investment. Nothing in this Amendment shall operate as
(a) the Banks' consent to the JLL/CIBC Investment or (b) a waiver of any
provision in the Credit Agreement prohibiting the JLL/CIBC Investment without
the Banks' consent pursuant to Section 13.13 of the Credit Agreement.
20. Entire Agreement. This Amendment, together with the Credit
Agreement and the other documents referred to in, or executed in connection
with, the Credit Agreement supersedes all prior agreements and understandings,
written or oral, among the parties with respect to the subject matter of this
Amendment.
21. Expenses. The Borrowers shall reimburse the Agents on demand for
all reasonable costs, expenses and charges (including, without limitation,
reasonable fees and charges of legal counsel and other consultants for the
Agents) incurred by the Agents in connection with the preparation, performance
or enforcement of this Amendment.
22. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of its parties and their respective successors and
permitted assigns.
23. Severability. Any provision of this Amendment that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Amendment and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
24. Captions. The captions and section headings appearing in this
Amendment are included solely for convenience of reference and are not intended
to affect the interpretation of any provision of this Amendment.
25. Counterparts. This Amendment may be executed in any number of
counterparts all of which when taken together shall constitute one and the same
instrument and any of the parties to this Amendment may execute this Amendment
by signing any such counterpart; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
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that all signatures are physically attached to the same document.
26. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF CALIFORNIA.
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IN WITNESS WHEREOF, the parties to this Amendment have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
APRIA HEALTHCARE GROUP INC.
APRIA HEALTHCARE, INC.
APRIACARE MANAGEMENT SYSTEMS, INC.
APRIA NUMBER TWO, INC.
APRIA HEALTHCARE OF NEW YORK STATE, INC.
By:-----------------------------------
Name: Xxxxx Xxxxxxx
Title:Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Administrative and Collateral Agent
By:------------------------------------
Name: Xxxxxxxxx Xxxxx
Title: Vice President
