EXHIBIT 10.13
FORM OF AMENDMENT NO. 1 TO CREDIT AGREEMENT
This AMENDMENT NO. 1 TO CREDIT AGREEMENT is made and
entered into as of July 30, 1998, by and among XXXXXX
RESPIRATORY CARE INC., a California corporation (the
"Borrower"), RIVER HOLDING CORP., a Delaware corporation
("Holding") and the Required Lenders (as defined in Article
I of the Credit Agreement).
RECITALS
A. The Borrower, Holding, the Lenders (as defined in Article I of the
Credit Agreement), Salomon Brothers Inc, and Bankers Trust Company, entered into
a Credit Agreement dated as of April 7, 1998 (the "Credit Agreement"), pursuant
to which the Borrower made negative covenants concerning its Debt/Adjusted
EBITDA Ratio and its Minimum EBITDA. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Credit
Agreement.
B. The Borrower requested an amendment to such negative covenants and to
certain definitions.
C. The Required Lenders are willing to so amend the Credit Agreement on
the terms and conditions set forth herein.
D. The Borrower, Holding and the Required Lenders are entering this
Amendment pursuant to Section 9.08(b) of the Credit Agreement.
AGREEMENTS
In consideration of the foregoing Recitals, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower, Holding and the Required Lenders agree as follows:
1. Definitions. (a) The following definitions as presented in Article I of
the Credit Agreement are amended in their entirety to read as follows:
"Consolidated Net Income" means, for any period, the net income (loss)
of the Borrower and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income (a) any net
income (loss) of any person (other than the Borrower) if such person is not
a Restricted Subsidiary, except that (i) subject to the exclusion contained
in clause (d), the Borrower's equity in the net income of any such person
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash distributed by such person during such period to
the Borrower or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (c)) and (ii) the
Borrower's equity in a net loss of any such person other than an
Unrestricted Subsidiary for such period shall be included in determining
such Consolidated Net Income, (b) for the purposes of Section 6.06 only,
any net income (loss) of any person acquired by the Borrower or any of its
consolidated Subsidiaries in a pooling of interests transaction for any
period prior to the date of such acquisition, (c) any net income (but not
loss) of any Restricted Subsidiary if such Restricted Subsidiary is subject
to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions, directly or indirectly, to the Borrower, except that subject
to the exclusion contained in clause (d), the Borrower's equity in the net
income of any such Restricted Subsidiary for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash
distributed by such Restricted Subsidiary during such period to the
Borrower or another Restricted Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to
another Restricted Subsidiary, to the limitation contained in this clause),
(d) any gain (but not loss) realized upon the sale or other disposition of
any Property of the Borrower or any of its consolidated Subsidiaries
(including pursuant to any Sale and Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business; provided,
that any tax benefit or tax liability resulting therefrom shall be excluded
in calculating such Consolidated Net Income, (e) any extraordinary gain or
loss; provided, that any tax benefit or tax liability resulting therefrom
shall be excluded in calculating such Consolidated Net Income, (f) the
cumulative effect of a change in accounting principles, (g) any non-cash
compensation expense realized for grants of performance shares, stock
options or other stock awards to officers, directors and employees of the
Borrower or any Restricted Subsidiary, (h) compensation expense realized
with respect to periods prior to the Closing Date in respect of payments
under the Borrower's 1994 Amended and Restated Equity Participation Plan,
(i) Contingent Acquisition-Related Payments; (j) fees and expenses incurred
in connection with the Recapitalization and referred to in Section 4.02(s)
to the extent the same would otherwise constitute an expense which would be
deducted in calculating Consolidated Net Income; (k) compensation expense
realized with respect to retention bonuses paid in connection with the
Recapitalization to employees of the Borrower or any Subsidiary in an
amount not to exceed $4,400,000, to the extent such expense was paid from
the Redemption Amount, and (l) any expense attributable to taxes incurred
by the Borrower as a result of its making the election under Section
338(h)(10) of the Code in connection with the Recapitalization in an amount
not to exceed $2,800,000.
"Fixed Charge Coverage Ratio" means, with respect to the Borrower and
its Restricted Subsidiaries for any period of four consecutive fiscal
quarters, the ratio of (a) EBITDA for such period, to (b) the sum of
Capital Expenditures paid in cash, Consolidated Interest Expense, scheduled
amortizations of Debt, taxes paid or due and payable (excluding taxes paid
resulting from the Borrower making the election under Section 338(h)(10) of
the Code in 1998 in connection with the Recapitalization in an amount not
to exceed $2,800,000), and dividends or other distributions on the Capital
Stock of such person paid in cash (other than to the Borrower or another
Restricted Subsidiary), in each case for such period.
(b) Clause (a) of the definition of "Excess Cash Flow" is amended in its
entirety to read:
(a) (i) permitted Capital Expenditures, (ii) taxes of the Borrower and
the Subsidiaries paid or payable in cash for such period, (iii) cash
consideration paid for Permitted Acquisitions (but excluding cash
consideration funded by a Borrowing under the Revolving Credit
Commitments), (iv) Consolidated Interest Expense, (v) increases in Adjusted
Working Capital for such period, (vi) scheduled and mandatory payments of
Debt, (vii) payments pursuant to Section 6.05(a)(i)(A) in connection with
purchases of Excluded Shares, (viii) Contingent Acquisition-Related
Payments, (ix) compensation payments made in such period in respect of
amounts excluded from the definition of "Consolidated Net Income" by virtue
of clause (h) thereof, and (x) dividends paid with respect to the
Borrower's Exchangeable Preferred Stock to the extent permitted by Section
6.05(a)(ii), in each case to the extent made in cash during such period;
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2. Debt/Adjusted EBITDA Ratio. Section 6.09 of the Credit Agreement is
amended in its entirety to read as follows:
Section 6.09. Debt/Adjusted EBITDA Ratio. The Debt/Adjusted EBITDA
Ratio shall not exceed the following amounts as of the ends of fiscal quarters
of the Borrower ending nearest to the following dates:
FISCAL QUARTER DEBT/ADJUSTED EBITDA RATIO
ENDING NEAREST
TO
------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003 2004
------------------------------------------------------------------------------------------------------
March 31 6.00:1.00 5.25:1.00 4.50:1.00 3.75:1.00 3.50:1.00 3.50:1.00
------------------------------------------------------------------------------------------------------
June 30 6.75:1:00 6.00:1.00 5.00:1.00 4.25:1.00 3.75:1.00 3.50:1.00
------------------------------------------------------------------------------------------------------
September 30 6.75:1:00 6.00:1.00 5.00:1.00 4.25:1.00 3.75:1.00 3.50:1.00
------------------------------------------------------------------------------------------------------
December 31 6.00:1.00 5.25:1.00 4.50:1.00 3.75:1.00 3.50:1.00 3.50:1.00
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and thereafter, 3.50:1.00.
3. Minimum EBITDA. Section 6.10 of the Credit Agreement is amended in its
entirety to read as follows:
Minimum EBITDA. The EBITDA for the fiscal year of the Borrower shall
not be less than the following amounts as of the end of the following
fiscal years:
FISCAL YEAR ENDING
NEAREST TO
DECEMBER 31, MINIMUM EBITDA
------------------ -----------------
1998 $26,500,000
1999 $29,000,000
2000 $32,000,000
2001 $34,000,000
2002 $37,000,000
2003 $39,000,000
and thereafter
4. Binding Effect. This Amendment may be executed in as many counterparts
as may be convenient and shall become binding when the Borrower, Holding and the
Required Lenders have each executed and delivered at least one counterpart.
5. Governing Law. This Amendment shall be a contract made under and
governed by the laws of the State of New York, without regard to the conflicts
of law provisions thereof.
6. Reference to Credit Agreement. Except as amended hereby, the Credit
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects. On and after the effectiveness of the amendment to
the Credit Agreement accomplished hereby, each reference in the Credit
Agreement, to "this Agreement", "hereunder", "hereof", "herein" or words
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of like import, and each reference to the Credit Agreement shall be deemed a
reference to the Credit Agreement, as amended hereby, as the case may be.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers as of the date first above written.
XXXXXX RESPIRATORY CARE INC.,
by __________________________________
Name:
Title:
RIVER HOLDING CORP.,
by __________________________________
Name:
Title:
Acknowledged by:
BANKERS TRUST COMPANY, as Administrative Agent,
Collateral Agent, Swingline Lender and Issuing
Bank,
by __________________________________
Name:
Title:
SALOMON BROTHERS INC, as Arranger, Advisor and
Syndication Agent,
by __________________________________
Name:
Title:
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LENDERS
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BANKERS TRUST COMPANY,
by __________________________________
Name:
Title:
SALOMON BROTHERS HOLDING COMPANY INC,
by __________________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION,
by __________________________________
Name:
Title:
by __________________________________
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
by __________________________________
Name:
Title:
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BHF-BANK AKTIENGESELLSCHAFT,
by __________________________________
Name:
Title:
by __________________________________
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC,
by __________________________________
Name:
Title:
by __________________________________
Name:
Title:
XXXXX FARGO BANK, N.A.,
by __________________________________
Name:
Title:
ROYAL BANK OF CANADA,
by __________________________________
Name:
Title:
NATIONSBANK, N.A., as successor to NationsBank of
Texas, N.A.,
by __________________________________
Name:
Title:
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SOCIETE GENERALE,
by __________________________________
Name:
Title:
IMPERIAL BANK,
by __________________________________
Name:
Title:
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