Exhibit 4 (h)
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT (the "Third Amendment") dated as of March 1, 1996
is to that Credit Agreement dated as of April 29, 1994 as amended by those
First and Second Amendments dated as of February 28, 1995 and October 20,
1995, respectively, (as amended and modified thereby and hereby and as
further amended and modified from time to time hereafter, the "Credit
Agreement"; terms used but not otherwise defined herein shall have the
meanings assigned in the Credit Agreement), by and among XXXXX & MINOR,
INC., a Virginia corporation formerly known as O & M Holding, Inc. (the
"Borrower"), CERTAIN OF ITS SUBSIDIARIES identified as a "Guarantor" in the
definition thereof and on the signature pages hereof (hereinafter sometimes
referred to individually as a "Guarantor" and collectively as the
"Guarantors"), the various banks and lending institutions identified on the
signature pages hereto (each a "Bank" and collectively, the "Banks"),
NATIONSBANK, N.A., a national banking association formerly known as
NationsBank of North Carolina, N.A., as agent (in such capacity, the
"Agent"), CHEMICAL BANK and CRESTAR BANK as co-agents (in such capacity,
the "Co-Agents") and NATIONSBANK, N.A., a national banking association
formerly known as NationsBank of North Carolina, N.A., as administrative
agent for the Banks (in such capacity, the "Administrative Agent").
W I T N E S S E T H
WHEREAS, the Banks have established a $425,000,000 credit facility for
the benefit of the Borrower pursuant to the terms of the Credit Agreement;
WHEREAS, the Borrower has requested modification of certain covenants
contained in the Credit Agreement; and
WHEREAS, the Required Banks have agreed to the requested modifications
for and on behalf of the Banks on the terms and conditions set forth
herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. The Credit Agreement is amended in the following respects:
1. The last five sentences of Section 2.05 regarding the
definition and determination of the "Applicable Margin" are amended to read
as follows:
"As used herein, "Applicable Margin" means one and three-fourths
percent (1 %) for the period from March 1, 1996 (being the date of the
Third Amendment) through June 30, 1996, and two and one-fourth percent
(2 1/4%) for the period from July 1, 1996 and thereafter."
2. The first sentence of Section 2.11(b) regarding the
Commitment Fee is amended and modified to read as follows:
"In consideration for the Commitments by the Banks hereunder, the
Borrower agrees to pay to the Administrative Agent quarterly in arrears on
the 15th day of the month following the last day of each of the Borrower's
fiscal quarters for the ratable benefit of the Banks a commitment fee (the
"Commitment Fee") of twenty-five basis points (.25%) per annum for the
period from March 1, 1996 (being the date of the Third Amendment) through
June 30, 1996, and thirty-seven and one-half basis points (.375%) per
annum for the period from July 1, 1996 and thereafter, on the average
daily unused amount of the Revolving Committed Amount for the prior
quarter."
3. A new subsection (e) is added to Section 2.11 to read as
follows:
(e) Amendment Fee. The Borrower agrees to pay to the Administrative
Agent for the benefit of the Banks in connection with the Third Amendment
fees consisting of (i) $531,250 (representing 12.5 b.p. on the aggregate
amount of the Revolving Commitments) payable on the effective date of the
Third Amendment, and (ii) $1,062,500 (representing 25 b.p. on the
aggregate amount of the Revolving Commitments) payable on July 1, 1996.
Such fees shall be non-refundable when paid.
4. The financial covenants in Section 6.11 are amended and
modified to read as follows:
6.11 Financial Covenants.
(a) Consolidated Current Ratio. The Borrower will maintain at all
times a Consolidated Current Ratio of at least 1.4 to 1.0.
(b) Consolidated Tangible Net Worth. The Borrower will maintain
Consolidated Tangible Net Worth, as determined on each Determination Date,
of not less than an amount equal to 85% of Consolidated Tangible Net Worth
as of December 31, 1995; provided, however, the minimum Consolidated
Tangible Net Worth required hereunder shall be increased on the last day
of each of the Borrower's fiscal quarters to occur after January 1, 1996,
by an amount equal to 50% of Consolidated Net Income for the fiscal
quarter then ended (or if Consolidated Net Income for such period is a
deficit figure, then zero).
(c) Consolidated Net Worth. The Borrower will maintain
Consolidated Net Worth, as determined on each Determination Date, of not
less than an amount equal to 85% of Consolidated Net Worth as of December
31, 1995; provided, however, the minimum Consolidated Net Worth required
hereunder shall be increased on the last day of each of the Borrower's
fiscal quarters to occur after January 1, 1996, by an amount equal to 50%
of Consolidated Net Income for the fiscal quarter then ended (or if
Consolidated Net Income for such period is a deficit figure, then zero).
(d) Leverage Ratio. On each Determination Date the ratio of
Consolidated Total Debt (specifically including for purposes hereof,
without limitation, the aggregate amount of financing outstanding as of
the Determination Date relating to accounts receivable subject at such
time to a sale of receivables (or other similar transaction) regardless of
whether such transaction is effected without recourse or in a manner which
would not be reflected on a balance sheet in accordance with GAAP) to
Consolidated Total Capitalization will not exceed:
Leverage Ratio
From the Closing Date through
February 28, 1998 .65 to 1.0
Thereafter .60 to 1.0
(e) Fixed Charge Coverage Ratio. As of each Determination Date for
the Applicable Period set forth below, the Fixed Charge Coverage Ratio
will not be less than:
Fixed Charge
Coverage Ratio
For the fiscal quarter ending
on March 31, 1996 .70 to 1.0
For the fiscal quarter ending
on June 30, 1996 .80 to 1.0
For the fiscal quarter ending
on September 30, 1996 .90 to 1.0
For the fiscal quarter ending
on December 31, 1996 1.0 to 1.0
For the fiscal quarter ending
on March 31, 1997 through
and including the fiscal
quarter ending on June 30, 1997 1.1 to 1.0
For the fiscal quarter ending
on September 30, 1997 through
and including the fiscal quarter
ending on December 31, 1997 1.2 to 1.0
For the fiscal quarter ending
on March 31, 1998 and
thereafter 1.3 to 1.0
The Applicable Period for which the Fixed Charge Coverage Ratio shall be
determined shall be for the period ending as of the Determination Date,
except that determination of current maturities of Funded Debt and current
maturities of Capitalized Leases under subsection (iii) of the definition
of Consolidated Fixed Charges shall be for the period shown beginning on
the applicable Determination Date:
Duration of
Determination Date Applicable Period
For the fiscal quarter ending
on March 31, 1996 One Quarter
For the fiscal quarter ending
on June 30, 1996 Two Quarters
For the fiscal quarter ending
on September 30, 1996 Three Quarters
For the fiscal quarter ending
on December 31, 1996 and thereafter Four Quarters
(f) Consolidated Operating EBITDA. As of each Determination Date
to occur during the period from October 20, 1995 (being the date of the
Second Amendment to Credit Agreement) through December 31, 1996 (being the
last day of the Borrower's fiscal year 1996), Consolidated Operating
EBITDA for the fiscal quarter then ending will not be less than:
For the Fiscal Quarter
Ending
March 31, 1996 $10,500,000
June 30, 1996 $13,000,000
September 30, 1996 $15,000,000
December 31, 1996 $16,000,000
5. A new Section 6.14 is added to read as follows:
6.14 Grant of Security Interests. The Borrower will at its own
expense provide, and will cause its Subsidiaries (other than O&M Funding
Corp. ("OMFC")) to provide, mortgages (including title insurance relating
thereto), liens and security interests on all of their material assets
(including blanket liens on accounts, inventory, equipment, contract
rights and general intangibles and other real and personal property), as
determined by and in form and substance acceptable to the Administrative
Agent and the Required Banks in their sole discretion, on July 1, 1996;
provided, however, there shall be specifically excluded from the liens and
security interests to be provided pursuant to this provision any lien or
security interest on (1) any of the assets of OMFC and (2) any "Pool
Receivable" (as used herein, "Pool Receivable" shall have the meaning
assigned to it in the Receivables Purchase Agreement, dated December 28,
1995, among OMFC, Xxxxx & Minor Medical, Inc., Xxxxx & Minor, Inc.,
Receivables Capital Corporation and Bank of America National Trust and
Savings Association). The Borrower will, and will cause its Subsidiaries
(other than OMFC) to, cooperate with and assist the Administrative Agent
and the Required Banks in the preparation, execution and filing of such
documents and instruments as the Administrative Agent or the Required
Banks may request in furtherance of the provisions hereof. Failure by the
Borrower and its Subsidiaries (other than OMFC) to provide such mortgages,
liens and security interests in accordance with this Section by the date
set out herein shall constitute an Event of Default hereunder.
Notwithstanding anything contained herein to the contrary, including the
provisions of Section 10.06, the provisions of this Section 6.14 may not
be waived, amended or otherwise modified without the prior written consent
of each of the Banks affected thereby.
6. The reference in the next-to-last sentence of Section 7.05(b)
to "40% of Consolidated Tangible Net Worth" is amended and modified to
refer instead to "40% of Consolidated Tangible Net Worth prior to July 1,
1996 and 20% of Consolidated Tangible Net Worth on and after July 1, 1996".
7. A new Section 7.12 is added to read as follows:
7.12 Dividends. On and after July 1, 1996, the Borrower will not
make or pay, nor will it permit any non-wholly owned Subsidiary to make or
pay, any Dividend, unless (i) no Default or Event of Default shall exist
either immediately prior to or immediately after giving effect thereto,
and (ii) the Borrower shall have demonstrated compliance with the
financial covenants set out in Section 6.11 on a Pro Forma Basis after
giving effect thereto. As used herein:
"Dividend" means any payment by the Borrower or any of its
non-wholly owned Subsidiaries of a payment, distribution, or
dividend (other than a dividend or distribution payable solely in
stock of the Person making such payment, distribution or dividend)
on, or any payment on account of the purchase, redemption or
retirement of, or any other distribution, any shares of any class of
stock or other ownership interest in the Borrower or any of its
Subsidiaries (including any such payment or distribution in cash or
in property or obligations of the Borrower or any of its
Subsidiaries).
"Pro Forma Basis" means, with respect to any transaction, that
such transaction shall be deemed to have occurred as of the first
day of the four- fiscal quarter period ending as of the end of the
fiscal quarter most recently ended prior to the date of such
transaction with respect to which the Administrative Agent has
received the financial information required under Section 6.01. As
used herein, "transaction" means any Dividend as referred in Section
7.12.
8. Section 10.06 is amended and modified in the following
respects:
(a) subsection (iii) thereof shall be modified to include a
reference also to Section 6.14; and
(b) and a new subsection (vi) shall be added to the end of the
first sentence to read as follows:
"and (vi) release of all or substantially all of the collateral
pledged to secure the Loans and Obligations hereunder"
B. The Required Banks, for and on behalf of the Banks under the
Credit Agreement, hereby waive compliance by the Borrower with the
provisions of Sections 6.11(c) regarding Consolidated Net Worth, 6.11(e)
regarding Fixed Charge Coverage Ratio and 6.11(f) regarding Consolidated
Operating EBITDA in each such case as of the Determination Date occurring
December 31, 1995 or for the period ending as of such Determination Date,
as appropriate, but only as of such Determination Date or for the period
then ending.
C. The Borrower agrees to pay in connection with this Third
Amendment a non-refundable fee of $531,250 (representing 12.5 b.p. on the
aggregate amount of the Revolving Commitments) to the Administrative Agent
for the ratable benefit of the Banks.
D. The Borrower hereby represents and warrants that:
(i) any and all representations and warranties made by the
Borrower and contained in the Credit Agreement (other than those which
expressly relate to a prior period) are true and correct in all
material respects as of the date of this Third Amendment; and
(ii) No Default or Event of Default currently exists and is
continuing under the Credit Agreement as of the date of (after giving
effect to) this Third Amendment.
E. This Third Amendment shall not be effective until receipt by the
Administrative Agent of the following in form and substance satisfactory to
the Banks:
1. Executed Documents. Executed copies of this Third Amendment
and related documentation by the Borrower, the Guarantors and the
Required Banks.
2. Legal Opinions. Legal opinions of Drew St.X. Xxxxxxx, Esq.,
Senior Vice President and Corporate Counsel of the Borrower, and
Hunton & Xxxxxxxx, special counsel to the Borrower and the Guarantors,
addressed to the Administrative Agent and the Banks in form acceptable
to the Administrative Agent and the Required Banks.
3. Amendment Fee. Payment to the Administrative Agent of the
fee referenced in paragraph C of this Third Amendment.
4. Other Information. Such other information and documents as
the Administrative Agent may reasonably request.
F. The Borrower will execute such additional documents as are
reasonably requested by the Administrative Agent to reflect the terms and
conditions of this Third Amendment.
G. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Schedules) remain in full force and effect.
H. The Borrower agrees to pay all reasonable costs and expenses in
connection with the preparation, execution and delivery of this Third
Amendment, including without limitation the reasonable fees and expenses of
Xxxxx & Xxx Xxxxx, PLLC, special counsel to the Administrative Agent.
I. This Third Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed
an original and it shall not be necessary in making proof of this Third
Amendment to produce or account for more than one such counterpart.
J. This Third Amendment and the Credit Agreement, as amended hereby,
shall be deemed to be contracts made under, and for all purposes shall be
construed in accordance with the laws of the Commonwealth of Virginia.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Third Amendment to Credit Agreement to be duly executed
under seal and delivered as of the date and year first above written.
BORROWER:
XXXXX & MINOR, INC.,
a Virginia corporation
(formerly known as O & M Holding, Inc.)
By____________________________
Title_________________________
GUARANTORS:
XXXXX & MINOR MEDICAL, INC.
a Virginia corporation
(formerly known as Xxxxx & Minor, Inc.)
By____________________________
Title_________________________
NATIONAL MEDICAL SUPPLY CORPORATION
a Delaware corporation
By____________________________
Title_________________________
XXXXX & MINOR WEST, INC.
a California corporation
By____________________________
Title_________________________
KOLEY'S MEDICAL SUPPLY, INC.
a Nebraska corporation
By____________________________
Title_________________________
Signature Pages to
Xxxxx & Minor, Inc. Third Amendment
XXXXX PHYSICIAN SUPPLY COMPANY
an Ohio corporation
By____________________________
Title_________________________
X. XXXXXXX & COMPANY
a Michigan corporation
By____________________________
Title_________________________
STUART MEDICAL, INC.
a Pennsylvania corporation
By____________________________
Title_________________________
BANKS:
NATIONSBANK, N.A.,
individually in its capacity as a
Bank and in its capacity as Agent and
Administrative Agent (formerly known as
NationsBank, N.A. (Carolinas) which was
formerly known as NationsBank of North
Carolina, N.A.)
By_____________________________
Xxxxxxx X. Xxxxx,
Vice President
CHEMICAL BANK,
individually in its capacity as a
Bank and in its capacity as a Co-Agent
By
Title
CRESTAR BANK,
individually in its capacity as a
Bank and in its capacity as a Co-Agent
By
Title
Signature Pages to
Xxxxx & Minor, Inc. Third Amendment
BANK OF AMERICA NT & SA
By
Title
THE BANK OF NOVA SCOTIA
By
Title
FIRST UNION NATIONAL BANK OF VIRGINIA
By
Title
PNC BANK, NATIONAL ASSOCIATION
By
Title
BANK OF MONTREAL
By
Title
THE BANK OF NEW YORK
By
Title
MELLON BANK, N.A.
By
Title
NATWEST BANK N.A. (formerly known as National
Westminster Bank USA)
By
Title
Signature Pages to
Xxxxx & Minor, Inc. Third Amendment
NBD BANK
By
Title
THE SANWA BANK LTD.
By
Title
SHAWMUT BANK CONNECTICUT N.A.
By
Title
SIGNET BANK/VIRGINIA
By
Title
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By
Title
