1
FIRST AMENDMENT
TO
CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated
effective as of April 14, 1997 or, with respect to the amendments to
SECTIONS 10.1, 10.2, 10.3 and 10.4 of the Credit Agreement (as hereinafter
defined) and the addition of SECTION 10.5 to the Credit Agreement as
referred to in Sections 2.15, 2.16, 2.17, 2.18 and 2.19 of this Amendment
and the amendments to the defined terms and definitions thereof referred to
in such SECTIONS 10.1, 10.2, 10.3, 10.4 and 10.5 as referred to in SECTION
2.1 of this Amendment, effective as of January 1, 1997, is among XXXXXXXXXX
HEALTHCARE CORPORATION, a California corporation (the "BORROWER"), each of
the banks or other lending institutions which is a party to the Credit
Agreement (as hereinafter defined) (individually, a "LENDER" and,
collectively, the "LENDERS") and is a signatory to this Amendment, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, as lead agent for the Lenders (the "AGENT"), BANQUE PARIBAS, a
bank organized and existing under the laws of the Republic of France, as
documentation agent for the Lenders (the "DOCUMENTATION AGENT"),
NATIONSBANK OF TEXAS, N.A., a national banking association, as managing
agent for the Lenders (the "MANAGING AGENT") and CREDIT LYONNAIS NEW YORK
BRANCH and TORONTO-DOMINION (TEXAS), INCORPORATED, as co-agents for the
Lenders (the "CO-AGENTS").
RECITALS:
A. The Borrower, the Lenders, the Agent, the Documentation Agent,
the Managing Agent and the Co-Agents previously executed or otherwise
became parties to that certain Credit Agreement dated as of August 16, 1996
(the "CREDIT AGREEMENT") pursuant to which the Lenders extended to the
Borrower a reducing revolving credit facility in the maximum aggregate
principal amount of $400,000,000 (inclusive of a $40,000,000 sublimit for
letters of credit).
B. The parties hereto desire (i) to amend the Credit Agreement to
reduce the Revolving Credit Loans Commitments to $200,000,000 in aggregate
principal amount and in several other respects and (ii) to provide a waiver
of certain provisions of the Credit Agreement, all as provided in this
Amendment.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto (which shall include the
Required Lenders) hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. All defined terms used in this Amendment but
not defined herein shall have the meanings therefor set forth in the Credit
Agreement as amended by this Amendment.
ARTICLE 2
AMENDMENTS
Section 2.1 AMENDED AND RESTATED DEFINITIONS. The following
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definitions set forth in SECTION 1.1 of the Credit Agreement are hereby
amended and restated to read in their entirety as follows:
" 'ADJUSTED EBITDA' means, on a consolidated basis without
duplication for the Borrower and its Subsidiaries, the sum of (a) income
before taxes and extraordinary items and cumulative effect of a change in
accounting (inclusive of minority interest income and expense), plus
interest expense, plus depreciation expense, plus amortization expense, in
each case (subject to the proviso below) measured on a twelve (12) month
basis and calculated as of the last day of the fiscal quarter most recently
ended, minus (b) the actual cash losses during such period referred to in
CLAUSE (A) preceding related to the capitated contract between Xxxxxxxxxx
PHC Regional Hospital, Inc. and FHP, Inc. (and its successor company);
PROVIDED, HOWEVER, that any determination of the amounts set forth in
CLAUSE (A) or (B) preceding made prior to December 31, 1997 shall be
calculated on an annualized basis based upon the number of days then ended
during 1997 and a 365 or 366 day year, as applicable (for example, any
determination of amounts for the period ending June 30, 1997 shall be
calculated based upon the amounts for the period from January 1, 1997
through and including June 30, 1997, multiplied by a fraction, the
numerator of which is the number of days in 1997 and the denominator of
which is the number of days during such period)."
" 'APPLICABLE MARGIN' means, for any date, and subject to the
limitations contained in SECTION 13.11, the rate per annum for Base Rate
Loans or Eurodollar Loans, as applicable, set forth for such date (by
reference to the applicable period which includes such date) in the
following table; PROVIDED, HOWEVER, THAT, notwithstanding anything to the
contrary contained in this Agreement, in no event shall the Applicable
Margin exceed the maximum rate that would permit compliance with SECTION
13.11 and, after taking into account the true principal balance of the
Obligations outstanding from time to time and all amounts which constitute
interest under applicable law, if the Applicable Margin as set forth in the
following table would at any time result in the amount of interest on the
Obligations contracted for in the Loan Documents exceeding the maximum
amount permitted by law or would otherwise not permit compliance with
SECTION 13.11, then the Applicable Margin shall be, IPSO FACTO and under
any and all circumstances, limited and reduced for each Lender to such rate
so that the rate and amount of interest on the Obligations contracted for
in the Loan Documents do not at any time exceed the Maximum Rate and
maximum amount permitted by law and shall otherwise comply with
SECTION 13.11:
Period Applicable Margin
------ ----------------------------------
EURODOLLAR LOANS BASE RAGE LOANS
----------------- ---------------
August 16, 1996, through and including
April 13, 1997 2.00% 0.75%
April 14, 1997, through and including
June 30, 1997 2.50% 1.25%
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July 1, 1997, through and including
July 31, 1997 3.00% 1.75%
August 1, 1997, through and including
August 31, 1997 3.50% 2.25%
September 1,1997,through and including
September 30, 1997 4.00% 2.75%
October 1, 1997, through and including
October 31, 1997 4.50% 3.25%
November 1, 1997, through and including
November 30, 1997 5.00% 3.75%
December 1, 1997, through and including
December 31, 1997 5.50% 4.25%
January 1, 1998, through and including
January 31, 1998 6.00% 4.75%
February 1, 1998, through and including
February 28, 1998 6.50% 5.25%
March 1, 1998, through and including
March 31, 1998 7.00% 5.75%
April 1, 1998, through and including
April 30, 1998 7.50% 6.25%
May 1, 1998, through and including
May 31, 1998 8.00% 6.75%
June 1, 1998, through and including
June 30, 1998 8.50% 7.25%
July 1, 1998, through and including
July 31, 1998 9.00% 7.75%
August 1, 1998, through and including
August 31, 1998 9.50% 8.25%
September 1, 1998, and at all times
thereafter 10.00% 8.75%
The Borrower acknowledges and agrees that the Applicable Margin
for the period from the Closing Date through and including
April 13, 1997, as set forth in the table above is consistent
with the Applicable Margin set forth in the Agreement prior to
giving effect to the First Amendment based upon the restated
financial statements of the Borrower and its consolidated
Subsidiaries. Notwithstanding anything to the contrary
contained in SECTION 13.10, this definition may be amended to
provide that the Applicable Margin is not less than the rates
specified in the definition of the term 'Applicable Margin' in
the Agreement as in effect prior to the First Amendment by
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written agreement of only the Required Lenders and the
Borrower."
" 'EBITDA' means, on a consolidated basis without
duplication for any Person and its consolidated Subsidiaries,
the sum of (a) income before taxes and extraordinary items
(inclusive of minority interest income and expense), plus
interest expense, plus depreciation expense, plus amortization
expense, in each case (subject to the proviso below) measured
on a twelve (12) month basis and calculated as of the last day
of the fiscal quarter most recently ended, plus (b) with
respect to any operations acquired by such Person or a
Subsidiary of such Person during such period referred to in
CLAUSE (A) preceding, the EBITDA of such operations (as
calculated pursuant to (a) above) for the portion of such
period prior to the respective date of acquisition, plus
(c) EBITDA demonstrated and certified by such Person, to the
reasonable satisfaction of the Agent, as attributable to newly
acquired businesses during such period referred to in CLAUSE
(A) preceding; PROVIDED, HOWEVER, that any determination of the
amounts set forth in CLAUSES (A), (B) AND (C) preceding made
prior to December 31, 1997 shall be calculated on an annualized
basis based upon the number of days then ended during 1997 and
a 365 or 366 day year, as applicable (for example, any
determination of amounts for the period ending June 30, 1997
shall be calculated based upon the amounts for the period from
January 1, 1997 through and including June 30, 1997, multiplied
by a fraction, the numerator of which is the number of days in
1997 and the denominator of which is the number of days during
such period)."
" 'EXCLUDED SUBSIDIARIES' means as follows:
(a) any Subsidiary of the Borrower identified
on SCHEDULE 1.1(A) hereto, including, but not limited to any
Subsidiary which is a partnership or owns a partnership
interest, if (but only if) at all times (x) the book value of
the total Property of such Subsidiary is less than five percent
(5%) of the book value of the total Property of the Borrower
(determined on a consolidated basis for the Borrower and all of
its Subsidiaries) and such Subsidiary's EBITDA does not exceed
five percent (5%) of the Adjusted EBITDA of the Borrower
(determined on a consolidated basis for the Borrower and all of
its Subsidiaries), and (y) the aggregate book value of the
total Property of all Excluded Subsidiaries of the Borrower and
the aggregate EBITDA for all Excluded Subsidiaries of the
Borrower at no time exceeds five percent (5%) of the book value
of the total Property of the Borrower (determined on a
consolidated basis for the Borrower and all of its
Subsidiaries) or five percent (5%) of the Adjusted EBITDA of
the Borrower (determined on a consolidated basis for the
Borrower and all of its Subsidiaries), respectively, PROVIDED,
HOWEVER, that the Subsidiaries of the Borrower identified on
SCHEDULE 1.1(A) hereto shall, whether or not the other
requirements set forth in this CLAUSE (A) preceding are
satisfied, constitute Excluded Subsidiaries for the period (and
only for the period) from the Closing Date through and
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including June 15, 1997.
(b) In addition, the following are Excluded
Subsidiaries:
(i) DHHS;
(ii) Metropolitan Hospital, L.P.;
(iii) Monrovia Community Hospital, a California
limited partnership;
(iv) PHC Funding Corp.;
(v) Hospital Assurance Company, Ltd., a Cayman
Island corporation;
(vi) IV Care, L.P.;
(vii) To be formed partnership of Psychiatric
Healthcare Corporation of Louisiana and a
subsidiary of Community Health Services, Inc.; and
(vii) Lincoln Community Medical, L.L.C. and Los
Angeles Community Hospital, L.L.C.
" 'FIXED CHARGE COVERAGE RATIO' means, on a
consolidated basis without duplication for the Borrower and its
Subsidiaries, as of the end of any fiscal quarter and in each
case (subject to the proviso below) measured on a twelve (12)
month basis and calculated as of the last day of such fiscal
quarter, the ratio of (a) the sum of (i) Adjusted EBITDA, plus
(ii) operating lease payments (to the extent treated as an
expense and deducted from Adjusted EBITDA), minus (iii) federal
and state income taxes paid in cash, minus (iv) the lesser of
Maintenance Capital Expenditures or actual Capital Expenditures
(exclusive of Capital Lease Obligations), to (b) the sum of (w)
Interest Expense, plus (x) Operating Lease payments (to the
extent treated as an expense and deducted from Adjusted
EBITDA), plus (y) all scheduled payments of principal with
respect to any Debt; PROVIDED, HOWEVER, that any determination
of the amounts set forth in CLAUSES (A) and (B) preceding made
prior to December 31, 1997 shall be calculated on an annualized
basis based upon the number of days then ended during 1997 and
a 365 or 366 day year, as applicable (for example, any
determination of amounts for the period ending June 30, 1997
shall be calculated based upon the amounts for the period from
January 1, 1997 through and including June 30, 1997, multiplied
by a fraction, the numerator of which is the number of days in
1997 and the denominator of which is the number of days during
such period)."
" 'HISTORICAL 10-K FINANCIAL STATEMENTS' means the
audited consolidated statements of operations and statements of
cash flow of the Borrower and its consolidated Subsidiaries for
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the fiscal year ended December 31, 1994, 1995 and 1996 and the
audited consolidated balance sheets of the Borrower and its
consolidated Subsidiaries as of December 31, 1995 and 1996, in
each case as included in the Borrower's Annual Report on Form
10-K filed with the Securities and Exchange Commission on
April 15, 1997 for the fiscal year ended December 31, 1996
which, among other things, restate certain financial statements
of the Borrower and its consolidated Subsidiaries."
" 'MAINTENANCE CAPITAL EXPENDITURES' means an amount
equal to three percent (3%) of the net revenues of the Borrower
and its Subsidiaries (and, in the case of any partnership or
joint venture, 3% of its net revenues multiplied by the
Borrower's or any of its Subsidiary's right to receive
distributable cash flow) determined in accordance with GAAP for
the twelve (12) months ended on the last day of the fiscal
quarter most recently ended; PROVIDED, HOWEVER, that any
determination of Maintenance Capital Expenditures for a period
prior to December 31, 1997 shall be calculated on an annualized
basis based upon such net revenues during the number of days
then ended during 1997 and a 365 or 366 day year, as applicable
(for example, any determination of Maintenance Capital
Expenditures for the period ending June 30, 1997 shall be
calculated based upon such net revenues for the period from
January 1, 1997 through and including June 30, 1997, multiplied
by a fraction, the numerator of which is the number of days in
1997 and the denominator of which is the number of days during
such period)."
" 'NET PROCEEDS' means, with respect to any Asset
Disposition, Dispute Resolution or Income Tax Refund (as
applicable) (a) the gross proceeds received (whether actually
or constructively) by the Borrower or any of its Subsidiaries
from such Asset Disposition, Dispute Resolution or Income Tax
Refund (including, without limitation, cash or notes), MINUS
(b) the amount, if any, of all taxes paid or payable by the
Borrower or any of its Subsidiaries directly resulting from
such Asset Disposition, Dispute Resolution or Income Tax Refund
(including the amount, if any, estimated by the Borrower in
good faith at the time of such Asset Disposition, Dispute
Resolution or Income Tax Refund for taxes payable by the
Borrower or any of its Subsidiaries on or measured by net
income or gain resulting from such Asset Disposition, Dispute
Resolution or Income Tax Refund), MINUS (c) the reasonable out-
of-pocket costs and expenses (or, if not readily determinable,
the Borrower's good faith estimate thereof) incurred by the
Borrower or such Subsidiary in connection with such Asset
Disposition, Dispute Resolution or Income Tax Refund (including
reasonable brokerage fees paid to a Person other than an
Affiliate of the Borrower) excluding any fees or expenses paid
to an Affiliate of the Borrower. 'NET PROCEEDS' with respect
to any Asset Disposition shall also include proceeds (after
deducting any amounts specified in CLAUSES (B) and (C) of the
preceding sentence) of insurance with respect to any actual or
constructive loss of Property, or an agreed or compromised loss
of Property or the taking of any Property under the power of
eminent domain and condemnation awards and awards in lieu of
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condemnation for the taking of Property under the power of
eminent domain, except such proceeds and awards as are released
to and used by the Borrower in accordance with SECTION 8.5. In
no event shall any item be included in "Net Proceeds" in
respect of any joint venture or partnership to the extent it
shall exceed the Borrower's direct or indirect share of the
earnings from such joint venture or partnership."
" 'PRO FORMAS' means the unaudited, summary
consolidated balance sheet and income statement of the Borrower
and its consolidated Subsidiaries, adjusted for losses at
Xxxxxxxxxx PHC Regional Medical Center, Inc., for fiscal year
1997, which the Borrower delivered to the Agent and the Lenders
on or about April 14, 1997."
" 'PROJECTIONS' means the Borrower's forecasted
consolidated balance sheet and income statement, together with
appropriate supporting details and a statement of underlying
assumptions, for fiscal year 1997, which the Borrower delivered
to the Agent and the Lenders on or about April 14, 1997."
" 'REVOLVING CREDIT LOANS COMMITMENT' means, as to
any Lender, the obligation of such Lender to make or continue
Revolving Credit Loans and incur or participate in Letter of
Credit Liabilities hereunder in an aggregate principal amount
at any one time outstanding up to but not exceeding the amount
set forth opposite the name of such Lender on SCHEDULE 1.1(E)
hereto under the heading "Revolving Credit Loans Commitment"
or, if such Lender is a party to an Assignment and Acceptance,
the amount set forth in the most recent Assignment and
Acceptance of such Lender, as the same may be reduced or
terminated pursuant to SECTIONS 2.7, 2.13 or 11.2, and
'REVOLVING CREDIT LOANS COMMITMENTS' means such obligations of
all Lenders; PROVIDED, HOWEVER, that the Revolving Credit Loans
Commitments shall be permanently reduced by $50,000,000 on each
of August 15, 1999 and August 15, 2000 and such reductions
pursuant to this proviso shall be applied ratably to the
respective Commitment of each Lender in accordance with its
respective Commitment Percentage. As of April 14, 1997, the
aggregate principal amount of the Revolving Credit Loans
Commitments is $200,000,000.
" 'REVOLVING CREDIT LOANS MATURITY DATE' means
August 1, 2001."
" 'SENIOR LEVERAGE RATIO' means, as of any date, the
ratio of (a) Total Debt, including Letter of Credit
Liabilities, less Subordinated Debt, to (b) Adjusted EBITDA for
the twelve (12) months ending with the last day of the fiscal
quarter most recently ended, PROVIDED, HOWEVER, that any
determination of Adjusted EBITDA made prior to December 31,
1997, shall be calculated on an annualized basis based upon the
number of days then ended during 1997 and a 365 or 366 day
year, as applicable (for example, any determination of Adjusted
EBITDA for the period ending June 30, 1997 shall be calculated
based upon the amounts for the period from January 1, 1997
through and including June 30, 1997, multiplied by a fraction,
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the numerator of which is the number of days in 1997 and the
denominator of which is the number of days during such
period)."
Section 2.2 NEW DEFINITIONS. SECTION 1.1 of the Credit
Agreement is hereby amended by the addition of the following
new terms and definitions, which terms and definitions shall
appear in alphabetical order in such SECTION 1.1:
" 'DISPUTE RESOLUTION' means the settlement,
determination or other resolution (whether formal or informal,
or in whole or in part) of or with respect to any litigation,
cause of action, claim, controversy or dispute."
" 'FIRST AMENDMENT' means that certain First
Amendment to Credit Agreement dated as of April 14, 1997,
executed by the Borrower, the Required Lenders, the Agent, the
Documentation Agent, the Managing Agent and the Co-Agents."
" 'INCOME TAX REFUND' means any refund or other
amount paid to a payor of any income taxes of any nature in
respect of income taxes of any nature previously paid by such
payor."
Section 2.3 COMMITMENTS; USE OF PROCEEDS. SECTION 2.1 of
the Credit Agreement is hereby amended to add a new SUBSECTION
(D) thereto immediately following SUBSECTION (C), which new
SUBSECTION (D) shall read in is entirety as follows:
"(d) Notwithstanding anything to the contrary
contained in this Agreement, the right of the Borrower to
borrow or reborrow any Loans, and the obligations of the
Lenders to make any Loans, shall be subject to the conditions
that (i) the aggregate amount of the Outstanding Credit that
has been used and, after given effect to the making of the
requested Loan or issuance of the requested Letter of Credit
(as applicable), will be used for any purposes other than to
finance (or otherwise for) Permitted Acquisitions shall not
exceed, in aggregate amount at any time outstanding, the
remainder of (A) $180,000,000 minus (B) the sum of the Net
Proceeds of Asset Dispositions and the Net Proceeds of Dispute
Resolutions received (actually or constructively) by the
Borrower or any Subsidiary of the Borrower on or after April
14, 1997, and (ii) the Outstanding Credit that has been used
and, after given effect to the making of the requested Loan or
issuance of the requested Letter of Credit (as applicable),
will be used to finance (or otherwise for) Permitted
Acquisitions shall not at any time exceed $20,000,000;
PROVIDED, HOWEVER, that, notwithstanding anything to the
contrary contained in SECTION 13.10, this SECTION 2.1(D) may be
amended (including, without limitation, to increase the
Borrower's right to borrow or reborrow Loans up to the amount
of the Commitments) by written agreement of only the Required
Lenders and the Borrower."
Section 2.4 ASSET DISPOSITIONS. SECTION 2.7(A) of the
Credit Agreement is hereby amended and restated to read in its
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entirety as follows:
"(a) ASSET DISPOSITIONS. The Borrower shall pay
(concurrently with the consummation of each such Asset
Disposition) to the Agent, for the benefit of the Lenders, as a
prepayment of the Revolving Credit Loans (or, if the Revolving
Credit Loans are then paid in full, as cash collateral for any
outstanding Letter of Credit Liabilities), an aggregate amount
equal to 100% of (i) the Net Proceeds from all Asset
Dispositions permitted by SECTION 9.12A(A) and (ii) the Net
Proceeds from all Income Tax Refunds, PROVIDED, HOWEVER, that
the Net Proceeds of Asset Dispositions of Property that does
not constitute Collateral shall not be required to be so paid
to the Agent if and to the extent that such proceeds are used
by the Borrower, within one year of receipt of such proceeds
in cash, to make Investments permitted by SECTION 9.4(B),
9.4(C) or 9.4(D)."
Section 2.5 USE OF PROCEEDS. SECTION 2.10(A) of the
Credit Agreement is hereby amended to add the phrase
"(including, without limitation, SECTION 2.1(D))" immediately
following the word "Agreement" in the third line of SECTION
2.10(A).
Section 2.6 COMMITMENT FEES. Section 2.11(A) of the
Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"(a) The Borrower agrees to pay to the Agent for the
account of each Lender a commitment fee (the 'COMMITMENT FEE')
on the daily average unused or unfunded amount of such Lender's
Revolving Credit Loans Commitment, for the period from and
including the Closing Date to and including the Revolving
Credit Loans Maturity Date, at the rate per annum equal to one-
half of one percent (0.50%), which accrued commitment fees
shall be payable in arrears on each Quarterly Date beginning on
September 30, 1996 and on the Revolving Credit Loans Maturity
Date."
Section 2.7 DRAWINGS UNDER LETTERS OF CREDIT. The first
sentence of SECTION 2.14(E) of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"Upon receipt from the beneficiary of any Letter of Credit of
any demand for payment or other drawing under such Letter of
Credit, the Issuing Bank shall promptly notify the Borrower,
the Agent and each Lender as to the amount to be paid as a
result of such demand or drawing and the respective payment
date."
Section 2.8 COLLATERAL. SECTION 5.1 of the Credit
Agreement is hereby amended and restated to read in its
entirety as follows:
"Section 5.1 COLLATERAL. To secure the full and
complete payment and performance of the Obligations (or, with
respect to any Lien granted by any Subsidiary of the Borrower
in accordance with CLAUSE (B) succeeding, to secure the full
and complete payment and performance of all indebtedness,
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liabilities and obligations of each Subsidiary Guarantor under
its Guarantee of the Obligations), (a) the Borrower will, and
will cause each of the Subsidiary Pledgors to, grant to the
Agent for the benefit of the Agent and the Lenders a perfected,
first priority Lien on all of its right, title and interest in
and to all Capital Stock of the Subsidiaries of the Borrower
that are corporations (except for Excluded Subsidiaries) owned
by the Borrower or any Subsidiary (except for Excluded
Subsidiaries) of the Borrower, whether now owned or hereafter
acquired, pursuant to the Security Documents and (b) subject to
the succeeding provisions of this SECTION 5.1, the Borrower
will, and will cause each of its Subsidiaries to, at any time
and from time to time on or after April 14, 1997, and promptly
upon (and, in any event unless the Agent and the Required
Lenders otherwise agree, within ten (10) Business Days after)
any written request of the Agent or the Required Lenders
delivered to the Borrower, grant to the Agent for the benefit
of the Agent and the Lenders a perfected, first priority Lien
(subject only to Permitted Liens, if any, which are, in
accordance with this Agreement, expressly permitted to have
priority over such Liens) on all of its right, title and
interest in and to any one or more of the real Properties (or
interests therein) and tangible personal Properties located
thereon or used in connection therewith, whether now owned or
hereafter acquired, of the Borrower and/or its Subsidiaries as
may be so requested and selected by the Agent and the
Documentation Agent, which Liens shall be granted pursuant to
and evidenced and accompanied by such agreements, documents or
instruments consistent with this Agreement as the Agent and the
Documentation Agent or the Required Lenders may reasonably
request. In connection with the execution of any agreement,
document or instrument referred to in CLAUSE (B) of the
immediately succeeding sentence which creates or evidences a
Lien on any real Property or any interest therein, the Borrower
will, or will cause its appropriate Subsidiary to, as
applicable, deliver or cause to be delivered to the Agent each
of the following which may be requested by the Agent or the
Documentation Agent at any time or from time to time, each of
which will be in form and substance reasonably satisfactory to
the Agent and the Documentation Agent and all of which shall be
delivered to the Agent promptly upon (and, in any event, unless
the Agent otherwise agrees, within sixty (60) days after) such
request:
(i) a commitment for a mortgagee policy of
title insurance (or, if such insurance is not available in the
jurisdiction in question, a title opinion issued by a law firm
satisfactory to the Agent) issued in the name of the Agent for
and on behalf of the Lenders insuring that such Lien is valid
and enforceable and of the required priority, which insurance
shall be in an amount reasonably acceptable to the Agent (but
not to exceed the estimated fair market value of the Property
affected by such Lien) and, as soon as practical thereafter, a
mortgagee policy of title insurance issued in accordance with
such commitment;
(ii) an appraisal of such real Property issued
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by an appraiser reasonably acceptable to the Agent which
complies with Title XI - Real Estate Appraisal Reform,
Amendments to the Financial Institution Reform, Recovery and
Enforcement Act of 1989 and all other regulatory requirements
of the Lenders;
(iii) a reasonably current environmental
assessment of such real Property;
(iv) a reasonably current survey of such real
Property;
(v) information relating to zoning affecting
such real Property; and
(vi) with respect to any such real Property
which is a leasehold interest, waivers of landlords' Liens and
other agreements of landlords and their lenders as may be
feasible to obtain and copies of relevant lease agreements.
Notwithstanding anything to the contrary contained in this
SECTION 5.1, if, after the receipt of all required agreements,
documents and instruments (including without limitation
mortgagee's policies of title insurance (or title opinions) and
appraisals) referred to in this SECTION 5.1 preceding, the
Agent possesses valid and enforceable Liens affecting real
Properties, and related tangible personal Properties, which
have a collateral value (based, as to the real Properties, upon
the appraised fair market value of the real Properties
affected thereby) of in excess of 133% of the aggregate
principal amount of the Commitments, then, promptly upon any
written request of the Borrower made at any time and from time
to time thereafter, the Agent will, at the expense of the
Borrower, execute such agreements, documents and instruments as
the Borrower may reasonably request to release certain of such
Liens as are selected by the Agent (PROVIDED, HOWEVER, that the
Agent shall be obligated, subject to the Borrower's compliance
with SECTION 2.7(A), to release its Liens affecting Properties
being sold pursuant to a permitted Asset Disposition as
provided in SECTION 9.12B) and the Documentation Agent such
that, after giving effect, to such release or releases, such
Collateral value equals but does not exceed 133% of the
aggregate principal amount of the Commitments. Notwithstanding
anything to the contrary contained in this SECTION 5.1, the
Borrower's failure to deliver, or to cause any Subsidiary to
deliver, (A) any of the agreements, documents or instruments
referred to in CLAUSE (B) preceding which evidence or create a
Lien on any leasehold interest within ten (10) Business Days
after request as provided in this SECTION 5.1 preceding or (B)
any agreements, documents or instruments referred to in CLAUSES
(I), (II), (III), (IV), (V) or (VI) of this SECTION 5.1
preceding within sixty (60) days after request as provided in
this SECTION 5.1 preceding, shall not constitute a Default or
an Event of Default if (but only if) (1) such failure is due to
the practical inability (for whatever reason) of the Borrower
or such Subsidiary to so comply notwithstanding the best
efforts of the Borrower and its Subsidiaries to so comply, and
12
(2) the Borrower and its Subsidiaries continue to use their
best efforts to promptly deliver all of such agreements,
documents and instruments referred to in this SECTION 5.1."
Section 2.9 FINANCIAL STATEMENTS. SECTION 7.2(A) of the
Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"Section 7.2 FINANCIAL STATEMENTS.
(a) The Borrower has delivered to the Agent
(i) audited consolidated statements of operations and
statements of cash flow of the Borrower for the fiscal year
ended December 31, 1994, 1995 and 1996 and audited consolidated
balance sheets of the Borrower as of December 31, 1995 and
1996, in each case as included in the Borrower's Annual Report
on Form 10-K as filed with the Securities and Exchange
Commission for the fiscal year of the Borrower ended December
31, 1996, (ii) audited consolidated statements of operations
and statements of cash flow of CHC for the fiscal years ended
December 31, 1993, 1994 and 1995, and (iii) audited
consolidated balance sheets of CHC as of December 31, 1994 and
1995. To the Borrower's knowledge, such financial statements
are true and correct, have been prepared in accordance with
GAAP and fairly and accurately present the financial condition
of the Borrower and its consolidated Subsidiaries and CHC and
its consolidated Subsidiaries as of the respective dates
indicated therein and the results of operations for the
respective periods indicated therein. There has not occurred,
as of any date after December 31, 1996, with respect to the
Borrower and its consolidated Subsidiaries, any material
adverse change in the business, condition (financial or
otherwise), operations, prospects or Properties of the Borrower
and its consolidated Subsidiaries since December 31, 1996, as
reflected in the restated, audited financial statements of the
Borrower and its consolidated Subsidiaries as of and for the
fiscal year ended December 31, 1996 as included in the
Borrower's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission for the fiscal year of the
Borrower ended December 31, 1996."
Section 2.10 DISCLOSURE. SECTION 7.14 of the Credit
Agreement is hereby amended and restated to read in its
entirety as follows:
"Section 7.14 DISCLOSURE. Except as otherwise agreed
to in writing by the Required Lenders pursuant to the First
Amendment, no written statement, information, report,
representation or warranty made to the Agent or any Lender by
any Loan Party in any Loan Document or furnished to the Agent
or any Lender by any Loan Party in connection with the Loan
Documents or any transaction contemplated hereby or thereby
contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements herein
or therein in light of the circumstances in which they were
made not misleading as of the respective dates thereof. No
material adverse change has occurred with respect to the
13
financial condition, business, operations, capitalization,
liabilities or prospects of Borrower and its Subsidiaries taken
as a whole since December 31, 1996."
Section 2.11 REPORTING REQUIREMENTS. SECTION 8.1 of the
Credit Agreement is hereby amended as follows:
(a) SECTION 8.1(B) of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"(b) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within forty-five (45) days after
the end of each fiscal quarter of each fiscal year of the
Borrower or, with respect to the last fiscal quarter, within
one hundred twenty (120) days after the end of such fiscal
quarter, beginning with the fiscal quarter ending March 31,
1997, a copy of an unaudited financial report of the Borrower
and its consolidated Subsidiaries as of the end of such fiscal
quarter and for the fiscal year or the portion of the fiscal
year then ended (as applicable) containing, on a consolidated
and consolidating (with respect to balance sheets and
statements of income and retained earnings only) basis, balance
sheets and statements of income, retained earnings and cash
flow, in each case (with respect to consolidated financial
information only) setting forth in comparative form the figures
for the corresponding period of the preceding fiscal year, all
in reasonable detail certified by a Responsible Officer of the
Borrower to have been prepared in accordance with GAAP and to
fairly and accurately present (subject to year-end audit
adjustments) the financial condition and results of operations
of the Borrower and its consolidated Subsidiaries, on a
consolidated and consolidating basis, at the date, and for the
periods indicated therein;";
(b) SECTION 8.1(C) of the Credit Agreement is hereby
amended (i) to add the phrase "and, with respect to CLAUSE (I)
succeeding, SECTION 8.1(O)" immediately following the phrase
"SECTIONS 8.1(A) and 8.1(B)" in the second line of CLAUSE (C)
of SECTION 8.1, (ii) to delete the word "and" at the end of
CLAUSE (I) of SECTION 8.1(C) and replace such word with a
comma, and (iii) to add the following phrase immediately
following CLAUSE (II) of SECTION 8.1(C): "and (iii) showing in
reasonable detail a reconciliation of the actual losses during
such fiscal quarter related to the capitated contract between
Xxxxxxxxxx PHC Regional Hospital, Inc. and FHP, Inc. (and its
successor company) and the reduction in the loss contract
reserve related thereto recorded as a liability of the Borrower
as of December 31, 1996, as shown on the Borrower's balance
sheet as of the end of such fiscal quarter";
(c) the word "and" at the end of CLAUSE (M) of
SECTION 8.1 is deleted;
(d) the period at the end of CLAUSE (N) of SECTION
8.1 is deleted and replaced by a semicolon;
(e) a new CLAUSE (O) is hereby added to SECTION 8.1
immediately succeeding CLAUSE (N) of SECTION 8.1, which CLAUSE
14
(O) shall read in its entirety as follows:
"(o) MONTHLY FINANCIAL STATEMENTS. As soon as
available, and in any event within forty-five (45) days after
the end of each month, beginning with the month ending March
31, 1997, a copy of (i) an unaudited financial report of the
Borrower and its consolidated Subsidiaries as of the end of
such month and for the portion of the fiscal year then ended
Containing, on a consolidated basis, balance sheets and
statements of income, retained earnings and cash flow, and (ii)
a schedule reflecting the EBITDA and net revenues of the
material operating Subsidiaries of the Borrower for such month
and the portion of the fiscal year then ended in a format
substantially identical to that previously provided to the
Lenders and, in the case of CLAUSE (II) preceding, in each case
setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year (PROVIDED,
HOWEVER, that comparative figures for the corresponding period
of the preceding fiscal year shall not be required for reports
relating to months ending in 1997) and the figures for the then
current budget, all in reasonable detail certified by a
Responsible Officer of the Borrower to have been prepared in
accordance with GAAP and to fairly and accurately present
(subject to year-end audit adjustments) the financial condition
and results of operations of the Borrower and its consolidated
Subsidiaries, on a consolidated basis, at the date, and for the
periods indicated therein; and,";
(f) a new CLAUSE (P) is hereby added to SECTION 8.1
immediately succeeding CLAUSE (O) of SECTION 8.1, which CLAUSE
(P) shall read in its entirety as follows:
"(p) NOTICES REGARDING SUBORDINATED DEBT.
Promptly upon the Borrower's or any Subsidiary's receipt
thereof, a true and correct copy of any written notice or other
communication (exclusive of immaterial notices or
communications of an administerial nature) given by or to the
trustee under the New Indenture or any holder of any
Subordinated Debt (in such holder's capacity as such) in any
way relating to any Subordinated Debt or any agreement,
document or instrument evidencing or governing any Subordinated
Debt;"
(g) a new CLAUSE (Q) is hereby added to SECTION 8.1
immediately succeeding CLAUSE (P) of SECTION 8.1, which CLAUSE
(Q) shall read in its entirety as follows:
"(q) AUDITOR'S MANAGEMENT LETTER. Promptly upon
the delivery of such management letter to the Borrower or its
management, a copy of the auditor's management letter relating
to the audited financial statements referred to in SECTION
8.1(A);" and
(h) a new CLAUSE (R) is hereby added to SECTION 8.1
immediately succeeding CLAUSE (Q) of SECTION 8.1, which
CLAUSE (R) shall read in its entirety as follows:
15
"(r) NOTICES RELATING TO PHC FUNDING SALE
DOCUMENTS. Promptly upon the delivery thereof to the Borrower,
a copy of (i) each notice or other written communication
regarding the occurrence or existence (or alleged occurrence or
existence) of any default (no matter how used or defined),
event of default (no matter how used or defined), Early
Amortization Event or Exclusion Event under the PHC Funding
Sale Documents, (ii) each amendment or modification of the PHC
Funding Sale Documents and (iii) each waiver relating to the
PHC Funding Sale Documents, and promptly upon the occurrence
thereof, notice regarding any expiration or termination of the
PHC Funding Sale Documents (whether in accordance with their
contemplated term or otherwise) or the transactions
contemplated thereby."
Section 2.12 LIMITATION ON DEBT. SECTION 9.1 of the
Credit Agreement is hereby amended as follows:
(a) the reference to SECTION 9.12A(D) in SECTION
9.01(J) of the Credit Agreement is hereby amended to read
"SECTION 9.12(A)(B)"; and
(b) the following sentence is hereby added to the
end of SECTION 9.1 (immediately following CLAUSE (N) of
SECTION 9.1): "Notwithstanding anything to the contrary
contained in this SECTION 9.1, the aggregate of the Debt of the
Borrower and its Subsidiaries referred to in CLAUSES (C), (E),
(F) and (M) of this SECTION 9.1 preceding which may be incurred
on or after December 31, 1996, shall not exceed $5,000,000 in
aggregate amount."
Section 2.13 LIMITATION ON BUSINESS ACQUISITIONS. SECTION
9.5 of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"Section 9.5 LIMITATION ON BUSINESS ACQUISITIONS.
The Borrower will not, and will not permit any of its
Subsidiaries (other than DHHS or any other partnership or joint
venture) to, make expenditures or incur or assume any
obligations, or consent to make expenditures or incur or assume
obligations, to make, or otherwise in connection with, Business
Acquisitions (including, without limitation, all Capital Lease
Obligations, Operating Lease obligations and other
indebtedness, liabilities and obligations to be assumed by the
Borrower or any of its Subsidiaries and all payments made or to
be made for covenants not to compete), except as follows (the
acquisitions permitted under this SECTION 9.5 are sometimes
referred to herein as "PERMITTED ACQUISITIONS"): (a)
expenditures made and obligations incurred or assumed in
connection with the acquisitions of the Facilities, health
related businesses or related lines of business specified in
SCHEDULE 9.5 hereto as agreed to among the Borrower, the Agent
and the Required Lenders in connection with the First
Amendment, which expenditures made and obligations incurred or
assumed shall not exceed the aggregate amounts therefor
specified in SCHEDULE 9.5, and (b) other expenditures made and
obligations incurred or assumed in connection with Business
16
Acquisitions which are approved in writing by the Agent and the
Required Lenders prior to the consummation thereof. In
connection with each Permitted Acquisition involving $5,000,000
or more in total consideration paid or payable (in whatever
form), the Borrower shall have submitted to the Lenders
proforma financial statements, based upon projections (based on
good faith estimates of the Borrower and its senior management
based on assumptions believed to be reasonable at the time
made), demonstrating compliance with all financial covenants
and agreements of the Borrower pursuant to this Agreement after
giving effect to such proposed acquisition, all in form and
substance reasonably satisfactory to the Required Lenders. Any
acquisition permitted under this SECTION 9.5 shall have been
approved by the appropriate officers, or, if required, by the
Board of Directors or other governing body, of the company or
business to be acquired or holding the assets to be acquired."
Section 2.14 RESTRICTED PAYMENTS. SECTION 9.10 of the
Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"Section 9.10 RESTRICTED PAYMENTS. Except as
permitted by SECTION 9.1, the Borrower will not, and will not
permit any of its Subsidiaries (other than Excluded
Subsidiaries) to, make any Restricted Payments, except:
(a) Subject to the subordination provisions
relating thereto, the Borrower and its Subsidiaries may make
regularly scheduled payments of interest on the Subordinated
Notes and on any other Subordinated Debt approved in writing by
the Required Lenders;
(b) The Borrower may pay cash dividends with
respect to its Capital Stock previously agreed, on or about
December 1994, to be paid in connection with the acquisition of
AmeriHealth, Inc. by CHC in an aggregate amount not to exceed
$250,000;
(c) Subsidiaries of the Borrower may make
Restricted Payments to the Borrower or Wholly-Owned
Subsidiaries or Majority-Owned Subsidiaries (in either event
other than Excluded Subsidiaries) of the Borrower;
(d) Subsidiaries of the Borrower that are joint
ventures or partnerships as of December 31, 1996, or that are
specified on SCHEDULE 9.10 hereto may make Restricted Payments
to their joint venturers or partners in accordance with the
joint venture agreements or partnership agreements as in effect
on December 31, 1996 or, with respect to the joint ventures or
partnerships specified on SCHEDULE 9.10, in accordance with the
joint venture agreements or partnership agreements which shall
have been approved in writing by the Agent;
(e) The Borrower or any Subsidiary may redeem
or repurchase any Equity Interests of the Borrower or any
Subsidiary held by any officers, directors or employees of the
Borrower (or any of its Subsidiaries) whose employment has been
17
terminated or who have died or become disabled, so long as the
aggregate amount of payments for all such redemptions or
repurchases in any fiscal year do not exceed $1 million; and
(f) The Borrower may, prior to December 31,
1996, pay a one-time dividend to Park Hospital, GmbH in an
amount not to exceed $22,000,000 and may make the payments
referred to in SECTION 2.10(A)(II);
PROVIDED, HOWEVER, that no Restricted Payments may be made,
except pursuant to CLAUSES (B), (C), (D), (E) and (F)
preceding, if a Default exists at the time of such Restricted
Payment or would result therefrom, except that the foregoing
provision will not be violated by the payment by the Borrower
of any dividend within 60 days of the date of declaration
thereof if at such date of declaration such payment would have
complied with the provisions of this SECTION 9.10."
Section 2.15 DISPOSITION OF PROPERTY. SECTION 9.12 of the
Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"A. Except as permitted by SECTION 9.4, the Borrower
will not, and will not permit any of its Subsidiaries to, sell,
lease, assign, transfer or otherwise dispose of any of its
Property, except:
(a) the Asset Dispositions specified in
SCHEDULE 9.12 hereto as agreed to among the Borrower, the Agent
and the Required Lenders in connection with the First
Amendment;
(b) Asset Dispositions by the Borrower or its
Subsidiaries to the Borrower or any Wholly-Owned Subsidiary or
Majority-Owned Subsidiary of the Borrower other than an
Excluded Subsidiary if no Default exists at the time of or will
result from such Asset Disposition;
(c) the sale of accounts receivable under the
PHC Funding Sale Documents in an amount sufficient to derive
Net Proceeds of no more than $65,000,000;
(d) dispositions of Property no longer used or
useful in the ordinary course of business; and
(e) transfers otherwise expressly permitted
under this Agreement.
B. In connection with an Asset Disposition
permitted under this Section 9.12 of any Properties which
constitute Collateral, the Agent hereby agrees to release (and
shall have the authority to release without the further consent
of any Lenders) such Collateral (at the expense of the
Borrower) as may be required to effectuate such permitted Asset
Disposition, PROVIDED, HOWEVER, that all Net Proceeds of such
Asset Disposition shall be paid to the Agent as required
pursuant to SECTION 2.7(A)."
18
Section 2.16 COMPENSATION PAID TO AFFILIATES. A new
SECTION 9.17 is hereby added to the Credit Agreement, which
SECTION 9.17 shall read as follows:
"Section 9.17. COMPENSATION PAID TO AFFILIATES. The
Borrower will not, and will not permit any of its Subsidiaries
to, pay (or agree to pay), on or after March 31, 1997,
compensation for services rendered in whatever form (other than
capital stock of the Borrower) (a) to any Affiliate of the
Borrower which, when aggregated with compensation paid to all
other Affiliates of such Affiliate, exceeds $250,000 in
aggregate amount during any fiscal year or (b) to all
Affiliates of the Borrower which, in the aggregate, exceeds
$1,000,000 during any fiscal year; PROVIDED, HOWEVER, that
customary fees and expenses paid to members of the Board of
Directors of the Borrower or any of its Subsidiaries for
services as a director shall be excluded for purposes of
determining compliance with the aforesaid maximum amounts if
and to the extent that such fees do not exceed such fees, and
such expenses are of the type, paid to any other director of
the Borrower or such Subsidiary."
Section 2.17 PHC FUNDING SALE DOCUMENTS. A new SECTION
9.18 is hereby added to the Credit Agreement, which SECTION
9.18 shall read as follows:
"Section 9.18. PHC FUNDING SALE DOCUMENTS. Except
as may result from the expiration or termination of such
program in accordance with its terms, the Borrower and its
Subsidiaries will maintain in full force and effect the
accounts receivables securitization program as contemplated by
the PHC Funding Sale Documents as in effect as of the Closing
Date without any material amendment or modification thereto
subsequent to the Closing Date which is materially adverse to
the Borrower and its Subsidiaries (except as contemplated in
the PHC Funding Sale Documents as of the Closing Date)."
Section 2.18 SENIOR LEVERAGE RATIO. Effective as of
January 31, 1997, SECTION 10.1 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:
"Section 10.1 SENIOR LEVERAGE RATIO. The Borrower
will not permit the Senior Leverage Ratio at the end of any
fiscal quarter to exceed, during the following time periods,
the following respective ratios:
CALENDAR YEAR QUARTERS ENDING MAXIMUM PERMITTED
DURING THE FOLLOWING PERIODS SENIOR LEVERAGE RATIO
January 1, 1997 through March 31,1997 2.30 to 1.00
April 1, 1997 through June 30, 1997 2.45 to 1.00
July 1, 1997 through September 30, 1997 2.50 to 1.00
October 1, 1997 through December 31, 1997 2.35 to 1.00
January 1, 1998 and at all times thereafter 2.20 to 1.00"
19
Section 2.19 MINIMUM NET WORTH. Effective as of January
1, 1997, SECTION 10.2 of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
"Section 10.2 MINIMUM NET WORTH. As of the close of
each fiscal quarter ending on or after December 31, 1996, the
Borrower will not permit Net Worth to be less than the sum of
(a) $46,000,000 plus (b) for each quarter on a cumulative basis
ending on or after the fiscal quarter ending December 31, 1996
or thereafter, seventy-five percent (75%) of the Borrower's
positive net income, if any, plus (c) seventy-five percent
(75%) of all net proceeds from any Equity Issuance following
the Closing Date."
Section 2.20 RATIO OF TOTAL DEBT TO ADJUSTED EBITDA.
Effective as of January 1, 1997, SECTION 10.3 of the Credit
Agreement is hereby amended and restated to read in its
entirety as follows:
"Section 10.3 RATIO OF TOTAL DEBT TO ADJUSTED
EBITDA. The Borrower will not permit the ratio, calculated as
of the end of each fiscal quarter ending during the periods
below, of (i) Total Debt to (ii) Adjusted EBITDA for the period
then ended, to exceed the ratio set forth below:
PERIOD RATIO
January 1, 1997 through March 31, 1997 6.70 to 1.00
April 1, 1997 through June 30, 1997 6.50 to 1.00
July 1, 1997 through September 30, 1997 6.50 to 1.00
October 1, 1997 through December 31, 1997 6.25 to 1.00
January 1, 1998 through March 31, 1998 6.00 to 1.00
April 1, 1998 and at all times thereafter 4.00 to 1.00"
Section 2.21 FIXED CHARGE COVERAGE RATIO. Effective as of
January 1, 1997, SECTION 10.4 of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"Section 10.4 FIXED CHARGE COVERAGE RATIO. The
Borrower will not permit the Fixed Charge Coverage Ratio,
calculated as of the end of each fiscal quarter ending during
the periods below, to be less than the ratio set forth below:
PERIOD RATIO
January 1, 1997 through March 31, 1998 1.00 to 1.00
April 1, 1998 and at all times thereafter 1.50 to 1.00"
Section 2.22 MINIMUM ADJUSTED EBITDA. Effective as of
January 1, 1997, a new SECTION 10.5 is hereby added to the
Credit Agreement, which SECTION 10.5 shall read in its entirety
as follows:
20
"Section 10.5 MINIMUM ADJUSTED EBITDA. As of the
last day of each fiscal quarter ending on or after December 31,
1996, the Borrower will not permit Adjusted EBITDA, in each
case (subject to the proviso below) for the twelve (12) month
period then ended, to be less than the amount set forth below,
PROVIDED, HOWEVER, that any determination of Adjusted EBITDA
made prior to December 31, 1997 shall be calculated on an
annualized basis based upon the number of days then ended
during 1997 and a 365 or 366 day year, as applicable (for
example, any determination of Adjusted EBITDA for the period
ending June 30, 1997 shall be calculated based upon the amounts
for the period from January 1, 1997 through and including June
30, 1997, multiplied by a fraction, the numerator of which is
the number of days in 1997 and the denominator of which is the
number of days during such period)."
CALENDAR YEAR QUARTERS ENDING MINIMUM PERMITTED
DURING THE FOLLOWING PERIODS ADJUSTED EBITDA
January 1, 1997 through March 31,1997 $78,700,000
April 1, 1997 through June 30, 1997 $79,900,000
July 1, 1997 through September 30, 1997 $79,900,000
October 1, 1997 through December 31, 1997 $81,400,000
January 1, 1998 through March 31, 1998 $82,900,000
April 1, 1998 and at all times thereafter $100,000,000"
Section 2.23 EVENTS OF DEFAULT. SECTION 11.1 of the
Credit Agreement is hereby amended as follows:
(a) CLAUSE (M) of SECTION 11.1 of the Credit
Agreement is hereby amended and restated to read in its
entirety as follows:
"(m) If, at any time, (i) the subordination
provisions of any of the Subordinated Notes, the Indentures or
any other Subordinated Debt Documents shall be invalidated or
shall otherwise cease to be in full force and effect or (ii)
any Restricted Payment, as defined in CLAUSE (C) of the
definition of such term, of principal shall be made with
respect to any Subordinated Debt except as may be expressly
permitted by SECTION 9.10;"; and
(b) a new CLAUSE (R) is hereby added to the end of
SECTION 11.1 immediately succeeding CLAUSE (Q) of SECTION 11.1,
which CLAUSE (R) shall read in its entirety as follows:
"(r) If the Borrower shall not have delivered to
the Agent, on or before April 16, 1997, the restated, audited
financial statements of the Borrower and its consolidated
Subsidiaries as of and for the period ended December 31, 1996,
which financial statements (i) shall have been audited by Ernst
& Young LLP and shall be accompanied by an audit opinion of
such accountants in form and substance essentially identical to
the draft audit opinion previously delivered to the Agent in
21
accordance with SECTION 4.1(B) of the First Amendment, and (ii)
shall be essentially identical in form and substance to the
draft of such financial statements previously delivered to the
Agent in accordance with SECTION 4.1(B) of the First
Amendment.".
Section 2.24 CERTAIN REMEDIES UPON THE OCCURRENCE OF AN
EVENT OF DEFAULT. The proviso at the end of SECTION 11.2
(immediately following CLAUSE (E) of SECTION 11.2) is hereby
amended and restated to read in its entirety as follows:
"PROVIDED, HOWEVER, that upon (i) the occurrence of an Event of
Default under SECTION 11.1(E) or SECTION 11.1(F), the
Commitments of all of the Lenders (including, without
limitation, the obligation of the Issuing Bank to issue Letters
of Credit) shall immediately and automatically terminate, and
the outstanding principal of and accrued and unpaid interest on
the Loans and all other amounts payable by the Borrower under
the Loan Documents shall thereupon become immediately and
automatically due and payable, and (ii) upon and concurrently
with the occurrence of an Event of Default under SECTION
11.1(M) or CLAUSE (II) of SECTION 11.1(N), the outstanding
principal of and accrued and unpaid interest on the Loans and
all other amounts payable by the Borrower under the Loan
Documents shall thereupon become immediately and automatically
due and payable, all (with respect to each of CLAUSE (I) and
(II) preceding) without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to
accelerate, protest or other formalities of any kind, all of
which are hereby expressly waived by the Borrower; PROVIDED,
FURTHER, HOWEVER, that the automatic acceleration of the Loans
and such other amounts upon the occurrence of an Event of
Default under SECTION 11.1(M) as referred to in CLAUSE (II)
preceding shall not be deemed to have occurred if the Required
Lenders expressly agree in writing, within thirty (30) days
after any such occurrence, that such acceleration has not
occurred."
Section 2.25 EXPENSES. CLAUSE (B) of SECTION 13.1 of the
Credit Agreement is hereby amended to delete the word
"reasonable" both places when such word appears.
Section 2.26 SUCCESSORS AND ASSIGNS. CLAUSE (I) of
SECTION 13.7(B) of the Credit Agreement is hereby amended and
restated to read in its entirety as follows:
"(i)except with respect to a Lender's assignment to any of its
bank Affiliates or to another Lender, each of the Agent and the
Issuing Bank and the Borrower has consented to such assignment,
which consents shall not be unreasonably withheld,".
Section 2.27 SCHEDULE 1.1(E). A new SCHEDULE 1.1(E) is
hereby added to the Credit Agreement, which SCHEDULE 1.1(E)
shall read as set forth as FIRST AMENDMENT SCHEDULE 1 to this
Amendment.
Section 2.28 SCHEDULE 9.10. A new SCHEDULE 9.10 is hereby
22
added to the Credit Agreement, which SCHEDULE 9.10 shall read
as set forth as FIRST AMENDMENT SCHEDULE 2 to this Amendment.
Section 2.29 EXHIBIT B. EXHIBIT B to the Credit Agreement
(the form of the Xxxxxxxxxx Subordinated Note) is hereby
amended to add thereto the letter agreement as set forth as
FIRST AMENDMENT EXHIBIT A to this Amendment.
Section 2.30 EXHIBIT G. The form of Notice of Borrowing
attached as a part of EXHIBIT G to the Credit Agreement is
hereby amended and restated to read as set forth as FIRST
AMENDMENT EXHIBIT B to this Amendment.
ARTICLE 3
WAIVERS AND RELATED MATTERS
Section 3.1 LIMITED WAIVERS AND AGREEMENTS AND CONDITIONS
THERETO. The waivers and other agreements contained in this
ARTICLE 3 shall be limited strictly as written and shall not
constitute a waiver of or other agreement with respect to, or
any consent to noncompliance with, any term or provision of the
Credit Agreement or any other Loan Document except as expressly
set forth in this ARTICLE 3.
Section 3.2 CERTAIN FINANCIAL COVENANTS. Subject to
SECTION 3.1 of this Amendment, the Required Lenders hereby
waive the Borrower's non-compliance with the financial
covenants set forth in SECTIONS 10.2, 10.3 and 10.4 of the
Credit Agreement for the fiscal quarters (and only for the
fiscal quarters) ended September 30, 1996 and December 31,
1996.
Section 3.3 CERTAIN PAST DUE INTEREST, ETC. Subject to
SECTION 3.1 of this Amendment, the Required Lenders hereby
waive (a) any noncompliance by the Borrower with SECTION 8.1(D)
or 8.1(G) of the Credit Agreement and (b) any Default or Event
of Default under SECTION 11.1(A), 11.1(B) or 11.1(C) of the
Credit Agreement, in each case (i.e., as to each of CLAUSES (A)
and (B) preceding) to the extent (but only to the extent) that
such noncompliance or Default or Event of Default directly
relates to the Borrower's failure, prior to April 14, 1997, to
pay the accrued and unpaid interest on the Loans, the accrued
and unpaid Commitment fees and the accrued and unpaid letter of
credit fees required to be paid concurrently with this
Amendment in accordance with SECTION 4.1(D) of this Amendment.
SECTION 3.4. ADDITIONAL WAIVERS. Subject to SECTION 3.1
of this Amendment, the Required Lenders hereby waive each of
the following Sections of the Credit Agreement, the Security
Agreement or the Subsidiary Security Agreements, as applicable,
DURING (BUT ONLY DURING) THE PERIOD APPLICABLE TO SUCH
PARTICULAR WAIVER AS SPECIFIED BELOW (and, in the case of any
breach of any representation or warranty as to which a waiver
is provided as specified below, such waiver of the Required
Lenders shall extend to any breach of any such representation
or warranty made or deemed during such period in any notice or
23
certificate delivered to the Agent or any Lender or in
connection with any extension of credit):
(a) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.2, 7.4, 7.14,
7.17, 7.23 or (as to each of Xxxxxxxxxx PHC Regional Hospital
Medical Center, Inc., Xxxxxxxxxx Senatobia Community Hospital,
Inc. and CareServices of America, Inc. only) 7.26 of the Credit
Agreement, (ii) any noncompliance by the Borrower with
SECTION 1.3, 5.1, 5.2, 8.1(A), 8.1(B), 8.1(C), 8.1(D), 8.1(E),
8.1(F), 8.1(G), 8.1(J), 8.7, 8.8 or (as to each of Xxxxxxxxxx
PHC Regional Hospital Medical Center, Inc., Xxxxxxxxxx
Senatobia Community Hospital, Inc. and CareServices of America,
Inc. only) 8.12 of the Credit Agreement, and (iii) any Default
or Event of Default under SECTION 11.1(A), 11.1(B), 11.1(C),
11.1(O) or 11.1(Q) of the Credit Agreement resulting from any
such breach or noncompliance referred to in CLAUSE (I) or (II)
preceding or (as to SECTION 11.1(O) and 11.1(Q) only) otherwise
resulting or existing, in each case (i.e., as to each of
CLAUSES (I), (II) and (III) preceding) to the extent (but only
to the extent) that such breach or noncompliance or Default or
Event of Default (A) occurred prior to April 14, 1997, and
(B) related directly to the Restatement of Financials
(including, without limitation, the matters relating thereto
disclosed under the heading "Restatement" of Item 7 and Note 2
- "Restatement of Financial Statements" of Note 2 of the Notes
to Consolidated Financial Statements in Item 8 of the draft of
the Form 10-K dated April 14, 1997 heretofore furnished to the
Agent and the Lenders and all changes in financial information
from former projections, pro formas and financial statements
reflected therein, all changes in the financial condition,
business, operations, capitalization, liabilities or prospects
of the Borrower and its Subsidiaries relating to any such
changes in financial information from former projections, pro
formas and financial statements reflected therein, and any
failure of previous financial statements or pro formas and
projections maintained, prepared, furnished or required to be
furnished under the Credit Agreement to correspond to such
Restatement of Financials);
(b) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.2, 7.14, 7.17,
7.22, 7.23 or (as to each of Xxxxxxxxxx PHC Regional Hospital
Medical Center, Inc., Xxxxxxxxxx Senatobia Community Hospital,
Inc. and CareServices of America, Inc. only) 7.26 of the Credit
Agreement, (ii) any noncompliance by the Borrower with
SECTION 8.1(A), 8.1(B), 8.1(C), 8.1(D), 8.1(G), 8.1(J), 8.7,
8.8, 8.9 or (as to each of Xxxxxxxxxx PHC Regional Hospital
Medical Center, Inc., Xxxxxxxxxx Senatobia Community Hospital,
Inc. and CareServices of America, Inc. only) 8.12 of the Credit
Agreement, and (iii) any Default or Event of Default under
SECTION 11.1(B), 11.1(C) or 11.1(Q) of the Credit Agreement
resulting from any such breach or noncompliance referred to in
CLAUSE (I) or (II) preceding or (as to SECTION 11.1(Q) only)
otherwise resulting or existing, in each case (i.e., as to each
of CLAUSES (I), (II) and (III) preceding) to the extent (but
only to the extent) that such breach or noncompliance or
24
Default or Event of Default (A) occurred prior to April 14,
1997 (except as otherwise expressly stated in the proviso in
this CLAUSE (B) below) and (B) related directly to the
condition (financial or otherwise), business, operations,
capitalization, liabilities or prospects of the Borrower and
its Subsidiaries relating to the PHC Regional Hospital as
disclosed under the headings (1) "PHC Regional Hospital" and
"Operations - Salt Lake City, Utah" under Item 7, (2) Note 3 -
"Impairment and Unusual Changes" of the Notes to Consolidated
Financial Statements in Item 8, and (3) Note 6 - "Acquisitions
and Dispositions" of the Notes to Consolidated Financial
Statements in Item 8, in each case of the draft of the Form 10-
K, dated April 14, 1997, heretofore furnished to the Agent and
the Lenders; PROVIDED, HOWEVER, that the waiver contained in
this CLAUSE (B) with respect to each of Xxxxxxxxxx PHC Regional
Hospital Medical Center, Inc., Xxxxxxxxxx Senatobia Community
Hospital, Inc. and CareServices of America, Inc. and relating
to SECTIONS 7.26 and 8.12 (and only such Sections) of the
Credit Agreement shall be a continuing waiver;
(c) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.2, 7.14, 7.17,
7.23 or (as to each of Xxxxxxxxxx PHC Regional Hospital Medical
Center, Inc., Xxxxxxxxxx Senatobia Community Hospital, Inc. and
CareServices of America, Inc. only) 7.26 of the Credit
Agreement, (ii) any noncompliance by the Borrower with
SECTION 1.3, 5.1, 5.2, 8.1(A), 8.1(B), 8.1(C), 8.1(D), 8.1(E),
8.1(F), 8.1(G), 8.1(J), 8.7, 8.8 or (as to each of Xxxxxxxxxx
PHC Regional Hospital Medical Center, Inc., Xxxxxxxxxx
Senatobia Community Hospital, Inc. and CareServices of America,
Inc. only) 8.12 of the Credit Agreement, and (iii) any Default
or Event of Default under SECTION 11.1(B), 11.1(C) or 11.1(Q)
of the Credit Agreement resulting from any such breach or
noncompliance referred to in CLAUSE (I) or (II) preceding or
(as to SECTION 11.1(Q) only) otherwise resulting or existing,
in each case (i.e., as to each of CLAUSES (I), (II) and (III)
preceding) to the extent (but only to the extent) that such
breach of noncompliance or Default or Event of Default (A)
occurred prior to April 14, 1997 and related directly to the
Pending Litigation or (B) exists or will exist now or hereafter
and relates directly to (1) the Pending Litigation or (2) any
other claims, causes of action or other proceedings that may
reasonably be expected (as of April 14, 1997) to be hereafter
asserted, pending or threatened, directly arising out of or
relating to any of the 1996 Transactions and based in whole or
part on the claims disclosed under Item 3, under the heading
"Pending Litigation" under Item 7, and in Note 16 -
"Commitments and Contingencies - Stockholders' Litigation" of
the Notes to Consolidated Financial Statements in Item 8, in
each case of the draft of the Form 10-K, dated April 14, 1997,
heretofore furnished to the Agent and the Lenders, or based in
whole or in part on the Restatement of Financials disclosed in
such draft, or (3) any shareholder or other security holder
claims, causes of action or other proceedings that may
reasonably be expected (as of April 14, 1997) to be hereafter
asserted, pending or threatened, directly arising out of or
relating to any of the matters relating to the condition
25
(financial or otherwise), business, operations, capitalization,
liabilities or prospects of the Borrower and its Subsidiaries
relating to PHC Regional Hospital referred to in CLAUSE (B)
above and as so disclosed in such draft of the Form 10-K, in
each case (i.e., as to each of CLAUSES (A), (B) and (C)
preceding) to the extent (but only to the extent) that such
matters referred to in CLAUSES (A), (B) and (C) preceding are
based upon facts or occurrences that existed or occurred on or
before April 15, 1997;
(d) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.2, 7.14, 7.17
or 7.23 of the Credit Agreement, (ii) any noncompliance by the
Borrower with SECTIONS 8.1(C), 8.1(D), 8.1(F), 8.1(G), 8.1(J),
8.7 or 8.8 of the Credit Agreement, and (iii) any Default or
Event of Default under SECTION 11.1(B), 11.1(C) or 11.1(Q) of
the Credit Agreement resulting from any such breach or
noncompliance referred to in CLAUSE (I) or (II) preceding or
(as to SECTION 11.1(Q) only) otherwise resulting or existing,
in each case (i.e., as to each of CLAUSES (I), (II) and (III)
preceding) to the extent (but only to the extent) that such
breach or noncompliance or Default or Event of Default (A)
occurred prior to April 14, 1997 and (B) directly related to
any failure of the Borrower to comply with any Governmental
Requirement relating to the reporting or disclosure
requirements under federal or state securities laws and either
relating to the 1996 Transactions or arising in connection with
or relating in whole or in part to the facts forming the basis
for the Pending Litigation or to the matters referred to in
CLAUSES (A), (B) and (C) above;
(e) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.2, 7.14, 7.16
or 7.22 of the Credit Agreement, (ii) any noncompliance by the
Borrower with SECTION 5.1, 8.1(C), 8.1(D), 8.1(G), 8.1(J) or
8.9 of the Credit Agreement, and (iii) any Default or Event of
Default under SECTION 11.1(B), 11.1(C) or 11.1(Q) of the Credit
Agreement resulting from any such breach or noncompliance
referred to in CLAUSE (I) or (II) preceding or (as to SECTION
11.1(Q) only) otherwise resulting or existing, in each case
(i.e., as to each of CLAUSES (I), (II) and (III) preceding) to
the extent (but only to the extent) that such breach or
noncompliance or Default or Event of Default (A) occurred prior
to April 14, 1997 and (B) directly related to any of the
following matters under the PHC Funding Sale Documents that
have been cured or waived as of April 14, 1997: any default,
event of default, Early Amortization Event, Exclusion Event or
right of set off under (and as used or defined in) any of the
PHC Funding Sale Documents;
(f) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.14 or 7.15 of
the Credit Agreement, (ii) any noncompliance by the Borrower
with SECTION 5.1, 5.2, 5.3, 8.1(C), 8.1(D), 8.1(G), 9.1, 9.4 or
9.11 of the Credit Agreement and (iii) any Default or Event of
Default under SECTION 11.1(B), 11.1(C) or 11.1(O) of the Credit
Agreement resulting from such breach or noncompliance referred
26
to in CLAUSE (I) or (II) preceding or (as to SECTION 11.1(O)
only) otherwise resulting or existing, in each case (i.e., as
to each of CLAUSES (I), (II) and (III) preceding) to the extent
(but only to the extent) that such breach or compliance or
Default or Event of Default (A) occurred or occurs on or before
May 15, 1997 and (B) directly related or relates to the failure
of the Borrower to disclose that certain of the following
entities were Subsidiaries of the Borrower as of the Closing
Date, the failure of the Borrower to grant or cause to be
granted any Lien on the Capital Stock of any of the following
entities, the failure by such entities to guarantee the
Obligations pursuant to the Master Guaranty or the failure to
deliver to the Agent certificates evidencing outstanding
certificated Capital Stock of such entities, in each case to
the extent required by the Loan Documents: Xxxxxxxxxx Xxxxxxxxx
County Medical Center, Inc. of Virginia, PHC Utah, Inc., Three
Rivers of Houston County, Inc., CliniCare of Utah, Inc. and
Premier Care Group, Inc.;
(g) (i) any breach by the Borrower of any
representation or warranty under SECTION 6.2, 7.14 or 7.15 of
the Credit Agreement, (ii) any noncompliance by the Borrower
with SECTION 5.1, 5.2, 5.3, 8.1(C), 8.1(D), 8.1(G), 9.1, 9.4 or
9.11 of the Credit Agreement, and (iii) any Default or Event of
Default under SECTION 11.1(B), 11.1(C) or 11.1(O) of the Credit
Agreement resulting from any such breach or noncompliance
referred to in CLAUSE (I) or (II) preceding or (as to SECTION
11.1(O) only) otherwise resulting or existing, in each case
(i.e., as to each of CLAUSES (I), (II) and (III) preceding) to
the extent (but only to the extent) that such breach or
noncompliance or Default or Event of Default (A) occurred or
occurs on or before June 15, 1997 and (B) directly related or
relates to the failure of the Borrower to redesignate Excluded
Subsidiaries after the Closing Date in accordance with the
requirements (the "EXCLUDED SUBSIDIARY REQUIREMENTS") set forth
in CLAUSE (A) of the definition of "Excluded Subsidiaries"
(which redesignation is now required under this Amendment to
occur by June 15, 1997) and any resulting failure of the
Borrower to grant or cause to be granted any Lien on the
Capital Stock of any entity no longer conforming to the
Excluded Subsidiary Requirements, the failure by such entities
no longer so conforming to guarantee the Obligations pursuant
to the Master Guaranty or the failure to deliver to the Agent
certificates evidencing outstanding certificated Capital Stock
of such entities; and
(h) (i) any breach by the Borrower or any Subsidiary
Pledgor of the representation and warranty contained in the
third sentence of SECTION 3.2 of the Security Agreement and the
Subsidiary Security Agreements executed by the Borrower and the
Subsidiary Pledgors, respectively, and (ii) any Default or
Event of Default under SECTION 11.1(B) of the Credit Agreement
resulting from such breach referred to in CLAUSE (I) preceding,
in each case (i.e., as to each of CLAUSES (I) and (II)
preceding) to the extent (but only to the extent) that such
breach or Default or Event of Default (A) occurred prior to
April 14, 1997, and (B) directly relates to any (if any)
27
noncompliance with the PHC Funding Sale Documents if and to the
extent that such PHC Funding Sale Documents restrict the
ability of the Borrower and the Subsidiary Pledgors to pledge
Capital Stock of the Subsidiaries which is required to be
pledged in accordance with the Credit Agreement, which
noncompliance has been waived on or before April 14, 1997;
PROVIDED, HOWEVER, that, notwithstanding anything to the
contrary contained in this SECTION 3.4 preceding, nothing
contained in this SECTION 3.4 is intended to or does waive any
breach or noncompliance or Default or Event of Default of or
with respect to (1) any Section of the Credit Agreement or any
other Loan Document except as is expressly stated in this
SECTION 3.4, (2) without limiting the generality of the
foregoing, any representation or warranty in SECTION 7.2(A)
(except to the extent that the last sentence thereof refers to
any material adverse change waived under CLAUSE (B) of this
SECTION 3.4), 7.2(B) or 7.2(O) as such Sections are amended by
this Amendment or any covenant referred to in SECTION 10.1,
10.2, 10.3, 10.4 or 10.5 of the Credit Agreement or (3) without
limiting the generality of the foregoing, any Event of Default
referred to in SECTIONS 11.1(D), 11.1(E), 11.1(F), 11.1(G),
11.1(H), 11.1(I), 11.1(J), 11.1(K), 11.1(L), 11.1(M), 11.1(N),
11.1(P) or 11.1(R) of the Credit Agreement.
As used in this SECTION 3.4, the following terms shall have the
following meanings:
"FORM 10-K" means the Borrower's Annual Report on Form 10-
K filed with the Securities and Exchange Commission on April
15, 1997 for the fiscal year ended December 31, 1996.
"PENDING LITIGATION" means the shareholder and other
security holder litigation described under Item 3 of the draft
of the Form 10-K dated April 14, 1997, heretofore furnished to
the Agent and the Lenders.
"RESTATEMENT OF FINANCIALS" means the Borrower's
restatement of the financial statements of the Borrower and its
Subsidiaries for each of the following: (a) the consolidated
statements of operations and cash flows for (i) each of the
fiscal years ended December 31, 1992, December 31, 1993,
December 31, 1994 and December 31, 1995, and (ii) for each of
the fiscal quarters in the fiscal years ended December 31,
1992, December 31, 1993, December 31, 1994 and December 31,
1995, and (iii) for each of the fiscal quarters in the nine
months ended September 30, 1996; and (b) the consolidated
balance sheets (i) as of each of December 31, 1992, December
31, 1993, December 31, 1994 and December 31, 1995, and (ii) as
of each of March 31, June 30 and September 30 in each of the
fiscal years December 31, 1992, December 31, 1993, December 31,
1994, December 31, 1995 and December 31, 1996.
"1996 TRANSACTIONS" means all transactions and the sale
and issuance of stock, notes or securities in connection with
the Merger, including without limitation (i) the Merger, (ii)
the Related Transactions as defined in the Credit Agreement,
28
together with the execution and delivery of the documents and
instruments in connection therewith, and (iii) the issuance and
funding of the Common Stock of the Borrower on August 16, 1996
and the execution and delivery of the documents and instruments
in connection therewith.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.1 The effectiveness of this Amendment,
including, without limitation, the waivers and other agreements
contained in ARTICLE 3 hereof, is conditioned upon satisfaction
of each of the following conditions precedent, each of which
must have occurred or have been complied with to the reasonable
satisfaction of the Agent:
(a) the amendment and waiver fee required to be paid
in accordance with SECTION 5.2 of this Amendment shall have
been paid in full to the Agent;
(b) the Borrower shall have delivered to the Agent
(which is contemplated to occur substantially simultaneously
with the delivery of this Amendment) a draft (current as of the
date of delivery of this Amendment) of the restated, audited
financial statements of the Borrower and its consolidated
Subsidiaries as of and for the period ended December 31, 1996,
and a draft of the audit opinion of Ernst & Young LLP to be
delivered in connection therewith, which draft financial
statements shall not differ materially (within the meaning of
GAAP) from the draft of such audited financial statements dated
April 14, 1997, previously delivered to the Agent and the
Lenders, and which draft opinion shall be acceptable to the
Agent in form and substance;
(c) the letter agreement in the form set forth as
FIRST AMENDMENT EXHIBIT A to this Amendment shall have been
executed by the holder of the Xxxxxxxxxx Subordinated Note and
the Borrower, and the Borrower shall have delivered a fully
executed counterpart of such letter agreement to the Agent;
(d) (i) all interest accrued on the Loans in
accordance with SECTION 2.4(A) of the Credit Agreement,
(ii) all Commitments Fees accrued with respect to the
Commitments in accordance with SECTION 2.11(A) of the Credit
Agreement and (iii) all letter of credit fees payable in
accordance with SECTION 2.14(C) of the Credit Agreement, in
each case for the period from August 16, 1996, through
April 13, 1997, which (in accordance with the Credit Agreement
as in effect prior to this Amendment) were (based upon the
restated financial statements of the Borrower) payable by the
Borrower at any time during such period but have not previously
been paid by the Borrower shall have been paid by the Borrower
to the Agent, for the account of the Lenders, in accordance
with the Credit Agreement; and the Borrower agrees that the
amounts referred to in CLAUSES (I), (II) and (III) immediately
preceding are $295,878.82, $193,603.48 and $25,258.63,
29
respectively;
(e) no Default or Event of Default shall exist as of
April 14, 1997, immediately after giving effect to this
Amendment;
(f) each of the Subsidiary Guarantors and Subsidiary
Pledgors shall have consented to this Amendment and ratified
and confirmed all of its indebtedness, liabilities and
obligations under, and all of its Liens granted pursuant to or
evidenced by, each of the Security Documents and other Loan
Documents to which it is a party pursuant to agreements
satisfactory in form and substance to the Agent, the
Documentation Agent and the Managing Agent;
(g) the Borrower shall have delivered to the Agent a
true, correct and complete copy of the Articles of
Incorporation of the Borrower as certified by the Secretary of
State of California and the Bylaws of the Borrower as certified
by the Secretary of the Borrower;
(h) the Agent shall have received legal opinions,
addressed to the Agent, the Documentation Agent, the Managing
Agent, the Co-Agents and the Lenders, rendered by the General
Counsel of the Borrower and Mayor, Day, Xxxxxxxx & Xxxxxx,
L.L.P. in form and substance satisfactory to the Agent;
(i) the Borrower shall have delivered the Pro Formas
and the Projections to the Agent;
(j) this Amendment and the other Loan Documents
executed in connection herewith shall be valid and enforceable
(except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors'
rights and general principles of equity) with respect to and
against, respectively, the Borrower and its Subsidiaries who
are parties thereto; and
(k) each of SCHEDULES 9.5 and 9.12 referred to in
SECTIONS 2.13 and 2.15, respectively, of this Amendment shall
have been delivered to the Lenders and shall have been agreed
to in writing by the Borrower and the Agent (and the Required
Lenders by virtue of their execution of this Amendment).
ARTICLE 5
MISCELLANEOUS
Section 5.1 REPRESENTATIONS AND WARRANTIES. The Borrower
hereby represents and warrants to the Agent, the Documentation
Agent, the Managing Agent, the Co-Agents and the Lenders as
follows:
(a) no Default or Event of Default will exist
immediately after giving effect to this Amendment;
(b) all representations and warranties contained in
30
ARTICLE 7 of the Agreement (as amended by this Amendment) are
true and correct in all material respects as of April 14, 1997,
as if such representations and warranties had been made on and
as of April 14, 1997 (except to the extent that such
representations and warranties are expressly made only as of a
specific date or dates);
(c) to the knowledge of the Borrower, as of April
14, 1997, and after giving effect to this Amendment and the
waiver with respect to the Xxxxxxxxxx Subordinated Note as
referred to in this Amendment, no "Default" or "Event of
Default", as such terms are defined in the New Indenture and
the Xxxxxxxxxx Subordinated Note, has occurred or is continuing
and no other event or circumstance has occurred or is
continuing which, with the giving of notice or the lapse of
time or both, would require or permit the acceleration of the
maturity of any Subordinated Debt or the prepayment or
redemption of any Subordinated Debt prior to August 15, 2006,
PROVIDED, HOWEVER, that the New Subordinated Debt is subject to
redemption on or after August 15, 2001 in accordance with
Article Eleven of the New Indenture;
(d) as of April 14, 1997, no payments have been made
on or with respect to any Subordinated Debt except for
regularly scheduled payments of interest accrued thereon in
accordance with the terms thereof;
(e) as of April 14, 1997, the only Subsidiaries of
the Borrower are (i) those specified on SCHEDULE 7.15 to the
Credit Agreement and (ii) the following Subsidiaries:
Xxxxxxxxxx Xxxxxxxxx County Medical Center, Inc. of Virginia,
PHC Utah, Inc., Three Rivers of Houston County, Inc., CliniCare
of Utah, Inc. and Premier Care Group, Inc.; and
(f) as of April 14, 1997, (i) to the Borrower's
knowledge after due inquiry (including, without limitation,
inquiry with Sheffield Receivables Corporation and Bankers
Trust Company) and after giving effect to any and all waivers
which have been granted, no event or circumstance has occurred
or exists and is continuing which, with the giving of notice or
the passage of time, or both, would constitute a default (no
matter how used or defined), an event of default (no matter how
used or defined), an Early Amortization Event or an Exclusion
Event under that certain Pooling Agreement among PFC Funding
Corp., Sheffield Receivables Corporation and Bankers Trust
Company, as Trustee, dated as of April 16, 1993, which
established the PFC Funding Corp. II Healthcare Receivables
Trust securitization program (the "SECURITIZATION PROGRAM")
evidenced by the PHC Funding Sale Documents; and (ii) the
Borrower has not received any demand for, or other notice
involving, the payment of any amount under that certain
Guarantee executed by the Borrower in favor of PFC Funding
Corp. dated as of April 16, 1993.
Section 5.2 AMENDMENT AND WAIVER FEE. The Borrower shall,
concurrently with the execution of this Amendment by the
Required Lenders, pay to the Agent an amendment and waiver fee
31
in the amount of $500,000, which fee shall be promptly paid by
the Agent to those Lenders who execute this Amendment on or
before April 15, 1997 and shall be allocated to such Lenders
pro rata based upon their Commitments.
Section 5.3 RATIFICATION AND CONFIRMATION OF LIENS. The
Borrower hereby ratifies and confirms all of its indebtedness,
liabilities and obligations under, and all of its Liens granted
pursuant to or evidenced by, each of the Security Documents and
other Loan Documents to which it is a party.
Section 5.4 COSTS. The Borrower shall pay all reasonable
fees, costs and expenses incurred by the Agent and the
Documentation Agent in connection with the negotiation,
preparation, execution and consummation of this Amendment and
the other Loan Documents and transactions contemplated hereby,
including without limitation the reasonable fees and expenses
of counsel to the Agent and the Documentation Agent.
Section 5.5 HEADINGS. The headings, captions and
arrangements used in this Amendment are for convenience only
and shall not affect the interpretation of this Amendment.
Section 5.6 EFFECT OF THIS AMENDMENT. The Credit
Agreement, as amended by this Amendment, shall remain in full
force and effect except that any reference therein, or in any
other Loan Document, to the Credit Agreement shall be deemed to
mean and refer to the Credit Agreement as amended by this
Amendment.
Section 5.7 COUNTERPARTS. This Amendment may be executed
in one or more counterparts, by means of facsimile or
otherwise, each of which shall be deemed an original, but all
of which together shall constitute one and the same Amendment.
SECTION 5.8 GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES)
AND APPLICABLE LAWS OF THE UNITED STATES.
SECTION 5.9 NO ORAL AGREEMENTS. THE CREDIT AGREEMENT, AS
AMENDED BY THIS AMENDMENT, TOGETHER WITH THE OTHER LOAN
DOCUMENTS, REPRESENT THE ENTIRE AGREEMENT BETWEEN AND AMONG THE
PARTIES, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE
PARTIES.
IN WITNESS WHEREOF, the undersigned parties hereto have
duly executed this Amendment effective as of the dates first
above written.
THE BORROWER:
XXXXXXXXXX HEALTHCARE CORPORATION
32
By:
Name:
Title:
THE AGENTS AND THE LENDERS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 1
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender and as Issuing Bank
By:
Name:
Title:
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 2
BANQUE PARIBAS, as Documentation Agent
and as a Lender
By:
Name:
Title:
By:
33
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 3
NATIONSBANK OF TEXAS, N.A., as Managing
Agent and as a Lender
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 4
AMSOUTH OF ALABAMA
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 5
BANK OF NEW YORK
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 0
XXX XXXX XX XXXX XXXXXX
By:
34
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 7
CREDIT LYONNAIS NEW YORK BRANCH,
as Co-Agent and as a Lender
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 8
CORESTATES BANK, N.A.
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 9
FUJI BANK LIMITED
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 10
FLEET NATIONAL BANK
By:
35
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 11
KEY BANK OF UTAH
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 12
THE LONG-TERM CREDIT
BANK OF JAPAN, LTD.
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 13
MELLON BANK, N.A.
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 14
PNC BANK, N.A.
By:
36
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 15
TORONTO-DOMINION (TEXAS), INCORPORATED,
as Co-Agent and as a Lender
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 00
XXXXX XXXX XX XXXXXXXXXX, N.A.
By:
Name:
Title:
FIRST AMENDMENT TO CREDIT AGREEMENT - Page 17
