EXHIBIT 10.12
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this
"Amendment") dated as of July 31, 1997 is made between APRIA
HEALTHCARE GROUP INC., a corporation organized and existing under
the laws of the State of Delaware ("Apria") and the Subsidiaries
of Apria identified on the signature pages of this Amendment and
any Subsidiary of Apria that, subject to Section 9.13 of the
Credit Agreement, shall have executed a Joinder Agreement (Apria
and such Subsidiaries are referred to individually as a
"Borrower" and, collectively, as the "Borrowers"), each of the
financial institutions listed on Schedule I to the Credit
Agreement or that, pursuant to Section 13.4 of the Credit
Agreement, shall become a "Bank" thereunder (individually, a
"Bank" and, collectively, the "Banks"), NATIONSBANK OF TEXAS,
N.A., as the Syndication Agent, and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as the Administrative Agent.
RECITALS
I. The Borrowers, the Banks, the Syndication Agent and the
Administrative Agent are parties to the Credit Agreement dated as
of August 9, 1996 (the "Credit Agreement"), as amended by the
First Amendment to Credit Agreement dated as of April 22, 1997
(the "First Amendment"), pursuant to which the Banks extended
certain credit to the Borrowers.
II. The Borrowers have requested that up to $76,000,000 of
the reserves and charges taken by Apria in the fourth quarter of
its 1996 fiscal year and up to $100,000,000 of the reserves and
charges to be taken in the second quarter of its 1997 fiscal year
be excluded from the calculation of Consolidated EBITDA and that
the net losses from such periods be deducted from the calculation
of Minimum Consolidated Net Worth.
III. The Borrowers have requested that the Total Revolving
Loan Commitment be reduced to $600,000,000, with the Revolving
Loan Commitment of each Bank commensurately reduced by 25%.
IV. The Borrowers have requested that the Credit Agreement
be amended to reflect the foregoing.
V. The Banks are willing to accommodate the requests of the
Borrowers on the terms and conditions specified in this
Amendment.
AGREEMENT
In consideration of the foregoing premises and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this
Amendment agree as follows:
1. Defined Terms. Capitalized terms used but not defined
in this Amendment shall have the respective meanings assigned to
such terms in the Credit Agreement.
2. Amendment to Recitals. The Recitals to the Credit
Agreement are hereby amended by deleting the amount
"$800,000,000" on the third line of the first Recital and
replacing it with the amount "$600,000,000".
3. Amendments to Section 1.1.
(a) The definition of "Consolidated EBITDA" in
Section 1.1 of the Credit Agreement is hereby amended to read in
its entirety as follows:
"Consolidated EBITDA" shall mean, for the four-
quarter period preceding any date of determination, the
sum of Consolidated Net Income (before consolidated
interest income, Consolidated Interest Expense and
provisions for taxes, and extraordinary gains or losses
or gains or losses from sales of assets other than
inventory or Rental Equipment sold in the Ordinary
Course of Business) for such period, plus (a) (to the
extent deducted in arriving at Consolidated Net Income
for such period) (i) the amount of amortization of
intangibles, (ii) depreciation, (iii) all Merger Costs
incurred in connection with the Abbey Merger
(determined on an pre-tax basis) and (iv) the 1996
Charges and Reserves and the 1997 Charges and Reserves,
plus (b) the EBITDA allocable to any Permitted Acquired
Business acquired in such period for such period, minus
(c) the EBITDA allocable to any assets, capital stock,
division or business group divested by Apria or any of
its Consolidated Subsidiaries in such period; provided
that with respect to clauses (b) and (c), such EBITDA
shall only be added or subtracted, as applicable, for
the period commencing at the beginning of such four-
quarter period through the date of such acquisition or
divestiture.
(b) The definition of "Total Revolving Loan
Commitment" in Section 1.1 of the Credit Agreement is hereby
amended to read in its entirety as follows:
"Total Revolving Loan Commitment" shall mean, at
any time, the sum of the Revolving Loan Commitments of
each of the Banks. The principal amount of the Total
Revolving Loan Commitment is $600,000,000 as of July
31, 1997.
(c) Section 1.1 of the Credit Agreement is hereby
amended by adding the following definition in proper alphabetical
order:
"1997 Charges and Reserves" shall mean the one
time charges and reserves in an aggregate amount of up
to $100,000,000 taken by Apria in the second quarter of
its 1997 fiscal year.
4. Amendment to Section 9.13. Section 9.13 of the Credit
Agreement is hereby amended by deleting subsection (a)(i) of such
Section and replacing it with the following new subsection
(a)(i):
(i) with respect to all Permitted Transactions
(other than Subsidiary Reorganizations) in any one
fiscal year, the sum (without duplication) of (I) cash
paid by Apria in connection with such Permitted
Transactions, (II) the Fair Market Value of Apria
Common Stock issued in connection with such Permitted
Transactions and (III) the amount (determined by using
the face amount of the debt or the amount payable at
maturity, whichever is greater) of all Permitted Debt
incurred, assumed or acquired in all such Permitted
Transactions, shall not exceed (x) $25,000,000 in
fiscal 1997 and (y) $60,000,000 in any fiscal year
thereafter;
5. Amendments to Section 10.
(a) Section 10.3 of the Credit Agreement is
hereby amended to read in its entirety as follows:
10.3 Dividends. Apria will not, nor permit any of its
Subsidiaries to, declare or pay any Dividends except
that: (1) any Subsidiary of Apria may pay Dividends to
Apria or any Wholly-Owned Subsidiary of Apria; and (ii)
provided that no Default or Event of Default has
occurred and is continuing or would result therefrom,
Apria may declare and pay Dividends in an amount not to
exceed $2,500,000 in any fiscal year.
(b) Section 10.9 of the Credit Agreement is
hereby amended by deleting the proviso at the end of such
Section, which proviso was added pursuant to the First Amendment.
(c) Section 10.10 of the Credit Agreement is
hereby amended to read in its entirety as follows:
10.10 Minimum Consolidated Net Worth. Apria will
not permit its Consolidated Net Worth at the end of any
fiscal quarter, commencing with the fiscal quarter
ending June 30, 1996, to be less than an amount equal
to (a) $313,832,767, plus (b) an amount equal to 75% of
Consolidated Net Income (in excess of zero) for each
fiscal quarter commencing with the fiscal quarter
ending September 30, 1996, which amount shall be added
to Consolidated Net Worth as of the last day of each
such fiscal quarter, plus (c) 100% of the net proceeds
of issuances of Apria Common Stock, minus (d) any
amounts used by Apria to repurchase its capital stock
in accordance with Section 10.3(iii) prior to July 31,
1997, minus (e) the net losses of Apria and its
Subsidiaries as reflected on Apria's consolidated
financial statements for the fiscal quarter ended
December 31, 1996 and the fiscal quarter ended June 30,
1997 (each calculated on an after tax basis).
(d) Section 10.11 of the Credit Agreement is
hereby amended by deleting the proviso at the end of such
Section, which proviso was added pursuant to the First Amendment.
6. Amendment to Annex I. Annex I to the Credit Agreement
is hereby amended by deleting the chart on page 1 of such Annex
and replacing it with the chart on Attachment A to this
Amendment.
7. Applicable Margin. Notwithstanding anything contained
in this Amendment or the Credit Agreement to the contrary and
irrespective of the then applicable Consolidated Funded
Indebtedness to Consolidated EBITDA Ratio or rating of Apria's
senior unsecured non-credit enhanced Indebtedness (unless such
ratio or rating would result in the Applicable Margin being based
at Level I), until the receipt by the Administrative Agent of the
financial statements of Apria and its consolidated Subsidiaries
for the fiscal year ended on December 31, 1997 pursuant to
Section 9.1(b) of the Credit Agreement, together with the
compliance certificate dated as of such date pursuant to Section
9.1(d) of the Credit Agreement, the Applicable Margin as set
forth on Annex I of the Credit Agreement (as amended by this
Amendment) shall not be based at a Level less than Level II (i.e.
Level III, IV or V).
8. Amendment to Schedule I. Schedule I to the Credit
Agreement is hereby deleted in its entirety and replaced with
Attachment B to this Amendment.
9. Amendment Fees, etc. The Borrowers shall to pay to
the Administrative Agent for distribution to each Bank that
approves this Amendment on or prior to August 8, 1997 an
amendment fee equal to .10% of such Bank's Commitment Amount as
in effect subsequent to the reductions set forth in this
Amendment.
10. Representations. Each of the Borrowers represents and
warrants to the Banks that it has the corporate or partnership
power to execute, deliver and perform the terms and provisions of
this Amendment and has taken all necessary corporate or
partnership action to authorize the execution, delivery and
performance by it of this Amendment. Each of Apria and its
Material Subsidiaries has duly executed and delivered this
Amendment and this Amendment constitutes its legal, valid and
binding obligation enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles
relating to enforceability.
11. Conditions Precedent. The effectiveness of this
Amendment is subject to (i) the Administrative Agent's receipt of
the consent of the Required Banks, (ii) each of the
representations and warranties contained in Section 8 of the
Credit Agreement being true and correct as of the date of this
Amendment, (iii) the receipt by the Administrative Agent of this
Amendment, duly executed and delivered by each of the Borrowers
and (iv) the payment of the fees set forth in Section 9.
12. Reference to and Effect on the Credit Agreement, Notes
and Guaranty.
(a) Except as specifically amended by this
Amendment, the Credit Agreement shall remain in full force and
effect and is hereby ratified and confirmed.
(b) This Amendment shall be construed as one with
the Credit Agreement and the Credit Agreement shall, where the
context requires, be read and construed throughout so as to
incorporate this Amendment.
(c) All documents executed in connection with the
Credit Agreement, including, but not limited to, the Notes and
the Guaranty shall remain in full force and effect and are hereby
ratified and confirmed with respect to the Credit Agreement, as
amended hereby.
13. Entire Agreement. This Amendment, together with the
Credit Agreement and the other documents referred to in, or
executed in connection with, the Credit Agreement supersedes all
prior agreements and understandings, written or oral, among the
parties with respect to the subject matter of this Amendment.
14. Expenses. The Borrowers shall reimburse the
Administrative Agent on demand for all costs, expenses and
charges (including, without limitation, reasonable fees and
charges of external legal counsel for the Administrative Agent)
incurred by the Administrative Agent in connection with the
preparation, performance or enforcement of this Amendment.
15. Successors and Assigns. This Amendment shall be
binding upon and inure to the benefit of its parties and their
respective successors and permitted assigns.
16. Severability. Any provision of this Amendment that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
this Amendment and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
17. Captions. The captions and section headings appearing
in this Amendment are included solely for convenience of
reference and are not intended to affect the interpretation of
any provision of this Amendment.
18. Counterparts. This Amendment may be executed in any
number of counterparts all of which when taken together shall
constitute one and the same instrument and any of the parties to
this Amendment may execute this Amendment by signing any such
counterpart; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signatures are physically attached to the same document.
19. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties to this Amendment have
caused their duly authorized officers to execute and deliver this
Amendment as of the date first above written.
APRIA HEALTHCARE GROUP INC.
APRIA HEALTHCARE, INC.
APRIA NUMBER ONE, INC.
APRIA NUMBER TWO, INC.
PROTOCARE OF METROPOLITAN NEW YORK,
INC.
HOMEDCO OF NEW YORK STATE, INC.
By:
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:
------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By:
------------------------------
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as a Bank and as Syndication Agent
By:
------------------------------
Name:
Title:
ABN AMRO BANK N.V.,
Los Angeles International Branch
By: ABN AMRO NORTH AMERICA, INC.
as agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
BANK OF IRELAND/GRAND CAYMAN BRANCH
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
BANQUE NATIONALE DE PARIS,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title
By:
------------------------------
Name:
Title:
BANQUE PARIBAS,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
CREDIT LYONNAIS
New York Branch
By:
------------------------------
Name:
Title:
DEUTSCHE BANK AG, acting through
its Los Angeles Branch and/or its
Cayman Islands Branch
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By:
------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:
------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LTD.,
Los Angeles Agency
By:
------------------------------
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN, LTD., as a Bank and as a Co-
Agent
By:
------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:
------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as a Bank and as a Co-Agent
By:
------------------------------
Name:
Title:
XXXXX FARGO BANK, N.A.
By:
------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:
------------------------------
Name:
Title:
THE SAKURA BANK LIMITED
By:
------------------------------
Name:
Title:
THE SANWA BANK, LIMITED
By:
------------------------------
Name:
Title:
THE SUMITOMO BANK LIMITED
By:
------------------------------
Name:
Title:
THE FUJI BANK, LIMITED,
Los Angeles Agency
By:
------------------------------
Name:
Title:
ATTACHMENT A
ANNEX I
APPLICABLE MARGIN
-------------------
Applicable Margin
(basis points per anum)
-----------------------
Level Consolidated Funded for
Indebtedness to interest on for Revolving
Consolidated EBITDA Eurodollar Loan Commitment
Ratio Loans Fee
----- ----------------------- ----------- --------------
Level I Greater than 2.5 to 1 150 37.5
Level II Less than or equal to 112.5 25.0
2.5 to 1 and greater
than 2.0 to 1
Level III Less than or equal to 87.5 22.5
2.0 to 1 and greater
than 1.5 to 1
Level IV Less than or equal to 75.0 17.5
1.5 to 1 and greater
than 1.0 to 1
Level V Less than or equal 50.0 15.0
to 1.0 to 1
ATTACHMENT B
SCHEDULE I
COMMITMENTS
Pro Rata
Bank Commitment Share
---- ----------- -----
Bank of America
National Trust and
Savings Association $ 56,250,000 9.375%
NationsBank of Texas, N.A. $ 56,250,000 9.375%
ABN AMRO Bank N.V.,
Los Angeles International
Branch $ 18,750,000 3.125%
Bank of Ireland/Grand
Cayman Branch $ 11,250,000 1.875%
The Bank of New York $ 26,250,000 4.375%
The Bank of Nova Scotia $ 45,000,000 7.500%
Banque Nationale de Paris $ 37,500,000 6.250%
Banque Paribas $ 33,750,000 5.625%
Credit Lyonnais
New York Branch $ 26,250,000 4.375%
Deutsche Bank AG,
Los Angeles Branch and/or
Cayman Islands Branch $ 15,000,000 2.500%
The First National Bank
of Chicago $ 18,750,000 3.125%
First Union National
Bank of North Carolina $ 18,750,000 3.125%
The Fuji Bank Limited,
Los Angeles Agency $ 11,250,000 1.875%
The Industrial Bank of
Japan, Ltd., Los Angeles
Agency $ 26,250,000 4.375%
The Long-Term Credit
Bank of Japan, Ltd. $ 41,250,000 6.875%
Mellon Bank, N.A. $ 18,750,000 3.125%
The Mitsubishi Trust
and Banking Corporation $ 11,250,000 1.875%
The Sakura Bank Limited $ 11,250,000 1.875%
The Sanwa Bank Limited $ 11,250,000 1.875%
The Sumitomo Bank Limited $ 11,250,000 1.875%
Toronto Dominion (Texas),
Inc. $ 33,750,000 5.625%
Union Bank of California,
N.A. $ 33,750,000 5.625%
Xxxxx Fargo Bank, N.A. $ 26,250,000 4.375%
============ ======
TOTAL $600,000,000 100%
