THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
AND APPROVAL OF ASSET DISPOSITION
THIS THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND
APPROVAL OF ASSET DISPOSITION (THIS "AGREEMENT") is made and entered into
effective as of June 30, 1999 (the "EFFECTIVE DATE") by and among
▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION, a California corporation (the
"BORROWER"), PARIBAS, a bank organized and existing under the laws of the
Republic of France ("PARIBAS"), as Agent, TORONTO DOMINION (TEXAS), INC.,
a Delaware corporation ("TD"), as Documentation Agent, BANK OF MONTREAL,
a Canadian chartered bank ("BMO"), as Administrative Agent, and the
Lenders as defined in the below-referenced Credit Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, Paribas, as lead agent for the Lenders (in
such capacity, together with its successors in such capacity, the
"AGENT") and as the Issuing Bank, TD, as documentation agent for the
Lenders (in such capacity, the "DOCUMENTATION AGENT") and BMO, as
administrative agent for the Lenders (in such capacity, the
"ADMINISTRATIVE AGENT"), and the Lenders (as defined therein) are parties
to that certain Amended and Restated Credit Agreement, dated as of March
30, 1998, as amended (the "CREDIT AGREEMENT");
WHEREAS the Borrower and the Required Lenders desire to amend the
Credit Agreement in the manner hereinafter set forth; and
WHEREAS, the Borrower desires that the Required Lenders approve the
disposition of the Utah Properties (as defined below);
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter contained, for the
consideration stipulated in Section 9 below and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower and the Required Lenders, each intending to be
legally bound, hereby mutually agree as follows:
1. CAPITALIZED TERMS. All capitalized terms used herein and not
otherwise defined shall have the respective meanings ascribed to such
terms in the Credit Agreement.
2. AMENDMENT OF SECTION 1.1: DEFINITIONS. Section 1.1 of the
Credit Agreement is hereby amended as follows:
(a) ADDITION OF THE DEFINITION OF EXECUTIVE AGREEMENTS. The
following definition of Executive Agreements is hereby added to
Section 1.1 of the Credit Agreement.
"EXECUTIVE AGREEMENTS" means those certain agreements
executed on November 25, 1998, as amended, between the Borrower
and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, as more fully described in the Borrower's annual
report on Form 10-K for the fiscal year ended December 31,
1998.
(b) AMENDMENT OF THE DEFINITION OF ADJUSTED EBITDA. The
definition of "Adjusted EBITDA" is hereby amended and restated
in its entirety as follows:
"ADJUSTED EBITDA" means, on a consolidated basis without
duplication for the Borrower and its Subsidiaries for any
period the Net Income (Loss) for such period taken as a single
accounting period (excluding the cumulative effect of a
non-cash change in accounting and discontinued operations),
PLUS (a) the sum of the following amounts for the Borrower and
its Subsidiaries for such period determined on a consolidated
basis in conformity with GAAP to the extent included in the
determination of Net Income (Loss): (i) Interest Expense, (ii)
depreciation expense, (iii) amortization expense, (iv) non-cash
impairment charges, (v) income tax expense and (vi)
extraordinary losses MINUS extraordinary gains, (vii) any debt
refinancing charges or gains to the extent such charges or
gains are not included in extraordinary gains or losses, 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) a one-time charge
of up to $2,600,000 relating to compensation paid pursuant to
the Executive Agreements, PLUS, (c) a one-time corporate
restructuring charge of $5,500,000, MINUS (d) gains or losses
on asset sales determined on a consolidated basis in conformity
with GAAP, PLUS (e) with respect to the acquisition by the
Borrower or a Subsidiary of the Borrower which has not been
owned or effective for a full fiscal quarter, Adjusted EBITDA
(as calculated pursuant to CLAUSE (A) and (D) preceding) shall
be computed based on the actual period owned or effective and
the number of months prior thereto necessary to total twelve
months and, upon being owned or effective one full fiscal
quarter, Adjusted EBITDA will be computed based on annualized
results, MINUS (f) with respect to any divestiture of any
entity (corporation, partnership, limited liability company or
joint venture) by the Borrower or a Subsidiary of the Borrower,
the Borrower will exclude from Adjusted EBITDA any amounts
attributable to such entity in the computation of Adjusted
EBITDA pursuant to CLAUSE (A) and (D) preceding for the twelve-
month period following the divestiture.
(c) AMENDMENT TO THE DEFINITION OF APPLICABLE BASE RATE MARGIN.
The definition of "Applicable Base Rate Margin" is hereby
amended by replacing the table at the end of such definition
with the following:
Applicable
SENIOR LEVERAGE RATIO BASE RATE MARGIN
Less than 1.00:1.00 0.25% per annum
Greater than or equal to 1.00:1.00 and less than 0.50% per annum
1.50:1.00
Greater than or equal to 1.50:1.00 and less than 1.00% per annum
2.00:1.00
Greater than or equal to 2.00:1.00 and less than 1.25% per annum
2.50:1.00
Greater than or equal to 2.50:1.00 1.50% per annum
PROVIDED, HOWEVER, that if the Company does not receive all
proceeds payable to the Company in connection with the
disposition of the Utah Assets (as defined below) on or before
November 15, 1999, each of the above-listed percentages shall
be increased by 0.25% which change shall be effective as of the
Payment Date (as defined below).
(d) AMENDMENT TO THE DEFINITION OF APPLICABLE EURODOLLAR MARGIN.
The definition of "Applicable Eurodollar Margin" is hereby
amended by replacing the table at the end of such definition
with the following:
SENIOR LEVERAGE RATIO Applicable
EURODOLLAR MARGIN
Less than 1.00:1.00 1.50% per annum
Greater than or equal to 1.00:1.00 and less than 2.00% per annum
1.50:1.00
Greater than or equal to 1.50:1.00 and less than 2.50% per annum
2.00:1.00
Greater than or equal to 2.00:1.00 and less than 2.75% per annum
2.50:1.00
Greater than or equal to 2.50:1.00 3.00% per annum
PROVIDED, HOWEVER, that if the Company does not receive all
proceeds payable to the Company in connection with the
disposition of the Utah Assets (as defined below) on or before
November 15, 1999, each of the above-listed percentages shall
be increased by 0.25% which change shall be effective as of the
Payment Date (as defined below).
(e) AMENDMENT TO THE DEFINITION OF APPLICABLE TRANCHE B MARGIN.
The definition of Applicable Tranche B Margin is hereby amended
and restated in its entirety as follows:
"`APPLICABLE TRANCHE B MARGIN' means, for any day, a
percentage per annum equal to 3.25% for Tranche B Loans that
are Eurodollar Loans and 1.75% for Tranche B Loans that are
Base Rate Loans."
PROVIDED, HOWEVER, that if the Company does not receive all
proceeds payable to the Company in connection with the
disposition of the Utah Assets (as defined below) on or before
November 15, 1999, each of the percentages in the above-listed
definition shall be increased by 0.50% which change shall be
effective as of the Payment Date (as defined below).
3. AMENDMENT TO SECTION 2.7: MANDATORY PREPAYMENTS. Section
2.7(g) of the Credit Agreement is hereby amended and restated in its
entirety as follows:
"Notwithstanding any other provision of this Agreement, on
August 11, 1999 and thereafter, any prepayment made in
connection with an Asset Disposition pursuant to this Section
2.7 shall reduce pro rata each Revolving Credit Loans
Commitment of each Lender."
4. AMENDMENT TO SECTION 2.14: LETTERS OF CREDIT. Section 2.14 of
the Credit Agreement is hereby amended by replacing the number
$25,000,000 where it appears in clause (i) of the sixth line of
subparagraph (a) with the number $26,000,000.
5. AMENDMENT TO SECTION 10.1: SENIOR LEVERAGE RATIO. Section
10.1 of the Credit Agreement is hereby amended by replacing the table
therein with the following:
Calendar Year Quarters Ending Maximum Permitted
DURING THE FOLLOWING PERIODS SENIOR LEVERAGE RATIO
April 1, 1999 through June 30, 1999 2.55:1.00
July 1, 1999 through December 31, 1999 2.60:1.00
January 1, 2000 and at all times thereafter 2.00:1.00
6. AMENDMENT TO SECTION 10.2: MINIMUM NET WORTH. Section 10.2
of the Credit Agreement is hereby amended and restated in its entirety as
follows:
"As of the close of each fiscal quarter ending on or
before December 31, 1999, the Borrower will not permit Net
Worth to be less than $30,000,000. As of the close of each
fiscal quarter ending on or after March 31, 2000, the Borrower
will not permit the Net Worth to be less than the sum of (a)
$30,000,000, PLUS (b) for each quarter on a cumulative basis
ending on or after the fiscal quarter after the fiscal quarter
ending December 31, 1999 or thereafter, seventy-five percent
(75%) of the positive Net Income, if any of the Borrower, PLUS
(c) ninety percent (90%) of all Net Proceeds from any Equity
Issuance following the Closing Date."
7. AMENDMENT TO SECTION 10.3: RATIO OF TOTAL DEBT TO ADJUSTED
EBITDA. Section 10.3 of the Credit Agreement is hereby amended by
replacing the table therein with the following:
PERIOD RATIO
April 1, 1999 through June 30, 1999 6.30:1.00
July 1, 1999 through September 30, 1999 6.10:1.00
October 1, 1999 through December 31, 1999 6.50:1.00
January 1, 2000 through March 31, 2000 5.40:1.00
April 1, 2000 through September 30, 2000 5.20:1.00
October 1, 2000 through March 31, 2001 4.75:1.00
April 1, 2001 and at all times thereafter 4.50:1.00
8. APPROVAL OF THE SALE OF THE UTAH ASSETS.
(a) By execution of this Agreement, each Lender that is a party
hereto approves, pursuant to Section 9.12 of the Credit
Agreement, the transfer and sale, whether by sale of stock or
assets, merger, consolidation, reorganization, recapitalization
or otherwise, of the health-care related operations and
business of the Borrower and its Subsidiaries in the Salt Lake
City Utah area (the "UTAH ASSETS"), including substantially all
of the Properties owned, leased or used in connection with the
acute care hospitals and other health care facilities and
related and other entities set forth on Exhibit A hereto;
PROVIDED, HOWEVER, that in connection with such disposition and
as a result thereof the Company receives in immediately
available funds consideration equal to not less than the
aggregate Commitments outstanding as of the Effective Date.
(b) The Borrower hereby agrees to pay, on August 16, 1999, to each
Lender that executes this Agreement on or prior to 5:00 p.m.
(Central Standard Time), August 13, 1999 (such time and date
hereinafter referred to as the "PAYMENT DATE") an amount equal
to .125% of such Lender's aggregate Commitments under the
Credit Agreement as of the Payment Date; PROVIDED, HOWEVER,
that if a valid and binding agreement with respect to the sale
of the Utah Assets is not executed on or before August 30,
1999, on such date the Borrower shall pay to each Lender that
has executed this Agreement on or prior to the Payment Date an
additional amount equal to .125% of such Lender's aggregate
Commitments under the Credit Agreement as of the Payment Date,
PROVIDED, FURTHER, that if the Company does not receive all
proceeds payable to the Company in connection with the
disposition of such assets on or before November 15, 1999, on
such date the Borrower shall pay to each Lender that has
executed this Agreement on or prior to the Payment Date an
additional amount equal to .125% of such Lender's aggregate
Commitments under the Credit Agreement as of the Payment Date.
Any payments made pursuant to this Section 8 shall be made by
wire transfer in immediately available funds to the Agent for
the account of each such Lender.
9. FURTHER REPRESENTATIONS OF THE BORROWER.
(a) The execution, delivery and performance by the Borrower of this
Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all requisite corporate or
other entity action on the part of the Borrower and do not and
will not (i) violate or conflict with, or result in a breach
of, or require any consent, except as may have been obtained
under (x) the Borrower's articles of incorporation or bylaws,
the violation of, conflict with, or breach of, which could
reasonably be expected to have a Material Adverse Effect,
(y) any Governmental Requirement or any order, writ, injunction
or decree of any arbitrator the violation of, conflict with, or
breach of, which could reasonably be expected to have a
Material Adverse Effect, or (z) any material agreement,
document or instrument to which the Borrower is a party or by
which the Borrower or any of its Property is bound or subject,
the violation of, conflict with, or breach of, which could
reasonably be expected to have a Material Adverse Effect, or
(ii) constitute a default under any such material agreement,
document or instrument which default could reasonably be
expected to have a Material Adverse Effect, or result in the
creation or imposition of any Lien (except for those in favor
of Agent pursuant to the Security Documents as provided in
ARTICLE 5 of the Credit Agreement and except for Permitted
Liens as defined after giving effect hereto) upon any of the
revenues or Property of the Borrower.
(b) This Agreement has been duly and validly executed and delivered
by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in
accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the
enforcement of creditors' rights and general principles of
equity.
(c) No authorization, approval or consent of, and no filing or
registration with or notice to, any Governmental Authority is
or will be necessary for the execution, delivery or performance
by the Borrower of this Agreement or for the validity or
enforceability thereof in respect of the Borrower, except for
such consents, approvals and filings as have been validly
obtained or made and are in full force and effect. The
Borrower has not failed to obtain any governmental consent,
Permit or franchise necessary for the ownership of any of its
Properties or the conduct of its business except where the
failure to do so could not reasonably be expected to have a
Material Adverse Effect.
(d) The Borrower further represents and warrants that (i) all of
the representations and warranties made by the Borrower in
ARTICLE VII of the Credit Agreement, and in each other Loan
Document, are true and correct on and as of the date hereof, as
though made on the date hereof except for any such
representations and warranties as are expressly stated to be
made as of a particular date; and (ii) no Default or Event of
Default shall have occurred and be continuing as of the
Effective Date.
10. CONDITIONS. The obligations of the Borrower and the Lenders
under this Agreement are subject to the condition precedent that this
Agreement shall have been duly executed by the Borrower and delivered to
the Agent, and each of the Required Lenders shall have executed and
delivered a counterpart hereof.
11. RATIFICATION OF CREDIT AGREEMENT. All terms and provisions of
the Credit Agreement not expressly amended hereby are hereby ratified and
reaffirmed and shall remain in full force and effect without
interruption, change, or impairment of any kind.
12. GENERAL.
(a) APPLICABLE LAW. This Agreement has been delivered and accepted
in, and shall be a contract made under and governed by and
enforced in accordance with the laws of the State of New York.
(b) BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the Borrower and the Lenders and their
respective successors and assigns.
(c) HEADINGS. The Section and subsection headings of this
Agreement are for convenience and shall not affect, limit or
expand any term or provision hereof.
(d) COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and each
counterpart shall be deemed an original. No one counterpart
need be signed by all parties hereto, but all such counterparts
shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment
to Amended and Restated Credit Agreement and Approval of Asset
Disposition to be executed and delivered by their duly authorized
officers, to be deemed effective as of the Effective Date.
BORROWER:______________________________
▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION
By:____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Senior Vice President and Treasurer
Approval Granted as of the Date First Written Above:
PARIBAS, as the Agent, as the Issuing Bank and as a Lender
By:____________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
By:____________________________________
Name:_____________________________
Title:____________________________
TORONTO DOMINION (TEXAS), INC., as Documentation Agent
and as a Lender
By:____________________________________
Name:_____________________________
Title:____________________________
BANK OF MONTREAL, as Administrative Agent and
as a Lender
By:____________________________________
Name:_____________________________
Title:____________________________
COMERICA BANK
By:____________________________________
Name:_____________________________
Title:____________________________
FLEET CAPITAL CORPORATION
By:____________________________________
Name:_____________________________
Title:____________________________
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY
By:____________________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ PRIME INCOME TRUST
By:____________________________________
Name:_____________________________
Title:____________________________
KZH ING-2 LLC
By:____________________________________
Name:_____________________________
Title:____________________________
KZH HIGHLAND-2 LLC
By:____________________________________
Name:_____________________________
Title:____________________________
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.,
as its Investment Manager
By:____________________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ DEBT STRATEGIES PORTFOLIO
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management, L.P.,
as investment advisor
By:____________________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ GLOBAL INVESTMENT SERIES:
INCOME STRATEGIES PORTFOLIO
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management, L.P.,
as investment advisor
By:____________________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ SENIOR FLOATING RATE FUND, INC.
By:____________________________________
Name:_____________________________
Title:____________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇ PRIME RATE PORTFOLIO
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Asset Management, L.P.,
as investment advisor
By:____________________________________
Name:_____________________________
Title:____________________________
SENIOR HIGH INCOME PORTFOLIO, INC.
By:____________________________________
Name:_____________________________
Title:____________________________
DEBT STRATEGIES FUND, INC.
By:____________________________________
Name:_____________________________
Title:____________________________
FRANKLIN FLOATING RATE TRUST
By:____________________________________
Name:_____________________________
Title:____________________________
Alliance Capital Management, L.P.,
as Manager on behalf of ALLIANCE CAPITAL FUNDING, L.L.C.
By: ALLIANCE CAPITAL MANAGEMENT CORPORATION,
General Partner of Alliance Capital Management L.P.
By:____________________________________
Name:_____________________________
Title:____________________________
EXHIBIT A
1. Stock and/or assets of PHC-Salt Lake City, Inc. d/b/a Salt Lake
Regional Medical Center
2. Stock and/or assets (including lease with AHP of Utah, Inc. or
successor) of ▇▇▇▇▇▇▇▇▇▇ Pioneer Valley Hospital, Inc. d/b/a/ Pioneer
Valley Hospital
3. Stock and/or assets of Pioneer Valley Health Plan
4. Stock and/or assets of PHC-Jordan Valley, Inc. d/b/a Jordan Valley
Hospital
5. Stock and/or assets of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Hospital, Inc. d/b/a ▇▇▇▇▇
Hospital and Medical Center
6. Stock and/or Assets of ▇▇▇▇▇▇▇▇▇▇ PHC Regional Medical Center, Inc.
d/b/a PHC Regional Medical Center
7. Stock and/or Assets of PHC Utah, Inc.
8. Stock and/or Assets of Clinicare of Utah, Inc.
9. Stock and/or assets of PHC/Psychiatric Healthcare Corporation but
excluding the shell subsidiary corporations of Psychiatric
Healthcare Corporation of Louisiana, Psychiatric Healthcare
Corporation of Missouri, Psychiatric Healthcare Corporation of
Texas. All these entities are Excluded Subsidiaries under the Credit
Agreement.*
11. Partnership interests of ▇▇▇▇▇▇▇▇▇▇ and/or its subsidiaries in
South Ridge MOB (11%); ▇▇▇▇▇ Surgical Center, LLC (30%), and ▇▇▇▇▇ City,
ASC, LLC (50%)
12. Stock or assets of Select Health Systems, Inc., Select Home Care,
Inc., and Select Home Health & Services, Inc. (Currently these are
all Excluded Subsidiaries under the Credit Facility and since the
Salt Lake home health operations were sold in 1998, these entities
have minimal assets.)**
*This entity is being used for recapitalization accounting purposes by
one of the potential Buyers for transfer of substantially all Salt Lake
market assets into prior to closing. If the transfer is not
substantially simultaneously, ▇▇▇▇▇▇▇▇▇▇ will ▇▇▇▇▇ a stock pledge of and
grant an upstream guaranty from PHC/Psychiatric Healthcare Corporation to
the bank group.
**One of the potential Buyers has excluded the Select entities; however,
we include in the event the other prospective Buyer includes these
assets, although substantially all of the home health care assets in
the Salt Lake market owned by the Select entities were sold in 1998.
