1 EXHIBIT 10.10
SECOND AMENDMENT
TO
CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated
effective as of August 14, 1997 or, with respect to the amendments to
SECTIONS 10.1, 10.2, 10.3, 10.4 and 10.5 of the Credit Agreement (as
hereinafter defined) as referred to in SECTIONS 3.18, 3.19, 3.20, 3.21
and 3.22 of this Amendment, dated effective as of April 1, 1997, or, with
respect to the amendment to SCHEDULE 1.1(C) to the Credit Agreement,
dated effective as of the Closing Date, is among ▇▇▇▇▇▇▇▇▇▇ 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, as amended by that certain First Amendment to Credit Agreement
dated (except as otherwise provided therein) as of April 14, 1997 (as so
amended, the "CREDIT AGREEMENT ") pursuant to which the Lenders extended
to the Borrower a reducing revolving credit facility in the maximum
aggregate principal amount of $200,000,000 (after giving effect to the
First Amendment).
B. The parties hereto desire to further amend the Credit Agreement
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
REVOLVING CREDIT LOANS COMMITMENTS.
The parties hereto hereby agree that, as of the Second Amendment
Date and in accordance with the terms and provisions of the Credit
Agreement after giving effect to the provisions of SECTION 5.13 of this
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Amendment, the aggregate principal amount of the Revolving Credit Loans
Commitments is$165,406,731.52.
ARTICLE 3
AMENDMENTS
Section 3.1 AMENDED AND RESTATED DEFINITIONS. The following
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, PLUS (b) any one-time
shut-down charge relating to the closure of ▇▇▇▇▇▇▇▇▇▇ PHC Regional
Hospital, Inc. for the fiscal quarter ended June 30, 1997, in an
aggregate amount not to exceed $3,500,000, PLUS (c) any one-time
corporate restructuring charge for the fiscal quarter ended June 30,
1997, in an aggregate amount not to exceed $2,500,000, MINUS (d) the
actual cash losses during such period referred to in CLAUSE (A)
preceding related to the capitated contract between ▇▇▇▇▇▇▇▇▇▇ PHC
Regional Hospital, Inc. and FHP, Inc. (and its successor company);
PROVIDED, HOWEVER, that (i) any determination of the amounts set
forth in CLAUSE (A) or (D) 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 day year (for example, any
determination of amounts for the period ending June 30, 1997 shall
be calculated based upon the amounts for the periods 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), (ii)
with respect to an 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 (a) above) 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, (iii) with
respect to any divestiture of any entity (corporate, partnership 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
(a) above for the period following the divestiture, and (iv) any
determination of the amounts set forth in CLAUSE (A) preceding made
during the period from January 1, 1997 through June 30, 1998 (and
only during such period) shall exclude one-time non-cash charges
(determined in accordance with GAAP) or non-recurring non-cash
charges (collectively, "NON-CASH CHARGES") in the current period
(determined in accordance with GAAP) that, but for this CLAUSE (IV),
would otherwise be included in the calculation of Adjusted EBITDA,
provided, further, however, that such determination of the amounts
set forth in CLAUSE (A) preceding shall be reduced in the
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appropriate current or subsequent period during which such cash is
expended by cash expenditures related to such charges."
" 'AGENT'S FEE LETTER' means the letter agreement dated July 9,
1996 among the Borrower, the Agent and the Arranger, as amended by
the letter agreement dated as of August 14, 1997, between the
Borrower and the Agent."
" 'APPLICABLE MARGIN' means, for any day, and subject to the
limitations contained in SECTION 13.11, a fluctuating rate per annum
for Base Rate Loans or Eurodollar Loans, as applicable, equal to
(a) with respect to Base Rate Loans, 2.25% during the period from
August 14, 1997, through June 30, 1998, and 2.75% thereafter, and
(b) with respect to Eurodollar Loans, 3.25% during the period from
August 14, 1997, through June 30, 1998, and 3.75% thereafter."
" 'COLLATERAL' means all Property and interests in Property and
proceeds thereof now owned or hereafter acquired by the Borrower
and/or its Subsidiaries in or upon which a Lien now or hereafter
exists in favor of the Lenders, or the Agent on behalf of the
Lenders, whether under this Agreement or under any other agreement,
document or instrument executed by any such Persons and delivered to
the Agent, the Documentation Agent or any Lender in connection
herewith as security for the Obligations or any portion thereof.
(For purposes of this definition, Property owned by a Subsidiary
shall not be deemed to be Collateral solely by virtue of the fact
that the Capital Stock of such Subsidiary is pledged as
Collateral.)"
" 'FEE LETTERS' means the Agent's Fee Letter, the Paribas Fee
Letter and the Second Amendment Fee Letter."
" '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, 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 day year (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)."
" 'INTEREST EXPENSE' means, for any period, the sum of (a) all
interest expense on Debt of the Borrower and its Subsidiaries paid
or accrued during such period, including the interest portion of
payments under Capital Lease Obligations, PLUS (b) the interest
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expense related to the loss contract accrual attributable to
▇▇▇▇▇▇▇▇▇▇ PHC Regional Hospital, Inc."
" '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 as and when received in payment of notes, provided
that such notes and appropriate endorsements thereto shall be
promptly delivered to the Agent and pledged as Collateral to secure
payment of the Obligations pursuant to agreements reasonably
satisfactory in form and substance to the Agent), 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, if applicable,
reasonable brokerage fees paid to a Person other than an Affiliate
of the Borrower and reasonable expenditures associated with the
termination of the PHC Funding Sale Documents as they relate to
accounts sold in connection with an Asset Disposition and the
amounts of any Medicare recapture) excluding any fees or expenses
paid to an Affiliate of the Borrower. 'NET PROCEEDS' with respect
to any Asset Disposition shall also include (to the extent of the
Borrower's or any of its Subsidiary's rights, titles or interests
therein) 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 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."
" 'SUBORDINATED DEBT' means (a) the Debt of the Borrower under
the Existing Subordinated Notes, the New Subordinated Notes and the
▇▇▇▇▇▇▇▇▇▇ Subordinated Note, (b) Debt incurred to refinance the
Subordinated Debt in existence as of the Closing Date provided that
(i) the proceeds of such Debt are used solely to retire, replace or
refinance the Subordinated Debt (and the transaction costs relating
thereto), (ii) such Debt is subordinated to the Obligations on terms
and conditions that are no less favorable to the Agent and the
Lenders than the Subordinated Debt being refinanced, as reasonably
determined by the Required Lenders, and (iii) the terms of such Debt
do not provide for scheduled payments of any principal of such Debt
(including scheduled repayments or sinking fund payments) prior to
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August 31, 2001, and are not more restrictive on the Borrower or any
of its Subsidiaries than the terms of the Subordinated Debt being
refinanced, including, without limitation, with respect to sales of
assets, incurrence of Debt, interest rate, change of control or the
granting of Liens, as reasonably determined by the Required Lenders,
and (c) any and all other current or future Debt of the Borrower or
any Subsidiary of the Borrower which is subordinated to all or any
portion of the Obligations and which is approved in writing by the
Required Lenders."
Section 3.2 OTHER DEFINITIONS. SECTION 1.1 of the Credit Agreement
is hereby amended to (a) delete the term "Maintenance Capital
Expenditures" and the definition thereof, and (b) to add the following
new terms and definitions thereof, which terms and definitions shall
appear in alphabetical order in such SECTION 1.1:
" 'LA METRO HOSPITALS' means the following hospitals (located
in or near Los Angeles, California): (a) Monrovia Community
Hospital, (b) Bellwood General Hospital, (c) Hollywood Community
Hospital of Hollywood and Hollywood Community Hospital of Van Nuys,
(d) Los Angeles Community Hospital and Los Angeles Community
Hospital of Norwalk, and (e) Orange County Community Hospital of
Buena Park."
" 'MESQUITE HOSPITAL' means the Medical Center of Mesquite
(located in or near Mesquite, Texas)."
" 'NON-CASH CHARGES' means as such term is defined in the
definition of the term 'Adjusted EBITDA'."
" 'SECOND AMENDMENT' means that certain Second Amendment to
Credit Agreement dated (except as otherwise provided therein) as of
August 14, 1997, executed by the Borrower, the Required Lenders, the
Agent, the Documentation Agent, the Managing Agent and the Co-
Agents."
" 'SECOND AMENDMENT FEE LETTER' means the letter agreement
dated as of August 14, 1997, among the Borrower, the Agent, the
Documentation Agent and NationsBank of Texas, N.A., as Managing
Agent."
" 'SECOND AMENDMENT DATE' means August 14, 1997."
Section 3.3 COMMITMENTS; USE OF PROCEEDS. SUBSECTION (D) of SECTION
2.1 of the Credit Agreement is hereby deleted in its entirety.
Section 3.4 ASSET DISPOSITIONS. In the event that this Amendment is
executed by all Lenders, SECTION 2.7(A) of the Credit Agreement is hereby
amended and restated to read in its entirety as follows:
"(a) ASSET DISPOSITIONS, ETC. The Borrower shall, unless
otherwise agreed by the Required Lenders from time to time in
connection with any particular Asset Disposition or Income Tax
Refund, pay (if feasible in each case, concurrently with the
consummation of each such Asset Disposition or, if such Asset
Disposition is a lease, concurrently with each actual or
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constructive receipt of any Net Proceeds thereof and concurrently
with the actual or constructive receipt of each such Income Tax
Refund, or, if not so feasible in each case, substantially
concurrently therewith and in any event within one Business Day
thereafter) to the Agent, for the benefit of the Lenders, as a
prepayment (and a corresponding reduction of the Commitments in
accordance with SECTION 2.7(C)) of the Revolving Credit Loans (or,
if the Revolving Credit Loans are then paid in full and all
Commitments have terminated, 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 other than the
Asset Dispositions permitted by CLAUSE (B), (C), (D) or (E) of
SECTION 9.12A, and (ii) the Net Proceeds from all Income Tax
Refunds; PROVIDED, HOWEVER, that if (but only if), at the time of
and after giving effect to any such Asset Disposition or any such
Income Tax Refund (as applicable), other than the Income Tax Refunds
in the aggregate amount of $24,593,268.48 received by the Borrower
during the last half of July 1997 which are required to be so paid
to the Agent in full, neither a payment Default nor an Event of
Default has occurred and is continuing, then (A) 40%, or such
greater percentage as may be agreed to by the Required Lenders, of
the Net Proceeds of Asset Dispositions of the Property specified in
SCHEDULE 2.7(A)(1) hereto as agreed to between the Borrower and the
Agent (with the consent of the Required Lenders as evidenced by
their execution of the Second Amendment) and 40%, or such greater
percentage as may be agreed to by the Required Lenders, of the Net
Proceeds of such Income Tax Refund, shall not be required to be so
paid to the Agent (and shall not reduce the Commitments pursuant to
SECTION 2.7(C)), (B) none of the Net Proceeds of that certain Lease
Agreement dated as of July 3, 1997, between the Borrower as lessor
and New Alternatives, Inc. as lessee (as amended or modified from
time to time) relating to Orange County Community Hospital (and
only such lease agreement) shall be required to be so paid to the
Agent (and none of such Net Proceeds shall reduce the Commitments
pursuant to SECTION 2.7(C)), and (C) in the event of the exchange of
the hospital identified in item 16 of SCHEDULE 9.12 for another
hospital approved by the Required Lenders, such exchange shall not
be deemed to constitute an Asset Disposition for purposes of this
SECTION 2.7(A), except to the extent of any cash or other liquid
assets received pursuant to such exchange, if (but only if) a
perfected (upon appropriate recording or filing thereafter), first
priority Lien (subject only to Permitted Liens, if any, which are
permitted in accordance with this Agreement) on the Property
received in such exchange shall have been granted to the Agent as
security for the Obligations. In addition, the Borrower shall,
unless otherwise agreed by the Required Lenders from time to time in
connection with any particular Dispute Resolution, pay (if feasible
in each case, concurrently with each actual or constructive receipt
of any such Net Proceeds or, if not so feasible, substantially
concurrently therewith and in any event within one Business Day
thereafter) to the Agent, for the benefit of the Lenders, as a
prepayment (and a corresponding reduction of the Commitments
pursuant to SECTION 2.7(C)) of the Revolving Credit Loans (or, if
the Revolving Credit Loans are then paid in full and all Commitments
have terminated, as cash collateral for any outstanding Letter of
Credit Liabilities), an aggregate amount equal to 100% of the Net
Proceeds of each Dispute Resolution (after deducting therefrom,
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without duplication, all reasonable out-of-pocket costs and
expenses, including claims, paid or incurred by the Borrower or its
Subsidiaries relating to, and arising out of the facts or
circumstances involved in, such Dispute Resolution)."
In the event that this Amendment is not executed by all Lenders,
SECTION 2.7(A) of the Credit Agreement is hereby amended and restated to
read in its entirety as follows:
"(a) ASSET DISPOSITIONS. The Borrower shall pay (if feasible
in each case, concurrently with the consummation of each such Asset
Disposition or, if such Asset Disposition is a lease, concurrently
with each actual or constructive receipt of any Net Proceeds thereof
and concurrently with the actual or constructive receipt of each
such Income Tax Refund, or, if not so feasible in each case,
substantially concurrently therewith and in any event within one
Business Day thereafter) to the Agent, for the benefit of the
Lenders, as a prepayment (and a corresponding reduction of the
Commitments in accordance with SECTION 2.7(C)) of the Revolving
Credit Loans (or, if the Revolving Credit Loans are then paid in
full and all Commitments have terminated, 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, unless otherwise agreed by the
Required Lenders, from all other Asset Dispositions other than the
Asset Dispositions permitted by CLAUSE (B), (C), (D) or (E) of
SECTION 9.12A, and (ii) the Net Proceeds from all Income Tax
Refunds; PROVIDED, HOWEVER, that if (but only if), at the time of
and after giving effect to any such Asset Disposition, neither a
payment Default nor an Event of Default has occurred and is
continuing, then (A) 70%, or such greater percentage as may be
agreed to by the Required Lenders, of the Net Proceeds of Asset
Dispositions of Property specified in SCHEDULE 2.7(A)(2) hereto as
agreed to between the Borrower and the Agent (with the consent of
the Required Lenders as evidenced by their execution of the Second
Amendment) that does not constitute Collateral shall not be required
to be so paid to the Agent (and shall not reduce the Commitments
pursuant to SECTION 2.7(C)) 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 SECTIONS 9.4(B),
9.4(C) or 9.4(D), (B) 100% of the Net Proceeds of that certain Lease
Agreement dated as of July 3, 1997, between the Borrower as lessor
and New Alternatives, Inc. as lessee (as amended or modified from
time to time) relating to Orange County Community Hospital (and only
such lease agreement) shall not be required to be so paid to the
Agent (and none of such Net Proceeds shall reduce the Commitments
pursuant to with SECTION 2.7(C)) 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), and (C) in the event of the
exchange of the hospital identified in item 16 of SCHEDULE 9.12 for
another hospital approved by the Required Lenders, such exchange
shall not be deemed to constitute an Asset Disposition for purposes
of this SECTION 2.7(A), except to the extent of any cash or other
liquid assets received pursuant to such exchange, if (but only if) a
perfected (upon appropriate recording or filing thereafter), first
priority Lien (subject only to Permitted Liens, if any, which are
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permitted in accordance with this Agreement) on the Property
received in such exchange shall have been granted to the Agent as
security for the Obligations. Any prepayment of the Loans made by
the Borrower with the proceeds of, or otherwise in connection with,
any Asset Disposition or Income Tax Refund shall be deemed to
constitute a mandatory prepayment made in accordance with this
SECTION 2.7(A) unless, prior to or concurrently with the time of
such prepayment, the Borrower informs the Agent in writing that such
prepayment is an optional prepayment and such prepayment is, in
accordance with SECTION 2.6 and this SECTION 2.7(A), permitted to be
an optional prepayment. In addition, the Borrower shall, unless
otherwise agreed by the Required Lenders from time to time in
connection with any particular Dispute Resolution, pay (if feasible
in each case, concurrently with each actual or constructive receipt
of any such Net Proceeds or, if not so feasible, substantially
concurrently therewith and in any event within one Business Day
thereafter) to the Agent, for the benefit of the Lenders, as a
prepayment (and a corresponding reduction of the Commitments in
accordance with SECTION 2.7(C)) of the Revolving Credit Loans (or,
if the Revolving Credit Loans are then paid in full and all
Commitments have terminated, as cash collateral for any outstanding
Letter of Credit Liabilities), an aggregate amount equal to 100% of
the Net Proceeds of each Dispute Resolution (after deducting
therefrom, without duplication, all reasonable out-of-pocket costs
and expenses, including claims, paid or incurred by the Borrower or
its Subsidiaries relating to, and arising out of the facts or
circumstances involved in, such Dispute Resolution)."
Section 3.5 USE OF PROCEEDS. SECTION 2.10(A) of the Credit
Agreement is hereby amended to delete the phrase "(including, without
limitation, SECTION 2.1(D))" immediately following the word "Agreement"
in the third line of SECTION 2.10(A).
Section 3.6 LETTER OF CREDIT FEE. The first sentence of SECTION
2.14(C) of the Credit Agreement is hereby amended and restated to read in
its entirety as follows:
"(c) The Borrower agrees to pay to the Agent a nonrefundable
letter of credit fee on the face amount of each Letter of Credit
calculated at a rate per annum equal to the Applicable Margin for
Eurodollar Loans as set forth in the definition of 'Applicable
Margin'."
Section 3.7 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) or (C) succeeding, to secure the full and complete
payment and performance of all indebtedness, 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
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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,
(b) the Borrower will, and/or will cause each of the Subsidiary
Pledgors to, as applicable, grant to the Agent for the benefit of
the Agent and the Lenders the Liens referred to in SECTION 5.6 on
the dates referred to in SECTION 5.6, and (c) subject to the
succeeding provisions of this SECTION 5.1, the Borrower will, and
will cause each of its Subsidiaries (other than Excluded
Subsidiaries) to, at any time and from time to time on or after and
during the continuation of a payment Default or an Event of Default,
and thereafter 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 permitted in accordance with
this Agreement) 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 , in each case whether now owned or hereafter acquired, of
the Borrower and/or its Subsidiaries (other than Excluded
Subsidiaries) as may be so requested and selected by the Agent or
the Required Lenders, 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 (C) of the immediately preceding
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 Required Lenders 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, unless the Required Lenders
from time to time agree to a later date or dates, within 60 days
after such request (or 90 days with respect to appraisals and
environmental surveys):
(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 by a nationally recognized title insurance
company 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 real 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 by an
appraiser reasonably acceptable to the Agent which complies
with Title XI - Real Estate Appraisal Reform, Amendments to the
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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, the Borrower's failure to deliver, or to cause any such
Subsidiary to deliver, (A) any of the agreements, documents or
instruments referred to in CLAUSE (C) 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
60 days after request (or 90 days with respect to appraisals and
environmental surveys) 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 (2) the Borrower and its Subsidiaries
(other than Excluded 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 3.8 COLLATERAL. In the event that this Amendment is
executed by all Lenders, a new SECTION 5.6 is hereby added to the Credit
Agreement, which SECTION 5.6 shall read as follows:
"Section 5.6 CERTAIN COLLATERAL. In addition to and
notwithstanding anything to the contrary contained in SECTION 5.1,
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, to secure the full and complete payment and
performance of all indebtedness, liabilities and obligations of each
Subsidiary Guarantor under its Guarantee of the Obligations), the
Borrower will, or will cause its appropriate Subsidiary to, as
applicable, grant to the Agent for the benefit of the Agent and the
Lenders, concurrently with the execution and delivery of the Second
Amendment unless otherwise specified in this SECTION 5.6, a
perfected (upon appropriate recording or filing thereafter), first
priority Lien (subject only to Permitted Liens, if any, which are
permitted in accordance with this Agreement) on all of its right,
title and interest in and to the following real Properties and
related personal Property consisting of equipment and inventory,
which Liens shall be granted pursuant to and evidenced and
accompanied by such agreements, documents or instruments consistent
11
with this Agreement as the Agent and the Documentation Agent or the
Required Lenders may reasonably request:
1. ▇▇▇▇▇ Hospital and Medical Center (located in or near
Layton, Utah), which the Borrower represents and warrants
is owned by ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Hospital, Inc.;
2. Salt Lake Regional Medical Center (located in or near Salt
Lake City, Utah), which the Borrower represents and
warrants is owned by PHC - Salt Lake City, Inc.;
3. Jordan Valley Hospital (located in or near West Jordan,
Utah), which the Borrower represents and warrants is owned
by PHC - Jordan Valley, Inc.;
4. BayCoast Medical Center (located in or near Baytown,
Texas), which the Borrower represents and warrants is
owned by Baytown Medical Center, Inc.;
5. Westwood Medical Center (located in or near Midland,
Texas), which the Borrower represents and warrants is
owned by PHC - B of Midland, Inc.;
6. ▇▇▇▇▇▇▇▇ County General Hospital (located in or near
Jamestown, Tennessee) (which Lien shall secure only
$34,300,000 of the principal amount of the Obligations for
purposes of applicable mortgage taxes), which the Borrower
represents and warrants is owned by ▇▇▇▇▇▇▇▇▇▇ Real Estate
Corporation, as to real Property, and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
County General Hospital, Inc., as to other assets;
7. Metropolitan Hospital (located in or near Richmond,
Virginia), which the Borrower represents and warrants is
owned by Metropolitan Hospital, L. P.;
8. Lancaster Community Hospital (located in or near
Lancaster, California), which the Borrower represents and
warrants is owned by ▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation,
as to real Property, and Lancaster Hospital Corporation,
as to other assets;
9. the Mesquite Hospital (located in or near Mesquite, Texas)
and any hospital (including real Property and related
personal Properties consisting of equipment and inventory)
acquired by the Borrower or any of its Subsidiaries in
exchange for the sale or other disposition of the Mesquite
Hospital , which the Borrower represents and warrants is
owned by ▇▇▇▇▇▇▇▇▇▇ Mesquite Hospital, Inc.;
10. PHC Regional Hospital and Medical Center (located in and
near Salt Lake City, Utah), which the Borrower represents
and warrants is owned by ▇▇▇▇▇▇▇▇▇▇ - PHC Regional County
Medical Center, Inc.;
11. Cumberland River Hospital - North (located in or near
Celina, Tennessee) (which Lien shall secure only
$16,000,000 of the principal amount of the Obligations for
purposes of applicable mortgage taxes), which the Borrower
represents and warrants is owned by ▇▇▇▇▇▇▇▇▇▇ Healthcare
12
Corporation, as to real Property, and ▇▇▇▇▇▇▇▇▇▇ Clay
County Hospital, Inc., as to other assets; and
12. each of the LA Metro Hospitals (located in or near Los
Angeles, California), which the Borrower represents and
warrants is owned by (1) as to Monrovia Community
Hospital, ▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real
Property, and Monrovia Community Hospital, L.P., as to
other assets, (2) as to Bellwood General Hospital,
▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real Property,
and Bellwood Medical Corporation, as to fixtures,
furniture and equipment, and Lincoln Community Medical,
LLC as to other assets, (3) as to Hollywood Community
Hospital of Hollywood and Hollywood Community Hospital of
Van Nuys, ▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real
Property, and Hollywood Community Hospital Medical Center,
Inc., as to other assets, (4) as to Los Angeles Community
Hospital and Los Angeles Community Hospital of Norwalk,
▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real Property,
and ▇▇▇▇▇▇▇▇▇▇ Los Angeles Community Hospital, Inc., as to
other assets, and (5) as to Orange County Community
Hospital of Buena Park, ▇▇▇▇▇▇▇▇▇▇ Real Estate
Corporation, as to real Property, and Lincoln Community
Medical Corporation, as to fixtures, furniture and
equipment, and Lincoln Community Medical, LLC as to other
assets;
PROVIDED, HOWEVER, that (a) (i) the Lien on Metropolitan Hospital
shall be required to secure only that certain Promissory Note dated
August 14, 1997, in the maximum original principal amount of
$20,000,000 made by Metropolitan Hospital, L.P. payable to the order
of ▇▇▇▇▇▇▇▇▇▇ Healthcare Holdings, Inc., which note and such Lien
securing it shall be collaterally assigned by ▇▇▇▇▇▇▇▇▇▇ Healthcare
Holdings, Inc. to the Agent and possession of such note shall be
delivered to the Agent, together with an endorsement thereto in
favor of the Agent, (ii) the Lien on the equipment and inventory
related to Monrovia Community Hospital shall be required to secure
only the intercompany indebtedness owed by Monrovia Community
Hospital, L.P. to ▇▇▇▇▇▇▇▇▇▇ Venture Corporation (to the extent that
such Lien is permitted by the partnership agreement of Monrovia
Community Hospital, L.P. existing as of June 30, 1997), which
indebtedness shall be evidenced by a negotiable promissory note and
which note and such Lien securing it shall be collaterally assigned
by ▇▇▇▇▇▇▇▇▇▇ Venture Corporation to the Agent and possession of
such note shall be delivered to the Agent, together with an
endorsement thereto in favor of the Agent, and (iii) the Lien on the
personal Property relating to Bellwood General Hospital and Orange
County Community Hospital of Buena Park shall not be required to be
granted to the extent that such personal Property is owned by
Lincoln Community Medical, LLC as of June 30, 1997 or, if and to the
extent acquired in the ordinary course of business from other than
an Affiliate of the Borrower and not indirectly from such Affiliate,
thereafter, and (b) the Liens affecting any particular LA Metro
Hospital and the related personal Property consisting of equipment
and inventory shall not be required to be granted until on or before
September 14, 1997, unless the Required Lenders agree from time to
time to delay such grant to a subsequent date or dates; PROVIDED,
FURTHER, HOWEVER, that Liens affecting any and all of the LA Metro
13
Hospitals and related personal Property consisting of equipment and
inventory shall (unless otherwise agreed by the Required Lenders) be
required to be granted promptly upon the request (and, in any event
unless the Required Lenders otherwise agree, within ten (10)
Business Days after such request) of the Agent or the Required
Lenders at any time after the occurrence and during the continuation
of an Event of Default. In connection with the execution of any
agreement, document or instrument referred to in this SECTION 5.6,
the Borrower will, or will cause its appropriate Subsidiary to, as
applicable, execute and/or deliver or cause to be executed and/or
delivered to the Agent each of the following (if any) which may be
requested by the Agent or the Required Lenders at any time or from
time to time, each of which will be in form and substance reasonably
satisfactory to the Agent and all of which shall be delivered to the
Agent, unless the Required Lenders from time to time agree to a
later date or dates, within 60 days (or 90 days with respect to
appraisals and environmental surveys) after the date upon which the
related Lien is required to be granted, in the case of CLAUSE (A)
succeeding, or within 60 days (or 90 days with respect to appraisals
and environmental surveys) after the date of such request (made
after the Second Amendment Date), in the case of CLAUSE (B)
succeeding:
(a) a commitment for a mortgagee policy of title insurance
(or, if a commitment for title insurance is not available in
any jurisdiction in question, a title abstract or report or
other evidence of title in form and substance reasonably
satisfactory to the Agent) issued by a nationally recognized
title insurance company to the Agent for and on behalf of the
Lenders, which, in the case of a commitment, offers to insure
that such Lien is valid and enforceable and of a first priority
subject only to Permitted Liens which are permitted to attach
to the subject Collateral; and
(b) such other agreements, documents, instruments and
certificates as the Agent or the Required Lenders may
reasonably request in connection with the Liens to be granted
in accordance with this SECTION 5.6;
PROVIDED, HOWEVER, that the Agent and the Lenders do not presently
intend to require delivery of policies of title insurance,
appraisals or environmental surveys other than environmental
questionnaires with respect to any of the mortgaged Properties
referred to in this SECTION 5.6 preceding and none of such title
insurance, appraisals or environmental surveys shall be required to
be delivered at the expense of the Borrower with respect to any of
such mortgaged Properties unless either (i) a payment Default or an
Event of Default has occurred and is continuing, (ii) the Required
Lenders believe, in good faith, that such title insurance, appraisal
or environmental survey (as applicable) is necessary to comply with
prudent banking practices or any Lender believes, in good faith,
that such title insurance, appraisal or environmental survey (as
applicable) is required by applicable law or applicable regulatory
authorities, or (iii) such title insurance, appraisal or
environmental survey (as applicable) is required to be delivered
after July 1, 1998. In addition, such title insurance, appraisals
and environmental surveys may be required to be delivered by the
14
Borrower on or before the dates specified above as the result of a
request of the Agent or the Required Lenders made at any time if the
same is to be provided at the expense of the Agent (subject to its
right of reimbursement or indemnification from the Lenders) and/or
the Lenders. Except as referred to in the immediately preceding
sentence, all such title insurance, appraisals and environmental
surveys shall be provided at the expense of the Borrower."
In the event that this Amendment is not executed by all
Lenders, a new SECTION 5.6 is hereby added to the Credit Agreement,
which SECTION 5.6 shall read as follows:
"Section 5.6 CERTAIN COLLATERAL. In addition to and
notwithstanding anything to the contrary contained in SECTION 5.1,
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, to secure the full and complete payment and
performance of all indebtedness, liabilities and obligations of each
Subsidiary Guarantor under its Guarantee of the Obligations), the
Borrower will, or will cause its appropriate Subsidiary to, as
applicable, grant to the Agent for the benefit of the Agent and the
Lenders, concurrently with the execution and delivery of the Second
Amendment unless otherwise specified in this SECTION 5.6, a
perfected (upon appropriate recording or filing thereafter), first
priority Lien (subject only to Permitted Liens, if any, which are
permitted in accordance with this Agreement) on all of its right,
title and interest in and to the following real Properties and
related personal Property consisting of equipment and inventory,
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:
1. ▇▇▇▇▇ Hospital and Medical Center (located in or near
Layton, Utah), which the Borrower represents and warrants
is owned by ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Hospital, Inc.;
2. Salt Lake Regional Medical Center (located in or near Salt
Lake City, Utah), which the Borrower represents and
warrants is owned by PHC - Salt Lake City, Inc.;
3. Jordan Valley Hospital (located in or near West Jordan,
Utah), which the Borrower represents and warrants is owned
by PHC - Jordan Valley, Inc.;
4. BayCoast Medical Center (located in or near Baytown,
Texas), which the Borrower represents and warrants is
owned by Baytown Medical Center, Inc.;
5. Westwood Medical Center (located in or near Midland,
Texas), which the Borrower represents and warrants is
owned by PHC - B of Midland, Inc.;
6. ▇▇▇▇▇▇▇▇ County General Hospital (located in or near
Jamestown, Tennessee) (which Lien shall secure only
$34,300,000 of the principal amount of the Obligations for
purposes of applicable mortgage taxes), which the Borrower
15
represents and warrants is owned by ▇▇▇▇▇▇▇▇▇▇ Real Estate
Corporation, as to real Property, and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
County General Hospital, Inc., as to other assets;
7. Metropolitan Hospital (located in or near Richmond,
Virginia), which the Borrower represents and warrants is
owned by Metropolitan Hospital, L. P.;
8. Lancaster Community Hospital (located in or near
Lancaster, California), which the Borrower represents and
warrants is owned by ▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation,
as to real estate, and Lancaster Hospital Corporation, as
to other assets;
9. the Mesquite Hospital (located in or near Mesquite, Texas)
and any hospital (including real Property and related
personal Properties consisting of equipment and inventory)
acquired by the Borrower or any of its Subsidiaries in
exchange for the sale or other disposition of the Mesquite
Hospital, which the Borrower represents and warrants is
owned by ▇▇▇▇▇▇▇▇▇▇ Mesquite Hospital, Inc.;
10. PHC Regional Hospital and Medical Center (located in or
near Salt Lake City, Utah), which the Borrower represents
and warrants is owned by ▇▇▇▇▇▇▇▇▇▇ - PHC Regional County
Medical Center, Inc.;
11. Cumberland River Hospital - North (located in or near
Celina, Tennessee) (which Lien shall secure only
$16,000,000 of the principal amount of the Obligations for
purposes of applicable mortgage taxes), which the Borrower
represents and warrants is owned by ▇▇▇▇▇▇▇▇▇▇ Healthcare
Corporation, as to real Property, and ▇▇▇▇▇▇▇▇▇▇ Clay
County Hospital, Inc., as to other assets; and
12. each of the LA Metro Hospitals (located in or near Los
Angeles, California), which the Borrower represents and
warrants is owned by (1) as to Monrovia Community
Hospital, ▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real
Property, and Monrovia Community Hospital, L.P., as to
other assets, (2) as to Bellwood General Hospital,
▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real Property,
and Bellwood Medical Corporation, as to fixtures,
furniture and equipment, and Lincoln Community Medical,
LLC as to other assets, (3) as to Hollywood Community
Hospital of Hollywood and Hollywood Community Hospital of
Van Nuys, ▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real
Property, and Hollywood Community Hospital Medical Center,
Inc., as to other assets, (4) as to Los Angeles Community
Hospital and Los Angeles Community Hospital of Norwalk,
▇▇▇▇▇▇▇▇▇▇ Real Estate Corporation, as to real Property,
and ▇▇▇▇▇▇▇▇▇▇ Los Angeles Community Hospital, Inc., as to
other assets, and (5) as to Orange County Community
Hospital of Buena Park, ▇▇▇▇▇▇▇▇▇▇ Real Estate
Corporation, as to real Property, and Lincoln Community
Medical Corporation, as to fixtures, furniture and
equipment, and Lincoln Community Medical, LLC as to other
assets;
16
PROVIDED, HOWEVER, that (a) (i) the Lien on Metropolitan Hospital
shall be required to secure only that certain Promissory Note dated
August 14, 1997, in the maximum original principal amount of
$20,000,000 made by Metropolitan Hospital, L.P. payable to the order
of ▇▇▇▇▇▇▇▇▇▇ Healthcare Holdings, Inc., which note and such Lien
securing it shall be collaterally assigned by ▇▇▇▇▇▇▇▇▇▇ Healthcare
Holdings, Inc. to the Agent and possession of such note shall be
delivered to the Agent, together with an endorsement thereto in
favor of the Agent, (ii) the Lien on the equipment and inventory
related to Monrovia Community Hospital shall be required to secure
only the intercompany indebtedness owed by Monrovia Community
Hospital, L.P. to ▇▇▇▇▇▇▇▇▇▇ Venture Corporation (to the extent that
such Lien is permitted by the partnership agreement of Monrovia
Community Hospital, L.P. existing as of June 30, 1997), which
indebtedness shall be evidenced by a negotiable promissory note and
which note and such Lien securing it shall be collaterally assigned
by ▇▇▇▇▇▇▇▇▇▇ Venture Corporation to the Agent and possession of
such note shall be delivered to the Agent, together with an
endorsement thereto in favor of the Agent, and (iii) the Lien on the
personal Property relating to Bellwood General Hospital and Orange
County Community Hospital of Buena Park shall not be required to be
granted to the extent that such personal Property is owned by
Lincoln Community Medical, LLC as of June 30, 1997 or, if and to the
extent acquired in the ordinary course of business from other than
an Affiliate of the Borrower and not indirectly from such Affiliate,
thereafter, and (b) the Liens affecting any particular LA Metro
Hospital and the related personal Property consisting of equipment
and inventory shall not be required to be granted if and to the
extent that such hospital is sold on or before December 31, 1997,
and, if and to the extent not so sold, such Liens affecting any such
LA Metro Hospital and such related personal Property shall be
promptly granted (and in any event such grant shall occur on a date
no later than ten (10) Business Days after December 31, 1997) unless
the Required Lenders agree from time to time to delay such grant to
a subsequent date or dates; PROVIDED, FURTHER, HOWEVER, that Liens
affecting any and all of the LA Metro Hospitals and related personal
Property consisting of equipment and inventory shall (unless
otherwise agreed by the Required Lenders) be required to be granted
promptly upon the request (and, in any event unless the Required
Lenders otherwise agree, within ten (10) Business Days after such
request) of the Agent or the Required Lenders at any time after the
occurrence and during the continuation of an Event of Default. In
connection with the execution of any agreement, document or
instrument referred to in this SECTION 5.6, the Borrower will, or
will cause its appropriate Subsidiary to, as applicable, execute
and/or deliver or cause to be executed and/or delivered to the Agent
each of the following (if any) which may be requested by the Agent
or the Required Lenders at any time or from time to time, each of
which will be in form and substance reasonably satisfactory to the
Agent and all of which shall be delivered to the Agent, unless the
Required Lenders from time to time agree to a later date or dates,
within 60 days (or 90 days with respect to appraisals and
environmental surveys) after the date upon which the related Lien is
required to be granted, in the case of CLAUSE (A) succeeding, or
within 60 days (or 90 days with respect to appraisals and
environmental surveys) after the date of such request (made after
the Second Amendment Date), in the case of CLAUSE (B) succeeding:
17
(a) a commitment for a mortgagee policy of title insurance
(or, if a commitment for title insurance is not available in
any jurisdiction in question, a title abstract or report or
other evidence of title in form and substance reasonably
satisfactory to the Agent) issued by a nationally recognized
title insurance company to the Agent for and on behalf of the
Lenders, which, in the case of a commitment, offers to insure
that such Lien is valid and enforceable and of a first priority
subject only to Permitted Liens which are permitted to attach
to the subject Collateral; and
(b) such other agreements, documents, instruments and
certificates as the Agent or the Required Lenders may
reasonably request in connection with the Liens to be granted
in accordance with this SECTION 5.6;
PROVIDED, HOWEVER, that the Agent and the Lenders do not presently
intend to require delivery of policies of title insurance,
appraisals or environmental surveys other than environmental
questionnaires with respect to any of the mortgaged Properties
referred to in this SECTION 5.6 preceding and none of such title
insurance, appraisals or environmental surveys shall be required to
be delivered at the expense of the Borrower with respect to any of
such mortgaged Properties unless either (i) a payment Default or an
Event of Default has occurred and is continuing, (ii) the Required
Lenders believe, in good faith, that such title insurance, appraisal
or environmental survey (as applicable) is necessary to comply with
prudent banking practices or any Lender believes, in good faith,
that such title insurance, appraisal or environmental survey (as
applicable) is required by applicable law or applicable regulatory
authorities, or (iii) such title insurance, appraisal or
environmental survey (as applicable) is required to be delivered
after July 1, 1998. In addition, such title insurance, appraisals
and environmental surveys may be required to be delivered by the
Borrower on or before the dates specified above as the result of a
request of the Agent or the Required Lenders made at any time if the
same is to be provided at the expense of the Agent (subject to its
right of reimbursement or indemnification from the Lenders) and/or
the Lenders. Except as referred to in the immediately preceding
sentence, all such title insurance, appraisals and environmental
surveys shall be provided at the expense of the Borrower."
Section 3.9 SUBSIDIARIES. The first sentence of SECTION 7.15 of the
Credit Agreement is hereby amended and restated to read in its entirety
as follows:
"SCHEDULE 7.15 correctly sets forth the name of each Subsidiary
of the Borrower and a statement of the ownership of the Capital
Stock or other interest of each such Subsidiary as of the Second
Amendment Date."
Section 3.10 REPORTING REQUIREMENTS. SECTION 8.1 of the Credit
Agreement is hereby amended as follows:
(a) SECTION 8.1(F) of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
18
"(f) NOTICE OF LITIGATION. Promptly and in any event
within five (5) days after the Borrower's obtaining knowledge
of the threat or commencement thereof or otherwise becoming
aware thereof, written notice of all of the following: (i) any
action, suit or proceeding before any Governmental Authority or
arbitrator affecting any Loan Party which, if adversely
determined to any such Person, could reasonably be expected to
have a Material Adverse Effect, (ii) any action, suit or
proceeding before any Governmental Authority or arbitrator to
which the Borrower or any of its Subsidiaries (other than
Excluded Subsidiaries) is a defendant or other potentially
liable party which alleges an amount in controversy of
$3,000,000 or more and is not covered by insurance or in which
injunctive or similar relief is sought, or (iii) any final
disposition by judgment or settlement of any action, suit or
proceeding before any Governmental Authority or arbitrator
against the Borrower or any of its Subsidiaries (other than
Excluded Subsidiaries) involving a liability (to the extent not
paid or covered by insurance) to the Borrower or any of its
Subsidiaries (other than Excluded Subsidiaries) of $3,000,000
or more; PROVIDED, HOWEVER, that nothing in this CLAUSE (F)
shall require disclosure of matters which could reasonably be
expected to result in a waiver of the attorney-client privilege
or work product protection of the Borrower or any of its
Subsidiaries or a violation of an obligation of the Borrower or
any of its Subsidiaries imposed by court order or otherwise
imposed by law."
(b) SECTION 8.1(P) of the Credit Agreement is hereby amended
and restated to read in its entirety as follows:
"(p) NOTICES REGARDING SUBORDINATED DEBT. (i) 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; and (ii)
immediately prior to or concurrently with the making of any
payment on or with respect to any Subordinated Debt, a
certificate executed by a Responsible Officer on behalf of the
Borrower stating that no Default exists or will exist at the
time of such payment or will result from such payment.";
(c) a new CLAUSE (S) is hereby added to SECTION 8.1 immediately
succeeding CLAUSE (R) of SECTION 8.1, which CLAUSE (S) shall read in
its entirety as follows:
"(s) MONTHLY NON-CASH CHARGES. As soon as available, and
in any event within forty-five (45) days after the end of each
month, beginning with the month ended July 31, 1997, and ending
with the month ending June 30, 1998, a report specifying the
Non-Cash Charges for such month and the cash expenditures
incurred during such month as a result of any prior Non-Cash
Charges (whether such prior Non-Cash Charges were incurred
during such month or any prior month), which report shall be in
19
reasonable detail and shall be certified by a Responsible
Officer of the Borrower to fairly and accurately present such
Non-Cash Charges as determined in accordance with GAAP."; and
(d) a new CLAUSE (T) is hereby added to SECTION 8.1 immediately
succeeding CLAUSE (S) of SECTION 8.1, which CLAUSE (T) shall read in
its entirety as follows:
"(t) CASH FLOW 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 July 31, 1997, a copy of
a financial report of the Borrower and its consolidated
Subsidiaries as of the end of such month, on a consolidated
basis, setting forth the actual receipt and disbursement of
funds for such month, all in reasonable detail certified by a
Responsible Officer of the Borrower to fairly and accurately
present the cash position of the Borrower, together with a
forecast of receipts and disbursements for each of the next
three months."
Section 3.11 INSURANCE. SECTION 8.5(A) is hereby amended by adding
the following sentence at the end thereof:
"The Agent, for the benefit of itself and the other Lenders, shall
be named as loss payee with respect to casualty insurance policies
covering all or any part of the Collateral to the extent of the
interests of the Lenders in the Collateral (other than Capital
Stock) and shall be named as additional insured with respect to the
general liability insurance policies of the Borrower and its
Subsidiaries to the extent of the interests of the Lenders in the
Collateral (other than Capital Stock)."
Section 3.12 LIMITATION ON DEBT. SECTION 9.1 of the Credit
Agreement is hereby amended as follows:
(a) the reference to SECTION 9.12A(B) in SECTION 9.1(J) of the
Credit Agreement is hereby amended to read "SECTION 9.12A(C)"; and
(b) the last sentence of SECTION 9.1 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:
"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 $20,000,000 in aggregate amount."
Section 3.13 LIMITATION ON INVESTMENT. SECTION 9.4 of the Credit
Agreement is hereby amended and restated to read in its entirety as
follows:
"Section 9.4 LIMITATION ON INVESTMENT. Except to the extent
permitted by SECTIONS 9.1, 9.6 or 9.10, the Borrower will not, nor
will it permit any of its Subsidiaries to, make or permit to remain
outstanding any loan, extension of credit or capital contribution to
or investment in any Person, or purchase or own any stock, bonds,
notes, debentures or other securities of any Person, or acquire or
purchase the assets or business of any other Person, or acquire or
purchase securities or become a joint venturer with or partner of
20
any Person (all such transactions being herein called
"INVESTMENTS"), other than:
(a) Cash Equivalents;
(b) Investments permitted by SECTION 9.5;
(c) Investments (whether in cash or property) in Wholly-
Owned Subsidiaries or Majority-Owned Subsidiaries of the
Borrower made consistent with past practices and not prohibited
by SECTION 9.12A, in either event so long as such Wholly-Owned
Subsidiaries or Majority-Owned Subsidiaries are not Excluded
Subsidiaries;
(d) other Investments (whether in cash or property, and,
in the case of Investments in Persons other than Excluded
Subsidiaries and if in property, valued at its then current
appraised value) made on or after the Second Amendment Date in
any Person, including Excluded Subsidiaries, in an aggregate
amount (together with Debt permitted by SECTION 9.1(L) and
together with Investments in Excluded Subsidiaries referred to
in SCHEDULE 9.5, in each case incurred or made on or after the
Second Amendment Date) not to exceed five percent (5%) of
Consolidated Tangible Assets; PROVIDED, HOWEVER, that such
other Investments in any Persons other than Excluded
Subsidiaries permitted under this CLAUSE (D) and made on or
after the Second Amendment Date shall not exceed $10,000,000;
(e) other Investments made by Hospital Assurance Company,
Ltd., a Wholly-Owned Subsidiary of Borrower, in investment
grade securities;
(f) receivables owing to it, if created in the ordinary
course of business or dischargeable in accordance with
customary trade terms;
(g) Investments between and among the Excluded
Subsidiaries; and
(h) existing Investments (other than the Investments
covered under SUBSECTIONS (A) through (G) above) identified on
SCHEDULE 7.15(A) or SCHEDULE 9.4 hereto;
PROVIDED, HOWEVER, that, no Investments may be made by the Borrower
or any of its Subsidiaries pursuant to CLAUSES (B) or (D) preceding
if an Event of Default exists at the time of such Investment or
would result therefrom."
Section 3.14 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 Investments or incur or assume any obligations, or
consent to make expenditures or Investments or incur or assume
obligations, to make, or otherwise in connection with, Business
21
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 or Investments 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 between the
Borrower and the Agent (with the consent of the Required Lenders as
evidenced by their execution of the Second Amendment) in connection
with the Second Amendment, each of which expenditures or Investments
made and obligations incurred or assumed shall not exceed the
aggregate amount therefor specified in SCHEDULE 9.5 and the
aggregate amount of which expenditures or Investments made and
obligations incurred or assumed shall not exceed $12,850,000, and
(b) other expenditures or Investments made and obligations incurred
or assumed in connection with Business 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 3.15 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
22
Majority-Owned Subsidiaries (in either event other than
Excluded Subsidiaries) of the Borrower;
(d) (i) Subsidiaries of the Borrower that are joint
ventures or partnerships as of December 31, 1996, 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, (ii) Lincoln
Community Medical, L.L.C. may make Restricted Payments to its
owners in accordance with the Operating Agreement for such
entity dated as of March 26, 1997 as previously delivered to
the Agent, and (iii) Subsidiaries of the Borrower referred to
in CLAUSES (I) and (II) preceding and that are specified on
SCHEDULE 9.10 hereto may make Restricted Payments to their
joint venturers or partners, in each case in accordance with
the joint venture or partnership agreements which shall have
been approved in writing by the Required Lenders (or, with
respect to the initial joint venture or partnership agreement
relating to Foot and Ankle Institute of West Los Angeles, 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
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 $1,000,000;
(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); and
(g) The Borrower may refinance any Subordinated Debt
(including, without limitation, Debt under the New Subordinated
Notes) with (and only with) other Subordinated Debt referred to
in CLAUSE (B) or CLAUSE (C) of the definition of such term;
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."
Section 3.16 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 for the
following which are permitted if and to the extent that the Agent
receives any and all prepayments (if any) required from the proceeds
thereof in accordance with SECTION 2.7(A);
(a) the Asset Dispositions specified in SCHEDULE 9.12
hereto as agreed to among the Borrower and the Agent (with the
consent of the Required Lenders as evidenced by their execution
23
of the Second Amendment) in connection with the Second
Amendment, PROVIDED, HOWEVER, that, without the prior written
consent of the Required Lenders, (i) each of the Asset
Dispositions specified in SCHEDULE 9.12 shall be for fair
consideration paid or payable to the transferor as determined
by the transferor in good faith, (ii) except as permitted by
SECTION 9.12A(B) succeeding, none of the Asset Dispositions
specified in SCHEDULE 9.12 may include Asset Dispositions by
the Borrower or any of its Subsidiaries to a Subsidiary of the
Borrower, and (iii) none of the Asset Dispositions specified in
SCHEDULE 9.12 may include a lease of Property;
(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; PROVIDED, HOWEVER, that Asset
Dispositions permitted in accordance with this CLAUSE (B) shall
not (i) include any Asset Disposition of a hospital or other
health care facility unless such Asset Disposition is approved
by the Required Lenders and (ii) shall not include any related
personal Property consisting of equipment or inventory unless
such Asset Disposition of equipment or inventory (A) is
approved by the Required Lenders, (B) (1) in the case of
inventory, is owned by ▇▇▇▇▇▇▇▇▇▇ PHC Regional Hospital, Inc.
and, in the case of equipment, is owned by ▇▇▇▇▇▇▇▇▇▇ PHC
Regional Hospital, Inc. as of the Second Amendment Date or (2)
is transferred to ▇▇▇▇▇▇▇▇▇▇ PHC Regional Hospital, Inc. and,
concurrently with such transfer under this CLAUSE (2), is
subject to a perfected Lien in favor of the Agent as security
for the Obligations, or (C) when combined with all other Asset
Dispositions of equipment or inventory which have occurred
under this CLAUSE (C) subsequent to June 30, 1997, does not
involve Property having an aggregate book value in excess of
$10,000,000;
(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, other than dispositions of a
hospital or other health care facility, no longer used or
useful in the ordinary course of business; and
(e) subject to the proviso contained in this CLAUSE (E)
below, sales, leases, assignments, transfers or other
dispositions otherwise expressly permitted under this Agreement
(including, without limitation, any transfer of the Capital
Stock or Property of an Excluded Subsidiary permitted under
SECTION 9.3 and any grant of a Lien which constitutes a
Permitted Lien permitted in accordance with this Agreement),
PROVIDED, HOWEVER, that sales, leases, assignments, transfers
or other dispositions of a hospital or other health care
facility or any related personal Property consisting of
equipment or inventory shall be excluded for purposes of this
CLAUSE (E) preceding unless such hospital or other health care
facility or personal Property is owned by an Excluded
24
Subsidiary;
PROVIDED, HOWEVER, that, notwithstanding anything to the contrary
contained in this Agreement, (i) no Asset Disposition may be made by
the Borrower or any of its Subsidiaries (other than Excluded
Subsidiaries) pursuant to CLAUSE (A) preceding if an Event of
Default exists at the time of such Asset Disposition or would result
therefrom, and (ii) unless otherwise agreed by the Required Lenders,
none of the hospitals (including real Property and related personal
Property) or any Capital Stock of the entities owning such hospitals
or related Property identified on SCHEDULE 1 to the agreement dated
the Second Amendment Date between the Borrower and the Agent may be
sold (A) for other than cash, the assumption of indebtedness by the
purchaser or notes payable by the purchaser to the seller without
the prior written consent of the Required Lenders, provided that any
such notes payable by the purchaser to the seller must be pledged to
the Agent as security for the Obligations unless the Required
Lenders otherwise agree, or (B) for less than the amounts of cash
(exclusive of the assumption of indebtedness, notes payable and
other non-cash consideration) specified therefor in such SCHEDULE 1.
B. Subject to the proviso contained in this SECTION 9.12 B
below, 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 (i) all
Net Proceeds of such Asset Disposition which are required to be paid
to the Agent pursuant to SECTION 2.7(A) shall be so paid to the
Agent (and the Commitments shall be reduced by a corresponding
amount in accordance with SECTION 2.7(C)) as a condition to such
release, (ii) the Agent shall not, and shall not be obligated to,
release any such Collateral in connection with any Asset Disposition
to the Borrower or any Subsidiary of the Borrower, and (iii) the
Agent shall not, and shall not be obligated to, release any such
Collateral in connection with any Asset Disposition if such Asset
Disposition is permitted or approved subject to the condition that
the Liens thereon securing the Obligations or any portion thereof
shall not be released."
Section 3.17 CERTAIN TRANSACTIONS OR AGREEMENTS. SECTION 9.14 of
the Credit Agreement is hereby amended and restated to read in its
entirety as follows:
"Section 9.14 CERTAIN TRANSACTIONS AND AGREEMENTS. Except as
may be expressly permitted or required by the Loan Documents, the
Borrower will not, and will not permit any of its Subsidiaries to,
create or otherwise cause or permit to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of
the Borrower or any Subsidiary (other than Excluded Subsidiaries) to
(a) pay dividends or make any other distribution to the Borrower or
any of its Subsidiaries in respect of such Subsidiary's Capital
Stock or with respect to any other interest or participation in, or
measured by, the profits of such Subsidiary, (b) pay any
indebtedness owed to the Borrower or any of its Subsidiaries,
(c) make any loan or advance to the Borrower or any of its
25
Subsidiaries, or (d) sell, lease or transfer any of its Property to
the Borrower or any of its Subsidiaries, or grant any Lien on any of
its Properties, except (with respect to this CLAUSE (D) only) an
encumbrance or restriction (i) with respect to (A) Properties
subject to Permitted Liens referred to in CLAUSES (A), (C), (F),
(G), (H), (I) or (K) of the definition of such term which are
permitted in accordance with this Agreement if and to the extent
that the agreements or documents creating such Liens include such an
encumbrance or restriction and such encumbrance or restriction is
required by the parties thereto other than the Borrower and its
Subsidiaries, (B) accounts receivable which are subject to any
accounts receivable securitization facility in effect and permitted
in accordance with this Agreement and (C) Properties subject to
purchase and sale agreements relating to Asset Dispositions
permitted by this Agreement, (ii) to the extent that any such
encumbrance or restriction is contained in the New Indenture as in
existence as of the Closing Date, and (iii) to the extent that any
such encumbrance or restriction relates to accounts of any
Subsidiary that is a party to the PHC Funding Sale Documents and is
contained in the PHC Funding Sale Documents."
Section 3.18 SENIOR LEVERAGE RATIO. Effective as of April 1, 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
April 1, 1997 through September 30, 1997 2.85 to 1.00
October 1, 1997 through December 31, 1997 2.60 to 1.00
January 1, 1998 through March 31, 1998 2.30 to 1.00
April 1, 1998 through June 30, 1998 2.15 to 1.00
July 1, 1998 and at all times thereafter 2.00 to 1.00
For purposes of this SECTION 10.1, the term 'Adjusted EBITDA' shall
have the meaning of such term in this Agreement as amended by the
Second Amendment."
Section 3.19 MINIMUM NET WORTH. Effective as of April 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 June 30, 1997, the Borrower will
not permit Net Worth to be less than the sum of (a) the greater of
$44,550,000 or 90% of Net Worth as of June 30, 1997, plus (b) for
each quarter on a cumulative basis ending on or after the fiscal
quarter ending September 30, 1997 or thereafter, seventy-five
percent (75%) of the positive net income, if any, of the Borrower
and its consolidated Subsidiaries, plus (c) seventy-five percent
26
(75%) of all net proceeds from any Equity Issuance following the
Closing Date; PROVIDED, HOWEVER, that the amount determined in
accordance with this SECTION 10.2 preceding shall be reduced by the
after-tax effect of the aggregate amount of Non-Cash Charges of the
Borrower subsequent to June 30, 1997; PROVIDED, FURTHER, HOWEVER,
that in no event shall the amount determined in accordance with this
SECTION 10.2 be less than $25,000,000."
Section 3.20 RATIO OF TOTAL DEBT TO ADJUSTED EBITDA. Effective as
of April 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
April 1, 1997 through September 30, 1997 7.60 to 1.00
October 1, 1997 through December 31, 1997 7.35 to 1.00
January 1, 1998 through March 31, 1998 6.85 to 1.00
April 1, 1998 through June 30, 1998 6.30 to 1.00
July 1, 1998 through September 30, 1998 6.00 to 1.00
October 1, 1998 through December 31, 1998 5.75 to 1.00
January 1, 1999 through June 30, 1999 5.50 to 1.00
July 1, 1999 through September 30, 1999 5.35 to 1.00
October 1, 1999 through December 31, 1999 5.25 to 1.00
January 1, 2000 through March 31, 2000 5.00 to 1.00
April 1, 2000 through June 30, 2000 4.95 to 1.00
July 1, 2000 through September 30, 2000 4.85 to 1.00
October 1, 2000 through December 31, 2000 4.75 to 1.00
January 1, 2001 and at all times thereafter 4.50 to 1.00
For purposes of this SECTION 10.3, the term 'Adjusted EBITDA' shall
have the meaning of such term in this Agreement as amended by the
Second Amendment."
Section 3.21 FIXED CHARGE COVERAGE RATIO. Effective as of April 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:
27
PERIOD RATIO
April 1, 1997 through March 31, 1998 1.15 to 1.00
April 1, 1998 through June 30, 1998 1.25 to 1.00
July 1, 1998 through September 30, 1998 1.35 to 1.00
October 1, 1998 through December 31, 1998 1.45 to 1.00
January 1, 1999 and at all times thereafter 1.50 to 1.00
For purposes of this SECTION 10.4, the terms 'Adjusted EBITDA',
'Fixed Charge Coverage Ratio' and 'Interest Expense' shall have the
meanings of such terms in this Agreement as amended by the Second
Amendment."
Section 3.22 MINIMUM ADJUSTED EBITDA. Effective as of April 1,
1997, SECTION 10.5 of the Credit Agreement is hereby amended and restated
in its entirety as follows:
"Section 10.5 MINIMUM ADJUSTED EBITDA. As of the last day of
each fiscal quarter ending on or after December 31, 1996, but prior
to January 1, 1999, 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
day year (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
April 1, 1997 through December 31, 1997 $70,000,000
January 1, 1998 through March 31, 1998 $74,700,000
April 1, 1998 through June 30, 1998 $80,800,000
July 1, 1998 through September 30, 1998 $84,300,000
October 1, 1998 through December 31, 1998 $87,800,000
January 1, 1999 and at all times thereafter not applicable
; PROVIDED, FURTHER, HOWEVER, that each of the minimum permitted
Adjusted EBITDA amounts set forth in the preceding table shall be,
on a cumulative basis (a) increased by, in connection with an
acquisition by the Borrower or a Subsidiary of the Borrower which
has not been owned or effective for a full fiscal year, EBITDA of
such acquired entity or attributable to such acquired assets for the
completed four fiscal quarters immediately preceding the date of
such acquisition and (b) reduced by, in connection with any
divestiture of an entity (corporate, partnership or joint venture)
by the Borrower or a Subsidiary of the Borrower, EBITDA of such
28
divested entity attributable to such entity for the completed four
fiscal quarters immediately preceding the date of such divestiture.
For purposes of this SECTION 10.5, the term 'Adjusted EBITDA' shall
have the meaning of such term in this Agreement as amended by the
Second Amendment."
Section 3.23 CAPITAL EXPENDITURES. Effective as of April 1, 1997, a
new SECTION 10.6 is hereby added to the Credit Agreement, which
SECTION 10.6 shall read in its entirety as follows:
"Section 10.6 CAPITAL EXPENDITURES. The Borrower agrees that
the aggregate of Capital Expenditures, exclusive (without
duplication) of expenditures or Investments permitted in accordance
with CLAUSE (A) of SECTION 9.5 and other expenditures or Investments
permitted in accordance with CLAUSE (B) of SECTION 9.5, made by the
Borrower and its consolidated Subsidiaries will not, during any
consecutive four fiscal quarter period commencing on or after
January 1, 1997, (a) be less than 2% of the net revenues of the
Borrower and its consolidated Subsidiaries during such period and
(b) be greater than 4% of the net revenues of the Borrower and its
consolidated Subsidiaries during such period; PROVIDED, HOWEVER,
that any determination of net revenues made prior to June 30, 1998
shall be calculated on an annualized basis based upon the number of
fiscal quarters ended subsequent to June 30, 1997."
Section 3.24 JUDGMENTS. CLAUSE (H) of SECTION 11.1 of the Credit
Agreement is hereby amended and restated to read in its entirety as
follows:
"(h) Any one or more judgments, settlements or decrees shall be
entered against, or agreed to by, the Borrower or any of its
Subsidiaries involving an aggregate liability in the aggregate
amount at any time of $5,000,000 or more in excess of any amounts
covered by insurance, and all of such judgments, settlements and
decrees shall not have been vacated, discharged, stayed or bonded
pending appeal, or paid or otherwise discharged, within ten days
from the date of entry thereof or agreement thereto or, with respect
to matters subject to appeal, within the later to occur of such ten
days or within the time period available for appeal under applicable
law;".
Section 3.25 EXPENSES. SECTION 13.1 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:
"Section 13.1 EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Borrower hereby agrees, on
demand, to pay or reimburse the Agent, the Documentation Agent,
NationsBank of Texas, N.A. as managing agent (the "MANAGING AGENT")
and each of the Lenders (as applicable) for: (a) all reasonable
out-of-pocket costs and expenses of the Agent and the Documentation
Agent in connection with the preparation, negotiation, execution,
administration and delivery of this Agreement and the other Loan
Documents, and any and all amendments, modifications, renewals,
extensions and supplements thereof and thereto, and the syndication
of the Loans, including, without limitation, the reasonable fees and
expenses of legal counsel and (subject to the provisions regarding
expenses contained in SECTIONS 5.1 and 5.6) other professionals for
29
the Agent and the Documentation Agent (and including, without
limitation, in the case of in-house counsel to the Agent, the
allocated fees and expenses of such counsel), (b) if requested or
consented to by the Required Lenders (at any time and from time to
time), all reasonable fees and expenses of financial consultants to
the Agent and the Lenders, (c) all out-of-pocket costs and expenses
of the Agent in connection with any Default, any Event of Default,
the exercise thereafter of any right or remedy and the enforcement
(including, without limitation, by way of collection, bankruptcy,
insolvency or other enforcement proceedings) of this Agreement or
any other Loan Document or any term or provision hereof or thereof,
including, without limitation, the fees and expenses of legal
counsel and (subject to the provisions regarding expenses contained
in SECTIONS 5.1 and 5.6) other professionals for the Agent (and
including, without limitation, in the case of in-house counsel to
the Agent, the allocated fees and expenses of such counsel), (d) all
out-of-pocket costs of expenses of the Documentation Agent, the
Managing Agent and the Lenders in connection with any Event of
Default, the exercise thereafter of any right or remedy and the
enforcement (including, without limitation, by way of collection,
bankruptcy, insolvency or other enforcement proceedings) of this
Agreement or any other Loan Document or any term or provision hereof
or thereof, including, without limitation, the fees and expenses of
legal counsel for any such Person and (subject to the provisions
regarding expenses contained in SECTIONS 5.1 and 5.6) other
professionals for the Documentation Agent and the Managing Agent
(and including, without limitation, in the case of in-house counsel
to the Documentation Agent and the Managing Agent, the allocated
fees and expenses of such counsel), (e) subject to ARTICLES 3 and 4
hereof, all out-of-pocket transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any Governmental
Authority in respect of this Agreement or any of the other Loan
Documents, (f) all reasonable costs, expenses, assessments and other
charges incurred by the Agent or the Documentation Agent in
connection with any filing, registration, recording or perfection of
any Lien contemplated by this Agreement or any other Loan Document,
and (g) all reasonable out-of-pocket costs and expenses incurred by
the Agent, the Documentation Agent and the Managing Agent in
connection with due diligence, computer services, copying,
appraisals, collateral audits, insurance, consultants and search
reports. For purposes of this SECTION 13.1, the term
"professionals" means, collectively, all attorneys, accountants,
consultants, paraprofessionals, appraisers, auditors, inspectors,
engineers, title insurance companies and environmental experts
employed, retained or internally used by any applicable Person
specified in this SECTION 13.1 in performing any of its duties or
obligations or in asserting any of its rights or remedies under this
Agreement or any other Loan Document."
Section 3.26 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 SECOND AMENDMENT EXHIBIT A to this
Amendment.
Section 3.27 SCHEDULE 1.1(A). SCHEDULE 1.1(A) to the Credit
Agreement is hereby amended to add Foot and Ankle Institute of West Los
Angeles thereto at such time as it is formed, thereby designating Foot
30
and Ankle Institute of West Los Angeles as an Excluded Subsidiary subject
to the requirements of such definition at such time.
Section 3.28 SCHEDULE 1.1(C). Effective as of the Closing Date,
SCHEDULE 1.1(C) to the Credit Agreement is hereby amended to add the
following thereto as a Permitted Lien: "Liens affecting the accounts,
instruments, deposit accounts, all cash deposited therein and all
proceeds of any of the foregoing of ▇▇▇▇▇▇▇▇▇▇ Convalescent Hospitals,
Inc. which are granted pursuant to and all as more fully set forth in
that certain California Facilities Security Agreement dated as of May 15,
1996 between ▇▇▇▇▇▇▇▇▇▇ Convalescent Hospitals, Inc., as debtor, and AHP
of Utah, Inc. as secured party, and Liens affecting the accounts, deposit
accounts, inventory, equipment and other goods, fixtures, books and
records and other personal property of ▇▇▇▇▇▇▇▇▇▇ Pioneer Valley
Hospital, Inc. ("PIONEER VALLEY") which are granted pursuant to and all
as more fully set forth in that certain Security Agreement dated as of
May 15, 1996 between Pioneer Valley, as debtor, and AHP of Utah, Inc., as
secured party, together with any pledge of the proceeds of the sale of
any of the foregoing constituting net working capital and sold in any
Asset Disposition permitted under this Agreement (including any letter of
credit issued for the amount of and secured by such proceeds, which
letter of credit shall be permitted under SECTION 9.1 hereof), in each
case securing only the obligations of Pioneer Valley under its Lease
dated as of May 15, 1996, between AHP of Utah, Inc., as landlord, and
Pioneer Valley, as tenant, and the obligations of such debtor under such
security agreement executed by it (without any material amendment or
modification to such security agreements or such lease agreement and
without any other amendment or modification thereto which in any way
expands or increases the security or collateral thereunder or increases
the indebtedness or monetary liabilities or obligations secured or
imposed thereunder except as may be approved by the Required Lenders)."
Section 3.29 SCHEDULES 2.7(A)(1) AND 2.7(A)(2). In the event that
this Amendment is executed by all Lenders, a new SCHEDULE 2.7(A)(1) to
the Credit Agreement is hereby added to the Credit Agreement, which
SCHEDULE 2.7(A)(1) shall read as such schedule is attached to the
agreement dated the Second Amendment Date between the Borrower and the
Agent. In the event that this Amendment is not executed by all Lenders,
a new SCHEDULE 2.7(A)(2) to the Credit Agreement is hereby added to the
Credit Agreement, which SCHEDULE 2.7(A)(2) shall read as such schedule is
attached to the agreement dated the Second Amendment Date between the
Borrower and the Agent.
Section 3.30 SCHEDULE 7.15. SCHEDULE 7.15 to the Credit Agreement
is hereby amended and restated to read as set forth as SECOND AMENDMENT
SCHEDULE 1 to this Amendment.
Section 3.31 SCHEDULE 9.10. SCHEDULE 9.10 to the Credit Agreement
is hereby amended and restated to read as set forth as SECOND AMENDMENT
SCHEDULE 2 to this Amendment.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.1 The effectiveness of this Amendment is conditioned upon
31
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 fees required to be paid in accordance with SECTION 5.2
of this Amendment shall have been paid in full to the Agent, the
mortgage taxes payable in connection with the Security Documents to
be granted concurrently with the Second Amendment Date pursuant to
SECTION 5.6 of the Credit Agreement shall have been made available
(to the reasonable satisfaction of the Agent) for payment in full by
the Borrower or the grantor of the Liens created by such Security
Documents to the appropriate Persons and all reasonable costs and
expenses of the Agent in connection with the preparation,
negotiation, execution, administration and delivery of this
Amendment (including, without limitation, attorney's fees and
expenses) invoiced (including by reasonable estimate) to the
Borrower on or before the execution and delivery of the Second
Amendment by the Agent and the Required Lenders shall have been paid
in full;
(b) the Agent shall have received a certificate of the Borrower
certifying that no Default or Event of Default, and no "Default" or
"Event of Default" as such terms are defined in the New Indenture,
exists as of August 14, 1997, immediately after giving effect to
this Amendment;
(c) 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;
(d) the Borrower and/or the appropriate Subsidiaries of the
Borrower, as applicable, shall have executed and/or delivered to the
Agent (i) the Security Documents required to grant and perfect the
Liens required to be granted and perfected with respect to items one
(1) through eleven (11) pursuant to SECTION 5.6 of the Credit
Agreement and (ii) such other agreements, documents, instruments or
certificates as may be reasonably required by the Agent regarding
the power and authority of the Persons executing such Security
Documents;
(e) 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 in-house counsel of the
Borrower and Mayor, Day, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. in form and
substance satisfactory to the Agent;
(f) the Agent shall have received a copy of the amendment or
extension agreement relating to the PHC Funding Sale Documents,
certified by the Borrower as being a true and correct copy thereof,
which amendment or extension agreement shall, by its terms, extend
the maturity of the PHC Funding Sale Documents to April 16, 1998
subject to all terms and conditions thereof;
32
(g) the Borrower shall have paid to the Agent, as a mandatory
prepayment of the Revolving Credit Loans, all Net Proceeds of the
Income Tax Refunds in the aggregate amount of $24,593,268.48
received by the Borrower during the last half of July 1997 which are
required to be paid to the Agent as a mandatory prepayment of the
Revolving Credit Loans in accordance with SECTION 2.7(A) of the
Credit Agreement as amended by this Amendment, and the aggregate
principal amount of the Revolving Credit Loan Commitments shall have
been permanently reduced by the aggregate amount of such prepayment
in accordance with SECTION 2.7(C) of the Credit Agreement and
ARTICLE 2 of this Amendment; and
(h) each of the Lenders shall have funded to the Agent, and the
Agent shall have funded to the Borrower, the additional Revolving
Credit Loans requested to be funded by the Borrower concurrently
with the execution and delivery of this Amendment as referred to in
SECTION 5.13 of this Amendment.
The Agent will, if and when all of the foregoing conditions precedent are
satisfied, so inform the Borrower in writing.
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 ARTICLE 7
of the Credit Agreement (as amended by this Amendment) are true and
correct in all material respects as of August 14, 1997, as if such
representations and warranties had been made on and as of August 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 August 14, 1997,
and after giving effect to this Amendment, no "Default" or "Event of
Default", as such terms are defined in the New Indenture and the
▇▇▇▇▇▇▇▇▇▇ 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 August 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;
33
(e) as of August 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, as
amended, renewed and extended, 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, as amended, renewed and extended; and
(f) as of August 14, 1997, the Borrower is in compliance with
SECTIONS 5.2 and 5.3 of the Credit Agreement.
Section 5.2 FEES. The Borrower shall, substantially concurrently
with the execution of this Amendment by the Required Lenders, pay to the
Agent, for and on behalf of each Lender who executes this Amendment on or
before August 14, 1997, an amendment fee in the aggregate amount equal to
the sum of the amounts set forth opposite the names of such Lenders (who
so execute this Amendment) on SCHEDULE 2 to the agreement dated the
Second Amendment Date between the Borrower and the Agent, which fee shall
be promptly paid by the Agent to those Lenders who execute this Amendment
on or before August 14, 1997 and shall be allocated to such Lenders in
the amounts specified on such SCHEDULE 2. In addition, the Borrower
shall, on or before the Second Amendment Date, (a) execute and deliver to
the Agent the amendment to the Agent's Fee Letter referred to in the
definition of such term and the Second Amendment Fee Letter and (b) pay
all of the fees required to be paid on or before the Second Amendment
pursuant thereto.
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 (including without limitation in the
case of in-house counsel to the Agent, the allocated fees and expenses of
such counsel) 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.
34
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 RELEASES. As a material inducement to the Agent and the
Required Lenders to enter into this Amendment, the Borrower hereby
represents and warrants that there are no claims or offsets against, or
defenses or counterclaims to, the terms and provisions of and the other
indebtedness, liabilities and obligations created or evidenced by the
Credit Agreement or the other Loan Documents. The Borrower hereby
releases, acquits and forever discharges the Agent, the Documentation
Agent, the Managing Agent, the Co-Agents and the Lenders, their
successors and permitted assigns, their parents, subsidiaries and
affiliated organizations, and the officers, employees, attorneys and
agents of each of the foregoing (all of whom are herein jointly and
severally referred to as the "RELEASED PARTIES") from any and all
liability, damages, losses, obligations, costs, expenses, suits, claims,
demands, causes of action for damages or any other relief, whether or not
now known or suspected, of any kind, nature or character, at law or in
equity, which the Borrower now has (as of the Second Amendment Date) or
may have ever had against any one or more of the Released Parties in any
way arising out of or relating to the Credit Agreement or the other Loan
Documents or the financing transactions made available by the Lenders
contemplated thereby, including, but not limited to, those relating to
(a) usury or penalties or damages therefor, (b) allegations that a
partnership existed between the Borrower and any Released Party, (c)
allegations of unconscionable acts, deceptive trade practices, lack of
good faith or fair dealing, lack of commercial reasonableness or special
relationships, such as fiduciary, trust or confidential relationships,
(d) allegations of dominion, control, alter ego, instrumentality, fraud,
misrepresentation, duress, coercion, undue influence, interference or
negligence, (e) allegations of tortious interference with present or
prospective business relationships or of antitrust, or (f) slander, libel
or damage to reputation (hereinafter being collectively referred to as
the "CLAIMS"), all of which Claims are hereby waived; PROVIDED, HOWEVER,
that nothing in this SECTION 5.7 shall release, acquit or discharge the
Agent, the Documentation Agent, the Managing Agent or the Co-Agents or
any of the Lenders or any other Person from their respective obligations
under SECTION 13.18 of the Credit Agreement.
Section 5.8 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 5.9 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 5.10 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
35
BETWEEN OR AMONG THE PARTIES.
Section 5.11 SEVERABILITY. Any provision of this Amendment held by
a court of competent jurisdiction to be invalid, illegal or unenforceable
(for whatever reason, including, without limitation, for lack of the
approval of certain Lenders) shall not impair or invalidate the remainder
of this Amendment and the effect thereof shall be confined to the
provision held to be invalid, illegal or unenforceable. Notwithstanding
anything to the contrary contained in this Amendment, in the event that
SECTION 3.8 of this Amendment is not valid or enforceable for whatever
reason, then the Liens referred to in such SECTION 3.8 shall be deemed to
have been granted at the written request of the Agent and the Required
Lenders delivered to the Borrower in accordance with SECTION 5.1 of the
Credit Agreement as amended by the First Amendment.
Section 5.12 SCHEDULES 9.5 AND 9.12. The Agent will deliver each of
the following to the Lenders prior to their execution and delivery of
this Amendment (although any failure of the Agent to do so shall not
affect the validity or enforceability of this Amendment): (a) a copy of
SCHEDULES 9.5 and 9.12 to the Credit Agreement as amended by this
Amendment; and (b) a copy of the letter agreement referred to in
CLAUSE (III) of SECTION 9.12A of the Credit Agreement as amended by this
Amendment and referred to in SECTION 5.2 of this Amendment.
Section 5.13 PREPAYMENT OF INCOME TAX REFUNDS AND CONCURRENT
REBORROWING. The Borrower agrees that, concurrently with the
effectiveness of this Amendment, the Net Proceeds of the Income Tax
Refunds in the aggregate amount of $24,593,268.48 received by the
Borrower during the last half of July 1997 (the "JULY 1997 INCOME TAX
REFUNDS"), all of which are required to be paid to the Agent as a
mandatory prepayment of the Revolving Credit Loans in accordance with
SECTION 2.7(A) of the Credit Agreement as amended by this Amendment,
shall be so paid in full. The Lenders agree that such payment
concurrently with the effectiveness of this Amendment will satisfy the
Borrower's obligations under SECTION 2.7(A) of the Credit Agreement as
amended by this Amendment in respect of the July 1997 Income Tax Refunds.
Each of the Lenders agrees that, concurrently with the execution and
delivery of this Amendment by all parties hereto, it will advance its
pro rata share (based upon its Revolving Credit Loans Commitment) of the
additional Revolving Credit Loans requested by the Borrower to be
advanced concurrently with the effectiveness of this Amendment in the
Borrower's notice of borrowing delivered to the Agent in accordance with
SECTION 2.9 of the Credit Agreement; PROVIDED, HOWEVER, that the
aggregate amount of such Revolving Credit Loans to be advanced shall not
exceed the aggregate amount of the unused or unfunded Revolving Credit
Loans Commitments and, notwithstanding anything to the contrary contained
in this Amendment, in no event shall any Lender be obligated to advance
its pro rata share of such Revolving Credit Loans unless all other
Lenders advance their pro rata shares of such Revolving Credit Loans.
Section 5.14 THIRD AMENDMENT. The Borrower hereby agrees that the
definition of the term "Required Lenders" in the Credit Agreement is
hereby amended and restated in its entirety to read as follows if all
Lenders execute and deliver the proposed Third Amendment to Credit
Agreement dated effective as of August 14, 1997 which so provides, and
the Borrower hereby agrees to execute such Third Amendment to Credit
Agreement:
36
" 'REQUIRED LENDERS' means, at any date of determination,
Lenders having in the aggregate at least 66-2/3% (in dollar amount
as to any one or more of the following) of the sum of the aggregate
outstanding Revolving Credit Loans Commitments (or, if such
Commitments have terminated or expired, the aggregate outstanding
principal amount of the Revolving Credit Loans and the aggregate
Letter of Credit Liabilities)."
The Agent agrees that it will notify the Borrower in the event that all
Lenders execute and deliver the proposed Third Amendment to Credit
Agreement and that it will deliver an executed counterpart of such Third
Amendment to Credit Agreement to the Borrower.
Section 5.15 SUBSEQUENT LEGAL OPINIONS. The Borrower agrees to
deliver or cause to be delivered to the Agent, on or before September 14,
1997, legal opinions rendered by in-house counsel to the Borrower, in
form and substance reasonably satisfactory to the Agent, as to the
Subsidiary Guarantors and their ratification and confirmation of the
Master Guaranty.
Section 5.16 COMMITMENTS FOR MORTGAGEE POLICIES OF TITLE INSURANCE.
In accordance with SECTION 5.6 of the Credit Agreement as amended by this
Amendment, the Agent hereby requests that the Borrower deliver the
commitments for mortgagee policies of title insurance relating to each of
the real Properties (or interests therein) in which the Agent has been
granted a Lien in accordance with SECTION 5.6 of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned parties hereto have duly
executed this Amendment effective as of the dates first above written.
THE BORROWER:
▇▇▇▇▇▇▇▇▇▇ HEALTHCARE CORPORATION
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President & Treasurer
THE AGENTS AND THE LENDERS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
37
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Lender
and as Issuing Bank
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President
BANQUE PARIBAS,
as Documentation Agent and as a Lender
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Regional General Manager
NATIONSBANK OF TEXAS, N.A.,
as Managing Agent and as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
AMSOUTH OF ALABAMA
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
BANK OF NEW YORK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By: /s/ A.T.D. ▇▇▇▇▇▇
Name: A.T. D. ▇▇▇▇▇▇
Title: Senior Manager
CREDIT LYONNAIS NEW YORK BRANCH,
as Co-Agent and as a Lender
By: /s/ Farbough Tavangar
Name: Farbough Tavangar
Title: First Vice President
CORESTATES BANK, N.A.
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
FUJI BANK LIMITED
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Title: Vice President & Manager
FLEET NATIONAL BANK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By:/s/ Koh ▇▇▇▇▇▇▇▇
Name: Koh ▇▇▇▇▇▇▇▇
Title: General Manager
MELLON BANK, N.A.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Assistant Vice President
PNC BANK, N.A.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
TORONTO- DOMINION (TEXAS),
INCORPORATED, as Co-Agent and as a Lender
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By:/s/ ▇▇▇▇ ▇.▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
