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EXHIBIT 10.2
AMENDMENT NO. 2 TO THE LOAN DOCUMENTS
AMENDMENT dated as of January 13, 1999 to the Amended and
Restated Credit Agreement dated as of June 9, 1998 (as amended and otherwise
modified by Amendment No. 1 to the Loan Documents dated as of December 4, 1998,
the "CREDIT AGREEMENT") among MedPartners, Inc., a Delaware corporation (the
"BORROWER"), the Lenders party thereto, NationsBank, N.A., as the Initial
Issuing Bank and the Swing Line Bank thereunder, Credit Lyonnais New York
Branch, The First National Bank of Chicago and ▇▇▇▇▇▇ Guaranty Trust Company of
New York, as the Syndication Agents therefor, NationsBanc ▇▇▇▇▇▇▇▇▇▇ Securities
LLC, as the Arranger therefor, and NationsBank, N.A., as the Administrative
Agent for the Lender Parties thereunder. Capitalized terms not otherwise defined
in this Amendment and Waiver have the same meanings as specified therefor in the
Credit Agreement.
PRELIMINARY STATEMENTS
(1) The Borrower has requested that the Lender Parties
agree to amend the Credit Agreement in order, among other things, (a) to delete
the requirement set forth in Section 5.04(a) of the Credit Agreement that the
Borrower have maintained a minimum Consolidated EBITDA as of the last day of the
Fiscal Quarter ended December 31, 1998 of at least $88,100,000, (b) to modify
the requirements of Sections 5.04(b) and 5.04(c) of the Credit Agreement that
the Borrower maintain a maximum Leverage Ratio and a minimum Fixed Charge
Coverage Ratio for the Fiscal Quarter ended December 31, 1998 and at all times
thereafter, among other things, to exclude the cash and noncash charges that
will be taken by the Borrower and its Subsidiaries in accordance with GAAP in
connection with the reclassification of the physician practice management
businesses of the Borrower and its Subsidiaries as "discontinued operations",
and the sale, lease, transfer or other disposition of the property and assets
comprising such businesses, all in accordance with the terms of the Loan
Documents, (c) to permit the Borrower and its Subsidiaries to deduct from the
Net Cash Proceeds received from one or more sales, leases, transfers or other
dispositions of their property and assets pursuant to Sections 5.02(d)(vii) and
5.02(d)(viii) of the Credit Agreement such amounts as are necessary to satisfy
the current accruals and medical claims payable and other accounts payable
retained by the Borrower or its applicable Subsidiary under the terms of such
sale, lease, transfer or other disposition and payable within 90 days of the
consummation thereof and (d) to increase the aggregate portion of Net Cash
Proceeds from one or more sales, leases, transfers or other dispositions of
property and assets of the Borrower and its Subsidiaries effected pursuant to
Sections 5.02(d)(vii), 5.02(d)(viii) and 5.02(d)(xi) of the Credit Agreement
that may be retained by the Borrower and its Subsidiaries for use in their
businesses and operations in the ordinary course to $125,000,000.
(2) The Lender Parties have indicated their willingness
to agree to amend the Credit Agreement in order, among other things, to permit
the modifications thereto described above in Preliminary Statement (1) on the
terms and subject to the satisfaction of the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein and in the Loan Documents, the
parties hereto hereby agree as follows:
SECTION 1. Amendments of Certain Provisions of the Credit
Agreement. The Credit Agreement is, upon the occurrence of the Amendment
Effective Date (as hereinafter defined), hereby amended to read as follows:
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(a) Section 1.01 of the Credit Agreement is hereby
amended to restate the following definitions set forth therein in their
entirety to read as follows:
"APPLICABLE MARGIN" means (a) in the case of the Term
A Facility, (i) at any time during the period from the date of
Amendment No. 1 to the Loan Documents to September 30, 1999,
2.250% per annum for Base Rate Advances and 3.250% per annum
for Eurodollar Rate Advances, (ii) at any time during the
period from September 30, 1999 to December 31, 1999, 2.500%
per annum for Base Rate Advances and 3.500% per annum for
Eurodollar Rate Advances and (iii) at any time and from time
to time on and after December 31, 1999, 2.750% per annum for
Base Rate Advances and 3.750% per annum for Eurodollar Rate
Advances, (b) in the case of the Term B Facility, (i) at any
time during the period from the date of Amendment No. 1 to the
Loan Documents to September 30, 1999, 2.500% per annum for
Base Rate Advances and 3.500% per annum for Eurodollar Rate
Advances, (ii) at any time during the period from September
30, 1999 to December 31, 1999, 2.750% per annum for Base Rate
Advances and 3.750% per annum for Eurodollar Rate Advances and
(iii) at any time and from time to time on and after December
31, 1999, 3.000% per annum for Base Rate Advances and 4.000%
per annum for Eurodollar Rate Advances, and (c) in the case of
the Revolving Credit Facility, (i) at any time during the
period from the date of Amendment No. 1 to the Loan Documents
through the Performance Level Determination Date, 2.250% per
annum for Base Rate Advances and 3.250% per annum for
Eurodollar Rate Advances and (ii) at any time and from time to
time thereafter, a percentage per annum equal to the
applicable percentage set forth below for the Performance
Level set forth below:
REVOLVING
REVOLVING CREDIT CREDIT
PERFORMANCE BASE RATE EURODOLLAR RATE
LEVEL ADVANCES ADVANCES
I 0.125% 1.125%
II 0.250% 1.250%
III 0.375% 1.375%
IV 0.625% 1.625%
V 1.000% 2.000%
VI 1.375% 2.375%
VII 1.750% 2.750%
VIII 2.000% 3.000%
IX 2.250% 3.250%
For purposes of subclause (c)(ii) of the immediately preceding
sentence, the Applicable Margin for each Base Rate Advance
shall be determined by reference to the Performance
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Level in effect from time to time and the Applicable Margin
for each Eurodollar Rate Advance shall be determined by
reference to the Performance Level in effect on the first day
of each Interest Period for such Eurodollar Rate Advance.
"CONSOLIDATED EBITDA" means, with respect to any
Person for any period, (a) the Consolidated Net Income of such
Person and its Subsidiaries for such period plus (b) the sum
of each of the following expenses that have been deducted from
the determination of the Consolidated Net Income of such
Person and its Subsidiaries for such period: (i) the
Consolidated Interest Expense of such Person and its
Subsidiaries for such period, (ii) all income tax expense
(whether federal, state, local, foreign or otherwise) of such
Person and its Subsidiaries for such period, (iii) all
depreciation expense of such Person and its Subsidiaries for
such period, (iv) all amortization expense of such Person and
its Subsidiaries for such period, (v) all extraordinary
noncash losses deducted in determining the Consolidated Net
Income of such Person and its Subsidiaries for such period
less all extraordinary noncash gains added in determining the
Consolidated Net Income of such Person and its Subsidiaries
for such period, and (vi) solely to the extent otherwise
deducted from the determination of the Consolidated Net Income
of the Borrower and its Subsidiaries for the period ended
December 31, 1998, all expenses incurred for premiums on the
AIC Insurance Policy during such period, in each case
determined on a Consolidated basis and in accordance with GAAP
for such period; provided, however, that, solely with respect
to any determination of Consolidated EBITDA of the Borrower
and its Subsidiaries for the first four Measurement Periods
following the Effective Date, Consolidated EBITDA will be
adjusted to exclude (A) the restructuring and merger related
charges taken by the Borrower and its Subsidiaries during the
Fiscal Quarter ended March 31, 1998 in an aggregate amount of
$42,400,000 and (B) the additional restructuring charges taken
by the Borrower and its Subsidiaries during the Fiscal Quarter
ending June 30, 1998 in an aggregate amount of $41,200,000;
and provided further, however, that Consolidated EBITDA of the
Borrower and the Restricted Subsidiaries for any Fiscal
Quarter ending on or after December 31, 1998 will be further
adjusted to exclude all of the charges set forth on Schedule
II hereto.
"LOAN PARTIES" means, collectively, the Borrower,
each of the Restricted Subsidiaries and each of the Excluded
Subsidiaries that is a party to the Subsidiaries Guarantee.
"RESTRICTED SUBSIDIARY" means any of the wholly owned
Domestic Subsidiaries (other than any of the Excluded
Subsidiaries, MP Receivables or any of the other Special
Purpose Vehicles), any of the Persons created, purchased or
otherwise acquired by the Borrower or any of its Subsidiaries
after the Amendment No. 2 Effective Date pursuant to Section
5.02(e)(vi) or, at the option of the Borrower, any of the
other Subsidiaries of the Borrower that does not constitute an
Excluded Subsidiary and that, in each case, (a) executes and
delivers the Subsidiaries Guarantee or a Guarantee Supplement
and (b) delivers such other agreements, opinions, certificates
and other documents required or requested under Section
5.02(k).
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"UNUSED REVOLVING CREDIT COMMITMENT" means, with
respect to any of the Revolving Credit Lenders at any time,
(a) the Revolving Credit Commitment of such Revolving Credit
Lender at such time less (b) the sum of:
(i) the aggregate principal amount of
all Revolving Credit Advances, Swing Line Advances
and Letter of Credit Advances made by such Revolving
Credit Lender (in its capacity as a Lender) and
outstanding at such time; and
(ii) such Revolving Credit Lender's Pro
Rata Share of (A) the aggregate Available Amount of
all Letters of Credit outstanding at such time, (B)
the aggregate principal amount of all Letter of
Credit Advances made by the Issuing Bank (in its
capacity as the Issuing Bank) pursuant to Section
2.03(c)(i) and outstanding at such time, (C) the
aggregate principal amount of all Swing Line Advances
made by the Swing Line Bank (in its capacity as the
Swing Line Bank) pursuant to Section 2.01(d) and
outstanding at such time and (D) for all purposes
other than the definition of "Required Lenders" set
forth in this Section 1.01 and Sections 2.08(a) and
7.05, the aggregate amount of all Holdback Reserves
established in connection with the sale, lease,
transfer or other disposition of the property and
assets of the Borrower and its Subsidiaries in
accordance with Section 5.02(d)(vii) or 5.02(d)(viii)
and in effect at such time."
(b) Section 1.01 of the Credit Agreement is hereby
further amended to add the following new definitions in their
appropriate alphabetical order:
"AIC INSURANCE POLICY" means the Excess Catastrophe
Equity Protection Coverage for Pending Actions issued by
American International Specialty Lines Insurance Company, an
affiliate of American Insurance Companies, as of September
30,1998 insuring the Borrower and its officers, directors and
employees against liabilities, costs and expenses arising out
of the actions and proceedings comprising part of the
Disclosed Litigation and described under the caption
"Securities Cases" on Schedule 3.01(d) hereto and other
claims, actions, litigation and proceedings asserting similar
claims for violations of the Securities Act, the Exchange Act
and other state securities laws, a complete and accurate copy
of which has been delivered to the Lender Parties prior to the
Amendment No. 2 Effective Date.
"AMENDMENT NO. 2 EFFECTIVE DATE" means the first date
on which all of the conditions precedent to the effectiveness
of Amendment No. 2 to the Loan Documents were satisfied.
"EXCLUDED SUBSIDIARIES" means, collectively, Team
Health, Government Services, MPN and each of the other
Subsidiaries of the Borrower the property and assets of which,
or the businesses and operations of which, comprise part of
the physician practice management businesses of the Borrower
and its Subsidiaries or otherwise are part of the operations
to be classified as "discontinued operations" in the
Consolidated financial statements of the Borrower and its
Subsidiaries for the Fiscal Year ended December 31, 1998, all
of which Subsidiaries as of the Amendment No. 2 Effective Date
are set forth on Part B of Schedule 4.01(b) hereto.
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"HOLDBACK RESERVE" means, with respect to any sale,
lease, transfer or other disposition of any property or assets
of the Borrower or any of its Subsidiaries pursuant to Section
5.02(d)(vii) or 5.02(d)(viii), an amount equal to the
aggregate amount of all current accruals and medical claims
payable and other accounts payable of the Borrower or its
applicable Subsidiary that (a) are associated with the
property and assets of the Borrower or such Subsidiary being
sold, leased, transferred or otherwise disposed of in such
transaction and (b) are required to be retained by the
Borrower or such Subsidiary as consideration for, and under
the terms of the documentation for, such sale, lease, transfer
or other disposition, as such amount may be reduced from time
to time pursuant to Section 2.01(c)(ii) or 2.05(b)(vii);
provided that (i) the aggregate amount of all such current
accruals and medical claims payable and other accounts payable
of the Borrower or any its Subsidiaries comprising any such
Holdback Reserve shall not exceed the lesser of (A) the
aggregate cash consideration received by the Borrower and its
Subsidiaries for their own account on the date on which such
Holdback Reserve is established for the accounts receivables
sold, transferred or otherwise disposed of in such transaction
and (B) the aggregate Unused Revolving Credit Commitments of
the Revolving Credit Lenders on the date of such sale, lease,
transfer or other disposition and (ii) each Holdback Reserve
shall be eliminated on the date that is 90 days after the date
on which the Borrower or any of its Subsidiaries consummated
the sale, lease, transfer or other disposition of any of its
property and assets that gave rise to the establishment of
such Holdback Reserve, regardless of whether the related
current accruals and medical claims payable and other accounts
payable of the Borrower or any its Subsidiaries have been paid
or otherwise satisfied by or on behalf of the Borrower or any
of its Subsidiaries on or prior to such date; and provided
further that the aggregate amount of all Holdback Reserves in
effect on any date of determination shall not exceed (1)
$30,000,000 at any time prior to the date on which the
aggregate Term Commitments are reduced to, and the aggregate
principal amount of all outstanding Term Advances is, less
than $300,000,000 and (2) $50,000,000 at any time thereafter.
"INTEREST COVERAGE RATIO" means, with respect to the
Borrower and its Subsidiaries for any period, the ratio of (a)
Consolidated EBITDA of the Borrower and the Restricted
Subsidiaries for such period to (b) Consolidated Interest
Expense of the Borrower and its Subsidiaries for such period."
(c) The definition of "Consolidated Net Income" set forth
in Section 1.01 of the Credit Agreement is hereby amended (i) to add
the word "and" at the end of clause (e) thereof, (ii) to delete the
language "; and" at the end of clause (f) thereof and substitute
therefore the punctuation "." and (iii) to delete clause (g) thereof in
its entirety.
(d) The definition of "Fixed Charge Coverage Ratio" set
forth in Section 1.01 of the Credit Agreement is hereby amended (i) to
delete the phrase "the Borrower and its Subsidiaries" in subclauses
(a)(i), (a)(ii) and (b)(iii) thereof and to substitute therefor the new
phrase "the Borrower and the Restricted Subsidiaries" and (ii) to
restate subclause (b)(iv) thereof in its entirety to read as follows:
"(iv) the aggregate amount of all outstanding Advances
scheduled to be repaid during such period pursuant to Section
2.04(a), 2.04(b) or 2.04(c)".
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(e) The definition of "Leverage Ratio" set forth in
Section 1.01 of the Credit Agreement is hereby amended to delete the
phrase "the Borrower and its Subsidiaries" in clause (b) thereof and to
substitute therefor the new phrase "the Borrower and the Restricted
Subsidiaries".
(f) The definition of "Net Cash Proceeds" set forth in
Section 1.01 of the Credit Agreement is hereby amended (i) to restate
clause (d) thereof in its entirety to read as follows:
"(d) the amount of the Holdback Reserve, if any,
established for such sale, lease, transfer or other disposition;",
(ii) to add the following new clauses (f) and (g) thereto:
"(f) in the case of the sale, lease, transfer or
other disposition of any property and assets, the aggregate
amount of all reasonable and customary post-closing purchase
price adjustments to the cash consideration received by the
Borrower or any of its Subsidiaries for one or more prior
sales, leases, transfers or other dispositions of their
property and assets pursuant to Section 5.02(d)(vii) or
5.02(d)(viii) to the extent (and only to the extent) that such
purchase price adjustments are for working capital
reconciliations determined on the basis of actual (as opposed
to estimated) financial statement information delivered
pursuant to the terms of the documentation for such prior
sale, lease, transfer or other disposition; and
(g) in the case of the sale, lease, transfer or
other disposition of any property and assets, the amount of
all notes and deferred payment obligations comprising part of
the Surviving Indebtedness and owing to one or more of the
physicians associated with any of the clinics or practice
groups being so sold, leased, transferred or otherwise
disposed of, in each case under this clause (g) to the extent,
but only to the extent, that the amounts so deducted are
actually paid (i) at the time of the receipt of such cash or
(ii) if later, within 15 days after the consummation of such
transaction;",
(iii) to add in subclause (A) of the final proviso clause thereto after
the phrase "clauses (a) through (e)" the new language "or clause (g)",
(iv) to delete the language "or insurance premiums referred to in
clause (a), (b), (d) or (e) of this definition" in subclause (B) of the
final proviso clause thereto and to substitute therefor the new
language ", insurance premiums, notes or deferred payment obligations
referred to "in clause (a), (b), (d), (e) or (g) of this definition",
(v) to add in subclause (B) of the final proviso clause thereto after
the phrase "under Sections 2.05(b)(vi)" the new language ",
2.05(b)(vii)" and (vi) to add in subclause (B) of the final proviso
clause thereto after the phrase "in accordance with the terms of
Section 2.05(b)(vi)" the new language "or 2.05(b)(vii), as
applicable,".
(g) Section 2.01(c) of the Credit Agreement is hereby
amended (i) to add the reference "(i)" prior to the first sentence
thereof, (ii) to add at the end of the fourth sentence of such newly
created subparagraph (i) thereto after the phrase "of such Revolving
Credit Lender at such time" the new parenthetical "(other than as
expressly provided for in subparagraph (ii) of this Section 2.01(c))"
and (iii) to add the following new subparagraph (ii) thereto:
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"(ii) Holdback Reserves. The Revolving Credit Commitment of
each of the Revolving Credit Lenders shall be deemed utilized at any
time and from time to time by such Lender's Pro Rata Share of the
aggregate amount of all Holdback Reserves established in connection
with all sales, leases, transfers or other dispositions of the property
and assets of the Borrower and its Subsidiaries pursuant to Section
5.02(d)(vii) or 5.02(d)(viii) and in effect at such time; provided,
however, that a Holdback Reserve may not be established at any time in
an amount that exceeds the aggregate Unused Revolving Credit
Commitments of the Revolving Credit Lenders at such time. The amount of
each Holdback Reserve shall, notwithstanding any of the other
provisions of this Agreement, be available to be borrowed solely for
purposes of paying the current accruals and medical claims payable and
other accounts payable of the Borrower or any its Subsidiaries in
respect of which each such Holdback Reserve was established within 90
days after the establishment of such Holdback Reserve. Each Holdback
Reserve shall be reduced on each date on which (A) all or a portion of
the current accruals and medical claims payable and other accounts
payable of the Borrower or any its Subsidiaries for which such Holdback
Reserve was established have been paid or otherwise satisfied by or on
behalf of the Borrower or any of its Subsidiaries by an amount equal to
such payment or other satisfaction and (B) the amount of such Holdback
Reserve, when aggregated with (1) the amount of all other Holdback
Reserves in effect on such date, (2) the aggregate principal amount of
all Revolving Credit Advances, all Swing Line Advances and all Letter
of Credit Advances outstanding on such date and (3) the aggregate
Available Amount of all Letters of Credit outstanding on such date
(after giving effect to any reduction or elimination of one or more
other Holdback Reserves on such date and any prepayment of any such
outstanding Advances pursuant to Section 2.06 on such date) exceeds the
Revolving Credit Facility on such date (after giving effect to any
permanent reduction thereof pursuant to Section 2.05 on such date), by
an amount equal to such excess amount. Furthermore, each Holdback
Reserve shall be eliminated in full on the date that is 90 days after
the date on which the Borrower or any of its Subsidiaries consummated
the sale, lease, transfer or other disposition of any of its property
and assets that gave rise to the establishment of such Holdback
Reserve, regardless of whether the related current accruals and medical
claims payable and other accounts payable of the Borrower or any its
Subsidiaries have been paid or otherwise satisfied by or on behalf of
the Borrower or any of its Subsidiaries on or prior to such date."
(h) Section 2.01(e) of the Credit Agreement is hereby
amended to delete the phrase "under Section 5.02(e)(iii)(C)," in the
seventh and eighth lines thereof and to substitute therefor the new
phrase "under Section 5.02(e)(iii)(C) or 5.02(e)(iii)(D),".
(i) Section 2.05(b) of the Credit Agreement is hereby
amended to add the following new clause (vii):
"(vii) The Term Facilities shall be automatically
and permanently reduced on the date that is 90 days after the
date on which the Borrower or any of its Subsidiaries
consummated the sale, lease, transfer or other disposition of
any of its property and assets that gave rise to the
establishment of any Holdback Reserve (regardless of whether
the related current accruals and medical claims payable and
other accounts payable of the Borrower or any its Subsidiaries
have been paid or otherwise satisfied by or on behalf of the
Borrower or any of its Subsidiaries on or prior to such date)
by the remaining amount of
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such Holdback Reserve. Each reduction of the Term Facilities
pursuant to this clause (vii) shall be applied in the manner
set forth in Section 2.05(c)(i)."
(j) Section 2.05(c) of the Credit Agreement is hereby
amended to delete the phrase "clause (v) or (vi) of Section 2.05(b)" in
the second line thereof and to substitute therefor the new phrase
"clause (v), (vi) or (vii) of 2.05(b)".
(k) Section 2.06(b) of the Credit Agreement is hereby
amended to delete the phrase "by the Borrower for use in its businesses
and operations in the ordinary course" in the third sentence thereof
after the phrase "may be retained" and to substitute therefor the new
phrase "by the Borrower and the Restricted Subsidiaries for use in
their businesses and operations in the ordinary course".
(l) Section 4.01(b) of the Credit Agreement is hereby
amended (i) to delete the phrase "set forth on Schedule 4.01(b) hereto"
in each of the first and seventh lines thereof and to substitute
therefor the new phrase "set forth on Part A of Schedule 4.01(b)
hereto" and (ii) to add the following new sentence at the end of such
subsection:
"Set forth on Part B of Schedule 4.01(b) hereto is a complete
and accurate list of all of the Excluded Subsidiaries as of
the Amendment No. 2 Effective Date, showing, as to each such
Excluded Subsidiary, the correct legal name thereof and
stating, as of September 30, 1998, whether or not such
Excluded Subsidiary constitutes a Material Subsidiary."
(m) Section 5.02(b) of the Credit Agreement is hereby
amended (i) to delete the phrase "expressly permitted under
5.02(e)(iii)(C), 5.02(e)(iii)(D) or 5.02(e)(iii)(E)(2)" at the end of
subclause (iv)(C) thereof and to substitute therefor the new phrase
"expressly permitted under 5.02(e)(iii)(D), 5.02(e)(iii)(E) or
5.02(iii)(F)(2)" and (ii) to delete the phrase "pursuant to Section
5.02(e)(iii)(C)" in subclause (viii)(B)(1) thereof and to substitute
therefor the new phrase "pursuant to Section 5.02(e)(iii)(D)".
(n) Section 5.02(c) of the Credit Agreement is hereby
amended to delete the phrase "the Borrower and its Subsidiaries in the
ordinary course" in subclause (1) of the second proviso clause to
clause (iv) thereof and to substitute therefor the new phrase "the
Borrower and the Restricted Subsidiaries in the ordinary course".
(o) Section 5.02(d) of the Credit Agreement is hereby
amended to delete the amount "$75,000,000" at the end of the
penultimate sentence thereof and to substitute therefor the new amount
"$125,000,000".
(p) Section 5.02(e) of the Credit Agreement is hereby
amended (i) to restate clause (iii) thereof in its entirety to read as
follows:
"(iii) Investments by (A) the Borrower in any of the
Restricted Subsidiaries, (B) any of the Subsidiaries of the
Borrower in the Borrower or any of the Restricted
Subsidiaries, (C) the Borrower or any of the Restricted
Subsidiaries in one or more of the Excluded Subsidiaries that
are party to the Subsidiaries Guarantee so long as the
proceeds of any such Investment are used solely to fund the
working capital requirements of such Excluded Subsidiary
(including, without limitation, Capital Expenditures made by
or on
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behalf of any such Excluded Subsidiary to the extent otherwise
permitted under Section 5.02(g)) in the ordinary course of
business, (D) the Borrower or any of the Restricted
Subsidiaries in one or more Unrestricted Subsidiaries in an
aggregate amount for all such Investments not to exceed (1)
$5,000,000 at any time less (2) the sum of (x) the aggregate
amount of all Contingent Obligations of the Borrower
guaranteeing one or more Obligations of the Unrestricted
Subsidiaries pursuant to Section 5.02(b)(viii) in existence at
such time and (y) the aggregate face amount of all Letters of
Credit issued in support of the Obligations of one or more of
the Unrestricted Subsidiaries in accordance with Section 2.03
and outstanding at such time, (E) the Borrower in MPN in an
aggregate amount not to exceed (1) the statutory reserve
requirements for managed care entities generally under the
▇▇▇▇-▇▇▇▇▇ Act (or similar Requirements of Law) plus (2) such
amounts as are reasonably anticipated to be necessary to
satisfy claims against MPN relating to patient care in the
ordinary course of business, (F) Caremark Inc. in MP
Receivables (1) constituting capital contributions of its
accounts receivables and related property and assets to MP
Receivables pursuant to, and in accordance with the
requirements of, the Caremark Receivables Securitization
Documents or (2) evidenced by the Subordinated Note (as
defined in Section 3.2(b) of the Caremark Receivables Purchase
Agreement), and (G) any of the Unrestricted Subsidiaries in
any of the other Unrestricted Subsidiaries;",
(ii) to delete the phrase "in accordance with Section 5.02(d)(vii) or
5.02(d)(viii)" in subclause (v)(A) thereof and to substitute therefor
the new phrase "in accordance with Section 5.02(d)(vii), 5.02(d)(viii)
or 5.02(d)(xi)", (iii) to delete the phrase "the Borrower and its
Subsidiaries in the ordinary course" in subclause (vi)(B) thereof and
to substitute therefor the new phrase "the Borrower and the Restricted
Subsidiaries in the ordinary course", (iv) to delete the language ";
and" at the end of clause (vii) thereof and to substitute therefor the
punctuation "." and (v) to delete clause (viii) thereof in its
entirety.
(q) Section 5.02(g) of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"(g) Capital Expenditures. Make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would
cause the aggregate amount of all such Capital Expenditures
made by the Borrower and its Subsidiaries in any Fiscal Year
to exceed the amount set forth below opposite such Fiscal
Year:
FISCAL YEAR
ENDING IN AMOUNT
------------- -------
December 1998 $150,000,000
December 1999 75,000,000
December 2000 40,000,000
December 2001
and thereafter 40,000,000
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; provided, however, that, notwithstanding the foregoing
provisions of this Section 5.02(g), none of the Excluded
Subsidiaries shall make any Capital Expenditures, and neither
the Borrower nor any of the Restricted Subsidiaries shall make
any Capital Expenditures on behalf of any of the Excluded
Subsidiaries or their respective property, assets or
businesses, that would cause the aggregate amount of all such
Capital Expenditures made by or on behalf of (i) KS-PSI of
Texas, L.P. located in Houston, Texas or its property, assets
or businesses after December 31, 1998 to exceed $20,000,000 or
(ii) one or more of the other Excluded Subsidiaries or their
property, assets or businesses after December 31, 1998 to
exceed $24,000,000."
(r) Section 5.02(l) of the Credit Agreement is hereby
amended to add the following new parenthetical at the end of such
Section 5.02(l):
"(other than solely as a result of the
discontinuation of the physician practice management
businesses of the Borrower and its Subsidiaries, and the sale,
lease, transfer or the disposition of the property and assets
of the Borrower and its Subsidiaries comprising part of such
businesses, in accordance with the terms of the Loan
Documents)".
(s) Section 5.03(a) of the Credit Agreement is hereby
amended to delete the phrase "five Business Days" in the first line
thereof and to substitute therefor the new phrase "one Business Day".
(t) Section 5.03(d) of the Credit Agreement is hereby
amended to delete the language "and (B)" in clause (iv) thereof after
the words "of such financial statements from GAAP" and to substitute
therefor the following new language:
", (B) a statement of reconciliation, in form reasonably
satisfactory to the Administrative Agent, setting forth
adjustments to Consolidated net assets and Consolidated net
income for the exclusion of the Excluded Subsidiaries and the
reclassification of the physician practice management
businesses of the Borrower and its Subsidiaries as
"discontinued operations" and (C)".
(u) Section 5.03(q) of the Credit Agreement is hereby
amended to delete the phrase "five Business Days" in the first line
thereof and to substitute therefor the new phrase "one Business Day".
(v) Section 5.03 of the Credit Agreement is hereby
further amended (i) to add the following new subsection (s):
"(s) Holdback Reserves. Promptly and in any event
within 15 days after the end of each calendar month, a
certificate of a Senior Financial Officer, in form and
substance reasonably satisfactory to the Administrative Agent,
setting forth in reasonable detail (i) the amount of each of
the Holdback Reserves in effect as of the last day of such
calendar month and of the immediately preceding calendar month
and the sale, lease, transfer or other disposition of property
and assets of the Borrower and its Subsidiaries for which such
Holdback Reserve was established, (ii) the date on which each
such Holdback Reserve was established, (iii) the aggregate
cash consideration received by the Borrower and its
11
-11-
Subsidiaries for their own account on the date on which each
such Holdback Reserve is established for the accounts
receivables sold, transferred or otherwise disposed of in each
such transaction and (iv) the aggregate amount, by clinic or
by practice group, of all of the current accruals and medical
claims payable and other accounts payable of the Borrower or
any its Subsidiaries that are the subject of each such
Holdback Reserve during such calendar month.",
and (ii) to reletter the existing subsection (s) of Section 5.03 of the
Credit Agreement as subsection (t) thereof.
(w) Section 5.04 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
"SECTION 5.04. Financial Covenants. So long as any of
the Advances or any of the other Obligations of any Loan Party
under or in respect of any of the Loan Documents shall remain
unpaid, any of the Letters of Credit shall remain outstanding
or any of the Lender Parties shall have any Commitment
hereunder, the Borrower will:
(a) Leverage Ratio. Maintain a Leverage
Ratio at all times of not more than the amount set
forth below for the period set forth below:
PERIOD RATIO
--------------------------- --------
December 31, 1998 through
March 30, 1999 9.85:1
March 31, 1999 through
June 29, 1999 7.35:1
June 30, 1999 through
September 29, 1999 6.50:1
September 30, 1999 through
December 30, 1999 5.85:1
December 31, 1999 through
June 29, 2000 5.50:1
June 30, 2000 through
December 30, 2000 5.00:1
December 31, 2000 and
thereafter 4.25:1
12
-12-
(b) Fixed Charge Coverage Ratio. Maintain a
Fixed Charge Coverage Ratio as of the last day of
each Measurement Period of not less than the amount
set forth below for each Measurement Period set forth
below:
MEASUREMENT PERIOD
ENDING IN RATIO
-------------------- -----
December 1998 1.10:1
March 1999 1.10:1
June 1999 1.20:1
September 1999 1.25:1
December 1999 1.35:1
June 2000 1.60:1
December 2000 and
thereafter 2.00:1
(c) Interest Coverage Ratio. Maintain an
Interest Coverage Ratio as of the last day of each
Measurement Period of not less than the amount set
forth below for each Measurement Period set forth
below:
MEASUREMENT PERIOD
ENDING IN RATIO
------------------- -----
December 1998 1.15:1
March 1999 1.15:1
June 1999 1.25:1
September 1999 1.30:1
December 1999 1.50:1
June 2000 1.75:1
December 2000 and
thereafter 2.25:1"
13
-13-
(x) Section 6.01(f) of the Credit Agreement is hereby
amended to delete the phrase "at least 60 consecutive days" in the
tenth and eleventh lines thereof and to substitute therefor the new
phrase "at least 45 consecutive days".
(y) Section 8.07(a) of the Credit Agreement is hereby
amended to delete the amount "$5,000,000" in subclause (B) thereof
after the phrase "in no event be less than" and to substitute therefor
the new amount "$2,500,000".
(z) Schedule 4.01(b) to the Credit Agreement is hereby
deleted in its entirety and replaced with the new Schedule 4.01(b) to
the Credit Agreement attached hereto as Annex A.
(aa) Schedule 5.02(d) to the Credit Agreement is hereby
deleted in its entirety and replaced with the new Schedule 5.02(d) to
the Credit Agreement attached hereto as Annex B.
(bb) The Credit Agreement is hereby further amended to add
the new Schedule II to the Credit Agreement attached hereto as Annex C.
SECTION 2. Conditions Precedent to the Effectiveness of This
Amendment. This Amendment shall become effective as of the first date (the
"AMENDMENT EFFECTIVE DATE") on which, and only if, each of the following
conditions precedent shall have been satisfied:
(a) The Administrative Agent shall have received (i)
counterparts of this Amendment executed by the Borrower and the
Required Lenders or, as to any of the Lender Parties, advice
satisfactory to the Administrative Agent that such Lender Party has
executed this Amendment and (ii) the Consent attached hereto shall have
been executed and delivered by each of the Loan Parties (other than the
Borrower).
(b) The representations and warranties set forth in each
of the Loan Documents shall be correct in all material respects on and
as of the Amendment Effective Date, before and after giving effect to
this Amendment, as though made on and as of such date (except (i) for
any such representation and warranty that, by its terms, refers to a
specific date other than the Amendment Effective Date, in which case as
of such specific date, (ii) that the Consolidated financial statements
of the Borrower and its Subsidiaries referred to in Sections 4.01(f)
and 4.01(g) of the Credit Agreement shall be deemed to refer to the
Consolidated financial statements of the Borrower and its Subsidiaries
comprising part of the Required Financial Information most recently
delivered to the Administrative Agent and the Lender Parties pursuant
to Sections 5.03(b) and 5.03(c), respectively, on or prior to the
Amendment Effective Date and (iii) that the forecasted Consolidated
financial statements of the Borrower and its Subsidiaries referred to
in Section 4.01(h) of the Credit Agreement shall be deemed to refer to
the forecasted Consolidated financial statements of the Borrower and
its Subsidiaries most recently delivered to the Administrative Agent
and the Lender Parties prior to the Amendment Effective Date).
(c) No event shall have occurred and be continuing, or
shall result from the effectiveness of this Amendment, that constitutes
a Default.
(d) The Borrower shall have paid to the Administrative
Agent, for the account of each of the Lenders that has executed and
delivered a counterpart of this Amendment to the
14
-14-
Administrative Agent on or prior to the Amendment Effective Date (or
advised the Administrative Agent in a manner satisfactory to it that
such Lender has executed this Amendment on or prior to the Amendment
Effective Date), an amendment fee of 0.25% on the aggregate Commitments
of such Lender.
(e) All of the accrued fees and expenses of the
Administrative Agent, the Arranger and the Lender Parties (including
the accrued fees and expenses of counsel for the Administrative Agent)
shall have been paid in full.
The effectiveness of this Amendment is further conditioned upon the accuracy of
all of the factual matters described herein. This Amendment is subject to the
provisions of Section 8.01 of the Credit Agreement.
SECTION 3. Reference to and Effect on the Loan Documents. (a)
On and after the Amendment Effective Date, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement, shall mean and be a
reference to the Credit Agreement, as amended by this Amendment.
(b) The Credit Agreement, the Notes and each of the other
Loan Documents, except to the extent of the amendments specifically provided
above, are and shall continue to be in full force and effect and are hereby in
all respects ratified and confirmed. The execution, delivery and effectiveness
of this Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of any of the Guaranteed Parties or the
Administrative Agent under any of the Loan Documents, nor constitute a waiver of
any provision of any of the Loan Documents.
SECTION 4. Costs and Expenses. The Borrower hereby agrees to
pay, upon demand, all of the reasonable costs and expenses of the Administrative
Agent and the Arranger (including, without limitation, the reasonable fees and
expenses of counsel for the Administrative Agent) in connection with the
preparation, execution, delivery, administration, modification and amendment of
this Amendment and all of the agreements, instruments and other documents
delivered or to be delivered in connection herewith, all in accordance with the
terms of Section 8.04 of the Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers, thereunto duly
authorized, as of the date first written above.
15
-15-
THE BORROWER
MEDPARTNERS, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
---------------------------------
Name:
Title:
THE ADMINISTRATIVE AGENT
NATIONSBANK, N.A.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name:
Title: VP
THE LENDER PARTIES
NATIONSBANK, N.A., as a Lender,
the Swing Line Bank and the Issuing
Bank
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name:
Title: VP
AMSOUTH BANK
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name:
Title: VP
16
-▇▇-
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ BANK
By /s/ ▇▇▇▇ ▇▇▇ ▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇ ▇▇▇
Title: Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
DEBT STRATEGIES FUND, INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ L. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: L. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
FLOATING RATE PORTFOLIO
BY: INVESCO Senior Secured
Management, Inc., as attorney
in fact
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Authorized Signatory
17
-17-
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title:Director
▇▇▇▇▇▇▇ ▇▇▇▇▇ DEBT STRATEGIES
PORTFOLIO, INC.
BY:▇▇▇▇▇▇▇ ▇▇▇▇▇ ASSET
MANAGEMENT L.P., as Investment
Advisor
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇ GLOBAL INVESTMENT
SERIES: INCOME STRATEGIES PORTFOLIO
BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ASSET
MANAGEMENT, L.P., as
Investment Advisor
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
ML CBO IV (CAYMAN) LTD.
BY: HIGHLAND CAPITAL
MANAGEMENT, L.P.,
as Collateral Manager
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name:▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:President
Highland Capital Managment LP.
18
-18-
ML CLO XX PILGRIM AMERICA
(CAYMAN) LTD.
BY: PILGRIM INVESTMENTS, INC.,
as Investment Manager
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
▇▇▇▇▇▇ GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Unn ▇▇▇▇▇▇▇
------------------------------------
Name:
Title: Vice President
▇▇▇ CAPITAL FUNDING, LP
BY: HIGHLAND CAPITAL MANAGEMENT,
L.P.,
as Collateral Manager
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name:▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:President
Highland Capital Managment
LP.
PAMCO CAYMAN, LTD.
BY: HIGHLAND CAPITAL MANAGEMENT,
L.P.,
as Collateral Manager
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name:▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:President
Highland Capital Managment LP.
19
-19-
PILGRIM PRIME RATE TRUST
BY: PILGRIM INVESTMENTS, INC.,
as Investment Manager
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Citibank, N.A.
By /s/ ▇▇▇▇▇▇▇▇ W. Weefes Jr.
---------------------------------
Name ▇▇▇▇▇▇▇▇ W. Weefes, Jr. :
Title: Attorney-in-fact
SCOTIABANC INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Relationship Manager
▇▇▇▇▇ ▇▇▇ & FARNHAM INCORPORATED,
as Agent for KEYPORT LIFE
INSURANCE COMPANY
By /s/ ▇▇▇▇▇ ▇. Good
---------------------------------
Name: ▇▇▇▇▇ ▇. Good
Title: Vice President &
Portfolio Manager
TORONTO DOMINION (TEXAS), INC.
By
---------------------------------
Name:
Title:
20
-20-
▇▇▇ ▇▇▇▇▇▇ PRIME RATE INCOME TRUST
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇▇▇ SENIOR INCOME TRUST
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇▇▇ CLO II, LIMITED
BY: ▇▇▇ ▇▇▇▇▇▇ MANAGEMENT,
INC.,
as Collateral Manager
By /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
WACHOVIA BANK, N.A.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President