LETTER AMENDMENT
Dated as of January 14, 1998
To the banks, financial institutions
and other institutional lenders
(collectively, the "Lender Parties")
--------------
parties to the Credit Agreement
referred to below and to NationsBank, N.A.,
as administrative agent
(the "Administrative Agent")
--------------------
for the Lenders
Ladies and Gentlemen:
We refer to the Credit Agreement dated as of October 31, 1997 (the
"Credit Agreement") among the undersigned and you. Capitalized terms not
----------------
otherwise defined in this Letter Amendment have the same meanings as specified
in the Credit Agreement.
It is hereby agreed by you and us as follows:
The Credit Agreement is, effective as of the date of this Letter
Amendment, hereby amended as follows:
(a) The cover page of the Credit Agreement is hereby amended by
deleting the number "$75,000,000" therein and replacing such number with
"$30,000,000".
(b) Section 1.01 of the Credit Agreement is hereby amended by
adding the following definitions in the correct alphabetical order:
"Applicable Percentage" means (x) prior to the date on which the
---------------------
Borrower delivers the financial statements for the fiscal quarter ended January
31, 1998 to the Administrative Agent pursuant to Section 5.03(c), 0.50% and (y)
thereafter, a percentage per annum determined by the Leverage Ratio as set forth
below:
Level I Percentage
------- ----------
Less than 2.00:1 0.25%
Level II
--------
2.00:1 or greater,
but less than 2.50:1 0.375%
Level III
---------
2.50:1 or greater 0.50%
2
The Applicable Percentage shall be determined by reference to the
ratio in effect from time to time; provided, however, that no change in the
Applicable Percentage shall be effective until three Business Days after the
date on which the Administrative Agent receives financial statements pursuant to
Section 5.03(c) or (d) and a certificate of the chief financial officer of the
Borrower demonstrating such ratio."
"Convertible Preferred Stock" means up to 80,800 shares of Series B
---------------------------
Convertible Preferred Stock, par value $.01 per share, of the Borrower
(including shares issuable upon the exercise of warrants to purchase Series B
Convertible Preferred Stock)".
"Convertible Preferred Stock Documents" means the Certificate of
-------------------------------------
Designations of Series B Convertible Preferred Stock of PHP Healthcare
Corporation dated December 23, 1997 and any other agreement, document or
instrument which governs the terms of the Convertible Preferred Stock".
(c) The definition of "Administrative Agent's Account" in Section
1.01 is hereby amended by deleting the address contained therein and replacing
such address with the following:
"NationsBank, N.A., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇".
(d) The definition of "Applicable Margin" in Section 1.01 is hereby
amended in full to read as follows:
"`Applicable Margin' means (x) prior to the date on which the
-----------------
Borrower delivers the financial statements for the fiscal quarter ended January
31, 1998 to the Administrative Agent pursuant to Section 5.03(c), 2.00% for
Eurodollar Rate Advances and 1.00% for Alternate Base Rate Advances, and (y)
thereafter, a percentage per annum determined by the Leverage Ratio as set forth
below:
================================================================================
Eurodollar Rate Advances Alternate Base Rate Advances
------------------------ ----------------------------
--------------------------------------------------------------------------------
Level I
-------
less than 2.00:1 1.25% 0.25%
--------------------------------------------------------------------------------
Level II
--------
2.00:1 or greater,
but less than 2.50:1 1.50% 0.50%
--------------------------------------------------------------------------------
Level III
---------
2.50:1 or greater,
but less than 3.00:1 1.75% 0.75%
--------------------------------------------------------------------------------
Level IV
--------
3.00:1 or greater 2.00% 1.00%
================================================================================
The Applicable Margin for each Alternate Base Rate Advance shall be
determined by reference to the ratio in effect from time to time and the
Applicable Margin for each Eurodollar Rate Advance shall be determined by
reference to the ratio in effect on the first day of each
3
Interest Period for such Advance, provided, however, that no change in the
Applicable Margin shall be effective until three Business Days after the date on
which the Administrative Agent receives financial statements pursuant to Section
5.03(c) or (d) and a certificate of the chief financial officer of the Borrower
demonstrating such ratio".
(e) The definition of "Eligible Assignee" in Section 1.01 is hereby
amended by deleting each reference therein to the phrase "NationsBridge and".
(f) The definition of "Related Documents" in Section 1.01 is hereby
amended by adding at the end thereof "and the Convertible Preferred Stock
Documents".
(g) Section 2.01(b) is hereby amended by adding at the end of the
first sentence thereof the following proviso:
"; provided, however, that the aggregate amount of Revolving
-------- -------
Credit Advances outstanding at any time prior to the date on which the Borrower
delivers the financial statements for the fiscal quarter ended January 31, 1998
to the Administrative Agent pursuant to Section 5.03(c) shall not exceed
$15,000,000".
(h) Section 2.05(b)(ii) is hereby amended in full to read as
follows:
"(ii) The Revolving Credit Commitments shall be
automatically and permanently reduced, on a pro rata basis, to $20,000,000 on
April 30, 1998 (after giving effect to all reductions in such Commitments on or
prior to such date as a result of the application of commitment reductions in
accordance with subsection (a) of this Section 2.05 or clause (iii) of this
Section 2.05(b)); provided, however, that, notwithstanding the foregoing
provisions of this clause (ii), the Revolving Credit Commitments shall be
terminated in whole on the Termination Date".
(i) Section 2.05(b)(iii) is hereby amended by adding to the end of
the first sentence therein the following proviso:
"; provided, however, that the Revolving Credit Facility shall
not be reduced below $20,000,000 as a result of the initial issuance of the
Convertible Preferred Stock or the related prepayment of the Net Cash Proceeds
thereof".
(j) Section 2.08(a) is hereby amended by deleting the phrase "of
1/2 of 1%" therein and replacing such phrase with the phrase "equal to the
Applicable Percentage".
(k) Section 5.02(b)(i) is hereby amended by adding at the end
thereof the following:
"and the Convertible Preferred Stock".
(l) Section 5.02(g) is hereby amended by adding at the end of
clause (i) therein the phrase "and (C) issue the Convertible Preferred Stock and
permit the conversion thereof into common stock of the Borrower".
4
(m) Section 5.03(b) is hereby amended by replacing the phrase "30
days" with the phrase "45 days".
(n) Section 5.04(c) is hereby replaced in its entirety with the
phrase "[Intentionally Omitted]".
(o) Section 5.04(d) is hereby amended in its entirety to read as
follows:
"Maintain at the end of each fiscal quarter a Leverage Ratio of
not more than (i) in the case of the fiscal quarter ended January 31, 1998,
3.5:1.00 and (ii) thereafter 3.0:1.00 for such fiscal quarter".
(p) Section 5.04(e) is hereby replaced in its entirety with the
phrase "[Intentionally Omitted]".
(q) Section 5.04(f) is hereby amended by (i) replacing the number
"$29,500,000" therein with the number "$36,500,000", (ii) replacing the date
"April 30, 1997" with the date "October 31, 1997" and (iii) replacing the phrase
"100% of all proceeds" with the phrase "100% of all net proceeds".
(r) Section 6.01 is hereby amended by (i) adding at the end of
paragraph (m) thereof the word "or" and (ii) adding immediately after paragraph
(p) the following paragraph:
"(n) the Borrower shall fail to pay to NationsBridge
and NationsBank, pursuant to the amended and restated side letter dated as
of October 31, 1997 from NationsBridge and NationsBank to the Borrower
relating to fees, expenses and warrants, $2,250,000 on or prior to the date
of the execution by the Borrower of the Letter Amendment dated as of
January 14, 1998 to the Credit Agreement;"
(s) Section 8.01 is hereby amended by deleting the phrase "and
NationsBridge" therein.
(t) Schedule I to the Credit Agreement is hereby amended in its
entirety to read as set forth in Annex A hereto.
(u) Exhibit C to the Credit Agreement is hereby amended by deleting
the signature block therein for NationsBridge, L.L.C.
This Letter Amendment shall become effective as of the date first
above written when, and only when, the Administrative Agent shall have received
counterparts of this Letter Amendment executed by the undersigned and all of the
Lenders or, as to any of the Lenders, advice satisfactory to the Administrative
Agent that such Lender has executed this Letter Amendment, and the consent
attached hereto executed by the Loan Parties (other than the Borrower). This
Letter Amendment is subject to the provisions of Section 8.01 of the Credit
Agreement.
On and after the effectiveness of this Letter Amendment, 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
5
"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 Letter Amendment.
The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Letter Amendment, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed. Without limiting the generality of the foregoing, the Collateral
Documents and all of the Collateral described therein do and shall continue to
secure the payment of all Obligations of the Loan Parties under the Loan
Documents, in each case as amended this Letter Amendment. The execution,
delivery and effectiveness of this Letter Amendment, shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender Party or the Administrative Agent under any of the Loan Documents,
nor constitute a waiver of any provision of any of the Loan Documents.
If you agree to the terms and provisions hereof, please evidence
such agreement by executing and returning at least two counterparts of this
Letter Amendment to ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇▇, Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
This Letter 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 Letter Amendment by telecopier shall be
effective as delivery of a manually executed counterpart of this Letter
Amendment.
This Letter Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
PHP HEALTHCARE
CORPORATION
By
---------------------------------
Title:
Agreed as of the date first above written:
NATIONSBANK, N.A.
as Administrative Agent and as Lender
By
----------------------------
Title:
CONSENT
Dated as of January 14, 1998
Each of the undersigned, as a Loan Party under the Loan Documents (as
defined in the Credit Agreement referred to in the foregoing Letter Amendment)
hereby consents to such Letter Amendment and hereby confirms and agrees that (a)
notwithstanding the effectiveness of such Letter Amendment, each Loan Document
to which such Loan Party is a party is, and shall continue to be, in full force
and effect and is hereby ratified and confirmed in all respects, except that, on
and after the effectiveness of such Letter Amendment, each reference in each
such Loan Document to the "Credit Agreement", "thereunder", "thereof" or words
of like import shall mean and be a reference to the Credit Agreement, as amended
by such Letter Amendment, and (b) the Collateral Documents to which such Loan
Party is a party and all of the Collateral described therein do, and shall
continue to, secure the payment of all of the Secured Obligations (as defined
therein).
HEALTH COST CONSULTANTS, INC.
By
----------------------------
Title:
Address:
PHP/CHE, INC.
By
----------------------------
Title:
Address:
7
PHP/IHS, INC.
By
-----------------------------
Title:
Address:
PHP LOUISIANA, INC.
By
-----------------------------
Title:
Address:
PHP NJ MSO, INC.
By
-----------------------------
Title:
Address:
PINNACLE HEALTH ENTERPRISES, L.L.C.
By PHP HEALTHCARE CORPORATION
as Member
By
-----------------------------
Title:
Address:
8
By PHP NJ MSO, Inc.
as Member
By
------------------------------
Title:
Address:
Annex A
SCHEDULE I
COMMITMENTS AND APPLICABLE LENDING OFFICES
==============================================================================================================
Revolving Letter of Eurodollar
Name of Lender Credit Credit Domestic Lending Office Lending Office
------------------- Commitment Commitment ----------------------- --------------
---------- ----------
--------------------------------------------------------------------------------------------------------------
NationsBank, N.A. $30,000,000 $5,000,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Same
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
==============================================================================================================