1 Exhibit 10.11		 THIRD AMENDMENT TO CREDIT AGREEMENT THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT"), dated effective as of August 14, 1997, is among PARACELSUS 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 and that certain Second Amendment to Credit Agreement dated (except as otherwise provided therein) as of August 14, 1997 (as so amended, the "CREDIT AGREEMENT"). B. The parties hereto desire to amend the definition of the term "Required Lenders" in the Credit Agreement. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto (which shall include the all 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 AMENDMENTS Section 2.1 AMENDED AND RESTATED DEFINITION. The following definition set forth in SECTION 1.1 of the Credit Agreement is hereby amended and restated to read in its entirety as follows: " 'REQUIRED LENDERS' means, at any date of determination, Lenders having in the aggregate at least 66 % (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 2 Commitments have terminated or expired, the aggregate outstanding principal amount of the Revolving Credit Loans and the aggregate Letter of Credit Liabilities)." ARTICLE 3 MISCELLANEOUS Section 3.1 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 3.2 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 transactions contemplated hereby, including without limitation the reasonable fees and expenses of counsel to the Agent and the Documentation Agent. Section 3.3 HEADINGS. The headings, captions and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment. Section 3.4 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 3.5 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 3.6 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 3.7 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 BETWEEN OR AMONG THE PARTIES. 3 IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Amendment effective as of the day and year first above written. THE BORROWER: PARACELSUS HEALTHCARE CORPORATION By: /s/ Deborah H. Frankovich Name: Deborah H. Frankovich Title: Senior Vice President & Treasurer THE AGENTS AND THE LENDERS: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ David Price Name: David Price Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Lender and as Issuing Bank By: /s/ Edward S. Han Name: Edward S. Han Title: Vice President By: /s/ Edward S. Han Name: Edward S. Han Title: Vice President BANQUE PARIBAS, as Documentation Agent and as a Lender By: /s/ Glenn E. Mealey Name: Glenn E. Mealey Title: Vice President By: /s/ Timothy A. Donnon Name: Timothy A. Donnon Title: Regional General Manager 4 NATIONSBANK OF TEXAS, N.A., as Managing Agent and as a Lender By: /s/ Brad W. DeSpain Name: Brad W. DeSpain Title: Senior Vice President AMSOUTH OF ALABAMA By: /s/ David Z. Blackstone Name: David Z. Blackstone Title: Senior Vice President BANK OF NEW YORK By: /s/ Lisa Y. Brown Name: Lisa Y. Brown Title: Vice President THE BANK OF NOVA SCOTIA By: /s/ A.T.D. Clarke Name: A.T.D. Clarke Title: Senior Manager CREDIT LYONNAIS NEW YORK BRANCH, as Co-Agent and as a Lender By: /s/ Farboud Tavangar Name: Farboud Tavangar Title: First Vice President CORESTATES BANK, N.A. By: /s/ Anne D. Brehony Name: Anne D. Brehony Title: Vice President FUJI BANK LIMITED By: /s/ Philip C. Lauinger III Name: Philip C. Lauinger III Title: Vice President & Manager 5 FLEET NATIONAL BANK By: /s/Ginger Stolzenthaler Name: Ginger Stolzenthaler Title: Senior Vice President KEY BANK OF UTAH By:/s/ Craig L. Haverlock Name: Craig L Haverlock Title: Vice President THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: /s/ Koh Takemoto Name: General Manager Title: MELLON BANK, N.A. By: /s/ Ryan Busch Name: Ryan Busch Title: Assistant Vice President PNC BANK, N.A. By: /s/ Thomas J. McCool Name: Thomas J. McCool Title: Senior Vice President TORONTO-DOMINION (TEXAS), INCORPORATED, as Co-Agent and as a Lender By: /s/ Neva Nesbitt Name: Neva Nesbitt Title: Vice President UNION BANK OF CALIFORNIA, N.A. By: /s/ Lynn E. Vine Name: Lynn E. Vine Title: Vice President