EXHIBIT 10.4
TOTAL RENAL CARE HOLDINGS, INC.
FIRST AMENDMENT
TO TERM LOAN AGREEMENT
This FIRST AMENDMENT TO TERM LOAN AGREEMENT (this "AMENDMENT") is
dated as of December 1, 1997 and entered into by and among TOTAL RENAL CARE
HOLDINGS, INC., a Delaware corporation (the "Borrower"), the financial
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institutions listed on the signature pages hereof and their respective
successors and assigns (the "Lenders", each a "Lender"), DLJ CAPITAL FUNDING,
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INC., as Syndication Agent (the "Syndication Agent"), THE BANK OF NEW YORK, as
-----------------
administrative agent for the Lenders (in such capacity, the "Administrative
--------------
Agent"), and, for purposes of Section 4 hereof, the Credit Support Parties (as
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defined in Section 4 hereof) listed on the signature pages hereof, and is made
with reference to that certain Term Loan Agreement dated as of October 24, 1997
(the "TERM LOAN AGREEMENT"), by and among Borrower, Lenders, Syndication Agent
and Administrative Agent. Capitalized terms used herein without definition
shall have the same meanings herein as set forth in the Term Loan Agreement.
RECITALS
WHEREAS, Nevada Acquisition Corp., a wholly-owned Subsidiary of
Borrower, has entered into an Agreement and Plan of Merger pursuant to which it
will merge with and into Renal Treatment Centers, Inc. ("RTC"), with RTC being
the surviving company and a wholly-owned Subsidiary of Borrower following the
effectiveness of such merger;
WHEREAS, Borrower and Lenders desire to amend the Term Loan Agreement
to permit RTC to remain liable with respect to certain Acquisition Debt incurred
in connection with such merger; and
WHEREAS, subject to the terms and conditions of this Amendment,
Lenders are willing to agree to such amendments.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE TERM LOAN AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO DEFINED TERMS
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0.1. Subsection 1.1 of the Term Loan Agreement is hereby amended by
adding thereto the following definitions, which shall be inserted in proper
alphabetical order:
"`NEWCO' means Nevada Acquisition Corp., a Delaware corporation and a
wholly-owned Subsidiary of Borrower."
"`RTC' means Renal Treatment Centers, Inc., a Delaware corporation."
"`RTC CONVERTIBLE SUBORDINATED INDENTURE' means that certain Indenture
dated as of June 12, 1996 by and between RTC and PNC Bank, National
Association, pursuant to which the RTC Convertible Subordinated Notes were
issued, as the same may be amended, supplemented, restated or otherwise
modified from time to time in accordance with Section 8.15."
"`RTC CONVERTIBLE SUBORDINATED NOTES' means the $125,000,000 in aggregate
principal amount of 5-5/8% Convertible Subordinated Notes due 2006 of RTC
issued pursuant to the RTC Convertible Subordinated Indenture, as the same
may be amended, supplemented, restated or otherwise modified from time to
time in accordance with Section 8.15."
"`RTC MERGER AGREEMENT' means that certain Agreement and Plan of Merger
dated as of November 18, 1997 by and among Borrower, Newco and RTC, as in
effect on November 22, 1997 and as such Agreement and Plan of Merger may be
amended, supplemented or otherwise modified from time to time with the
consent of the Administrative Agent and the Syndication Agent."
2. Subsection 1.1 of the Term Loan Agreement is hereby amended by
deleting clause (c) from the definition of "Restricted Payment" contained
therein and substituting the following therefor:
"(c) any payment to purchase, redeem, defease or otherwise acquire or
retire for value any Subordinated Indebtedness (other than payments made in
Stock of the Borrower and payments made with the proceeds of Indebtedness
(including, but not limited to, Refinancing Indebtedness) permitted under
this Agreement), except in accordance with the mandatory redemption or
repayment provisions set forth in the original documentation governing such
Subordinated Indebtedness; or".
1.2 AMENDMENT TO SECTION 2: AMOUNT AND TERMS OF LOANS
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Subsection 2.4(d)(ii) of the Term Loan Agreement is hereby amended by
inserting a reference to the phrase "(to an amount not less than zero)"
immediately after the reference to the phrase "on such date shall be reduced"
contained in the first sentence thereof.
1.3 AMENDMENTS TO SECTION 8: NEGATIVE COVENANTS
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A. Subsection 8.1(b)(ix) of the Term Loan Agreement is hereby amended by
deleting it in its entirety and substituting the following therefor:
"(ix) (A) Acquisition Debt incurred in connection with the acquisition
of Domestic Subsidiaries of the Borrower in an aggregate principal amount
not to exceed $35,000,000 at any one time outstanding plus (B) Acquisition
Debt outstanding under the RTC Convertible Subordinated Notes and other
Acquisition Debt in an aggregate principal amount not to exceed
$10,000,000, in each case owed by RTC on the effective date of the merger
contemplated by the RTC Merger Agreement provided that no debt shall be
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permitted under clause (B) of this subsection 8.1(b)(ix) unless and until
(1) Newco shall have merged into RTC in the manner provided in the RTC
Merger Agreement, (2) no material term or provision of the RTC Merger
Agreement is amended, modified or waived at any time after the execution
thereof without the written consent of the Administrative Agent and the
Syndication Agent, and (3) concurrently with the consummation of the merger
contemplated by the RTC Merger Agreement, RTC shall become a party to the
Subsidiary Guaranty and all other actions described in Section 7.11(a)
relating to RTC shall be taken, notwithstanding the 30 day period that such
Section would otherwise permit for such actions to be taken;".
B. Section 8.5 of the Term Loan Agreement is hereby amended by (i)
deleting the reference to the phrase "clauses (a)-(i)" contained in clause (j)
thereof and substituting a reference to the phrase "clauses (a)-(j)", (ii)
relabelling clauses (j) and (k) thereof as clauses (k) and (l), respectively,
and (iii) adding a new clause (j) thereto as follows:
"(j) Investments by RTC and its Subsidiaries existing on the effective
date of the merger contemplated by the RTC Merger Agreement that are set forth
on Schedule 8.5A hereto; and".
C. Subsection 8.11 of the Term Loan Agreement is hereby amended by
deleting clause (e) therefrom and substituting therefor a new clause (e) and
proviso as follows:
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"(e) the Borrower may issue Stock; provided, however, that
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all Stock issued pursuant to this Section 8.11 shall constitute common
stock with no mandatory dividend, redemption or similar requirement, or
warrants, options or other equivalents (however designated) to acquire such
common stock."
D. Section 8.15 of the Term Loan Agreement is hereby amended by adding a
new subsection (c) thereto as follows:
"(c) The Borrower will not, and will not permit any of its Subsidiaries
to, amend or otherwise change the terms of any Indebtedness outstanding
under the RTC Convertible Subordinated Notes or the RTC Convertible
Subordinated Indenture (or any Refinancing Indebtedness issued in respect
thereof), or make any payment consistent with an amendment thereof or
change thereto, if the effect of such amendment or change is to change (to
earlier dates) any dates upon which payments of principal or interest are
due thereon, change the redemption, prepayment or defeasance provisions
thereof, or change the subordination provisions thereof (or of any guaranty
thereof), provided, however, that (i) the Borrower and RTC shall be
permitted to enter into a supplemental indenture to the RTC
Convertible Subordinated Indenture (in form and substance satisfactory to
the Administrative Agent and the Syndication Agent) containing the terms
described in Section 2.1(d) of the RTC Merger Agreement and (ii) this
Section 8.15 shall not restrict the ability of RTC to voluntarily redeem
RTC Convertible Subordinated Notes to the extent permitted by Section 8.4
hereof or the ability of the Borrower to issue any common stock upon the
conversion of any RTC Convertible Subordinated Notes."
1.4 AMENDMENTS TO SCHEDULES
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The Term Loan Agreement is hereby amended by adding a new Schedule
8.5A thereto in the form of Schedule 8.5A hereto.
SECTION 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "FIRST AMENDMENT
EFFECTIVE DATE"):
A. The Administrative Agent shall have received a certificate from
an Authorized Signatory of the Borrower attaching a true, correct and
complete copy of an amendment and consent to the Revolving Credit Agreement
that permits the transactions contemplated by the RTC Merger Agreement and
consents to this Amendment, which amendment and consent shall be in form
and substance satisfactory to the Administrative Agent and Syndication
Agent, and all conditions to the effectiveness thereof (other than
effectiveness hereof) shall have been satisfied or waived.
B. The Administrative Agent shall have received a certificate from
an Authorized Signatory of the Borrower attaching a true, correct and
complete copy of the RTC Merger Agreement.
C. All fees and expenses incurred by Syndication Agent and its
counsel, O'Melveny & Myers LLP, in connection with the preparation,
negotiation and closing of this Amendment shall have been paid by Borrower.
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Term Loan Agreement in the manner provided herein, Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Each Credit Party has all
requisite corporate power and authority to enter into this Amendment and to
carry out the
transactions contemplated by, and perform its obligations under, the Term Loan
Agreement as amended by this Amendment (the "AMENDED AGREEMENT"), and each of
Borrower and Newco has all requisite corporate power and authority to enter into
the RTC Merger Agreement and to carry out the transactions contemplated by, and
perform its obligations under, the RTC Merger Agreement.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Amendment have been duly authorized by all necessary corporate action on
the part of each Credit Party, and the execution and delivery of the RTC Merger
Agreement have been duly authorized by all necessary corporate action on the
part of Borrower and Newco. The performance of the Amended Agreement has been
duly authorized by all necessary corporate action on the part of each Credit
Party, and the performance of the RTC Merger Agreement has been duly authorized
by all necessary corporate action on the part of Borrower and Newco.
C. NO CONFLICT. The execution and delivery by each Loan Party
of this Amendment, the execution and delivery by Borrower and Newco of the
Merger Agreement, the performance by each Loan Party of the Amended Agreement
and the performance by Borrower and Newco of the RTC Merger Agreement (including
the consummation of the merger contemplated thereby) do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Borrower or any of its Subsidiaries, the Certificate or Articles
of Incorporation or Bylaws of Borrower or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on
Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
contractual obligation of Borrower or any of its Subsidiaries, (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of Borrower or any of its Subsidiaries (other than Liens created under
any of the Loan Documents in favor of Administrative Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval or
consent of any Person under any contractual obligation of Borrower or any of its
Subsidiaries, except for such approvals or consents required in connection with
the RTC Merger Agreement which will be obtained on or before the consummation of
the merger contemplated thereby.
D. GOVERNMENTAL CONSENTS. The execution and delivery by each
Credit Party of this Amendment, the execution and delivery by Borrower and Newco
of the RTC Merger Agreement, the performance by each Loan Party of the Amended
Agreement and the performance by Borrower and Newco of the RTC Merger Agreement
(including consummation of the merger contemplated thereby) do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body, other than registrations, consents, approvals and notices
required in connection with the RTC Merger Agreement, which will be made or
obtained on or before the consummation of the merger contemplated thereby.
E. BINDING OBLIGATION. This Amendment and the Amended Agreement
have been duly executed and delivered by each Credit Party and are the legally
valid
and binding obligations of each Credit Party, enforceable against each Credit
Party in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
F. RTC MERGER AGREEMENT. Borrower has delivered to Administrative
Agent true and correct copies of the RTC Merger Agreement and all exhibits and
schedules thereto. The RTC Merger Agreement has been duly authorized, executed
and delivered by the parties thereto, is in fully force and effect and no term
or condition thereof has been modified or amended as of the date hereof.
G. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM TERM LOAN
AGREEMENT. The representations and warranties contained in Section 4 of the Term
Loan Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
H. ABSENCE OF DEFAULT. No event has occurred and is continuing
or will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default.
SECTION 4. ACKNOWLEDGEMENT AND CONSENT
Borrower is a party to the Borrower Pledge Agreement pursuant to which
Borrower has pledged certain Collateral to Administrative Agent to secure the
Obligations. TRC is a party to the Subsidiary Guaranty and the Subsidiary Pledge
Agreement pursuant to which TRC has (i) guarantied the Obligations and (ii)
pledged certain Collateral to Administrative Agent to secure the Obligations and
to secure the obligations of TRC under the Subsidiary Guaranty. TRC West, Inc.
is a party to the Subsidiary Guaranty pursuant to which TRC West, Inc. has
guarantied the Obligations. Total Renal Care Acquisition Corp. is a party to the
Subsidiary Guaranty pursuant to which Total Renal Care Acquisition Corp. has
guarantied the Obligations. Borrower, TRC, TRC West, Inc. and Total Renal Care
Acquisition Corp. are collectively referred to herein as the "CREDIT SUPPORT
PARTIES", and the Borrower Pledge Agreement, the Subsidiary Pledge Agreement and
the Subsidiary Guaranty are collectively referred to herein as the "CREDIT
SUPPORT DOCUMENTs".
Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Term Loan Agreement and this Amendment and consents
to the amendment of the Term Loan Agreement effected pursuant to this Amendment.
Each Credit Support Party hereby confirms that each Credit Support Document to
which it is a party or otherwise bound and all Collateral encumbered thereby
will continue to guaranty or secure, as
the case may be, to the fullest extent possible the payment and performance of
all "Guarantied Obligations" and "Secured Obligations," as the case may be (in
each case as such terms are defined in the applicable Credit Support Document),
including without limitation the payment and performance of all such "Guarantied
Obligations" and "Secured Obligations," as the case may be, in respect of the
Obligations of Borrower now or hereafter existing under or in respect of the
Amended Agreement and the Notes defined therein.
Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the First Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.
Each Credit Support Party acknowledges and agrees that (i)
notwithstanding the conditions to effectiveness set forth in this Amendment,
such Credit Support Party is not required by the terms of the Term Loan
Agreement or any other Loan Document to consent to the amendments to the Term
Loan Agreement effected pursuant to this Amendment and (ii) nothing in the Term
Loan Agreement, this Amendment or any other Loan Document shall be deemed to
require the consent of such Credit Support Party to any future amendments to the
Term Loan Agreement.
SECTION 5. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE TERM LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
(i) On and after the First Amendment Effective Date, each reference
in the Term Loan Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Term Loan Agreement, and
each reference in the other Loan Documents to the "Term Loan Agreement",
"thereunder", "thereof" or words of like import referring to the Term Loan
Agreement shall mean and be a reference to the Amended Agreement.
(ii) Except as specifically amended by this Amendment, the Term Loan
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of
Administrative Agent or any Lender under, the Term Loan Agreement or any of
the other Loan Documents.
B. FEES AND EXPENSES. Borrower acknowledges that all costs, fees and
expenses as described in Sections 5.13 and 5.14 of the Term Loan Agreement
incurred by Administrative Agent, Syndication Agent, Co-Arrangers, Lenders and
Special Counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Borrower.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Section 1
hereof, the effectiveness of which is governed by Section 2 hereof) shall become
effective upon the execution of a counterpart hereof by Borrower, Required
Lenders and each of the Credit Support Parties and receipt by Borrower and
Administrative Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
[Remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
BORROWER: TOTAL RENAL CARE HOLDINGS, INC.
By: _______________________________
Title: ____________________________
CREDIT SUPPORT PARTIES: TOTAL RENAL CARE, INC., (for purposes
of Section 4 only) as a Credit Support
Party
By: _______________________________
Title: ____________________________
TRC WEST, INC., (for purposes of
Section 4 only) as a Credit Support
Party
By: _______________________________
Title: ____________________________
TOTAL RENAL CARE ACQUISITION CORP.,
(for purposes of Section 4 only) as a
Credit Support Party
By: _______________________________
Title: ____________________________
AGENTS: THE BANK OF NEW YORK, INDIVIDUALLY
AND AS ADMINISTRATIVE AGENT
By: ________________________________
Title: _____________________________
DLJ CAPITAL FUNDING, INC.,
INDIVIDUALLY AND AS SYNDICATION AGENT
By: ________________________________
Title: _____________________________
LENDERS: BDC FINANCE, LLC
By: _______________________________
Title: ____________________________
CITIBANK, N.A.
By: _______________________________
Title: ____________________________
CONTINENTAL ASSURANCE COMPANY
Separate Account (E)
By:TCW Asset Management Company, as
Attorney-In-Fact, as Assignee
By: _______________________________
Title: ____________________________
By: _______________________________
Title: ____________________________
DEBT STRATEGIES FUND, INC.
By: _______________________________
Title: ____________________________
DEEPROCK & COMPANY
By: Eaton Vance Management as
Investment Advisor
By: _______________________________
Title: ____________________________
FRANKLIN FLOATING RATE TRUST
By: _______________________________
Title: ____________________________
KZH HOLDING CORPORATION III
By: _______________________________
Title: ____________________________
KZH - CRESCENT CORPORATION
By: _______________________________
Title: ____________________________
KZH - SOLEIL CORPORATION
By: _______________________________
Title: ____________________________
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By: _______________________________
Title: ____________________________
MORGAN STANLEY SENIOR FUNDING, INC.
By: _______________________________
Title: ____________________________
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(a unit of The Chase Manhattan Bank)
By: _______________________________
Title: ____________________________
ORIX USA CORP.
By: _______________________________
Title: ____________________________
PARIBAS CAPITAL FUNDING LLC
By: _______________________________
Title: ____________________________
PILGRIM AMERICA PRIME RATE TRUST
By: _______________________________
Title: ____________________________
PIMCO HIGH YIELD FUND (Acct 705)
By: Pacific Investment Management
Company, as its Investment Advisor
acting through Investors Fiduciary
Trust Company in the Nominee Name of
IFTCO
By: _______________________________
Title: ____________________________
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By: _______________________________
Title: ____________________________
SENIOR HIGH INCOME PORTFOLIO, INC.
By: _______________________________
Title: ____________________________
T. ROWE PRICE HIGH YIELD FUND INC.
By: _______________________________
Title: ____________________________
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By: _______________________________
Title: ____________________________
SCHEDULE 8.5A
Existing Investments of RTC and its Subsidiaries
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SUBSIDIARY /1/ EQUITY INTEREST OWNED
BY RTC
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Renal Treatment Centers - Mid-Atlantic, Inc. 100%
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Dialysis Treatment Centers of Macon, L.L.C. 20%
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Renal Treatment Centers - Northeast, Inc. 100%
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RTC Supply, Inc. 100%
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Renal Treatment Centers - California, Inc. 100%
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Renal Treatment Centers - West, Inc. 100%
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Hutchinson Dialysis, L.L.C. 50%
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Renal Treatment Centers - Southeast, Inc. 100%
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RTC - Texas Acquisition, Inc. 100%
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Southwest Dialysis Center, Inc. 100%
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Tomball Dialysis, Inc. 100%
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Renal Treatment Centers - Illinois, Inc. 100%
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Renal Treatment Centers - Management Acquisition, Inc. 100%
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Renal Treatment Centers - Hawaii, Inc. 100%
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RTC TN, Inc. 100%
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RTC Holdings, Inc. 100%
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Renal Diagnostic Laboratories, Inc. 100%
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RTC Holdings International, Inc. 95%
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RTC Argentina S.A. 99.77%
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RTC Buenos Aires S.A. 80%
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RTC Cordoba S.A. 80%
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SUBSIDIARY OF SHARES OWNED BY
RTC ARGENTINA S.A. RTC ARGENTINA S.A.
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Caper S.A. 80%
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Cenesi S.A. 100%
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Cenha S.A. 100%
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Centro Modelo Privado de Enfermedades Renales S.A. 80%
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Centro de Enfermedades Renales S.A. 100%
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Centro Nefrologico Junin S.A. 80%
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Centro Nefrologico Privado Modelo S.A. 100%
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Cerenales de Teer S.A. 100%
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Enfermadades Renales-Centro de Dialisis S.A. 100%
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Netroy S.A. 100%
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Nudial S.A. 100%
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Raquemar S.A. 100%
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Terapia Sustitutiva Renal S.A. 100%
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Tider S.A. 100%
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Unidad Modelo de Nefrologia y Hemodialysis S.A. 80%
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Unidad Renal S.A. 100%
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/1/ Indented headings indicate subsidiaries of the non-indented subsidiary
directly above such indented subsidiary.