EXHIBIT 10.3
TOTAL RENAL CARE HOLDINGS, INC.
LIMITED WAIVER AND SECOND AMENDMENT
TO AMENDED AND RESTATED TERM LOAN AGREEMENT
This LIMITED WAIVER AND SECOND AMENDMENT TO AMENDED AND RESTATED TERM LOAN
AGREEMENT (this "Amendment") is dated as of August 9, 1999, and entered into by
and among TOTAL RENAL CARE HOLDINGS, INC., a Delaware corporation (the
"Borrower"), the financial institutions listed on the signature pages hereof
(the "Lenders", each a "Lender"), DLJ CAPITAL FUNDING, INC., as Syndication
Agent (the "Syndication Agent"), THE BANK OF NEW YORK, as collateral agent and
as administrative agent for the Lenders (in such capacity, the "Administrative
Agent"), and, for purposes of Section 5 hereof, the Credit Support Parties (as
defined in Section 5 hereof) listed on the signature pages hereof, and is made
with reference to that certain Amended and Restated Term Loan Agreement dated
as of April 30, 1998, as amended to the date hereof (as so amended, the "Term
Loan Agreement"), by and among the 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, the Borrower, the undersigned Lenders, constituting Required
Lenders, the Administrative Agent, and the Syndication Agent desire to amend
the Term Loan Agreement for the purpose of increasing the interest rates
payable on the Loans and shortening the maturity from March 31, 2008 to March
31, 2006;
WHEREAS, the Borrower may need to adjust its financial statements for the
fiscal period ending on March 31, 1999, in order to increase certain charges
and decrease its net income reported for such period (the "Prior Period
Adjustments"), and the Borrower has requested Lenders to waive any Defaults or
Events of Default that may have arisen under the Term Loan Agreement as a
direct or indirect result of the failure of the financial statements,
Compliance Certificates and other documents delivered by the Borrower under the
Term Loan Agreement and the Revolving Credit Facility to reflect the Prior
Period Adjustments or to incorporate the effects of such Prior Period
Adjustments in calculations based on Borrower's financial position and results
of operations for such period, and Lenders are willing to waive any such
Defaults and Events of Default, subject to the terms and conditions hereof;
WHEREAS, Borrower has requested the lenders that are parties to the Revolving
Credit Facility to enter into an Amendment No. 3 and Waiver to and Under
Amended and Restated Revolving Credit Agreement substantially in the form of
Annex I hereto (the "Revolving Credit Facility Waiver"), pursuant to which such
lenders would waive certain defaults that may have arisen under the Revolving
Credit Facility resulting from, among other things, the Borrower's failure to
comply with subsection 7.15 thereof;
WHEREAS, the Borrower has requested Lenders to waive any Defaults or Events
of Default that may have arisen under subsection 9.1(g) of the Term Loan
Agreement as a result of any defaults that may have arisen under the Revolving
Credit Facility that will be waived pursuant to the Revolving Credit Facility
Waiver, and Lenders are willing to waive any such Defaults and Events of
Default, subject to the terms and conditions hereof;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
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Section 1. AMENDMENTS TO THE TERM LOAN AGREEMENT
1.1 Amendments to Section 1: Definitions and Principals of Construction
A. Section 1.1 of the Term Loan Agreement is hereby amended effective as of
August 9, 1999, by deleting clause (a) of the definition of "Applicable Margin"
in its entirety and substituting the following therefor:
"(a) at all times, with respect to the unpaid principal amount of
Eurodollar Advances and ABR Advances, and based on the most recently
delivered Compliance Certificate of the Borrower, the percentage set forth
below under the heading "Applicable Margin for Eurodollar Advances" or
"Applicable Margin for ABR Advances", as applicable, next to the applicable
period:
Applicable Applicable
Margin for Margin for
Eurodollar ABR
Period Advances Advances
------ ---------- ----------
When the Leverage Ratio is greater than 4.00:1.00.... 3.00% 1.75%
When the Leverage Ratio is equal to or less than
4.00:1.00 but greater than 3.50:1.00................ 2.75% 1.50%
When the Leverage Ratio is equal to or less than
3.50:1.00 but greater than 3.00:1.00................ 2.50% 1.25%
When the Leverage Ratio is equal to or less than
3.00:1.00........................................... 2.25% 1.00%"
B. Section 1.1 of the Term Loan Agreement is hereby further amended by
deleting the reference to the date "March 31, 2008" in the definition of
"Maturity Date" contained therein and substituting "March 31, 2006" therefor.
1.2 Amendment to Section 2: Amount and Terms of Loans
A. Section 2.4(b) of the Term Loan Agreement is hereby amended by (i)
deleting the reference to "$4,000,000" opposite the reference to "September 30,
2006" contained therein and substituting "$368,000,000" therefor; (ii) deleting
the last two lines in the table of Scheduled Repayments of Term Loans contained
therein; and (iii) deleting the final reference to the date "March 31, 2008"
contained in the proviso therein and substituting "the Maturity Date" therefor.
Section 2. LIMITED WAIVER TO TERM LOAN AGREEMENT
A. Subject to the terms and conditions set forth herein and in reliance on
the representations and warranties of the Borrower herein contained, Lenders
hereby waive any Defaults and Events of Default that may have arisen under the
Term Loan Agreement as a direct or indirect result of the failure of the
financial statements, Compliance Certificates and other documents delivered by
the Borrower under the Term Loan Agreement and the Revolving Credit Facility to
reflect the Prior Period Adjustments or to incorporate the effects of such
Prior Period Adjustments in calculations based on Borrower's financial position
and results of operations for the fiscal period ending on March 31, 1999.
B. Subject to the terms and conditions set forth herein and in reliance on
the representations and warranties of the Borrower herein contained,
simultaneously with the effectiveness of the Revolving Credit Facility Waiver,
Lenders hereby waive any Defaults and Events of Default that may have arisen
under subsection 9.1(g) of the Term Loan Agreement as a result of any defaults
that may have arisen under the Revolving Credit Facility that will be and
remain waived pursuant to the Revolving Credit Facility Waiver.
Without limiting the generality of the provisions of subsection 11.1 of the
Term Loan Agreement, the waivers set forth above shall be limited precisely as
written and nothing in this Amendment shall be deemed to:
(a) constitute a waiver of any Defaults or Events of Default arising as a
result of any inaccuracy in financial statements of the Borrower other than
the failure of such statements to reflect the Prior Period
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Adjustments, or arising under subsection 9.1(g) of the Term Loan Agreement
in any other instance, or a waiver any other term, provision or condition
of the Term Loan Agreement or any other instrument or agreement referred to
therein; or
(b) prejudice any right or remedy that Agents or any Lender may now have
(except to the extent such right or remedy was based upon any existing
defaults that will not exist after giving effect to this Waiver) or may
have in the future under or in connection with the Term Loan Agreement or
any other instrument or agreement referred to therein.
Section 3. CONDITIONS TO EFFECTIVENESS
Sections 1 and 2 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 "Second
Amendment Effective Date"):
A. Required Lenders (as such term is defined in the Revolving Credit
Agreement) shall have entered into the Revolving Credit Facility Waiver,
Administrative Agent and Syndication Agent shall have received an executed copy
thereof, and such Revolving Credit Facility Waiver shall have become effective
simultaneously with the effectiveness hereof.
B. Borrower shall have executed and delivered to Administrative Agent
Allonges to Promissory Notes substantially in the form of Annex II hereto
(each, an "Allonge"), duly completed for each outstanding Term Loan Note.
C. Borrower shall have paid to Administrative Agent, for distribution to each
Approving Lender (as defined in Section 7C hereof), the fees set forth in
Section 7C hereof.
D. The Administrative Agent shall have received a certificate, dated the
Second Amendment Effective Date, of the Secretary or Assistant Secretary of the
Borrower (i) attaching a true and complete copy of the resolutions of its Board
of Directors and of all documents evidencing other necessary corporate action
(in form and substance satisfactory to the Administrative Agent and the
Syndication Agent) taken by it to authorize this Amendment and the transactions
contemplated hereby, and (ii) setting forth the incumbency of its officer or
officers (including therein the signature specimen of such officer or officers)
who may sign this Amendment, any Loan Document or any other document, notice or
certificate executed and delivered in connection with any Loan Document..
E. The Administrative Agent shall have received the opinion of the general
counsel of the Borrower, the Guarantors and the Pledgors, dated the Second
Amendment Effective Date and addressed to the Administrative Agent, the
Collateral Agent, the Documentation Agent, the Syndication Agent and the
Lenders, in form and substance reasonably satisfactory to the Administrative
Agent and the Syndication Agent.
Section 4. 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, in the
case of Borrower, the Term Loan Notes as amended by the Allonges (the "Amended
Notes").
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
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the Allonges have been duly authorized by all necessary corporate action on the
part of Borrower. 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 and payment of the Amended Notes has been duly authorized
by all necessary corporate action on the part of Borrower.
C. No Conflict. The execution and delivery by each Credit Party of this
Amendment, the execution and delivery by Borrower of the Allonges, the
performance by each Credit Party of the Amended Agreement, and the performance
and payment by Borrower of the Amended Notes 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.
D. Governmental Consents. The execution and delivery by each Credit Party of
this Amendment, the execution and delivery by Borrower of the Allonges, the
performance by each Credit Party of the Amended Agreement, and the performance
and payment by Borrower of the Amended Notes do not and will not 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.
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. The Allonges have been duly executed and delivered by Borrower
and the Allonges and the Amended Notes are the legally valid and binding
obligations of Borrower, enforceable against Borrower 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. Incorporation of Representations and Warranties From Term Loan
Agreement. The representations and warranties contained in Section 4 of the
Term Loan Agreement (after giving effect to this Amendment) are and will be
true, correct and complete in all material respects on and as of the Second
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.
G. 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, other than any Events of Default that
will be cured or waived upon the effectiveness of this Amendment.
Section 5. 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.
Each of the other Guarantors listed on the signature pages hereof is a party to
the Subsidiary Guaranty pursuant to which such Guarantor has guarantied the
Obligations. Borrower and the
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Guarantors 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
Second 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 6. PAYMENT OF ADDITIONAL INTEREST
On or before August 16, 1999, the Borrower shall deliver to Administrative
Agent a revised Compliance Certificate for the fiscal quarter of Borrower ended
on March 31, 1999, which shall recalculate the Leverage Ratio to reflect the
Prior Period Adjustments. The Applicable Margin for the period from May 17,
1999 (the date the Borrower delivered the original Compliance Certificate for
the fiscal quarter of Borrower ended on March 31, 1999), to and including the
date the next Compliance Certificate is delivered or is required to be
delivered shall be based on such revised Leverage Ratio. On or before August
20, 1999, the Borrower shall pay to Administrative Agent, for distribution to
Lenders (including assignors of Notes to Lenders, as applicable) any additional
interest that accrued under the Term Loan Agreement and Notes during the period
from and including May 17, 1999, to and including August 19, 1999, as a result
of any increase in the Applicable Margin caused by the Prior Period
Adjustments, to the extent that such accrued interest would have been payable
on any Interest Payment Date during such period. All such additional interest
that accrued under the Term Loan Agreement and the Notes on and after May 17,
1999, that is not paid on August 19, 1999, shall continue to be owed under the
Term Loan Agreement and the Notes, and shall be paid in accordance with the
Term Loan Agreement on the next applicable Interest Payment Date.
Section 7. MISCELLANEOUS
A. Reference to and Effect on the Term Loan Agreement and the Other Loan
Documents.
(i) On and after the Second 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
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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 and the Allonges,
the Term Loan Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed.
(iii) The definition of "Applicable Margin" in the Term Loan Agreement as
in effect immediately prior to August 9, 1999, shall continue to govern the
calculation of interest payable thereunder for periods prior to such date.
(iv) The execution, delivery and performance of this Amendment shall and
the Allonges 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 Section 11.5 of the Term Loan Agreement incurred by
Administrative Agent, Syndication Agent, Co-Arrangers, and Special Counsel,
with respect to this Amendment and the documents and transactions contemplated
hereby shall be for the account of Borrower and shall be promptly paid by
Borrower following the submission of an invoice therefor.
C. Consent Fee. Borrower shall pay to Administrative Agent, for distribution
to each Lender that shall have executed and delivered (without any reservation
or condition) a counterpart of this Amendment to Administrative Agent before
5:00 p.m. (New York City time) on August 9, 1999 (each, an "Approving Lender"),
non-refundable fees in the amount of 1/8 of 1% of the aggregate amount of the
Loans of each such Approving Lender (immediately prior to the effectiveness
hereof).
D. Consent to Revolving Credit Facility Waiver. The Lenders hereby consent to
the Revolving Credit Facility Waiver.
E. 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.
F. 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.
G. 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
Sections 1 and 2 hereof, the effectiveness of which is governed by Section 3
hereof) shall become effective upon the execution of a counterpart hereof by
Borrower, Required Lenders, Administrative Agent, 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]
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ANNEX I
REVOLVING CREDIT FACILITY WAIVER
ANNEX II
[FORM OF ALLONGE]
ALLONGE TO PROMISSORY NOTE
By this Allonge to Promissory Note (this "Allonge"), the undersigned, Total
Renal Care Holdings, Inc. ("Borrower"), hereby acknowledges that pursuant to
that certain Limited Waiver and Second Amendment to Amended and Restated Term
Loan Agreement dated as of August 9, 1999, by and among Borrower, the financial
institutions listed on the signature pages thereof as lenders, DLJ Capital
Funding, Inc., as Syndication Agent, The Bank of New York, as Administrative
Agent, and the Credit Support Parties named therein, the final scheduled
maturity date of all amounts owed under Borrower's Promissory Note to which
this Allonge is attached has been amended to March 31, 2006, and that each
reference in such Promissory Note to "March 31, 2008" is hereby amended to be a
reference to "March 31, 2006".
Date: August , 1999 TOTAL RENAL CARE HOLDINGS, INC.
By: _________________________________
Name: _______________________________
Title: ______________________________
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: _________________________________
Name: _______________________________
Title: ______________________________
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CREDIT SUPPORT PARTIES: TOTAL RENAL CARE, INC.,
TOTAL RENAL CARE ACQUISITION CORP.
RENAL TREATMENT CENTERS, INC.,
RENAL TREATMENT CENTERS-
MID-ATLANTIC, INC.
RENAL TREATMENT CENTERS-
NORTHEAST, INC.
RENAL TREATMENT CENTERS-
CALIFORNIA, INC.
RENAL TREATMENT CENTERS-WEST, INC.
RENAL TREATMENT CENTERS-
SOUTHEAST, INC. (for purposes of
Section 5 only) each as a Credit
Support Party
Each by: ____________________________
Name: _______________________________
Title: ______________________________
TRC WEST, INC., (for purposes of
Section 5 only) as a Credit Support
Party
By: _________________________________
Name: _______________________________
Title: ______________________________
AGENTS: THE BANK OF NEW YORK, Individually
and as
Administrative Agent and Collateral
Agent
By: _________________________________
Name: _______________________________
Title: ______________________________
DLJ CAPITAL FUNDING, INC.,
Individually and as Syndication
Agent
By: _________________________________
Name: _______________________________
Title: ______________________________
LENDERS: [omitted]
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