FIRST AMENDMENT AGREEMENT AND WAIVER
First Amendment Agreement and Waiver, dated as of January 28, 1997 (this
"Amendment"), among Foundation Health Corporation, a Delaware corporation
(the "Borrower"), the lenders (the "Lenders") listed on the signature pages
hereof and Citibank, N.A., as administrative agent (the "Agent") for the
Lenders.
1. The Borrower, the Lenders and the Agent have entered into a
Revolving Credit Agreement, dated as of December 17, 1996 (such credit
agreement as it may be amended and in effect from time to time, being
referred to herein as the "Credit Agreement"; terms defined therein and not
otherwise defined herein being used herein as therein defined).
2. The Borrower, Health Systems International, Inc. ("HSI") and FH
Acquisition Corp. on October 1, 1996 entered into an Agreement and Plan of
Merger ("Merger Agreement") pursuant to which the Borrower will become a
wholly owned subsidiary of HSI (the "Merger"). The Borrower has requested the
Lenders and the Agent to amend the Credit Agreement to permit the Credit
Agreement to survive the Merger and to grant a waiver thereunder in
connection therewith. The Lenders and the Agent have agreed to such request
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is,
effective as of the consummation of the Merger and subject to the
satisfaction of the conditions precedent set forth in Section 3 hereof,
hereby amended as follows:
(a) Section 1.01 is hereby amended by adding the following defined
term after the definition of "HMO SUBSIDIARY" therein:
"`HSI' means Health Systems International, Inc., a Delaware
corporation."
(b) Section 6.01 of the Credit Agreement is hereby amended by
deleting the semicolon at the end of Section 6.01 (n) and replacing it
with the word "; or" and adding the following subsection (o) after such
subsection (n):
"(o) HSI or any of its Subsidiaries (other than those
Subsidiaries subject to Section 6.01 (d) hereof) shall fail to pay
any Debt in a principal payment amount (whether singly or in the
aggregate) equal to or in excess of $15,000,000 of HSI or such
Subsidiary, as the case may be, when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration,
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demand or otherwise (and inclusive of principal, interest,
fees and penalties)), and such failure shall continue after the
applicable grace period, if any, specified in the agreements or
instruments relating to such Debt; or any other event shall occur
or condition shall exist under any agreements or instruments
relating to such Debt and shall continue after the applicable
grace period, if any, specified in such agreements or instruments,
if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such
Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment),
prior to the stated maturity thereof."
SECTION 2. WAIVERS TO CREDIT AGREEMENT. Subject to the satisfaction of
the conditions precedent set forth in Section 3 hereof, any Default or Event
of Default arising from the transactions contemplated by the Merger Agreement
is hereby waived from the date hereof to and including June 30, 1997.
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective if, on or prior to February 9, 1997, the Agent shall have received
(i) counterparts of this Amendment duly executed by the Borrower, the
Majority Lenders and the Agent, (ii) resolutions of the Board of Directors of
the Borrower approving this Amendment and the transactions contemplated
hereby, together with an incumbency certificate with respect to the officers
of the Borrower executing this Amendment and (iii) evidence that the Amended
and Restated Credit Agreement, dated as of April 26, 1996 among HSI, the
lenders thereto and Bank of America, N.T. & S.A., as agent, has been amended,
pursuant to an amendment in form and substance satisfactory to the Agent and
to the Borrower, to permit the Merger and to permit the indebtedness of the
Borrower under the Credit Agreement to continue after the effectiveness of
the Merger.
SECTION 4. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT. (a) Upon
the effectiveness of this Amendment, on and after the date hereof, each
reference in the Credit Agreement to "this Agreement," "hereunder," "hereof"
or words of like import referring to the Credit Agreement, shall mean and be
a reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement is and
shall continue to be in full force and effect and is hereby ratified and
confirmed in all respects.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender or the
Agent under the Credit Agreement, nor constitute a waiver of any provision of
the Credit Agreement, except as specifically herein provided.
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SECTION 5. FEES, COSTS AND EXPENSES. The Borrower agrees to
pay on demand all reasonable costs and expenses of the Agent incurred in
connection with the preparation, execution, delivery, administration,
modification and amendment of this Amendment and the other documents to be
delivered hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of the Agent's legal counsel. The Borrower further
agrees to pay on demand all costs and expenses of the Agent and the Lenders
(including, without limitation, reasonable fees and expenses of the Agent's
legal counsel) in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of the Amendment and other
documents to be delivered under this Amendment.
SECTION 6. 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 and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
SECTION 7. 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 above written.
THE BORROWER:
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FOUNDATION HEALTH CORPORATION
By:
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Name:
Title:
THE AGENT:
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CITIBANK, N.A.
By:
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Name:
Title:
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THE LENDERS:
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CITIBANK, N.A.
By:
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Name:
Title:
NATIONSBANK OF TEXAS, N.A.
By:
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Name:
Title:
BANK OF AMERICA, N.T. & S.A.
By:
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Name:
Title:
THE CHASE MANHATTEN BANK, N.A.
By:
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Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
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Name:
Title:
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THE BANK OF NOVA SCOTIA
By:
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Name:
Title:
THE DAI-ICHI KANGYO BANK, LIMITED,
SAN FRANCISCO AGENCY
By:
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Name:
Title:
THE SUMITOMO BANK, LIMITED,
SAN FRANCISCO BRANCH
By:
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Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
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Name:
Title:
THE SANWA BANK, LIMITED
By:
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Name:
Title: