THIRD AMENDMENT AGREEMENT AND WAIVER
Third Amendment Agreement and Waiver, dated as of December 13, 1996
(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 successor to Citicorp USA,
Inc.), as administrative agent (the "Agent") for the Lenders.
PRELIMINARY STATEMENTS:
1. The Borrower, the Lenders, the Agent, Wells Fargo Bank, N.A. and
NationsBank of Texas, N.A., as co-agents (the "Co-Agents") for the Lenders,
and Citicorp Securities, Inc., as arranger (the "Arranger"), have entered
into a Revolving Credit Agreement, dated as of December 5, 1994, as amended
by a First Amendment Agreement dated as of August 1, 1995 and a Second
Amendment Agreement dated as of June 28, 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, the Lenders and the Agent wish to amend the Credit
Agreement to, (i) amend Section 5.02(e) of the Credit Agreement regarding the
sale of certain assets; (ii) amend Section 5.03(b) of the Credit Agreement
regarding the Fixed Charge Coverage Ratio; and (iii) memorialize certain
matters with respect to the Agent and to waive the Borrower's obligation to
comply with certain reporting requirements.
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 December 31, 1996 (the "Amendment Effective Date") and
subject to the satisfaction of the conditions precedent set forth in Section
3 hereof, hereby amended as follows:
(a) Subsection (e) of Section 5.02 of the Credit Agreement is hereby
amended in full to read as follows:
"(e) SALES, TRANSFERS, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of, or permit any of its Material Subsidiaries to sell, lease,
transfer or otherwise dispose of, any assets (including, without
limitation, any portion of assets
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constituting the business of a division, branch or other unit of
operation), except for (A) sales in the ordinary course of business
consistent with past practices; (B) sales and dispositions of worn out,
surplus or obsolete assets; (C) sales or transfers of property during any
Fiscal Year of the Borrower the aggregate value of which (determined by
the greater of the book value thereof or the sales or transfer price
thereof) does not exceed 10% of the Borrower's Consolidated Total Assets
(determined as of the end of the Fiscal Quarter of the Borrower
immediately preceding such sale or transfer); (D) sales or transfers or
property from any Material Subsidiary to the Borrower or any other
Subsidiary of the Borrower, PROVIDED, that in the case of any sale or
transfer from a Material Subsidiary to a Subsidiary of the Borrower, such
sale or transfer would not cause such transferring Material Subsidiary to
cease being a Material Subsidiary, unless each transferee Subsidiary
thereby becomes (or is) a Material Subsidiary; and (E) the sale of
Foundation Health Medical Services, Thomas-Davis Medical Centers, P.C.,
Foundation Health Medical Group, Inc., surgery centers and related
healthcare center assets to PPA Medical Management, Inc. or to any other
Person."
(b) Subsection (b) of Section 5.03 of the Credit Agreement is hereby
amended in full to read as follows:
"(b) FIXED CHARGE COVERAGE RATIO. Permit, as at the end of any Fiscal
Quarter of the Borrower ending on or after December 31, 1996, the
Consolidated Fixed Charge Coverage Ratio of the Borrower and its
Subsidiaries for the four-Fiscal Quarter period ending on the last day of
such Fiscal Quarter to be less than 3.75 to 1.0."
(c) Subsection (a) of Section 5.04 of the Credit Agreement is hereby
amended by adding the phrase "(except the last Fiscal Quarter in each Fiscal
Year)" in the second line thereof after the words "Fiscal Quarter".
(d) Section 8.02 of the Credit Agreement is amended by deleting the
address of the Agent in the first sentence thereof and substituting therefor
the following: "399 Park Avenue, New York, New York 10043, Attention: Credit
Department, with a copy to Citicorp Securities, Inc., 399 Park Avenue, 8th
Floor, New York, New York 10043, Attention: Margaret A. Brown."
SECTION 2. WAIVERS TO CREDIT AGREEMENT. Subject to the satisfaction of
the conditions precedent set forth in Section 3 hereof, the obligation of the
Borrower to deliver the financial information required by Section 5.04(a) in
respect of the Fiscal Quarter ended
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September 30, 1996 and the financial information required by Section 5.04(b)
in respect of the Fiscal Year ended June 30, 1996 is hereby waived to and
including November 22, 1996.
SECTION 3. CONDITIONS OF EFFECTIVENESS. This Amendment shall become
effective as of the Amendment Effective Date if, on or prior to that date, the
Agent shall have received (i) counterparts of this Amendment duly executed by
the Borrower, the Lenders and the Agent, and (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.
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) On and after the date hereof, each reference in the Credit Agreement
and the exhibits thereto to "Citicorp USA, Inc." shall be a reference to
"Citibank, N.A.," and each reference to "CUSA" shall be a reference to
"Citibank."
(c) 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.
(d) 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.
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 this 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.
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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:
FOUNDATION HEALTH CORPORATION
By:
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Name:
Title:
THE AGENT:
CITIBANK, N.A.
By:
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Name:
Title:
THE LENDERS:
CITIBANK, N.A.
By:
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Name:
Title:
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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 MANHATTAN BANK
By:
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Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
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Name:
Title:
THE BANK OF NOVA SCOTIA
By:
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Name:
Title:
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THE DAI-ICHI KANGYO BANK, LIMITED,
SAN FRANCISCO AGENCY
By:
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Name:
Title:
THE FUJI BANK, LIMITED
By:
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Name:
Title:
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
By:
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Name:
Title:
By:
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Name:
Title:
THE SUMITOMO BANK, LIMITED,
SAN FRANCISCO BRANCH
By:
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Name:
Title:
7
CREDIT LYONNAIS NEW YORK BRANCH
By:
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Name:
Title:
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
By:
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Name:
Title:
THE SANWA BANK, LIMITED
By:
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Name:
Title: