EXHIBIT 10.r
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT, dated as of May 31, 1995 (this "Amendment"), to the
Credit Agreement referred to below by and among C.I.S., Inc., an Oklahoma
corporation ("CIS, Inc."), and Hospital Billing Analysis, Inc., a California
corporation ("HBA", and together with CIS, Inc., collectively, "Borrowers"),
C.I.S. Technologies, Inc., a Delaware corporation ("Parent"), and General
Electric Capital Corporation, a corporation organized under the banking laws of
the State of New York ("Lender"), and acknowledged and consented to by AMSC,
Inc., a Florida corporation ("AMSC"), and the Parent in its capacity as a
guarantor.
W I T N E S S E T H
WHEREAS, Borrowers, Parent and Lender are parties to that certain
Credit Agreement, dated as of October 15, 1994 (as amended, supplemented or
otherwise modified prior to the date hereof, the "Credit Agreement");
WHEREAS, Parent has executed and delivered a Guaranty dated as of
October 15, 1994 in favor of Lender (the "Parent Guaranty");
WHEREAS, AMSC has executed and delivered a Guaranty dated as of
November 26, 1994 in favor of Lender (the "Subsidiary Guaranty");
WHEREAS, pursuant to that certain Stock Purchase and Sale Agreement,
dated May 11, 1995, among First Financial Management Corporation, a Georgia
corporation ("FFMC"), MicroBilt Corporation, a Georgia corporation wholly owned
by FFMC ("MicroBilt"), and Parent, Parent is acquiring (the "HCCI Acquisition")
from MicroBilt all of the issued and outstanding capital stock of Hospital Cost
Consultants, Inc., a California corporation ("HCCI");
WHEREAS, in connection with the HCCI Acquisition, Borrowers and Parent
have requested that Lender agree to amend certain provisions of the Credit
Agreement;
WHEREAS, Borrowers, Parent and Lender have agreed to amend the Credit
Agreement in the manner, and on the terms and conditions, provided for herein;
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WHEREAS, Parent, in its capacity as a guarantor, has also consented to
the amendments provided for herein and has agreed to confirm its obligations
under the Parent Guaranty; and
WHEREAS, AMSC has consented to the amendments provided for herein and
has agreed to confirm its obligations under the Subsidiary Guaranty;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, Borrowers, Parent and Lender hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement after giving
effect to this Agreement.
2. Amendment to Section 5.10 of the Credit Agreement. Section 5.10
of the Credit Agreement is hereby amended by inserting at the end of such
Section the following new sentence:
"Notwithstanding the foregoing, prior to the FFMC Note Maturity Date
(a) HCCI shall be permitted to be subject to Section 8.13 of the Stock
Purchase Agreement and (b) HCCI may enter into and perform its
obligations under the FFMC Security Agreement."
3. Amendment to Section 6.3 of the Credit Agreement. Section 6.3 of
the Credit Agreement is hereby amended by deleting in its entirety the portion
of such Section contained after the reference to "Schedule 6.3" therein and
inserting in lieu thereof the following:
"; (e) the Acquisition Notes; (f) the FFMC Note; (g) Indebtedness
(other than the FFMC Note) assumed in connection with Permitted
Acquisitions, including Indebtedness (other than the FFMC Note) of any
Acquired Subsidiary, in a maximum aggregate amount outstanding not to
exceed $500,000 outstanding at any time; (h) until the FFMC Note
Maturity Date, the FFMC Guarantee; and (i) unsecured subordinated
Indebtedness of Parent or HCCI constituting a renewal, extension,
refinancing or refunding of the FFMC Note, (i) for a principal amount
outstanding not in excess of
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$5,000,000, (ii) the payment of the principal of and interest on which
and other obligations of any Loan Party in respect thereof are
subordinated in a manner acceptable to Lender to the prior payment in
full of the Obligations, (iii) which is not secured by a Lien on any
property or assets of any Loan Party or any Subsidiary thereof, (iv)
which has a final maturity date after April 30, 1998, and (v)
otherwise having terms and conditions satisfactory in form and
substance to Lender."
4. Amendment to Section 6.4 of the Credit Agreement. Section 6.4 of
the Credit Agreement shall be amended and restated to read in its entirety as
follows:
"6.4 Affiliate Transactions. Except as otherwise expressly
permitted hereunder, no Loan Party shall enter into any lending,
borrowing or other commercial transaction with any of its Subsidiaries
or Affiliates, including payment of any management, consulting,
advisory or similar fee provided that such Loan Parties may make: (i)
intercompany advances by any Loan Party ("Lender Loan Party") to
another Loan Party at any time not in excess of $100,000 (net of any
intercompany loans made to such Lender Loan Party by such Loan Party)
in the aggregate for all Loan Parties; (ii) intercompany advances by
Borrowers to AMSC not in the aggregate at any time in excess of
$1,200,000 (net of any intercompany loans made by AMSC to Borrowers);
(iii) intercompany advances by any Loan Party (other than a Borrower)
to any Borrower; (iv) an advance by Borrowers to Parent in an amount
equal to $1,000,000 from proceeds of the Tranche B Loan to be used by
Parent in payment of the cash portion of the purchase price for the
AMSC Acquisition and an advance by Borrowers to Parent not to exceed
$2,000,000 from proceeds of Revolving Credit Advances to be used by
Parent in partial payment of the cash portion of the purchase price
for HCCI; and (v) redemption of the Parent's common stock from Philip
Kurtz in repayment of the loan referred to on Schedule 6.4. Set forth
in Schedule 6.4 is a list of all such lending, borrowing or other
commercial transactions existing or outstanding as of the Closing
Date."
5. Amendment to Section 6.6 of the Credit Agreement. Section 6.6 of
the Credit Agreement is hereby amended by (a) deleting the word "and" where it
appears immediately before the parenthetical "(c)" contained therein
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and (b) adding the following new clauses (d) and (e) at the end thereof to read
as follows:
"; (d) as permitted by clause (h) of Section 6.3; and (e) the
indemnities set forth in Section 12.2 of the Stock Purchase
Agreement."
6. Amendment to Section 6.7 of the Credit Agreement. Section 6.7 of
the Credit Agreement shall be amended and restated to read in its entirety as
follows:
"6.7 Liens. No Loan Party shall create or permit to exist any Lien
on any of its properties or assets except for: (a) presently existing
or hereafter created Liens in favor of Lender to secure the
Obligations; (b) Permitted Encumbrances; (c) until the FFMC Note
Maturity Date, Liens created in favor of FFMC pursuant to the FFMC
Pledge Agreement and the FFMC Security Agreement; (d) Liens in favor
of the holders of the Acquisition Notes as contemplated by Section
5.13 pursuant to documentation satisfactory to Lender; and (e)
purchase money Liens or purchase money security interests upon or in
Equipment acquired by such Loan Party in the ordinary course of
business to secure the purchase price of such Equipment or to secure
Capital Lease Obligations or Indebtedness permitted under clause (c)
of Section 6.3 incurred solely for the purpose of financing the
acquisition of such Equipment; provided that no Loan Party shall
create or permit any Lien to exist on any of the Collateral (other
than Liens described in clauses (a), (b) and (c) above)."
7. Amendment to Section 6.18 of the Credit Agreement. Section 6.18 of
the Credit Agreement is hereby amended by inserting the following proviso at the
end thereof:
"; provided, that (i) until the FFMC Note Maturity Date, HCCI shall be
permitted to be a party to the FFMC Security Agreement and Parent
shall be permitted to be a party to the FFMC Pledge Agreement and (ii)
Parent shall be permitted to be a party to the Stock Purchase
Agreement so long as Section 8.13 thereof shall have no force and
effect after the FFMC Note Maturity Date."
8. Amendment to Article 6 of the Credit Agreement. Article 6 of the
Credit Agreement is hereby
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amended by adding the following new Section 6.19 at the end thereof:
"6.19 Amendments to FFMC Documents. No Loan Party without the prior
written consent of Lender shall amend (or permit to be amended) the
FFMC Guaranty, the FFMC Pledge Agreement, the FFMC Security Agreement,
the FFMC Note, the Stock Purchase Agreement, the Earn Out Agreement to
increase the monetary obligations of HCCI thereunder or otherwise
adversely affect the interests of Lender, or any other HCCI
Acquisition Document."
9. Amendment to Section 8.1 of the Credit Agreement. Section 8.1 of
the Credit Agreement is hereby amended by adding the following new subparagraph
(n) at the end thereof:
"(n) Without limiting subparagraph (d) above, an "Event of Default"
under and as defined in the FFMC Note, or the FFMC Note shall not be
indefeasibly paid or refinanced in full in a manner acceptable to the
Lender on or prior to the FFMC Note Maturity Date."
10. Amendment to Annex A to the Credit Agreement. Annex A to the
Credit Agreement is hereby amended as of the Amendment Effective Date as
follows:
(a) The following new definitions shall be inserted in the proper
alphabetical order:
"'Accounts Security Agreement' shall mean the Accounts Security
Agreement, substantially in the form of Exhibit A to First Amendment,
to be made between HCCI and Lender.
'Earn Out Agreement' shall mean that certain agreement dated May
11, 1995 by and among FFMC, Parent, John A. Booth and each of the
parties listed on the signature lines thereto as Shareholders.
'FFMC' shall mean First Financial Management Corporation, a
Georgia corporation.
'FFMC Guaranty' shall mean that certain Corporate Guaranty made
and entered into as of the 31st day of May, 1995 by Parent in favor of
FFMC.
'FFMC Note' shall mean that certain promissory note in the
original aggregate
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principal amount of $5,000,000 made by HCCI in favor of FFMC.
'FFMC Note Maturity Date' shall mean the earlier of (i) February
29, 1996, (ii) the final maturity date of the FFMC Note, and (iii) the
date on which the FFMC Note is paid in full.
'FFMC Pledge Agreement' shall mean that certain Stock Pledge
Agreement made and entered into as of the 31st day of May, 1995,
between Parent and FFMC whereby Parent has pledged in favor of FFMC
all of the capital stock of HCCI.
'FFMC Security Agreement' shall mean that certain Security
Agreement dated May 31, 1995 made by HCCI in favor of FFMC, whereby
HCCI has granted in favor of FFMC a second priority security interest
in HCCI's accounts receivable.
'First Amendment' shall mean that certain First Amendment, dated
as of May 31, 1995, to this Agreement among CIS, Inc., HBA, Parent and
Lender.
'HCCI' shall mean Hospital Cost Consultants, Inc., a California
corporation.
'HCCI Acquisition' shall mean the acquisition by Parent of all
the capital stock of HCCI from MicroBilt Corporation pursuant to the
Stock Purchase Agreement and the other HCCI Acquisition Documents.
'HCCI Acquisition Documents' shall mean the Stock Purchase
Agreement, the Earn Out Agreement and any other document directly
related to the HCCI Acquisition.
"Intercreditor Agreement' shall mean the Intercreditor Agreement,
substantially in the form of Exhibit B to First Amendment, between
Lender and FFMC, and consented and agreed to by the Loan Parties.
'Pledge Agreement' shall mean the Pledge Agreement, substantially
in the form of Exhibit C to First Amendment, to be made by Parent in
favor of Lender, whereby Parent has granted in favor of Lender a
second priority security interest in all of the Stock of HCCI.
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'Stock Purchase Agreement' shall mean that certain Stock Purchase
and Sale Agreement dated the 11th day of May, 1995 by and among FFMC,
MicroBilt Corporation and Parent."
(b) The definition of "Collateral Documents" shall be amended and
restated to read in its entirety as follows:
"'Collateral Documents' shall mean the Security Agreement,
any Subsidiary Security Agreement, the Accounts Security Agreement,
the Pledge Agreement, the Intercreditor Agreement, the Concentration
Account Agreement, the Lock Box Account Agreements and the
Disbursement Account Agreement and all other instruments and
agreements now or hereafter securing the whole or any part of the
Obligations."
11. Amendment to Annex B to the Credit Agreement. Annex B to the
Credit Agreement is hereby amended by deleting the word "Borrowers" where it
appears in Section 1 of such Annex and inserting in lieu thereof the words "Loan
Parties".
12. Amendment to Schedules 3.2, 3.6, 3.8, 3.9, 3.14, 3.16 and 3.20.
Each of Schedules 3.2, 3.6, 3.8, 3.9, 3.14, 3.16 and 3.20 is hereby amended by
deleting such Schedule in its entirety and substituting in lieu thereof a new
Schedule 3.2, 3.6, 3.8, 3.9, 3.14, 3.16 and 3.20, respectively, reading in its
entirety as set forth in Exhibit E, F, G, H, I, J and K hereto, respectively.
13. HCCI Subsidiary Guaranty and Subsidiary Security Agreement. The
Parent hereby reconfirms its obligations contained in the last (prior to giving
effect to Section 2 of this Amendment) sentence of Section 5.10 of the Credit
Agreement, and acknowledges and agrees that on or after the FFMC Note Maturity
Date, Lender may require HCCI to deliver a Subsidiary Guaranty and a Subsidiary
Security Agreement in favor of Lender. Notwithstanding anything to the contrary
contained in such sentence, Lender shall not require HCCI to deliver such
Subsidiary Guaranty or Subsidiary Security Agreement prior to the FFMC Note
Maturity Date.
14. Representations and Warranties. To induce Lender to enter into
this Amendment, each of the Borrowers and Parent hereby represents and warrants
that:
(a) The execution, delivery and performance by such Loan Party of this
Amendment are within such Loan
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Party's corporate power and have been duly authorized by all necessary
corporate and shareholder action.
(b) This Amendment has been duly executed and delivered by or on
behalf of such Loan Party and AMSC.
(c) This Amendment constitutes a legal, valid and binding obligation
of such Loan Party enforceable against such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(d) No Default has occurred and is continuing both before and after
giving effect to this Amendment, other than prior to giving effect to this
Amendment a Default due to the Loan Parties making intercompany advances
(which advances did not exceed $1,000,000) to AMSC in an amount in excess
of that permitted by Section 6.4 of the Credit Agreement before giving
effect to this Amendment.
(e) No action, claim or proceeding is now pending or, to the knowledge
of such Loan Party threatened against any Loan Party (including HCCI) at
law, in equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency
or subdivision thereof, or before any arbitrator or panel of arbitrators,
(i) which challenges, to the extent applicable, any Loan Party's (including
HCCI's) right, power, or competence to enter into this Amendment or, to the
extent applicable, perform any of its obligations under this Amendment, any
HCCI Acquisition Document, the Credit Agreement as amended hereby or any
other Loan Document, or the validity or enforceability of this Amendment,
any HCCI Acquisition Document, the Credit Agreement as amended hereby or
any other Loan Document or any action taken under this Amendment, the
Credit Agreement as amended hereby or any other Loan Document or (ii) which
if determined adversely, is reasonably likely to have or result in a
Material Adverse Effect after giving effect to this Amendment. To the
knowledge of such Loan Party, there does not exist a state of facts which
is reasonably likely to give rise to such proceedings.
15. No Other Amendments. Except as expressly amended herein, the
Credit Agreement shall be unmodified and
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shall continue to be in full force and effect in accordance with its terms.
16. Expenses. Each of the Borrowers hereby reconfirms its
obligations pursuant to Section 10.2 of the Credit Agreement to pay and
reimburse Lender for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred in connection with the
negotiation, preparation, execution and delivery of this Amendment and all other
documents and instruments delivered in connection herewith.
17. Effectiveness. This Amendment shall become effective on the date
(the "Amendment Effective Date") on which in the judgment of the Lender each of
the following conditions shall have been either satisfied or waived in writing
by Lender:
(a) Documents. Lender shall have received four original copies of each
of the following:
(i) This Amendment duly executed and delivered by Lender, each of
the Borrowers and Parent and consented and agreed to by AMSC and
Parent in its capacity as a guarantor.
(ii) The Accounts Security Agreement fully executed by HCCI
together with one set of acknowledgement copies of proper Financing
Statements (Form UCC-1) (the "Financing Statements") for filing under
the Uniform Commercial Code of all jurisdictions as may be necessary
or, in the opinion of Lender, desirable to perfect the Lien created
by the Accounts Security Agreement.
(iii) The Pledge Agreement duly executed by Parent together with
delivery to FFMC on behalf of Lender pursuant to the terms of the
Intercreditor Agreement of (A) certificates or other evidence of
ownership representing the Pledged Shares (as defined in the Pledge
Agreement) and appropriate undated stock powers executed in blank and
(B) evidence that all action necessary or, in the opinion of and at
the request of Lender, desirable to perfect and protect the security
interests created by the Pledge Agreement has been taken.
(iv) The Intercreditor Agreement duly executed by Lender and FFMC
and acknowledged and consented to by Parent, each of the Borrowers,
AMSC and HCCI.
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(v) A Joinder Agreement (the "Joinder Agreement"),
substantially in the form of Exhibit D hereto, executed by Liberty
Bank and Trust Company of Tulsa, National Association, Parent,
Borrowers, AMSC and HCCI, whereby, among other things, AMSC and HCCI
shall become parties to the Lock Box Account Agreement and the
Concentration Account Agreement.
(vi) A favorable opinion of Pray, Walker, Jackman, Williamson &
Marlar, counsel to the Loan Parties, in form and substance
satisfactory to Lender.
(b) Other Evidence of Filing and Perfection. Lender shall have
received certified copies of Requests for Information (Form UCC-11), or
other evidence satisfactory to Lender, listing the Financing Statements
referred to in paragraph (a)(ii) and all other effective financing
statements which name HCCI as debtor and which are filed in the
jurisdictions referred to in paragraph (a)(ii) above, together with copies
of such other financing statements (none of which (other than financing
statements acceptable to Lender relating to the security interest granted
in favor of FFMC pursuant to the FFMC Security Agreement) shall cover the
Collateral purported to be covered by the Accounts Security Agreement).
(c) Board Resolutions. Lender shall have received a certificate of the
Secretary or an Assistant Secretary of (i) Parent certifying (A) the
resolutions adopted by the Board of Directors of Parent approving this
Amendment, the Pledge Agreement, the Intercreditor Agreement, the HCCI
Acquisition, the Joinder Agreement, and the transactions contemplated
hereby and thereby and (B) all documents, if any, evidencing other
necessary corporate action by Parent and required governmental and third
party approvals with respect to this Amendment, the Pledge Agreement, the
Joinder Agreement and the Intercreditor Agreement, (ii) each Borrower
certifying (A) the resolutions adopted by the Board of Directors of such
Borrower approving this Amendment, the Joinder Agreement and the
Intercreditor Agreement and the transactions contemplated hereby and
thereby and (B) all documents evidencing other necessary corporate action
by such Borrower and required governmental and third party approvals with
respect to this Amendment, the Joinder Agreement and the Intercreditor
Agreement, (iii) HCCI certifying (A) the resolutions adopted by the Board
of Directors of HCCI approving the Intercreditor Agreement, the
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Accounts Security Agreement, the Joinder Agreement and the transactions
contemplated thereby, (B) all documents, if any, evidencing other necessary
corporate action by HCCI and required governmental and third party
approvals with respect to the Accounts Security Agreement, the Joinder
Agreement and the Intercreditor Agreement and (C) the names and true
signatures of the authorized officers of HCCI, and (iv) AMSC certifying (A)
the resolutions adopted by the Board of Directors of AMSC approving the
Joinder Agreement and (B) all documents, if any, evidencing other necessary
corporate action by AMSC and required governmental and third party
approvals with respect to the Joinder Agreement.
(d) Articles of Incorporation; By-Laws and Good Standing Certificates
of HCCI. Lender shall have received each of the following documents:
(i) the certificate of incorporation of HCCI and of its
Subsidiaries as in effect on the Amendment Effective Date, certified
by the Secretary of State or other appropriate authority of the State
or country of its incorporation as of a recent date, and the by-laws
of HCCI and each of its Subsidiaries as in effect on the Amendment
Effective Date, certified by the Secretary, Assistant Secretary or
other appropriate officer or director of HCCI and each of its
Subsidiaries; and
(ii) a good standing certificate for HCCI and each of its
Subsidiaries from the Secretary of State or other appropriate
authority of the State or country of its incorporation as of a recent
date.
(e) Consummation of HCCI Acquisition. Lender shall have received
evidence satisfactory to it that the HCCI Acquisition shall have been
consummated in a manner satisfactory to Lender and Lender shall have
received copies of the FFMC Note, the FFMC Guaranty, the FFMC Pledge
Agreement, the FFMC Security Agreement, the Stock Purchase Agreement, the
Earn Out Agreement and any other HCCI Acquisition Document, together with
all certificates, opinions, instruments and other documents relating
thereto, all of which shall be satisfactory to Lender in its discretion,
certified by an authorized officer of Parent as true, correct and complete
copies thereof. Without limiting the foregoing, it is understood that
Section 8.13 of the Stock Purchase Agreement shall be amended in a manner
satisfactory to Lender.
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(f) Payment of Expenses. Borrowers shall have paid to Lender all
costs, fees and expenses owing in connection with this Amendment and the
other Loan Documents and due to Lender (including, without limitation,
reasonable legal fees and expenses and the amendment fee referred to in
Section 18 hereof).
(g) Representations and Warranties. Lender shall have received a
certificate of the Secretary or an Assistant Secretary of Parent certifying
that all representations and warranties of or on behalf of the Loan Parties
in this Amendment and all the other Loan Documents are true and correct in
all material respects with the same effect as though such representations
and warranties had been made on and as of the date hereof (both before and
after giving effect to this Amendment) and on and as of the date that the
other conditions precedent in this Section 17 have been satisfied.
18. Amendment Fee. Each of the Borrowers jointly and severally
agrees to pay to Lender, for the account of Lender, a non refundable amendment
fee in an amount equal to $5,000, payable on the Amendment Effective Date.
19. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
20. Counterparts. This Amendment may be executed by the parties
hereto on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
Borrowers:
C.I.S., INC.
By /s/ Richard V. Souders
----------------------
Name: Richard Souders
Title:SR. Vice President
HOSPITAL BILLING ANALYSIS, INC.
By /s/ Phillip D. Kurtz
--------------------
Name: Phillip D. Kurtz
Title:Vice President
Parent:
C.I.S. TECHNOLOGIES, INC.
By /s/ Richard V. Souders
----------------------
Name: Richard Souders
Title:SR. Vice President
Lender:
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/ Dan Pengue
-----------------------
Name:
Title:
Each of the undersigned guarantors (i)
acknowledges and consents to each
of the amendments to the Credit
Agreement effected by this Amendment,
and (ii) hereby confirms and agrees that
its obligations under the Parent
Guaranty or the Subsidiary Guaranty, as
the case may be, shall continue without
any diminution thereof and shall remain
in full force and effect on and after
the effectiveness of this Amendment.
Acknowledged, consented and agreed to as
of this May 31, 1995.
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Guarantors:
C.I.S. TECHNOLOGIES, INC.
By /s/ Richard V. Souders
-------------------------
Name: Richard Souders
Title: SR. Vice President
AMSC, INC.
By /s/ Richard A. Evans
-------------------------
Name: Richard A. Evans
Title: Vice President
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
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Exhibits A through D of the First Amendment to Credit Agreement have been
deleted because they are substantially similar to documents filed herewith as
separate material contracts. Exhibits E through K and all schedules related to
the amendment have been omitted as immaterial.
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