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EXHIBIT 10
AMENDMENT NO. 2 AND CONSENT
Dated as of March 10, 1999
To the banks, financial institutions and other
institutional lenders (collectively, the "Banks")
party to the Credit Agreement referred to
below, to Citibank, N.A., as administrative
agent (the "Agent") for the Banks, to SunTrust
Bank, Nashville, N.A., as the swing line bank,
and to NationsBank, N.A., as documentation agent
Ladies and Gentlemen:
We refer to the Second Amended and Restated Revolving Credit Agreement
dated as of April 2, 1998, and the Amendment No.1 and Consent thereto dated as
of September 22, 1998 (such Credit Agreement, as so amended, the "Credit
Agreement") among the undersigned and you. Capitalized terms not otherwise
defined in this Amendment No. 2 and Consent have the same meanings as specified
in the Credit Agreement.
It is hereby agreed by you and us as follows:
The Credit Agreement is, effective as of the date of this Amendment
No. 2 and Consent, hereby amended as follows:
(a) The definition of "EBITDA" in Section 1.01 is amended by adding at
the end thereof new clauses (xi), (xii) and (xiii) to read as follows:
"plus (xi) in the case of the fiscal quarters ending December 31, 1998
and the following three quarters, the aggregate amount of any
reduction in Net Income attributable to any non-cash charge for the
revaluation of assets made in accordance with generally accepted
accounting principles, provided that such reduction shall not exceed
$110,400,000 (prior to any adjustment for income taxes) plus (xii) in
the case of the fiscal quarter ending March 31, 1999 and the following
three quarters, the aggregate amount of any reduction in Net Income
attributable to any charge for the revaluation of assets made and/or
any restructuring charges taken, in each case in accordance with
generally accepted accounting principles, provided that such reduction
shall not exceed $8,700,000 (prior to any adjustment for income taxes)
plus (xiii) in the case of the fiscal quarter ending December 31, 1999
and the following three quarters, the aggregate
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amount of any reduction in Net Income attributable to any charge
related to the implementation of SFAS No. 133 made in accordance with
generally accepted accounting principles, provided that such non-cash
reduction shall not exceed $10,000,000 (prior to any adjustment for
income taxes)."
(b) The definition of "Applicable Eurodollar Rate Margin" in Section
1.01 is amended by (i) deleting the phrase "0.5000% per annum and
thereafter 0.6750% per annum" in the first sentence thereof and
substituting therefor the phrase "0.6750% per annum and thereafter 0.8500%
per annum", (ii) deleting the date "September 30, 1998" in the second to
last sentence thereof and substituting therefor the date "March 31, 1999",
(iii) deleting the figure "0.6750%" in the last sentence thereof and
substituting therefor the figure "0.8500%" and (iv) deleting the table
therein and substituting therefor the following table:
Applicable Eurodollar
"Consolidated Rate Margin for
Debt/EBITDA Ratio Advances
---------------------- --------------------
Greater than 3.50 to 1.00 0.8500%
Less than or equal to 3.50 to 1.00 but 0.6750%
greater than 3.00 to 1.00
Less than or equal to 3.00 to 1.00 but 0.5000%
greater than 2.50 to 1.00
Less than or equal to 2.50 to 1.00 but 0.4250%
greater than 2.00 to 1.00
Less than or equal to 2.00 to 1.00 0.3250%"
(c) The definition of "Applicable Facility Fee Rate" in Section 1.01
is amended by (i) deleting the phrase "0.2500% per annum and thereafter for
each Effective Period (as defined below) 0.3250% per annum" in the first
sentence thereof and substituting therefor the phrase "0.3250% per annum
and thereafter for each Effective Period (as defined below) 0.4000% per
annum", (ii) deleting the date "September 30, 1998" in the second to last
sentence thereof and substituting therefor the date "March 31, 1999", (iii)
deleting the figure "0.3250%" in the last sentence thereof and substituting
therefor the figure "0.4000%" and (iv) deleting the table therein and
substituting therefor the following table:
Applicable Facility Fee
"Consolidated Rate for
Debt/EBITDA Ratio Advances
--------------------- ------------------------
Greater than 3.50 to 1.00 0.4000%
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Applicable Facility Fee
"Consolidated Rate for
Debt/EBITDA Ratio Advances
--------------------- ------------------------
Less than or equal to 3.50 to 1.00 but 0.3250%
greater than 3.00 to 1.00
Less than or equal to 3.00 to 1.00 but 0.2500%
greater than 2.50 to 1.00
Less than or equal to 2.50 to 1.00 but 0.2000%
greater than 2.00 to 1.00
Less than or equal to 2.00 to 1.00 0.1750%"
(d) The definition of "Applicable Letter of Credit Fee Rate"
in Section 1.01 is amended by (i) deleting the phrase "0.3750% per
annum and thereafter for each Effective Period (as defined below)
0.5000% per annum" in the first sentence thereof and substituting
therefor the phrase "0.5500% per annum and thereafter for each
Effective Period (as defined below) 0.7250% per annum", (ii) deleting
the date "September 30, 1998" in the second to last sentence thereof
and substituting therefor the date "March 31, 1999", (iii) deleting the
figure "0.5000%" in the last sentence thereof and substituting therefor
the figure "0.7250%" and (iv) deleting the table therein and
substituting therefor the following table:
"Consolidated Applicable Letter of Credit
Debt/EBITDA Ratio Fee Rate
--------------------- ---------------------------
Greater than 3.50 to 1.00 0.7250%
Less than or equal to 3.50 to 1.00 but 0.5500%
greater than 3.00 to 1.00
Less than or equal to 3.00 to 1.00 but 0.3750%
greater than 2.50 to 1.00
Less than or equal to 2.50 to 1.00 but 0.3000%
greater than 2.00 to 1.00
Less than or equal to 2.00 to 1.00 0.2000%"
(e) The definition of "Applicable Utilization Fee Rate" in
Section 1.01 is amended by (i) deleting the phrase "0.1250% per annum"
in the first sentence thereof and substituting therefor the phrase
"0.2500% per annum", (ii) deleting the date "September 30, 1998" in the
second to last sentence thereof and substituting therefor the date
"March 31, 1999" and (iii) deleting the table therein and substituting
therefor the following table:
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Applicable Utilization Fee
"Consolidated Rate for
Debt/EBITDA Ratio Advances
---------------------- ---------------------
Greater than 3.50 to 1.00 0.2500%
Less than or equal to 3.50 to 1.00 but 0.2500%
greater than 3.00 to 1.00
Less than or equal to 3.00 to 1.00 but 0.1250%
greater than 2.50 to 1.00
Less than or equal to 2.50 to 1.00 but 0.1250%
greater than 2.00 to 1.00
Less than or equal to 2.00 to 1.00 0.1250%"
(f) The definition of "Fixed Charge Coverage Ratio" in Section
1.01 is amended by adding at the end thereof the following:
"plus, in the case of the quarter ended September 30,
2002, the current portion of the notional amount of the
4.5% Convertible Subordinated Debentures, due 2003, and
the current portion of the public Subordinated Debt to
refinance the 4.5% Convertible Subordinated Debentures,
due 2003."
(g) The definition of "Guarantors" in Section 1.01 is amended
by deleting the second proviso therein and replacing such proviso with
the following proviso:
"; and provided further that the Subsidiaries listed on
Schedule VIII hereto shall not be
Guarantors so long as less than
9.0% of the EBITDA of the Borrower
and its Subsidiaries (calculated
on a rolling four quarter basis)
is attributable to their interests
in such Subsidiaries."
(h) Section 3.01 is amended by deleting the figure
"$25,000,000" in the fifth line thereof and substituting therefor the
figure "$50,000,000".
(i) Section 6.01(j) is amended by (i) adding to the end of
clause (C) thereof the following proviso:
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", provided that the Subsidiaries listed on Schedule VIII
hereto shall not enter into the Intercompany Subordination
Agreement so long as less than 9.0% of the EBITDA of the
Borrower and its Subsidiaries (calculated on a rolling four
quarter basis) is attributable to their interests in such
Subsidiaries"
and (ii) adding to the end of such Section a new clause (E), to read as
follows:
"(E) If, at any time, the Borrower's Debt is rated at or
below BB- by Standard & Poor's Ratings Group or Ba3 by
Moody's Investors Service, Inc., then the Borrower shall
promptly and in any event within ten Business Days (or, in
the case of any Subsidiary referred to below, such other
time period as agreed by the Agent) after the announcement
of such downgrade (i) pledge and deliver to the Agent as
security for its benefit and the ratable benefit of the
Banks all of the Securities (accompanied by undated stock
powers executed in blank) of each of its Subsidiaries that
is not (x) an Immaterial Subsidiary or (y) listed on
Schedule VIII, (ii) execute and deliver a pledge agreement
in form and substance reasonably satisfactory to the Agent,
(iii) take all such other action as the Agent may deem
necessary or desirable in order to obtain and maintain, from
and after the time such Securities are pledged and delivered
to the Agent, a perfected, first priority lien on and
security interest in such Securities (and all dividends,
cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of
or in exchange for any or all of such Securities), and (iv)
use all reasonable efforts to pledge and deliver to the
Agent as security for its benefit and the ratable benefit of
the Banks all of the Securities (accompanied by undated
stock powers executed in blank) of each of the Subsidiaries
described in clause (i)(y) as soon as practicable following
the date of such downgrade so long as such pledge and
delivery would not adversely affect the business of such
Subsidiary."
(j) Section 6.02(e)(i) is amended by deleting the figure
"$75,000,000" in clause (C) thereof and replacing such figure with the
following phrase:
"(1) $15,000,000 if, at the time of such Common Stock
Payment, the Borrower's Consolidated Debt/EBITDA Ratio is
greater than or equal to 3.50 to 1.00, (2) $25,000,000 if,
at the time of such Common Stock Payment, the Borrower's
Consolidated Debt/EBITDA Ratio is less than 3.50 to 1.00 but
greater than or equal to 3.00 to 1.00, or (3) $50,000,000
if, at the time of such Common Stock Payment, the Borrower's
Consolidated Debt/EBITDA Ratio is less than 3.00 to 1.00".
(k) Section 6.02(f)(i) is amended by (i) deleting in clause
(A) thereof the figure "$75,000,000" and substituting therefor the figure
"25,000,000" and (ii) deleting in clause
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(B) thereof the phrase "shall not exceed $500,000,000" and substituting
therefor the phrase "(commencing on and after the date of Amendment No. 2
and Consent to this Agreement) shall not exceed $150,000,000".
(l) Section 6.02(f)(ii) is amended by deleting the figure
"$75,000,000" in the fifth line thereof and substituting therefor the
figure "25,000,000".
(m) Section 6.02(f)(viii) is amended by deleting the figure
"$75,000,000" therein and replacing such figure with the following phrase:
"(1) $15,000,000 if, at the time of such Capital Investment,
the Borrower's Consolidated Debt/EBITDA Ratio is greater
than or equal to 3.50 to 1.00, (2) $25,000,000 if, at the
time of such Capital Investment, the Borrower's Consolidated
Debt/EBITDA Ratio is less than 3.50 to 1.00 but greater than
or equal to 3.00 to 1.00, or (3) $50,000,000 if, at the time
of such Capital Investment, the Borrower's Consolidated
Debt/EBITDA Ratio is less than 3.00 to 1.00".
(n) Section 6.02(j)(vii) is amended by deleting the figure
"$75,000,000" therein and replacing such figure with the following
phrase:
"(1) $15,000,000 if, at the time of such purchase, the
Borrower's Consolidated Debt/EBITDA Ratio is greater than or
equal to 3.50 to 1.00, (2) $25,000,000 if, at the time of
such purchase, the Borrower's Consolidated Debt/EBITDA Ratio
is less than 3.50 to 1.00 but greater than or equal to 3.00
to 1.00, or (3) $50,000,000 if, at the time of such
purchase, the Borrower's Consolidated Debt/EBITDA Ratio is
less than 3.00 to 1.00".
(o) Section 6.02 is amended by adding at the end thereof a new
subsection (p) to read as follows:
"(p) Transfers to Excluded Subsidiaries. Sell, lease,
transfer or otherwise dispose of any of its assets
(including cash), or permit any Guarantor to sell, lease,
transfer or otherwise dispose of any of its assets
(including cash), to any of the Subsidiaries listed on
Schedule VIII such that, immediately after giving effect to
such sale, lease, transfer or other disposition, the
aggregate value of the assets of the Subsidiaries listed on
Schedule VIII shall be greater than 9.0% of the aggregate
value of the assets of the Borrower and its Subsidiaries."
(p) Section 6.03(b) is amended by (i) inserting after the
phrase "for each such period" therein the parenthetical "(other than
the period ending September 30, 2002)" and (ii) adding at the end thereof
the phrase ", and for the period ending September 30, 2002, 3.50
to 1.00."
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(q) The Credit Agreement is amended by adding Schedule VIII
thereto to read as set forth on Schedule I hereto.
Notwithstanding the provisions of Section 7.01(j), the
Majority Banks hereby consent to the termination of the Service Agreements
listed on Schedule II hereto.
This Amendment No. 2 and Consent shall become effective as of
the date first above written when, and only when, (i) the Agent shall have
received counterparts of this Amendment No. 2 and Consent executed by the
undersigned, the Issuing Bank and the Majority Banks or, as to any of the Banks,
advice satisfactory to the Agent that such Bank has executed this Amendment No.
2 and Consent, (ii) the Agent shall have received, for the ratable account of
each Bank approving this Amendment No. 2 and Consent on or prior to 5:00 p.m.
(New York City time) on March 12, 1999, a consent fee of 1/8 of one percent of
each such Bank's Commitment, and (iii) the consent attached hereto executed by
each Guarantor. This Amendment No. 2 and Consent is subject to the provisions of
Section 9.01 of the Credit Agreement.
On and after the effectiveness of this Amendment No. 2 and
Consent, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof" or words of like import referring to the Credit Agreement,
and each reference in the Notes and each of the other Loan Documents to "the
Credit Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement, shall mean and be a reference to the Credit Agreement, as
amended by this Amendment No. 2 and Consent.
The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Amendment No. 2 and Consent, are and
shall continue to be in full force and effect and are hereby in all respects
ratified and confirmed. The execution, delivery and effectiveness of this
Amendment No. 2 and Consent shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Bank or the Agent under
any of the Loan Documents, nor constitute a waiver of any provision of any of
the Loan Documents.
If you agree to the terms and provisions hereof, please
evidence such agreement by executing and returning at least three counterparts
of this Amendment No. 2 and Consent to Michael Stein at Shearman & Sterling, 599
Lexington Avenue, New York, NY 10022 (Telecopier No. (212) 848-7179).
This Amendment No. 2 and Consent may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Amendment No. 2 and Consent by
telecopier shall be effective as delivery of a manually executed counterpart of
this Amendment No. 2 and Consent.
This Amendment No. 2 and Consent shall be governed by, and
construed in accordance with, the laws of the State of New York.
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Very truly yours,
PHYCOR, INC.
By /s/ John K. Crawford
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Title: Executive Vice President
and Chief Financial Officer
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Agreed as of the date first above written:
CITIBANK, N.A.,
as Agent, as an Issuing Bank and as Bank
By /s/ Gregory K. Park
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Title: Vice President
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NATIONSBANK, N.A.
as Documentation Agent
By Kevin Wagley
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Title: Vice President
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BANK OF AMERICA NT & SA
By Kevin Wagley
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Title: Vice President
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BANKERS TRUST COMPANY
By David J. Bell
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Title: Principal
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CREDIT LYONNAIS NEW YORK BRANCH
By Henry Reukauf
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Title: Vice President
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FIRST AMERICAN NATIONAL BANK
By Allison H. Jones
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Title: Senior Vice President
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THE FIRST NATIONAL BANK OF CHICACO
By /s/ First National Bank of Chicago
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Title:
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FIRST UNION NATIONAL BANK
By /s/ Carolyn Hannon
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Title: Director
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MELLON BANK, N.A.
By /s/ Scott Hennessee
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Title: Vice President
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COOPERATIEVE CENTRALE RAIFFEISEN
BOERENLEENBANK B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By Terrell Boyle
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Title: Vice President
By Jeff Vollack
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THE SUMITOMO BANK, LIMITED
By Gary Franke
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Title: Vice President and Manager
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