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Exhibit 10.16
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NCS HEALTHCARE, INC.
AS BORROWER
THE LENDERS NAMED HEREIN
AS LENDERS
BANK ONE, MICHIGAN
BANK ONE, NA
NATIONAL CITY BANK
AS CO-AGENTS
AND
[LOGO KEYBANK]
KEYBANK NATIONAL ASSOCIATION
AS A LENDER,
THE SWING LINE LENDER, THE LETTER OF CREDIT ISSUER
AND AS THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
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AMENDMENT NO. 3
DATED AS OF
AUGUST 3, 1999
TO
CREDIT AGREEMENT
DATED AS OF
JUNE 1, 1998
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AMENDMENT NO. 3 TO CREDIT AGREEMENT
THIS AMENDMENT NO. 3 TO CREDIT AGREEMENT, dated as of August 3, 1999
("THIS AMENDMENT"), among the following:
(i) NCS HEALTHCARE, INC., a Delaware corporation (herein,
together with its successors and assigns, the "BORROWER");
(ii) the Lenders party hereto;
(iii) BANK ONE, MICHIGAN; BANK ONE, NA; and NATIONAL CITY
BANK, as Lenders and as Co-Agents; and
(iv) KEYBANK NATIONAL ASSOCIATION, a national banking
association, as a Lender, the Swing Line Lender, the Letter of Credit
Issuer, and as the Administrative Agent and the Collateral Agent under
the Credit Agreement:
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders named therein, the Swing Line Lender
and the Administrative Agent entered into the Credit Agreement, dated as of June
1, 1998, as amended by Amendment No. 1 thereto, dated as of July 13, 1998, and
Amendment No. 2 thereto, dated as of March 3, 1999 (as so amended and in effect
immediately prior to the effective date of this Amendment, the "CREDIT
AGREEMENT"; with the terms defined therein, or the definitions of which are
incorporated therein, being used herein as so defined).
(2) The parties hereto desire to change certain of the terms and
provisions of the Credit Agreement, all as more fully set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1. SECTION AMENDMENTS, ETC.
1.1. PERMANENT REDUCTION IN TOTAL GENERAL REVOLVING COMMITMENT.
Effective on the Effective Date of this Amendment provided for in section 4
hereof, (i) the Total General Revolving Commitment is permanently reduced from
$245,000,000 to $235,000,000, and (ii) the Lenders party hereto waive any
requirement for prior notice of such reduction under section 4.2 or any other
applicable provision of the Credit Agreement.
1.2. CHANGE IN CERTAIN DEFINITIONS. Effective on the Effective Date
of this Amendment provided for in section 4 hereof, section 1.1 of the Credit
Agreement is amended by deleting therefrom the definitions of the terms
"CONSOLIDATED NET INCOME", "CONSOLIDATED EBIT", "INTEREST COVERAGE RATIO",
"MATERIAL ADVERSE EFFECT", "TOTAL INCOME TAX EXPENSE" and "TOTAL INTEREST
EXPENSE", and by inserting therein the following defined terms in appropriate
alphabetic order:
"CONSOLIDATED AMORTIZATION EXPENSE" shall mean, for any
period, all amortization expenses of the Borrower and its Subsidiaries,
all as determined for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
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"CONSOLIDATED DEPRECIATION EXPENSE" shall mean, for any
period, all depreciation expenses of the Borrower and its Subsidiaries,
all as determined for the Borrower and its Subsidiaries on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED INCOME TAX EXPENSE" shall mean, for any period,
all provisions for taxes based on the net income of the Borrower or any
of its Subsidiaries (including, without limitation, any additions to
such taxes, and any penalties and interest with respect thereto), and
all franchise taxes of the Borrower and its Subsidiaries, all as
determined for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE" shall mean, for any period,
total interest expense (including that which is capitalized and that
which is attributable to Capital Leases, in accordance with GAAP) of
the Borrower and its Subsidiaries on a consolidated basis with respect
to all outstanding Indebtedness of the Borrower and its Subsidiaries
including, without limitation, all commissions, discounts and other
fees and charges owed with respect to letters of credit and net costs
under Hedge Agreements, all as determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" shall mean for any period, the net
income (or loss), without deduction for minority interests, of the
Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP.
"CONSOLIDATED EBITDA" shall mean, for any period, Consolidated
Net Income for such period; PLUS (A) the sum (without duplication) of
the amounts for such period of (i) Consolidated Interest Expense, (ii)
Consolidated Income Tax Expense, (iii) Consolidated Depreciation
Expense, (iv) Consolidated Amortization Expense, (v) amortization or
write-off of deferred financing costs and charges for prepayment
penalties on prepayment of Indebtedness, and (v) extraordinary and
other non-recurring non-cash losses and charges; LESS (B) gains on
sales of assets and other extraordinary and non-recurring gains; all as
determined for the Borrower and its Subsidiaries on a consolidated
basis in accordance with GAAP, EXCEPT that in computing Consolidated
Net Income for purposes of this definition, there shall be excluded
therefrom (x) the income, (or loss) of any entity (other than
Subsidiaries of the Borrower) in which the Borrower or any of its
Subsidiaries has a joint or minority interest, except to the extent of
the amount of dividends or other distributions actually paid to the
Borrower or any of its Subsidiaries during such period, and (y) the
income of any Subsidiary of the Borrower to the extent that the
declaration or payment of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted by operation of
the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to
that Subsidiary.
Notwithstanding anything to the contrary contained herein, (1)
in computing the Borrower's Consolidated EBITDA for any Testing Period,
in no event shall any extraordinary or non-recurring charges or
write-offs with respect to trade receivables or bad debts, even if
commonly considered "non-cash" items, be added to Consolidated Net
Income, and (2) in computing the Borrower's Consolidated EBITDA for any
Testing Period which includes the fiscal quarter ended on or nearest to
June 30, 1999, the extraordinary and non-recurring losses and charges
of up to $40,000,000 during such fiscal quarter shall be an addition
under clause (v) above, even though a portion of such losses and
charges may be considered cash items.
Notwithstanding anything to the contrary contained herein, in
computing the Borrower's Consolidated EBITDA for any Testing Period,
such Consolidated EBITDA shall (x) include the appropriate financial
items for any person or business unit which has been acquired by the
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Borrower for any portion of such Testing Period prior to the date of
acquisition, and (y) exclude the appropriate financial items for any
person or business unit which has been disposed of by the Borrower, for
the portion of such Testing Period prior to the date of disposition.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of, when used with reference to
the Borrower or any of its Subsidiaries, the Borrower and its
Subsidiaries, taken as a whole, or when used with reference to any
other person, such person and its Subsidiaries, taken as a whole, as
the case may be; PROVIDED that a Material Adverse Effect with respect
to the Borrower and its Subsidiaries, taken as a whole, shall not be
considered to have occurred solely as a result of the occurrence (under
the circumstances therein described) of any of the events identified in
the letter dated as of August 3, 1999, from the Borrower to the Lenders
which specifically refers to this definition.
1.3. ADDITION OF APPLICABLE PRIME RATE MARGIN TO PRIME RATE LOANS.
Effective on the Effective Date of this Amendment provided for in section 4
hereof, sections 2.8(a) and 2.8(b) of the Credit Agreement are amended to read
in their entirety as follows:
2.8. INTEREST. The unpaid principal amount of each General
Revolving Loan which is a Prime Rate Loan shall bear interest from the
date of the Borrowing thereof until maturity (whether by acceleration or
otherwise) at a fluctuating rate per annum which shall at all times be
equal to the Prime Rate in effect from time to time PLUS the Applicable
Prime Rate Margin (as defined below); and a Eurodollar Loan shall bear
interest from the date of the Borrowing thereof until maturity (whether
by acceleration or otherwise) at a rate per annum which shall at all
times be the Applicable Eurodollar Margin (as defined below) for such
General Revolving Loan PLUS the relevant Eurodollar Rate.
(b) The unpaid principal amount of each Swing Line Revolving
Loan which is a Prime Rate Loan shall bear interest from the date of the
Borrowing thereof until maturity (whether by acceleration or otherwise)
at a fluctuating rate per annum which shall at all times be equal to the
Prime Rate in effect from time to time PLUS the Applicable Prime Rate
Margin; and a Money Market Rate Loan shall bear interest from the date
of the Borrowing thereof until maturity (whether by acceleration or
otherwise) at a rate per annum which shall be equal to the Quoted Rate
therefor.
1.4. CHANGE IN INTEREST RATE MARGINS. Effective on the Effective Date
of this Amendment provided for in section 4 hereof, section 2.8(g) of the Credit
Agreement is amended to read in its entirety as follows:
(g) As used herein the terms "APPLICABLE PRIME RATE MARGIN" and
"APPLICABLE EURODOLLAR MARGIN" shall mean the particular rate per annum
determined by the Administrative Agent in accordance with the Pricing
Grid Table which appears below, based on the Borrower's ratio of Total
Indebtedness to Consolidated EBITDA, as computed in accordance with
section 9.6(a) hereof, and such Pricing Grid Table, and the following
provisions:
(i) Initially, until changed hereunder in accordance
with the following provisions, the Applicable Prime Rate Margin
will be 25.00 basis points per annum and the Applicable
Eurodollar Margin will be 225.00 basis points per annum.
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(ii) Commencing with the fiscal quarter of the Borrower
ended on or nearest to December 31, 1999, and continuing with
each fiscal quarter thereafter, the Administrative Agent will
determine the Applicable Prime Rate Margin and the Applicable
Eurodollar Margin in accordance with the Pricing Grid Table,
based on the Borrower's ratio of (x) Total Indebtedness as of
the end of the fiscal quarter, to (y) Consolidated EBITDA for
the Testing Period ended on the last day of the fiscal quarter,
as computed in accordance with section 9.6(a) hereof, and
identified in such Pricing Grid Table. Changes in the Applicable
Prime Rate Margin and/or the Applicable Eurodollar Margin based
upon changes in such ratio shall become effective on the first
day of the month following the receipt by the Administrative
Agent pursuant to section 8.1(a) or (b) of the financial
statements of the Borrower, accompanied by the certificate and
calculations referred to in section 8.1(c), demonstrating the
computation of such ratio, based upon the ratio in effect at the
end of the applicable period covered (in whole or in part) by
such financial statements.
(iii) Notwithstanding the above provisions, during any
period when (1) the Borrower has failed to timely deliver its
consolidated financial statements referred to in section 8.1(a)
or (b), accompanied by the certificate and calculations referred
to in section 8.1(c), (2) a Default under section 10.1(a) has
occurred and is continuing, or (3) an Event of Default has
occurred and is continuing, the Applicable Prime Rate Margin and
the Applicable Eurodollar Margin shall each be the highest rate
per annum indicated therefor in the Pricing Grid Table,
regardless of the Borrower's ratio of Total Indebtedness to
Consolidated EBITDA at such time.
(iv) Any changes in the Applicable Prime Rate Margin
and/or the Applicable Eurodollar Margin shall be determined by
the Administrative Agent in accordance with the above provisions
and the Administrative Agent will promptly provide notice of
such determinations to the Borrower and the Lenders. Any such
determination by the Administrative Agent pursuant to this
section 2.8(g) shall be conclusive and binding absent manifest
error.
PRICING GRID TABLE
(EXPRESSED IN BASIS POINTS)
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RATIO OF APPLICABLE APPLICABLE APPLICABLE
TOTAL INDEBTEDNESS EURODOLLAR PRIME RATE FACILITY FEE
TO MARGIN MARGIN RATE
CONSOLIDATED EBITDA
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greater than 5.00 to 1.00 225.00 25.00 50.00
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greater than 4.50 to 1.00 and # 5.00 to 1.00 200.00 12.50 50.00
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greater than 4.00 to 1.00 and # 4.50 to 1.00 175.00 -0- 50.00
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RATIO OF APPLICABLE APPLICABLE APPLICABLE
TOTAL INDEBTEDNESS EURODOLLAR PRIME RATE FACILITY FEE
TO MARGIN MARGIN RATE
CONSOLIDATED EBITDA
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greater than 3.50 to 1.00 and # 4.00 to 1.00 162.50 -0- 37.50
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greater than 3.00 to 1.00 and # 3.50 to 1.00 137.50 -0- 37.50
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less than or equal to 3.00 to 1.00 112.50 -0- 37.50
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For the avoidance of doubt, it is agreed that the above changes in section
2.8(g) of the Credit Agreement shall (i) be effective from and after the
Effective Date of this Amendment provided for in section 4 hereof, as to all
Loans then or thereafter outstanding; and (ii) in no event result in a lower
Applicable Eurodollar Margin than would have been applicable if this Amendment
had not been executed and delivered.
1.5. CHANGE IN APPLICABLE FACILITY FEE RATE. Effective on the
Effective Date of this Amendment provided for in section 4 hereof, section
4.1(a) of the Credit Agreement is amended to read in its entirety as follows:
4.1. FEES. (a) The Borrower agrees to pay to the
Administrative Agent a Facility Fee ("FACILITY FEE") for the account of
each Non-Defaulting Lender which has a General Revolving Commitment for
the period from and including the Effective Date to but not including
the date the Total General Revolving Commitment has been terminated and
no Loans, Letters or Credit or Unpaid Drawings remain outstanding , on
the average daily amount of the Total General Revolving Commitment,
whether used or unused, at the Applicable Facility Fee Rate, payable
quarterly in arrears on the last Business Day of each March, June,
September and December and the date the Total General Revolving
Commitment is terminated.
As used herein, the term "APPLICABLE FACILITY FEE RATE" means
the particular rate per annum determined by the Administrative Agent in
accordance with the Pricing Grid Table which appears in section 2.8(g)
hereof, based on the Borrower's ratio of Total Indebtedness to
Consolidated EBITDA, as computed in accordance with section 9.6(a)
hereof, and such Pricing Grid Table, and the following provisions:
(i) Initially, until changed hereunder in
accordance with the following provisions, the Applicable
Facility Fee Rate will be 50 basis points per annum.
(ii) Commencing with the fiscal quarter of the
Borrower ended on or nearest to December 31, 1999, and
continuing for each fiscal quarter thereafter, the
Administrative Agent will determine the Applicable Facility
Fee Rate in accordance with the Pricing Grid Table, based on
the Borrower's ratio of Total Indebtedness to Consolidated
EBITDA, as computed in accordance with section 9.6(a) hereof,
and such Pricing Grid Table. Changes in the Applicable
Facility Fee Rate shall be made and effective as of the same
date as is provided in section 2.8(g) in the case of the
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determination or re-determination of the Applicable Eurodollar
Margin. If any such change in the Applicable Facility Fee Rate
is retroactive to a date in a period for which the Facility
Fee has already been paid, the Borrower will immediately pay
to the Administrative Agent for the account of the Lenders all
additional Facility Fee due by reason of such increased
Applicable Facility Fee Rate.
(iii) Notwithstanding the above provisions, during
any period when (1) the Borrower has failed to timely deliver
its consolidated financial statements referred to in section
8.1(a) or (b), accompanied by the certificate and calculations
referred to in section 8.1(c), (2) a Default under section
10.1(a) has occurred and is continuing, or (3) an Event of
Default has occurred and is continuing, the Applicable
Facility Fee Rate shall be the highest rate per annum
indicated therefor in the Pricing Grid Table, regardless of
the Borrower's ratio of Total Indebtedness to Consolidated
EBITDA at such time.
(iv) Any changes in the Applicable Facility Fee
Rate shall be determined by the Administrative Agent in
accordance with the above provisions and the Administrative
Agent will promptly provide notice of such determinations to
the Borrower and the Lenders. Any such determination by the
Administrative Agent pursuant to this section 4.1(a) shall be
conclusive and binding absent manifest error.
For the avoidance of doubt, it is agreed that the above changes in section
4.1(a) of the Credit Agreement shall in no event result in a lower Applicable
Facility Fee Rate than would have been applicable if this Amendment had not been
executed and delivered.
1.6. ADDITIONAL MANDATORY REDUCTION OF TOTAL GENERAL REVOLVING
COMMITMENT---CERTAIN PROCEEDS OF EQUITY SALES. Effective on the Effective Date
of this Amendment provided for in section 4 hereof, a new section 4.3(d) is
added to the Credit Agreement, reading in its entirety as follows:
(d) The Total General Revolving Commitment shall be
permanently reduced, without premium or penalty, at the time that any
mandatory prepayment of General Revolving Loans would be made pursuant
to section 5.2(f) if General Revolving Loans were then outstanding in
the full amount of the Total General Revolving Commitment, in an amount
at least equal to the required prepayment of principal of General
Revolving Loans which would be required to be made in such
circumstance; PROVIDED that in no event shall the Total General
Revolving Commitment be required to be reduced pursuant to this section
4.3(d) to an amount which, when taken together with the aggregate
principal amount of Indebtedness, other than the Obligations, included
in Total Senior Indebtedness then outstanding, would be less than 3.50
times the Borrower's Consolidated EBITDA for its most recent fiscal
quarter or quarters ended June 30, 1999 or subsequent thereto
(annualized to a period of 4 fiscal quarters in the case of any such
period which consists of less than 4 consecutive fiscal quarters all of
which end June 30, 1999 or later). Any such reduction shall apply to
proportionately and permanently reduce the General Revolving Commitment
of each of the affected Lenders, and any partial reduction of the Total
General Revolving Commitment pursuant to this section 4.3(d) shall be
in the amount of at least $1,000,000 (or, if greater, in integral
multiples of $1,000,000). The Borrower will provide at least three (or
such lesser number as the Administrative Agent may permit in the
exercise of reasonable discretion) Business Days' prior written notice
(or telephonic notice confirmed in writing) to the Administrative Agent
at its Notice Office (which notice the Administrative Agent shall
promptly transmit to each of the Lenders), of any reduction of the
Total General Revolving Commitment pursuant to this section 4.3(d),
specifying the date and amount of the reduction.
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1.7. MANDATORY PREPAYMENTS. (a) Effective on the Effective Date of this
Amendment provided for in section 4 hereof, section 5.2(d) of the Credit
Agreement is amended to read in its entirety as follows:
(d) CERTAIN PROCEEDS OF ASSET SALES. If during the fiscal year of
the Borrower beginning on July 1, 1999, or any subsequent fiscal year,
the Borrower and its Subsidiaries have received any Cash Proceeds during
such fiscal year from one or more Asset Sales (other than the Excluded
Asset Sales), not later than the third Business Day following the date of
receipt of any such Cash Proceeds an amount, conforming to the
requirements as to the amount of partial prepayments contained in section
5.1, at least equal to 100% of the Net Cash Proceeds then received from
any such Asset Sale shall be applied as a mandatory prepayment of
principal of, FIRST, the then outstanding General Revolving Loans, if
any, and SECOND, after all outstanding General Revolving Loans have been
paid in full, the then outstanding Swing Line Revolving Loans, if any. As
used herein, the term "EXCLUDED ASSET SALES" shall mean any Asset Sale of
the business and assets which, for purposes of identification, were
operated as of June 30, 1999 as (i) the Vanguard Packaging operations,
(ii) the Medical Supply Division, and/or (iii) the Durable Medical
Equipment Division.
(b) Effective on the Effective Date of this Amendment provided for in
section 4 hereof, section 5.2(f) of the Credit Agreement is redesignated as
section 5.2(g) and a new section 5.2 (f) is added to the Credit Agreement,
reading in its entirety as follows:
(f) MANDATORY PREPAYMENT---CERTAIN PROCEEDS OF EQUITY SALES. Not
later than the Business Day following the date of the receipt by the
Borrower and/or any Subsidiary of the cash proceeds (net of underwriting
discounts and commissions, placement agent fees and other customary fees
and costs associated therewith) from any sale or issuance of equity
securities by the Borrower or any Subsidiary after June 30, 1999 (other
than (i) any inter-company sale to the Borrower or any Subsidiary and
(ii) any sale or issuance to management, employees (or key employees) or
directors pursuant to stock option, stock purchase or similar plans for
the benefit of management, employees (key employees) or directors
generally), the Borrower will prepay the principal of FIRST, the
outstanding General Revolving Loans, if any, and SECOND, after no General
Revolving Loans are outstanding, the outstanding Swing Line Revolving
Loans, if any, in an aggregate amount, conforming to the requirements as
to the amounts of partial prepayments contained in section 5.1, which is
not less than (x) 100% of such net proceeds, or (y) if less, an amount
equal to the then aggregate outstanding principal amount of the
outstanding Loans, if any.
1.8. NO MATERIAL ADVERSE CHANGE. Effective on the Effective Date of
this Amendment provided for in section 4 hereof, section 7.9 of the Credit
Agreement is amended to read in its entirety as follows:
7.9. NO MATERIAL ADVERSE CHANGE. Since June 30, 1999, there has
been no change in the condition, business or affairs of the Borrower and
its Subsidiaries taken as a whole, or their properties and assets
considered as an entirety, except for changes, none of which,
individually or in the aggregate, has had or could reasonably be expected
to have, a Material Adverse Effect.
1.9. ADDITIONAL MONTHLY AND OTHER REPORTING REQUIREMENTS.. Effective on
the Effective Date of this Amendment provided for in section 4 hereof, section
8.1 of the Credit Agreement is amended by adding a new paragraph (k) at the end
thereof, reading in its entirety as follows:
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(k) CERTAIN MONTHLY AND OTHER REPORTS. (i) As soon as practicable
and in any event within 20 working days after the end of each calendar
month, commencing with July 1999 and continuing for the next 12 calendar
months, a written report certified by a responsible financial or
accounting officer of the Borrower, reasonably satisfactory in form,
scope and detail to the Administrative Agent, as to (i) the consolidated
condensed balance sheet, and related consolidated condensed income
statement and statement of cash flows of the Borrower and its
consolidated Subsidiaries for such month, (ii) the amounts and specific
financial or investment institution accounts in which the same are held
of all cash and Cash Equivalent balances of the Borrower and its
consolidated Subsidiaries as at the end of such month, and (iii) the
aging of the accounts receivable of the Borrower and its Subsidiaries on
a consolidated basis, displayed for the principal categories or
classifications of account debtors (such as Medicare, Medicaid, Private
Pay, etc.).
(ii) As soon as practicable and in any event within one month
following each fiscal quarter, a written report certified by a
responsible financial or accounting officer of the Borrower, reasonably
satisfactory in form, scope and detail to the Administrative Agent, as to
(x) the aging of the accounts receivable of the Borrower and its
Subsidiaries on a consolidated basis, (y) charge-offs or write-offs of
accounts receivable and any increases or decreases in reserves for
delinquent or unrecoverable accounts receivable, and (z) the amounts of
the accounts receivable of the Borrower and its Subsidiaries on a
consolidated basis, which is owed by (x) the principal categories or
classifications of account debtors (such as Medicare, Medicaid, Private
Pay, etc.), and (y) the 10 account debtors with the largest outstanding
balances.
1.10. SENIOR DEBT. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 8.13 of the Credit Agreement is
amended to read in its entirety as follows:
8.13. SENIOR DEBT. The Borrower will at all times ensure that the
claims of the Lenders in respect of the Obligations of the Borrower will
in all respects rank prior to the claims of every unsecured creditor of
the Borrower, and any Indebtedness of the Borrower which is subordinated
in any manner to the claims of any other creditor of the Borrower will be
subordinated in like manner to such claims of the Lenders.
1.11. ADDITIONAL SECURITY DOCUMENTS. Effective on the Effective Date of
this Amendment provided for in section 4 hereof, section 8.11 of the Credit
Agreement is amended to read in its entirety as follows:
8.11. ADDITIONAL SECURITY; FURTHER ASSURANCES. In the event
that at any time after June 30, 1999 the Borrower or any of its
Subsidiaries owns or holds an interest in any Real Property, assets,
stock, securities or any other property or interest, located within or
outside of the United States or arising out of business conducted from
any location within or outside the United States, which is not at the
time included in the Collateral and is not subject to a Permitted Lien
securing Indebtedness (all of the foregoing, "UNCOLLATERALIZED
PROPERTY"), the Borrower will notify the Administrative Agent in writing
of such event, identifying the Uncollateralized Property in question and
referring specifically to the rights of the Administrative Agent and the
Lenders under this section 8.11; PROVIDED that notwithstanding the
foregoing, (x) the Borrower need not notify the Administrative Agent
under this section 8.11(a) of any leasehold interest which is acquired or
held by the Borrower or any Subsidiary unless the same involves a nominal
or bargain purchase price option, and (y) the Borrower need not notify
the Administrative Agent under this section 8.11(a) of the ownership by
the Borrower or any of its Subsidiaries of any Real Property if such Real
Property was owned by the Borrower or any of its Subsidiaries as of June
30, 1999.
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(b) The Borrower will, or will cause an applicable Subsidiary to,
within 30 days following request by the Collateral Agent (who may make
such request only upon written instructions from the Required Lenders,
issued by the Required Lenders, in their sole respective discretion,
following review of any monthly, quarterly or annual financial
information regarding the Borrower and its Subsidiaries which is
furnished pursuant to section 8.1 of this Agreement for any period
subsequent to June 30, 1999), grant the Collateral Agent for the benefit
of the Secured Creditors (as defined in the Security Documents) security
interests and mortgages or deeds of trust, pursuant to new documentation
(each an "ADDITIONAL SECURITY DOCUMENT") or joinder in any existing
Security Document to which it is not already a party, in all of the
Uncollateralized Property as to which the Administrative Agent has
notified the Borrower that the same is required to be included in the
Collateral, SUBJECT to obtaining any required consents from third parties
(including third party lessors and co-venturers) necessary to be obtained
for the granting of a Lien on any particular Uncollateralized Property
(with the Borrower hereby agreeing to use, and to cause its Subsidiaries
to use, reasonable best efforts to obtain such consents), and ALSO
SUBJECT to the provisions of section 8.10(b).
(c) Each Additional Security Document (i) shall be granted
pursuant to documentation reasonably satisfactory in form and substance
to the Administrative Agent, which documentation shall in the case of
Real Property owned in fee be accompanied by such Phase I environmental
reports or assessments, a mortgage policy of title insurance (subject to
a standard survey exception), and other supporting documentation
requested by and reasonably satisfactory in form and substance to the
Administrative Agent; and (ii) shall constitute a valid and enforceable
perfected Lien upon the interests or properties so included in the
Collateral, subject to no other Liens except those permitted by section
9.3 or otherwise agreed to by the Administrative Agent at the time of
perfection thereof and (in the case of Real Property or interests
therein) such other encumbrances as may be set forth in the mortgage
policy, if any, relating to such Additional Security Document which shall
be delivered to the Collateral Agent together with such Additional
Security Document and which shall be satisfactory in form and substance
to the Collateral Agent and the Administrative Agent. The Borrower, at
its sole cost and expense, will cause each Additional Security Document
or instruments related thereto to be duly recorded or filed in such
manner and in such places as are required by law to establish, perfect,
preserve and protect the Liens created thereby required to be granted
pursuant to the Additional Security Document, and will pay or cause to be
paid in full all taxes, fees and other charges payable in connection
therewith. Furthermore, if so requested in writing by the Collateral
Agent (who may make such request only upon written instructions from the
Required Lenders, issued by the Required Lenders, in their sole
respective discretion, following review of any monthly, quarterly or
annual financial information regarding the Borrower and its Subsidiaries
which is furnished pursuant to section 8.1 of this Agreement for any
period subsequent to June 30, 1999), the Borrower shall cause to be
delivered to the Collateral Agent such opinions of local counsel,
appraisals (if required under section 8.11(e) below), title insurance,
environmental assessments and other related documents as may be
reasonably requested by the Collateral Agent in connection with the
execution, delivery and recording of any Additional Security Document,
all of which documents shall be in form and substance reasonably
satisfactory to the Collateral Agent and the Administrative Agent, except
that no leasehold mortgage or title insurance shall be required for any
leasehold properties (unless the lessee has a nominal or bargain purchase
option).
(d) The Borrower will, and will cause each of its Subsidiaries
to, at the expense of the Borrower, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time such
conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, and other assurances or instruments and take such
further steps relating to the
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Collateral covered by any of the Security Documents as the Collateral
Agent may reasonably require. If at any time the Collateral Agent
determines, based on applicable law, that all applicable taxes
(including, without limitation, mortgage recording taxes or similar
charges) were not paid in connection with the recordation of any mortgage
or deed of trust, the Borrower shall promptly pay the same upon demand.
(e) The Borrower will if requested by any Lender at any time, in
order to meet any legal requirement applicable to such Lender, provide to
the Collateral Agent and the Lenders, at the sole cost and expense of the
Borrower, appraisals and other supporting documentation relating to any
mortgage or deed of trust delivered as an Additional Security Document
hereunder, as specified by any Lender, meeting the appraisal and other
documentation requirements of the Real Estate Reform Amendments of the
Financial Institution Reform, Recovery and Enforcement Act of 1989, as
amended, or any other legal requirements applicable to any Lender, which
in the case of any such appraisal shall be prepared by one or more
valuation firms of national standing, acceptable to the Required Lenders,
utilizing appraisal standards satisfying such Amendments, Act or other
legal requirements.
(f) For the avoidance of doubt, the Borrower shall have no
obligation to cause to be delivered any survey of a Real Property
subjected to a mortgage or deed of trust so as to permit a title company
to eliminate by endorsement the "survey exception" to the title policy
for such Real Property.
(g) Notwithstanding the foregoing provisions of this section
8.11, in the event the Administrative Agent notifies the Borrower that
the Required Lenders have determined on the basis of an environmental
report or assessment delivered by the Borrower pursuant to the provisions
of section 8.11(c) that an Additional Security Document encumbering any
particular Real Property should not be delivered under this section 8.11,
the Borrower shall be relieved of its obligation in this section 8.11 to
deliver or cause to be delivered an Additional Security Document in the
form of a mortgage, deed of trust or similar instrument covering such
Real Property, SUBJECT to any later determination by the Required Lenders
notified to the Borrower by the Administrative Agent that an Additional
Security Document in the form of a mortgage, deed of trust or similar
instrument covering such Real Property should be executed and delivered
hereunder.
(h) As promptly as practicable after the date (i) any Credit
Party has any Collateral located in a jurisdiction as to which the
Administrative Agent shall not previously have received a lien search
report listing all effective UCC financing statements and other Liens
filed against such Credit Party in such jurisdiction and containing
copies of all such effective UCC financing statements and other Lien
documents, (ii) any person first becomes a Credit Party, or (iii) any UCC
financing statement or Security Document is filed against any Credit
Party to perfect security interests granted pursuant to the Security
Agreement or any other Security Document, the Borrower will, at its
expense, cause to be delivered to the Administrative Agent and the
Lenders search reports listing all effective UCC financing statements and
other Lien documents filed against such person or Credit Party in each
applicable jurisdiction and containing copies of all such effective UCC
financing statements and other Lien documents. In addition, whenever
requested by the Administrative Agent, but not more frequently than once
in any 12-month period, the Borrower will promptly provide the
Administrative Agent and the Lenders with such new or updated title,
lien, judgment, patent, trademark and UCC financing statement searches or
reports as to the Borrower or any of its Subsidiaries, or any Collateral
of any Credit Party, as the Administrative Agent may specify to the
Borrower in its request.
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(i) The Collateral Agent is authorized, without the consent of any
of the Lenders, to enter into any modification of any Security Document
which the Collateral Agent reasonably believes is required to conform to
the mandatory requirements of local law, or to local customs followed by
financial institutions with respect to similar collateral documents
involving property located in any particular jurisdiction, in the case of
any Security Document relating to property located in a particular
jurisdiction which imposes a tax with respect to such Security Document
based on the amount of the obligations secured thereby, expressly limit
the amount of such secured obligations which are secured by such property
to such amount as, in the Collateral Agent's good faith judgment, is
appropriate so that the amount of such tax is reasonable in light of the
estimated value of the property located in such jurisdiction, and/or
designate the amount of title insurance coverage for any title insurance
policy provided hereunder in an amount reasonably believed by the
Collateral Agent to be representative of the fair value of the property
covered thereby.
(j) The Borrower will provide the Administrative Agent with
sufficient copies of each Additional Security Document and any additional
supporting documents delivered in connection therewith for distribution
of copies thereof to the Lenders, and the Administrative Agent will
promptly so distribute such copies.
1.12. ACQUISITIONS. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 9.2(d) of the Credit Agreement is
amended to read in its entirety as follows:
(d) ACQUISITIONS: if no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the Borrower or any
Subsidiary may make any Acquisition which has been approved in writing by
the Required Lenders, PROVIDED that no Acquisition may be consummated
which is actively opposed by the Board of Directors (or similar governing
body) of the selling person or the person whose equity interests are to
be acquired unless all of the Lenders consent in writing to such
Acquisition;
1.13. INDEBTEDNESS. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 9.4 of the Credit Agreement is amended
to read in its entirety as follows:
9.4. INDEBTEDNESS. The Borrower will not, and will not permit any
of its Subsidiaries to, contract, create, incur, assume or suffer to
exist any Indebtedness of the Borrower or any of its Subsidiaries,
EXCEPT:
(a) Indebtedness incurred under this Agreement and the
other Credit Documents;
(b) Indebtedness of the Borrower or any Subsidiary in
respect of Capital Leases; PROVIDED that the aggregate Capitalized
Lease Obligations of the Borrower and its Subsidiaries, plus the
aggregate outstanding principal amount of Indebtedness permitted
under clause (c) below, shall not exceed $5,000,000 in the
aggregate at any time outstanding, and at the time of any
incurrence thereof after the date hereof, and after giving effect
thereto, no Event of Default shall have occurred and be continuing
or would result therefrom;
(c) Indebtedness of the Borrower or any Subsidiary subject
to Liens permitted by section 9.3(j), including any guaranty by
the Borrower of any such Indebtedness; PROVIDED that the aggregate
principal amount of such Indebtedness shall not exceed
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$2,000,000 in the aggregate at any time outstanding, and at the
time of any incurrence thereof after the date hereof, and after
giving effect thereto, no Event of Default shall have occurred and
be continuing or would result therefrom;
(d) the Subordinated Indebtedness evidenced by the
Convertible Subordinated Debentures due 2004 in the aggregate
principal amount of $100,000,000;
(e) any refinancing, extension, renewal or refunding of any
Subordinated Indebtedness permitted by the foregoing clause (d)
not involving an increase in the principal amount thereof, a
reduction of more than 10% in the remaining weighted average life
to maturity thereof (computed in accordance with standard
financial practice), or any changes in the terms of subordination
applicable thereto which is adverse to the interests of the
Lenders;
(f) the subordinated guaranties of Subsidiaries of the
Borrower with respect to the Subordinated Indebtedness referred to
in clauses (d) and (e) above, PROVIDED the terms of such
subordination are substantially the same as contained in the
subordinated guaranties originally issued in support of the
Convertible Subordinated Debentures due 2004;
(g) Existing Indebtedness, and any refinancing, extension,
renewal or refunding of any such Existing Indebtedness not
involving an increase in the principal amount thereof or a
reduction of more than 10% in the remaining weighted average life
to maturity thereof (computed in accordance with standard
financial practice);
(h) Indebtedness of the Borrower or any Subsidiary under
Hedge Agreements entered into in the ordinary course of business;
(i) Indebtedness of the Borrower to any of its
Subsidiaries, and Indebtedness of any of the Borrower's
Subsidiaries to the Borrower or to another Subsidiary of the
Borrower, in each case to the extent permitted under section 9.5;
(j) Guaranty Obligations permitted under section 9.5; and
(k) additional unsecured Indebtedness of the Borrower not
in excess of $2,000,000 aggregate principal amount outstanding at
any time, to the extent not otherwise permitted pursuant to the
foregoing clauses, PROVIDED that at the time of incurrence
thereof, and after giving effect thereto, the Borrower will be in
compliance with sections 9.6, 9.7 and 9.8, and no Event of Default
shall have occurred and be continuing or would result therefrom.
1.14. ADDITIONAL SCHEDULED EXISTING INDEBTEDNESS. Effective on the
Effective Date of this Amendment provided for in section 4 hereof, Annex III of
the Credit Agreement is amended to add thereto an appropriate reference to
miscellaneous Capital Leases outstanding at June 30, 1999, in the aggregate
amount of not more than $4,000,000.
1.15. GUARANTEES. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 9.5(p) of the Credit Agreement is
amended to read in its entirety as follows:
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(p) if no Event of Default shall have occurred and be continuing,
or would result therefrom, unsecured Guaranty Obligations not otherwise
permitted by the foregoing clauses, made after June 30, 1999, covering up
to $2,000,000 aggregate principal amount of Indebtedness outstanding at
any time, shall be permitted to be incurred.
1.16. ADDITIONAL SCHEDULED GUARANTEES. Effective on the Effective Date
of this Amendment provided for in section 4 hereof, Annex V of the Credit
Agreement is amended to add the following item:
2. Miscellaneous guaranties outstanding at June 30, 1999, in the
aggregate amount of not more than $3,000,000.
1.17. FINANCIAL COVENANTS. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, sections 9.6, 9.7, 9.8 and 9.9 of
the Credit Agreement are amended to read in their entirety as follows:
9.6. LEVERAGE RATIOS. (a) TOTAL LEVERAGE RATIO. The Borrower will
not at any time permit the ratio of (i) the amount of its Total
Indebtedness at such time to (ii) its Consolidated EBITDA for its Testing
Period most recently ended, to exceed the ratio specified below for any
Testing Period:
==================================================================================
TESTING PERIOD RATIO
==================================================================================
Testing Period ended on or nearest to September 30, 4.85 to 1.00
1999
----------------------------------------------------------------------------------
Testing Period ended on or nearest to December 31, 5.10 to 1.00
1999
----------------------------------------------------------------------------------
Testing Period ended on or nearest to 5.45 to 1.00
March 31, 2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to 5.25 to 1.00
June 30, 2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to September 30, 5.00 to 1.00
2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to December 31, 4.75 to 1.00
2000 and any Testing Period thereafter
==================================================================================
(b) SENIOR LEVERAGE RATIO. The Borrower will not at any time
permit the ratio of (i) the amount of its Total Senior Indebtedness at
such time to (ii) its Consolidated EBITDA for its Testing Period most
recently ended, to exceed the ratio specified below for any Testing
Period:
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==================================================================================
TESTING PERIOD RATIO
==================================================================================
Testing Period ended on or nearest to September 30, 3.400 to 1.00
1999
----------------------------------------------------------------------------------
Testing Period ended on or nearest to December 31, 3.575 to 1.00
1999
----------------------------------------------------------------------------------
Testing Period ended on or nearest to 3.825 to 1.00
March 31, 2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to 3.675 to 1.00
June 30, 2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to September 30, 3.500 to 1.00
2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to December 31, 3.250 to 1.00
2000 and any Testing Period thereafter
==================================================================================
9.7. COVERAGE RATIO. The Borrower will not at any time permit the
ratio of (i) its Consolidated EBITDA for any Testing Period, minus the
amount of its Consolidated Capital Expenditures for such Testing Period,
to (ii) its Consolidated Interest Expense for such Testing Period, to
exceed the ratio specified below for any applicable Testing Period;
PROVIDED, that in computing Consolidated Capital Expenditures for any
Testing Period ended on or prior to March 31, 2000, the Consolidated
Capital Expenditures for such Testing Period shall be determined on an
annualized basis using the Consolidated Capital Expenditures for the
period from July 1, 1999 through the end of such Testing Period as the
basis for such annualization:
==================================================================================
TESTING PERIOD RATIO
==================================================================================
Testing Period ended on or nearest to September 30, 2.200 to 1.00
1999
----------------------------------------------------------------------------------
Testing Period ended on or nearest to December 31, 1.950 to 1.00
1999
----------------------------------------------------------------------------------
Testing Period ended on or nearest to 1.675 to 1.00
March 31, 2000
----------------------------------------------------------------------------------
Testing Period ended on or nearest to 1.725 to 1.00
June 30, 2000
----------------------------------------------------------------------------------
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==================================================================================
TESTING PERIOD RATIO
==================================================================================
Testing Period ended on or nearest to September 30, 1.800 to 1.00
2000 and any Testing Period thereafter
==================================================================================
9.8. MINIMUM CONSOLIDATED EBITDA. The Borrower will not permit its
Consolidated EBITDA for any Testing Period consisting of its fiscal
quarter then most recently ended to be less than the amount indicated
below for such Testing Period:
==================================================================================
MINIMUM CONSOLIDATED EBITDA
TESTING PERIOD
==================================================================================
Testing Period consisting of single fiscal quarter $14,250,000
ended on or nearest to September 30, 1999
----------------------------------------------------------------------------------
Testing Period consisting of single fiscal quarter $14,500,000
ended on or nearest to December 31, 1999
----------------------------------------------------------------------------------
Testing Period consisting of single fiscal quarter $14,750,000
ended on or nearest to
March 31, 2000
----------------------------------------------------------------------------------
Testing Period consisting of single fiscal quarter $15,000,000
ended on or nearest to
June 30, 2000
----------------------------------------------------------------------------------
Testing Period consisting of single fiscal quarter $15,250,000
ended on or nearest to September 30, 2000 and any
Testing Period consisting of any single fiscal
quarter thereafter
==================================================================================
The amounts specified in the above table shall be subject to adjustment
in accordance with the following provisions:
(i) In the event the Borrower and/or its Subsidiaries
completes any Acquisition after June 30, 1999 and before the
beginning of any Testing Period identified in the above table, the
amounts for such Testing Period and for all subsequent Testing
Periods in such table shall each be increased by 94% of the
consolidated earnings before interest, income taxes, depreciation
and amortization attributable to the business and assets acquired
in each such Acquisition for its most recent fiscal quarter
preceding the date such
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Acquisition is completed. Promptly after it completes an
Acquisition referred to in the preceding sentence, the Borrower
will provide to the Administrative Agent such financial statements
and other information as may be required by the Administrative
Agent to determine the amount of any such increase. The amount of
any such increase shall be determined by the Administrative Agent
in good faith and the Administrative Agent will promptly provide
notice of such determination to the Borrower and the Lenders. Any
such determination by the Administrative Agent pursuant to this
paragraph (i) shall be conclusive and binding absent manifest
error.
(ii) In the event the Borrower and/or its Subsidiaries
completes any sale or disposition of a Subsidiary or other Asset
Sale after June 30, 1999, the amounts for the then current and any
subsequent Testing Periods in such table shall each be decreased
by an amount equal to 94% of the consolidated earnings before
interest, income taxes, depreciation and amortization attributable
to the business and assets so sold or disposed of, for the
remaining portion of the Testing Period in which such sale or
disposition occurs and for any subsequent Testing Period, based on
the appropriate financial information for the most recent fiscal
quarter preceding the date such sale or disposition is completed.
Promptly after it completes a sale or disposition referred to in
the preceding sentence, the Borrower will provide to the
Administrative Agent such financial statements and other
information as may be required by the Administrative Agent to
determine the amount of any such decrease. The amount of any such
decrease shall be determined by the Administrative Agent in good
faith and the Administrative Agent will promptly provide notice of
such determination to the Borrower and the Lenders. Any such
determination by the Administrative Agent pursuant to this
paragraph (ii) shall be conclusive and binding absent manifest
error.
9.9. MINIMUM CONSOLIDATED NET WORTH; NO DIVIDENDS, ETC. The
Borrower will not permit its Consolidated Net Worth at any time to be
less than $268,000,000, EXCEPT that (i) effective as of the end of the
Borrower's fiscal quarter ended December 31, 1999, and as of the end of
each fiscal quarter thereafter, the foregoing amount (as it may from time
to time be increased as herein provided), shall be increased by 50% of
the Consolidated Net Income of the Borrower and its Subsidiaries for the
fiscal quarter ended on such date, if any, without deduction for minority
interests, as determined in conformity with GAAP (there being no
reduction in the case of any such Consolidated Net Income which reflects
a deficit), and (ii) the foregoing amount (as it may from time to time be
increased as herein provided), shall be increased by (A) an amount equal
to 100% of the cash proceeds (net of underwriting discounts and
commissions and other customary fees and costs associated therewith) from
any sale or issuance of equity by the Borrower after June 30, 1999 (other
than any sale or issuance to management or employees pursuant to employee
benefit plans of general application), plus (B) the principal amount of
any Indebtedness which after June 30, 1999 is converted or exchanged into
equity securities of the Borrower.
(b) The Borrower will not directly or indirectly declare, order,
pay or make any dividend (other than dividends payable solely in common
stock of the Borrower) or other distribution on or in respect of any
capital stock of any class of the Borrower, whether by reduction of
capital or otherwise, or directly or indirectly make, or permit any of
its Subsidiaries to directly or indirectly make, any purchase,
redemption, retirement or other acquisition of any capital stock of any
class of the Borrower (other than for a consideration consisting solely
of capital stock of the same class of the Borrower) or of any warrants,
rights or options to acquire or any securities convertible into or
exchangeable for any capital stock of the Borrower, except that the
Borrower may make any cash payments in lieu of fractional shares in
connection with the
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conversion into common stock of the Borrower of any of the Borrower's
Convertible Subordinated Debentures due 2004.
1.18. RELEASE OF COLLATERAL. Effective on the Effective Date of this
Amendment provided for in section 4 hereof, the reference to "section 8.11(b)"
in clause (iv) of section 12.12 of the Credit Agreement is changed to "this
Agreement".
1.19. CONCERNING THE FORMER INTEREST COVERAGE RATIO FINANCIAL COVENANT.
For the avoidance of doubt, and in light of the elimination of the financial
covenant which had been contained in section 9.8 of the Credit Agreement, and
which had required that the Borrower's Interest Coverage Ratio not be less than
the required minimum Interest Coverage Ratios specified therein, which
elimination is being effected by this Amendment, the Lenders party hereto hereby
confirm and agree that (i) compliance with section 9.8 of the Credit Agreement
for the period ending June 30, 1999, is waived, and (ii) during the period from
June 30, 1999 to the Effective Date of this Amendment provided for in section 4
hereof, no Default or Event of Default solely attributable to section 9.8 of the
Credit Agreement shall be deemed to have occurred.
1.20. PLEDGE AGREEMENT. Effective on the Effective Date of this Amendment
provided for in section 4 hereof, section 18(b) of the Pledge Agreement, which
had provided for termination of the Pledge Agreement at the option of the
Borrower under certain circumstances, shall be of no further force or effect.
Except as expressly modified and superseded by the preceding sentence, the terms
and provisions of the Pledge Agreement are ratified and confirmed and shall
continue in full force and effect. If required by the Administrative Agent, the
Borrower will, and will cause any other Credit Party which is a party to the
Pledge Agreement to, enter into a separate amendment of the Pledge Agreement
which gives effect to the foregoing.
2. SECTION REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants as follows:
2.1. AUTHORIZATION AND VALIDITY OF AMENDMENT, ETC. This Amendment has
been duly authorized by all necessary corporate action on the part of the
Borrower, has been duly executed and delivered by a duly authorized officer of
the Borrower, and constitutes the valid and binding agreement of the Borrower,
enforceable against the Borrower in accordance with its terms, except to the
extent that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
2.2. REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the Credit Parties contained in the Credit Agreement or in the other Credit
Documents are true and correct in all material respects on and as of the date
hereof as though made on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties are hereby reaffirmed as
true and correct in all material respects as of the date when made.
2.3. NO EVENT OF DEFAULT. No condition or event has occurred or exists
which constitutes or which, after notice or lapse of time or both, would
constitute an Event of Default.
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2.4. COMPLIANCE. The Borrower is in full compliance with all covenants
and agreements contained in the Credit Agreement, as amended hereby, and the
other Credit Documents to which it is a party; and without limitation of the
foregoing, each Subsidiary of the Borrower which, as of the date hereof, is
required to be a Subsidiary Guarantor, has as on or prior to the date hereof
become a Subsidiary Guarantor under the Subsidiary Guaranty.
2.5. FINANCIAL STATEMENTS, ETC. The Borrower has furnished to the
Lenders and the Administrative Agent complete and correct copies of:
(a) the audited consolidated balance sheets of the Borrower and
its consolidated subsidiaries as of June 30, 1997, and June 30, 1998, and
the related audited consolidated statements of income, stockholders'
equity, and cash flows for the fiscal years then ended, accompanied by
the unqualified report thereon of the Borrower's independent accountants;
and
(b) the unaudited condensed consolidated balance sheets of the
Borrower and its consolidated subsidiaries as of March 31, 1999, and the
related unaudited condensed consolidated statements of income and of cash
flows of the Borrower and its consolidated subsidiaries for the fiscal
quarter or quarters then ended, as contained in the Form 10-Q Quarterly
Report of the Borrower filed with the SEC.
All such financial statements have been prepared in accordance with GAAP,
consistently applied (except as stated therein), and fairly present the
financial position of the Borrower and its consolidated subsidiaries as of the
respective dates indicated and the consolidated results of their operations and
cash flows for the respective periods indicated, subject in the case of any such
financial statements which are unaudited, to the absence of footnotes and to
normal audit adjustments which the Borrower reasonably believes will not involve
a Material Adverse Effect.
2.6. RECENT FINANCIAL PROJECTIONS, ETC. The Borrower has delivered or
caused to be delivered to the Lenders, prior to the execution and delivery of
this Amendment, financial projections prepared by management of the Borrower for
the Borrower and its Subsidiaries consisting of, among other things, a projected
balance sheet, income statement and cash flow statement for its fiscal year
ended June 30, 2000, and projected income statements for its fiscal years ended
June 30, 2001 and 2002 (the "RECENT FINANCIAL PROJECTIONS"). The Recent
Financial Projections were prepared on behalf of the Borrower in good faith
after taking into account the existing and historical levels of business
activity of the Borrower and its Subsidiaries, trends known to the Borrower,
including general economic trends, and all other information, assumptions and
estimates considered by management of the Borrower and its Subsidiaries to be
pertinent thereto. The Recent Financial Projections were considered by
management of the Borrower, as of such date of preparation, to be realistically
achievable; PROVIDED, that no representation or warranty is made as to the
impact of future general economic conditions or as to whether the Borrower's
projected consolidated results as set forth in the Recent Financial Projections
will actually be realized. No material facts have become known to the Borrower
subsequent to the date of preparation of the Recent Financial Projections and
prior to the date hereof which, if they had been appropriately reflected in the
Recent Financial Projections, would have resulted in a material adverse change
in the assets, liabilities, results of operations or cash flows reflected
therein.
2.7. FEE OWNERSHIP OF REAL PROPERTY. At the date of this Amendment,
neither the Borrower nor any of its Subsidiaries is the fee owner of any Real
Property, other than the 5 facilities located at (i) 90 Glade Drive, Kittaning,
Pennsylvania (the Borrower), (ii) 12 East Second Street, Kaukauna, Wisconsin
(NCS HealthCare of Wisconsin, Inc.), (iii) 90 Glade Drive, Kittaning,
Pennsylvania (NCS HealthCare of Pennsylvania, Inc.), (iv) 110 Davis Farm Road,
Portland, Maine (Uni-Care Health Services of Maine, Inc.)
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and (v) 835 North L. Rogers Wells Blvd., Glasgow, Kentucky (NCS HealthCare of
Kentucky, Inc.), which in the aggregate have a net book value on the
consolidated financial statements of the Borrower of less than $2,500,000. (For
the avoidance of doubt, it is noted that the Lenders have determined at the
present time not to require that any such Real Property be subjected to a
mortgage or deed of trust as security for the Obligations, SUBJECT to any later
determination by the Required Lenders or the Administrative Agent in accordance
with section 8.11 of the Credit Agreement, as amended hereby, to require that
any such Real Property be so subjected to a mortgage or deed of trust as
security for the Obligations.)
SECTION 3. RATIFICATIONS.
Except as expressly modified and superseded by this Amendment, the terms
and provisions of the Credit Agreement are ratified and confirmed and shall
continue in full force and effect.
SECTION 4. BINDING EFFECT.
This Amendment shall become effective on a date (the "EFFECTIVE DATE"),
on or before August 3, 1999, if the following conditions shall have been
satisfied on and as of such date:
(a) EXECUTION OF AMENDMENT. This Amendment shall have been
executed by the Borrower and the Administrative Agent, and counterparts
hereof as so executed shall have been delivered to the Administrative
Agent; the Acknowledgment and Consent appended hereto shall have been
executed by the Credit Parties named therein, and counterparts thereof as
so executed shall have been delivered to the Administrative Agent; and
the Administrative Agent shall have been notified by the Required Lenders
that such Lenders have executed this Amendment (which notification may be
by facsimile or other written confirmation of such execution).
(b) FEES. The Borrower shall have paid to the Administrative
Agent, in immediately available funds, such nonrefundable fees as have
previously been agreed between the Borrower and the Administrative Agent.
In addition, the Administrative Agent shall have paid to the Lenders who
have entered into this Amendment such fees as have been previously
communicated to such Lenders by the Administrative Agent.
(c) SECURITY AGREEMENT. The Credit Parties named therein shall
have duly executed and delivered and there shall be in full force and
effect, and original counterparts shall have been delivered to the
Administrative Agent, in sufficient quantities for the Lenders, of the
Security Agreement (as modified, amended or supplemented from time to
time in accordance with the terms thereof and hereof, the "SECURITY
AGREEMENT"), substantially in the form of Exhibit A attached hereto.
(d) CORPORATE RESOLUTIONS AND APPROVALS. The Administrative
Agent shall have received, in sufficient quantity for the Administrative
Agent and the Lenders, certified copies of the resolutions of the Board
of Directors of the Borrower and each other Credit Party, approving the
Credit Documents to which the Borrower or any such other Credit Party, as
the case may be, is or may become a party, and of all documents
evidencing other necessary corporate action and governmental approvals,
if any, with respect to the execution, delivery and performance by the
Borrower or any such other Credit Party of the Credit Documents to which
it is or may become a party.
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(e) INCUMBENCY CERTIFICATES. The Administrative Agent shall have
received, in sufficient quantity for the Administrative Agent and the
Lenders, a certificate of the Secretary or an Assistant Secretary of the
Borrower and of each other Credit Party, certifying the names and true
signatures of the officers of the Borrower or such other Credit Party, as
the case may be, authorized to sign the Credit Documents to which the
Borrower or such other Credit Party is a party and any other documents to
which the Borrower or any such other Credit Party is a party which may be
executed and delivered in connection herewith.
(f) OPINION OF COUNSEL. On or prior to the Effective Date of this
Amendment, the Administrative Agent shall have received an opinion,
addressed to the Administrative Agent and each of the Lenders and dated
on or prior to the Effective Date of this Amendment, from Calfee, Halter
& Griswold LLP, special counsel to the Borrower, satisfactory in form and
substance satisfactory to the Administrative Agent, to the effect that
(i) this Amendment, the Acknowledgment and Consent appended
hereto and the Security Agreement have been duly authorized by all
necessary corporate or other organizational action on the part of,
and have been duly executed and delivered by, the Borrower and
each other Credit Party which is a party thereto;
(ii) the execution, delivery and performance by the
Borrower and the other Credit Parties of this Amendment and the
Security Documents will not
(A) conflict with or result in any breach of, any of
the terms, covenants, conditions or provisions of,
(B) constitute a default under, or
(C) result in the creation or imposition of (or the
obligation to create or impose) any Lien (other than the
Liens created pursuant to the Security Documents) upon any
of the property or assets of the Borrower or any of its
Subsidiaries pursuant to the terms of,
the Indenture relating to the Convertible Subordinated Debentures
due 2004;
(iii) the Security Agreement is effective as between the
parties thereto to create a security interest, in favor of the
Collateral Agent, as security for the Secured Obligations (as
defined therein) in all Collateral (as defined therein) of the
Borrower and each other Credit Party which is a party thereto in
which a security interest is purported to be created by the
Security Agreement, to the extent that such Collateral consists of
the type of property in which a security interest may be created
under the Uniform Commercial Code as in effect in the State of
Ohio; and
(iv) no order, consent, approval, license, authorization,
or validation of, or filing, recording or registration with, or
exemption by, any United States federal or Ohio governmental or
public body, agency or authority, is required to authorize or is
required under the federal laws of the United States or the laws
of the State of Ohio as a condition to (A) the execution, delivery
and performance by any Credit Party of any Credit Document to
which it is a party, or (B) the legality, validity, binding effect
or enforceability as against any Credit Party of any Credit
Document to which any Credit Party is a party, EXCEPT for (1) the
filing and recording of financing statements and other
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documents necessary in order to perfect the Liens created by the
Security Documents, and (2) such filings, orders, consents,
approvals or other actions as may be required to be obtained or
effected with governmental or public bodies, agencies or
authorities, including courts, in connection with any actual or
attempted grant or perfection or enforcement of a security
interest in, or realization upon, any type of Collateral the
possession or alienability of which is subject to specific federal
or state requirements or limitations under published laws,
regulations, rules or directives, now or hereafter in effect.
(g) RECORDATION OF SECURITY DOCUMENTS, DELIVERY OF COLLATERAL,
TAXES, ETC. The Security Documents (or proper notices or financing
statements in respect thereof) shall have been duly recorded, published
and filed in such manner and in such places as is required by law to
establish, perfect, preserve and protect the rights and security
interests of the parties thereto and their respective successors and
assigns, all collateral items required to be physically delivered to the
Collateral Agent thereunder shall have been so delivered, accompanied by
any appropriate instruments of transfer, and all taxes, fees and other
charges then due and payable in connection with the execution, delivery,
recording, publishing and filing of such instruments and the issue and
delivery of the Notes shall have been paid in full.
(h) EVIDENCE OF INSURANCE. The Collateral Agent shall have
received certificates of insurance and other evidence, satisfactory to
it, of compliance with the insurance requirements of this Agreement and
the Security Documents.
(i) SEARCH REPORTS. The Administrative Agent shall have received
completed requests for information on Form UCC-11, or search reports from
one or more commercial search firms acceptable to the Administrative
Agent, listing all of the effective financing statements filed against
any Credit Party which is a party to any Security Document in any
jurisdiction in which such Credit Party maintains an office or in which
any Collateral of such Credit Party is located, together with copies of
such financing statements.
(j) PROCEEDINGS AND DOCUMENTS. All corporate and other
organizational proceedings of the Credit Parties incident to this
Amendment and the transactions contemplated hereby shall be satisfactory
in form and substance to the Administrative Agent and the Administrative
Agent shall have received from the Credit Parties such documents incident
to the transactions completed hereby as it may require.
Thereafter this Amendment shall be binding upon and inure to the benefit of the
Borrower, the Administrative Agent, and each Lender and their respective
permitted successors and assigns. After this Amendment becomes effective, the
Administrative Agent will promptly furnish a copy of this Amendment to each
Lender and the Borrower and advise them of the Effective Date.
5. SECTION MISCELLANEOUS.
5.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in this Amendment shall survive the execution and delivery
of this Amendment, and no investigation by the Administrative Agent or any
Lender or any subsequent Loan or other Credit Event shall affect the
representations and warranties or the right of the Administrative Agent or any
Lender to rely upon them.
5.2. REFERENCE TO CREDIT AGREEMENT. The Credit Agreement and any and
all other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms
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of the Credit Agreement as amended hereby, are hereby amended so that any
reference therein to the Credit Agreement shall mean a reference to the Credit
Agreement as amended hereby.
5.3. EXPENSES. As provided in the Credit Agreement, but without
limiting any terms or provisions thereof, the Borrower shall pay on demand all
reasonable costs and expenses incurred by the Administrative Agent in connection
with the preparation, negotiation, and execution of this Amendment, including
without limitation the reasonable costs and fees of the Administrative Agent's
special legal counsel, regardless of whether this Amendment becomes effective in
accordance with the terms hereof, and all reasonable costs and expenses incurred
by the Administrative Agent or any Lender in connection with the enforcement or
preservation of any rights under the Credit Agreement, as amended hereby.
5.4. SEVERABILITY. Any term or provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.
5.5. APPLICABLE LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of Ohio.
5.6. HEADINGS. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.7. ENTIRE AGREEMENT. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement.
5.8. JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO
HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
5.9. COUNTERPARTS. This Amendment may be executed by the parties hereto
separately in one or more counterparts, each of which when so executed shall be
deemed to be an original, but all of which when taken together shall constitute
one and the same agreement.
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IN WITNESS WHEREOF, this Amendment has been duly executed and delivered
as of the date first above written.
NCS HEALTHCARE, INC. KEYBANK NATIONAL ASSOCIATION,
INDIVIDUALLY AS A LENDER, THE SWING LINE
LENDER, THE LETTER OF CREDIT ISSUER, AND
BY: /S/ GERALD D. STETHEM AS THE ADMINISTRATIVE AGENT AND THE
------------------------------ COLLATERAL AGENT
CHIEF FINANCIAL OFFICER
BY: /S/ THOMAS J. PURCELL
----------------------------
VICE PRESIDENT
BANK ONE, MICHIGAN NATIONAL CITY BANK,
(FORMERLY NBD BANK), AS A LENDER AND AS CO-AGENT
AS A LENDER AND AS CO-AGENT
BY: /S/ GARY C. WILSON BY: /S/ CHRIS D. THORNTON
------------------------------ ----------------------------
FIRST VICE PRESIDENT VICE PRESIDENT
BANK ONE, NA, FIRST UNION NATIONAL BANK
AS A LENDER AND AS CO-AGENT
BY: /S/ GARY C. WILSON BY: /S/ J. PAUL SOLITARIO
------------------------------ ----------------------------
FIRST VICE PRESIDENT VICE PRESIDENT
COMERICA BANK MELLON BANK, N. A.
BY: /S/ CRAIG F. DURNO BY: /S/ THOMAS E. CONSTANTINE
------------------------------ ----------------------------
ASSISTANT VICE PRESIDENT VICE PRESIDENT
HARRIS TRUST AND SAVINGS BANK FIRSTAR BANK, NATIONAL ASSOCIATION
(FORMERLY STAR BANK, N. A.)
BY: /S STAN C. ROSENDAHL BY: /S/ DAVID J. DANNEMILLER
------------------------------ ----------------------------
VICE PRESIDENT VICE PRESIDENT
AMSOUTH BANK BANK HAPOALIM B. M.,
CHICAGO BRANCH
BY: /S/ DAVID C. STYLES BY: /S/ PHILIP E. GANSCH
------------------------------ ----------------------------
VICE PRESIDENT VICE PRESIDENT
AND: /S/ AZARYA D. RESSLER
----------------------------
SVP & BRANCH MANAGER
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ACKNOWLEDGMENT AND CONSENT
For the avoidance of doubt, and without limitation of the intent and
effect of sections 6 and 10 of the Subsidiary Guaranty (as such term is defined
in the Credit Agreement referred to in the Amendment No. 3 to Credit Agreement
(the "AMENDMENT"), to which this Acknowledgment and Consent is appended), each
of the undersigned hereby unconditionally and irrevocably (i) acknowledges
receipt of a copy of the Credit Agreement and the Amendment, and (ii) consents
to all of the terms and provisions of the Credit Agreement as amended by the
Amendment. To the extent any of the undersigned is not already a party to the
Subsidiary Guaranty, it hereby joins in and agrees to be bound by the Subsidiary
Guaranty as a Guarantor thereunder.
Capitalized terms which are used herein without definition shall have
the respective meanings ascribed thereto in the Credit Agreement referred to
herein. This Acknowledgment and Consent is for the benefit of the Lenders, the
Administrative Agent, the Collateral Agent and any Hedge Creditor (as defined in
the Subsidiary Guaranty) which may be a third party beneficiary of the
Subsidiary Guaranty or the Pledge Agreement, in its capacity as such third party
beneficiary under any Credit Document, and their respective successors and
assigns. No term or provision of this Acknowledgment and Consent may be modified
or otherwise changed without the prior written consent of the Administrative
Agent, given as provided in the Credit Agreement. This Acknowledgment and
Consent shall be binding upon the successors and assigns of each of the
undersigned. This Acknowledgment and Consent may be executed by any of the
undersigned in separate counterparts, each of which shall be an original and all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the undersigned has duly executed and
delivered this Acknowledgment and Consent as of the date of the Amendment
referred to herein.
NCS HEALTHCARE OF OKLAHOMA, INC. NCS SERVICES, INC. NCS HEALTHCARE OF MASSACHUSETTS, INC.
NCS HEALTHCARE OF RHODE ISLAND, INC. NCS HEALTHCARE OF IOWA, INC. NCS HEALTHCARE OF ARIZONA, INC.
NCS HEALTHCARE OF KANSAS, INC. NCS HEALTHCARE OF KENTUCKY, INC. NCS HEALTHCARE OF MONTANA, INC.
NCS HEALTHCARE OF SOUTH CAROLINA, INC. NCS HEALTHCARE OF VERMONT, INC. NCS HEALTHCARE OF MISSOURI, INC.
NCS HEALTHCARE OF OREGON, INC. NCS HEALTHCARE OF BEACHWOOD, INC. NCS HEALTHCARE OF NEW YORK, INC.
NCS HEALTHCARE OF MARYLAND, INC. NCS HEALTHCARE OF OHIO, INC. PHARMASOURCE HEALTHCARE, INC.
NCS HEALTHCARE OF ARKANSAS, INC. NCS HEALTHCARE OF MICHIGAN, INC. NCS HEALTHCARE OF TEXAS, INC.
NCS HEALTHCARE OF CALIFORNIA, INC. NCS HEALTHCARE OF INDIANA, INC. NCS HEALTHCARE OF TENNESSEE, INC.
RESCOT SYSTEMS GROUP, INC. NCS HEALTHCARE OF ILLINOIS, INC. NCS HEALTHCARE OF MINNESOTA, INC.
UNI-CARE HEALTH SERVICES, INC. NCS HEALTHCARE OF PENNSYLVANIA, INC. NCS HEALTHCARE OF WISCONSIN, INC.
UNI-CARE HEALTH SERVICES OF MAINE, INC. NCS HEALTHCARE OF CONNECTICUT, INC. NCS HEALTHCARE OF NEBRASKA, INC.
NCS HEALTHCARE OF NEW JERSEY, INC. NCS HEALTHCARE OF NEW MEXICO, INC.
NCS HEALTHCARE OF FLORIDA, INC. BEACHWOOD HEALTHCARE MANAGEMENT, INC.
NCS HEALTHCARE OF WASHINGTON, INC.
MANAGEMENT & NETWORK SERVICES, INC.
BY: /S/ MICHAEL J. MASCALI
-------------------------------------------
MICHAEL J. MASCALI, VICE PRESIDENT,
ON BEHALF OF EACH OF
THE ABOVE CORPORATIONS
NCS HEALTHCARE OF NORTH CAROLINA, INC.
BY: /S/ KEVIN B. SHAW
----------------------------------
KEVIN B. SHAW, PRESIDENT