EXHIBIT 10.1
FIRST AMENDMENT TO
REVOLVING CREDIT AGREEMENT
FIRST AMENDMENT dated as of September 21, 2000 ("First Amendment") among
SUN HEALTHCARE GROUP, INC. ("SHG") and EACH OF ITS SUBSIDIARIES WHICH ARE
BORROWERS UNDER THE FINANCING AGREEMENT (as defined below), debtors and
debtors-in-possession (the "Borrowers"), THE LENDERS PARTY HERETO (each referred
to as a "Lender" and collectively, the "Lenders"), THE CIT GROUP/BUSINESS
CREDIT, INC., as Lenders' Agent (in such capacity, together with its successors
in such capacity, the "Lenders' Agent") and HELLER HEALTHCARE FINANCE, INC., as
Collateral Agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent" and with the Lenders' Agent, the "Agents").
Reference is made to the Revolving Credit Agreement dated as of October 14, 1999
among the Borrower, the Lenders each other lender which may thereafter execute
and deliver an instrument of assignment under the Financing Agreement as
provided therein, the Lenders' Agent and the Collateral Agent (as it may be
further amended, supplemented or modified from time to time, the "Financing
Agreement"). Any term used and not otherwise defined in this First Amendment
shall have the meaning assigned to such term in the Financing Agreement.
WHEREAS, on October 14, 1999 (the "Filing Date"), the Borrowers each filed
a voluntary petition with the Bankruptcy Court initiating the Case and has
continued in the possession of its assets and in the management of its business
pursuant to Sections 1107 and 1108 and the Bankruptcy Code;
WHEREAS, pursuant to a Motion dated October 14, 1999, the Borrowers made a
motion to the Bankruptcy Court requesting entry of a First Day Order, Interim
Order and a Final Order authorizing the Borrowers' entry into the Financing
Agreement and approving the terms of the Financing Agreement;
WHEREAS, by Orders dated October 14 and 22, 1999 and November 12 and 29,
1999, the Bankruptcy Court gave first day, interim and final approval to the
Financing Agreement and authorized the Borrowers' entry into the Financing
Agreement;
WHEREAS, the Borrowers have notified the Agents of the occurrence of
certain Defaults and/or Events of Default (the "DIP Defaults") under the
Financing Agreement and have requested that the Required Lenders agree to waive
such DIP Defaults;
WHEREAS, pursuant to a letter agreement dated July 13, 2000 (as extended by
letters dated July 28, 2000, August 8, 2000, August 24, 2000 and September 21,
2000), the Required Lenders agreed to waive the DIP Defaults provided that the
Agents, Lenders and Borrowers enter into a First Amendment to the Financing
Agreement which, among other things, adjusts certain covenants under the
Financing Agreement;
WHEREAS, the Borrowers have requested that from and after the First
Amendment Closing Date (as defined below), the Financing Agreement be amended
subject to and upon the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto have agreed as hereinafter set forth.
SECTION 1. Amendments to Financing Agreement. The Financing Agreement is,
subject to the satisfaction of the conditions precedent set forth in Section 2
hereof, hereby amended as follows:
(a) The definition of "EBITDA" is deleted in its entirety and replaced with the
following:
"'EBITDA' shall mean, for any period, the net income (or net loss) of SHG
and its Domestic Subsidiaries for such period, determined in accordance with
GAAP on a consolidated basis for SHG and such Subsidiaries, plus (a) the sum of
(i) depreciation expense, (ii) amortization expense, (iii) other non-cash
charges or expenses, (iv) provision for LIFO adjustment for Inventory valuation,
(v) net total federal, state, and local income tax expense, (vi) gross interest
expense for such period less gross interest income for such period, (vii)
extraordinary losses, (viii) any non-recurring charge or restructuring charge
which in the reasonable judgment of the Agents should be excluded from operating
income, (ix) the cumulative effect of any change in accounting principles and
(x) "Chapter 11 expenses" (or "administrative costs reflecting Chapter 11
expenses") as shown on the consolidated statement of income for SHG and its
Subsidiaries for such period less (b) extraordinary gains plus or minus (c) the
amount of cash received or expended in such period in respect of any amount
which, under clauses (iii) or (viii) above, was taken into account in
determining EBITDA for the same or any prior period."
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(b) Section 6.05 of the Financing Agreement is deleted in its entirety and
replaced with the following:
"SECTION 6.05. EBITDA. (a) Permit cumulative EBITDA for the immediately
preceding contiguous six-month period ending on the last day of each month
specified below to be less than the amount specified opposite such month:
Month EBITDA
August 2000 $26,000,000
September 2000 $26,000,000
October 2000 $26,000,000
November 2000 $26,000,000
December 2000 $26,000,000
January 2001 $28,700,000
February 2001 $31,300,000
March 2001 $34,000,000
April 2001 $36,700,000
May 2001 $39,300,000
June 2001 $42,000,000
(b) Permit cumulative EBITDA for any previous contiguous six-month period
beginning with or after July 2001 to be less than $42,000,000."
SECTION 2. Conditions of Effectiveness. This First Amendment and the
amendments provided for in Section 1 above shall become effective as of the date
on which each of the following conditions has been fulfilled (the "First
Amendment Closing Date") provided that the Bankruptcy Court shall have entered
an order in substantially the form set forth in Exhibit A (the "First Amendment
Order") authorizing the Borrower to enter into, and approving, this First
Amendment and providing for the payment of fees and expenses as provided for
herein, on or before October 26, 2000:
(a) First Amendment. The Borrowers, the Required Lenders, the Lenders' Agent
and the Collateral Agent shall each have executed and delivered this First
Amendment.
First Amendment Order. Lenders' Agent shall have received a certified copy
(or such other evidence satisfactory to it) of the First Amendment Order.
(b) Fees and Expenses. On the First Amendment Closing Date, the Borrowers shall
have (i) reimbursed the Lenders and Lenders Agent for all Out-of-Pocket
Expenses for which a request for payment shall have been made on or prior
to the First Amendment Closing Date and (ii) paid to Lenders' Agent, for
pro rata distribution by it to the Lenders in accordance with each Lender's
Commitment, a fee in the amount of $250,000 with the approval of the
Bankruptcy Court (such approval to be evidenced by the entry of the First
Amendment Order).
(c) Officer's Certificate. The following statements shall be true and Lenders'
Agent shall have received a certificate signed by a duly authorized officer
of the Borrowers dated the date hereof stating that, after giving effect to
this First Amendment and the transactions contemplated hereby:
(i) The representations and warranties contained in the Financing Agreement are
true and correct on and as of the date hereof as though made on and as of
such date; and
(ii) No Default or Event of Default has occurred and is continuing.
(d) Other Documents. Lenders Agent shall have received such other approvals,
opinions or documents as Lenders Agent may reasonably request.
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SECTION 3. Reference to and Effect on the Loan Documents. Upon the
effectiveness of this First Amendment, on and after the date hereof each
reference in the Financing Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of like import, and each reference in the other Loan Documents
to the Financing Agreement, shall mean and be a reference to the Financing
Agreement as amended hereby.
SECTION 4. No Waiver. Except to the extent specifically set forth in the
Waiver Letter or this First Amendment, the execution, delivery and effectiveness
of this First Amendment shall not operate as a waiver of any right, power or
remedy of the Lenders or the Agents under any of the Loan Documents, nor shall
any of them constitute a waiver of any provision of any of the Loan Documents,
and, except as expressly amended herein, the Financing Agreement and each other
Loan Document shall remain in full force and effect and are hereby ratified and
confirmed. Time and continuing strict performance are still of the essence of
our agreement.
SECTION 5. Representations and Warranties. To induce the Lenders and
Lenders Agent to execute this First Amendment, the Borrower hereby represents
and warrants to the Lenders and the Agents that all representations and
warranties contained in the Financing Agreement and each other Loan Document are
true and correct as of the date hereof as if made on the date hereof and there
is no continuing Default or Event of Default as of the date hereof.
SECTION 6. Expenses. The Borrowers agree and acknowledge that their
obligations set forth in Section 10.05 of the Financing Agreement shall extend
to the preparation, execution and delivery of this Amendment and the Bankruptcy
Court approval referenced hereby.
SECTION 7. Related Document. This First Amendment is executed pursuant to
the Financing Agreement and shall be construed, administered and applied in
accordance with all of the terms and provisions of the Financing Agreement. Any
breach of any representation or warranty contained in this First Amendment shall
be deemed to be an Event of Default for all purposes of the Financing Agreement.
SECTION 8. Further Assurances. The Borrower shall take any action that from
time to time may be reasonably necessary to give effect to the amendments
contemplated herein.
SECTION 9. Governing Law. The validity, interpretation and enforcement of
this First Amendment shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflicts of laws.
SECTION 10. Headings. Section headings in this First Amendment are included
herein for convenience of reference only and shall not constitute a part of this
First Amendment for any other purpose.
SECTION 11. Counterparts. This First Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any party hereto may execute this First Amendment by
signing any such counterpart. Facsimile signatures on this First Amendment shall
be treated for all purposes as binding on such signatory to the same extent as
an original signature. If a party delivers an executed counterpart of this First
Amendment or any other document to be delivered by it hereunder by facsimile,
such party shall promptly thereafter deliver original executed counterparts to
the other party by overnight courier.
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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
be duly executed as of the day and year first above written.
SUN HEALTHCARE GROUP, INC.,
For itself and each of the Borrowers
By: /s/ Matthew G. Patrick
----------------------
Name: Matthew G. Patrick
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
Individually and as Lenders' Agent
By: /s/ Karen Hoffman
-----------------
Name: Karen Hoffman
Title: Vice President
HELLER HEALTHCARE FINANCE, INC.,
Individually and as Collateral Agent
By: /s/ J. Anthony Romero
---------------------
Name: J. Anthony Romero
Title: Vice President
CITICORP USA
By:
Name:
Title:
LaSALLE BUSINESS CREDIT INC.
By: /s/ Mitchell B. Rasky
---------------------
Name: Mitchell B. Rasky
Title: First Vice President
GMAC COMMERCIAL CREDIT LLC
By:
Name:
Title:
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