EXHIBIT 10.17
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of October 25, 2002
(this "Amendment"), is made among US ONCOLOGY, INC., a Delaware corporation with
its principal offices in Houston, Texas (the "Borrower"), the undersigned banks
and other financial institutions party to the Credit Agreement (as hereinafter
defined) (each, a "Lender," and collectively, the "Lenders"), and WACHOVIA BANK,
NATIONAL ASSOCIATION (as successor in interest to and formerly known as First
Union National Bank), as administrative agent for the Lenders to the extent
described in Article X of the Credit Agreement (in such capacity, the
"Administrative Agent"), UBS WARBURG LLC, as syndication agent (in such
capacity, the "Syndication Agent") and GE CAPITAL HEALTHCARE FINANCIAL SERVICES,
as documentation agent (in such capacity, the "Documentation Agent", and
collectively with the Administrative Agent, the Document Agent, the "Agents").
RECITALS
A. The Borrower, the Lenders, and the Agents have entered into a Credit
Agreement, dated as of February 1, 2002 (together with all amendments and
modifications, the "Credit Agreement"). Capitalized terms not otherwise defined
herein shall have the meanings as defined in the Credit Agreement.
B. The Borrower has requested amendments to the Credit Agreement to (i)
allow the Borrower to make certain repurchases of its Subordinated Notes, (ii)
to reflect certain modifications of the ELLF and (iii) to permit the formation
by the Borrower of a group purchasing organization, (iv) permit certain
physician joint ventures and (v) reflect such other matters set forth herein.
C. To effect such amendment, the Borrower, the Lenders, and the Agents
have entered into this Amendment.
STATEMENT OF AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Lenders, and the
Agents hereby agree as follows:
ARTICLE 1.
AMENDMENT
1.1 Wachovia. All references in the Credit Agreement and the Credit
Documents to "First Union National Bank" shall be changed to "Wachovia Bank,
National Association", to reflect the name change of First Union National Bank
to Wachovia Bank, National Association following the merger of First Union
National Bank and Wachovia Bank, N.A.
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1.2 Amendment to Section 8.6 "Restricted Payments." Section 8.6 of
the Credit Agreement is hereby amended by deleting the "and" at the end of
subsection (a)(ii) thereof, restating subsection "(iii)" in its entirety and
adding the following new sections "(iv)" at the end of Section 8.6(a):
(iii) the Borrower, (A) may make repurchases of shares of its
outstanding common stock or Subordinated Notes and (B) may repurchase or
otherwise take delivery of shares of its outstanding common stock as
consideration to the Borrower or a Subsidiary in connection with any PPM Asset
Disposition, provided, in each case, that (v) no Default or Event of Default
shall have occurred and be continuing or would occur after giving effect
thereto, (w) the Leverage Ratio (as of the last day of the latest fiscal quarter
included in a Compliance Certificate) will not be greater than 2.5 to 1.0 after
giving pro forma effect thereto, (x) for the period beginning with the effective
date of the First Amendment to Credit Agreement and ending December 31, 2003,
the consideration paid in respect of such repurchases shall not exceed
$150,000,000 and no more than $60,000,000 in Loans may be utilized therefor
after the Borrower first utilizes excess cash for such purchase, and (y) for
periods beginning January 1, 2004, (1) no more than $60,000,000 in Loans may be
outstanding and (2) the aggregate amount of consideration paid in respect of
such repurchases during the twelve months period prior to any such repurchase
beginning on or after January 1, 2004, shall not exceed $50,000,000, provided,
further that the Agents, by written notice to the Borrower at any time, may
suspend the Borrower's ability to make any or all such repurchases under clause
(A) if the Agents reasonably determine that there has occurred a change in the
Medicare or Medicaid statutes, state statutes, case laws, regulations or general
instructions, or the interpretation or enforcement of any of the foregoing, the
adoption of new federal or state legislation, or a change in any third party
reimbursement system, any of which are reasonably likely to materially and
adversely affect the business or revenues of the Borrower and its Subsidiaries,
taken as a whole;
(iv) Each Special Purpose Subsidiary and the GPO Subsidiary may
declare and make dividend payments or other distributions to its equity owners
in proportion to their equity interest, provided, that no Default or Event of
Default shall have occurred and be continuing or would occur after giving effect
thereto and provided further that such dividends are not greater than 50% of Net
Income for the fiscal period then ended determined in accordance with generally
accepted accounting principles.
Section 8.6(b) is hereby amended by adding "Except as permitted
pursuant to Section 8.6(a)(iii) above" to the beginning thereof. Additionally,
it is understood that any Investment permitted by the First Amendment under
Section 8.6 shall also be deemed permitted by Section 8.5 of the Credit
Agreement.
1.3 ELLF. Pursuant to a First Amendment to Certain Operative
Agreements (AOR Trust 1997-1) (the "ELLF First Amendment") by and among AOR
Synthetic Real Estate, Inc. (the "Lessee"), the Borrower, as guarantor, various
subsidiary guarantors, Xxxxx Fargo Bank Northwest, National Association, as
owner trustee, Wachovia Bank, National Association, as agent and various
lenders, the parties are amending the ELLF documents to, among other things, (a)
allow the Lessee (i) to move certain items of personal property which comprise
portions of the ELLF properties to various locations which locations are either
owned or leased by one or more of the Borrower and the Guarantors, (ii) to make
prepayments of supplemental rent, and
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(iii) to purchase one or more ELLF properties at Termination Value (as defined
in the ELLF) to the extent no Default or Event of Default shall have occurred or
be continuing at such time and (b) to change the percentage in the definition of
"Maximum Residual Guarantee Amount" (as defined in the ELLF) to one hundred
percent (100%). The Agents and the Lenders hereby acknowledge and consent to the
ELLF First Amendment.
1.4 Group Purchasing Organization.
(a) The Borrower intends to form a non-wholly owned limited liability
company Subsidiary to engage in certain group purchasing activities for
pharmacies owned by the Borrower and its Subsidiaries (the "GPO Subsidiary"). At
least 95% of the GPO Subsidiaries will be owed by the Borrower or its
Subsidiaries with the remainder owned by a third party. The GPO Subsidiary does
not constitute a Permitted Joint Venture or a wholly-owned Subsidiary under the
Credit Agreement. The Lenders hereby consent to the creation of the GPO
Subsidiary. Within ten (10) Business Days after the creation of the GPO
Subsidiary, the Borrower shall cause the GPO Subsidiary to execute and deliver
to the Administrative Agent (i) a joinder to the Subsidiary Guaranty, pursuant
to which such new Subsidiary shall become a party thereto and shall guarantee
the payment of the Obligations of the Borrower under the Credit Agreement and
the other Credit Documents, and (ii) a joinder to the Security Agreement,
pursuant to which such new Subsidiary shall become a party thereto and shall
grant to the Agent a first priority Lien upon and security interest in its
accounts receivable, inventory, equipment, general intangibles and other
personal property as Collateral for its obligations under the Subsidiary
Guaranty, subject only to Permitted Liens. Additionally, concurrently with the
GPO Subsidiary delivering a joinder to the Subsidiary Guaranty, the Borrower or
its Subsidiaries as applicable will execute and deliver to the Administrative
Agent an amendment or supplement to the Security Agreement pursuant to which all
of the Capital Stock of such new Subsidiary owned by the Borrower shall be
pledged to the Administrative Agent. As promptly as reasonably possible, the
Borrower and the GPO Subsidiary will deliver any such other documents,
certificates and opinions (including opinions of local counsel in the
jurisdiction of organization of the new Subsidiary), in form and substance
reasonably satisfactory to the Administrative Agent, as the Administrative Agent
may reasonably request in connection therewith and will take such other action
as the Administrative Agent may reasonably request to create in favor of the
Administrative Agent a perfected security interest in the Collateral being
pledged pursuant to the documents described above.
(b) Subject to provisions of Section 8.5 of the Agreement, the Borrower
or its Subsidiaries may from time to time create new Subsidiaries, of which it
owns a majority of the equity interests (it is anticipated that such
Subsidiaries will be limited liability companies with the Borrower or a
Subsidiary as manager), solely to own land and buildings affiliated with the
Borrower's business ("Special Purpose Subsidiary"), provided that the equity
interests held by third-parties were acquired for consideration that the
officers of the Borrower reasonably believe to be the fair market value of such
interests and such third parties are physicians affiliated with practices, or
the practices themselves, affiliated with the Borrower or under contract with
the Borrower; and provided further the aggregate investment by the Borrower in
Special Propose Subsidiary may not exceed $25,000,000 in the aggregate at any
time. In addition, within ten (10) Business Days after the creation of the
Special Purpose Subsidiary, the Borrower shall cause the Special Purpose
Subsidiary to execute and deliver to the Administrative Agent (i) a joinder to
the Subsidiary Guaranty, pursuant to which such new Subsidiary shall become a
party thereto and
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shall guarantee the payment of the Obligations of the Borrower under the Credit
Agreement and the other Credit Documents, and (ii) a joinder to the Security
Agreement pursuant to which such new subsidiary shall become a party thereto and
shall grant to the Agent a first priority Lien upon and security interest in its
accounts receivable, inventory, equipment, general intangibles and other
personal property as Collateral for its obligations under the Subsidiary
Guaranty, subject only to Permitted Liens. Additionally, concurrently with the
Subsidiary delivering a joinder to the Subsidiary Guaranty, the Borrower or its
Subsidiary, as applicable, will execute and deliver to the Administrative Agent
an amendment or supplement to the Security Agreement pursuant to which all of
the Capital Stock of such new Subsidiary owned by the Borrower shall be pledged
to the Administrative Agent. As promptly as reasonably possible, the Borrower
and the Special Purpose Subsidiary will deliver any such other documents,
certificates and opinions (including opinions of local counsel in the
jurisdiction of organization of the new subsidiary), in form and substance
reasonably satisfactory to the Administrative Agent, as the Administrative Agent
may reasonably request in connection therewith and will take such other action
as the Administrative Agent may reasonably request to create in favor of the
Administrative Agent a perfected security interest in the Collateral being
pledged pursuant to the documents described above.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
The Borrower hereby represents and warrants that:
2.1 Compliance with Credit Agreement. The Borrower is in compliance
with all terms and provisions set forth in the Credit Agreement, the Credit
Documents and the ELLF to be observed or performed, except where the Borrower's
failure to comply has been waived in writing by the Required Lenders.
2.2 Representations in Credit Agreement. The representations and
warranties of the Borrower set forth in the Credit Agreement, the Credit
Documents and the ELLF, except for those relating to a specific date other than
the date hereof, are true and correct in all material respects on and as of the
date hereof as if made on and as of the date hereof.
2.3 No Default. No Default or Event of Default is continuing other than
those, if any, waived in writing by the Lenders.
2.4 Continuing Security Interests. All Obligations and advances by the
Lenders to the Borrower under the Credit Agreement, as amended hereby, the Notes
and the Swingline Note will continue to be secured by the Agent's, on behalf of
the Lenders, security interest in all of the Collateral granted under the Credit
Agreement, Security Agreements and other Credit Documents, and nothing herein
(other than the expressly permitted sharing of the Collateral with holders of
the ELLF) will affect the validity, perfection or enforceability of such
security interests.
2.5 No Conflicts. Neither the execution, delivery or performance of
this Amendment by the Borrower, nor compliance by the Borrower with the Credit
Agreement as amended
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hereby, (a) conflicts or will conflict with or results or will result in any
breach of, or constitutes or will constitute with the passage of time or the
giving of notice or both, a default under (i) any Requirement of Law or (ii) any
written or oral agreement or instrument to which the Borrower or any Guarantor
is a party or by which it, or any of its property, is bound, except where such
conflict, breach or default would not have a Material Adverse Effect, or (b)
results or will result in the creation or imposition of any lien, charge or
encumbrance upon the properties of the Borrower or any Subsidiary pursuant to
any such agreement or instrument, except for Permitted Liens.
ARTICLE 3.
MODIFICATION OF CREDIT DOCUMENTS
The other Credit Documents are amended as follows:
3.1 Credit Agreement. Any reference to the Credit Agreement in any of
the other Credit Documents shall mean, unless otherwise specifically provided,
the Credit Agreement as amended and supplemented by this Amendment, and as the
Credit Agreement is further amended, restated, supplemented or modified from
time to time and any substitute or replacement therefor or renewals thereof.
ARTICLE 4.
GENERAL
4.1 Consent of Guarantors. This Amendment is expressly conditioned upon
the execution by each Guarantor of the Acknowledgement and Consent attached as
Annex 1 indicating the Guarantors' consent to this Amendment and confirming
their obligations pursuant to the Guaranty Agreement and Guarantors' Security
Agreement and any other Credit Document to which any of them are party.
4.2 Full Force and Effect. As expressly amended hereby, the Credit
Agreement shall continue in full force and effect in accordance with the
provisions thereof, and no change or modification in any of the terms thereof
except as specifically set forth herein has been effected. As used in the Credit
Agreement, "hereinafter," "hereto," "hereof," and words of similar import shall,
unless the context otherwise requires, mean the Credit Agreement as amended by
this Amendment. The Borrower and the Lenders acknowledge and agree that this
Amendment complies with the provisions of Section 11.6 of the Credit Agreement.
4.3 Applicable Law. This Amendment shall be governed by and construed
in accordance with the internal laws and judicial decisions of the State of
North Carolina.
4.4 Counterparts. This Amendment may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute but one instrument.
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4.5 Fees, Expenses and Indemnity. The Borrower will pay each Lender
executing this Amendment an upfront fee equal to 0.125% of such Lender's
aggregate Commitment (under the Credit Agreement, whether drawn or unutilized).
The Borrower agrees to pay all out-of-pocket expenses incurred by the Agent in
connection with the preparation, execution and delivery of this Amendment,
including, without limitation, all reasonable attorneys' fees. The provisions of
Section 10.7 of the Credit Agreement shall apply fully to this Amendment.
4.6 Further Assurance. The Borrower shall execute and deliver to the
Lenders such documents, certificates and opinions as the Lenders may reasonably
request to effect the amendment contemplated by this Amendment.
4.7 Headings. The headings of this Amendment are for the purposes of
reference only and shall not affect the construction of this Amendment.
4.8 Conditions to Effectiveness. This Amendment shall be effective as
of the date first set forth above upon (i) execution hereof by the Borrower, the
Agent and the Required Lenders, (ii) the delivery to the Agent of the
fully-executed Acknowledgement and Consent of the Guarantors, (iii) the payment
of the fees and expenses required by Section 4.5 hereof and (iv) the prior or
concurrent execution and delivery of the ELLF First Amendment.
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IN WITNESS WHEREOF, the Borrower, the Lenders, and the Agent have
executed this Amendment as of the date hereof.
US ONCOLOGY, INC.
By: ___________________________________
Name: _____________________________
Title: ____________________________
WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent and a Lender
By: ___________________________________
Name: _____________________________
Title: ____________________________
UBS WARBURG LLC, as Syndication Agent
By: ___________________________________
Name: _____________________________
Title: ____________________________
By: ___________________________________
Name: _____________________________
Title: ____________________________
UBS AG, STAMFORD BRANCH, as Lender
By: ___________________________________
Name: _____________________________
Title: ____________________________
[signatures continue on following page]
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GENERAL ELECTRIC CAPITAL CORPORATION, as
Documentation Agent and Lender
By: ____________________________________
Name: ______________________________
Title: _____________________________
DEUTSCHE BANK TRUST COMPANY AMERICAS,
formerly known as Bankers Trust
Company, as a Lender
By: ____________________________________
Name: ______________________________
Title: _____________________________
XX XXXXXX XXXXX BANK, as a Lender
By: ____________________________________
Name: ______________________________
Title: _____________________________
CREDIT LYONNAIS NEW YORK BRANCH, as a Lender
By: ____________________________________
Name: ______________________________
Title: _____________________________
LASALLE BANK, N.A., as a Lender
By: ____________________________________
Name: ______________________________
Title: _____________________________
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[signatures continue on following page]
HIBERNIA NATIONAL BANK, as a Lender
By: ____________________________________
Name: ______________________________
Title: _____________________________
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