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Exhibit 1
SEVENTH AMENDMENT TO CREDIT AGREEMENT
SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of October 1, 1997, among TRANSWORLD HEALTHCARE, INC. (the "Borrower"), the
lenders party to the Credit Agreement referred to below (each a "Bank" and,
collectively, the "Banks"), and BANKERS TRUST COMPANY, as Agent (in such
capacity, the "Agent"). All capitalized terms used herein and not otherwise
defined shall have the respective meanings provided such terms in the Credit
Agreement.
WITNESSETH:
WHEREAS, the Borrower, the Banks and the Agent are parties to a
Credit Agreement, dated as of July 31, 1996 (as in effect on the date hereof,
the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the Credit Agreement as
provided herein;
NOW, THEREFORE, it is agreed:
I. Amendments and Modifications to Credit Agreement.
1. Notwithstanding the provisions of Section 13.20 or any other
section of the Credit Agreement or any other Credit Document, it is acknowledged
and agreed that the Borrower may consummate the HMI Merger so long as the
following conditions are satisfied: (I) no Default or Event of Default is in
existence at the time of the consummation of the HMI Merger or immediately after
giving effect thereto, (II) the Borrower does not waive any condition precedent
to the HMI Merger set forth in the HMI Merger Agreement without the consent of
the Agent, provided that the Borrower may make immaterial waivers without the
consent of the Agent, (III) the consideration payable to holders of stock of HMI
in connection with the HMI Merger is as set forth in the HMI Merger Agreement on
the date hereof, (IV) the aggregate consideration paid to holders of stock of
HMI or options to purchase stock of HMI in connection with the HMI Merger (the
"HMI Merger Consideration") does not exceed $2,800,000 and (V) the HMI Sale (as
defined below) is consummated immediately following consummation of the HMI
Merger.
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2. Notwithstanding the provisions of the Credit Agreement or any other
Credit Document, it is acknowledged and agreed that the Borrower may sell
substantially all of the assets (other than accounts receivable and certain
retained assets as set forth in the HMI Sale Agreement (as defined below) ("the
Retained Assets")) of HMI and its Subsidiaries to ▇▇▇▇▇▇▇▇▇▇▇ Drug Distribution
Co., Inc. ("▇▇▇▇▇▇▇▇▇▇▇") (the "HMI Sale") and that the provisions of Section
3.03(c) shall not apply to the HMI Sale so long as the following conditions are
satisfied: (I) the HMI Merger has been consummated in accordance with the terms
of the Credit Agreement and this Amendment, (II) the HMI Sale is consummated in
accordance with the Asset Purchase Agreement, dated as of October 1, 1997, among
Health Management, Inc., Health Reimbursement Corporation, HMI Illinois, Inc.,
HMI Pennsylvania, Inc., HMI PMA, Inc., HMI Retail Corp., Inc., Home Care
Management, Inc. (the "HMI Subsidiaries"), as Sellers, the Borrower, as Seller
Guarantor, ▇▇▇▇▇▇▇▇▇▇▇, as Purchaser, and Counsel Corporation, as Purchaser
Guarantor and the schedules, exhibits and/or annexes thereto, (the "HMI Sale
Agreement"), (III) the aggregate gross consideration received at the time of
such sale (without giving effect to (x) any application of such amounts to the
liabilities set forth on Annex XIV hereto and (y) any amounts loaned by
▇▇▇▇▇▇▇▇▇▇▇ to HMI or any of its Subsidiaries) is not less than $20,000,000
(less reductions of up to $2,000,000 based on book value adjustments in
accordance with the HMI Sale Agreement) (the "HMI Consideration"), (IV) at the
time of such sale ▇▇▇▇▇▇▇▇▇▇▇ lends a gross amount of not less than $20,000,000
to HMI and/or its Subsidiaries (the "▇▇▇▇▇▇▇▇▇▇▇ Loan") as permitted by the
Credit Agreement as amended by this Amendment, (V) not more than $10,000,000 of
the amounts received in satisfaction of clauses (III) and (IV) is placed into
escrow, which amounts shall be held in escrow either pursuant to an escrow
arrangement required by the HMI Sale Agreement or pursuant to the Loan Escrow
Agreement, dated as of October 1, 1997, between the Borrower and Bankers Trust
Company, as Escrow Agent, (VI) upon consummation of the HMI Sale the Borrower
shall receive an aggregate amount of not less than $15,000,000 from HMI from (1)
repayment of outstanding HMI Loans held by the Borrower and/or (2) repayment of
other amounts owing to the Borrower and its Subsidiaries (other than HMI and its
Subsidiaries), (VII) not less than $15,000,000 of the amounts received in
accordance with clause (VI) shall be applied by the Borrower to repay
outstanding Loans and (VIII) after giving effect to the HMI Sale, HMI and its
Subsidiaries have no material assets other than the Retained Assets (which shall
include accounts receivable with an aggregate net value of at least $23,000,000
and no material liabilities other than pursuant to the HMI Sale Agreement and
the ▇▇▇▇▇▇▇▇▇▇▇ Loan, liabilities owing to the Borrower and its Subsidiaries,
liabilities owing to HPII and its Affiliates, and those liabilities set forth on
Annex XIV to this Amendment.
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3. The parties hereto acknowledge and agree that failure by the
Borrower to comply in all material respects with paragraphs one and two of this
Amendment shall constitute an immediate Event of Default under the Credit
Agreement.
4. Section 4.02 is hereby amended by adding at the end thereof the
following clause (d):
"(d) In addition to any other mandatory repayment pursuant to
this Section 4.02, the Borrower shall be required to repay that
principal amount of Revolving Loans, to the extent then
outstanding, equal to (i) $15,000,000 on the HMI Sale Effective
Date, (ii) $8,500,000 (less any amounts voluntarily prepaid
pursuant to Section 4.01 during the period from but not including
the HMI Sale Effective Date to and including December 31, 1997) on
December 31, 1997, (iii) $500,000 (less any amounts voluntarily
prepaid pursuant to Section 4.01 during the period from and
including January 1, 1998 to and including February 28, 1998) on
February 28, 1998 and (iv) $1,000,000 (less any amounts theretofore
voluntarily prepaid pursuant to Section 4.01 during the period from
and including March 1, 1998 to and including the Final HMI Sale
Prepayment Date) on the Final HMI Sale Prepayment Date."
5. Section 8.01(k) of the Credit Agreement is hereby amended by (1)
deleting the word "Promptly" appearing in the first sentence thereof and
inserting in lieu thereof the phrase "At any time on or prior to the HMI Merger
Effective Date," and (2) inserting immediately following the phrase "after the
HMI Stock Purchase Effective Date" appearing in the second sentence thereof the
phrase "and ending prior to the HMI Merger Effective Date".
6. Section 8.14(a) of the Credit Agreement is hereby amended by
deleting the last sentence thereof and inserting in lieu thereof the following
sentence:
"Notwithstanding anything herein to the contrary, no Permitted
Acquisition may be effected without the consent of the Required
Banks, which consent may be granted or withheld by the Banks in
their sole discretion."
7. Section 8.19 of the Credit Agreement is hereby amended by deleting
the text contained therein and inserting in lieu thereof the following text:
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"On or prior to December 31, 1997, the Borrower shall have filed
the preliminary proxy materials necessary under the Securities
Exchange Act of 1934 to consummate the Supplemental Payables Equity
Financing and receive the Hyperion Trade Payables."
8. Section 9.01 of the Credit Agreement is hereby amended by inserting
at the end thereof the following new clause:
"(e) HMI and its Subsidiaries shall (x) engage in no business
other than and (y) take no actions and incur no liabilities except
related to, the Retained Assets, the Retained Liabilities, the HMI
Sale Agreement and the ▇▇▇▇▇▇▇▇▇▇▇ Loan."
9. Section 9.02 of the Credit Agreement is hereby amended by inserting
immediately following the phrases "Domestic Subsidiary of the Borrower" and
"Wholly-Owned Domestic Subsidiary of the Borrower" each time either such phrase
appears in clauses (f) and (g) of said Section the parenthetical "(other than
HMI and its Subsidiaries)".
10. Section 9.03 of the Credit Agreement is hereby amended by (1)
deleting the word "and" at the end of clause (l) thereof, (2) deleting the
period at the end of clause (m) thereof and inserting in lieu thereof ";" and
(3) inserting at the end thereof the following new clauses:
"(n) Liens created pursuant to the ▇▇▇▇▇▇▇▇▇▇▇ Loan Documents
on Retained Assets constituting accounts receivable of HMI and its
Subsidiaries securing the ▇▇▇▇▇▇▇▇▇▇▇ Loan;
(o) rights established pursuant to HMI Sale Documents to cash
held in escrow in an amount not to exceed $2,500,000 less amounts
released from such escrow arrangement; and
(p) rights established pursuant to the ▇▇▇▇▇▇▇▇▇▇▇ Loan
Documents to proceeds of the ▇▇▇▇▇▇▇▇▇▇▇ Loan held in escrow in an
amount not to exceed to the lesser of (x) $10,000,000 less the
amount in escrow on the HMI Sale Date as permitted by clause (o)
and (y) the aggregate principal amount of the ▇▇▇▇▇▇▇▇▇▇▇ Loan,
securing the ▇▇▇▇▇▇▇▇▇▇▇ Loan."
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11. Section 9.04 of the Credit Agreement is hereby amended by (1)
deleting the word "and" at the end of clause (i) thereof, (2) relettering clause
(j) thereof as clause (k) and (3) inserting at the end of clause (i) the
following new clause:
"(j) Indebtedness of HMI and its Subsidiaries constituting the
▇▇▇▇▇▇▇▇▇▇▇ Loan (and the guaranty thereof by the Borrower); and"
12. Section 9.05 of the Credit Agreement is hereby amended by (1)
inserting immediately following the phrases "Wholly-Owned Subsidiaries" and
"Wholly-Owned Subsidiary" each time either such phrase appears in clause (f)
thereof the parenthetical "(other than HMI and its Subsidiaries)", (2) inserting
immediately following the phrase "Third Amendment Effective Date" appearing in
clause (r) thereof the phrase "and prior to the occurrence of the HMI Merger
Effective Date", (3) deleting the word "and" at the end of clause (s) thereof,
(4) deleting the period at the end of clause (t) thereof and inserting in lieu
thereof "; and" and (5) inserting at the end thereof the following additional
clause:
"(u) the Borrower may make additional HMI Loans to HMI and its
Subsidiaries, provided that (i) the aggregate amount of such HMI
Loans does not exceed $12,000,000 less the amount by which the
aggregate gross consideration received at the time of the HMI Sale
was reduced by the application of amounts to the liabilities set
forth on Annex XIV hereto to the extent such amounts otherwise
would have been payable to HMI, (ii) no Default or Event of Default
under Section 10.11 then exists or would result therefrom, and
(iii) the proceeds of any such HMI Loans are used promptly to make
payments on liabilities of HMI and its Subsidiaries."
13. Section 9.12 of the Credit Agreement is hereby amended by (1)
inserting immediately following the phrase "the Omnicare Stock Purchase
Documents" appearing in clause (i) thereof the phrase ", any ▇▇▇▇▇▇▇▇▇▇▇ Loan
Document, any HMI Sale Document" and (2) inserting immediately following the
phrase "any Seller Subordinated Notes" appearing in clause (ii) thereof the
phrase "or the ▇▇▇▇▇▇▇▇▇▇▇ Loan, provided that voluntary principal repayments
may be made by HMI and its Subsidiaries on the ▇▇▇▇▇▇▇▇▇▇▇ Loan with the
proceeds from any collection by HMI and its Subsidiaries of amounts owing to
them under their accounts receivable".
14. Section 9.12(a)(iii) of the Credit Agreement is hereby amended by
inserting the following new clause (w) immediately preceding clause (x):
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"(w) those changes to the Partners II Second Stock Purchase
Agreement contained in the First Amendment to Partners II Second
Stock Purchase Agreement,"
15. Section 9.15(a) of the Credit Agreement is hereby amended by
deleting the phrase "prior the consummation of the HMI Merger" appearing in the
last sentence thereof and inserting in lieu thereof the phrase "unless requested
by the Required Banks".
16. Section 10 of the Credit Agreement is hereby amended by (1)
inserting "or" at the end of Section 10.10 thereof and (2) inserting following
Section 10.10 the following new Section 10.11:
"10.11 HMI Sale Net Proceeds. The HMI Sale Net Proceeds Amount
shall at any time, (i) after the HMI Merger Effective Date and on
or prior to December 30, 1997, be less than $15,000,000, (ii) from
and including December 31, 1997 to and including February 27, 1998,
be less than $23,500,000, (iii) from and including February 28,
1998 to but excluding the Final HMI Sale Prepayment Date be less
than $24,000,000 and (iv) thereafter be less than $25,000,000."
17. The definition of "Partners II Second Stock Purchase Agreement"
appearing in Section 11 of the Credit Agreement is hereby amended by inserting
the phrase ", as amended in accordance with the First Amendment to Partners II
Second Stock Purchase Agreement" immediately before the period at the end
thereof.
18. The definition of "Supplemental Payables Equity Financing"
appearing in Section 11 of the Credit Agreement is hereby amended by deleting
the number "1,234,176" appearing therein.
19. Section 11 of the Credit Agreement is hereby amended by inserting
immediately prior to the period at the end of the definition of "Subsidiary" the
following new proviso:
"provided further that notwithstanding anything to the contrary
contained in this agreement and any other Credit Document, on and
after the HMI Merger Effective Date (I) the provisions of Section
8.11 (although the capital stock of HMI (other than capital stock
constituting Margin Stock) owned by the Borrower and its
Subsidiaries other than HMI and its Subsidiaries shall be required
to be pledged pursuant to the Pledge
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Agreement) shall not apply to HMI or any of its Subsidiaries unless
the Required Banks deliver a written notice to the Borrower stating
otherwise, (II) neither HMI nor any of its Subsidiaries shall be
required to become a party to the Subsidiaries Guaranty, the Pledge
Agreement or the Security Agreement unless requested to do so in
writing by the Required Banks, (III) none of the capital stock of
any Subsidiary of HMI (except to the extent owned by the Borrower
and its Subsidiaries other than HMI and its Subsidiaries and not
constituting Margin Stock) shall be required to be pledged or
delivered to the Collateral Agent unless such pledge or delivery is
requested in writing by the Required Banks and (IV) HMI and its
Subsidiaries may (1) transfer assets (other than accounts
receivable), (2) make advances, investments or loans and (3)
declare or pay a Dividend, in each case amongst themselves"
20. Section 11 of the Credit Agreement is hereby amended by inserting
in appropriate alphabetical order the following new definitions:
"Final HMI Sale Prepayment Date" shall mean the later of (x)
March 1, 1998 and (y) the date on which HMI or any of its
Subsidiaries receives payment from its insurers with respect to the
litigation related to the Second Restated Stipulation of Partial
Settlement, but in any event shall not be later than June 30, 1998.
"First Amendment to Partners II Second Stock Purchase
Agreement" shall mean the amendment to the Partners II Second Stock
Purchase Agreement in substantially the form of the draft dated
September 29, 1997.
"HMI Merger Effective Date" shall mean the date on which the
HMI Merger is consummated in accordance with the terms of this
Agreement and the Seventh Amendment.
"HMI Sale Net Proceeds Amount" shall mean, at any time, an
amount equal to (A) the sum of (x) $2,900,000 and (y) the aggregate
amount received by the Borrower during the period from and
including the HMI Sale Effective Date to and including such time
from (1) repayment of outstanding HMI Loans held by the Borrower
and (2) repayment of other amounts owing to the Borrower and its
Subsidiaries (other than HMI and its Subsidiaries) less (B) amounts
invested by the Borrower and its Subsidiaries (other than HMI and
its Subsidiaries) in
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HMI during such period (including without limitation pursuant to
Section 9.05(u)).
"HMI Sale" shall mean the sale of substantially all of the
assets (other than Retained Assets) of HMI and its Subsidiaries to
▇▇▇▇▇▇▇▇▇▇▇ of HMI and its Subsidiaries to ▇▇▇▇▇▇▇▇▇▇▇.
"HMI Sale Documents" shall mean the Asset Purchase Agreement,
dated as of October 1, 1997, among Health Management, Inc., Health
Reimbursement Corporation, Inc., HMI Illinois, Inc., HMI
Pennsylvania, Inc., HMI PMA, Inc., HMI Retail Corp., Inc., Home
Care Management, Inc., as Sellers, the Borrower, as Seller
Guarantor, ▇▇▇▇▇▇▇▇▇▇▇, as Purchaser, and Counsel Corporation, as
Purchaser Guarantor and the schedules, exhibits and annexes
thereto.
"HMI Sale Effective Date" shall mean the date on which the HMI
Sale is consummated in accordance with the terms of this Agreement
and the Seventh Amendment.
"Retained Assets" shall mean those assets held by HMI and its
Subsidiaries on the HMI Sale Effective Date after giving effect to
the HMI Sale.
"Retained Liabilities" shall mean those liabilities set forth
on Annex XIV to this Agreement in existence on the HMI Sale
Effective Date and after giving effect to the HMI Sale (other than
liabilities under the HMI Sale Documents and the ▇▇▇▇▇▇▇▇▇▇▇ Loan
Documents).
"Seventh Amendment" shall mean the Seventh Amendment to this
Agreement, dated as of October 1, 1997.
"▇▇▇▇▇▇▇▇▇▇▇" shall mean ▇▇▇▇▇▇▇▇▇▇▇ Drug Distribution Co.,
Inc.
"▇▇▇▇▇▇▇▇▇▇▇ Loan" shall mean the loan in the amount of
$20,000,000 (less any repayments of principal thereof) by
▇▇▇▇▇▇▇▇▇▇▇ to HMI and its Subsidiaries guaranteed by the Borrower
pursuant to and in accordance with the ▇▇▇▇▇▇▇▇▇▇▇ Loan Documents.
"▇▇▇▇▇▇▇▇▇▇▇ Loan Documents" shall mean the Loan Agreement,
dated as of October 1, 1997, among the HMI Subsidiaries, as
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Borrowers, and ▇▇▇▇▇▇▇▇▇▇▇, as Lender, the Loan Escrow Agreement,
dated as of October 1, 1997, among the Borrower, the HMI
Subsidiaries and ▇▇▇▇▇▇▇▇▇▇▇, the Loan Escrow Agreement, dated as
of October 1, 1997, between the Borrower and Bankers Trust Company,
as Escrow Agent, and the Pledge Agreement, dated as of October 1,
1997, among the HMI Subsidiaries and ▇▇▇▇▇▇▇▇▇▇▇ and all other
documents executed in connection with the ▇▇▇▇▇▇▇▇▇▇▇ Loan."
"Supermajority Banks" shall mean those Non-Defaulting Banks
which would constitute the Required Banks under, and as defined in,
this Agreement if the percentage "50%" contained therein were
changed to "66-2/3%.""
21. The Credit Agreement is hereby further amended by adding new Annex
XIV in the form attached hereto as Annex XIV.
22. As consideration for the approval of this Amendment, the parties
hereto acknowledge and agree that, notwithstanding anything to the contrary
contained in the Credit Agreement or any other Credit Document, the Borrower
shall not be permitted to request or incur any additional Loans or to request or
have any additional Letters of Credit issued for its account, in either case
unless and until either (x) the Agent and the Required Banks or (y) the
Supermajority Banks, in all cases in their sole discretion, otherwise agree.
The parties hereto acknowledge and agree that either the Agent and/or
one or more Banks may, in their sole discretion, decline to agree to permit the
Borrower to request or incur additional Loans or to request or have any
additional Letters of Credit issued for its account pursuant to the Credit
Agreement (as contemplated by the immediately preceding paragraph) or may impose
conditions on such permission and (ii) neither the Agent nor any Bank shall have
any liability whatsoever to the any of the parties hereto, or any other Person,
as a result of any refusal (for any reason whatsoever) of the Agent and/or one
or more Banks to grant permission as is required above with respect to
additional Loans or Letters of Credit as described above.
The parties hereto further acknowledge and agree that in the event that
on December 31, 1997 (x) no Default or Event of Default then exists and (y) the
Borrower shall have made all repayments of Loans required by Sections 4.02(d)(i)
and (ii), then the Banks shall endeavor in good faith to eliminate the approval
requirement of this Section 22 with respect to additional Loans on and after
January 1, 1998 in an amount not to exceed $3,000,000 in accordance with, and
subject to compliance with all terms
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and conditions (including applicable conditions precedent) contained in, the
Credit Agreement, provided that all proceeds of such Loans shall be required to
be used for the working capital purposes of the Borrower and its Subsidiaries
(other than HMI and its Subsidiaries).
II. Miscellaneous Provisions.
23. In order to induce the Banks to enter into this Amendment, the
Borrower hereby represents and warrants that:
(a) no Default or Event of Default exists as of the Seventh
Amendment Effective Date (as defined below), after giving effect to
this Amendment; and
(b) all of the representations and warranties contained in the
Credit Agreement and the other Credit Documents are true and correct in
all material respects as of the Seventh Amendment Effective Date, both
before and after giving effect to this Amendment, with the same effect
as though such representations and warranties had been made on and as
of the Seventh Amendment Effective Date (it being understood that any
representation or warranty made as of a specific date shall be true and
correct in all material respects as of such specific date).
24. This Amendment is limited as specified and shall not constitute a
modification, acceptance or waiver of any other provision of the Credit
Agreement or any other Credit Document.
25. This Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Agent.
26. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
27. This Amendment shall become effective as of the date (the "Seventh
Amendment Effective Date") when (i) the Borrower, each other Credit Party and
the Required Banks shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered (including by way of facsimile
transmission) the
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same to the Agent at its Notice Office and (ii) the HMI Merger is consummated in
accordance with the terms of the Credit Agreement and this Amendment. The Agent
shall promptly notify the Borrower and the Banks in writing of the Seventh
Amendment Effective Date.
28. From and after the Seventh Amendment Effective Date, all references
in the Credit Agreement and each of the other Credit Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as modified
hereby.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date first
above written.
TRANSWORLD HEALTHCARE, INC.,
as Borrower
By /s/
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By /s/
---------------------------------
Name:
Title:
THE BANK OF NEW YORK
By /s/
---------------------------------
Name:
Title:
13
BANQUE PARIBAS
By /s/
---------------------------------
Name:
Title:
By /s/
---------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH
By /s/
---------------------------------
Name:
Title:
By /s/
---------------------------------
Name:
Title:
FLEET BANK, N.A.
By /s/
---------------------------------
Name:
Title:
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Each of the undersigned, each being a Subsidiary Guarantor pursuant to the
Credit Agreement referenced in the foregoing Seventh Amendment and a party to
various Security Documents, hereby acknowledges and agrees to the foregoing
provisions of the Seventh Amendment.
Acknowledged and
Agreed this first day
of October, 1997.
DERMAQUEST, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
MK DIABETIC SUPPORT
SERVICES, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
THE PROMPTCARE COMPANIES, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
15
THE PROMPTCARE LUNG CENTER, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
STERI-PHARM, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
TRANSWORLD HOME HEALTHCARE NURSING DIVISION, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
RESPIFLOW, INC.,
as a Pledgor
By /s/
---------------------------------
Title:
