Exhibit 10.2

 

THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER

 

THIS THIRD AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “Amendment”), dated as
of April 29, 2011, is made by and between BROTMAN MEDICAL CENTER, INC., a
California corporation, as borrower (“Borrower”) and GEMINO HEALTHCARE FINANCE,
LLC, a Delaware limited liability company, as lender (“Lender”).

 

BACKGROUND STATEMENT

 

A.                                   Borrower and Lender are parties to a Credit
Agreement, dated as of April 14, 2009 (as amended by that certain First
Amendment to Credit Agreement and Waiver, dated as of December 11, 2009, and
that certain Second Amendment to Credit Agreement, dated as of February 17,
2010, and as further amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”). Capitalized terms used herein without
definition shall have the meanings given to them in the Credit Agreement.

 

B.                                     Borrower has requested that Lender
(i) waive a certain Event of Default pursuant to Section 8.01(b) of the Credit
Agreement and (ii) agree to make certain revisions to the Credit Agreement.
Lender has agreed to make the following amendments to the Credit Agreement and
provide the following waiver, subject to the terms and conditions set forth
herein.

 

STATEMENT OF AGREEMENT

 

The parties hereto, in consideration of the mutual covenants and agreements set
forth herein, agree as follows:

 

ARTICLE I

 

AMENDMENTS

 

1.1                                 Amendment to Section 6.06(b). The Credit
Agreement is hereby amended by deleting Section 6.06(b) in its entirety and
replacing it with the following:

 

“(b)                           Fixed Charge Coverage Ratio. Borrower shall
maintain a Fixed Charge Coverage Ratio measured quarterly at the end of each
fiscal quarter of not less than 1.0:1.0 for the fiscal quarter ending March 31,
2011 and each fiscal quarter thereafter.

 

The Fixed Charge Coverage Ratio shall be calculated on a rolling four quarter
basis ending with the quarter being measured, provided, however, that for the
fiscal quarters ending March 31, 2011, June 30, 2011, and September 30, 2011,
the Fixed Charge Coverage Ratio shall be calculated on a cumulative annualized
basis.  The reporting and calculation of the Fixed Charge Coverage Ratio shall
commence for the fiscal quarter ending March 31, 2011.”

 

1.2                                 Amendment to Definition of “Fixed Charge
Coverage Ratio”.  The definition of “Fixed Charge Coverage Ratio” in Annex I of
the Credit Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

 

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“Fixed Charge Coverage Ratio” means the ratio of (a) EBITDAC, less any revenue
and expenses (not including legal fees) incurred due to AB 1383, to (b) the sum
of (i) the current portion of any long-term Indebtedness (provided, that any
indebtedness under the JHA Loans shall not be considered “current” so long as
(A) the Borrower is in full compliance with the terms of the JHA Loans, (B) the
Borrower has not received any notices of default or similar notices by JHA or
its assignees, (C) JHA or its assigns have not terminated the JHA Loans or
exercised any remedies against the Borrower, and (D) JHA or its assigns have not
exercised, or provided notice of their exercise, of any put right, including,
without limitation, the Put Right as defined in the JHA Loan Documents)(further
provided, that any portion of the indebtedness related to the AB 1383 liability
shall not be considered “current” to the extent there exists at all times a
written, enforceable commitment from Shareholders to immediately fund such
liability to the Borrower when it is either paid by the Borrower or withheld
from Borrower’s Medi-Cal remittances), plus (ii) the current portion of lease
payments under capitalized leases, plus (iii) cash interest paid, plus
(iv) income taxes paid, plus (v) Unfunded Capital Expenditures, plus (vi) any
Distributions paid in cash, plus (vii) any consulting fees (including without
limitation the Prospect Consulting Fee) paid, plus (viii) current portion of any
amount due to CMS under any extended repayment plan in connection with any CMS
Claim, in accordance with generally accepted accounting principles consistently
applied, calculated on a rolling four quarter basis ending with the quarter
being measured, provided, however, that for the fiscal quarters ending March 31,
2011, June 30, 2011, and September 30, 2011, the Fixed Charge Coverage Ratio
shall be calculated on a cumulative annualized basis, though the cash payments
of (a)(ii) and (b)(ix) above shall not be annualized.”

 

1.3                                 New Definition of “Unfunded Capital
Expenditure”.  The following new definition of Unfunded Capital Expenditure
shall be added to Annex I:

 

“Unfunded Capital Expenditure” means expenditures by Borrowers for the
acquisition of capital equipment, improvements or other capital assets that are
not funded by the incurrence of any Indebtedness or cash received from
Borrower’s $3.75MM Rights Offering in November of 2010.”

 

ARTICLE II

 

WAIVER

 

2.1                                 Financial
Covenants.                                Lender hereby waives the Event of
Default pursuant to Section 8.01(b) of the Credit Agreement resulting from
Borrower’s failure to comply with Section 6.06(b) of the Credit Agreement with
respect to the testing period ending December 31, 2010.

 

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

Borrower hereby represents and warrants as follows:

 

3.1                                 Representations and Warranties. After giving
effect to this Amendment, each of the representations and warranties of Borrower
contained in the Credit Agreement and in the other Loan Documents is true and
correct on and as of the date hereof with the same effect as if made on and as
of the date hereof (except to the extent any such representation or warranty is
expressly stated to have been made as of a specific date, in which case such
representation or warranty is true and correct as of such date).

 

3.2                                 No Default. After giving effect to this
Amendment, no Event of Default or Unmatured Event of Default has occurred and is
continuing.

 

3.3                                 Enforceability. This Amendment has been duly
executed and delivered by Borrower and constitutes Borrower’s legal, valid and
binding obligation, enforceable in accordance with its terms, except as such
enforceability may be limited (a) by general principles of equity and conflicts
of laws or (b) by bankruptcy, reorganization, insolvency, moratorium or other
laws of general application relating to or affecting the enforcement of Lender’s
rights.

 

3.4                                 No Conflicts. No consent, approval,
authorization or order of, or filing, registration or qualification with, any
court or governmental authority or third party is required in connection with
the execution, delivery or performance by Borrower of this Amendment.

 

3.5                                 Obligations. The execution and delivery of
this Amendment does not diminish or reduce Borrower’s obligations under the Loan
Documents, except as modified by this Amendment.

 

3.6                                 No Claims. Borrower has no claims,
counterclaims, offsets or defenses to the Loan Documents or the performance of
its obligations thereunder, or if Borrower has any such claims, counterclaims,
offsets, or defenses to the Loan Documents or any transaction related to the
Loan Documents, the same are hereby waived, relinquished and released in
consideration of Lender’s execution and delivery of this Amendment.

 

ARTICLE IV

 

CONDITIONS TO EFFECTIVENESS

 

The effectiveness of the amendments to the Credit Agreement and of the waiver
set forth in this Amendment is subject to the satisfaction of the following
conditions:

 

4.1                                 Executed Amendment and Other Documents. This
Amendment and any other documents required by Lender in its sole discretion
shall have been duly executed and delivered by Borrower in form and substance
satisfactory to Lender in its sole discretion.

 

4.2                                 Fees.  Prior to closing of this Amendment,
Borrower shall have paid to Lender (i) all Expenses (including without
limitation the reasonable fees and expenses of counsel to Lender) associated
with this Amendment and (ii) Seventeen Thousand Five Hundred Dollars ($17,500)
to Lender as a waiver and amendment fee.

 

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4.3                                 No Material Adverse Change. No Material
Adverse Effect has occurred and is continuing, and no Borrower knows of any
event, condition or state of facts that could reasonably be expected to have a
Material Adverse Effect.

 

ARTICLE V

 

MISCELLANEOUS

 

5.1                                 Effect of Amendment. From and after the
Effective Date (as defined below), all references to the Credit Agreement set
forth in any other Loan Document or other agreement or instrument shall, unless
otherwise specifically provided, be references to the Credit Agreement as
amended by this Amendment and as may be further amended, modified, restated or
supplemented from time to time. This Amendment is limited as specified and shall
not constitute or be deemed to constitute an amendment, modification or waiver
of any provision of the Credit Agreement or of any other Loan Document except as
expressly set forth herein. Except as expressly amended hereby, the Credit
Agreement shall remain in full force and effect in accordance with its terms.

 

5.2                                 Governing Law. This Amendment shall be
governed by and construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania (without regard to the conflicts of law provisions
thereof).

 

5.3                                 Expenses. Borrower agrees to pay upon demand
all out-of-pocket costs and expenses of Lender (including, without limitation,
the reasonable fees and expenses of counsel to Lender) in connection with the
preparation, negotiation, execution and delivery of this Amendment.

 

5.4                                 Severability. To the extent any provision of
this Amendment is prohibited by or invalid under the applicable law of any
jurisdiction, such provision shall be ineffective only to the extent of such
prohibition or invalidity and only in any such jurisdiction, without prohibiting
or invalidating such provision in any other jurisdiction or the remaining
provisions of this Amendment in any jurisdiction.

 

5.5                                 Successors and Assigns.  This Amendment
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.

 

5.6                                 Construction. The headings of the various
sections and subsections of this Amendment have been inserted for convenience
only and shall not in any way affect the meaning or construction of any of the
provisions hereof.

 

5.7                                 Counterparts; Effectiveness. This Amendment
may be executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument. This Amendment shall become effective upon the execution and
delivery of a counterpart hereof by Borrower and Lender and the satisfaction of
the conditions set forth in Article III hereof (such date, the “Effective
Date”).  Signatures of the parties to this Amendment

 

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transmitted by facsimile or via other electronic format shall be deemed to be
their original signatures for all purposes.

 

[Signatures on following page.]

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.

 

BORROWER:

 

 

 

 

 

Address for notices to Borrower:

BROTMAN MEDICAL CENTER, INC.

 

 

 

Brotman Medical Center, Inc.

 

 

3828 Delmas Terrace

 

 

Culver City, CA 90231

 

 

Attn: Von Crockett, Chief Executive Officer

By:

/s/ Von Crockett

Fax: (310) 202-4125

Name:

Von Crockett

 

Title:

Chief Executive Officer

 

 

 

 

 

 

LENDER:

 

 

 

 

 

Address for notices to Lender:

GEMINO HEALTHCARE FINANCE, LLC

 

 

 

Gemino Healthcare Finance, LLC

 

 

1 International Plaza, Suite 220

By:

/s/ Stacy L. Allen

Philadelphia, PA 19113

Name:

Stacy L. Allen

Attn: Miriam Gallagher

Title:

Vice President

Fax: (610) 870-5401

 

 

 

 

 

With a copy to (which shall not constitute notice):

 

 

 

 

 

Waller Lansden Dortch & Davis, LLP

 

 

511 Union Street, Suite 2700

 

 

Nashville City Center

 

 

Nashville, TN 37219

 

 

Attn: Robert L. Harris

 

 

Fax: (615) 244-6804

 

 

 

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