Exhibit 10.12

 

$5.000,000.00 SECURED TERM LOAN

 

AMENDMENT NO. 4

 

TO

 

MORTGAGE LOAN AGREEMENT

 

originally dated as of August 31, 2000

 

by and among

 

HEALTHMONT, INC.,

HEALTHMONT OF GEORGIA, INC.

(dba Memorial Hospital of Adel and Memorial Convalescent Center),

HEALTHMONT OF TEXAS, INC.,

HEALTHMONT OF TEXAS I, LLC (dba Dolly Vinsant Memorial Hospital),

HEALTHMONT OF OREGON I, INC.,

HEALTHMONT OF OREGON II, INC.,

HEALTHMONT OF OREGON III, INC. (dba Woodland Park Medical Plaza),

HEALTHMONT OF OREGON V, LLC (dba Woodland Park Hospital), and

HEALTHMONT OF OREGON IV, LLC (dba Eastmoreland Hospital)

(collectively, “Borrower”)

 

and

 

HELLER HEALTHCARE FINANCE, INC.

(“Lender”)

 

Amended as of March 31, 2002

 

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AMENDMENT NO. 4 TO MORTGAGE LOAN AGREEMENT

 

THIS AMENDMENT NO. 4 TO MORTGAGE LOAN AGREEMENT (this “Amendment”) is made as of
March 31, 2002, by and among HEALTHMONT, INC., a Tennessee corporation,
HEALTHMONT OF GEORGIA, INC., a Tennessee corporation (dba Memorial Hospital of
Adel and Memorial Convalescent Center), HEALTHMONT OF TEXAS, INC., a Tennessee
corporation, HEALTHMONT OF TEXAS I, LLC, a Tennessee limited liability company
(dba Dolly Vinsant Memorial Hospital), and HEALTHMONT OF MISSOURI, INC., a
Tennessee corporation (dba Callaway County Community Hospital) (collectively,
“Borrower”), and HELLER HEALTHCARE FINANCE, INC., a Delaware corporation
(“Lender”).

 

RECITALS

 

A. Pursuant to that certain Mortgage Loan Agreement dated August 31, 2000 by and
among Borrower and Lender (as amended, restated, modified or supplemented from
time to time, the “Loan Agreement”), the parties have established certain
financing arrangements that allow Borrower to borrow funds from Lender in
accordance with the terms and conditions set forth in the Loan Agreement.

 

B. Borrower has requested, and Lender has agreed, to make certain modifications
to certain financial covenant provisions in the Loan Agreement, all as set forth
herein.

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower have agreed to the following amendments to the Loan
Agreement.

 

1. Definitions. Capitalized terms used but not defined in this Amendment shall
have the meanings that are set forth in the Loan Agreement.

 

2. Other Amendments to Loan Agreement.

 

(a) Section 5.20 – Debt Service Coverage Ratio. Section 5.20 is hereby deleted
in its entirety and replaced by the following:

 

“5.20 Debt Service Coverage Ratio. Commencing with a measurement on March 31,
2002, and continuing with measurements on the last day of each quarter
thereafter throughout the term of the Loan, Borrower shall have maintained the
following Debt Service Coverage Ratios:

 

Quarter Ending

--------------------------------------------------------------------------------

   DSC Ratio

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3/31/02

   .70 to 1.0

6/30/02

   .55 to 1.0

9/30/02

   .60 to 1.0

12/31/02

   .55 to 1.0

3/31/03

   1.2 to 1.0

6/30/03

   1.50 to 1.0

 

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For purposes of this covenant, “Debt Service Coverage Ratio” shall mean the
ratio of (i) Cash Flow (defined below) from the Facilities (determined as set
forth below) to (ii) Debt Service (defined below). The Debt Service Coverage
Ratio shall be measured on a quarterly basis beginning with the quarter ending
December 31, 2000 and continuing until the Loan is repaid in full. For purposes
of this covenant, “Cash Flow” shall mean, for any given accounting period, net
income (as determined in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods) plus amortization,
depreciation, interest, accrued taxes, and management fees. For purposes of this
covenant, “Debt Service” shall mean, for any given period, all regularly
scheduled interest payments due under all loans to Lender, plus all interest on
capital leases, and any other debt permitted pursuant to the terms of the Loan
Documents or otherwise permitted in writing by Lender.”

 

(b) Section 5.21 – Cash Flow Requirements. Section 5.21 is hereby deleted in its
entirety and replaced by the following:

 

“5.21 Cash Flow. Commencing with a measurement on March 31, 2002, and continuing
with measurements on the last day of each quarter thereafter throughout the term
of the Loan, Borrower shall have maintained minimum annualized Cash Flow (as
defined in Section 5.20) for the preceding twelve (12) months of operations as
follows:

 

Quarter Ending

--------------------------------------------------------------------------------

   Cash Flow

--------------------------------------------------------------------------------

3/31/02

   $ 150,000.00  

6/30/02

   $ 235,000.00  

9/30/02

   $ 120,000.00  

12/31/02

   $ 450,000.00  

3/31/03

   $ 500,000.00  

6/30/03

   $ 800,000.00”

 

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(c) Section 5.22 – Working Capital Requirements. Section 5.22 of the Loan
Agreement is hereby amended and restated to read as follows:

 

“5.22 Working Capital Ratio. At the end of each calendar quarter throughout the
term of the Loan, Borrower shall have maintained a Working Capital Ratio as
follows:

 

Period Ending

--------------------------------------------------------------------------------

   Working Capital Ratio

--------------------------------------------------------------------------------

12/31/00

   2.15 to 1.0

3/31/01

     1.4 to 1.0

6/30/01 through 3/31/02

   1.18 to 1.0

6/30/02 through Maturity

   1.25 to 1.0

 

For purposes of this covenant, “Working Capital Ratio” shall mean the ratio of
Borrower’s current assets to Borrower’s current liabilities (excluding amounts
due and owing under the Loan and the Revolving Loan). The Working Capital Ratio
shall be measured on a quarterly basis beginning with the quarter ending
December 31, 2000 and continuing until the Loan is repaid in full.”

 

3. Confirmation of Representations and Warranties. Each of the entities
comprising Borrower hereby confirms that all of the representations and
warranties set forth in Article IV of the Loan Agreement are true and correct
with respect to Borrower, and specifically represents and warrants to Lender
that it has good and marketable title to all of its respective Collateral, free
and clear of any lien or security interest in favor of any other person or
entity.

 

4. Costs. In consideration of Lender’s agreement to modify certain financial
covenants of the Loan Agreement as described in Section 2 of this Amendment, and
for Lender’s consent to certain actions of Borrower as described in a letter
agreement dated of even date of this Amendment, Borrower hereby agrees to pay to
Lender a modification fee equal to Fifteen Thousand Dollars ($15,000). In
addition, Borrower shall be responsible for the payment of all reasonable fees
of Lender’s in-house counsel incurred in connection with the preparation of this
Amendment and any related documents. All of the fees described in this Section 4
shall constitute a portion of the Obligations evidenced by the Revolving Credit
Note and secured by the Revolving Loan Agreement and other Loan Documents, and
Borrower hereby authorizes Lender to deduct all of such fees set forth in this
Section 4 from the proceeds of the next Revolving Credit Loan.

 

5. Reference to the Effect on the Loan Agreement.

 

(a) Upon the effectiveness of this Amendment, each reference in the Loan
Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of
similar import shall mean and be a reference to the Loan Agreement as amended by
this Amendment.

 

(b) Except as specifically amended above, the Loan Agreement, and all other Loan
Documents, shall remain in full force and effect, and are hereby ratified and
confirmed.

 

(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided in this Amendment, operate as a waiver of any
right, power or remedy of Lender, nor constitute a waiver of any provision of
the Loan Agreement, or any other

 

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documents, instruments and agreements executed or delivered in connection with
the Loan Agreement.

 

6. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Maryland.

 

7. Headings. Section headings in this Amendment are included for convenience of
reference only and shall not constitute a part of this Amendment for any other
purpose.

 

8. Counterparts. This Amendment may be executed in counterparts, and both
counterparts taken together shall be deemed to constitute one and the same
instrument.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the date first written above.

 

LENDER:

HELLER HEALTHCARE FINANCE, INC.,

a Delaware corporation

By:   /s/    JOSEPH PRANDANI          

(SEAL)

   

--------------------------------------------------------------------------------

   

Name:

Title:

 

Joseph Prandani

Vice President

   

 

BORROWER:

HEALTHMONT, INC.,

a Tennessee corporation

By:   /s/    TIMOTHY S. HILL          

(SEAL)

   

--------------------------------------------------------------------------------

   

Name:

Title:

 

Timothy S. Hill

President

   

 

HEALTHMONT OF GEORGIA, INC.,

a Tennessee corporation

By:   /s/    TIMOTHY S. HILL          

(SEAL)

   

--------------------------------------------------------------------------------

   

Name:

Title:

 

Timothy S. Hill

President

   

 

HEALTHMONT OF TEXAS, INC.,

a Tennessee corporation

By:   /s/    TIMOTHY S. HILL          

(SEAL)

   

--------------------------------------------------------------------------------

   

Name:

Title:

 

Timothy S. Hill

President

   

 

HEALTHMONT OF TEXAS I, LLC,

a Tennessee limited liability company

By:   /s/    TIMOTHY S. HILL          

(SEAL)

   

--------------------------------------------------------------------------------

   

Name:

Title:

 

Timothy S. Hill

President

   

 

HEALTHMONT OF MISSOURI, INC.,

a Tennessee corporation

By:   /s/    TIMOTHY S. HILL          

(SEAL)

   

--------------------------------------------------------------------------------

   

Name:

Title:

 

Timothy S. Hill

President

   

 

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