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AMENDMENT NO. 7
Dated as of February 4, 1999
This AMENDMENT among U.S. HOMECARE CORPORATION AND ITS SUBSIDIARIES
LISTED IN ANNEX 1 HERETO (collectively, the "Borrowers" and each, individually,
a "Borrower"), the banks parties to the Credit Agreement referred to below (the
"Banks"), and THE CHASE MANHATTAN BANK (successor by merger to The Chase
Manhattan Bank, N.A.), as agent (the "Agent") for the Banks thereunder.
PRELIMINARY STATEMENT.
A. The Borrowers, the Banks and the Agent have entered into an Amended
and Restated Credit Agreement dated as of October 6, 1995, as amended by
Amendment No. 1 dated as of October 31, 1996, Amendment No. 2 dated as of
November 14, 1996, Amendment No. 3 dated as of March 25, 1997, Amendment No. 4
dated as of December 24, 1997, Amendment No. 5 dated as of March 25, 1998, and
Amendment No. 6 dated as of January 4, 1999 (said Credit Agreement, as so
amended, being hereinafter referred to as the "Credit Agreement"; the terms
defined therein being used herein as therein defined unless otherwise defined
herein).
B. Pursuant to the Credit Agreement, the Borrowers are indebted to the
Banks under the Notes in the aggregate principal amount of $5,852,918.21 as of
the date hereof (the "Indebtedness"), which Indebtedness is owed by the
Borrowers to the Banks without offset, defense or counterclaim of any kind,
nature or description. As security for such Indebtedness, the Borrowers have
heretofore granted to the Banks a first priority security interest in all the
Borrowers' assets (such security interest having been partially released by the
Banks pursuant to the Partial Release Letter dated November 8, 1993), whether
now owed or hereafter acquired, wherever located of any kind, nature or
description, tangible or intangible, including without limitation, the
Borrowers' accounts receivable, inventory, equipment, and general intangibles,
and such security interests and liens granted by the Borrowers to the Banks are,
subject to the terms of the Partial Release Letter, hereby reacknowledged and
confirmed by the Borrowers.
C. The Borrowers, the Banks and the Agent each hereby acknowledge
that the Borrowers have failed to comply with the covenants contained in
Sections 8.1 and 8.4 of the Credit Agreement for the months of October, November
and December of 1998, and for the month of January of 1999. As a result of such
noncompliance, Events of Default have occurred and are continuing under Section
9.1(c) of the Credit Agreement (the "Subject Events of Default"). The Borrowers
have requested that the Banks and the Agent forbear, from February 4, 1999
through March 3, 1999, from exercising their available rights and remedies
solely in connection with the Subject Events of Default.
D. The Borrowers, the Banks and the Agent have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments. The Credit Agreement is, effective as
of the date hereof and subject to the satisfaction of the conditions precedent
set forth in Section 3 hereof, hereby amended as follows:
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(a) The following new definitions are added in proper
alphabetical order to Section 1.1 of the Credit Agreement:
"Class B Receivables" means, as of any date of determination
thereof, all Receivables that would constitute Eligible Receivables but for
the application of clause (i), (ii) or (iii) contained in the definition of
"Eligible Receivable."
"Unapplied Cash" means, as of any date of determination thereof,
all cash proceeds of Receivables that are identified as "unapplied cash" on
the Borrowers' general ledger.
(b) The following definition contained in Section 1.1 of the
Credit Agreement is amended and restated in full to read as follows:
"Termination Date" means (i) March 4, 1999 or such later date
that is set forth in any extension letter from the Agent and the Banks to
the Borrowers from time to time; provided that if such date is not a
Banking Day, the Termination Date shall be the next succeeding Banking Day,
or (ii) the earlier date of termination in whole of the Commitments
pursuant to Section 2.7 or Section 9.2, or otherwise.
(c) Paragraphs (a) and (b) of the definition of Borrowing Base
contained in Section 1.1 of the Credit Agreement are amended and restated in
full to read as follows:
(a) the lesser of (i) the sum of (A) 90% of Eligible Receivables,
plus (B) 65% of Class B Receivables, plus (C)$335,000 (or any lesser amount
of cash reserves established under the Purchase Agreement in which the
Agent for the benefit of the Banks has a second priority security interest,
which security interest is hereby reacknowledged and confirmed by the
Borrowers), or (ii) $5,750,000, as such number set forth in this clause
(ii) shall reduce in the manner set forth in paragraph (b) below; plus
(b) an amount equal to (i) $1,315,661, less (ii) the principal
amount of any reductions in the Commitments occurring after February 4,
1999, whether pursuant to Section 2.7 or otherwise, less (iii) as of the
date the same are collected, fifty percent (50%) of all collections after
February 4, 1999, of USHNJ Receivables other than USHNJ Eligible
Receivables and USHNJ Receivables subject to the Purchase Agreement, less
(iv) $50,000 on August 30, 1998, and on the thirtieth day (twenty-eighth
day with respect to February) of each calendar month thereafter; provided
that such amount under this clause (b) shall not be less than zero, and
when such amount is reduced to zero, the reductions set forth in clause
(iv) of this paragraph (b) that have not yet been made shall be applied in
reduction of the dollar amount set forth in clause (ii) of paragraph (a)
above; less
(d) The first paragraph of the definition of Eligible Receivable
contained in Section 1.1 of the Credit Agreement is amended and restated in full
to read as follows:
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"Eligible Receivable" means, as of any date of determination
thereof, all Receivables, net of USHNJ Receivables, Unapplied Cash, the
Borrowers' customary reserves (the Agent will make adjustments to the
extent contractual reserves are maintained at a lesser or greater
percentage level than the level in effect on the date of the June 30, 1995
financial statements referred to in Section 5.5), unearned customer
deposits, taxes, trade or other documents, discounts, claims, credits,
returns, allowances, or set-offs, excluding the following:
(e) The form of Borrowing Base Certificate attached to the
Credit Agreement as Exhibit C is hereby replaced with the form of Borrowing Base
Certificate attached hereto as Exhibit C.
SECTION 2. Forbearance and Extensions.
(a) From February 4, 1999 until and including March 3, 1999,
and subject to the satisfaction of the conditions precedent set forth in Section
3 hereof, the Agent and the Banks hereby agree to forbear from pursuing their
available rights and remedies solely in connection with the Subject Events of
Default, except that the Agent and the Banks may, in their sole discretion,
refuse to make any additional Loan or Loans during such period; provided,
however, that as between the Agent and the Banks, no Bank may refuse to make any
Loan or Loans unless it has provided at least one Banking Day's prior written
notice to the Agent of its intention to no longer make any additional Loan or
Loans, and after receipt of such written notice, the Agent shall make no
additional Loan or Loans on behalf of such Bank. Notwithstanding the
satisfaction by the Borrowers of any conditions precedent to the making of Loans
under the Credit Agreement, nor any provision of the Credit Agreement or the
other Facility Documents to the contrary, the Borrowers acknowledge that the
Agent and the Banks are not under any commitment to make any Loans to the
Borrowers and the decision to make each Loan is subject to the sole discretion
of the Agent and the Banks. The Borrowers shall use their reasonable best
efforts during the forbearance period to provide to the Agent and the Banks, in
form and substance satisfactory to the Agent and the Banks, photocopies of an
executed letter of intent for the sale of all or substantially all of the assets
and/or business of the Borrowers to a non-affiliated third party.
(b) The Agent and the Banks did not require that the Borrowing
Base reduce by the amount of $50,000 (the "Note B Reduction") on each of August
30, 1998, September 30, 1998, October 30, 1998, November 30, 1998, December 30,
1998, and January 30, 1999, as provided in paragraph (b) of the definition of
"Borrowing Base" in Section 1.1. The Note B Reductions shall continue to be
deferred until the Agent on behalf of the Banks shall provide written notice to
the Borrowers requiring the Borrowers to make such Note B Reductions. The
Borrowers acknowledge that the Agent and the Banks have not waived such Note B
Reductions, but have only extended the time for the Note B Reductions until such
time satisfactory to the Agent and the Banks.
(c) In accordance with the Letter Waiver and Extension by and
among the Borrowers, the Agent and the Banks dated November 16, 1998 (the
"Letter Waiver"), the Borrowers were to provide the Agent and the Banks, (i) not
later than December 1, 1998, with
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management-prepared 1999 projected financial statements (the "Projections"), and
(ii) not later than December 15, 1998, with a written report from X.X. Xxxxxx,
certified public accountants (the "Accountants"), detailing the results of their
review of the Projections. The Agent and the Banks did not receive such
Projections until on or about December 15, 1998, and the Agent and the Banks
have not yet received the report from the Accountants. The Agent and the Banks
reserve their rights and remedies with respect to the failure of the Borrowers
to comply with the foregoing terms of the Letter Waiver, and nothing contained
herein shall constitute a waiver by the Agent or any Bank of such rights and
remedies.
(d) Nothing contained herein shall prejudice any rights or
remedies the Agent or any Bank may have to exercise their rights and remedies
with respect to the Subject Events of Default after March 3, 1999, or, on any
future date, to declare the Borrowers to be out of compliance with any term or
provision of the Credit Agreement, for any reason other than the Subject Events
of Default, or prevent the Agent or the Banks now or hereafter from pursuing any
of their available remedies in connection with any Default or Event of Default
under the Credit Agreement, other than the Subject Events of Default.
SECTION 3. Conditions of Effectiveness. This Amendment shall
become effective when, and only when, the Agent shall have received counterparts
of this Amendment executed by the Borrowers and all of the Banks, except that
Section 1 hereof shall become effective when, and only when, the Agent and the
Banks shall have additionally received true photocopies of the executed
originals of an Amendment No. 7 to Receivables Purchase and Servicing Agreement
extending the maturity date of the Purchase Agreement to March 4, 1999 and in
form and substance satisfactory to the Agent and the Banks.
SECTION 4. Additional Covenants of the Borrowers.
(a) Not later than February 21, 1999, the Borrowers shall
provide to the Agent and the Banks, in form and substance satisfactory to the
Agent and the Banks, photocopies of the executed originals of all waivers and
amendments with respect to the Junior Debt concerning the matters covered by
this Amendment, which shall include an amendment to the Junior Debt documents
extending the maturity date thereof to March 15, 1999.
(b) The failure of the Borrowers to comply with any of the
additional covenants set forth in this Amendment shall constitute an immediate
Event of Default under the Credit Agreement.
SECTION 5. Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a) Such Borrower is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation.
(b) The execution, delivery and performance by such Borrower
of this Amendment and the Facility Documents, as amended hereby, to which it is
or is to be a party are within such Borrower's corporate powers, have been duly
authorized by all necessary corporate
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action and do not contravene (i) such Borrower's charter or by-laws, (ii) any
contractual restriction binding on or affecting such Borrower, or result in, or
require, the creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge, encumbrance or preferential arrangement
of any nature upon or with respect to any of the properties now owned or
hereafter acquired by such Borrower, or (iii) to the best of such Borrower's
knowledge, any law.
(c) No authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such Borrower of this Amendment
or any of the Facility Documents, as amended hereby, to which it is or is to be
a party.
(d) This Amendment and each of the other Facility Documents as
amended hereby, to which such Borrower is a party constitute legal, valid and
binding obligations of such Borrower enforceable against such Borrower in
accordance with their respective terms.
(e) To the best of such Borrower's knowledge, the Security
Agreement constitutes valid and perfected first priority security interests and
liens in and to the Collateral covered thereby enforceable against all third
parties in all jurisdictions and secure the payment of all obligations of such
Borrower under the Facility Documents, as amended hereby, and the execution,
delivery and performance of this Amendment do not adversely affect the aforesaid
security interests and liens of such Security Agreement.
(f) Except as set forth on Schedule 5(f), there is no pending or
threatened action or proceeding affecting such Borrower or any of its
Subsidiaries before any court, governmental agency or arbitrator, which may
materially adversely affect the financial condition or operations of such
Borrower or any Subsidiary or which purport to affect the legality, validity or
enforceability of this Amendment or any of the other Facility Documents, as
amended hereby.
(g) After giving effect to the terms of the Amendment, no event
has occurred and is continuing which constitutes a Default or an Event of
Default.
SECTION 6. Reference to and Effect on the Facility Documents.
(a) Upon the effectiveness of this Amendment, on and after the
date hereof each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import, and each reference in
any Facility Documents to the Credit Agreement or any other Facility Document,
shall mean and be a reference to the Credit Agreement or such other Facility
Document as amended hereby.
(b) Except as specifically amended above, the Credit Agreement
and the other Facility Documents shall remain in full force and effect and are
hereby ratified and confirmed. Without limiting the generality of the foregoing,
the Pledge Agreements and all of the Pledged Collateral described therein, and
the Security Agreement and all of the Collateral described therein, do and shall
continue to secure the payment of all Obligations, in each case as amended
hereby.
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(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Agent or any Bank under any of the Facility
Documents, nor constitute a waiver of any provision of any of the Facility
Documents.
(d) The Agent and the Banks are under no obligation to enter into
this Amendment. The Agent's and the Banks' entering into this Amendment shall
not be deemed to limit or hinder any rights of the Agent or any Bank under the
Credit Agreement, nor shall it be deemed to create or infer a course of dealing
between the Agent or any Bank and the Parent or any of the other Borrowers with
regard to any provision of the Credit Agreement.
SECTION 7. Costs, Expenses and Taxes. The Borrowers jointly
and severally agree to pay on demand all costs and expenses of the Agent and the
Banks in connection with the preparation, execution and delivery of this
Amendment and the other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent and the Banks with respect thereto and with respect to
advising the Agent and the Banks as to their rights and responsibilities
hereunder and thereunder. The Borrowers further jointly and severally agree to
pay on demand all costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Amendment
and the other instruments and documents to be delivered hereunder, including,
without limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 7. In addition, the Borrowers shall pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and agrees to save the
Agent and the Banks harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
SECTION 8. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
SECTION 9. Governing Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
Borrowers:
U.S. HOMECARE CORPORATION AND ITS
SUBSIDIARIES LISTED ON ANNEX 1 HERETO
By: ____________________________________
Name:
Vice President of each of the above
corporations
Banks:
THE CHASE MANHATTAN BANK (successor by
merger to The Chase Manhattan Bank, N.A.)
By: ____________________________________
Xxxx Xxxxxxxxx
Vice President
BANK AUSTRIA CREDITANSTALT CORPORATE
FINANCE, INC., formerly known as
CREDITANSTALT CORPORATE FINANCE, INC.
By: ____________________________________
Name:
Title:
By: ____________________________________
Name:
Title:
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Agent:
THE CHASE MANHATTAN BANK (successor by
merger to The Chase Manhattan Bank, N.A.)
By: ____________________________________
Xxxx Xxxxxxxxx
Vice President
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ANNEX 1
U.S. HOMECARE CORPORATION, AFFILIATED HOME CARE OF WESTCHESTER, INC., U.S.
HOMECARE CORPORATION OF NORTHERN WESTCHESTER, U.S. HOMECARE CORPORATION OF
MANHATTAN, U.S. HOMECARE CORPORATION OF THE BRONX, U.S. HOMECARE CERTIFIED
CORPORATION OF NEW YORK, U.S. HOMECARE CORPORATION OF ALBANY, U.S. HOMECARE
INFUSION THERAPY SERVICES CORPORATION OF NEW JERSEY, U.S. HOMECARE
CORPORATION OF CONNECTICUT, U.S. HOMECARE CERTIFIED CORPORATION OF
CONNECTICUT, U.S. HOMECARE CORPORATION OF PENNSYLVANIA, U.S. HOMECARE
CERTIFIED CORPORATION OF PENNSYLVANIA, U.S. HOMECARE INFUSION THERAPY
PRODUCTS CORPORATION
