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EXHIBIT 4.7(e)
THIRD AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT
THIS THIRD AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT (this
"Third Amendment to Loan Agreement" or this "Third Amendment") is entered into
on February 2nd, 1998 between NBD Bank ("NBD" or "Bank"), as lender, with
offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; Universal Standard
Healthcare, Inc., formerly known as Universal Standard Medical Laboratories,
Inc., a Michigan corporation ("USML"); Universal Standard Healthcare of
Michigan, Inc., formerly known as Universal Standard Managed Care of Michigan,
Inc., a Michigan corporation ("Michigan Managed Care"); Universal Standard
Healthcare of Ohio, Inc., formerly known as Universal Standard Managed Care of
Ohio, Inc., an Ohio corporation ("Ohio Managed Care"); Universal Standard
Healthcare of Delaware, Inc., formerly known as Universal Standard Managed Care,
Inc., a Delaware corporation ("Delaware Managed Care"); T.P.A., Inc., a Michigan
corporation ("Processing"); and A/R Credit, Inc., a Michigan corporation ("AR
Credit"), all of whose addresses are 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000.
RECITALS
This Third Amendment to Loan Agreement is based on the following recitals
("Recitals"), which are incorporated into and made a part of this Third
Amendment:
1. USML, Delaware Managed Care, Ohio Managed Care, Michigan
Managed Care, Processing, AR Credit (each, an "Obligor" and
collectively, the "Obligors"), and NBD are parties to a Revolving
Credit and Loan Agreement dated April 30, 1997, as amended by a First
Amendment to Revolving Credit and Loan Agreement dated September 26,
1997, and by a Second Amendment to Revolving Credit and Loan Agreement
dated November 30, 1997 (as amended, and as may be further amended or
restated from time to time, the "Loan Agreement"). In addition to the
Loan Agreement, Bank and Obligors are parties to various other loan and
security documents and guaranties more particularly described in or
executed in connection with the Loan Agreement (which are defined as
the "Loan Documents" in the Loan Agreement). Capitalized terms used but
not defined in this Third Amendment have the same meanings given to
those terms in the Loan Documents.
2. Recently, a $813,074.66 judgment was entered against USML
in the so-called "Fawzi and Xxxx Xxxxx vs. Universal Standard Medical
Laboratories, Inc." litigation (the "Shaya Judgment"). The Obligors
have advised NBD that they believe that USML will prevail in an appeal
of the Shaya Judgment. In order to obtain a bond to appeal the Shaya
Judgment, the Obligors have requested that NBD issue a standby letter
credit.
3. Obligors have requested and, subject to the terms hereof,
Bank has agreed to amend the Loan Agreement as set forth in this Third
Amendment.
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AGREEMENT
Based on the foregoing Recitals (which are incorporated herein as
representations, warranties, acknowledgments and agreements of the parties, as
the case may be) and for other good and valuable consideration, the receipt and
adequacy of which is mutually acknowledged by the parties hereto, Obligors and
Bank agree as follows:
A. The definition of "Borrowing Base" in Section 1.1 of the
Loan Agreement is amended in its entirety to read as follows:
"Borrowing Base" means as of the date of determination, the
sum of (1) the following applicable percentage of Qualified
Accounts, multiplied by, a person's Qualified Accounts
reported in a Collateral Activity Report delivered in
accordance with Section 6.4(b), plus, (2) the following
applicable percentage of Qualified Inventory, multiplied by, a
person's Qualified Inventory reported on a Collateral Activity
Report delivered in accordance with Section 6.4(b), plus, (3)
the following applicable percentage of Qualified Equipment,
multiplied by, a person's Qualified Equipment reported in a
Collateral Activity Report delivered in accordance with
Section 6.4(b), plus, (4) the following applicable percentage
of Qualified Edit Accounts, multiplied by, a person's
Qualified Edit Accounts reported on a Collateral Activity
Report delivered in accordance with Section 6.4(b), plus, (5)
the Applicable Amount, minus, (6) 100% of the face amount of
the Litigation Letter of Credit and 100% of all unreimbursed
draws in connection with the Litigation Letter of Credit:
Qualified Accounts up to 80%
Qualified Inventory up to 50%
Qualified Equipment up to 80%
Qualified Edit Accounts up to 80%
Notwithstanding anything to the contrary contained in this Agreement
(a) Advances under the Line of Credit Loan against Qualified Inventory may not
exceed $500,000 at any time and (b) Advances under the Line of Credit Loan
against Qualified Edit Accounts may not exceed $1,000,000 at any time. All
Qualified Accounts and Qualified Edit Accounts reported in the Borrowing Base
must be net of reserves for contractual reimbursement levels and bad debt
expense, and these reserves must be satisfactory to NBD in its Reasonable Credit
Judgment. "Applicable Amount" means $0 unless the Litigation Letter of Credit
has been issued, in which case it means the amount determined from the following
table:
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Applicable
Time Period Amount
----------- ------
Date on which Litigation Letter of Credit
is issued to April 29, 1998 $600,000
April 30, 1998 to May 30, 1998 $350,000
May 31, 1998 and thereafter $ -0-
B. The definition of "Loan Documents" in Section 1.1 of the
Loan Agreement is amended in its entirety to read as follows:
"Loan Documents" means this Agreement, the Notes, the Lease
Documents, the Litigation Letter of Credit Documents, the
documents and agreements delivered to the Bank in accordance
with the Articles II and III of this Agreement, and all other
agreements and documents or instruments now or hereafter
executed by or on behalf of any one or more of the Obligors
and delivered to Bank."
C. Section 2.1 of the Loan Agreement is amended to add the
following: "NBD, in its sole discretion, agrees to issue a standby
letter of credit for a Borrower's account subject to all of the terms
and conditions of this Agreement and on the following terms and
conditions:
(a) NBD agrees, in its sole discretion, to issue for USML's
account a standby letter of credit for the sole purpose of bonding the
Shaya Judgment in the face amount of $1,016,343.32 (together with all
replacements thereof and amendments thereto, the "Litigation Letter of
Credit").
(b) The Litigation Letter of Credit must have an expiry date
of not later than one year from the date of issuance, but may contain a
usual and customary provision providing for automatic one year
extensions unless NBD gives 60 days prior written notice that it will
not extend the expiry date.
(c) USML must execute NBD's standard documentation relating to
the issuance of standby letters of credit (for convenience, such
documentation, together with all other documentation related to the
Litigation Letters of Credit, as may be amended or restated from time
to time, is referred to collectively as the "Litigation Letter of
Credit Documents" and individually as a "Litigation Letter of Credit
Document").
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(d) USML must (i) pay to NBD on any date on which NBD pays a
draft presented under a Litigation Letter of Credit, a sum equal to the
amount so paid plus a disbursement fee of $200 plus any and all
expenses that NBD may pay or incur relative to the Litigation Letter of
Credit, and (ii) immediately pay to NBD any and all expenses incurred
by NBD in enforcing or protecting any rights under this Agreement or
any of the Litigation Letter of Credit Documents or the other Loan
Documents. If USML fails to make any payment due NBD under this
Agreement or the Litigation Letter of Credit Documents, NBD may charge
any Borrower's account for such amount.
(e) All of USML's present and future Obligations to NBD under
the Litigation Letter of Credit Documents are secured by all collateral
security (including the Collateral) heretofore, simultaneously
herewith, or hereafter granted to NBD by each Obligor or any other
party for the purpose of securing any of any Obligor's present or
future Obligations to NBD.
(f) The Litigation Letter of Credit will accrue a commission
at the per annum rate of 1.50 percent per annum of the face amount of
the Litigation Letter of Credit, payable annually and in advance at the
time of issuance or extension, in addition, USML must also pay all
other usual and customary fees charged by NBD in connection with
issuance of standby letters of credit.
(g) For purposes of calculating the Line Limit and Borrower
Base, the full face amount of the Litigation Letter of Credit is
treated as an outstanding principal advance under the Line of Credit."
D. Subsections 6.1A through D are amended in their
entirety to read as follows:
"A. Consolidated Current Ratio. Maintain at all times
a Consolidated Current Ratio of not less than (i) 1.20 to
1 from December 31, 1997 through June 29, 1998, and (ii)
1.25 to 1 on and after June 30, 1998.
B. Consolidated Funded Debt Ratio. Maintain at all times a
Consolidated Funded Debt Ratio of not greater than (i) .75 to
1 from December 31, 1997 through September 29, 1998, (ii) .70
to 1 for the period from September 30, 1998 through December
30, 1998, and (iii) .65 to 1 on and after December 31, 1998.
C. Consolidated Debt Service Coverage Ratio. Maintain a
Consolidated Debt Service Coverage Ratio of not less than (i)
1.10 to 1 for periods ending between December 31, 1997 and
June 29, 1998, and (ii) 1.25 to 1 for the period ended June
30, 1998 and periods thereafter. This financial covenant will
be measured as of
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the last day of each fiscal quarter of the Obligors on a
trailing four quarter basis.
D. Consolidated Leverage Ratio. Maintain at all times a
Consolidated Leverage Ratio of not greater than (i) 6.75 to 1
for the period from December 31, 1997 through March 30, 1998;
(ii) 5.25 to 1 for the period from March 31, 1998 through June
29, 1998; (iii) 4 to 1 for the period from June 30, 1998
through December 30, 1998; and (iv) 3 to 1 on and after
December 31, 1998."
E. Simultaneously with the execution of this Third Amendment,
USML must pay NBD a $5,000 amendment fee, which is in addition to all
other fees and interest due NBD. This amendment fee is fully earned by
NBD upon execution of the Third Amendment.
F. The definition of "Obligations" in Section 1.1 of the Loan
Agreement is amended to provide that in addition to the obligations
described therein, the term "Obligations" also includes all present and
future obligations arising under or in connection with the Litigation
Letter of Credit Documents. References in the Loan Documents to the
"Lease Transactions" are to be treated as referring to an approximate
$705,000 series of lease transactions.
G. Any Event of Default under the Loan Documents is also a
default under each of the Litigation Letter of Credit Documents.
H. Prior to or simultaneously with execution and delivery of
this Third Amendment, Obligors must cause to be executed and delivered
to Bank such financing statements, resolutions and other agreements
that Bank may require to effectuate the transactions contemplated by
this Third Amendment. Obligors must pay all costs and expenses
(including attorneys' fees) incurred by Bank in connection with this
Third Amendment.
I. Obligors expressly acknowledge and agree that all
collateral security and security interests, liens, pledges, guaranties,
and mortgages heretofore or hereafter granted Bank including, without
limitation, such collateral, security interests, liens, pledges, and
mortgages granted under the Loan Documents, extend to and cover all of
each Obligor's Obligations to Bank, now existing or hereafter arising
including, without limitation, those arising in connection with this
Third Amendment (including the Lease Transactions and the Lease
Documents) and under all guaranty agreements now or in the future given
by one or more of the Obligors in Bank's favor, upon the terms set
forth in such agreements, all of which security interests, liens,
pledges, and mortgages are ratified, reaffirmed, confirmed and
approved.
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J. From and after the date of this Third Amendment, references
in the Loan Documents to the Loan Agreement are to be treated as
referring to the Loan Agreement as amended by this Third Amendment.
K. Obligors represent and warrant to the NBD that:
(1) (a) The execution, delivery and performance of
this Third Amendment by the Obligors and all agreements and
documents delivered by Obligors in connection with this Third
Amendment have been duly authorized by all necessary corporate
or other organizational action and does not and will not
require any consent or approval of its stockholders or
members, violate any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to it or of its
articles of incorporation, articles of organization, or
bylaws, or result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other
agreement, lease or instrument to which any Obligor is a party
or by which it or its properties may be bound or affected.
(b) No authorization, consent, approval,
license, exemption of or filing a registration with any court
or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, is or will be
necessary to the valid execution, delivery or performance by
Obligors of this Third Amendment and all agreements and
documents delivered in connection with this Third Amendment.
(c) This Third Amendment and all agreements
and documents delivered by Obligors in connection with this
Third Amendment are the legal, valid and binding obligations
of Obligors enforceable against each of them in accordance
with the terms thereof.
(2) After giving effect to the amendments contained
in this Third Amendment, all of the representations and
warranties contained in the Loan Documents are true and
correct on and as of the date hereof with the same force and
effect as if made on and as of the date hereof.
(3) Obligors's financial statements furnished to the
NBD, fairly present Obligors's financial condition as at such
dates and the results of Obligors's operations for the periods
indicated, all in accordance with generally accepted
accounting principles applied on a consistent basis, and since
the date of the last such financial statement there has been
no material adverse change in such financial condition.
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(4) No Default or Event of Default has occurred and
is continuing or will exist on the date of this Third
Amendment under the Loan Agreement or any of the other Loan
Documents.
L. The terms and provisions of this Third Amendment amend, add
to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Third Amendment, all of the
other terms and conditions of the Loan Agreement and the other Loan
Documents (including all guaranties, which, without limitation, extend
to and cover the Obligations arising in connection with the Lease
Transactions and the Lease Documents) remain in full force and effect
and are hereby ratified, reaffirmed, confirmed, and approved.
M. If there is an express conflict between the terms of this
Third Amendment to Loan Agreement and the terms of the Loan Agreement
or the other Loan Documents, the terms of this Third Amendment govern
and control.
N. This Third Amendment may be executed in any number of
counterparts with the same effect as if all signatories had signed the
same document. All counterparts must be construed together to
constitute one instrument.
O. WAIVER OF JURY TRIAL AND ACKNOWLEDGMENT. THE PARTIES HERETO
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT,
BUT THAT THIS RIGHT MAY BE WAIVED. NBD AND OBLIGORS EACH HEREBY
KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVE ALL RIGHTS TO A
TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR IN RELATION TO THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENTS BETWEEN ANY OF
THE PARTIES. NO PARTY SHALL BE DEEMED TO HAVE RELINQUISHED THE BENEFIT
OF THIS WAIVER OF JURY TRIAL UNLESS SUCH RELINQUISHMENT IS IN A WRITTEN
INSTRUMENT SIGNED BY THE PARTY TO WHICH SUCH RELINQUISHMENT WILL BE
CHARGED.
NBD BANK
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
First Vice President
[Signatures continued on following page]
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[Signature continued from preceding page]
UNIVERSAL STANDARD
HEALTHCARE, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx
Vice President Finance and Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF MICHIGAN, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF OHIO, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF DELAWARE, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, Treasurer
A/R CREDIT, INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, Treasurer
[Signatures continued on following page]
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[Signature continued from preceding page]
T.P.A., INC.
By: /s/ Xxxx X. Xxx
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Xxxx X. Xxx, Treasurer
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