1
EXHIBIT 1.1
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
AGREEMENT made as of the 27th day of December, 1996, between
COMMUNITY CARE OF AMERICA, INC., a Delaware corporation ("Borrower"), and IHS
FINANCIAL HOLDINGS, INC., a Delaware corporation ("Lender" or "Manager").
WHEREAS, Borrower and Lender are concurrently herewith
entering into a Management Agreement (the "Management Agreement") pursuant to
which Borrower has engaged the services of Lender to manage various functions of
the Borrower's business; and
WHEREAS, Lender is willing to make available to the Borrower a
revolving line of credit in the maximum aggregate amount of $5,000,000, and
Borrower wishes to obtain such revolving line of credit, all upon the terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises, the mutual promises
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree that:
1. IHS Revolving Line of Credit.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties of the Borrower herein set forth, Lender hereby
makes available to Borrower a revolving line of credit (the "IHS Line of
Credit") in the aggregate maximum principal amount outstanding at any time of
FIVE MILLION DOLLARS ($5,000,000). It is contemplated that, subject to the
terms and conditions hereof, the Borrower will be permitted to effect draws
under the IHS Line of Credit at any time and from time to time during the
period that commences on the date hereof and ends on the second anniversary of
the date hereof.
(b) Lender shall not be required to make any advances under the IHS Line of
Credit to the Borrower unless all of the following conditions shall have been
satisfied at the time the advance is requested and at the time such advance is
to be made: (i) all of the representations and warranties made by the Borrower
in this Agreement and the Management Agreement shall be true and correct in all
respects at and as of the date on which such advance is to be made with the same
force and effect as if each such representation or warranty were made at and as
of such time, and in furtherance thereof, the Borrower shall automatically be
deemed to have remade each of such representations and warranties on each such
date; (ii) the Borrower shall have performed and complied with all covenants,
2
agreements and obligations required to be performed or complied with by it, on
or prior to the date on which such advance is to be made; (iii) no Event of
Default (as defined in Section 5) shall have occurred and be continuing; (iv)
the Borrower shall have complied with the procedure set forth in subsection (c)
below with respect to such advance; and (v) Lender shall have consented to the
making of such advance, such consent not to, be unreasonably withheld; provided,
however, that Lender's consent to the making of an advance shall not be required
if the proceeds of such advance are applied to payment of fees under the
Management Agreement.
(c) (i) If the Borrower shall desire that Lender make an advance to it, it
shall provide Lender with a written request, certified to be true, complete and
correct by its President or Chief Financial Officer, at least forty-eight (48)
hours prior to the date on which the borrowing is to be made. Such request
shall set forth: (A) the amount of the requested advance, (B) the proposed
use thereof in reasonable detail, and (C) shall contain a statement that: (I)
all of the representations and warranties made in this Agreement are true and
correct in all respects as if made on the date of the request, (II) the
Borrower is in compliance with all of its covenants and obligations under this
Agreement and the Management Agreement, and (III) no Event of Default has
occurred. Such request shall also contain an undertaking by the individual
executing same to immediately notify Lender if any of the statements made
therein shall become untrue, incomplete or incorrect after the date of delivery
and on or prior to the date of the requested borrowing.
(ii) If the Manager shall desire that an advance be made to the Borrower,
it shall provide the Borrower with notice (which notice may be oral)
thereof at least forty-eight (48) hours prior to the date on which the
borrowing is to be made. Such request shall set forth: (A) the amount of the
requested advance, and (B) the proposed use thereof in reasonable detail. No
such advance shall be made at Manager's request (unless pursuant to Section 5.3
of the Management Agreement) without the consent of the Borrower, which consent
shall not be unreasonably withheld and shall be deemed given unless Borrower
shall otherwise notify Manager (which notice may be oral) within forty-eight
hours of said request. (d) The proceeds of each advance shall be used as
directed by the Manager in accordance with the terms of the Management
Agreement.
(e) Lender shall have no obligation to make any further advances if the
payment of the Note (as defined below) shall have been accelerated.
2. Loan Note.
The obligation of the Borrower to repay the unpaid principal amount of the
IHS Line of Credit, together with interest thereon, and Lender's fees and costs
in connection therewith shall be evidenced by that certain Subordinated Note
dated December 27, 1996 (the "Note") of Borrower of even date herewith, payable
to the order of Lender in a face amount equal to the maximum loan amount set
forth in Section 1, above, and having a maturity date which is on the second
anniversary of the date hereof (the "Maturity Date").
3. Repayment of IHS Line of Credit.
Interest on the IHS Line of Credit shall be payable monthly during the
period commencing on the date hereof and ending on the Maturity Date. Such
interest shall be payable at a rate per annum equal to the annual rate of
interest set forth in the Revolving Credit Agreement by and between Integrated
Health Services, Inc., as Borrower, and Citibank, N.A., as Lender, dated May 16,
1996 plus two (2%) percent.
4. Additional Covenants of Borrowers.
Until all of the Borrower's obligations under this Agreement and the Note
(the "Obligations") are satisfied in full, subject to the provisions of Section
5, below, the Borrower agrees that it will do or perform each of the following
(except to the extent that any of the following are the responsibility of Lender
in its capacity as Manager pursuant to the Management Agreement):
(a) furnish or cause to be furnished to the Lender any financial or other
information that the Lender may reasonably deem necessary or desirable;
(b) duly pay and discharge all taxes, assessments and governmental charges
owed by or against the Borrower or any of its subsidiaries or any of their
respective properties, prior to the date on which penalty will attach thereto,
unless and only to the extent that any such taxes are contested in good faith by
appropriate proceedings by the Borrower;
(c) take whatever actions are necessary to comply with all statutes and
regulations governing the operation of the Borrower's business;
(d) promptly cure any defects in the execution and delivery of this
Agreement and all other instruments executed in connection with this
transaction;
(e) execute and deliver or cause to be executed and delivered any other
instruments or documents which the Lender may reasonably request;
(g) promptly notify the Lender of any Event of Default discovered by the
Borrower; and
(h) permit the Lender to designate one additional member of the Board of
Directors of Borrower.
3
5. Events of Default.
At the option of Lender, all or any part of the Obligations shall
immediately become due and payable irrespective of any agreed maturity upon the
happening of any of the following events of default ("Events of Default"): (a)
any Acceleration Event occurs under the Note; (b) any breach by the Borrower of
any of its representations or warranties under this Agreement or the Management
Agreement; (c) any other breach of this Agreement which breach continues for a
period of sixty (60) days following notice from Lender to the Borrower; or (d)
the termination of the Management Agreement.
6. Waivers.
The Lender shall not be deemed to have waived any of its rights upon or
under any of the Obligations unless such waiver be in writing, shall expressly
refer to this Section 6 and shall be signed by the Lender. No delay or omission
on the part of the Lender on Obligations, whether evidenced hereby or by any
other instrument or papers, shall be cumulative and may be exercised separately
or concurrently.
7. Transfers by Lender.
Subject to the same limitations as are set forth in Section 11.1 of the
Management Agreement, Lender may transfer any or all of the Obligations.
8. Definition of Borrowers.
The term "Borrower" as used throughout this Agreement shall include (a) its
successors and assigns; (b) any individual, association, trust, partnership,
corporation, or other entity to which all or substantially all of the business
or assets of the Borrower shall have been transferred or with or into which any
of them shall have been merged, consolidated, reorganized or absorbed; and (c)
in the case of a partnership or joint venture, any general or limited
partnership or joint venture which shall have been created by reason of, or
continued in existence after, the admission of any new partner, partners or
joint venturers therein or the dissolution of the existing partnership or joint
venture by the death, resignation or other withdrawal of any partner or joint
venturer.
9. Maximum Interest.
All agreements between the Borrower and Lender are hereby expressly limited
so that in no contingency or event whatsoever, whether by reason of deferment in
accordance with this Agreement or advancement of the loan proceeds, acceleration
of maturity of the Obligations, or otherwise, shall the amount paid or agreed to
be paid to Lender for the use, forbearance or detention of the money to be
loaned hereunder exceed the maximum permissible under applicable law. If, from
any circumstance whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any circumstance
Lender should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the principal of the Obligations and not to the payment of
interest. This provision shall control every other provision of all agreements
between the Borrower and Lender.
10. Borrower's Representations and Warranties.
To induce the Lender to lend monies pursuant to the Note, the Borrower
represents and warrants to Lender that:
(a) The Borrower is duly authorized to execute and deliver this Agreement,
the Note and the Management Agreement and to perform its obligations hereunder
and thereunder;
(b) the execution and delivery by the Borrower of this Agreement, the Note
and the Management Agreement, and the performance by the Borrower of its
obligations hereunder and thereunder do not and will not conflict with any
provision of the charter or by-laws of the Borrower;
(c) this Agreement, the Note and the Management Agreement when duly
executed and delivered, will be the legal, valid and binding obligation of
Borrower enforceable against it in accordance with its terms;
(d) Neither the execution and delivery of this Agreement, the Note or the
Management Agreement nor the performance by Borrower of its obligations
hereunder and thereunder will result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property or
assets of the Borrower, except as contemplated or provided herein or therein,
and such execution, delivery and performance will not conflict with or result in
the breach or violation of or a default (with due notice or passing of time or
both) under the terms, conditions or provisions of (a) any indenture, evidence
of indebtedness, loan or financing agreement, or other agreement or instrument
of whatever nature to which the Borrower is a party or by which the Borrower is
bound; or (b) any provision of any existing law, rule, regulation, order, writ,
injunction or decree of any court or federal, state, county or municipal
governmental authority to which the Borrower is subject;
(e) Each representation and warranty contained in Sections 6.4, 6.5, 6.6
and 6.7 of the Management Agreement is true and correct.
4
(f) No person is entitled to receive from the Borrower any brokerage
commission, finder's fee or similar fee or payment in connection with the
consummation of the transactions contemplated by this Agreement, the Note or the
Management Agreement.
11. Notices.
Any notice or other communication by either party to the other shall be
in writing (except as otherwise expressly provided in this Agreement) and shall
be given and be deemed to have been duly given, upon the date delivered if
delivered personally or upon the date received if mailed postage pre-paid,
registered, or certified mail, or upon confirmation of receipt if sent by
telefacsimile transmission, or one business day after sent if sent by nationally
recognized overnight courier service, in each case, addressed as follows:
To the Borrower: Community Care of America, Inc.
0000 X. Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx, President
Fax: 000-000-0000
With a copy to: J. Xxxxx Xxxxxx
Xxxxxxxxxx & Xxxxx, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: 000-000-0000
To the Lender: IHS Financial Holdings, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Fax: 000-000-0000
With a copy to: Integrated Health Services, Inc.
00000 Xxx Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Fax: 000-000-0000
- and -
Xxxxx Xxxxxxxx
Xxxx Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Fax: 000-000-0000
or to such other address, and to the attention of such other person or officer
as either party may designate in writing by notice.
12. Applicable Law.
The substantive laws of the State of Maryland shall govern the validity,
construction, enforcement and interpretation of this Agreement and all other
documents and instruments referred to herein, unless otherwise specified
therein.
13. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
14. Construction.
The parties have participated jointly in the negotiation and drafting of
this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. If any party has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty, or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty, or covenant.
15. Press Releases and Public Announcements.
Neither party shall issue any press release nor make any public
announcement relating to the subject matter of this Agreement, the Note or the
Management Agreement without the prior written approval of an officer of the
Borrower and the Lender; provided, however, that any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing party will use its best efforts to advise and consult with
the other party before making the disclosure.
5
16. Arbitration.
If any controversy should arise between the parties in performance,
interpretation, or application of this Agreement or the Note which involves any
matter, either party may serve upon the other a written notice stating that such
party desires to have the controversy reviewed by an arbitrator. If the parties
cannot agree within fifteen (15) days from the service of such notice upon the
selection of such arbitrator, an arbitrator shall be selected or designated by
the American Arbitration Association upon written request of either party
hereto. Arbitration of such controversy, disagreement, or dispute shall be
conducted in accordance with the Commercial Arbitration Rules then in force of
the American Arbitration Association and the decision and award of the
arbitrator so selected shall be binding upon the Owner and Manager. The
arbitration will be held in New York, New York.
As a condition precedent to the appointment of any arbitrator both parties
shall be required to make a good faith effort to resolve the controversy which
effort shall continue for a period of thirty (30) days prior to any demand for
arbitration. The cost of any such arbitration shall be shared equally by the
parties. Each party shall pay its own costs incurred as a result of its
participation in any such arbitration.
The Arbitrator shall have no authority to award punitive damages or any
other damages in excess of the prevailing party's actual damages, and may not
make any ruling, finding or award that does not conform to the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date
first above written.
Borrower: LENDER:
COMMUNITY CARE OF AMERICA, IHS FINANCIAL HOLDINGS,
INC. INC.
By: By:
Title: Title:
Attest: Attest:
