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EXHIBIT 10.47
AMENDMENT OF BUSINESS LOAN AGREEMENT
THIS AMENDMENT OF BUSINESS LOAN AGREEMENT ("Amendment") made SEPTEMBER
1, 1998, by and between UNITED AMERICAN HEALTHCARE CORPORATION, a MICHIGAN
CORPORATION, whose address is 0000 XXXXXXX XXXX XXXXXXXXX, XXXXX 000, XXXXXXX,
XXXXXXXX 00000 (the "Borrower"), and MICHIGAN NATIONAL BANK, a NATIONAL BANKING
ASSOCIATION, whose address is 00000 XXXXXXX XXXX, XXXXXXXXXX XXXXX, XXXXXXXX
00000-0000 (the "Bank").
RECITALS
WHEREAS the Bank has made or agreed to make one or more loans to
Borrower described in and subject to the terms and conditions of a certain
Business Loan Agreement dated MARCH 12, 1998, EFFECTIVE AS OF FEBRUARY 1, 1998
(the "Loan Agreement") and the Related Documents described therein;
WHEREAS the $22,944,205.00 LINE OF CREDIT LOAN described in the Loan
Agreement (the "Loan") will mature on OCTOBER 1, 1999;
WHEREAS Borrower has requested the Bank to DECREASE AND AMEND the Loan
and modify and amend the terms and conditions of the Loan Agreement to evidence
that DECREASE AND AMENDMENT and the Bank has agreed to do so upon the terms and
conditions of the Loan Agreement, Related Documents and this Amendment; and
NOW THEREFORE in consideration of and in reliance upon the foregoing
recitals of fact (which are a material part of this Amendment) and the
agreements between the parties hereinafter set forth, Borrower and Bank AGREE AS
FOLLOWS:
A. DEFINITIONS:
Capitalized terms not defined in this Amendment shall have the meaning
provided in the Loan Agreement.
B. AMENDMENTS TO LOAN AGREEMENT:
1. SECTION I. of the Loan Agreement is by this Amendment deleted in its
entirety and replaced by the following new SECTION I.:
I. LOANS. The following Loans and any amendments, extensions,
renewals or refinancing thereof are subject to this Agreement:
LOAN
TYPE OF LOAN NOTE AMOUNT DATE
LINE OF CREDIT $20,944,205.00 09/__1998
PURPOSE of Loans listed above:
DECREASE AND AMENDMENT TO EXISTING LINE OF CREDIT, NOTE NO.
02007144, USED FOR WORKING CAPITAL LIQUIDITY, AND GUARANTY
PAYMENT FOR EXISTING LETTER OF CREDIT NO. LC0-17478-DY ISSUED
FOR INSURANCE PURPOSES FOR THE ACCOUNT OF OMNICARE HEALTH PLAN
OF LOUISIANA, LISTING LIBERTY BANK AND TRUST AS BENEFICIARY,
WHICH EXPIRES ON JANUARY 12, 1999.
2. SECTION II.J. of the Loan Agreement is by this Amendment deleted in its
entirety and replaced by the following new SECTION II.J.:
J. YEAR 2000 PROBLEM. Borrower has reviewed all areas within its
business and operations which could be adversely affected by
the Year 2000 Problem and, except as Borrower has specifically
disclosed to Bank in writing, Borrower has developed and
implemented or is developing and will implement a program by
not later than January 31, 1999, to assure that Borrower's
computer applications will not have a Year 2000 Problem.
3. SECTION III.A. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION III.A.:
A. FINANCIAL REQUIREMENTS.
1. MEET WITH BANK TO ESTABLISH FINANCIAL COVENANTS FOR A MINIMUM
NET WORTH; DEBT SERVICE COVERAGE RATIO AND MAXIMUM DEBT TO
WORTH RATIO, PRIOR TO MARCH 1, 1999.
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4. SECTION III.B.5. of the Loan Agreement is hereby deleted in its
entirety and replaced by the following new SECTION III.B.5.:
5. FINANCIAL STATEMENTS. Within THIRTY (30) DAYS after the end of
each fiscal QUARTER, furnish to Bank, in form acceptable to
Bank, a TURNAROUND STATUS REPORT of Borrower, which Borrower's
management prepared for the foregoing period and is certified
to be correct by Borrower's Treasurer or Chief Financial
Officer.
5. SECTION III.B. of the Loan Agreement is hereby amended by the addition
of the following new SECTION III.B. 11. AND 12.:
11. CHFA, INC., FINANCIAL STATEMENTS. Within TEN (10) DAYS after
receipt, cause to be furnished to Bank, in form acceptable to
Bank, after the end of each QUARTERLY FISCAL PERIOD of each
fiscal year, UNAUDITED CONSOLIDATED income and cash flow
statements of CHFA, INC., AND ITS CONSOLIDATED SUBSIDIARIES,
for such period and for the period from the beginning of the
fiscal year to the end of such period, and the related balance
sheets as at the end of such period, setting forth in each
case in comparative form the corresponding figures for the
corresponding period in the preceding fiscal year; and
UNAUDITED CONSOLIDATED statements of income and cash flow of
CHFA, INC., AND ITS CONSOLIDATED SUBSIDIARIES, for such year
and the related balance sheets at the end of such year,
setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year.
12. MANAGEMENT LETTERS, RECOMMENDATIONS AND REPORTS. Promptly upon
receipt thereof, furnish to Bank, copies of all management
letters, recommendations and reports, INCLUDING, BUT NOT
LIMITED TO ANY FINANCIAL STATEMENTS RECEIVED IN ADDITION TO
THOSE LISTED IN SECTION III.B. 11. ABOVE, if any, submitted to
CHFA, Inc., and any related entities thereof, by any
independent certified public accountants in connection with
any annual or interim review, compilation or audit of CHFA,
Inc., and any related entities thereof, made by such
accountants.
6. SECTION III. N. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION III. N.:
N. MANAGEMENT CONTINUATION. Borrower agrees that CURRENT
MANAGEMENT shall continue to actively manage and operate
Borrower's business, and acknowledges that the Bank has made
the Loans in
reliance thereon.
7. SECTION III. O. AND P. of the Loan Agreement are hereby deleted in
their entirety.
8. SECTION V.A. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION V.A.:
A. SECURITY/MORTGAGE INTERESTS. Borrower and the other Obligor(s)
named in this Agreement have granted or agree to grant to Bank
on the date of this Agreement, security/mortgage interests in
certain Property as collateral security for the Loans and
repayment of the Indebtedness, among which are the following
Related Documents:
AGREEMENT FOR DIRECT ASSIGNMENT OF NOTE PAYMENTS DATED
SEPTEMBER _____, 1998 PLEDGE AGREEMENT DATED SEPTEMBER _____,
1998 SECURITY AGREEMENT DATED SEPTEMBER _____, 1998
9. SECTION VI.K. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION VI.K.:
K. CANCELLATION OF LETTER OF CREDIT. BORROWER FAILS TO OBTAIN OR
ARRANGE FOR THE RETURN OR CANCELLATION OF THE EXISTING LETTER
OF CREDIT NO. LC-017478-DY, IN THE AMOUNT OF $500,000.00 FROM
THE BENEFICIARY ON OR BEFORE JANUARY 1, 1999.
10. SECTION VIII. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION VIII.:
VIII. CROSS-COLLATERALIZATION/CROSS-DEFAULT.
A. Borrower agrees the Collateral is security for the Loans under
this Agreement and for all other Indebtedness of Borrower to
Bank, whether or not such Indebtedness is related by class or
kind and whether or not contemplated by the parties at the
time of executing each evidence of Indebtedness. Any Borrower
default under the terms of any Indebtedness to Bank shall also
constitute an Event of Default under this Agreement and any
Event of Default under this Agreement shall be a default under
any Indebtedness of Borrower to Bank.
B. Unless Bank otherwise consents in writing, Borrower shall take
the following actions in the event of a default by CHFA, Inc.,
on the secured note (which default is not cured within any
applicable grace period provided for therein): (i) notify
CHFA, Inc., and guarantor in writing of the occurrence of
default and acceleration of the secured note payment
obligations; (ii) initiate and prosecute legal proceedings
against CHFA, Inc., to collect the secured note and enforce
secured note obligations; (iii) initiate and prosecute
foreclosure proceedings with respect to collateral; (iv)
initiate and prosecute legal proceedings against guarantor to
enforce guarantor obligations, and (v) take any and all other
actions as Bank may reasonably direct to assure collection and
payment of the secured note.
11. SECTION IX.L. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION IX.L.:
L. ADDITIONAL COSTS AND EXPENSES AFTER DEFAULT. Borrower
acknowledges and agrees that after an Event of Default the
Bank will incur additional fees, costs and expenses not
included in the Bank's original pricing of the Loans,
including, without limitation, field audits of the Bank's
Collateral, the salary and fringe benefits of the defaulted
loans officer assigned to the Loans, the professional fees of
appraisers, accountants, lawyers, field engineers and other
consultants, and the cost to the Bank of obtaining, verifying
and/or updating property surveys, Environmental Laws reports,
insurance coverages, tax searches, title reports and Uniform
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Commercial Code search fees, and Borrower agrees to pay all of
said fees, costs and expenses incurred by the Bank, at the
Bank's cost, and authorizes the Bank to charge any of
Borrower's Bank accounts as and when said fees, costs and
expenses are incurred.
12. SECTION IX.M. of the Loan Agreement is hereby deleted in its entirety
and replaced by the following new SECTION IX.M.:
M. COMMITMENT FEE. Borrower hereby agrees to pay to Bank, upon
execution of this Agreement and related documents, a TEN
THOUSAND AND 00/100 DOLLAR ($10,000.00) non-refundable
Commitment Fee.
13. SECTION IX. of the Loan Agreement is hereby amended by the addition of
the following new SECTIONS, IX.N. AND IX.O.:
N. NOTICE OF SALE. Borrower agrees and understands that should
CHFA, Inc., decide to sell CHF, Borrower shall immediately
provide verbal, followed with written, notice to Bank. All
such documentation and issues which would affect the security
being pledged to Bank as stated on, but not limited to, the
Pledge Agreement by and between Borrower and Bank executed on
even date hereof shall be provided to Bank for Bank's review
and approval of same within a reasonable time frame to be
determined by Bank.
O. AGREEMENT. Borrower hereby agrees and understands that this
Loan is subject to the terms and conditions of a certain
Agreement dated August 31, 1998, by and between CHFA, Inc.,
and Bank (the "CHFA Agreement").
14. SECTION XI. of the Loan Agreement is hereby deleted in its entirety and
replaced by the following new SECTION XI.:
XI. ADDITIONAL AGREEMENTS:
SEE THE BUSINESS LOAN AGREEMENT ADDENDUM (LINE OF CREDIT WITH LETTER OF
CREDIT ADVANCES), DATED MARCH 12, 1998, EFFECTIVE AS OF FEBRUARY 1,
1998, AS AMENDED BELOW, FOR ADDITIONAL TERMS AND CONDITIONS.
C. AMENDMENTS TO ADDENDUM TO BUSINESS LOAN AGREEMENT:
1. SECTION I. of the Business Loan Agreement Addendum (Line of Credit with
Letter of Credit Advances) is hereby deleted in its entirety and
replaced by the following new SECTION I.:
I. LINE OF CREDIT LOAN
Under those terms and conditions set forth in the Business
Loan Agreement and in this Addendum, and provided there shall exist no
Event of Default, Bank agrees from time to time, at Borrower's request,
to provide Borrower with Advances in an aggregate amount up to but not
to exceed THE LESSER OF the sum of TWENTY MILLION FOUR HUNDRED FORTY
FOUR THOUSAND TWO HUNDRED FIVE AND 00/100 DOLLARS ($20,444,205.00), or
the maximum of Advances allowable under the Advance Requirement set
forth in Section IV of this Addendum, AND CREDIT ADVANCES UP TO BUT NOT
TO EXCEED FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00), (the
"Line of Credit Loan").
2. SECTION III. of the Business Loan Agreement Addendum (Line of Credit
with Letter of Credit Advances) is hereby deleted in its entirety and
replaced by the following new SECTION III.:
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III. EXPIRATION OF BANK'S COMMITMENT
Bank's obligation to make any Advance or Credit Advance under
the Line of Credit Loan and Line of Credit Note shall automatically (a)
cease and terminate upon the maturity date stated in the Line of Credit
Note; (b) suspend or terminate (at Bank's option), upon the occurrence
of any Event of Default unless Bank in writing agrees to waive said
Event of Default; AND (C) CREDIT ADVANCE UNDER THE LINE OF CREDIT LOAN
AND LINE OF CREDIT NOTE SHALL AUTOMATICALLY CEASE AND TERMINATE ON
JANUARY 1, 1999, OR BORROWER WILL BE IN DEFAULT. No subsequent Advance
by Bank shall be construed as a waiver by Bank of the benefit of this
provision, nor shall Bank be estopped thereby to refuse any subsequent
Borrower Advance request.
3. SECTION IV. of the Business Loan Agreement Addendum (Line of Credit
with Letter of Credit Advances) is hereby deleted in its entirety and
replaced by the following new SECTION IV.:
IV. ADVANCE REQUIREMENT
All Advances and Credit Advances to Borrower under the Line of
Credit Loan shall be made under the following Advance Requirement:
A. PAY DOWNS AND READVANCES UNDER THE LINE OF CREDIT LOAN WILL BE
ALLOWED TO THE EXTENT THAT THE LOAN HAS BEEN PAID DOWN FROM
CASH FLOW OR ASSET SALES EXCLUDING THE PAYMENT PROCEEDS
RECEIVED FROM CHFA, INC., AND/OR BORROWER FROM THE SALE OF
CORPORATE HEALTH CARE, FINANCING, INC. ("CHF"), PLUS;
B. PAYMENT PROCEEDS, AS STATED ABOVE AND DEFINED IN SECTION X.,
ARE TO BE APPLIED AS PERMANENT REDUCTIONS TO THE BANK'S
COMMITMENT UPON RECEIPT BY BANK, PLUS;
C. BY APRIL 1, 1999, BANK'S COMMITMENT SHALL BE PERMANENTLY
REDUCED TO THE LESSER OF THE THEN OUTSTANDING PRINCIPAL
BALANCE OR $8,000,000.00, PLUS;
D. ON OR BEFORE JANUARY 1, 1999, BORROWER WILL OBTAIN OR ARRANGE
FOR THE RETURN OR CANCELLATION OF THE EXISTING LETTER OF
CREDIT NO.: LC-017478-DY, IN THE AMOUNT OF $500,000.00 FOR THE
ACCOUNT OF OMNICARE HEALTH PLAN OF LOUISIANA, LISTING LIBERTY
BANK AND TRUST AS THE BENEFICIARY, AT WHICH TIME CREDIT
ADVANCE CAPABILITY WILL CEASE TO EXIST.
4. SECTION VI. of the Business Loan Agreement Addendum (Line of Credit
with Letter of Credit Advances) is hereby deleted in its entirety and
replaced by the following new SECTION VI.:
VI. CREDIT ADVANCE PROCEDURE
Subject to Paragraph III above, Credit Advances would be
provided to Borrower through DECEMBER 31, 1998, upon Bank receiving
draft instructions, acceptable to Bank, from Liberty Bank and Trust on
Letter of Credit No. LC-017478-DY, in an amount not to exceed Five
Hundred Thousand and 00/100 Dollars ($500,000.00). Credit Advances
shall be made only under the following terms and conditions:
A. Borrower acknowledges and agrees that the Letter of Credit
issued by Bank for the account of OMNICARE HEALTH PLAN OF
LOUISIANA is subject to all terms and conditions set forth in
the Application including, without limitation, the grant to
Bank of a security interest in such collateral as is
identified in the Business Loan Agreement and/or in the
Application.
B. Borrower shall pay to Bank, for the Letter of Credit issued by
Bank for the account of OMNICARE HEALTH PLAN OF LOUISIANA, all
fees, charges, and expenses specified in Bank's international
department standard fee schedule then in effect including,
without limitation, issuance fees, payment fees, amendment
fees, non-utilization fees, communication and delivery
expenses, and any and all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in defending any
suit or claim brought against the Bank by any Letter of Credit
beneficiary. For each Letter of Credit draft received and
paid by Bank, Borrower's obligation to immediately put Bank in
good funds shall be funded by an Advance under the Line of
Credit Note to the extent unpaid Advances and other open and
outstanding Credit Advances do not exceed the lesser of the
Line of Credit Loan or Advance Requirement, otherwise Borrower
shall immediately pay Bank the entire amount of any Letter of
Credit draft paid by Bank.
5. SECTION VIII.A. of the Business Loan Agreement Addendum (Line of Credit
with Letter of Credit Advances) is hereby deleted in its entirety and
replaced by the following new SECTION VIII.A.:
A. Any Event of Default under the Business Loan Agreement of
which this Addendum is a part, INCLUDING, BUT NOT LIMITED TO
BORROWER'S FAILURE TO OBTAIN OR ARRANGE FOR THE RETURN OR
CANCELLATION OF THE EXISTING LETTER OF CREDIT NO.
LC-017478-DY, ON OR BEFORE JANUARY 1, 1999;
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6. SECTION DEFINITIONS of the Business Loan Agreement Addendum (Line of
Credit with Letter of Credit Advances) is hereby deleted in its
entirety and replaced by the following new SECTION X. DEFINITIONS:
X. DEFINITIONS
The following terms used in this Addendum shall have the following
meanings:
A. "ADVANCE" or "ADVANCES" shall mean a loan or loans of money
from Bank to Borrower.
B. "ADVANCE REQUIREMENT" shall mean the maximum aggregate
Advances and Credit Advances for which Borrower from time to
time will be eligible under the Line of Credit Loan by
application of the requirements set forth in Section IV above.
C. "CREDIT ADVANCE" shall mean the Bank's liability, direct or
contingent, for or arising under Letter of Credit No.
LC-017478-DY, issued by Bank.
D. "LETTER OF CREDIT" shall have the meaning ascribed to such
term under Article 5 of the Michigan Uniform Commercial Code,
as amended from time to time, as supplemented by the Uniform
Customs and Practice for Documentary Credits, ICC Publication
500, as amended from time to time, PERTAINING TO LETTER OF
CREDIT NO. LC-017478-DY.
E. "PAYMENT PROCEEDS" SHALL MEAN THE PRINCIPAL AND INTEREST
PAYMENTS AS STATED ON A SECURED PROMISSORY NOTE AND UNSECURED
PROMISSORY NOTE BY AND BETWEEN BORROWER AND CHFA, INC.,
PLEDGED TO BANK UNDER A PLEDGE AGREEMENT OF EVEN DATE HEREOF
BY AND BETWEEN BORROWER AND BANK.
D. SURVIVAL:
In all other respects and except as expressly amended, modified or
restated in this Amendment, the Loan Agreement and all of the terms, covenants
and conditions thereof as originally executed and delivered and heretofore
modified and amended are hereby ratified and confirmed in their entirety and
shall remain in full force and effect until all of the Loans, with all accrued
interest thereon, shall be fully paid and satisfied.
E. EFFECT OF AMENDMENT AND CONSTRUCTION WITH LOAN AGREEMENT AND RELATED
DOCUMENTS:
This Amendment shall not be construed as an agreement to substitute a
new obligation or to extinguish an obligation under the Loan Agreement or
Related Documents and shall not constitute a novation as to the obligations of
the parties. If any express conflict shall exist between the agreements of the
parties herein and as set forth in the Loan Agreement or the Related Documents,
this Amendment shall govern and supersede the agreements set forth in the
previous documents. The Loan Agreement and Related Documents shall continue in
full force and effect, and except as above specifically modified and amended,
shall be unamended, unchanged, and unmodified by this Amendment and shall
continue to secure to Bank the repayment and performance of Borrower's
Indebtedness to Bank.
IN WITNESS WHEREOF Borrower and Bank have executed this Amendment on
the date first above written.
BORROWER:
UNITED AMERICAN HEALTHCARE
CORPORATION,
a MICHIGAN CORPORATION
By: /s/ Xxxxxx Xxxxx
Xxxxxxx Xxxxx
Its: Chief Operating Officer
AND
By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Its: Interim Chief Financial Officer
(CONTINUED ON THE FOLLOWING PAGE)
BANK:
MICHIGAN NATIONAL BANK,
A NATIONAL BANKING ASSOCIATION
By: /s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
Its: Corporate Asset Manager
