EXHIBIT 10.2
FIRST AMENDMENT AND CONSENT AGREEMENT TO LOAN AND SECURITY AGREEMENT
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This FIRST AMENDMENT AND CONSENT AGREEMENT TO LOAN AND SECURITY
AGREEMENT ("Amendment") is made this 7th day of August, 2003 by and among the
lending institutions listed in Annex I to the Loan Agreement (as defined below)
(each a "Lender", and collectively, "Lenders"), Fleet Capital Corporation, a
Rhode Island corporation with an office at 000 Xxxxxxxxxxx Xxxxxxxxx,
Xxxxxxxxxxx, XX 00000, as administrative agent for the Lenders ("Agent"), and
Gentiva Health Services, Inc., a Delaware corporation with its chief executive
office at 0 Xxxxxxxxxx Xxxxxxxxxx 0X, Xxxxxxxx, XX 00000 (the "Company"),
Gentiva Health Services Holding Corp., a Delaware corporation with its chief
executive office at 0 Xxxxxxxxxx Xxxxxxxxxx 0X, Xxxxxxxx, XX 00000 ("GHS"), and
each of the Subsidiary Borrowing Corporations listed on the signature pages
hereto, each with a state of incorporation and chief executive office as listed
on the exhibits to the Loan Agreement (each of the Company, GHS and each
Subsidiary Borrowing Corporation, a "Borrower," and collectively, "Borrowers").
BACKGROUND
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A. Borrowers, Agent and Lenders are parties to a certain Loan and
Security Agreement dated June 13, 2002 (as it may heretofore have been or may
herein or hereafter be modified, amended, restated or replaced from time to
time, the "Loan Agreement") pursuant to which Borrowers established certain
financing arrangements with Lenders including a Revolving Credit Loan facility
and a Letter of Credit facility. The Loan Agreement and all instruments,
documents and agreements executed in connection therewith or related thereto are
referred to herein collectively as the "Existing Loan Documents." All
capitalized terms not otherwise defined herein shall have the meaning ascribed
thereto in the Loan Agreement.
B. Borrowers have advised Agent and Lenders that Borrowers wish
to sell and dispose of all of the equity interests in Bayshore Health Group, a
Canadian entity ("Bayshore"), that are currently owned by any one or more of the
Borrowers, and Borrowers have requested that Agent and Lenders give their
consent to such sale and disposition. Agent and Lenders have agreed to consent
to such sale and disposition on the terms and conditions and according to the
provisions of this Amendment.
C. Borrowers, Agent and Lenders have agreed that certain
modifications should be made to the terms and provisions of the Loan Agreement
on the terms and conditions and according to the provisions of this Amendment.
NOW, THEREFORE, with the foregoing Background incorporated by reference
and made a part hereof and intending to be legally bound, the parties agree as
follows:
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1. Consent to Sale of Equity Interests in Bayshore. Upon the
satisfaction of the Effectiveness Conditions (as defined below), Agent and
Lenders shall be deemed to have consented to the sale and disposition by
Borrowers of all of the equity interests in Bayshore owned by any one or more of
the Borrowers. Agent and Lenders agree that this sale and disposition by
Borrowers shall be permitted notwithstanding the prohibitions regarding sales
and dispositions of Property contained in subsection 8.2.9 of the Loan
Agreement, and Agent and Lenders further agree that the fair market value of the
equity interests in Bayshore disposed of by the Borrowers through this sale
shall not be included in any calculation of the aggregate amount of the fair
market value of dispositions of Property by the Borrowers during fiscal year
2003 for the purpose of determining Borrowers' compliance with the provisions of
subsection 8.2.9(iii).
2. Amendments to Loan Agreement. Upon the satisfaction of the
Effectiveness Conditions, the Loan Agreement shall be amended as follows:
(a). Amendment to Permitted Loans Covenant. Subsection
8.2.2 of the Loan Agreement shall be amended by deleting clause (c) thereto in
its entirety and replacing it as follows:
(c) any indebtedness arising in favor of any one or more of the
Borrowers in connection with sale by one or more of the Borrowers
of all of the equity interests owned by such Borrowers in Bayshore
Health Group, a Canadian entity, which sale was approved pursuant
to the First Amendment and Consent Agreement to Loan and Security
Agreement executed among Agent, Lenders and Borrowers (provided
that, no other loans from Borrowers to Bayshore Health Group shall
be permitted hereunder).
(b). Addition of New Definition of "Aggregate Excess
Liquidity". Appendix A of the Loan Agreement shall be amended by adding the
following new definition to such Appendix A in the appropriate alphabetical
place:
"Aggregate Excess Liquidity - as of any date of calculation, an
amount equal to the sum of (A) the Borrowing Base as of such date
plus (B) Borrowers' cash and liquid marketable investments and
short-term investments on hand as reflected on the consolidated
balance sheets of Borrowers as of such date, less (C) the sum of
(i) the aggregate amount of all Loans and the LC Amount outstanding
as of such date plus (ii) all sums due and owing to trade creditors
as of such date which remain outstanding beyond normal trade terms,
or special terms granted by trade creditors, plus (iii) any
reserves against the Borrowing Base permitted by subsection 1.1.1
hereof existing as of such date."
(c). Addition of New Definition of "Permitted Stock
Repurchase". Appendix A of the Loan Agreement shall be amended by adding the
following new definition to such Appendix A in the appropriate alphabetical
place:
"Permitted Stock Repurchase - any share repurchase of the capital
stock of the Company, provided that (i) the aggregate amount of all
such stock repurchases calculated from and after August 7, 2003
(and exclusive of the amount of any stock repurchases by the
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Company prior to such date) shall not exceed Twenty-Five Million
Dollars ($25,000,000.00), (ii) both prior and after giving effect
to any such stock repurchase, no Default or Event of Default shall
exist and (iii) both prior to and immediately after giving effect
to any such stock repurchase, and at all times during each of the
next two fiscal quarters ending immediately after the date of any
such stock repurchase, Borrowers shall have an Aggregate Excess
Liquidity of at least Sixty Million Dollars ($60,000,000.00), and
the financial information reported in the Form 10-K/10-Q reports
filed by the Company with the Securities and Exchange Commission
for each such two fiscal quarters shall reflect compliance as of
the end of each such fiscal quarter with the forgoing Aggregate
Excess Liquidity covenant. The quarterly Compliance Certificate
provided by Borrowers at the end of each such fiscal quarter shall
include a certification with supporting calculations as to whether
or not Borrowers are in compliance with the Aggregate Excess
Liquidity covenant set forth in the preceding sentence."
(d). Amendment to Definition of "Permitted Acquisition".
The first sentence of the definition of "Permitted Acquisition" in Appendix A to
the Loan Agreement shall be deleted in its entirety and replaced as follows:
"any acquisition transaction whereby any Borrower shall acquire all
or substantially all of the assets of another Person or shall
acquire all of the capital stock or other equity interests of
another Person and/or merge or consolidate with another Person,
provided that (i) the value of each such acquisition shall not
exceed Three Million Dollars ($3,000,000.00), (ii) the aggregate
value of all such acquisition transactions which have occurred
since the Closing Date shall not exceed Twenty Million Dollars
($20,000,000.00), (iii) both prior and after giving effect to any
such acquisition transaction, no Default or Event of Default shall
exist, and (iv) both prior to and immediately after giving effect
to any such acquisition transaction, and at all times during each
of the next two fiscal quarters ending immediately after the date
of any such acquisition transaction, Borrowers shall have an
Aggregate Excess Liquidity of at least Sixty Million Dollars
($60,000,000.00), and the financial information reported in the
Form 10-K/10-Q reports filed by the Company with the Securities and
Exchange Commission for each such two fiscal quarters shall reflect
compliance as of the end of each such fiscal quarter with the
forgoing Aggregate Excess Liquidity covenant. The quarterly
Compliance Certificate provided by Borrowers at the end of each
such fiscal quarter shall include a certification with supporting
calculations as to whether or not Borrowers are in compliance with
the Aggregate Excess Liquidity covenant set forth in the preceding
sentence."
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(e). Amendment to Definition of "Restricted Investment".
The definition of "Restricted Investment" in Appendix A to the Loan Agreement
shall be amended by adding the following new clause (viii) to the end thereof:
"(viii) investments made in connection with any Permitted
Stock Repurchase."
(f). Amendment of Form of Compliance Certificate. EXHIBIT
B to the Loan Agreement entitled COMPLIANCE CERTIFICATE shall be amended by
deleting it in its entirety and replacing it with the revised EXHIBIT B attached
hereto.
(g). Amendment of Form of Borrowing Base Certificate.
EXHIBIT C to the Loan Agreement entitled BORROWING BASE CERTIFICATE shall be
amended by deleting it in its entirety and replacing it with the revised EXHIBIT
C attached hereto.
(h). Amendment to Adjusted Net Earnings from Operations
Add Back. The second bullet point item on EXHIBIT J to the Loan Agreement
entitled ADJUSTED NET EARNINGS FROM OPERATIONS ADD BACK shall be deleted in its
entirety and replaced as follows:
"Any loss or expense arising from any Special Charges relating to
any Permitted Stock Repurchases."
3. Amendment and Consent Fee. Borrowers covenants and agrees
that, in consideration for the consent and accommodations provided for herein,
Borrowers shall pay to Agent for the ratable benefit of the Lender a fee of
Twenty-Seven Thousand Five Hundred Dollars ($27,500.00) (the "Amendment and
Consent Fee"), which fee shall be due and payable and fully earned and
non-refundable on the date of the execution of this Amendment.
4. Representations and Warranties. To induce Agent and Lenders to
enter into this Amendment, each Borrower warrants, represents and covenants to
Agent and Lenders that:
(i). All warranties and representations made to Agent and
Lenders under the Loan Agreement and the other Existing Loan Documents are true
and correct as to the date hereof.
(ii). The execution and delivery by each Borrower of this
Amendment and the performance by it of the transactions herein contemplated (i)
are and will be within its powers, (ii) have been authorized by all necessary
corporate actions and will not contravene any provision of the certificate or
articles of incorporation or bylaws or other similar corporate governance
documents of such Borrower, and (iii) are not and will not be in contravention
of any order of any court or other agency of government, of law or any other
indenture, agreement or undertaking to which such Borrower is a party or by
which the property of such Borrower is bound, or be in conflict with, result in
a breach of, or constitute (with due notice and/or lapse of time, if applicable)
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a default under any such indenture, agreement or undertaking or result in the
imposition of any lien, charge or encumbrance of any nature on any of the
properties of such Borrower.
(iii). This Amendment and any assignment, instrument,
document, or agreement executed and delivered in connection herewith, will be
valid and binding on and enforceable against each Borrower in accordance with
its respective terms.
(iv). Both prior to and after giving effect to this
Amendment, no Default or Event of Default exists under the Loan Agreement or any
of the other Existing Loan Documents.
(v). No authorization or approval or other action by, and
no notice to or filing with, any governmental authority or other regulatory body
is required in connection with the due execution, delivery and performance by
any Borrower of this Amendment or the performance by such Borrower of the Loan
Agreement, as amended hereby.
(vi). The name, office and signature of the officer(s) of
each Borrower signing this Amendment have previously been certified to Agent in
the incumbency and signature certificates of such Borrower heretofore delivered
to Agent.
5. Confirmation of Security Interest. To secure the prompt
payment and performance to Agent and Lenders of the Obligations and satisfaction
by Borrowers of all covenants and undertakings contained in the Loan Agreement
and other Existing Loan Documents, each Borrower hereby reconfirms the grant to
Agent, for the ratable benefit of Lenders, of a continuing security interest in
and Lien upon all of the Collateral owned by such Borrower, whether now owned or
existing or hereafter created, acquired or arising and wherever located, given
to Agent by such Borrower under the Existing Loan Documents. Each such Borrower
hereby confirms and agrees that all such security interests and liens granted to
Agent under the Existing Loan Documents continue in full force and effect and
shall continue to secure the Obligations. All Collateral remains free and clear
of any liens other than liens in favor of Agent, except for Permitted Liens.
Nothing herein contained is intended to in any way impair or limit the validity,
priority and extent of Agent's existing security interest in and liens upon the
Collateral.
6. Effectiveness Conditions. This Amendment shall be effective
upon completion of the following conditions precedent (the "Effectiveness
Conditions"):
(a). Execution and delivery of this Amendment by all
parties hereto;
(b). To the extent that the name, office and signature of
the officer(s) of any Borrower or Subsidiary Guarantor signing this Amendment or
any of the certificates or other documents contemplated hereby do not currently
appear in the incumbency and signature certificates of such Borrower or
Subsidiary Guarantor heretofore delivered to Agent, Agent shall have received,
in form and substance satisfactory to it, certificates as to the incumbency and
signature of such officer(s); and
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(c). Payment of the Amendment and Consent Fee and all fees
and expenses of Agent (including legal expenses) incurred in relation to the
preparation and execution of this Amendment.
7. Ratification of Existing Loan Documents. Except as expressly
set forth herein, all of the terms and conditions of the Loan Agreement and the
other Existing Loan Documents are hereby ratified and confirmed and continue
unchanged and in full force and effect. All references to the Loan Agreement
shall mean the Loan Agreement as modified by this Amendment.
8. Amendment as Loan Document. Borrowers hereby acknowledge and
agree that this Amendment constitutes a "Loan Document" under the Loan
Agreement. Accordingly, it shall be an Event of Default under the Loan Agreement
if (i) any representation or warranty made by Borrowers under or in connection
with this Amendment shall have been untrue, false or misleading in any material
respect when made, or (ii) Borrowers shall fail to perform or observe any term,
covenant or agreement contained in this Amendment.
9. Reaffirmation by Guarantors. Each Subsidiary Guarantor
acknowledges and agrees that the execution, delivery and performance of this
Amendment by Agent, Lenders and Borrowers, and the carrying out of the
provisions hereof and the consummation of all transactions contemplated
hereunder, including without limitation the consents granted and amendments to
the Loan Agreement provided for hereunder, shall not affect or in any way
diminish or modify the obligations of each of them under the Subsidiary Guaranty
and Surety Agreement executed by Subsidiary Guarantors as of June 13, 2002 or
any other Existing Loan Document to which such Subsidiary Guarantor is a party,
and each Subsidiary Guarantor acknowledges and affirms its obligations under the
Subsidiary Guaranty and Surety Agreement and the other Existing Loan Documents.
10. Governing Law. THIS AMENDMENT HAS BEEN NEGOTIATED, EXECUTED
AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN NEW YORK. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ITS OTHERWISE APPLICABLE CONFLICTS OF LAWS
RULES.
11. Waiver of Jury Trial. EACH BORROWER AND EACH SUBSIDIARY
GUARANTOR WAIVES THE RIGHT TO TRIAL BY JURY (WHICH EACH LENDER AND AGENT HEREBY
ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING
OUT OF OR RELATED TO ANY OF THIS AMENDMENT. EACH BORROWER AND EACH SUBSIDIARY
GUARANTOR WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVER WITH
ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
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12. Successors and Assigns. This Amendment, along with each of the
Existing Loan Documents, shall be binding upon and shall benefit Agent, Lenders,
Borrowers and Subsidiary Guarantors and their respective successors and
permitted assigns (as and if permitted under the Loan Agreement).
13. Counterparts. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts together shall constitute one and the same respective
agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this First
Amendment and Consent Agreement to Loan and Security Agreement as of the date
first written above.
BORROWERS:
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GENTIVA HEALTH SERVICES, INC.
By:______________________________
Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President and Chief
Financial Officer
GENTIVA HEALTH SERVICES HOLDING CORP.
By:______________________________
Name: Xxxx X. Xxxxxxxxx
Title: Treasurer
BORROWING SUBSIDIARY CORPORATIONS:
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GENTIVA CARECENTRIX, INC.
GENTIVA CARECENTRIX (AREA ONE) CORP.
GENTIVA CARECENTRIX (AREA TWO) CORP.
GENTIVA CARECENTRIX (AREA THREE) CORP.
GENTIVA CERTIFIED HEALTHCARE CORP.
GENTIVA HEALTH SERVICES (CERTIFIED), INC.
GENTIVA HEALTH SERVICES (USA), INC.
GENTIVA SERVICES OF NEW YORK, INC.
NEW YORK HEALTHCARE SERVICES, INC.
OHS SERVICE CORP.
QC-MEDI NEW YORK, INC.
QUALITY CARE - USA, INC.
QUALITY MANAGED CARE, INC.
By:______________________________
Name: Xxxx X. Xxxxxxxxx
Title: Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
[Borrowers Signature Page to First Amendment to June 2002 Loan Agreement]
X-0
0
XXXXXXXXXX XXXXXXXXXX:
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COMMONWEALTH HOME CARE, INC.
XXXXXXXX HOME HEALTH CARE, INC.
PARTNERSFIRST MANAGEMENT, INC.
QUANTUM CARE NETWORK, INC.
QUANTUM HEALTH RESOURCES, INC.
THE I.V. CLINIC, INC.
THE I.V. CLINIC II, INC.
THE I.V. CLINIC III, INC.
By:________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Treasurer
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
[Subsidiary Guarantors Signature Page to First Amendment to June 2002
Loan Agreement]
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AGENT:
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FLEET CAPITAL CORPORATION,
as Agent
By:______________________________
Name: Xxxx Xxxxxx
Title: Vice President
LENDERS:
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FLEET CAPITAL CORPORATION,
By:______________________________
Name: Xxxx Xxxxxx
Title: Vice President
SIEMENS FINANCIAL SERVICES, INC.
By:______________________________
Name:
Title:
HFG HEALTHCO-4 LLC
By:______________________________
Name:
Title:
[Agent and Lenders Signature Page to First Amendment to June 2002
Loan Agreement]
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EXHIBIT B
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REVISED COMPLIANCE CERTIFICATE
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EXHIBIT C
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REVISED BORROWING BASE CERTIFICATE
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