August 24, 1998
Continental Managed Pharmacy Services, Inc.
Continental Pharmacy, Inc.
Preferred RX, Inc.
Automated Scripts, Inc.
Valley Physicians Services, Inc.
0000 X. Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Gentlemen:
Reference is hereby made to that certain letter agreement dated January 24,
1995, as amended and supplemented by that certain Additional Credit Agreement
dated January 23, 1996 and that certain letter agreement dated January 28, 1997
(collectively, the "Agreement"), by and between the Bank and the Borrower. Terms
used but not otherwise defined in this letter agreement shall have the meanings
given to such terms in the Agreement and the Loan Documents.
On January 27, 1998, Borrower entered into an Agreement and Plan of Merger
with CMP Acquisition Corp. ("CMP"), a wholly-owned subsidiary of MIM
Corporation, a Delaware corporation ("MIM"), upon the consummation of which
Borrower shall survive as a wholly-owned subsidiary of MIM and the separate
corporate existence of CMP will terminate (the "Merger"). The Bank has consented
to the Merger by delivery to Borrower of that Letter of Consent dated the date
hereof.
Borrower has requested that (i) the interest rate on that certain Second
Amended and Restated Master Revolving Note for $6,500,000 dated as of April 9,
1997 from Borrower to Bank be amended and restated to provide that the per annum
rate of interest prior to a Default shall be reduced from a per annum rate of
the Bank's "prime rate" plus .75%, to an amount equal to the Bank's "prime rate"
as it is from time to time in effect; (ii) the guaranty from Xxxxxxx X.
Xxxxxxxxx, dated January 24, 1995, as reaffirmed on January 24, 1996 and January
28, 1997 (collectively, the "Guaranty"), which Guaranty guarantees the payment
of all Indebtedness to the Bank when due, up to an aggregate amount of
$1,000,000, be terminated and replaced with an unlimited Guaranty from MIM to
Bank; (iii) Bank accept, in lieu of annual audited financial statements of
Borrower, annual audited consolidated financial statements of MIM, together with
unaudited, certified financial statements of Borrower; (iv) instead of thirty
(30) days, Bank accept the quarterly financial statements of Borrower forty-five
(45) days after the close of the applicable quarter; and (v) Bank acknowledge
the existence of certain indebtedness and liens and waive any and all prior,
current and future rights it may have as a result of the existence thereof.
Continental Managed Pharmacy Services, Inc.
August 24, 1998
Page 2
Subject to the conditions set forth below, Bank is willing to grant such
amendments upon the following terms and conditions:
1. That the Borrower covenants and agrees that so long as any Liabilities
remain outstanding, Borrower shall not:
(a) Create, incur, assume or in any manner become liable in respect of, or
suffer to exist, any indebtedness, other than (i) the Indebtedness,
(ii) indebtedness in respect of taxes, assessments and governmental
charges which at the time are not yet due and payable or the amount or
validity of which is currently being contested in good faith by
appropriate proceedings and for which adequate reserves in conformity
with generally accepted accounting principles ("GAAP") have been
taken; and (iii) indebtedness incurred with respect to purchases of
goods, equipment, services and inventory arising in the ordinary
course of business.
(b) Purchase or otherwise acquire, whether in one or a series of
transactions, all or a substantial portion of the business, assets,
rights, revenues or property, real, personal or mixed, tangible or
intangible, of any person or all or a substantial portion of the
capital stock of, or other ownership interest in any other person, nor
merge or consolidate or amalgamate with any other person or take any
other action having a similar effect, nor enter into any joint venture
or similar arrangement with any other person except CMP.
(c) Sell, lease, license, transfer, assign or otherwise dispose of all or
a material portion of its business, assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether in
one or a series of transactions, other than inventory sold in the
ordinary course of business upon customary credit terms.
(d) Make any substantial change in the nature of its business from that
engaged in on the date of this letter agreement or engage in any other
businesses other than those in which it is engaged on the date of this
letter agreement.
(e) Make, pay, declare or authorize any dividend, payment or distribution
in respect of any class of its capital stock or make any dividend,
payment or distribution in connection with the redemption, purchase,
retirement or other acquisition, directly or indirectly, of any shares
of its capital stock.
(f) Purchase or otherwise acquire any capital stock of or other ownership
interest in, or debt securities of or other evidences of indebtedness
of, any other person; nor make
Continental Managed Pharmacy Services, Inc.
August 24, 1998
Page 3
any loan or advance of any of its funds or property or make any other
extension of credit to, or make any investment or acquire any interest
whatsoever, in, any other person; nor incur any contingent liability;
nor permit any subsidiary or related company subject to Borrower's
control (collectively, "Affiliate"), to do any of the foregoing, other
than (i) extensions of trade credit made in the ordinary course of
business on customary credit terms, and (ii) commercial paper of any
United States issuer having the highest rating then given by Xxxxx'x
Investors Service, Inc., or Standard & Poor's Corporation, direct
obligations of and obligations fully guaranteed by the United States
of America or any agency or instrumentality thereof or certificates of
deposit of any commercial bank which is a member of the Federal
Reserve System and which has capital surplus and undivided profit (as
shown on its most recently published statement of financial condition)
aggregating not less than $100,000,000.
(g) Make, or suffer to be made by any Affiliate, any dispositions of
money, including revenues and rights thereto, other than as
contemplated in this letter agreement, the Agreement and the Loan
Documents, to any other person other than in the ordinary course of
business pursuant to an arm's length transaction.
(h) Enter into, become a party to, or become liable in respect of, any
contract or undertaking with any related entity or Affiliate except in
the ordinary course of business and on terms not less favorable to the
Borrower or such related entity or Affiliate, other than those which
could be obtained if such contract or undertaking were an arm's length
transaction with a person other than the related company.
(i) Create, incur, assume or in any manner become liable in respect of, or
suffer to exist, any contingent liabilities other than any guarantees
in favor of the Bank as requested by the Bank.
(j) Make any optional payment, prepayment or redemption of any debt
subordinate to the Indebtedness ("Subordinated Debt"), nor amend or
modify, or consent or agree to any amendment or modification, which
would shorten any maturity or increase the amount of any payment of
principal or increase the rate (or require earlier payment) of
interest on any such Subordinated Debt, nor amend the subordination
provisions of any agreement under which any such Subordinated Debt is
issued or created or otherwise related thereto, nor enter into any
agreement or arrangement providing for the defeasance of any such
Subordinated Debt.
Continental Managed Pharmacy Services, Inc.
August 24, 1998
Page 4
(k) Enter into any agreement with any person other than the Bank which
prohibits or limits the ability of the Borrower, or any Affiliate, to
create, incur, assume or suffer to exist any lien upon any of its
assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether now or hereafter acquired.
(1) Enter into any agreement containing any provision which would be
violated or breached by this letter agreement or any of the
transactions contemplated hereby or by performance by the Borrower of
its obligations in connection therewith.
(m) Change its fiscal year or make any significant changes (i) in
accounting treatment and reporting practices except as permitted by
GAAP or (ii) in tax reporting treatment except as permitted by law.
2. That the following actions are taken:
(a) Borrower shall execute and deliver a Third Amended and Restated Master
Revolving Note in form and substance acceptable to the Bank.
(b) MIM shall execute a guaranty in favor of the Bank in form and
substance acceptable to the Bank.
(c) Borrower shall pay to Bank the sum of $15,000 and shall pay all costs
and expenses incurred by the Bank in connection with this letter
agreement and any costs related thereto.
3. Bank hereby acknowledges that the indebtedness and liens represented by the
UCC filings set forth on Exhibit A attached hereto presently exist and/or
have existed during the term of the Agreement from and after the time
indicated on Exhibit A and that such indebtedness and liens may have
resulted in certain breaches by Borrower of its representations,
warranties, covenants and agreements under the Agreement and Loan Documents
and thereby may have given the Bank certain rights by reason of events of
default under the Agreement and Loan Documents. Bank hereby waives any and
all breaches by Borrower of its representations, warranties, covenants and
agreements under the Agreement and Loan Documents relating to or arising
from the indebtedness and liens set forth on Exhibit A which occurred prior
to the date hereof ("Prior Breaches") and hereby waives any and all rights
(including, without limitation, rights in connection with events of
default) it may have under this letter agreement, the Agreement and Loan
Documents as a result of such Prior Breaches. Bank further waives any all
breaches by Borrower of its representations, warranties, covenants and
agreements under this letter agreement, the Agreement and Loan Documents
(as amended hereby)
Continental Managed Pharmacy Services, Inc.
August 24, 1998
Page 5
relating to or arising from the indebtedness and liens set forth on Exhibit
A which may occur on or after the date hereof ("Future Breaches") and
hereby waives any and all rights (including, without limitation, rights in
connection with events of default) it may have in the future under this
letter agreement, the Agreement and Loan Documents as a result of such
Future Breaches, provided that said indebtedness and liens are not modified
in any way from and after the date hereof.
Except as modified hereby, all of the terms and conditions of the Agreement
and Loan Documents shall remain unaffected and in full force and effect.
To confirm your acceptance of the foregoing, your affirmation of all of
Borrower's Liabilities to the Bank under the Agreement and the Loan Documents,
and your acknowledgment that as of the date hereto, Borrower does not have any
claim, defense or set-off rights against the Bank of any nature whatsoever,
whether arising in tort, contract or otherwise, please indicate with the
authorized signature of Borrower as provided below.
Very truly yours,
COMERICA BANK
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Its: Assistant Vice President
Acknowledged and agreed to
this 24th day of August, 1998:
CONTINENTAL MANAGED PHARMACY
SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Its: Vice President
Continental Managed Pharmacy Services, Inc.
August 24, 1998
Page 6
CONTINENTAL PHARMACY, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Its: President
PREFERRED RX, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Its: Vice President
AUTOMATED SCRIPTS, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Its: Vice President
VALLEY PHYSICIANS SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------------
Its: Vice President
EXHIBIT A
Page 1
Rank Name Type Other Party Loc Filing Xxxx
1. CONTINENTAL MANAGED PHARMAC ORIGINAL HEWLETT-PACKAR OH 06-29-1994
2. CONTINENTAL MANAGED PHARMAC ORIGINAL COMERICA BANK OH 01-25-1995
3. CONTINENTAL MANAGED PHARMAC ORIGINAL HEWLETT-PACKAR OH 07-28-1994
4. CONTINENTAL PHARMACY INC-De AMENDMENT BANKERS LEASIN OH 03-04-1994
5. CONTINENTAL PHARMACY INC-De TERMINATIO BANKERS LEASIN OH 01-30-1995
6. CONTINENTAL PHARMACY INC-De ORIGINAL FINANCING SYST OH 02-16-1990
7. CONTINENTAL PHARMACY INC-De ORIGINAL FIRST BANK RIC OH 01-17-1997
8. CONTINENTAL PHARMACY INC-De ORIGINAL XXX XXXXX XXXX XX 00-00-0000
9. CONTINENTAL PHARMACY INC-De CONTINUATI XXXXXXXX XXXXX XX 00-00-0000
10. CONTINENTAL PHARMACY INC-De ASSIGNMENT XXXXXXXX XXXXX XX 00-00-0000
11. CONTINENTAL PHARMACY INC-De ORIGINAL XXXXXXXX XXXX XX 00-00-0000
12. CONTINENTAL PHARMACY INC-De XXXXXXXXXX XXXXXXXX XXXX XX 00-00-0000
13. CONTINENTAL PHARMACY INC-De ORIGINAL PITNEY XXXXX X XX 00-00-0000
14. CONTINENTAL PHARMACY INC-De ORIGINAL SOCIETY EQUIPM OH 07-09-1991
15. CONTINENTAL PHARMACY INC-De ORIGINAL XXXXXXX XXXXXX XX 00-00-0000
16. CONTINENTAL PHARMACY, INC.- ORIGINAL BANKERS XXXXXX XX 00-00-0000
17. CONTINENTAL PHARMACY, INC.- ORIGINAL BANKERS XXXXXX XX 00-00-0000
18. CONTINENTAL PHARMACY, INC.- ORIGINAL COMERICA BANK OH 01-25-1995
Copr.(C) West 1998 No Claim to Orig. U.S. Govt. Works
