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EXHIBIT 10.26
AMENDMENT NO. 3
Dated as of March 25, 1997
This AMENDMENT among U.S. HOMECARE CORPORATION AND ITS
SUBSIDIARIES LISTED IN ANNEX 1 HERETO (collectively, the "Borrowers" and each,
individually, a "Borrower"), the banks parties to the Credit Agreement referred
to below (the "Banks"), and THE CHASE MANHATTAN BANK (successor by merger to The
Chase Manhattan Bank, N.A.), as agent (the "Agent") for the Banks thereunder.
PRELIMINARY STATEMENT.
A. The Borrowers, the Banks and the Agent have entered into an
Amended and Restated Credit Agreement dated as of October 6, 1995, as amended by
Amendment No. 1 dated as of October 31, 1996, and Amendment No. 2 dated as of
November 14, 1996 (said Credit Agreement, as so amended, being hereinafter
referred to as the "Credit Agreement"; the terms defined therein being used
herein as therein defined unless otherwise defined herein).
B. Pursuant to the Credit Agreement, the Borrowers are indebted
to the Banks under the Notes in the aggregate principal amount of $5,065,802.29,
as of the date hereof (the "Indebtedness"), which Indebtedness is owed by the
Borrowers to the Banks without offset, defense or counterclaim of any kind,
nature or description. As security for such Indebtedness, the Borrowers have
heretofore granted to the Banks a first priority security interest in all the
Borrowers' assets (such security interest having been partially released by the
Banks pursuant to the Partial Release Letter), whether now owed or hereafter
acquired, wherever located of any kind, nature or description, tangible or
intangible, including without limitation, the Borrowers' accounts receivable,
inventory, equipment, and general intangibles, and such security interests and
liens granted by the Borrowers to the Banks are, subject to the terms of the
Partial Release Letter, hereby reacknowledged and confirmed by the Borrowers.
C. The Borrowers, the Banks and the Agent have agreed to amend
the Credit Agreement as hereinafter set forth.
SECTION 1. Amendments. The Credit Agreement is,
effective as of the date hereof and subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, hereby amended as follows:
(a) The following definitions contained in Section 1.1 of the
Credit Agreement are amended and restated in full to read as follows:
"Current Liabilities" means all liabilities of the
Borrowers treated as current liabilities in accordance with GAAP,
including without limitation (a) all obligations payable on demand or
within one year after the date in which the determination is made and
(b) installment and sinking fund payments required to be made within
one year after the date on which determination is made, but excluding
(i) the Restructuring Reserve, (ii) current maturities of long term
debt (including the
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Junior Debt and debt under this Agreement), and (iii) all such
liabilities or obligations which are renewable or extendable at the
option of any Borrower to a date more than one year from the date of
determination.
"Interest Coverage Ratio" shall mean, for any Person, as at
the end of any fiscal quarter, the ratio of (a) to (b) where (a) is
equal to (i) EBITDA (but not including in such calculation any
adjustments included in EBITDA during the relevant period, with respect
to any prior periods, relating to Medicare/Medicaid, discontinued
operations or other matters of such Person) of such Person for such
fiscal quarter, less (ii) Capital Expenditures of such Person for such
fiscal quarter, and (b) is equal to the Interest Expense of such Person
for such fiscal quarter.
"Margin" means (a) for the period up to and including June
30, 1997, two percent (2%), (b) for the period from and including July
1, 1997 to and including September 30, 1997, three percent (3%), and
(c) thereafter, four percent (4%); provided, however, that so long as
no Default or Event of Default then exists, when the aggregate
Commitments of the Banks are equal to $5,000,000 or less, the Margin
shall be one-half percent (1/2%) less than the Margin that would
otherwise be in effect.
"Termination Date" means (i) January 2, 1998; provided that
if such date is not a Banking Day, the Termination Date shall be the
next succeeding Banking Day, or (ii) the earlier date of termination in
whole of the Commitments pursuant to Section 2.7 or Section 9.2, or
otherwise.
"Warrants" means those certain warrants in the form of
Exhibit L to be delivered by the Parent to the Banks under the terms of
this Agreement and any additional warrants from time to time delivered
by the Parent to the Banks in connection with this Agreement.
(b) Article 8 is amended and restated in its entirety to
read as follows:
ARTICLE 8. FINANCIAL COVENANTS.
So long as any of the Notes shall remain unpaid or any Bank
shall have any Commitment under this Agreement:
Section 8.1 Minimum Earnings. The Borrowers shall maintain
on a consolidated basis at all times as of the end of each calendar
month EBITDA of not less than 90% of the projected EBITDA for such
month as set forth in the Borrowers' business plan dated October 23,
1996.
Section 8.2 Capital Expenditures. The Borrowers shall not
make or permit to be made Consolidated Capital Expenditures during any
fiscal year of the Borrowers to exceed in the aggregate $500,000.
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Section 8.3 Current Ratio. The Borrowers shall maintain at
all times as of the end of each fiscal quarter a ratio of Consolidated
Current Assets to Consolidated Current Liabilities of not less than
1.25 to 1.0.
Section 8.4 Interest Coverage Ratio. The Borrowers shall
maintain at all times as of the end of each fiscal quarter on a
consolidated basis an Interest Coverage Ratio of not less than 2.5 to
1.0.
(a) The following new Subsection (d) is added at the end of
Section 2.11:
(d) Extension Fee. The Borrowers shall pay to the Agent for
the ratable benefit of the Banks an extension fee in the amount of
$35,000, which shall be fully earned by the Banks on March 31, 1997,
and which shall be payable on the Termination Date.
(d) A new Section 6.13 is added as follows:
Section 6.13. Amendment to Purchase Agreement. By March 31,
1997, enter into an amendment to the Purchase Agreement extending the
maturity date thereof to January 2, 1998, which amendment shall modify
the Purchase Agreement consistent with the terms of that certain
memorandum Re: Terms and Conditions Addendum for Contract Extension to
U.S. HomeCare Receivables Purchasing Program, dated March 12, 1997, by
and between The Chase Manhattan Bank and the Parent and which amendment
shall be satisfactory to the Banks.
(e) A new Section 6.14 is added as follows:
Section 6.14. Corporate Status. By April 30, 1997, with
respect to each of U.S. Homecare Medical Equipment Corp., U.S. Homecare
Infusion Therapy Products Corporation, U.S. HomeCare Infusion Therapy
Services Corporation of Connecticut, U.S. Homecare Corporation of the
MidAtlantic Region and U.S. Homecare Corporation of Michigan (the
"Inactive Borrowers"), either (i) take affirmative steps to cause such
Inactive Borrower's dissolution or (ii) cause such Inactive Borrower to
be in good standing under the laws of its jurisdiction of incorporation
and each other state in which it is required to qualify to do business
as a foreign corporation, and provide copies of good standing
certificates from the relevant states to the Banks. As soon as
available, the Borrowers will provide the Banks with copies of
certificates of dissolution for each of the Inactive Borrowers
dissolved in accordance with clause (i) of this Section 6.14.
(f) Subsection 6.8(m) is deleted in its entirety, and the
following subsections relettered accordingly.
(g) The corporations listed on Schedule 1(g) to this
Amendment (the "Dissolved Borrowers") shall cease to be "Borrowers" under the
Credit Agreement and the other Facility Documents in all respects.
Notwithstanding the foregoing, the
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Agent and the Banks shall have no obligation to release their security interests
in and security interest filings against the assets of the Dissolved Borrowers,
and nothing contained herein shall be construed to constitute such a release.
(h) A new Section 7.15 is added as follows:
Section 7.15. Inactive Borrowers. Unless the Borrowers have
elected pursuant to Section 6.14 to return such Inactive Borrower to
good standing, transfer assets or liabilities to any Inactive Borrower
or cause any such Inactive Borrower to generate accounts receivable.
SECTION 2. Conditions of Effectiveness. This Amendment shall
become effective when, and only when, the Agent shall have received counterparts
of this Amendment executed by the Borrowers and all of the Banks , except that
Sections 1 and 2 hereof shall become effective when, and only when, the Agent
shall have additionally received all of the following documents, each document
(unless otherwise indicated) being dated the date of receipt thereof by the
Agent (which date shall be the same for all such documents), in form and
substance satisfactory to the Banks:
(a) Certified copies of (i) the resolutions of the Board of
Directors or Executive Committee of each Borrower approving this Amendment and
the matters contemplated hereby, and (ii) all documents evidencing other
necessary corporate action and governmental approvals, if any, with respect to
this Amendment and the matters contemplated hereby, (iii) all waivers and
amendments with respect to the Junior Debt concerning the matters covered by
this Amendment, which shall include an amendment to the Junior Debt documents
extending the maturity date thereof to January 15, 1998, (iv) an executed copy
of that certain memorandum Re: Terms and Conditions Addendum for Contract
Extension to U.S. HomeCare Receivables Purchasing Program, dated March 12, 1997,
by and between The Chase Manhattan Bank and the Parent, and (v)
management-prepared financial statements as of December 31, 1996.
(b) A certificate of the Secretary or an Assistant Secretary of
each Borrower certifying the names and true signatures of the officers of such
Borrower authorized to sign this Amendment and the other documents to be
delivered hereunder.
(c) A favorable opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
counsel for the Borrowers, to the effect that this Amendment and each and every
other document delivered by any of the Borrowers have been duly authorized,
executed and delivered by such Borrowers, and constitute the legal, valid and
binding obligations of such Borrowers, enforceable against such Borrowers in
accordance with their respective terms, and as to such other matters as the
Agent may reasonably require.
(d) A certificate signed by a duly authorized officer of each
Borrower stating that:
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(i) The representations and warranties contained in Section
3 hereof are correct on and as of the date of such certificate as
though made on and as of such date, and
(ii) After giving effect to the terms of the Amendment, no
event has occurred and is continuing which constitutes a Default or an
Event of Default.
(e) Results of a recent field examination by the Banks of the
Borrowers' assets, liabilities, books and records.
(f) Additional warrants, in the same form and containing the same
strike price as the Warrants dated as of October 6, 1995 (the "Existing
Warrants"), granting the Banks the ratable rights to purchase 89,000 shares of
the Parent (the "Additional Warrants"). The Additional Warrants will contain a
provision granting the Banks the rights to purchase the following additional
shares of the Parent on the following dates if the Parent has not received by
such dates either a bona fide letter of intent for a merger or consolidation
involving the Parent or the purchase of substantially all of the stock of the
Borrowers or the Parent or substantially all of their assets or a bona fide
commitment to refinance the Loans: (i) on June 30, 1997, the rights to purchase
44,500 shares of the Parent, and (ii) on September 30, 1997, the rights to
purchase 44,500 shares of the Parent. The registration statement covering the
shares issuable upon exercise of the Existing Warrants that is to be filed
within 30 days following completion of the Parent's audited financial statements
for the year ended December 31, 1996 (but in no event later than April 30, 1997)
shall also cover all shares issuable upon exercise of the Additional Warrants.
(g) Amendment No. 1 to the Registration Rights Agreement, dated
October 6, 1995, among the Parent and the Banks.
(h) Notice Letter from the Parent, notifying the holders of the
Existing Warrants of the current strike price and number of shares issuable upon
exercise thereof and reaffirming the continuing validity of the Existing
Warrants and the obligations of the Parent thereunder.
(i) Amendment No. 1 to the Existing Warrants.
(j) Payment of a $40,000 extension fee to the Agent for the
ratable benefit of the Banks, which shall be fully earned by the Banks on the
date so paid.
SECTION 3. Representations and Warranties of the Borrowers.
Each Borrower represents and warrants as follows:
(a) Such Borrower is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation.
(b) The Dissolved Borrowers, on their respective dates of
dissolution, possessed no material assets and no material liabilities. The
Inactive Borrowers possess no
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material assets and no material liabilities. None of the Dissolved Borrowers or
the Inactive Borrowers generate accounts receivable.
(c) The execution, delivery and performance by such Borrower of
this Amendment and the Facility Documents, as amended hereby, to which it is or
is to be a party are within such Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not contravene (i) such
Borrower's charter or by-laws, (ii) any contractual restriction binding on or
affecting such Borrower, or result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or other charge,
encumbrance or preferential arrangement of any nature upon or with respect to
any of the properties now owned or hereafter acquired by such Borrower, or (iii)
to the best of such Borrower's knowledge, any law.
(d) No authorization, approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such Borrower of this Amendment
or any of the Facility Documents, as amended hereby, to which it is or is to be
a party.
(e) This Amendment and each of the other Facility Documents as
amended hereby, to which such Borrower is a party constitute legal, valid and
binding obligations of such Borrower enforceable against such Borrower in
accordance with their respective terms.
(f) To the best of such Borrower's knowledge, the Security
Agreement constitutes valid and perfected first priority security interests and
liens in and to the Collateral covered thereby enforceable against all third
parties in all jurisdictions and secure the payment of all obligations of such
Borrower under the Facility Documents, as amended hereby, and the execution,
delivery and performance of this Amendment do not adversely affect the aforesaid
security interests and liens of such Security Agreement.
(g) There is no pending or threatened action or proceeding
affecting such Borrower or any of its Subsidiaries before any court,
governmental agency or arbitrator, which may materially adversely affect the
financial condition or operations of such Borrower or any Subsidiary or which
purport to affect the legality, validity or enforceability of this Amendment or
any of the other Facility Documents, as amended hereby.
(h) After giving effect to the terms of the Amendment, no event
has occurred and is continuing which constitutes a Default or an Event of
Default.
SECTION 4. Reference to and Effect on the Facility Documents.
(a) Upon the effectiveness of Sections 1 and 2 hereof, on and
after the date hereof each reference in the Credit Agreement to "this
Agreement," "hereunder," "hereof," "herein" or words of like import, and each
reference in any Facility Documents to the Credit Agreement or any other
Facility Document, shall mean and be a reference to the Credit Agreement or such
other Facility Document as amended hereby.
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(b) Except as specifically amended above, the Credit Agreement
and the other Facility Documents shall remain in full force and effect and are
hereby ratified and confirmed. Without limitation to the foregoing, each of the
Borrowers hereby confirms that the removal of the Dissolved Borrowers from the
Borrowers hereunder shall not affect its obligations under the Credit Agreement
and the other Facility Documents, which are continuing obligations of such
Borrower. Without limiting the generality of the foregoing, the Pledge
Agreements and all of the Pledged Collateral described therein, and the Security
Agreement and all of the Collateral described therein, do and shall continue to
secure the payment of all Obligations, in each case as amended hereby.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Agent or any Bank under any of the Facility
Documents, nor constitute a waiver of any provision of any of the Facility
Documents.
(d) The Agent and the Banks are under no obligation to enter into
this Amendment. The Agent's and the Banks' entering into this Amendment shall
not be deemed to limit or hinder any rights of the Agent or any Bank under the
Credit Agreement, nor shall it be deemed to create or infer a course of dealing
between the Agent or any Bank and the Parent or any of the other Borrowers with
regard to any provision of the Credit Agreement.
SECTION 5. Costs, Expenses and Taxes. The Borrowers jointly
and severally agree to pay on demand all costs and expenses of the Agent and the
Banks in connection with the preparation, execution and delivery of this
Amendment and the other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Agent and the Banks with respect thereto and with respect to
advising the Agent and the Banks as to their rights and responsibilities
hereunder and thereunder. The Borrowers further jointly and severally agree to
pay on demand all costs and expenses, if any (including, without limitation,
reasonable counsel fees and expenses), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this Amendment
and the other instruments and documents to be delivered hereunder, including,
without limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 5. In addition, the Borrowers shall pay
any and all stamp and other taxes payable or determined to be payable in
connection with the execution and delivery of this Amendment and the other
instruments and documents to be delivered hereunder, and agrees to save the
Agent and the Banks harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes.
SECTION 6. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same instrument.
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SECTION 7. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the State of New
York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written..
Borrowers:
U.S. HOMECARE CORPORATION AND ITS
SUBSIDIARIES LISTED ON ANNEX 1 HERETO
By: _____________________________________
Name:
Vice President of each of the above
corporations
Banks:
THE CHASE MANHATTAN BANK (successor by
merger to The Chase Manhattan Bank, N.A.)
By: _____________________________________
Xxxx Xxxxxxxxx
Vice President
CREDITANSTALT BANKVEREIN
By: _____________________________________
X. X. Xxxxxx
Vice President
By: _____________________________________
Xxxxx Xxxxxx
Vice President
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Agent:
THE CHASE MANHATTAN BANK (successor by
merger to The Chase Manhattan Bank, N.A.)
By: _____________________________________
Xxxx Xxxxxxxxx
Vice President
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ANNEX 1
U.S. HOMECARE CORPORATION, AFFILIATED HOME CARE OF WESTCHESTER, INC., U.S.
HOMECARE CORPORATION OF NORTHERN WESTCHESTER, U.S. HOMECARE CORPORATION OF
MANHATTAN, U.S. HOMECARE CORPORATION OF THE BRONX, U.S. HOMECARE CERTIFIED
CORPORATION OF NEW YORK, U.S. HOMECARE CORPORATION OF ALBANY, U.S. HOMECARE
INFUSION THERAPY SERVICES CORPORATION OF NEW JERSEY, U.S. HOMECARE CORPORATION
OF CONNECTICUT, U.S. HOMECARE CERTIFIED CORPORATION OF CONNECTICUT, U.S.
HOMECARE CORPORATION OF PENNSYLVANIA, U.S. HOMECARE CERTIFIED CORPORATION OF
PENNSYLVANIA, U.S. HOMECARE MEDICAL EQUIPMENT CORP., U.S. HOMECARE INFUSION
THERAPY PRODUCTS CORPORATION, U.S. HOMECARE INFUSION THERAPY SERVICES
CORPORATION OF CONNECTICUT, U.S. HOMECARE CORPORATION OF THE MIDATLANTIC REGION,
U.S. HOMECARE CORPORATION OF MICHIGAN
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SCHEDULE 1(G)
DISSOLVED BORROWERS
Florida Corporations:
U.S. Homecare Corp. of South Florida
U.S. Homecare Certified Corp. of Florida
U.S. Homecare Infusion Therapy Corp. of Florida
California Corporation:
U.S. Homecare Corporation of California
