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AMENDMENT NO. 3
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Dated as of December 24, 1997
This AMENDMENT among U.S. HOMECARE CORPORATION AND ITS SUBSIDIARIES LISTED
IN ANNEX I HERETO (collectively, the "Borrowers" and each, individually, a
"Borrower") and FLEET NATIONAL BANK (successor by merger to Fleet Bank,
National Association) (the "Bank").
PRELIMINARY STATEMENT.
A. The Borrowers and the Bank have entered into a Credit Agreement dated
as of October 6, 1995, as amended by Amendment No. 1 dated as of November 14,
1996 and Amendment No. 2 dated as of March 25, 1997 (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
Bank under the Note in the principal amount of $3,000,000, as of the date
hereof (the "Indebtedness"), which Indebtedness is owed by the Borrowers to the
Bank without offset, defense or counterclaim of any kind, nature or
description. As security for such Indebtedness, the Borrowers have heretofore
granted to the Bank a second priority security interest in all the Borrowers'
assets (excluding certain health care receivables as more fully set forth in
the Security Agreement), 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 Bank are hereby reacknowledged and confirmed by the Borrowers.
C. The Borrowers and the Bank have agreed to amend the Credit Agreement
as hereinafter set forth.
SECTION 1. Amendments.
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(a) 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:
(i) The following definition contained in Section 1.1 of the Credit
Agreement is amended and restated in full to read as follows:
"Termination Date" means (i) April 15, 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 Commitment pursuant to Section 2.6 or Section 8.2, or
otherwise.
(ii) For financial reporting periods ending on and before December 31,
1997, Article 7 shall remain unchanged. Commencing with
financial reporting periods ending after December 31, 1997,
Article 7 is amended and restated in its entirety to read
as follows:
ARTICLE 7. FINANCIAL COVENANTS.
So long as the Note shall remain unpaid or the Bank shall have any
Commitment under this Agreement:
Section 7.1 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' 1998 Business Plan.
Section 7.2 Capital Expenditures. The Borrowers shall not make
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or permit to be made Consolidated Capital Expenditures during any calendar
month to exceed in the aggregate $50,000.
Section 7.3 Interest Coverage Ratio. The Borrowers shall maintain
at all times as of the end of each calendar month on a consolidated basis
an Interest Coverage Ratio of not less than 2.5 to 1.0.
(b) The Note 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:
The following definition contained in Section 1(ix) of the Note is amended
and restated in full to read as follows:
(ix) "Termination Date" means April 15, 1998.
SECTION 2. Conditions of Effectiveness. This Amendment shall become
effective when, and only when, the Bank shall have received counterparts of
this Amendment executed by the Borrowers and the Bank and the Bank shall have
additionally received all of the following documents, each document (unless
otherwise indicated) being dated the date of receipt thereof by the Bank (which
date shall be the same for all such documents), in form and substance
satisfactory to the Bank and the Guarantor:
(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, (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 Senior Debt (as defined in the Intercreditor Agreement) concerning the
matters covered by this Amendment, which shall include an amendment to the
Senior Debt (as defined in the Intercreditor Agreement) documents extending the
maturity date thereof to March 31, 1998 and (iv) an executed copy of Amendment
No. 4 to Receivables Purchase and Servicing Agreement extending the maturity
date of the Purchase Agreement to March 31, 1998 and in form and substance
satisfactory to the Bank and the Guarantor.
(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 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 Bank or the
Guarantor may reasonable require.
(d) A certificate signed by a duly authorized officer of each Borrower
stating that:
(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.
(iii) All conditions to the effectiveness of Section 1 of Amendment
No. 4 to the Restated First Credit Agreement with the Senior Lenders, a
certified copy of which shall have been provided to the Bank as provided
above, have been satisfied and that Section
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1 is effective.
(e) A 1998 Business Plan (forecasted on a monthly basis).
(f) A fully executed amendment to the Guarantee extending the termination
date thereof to a date no earlier than April 30, 1998.
(g) Payment of a $10,000 extension fee to the Bank, which shall be fully
earned by the Bank 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 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.
(c) 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.
(d) 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.
(e) To the best of such Borrower's knowledge, the Security Agreement
constitutes valid and perfected second 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 interest and liens of such Security Agreement.
(f) Except as set forth on Schedule 3(f), 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.
(g) 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 Section 1 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 limiting the generality of the foregoing, the
Pledge Agreement 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 (as defined in the Pledge
Agreement and the Security Agreement respectively), 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 Bank or the Guarantor under any of the Facility
Documents, nor constitute a waiver of any provision of any of the Facility
Documents.
(d) The Bank is under no obligation to enter into this Amendment. The
Bank's entering into this Amendment shall not be deemed to limit or hinder any
rights of the Bank or the Guarantor under the Credit Agreement, nor shall it be
deemed to create or infer a course of dealing between the 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 Bank and the Guarantor 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 Bank and the Guarantor with respect thereto and with respect to
advising the Bank and the Guarantor 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 Bank and the Guarantor 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 be governed by, and
construed in accordance with, the laws of the State of Connecticut.
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:
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U.S. HOMECARE CORPORATION AND ITS
SUBSIDIARIES LISTED ON ANNEX 1 HERETO
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Vice president of each of the above corporations
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Bank:
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FLEET NATIONAL BANK (successor by merger to
Fleet Bank, National Association)
By: /s/ Xxxxxxxxxxx X. Xxxx
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Xxxxxxxxxxx X. Xxxx
Vice President
CONSENT OF GUARANTOR
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The Guarantor hereby consents to the execution of the foregoing Amendment by
the Bank and to the terms and conditions contained therein.
CONNECTICUT DEVELOPMENT AUTHORITY
By: /s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Its Executive Vice President
and Executive Director
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ANNEX 1
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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 INFUSION THERAPY PRODUCTS CORPORATION
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SCHEDULE 3(f)
A broad based review and investigation of the personal care industry is being
conducted by the office of the New York State Attorney General. Based on
information circulated by an industry organization, the review and the
investigation began in November with a number of New York providers of personal
care services, including U.S. HomeCare Corporation ("U.S. HomeCare"). As part
of this review and investigation, the Attorney General served these providers
with subpoenas for production of documentation. U.S. HomeCare is cooperating
with the investigation and has asked for an expeditious review.
U.S. HomeCare believes that the services under review are New York State
Medicaid programs which involve personal care attendant services. U.S. HomeCare
is a long term provider of such services in over ten counties within the State.
U.S. HomeCare is subject to frequent, independent reviews and audits of its
operations and its Medicare/Medicaid participation on an ongoing basis by
county, state and federal agencies.
