<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ____________________
Commission file number 1-11343
CORAM HEALTHCARE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 33-0615337
---------------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4675 MacArthur Court
Suite 1250
Newport Beach, CA 92660
--------------------------------------- ---------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (714) 955-8776
---------------
</TABLE>
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES NO (1)
---- ----
(1) The registrant has filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act of 1934 since July 8, 1994, the date upon which the
registrant became subject to such filing requirements of such Act, but has not
been subject to such filing requirements for the past 90 days.
The number of shares outstanding of the Registrant's Common Stock, $.001 par
value, as of June 30, 1994 was 38,593,507.
Page 1 of 107 Pages
<PAGE> 2
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CORAM HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
6/30/94 12/31/93
-------- --------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 25,065 $ 22,971
Accounts receivable, net 118,741 112,525
Short term investments (note 8) 26,016 33,082
Inventory 13,241 11,194
Prepaid taxes 7,504 1,129
Prepaid expenses 4,569 3,283
Prepaid merger expenses (note 3) 3,935 -
Other current assets 1,640 2,095
Deferred income tax asset 5,638 5,318
-------- --------
Total current assets 206,349 191,597
Equipment, furniture & fixtures, net 38,273 40,158
Land and buildings 3,079 2,759
Joint ventures & other assets (note 7) 26,309 27,135
Goodwill, net 294,627 294,118
-------- --------
Total assets $568,637 $555,767
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of debt $ 22,397 $ 29,876
Accounts payable 18,751 23,411
Accrued compensation 3,016 4,969
Other accrued liabilities 5,672 6,181
Deferred income taxes 4,202 4,101
Provision for litigation (note 5) 17,200 -
-------- --------
Total current liabilities 71,238 68,538
Long-term debt (note 4) 47,567 39,040
Minority interest in consolidated joint ventures 6,085 6,298
Deferred income taxes non-current 3,158 3,020
-------- --------
Total liabilities 128,048 116,896
-------- --------
Stockholders' equity:
Preferred stock, par value $.001, authorized - -
10 million shares, no shares issued and outstanding
Common stock par value $.001, authorized
75 million shares; issued 39 million in 1994
and 38 million in 1993 39 38
Additional paid-in capital 337,959 328,395
Less: Treasury stock (5) (5)
Stock purchase note (860) (860)
Retained Earnings 103,456 111,303
-------- --------
Total common stockholders' equity 440,589 438,871
-------- --------
Total liabilities & stockholders' equity $568,637 $555,767
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements
Page 2 of 107 Pages
<PAGE> 3
CORAM HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------
1994 1993
-------- --------
<S> <C> <C>
Net revenue $113,647 $117,885
Drugs and supplies 35,222 32,277
Clinical services 42,093 37,227
Selling, general and administrative expenses 19,015 19,647
Provision for estimated uncollectible accounts receivable 5,976 7,341
Amortization of goodwill 2,212 2,011
Provision for litigation settlement (note 5) 17,200 -
Merger expenses - 517
-------- --------
Operating income (loss) (8,071) 18,865
Interest income 825 874
Interest expense (1,474) (1,108)
Minority interest in net income of consolidated joint ventures (3,137) (2,183)
Equity in net income of unconsolidated joint ventures 227 285
Gain on sale of assets 41 6,269
Other Income 305 180
-------- --------
Income (loss) before taxes (11,284) 23,182
Income tax (benefit), expense (note 6) (2,284) 10,502
-------- --------
Net income (loss) $ (9,000) $ 12,680
======== ========
Net income (loss) per common share: (note 1)
Primary $ (0.23) $ 0.33
======== ========
Fully Diluted $ (0.23) $ 0.33
======== ========
Weighted average common shares outstanding:
Primary 38,497 37,896
======== ========
Fully Diluted 38,497 38,586
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements
Page 3 of 107 Pages
<PAGE> 4
CORAM HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1994 1993
--------- --------
<S> <C> <C>
Net revenue $226,712 $231,301
Drugs and supplies 70,208 62,297
Clinical services 84,226 72,849
Selling, general and administrative expense 38,611 35,439
Provision for estimated uncollectible accounts receivable 10,708 16,112
Amortization of goodwill 4,416 3,635
Provision for litigation settlement (note 5) 17,200 -
Merger expenses - 2,822
Restructuring - 1,605
-------- --------
Operating income 1,343 36,542
Interest income 1,540 2,013
Interest expense (2,642) (1,907)
Minority interest in net income of consolidated joint ventures (5,528) (3,846)
Equity in net income of unconsolidated joint ventures 503 423
Gain on sale of assets 41 5,768
Other Income 366 456
-------- --------
Income (loss) before taxes (4,377) 39,449
Income tax (note 6) 1,411 16,552
-------- --------
Net income (loss) $ (5,788) $ 22,897
======== ========
Net income (loss) per common share: (note 1)
Primary $ (0.15) $ 0.61
======== ========
Fully Diluted $ (0.15) $ 0.60
======== ========
Weighted average common shares outstanding
Primary 38,372 37,681
======== ========
Fully Diluted 38,372 38,341
======== ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements
Page 4 of 107 Pages
<PAGE> 5
CORAM HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1994 1993
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (5,788) $ 22,897
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Provision for estimated uncollectible
accounts receivable 10,708 16,112
Depreciation and amortization 10,407 8,671
Minority interest in net income of
consolidated joint ventures 5,528 3,846
(Gain) loss on sale of property and equipment 120 (5,768)
Gain on sales of equity in joint ventures (161) --
Equity in net income of unconsolidated
joint ventures (503) (423)
Other (557) 26
Change in assets and liabilities, net of
acquisitions:
Increase in accounts and notes receivable (16,392) (10,438)
(Increase) decrease in prepaid expenses
and other assets 528 (11,287)
Decrease in current and other
liabilities (1,440) (6,474)
-------- --------
Net cash provided by
operating activities 2,450 17,162
-------- --------
Cash flows from investing activities:
Proceeds from sale of short-term investments 7,016 14,393
Proceeds from sale of property and equipment 418 5,375
Proceeds from sale of equity in joint ventures 500 -
Purchase of equipment, furniture and fixtures (4,784) (4,958)
Payments for acquisition of businesses (4,966) (42,905)
Capital contributions to unconsolidated
joint ventures (1,654) (829)
Distributions of S corporation earnings - (5,028)
Distribution of earnings from unconsolidated
joint ventures 515 1,335
Distributions to minority interest in
consolidated joint ventures (5,741) (3,760)
-------- --------
Net cash used by
investing activities (8,696) (36,377)
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 5 of 107 Pages
<PAGE> 6
CORAM HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Sales of common and preferred stock, net of
repurchases and issuance costs 1,154 1,043
Debt borrowings 15,216 38,364
Dividends (2,059) (2,032)
Exercise of stock options 4,552 297
Repayment of debt (10,523) (13,923)
------- -------
Net cash provided by financing activities 8,340 23,749
------- -------
Net increase in cash 2,094 4,534
Cash at beginning of period 22,971 16,332
------- -------
Cash at end of period $25,065 $20,866
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 2,775 $ 1,940
Income taxes $14,663 $26,641
</TABLE>
See accompanying notes to condensed consolidated financial statements
Page 6 of 107 Pages
<PAGE> 7
CORAM HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994
(UNAUDITED)
(1) Significant Accounting Policies
Basis of Presentation
The accompanying interim unaudited condensed consolidated financial
statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such regulations. The condensed consolidated financial
statements reflect all adjustments and disclosures which are, in the opinion of
management, necessary for a fair presentation. All such adjustments are of a
normal recurring nature. The interim consolidated financial statements should
be read in conjunction with the Company's Registration Statement on Form S-4
filed on June 6, 1994. The results of operations for the interim periods are
not necessarily indicative of the results of the full fiscal year.
As described in Note (2), the Company acquired T2 Medical, Inc.
("T2"), Curaflex Health Services, Inc. ("Curaflex"), Medisys, Inc.
("Medisys"), and HealthInfusion, Inc. ("HealthInfusion"), on July 8, 1994 in a
transaction accounted for as a pooling of interests. Accordingly, the
accompanying financial information has been restated to include the accounts of
T2, Curaflex, Medisys and HealthInfusion for all periods presented.
Earnings per Share
Earnings per share are computed by dividing net earnings by the
weighted average number of common and common equivalent shares outstanding.
(2) Business Combinations
On February 6, 1994, a definitive agreement was signed providing for
the merger (the "Merger") of Curaflex , a home infusion therapy company, T2,
an alternate site health care provider, HealthInfusion, a home infusion
therapy company, and Medisys, a home infusion therapy company. The merger was
consummated on July 8, 1994.
Under the terms of the agreement, all shares of common stock of
Curaflex, T2, HealthInfusion and Medisys issued and outstanding prior to the
merger were exchanged for shares of common stock of a newly formed company
("Coram") on the following basis: each stockholder of Curaflex received .333
shares of Coram's common stock in exchange for each share of Curaflex common
stock; each stockholder of T2 received .630 shares of Coram's common stock in
exchange for each share of T2 common stock; each stockholder of HealthInfusion
received .447 shares of Coram's common stock in exchange for each share of
HealthInfusion common stock; and each stockholder of Medisys received .243
shares of Coram's common stock in exchange for each share of Medisys common
stock. The Merger has been accounted for as a "pooling of interests" and,
accordingly, Coram's historical consolidated financial statements have been
restated to include the financial position and results of operations of the
four companies.
Page 7 of 107 Pages
<PAGE> 8
CORAM HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
The results of operations previously reported by the separate
enterprises and the combined amounts presented in the accompanying condensed
consolidated financial statements are summarized below (in thousands):
<TABLE>
<CAPTION>
Three Months Ended June 30 Six Months Ended June 30
-------------------------- -------------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Revenue
- -----------
Curaflex $ 24,015 $ 24,695 $ 48,989 $ 45,291
T2 57,561 66,552 115,770 134,222
HealthInfusion 18,141 14,346 34,515 27,326
Medisys 13,930 12,292 27,438 24,462
------- ------- ------- -------
Combined $113,647 $117,885 $226,712 $231,301
======== ======== ======== ========
Net Income
- ----------
Curaflex $ (2,809) $ 1,749 $ (4,400) $ (330)
T2 (6,949) 10,335 (3,386) 20,596
HealthInfusion 741 1,442 1,703 2,689
Medisys 322 (846) 599 (58)
Coram Holding (305) - (304) -
------- ------ ------- -------
Combined $ (9,000) $ 12,680 $ (5,788) $ 22,897
======== ======== ======== ========
</TABLE>
(3) Merger & Restructuring
On July 8, 1994, as described in note (2), the Company consummated the
merger transaction between T2, Curaflex, HealthInfusion and Medisys. As a
result of the merger, management is in the process of developing a merger and
restructuring plan ("Plan") to reduce future operating cost, improve
productivity and gain efficiencies through consolidation of redundant centers
and corporate offices. It is anticipated that this Plan will include costs to
consolidate existing regional centers, local centers and satellite facilities;
costs for severance and fringe benefits related to workforce reduction; costs
incurred to complete the transaction; and disposition of selected assets.
The merger was consummated subsequent to June 30, 1994 and management
and the board of directors have not completed their review of the costs
associated with the merger and restructuring and have not adopted or approved a
formal Plan; accordingly, no amount has been provided for these costs in the
statement of operations for the three or six months ended June 30, 1994.
However, management anticipates this review and adoption of the Plan will be
completed in the quarter ending September 30, 1994. Accordingly, merger and
restructuring charges will be recorded in the third quarter of 1994.
Based on a preliminary review of the costs to be incurred, management
estimates that the merger and restructuring costs could range from $60 million
to $75 million. However, until management completes its review and adopts the
Plan, there can be no assurance that the actual costs will fall within this
range. Through the consummation of the merger, the Company had incurred
approximately $17 million of merger costs of which $4 million was paid as of
June 30, 1994 but was deferred until the consummation of the merger on July 8,
1994. The entire $17 million will be included in the merger and restructing
charge to be recorded in the third quarter of 1994.
Page 8 of 107 Pages
<PAGE> 9
CORAM HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
(4) Revolving Credit
As of June 30, 1994, Curaflex had net borrowings against its bank line
of credit of $25.0 million. The $25.0 million, 3-year revolving line was
secured by accounts receivable and general assets of Curaflex, and contained
certain financial covenants.
At June 30, 1994, HealthInfusion had net borrowings against its bank
line of credit of $14.7 million. The $25 million revolving line was secured by
accounts receivable and general assets of HealthInfusion and contained certain
financial covenants.
At June 30, 1994, Medisys had net borrowings against its $7.5 million
bank line of credit of $5.9 million. Borrowings were secured by accounts
receivable and general assets of Medisys.
At June 30, 1994, T2 had net borrowings against its $10 million
revolving line of credit note of $3.9 million. Short-term investments and
certain marketable securities were pledged to secure T2's line of credit note.
On July 21, 1994, the Company entered into an $80 million revolving
credit agreement and the previously existing lines of credit maintained by each
of its subsidiaries were all paid in full and terminated. The new line is for
a term of eighteen months and bears interest on base rate borrowing of zero to
.75% over prime and on LIBOR borrowings at a rate of 1.25% to 2.00% over the
base rate.
The line is collateralized by a pledge of the stock of the Company's
subsidiaries, and accounts receivable, short-term investments, and general
assets of the Company and its subsidiaries. At July 31,1994, borrowings on the
line were $62.6 million, $55.0 million of which were LIBOR borrowings at a rate
of 6.25% through August 30, 1994, and $7.6 million of which were base rate
borrowings at a variable rate, currently at 7.75%.
On August 2, 1994, the Company received a commitment letter to amend
the credit agreement to increase the line to $120 million.
(5) Litigation
T2 and certain of its former officers are defendants in civil suits
filed in 1992 on behalf of individuals claiming to have purchased T2 Common
Stock during the time period from December 2, 1991 through June 24, 1992. The
individual defendants are no longer involved in the management of the Company
or any of its subsidiaries.
The suits were consolidated into one suit in the United States
District Court for the Northern District Court of Georgia. The complaint seeks
certification of a class of plaintiffs and damages in an unspecified amount.
The complaint alleges, among other things, that T2 and the named individuals
violated various provisions of the Securities Exchange Act of 1934 and violated
certain other laws by failing to make complete and accurate statements about
T2's business. On November 16, 1993, the proceeding was certified as a class
action ("In Re T2 Shareholder Litigation").
In 1993, T2 conducted an inquiry which resulted in the restatement of
its interim financial statements for the periods ended December 31, 1992 and
March 31, 1993. Subsequently, T2 and certain of its former officers and
directors were named as defendants in seventeen civil suits filed in the United
States District Court for the Northern District of Georgia on behalf of
individuals claiming to
Page 9 of 107 Pages
<PAGE> 10
CORAM HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
have purchased or sold T2 Common Stock during various time periods in 1991,
1992 and 1993. The complaints, which were generally similar, alleged in
part that T2 made misleading public statements concerning their business,
results of operations, future prospects, revenues and reimbursements from
its payor sources. In September 1993, many of the complaints were
dismissed and a new class action complaint was filed.
On January 14, 1994, the court in "In Re T2 Shareholder Litigation"
granted the plaintiffs' motion to amend their complaint to allege violations of
the Securities Exchange Act of 1934 on behalf of a putative class consisting of
purchasers of T2 Common Stock for the period December 2, 1991, through August
12, 1993. Although the amended complaint has been filed, the court has not yet
ruled on the plaintiffs' motion to expand the previously certified class. Five
other putative class action complaints were previously pending in the Northern
District of Georgia, and all such cases have been consolidated with the "In Re
T2 Shareholder Litigation".
Based on discussions regarding the possible resolution of such
litigation, the Company has recorded a provision of $17,200,000 for the quarter
ended June 30, 1994, with respect to the Company's potential expense in
connection with such resolution. There can be no assurance, however, that such
litigation can be resolved or, if it can, that any such resolution will be on
terms currently under discussion. If the foregoing claims continue to be
pressed, the resulting distraction of management, the costs of defending these
claims and the payment of any settlement or damage award could have a material
adverse effect on the Company's operations and financial condition.
(6) Income Taxes
The Company has recorded a tax benefit of $2,284,000 for the three
months ended June 30, 1994 and income tax expense of $1,411,000 for the six
months ended June 30, 1994, on a combined loss before income taxes of
$11,284,000 and $4,377,000, respectively. The loss of Curaflex may not be
utilized to offset the income of Medisys and HealthInfusion, and, therefore, no
benefit for the Curaflex loss has been recorded for the three and six months
ended June 30, 1994. An income tax benefit has been recognized for the T2 loss
since it can be carried back to previously taxed income.
(7) Debenture Purchase Agreement
Pursuant to a Debenture Purchase Agreement ("Agreement") dated January
1, 1993, T2 has loaned as of June 30, 1994, $12,928,000 to Surgex, Inc.
("Surgex") at an interest rate of prime plus 1%. The debentures are
convertible, at T2's option, into approximately 74% of the usual and
outstanding common stock of Surgex on the date of the conversion. At December
31, 1993, the amount outstanding under the agreement was $11,505,000.
(8) Short-term Investment
The Financial Accounting Standards Board issued Statement No. 115
entitled "Accounting for Certain Investment in Debt and Equity Securities"
which is effective for fiscal years beginning after December 15 1993. The
adoption of this Statement did not have a material effect on the financial
position or results of operations of the Company.
Page 10 of 107 Pages
<PAGE> 11
CORAM HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1994
(UNAUDITED)
(9) Subsequent Event
The Company, Secomerica, Inc., a Delaware corporation ("Secomerica"),
and H.M.S.S., Inc., a Delaware corporation ("H.M.S.S.") and wholly owned
subsidiary of Secomerica, entered into a Stock Purchase Agreement dated as of
August 2, 1994 (the "Purchase Agreement"), pursuant to which the Company has
agreed to purchase all of the shares of capital stock of H.M.S.S. from
Secomerica for cash to be paid at the closing. Upon consummation of the
transaction, H.M.S.S. will become a wholly owned subsidiary of the Company.
The transaction is conditioned on, among other things, (i) the expiration of
the applicable waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, (ii) the procurement of all material
consents, approvals, or authorizations of or notifications to any third parties
(including governmental agencies) required to consummate the transactions as
contemplated by the Purchase Agreement, (iii) the nonoccurrence of any event
which has a material adverse effect on the assets, liabilities, business,
financial condition or results of operations of H.M.S.S. and its subsidiaries,
taken as a whole and (iv) the obtainment by the Company of financing which has
been committed by its banks. The Company intends to record this business
combination as a purchase during the third quarter of 1994.
Page 11 of 107 Pages
<PAGE> 12
ITEM 2
CORAM HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
On July 8, 1994, CORAM Healthcare Corporation was created by the
combination of Curaflex Health Services, Inc., T2 Medical, Inc.,
HealthInfusion, Inc. and Medisys, Inc, all of which are now wholly owned
subsidiaries of the Company.
RESULTS OF OPERATIONS
Net revenue for the three months and six months ended June 30, 1994
decreased by 4% and 2% respectively, compared to the corresponding periods in
the prior year. The decrease in net revenue is primarily the result of
continued cost reduction initiatives by third party payors. These initiatives
to reduce costs include, but are not limited to, retroactive implementation of
case management price discounts and demands for larger price discounts by
indemnity insurance carriers. Acquisitions consummated subsequent to June 30,
1993, however, offset decreasing patient revenues to a small degree.
Although the number of infusion therapy patients served during the
three and six month periods ended June 30, 1994, increased, the Company
experienced a significant reduction in per patient revenue due to pricing and
reimbursement pressures imposed by third-party payors. Such pricing and
reimbursement pressures are expected to continue to have a negative effect on
the Company's infusion therapy revenues for the foreseeable future.
Lithotripsy revenues were $12,638,100 and $24,857,900 for the three and
six month periods ended June 30, 1994 compared with $10,529,000 and $17,516,300
for the corresponding periods in the prior year. The increases of 20% and 42%,
respectively, for the three and six month periods ended June 30, 1994,
respectively over the corresponding periods in the prior year were primarily
attributable to an increase in patients served and the acquisitions since June
30, 1993, of majority interests in three lithotripsy companies in which the
Company had no prior interest.
While pricing pressures have been primarily related to the Company's
infusion therapy operations, there can be no assurance that similar pricing
pressures will not be applied to the Company's lithotripsy operations. The
Health Care Finance Administration ("HCFA") has issued a proposed rule that
would, if implemented, significantly reduce the amount Medicare would reimburse
its beneficiaries for the cost of lithotripsy procedures performed in an
ambulatory surgery center or on an out-patient basis at a hospital. Further, a
decrease in the Medicare reimbursement rate for lithotripsy may trigger demands
for similar reductions by other third-party payors.
Despite the fact that revenues per patient decreased, the number of
patients served increased. As a result of serving more patients, the cost of
drugs and supplies used increased by 9% and 13% for the three and six month
periods ended June 30, 1994, compared to the corresponding periods in the prior
year.
Clinical services increased 13% and 16% for the three and six month
periods ended June 30, 1994 compared to the corresponding periods in 1993.
These increases are due to increased personnel costs required to serve the
larger patient base, as well as the inclusion of clinical costs of the
companies acquired subsequent to the second quarter of 1993.
Page 12 of 107 Pages
<PAGE> 13
CORAM HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Selling, general and administrative expenses decreased slightly during
the three months ended June 30, 1994 compared to the corresponding period of
1993. This decrease was primarily the result of a reduction in travel costs,
some decrease in personnel costs, and the cost control efforts of the Company.
During the six month period ended June 30, 1994, selling, general and
administrative expenses increased by 9%, primarily due to the addition of three
senior executives at HealthInfusion during the latter half of 1993, and
increased legal costs associated with, among other matters: (i) the defense of
T2 and certain former officers and directors in the previously mentioned
stockholder litigation involving T2, (ii) the representation of T2 in
connection with the previously disclosed inquiries currently being conducted by
certain governmental authorities; and (iii) the advancement of legal fees and
expenses to certain former T2 officers and directors.
The provision for the estimated uncollectible accounts receivable
decreased as a percentage of net revenue to 5.3% for the three months ended June
30, 1994 from 6.2% for the corresponding period in 1993, and to 4.7% for the six
months ended June 30, 1994 from 7.0% for the corresponding period in 1993.
Management regularly reviews the collectibility of accounts receivable and makes
adjustments to the allowance for estimated uncollectible accounts as needed to
reflect prevailing conditions.
The increases in the amortization of goodwill of 10% and 21% for the
three and six month periods ended June 30, 1994, respectively, compared to the
corresponding periods of 1993 reflects additional goodwill associated with
acquisitions made subsequent to June 30, 1993 which were accounted for as
purchases.
During the second quarter of 1994 the Company recorded a provision for
litigation of $17.2 million with respect to the legal proceeding involving T2
described in note 5. There was not a comparable charge in 1993.
The merger costs recorded during the three months ended June 30, 1993
relate to the costs associated with Medisys's merger and pooling of interests
with American Home Therapies, Inc. ("AHT"). The merger and restructuring costs
during the six months ended June 30, 1993, are associated with the Medisys
merger with AHT and with Curaflex's merger with Clinical Homecare, Inc. The
costs associated with the merger of Curaflex, T2 Medical, HealthInfusion and
Medisys will be recorded in the third quarter of 1994.
Interest income decreased by 6% and 24% for the three months and six
months, respectively, ended June 30, 1994 compared to the same periods in 1993.
The decreases were due primarily to the decrease in short-term investments
which were used to finance acquisitions.
Interest expense increased by 33% and 39% for the three and six month
periods ended June 30, 1994, respectively, compared to the corresponding
periods in 1993, primarily due to increased borrowings used to finance
acquisitions and general working capital requirements.
Page 13 of 107 Pages
<PAGE> 14
CORAM HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Minority interest in consolidated joint ventures increased by 44% in
both the three and six month periods ended June 30, 1994, compared to the same
period in 1993. This increase is due to the Company's acquisition of majority
positions in several lithotripsy companies subsequent to the second quarter
1993.
Other income decreased by 91% and 86% during the three and six month
periods ended June 30, 1994 compared to the same periods in 1993, primarily due
to a gain of $6.3 million on the sale of T2's respiratory therapy business
during the second quarter of 1993.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1994 each of the individual parties to the merger had a
revolving credit agreement in place. Borrowings against these lines as of
June 30, 1994, were $25 million for Curaflex, $3.9 million for T2, $14.7
million for HealthInfusion, and $5.9 million for Medisys. On July 21, 1994,
the Company entered into a revolving credit agreement for $80 million, and paid
in full and terminated all the previously existing lines. The credit agreement
is collateralized by a pledge of the stock of the Company's subsidiaries,
accounts receivable and general assets of the Company. Interest on base rate
borrowings are zero to .75% over prime and LIBOR borrowings at rates of 1.25%
to 2.00% over LIBOR. The current LIBOR borrowings of $55 million are at
a rate of 6.25% through August 30, 1994, and the $7.6 million of base rate
borrowings are currently at 7.75%. As of July 31, 1994, borrowings on the new
line were $62.6 million. On August 2, 1994, the Company received a commitment
letter to amend the credit agreement which would increase the amount available
under the line to $120 million.
For the six months ended June 30, 1994, the Company's operating
activities produced cash flows of $2.5 million. Investing activities resulted
in the net use of cash of $8.7 million, primarily for purchases of equipment,
furniture and fixtures of $4.8 million, as well as payments for acquisitions of
businesses of $5.0 million and distributions to minority owners of consolidated
joint ventures of $5.7 million. These expenditures were partially offset by
proceeds from the sale short-term of investments of $7.0 million. Financing
activities during the six months ended June 30, 1994 produced positive cash
flow of $8.3 million. This was comprised primarily of increased borrowings net
of repayments of $4.9 million, plus cash from the exercise of stock options of
$4.6 million, offset by the payment of dividends of $2.1 million.
Management believes that available cash, funds generated by operations
and funds available under its revolving credit agreement will be sufficient for
the Company to satisfy its growth and to finance working capital requirements
for the foreseeable future. However, the Company is currently reviewing all of
T2's relationships with the infusion therapy companies T2 manages and may
acquire such companies or restructure the management agreements T2 has with
such companies. If the Company causes T2 to acquire such managed companies,
the Company may need to seek additional funds to finance such acquisitions. In
addition, if T2 is required to acquire the minority interests in its
lithotripsy ventures, or resolves its material pending litigation, the Company
may need to seek additional sources of capital either through an expansion of
its current credit facility or through other means.
Page 14 of 107 Pages
<PAGE> 15
CORAM HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FUTURE HEALTH CARE PROPOSALS AND LEGISLATION
Political, economic and regulatory influences are subjecting the
health care industry in the United States to fundamental change. The Clinton
Administration proposed legislation, known as the Health Security Act of 1993,
which has been introduced into Congress and is designed to reform the United
States health care system. The Health Security Act proposes a major
restructuring of the health care system, including (i) universal access to
health care and (ii) measures to control or reduce the rate of increase of
public and private spending on health care. Alternative federal health care
reform legislation is being considered by Congress, including a single-payor
approach, "managed competition" proposals, the creation of a "Medicare Part C"
for the uninsured and more incremental approaches to health care reform. In
addition, some of the states in which the Company operates have enacted and
other are considering various health care reform proposals. The Company
anticipates that Congress and state legislatures will continue to review and
assess alternative health care delivery systems and payment methodologies and
public debate of these issues will likely continue in the future. Due to
uncertainties regarding the ultimate features of reform initiatives and their
enactment and implementation, the Company cannot predict which, if any, of such
reform proposals will be adopted, when they may be adopted or what impact they
may have on the Company.
Page 15 of 107 Pages
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Annual Report on Commission Form 10-K of T2 for the fiscal
year ended September 30, 1993 and the Quarterly Report of T2
on Commission Form 10-Q for the period ended March 31, 1994
(the "T2 10-Q Report") disclosed certain lawsuits filed on
behalf of persons claiming to be stockholders of T2. The T2
10-Q Report stated that five putative class action lawsuits
were pending against T2 in addition to a suit captioned: "In
Re T2 Stockholder Litigation," Matter File No. 1:92-CV-1564-RLV
that was pending in the United States District Court for the
Northern District of Georgia. All five of such putative class
action suits have been consolidated with "In Re T2 Stockholder
Litigation".
Based on discussions regarding the possible resolution of such
litigation, the Company has recorded a provision of $17,200,000 for
the quarter ended June 30, 1994, with respect to the Company's
potential expense in connection with such resolution of such
litigation. There can be no assurance, however, that such litigation
can be resolved or that any such resolution will be on terms currently
under discussion. If the foregoing claims continue to be pressed,
the resulting distraction of management, the costs of defending
these claims and the payment of any settlement or damage award could
have a material adverse effect on the Company's operations and
financial condition.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
On August 3, 1994, the Company announced that it had entered
into an agreement to acquire H.M.S.S., Inc. A copy of the
August 3, 1994 press release related to such announcement is
attached hereto as Exhibit 99 and is incorporated herein by
reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Reports on Form 8K
On July 15, 1994, the Company filed a current report
on Form 8-K announcing the consummation of the
acquisition and combination of four public companies
- T2 Medical, Inc., Curaflex Health Services, Inc.,
HealthInfusion, Inc. and Medisys, Inc. The
transaction was approved by the respective
stockholders of the four companies at respective
special meetings of such stockholders held on July 8, 1994.
<TABLE>
<CAPTION>
Sequential
(b) Exhibit No. Description Page No.
----------- ----------- ----------
<S> <C> <C>
10.93 Credit Agreement dated as of 21
July 15, 1994, by and among
Coram, Curaflex, T2,
HealthInfusion, and Medisys,
as Co-Borrowers, Wells Fargo
Bank, National Association,
as Agent, and the Financial
Institutions Party thereto
(the "Credit Agreement").
The exhibits and schedules
to the Credit Agreement as
listed in the Exhibit
</TABLE>
Page 16 of 107 Pages
<PAGE> 17
PART II - OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Sequential
(b) Exhibit No. Description Page No.
----------- ----------- ----------
<S> <C>
10.93 (continued)
Index are omitted from this
Exhibit. The Company agrees
to furnish supplementally
any omitted exhibit or schedule
to the Securities and Exchange
Commission upon request.
Exhibit 2.1(c) Form of Loan
Request
Exhibit 2.1(d) Form of Note
Exhibit 2.2(b) Notice of
Conversion / Extension
Exhibit 3.1 Form of Security
Agreement
Exhibit 3.2 Form of Guaranty
Exhibit 4.1(c)(i) Form of Opinion
of Brobeck, Phleger & Harrison
Exhibit 4.1(c)(ii)-A Form of Opinion
of Oppenheimer Wolff & Donnelly
Exhibit 4.1(c)(ii)-B Form of Opinion
Traurig, Hoffman, Lipoff, Rocoh &
Quentel, P.A.
Exhibit 4.1(c)(ii)-C Form of Opinion of
Scott T. Larson, Esq.
Exhibit 4.1(n) Notice of Authorized
Representatives
Exhibit 6.2(c)-1 Form of Certificate
of Compliance
Exhibit 6.2(c)-2 Form of Certificate
re Real Property and New Locations
Exhibit 6.2(e) Form of Borrowing
Certificate and Aging of Accounts
of Coram and its subsidiaries
</TABLE>
Page 17 of 107 Pages
<PAGE> 18
PART II - OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Sequential
(b) Exhibit No. Description Page No.
----------- ----------- ----------
<S> <C>
10.93 (continued)
Exhibit 10.1 Form of
Assignment and Acceptance
Sched.4.1(b)(iii) Good
Standing Certificates
Schedule 4.1(j) List of
Property Subject to
Perfected Liens
Schedule 4.1(k) List of
Existing Indebtedness
to be Paid
Schedule 5.2 List of Subsidiaries
by States of Incor-
poration or Organiza-
tion and Qualification
Schedule 5.4 Exceptions
to Requisite
Corporate Power
Schedule 5.8 Exceptions
to "No Conflicts"
Schedule 5.10 List of
Financial Statements
Schedule 5.14 Key Contracts
Schedule 5.15 Intellectual
Property
Schedule 5.16 Litigation
and Contingent
Liabilities
Schedule 5.18(i) ERISA
Title IV Benefit Plans
Schedule 5.18(ii) Other
Benefit Plans
Schedule 5.19 Environmental
Matters
Schedule 5.20 List of
Insurance Policies
Schedule 5.21 Exceptions
to Compliance with
Laws
</TABLE>
Page 18 of 107 Pages
<PAGE> 19
PART II - OTHER INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
Sequential
(b) Exhibit No. Description Page No.
----------- ----------- ----------
<S> <C>
10.93 (continued)
Schedule 5.27 Exceptions
to Compliance with
Physician Self-
Referral Laws
Schedule 6.21-A Actions on
or before July 31, 1994
Schedule 6.21-B Collateral
in which Security Interest
Perfected on or before
August 31, 1994
Schedule 7.6 List of
Existing Permitted
Encumbrances
Schedule 7.8 List of
Existing Interest-Bearing
Indebtedness
Schedule 7.12 Existing
Transactions with
Affiliates
99 August 12, 1994
press release
relating to the
proposed acquisition
of H.M.S.S., Inc.
</TABLE>
Page 19 of 107 Pages
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORAM HEALTHCARE CORPORATION
By: /S/ JAMES M. SWEENEY
-------------------------
James M. Sweeney
Chairman and Chief
Executive Officer
(Duly Authorized Officer)
By: /S/ SAM R. LENO
-------------------------
Sam R. Leno
Chief Financial Officer
Date: August 15, 1994
-------------------
Page 20 of 107 Pages
<PAGE> 1
EXHIBIT 10.93
CREDIT AGREEMENT
By and Among
CORAM HEALTHCARE CORPORATION,
CURAFLEX HEALTH SERVICES, INC.,
HEALTHINFUSION, INC.,
MEDISYS, INC.,
and
T2 MEDICAL, INC.,
as Co-Borrowers,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent,
and
THE TORONTO-DOMINION BANK
as Co-Agent,
and
THE FINANCIAL INSTITUTIONS PARTY HERETO
Dated as of July 15, 1994
____________________
$80,000,000
Page 21 of 107 Pages
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.1 Revolving Credit . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 25
(b) Commitment Limits . . . . . . . . . . . . . . . . . . . . . 25
(c) Borrowing Procedures . . . . . . . . . . . . . . . . . . . . 26
(d) Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.2 Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) Extensions and Conversions . . . . . . . . . . . . . . . . . 27
(c) Adjustment of Rate Spreads . . . . . . . . . . . . . . . . . 28
(d) Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . 28
(e) Computation of Interest and Commitment Fee . . . . . . . . . 29
(f) Illegality, Taxation and Additional Interest
Rate Provisions . . . . . . . . . . . . . . . . . . . . . . . 29
(g) Capital Adequacy Requirements . . . . . . . . . . . . . . . 30
(h) Substitution of Banks . . . . . . . . . . . . . . . . . . . 31
2.3 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Payment of Loans . . . . . . . . . . . . . . . . . . . . . . 31
(b) Optional Prepayment . . . . . . . . . . . . . . . . . . . . 31
(c) Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . 31
(d) Payments Prior to Interest Period Expiration . . . . . . . . 32
(e) Payments by the Co-Borrowers . . . . . . . . . . . . . . . . 33
(f) Payments by the Banks to the Agent . . . . . . . . . . . . . 33
(g) Sharing of Payments, etc . . . . . . . . . . . . . . . . . . 34
(h) Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.4 Joint and Several Liability . . . . . . . . . . . . . . . . . . . 35
ARTICLE 3 Security Documents . . . . . . . . . . . . . . . . . . . . . . 38
3.1 Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . 38
3.2 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 4 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . 38
4.1 Conditions to Initial Borrowing . . . . . . . . . . . . . . . . . 38
(a) Delivery of Documents . . . . . . . . . . . . . . . . . . . 38
</TABLE>
Page 22 of 107 Pages
<PAGE> 3
<TABLE>
<S> <C> <C>
(b) Reports, Certificates and Other Information . . . . . . . 38
(c) Opinions of Counsel . . . . . . . . . . . . . . . . . . . 39
(d) Payment of Fees . . . . . . . . . . . . . . . . . . . . . 39
(e) No Existing Default . . . . . . . . . . . . . . . . . . . 40
(f) Representations and Warranties Correct . . . . . . . . . . 40
(g) Legality of Transactions . . . . . . . . . . . . . . . . . 40
(h) Insurance . . . . . . . . . . . . . . . . . . . . . . . . 40
(i) Closing of Merger . . . . . . . . . . . . . . . . . . . . 40
(j) Perfection of Liens and Security Interests . . . . . . . . 40
(k) Payment of Existing Indebtedness . . . . . . . . . . . . . 40
(m) Written Receipt . . . . . . . . . . . . . . . . . . . . . 41
(o) Other Documents . . . . . . . . . . . . . . . . . . . . . 41
4.2 Conditions to Each Loan . . . . . . . . . . . . . . . . . . . . . . 41
(a) Initial Closing Date . . . . . . . . . . . . . . . . . . . 41
(b) No Existing Default . . . . . . . . . . . . . . . . . . . 41
(c) Representations and Warranties Correct . . . . . . . . . . 41
(d) Loan Request . . . . . . . . . . . . . . . . . . . . . . . 41
(e) No Material Adverse Change . . . . . . . . . . . . . . . . 42
4.3 Conditions for the Benefit of the Agent and the Banks . . . . . . . 42
4.4 Failure of Conditions . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 5 Representations and Warranties of the Co-Borrowers. . . . . . . 42
5.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2 Organization, Standing and Qualification of Subsidiaries . . . . . 43
5.3 Absence of Certain Activities . . . . . . . . . . . . . . . . . . . 43
5.4 Requisite Power . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.5 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.6 Officer Authorization . . . . . . . . . . . . . . . . . . . . . . . 44
5.7 Binding Nature . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.8 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.9 No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 45
5.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 45
5.11 Pro Forma Financial Statements and Projections . . . . . . . . . . 45
5.12 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.13 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.14 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.15 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . 46
5.16 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.17 Tax Returns and Tax Matters . . . . . . . . . . . . . . . . . . . . 47
5.18 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Plans Maintained . . . . . . . . . . . . . . . . . . . . . 47
(b) Reporting and Disclosure . . . . . . . . . . . . . . . . . 48
(c) Qualification of Plans . . . . . . . . . . . . . . . . . . 48
(d) Contributions and Premiums . . . . . . . . . . . . . . . . 48
</TABLE>
Page 23 of 107 Pages
<PAGE> 4
<TABLE>
<S> <C>
(e) Litigation and Extraordinary Claims . . . . . . . . . . 48
(f) Prohibited Transactions . . . . . . . . . . . . . . . . 49
(g) COBRA . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . 49
5.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.21 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 50
5.22 Statutory Regulation . . . . . . . . . . . . . . . . . . . . . . 50
5.23 Use of Proceeds; Regulation U . . . . . . . . . . . . . . . . . 50
5.24 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.25 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.26 Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . . 51
5.27 Compliance With Physician Self-Referral Laws . . . . . . . . . . 51
ARTICLE 6 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . 51
6.1 Accounting Records . . . . . . . . . . . . . . . . . . . . . . . 51
6.2 Financial Statements and Notices . . . . . . . . . . . . . . . . 51
6.3 Inspection of Property, Books and Records . . . . . . . . . . . 55
6.4 Maintenance of Existence . . . . . . . . . . . . . . . . . . . . 55
6.5 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.6 Qualifications To Do Business . . . . . . . . . . . . . . . . . 56
6.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . 56
6.8 Material Agreements . . . . . . . . . . . . . . . . . . . . . . 56
6.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.10 Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.11 Taxes and Other Liabilities . . . . . . . . . . . . . . . . . . 57
6.12 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . 57
6.13 Compliance with Governmental Approvals and
Governmental Requirements . . . . . . . . . . . . . . . . . . . . 57
6.14 Compliance with Environmental Laws . . . . . . . . . . . . . . . 57
6.15 Prevent Contamination . . . . . . . . . . . . . . . . . . . . . 57
6.16 Tax Qualification . . . . . . . . . . . . . . . . . . . . . . . 58
6.17 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.18 Financial Tests . . . . . . . . . . . . . . . . . . . . . . . . 58
6.19 Concentration Account . . . . . . . . . . . . . . . . . . . . . 59
6.20 Compliance Procedures . . . . . . . . . . . . . . . . . . . . . 59
6.21 Required Future Perfection . . . . . . . . . . . . . . . . . . . 59
ARTICLE 7 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 60
7.1 Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.2 Change of Business . . . . . . . . . . . . . . . . . . . . . . . 60
7.3 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.4 Accounting Policies . . . . . . . . . . . . . . . . . . . . . . 60
7.5 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.6 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
Page 24 of 107 Pages
<PAGE> 5
<TABLE>
<S> <C>
7.7 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . 61
7.8 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.9 Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.10 Sale-Leaseback Transactions . . . . . . . . . . . . . . . . . . 62
7.11 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . 62
7.12 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 63
7.13 Restrictive Agreements . . . . . . . . . . . . . . . . . . . . . 63
7.14 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . 63
7.15 Certain ERISA Payments . . . . . . . . . . . . . . . . . . . . . 63
7.16 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . 63
7.17 Litigation Settlement . . . . . . . . . . . . . . . . . . . . . 64
7.18 Adoption of "Rabbi Trust" . . . . . . . . . . . . . . . . . . . 64
ARTICLE 8 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 64
8.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 64
(a) Payments . . . . . . . . . . . . . . . . . . . . . . . . 64
(b) Certain Covenants in This Agreement . . . . . . . . . . 64
(c) Other Covenants and Agreements . . . . . . . . . . . . . 65
(d) Representations and Warranties . . . . . . . . . . . . . 65
(e) Monetary Judgment . . . . . . . . . . . . . . . . . . . 65
(f) Non-Monetary Judgments . . . . . . . . . . . . . . . . . 65
(g) Liens for Pension Contributions . . . . . . . . . . . . 65
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 65
(i) Cross-Default . . . . . . . . . . . . . . . . . . . . . 66
(j) Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . 66
(k) Material Adverse Change . . . . . . . . . . . . . . . . 67
(l) Invalidity of Loan Documents . . . . . . . . . . . . . . 67
(m) Impairment of Collateral . . . . . . . . . . . . . . . . 67
(n) Change of Control . . . . . . . . . . . . . . . . . . . 68
ARTICLE 9 The Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.1 Appointment and Authorization . . . . . . . . . . . . . . . . . 68
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 68
9.3 Liability of Agents . . . . . . . . . . . . . . . . . . . . . . 69
9.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . 69
9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . 70
9.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . 70
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 71
9.8 Agents in Individual Capacity . . . . . . . . . . . . . . . . . 71
9.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE 10 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 72
10.1 Successors and Assigns and Sale of Interests . . . . . . . . . . 72
10.2 No Implied Waiver . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
Page 25 of 107 Pages
<PAGE> 6
<TABLE>
<S> <C> <C>
10.3 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 74
10.4 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . 75
10.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.6 Costs, Expenses and Attorneys' Fees . . . . . . . . . . . . . 75
10.7 General Indemnification . . . . . . . . . . . . . . . . . . . 76
10.8 Environmental Indemnification . . . . . . . . . . . . . . . . 76
10.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.10 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 78
10.11 Governing Law and Consent to Jurisdiction . . . . . . . . . . 79
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 79
10.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . 79
10.14 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
</TABLE>
Page 26 of 107 Pages
<PAGE> 7
EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
No. Description
--- -----------
<S> <C>
Exhibit 2.1(c) Form of Loan Request
Exhibit 2.1(d) Form of Note
Exhibit 2.2(b) Notice of Conversion/Extension
Exhibit 3.1 Form of Security Agreement
Exhibit 3.2 Form of Guaranty
Exhibit 4.1(c)(i) Form of Opinion of Brobeck, Phleger & Harrison
Exhibit 4.1(c)(ii)-A Form of Opinion of Oppenheimer, Wolff & Donnelly
Exhibit 4.1(c)(ii)-B Form of Opinion of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
Exhibit 4.1(c)(ii)-C Form of Opinion of Scott Larson, Esq.
Exhibit 4.1(n) Notice of Authorized Representatives
Exhibit 6.2(c)-1 Form of Certificate of Compliance
Exhibit 6.2(c)-2 Form of Certificate re Real Property and New Locations
Exhibit 6.2(e) Form of Borrowing Certificate and Aging of
Accounts Coram and its Subsidiaries
Exhibit 10.1 Form of Assignment and Acceptance
Schedule 4.1(b)(iii) Good Standing Certificates
Schedule 4.1(j) List of Property Subject to Perfected Liens
Schedule 4.1(k) List of Existing Indebtedness to be Paid
Schedule 5.2 List of Subsidiaries by States of Incorporation or
Organization and Qualification
Schedule 5.4 Exceptions to Requisite Corporate Power
</TABLE>
Page 27 of 107 Pages
<PAGE> 8
<TABLE>
<S> <C>
Schedule 5.8 Exceptions to "No Conflicts"
Schedule 5.10 List of Financial Statements
Schedule 5.14 Key Contracts
Schedule 5.15 Intellectual Property
Schedule 5.16 Litigation
Schedule 5.18(i) ERISA Title IV Benefit Plans
Schedule 5.18(ii) Other Benefit Plans
Schedule 5.19 Environmental Matters
Schedule 5.20 List of Insurance Policies
Schedule 5.21 Exceptions to Compliance with Laws
Schedule 5.27 Exceptions to Compliance with Physician
Self-Referral Laws
Schedule 6.21-A Actions on or before July 31, 1994
Schedule 6.21-B Collateral in which Security Interest
Perfected on or before August 31, 1994
Schedule 7.6 List of Existing Permitted Encumbrances
Schedule 7.8 List of Existing Interest-Bearing Indebtedness
Schedule 7.12 Existing Transactions with Affiliates
</TABLE>
Page 28 of 107 Pages
<PAGE> 9
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of July 15, 1994, by and among CORAM
HEALTHCARE CORPORATION, a Delaware corporation ("Coram"), CURAFLEX HEALTH
SERVICES, INC., a Delaware corporation ("Curaflex"), HEALTHINFUSION, INC., a
Florida corporation ("HealthInfusion"), MEDISYS, INC., a Delaware corporation
("Medisys"), and T2 MEDICAL, INC., a Delaware corporation ("T2"), WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, as agent for the
financial institutions party hereto (in such capacity, the "Agent"), and THE
TORONTO-DOMINION BANK, as co-agent for the financial institutions party hereto
(in such capacity, the "Co-Agent"), and THE FINANCIAL INSTITUTIONS PARTY TO
THIS AGREEMENT (collectively, the "Banks"; individually, a "Bank").
W I T N E S S E T H:
In consideration of the premises and mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
Definitions
In addition to any terms defined elsewhere in this Agreement, the following
terms have the meanings indicated for purposes of this Agreement (such
definitions being equally applicable to the singular and plural forms of the
defined term):
"Acceleration" means that the Loans (i) shall not have been paid at the Final
Maturity Date, or (ii) shall have become due and payable prior to their stated
maturity pursuant to Paragraph 8.2 hereof.
"Account" means any right to payment, whether or not it has been earned by
performance, for goods sold or leased or for services rendered in the ordinary
course of business which is not evidenced by an instrument (except as part of
chattel paper).
"Account Debtor" means the Person obligated in respect of an Account.
"Affected Bank" has the meaning specified in Paragraph 2.2(h) hereof.
"Affiliate" means with respect to any Person (i) each Person that, directly or
Page 29 of 107 Pages
<PAGE> 10
indirectly, owns or controls, whether beneficially, or as a trustee, guardian
or other fiduciary, five percent (5%) or more of the capital stock having
ordinary voting power in the election of directors of such Person, (ii) each
Person that controls, is controlled by or is under common control with such
Person or any Affiliate of such Person or (iii) each of such Person's officers,
directors, joint venturers and partners. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent" has the meaning specified in the heading to this Agreement.
"Agents" means the Agent and the Co-Agent.
"Agent's Fee Letter" means that certain letter dated June 17, 1994 from the
Agent to Coram, referred to therein as the Fee Letter.
"Agent-Related Persons" has the meaning set forth in Paragraph 9.3 hereof.
"Agreement" or "Credit Agreement" means this Credit Agreement, as from time
to time amended, modified or supplemented.
"Applicable Spread" means
(i) with respect to Base Rate Loans, the Base Rate Spread; and
(ii) with respect to LIBOR Loans, the LIBOR Spread.
"Assignment and Acceptance" has the meaning specified in Paragraph 10 hereof.
"Authorized Officer" means each officer or other designee of a corporation
authorized by the board of directors of that corporation to act on behalf of
that corporation under this Agreement or any of the other Loan Documents.
"Authorized Representatives" shall mean those officers, employees or other
persons designated by Coram on the most current Notice of Authorized
Representatives delivered to the Administrative as being authorized to request
any borrowing, to make any interest rate designation on behalf of any
Co-Borrower hereunder, or to give the Agents any other notice hereunder which
is contemplated by the terms hereof.
"Bank Indemnitees" has the meaning set forth in Paragraph 10.7 hereof.
"Bank" or "Banks" has the meaning specified in the heading of this Agreement
and any successors thereto.
Page 30 of 107 Pages
<PAGE> 11
"Banking Day" means a day other than a Saturday or a Sunday when commercial
banks are open for business in San Francisco, California and, with respect to
LIBOR Loans, when commercial banks are open for business in London, England.
"Base LIBOR" shall mean, for any Interest Period pertaining to a LIBOR Loan,
the rate per annum at which the Agent is offered dollar deposits in the
interbank Eurodollar market at approximately 9:00 a.m. San Francisco time two
(2) Banking Days prior to the beginning of the Interest Period for such Loan,
for delivery on the first day thereof for the number of months comprised
therein and in an amount equal to the amount of the LIBOR Loan to be
outstanding during such Interest Period.
"Base Rate" means on any day the greater of (a) the Prime Rate in effect on
that day, or (b) the Federal Funds Rate in effect on that day plus 0.5% per
annum.
"Base Rate Loans" means all Loans bearing interest at a rate based on the
Base Rate.
"Base Rate Spread" means (a) for Base Rate Loans outstanding (when added to
LIBOR Rate Loans outstanding) up to the amount of the Borrowing Base, .50% per
annum, subject to adjustment as provided in Paragraph 2.2(c) hereof, and (b)
for Base Rate Loans outstanding (when added to LIBOR Rate Loans outstanding) in
excess of the Borrowing Base, 1.00% per annum.
"Blocked Investment Account" has the meaning specified therefor in the
Security Agreement.
"Borrowing" means an extension of a Loan by the Banks to any Co-Borrower
pursuant to Article 2 hereof.
"Borrowing Base" means at any time an amount equal to seventy-five percent
(75%) of Eligible Accounts, plus one hundred percent (100%) of the face amount
of Grade I Securities, ninety percent (90%) of the market value of Grade II
Securities, eighty-five percent (85%) of the market value of Grade III
Securities, and seventy-five percent (75%) of the market value of Grade IV
Securities, all as of such time.
"Capital Expenditure" means any expenditure (including any portion of any
payment under any Capitalized Lease) that would be capitalized on the balance
sheet of Coram (consolidated with its Subsidiaries) as of the end of that
period, in conformity with GAAP, other than payment of the purchase price of
any fixed assets in connection with a Permitted Acquisition.
"Capitalized Lease" means any lease under which the obligation of the lessee is
required by GAAP to be shown as a liability on the financial statements of the
lessee.
Page 31 of 107 Pages
<PAGE> 12
"Capitalized Lease Obligation" means any lease obligation that, in accordance
with GAAP, is required to be shown as a liability on the financial statements
of the lessee. The amount of a Capitalized Lease Obligation shall be the
amount required by GAAP so to be shown.
"Cash Flow" means, for any fiscal period, EBITDA for such period less
Consolidated Capital Expenditures actually made during such period less any
dividends or other distributions in respect of any capital stock of Coram or to
repurchase or redeem any capital stock of Coram.
"Cash Flow Coverage Ratio" means for any period the ratio of (a) Cash Flow for
such period, to (b) the sum of (i) Consolidated Interest Expense for such
period, plus (ii) scheduled principal payments during such period in respect of
long-term debt of Coram and its Subsidiaries on a consolidated basis, plus
(iii) scheduled principal payments during such period in respect of Capitalized
Lease Obligations of Coram and its Subsidiaries on a consolidated basis.
"Cash Management Policy" the Cash Management Policy of Coram as in effect on
the Initial Closing Date.
"Change of Control" means the occurrence of any of the following events: (a)
all or substantially all of the assets of Coram are sold, leased, exchanged or
otherwise transferred to any Person or group of persons or entities acting in
concert as a partnership or other group; (b) Coram is merged or consolidated
with or into another corporation with the effect that the common stockholders
immediately prior to such merger or consolidation hold less than seventy-five
percent (75%) of the ordinary voting power of the outstanding securities of the
surviving corporation of such merger or the corporation resulting from such
consolidation; or (c) a Person or group (as such term is used in rule 13d-5
under the Securities Exchange Act of 1934) of Persons shall, as a result of a
tender or exchange offer, open market purchases, merger, privately negotiated
purchases or otherwise, have become , directly or indirectly, the beneficial
owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934) of securities having twenty-five percent (25%) or more of the ordinary
voting power of then outstanding securities of Coram.
"COBRA" means Title X of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended from time to time.
"Co-Agent" has the meaning specified in the heading to this Agreement and any
successor co-agent.
"Co-Borrower" means any one of Coram, Curaflex, HealthInfusion, Medisys and
T2, and "Co-Borrowers" means all such corporations collectively.
Page 32 of 107 Pages
<PAGE> 13
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, all of the assets and property constituting
collateral under the Security Agreement or any document or instrument executed
pursuant thereto or under any of the other Loan Documents.
"Collateral Agent" has the meaning specified in the Security Agreement.
"Collateral Documents" means the Security Agreement and any other documents or
instruments executed pursuant to the Security Agreement.
"Commitment" means the obligation of the Banks severally to extend
Loans to the Co-Borrowers pursuant to the terms and conditions of Paragraph 2.1
hereof.
"Commitment Amount" means, with respect to each Bank, an amount equal to such
Bank's Commitment Percentage multiplied by the Total Commitment Amount.
"Commitment Fee" has the meaning set forth in Paragraph 2.2(d) hereof.
"Commitment Letter" means the letter agreement dated June 17, 1994 from the
Agent to Coram, countersigned by Coram June 22, 1994.
"Commitment Percentage" means the percentage set forth after each Bank's
signature at the end of this Agreement, plus the aggregate of any Commitment
Percentages thereafter acquired by such Bank as the Assignee pursuant to any
Assignment and Acceptances to which such Bank is a party, less the Aggregate of
any Commitment Percentages assigned by such Bank pursuant to any Assignment and
Acceptances to which such Bank is a party, and, as to any new Bank, the
aggregate of any Commitment Percentages acquired by such new Bank as the
Assignee pursuant to any Assignment and Acceptances to which such new Bank is a
party, less the aggregate of any Commitment Percentages assigned by such new
Bank as the Assignor pursuant to any Assignment and Acceptances to which such
new Bank is a party.
"Concentration Account" means an account into which substantially all cash
receipts of Coram and its Wholly Owned Subsidiaries are deposited On the
Initial Closing Date, the Concentration Account is Account Number 4896044377 in
the Rancho Cucamonga branch of the Agent, in the name of Coram Healthcare
Corporation general account.
"Consolidated Capital Expenditures" means the aggregate Capital Expenditures
of Coram and its Subsidiaries.
"Consolidated Funded Debt" means, for Coram and its Subsidiaries on a
consolidated basis, all Obligations and all other interest-bearing
Indebtedness.
Page 33 of 107 Pages
<PAGE> 14
"Consolidated Liabilities" means all liabilities of Coram and its
Subsidiaries that would, in accordance with GAAP, be required to be included as
liabilities on a consolidated balance sheet of Coram and its Subsidiaries.
"Consolidated Net Income" means, for any period, the net income of Coram and
its Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP; provided, however, that in determining Consolidated Net
Income, there shall not be included in gross revenues any earnings of, and
dividends payable to, Coram or one of its Subsidiaries in a currency which at
the time may not be converted into Dollars under the laws of the nation issuing
such currency.
"Consolidated Interest Expense" means, for any period, gross consolidated
interest expense for the period (including all commissions, discounts, fees and
other charges in connection with standby letters of credit and similar
instruments such portion of payments under Capitalized Leases as may be
characterized as interest expense in accordance with GAAP) for Coram and its
Subsidiaries, plus the portion of the up-front costs and expenses for Rate
Contracts (to the extent not included in gross interest expense) fairly
allocated to such Rate Contracts as expenses for such period; as determined in
accordance with GAAP.
"Consolidated Net Revenue" means net revenue for Coram and its Subsidiaries on
a consolidated basis.
"Contingent Obligation" means, as applied to any Person, without duplication,
any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including, without limitation, any such
obligation for which that Person is in effect liable through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet item, level of income or other financial condition of the
obligor of such obligation, or to make payment for any products, materials or
supplies or for any transportation, services or lease regardless of the
nondelivery or nonfurnishing thereof, in any such case if the purpose or intent
of such agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. The amount of any Contingent Obligation
(subject to any limitation set forth therein) shall be equal to the outstanding
principal amount of the debt, obligation or other liability guaranteed thereby
or, if not stated or determinable, the maximum reasonably anticipated liability
Page 34 of 107 Pages
<PAGE> 15
in respect thereof (assuming such Person is required to perform thereunder).
"Controlled Group" means any Co-Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with any
Co-Borrower pursuant to section 414(b) or (c) of the Code.
"Coram" has the meaning specified in the heading to this Agreement.
"Curaflex" has the meaning specified in the heading to this Agreement.
"Dollars" and "$" mean United States Dollars.
"EBITDA" means, in respect of any fiscal period, all for such period for
Coram and its Subsidiaries on a consolidated basis, Consolidated Net Income,
increased by extraordinary charges (other than Special Charges), decreased by
extraordinary gains, and increased by depreciation, amortization, interest
(including the portion of payments under any Capitalized Lease that may be
characterized as interest), federal, state, local and foreign income taxes, and
Special Charges (but not in excess of forty-five million Dollars ($45,000,000)
prior to settlement of the T2 Shareholder Litigation (or seventy million
Dollars ($70,000,000) thereafter) for all Special Charges which are cash items,
and not in excess of seventy-five million Dollars ($75,000,000) prior to
settlement of the T2 Shareholder Litigation (or one hundred million Dollars
($100,000,000) thereafter) for all cash and non-cash Special Charges.
"Eligible Account" means an Account:
(a) upon which the right to receive payment is absolute and not
contingent upon the fulfillment of any condition whatsoever and, if no
invoice has been sent as of the end of a calendar month, such Account did not
arise more than thirty (30) days prior to the end of such month (provided,
however, that the aggregate amount of all Eligible Accounts for which no
invoice has been sent shall not exceed five million Dollars ($5,000,000));
(b) against which is asserted no defense, counterclaim, discount
(other than a normal trade discount) or setoff, whether well founded or
otherwise;
(c) the amount of which is completely net of all contractual or other
allowances (whether or not relating to the particular transaction out of
which the Account arose) and discounts;
(d) that is a true and correct statement of a bona fide indebtedness
incurred in the amount of the Account for goods sold or leased and delivered
to, or for services rendered to and accepted by, the Account Debtor obligated
Page 35 of 107 Pages
<PAGE> 16
on the Account;
(e) that is owned by a Co-Borrower or a Wholly Owned Subsidiary of
Coram subject to a security interest in favor of the Collateral Agent
pursuant to the Security Agreement, and otherwise free and clear of all
Liens, encumbrances, charges, interests and rights of others;
(f) under which the Account Debtor is not an Affiliate of Coram;
(g) that is not the obligation of an Account Debtor that is the
federal government or any other Governmental Authority (any Account with
respect to which the Account Debtor has assigned to Coram or any of its
Subsidiaries a right to reimbursement from the federal government or any
other Governmental Authority under the Medicare program or any similar
program enacted by the federal government or a state which provides health
benefits generally not being considered an Account under which the Account
Debtor is the federal government or any other Governmental Authority for
purposes of this subparagraph (g));
(h) that is not in default, an Account being deemed in default upon
the occurrence of any of the following:
(i) the Account is more than one hundred twenty (120) days
past due;
(ii) after January 1, 1995, the Account is owed by a single
Account Debtor with more than twenty-five percent (25%) of all of
its Accounts more than one hundred twenty (120) days past due, which
Account Debtor does not have a rating of BBB or better for its senior
unsecured long-term debt from either Moody's or S&P;
(iii) the Account Debtor obligated on the Account suspends
business, makes a general assignment for the benefit of creditors, or
shall consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator for itself or any of its property or shall
generally fail to pay its debts as they become due; or
(iv) any petition is filed by or against any Account Debtor
obligated on the Account under any bankruptcy or reorganization law or
any other law or laws for the relief of debtors; and
(i) that is otherwise reasonably acceptable to the Majority Banks.
Page 36 of 107 Pages
<PAGE> 17
"Employee Benefit Plan" means any Pension Plan or any other employee benefit
plan (as defined in section 3(3) of ERISA) which any Co-Borrower or any member
of the Controlled Group maintains, or to which it makes or is obligated to make
contributions.
"Environmental Claim" means all claims, however asserted, by any Governmental
Authority or other Person alleging potential liability or responsibility for
violation of any Environmental Law or for release or injury to the environment
or threat to public health, personal injury (including sickness, disease or
death), property damage, natural resources damage, or otherwise alleging
liability or responsibility for damages (punitive or otherwise), cleanup,
removal, remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based upon (a)
the presence, placement, discharge, emission or release (including intentional
and unintentional, negligent and non-negligent, sudden or non-sudden,
accidental or non-accidental placement, spills, leaks, discharges, emissions or
releases) of any Hazardous Material at, in or from property, whether or not
owned by Coram or any Subsidiary of Coram, or (b) any other circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
"Environmental Laws" means any applicable Governmental Requirement pertaining
to land use, air, soil, surface water, groundwater (including the protection,
cleanup, removal, remediation or damage thereof), public or employee health or
safety or any other environmental matter; including without limitation, the
following laws as the same may be amended from time to time:
(1) Clean Air Act (42 U.S.C. Section 7401, et seq.);
(2) Clean Water Act (33 U.S.C. Section 1251, et seq.);
(3) Resource Conservation and Recovery Act (42 U.S.C. Section
6901, et seq.);
(4) Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, et seq.);
(5) Safe Drinking Water Act (42 U.S.C. Section 300f, et seq.);
(6) Toxic Substances Control Act (15 U.S.C. Section 2601, et
seq.);
(7) Rivers and Harbors Act (33 U.S.C. Section 401, et seq.);
(8) Endangered Species Act (16 U.S.C. Section 1531, et seq.);
Page 37 of 107 Pages
<PAGE> 18
and
(9) Occupational Safety and Health Act (29 U.S.C. Section 651, et
seq.);
together with any other applicable foreign or domestic laws (federal, state,
provincial or local) relating to emissions, discharges, releases or threatened
releases of any Hazardous Substance into ambient air, land, surface water,
groundwater, personal property or structures, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, discharge or handling of any Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time.
"ERISA Affiliated Group" means any entity that, together with any Co-Borrower
or other member of the Controlled Group, is treated as a single employer under
section 414(m) of the Code.
"Event of Default" has the meaning set forth in Article 8 hereof.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such successor,
"H.15(519)") for such day opposite the caption "Federal Funds (Effective)." If
on any relevant day such rate is not yet published in H.15(519), the rate for
such day will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any
successor publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m. Quotations") for such
day under the caption "Federal Funds Effective Rate." If on any relevant day
the appropriate rate for such day is not yet published in either H.15(519) or
the Composite 3:30 p.m. Quotations, the rate for such day will be the
arithmetic mean of the rates for the last transaction in overnight federal
funds arranged prior to 9:00 a.m. New York time on that day by each of three
leading brokers of federal funds transactions in New York City, selected by the
Agent.
"Final Maturity Date" means December 31, 1995.
"Funded Debt Ratio" means, as of the last day of any fiscal quarter, the ratio
of Consolidated Funded Debt as of such day to EBITDA for the period of four
fiscal quarters ended on such day; provided, however that the Funded Debt Ratio
as of the last day of the fiscal quarters ending June 30, 1994, and September
30, 1994, shall be determined by using EBITDA for the period beginning January
1, 1994 and adjusting EBITDA for the periods of two and three fiscal quarters
ending respectively on such
Page 38 of 107 Pages
<PAGE> 19
dates proportionately so as to represent the four-quarter equivalent of EBITDA
for such periods of two and three fiscal quarters (as an example, to determine
the Funded Debt Ratio as of June 30, 1994, EBITDA for the period of two fiscal
quarters ending on such date shall be multiplied by two (2)).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Approvals" means any consent, right, exemption, concession,
permit, license, authorization, certificate, order, franchise, determination or
approval of any federal, state, provincial, municipal or governmental
department, commission, board, bureau, agency or instrumentality required for
the ownership of, or activities of Coram or any of its Subsidiaries or any
other Person in connection with the business of Coram or any of its
Subsidiaries.
"Governmental Authority" means any nation or government, any state, province
or other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Governmental Requirements" means all legal requirements in effect from time
to time including all laws, statutes, codes, acts, ordinances, orders,
judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, certificates, orders, franchises, determinations, approvals,
notices, demand letters, directions and requirements of all governments,
departments, commissions, boards, courts, authorities, agencies, officials and
officers, and all instruments of record, foreseen or unforeseen, ordinary or
extraordinary, including but not limited to any change in any law, regulation
or the interpretation thereof by any foreign or domestic governmental or other
authority (whether or not having the force of law), relating now or at any time
heretofore or hereafter to the business or operations of Coram or any of its
Subsidiaries or to any of the property owned, leased or used by Coram or any of
its Subsidiaries, including, without limitation, the development, design,
construction, acquisition, start-up, ownership and operation and maintenance of
property.
"Grade I Securities" means certificates of deposit issued by the Agent and
held in the Blocked Investment Account
"Grade II Securities" means bonds, notes, bills and other debt instruments
issued or guaranteed by the United States or an agency or instrumentality
thereof and held in the Blocked Investment Account.
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"Grade III Securities" means bonds, notes, and other debt instruments issued
by states, state agencies, municipalities or local governmental agencies or by
corporate issuers, which have a rating from Moody's and S&P of AA or higher and
are held in the Blocked Investment Account.
"Grade IV Securities" means bonds, notes, and other debt instruments issued by
states, state agencies, municipalities or local governmental agencies or by
corporate issuers, which have a rating from Moody's and S&P of A, BAA or BBB
and are held in the Blocked Investment Account.
"Guaranty" has the meaning specified in Paragraph 3.2 hereof.
"Hazardous Substance" means any pollutant, contaminant, toxic or hazardous
substance, material, constituent or waste as such terms are defined in or
pursuant to any Environmental Law.
"Hazardous Waste Facility Permit" means any permit, license or other
governmental authorization relating to the storage, treatment or disposal of
any Hazardous Substance required pursuant to any Environmental Law.
"HealthInfusion" has the meaning specified in the heading to this Agreement
"Incipient Default" has the meaning set forth in Paragraph 4.1(e) hereof.
"Indebtedness" of any Person means, without duplication (a) any obligation
for borrowed money; (b) any obligation evidenced by bonds, debentures, notes or
other similar instruments; (c) any obligation to pay the deferred purchase
price of property or for services (other than in the ordinary course of
business); (d) any Capitalized Lease Obligation; (e) any obligation under any
Rate Contract; (f) any obligation or liability of others secured by a Lien on
property owned by such Person, whether or not such obligation or liability is
assumed; (g) any Contingent Obligation (other than those incurred in the
ordinary course of business); and (h) any other obligation or liability which
is required by GAAP to be shown as part of the Consolidated Liabilities on a
consolidated balance sheet of Coram and its Subsidiaries.
"Initial Closing Date" means the date on which all of the conditions set
forth in Paragraph 4.1 hereof have been satisfied or waived and the initial
Borrowing occurs.
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors; or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors or other, similar arrangement.
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"Intellectual Property Rights" has the meaning set forth in Paragraph 5.15
hereof.
"Interest Period" means, with respect to any LIBOR Loan, a period from the
borrowing date with respect to such Loan (or the date of the expiration of the
then current Interest Period with respect to such Loan) to a date up to one
(1), two (2), three (3) or six (6) months thereafter, subject to the following:
(a) if any Interest Period would otherwise end on a day which is not
a Banking Day, that Interest Period shall be extended to the next succeeding
Banking Day, unless the result of such extension would be to extend such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Banking Day;
(b) no Interest Period may be extended beyond a principal payment
date unless at the time of such extension the aggregate amount of any Base
Rate Loans plus the aggregate amount of all LIBOR Loans having Interest
Periods expiring on or before such principal payment date is at least equal
to the principal payment due on such date; and
(c) any Interest Period that would otherwise extend beyond the Final
Maturity Date shall end on the Final Maturity Date or, if the Final Maturity
Date shall not be a Banking Day, on the next preceding Banking Day.
"Inventory" means all goods intended for sale or lease or furnished or to be
furnished under contracts of service or used or consumed in the business of
Coram or any of its Subsidiaries, including, without limitation, all raw
materials, work in process, and finished goods or materials, together with all
supplies of any kind, nature or description which are or might be used in
connection with the manufacture, packing, shipping, advertisement, sale or
finishing of such goods, and all documents of title or documents representing,
covering or evidencing any of the foregoing.
"Investment," as applied to any Person, means any direct or indirect
ownership or purchase or other acquisition by that Person of any capital stock,
equity interest, obligations or other securities, or of a beneficial interest
in any capital stock, equity interest, obligations or other securities, or all
or substantially all of the assets of any other Person (including any
Subsidiary), or any direct or indirect loan, advance (other than advances to
officers and employees for moving and travel expenses, drawing accounts and
similar expenditures in the ordinary course of business) or capital
contribution by that Person to any other Person, including all indebtedness and
accounts receivable from that other Person which are not current assets or did
not arise from sales to that other Person in the ordinary course of business.
"Key Contracts" has the meaning set forth in Section 5.14 hereof.
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"Leverage Ratio" means, for any fiscal period, the ratio of Consolidated
Funded Debt as of the end of such period to EBITDA for such period; provided,
however that if the Leverage Ratio is determined for a period of less than four
(4) fiscal quarters, EBITDA for such period shall be proportionately adjusted
so as to represent the four-quarter equivalent of EBITDA for such period of
less than four fiscal quarters (as an example, to determine a Leverage Ratio
for a period of two fiscal quarters, EBITDA for such period shall be
multiplied by two (2)).
"LIBOR Loan" means any Loan bearing interest at a rate based upon Base LIBOR.
"LIBOR Rate" means the rate (rounded upwards if necessary to the nearest
whole one-sixteenth of 1%) equal to the product of Base LIBOR times Statutory
Reserves.
"LIBOR Spread" means (a) for LIBOR Loans outstanding (when added to Base Rate
Loans outstanding) up to the amount of the Borrowing Base, 1.75% per annum,
subject to adjustment as provided in Paragraph 2.2(c) hereof, and (b) for LIBOR
Loans outstanding (when added to Base Rate Loans outstanding) in excess of the
Borrowing Base, 2.25% per annum.
"Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment,
charge or deposit arrangement, encumbrance, lien (statutory or other) or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including, without limitation, those created by,
arising under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a Capitalized Lease, any financing
lease having substantially the same economic effect as any of the foregoing, or
the filing of any financing statement naming the owner of the asset to which
such lien relates as debtor, under the UCC or any comparable law, but excluding
therefrom any financing statement filed by a lessor under an operating lease
not intended as security) and any contingent or other agreement to provide any
of the foregoing.
"Loan" has the meaning set forth in Paragraph 2.1(a) hereof (including any
and all Base Rate Loans and LIBOR Loans), and "Loans" means all such Loans
(including any and all Base Rate Loans and LIBOR Loans) at any time
outstanding.
"Loan Documents" means this Agreement, the Notes, the Security Agreement, the
Guaranty, the Agent's Fee Letter, the Prior Commitment Termination Letter, Rate
Contracts under which either of the Agents is the counter-party, and all
agreements, instruments and documents (including, without limitation, security
agreements, loan agreements, notes, fee agreements, guaranties, mortgages,
deeds of trust, subordination agreements, pledges, assignments of intellectual
property, powers of attorney, consents, assignments, contracts, notices,
leases, financing statements, certificates reports and notices and all other
writings) heretofore, now or hereafter executed by, on behalf of or
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for the benefit of Coram or any of its Subsidiaries and delivered to the Agents
or any of the Banks pursuant to or in connection with this Agreement or the
transactions contemplated hereby, together with all amendments, modifications
and supplements thereto.
"Loan Request" has the meaning set forth in Paragraph 2.1(c) hereof.
"Majority Banks" means at any time Banks holding in excess of fifty percent
(50%) of the then aggregate unpaid principal amount of the Loans, or, if no
such principal amount is then outstanding, Banks having in excess of fifty
percent (50%) of the Commitment Percentages.
"Material Adverse Change" shall mean a material adverse change in (i) the
business, assets, operations, or financial condition of Coram and its
Subsidiaries considered as a whole, (ii) the collective ability of Coram and
its Subsidiaries to pay the Obligations in accordance with their terms, or
(iii) the security interests or liens of the Collateral Agent and the Banks on
the Collateral or the priority of such security interests or liens.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, operations, or financial condition of Coram and its
Subsidiaries considered as a whole, or (ii) the collective ability of Coram and
its Subsidiaries to pay the Obligations in accordance with their terms, and
(iii) the security interests or liens of the Collateral Agent and the Banks on
the Collateral or the priority of such security interests or liens.
"Maturity" means any date on which a Loan or any portion thereof becomes due
and payable whether as stated, by virtue of mandatory prepayment, by
acceleration or otherwise.
"Medisys" has the meaning specified in the heading to this Agreement
"Merger" means the contemporaneous merger of Curaflex into a Wholly Owned
Subsidiary of Coram, HealthInfusion into a Wholly Owned Subsidiary of Coram,
Medisys into a Wholly Owned Subsidiary of Coram and T2 into a Wholly Owned
Subsidiary of Coram, all pursuant to the Merger Agreement.
"Merger Agreement" means that certain Agreement and Plan of Merger dated as of
February 6, 1994 by and among Coram (then known as CHM Holding Corporation),
Curaflex, CHS Acquisition Company, a Delaware corporation, HealthInfusion, HII
Acquisition Company, a Florida corporation, Medisys, MI Acquisition Company, a
Delaware corporation, T2, and T2 Acquisition Company, a Delaware corporation,
as amended by that certain First Amendment to Agreement and Plan of Merger
dated as of May 25, 1994 by and among the same parties, and as further amended
by that certain Second Amendment to Agreement and Plan of Merger dated as of
July 8, 1994 by and
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among the same parties.
"Moody's" means Moody's Investors Service, Inc. and any successor thereto
that is a nationally-recognized rating agency.
"Multiemployer Plan" means a "multiemployer plan" as defined in section
4001(a)(3) of ERISA) and to which any Co-Borrower or any other member of the
Controlled Group makes, is obligated to make or at any time since December 31,
1988 has made or been obligated to make contributions.
"Note" has the meaning set forth in Paragraph 2.1(d) hereof.
"Notice of Authorized Representative" has the meaning set forth in
Paragraph 4.1(n) hereof.
"Obligations" means all loans, advances, debts, liabilities, obligations,
covenants and duties owing to either of the Agents or the Banks by Coram or any
of its Subsidiaries of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, arising under this
Agreement, any of the Notes, the Security Agreement, the Guaranty, the Agent's
Fee Letter, the Prior Commitment Termination Letter, Rate Contracts under which
either of the Agents is the counter-party or any of the other Loan Documents,
whether or not for the payment of money, arising by reason of an extension of
credit, absolute or contingent, due or to become due, now existing or hereafter
arising, including all principal, interest, charges, expenses, fees, attorneys'
fees and disbursements and any other sum chargeable to Coram or any of its
Subsidiaries under this Agreement or any other Loan Document.
"Participant" has the meaning set forth in Paragraph 10.1(e) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor to
all or any part of such corporation's functions under ERISA.
"Pension Plan" means any Multiemployer Plan or any other employee pension
benefit plan (as defined in section 3(2) of ERISA) that is subject to Title IV
of ERISA and which any Co-Borrower or any member of the Controlled Group
maintains, or to which it makes, is obligated to make or at any time during the
preceding five calendar years has made or has been obligated to make
contributions.
"Permitted Acquisitions" means any acquisition of all or substantially all of
the capital stock of a corporation, all or substantially all of the ownership
interests in any partnership or joint venture, all or substantially all of the
operating assets of any Person, or assets which constitute all or substantially
all of the assets of a division or a separate or separable line of business,
provided that:
Page 44 of 107 Pages
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(a) the corporation, partnership, operating assets or line of business
acquired is in a substantially similar line of business as Coram or any of
its Subsidiaries; and
(b) the Agent shall have received reasonably adequate financial
information regarding the assets or business to be acquired, including the
most recent audited financial statements, if available, but in any case the
most recently prepared balance sheet and statement of income for the assets
or business to be acquired and pro forma projected financial statements
showing the effect of the acquisition of the assets or business, including a
balance sheet for Coram and its Subsidiaries on a consolidated basis as of
the time of the acquisition and projected statements of income for Coram and
its Subsidiaries on a consolidated basis through at least the end of eight
(8) complete fiscal quarters after the acquisition;
(c) no Event of Default or Incipient Default shall exist at the time
of such acquisition or would result on a pro forma basis after completion of
such acquisition;
(d) the Collateral Agent contemporaneously with the closing of such
acquisition shall have received such documents and instruments as may be
necessary to grant or confirm to the Collateral Agent a lien on or security
interest in all of the assets so acquired and, if the acquisition is an
acquisition of capital stock of a corporation or an interest in a
partnership, and to perfect a pledge of such capital stock or security
interest, and, in such case, the Agent shall also have received a guaranty by
the corporation or partnership so acquired;
(e) if the acquisition is not of a physician-owned business to which
T2 provides management services, then:
(i) the purchase price of any such single acquisition (including the
amount of all liabilities assumed or, in the case of an acquisition of
a corporation or partnership, plus the amount of liabilities shown on
a balance sheet for such corporation or partnership at the time of
acquisition) shall not exceed twenty-five million Dollars
($25,000,000);
(ii) the aggregate purchase price of all such acquisitions which occur
after June 15, 1994 (determined on the same basis as in clause (i)
above) shall not exceed fifty million Dollars ($50,000,000); and
(iii) if the Leverage Ratio shown in the certificate most recently
delivered to the Agent pursuant to Paragraph 6.2(c) hereof is greater
than or equal to 1.75 to 1.00, then the consideration in respect of
such acquisition shall consist entirely of common stock of Coram; and
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(f) if the acquisition is an acquisition of a physician-owned business
to which T2 provides management services, then the aggregate purchase price
of all such acquisitions which occur after June 15, 1994 (including the
amount of all liabilities assumed or, in the case of an acquisition of a
corporation or partnership, plus the amount of liabilities shown on a balance
sheet for such corporation or partnership at the time of acquisition) shall
not exceed twenty-one million Dollars ($21,000,000).
"Permitted Encumbrances" means: (a) carriers', warehousemen's, mechanics',
landlords', materialmen's, suppliers', tax, assessment, governmental and other
like liens and charges arising in the ordinary course of business securing
obligations that are not incurred in connection with the obtaining of any
advance or credit and which are not more than thirty (30) days overdue, or are
being contested in good faith by appropriate proceedings, provided that, in
accordance with GAAP, adequate reserves have been established; (b) liens
arising in connection with worker's compensation, unemployment insurance,
appeal and release bonds and progress payments under government contracts; (c)
judgment liens in existence less than forty-five (45) days after the entry of
the judgment, or with respect to which execution has been stayed, or the
payment of which is covered in full by insurance; (d) zoning restrictions,
easements, licenses or other restrictions on the use of real property, so long
as the same do not materially impair the use of such real property by Coram or
any of its Subsidiaries or the value thereof to the owner of such real
property; (e) any lien existing or arising by operation of law in the ordinary
course of business, such as a "banker's lien" or similar right of offset; (f)
liens on the property of Coram or any of its Subsidiaries securing (i) the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, (ii) obligations on surety and appeal bonds, and (iii)
other obligations of a like nature incurred in the ordinary course of business
provided all such Liens in the aggregate have no reasonable likelihood of
causing a Material Adverse Effect; (g) liens covering equipment (including
liens in favor of a lessor under a Capitalized Lease), which liens secure
purchase money financing for such equipment, provided that (A) any such lien
covers only the equipment so acquired, and (B) the indebtedness secured thereby
is permitted pursuant to Paragraph 7.8 hereof; (h) liens identified on Schedule
7.6 attached hereto; (i) liens and security interests securing payment of the
Obligations granted pursuant to any of the Loan Documents; (j) liens
encumbering assets acquired (whether directly or by acquisition of the stock of
a corporation or ownership interests in a partnership or joint venture) in a
Permitted Acquisition which were not incurred or created in connection with or
in contemplation of such Permitted Acquisition; (k) any renewals or extensions
of any of the liens referred to in any of the foregoing clauses (g), (h), (i),
or (j), provided that by any such renewal or extension no lien is extended to
additional property and that no monetary amount secured by any such lien is
increased; and (l) any other lien or security interest securing payment of a
determinable amount which is not overdue and which, when added to all other
liens covered by this clause (l), does not exceed two hundred fifty thousand
Dollars ($250,000).
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"Person" means any individual, corporation, partnership, trust, association
or other entity or organization, including any government, political
subdivision, agency or instrumentality thereof.
"Physician Self-Referral Laws" means all of the following, as from time to
time amended, modified or supplemented:
(a) 42 U.S.C. Section 1395nn;
(b) California Labor Code Section 139;
(c) California Business & Professions Code Section Section 650.01 and
650.02;
and any successor or similar Governmental Requirement which imposes
restrictions on the right of Coram or any of its Subsidiaries or any of its
Subsidiaries to bill any Governmental Authority if the physician ordering the
applicable service has an ownership, investment or other financial interest in
Coram or any of its Subsidiaries or receives compensation from Coram or any of
its Subsidiaries.
"Prime Rate" shall be the rate most recently announced by the Agent at its
principal office as its "Prime Rate." Prime Rate is a base rate and serves as
the basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the reporting thereof after its
announcement in such internal publication or publications as the Agent may
designate. Any change in the interest rate resulting from a change in such
Prime Rate shall become effective as of 12:01 a.m. of the Banking Day on which
each change in Prime Rate is announced by the Agent.
"Prior Commitment Termination Letter" means that certain letter dated June 8,
1994 from the Agent to Coram, countersigned by Coram on June 20, 1994, which
letter incorporates by reference certain obligations of Coram under two letter
agreements, both dated April 20, 1994 from the Agent to Coram, both
countersigned by Coram on April 22, 1994.
"Pro Forma Balance Sheet" has the meaning set forth in Paragraph 5.11 hereof.
"Rate Contracts" means interest rate and currency swap agreements, cap, floor
and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.
"Replacement Bank" has the meaning set forth in Paragraph 2.2(h) hereof.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA
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or the regulations thereunder other than a Reportable Event as to which the
provision of thirty (30) days' notice to the PBGC is waived under applicable
regulations. In addition, a Reportable Event means a withdrawal from a plan
described in Section 4063 of ERISA or a cessation of operations described in
Section 4062(e) of ERISA, if such withdrawal or cessation could reasonably be
expected to result in a liability of any Co-Borrower or member of the
Controlled Group to the PBGC, to a trustee or to a Multiemployer Plan in
aggregate amount of one million Dollars ($1,000,000) or more.
"Responsible Officer" means Coram's Chief Executive Officer, Chief Financial
Officer or any Vice President or, with respect to any other Co-Borrower, such
Co-Borrower's Chief Executive Officer or Chief Financial Officer.
"Revolving Termination Date" means the Final Maturity Date or earlier if the
Total Commitment Amount is reduced to zero pursuant to Paragraph 2.1(b) hereof.
"S&P" means Standard & Poor's Corporation and any successor thereto that is a
nationally-recognized rating agency
"Sale-Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby Coram or one of its Subsidiaries transfers
such property to a Person and Coram or one of its Subsidiaries leases it from
such Person.
"Sales Turnover Ratio" means, for any fiscal period, the ratio of Consolidated
Net Revenue for such period to accounts receivable as of the end of such
period; provided, however, that if the Sales Turnover Ratio is determined for a
period of less than four (4) fiscal quarters, Consolidated Net Revenue for such
period shall be proportionately adjusted so as to represent the four-quarter
equivalent of Consolidated Net Revenue for such period of less than four fiscal
quarters (as an example, to determine a Sales Turnover Ratio for a period of
two fiscal quarters, Consolidated Net Revenue for such period shall be
multiplied by two (2)).
"Security Agreement" has the meaning specified in Paragraph 3.1 hereof.
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(i) the fair value of its assets (both at fair valuation and at
present fair salable value) is in excess of the total amount of all of its
debts and liabilities, including contingent, subordinated, unmatured and
unliquidated liabilities; and
(ii) it is then able to pay its debts as they become due; and
(iii) it owns property having a value (both at fair valuation and at
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present fair salable value) in excess of the total amount required to pay its
debts; and
(iv) it has capital sufficient to carry on its business.
"Special Charges" means fees and expenses associated with the Merger,
restructuring charges associated with consolidation of the operations of
Curaflex, HealthInfusion, Medisys and T2, and any cash payments made in
connection with settlement of the T2 Shareholder Litigation.
"Statutory Reserves" means a fraction (expressed as a decimal), the numerator
of which is the number one and the denominator of which is the number one minus
the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency or supplemental reserves, and
expressed as a decimal) established by the Federal Reserve Board or any other
United States banking authority to which either of the Agents or any Bank is
subject for Eurocurrency Liabilities (as defined in Regulation D of the Federal
Reserve Board). Such reserve percentages shall include, without limitation,
those imposed under said Regulation D. LIBOR Loans shall be deemed to
constitute Eurocurrency Liabilities and as such shall be deemed to be subject
to such reserve requirements without benefit of or credit for proration,
exceptions or offsets which may be available from time to time to the Banks
under said Regulation D. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"Subsidiary" of a Person means any corporation, partnership, joint venture,
association or other business entity of which such Person now or hereafter
owns, directly or indirectly, securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
governing body thereof.
"Subsidiary Guarantor" means each Subsidiary of Coram which is a signatory to
the Guaranty and the Security Agreement.
"Supplemental Subfacility Amount" means, subject to Paragraphs 2.1(b) and
2.3(c) hereof, an amount equal to twenty-five million dollars
($25,000,000).
"T2" has the meaning specified in the heading to this Agreement
"T2 Shareholder Litigation" means the litigation described under the heading
"T2 Stockholder Litigation" in item E of Schedule 5.16.
"Total Commitment Amount" means, subject to Paragraph 2.1(b) hereof,
an amount equal to eighty million Dollars ($80,000,000).
"UCC" means the Uniform Commercial Code as in effect in any jurisdiction.
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"Wholly Owned Subsidiary" means any direct or indirect Subsidiary of a Person
where such Person's ownership of such Subsidiary is through ownership of 100%
of all issued and outstanding capital stock (or other ownership interests) and
warrants, options or rights to purchase capital stock (or other ownership
interests) at all levels.
Each accounting term not defined herein and each accounting term partly defined
herein to the extent not defined shall have the meaning given to it under GAAP.
ARTICLE 2
Loans
2.1 Revolving Credit.
(a) Revolving Loans. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make loans to any of the Co-Borrowers
on a revolving basis (each herein called a "Loan") from time to time on and
after the Initial Closing Date until the Revolving Termination Date, in an
aggregate principal amount not to exceed at any time outstanding such Bank's
Commitment Amount. The Co-Borrower to which Loans are disbursed (all Loans to
any Co-Borrower being disbursed through the Concentration Account) shall use
the proceeds of the Loans exclusively for payment of expenses relating to the
Merger, to pay Indebtedness of the Co-Borrower or one of its Subsidiaries, for
Permitted Acquisitions of physician practices associated with T2, for Permitted
Acquisitions which are not acquisitions of physician practices associated with
T2 (if the condition specified in clause (iii) of subparagraph (e) of the
definition of "Permitted Acquisitions is satisfied), or for general working
capital purposes, or, in the case of Coram, to loan to one of the other
Co-Borrowers for any such purpose. All of the Loans in the aggregate shall
consist of one or more Base Rate Loans and LIBOR Loans. Subject to the terms
and conditions of this Agreement, Loans which are repaid may be reborrowed
prior to the Revolving Termination Date. Each Borrowing of a Base Rate Loan
hereunder shall be in an amount equal to an integral multiple of one hundred
thousand Dollars ($100,000) and in a minimum amount of one hundred thousand
Dollars ($100,000), and each Borrowing of a LIBOR Loan hereunder shall be in an
amount equal to an integral multiple of five hundred thousand Dollars
($500,000) and in a minimum amount of five million Dollars ($5,000,000).
(b) Commitment Limits. The aggregate principal amount of Loans
outstanding shall not at any one time exceed the lesser of (i) the Total
Commitment Amount, or (ii) the Borrowing Base plus the Supplemental Subfacility
Amount. The Co-Borrowers may reduce the Total Commitment Amount (which
reduction shall dollar for dollar reduce the Supplemental Subfacility Amount)
upon not less than five (5) Banking Days' telephone notice, confirmed by an
Authorized Representative on the date of such notice by electronic facsimile
transmission, to the Agent and by repaying to the Banks any
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Loans outstanding in excess of the limits specified in the foregoing sentence.
Any such reduction shall be permanent and shall (unless reducing the Total
Commitment Amount to zero) be in an amount equal to at least five million
Dollars ($5,000,000) and be an integral multiple of one hundred thousand
Dollars ($100,000).
(c) Borrowing Procedures. For any proposed Borrowing which is to be a
Base Rate Loan, an Authorized Representative shall give the Agent telephone
notice not later than 8:30 a.m. (San Francisco time) on the Banking Day of the
proposed Borrowing, confirmed by a written borrowing request in substantially
the form attached hereto as Exhibit 2.1(c) (a "Loan Request"), executed by an
Authorized Representative and received by the Agent by facsimile on the day of
such telephone notice. For any proposed Borrowing which is to consist of at
least one LIBOR Loan, an Authorized Representative shall give the Agent
telephone notice not later than 9:00 a.m. (San Francisco time) at least three
(3) Banking Days prior to the date of the proposed Borrowing, confirmed by a
Loan Request executed by an Authorized Representative and received by the Agent
by facsimile on the day of such telephone notice. Upon receipt by the Agent of
the Loan Request, the Agent shall promptly notify each Bank of the proposed
Borrowing, including the date and amount thereof. Each Bank will make an
amount equal to its respective Commitment Percentage of the Borrowing available
to the Agent for the account of the Co-Borrower to which the Loan is to be
disbursed at the office specified by the Agent in Paragraph 10.9 hereof for
payment by 12:00 noon (San Francisco time) on the borrowing date requested by
such Co-Borrower in funds immediately available to the Agent. Unless any
applicable condition specified in Article 4 has not been satisfied, the
proceeds of all such Loans will then be made available to such Co-Borrower by
the Agent at such office by crediting the Concentration Account with the
aggregate of the amounts made available to the Agent by the Banks in like funds
as received by the Agent.
(d) Notes. The Co-Borrower's obligations to repay all Loans made by the
Banks shall be evidenced by a promissory note in favor of each Bank in the form
attached hereto as Exhibit 2.1(d) (the "Notes"). On the Initial Closing Date,
the Co-Borrowers shall deliver to the Agent Notes payable to each of the Banks
in the Commitment Amount of each Bank, executed by an Authorized
Representative.
2.2 Interest and Fees.
(a) Interest. Subject to all other provisions of this Paragraph 2.2, all
or a part of each Loan may, at the option of the Co-Borrowers, be a Base Rate
Loan or a LIBOR Loan. Subject to Paragraph 2.2(f) hereof, the Loans shall bear
interest from the date of disbursement on the unpaid principal amount thereof
until such amount shall become due and payable (whether upon Maturity, by
Acceleration or otherwise) (i) in the case of each Base Rate Loan, at a
fluctuating rate per annum equal to the Base Rate, as from time to time in
effect, plus the Base Rate Spread then in effect, and (ii) in the case of each
LIBOR Loan, at a rate per annum equal to LIBOR for the applicable Interest
Page 51 of 107 Pages
<PAGE> 32
Period plus the LIBOR Spread then in effect. Interest on each Base Rate Loan
shall be payable in arrears on the last Banking Day of each calendar month,
commencing with July 1994, on any date that such Base Rate Loan is converted to
a LIBOR Loan, on the date of any prepayment as to the amount of such
prepayment, and on the Revolving Termination Date. Interest on each LIBOR Loan
shall be payable in arrears on the last day of the applicable Interest Period
(provided, however, that interest on each LIBOR Loan with an Interest Period of
six (6) months shall be paid three (3) months after commencement of such
Interest Period ), on any date when such LIBOR Loan is converted to a Base Rate
Loan, on the date on which any LIBOR Loan is prepaid as to the amount of such
prepayment, and on the Revolving Termination Date.
Upon Maturity, the Loans shall bear interest at a rate equal to the
applicable rate provided above plus two percent (2%) per annum. All other
Obligations, if not paid when due, shall bear interest from the date when due
until paid, at a rate equal to the Base Rate plus the Base Rate Spread plus two
percent (2%) per annum.
(b) Extensions and Conversions. Subject to the terms and conditions
hereof, the Co-Borrowers shall have the option at any time to convert all or
any part of a Loan into a Base Rate Loan or a LIBOR Loan; provided, however,
that a LIBOR Loan may be converted only as of the last day of the applicable
Interest Period. Each LIBOR Loan shall be in an amount equal to an integral
multiple of five hundred thousand Dollars ($500,000) and in a minimum amount of
five million Dollars ($5,000,000). Subject to the terms and conditions hereof,
the Co-Borrowers may extend a LIBOR Loan beyond its current Interest Period.
In the case of a proposed conversion of a Base Rate Loan into a LIBOR Loan or
an extension of a LIBOR Loan, an Authorized Representative shall give the Agent
telephone notice not later than 9:00 a.m. (San Francisco time) at least three
(3) Banking Days prior to the date of the proposed conversion or extension,
confirmed by a written notice in the form of Exhibit 2.1(b) attached hereto (a
"Notice of Conversion/Extension") executed by an Authorized Representative and
received by the Agent by facsimile on the day of such telephone notice. In the
case of a proposed conversion into a Base Rate Loan, an Authorized
Representative shall give the Agent telephone notice not later than 9:00 a.m.
(San Francisco time) at least one (1) Banking Day prior to the end of the
applicable Interest Period confirmed by a Notice of Conversion/Extension
executed by any Authorized Representative and received by the Agent by
facsimile the day of such telephone notice. Any notice given by an Authorized
Representative under this Paragraph 2.2(b) shall be irrevocable. Unless the
Agent receives notice of a proposed conversion as and when required hereunder,
then at the end of an Interest Period for a LIBOR Loan, such Loan shall
automatically convert to a Base Rate Loan.
(c) Adjustment of Rate Spreads. The Base Rate Spread for Loans up to the
amount of the Borrowing Base shall initially be .50% per annum, and the LIBOR
Rate Spread for Loans up to the amount of the Borrowing Base shall initially be
1.75% per annum. The Base Rate Spread for such Loans and the LIBOR Spread for
such Loans
Page 52 of 107 Pages
<PAGE> 33
shall be adjusted, from time to time, as provided below (which adjustments
shall remain effective only so long as Coram maintains compliance with such
conditions):
Funded Debt Ratio = x
<TABLE>
<S> <C> <C> <C> <C>
x <1.00 1.00< x <1.50 1.50< x <2.50 x>2.50
- - -
- -------------------------------------------------------------------------
LIBOR Spread 1.25% 1.50% 1.75% 2.00%
Base Rate Spread 0 .25% .50% .75%
</TABLE>
Any reduction or increase in the LIBOR Spread for such Loans and the Base Rate
Spread for such Loans in accordance with this Paragraph 2.2(c) shall become
effective as of the first day of the month following the month in which Coram
delivers to the Agent quarterly or annual financial statements pursuant to
Paragraph 6.2(a) or 6.2(b) hereof and a certificate of the Chief Financial
Officer of Coram specifying the applicable Funded Debt Ratio.
(d) Commitment Fee. The Co-Borrowers shall pay to the Agent for the
account of each Bank a commitment fee (the "Commitment Fee") on the average
daily unused portion of such Bank's Commitment Amount at rate per annum
determined as follows:
Funded Debt Ratio = x
<TABLE>
<S> <C> <C> <C> <C>
x <1.00 1.00< x <1.50 1.50< x <2.50 x >2.50
- - -
- -----------------------------------------------------------------------------
Commitment Fee .25% .25% .375% .50%
</TABLE>
The Commitment Fee shall (i) be computed on a daily basis based on the
respective Commitment Amount of each Bank in effect on each day, (ii) accrue
from the Initial Closing Date to the Revolving Termination Date and (iii) be
payable quarterly in arrears on the last Banking Day of each quarter commencing
with the quarter ending September 30, 1994 and on the Revolving Termination
Date. The initial Commitment Fee in effect shall be 0.375% per annum. Any
reduction or increase in the Commitment Fee shall become effective as of the
first day of the month following the month in which Coram delivers to the Agent
quarterly or annual financial statements pursuant to Paragraph 6.2(a) or 6.2(b)
hereof and a certificate of the Chief Financial Officer of Coram specifying the
applicable Funded Debt Ratio.
(e) Computation of Interest and Commitment Fee. Interest and the
Commitment Fee shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days.
(f) Illegality, Taxation and Additional Interest Rate Provisions.
(i) In the event the Agent shall have determined (which
determination shall be conclusive and binding)
Page 53 of 107 Pages
<PAGE> 34
that by reason of circumstances affecting the interbank Eurodollar market,
adequate and reasonable means do not exist for ascertaining Base LIBOR, the
Agent shall forthwith give notice of such determination, confirmed in
writing, to the Co-Borrowers. If such notice is given, and until such notice
has been withdrawn by the Agent, no additional LIBOR Loans shall be made and
no additional conversions of Loans to LIBOR Loans shall be permitted, and at
the end of the Interest Period relating to any outstanding LIBOR Loans, such
Loans shall become Base Rate Loans.
(ii) Notwithstanding any other provisions herein, if any law,
treaty, rule or regulation, or determination of a court or other Governmental
Authority, or any change therein or in the interpretation or application
thereof, shall make it unlawful for a Bank to make or maintain LIBOR Loans,
as contemplated by this Agreement, the obligation of such Bank hereunder to
make LIBOR Loans shall forthwith be suspended until such Bank shall notify
the Agent that the circumstances causing such suspension no longer exist, and
each LIBOR Loan of such Bank then outstanding shall immediately become a Base
Rate Loan.
(iii) In the event that any adoption or modification of any law,
treaty, rule or regulation, or determination of a court or other Governmental
Authority, or that any change in the interpretation or application thereof,
which adoption, modification or change becomes effective after the Initial
Closing Date, or in the event that compliance by a Bank with any request or
directive issued after the date hereof (whether or not having the force of
law) from any Governmental Authority:
(A) does or shall subject a Bank or any of its foreign
offices to any tax of any kind whatsoever (other than taxes based on
income from all sources) with respect to this Agreement, the Notes,
the Loans or any payments made to and received by such Bank of
principal, interest, fees or any other amount payable hereunder; or
(B) does or shall impose, modify, or hold applicable any
reserve, special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, deposits or other liabilities in
or for the account of, advances or loans by, other credit extended by
or any other acquisition of funds by, any office of a Bank (other
than to the extent previously taken into
Page 54 of 107 Pages
<PAGE> 35
account in determining the Base Rate or Statutory Reserves); or
(C) does or shall impose on a Bank any other condition;
and the result of any of the foregoing is to increase the cost to a Bank of
making, renewing or maintaining such Bank's Commitment Amount or the Loans,
or to reduce any amount receivable in respect thereof or under any of the
Loan Documents; then, in any such case, such Bank shall notify the
Co-Borrowers of any such event of which it has knowledge and shall deliver to
the Agent and the Co-Borrowers a written statement specifying in reasonable
detail the losses or expenses sustained or incurred, and any reasonable
allocation made by such Bank of such losses and expenses shall be conclusive.
The Co-Borrowers shall, within ten (10) days following demand therefor, pay
the amount of such losses and expenses.
(g) Capital Adequacy Requirements. If any Bank shall determine that the
application of any law, rule, regulation or guideline regarding capital
adequacy, or any change therein or any change in the interpretation or
administration thereof by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or compliance by
such Bank (or its lending office) or any corporation controlling such Bank,
with any request, guideline or directive regarding capital adequacy (whether or
not having the force of law) of any such central bank or other authority (which
in any such case has become effective after the date hereof), affects or would
affect the amount of capital required or expected to be maintained by such Bank
or any corporation controlling such Bank, and such Bank determines that the
amount of such capital is increased as a consequence of its obligation under
this Agreement, then, upon demand of such Bank, the Co-Borrowers shall, within
ten (10) days following demand therefor, pay to such Bank, from time to time as
specified by the Bank, additional amounts sufficient to compensate such Bank
for such increase.
(h) Substitution of Banks. Upon the receipt by any Co-Borrower from any
Bank (an "Affected Bank") of a request for compensation or payment under this
Paragraph 2.2, the Co-Borrower may: (i) request the Affected Bank to use its
best efforts to obtain a replacement bank or financial institution satisfactory
to the Co-Borrowers to acquire and assume all or part of such Affected Bank's
Loans and Commitments (a "Replacement Bank"); (ii) request one or more of the
other Banks to acquire and assume all or part of such Affected Bank's Loans and
Commitments; (iii) designate a Replacement Bank; or (iv) terminate in whole or
reduce in part the Commitments of the Affected Bank and prepay all or
Page 55 of 107 Pages
<PAGE> 36
part of the outstanding Loans owing to such Affected Bank in accordance with
Paragraph 2.3. Any such designation of a Replacement Bank under clause (i) or
(iii) shall be subject to the prior written consent of the Agents and the other
Banks (which consent in the case of the Banks shall not be unreasonably
withheld).
2.3 Payments.
(a) Payment of Loans. The Co-Borrowers shall repay all Loans then
outstanding on the Revolving Termination Date.
(b) Optional Prepayment. Subject to the following and the provisions of
Paragraph 2.3(c) hereof, the Co-Borrowers may at any time prepay, upon notice
given not later than 8:30 A.M. San Francisco time on the date of such
prepayment in the case of Base Rate Loans, or three (3) Banking Days' prior
written notice to the Agent as to any LIBOR Loans, any or all of the Loans in
whole or in part, without penalty or premium. Each such prepayment shall
include interest accrued to the date of prepayment on the amount of such
prepayment. Any such notice of prepayment shall specify the amount of the
prepayment. Any such prepayment shall be in a minimum principal amount of five
million Dollars ($5,000,000) and in a principal amount which is an integral
multiple of one million Dollars ($1,000,000).
(c) Mandatory Prepayment. (i) If at any time the aggregate principal
amount of the Loans outstanding exceeds the Borrowing Base plus the
Supplemental Subfacility Amount, then the Co-Borrowers shall immediately pay to
the Agent for the account of each Bank the amount of such excess (as a
prepayment in respect of the Loans), plus any amount due under Paragraph 2.3(d)
hereof as a result of such prepayment.
(ii) The Co-Borrowers shall make prepayments to the Banks in respect of the
Loans in amounts equal to:
(A) eighty percent (80%) of all net cash proceeds in excess of
two million five hundred thousand dollars ($2,500,000) received at any time
by Coram and its Subsidiaries (considered in the aggregate) from sales of
assets or lines of business (other than sales of readily marketable
securities);
(B) one hundred percent (100%) of all net cash proceeds received
by Coram or any of its Subsidiaries from any issuance by Coram or any of its
Subsidiaries of debt or equity securities; and
(C) one hundred percent (100%) of net cash proceeds in excess of
ten million dollars ($10,000,000) received in respect of any insurance
policies covering
Page 56 of 107 Pages
<PAGE> 37
liability (whether of T2 or its officers and directors) in respect of the T2
Shareholder Litigation.
The Co-Borrowers shall also pay any amount due under Paragraph 2.3(d) as a
result of such prepayment or may, in lieu thereof, deposit the net cash
proceeds with the Agent, to be held pending expiration of Interest Periods
until the earliest time at which such proceeds may be used to prepay the Loans
in accordance herewith without the Co-Borrowers being obligated to pay any
amounts which would have been due under Paragraph 2.3(d) had payment been made
earlier. Any such prepayment shall dollar for dollar immediately reduce the
Supplemental Subfacility Amount.
(d) Payments Prior to Interest Period Expiration. The Co-Borrowers
hereby agree to indemnify and hold the Banks free and harmless from any loss or
expense (including, without limitation, any loss or expense incurred by reason
of the liquidation or redeployment of deposits or other funds acquired by the
Banks to fund or maintain any LIBOR Loan and in addition to any interest or
other payments which may be due the Banks under this Agreement) which the Banks
may incur as a result of (i) the termination of this Agreement without the
occurrence of the Initial Closing Date, other than by reason of a default by
the Banks, (ii) the failure by any Co-Borrower to accept or complete a
borrowing, conversion or extension with respect to a LIBOR Loan after making a
request therefor, (iii) the failure of any Co-Borrower to make any prepayment
after notice has been given in accordance with Paragraph 2.3(b) hereof, (iv) a
prepayment in whole or in part (whether optional or mandatory) of any LIBOR
Loan prior to the expiration of a related Interest Period, or (v) the
conversion of a LIBOR Loan as a result of any of the events indicated in
Paragraph 2.3(g) hereof. The Agent shall deliver to the Co-Borrowers a written
statement specifying in reasonable detail any amounts due the Banks as provided
above, and such statement, in the absence of manifest error, shall be fixed and
binding on both parties. In no event shall any amounts be payable by the Banks
to any Co-Borrower under this Paragraph 2.3(d).
(e) Payments by the Co-Borrowers. All payments (including prepayments)
required to be made on account of principal, interest and fees shall be made
without set-off or counterclaim and shall be made to the Agent, for the account
of the Banks, at the Agent's office referenced in Paragraph 10.9 hereof, in
Dollars and in immediately available funds no later than 12:00 noon (San
Francisco time). The Agent will promptly distribute such payments to each Bank
its Commitment Percentage of such principal, interest, fees or other amounts,
in like funds as received. Any payment which is received by the Agent later
than 12:00 noon (San Francisco time) shall be deemed to have been received on
the immediately succeeding Banking Day. Whenever any payment hereunder shall
be stated to be due on a day other than a Banking Day, such payment shall be
made on the next succeeding Banking
Page 57 of 107 Pages
<PAGE> 38
Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be. Unless the Agent shall
have received notice from the Co-Borrowers prior to the date on which any
payment is due to the Banks hereunder that the Co-Borrowers will not make such
payment in full, the Agent may assume that the Co-Borrowers have made such
payment in full to the Agent on such date and the Agent may (but shall not be
so required), in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent such payment has not been made in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to such Bank,
together with interest thereon for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate as in effect from time to time. The
Co-Borrowers irrevocably authorize the Agent to debit the Concentration Account
or any other account maintained by any Co-Borrower with the Agent for any
payment due the Agent or the Banks hereunder.
(f) Payments by the Banks to the Agent. Each Bank shall make available
to the Agent in immediately available funds for deposit to the Concentration
Account the amount of such Bank's Commitment Percentage of any Borrowing.
Unless the Agent shall have received notice from a Bank at least one Banking
Day prior to the date of any proposed Borrowing that such Bank will not make
available to the Agent for the account of the respective Co-Borrower the amount
of that Bank's Commitment Percentage of the proposed Borrowing, the Agent may
assume that each Bank has made such amount available to the Agent on the
borrowing date and the Agent may (but shall not be so required), in reliance
upon such assumption, make available to such Co-Borrower on such date a
corresponding amount. If and to the extent any Bank shall not have made its
full amount available to the Agent and the Agent in such circumstances has made
available to such Co-Borrower such amount, that Bank shall within two (2)
Banking Days following the date of such Borrowing make such amount available to
the Agent, together with interest at the Federal Funds Rate as in effect for
each day during such period. A notice from the Agent submitted to any Bank
with respect to amounts owing under this Paragraph 2.3(f) shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
the Agent shall constitute such Bank's Loan on the date of the Borrowing for
all purposes of this Agreement. If such amount is not made available to the
Agent within two (2) Banking Days following the date of such Borrowing, the
Agent shall notify such Co-Borrower of such failure to fund and, upon demand by
the Agent, the Co-Borrowers shall pay such amount to the Agent for the account
of the Agent, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing. The failure of
any Bank to make any Loan on any date of any
Page 58 of 107 Pages
<PAGE> 39
proposed Borrowing shall not relieve any other Bank of its obligation hereunder
to make its Loan on such date, but no Bank shall be responsible for the failure
of any other Bank to make the Loan to be made by such other Bank on such date.
(g) Sharing of Payments, etc. If while any Event of Default exists any
Bank shall obtain on account of the Loans made by it, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) in excess of its Commitment Percentage of payments on account of the
Loans obtained by all the Banks, such Bank shall forthwith (a) notify the Agent
of such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid thereto together with an
amount equal to such paying Bank's Commitment Percentage (according to the
proportion of (i) the amount of such paying Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Co-Borrowers agree that any Bank so purchasing a
participation from another Bank pursuant to this Paragraph 2.3(g) may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of offset in Paragraph 2.3(h) hereof), with respect to such
participation as fully as if such Bank were the direct creditor of the
Co-Borrowers in the amount of such participation. The Agent shall keep records
(which shall be conclusive and binding in the absence of manifest error), of
participations purchased pursuant to this Paragraph 2.3(g) and shall in each
case notify the Banks following any such purchases.
(h) Offset. In addition to and not in limitation of all rights of offset
that the Banks may have under applicable law, the Banks, upon the occurrence
and during the continuance of an Acceleration, shall have the right to
appropriate and apply to the payment of all Obligations any and all balances,
credits, deposits, accounts or moneys of any Co-Borrower then or thereafter
with the Banks. Each Bank agrees promptly to notify the Co-Borrowers and the
Agent after any such offset and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such offset and application. The rights of each Bank under this Paragraph
2.3(h) are in addition to the other rights and remedies which such Bank may
have.
2.4 Joint and Several Liability.
(a) Notwithstanding any other provision of this Agreement,
Page 59 of 107 Pages
<PAGE> 40
the Co-Borrowers are and shall be jointly and severally liable for all
Obligations (including, without limitation, those with respect to all Loans),
and in each instance where the term "Co-Borrower" is used, it is expressly
understood that the act, omission or interest of any Co-Borrower, and any act
taken with respect to any Co-Borrower shall be deemed, for purposes of the Loan
Documents, to be the act, omission or interest of each Co-Borrower or act taken
with respect to each Co-Borrower. The joint and several liability of each
Co-Borrower hereunder shall not in any way be affected, impaired or reduced as
a result of which particular Co-Borrower receives or uses the proceeds of Loans
or the purposes for which such proceeds are used.
(b) Each Co-Borrower hereby expressly waives any right to compel the Agent
or the Banks to sue or enforce payment of any and all Obligations of any other
Co-Borrower hereunder. Each Co-Borrower hereby expressly waives presentment,
protest, notice, demand or action on delinquency in respect of the Obligations,
and, to the extent applicable, any and all benefits under the California Civil
Code Sections 2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849, 2850 and 3433 and
any and all other similar benefits which might otherwise be available under
applicable law.
(c) No invalidity, irregularity or unenforceability, by reason of any
bankruptcy or similar law, any law or order of any Governmental Authority
purporting to reduce, amend or otherwise affect any liability of any
Co-Borrower, shall affect, impair or be a defense to the Obligations of any
other Co-Borrower hereunder unless such invalidity, irregularity or
unenforceability is also applicable to such other Co-Borrower.
(d) Without in any manner limiting the generality of the foregoing, each
Co-Borrower agrees that the Agents and Majority Banks may, from time to time,
consent to any action or non-action of any Co-Borrower which, in the absence of
such consent, violates or may violate this Agreement, with or without
consideration, on such terms and conditions as may be acceptable to the Agents
and Majority Banks, without in any manner affecting or impairing the liability
of any other Co-Borrower hereunder. Each Co-Borrower waives any defense
arising by reason of any inability to pay or any defense based on bankruptcy or
insolvency or other similar limitations on creditors' remedies. Each
Co-Borrower authorizes the Agents and Majority Banks, without notice or demand
and without affecting such Co-Borrower's liability hereunder or under any of
the other Loan Documents, from time to time to: (i) renew, extend, accelerate
or otherwise change the time or place for payment of, or otherwise change the
terms of, the Notes or the Obligations or any part thereof including, without
limitation, increase or decrease of the rate of interest thereon; (ii) take and
hold security, and exchange, enforce, waive and release any collateral or
security or any part thereof or any such other security surrender, modify,
impair, change, alter, renew,
Page 60 of 107 Pages
<PAGE> 41
continue, compromise or release in whole or in part any such security, or fail
to perfect its interest in any such security or to establish its priority with
respect thereof; (iii) apply such security and direct the order or manner or
sale thereof as the Agents and Majority Banks in their sole discretion may
determine; (iv) release or substitute the any other Co-Borrower, in whole or in
part any of the endorsers or guarantors of the Obligations or any part thereof,
and (v) settle or compromise any or all of the Obligations with any other
Co-Borrower or any endorser or guarantor of the Obligations; and (vi)
subordinate any or all of the Obligations to any other obligations of or claim
against any other Co-Borrower, whether owing to or existing in favor of the
Agents or the Banks or any other party. The Obligations of each Co-Borrower
shall continue to be effective or be reinstated (as the case may be) if at any
time payment by any Co-Borrower of all or any part of the Obligations is
rescinded or must otherwise be returned by either of the Agents or the Banks
upon the insolvency, bankruptcy or reorganization of any Co-Borrower or
otherwise, all as though such payment to either of the Agents or the Banks had
not been made.
(e) Each Co-Borrower hereby acknowledges and agrees that, if and to the
extent that (i) the sum of (A) the amounts paid by such Co-Borrower to either
of the Agents and the Banks in respect of the Obligations, plus (B) the value
of any realization by either of the Agents and the Banks upon the assets of
such Co-Borrower pursuant to the Security Agreement, exceeds (ii) the amount of
the Loans made to such Co-Borrower plus interest accrued on such Loans and fees
and expenses attributable to such Loans plus the aggregate benefits, direct and
indirect, realized by such Co-Borrower from the Loans made to the other
Co-Borrowers, such Co-Borrower shall have a right of contribution from each
other Co-Borrower to such extent.
(f) Each Co-Borrower agrees that (i) it will not seek to exercise any right
of subrogation or contribution that it may have pursuant to applicable law,
subparagraph (e) above or otherwise against any of the other Co-Borrowers until
all of the Obligations have been paid in full and the Commitments have expired
or been terminated, and (ii) if by law any such right of subrogation or
contribution may not be so postponed, then such right shall be subject and
subordinate to the rights of the Agents and the Banks under the Loan Documents.
(g) The Agents and Majority Banks may, at their election, exercise any right
or remedy they may have against any Co-Borrower or any security now or
hereafter held by or for the benefit of the Agents or the Banks including,
without limitation, the right to foreclose upon any such security by judicial
or nonjudicial sale, without affecting or impairing in any way the liability of
any other Co-Borrower hereunder, except to the extent the Obligations may
thereby be paid. Each Co-Borrower waives any defense arising
Page 61 of 107 Pages
<PAGE> 42
out of the absence, impairment or loss of any right of reimbursement or other
right or remedy against any other Co-Borrower or any such security, whether
resulting from the election by the Agents or Majority Banks to exercise any
right or remedy they may have against any other Co-Borrower, any defect in,
failure of, or loss or absence of priority with respect to the interest of the
Agents or the Banks in such security, or otherwise. In the event that any
foreclosure sale is deemed to be not commercially reasonable, each Co-Borrower
waives any right that it may have to have any portion of the Obligations
discharged except to the extent of the amount actually bid and received by the
Banks at any such sale. Neither of the Agents nor any Bank shall be required
to institute or prosecute proceedings to recover any deficiency as a condition
of payment hereunder or enforcement hereof.
(h) Each Co-Borrower waives the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof, to the extent
permitted by law. Any part performance of the Obligations by a Co-Borrower,
or any other event or circumstances, which operate to toll any statute of
limitations as to such Co-Borrower, shall not operate to toll the statute of
limitations as to any other Co-Borrower. Each Co- Borrower understands and
acknowledges that the Banks would not make the Loans in the absence of the
covenants and waivers of the Co-Borrowers contained herein.
(i) Each Co-Borrower acknowledges that repeated and successive demands may
be made and payments or performance made hereunder in response to such demands
as and when, from time to time, any Co-Borrower may default in performance of
the Obligations. Notwithstanding any such payment or performance hereunder,
this Agreement shall remain in full force and effect and shall apply to any and
all subsequent defaults by any Co-Borrower in payment or performance of the
Obligations.
(j) Each Co-Borrower waives any defense arising by reason of any disability
or other defense of any other Co-Borrower or by reason of the cessation from
any cause whatsoever of the liability of any other Co-Borrower. Each
Co-Borrower waives any setoff, defense or counterclaim which any other
Co-Borrower may have or claim to have against the Agents or the Banks.
ARTICLE 3
Security Documents
3.1 Security Agreement. The Obligations shall be secured by a Security
Agreement to be executed and delivered by each of Coram, Curaflex,
HealthInfusion, Medisys and T2, and by each of the other Wholly Owned
Subsidiaries of Coram (as amended, modified
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or supplemented from time to time, the "Security Agreement") in the form of
Exhibit 3.1 attached hereto.
3.2 Guaranty. The Obligations shall be unconditionally guaranteed as set
forth in a Guaranty in the form of Exhibit 3.2 attached hereto to be executed
and delivered by each of the Wholly Owned Subsidiaries of Coram (as amended,
modified or supplemented from time to time, the "Guaranty").
ARTICLE 4
Conditions Precedent
4.1 Conditions to Initial Borrowing. The obligation of the Banks to make
the initial Loans shall be subject to the prior or contemporaneous satisfaction
of each of the following conditions precedent on the Initial Closing Date:
(a) Delivery of Documents. The Notes, the Security Agreement
and the Guaranty shall each have been duly executed and delivered to the
Agent by the respective signatories thereto;
(b) Reports, Certificates and Other Information. The Agent
shall have received the following, dated and in full force and effect on the
Initial Closing Date:
(i) a certificate of the Secretary or an Assistant
Secretary of each Co-Borrower and each Subsidiary Guarantor as to (A)
its corporate charter and by-laws (as to the Co-Borrowers only), (B)
authorization of the execution, delivery and performance of this
Agreement and all of the other Loan Documents by each Co-Borrower and
each of the Subsidiary Guarantor (including action of shareholders,
where required), and (C) the incumbency and signatures of persons
authorized to act hereunder and thereunder on behalf of the
respective Co-Borrowers or Subsidiary Guarantor;
(ii) a certificate, signed by a Responsible Officer of
Coram, stating (A) that the representations and warranties contained
in Article 5 hereof and in the Security Agreement and the Guaranty
are then true and accurate as though made on and as of such date, and
(B) that there then exists no Event of Default or Incipient Default;
(iii) good standing certificates for each of the
Co-Borrowers and the Subsidiary Guarantors (other than the
Subsidiaries specified in Schedule
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4.1(b)(iii)) bearing a date satisfactory to Majority Banks in
accordance with Schedule 4.1(b)(iii) hereof; and
(iv) such other instruments or documents as either the
Agent may reasonably request relating to the existence and good
standing of Coram or any of its Subsidiaries or corporate authority
for execution, delivery and performance of this Agreement or any of
the other Loan Documents.
(c) Opinions of Counsel. There shall have been delivered to the
Agent a written opinion dated as of the Initial Closing Date (i) by Brobeck,
Phleger & Harrison, as counsel to the Co-Borrowers, substantially in the form
of Exhibit 4.1(c)(i) attached hereto, (ii) (A) by Oppenheimer, Wolff &
Donnelly, substantially in the form of Exhibit 4.1(c)(ii)-A attached hereto,
(B) by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
substantially in the form of Exhibit 4.1(c)(ii)-B attached hereto, and (C) by
Scott Larson, Esq., substantially in the form of Exhibit 4.1(c)(ii)-C
attached hereto, and (iii) by Pillsbury Madison & Sutro, as special counsel
to the Agent, covering such matters as the Agent may request;
(d) Payment of Fees. The Agent shall have received payment of
(i) all fees required in the Commitment Letter or the Agent's Fee Letter or
under the Prior Commitment Termination Letter to be paid on or prior to the
Initial Closing Date, including without limitation any outstanding invoices
of Coopers & Lybrand for services rendered to the Agent in connection with
this transaction, and (ii) a reasonable estimate of the fees and expenses of
Messrs. Pillsbury Madison & Sutro, as special counsel to the Agent in
connection with preparation, negotiation, execution and closing of this
Agreement, and (iii) any other fee or other payment due either of the Agents
or the Banks under any of the Loan Documents on or before the Initial Closing
Date;
(e) No Existing Default. No Event of Default or event which,
upon the lapse of time or the giving of notice or both, would constitute an
Event of Default (an "Incipient Default") shall exist on the Initial Closing
Date or after giving effect to the transactions contemplated to take place
hereunder on such date;
(f) Representations and Warranties Correct. The representations
and warranties set forth in Article 5 hereof and in the Guaranty shall be
true and correct on the Initial Closing Date, and after giving effect to the
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transactions contemplated to occur on such date;
(g) Legality of Transactions. It shall not be unlawful for the
Co-Borrower, the Subsidiary Guarantors, either Co-Agent or the Banks to carry
out their respective obligations under this Agreement;
(h) Insurance. The Co-Borrowers shall have obtained the
insurance called for in Paragraph 6.9 hereof, and the Banks shall have
received evidence satisfactory to Majority Banks that such insurance is in
effect;
(i) Closing of Merger. The Banks shall have received evidence
satisfactory to Majority Banks that the Merger has occurred;
(j) Perfection of Liens and Security Interests. The Banks shall
have obtained assurance satisfactory to Majority Banks (including UCC search
reports, confirmation of filing or recording, and opinions of counsel) that
the security interests created by the Security Agreement and the Guaranty in
the property specified in Schedule 4.1(j) attached hereto shall have been
duly perfected under applicable law and shall be of first priority, subject
only to Permitted Encumbrances;
(k) Payment of Existing Indebtedness. The Banks shall have
received evidence satisfactory to Majority Banks that the indebtedness of
Coram and its Subsidiaries identified on Schedule 4.1(k) attached hereto has
been paid in full and any commitment to lend associated therewith has been
terminated and all liens and security interests securing such indebtedness
have been released;
(l) Solvency. The Agent shall have received a certificate of
the Chief Financial Officer of Coram in form and substance satisfactory to
the Majority Banks that Coram and each of its Subsidiaries is Solvent on and
as of the Initial Closing Date;
(m) Written Receipt. If any part of the proceeds of the Loan is
to be disbursed to a Person other than a Co-Borrower, the Agent shall have
received from the Co-Borrowers written disbursement instructions and a
written receipt for such proceeds;
(n) Notice of Authorized Representatives. The Agent shall have
received a Notice of Authorized Representatives in the form attached hereto
as Exhibit 4.1(n) (a "Notice of Authorized
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Representatives"), duly executed on behalf of the Co-Borrowers; and
(o) Other Documents. The Agent shall have received any other
document, instrument, undertaking or certificate stated in any of the Loan
Documents to be delivered on or prior to the Initial Closing Date.
4.2 Conditions to Each Loan. The obligation of the Banks to make any
Loan is subject to the prior or contemporaneous satisfaction of each of the
following conditions precedent on and as of the date of such Borrowing:
(a) Initial Closing Date. The Initial Closing Date shall have
occurred.
(b) No Existing Default. No Event of Default or Incipient
Default shall exist at the date of such Borrowing, or after giving effect to
the transactions contemplated to take place hereunder on such date;
(c) Representations and Warranties Correct. The representations
and warranties set forth in Article 5 hereof shall be true and correct at the
date of such Borrowing, and after giving effect to the transactions
contemplated to take place hereunder on such date (except that to the extent
that such representations and warranties by their terms relate solely to an
earlier date, in which case such representations and warranties shall have
been true and correct as of the date to which such representations and
warranties relate), provided that Paragraph 5.10 hereof shall be deemed to
refer to the financial statements most recently delivered to the Agent
pursuant to Paragraph 6.2 hereof;
(d) Loan Request. The Agent shall have received in connection
with each Loan a Loan Request, the receipt of which by the Agent shall
constitute a certification by the Co-Borrowers that the conditions set forth
in Paragraphs 4.2(b) and 4.2(c) hereof are or will be satisfied on and as of
the date of such Borrowing; and
(e) No Material Adverse Change. No Material Adverse Change and
no material adverse change in the prospects of Coram and its Subsidiaries
considered as a whole shall have occurred since September 30, 1993.
4.3 Conditions for the Benefit of the Agent and the Banks. The
conditions set forth in this Article 4 are for the exclusive benefit of the
Banks and the Agent and may be waived only by a written waiver signed by all
the Banks or the Agent, as applicable. For purposes of determining
satisfaction of the
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conditions set forth in Paragraph 4.1 hereof, each Bank agrees that, by funding
its Commitment Percentage of the initial Borrowing, it will be deemed to have
approved any matter in such conditions requiring its approval. For purposes of
determining satisfaction or waiver of the conditions set forth in Paragraph 4.2
hereof for any Borrowing subsequent to the initial Borrowing, each Bank which
funds its Commitment Percentage of such subsequent Borrowing shall be deemed to
have approved any matter disclosed by Coram in writing to such Bank (and to the
Agent) at least three (3) Banking Days prior to such Borrowing, which writing
refers specifically to Paragraphs 4.2 and 4.3 hereof and includes a statement
to the effect that such Bank's funding shall be deemed a waiver of the
applicable condition with respect to such matter. Such waiver shall not be
deemed a waiver with respect to the conditions applicable to any subsequent
Borrowing, but Coram shall not be required to send the Banks or the Agent any
additional written notice.
4.4 Failure of Conditions. This Agreement (exclusive of obligations of
the Co-Borrowers stated herein to survive termination hereof) shall terminate
if the Initial Closing Date does not occur on or before July 31, 1994. In such
event, Coram shall pay to the Agent on demand such amounts as may be due under
the Commitment Letter or the Agent's Fee Letter. The obligation of Coram to
make such payment shall survive termination of this Agreement.
ARTICLE 5
Representations and Warranties of the Co-Borrowers
In order to induce the Agents and the Banks to enter into or become parties
to this Agreement and to extend the Loans, each of the Co-Borrowers makes the
following representations and warranties to the Agents and the Banks (which
representations and warranties refer to Coram and its Subsidiaries after the
Merger):
5.1 Due Organization. Each of Coram and its Subsidiaries is a
corporation or partnership, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, and each is duly licensed or qualified to conduct business, and
each is in good standing in, each jurisdiction wherein the character of the
property owned or the nature of the business transacted by it makes such
licensing or qualification necessary (except for jurisdictions in which the
failure to so qualify or be in good standing would not have a Material Adverse
Effect).
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5.2 Organization, Standing and Qualification of Subsidiaries.
(a) Set forth in Schedule 5.2 attached hereto is a complete and accurate
list of Coram's Subsidiaries, showing their respective jurisdictions of
incorporation or organization and, as of the Initial Closing Date, the
jurisdictions in which each is qualified to do business.
(b) The corporate charter or articles of incorporation and all amendments
thereto or the partnership agreement or other constituent document and all
amendments thereto for Coram and each of its Subsidiaries have been duly filed
(where required) and are in proper order. All of the outstanding capital stock
of Coram and its Subsidiaries has been validly issued in compliance with all
federal and state securities laws and is fully paid and nonassessable. Except
as specified in Schedule 5.2, all of the capital stock of or other ownership
interest in each of the Subsidiaries listed in Schedule 5.2 attached hereto is
owned by Coram or one of its Subsidiaries free and clear of all mortgages,
deeds of trust, pledges, liens, security interests and other charges or
encumbrances.
(c) Neither Coram nor any of its Subsidiaries is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any other equity interest therein.
(d) The chief executive office of each Co-Borrower is located at 4675
MacArthur Court, Suite 1250, Newport Beach, California 92660 for Coram, One
Lakeshore Centre, 3281 Guasti Road, Suite 700, Ontario, California 91761, for
Curaflex, 5200 Blue Lagoon Drive, Suite 200, Miami, Florida 33126 for
HealthInfusion, 4550 West 77th Street, Edina, Minnesota 55435 for Medisys, and
1121 Alderman Drive, Alpharetta, Georgia 30202 for T2.
5.3 Absence of Certain Activities. Except as set forth on Schedule 5.2
attached hereto, neither Coram nor any or its Subsidiaries is a partner in any
partnership or a joint venturer in any joint venture.
5.4 Requisite Power. Except as set forth in Schedule 5.4 attached
hereto, Coram and each of its Subsidiaries each has all requisite corporate or
partnership power and all governmental licenses, permits, authorizations,
consents and approvals necessary to own and operate its respective properties
and to carry on its respective business as now conducted and as proposed to be
conducted. Each of the Co-Borrowers has and each of the Subsidiary Guarantors
has all requisite power to borrow the sums provided for in this Agreement and
to execute, deliver, issue and perform this Agreement, the Notes, the Security
Agreement, the Guaranty and the other Loan Documents to which any of them is a
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<PAGE> 49
party.
5.5 Authorization. All action on the part of Coram and each Subsidiary
and their respective directors, stockholders and partners necessary for the
authorization, execution and delivery and performance of this Agreement, the
Notes, the Security Agreement, the Guaranty and the other Loan Documents has
been duly taken and is in full force and effect.
5.6 Officer Authorization. Each natural person executing this Agreement
or any of the other Loan Documents on behalf of any Co-Borrower or any
Subsidiary Guarantor is (as of the date of such execution) duly and properly in
office and fully authorized to execute and deliver the same.
5.7 Binding Nature. This Agreement, the Notes, the Security Agreement,
the Guaranty and each of the other Loan Documents is, or upon the execution and
delivery thereof will be, a legal, valid and binding obligation of the
Co-Borrowers or of the Subsidiary Guarantors, where any of such parties is a
signatory thereto, in full force and effect and enforceable in accordance with
its respective terms, except for the effect of applicable laws regarding
bankruptcy or insolvency and the effect of equitable principles generally.
5.8 No Conflict. Except as set forth in Schedule 5.8, neither the
execution nor delivery of this Agreement, the Notes, the Security Agreement,
the Guaranty or any of the other Loan Documents nor performance of nor
compliance with the terms and provisions hereof or thereof will (a) conflict
with or result in a breach of any Governmental Requirement, or of any other
agreement or instrument binding upon Coram or any of its Subsidiaries, or
conflict with or result in a breach of any provision of the corporate charter
or by-laws, partnership, or other constituent document of Coram or any of its
Subsidiaries, or (b) result in the creation or imposition of any Lien upon any
property of Coram or any of its Subsidiaries pursuant to any such agreement or
instrument (other than pursuant to the Security Agreement and the Guaranty).
No authorization, consent or approval or other action by, and no notice to or
filing with, any Governmental Authority is required to be obtained or made by
Coram or any of its Subsidiaries, other than those which will be obtained or
made prior to the Initial Closing Date, for the due execution, delivery and
performance by Coram or any of its Subsidiaries of this Agreement, the Notes,
the Security Agreement, the Guaranty or any of the other Loan Documents or for
the validity or enforceability thereof.
5.9 No Event of Default. No Event of Default or Incipient Default has
occurred and is continuing or would result from the execution, delivery or
performance of this Agreement, the Notes, the Security Agreement, the Guaranty
or any of the other Loan
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Documents.
5.10 Financial Statements. The financial statements described in Schedule
5.10 attached hereto, copies of which have been furnished to the Agents and the
Banks, and the financial statements most recently delivered to the Agent
pursuant to Paragraph 6.2(b) hereof, fairly present the financial condition and
results of operations of each Co-Borrower (other than Coram) respectively,
consolidated with the respective Subsidiaries of such Co-Borrower. All such
financial statements were prepared in accordance with GAAP consistently applied
throughout the respective periods covered thereby, except that financial
statements not dated as of the end of a fiscal year are subject to adjustments
upon audit. Except as disclosed in such financial statements or otherwise
disclosed in writing to the Banks, neither Coram nor any Subsidiary of Coram is
liable for any material liability, direct or contingent, including, but not
limited to, liabilities for taxes, long-term leases or long-term commitments,
which would be required to be shown as a liability or otherwise disclosed in
current financial statements.
5.11 Pro Forma Financial Statements and Projections. The Agents and the
Banks have been furnished with certain information, including (a) a pro forma
consolidated combined balance sheet (the "Pro Forma Balance Sheet") for Coram
and its Subsidiaries as of March 31, 1994, giving effect to the Merger, and (b)
estimates and projections of the financial position and the results of
operations (consolidated for Coram and its Subsidiaries) for, and as at the end
of, certain future periods. The Pro Forma Balance Sheet and such estimates and
projections were prepared with reasonable care on the basis of the assumptions
stated therein, and such assumptions are, to the best knowledge and belief of
Coram and each of the other Co-Borrowers, reasonable and made in good faith, it
being understood that estimates and projections by their nature involve
uncertainty and approximations. It is understood that no representation or
warranty is made by any Co-Borrower concerning any predictions, forecasts,
estimates, or any other analyses prepared by or on behalf of Coram or any of
its Subsidiaries, except as above stated. There is no fact known to any
Co-Borrower which could reasonably be expected to have a Material Adverse
Effect which has not been disclosed in documents furnished to the Banks in
connection with this Agreement.
5.12 Real Property. Coram or one of its Subsidiaries has good marketable
title in fee simple to, or a valid and subsisting leasehold interest in, all
real property reasonably necessary for the operation of its business as a
whole, free from all Liens, charges, mortgages, deeds of trust, security
interests and encumbrances of any nature whatsoever, except for Permitted
Encumbrances.
5.13 Equipment. Coram and its Subsidiaries own or have the
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right to use under valid and subsisting leases, equipment and fixtures,
reasonably necessary for the operation of their business as a whole.
Substantially all of the tangible property of Coram and its Subsidiaries used
in connection with their business is in good operating condition (ordinary wear
and tear excepted), usable in the ordinary course of business, and is adequate
for the operation of their business.
5.14 Contracts. Schedule 5.14 attached hereto contains a list of each
material contract to which Coram or any of its Subsidiaries is a party (the
"Key Contracts"). Each of the Key Contracts is in effect. Except as disclosed
in Schedule 5.14, neither Coram nor any of its Subsidiaries nor, to the best
knowledge of any of the Co-Borrowers, any other party to any of the Key
Contracts is in material default thereunder, and there are no presently
existing facts or circumstances which, if continued or on notice, could
reasonably be expected to result in such a material default on the part of
Coram or any of its Subsidiaries, or, to the best knowledge of any Co-Borrower,
on the part of the other party thereto. No Co-Borrower has any knowledge that
any other party to any of the Key Contracts intends to terminate such Key
Contract. Each contract with a supplier to which Coram or any of its
Subsidiaries is a party is on normal trade terms and has been entered into in
the ordinary course of business. Each contract with a customer of Coram or any
of its Subsidiaries has been entered into in the ordinary course of business.
Performance by the parties to all contracts and other commitments of Coram and
its Subsidiaries would not in the aggregate have a Material Adverse Effect.
5.15 Intellectual Property. Schedule 5.15 attached hereto contains a
complete and correct list of all material patents, copyrights, trademarks,
licenses, service marks, trade names and other similar rights (the
"Intellectual Property Rights") used by Coram or any of its Subsidiaries. No
proceedings have been instituted or are pending or have been threatened in
writing which challenge the validity, ownership or use of any such Intellectual
Property Rights. To the best knowledge of each of the Co-Borrowers, no
infringement of any Intellectual Property Right of any third party has occurred
or would result in any way from the operations or business of Coram or any of
its Subsidiaries, and, except as set forth in Schedule 5.16, no claim has been
made by any such third party based on allegation of any such infringement.
5.16 Litigation. Excepting those matters set forth in Schedule 5.16
attached hereto, there is no action, suit, investigation, tax claim or
proceeding pending or, to the knowledge of each of the Co-Borrowers, threatened
in writing against or affecting Coram or any Subsidiary or the property of
Coram or any Subsidiary thereof, before any court, arbitrator or administrative
or governmental body, which would reasonably be
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expected to have a Material Adverse Effect.
5.17 Tax Returns and Tax Matters. Coram and each of its Subsidiaries has
filed all federal and state income tax returns which are required to be filed,
and each has paid all taxes as shown on said returns and on all assessments
received by it to the extent that such taxes have become due. There is no
proposed, asserted or assessed tax deficiency against Coram or any of its
Subsidiaries, except those being contested in good faith and for which such
reserve as is required by GAAP has been created.
5.18 Employee Benefits.
(a) Plans Maintained. Except as provided in Schedule 5.18(i) with respect
to clauses (i) and (iii) below or in Schedule 5.18(ii) with respect to clauses
(ii) and (iv) below, no Co-Borrower is, and no Controlled Group member is, a
party to, contributes to or is currently obligated to contribute to any plans,
programs, agreements, policies, commitments or other arrangements (whether or
not set forth in a written document) in the following categories:
(i) Any funded employee pension benefit plan subject to Title IV of
ERISA, including (without limitation) any Multiemployer Plan,
(ii) Any material plan, program, agreement, policy, commitment or
other arrangement relating to severance or termination pay, whether or not
published or generally known,
(iii) Any material retiree health care plan other than COBRA (as
described in Section 5.18(g) below) and any material retiree life insurance
plan, and
(iv) Any material plan that is an excess benefit plan or a "top hat"
plan, as defined in section 3(36) or section 301(a)(3) of ERISA, and is
unfunded, as described in section 4(b)(5) or section 301(a)(3) of ERISA.
(b) Reporting and Disclosure. With respect to each Employee Benefit
Plan, including employee welfare benefit plans not required to be listed in
Schedule 5.18, and which is subject to the reporting, disclosure and record
retention requirements set forth in Part 1 of Subtitle B of Title I of ERISA
and the regulations thereunder, each of such requirements has been fully met on
a timely basis, except where instances of failing to do so could not,
considered in the aggregate, have a Material Adverse Effect. The
representation and warranty set forth in this Paragraph 5.18(b) is made to the
best knowledge of the Co-Borrowers to the extent that it applies to a
Multiemployer Plan.
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(c) Qualification of Plans. Except as provided on Schedule 5.18(i), each
plan which is listed in Schedule 5.18(i) attached hereto, and which is intended
to be qualified under section 401(a) of the Code, has been determined by the
Internal Revenue Service in writing to be so qualified. To the best knowledge
of the Co-Borrowers, since the Internal Revenue Service issued its
determination with respect to any such plan, there has been no occurrence
(including, without limitation, a plan amendment, the enactment of legislation
or the adoption of regulations) that could cause such plan not to be so
qualified. Within the applicable remedial amendment period described in the
regulations under section 401(b) of the Code, an application for such a
determination was or will be filed with the Internal Revenue Service with
respect to each amendment to any such plan for which a failure to do so could
reasonably be expected to have a Material Adverse Effect. Each such plan has
in all material respects been administered in accordance with its terms and the
applicable provisions of ERISA and the Code and the regulations thereunder.
The representations and warranties set forth in this Paragraph 5.18(c) are made
to the best knowledge of the Co- Borrowers with respect to any Multiemployer
Plan.
(d) Contributions and Premiums. All material contributions, premiums or
other payments due from any Co-Borrower or any other member of the Controlled
Group to (or under) any Employee Benefit Plan have been fully paid or
adequately provided for on the books and financial statements of such
Co-Borrower or other member of the Controlled Group.
(e) Litigation and Extraordinary Claims. There are no pending or, to the
best knowledge of the Co-Borrowers, threatened claims, actions or lawsuits,
other than routine claims for benefits in the usual and ordinary course,
asserted or instituted against (i) any Employee Benefit Plan, (ii) any member
of the Controlled Group with respect to any Employee Benefit Plan, or (iii) any
fiduciary with respect to any Employee Benefit Plan, for which any Co-Borrower
may be directly or indirectly liable, through indemnification obligations or
otherwise that, in the aggregate could reasonably be expected to have a
Material Adverse Effect.
(f) Prohibited Transactions. To the best knowledge of the Co-Borrowers,
with respect to each Employee Benefit Plan which is subject to Part 4 of
Subtitle B of Title I of ERISA, there does not now exist, nor has there existed
within the six-year period ending on the date hereof, any act or omission which
constitutes a violation of sections 406 or 407 of ERISA and is not exempted by
section 408 of ERISA or which constitutes a violation of section 4975(c) of the
Code and is not exempted by section 4975(d) of the Code, except for violations
which, considered in the aggregate, would not have a Material Adverse Effect.
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(g) COBRA. To the best knowledge of the Co-Borrowers, the Co-Borrowers
and all of their Subsidiaries are in compliance with the requirements of Title
X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
from time to time, except for violations which, considered in the aggregate,
would not have a Material Adverse Effect.
5.19 Environmental Matters. (a) Except as disclosed in Schedule 5.19
attached hereto, and provided that the Majority Banks have not made a
reasonable judgment that such failure of the following to be true and complete
as may exist would in the aggregate have a Material Adverse Effect: (i) the
properties and operations of Coram and each of its Subsidiaries comply in all
respects with all applicable Environmental Laws; (ii) none of the properties or
operations of Coram or any of its Subsidiaries is subject to any judicial or
administrative proceeding alleging the violation of any Environmental Law;
(iii) none of the properties or operations of Coram or any of its Subsidiaries
is the subject of any federal or state investigation concerning any use or
release of any Hazardous Substance; (iv) neither Coram nor any of its
Subsidiaries, nor, to the best knowledge of each of the Co-Borrowers, any
predecessor of Coram or any of its Subsidiaries, has filed any notice under any
federal or state law indicating past or present treatment, storage or disposal
of a Hazardous Substance or reporting a spill or release of a Hazardous
Substance into the environment; (v) neither Coram nor any of its Subsidiaries
has any contingent liability in connection with any release of any Hazardous
Substance into the environment and no such release which could, under
applicable law, require remediation has occurred; (vi) neither Coram nor any of
its Subsidiaries' operations involve the generation, transportation, treatment,
storage or disposal of Hazardous Substances, except for the generation of
Hazardous Substances in the ordinary course of business, and except for such
activities carried out through licensed independent contractors; (vii) neither
Coram nor any of its Subsidiaries has disposed of any Hazardous Substance in,
on or about any premises owned, leased or used by Coram or any of its
Subsidiaries and, to the best of the knowledge of each of the Co-Borrowers,
neither has any lessee, prior owner, or other Person; and (viii) no surface
impoundments or, to the best of the knowledge of each of the Co-Borrowers,
underground storage tanks are located in, on or about any of the premises
owned, leased or used by Coram or any of its Subsidiaries.
(b) No Lien in favor of any Governmental Authority for (i) any liability
under Environmental Laws, or (ii) damages arising from or costs incurred by
such Governmental Authority in response to a release of any Hazardous Substance
into the environment has been filed or attached to any of the premises owned,
leased or used by Coram or any of its Subsidiaries.
5.20 Insurance. Schedule 5.20 attached hereto contains a
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complete and accurate list, as of the Initial Closing Date, of all liability
insurance policies maintained by Coram or any of its Subsidiaries. Coram and
each of its Subsidiaries maintain such insurance with insurers duly licensed in
the applicable jurisdictions, in such amounts and against such risks and losses
as is reasonable for their business and properties. All such insurance is in
full force and effect and all premiums due in respect thereof have been paid.
5.21 Compliance with Laws. Except as set forth in Schedule 5.21 attached
hereto, Coram and each of its Subsidiaries are in compliance with all
Governmental Requirements applicable to their properties, assets and business
with only such exceptions as in the aggregate could not have a Material Adverse
Effect. There are no proceedings pending or, to the best of their knowledge,
threatened, to terminate or modify any material Governmental Approvals.
5.22 Statutory Regulation. Neither Coram nor any of its Subsidiaries is an
investment company within the meaning of the Investment Company Act of 1940, as
amended, or is, directly or indirectly, controlled by or acting on behalf of
any person which is an investment company, within the meaning of said Act.
Neither Coram nor any of its Subsidiaries is subject to any state law or
regulation regulating public utilities or similar entities, or is, within the
meaning of the Public Utility Holding Company Act of 1935, as amended, (a) a
holding company; (b) a subsidiary or affiliate of a holding company; or (c) a
public utility. Neither Coram nor any of its Subsidiaries is subject to
regulation under the Interstate Commerce Act or the Federal Power Act or under
any other federal or state statute or regulation limiting or placing conditions
upon their respective power or right to borrow money.
5.23 Use of Proceeds; Regulation U. Neither Coram nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board of Governors of
the Federal Reserve System of the United States). No part of the proceeds of
the Loans will be used to purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or carrying any such margin
stock, except in compliance with such regulations. No part of the proceeds of
the Loans will be used for any purpose which violates the provisions of
Regulation G, T, U or X of said Board of Governors.
5.24 Solvency. As of the Initial Closing Date and after giving effect to
the transactions contemplated by this Agreement and the other Loan Documents,
including all of the Loans made and to be made hereunder, each of the
Co-Borrowers is Solvent and each of their respective Subsidiaries is Solvent.
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5.25 Fiscal Year. The fiscal year of Coram ends on December 31.
5.26 Merger Agreement. The Banks have received a complete copy of the
Merger Agreement. The Merger Agreement sets forth the entire agreement among
the parties thereto relating to the Merger. The Merger Agreement is in full
force and effect and no default exists thereunder on the part of any party
thereto.
5.27 Compliance With Physician Self-Referral Laws. Except as set forth on
Schedule 5.27, there presently exists (i) no assertion of any claim of material
violation by Coram or any of its Subsidiaries of the Physician Self-Referral
Laws, and (ii) no active inquiry, investigation or audit with respect to the
compliance of Coram and its Subsidiaries with the Physician Self-Referral Laws.
ARTICLE 6
Affirmative Covenants
Each of the Co-Borrowers covenants and agrees that so long as any Obligation
is outstanding or any Commitment is in effect it will comply with and, if
applicable, cause each of its Subsidiaries to comply with the following
provisions:
6.1 Accounting Records. Coram and each of its Subsidiaries shall
maintain adequate books and accounts in accordance with sound business
practices and GAAP consistently applied. In the event of any changes in GAAP
or in the application of GAAP to Coram and its Subsidiaries, the parties shall,
unless they agree otherwise, continue to determine the compliance of the
Co-Borrowers with the covenants herein set forth and otherwise interpret the
provisions of this Agreement based on GAAP prior to any such changes.
6.2 Financial Statements and Notices. Coram shall furnish to the Agent
with sufficient copies for each Bank the following financial statements,
information and notices:
(a) Within forty-five (45) days after the close of each quarter
of Coram's fiscal year, commencing with the fiscal quarter ending June 30,
1994: (i) a statement of stockholders' equity for such quarter; (ii) a
statement of changes in financial position or statement of cash flows
(whichever is required by GAAP) for such quarter; (iii) an income statement
for such quarter; and (iv) a balance sheet as of the end of such quarter.
All such statements shall be prepared on a consolidated basis for Coram and
its Subsidiaries, and on a consolidating basis for Coram and each of the
other Co-Borrowers, in
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reasonable detail, subject to year-end audit adjustments and without
footnotes, shall include (commencing with the quarter ending March 31, 1995)
appropriate comparisons to the same period for the prior year, and shall be
certified by the Chief Financial Officer of Coram to have been prepared in
accordance with GAAP consistently applied, subject to year-end audit
adjustments;
(b) Within ninety (90) days after the close of each fiscal year,
commencing with the fiscal year ending December 31, 1994 a copy of the annual
audit report for such year for Coram, including for Coram and its
Subsidiaries on a consolidated basis (i) a statement of stockholders' equity
for such fiscal year; (ii) a statement of changes in financial position or
statement of cash flows (whichever is required by GAAP) for such fiscal year,
(iii) an income statement for such fiscal year, and (iv) a balance sheet as
of the end of such fiscal year, together with like unaudited consolidating
statements for Coram and its Subsidiaries. All statements required by this
Paragraph 6.2(b) shall include appropriate comparisons to the prior year.
Such consolidated financial statements shall be audited by Ernst & Young or
another independent certified public accounting firm acceptable to the
Majority Banks, shall include a report of such accounting firm, which report
shall be unqualified and shall state that such financial statements fairly
present the financial position of Coram and its Subsidiaries as at the dates
indicated and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP, consistently applied, and shall
also include a letter from such accounting firm, in form satisfactory to
Majority Banks, to the effect that the Agents and the Banks may rely on such
report. Such accounting firm shall also certify to the Agents and the Banks
that in the course of the regular annual examination of the business of Coram
and its Subsidiaries, which examination was conducted by such accounting firm
in accordance with generally accepted auditing standards, such accounting
firm has obtained no knowledge that an Event of Default, or an Incipient
Default, has occurred and is continuing as of the date of certification, or
if, in the opinion of such accounting firm, an Event of Default or an
Incipient Default has occurred and is continuing, a statement as to the
nature thereof;
(c) Contemporaneously with each quarterly and year-end financial
report required by the foregoing paragraphs (a) and (b), certificates in the
forms of Exhibits 6.2(c)-1 and 6.2(c)-2 attached hereto;
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(d) Contemporaneously with each year-end financial report
required by the foregoing paragraph (b), a schedule identifying all insurance
then in effect and certificates evidencing such insurance;
(e) Not later than twenty (20) days after the end of each month,
a certificate as to the Borrowing Base and summarizing the aging of the
Accounts of Coram and its Subsidiaries, substantially in the form of Exhibit
6.2(e) attached hereto;
(f) Promptly after they are released, sent, made available or
filed, copies of all press releases, material reports, proxy statements and
financial statements that Coram sends or makes available to its stockholders
generally and all registration statements and reports that Coram files with
the Securities and Exchange Commission, or any other governmental official,
agency or authority; copies of all such reports provided that include the
information required to be provided pursuant to Paragraph 6.2(a) or 6.2(b)
shall to that extent be deemed to satisfy such requirements;
(g) Promptly but in no event later than one (1) Banking Day
after a Responsible Officer of any Co-Borrower obtains knowledge of (i) the
occurrence of an Event of Default or an Incipient Default, or (ii) any
default or event of default as defined in any evidence of Indebtedness in
excess of one million Dollars ($1,000,000) or under any agreement, indenture
or other instrument under which such Indebtedness has been created, whether
or not such Indebtedness is accelerated or such default waived, the
Co-Borrowers shall notify the Agent, and, within five (5) calendar days after
obtaining such knowledge, the Co-Borrowers shall provide the Agent with a
statement of a Responsible Officer setting forth details thereof and the
action which the Co-Borrowers propose to take with respect thereto;
(h) As soon as available, any written report involving the
internal controls of Coram and its Subsidiaries submitted to Coram by its
independent public accountants in connection with their annual or interim
special audit of the financial condition of Coram and its Subsidiaries;
(i) Promptly but in no event later than five (5) calendar days
after a Responsible Officer learns thereof, written notice of any actual or
threatened claim, litigation, suit, investigation, proceeding or dispute
against or affecting Coram or any of its Subsidiaries, which: (i) may have a
Material Adverse
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Effect; (ii) involves a monetary amount in excess of one million Dollars
($1,000,000) and is not covered by insurance; (iii) is reasonably expected to
result in a strike, work stoppage, boycott, shutdown or other labor
disruption against or involving Coram or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect; (iv) could
reasonably be expected materially to limit, prohibit or restrict the manner
in which Coram or any of its Subsidiaries currently conducts its business; or
(v) concerns any alleged violation by Coram or any of its Subsidiaries, or
any of their respective predecessors, of any Environmental Law, where there
exists a reasonable possibility that such violation could materially affect
any of the properties or the operations of Coram or such Subsidiary or any
alleged material noncompliance of any of the properties or the operations of
Coram or such Subsidiary therewith;
(j) As soon as possible, and in any event within twenty (20)
calendar days, after a Responsible Officer learns that any of the following
events has occurred, such Responsible Officer shall deliver to the Agent a
statement describing such event and any action that the Co-Borrowers propose
to take with respect thereto: (i) any Reportable Event with respect to a
Pension Plan; (ii) the institution of proceedings by the PBGC to terminate
any Pension Plan or to have a trustee appointed to administer such plan, or
receipt of notice of any intention by the PBGC to do so; (iii) the filing of
a request for a minimum funding waiver by a Co-Borrower or a member of the
Controlled Group under section 412 of the Code with respect to any Pension
Plan or any employee pension benefit plan (as defined in section 3(2) of
ERISA) maintained by any member of the ERISA Affiliated Group; or (iv) the
receipt by any Co-Borrower or any other member of the Controlled Group of a
material demand for withdrawal liability under section 4219 or 4202 of ERISA;
(k) As soon as possible, and in any event within ten (10) days after
receipt of a written request from the Agent or the Majority Banks, the
Co-Borrowers shall deliver to the Agent, as requested by either the Agent or
the Majority Banks: (i) a copy of any Employee Benefit Plan or summary
description of such plan; (ii) a copy of any report, description or other
document filed with any governmental agency with respect to any Employee
Benefit Plan or any plan (as defined in section 3(3) of ERISA) maintained by
any Co-Borrower or any ERISA Affiliate; or (ii) a copy of any notice,
determination letter, ruling or opinion that any Co-Borrower or any other
Controlled Group member receives from any governmental agency with respect to
any Employee Benefit Plan;
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(l) Not later than forty-five (45) days prior to commencement of
each fiscal year of Coram, a copy of Coram's consolidated financial
projections for such fiscal year, including a projected consolidated balance
sheet, income statement, and statement of changes in financial position or
statement of cash flows for and as of the end of such fiscal year; and
(m) Within a reasonable time after a request therefor, such
other information as either of the Agents or the Majority Banks may
reasonably request.
6.3 Inspection of Property, Books and Records. (a) Coram and each of
its Subsidiaries shall permit either of the Agents or any of the Banks, at such
reasonable times and intervals as either of the Agents or Banks may designate
upon reasonable notice, at their own expense, by and through the
representatives of either of the Agents or any of the Banks, to inspect, audit
and examine their respective books and records, to make copies thereof, to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants, and to visit and inspect their
respective properties; provided, however, when an Event of Default exists
representatives of either of the Agents or any of the Banks may visit and
inspect at the expense of the Co-Borrowers such properties at any time during
business hours and without advance notice.
(b) Coram and its Subsidiaries shall extend their cooperation and assistance
and comply with the requests of the Agent or the Majority Banks or their
respective representatives in connection with any audit regarding the
Collateral and will furnish any information requested in respect thereof,
including, without limitation, appraisals of the Collateral, lien search
reports, and physical counts. The Co-Borrowers shall pay the fees and expenses
of Coopers & Lybrand (or such other accounting firm as may be selected by
Majority Banks) to conduct a quarterly examination of the Accounts of Coram and
its Subsidiaries, up to a maximum amount of ten thousand Dollars ($10,000) per
quarter. The Co-Borrowers shall also pay all reasonable out-of-pocket expenses
of the Collateral Agent in connection with any other audit or examination of
the Collateral hereunder.
6.4 Maintenance of Existence. Coram and each of its Subsidiaries shall
preserve and maintain their respective existences and all of their licenses,
permits, privileges and franchises and other rights necessary or desirable in
the normal course of their businesses, and will use reasonable efforts, in the
ordinary course and consistent with past practice, to preserve their respective
business organization and preserve the goodwill and business of the customers,
suppliers and others having business relations with them; provided, however,
that the foregoing shall not preclude the merger of any Wholly Owned
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Subsidiary of Coram into another Wholly Owned Subsidiary of Coram if permitted
under Paragraph 7.1 hereof.
6.5 Tax Returns. Coram and each of its Subsidiaries shall file all
federal and state income tax returns which are required to be filed, and shall
pay all taxes as shown on said returns and on all assessments received by it to
the extent that such taxes have become due, except any such assessments which
are being contested in good faith and for which such reserve as is required by
GAAP has been created.
6.6 Qualifications To Do Business. Coram and each of its Subsidiaries
shall qualify to do business and shall remain in good standing in each
jurisdiction in which the nature of their business requires them to be so
qualified, except where the failure to so qualify could not in the aggregate
have a Material Adverse Effect.
6.7 Compliance with Laws. Coram and its Subsidiaries shall comply with
all Governmental Requirements, except where the failure to do so could not have
a Material Adverse Effect.
6.8 Material Agreements. Coram and its Subsidiaries shall comply in all
respects with the terms of each agreement to which any of them is a party,
except where all instances of any failure to so comply would not, in the
aggregate, have a Material Adverse Effect.
6.9 Insurance. Coram and its Subsidiaries shall maintain in full force
and effect insurance of such types and in such amounts as are customarily
carried in their respective lines of business, including, but not limited to,
fire, hazard, public liability, property damage, products liability and workers'
compensation insurance. All such insurance policies which insure real or
personal property shall include a standard form Lender's loss payee
endorsement, naming the Collateral Agent as loss payee. All such insurance
policies which insure liability shall name the Agents as additional insureds
for the benefit of the Agents and each Bank. Coram and its Subsidiaries shall
deliver or cause to be delivered to the Agent, as the Agent may from time to
time request, schedules identifying all insurance then in effect and
certificates evidencing such insurance.
6.10 Facilities. Coram and its Subsidiaries shall keep the properties used
in their respective businesses in good repair, working order and condition, and
from time to time shall make necessary repairs or replacements thereto so that
their property shall be maintained adequately for its intended use.
6.11 Taxes and Other Liabilities. Coram and its Subsidiaries shall pay and
discharge when due any and all indebtedness, obligations, liabilities,
assessments and real and per-
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sonal property taxes, including, but not limited to, federal and state income
and personal and real property taxes, except as may be subject to good faith
contest or as to which a bona fide dispute may arise; provided, however, that
adequate reserves in accordance with GAAP or other provision is made to the
satisfaction of Majority Banks for prompt payment thereof in the event that it
is found that any of the above are due and owing.
6.12 Governmental Approvals. Except where the failure to do so could not
have a Material Adverse Effect, Coram and its Subsidiaries shall apply for,
diligently pursue, and obtain or cause to be obtained, and shall thereafter
maintain in full force and effect all Governmental Approvals that shall now or
hereafter be necessary under any Governmental Requirement (i) for land use,
public and employee health and safety, pollution or protection of the
environment, and (ii) for the operation of the business of Coram and the
Subsidiaries. The Co-Borrowers shall promptly notify the Agent in the event of
any, and provide the Agent with a copy of all notices of, denial, suspension,
or revocation of any material Governmental Approvals.
6.13 Compliance with Governmental Approvals and Governmental Requirements.
Except where the failure to do so could not have a Material Adverse Effect,
Coram and each of its Subsidiaries shall comply with all terms and conditions
of all Governmental Approvals and with all other limitations, restrictions,
obligations, schedules, timetables and reporting requirements in any
Governmental Requirements in all material respects.
6.14 Compliance with Environmental Laws. Coram shall, and shall cause each
of its Subsidiaries to, conduct its respective operations and keep and maintain
its respective property in substantial compliance with all Environmental Laws.
6.15 Prevent Contamination. Coram and its Subsidiaries shall conduct their
operations in such a way as to prevent material contamination of any part of
their respective properties by any Hazardous Substance. Coram and its
Subsidiaries shall manage all Hazardous Substances in a manner that does not
require a Hazardous Waste Facility Permit, and in compliance in all material
respects with all Governmental Requirements and Governmental Approvals.
Without limiting the foregoing covenants, Coram and its Subsidiaries shall not
intentionally or recklessly, shall endeavor not to unintentionally, and shall
not permit any other Person to, emit, release or discharge into air, soil,
surface water or groundwater, any Hazardous Substance in excess of permitted
levels or reportable quantities, or other concentrations, standards, or
limitations under any Governmental Requirements or Governmental Approvals.
6.16 Tax Qualification. For any Employee Benefit Plan which is intended to
be qualified under section 401(a) of the
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Code, the Co-Borrowers shall, or shall use their best efforts to cause the
respective member of the Controlled Group to:
(a) Use its best efforts to seek and receive determination
letters from the Internal Revenue Service stating that such plan, or any
material amendment to such plan, meets the requirements for qualification
under section 401(a) of the Code, unless there is no reasonable possibility
that the failure to do so would have a Material Adverse Effect;
(b) Use its best efforts to cause such plan to meet such
requirements in operation and to be administered in accordance with the
requirements of the Code and ERISA, unless the failure to do so could not
reasonably be expected to result in a liability described in Section
8.2(h)(i); and
(c) Use its best efforts to refrain from taking any action that
would cause such plan to lose its qualification under section 401(a) of the
Code or to violate the requirements of the Code or ERISA in any material
respect.
6.17 Funding. Each Co-Borrower shall, and shall use its best efforts to
cause each other member of the Controlled Group to, make all material
contributions that it is required to make by law or by any plan prior to the
earliest date when statutory Liens could be imposed under the Code or ERISA on
any assets of such Co-Borrower or such member of the Controlled Group in order
to satisfy payment of such contributions. Each Co-Borrower shall not, and
shall use its best efforts to not permit any other member of the Controlled
Group to, allow or suffer any material statutory Lien to be placed upon its
assets under the Code or ERISA.
6.18 Financial Tests. The Co-Borrowers shall:
(a) Maintain for the period of two (2) fiscal quarters ending
June 30, 1994, the period of three (3) fiscal quarters ending September 30,
1994, and each period of four (4) fiscal quarters ending at the end of each
fiscal quarter thereafter, a Leverage Ratio of not more than 3.00 to 1.00;
(b) Maintain EBITDA of not less than the following for each
period indicated:
<TABLE>
<CAPTION>
Period Minimum EBITDA
------ --------------
<S> <C>
Two (2) fiscal quarters
ending June 30, 1994 $18,750,000
</TABLE>
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<TABLE>
<S> <C>
Three (3) fiscal quarters
ending September 30, 1994 $28,125,000
Four (4) fiscal quarters
ending on December 31, 1994 $37,500,000
Four (4) fiscal quarters
ending on the last day
of each fiscal quarter
commencing with the
fiscal quarter ending
March 31, 1995 $45,000,000
</TABLE>
(c) Maintain a Cash Flow Coverage Ratio of not less than 2.00 to
1.00 for the period of two (2) fiscal quarters ending June 30, 1994, the
period of three (3) fiscal quarters ending September 30, 1994, and thereafter
for the period of four (4) fiscal quarters ending on the last day of each
fiscal quarter, commencing with the quarter ending December 31, 1994; and
(d) Maintain a Sales Turnover Ratio of not less than 3.25 to
1.00 for the period of two (2) fiscal quarters ending June 30, 1994, the
period of three (3) fiscal quarters ending September 30, 1994, and thereafter
for the period of four (4) fiscal quarters ending on the last day of each
fiscal quarter, commencing with the quarter ending December 31, 1994.
6.19 Concentration Account. The Co-Borrowers shall maintain the
Concentration Account with the Agent. After August 31, 1994, all other bank
accounts maintained by Coram and any of its Wholly Owned Subsidiaries (other
than accounts maintained exclusively for the purpose of making disbursements)
shall be and at all times remain subject to instructions to transfer all funds
out of such accounts into the Concentration Account no less frequently than
Friday of each week (or, when a Friday is not a Banking Day, then on the
previous Banking Day).
6.20 Compliance Procedures. Coram and its Subsidiaries shall at all times
comply with applicable Physician Self-Referral Laws and shall maintain adequate
internal audit procedures to assure substantial compliance with applicable
Physician Self-Referral Laws.
6.21 Required Future Perfection. On or before July 31, 1994, the
Co-Borrowers shall take the actions specified on Schedule 6.21-A. On or before
August 31, 1994, the Co-Borrowers and their Subsidiaries shall take all actions
necessary or reasonable, including the execution and delivery of supplements to
the Security Agreement, appropriate financing statements,
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mortgages, deeds of trust, and other filings or recordings, and the delivery of
appropriate certificates, opinions of counsel, lien searches and title
insurance policies, all in form and substance satisfactory to the Collateral
Agent, to cause the liens and security interests in favor of the Collateral
Agent and the Banks on the Collateral described in Schedule 6.21-B to become
fully perfected and to assure the Collateral Agent and the Banks that such
liens and security interests are of first priority, subject only to Permitted
Encumbrances.
ARTICLE 7
Negative Covenants
Each of the Co-Borrowers covenants and agrees that so long as any Obligation
is outstanding or any Commitment is in effect, it will comply with and, if
applicable, cause each of its Subsidiaries to comply with the following
provisions:
7.1 Mergers. Neither Coram nor any of its Subsidiaries shall enter into
any merger, consolidation, reorganization or recapitalization, or any agreement
to do any of the foregoing, except pursuant to a Permitted Acquisition and
except that any Wholly Owned Subsidiary of Coram may be merged into another
Wholly Owned Subsidiary of Coram.
7.2 Change of Business. Neither Coram nor any of its Subsidiaries shall
change the nature of its business or engage in any other business other than
the businesses which are substantially similar to the lines of business in
which Coram and its Subsidiaries are engaged as of the Initial Closing Date.
7.3 Distributions. Neither Coram nor any of its Subsidiaries shall,
directly or indirectly, make or declare any dividend (in cash, securities or
any other form of property) on, or other payment or distribution on account of,
or set aside assets for a sinking or other similar fund for purchase, or
redeem, purchase, retire or otherwise acquire, any capital stock of Coram, or
make any other distribution in respect thereof, whether in cash or other
property; provided, however, that (a) Coram may declare and distribute
dividends payable solely in its common stock; and (b) provided that no
Incipient Default or Event of Default exists, then (i) Coram may repurchase
shares of its common stock from former employees at an amount not to exceed the
amount originally paid by such former employees for such stock, and (ii) Coram
may make other distributions or payments in respect of its capital stock not to
exceed two hundred fifty thousand Dollars ($250,000) in the aggregate.
7.4 Accounting Policies. Except in order to comply with GAAP, Coram
shall not materially change any of its accounting
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policies or its fiscal year or the fiscal year of any of its Subsidiaries
(except that the fiscal year of T2 may be changed to December 31).
7.5 Investments. Neither Coram nor any of its Subsidiaries shall make
(or acquire as part of an acquisition) any Investment, except (a) future
investments in any Wholly Owned Subsidiary of Coram (provided that such Wholly
Owned Subsidiary is a Subsidiary Guarantor and is a party to the Security
Agreement); (b) Investments in cash or cash equivalents; (c) Investments in
accordance with the Cash Management Policy (provided that no such Investment
may be made in stock, securities or obligations of the Agent or of any
affiliate thereof (as defined in Section 23A of the Federal Reserve Act (12
U.S.C. 371(c), as amended from time to time, or in a collective investment fund
as described in 12 C.F.R. 9.18 maintained by the Agent); (d) Permitted
Acquisitions; (e) Investments by Coram consisting of loans at arms' length
terms to any Person in which Coram, directly or indirectly, owns more than a
twenty percent (20%) equity interest (but which is not a Wholly Owned
Subsidiary of Coram), provided that at all times the Collateral Agent has a
perfected security interest in all of Coram's rights to repayment thereof and
security therefor, and further provided that the aggregate amount of such loans
outstanding at any time, when added to the aggregate amount of Investments made
pursuant to clause (f) below, shall not exceed four million Dollars
($4,000,000); and (f) other Investments not exceeding two million five hundred
thousand Dollars ($2,500,000) in the aggregate.
7.6 Liens. Neither Coram nor any of its Subsidiaries shall mortgage,
pledge, grant or permit to exist a security interest in, or Lien upon, any of
their respective assets of any kind now owned or hereafter acquired, or any
income or profits therefrom, except for Permitted Encumbrances.
7.7 Contingent Obligations. Neither Coram nor any of its Subsidiaries
shall become liable, directly or indirectly, for any Contingent Obligation
except: (a) endorsements for collection or deposit in the ordinary course of
business; (b) Contingent Obligations incurred by Coram or one of its
Subsidiaries for the benefit of Coram or one of its Wholly Owned Subsidiaries;
(c) Contingent Obligations of Coram and its Subsidiaries existing as of the
Initial Closing Date; and (d) Contingent Obligations incurred by Coram or one
of its Wholly Owned Subsidiaries for the benefit of a Subsidiary which is not a
Wholly Owned Subsidiary of Coram, which Contingent Obligations outstanding
under this clause (d) do not at any time exceed five hundred thousand Dollars
($500,000) in the aggregate.
7.8 Indebtedness. Neither Coram nor any of its Subsidiaries shall incur,
create, assume or permit to exist any Indebtedness except: (a) the Obligations;
(b) Indebtedness where payment is
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secured by a Permitted Encumbrance (other than a Permitted Encumbrance
described in clause (k) of the definition of "Permitted Encumbrances"); (c)
taxes, assessments and governmental charges or levies which are not delinquent
or which are being contested in good faith and for which, in accordance with
GAAP, adequate reserves have been set aside on the books of Coram or the
affected Subsidiary of Coram; (d) current liabilities incurred in connection
with the obtaining of goods or services in the ordinary course of business; (e)
Indebtedness incurred to finance a Permitted Acquisition, provided that the
condition specified therefor in clause (e)(iii) of the definition of "Permitted
Acquisition" is satisfied; (f) Indebtedness owing by a Subsidiary acquired in
a Permitted Acquisition provided that such Indebtedness was not incurred or
created in connection with or in contemplation of such Permitted Acquisition;
(g) Indebtedness owing from Coram to a Wholly Owned Subsidiary of Coram or from
one Wholly Owned Subsidiary of Coram to another Wholly Owned Subsidiary of
Coram; (h) Indebtedness incurred in connection with Rate Contracts; (i)
Indebtedness which is subordinated to payment of the Obligations, provided that
the terms of repayment of such Indebtedness and the terms of subordination are
acceptable to Majority Banks; (j) Indebtedness undertaken by Coram in
settlement of contingent obligations to pay additional consideration undertaken
in connection with the acquisition prior to the Initial Closing Date of capital
stock or other ownership of a business or a line of business, but not to exceed
one million five hundred thousand Dollars ($1,500,000) in the aggregate; (k)
Indebtedness of a Subsidiary of Coram incurred by reason of an Investment made
pursuant to Paragraph 7.5(e) hereof; (l) Contingent Obligations permitted under
Paragraph 7.7 hereof; (m) interest-bearing Indebtedness shown on Schedule 7.8
and any other Indebtedness (other than interest-bearing Indebtedness) existing
on the Initial Closing Date; and (n) any extensions, renewals and refinancings
of the Indebtedness securing Permitted Encumbrances described in clauses (g),
(h) and (i) of the definition of "Permitted Encumbrances", provided that the
principal amount of such Indebtedness is not increased.
7.9 Sale of Assets. Other than sales of assets (excluding readily
marketable securities) where the aggregate gross cash proceeds therefrom do not
exceed two million five hundred thousand Dollars ($2,500,000) during any of the
periods of two fiscal quarters ending December 31, 1994, June 30, 1995 or
December 31, 1995, and other than sales of readily marketable securities,
neither Coram nor any of its Subsidiaries shall sell, transfer or otherwise
dispose of any of their respective assets (including, but not limited to, sales
of stock of Subsidiaries, but excluding sales, transfers, leases or other
dispositions between or among any of Coram and any of its Wholly Owned
Subsidiaries).
7.10 Sale-Leaseback Transactions. Neither Coram nor any of its Subsidiaries
shall enter into any Sale-Leaseback Transaction.
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7.11 Capital Expenditures. Coram and its Subsidiaries, considered in the
aggregate, shall not during any of the periods of two fiscal quarters ending
December 31, 1994, June 30, 1995 or December 31, 1995, make Consolidated
Capital Expenditures in excess of seven million five hundred thousand Dollars
($7,500,000).
7.12 Transactions with Affiliates. Excepting the transactions or
arrangements described in Schedule 7.12 attached hereto, neither Coram nor any
of its Subsidiaries shall, directly or indirectly, enter into any transaction
or permit to exist any relationship material to Coram or any of its
Subsidiaries with or for the benefit of an Affiliate on terms which are not
fair and reasonable to Coram or such Subsidiary. Prior to Coram or any of its
Subsidiaries engaging in any transaction or relationship permitted by this
Paragraph 7.12, the board of directors of Coram shall determine that such
transaction has been negotiated or such relationship will be conducted in good
faith and that such transaction is fair and reasonable to Coram (or its
Subsidiary) and such determination shall be evidenced by a resolution of the
board of directors of Coram; provided, however, that no member of such board of
directors affiliated (except by virtue of being members of the board of
directors or by being employed by Coram or one of its Subsidiaries) with any
such Affiliate shall participate in such determination with respect to
transactions or relationships in which such holder or Affiliate is a
participant.
7.13 Restrictive Agreements. Coram shall not and shall not permit any of
its Subsidiaries to enter into any agreement which restricts the ability or
right of any such Subsidiary to make payments to Coram or another Subsidiary of
Coram by way of dividends, distributions, returns of capital, advances,
reimbursement or otherwise.
7.14 Prepayments. Neither Coram nor any of its Subsidiaries shall prepay
any Indebtedness (other than the Obligations) in an amount in excess of one
million Dollars ($1,000,000) in any fiscal year.
7.15 Certain ERISA Payments. No Co-Borrower shall, and none of their
respective Subsidiaries shall, make any payment of any material liability
arising under ERISA or under the Code of any Controlled Group member which is
not a Subsidiary of such Co-Borrower.
7.16 Compliance with ERISA. No Co-Borrower shall, directly or indirectly,
and each Co-Borrower shall use its best efforts to prevent any Controlled Group
member from directly or indirectly undertaking to:
(a) Maintain, become a party to, contribute to or become or be
obligated to contribute to a Pension Plan, if
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such maintenance or contribution would result in material unfunded
liabilities in excess of one million Dollars ($1,000,000) immediately
following such action;
(b) Maintain, become a party to, contribute to or become
obligated to contribute to a material plan maintained outside of the United
States primarily for the benefit of persons substantially all of whom are
nonresident aliens, as described in section 4(b)(4) of ERISA; or
(c) Maintain, become a party to, contribute to or being
obligated to contribute to or otherwise provide material health care or
material life insurance benefits to retirees or survivors of employees.
7.17 Litigation Settlement. T2 shall not carry out any settlement with
respect to the T2 Shareholder Litigation if such settlement agreement would
require that cash payments (net of insurance proceeds received by T2 or which
T2 has a right to receive under a binding written agreement) aggregating more
than twenty-five million Dollars ($25,000,000) be made to or for the benefit of
the plaintiffs (a "Nonpermitted Settlement"), and T2 shall not enter into any
such agreement to carry out any such Nonpermitted Settlement unless the
obligations of T2 thereunder are conditional upon approval thereof by the Banks
under this Agreement or upon payment in full of the Obligations and complete
termination of the Commitments.
7.18 Adoption of "Rabbi Trust". Neither Coram nor any of its Subsidiaries
shall adopt or fund any so-called "rabbi trust" unless the terms thereof, the
Security Agreement and such other documents as may be executed pursuant to the
Security Agreement result in the Collateral Agent and the Banks having a
perfected security interest of first priority in the right of reversion with
respect thereto in favor of the trustor, its creditors, or a trustee of the
trustor's estate.
ARTICLE 8
Events of Default
8.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
(a) Payments. The Co-Borrowers shall fail to pay when due any
installment of principal or interest due hereunder, or the Co-Borrowers shall
fail to pay not later than two (2) Banking Days after the date when due any
other sum payable hereunder or under the Agent's Fee Letter or any of the
other Loan Documents;
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(b) Certain Covenants in This Agreement. Any Co-Borrower shall
default in the performance of any of its agreements set forth in Paragraphs
6.18 through 6.21 hereof or in Article 7 hereof;
(c) Other Covenants and Agreements. Coram or any of its
Subsidiaries shall default in the performance of any of their respective
agreements set forth in any other provision herein or in the Guaranty or in
any of the other Loan Documents (and not constituting an Event of Default
under any of the other clauses of this Paragraph 8.1) and continuation of
such default for fifteen (15) days after written notice thereof to the
Co-Borrowers from the Agent;
(d) Representations and Warranties. Any representation,
warranty or certification made by any of the Co-Borrowers or any of their
Subsidiaries or any officer of any of the Co-Borrowers or any of their
Subsidiaries, in any of the Loan Documents, shall be untrue in any material
respect, on any date as of which the facts set forth are stated or certified;
(e) Monetary Judgment. A judgment shall be entered against
Coram or any of its Subsidiaries in the uninsured or unbonded portion of
which is in excess of one million Dollars ($1,000,000) and such judgment
shall remain unstayed, unvacated, undischarged or unsatisfied for thirty (30)
days;
(f) Non-Monetary Judgments. Any final non-monetary judgment, order
or decree shall be rendered against Coram or any of its Subsidiaries which
may have a Material Adverse Effect, and either (i) enforcement proceedings
shall have been commenced by any Person upon such judgment or order or (ii)
there shall be any period of thirty (30) days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect, unless such judgment, order or decree
shall, within such thirty-day period, be vacated or discharged (other than by
satisfaction thereof);
(g) Liens for Pension Contributions. Any statutory Lien shall
have been placed upon the assets of any Co-Borrower or any member of the
Controlled Group under the Code or ERISA in an amount in excess of two
hundred and fifty thousand Dollars ($250,000);
(h) ERISA. (i) An Employee Benefit Plan that is intended to be
qualified under section 401(a) of the Code shall lose its qualification, and
the resulting
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loss or cost to any Co-Borrower or any other member of the Controlled Group
can reasonably be expected to exceed one million Dollars ($1,000,000); (ii)
the commencement or increase of contributions to, the adoption of, or the
amendment of a Pension Plan by, any Co-Borrower or any other Controlled Group
member shall result in a net increase in unfunded liabilities to any
Co-Borrower or any other Controlled Group member in the aggregate in excess
of one million Dollars ($1,000,000) immediately following such action; (iii)
any termination of a single employer Employee Benefit Plan (as defined in
section 4001(a)(15) of ERISA, but also including a plan amendment described
in section 4041(e) of ERISA) or any complete or partial withdrawal from a
Multiemployer Plan shall occur, or steps shall have been taken by any Person
that make it reasonable to expect that such termination or withdrawal will
occur, and such termination or withdrawal could reasonably be expected to
result in liability of any Co-Borrower or any member of the Controlled Group
to the PBGC, to a trustee or to such Multiemployer Plan in the aggregate
amount of one million Dollars ($1,000,000) or more; (iv) a Co-Borrower or any
member of the Controlled Group shall apply under section 412 of the Code for
a waiver of the minimum funding standard; or (v) a Co-Borrower or any member
of the Controlled Group shall incur liability attributable to the
participation of a member of the ERISA Affiliated Group (other than the
Co-Borrower or a member of the Controlled Group) in an employee benefit plan
(as defined in section 3(3) of ERISA) and such liability will or can
reasonably be expected to have a Material Adverse Effect;
(i) Cross-Default. Coram or any of its Subsidiaries shall
default (unless waived) in the payment when due, whether by acceleration or
otherwise, of any amount of principal or interest due in respect of
Indebtedness in an aggregate principal amount greater than one million
Dollars ($1,000,000), or any guaranty of such indebtedness, or default
(unless waived) in the performance or observance (subject to any applicable
grace period) of any agreement, covenant or condition with respect to any
such Indebtedness or guaranty if the effect of such default is to accelerate
the maturity of any such indebtedness or to permit the holder or holders of
any such Indebtedness or guaranty, or any trustee or agent for such holders,
to cause such indebtedness to become due and payable prior to its expressed
maturity or to call upon such guaranty in advance of nonpayment of the
guaranteed indebtedness;
(j) Bankruptcy. Coram or any of its Subsidiaries
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shall institute a voluntary case seeking liquidation or reorganization under
Chapter 7 or Chapter 11, respectively, of the United States Bankruptcy Code,
or shall consent to the institution of an involuntary case thereunder against
it; or Coram or any of its Subsidiaries shall file a petition initiating or
shall otherwise institute any similar Insolvency Proceeding under any other
applicable federal or state law, or shall consent thereto; or Coram or any of
its Subsidiaries shall apply for, or by consent or acquiescence there shall
be an appointment of, a receiver, liquidator, sequestrator, trustee or other
officer with similar powers, or Coram or any of its Subsidiaries shall make
an assignment for the benefit of creditors; or Coram or any of its
Subsidiaries shall admit in writing its inability to pay its debts generally
as they become due; or, if an involuntary case shall be commenced seeking the
liquidation or reorganization of Coram or any of its Subsidiaries under
Chapter 7 or Chapter 11, respectively, of the United States Bankruptcy Code,
or any similar proceeding shall be commenced against Coram or any of its
Subsidiaries under any other applicable federal or state law, and (i) the
petition commencing the involuntary case is not timely controverted; or (ii)
the petition commencing the involuntary case is not dismissed within
forty-five (45) days of its filing; or (iii) an interim trustee is appointed
to take possession of all or a portion of the property and/or to operate all
or any part of the business of Coram or such Subsidiary; or (iv) an order for
relief shall have been issued or entered therein; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee or other officer having similar powers over
Coram or such Subsidiary, or of all or a part of the property of any of the
foregoing, shall have been entered; or any other similar relief shall be
granted against Coram or any of its Subsidiaries under any applicable federal
or state law;
(k) Material Adverse Change. The Majority Banks shall have
determined in their reasonable judgment that a Material Adverse Change has
occurred since September 30, 1993;
(l) Invalidity of Loan Documents. Any of the Loan Documents
shall cease for any reason to be in full force and effect or any party
thereto (other than either of the Agents or the Banks) shall purport to
disavow its obligations thereunder, shall declare that it does not have any
further obligation thereunder or shall contest the validity or enforceability
thereof;
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(m) Impairment of Collateral. A judgment creditor of the
Borrower or any of its Subsidiaries shall obtain possession of any of the
Collateral having a value in excess of one million Dollars ($1,000,000) by
any means, including, but not limited to, levy, distraint, replevin or
self-help, or the Collateral Agent's or the Banks' security interest in, or
Lien on, any portion of the Collateral with a fair market value in excess of
one million Dollars ($1,000,000) shall become impaired or otherwise
unenforceable;
(n) Change of Control. A Change of Control shall occur; or
(o) Change of Management. James Sweeney shall cease to act as
Chairman of the Board of Directors and Chief Executive Officer of Coram.
8.2 Termination of Commitment and Acceleration. If any Event of Default
described in Paragraph 8.1(j) hereof shall occur, the Commitments shall
terminate immediately, and the Notes and all other Obligations shall become
immediately due and payable, all without notice of any kind. If any other
Event of Default shall be continuing, the Agent or the Majority Banks may
declare the Commitments to be terminated and the outstanding Notes and all
other Obligations to be due and payable, or all of the foregoing, whereupon the
Commitments shall be terminated and the Notes and all other Obligations shall
immediately become due and payable, all as so declared by the Agent or the
Majority Banks and without presentment, demand, protest or other notice of any
kind. Any such declaration made pursuant to this Paragraph 8.2 may be
rescinded by the Agent or the Majority Banks.
ARTICLE 9
The Agents
9.1 Appointment and Authorization. Each Bank hereby irrevocably appoints,
designates and authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, neither of
the Agent shall have any duties or responsibilities, except those expressly set
forth herein, or any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or otherwise exist
against either of the Agents.
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9.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Neither of the Agents shall be responsible
for the negligence or misconduct of any agent or attorney-in-fact that has been
selected with reasonable care.
9.3 Liability of Agents. Neither of the Agents, nor any of their respective
Affiliates, nor any of their respective officers, directors, employees, agents,
or attorneys-in-fact (collectively, the "Agent-Related Persons") shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement (except for their own gross negligence or
willful misconduct) or (b) be responsible in any manner to any of the Banks for
any recital, statement, representation or warranty made by the Co-Borrowers or
any Subsidiary of Coram or any officer thereof contained in this Agreement or
in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the either of the
Agents under or in connection with, this Agreement or any other Loan Document,
or for the value of any Collateral or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of any Co-Borrower or any other party to any Loan Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of Coram or any of its Subsidiaries.
9.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by the Agent to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including counsel to Coram or any of its
Subsidiaries), independent accountants and other experts selected by the
Co-Agents. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless the Agent
shall first receive such advice or concurrence of the Majority Banks as the
Agent shall deem appropriate and, if the Agent so requests, the Agent shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by the Agent by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
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other Loan Document in accordance with a request or consent of the Majority
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions specified in
Paragraphs 4.1 and 4.2 hereof, each Bank shall be deemed to have consented to,
approved or accepted or to be satisfied with each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to the Majority Banks unless an officer of the Agent responsible
for the transactions contemplated by the Loan Documents shall have received
notice from a Bank prior to the extension of a Borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or such Bank shall not have made available
to the Agent the Bank's ratable portion of such Borrowing.
9.5 Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees payable to
the Agent for the account of the Banks, unless the Agent shall have received
written notice from a Bank or a Co-Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Banks. The Agent shall take such action
with respect to such Default or Event of Default as shall be requested by the
Majority Banks in accordance with Article 8; provided, however, that unless and
until the Agent shall have received any such request, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as the Agent shall deem advisable
in the best interests of the Banks.
9.6 Credit Decision. Each Bank expressly acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it and that no
act by either of the Agents hereinafter taken, including any review of the
affairs of Coram and its Subsidiaries shall be deemed to constitute any
representation or warranty by either of the Agents to any Bank. Each Bank
represents to the Agents that it has, independently and without reliance upon
the Agents and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of Coram and its Subsidiaries and made its own decision to
enter into this Agreement and extend credit to the Co-Borrowers hereunder.
Each Bank also represents that it will, independently and without reliance upon
the Agents and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking
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or not taking action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Coram and its Subsidiaries. Except for notices, reports
and other documents expressly required to be furnished to the Banks by the
Agent hereunder, neither of the Agents shall have any duty or responsibility to
provide any Bank with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of Coram and its Subsidiaries which may come into the
possession of any of the Agent-Related Persons.
9.7 Indemnification. The Banks agree to indemnify the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Co-Borrowers and without
limiting the obligation of the Co-Borrowers to do so), ratably according to the
respective amounts of their outstanding Loans, or, if no Loans are outstanding,
their outstanding Commitment Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind whatsoever which may at
any time (including at any time following the repayment of the Loans) be
imposed on, incurred by or asserted against any such person any way relating to
or arising out of this Agreement or any document contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by any such person under or in connection with any of
the foregoing; provided, however, that no Bank shall be liable for the payment
to the Agent-Related Persons of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from such person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Agent promptly upon demand for its ratable share of any costs or out-of-pocket
expenses (including attorneys' fees and the allocated cost of in-house counsel)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein to the extent that the Agent
is not reimbursed for such expenses by or on behalf of the Co-Borrowers.
9.8 Agents in Individual Capacity. The Agents and their respective
Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from and generally engage in any kind of business with Coram or
any of its Subsidiaries as though the Agents were not the Agents hereunder and
without notice to the Banks. With respect to its Loans, the Agents shall have
the same rights and powers under this Agreement as any other Bank
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and may exercise the same as though they were not the Agents, and the terms
"Bank" and "Banks" shall include the Agents in their respective individual
capacities.
9.9 Successor Agent. Either of the Agents may, and at the request of the
Majority Banks shall, resign as Agent upon thirty (30) days' notice to the
Banks. If the Agent resigns, the Co-Agent shall become the successor Agent, in
which event the Majority Banks may, but need not, appoint from among the Banks
a successor Co-Agent. The new Agent shall succeed to all the rights, powers
and duties of the Agent hereunder, including the rights, powers and duties of
the Agent as the Collateral Agent. If the Co-Agent become the Agent and
thereafter resigns as Agent, the Majority Banks shall appoint from among the
Banks a successor agent for the Banks. If no successor Agent is appointed
prior to the effective date of the resignation of the Agent, the Agent shall
appoint, after consulting with the Banks and Coram, a successor agent from
among the Banks. Upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the prior Agent, and the retiring Agent's rights, powers and duties
as such shall be terminated. After any retiring Co- Agent's or Agent's
resignation hereunder as such, the provisions of this Article 9 and Paragraphs
10.6, 10.7 and 10.8 hereof shall inure to the benefit of such Co-Agent or Agent
as to any actions taken or omitted to be taken by it while it was Co-Agent or
Agent under this Agreement.
ARTICLE 10
Miscellaneous
10.1 Successors and Assigns and Sale of Interests.
(a) The terms and provisions of this Agreement shall be binding upon,
and, subject to the provisions of this Paragraph 10.1, the benefits thereof
shall inure to, the parties hereto and their respective successors and assigns;
provided, however, that the no Co-Borrower may assign this Agreement or any of
the rights, duties or obligations of such Co-Borrower hereunder without the
prior written consent of all of the Banks.
(b) Any Bank, with the written consent of Coram, which shall not be
unreasonably withheld, and with the written consent of the Agent, may at any
time assign and delegate to any Person, or, with notice to Coram and the Agent
but without the consent of either Coram or the Agent, may assign and delegate
to any of its wholly owned Affiliates (each an "Assignee") all or any part of
the Loans or the Commitments or any other rights or obligations of such Bank
hereunder in a minimum amount of five million Dollars ($5,000,000),
representing the principal amount of the Loans
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assigned plus the amount of the Commitment Percentage so assigned multiplied by
the Total Commitment Amount; provided, however, that the Co-Borrowers and the
Agent may continue to deal solely and directly with such Bank in connection
with the interests so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Co-Borrowers and the Agent by such Bank and the Assignee and (ii) such Bank and
its Assignee shall have delivered to the Co-Borrowers and the Agent an
Assignment and Acceptance in the form of Exhibit 10.1 ("Assignment and
Acceptance") together with any Note or Notes subject to such assignment; and
(iii) the processing fees of three thousand five hundred Dollars ($3,500) shall
have been paid to the Agent.
(c) From and after the date that the Agent notifies the assignor Bank that
it has received the Assignment and Acceptance, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
shall have the rights and obligations of a Bank under the Loan Documents and
(ii) assignor Bank shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Loan Documents.
(d) Within five (5) Banking Days after its receipt of notice by the Agent
that it has received an executed Assignment and Acceptance, the Co-Borrowers
shall execute and deliver to the Agent new Notes evidencing such Assignee's
assigned Loans and Commitment Amount and, if the assignor Bank has retained a
portion of its Loans and its Commitment Amount, replacement Notes in the
Commitment Amount retained by the assignor Bank (such Notes to be in exchange
for, but not in payment of, the Notes held by such Bank). Immediately upon
each Assignee's making its payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Assignor's Commitment Amount arising therefrom. The Commitment Amount
allocated to each Assignee shall reduce such the Commitment Amount of the
assigning Bank pro tanto.
(e) Any Bank may at any time sell to one or more banks or other entities (a
"Participant") participating interests in any Loans, the Commitment Amount of
that Bank or any other interest of that Bank hereunder in a minimum amount of
five million Dollars ($5,000,000); provided, however, that (i) the Bank's
obligations under this Agreement shall remain unchanged, (ii) the selling Bank
shall remain solely responsible for the performance of such obligations, (iii)
the Co-Borrowers and the Agent shall continue to deal solely and directly with
the selling Bank in connection with such Bank's rights and obligations under
this Agreement, and
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<PAGE> 79
(iv) no Bank shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to this Agreement except to the extent such amendment,
consent or waiver would require unanimous consent as described in the first
proviso to Paragraph 10.3 hereof. In the case of any such participation, the
Participant shall not have any rights under this Agreement, or any of the other
Loan Documents, and all amounts payable by the Co-Borrowers hereunder shall be
determined as if such Bank had not sold such participation, except that if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
10.2 No Implied Waiver. No delay or omission to exercise any right, power
or remedy accruing to the Agent or any Bank upon any breach or default of any
of the Co-Borrowers under this Agreement or under any of the other Loan
Documents shall impair any such right, power or remedy of the Agent or any
Bank, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default occurring
thereafter, nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default occurring theretofore or thereafter.
10.3 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document and no consent with respect to any
departure by any of the Co-Borrowers therefrom, shall be effective unless the
same shall be in writing and signed by the Majority Banks, and then such waiver
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Banks, do any of the following:
(a) increase the Commitment Amount of any Bank or subject any Bank
to any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due hereunder or under any Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or of any fees or other amounts payable hereunder or
under any Loan Document;
(d) change the definition of "Majority Banks" or
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<PAGE> 80
the percentage of the aggregate Commitment Percentages or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder;
(e) amend this Paragraph 10.3; or
(f) release any material portion of the Collateral, (unless pursuant
to a bona fide arms' length transaction not with an Affiliate of Coram,
which transaction either permitted by this Agreement of, if such transaction
requires the consent of the Majority Banks, such consent has been obtained);
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Agent in addition to the Majority Banks, affect
the rights or duties of the Agent under this Agreement, and (ii) the definition
of "Majority Banks" or the percentage of the aggregate Commitment Percentages
or of the aggregate principal amount of the Loans which shall be required for
the Banks or any of them to take any action hereunder may be changed without
the consent of the Co-Borrowers.
10.4 Remedies Cumulative. All rights and remedies, either under this
Agreement, by law or otherwise afforded to the Agent or the Banks shall be
cumulative and not exclusive, and any single or partial exercise of any power
or right hereunder or thereunder does not preclude other or further exercise
thereof, or the exercise of any other power or right.
10.5 Severability. Any provision of this Agreement, the Notes or any of
the other Loan Documents which is prohibited or unenforceable in any
jurisdiction, shall be, only as to such jurisdiction, ineffective to the extent
of such prohibition or unenforceability, but all the remaining provisions of
this Agreement, the Notes and the other Loan Documents shall remain valid.
10.6 Costs, Expenses and Attorneys' Fees. The Co-Borrowers shall reimburse
the Agents for all reasonable costs and expenses, including, but not limited
to, reasonable attorneys' fees and expenses (including the allocated cost of
the Agents' internal counsel) and appraisal, audit, review (including the fees
and expenses of Coopers & Lybrand), search and filing fees and expenses,
expended or incurred by either of the Agents in connection with the
preparation, negotiation and execution of this Agreement, in connection with
the initial Borrowing, in amending this Agreement, or extending any waiver or
consent hereunder, or in any transaction referred to in Paragraph 10.1(b)
hereof, and shall reimburse the Agents and the Banks for all costs and
expenses, including, but not limited to, reasonable attorneys' fees and
expenses (including the allocated cost of the Agents'
Page 100 of 107 Pages
<PAGE> 81
internal counsel), expended or incurred by either of the Agents or any Bank in
collecting any sum which becomes due under the Notes or under this Agreement or
any of the other Loan Documents, or in the protection, perfection, preservation
and enforcement of any and all rights of the Agents or any Bank in connection
with the Loan Documents, including, without limitation, the fees and costs
incurred in any out-of-court work-out or a bankruptcy or reorganization
proceeding. This obligation on the part of the Co-Borrowers shall survive the
expiration or termination of this Agreement, with or without occurrence of the
Initial Closing Date.
10.7 General Indemnification. The Co-Borrowers shall indemnify and hold
each Bank, the Agents and each of their directors, officers, employees,
Affiliates, attorneys and agents (collectively referred to herein as the "Bank
Indemnitees") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, any expenses (including attorneys' fees and the allocated cost of
in-house counsel) incurred by any such Bank Indemnitee in connection with any
investigation in connection with any such matter, whether or not any such Bank
Indemnitee shall be designated a party thereto) which may be imposed on,
incurred by or asserted against such Bank Indemnitees by any Person other than
the Bank with which such Bank Indemnitee is affiliated (whether direct,
indirect or consequential and whether based on any federal or state laws or
other statutory regulations, including, without limitation, securities,
environmental and commercial laws and regulations, under common law or at
equitable cause, or on contract or otherwise) in any manner relating to or
arising out of this Agreement, any other Loan Documents, or any act, event or
transaction related or attendant thereto; the making of Loans hereunder, the
management of the Loans (including any liability under federal, state or local
environmental laws or regulations), the use or intended use of the proceeds of
the Loans (collectively, the "Indemnified Matters"); provided, however, that
the Co-Borrowers shall have no obligation to any Bank Indemnitee under this
Paragraph 10.7 with respect to Indemnified Matters to the extent such
Indemnified Matters were caused by or resulted from the gross negligence or
willful misconduct of a Bank Indemnitee. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the
Co-Borrowers shall contribute to the payment and satisfaction of all
Indemnified Matters incurred by the Bank Indemnitees the maximum portion which
the Co-Borrowers are permitted to pay and satisfy under applicable law. This
indemnification shall survive repayment by the Co-Borrowers of all Loans made
under this Agreement, and the termination of this Agreement without occurrence
of the Initial Closing Date.
10.8 Environmental Indemnification. The Co-Borrowers hereby
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<PAGE> 82
agree to indemnify, defend and hold harmless each Bank Indemnitee, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, charges, expenses or disbursements
(including attorneys' fees and the allocated cost of in-house counsel), which
may be incurred by or asserted against such Bank Indemnitee in connection with
or arising out of any pending or threatened investigation, litigation or
proceeding, or any action taken by any Person, with respect to any
Environmental Claim arising out of or related to any property subject to a
mortgage in favor of the Collateral Agent, either of the Agents or any Bank.
No action taken by legal counsel chosen by either of the Agents or any Bank in
defending against any such investigation, litigation or proceeding or requested
remedial, removal or response action shall vitiate or any way impair the
Co-Borrowers' obligations and duties hereunder to indemnify and hold harmless
the Agents and each Bank. In no event shall site visit, observation, or
testing by either of the Agents or any Bank be a representation that Hazardous
Materials are or are not present in, on, or under the site, or that there has
been or shall be compliance with any law, regulation, or ordinance pertaining
to Hazardous Materials or any other applicable governmental law. Neither the
Co-Borrowers nor any other party is entitled to rely on any site visit,
observation, or testing by either of the Agents or any Bank. Neither of the
Agents nor any Bank owes any duty of care to protect any Co-Borrower or any
other party against, or to inform any Co-Borrower or any other party of, any
Hazardous Materials or any other adverse condition affecting any site or
property. Neither of the Agents nor any Bank shall be obligated to disclose to
any Co-Borrower or any other party any report or findings made as a result of,
or in connection with, any site visit, observation, or testing by either of the
Agents or any Bank. This indemnification shall survive repayment of all Loans
made under this Agreement and termination of the Commitments, and the
termination of this Agreement without occurrence of the Initial Closing Date.
10.9 Notices. Any notice which the Co-Borrowers, either of the Agents or
any of the Banks may be required or may desire to give to the other parties
under any provision of this Agreement shall be in writing by electronic
facsimile transmission and shall be deemed to have been given or made when
transmitted and addressed to any Bank at the address set forth on the signature
pages hereto or to the Agents or the Co-Borrowers as follows:
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<PAGE> 83
<TABLE>
<S> <C>
To any of the
Co-Borrowers: Coram Healthcare Corporation
Curaflex Health Services, Inc.
HealthInfusion, Inc.
Medisys, Inc.
T2 Medical, Inc.
4675 MacArthur Court,
Suite 1250
Newport Beach, California 92660
Attention: Mr. James Sweeney
Facsimile: (714) 752-7522
Copy to: Richard A. Fink, Esq.
Brobeck, Phleger & Harrison
4675 MacArthur Court,
Suite 1000
Newport Beach, California 92660
Facsimile: (714) 752-7522
To the Agent: Wells Fargo Bank, National Association
Agency Department
201 Third Street, 8th Floor
San Francisco, California 94103
Attention: Ms. Sorana Soong
Facsimile: (415) 512-8960
To the Co-Agent: The Toronto-Dominion Bank
31 West 52nd Street
New York, New York 10019
Attention: Ms. Diana Sajer
Facsimile: (212) 397-4135
Copy to: Wells Fargo Bank, National Association
Inland Empire Commercial
Banking Office
10535 Foothill Blvd., Suite 270
Rancho Cucamonga, California 91730
Attention: Mr. Bruce L. Bell
Facsimile: (909) 941-0900
</TABLE>
Page 103 of 107 Pages
<PAGE> 84
<TABLE>
<S> <C>
Copy to: Pillsbury Madison & Sutro
225 Bush Street
San Francisco, CA 94104
Attention: Richard Grey, Esq.
Facsimile: (415) 983-1200
</TABLE>
Any party may change the address to which all notices, requests and other
communications are to be sent to it by giving written notice of such address
change to the other parties in conformity with this paragraph, but such change
shall not be effective until notice of such change has been received by the
other parties.
10.10 Entire Agreement. This Agreement, together with the exhibits to this
Agreement and all of the other Loan Documents, is intended by the Co-Borrowers,
the Agents and the Banks as a final expression of their agreement and, together
with all of the other Loan Documents, is intended as a complete statement of
the terms and conditions of their agreement. This Agreement and the other Loan
Documents contain all of the agreements and understandings between or among the
Co-Borrowers, the Agents and the Banks concerning the Loans and the other
transactions contemplated hereby. This Agreement and the other Loan Documents
completely supersede the Commitment Letter and the letters dated April 20, 1994
from the Agent to Coram.
10.11 Governing Law and Consent to Jurisdiction. The validity, construction
and effect of this Agreement, the Notes and all of the other Loan Documents
shall be governed by the laws of the State of California, without regard to its
laws regarding choice of applicable law, but giving effect to federal laws
applicable to national and federally insured banks. All judicial proceedings
brought against the Co-Borrowers with respect to this Agreement, the Notes or
any of the other Loan Documents may be brought in any state or federal court of
competent jurisdiction in the State of California, and the Co-Borrowers accept
for themselves and their assets and properties, generally and unconditionally,
the nonexclusive jurisdiction of the aforesaid courts. Each of the
Co-Borrowers waives, to the fullest extent permitted by applicable law, any
objection (including, without limitation, any objection to the laying of venue
or based on the grounds of forum non conveniens) which it may now or hereafter
have to the bringing of any such action or proceeding in any such jurisdiction.
Nothing herein shall limit the right of a Bank or either of the Agents to bring
proceedings against the any Co-Borrower in the court of any other jurisdiction.
10.12 Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be an original with the same effect as if the
signatures thereto and hereto were upon the same instrument.
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<PAGE> 85
10.13 Waiver of Jury Trial. Each of the Co-Borrowers waives any right to
trial by jury with regard to any action of any type or nature whatsoever under
or concerning this Agreement or any of the other Loan Documents or in any way
related to the Loans or the administration or enforcement thereof.
10.14 Headings. Captions, headings and the table of contents in this
Agreement are for convenience only, and are not to be deemed part of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by its
duly authorized officers as of the date and year first above written.
CORAM HEALTHCARE CORPORATION
By /s/ James M. Sweeney
---------------------------------------
Title Chairman and Chief Executive Officer
------------------------------------
CURAFLEX HEALTH SERVICES, INC.
By /s/ Kevin M. Higgins
---------------------------------------
Title VP and Secretary
------------------------------------
HEALTHINFUSION, INC.
By /s/ Miles E. Gilman
---------------------------------------
Title President
------------------------------------
MEDISYS, INC.
By /s/ David J. Byrd
---------------------------------------
Title CFO
------------------------------------
Page 105 of 107 Pages
<PAGE> 86
T2 MEDICAL, INC.
By /s/ Tommy H. Carter
-------------------------------------
Title President & CEO
----------------------------------
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as Agent
By /s/ Gary A. Leduc
-------------------------------------
Gary A. Leduc
Vice President
THE TORONTO-DOMINION BANK,
as Co-Agent
By /s/ David G. Parker
-------------------------------------
Name____________________________________
Manager - Credit Administration
WELLS FARGO BANK,
NATIONAL ASSOCIATION,
as a Bank
By /s/ Gary A. Leduc
-------------------------------------
Gary A. Leduc
Vice President
Address: Inland Empire Commercial
Banking Office
10535 Foothill Blvd.
Suite 270
Rancho Cucamonga, CA
91730
Attention: Mr. Bruce L. Bell
Facsimile: (909) 941-0900
Commitment Percentage: 50%
Page 106 of 107 Pages
<PAGE> 87
THE TORONTO-DOMINION BANK,
as a Bank
By /s/ David G. Parker
--------------------------------------
Name_____________________________________
Manager - Credit Administration
Address: The Toronto-Dominion
Bank
31 West 52nd Street
New York, New York 10019
Facsimile: (212) 397-4135
The Toronto-Dominion
Bank
909 Fannin Street
Suite 1700
Houston, Texas 77010
Facsimile: (713) 652-2644
Commitment Percentage: 50%
Page 107 of 107 Pages
