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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB
(Mark One)
|X| ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31,1996
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OR
|_| TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ___________________________ to __________________
Commission file number 0-24640
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COMMUNITY MEDICAL TRANSPORT, INC.
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(Exact name of small business issuer in its charter)
Delaware 13-3507464
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
45 Morris Street, Yonkers, New York 10705
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number 914-963-6666
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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_________________________________ _________________________________________
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
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(Title of Class)
Redeemable Warrants expiring on September 29, 1999
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes..X..... No........
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained herein, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. |_|
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Issuer's revenues for the year ended December 31, 1996 are $15,532,000.
The aggregate market value of the voting stock held by nonaffiliates of the
issuer is $11,066,319 (as of March 25, 1997).
The number of shares outstanding of the issuer's common stock is 4,965,226
(as of March 25, 1997).
DOCUMENTS INCORPORATED BY REFERENCE
Transitional Small Business Disclosure Format: Yes....... No...X....
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PART I
Item 1. Description of Business
Introduction
Community Medical Transport, Inc. (the "Company"), through its
subsidiaries, provides medical transportation and other specialized services in
the New York - New Jersey metropolitan area.
Simultaneously with the closing of the Company's public offering (the
"Public Offering") in October 1994, the Company became the sole shareholder of
Community Ambulette Service, Inc. ("Community Ambulette") and First Help
Ambulance and Ambulette Inc. ("First Help"). After completing the Public
Offering, the Company implemented a strategy to expand its business in the New
York - New Jersey metropolitan area. This strategy included plans to acquire
ambulette and ambulance service providers, and to integrate such acquired
operations into the Company's existing operations as well as expand by internal
growth. Management believes that such acquisitions and consolidation of these
acquired operations have and will enable it to achieve economies of scale,
improve its gross margins and become a significant service provider in its
market.
Community Ambulette, which has operated since 1984, provides
specialized transportation for the handicapped, disabled, mentally retarded,
elderly and chronically ill to and from day treatment centers, day care
programs, hospitals, nursing homes, dialysis centers, and other health care
facilities. This service is provided in ambulettes -- specialized vans that
contain ramps and other equipment designed to secure and safely transport
wheelchair bound passengers. Since February 1994, First Help has provided
emergency and non-emergency ambulance transportation services for patients who
require basic medical care or supervision during transport to and from
hospitals, nursing homes and other health care facilities. During 1996 newly
formed and existing subsidiaries of the Company acquired assets and/or
operations of several medical transportation companies located in the New York -
New Jersey metropolitan area.
The principal executive offices of the Company are located at 45 Morris
Street, Yonkers, New York 10705 and its telephone number is (914) 963-6666.
Unless the context otherwise requires, references to the "Company"
contained herein include the operating subsidiaries of the Company.
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Recent Business Developments
The Company continued to implement its strategy in 1996 by completing
the acquisition of the assets and businesses of five medical transportation
companies in the New York - New Jersey metropolitan area. During 1996 the
Company, also, as part of its strategy, substantially increased its sales and
marketing efforts by hiring several new sales representatives, each generally
responsible for a specific territory. As a result of additional acquisitions and
marketing activities, the Company now operates medical transportation services
from the Catskill area of lower New York and Westchester to counties in Northern
New Jersey and New York City. The Company believes it operates the largest
contiguous licensed area for ambulance service in New York state. During the
year the Company also increased its ambulance services in New York City through
aggressive marketing efforts. The Company also entered into additional written
arrangements for medical transportation and entered into arrangements with HMO's
as an approved provider of medical transportation services.
On June 12, 1996 a wholly-owned subsidiary of the Company completed the
purchase from A-1 Ambulance Service, Inc. ("A-1 Ambulance") of ambulances and
certain additional assets, equipment (ambulettes), contracts and a license
issued by the Department of Health of the State of New York to provide ambulance
services in Westchester, Putnam and Dutchess counties for $750,000, pursuant to
an asset purchase agreement, between the Company, A-1 Ambulance and the
shareholders of A-1 Ambulance. A-1 operated ambulance services in the licensed
area. After the acquisition, the subsidiary provided ambulance service in the
licensed area utilizing the acquired assets.
On August 15, 1996, a wholly-owned subsidiary of the Company completed
the purchase from Hudvalco, Inc. ("Hudvalco") and Harvey H. McGeorge, Inc.
("HHM") of ambulances and certain other assets, including equipment and licenses
of the New York State Department of Health to operate an ambulance business
previously conducted by Hudvalco. Hudvalco operated an ambulance business under
the name Hudson Valley Ambulance in several counties of the lower Hudson Valley
region of New York State. This business included "911" emergency service for two
townships in Rockland County, New York. The transaction was made pursuant to a
purchase agreement among the Company, Hudvalco, HHM and Alan McGeorge. As part
of the acquisition, the subsidiary also (i) acquired related corporate entities
providing services to Hudson Valley Ambulance and (ii) agreed to acquire shares
of a corporation ("RDO") owned by Alan McGeorge operating an ambulance service
in the Catskill area of the Hudson Valley region, subject only to regulatory
approval. The subsidiary provides operating services to RDO and is to receive
all the revenues from its operations until transfer of shares of RDO at a
deferred closing. The subsidiary also entered into leases for Hudvalco's
facilities. Pursuant to the original agreement, the total consideration for the
acquisition was $7,000,000, subject to certain adjustments, of which $3,000,000
was paid in cash, approximately $940,000 consisted of the assumption of debt and
$3,060,000 consisted of a promissory note. Up to $1,000,000 of the principal
amount of the note is convertible into shares of the Company's Common Stock at
$6.50 per share. The Company deferred $1,050,000 of the original amount of the
note for payment at a deferred closing of RDO.
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The parties have reached an understanding to modify the terms of purchase
including an adjustment to the purchase price which may result in an increase of
the purchase price by $100,000 and payment of at least one-half of the balance
of the purchase price in shares of the Company's common stock and the balance
payable pursuant to a short term note.
On August 22, 1996, a wholly-owned subsidiary of the Company completed
the purchase from Elite Ambulance & Medical Coach, Inc. ("Elite") of ambulettes
and certain other assets, including accounts receivable and a license to operate
an ambulette service by the State of New Jersey. The assets were acquired
pursuant to an asset purchase agreement among the Company, Elite and its
shareholders. Elite operated an ambulette service from Orange, New Jersey
servicing Essex County, New Jersey and other nearby counties under the name
Elite. After the acquisition, the Subsidiary changed its name to Elite Ambulance
& Medical Coach, Inc. and is operating the acquired ambulette service under the
name Elite. The consideration for the acquisition was $759,576 of which half was
paid in cash at the closing and the balance pursuant to a one year note (the
"Note"). In connection with the acquisition, the Company (i) assumed certain
debts related to the assets, (ii) entered into a contract with affiliates of
Elite to acquire the real estate facility containing Elite's operating facility
for approximately $1,200,000 in cash and short term mortgage notes, and (iii)
assumed a lease for such facility until the closing of the real estate contract
of sale. The Company terminated the agreement for the sale of property and is
negotiating a long term lease of the facility. The Company is also seeking to
renegotiate the purchase price of this acquisition based on what it believes to
be inaccurate representations.
The Company also acquired two additional operations which in the
aggregate are immaterial to the Company's business.
In December 1996 the Company entered into an agreement with a day
treatment psychiatric center to provide daily transportation for out patients of
the facility.
As of February 28, 1997, the Company had entered into several letters
of intent for the acquisition of assets or shares of medical transportation
companies and was considering additional acquisitions.
Industry Background
Based on the Company's review of publicly available documents produced
by other service providers, the Company believes that expenditures for ambulance
and ambulette services in the United States have grown at approximately 10% per
year over the last decade. Although the ambulance service industry has recently
experienced an increase in consolidation by large national companies, the
Company believes that the medical transportation industry continues to be highly
fragmented, with over 2,000 privately-owned companies.
The Company believes that the growth in expenditures for ambulance
services has been a result of an increase in both the number of ambulance
transports and the average expenditures
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per transport. The growth and aging of the U.S. population have increased demand
for medical services, including general ambulance and ambulette services. In
addition, a greater emphasis on cost containment through earlier hospital
discharge and on the use of outpatient facilities and home care therapy has
resulted in an increased need for ambulance and ambulette services to provide
patients with transportation under medical supervision. The enactment of the
Americans with Disabilities Act in 1990 has also resulted in a greater need for
para-transit services.
Strategy
As overall demand for ambulance and ambulette services is increasing,
contracting parties and regulatory authorities are imposing more stringent
requirements in terms of quality of care and cost of service. Ambulance and
ambulette service providers are facing increasing demand to deploy vehicles more
efficiently, employ more highly trained personnel and otherwise operate more
cost-efficiently. These requirements and their associated costs are producing
consolidation opportunities as smaller service providers seek to combine with
larger providers to gain access to greater financial, technological and
managerial resources to improve dispatch systems, fleet maintenance, training of
personnel, accounts receivable recovery and marketing capability. In addition,
there are significant barriers to entry into this industry, particularly with
respect to ambulance services. As a result, the Company believes that
well-established transportation providers with a strong customer base, a
reputation for high quality of service, and profitable operations will have
considerable opportunity to expand their operations through acquisitions and
consolidation of smaller local providers.
The Company believes that the fragmented nature of its industry
combined with increasing performance requirements and cost burdens imposed on
smaller companies creates favorable acquisition and expansion opportunities for
the Company.
In the New York - New Jersey metropolitan and surrounding area the
Company had intended, through such acquisitions and expansion, to build a
network of and become a significant provider of ambulette and ambulance
services. The Company believes it is now a significant medical transportation
provider in the New York - New Jersey metropolitan area and intends to further
expand through acquisitions and internal growth. The Company intends to achieve
this by:
o Continuing its commitment to high quality, specialized and
medical transportation services provided by qualified
personnel;
o Acquiring ambulance and ambulette service providers in the New
York-New Jersey metropolitan area, and integrating and
consolidating these companies and their operations with the
operations of the Company. The Company believes such
acquisitions and consolidations will improve the efficiency of
existing operations;
o Expansion of services through increased marketing efforts to
day care centers, nursing homes, hospitals, and other health
care facilities and providers;
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o Preserving ties to the local community and providing
continuity of service and community relations, which may
include retaining management of its acquired service
providers, where necessary.
The Company may also seek to expand through the acquisition of
ambulance and ambulette providers outside of the New York - New Jersey
metropolitan area with high quality management and strong performance records.
The Company will consider acquisition candidates that it believes offer
attractive opportunities for intrinsic growth and expansion into nearby service
areas and where the Company believes it may become a significant provider.
Management believes that such acquisitions would enable it to achieve
economies of scale, improve its gross margins and increase its ability to
compete with other service providers. The Company may retain senior management
of acquired companies outside of the New York - New Jersey metropolitan area
after the acquisition to manage local operations. The Company will also consider
acquiring businesses that provide related health care services including the
distribution of durable medical equipment and supplies.
Ambulette Services
The Company, through Community Ambulette and Elite, provides
specialized transportation for the handicapped, disabled, mentally retarded,
elderly and chronically ill to and from day treatment centers, day care
programs, hospitals, nursing homes, dialysis centers, and other health care
facilities in the New York - New Jersey metropolitan area. This service is
provided in ambulettes - specialized vans that contain ramps and other equipment
designed to secure and safely transport wheelchair bound passengers. The Company
provides two principal types of ambulette services to its customers:
"pre-scheduled day treatment" and "scheduled daily in advance."
The "pre-scheduled day treatment" services, which accounted for over
75% of the Company's revenues during 1995 and approximately 37% of the Company's
revenues during 1996, are provided to customers both with and without contracts.
Under this service, the customer or provider typically retains the Company to
provide regularly scheduled transportation services for patients who attend the
provider's facilities on a daily or other regularly scheduled basis.
Transportation is generally between the patient's residence and the customer's
health care facility and is provided five days a week except for long term care
and other specialized situations in which service is provided seven days a week.
Users of such services include health care facilities such as dialysis centers,
adult day centers that service the elderly, day treatment programs that service
individuals with mental retardation and, in certain cases, other developmental
disabilities, and comprehensive health care facilities which serve as a
long-term, "day care" alternative to nursing homes.
The "scheduled daily in advance" services are provided to nursing homes
and other health care facilities on an "as-needed basis" pursuant to direct
calls from the customer. Transportation
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for this service is generally between residences or nursing homes and hospitals
or other health care facilities and is generally requested by the customer not
more than one day in advance.
The Company has entered into an agreement with Union County, New Jersey
in connection with paratransit services (non-medical transportation) provided by
the county. Drivers required by the county are provided by the Company pursuant
to this agreement.
Ambulance Services
The Company, through its subsidiaries, provides general ambulance
services to patients requiring various levels of medical supervision during
transfer to and from residences and health care facilities. The Company's
ambulance business commenced in February 1994 and was significantly augmented as
a result of recent marketing efforts and acquisitions.
Ambulance operations generated approximately 22.4% and 37.0% of the
Company's total revenues during the fiscal years ended December 31, 1995 and
1996, respectively. Presently, the Company's ambulance services are provided
primarily in New York City and, particularly Manhattan and the Bronx, as well as
the Hudson Valley and Westchester area of the New York-New Jersey Metropolitan
area. Elite has recently initiated limited ambulance services in Northern New
Jersey.
The Company is licensed to provide ambulance services in New York City,
Westchester, Rockland, Orange, Putnam, Dutchess, and Northern New Jersey and
other counties in south eastern New York State. The Company's ambulances provide
both basic life support ("BLS") services and advanced life support services
("ALS"). BLS service is utilized by patients requiring a basic level of medical
supervision during transport. BLS services may include basic airway management,
hemorrhage control and stabilization of fractures. ALS service requires advanced
life support systems such as cardiac monitors, defibrillators, oxygen delivery
systems and speciality pharmaceutical and medical supplies.
The Company currently provides only limited "911" emergency services
because such services are provided by municipal authorities in the geographic
areas in which the Company operates. A subsidiary of the Company provides 911
services to two townships in Rockland County as a result of the Hudvalco
acquisition.
Ambulance units are staffed by two EMTs and equipped with medical
supplies, oxygen delivery systems, and equipment necessary to administer first
aid and other medical treatment. ALS ambulance units, staffed by crews of
specially certified EMTs (paramedics), are equipped with advanced life support
equipment, such as cardiac monitors, defibrillators, specialty pharmaceuticals
and medical supplies. The Company's ambulance services are typically provided
pursuant to arrangements with health care facilities and are either scheduled in
advance or provided on an as-needed basis.
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Marketing and Sales
The Company markets it's services on the basis of quality of care,
reliability, reputation and cost. As part of its strategy, the Company
substantially expanded its marketing efforts in 1996. During the year the
Company retained several marketing representatives each responsible for a
particular area. The representatives receive a base salary and additional
compensation based upon increased revenues in the territory for which they are
responsible.
The Company markets its ambulette services principally to day treatment
centers and day care programs which provide programs for the handicapped,
disabled and elderly, as well as other health care facilities that require a
stable and reliable source of medical transportation for its patients. The
Company provides its ambulance services to several major hospitals and nursing
homes in New York City, Rockland and Westchester counties. As part of its
marketing strategy, the Company is pursuing managed care providers and is
seeking to enter into arrangements to become a single source transportation
provider for medical institutions.
Personnel Training and Quality Assurance
As of December 31, 1996, the Company employed 161 EMTs and 96
paramedics. In general, EMTs furnish basic and emergency treatment while
transporting patients in ambulances. EMTs must be state certified to perform
basic and emergency care services. Certification as an EMT in the geographic
area in which the Company provides services requires completion of a training
program designed by the state. Paramedics providing ALS are required to complete
advanced training courses for more advanced emergency care services. The Company
carefully screens all job applicants and is committed to providing consistently
high quality transport and other services. All of the Company's ambulette
drivers are subject to state regulation. They must have a commercial driver's
license with a designation to transport passengers. Each new driver must undergo
driver training, physical examination and periodical testing for controlled
substance abuse. Additionally, the Company verifies the driving record of each
new driver.
Billing and Collection
The Company derives a substantial majority of its revenue from
reimbursement by third-party payors, particularly Medicaid and Medicare,
typically invoicing and collecting payments directly from the third party payor.
During the fiscal years ended December 31, 1995 and 1996, the Company derived
approximately 69% and 60%, respectively, of its net revenues from Medicaid and
Medicare; 19% and 11%, respectively, of its net revenues pursuant to contracts
with Beth Abraham Hospital (the Company's only fixed-cost provider); and 12% and
29%, respectively, of its net revenues from private insurers and other
non-governmental sources.
The Company has substantial expertise in processing claims to
third-party payors. The Company uses specialized software systems to
specifically tailor and electronically submit most claims to Medicaid, Medicare
and certain other third-party payors. The Company believes that
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its expertise in processing third-party claims reduces the collection time on
its receivables and results in fewer rejected claims based on incomplete or
inaccurate information.
The Company has only two contracts with municipalities or health care
facilities which require the Company to provide services without regard to a
patient's insurance coverage or ability to pay. Such requirements are generally
imposed on ambulance services which provide "911" or other emergency services on
an exclusive basis. The Company provides 911 services to two towns in Rockland
County. Overall, the Company believes that uncompensated trips presently provide
an insignificant level of uncompensated services.
Principal Customers
During 1996 the majority of the Company's services are provided
pursuant to oral arrangements or short-term, non-exclusive contracts with its
customers. However, the Company provides ambulette services to a significant
customer, Beth Abraham Hospital (and affiliates) located in Bronx County, New
York, pursuant to written contracts since 1988. Under these contracts, the
Company provides ambulette services on an exclusive basis for two programs of
the hospital: an adult day treatment center and a comprehensive care management
center, an innovative alternative to nursing home care for many people who are
elderly and have physical disabilities. These agreements expire on December 31,
1997 or earlier in certain circumstances. During the fiscal years ended December
31, 1995 and 1996, the Company derived approximately 28% and 13%, respectively,
of its revenues from services provided on behalf of Beth Abraham Hospital and
its affiliates including amounts reimbursed by third parties. Dean Sloane,
President of the Company, serves as honorary director of Beth Abraham Hospital,
without compensation. As the Company's other business expands and acquired
businesses are operational for a full year, it is anticipated that Beth Abraham
will account for an increasingly lower percentage of revenues in 1997 and in the
future.
The Company provides transportation services to several day treatment
centers. In some cases, the majority of the people transported live in group
homes, which are operated by either voluntary or state agencies. The Company
negotiates separate arrangements with the group homes and day treatment centers
for the transportation needs of their clients.
As a result of acquisitions and trends in the medical transportation
industry the Company has entered into additional agreements for medical
transportation services. In the New York New Jersey metropolitan area, large
hospitals and health institutions are seeking to enter into single source
medical transportation contracts and the Company has entered into such
agreements with several hospitals.
Competition
The ambulance and ambulette service industry is highly competitive.
Principal participants include government entities, large regional ambulance
service providers, hospitals and numerous local providers. The Company competes
with several large firms in its market, including Med-
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Trans, a subsidiary of Laidlaw, Transcare and Metropolitan Ambulance. The
Company also encounters competition, particularly with respect to ambulette
services, from small commercial providers operating in the New York - New Jersey
metropolitan area. The Company believes that health care facilities in the
geographic area serviced by the Company consider quality of care, reliability
and reputation to be the most important factors in utilizing a medical
transportation provider, although other factors such as financial stability,
personnel policies and practices and cost are also considered. In addition to
present competition, other companies that do not currently operate ambulance or
ambulette services may enter the ambulance or ambulette service business. There
can be no assurance that health care facilities that presently contract for
ambulance or ambulette services will not choose to provide ambulance or
ambulette services directly in the future.
Persons or entities seeking to enter the ambulance industries have
typically been required to acquire an existing entity already in possession of
such licenses. Consequently, the Company believes that competition has been
occurring in the environment of a substantially fixed number of operating
licenses.
The Company believes that it may encounter significant competition for
acquisitions of other medical transportation service providers, particularly as
the industry consolidates. There are many companies with greater capital and
other resources than the Company which are actively seeking to acquire ambulance
service providers. Prospective acquirors of ambulance and ambulette service
providers compete primarily on the basis of price, form of consideration,
operating synergy opportunities and management. Competition for acquisition
candidates is intensifying within the ambulance service industry as the industry
consolidates. Such competition may result in the inflation of purchase prices to
levels which exceed the Company's financial capability or otherwise inhibit its
acquisition program.
Government Regulation
The Company's business is subject to governmental regulation at the
federal, state and local levels. At the federal level, the Company is subject to
regulations under the Occupational Safety and Health Act designed to protect
employees of the Company. The federal government also recommends standards for
ambulance design and construction, medical training curriculum, and designation
of appropriate trauma facilities, which standards may be modified by state
agencies.
Various aspects of the Company's operations are subject to and
regulated by New York State law. State requirements govern the licensing or
certification of ambulance service providers, training and certification of
medical personnel, the scope of services that may be provided by medical
personnel, staffing requirements, medical control, medical procedures,
communication systems, license and qualification of drivers and vehicles and
equipment.
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In addition, the operation of the Company's ambulette services are
subject to regulation by various state and local agencies. These regulations
encompass the licensing and qualification of drivers, vehicles, and equipment.
Applicable federal, state and local laws and regulations are subject to
change. The Company believes that it currently is in substantial compliance with
regulatory requirements applicable to its ambulance and ambulette service
business. These regulatory requirements, however, may require the Company in the
future to increase its capital and operating expenditures in order to maintain
current operations or initiate new operations.
Reimbursement
The Company must comply with various requirements in connection with
its participation in the Medicaid and Medicare programs. Medicaid is a combined
federal-state program for medical assistance to impoverished individuals who are
aged, blind, disabled or members of families with dependent children. The
various authorities of Medicare/Medicaid, including the New York State
Department of Social Services have the authority to set levels of reimbursement
within federal guidelines. The Company receives from its customers that are
covered by Medicaid, only the reimbursement permitted by Medicaid and is not
permitted to collect from the patient any difference between its customary
charge to such customers and the amount reimbursed. Any difference between the
Company's customary charge to its customers that are covered by Medicaid and
amounts reimbursed by Medicaid are not material to the Company's operating
results because the Company's customary charges to such customers generally do
not exceed amounts reimbursable by Medicaid.
Medicare is a federal health insurance program for the elderly and for
chronically disabled individuals, which pays for ambulance services when
medically necessary. Medicare uses a charge-based reimbursement system for
ambulance services and reimburses 80% of charges determined to be reasonable by
Medicare, subject to the limits fixed for the particular geographic area. The
patient is responsible for paying the balance of the bill, and Medicare requires
the Company to expend reasonable efforts to collect the balance. Medicare does
not reimburse the Company for amounts the Company can not collect from the
patient. In determining reasonable charges, Medicare considers and applies the
lowest of various charge factors including the actual charge, the customary
charge, the prevailing charge in the same locality, the amount of reimbursement
for comparable services or the inflation-indexed charge limit.
The Company, like other Medicaid and Medicare providers, is subject to
governmental audits of its Medicaid and Medicare reimbursement claims, but to
date the Company has not experienced significant losses as a result of any such
audit. As a provider of services under the Medicaid and Medicare programs, the
Company is also subject to the Medicaid and Medicare fraud and abuse laws. The
laws prohibit any bribe, kickback or rebate in return for the referral of
Medicaid or Medicare patients. Violations of these prohibitions may result in
civil and criminal penalties and exclusion from participation in the Medicaid
and Medicare programs.
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Pursuant to the federal/state statutory scheme for the regulation and
administration of the Medicaid program, each state has a Medicaid Fraud Control
Unit. In New York State that Unit is placed within the Office of the Attorney
General. This office has broad civil and criminal jurisdiction over Medicaid
providers. In the course of its operations, it reviews Medicaid providers. The
Company is currently the subject of such a review, together with several other
medical transportation providers in the same general geographic area. The
Company believes that it has complied with all appropriate regulations. Based on
conversations with the attorney general's office, the Company believes that the
state will make a claim in an amount not to exceed $105,000 for miscalculations
of reimbursement payments. Based on such conversation, the Company does not
anticipate that any charges will be lodged by the Attorney General as a result
of this review.
Government funding for health care programs is subject to statutory and
regulatory changes, administrative rulings, interpretations of policy,
determinations by intermediaries and governmental funding restrictions, all of
which could materially increase or decrease program reimbursements for ambulance
services. In recent years, Congress has consistently attempted to curb federal
spending on such programs. Amounts under reimbursement programs are subject o
administrative interpretation and enforcement policies. Currently, several
agencies have taken restrictive positions concerning Medicaid reimbursement. It
is likely that future funding levels for Medicare and Medicaid programs will be
reduced from present levels. The current Congress and various states are
considering proposals to reduce expenditures under various reimbursement
programs. Government agencies in the areas in which the Company operates have
proposed extensive budgetary reductions and rules changes for these programs.
The Company can not predict the overall effect on it as a result of any budget
or policy cuts, but such actions could adversely affect the Company.
Moreover, the Company anticipates that Congress and state and local
legislatures will continue to review and assess alternative health care delivery
systems and cost-control measures, and public debate of these issues will likely
continue in the future. The Company cannot predict the effect any measures, if
adopted in the future, will have on the Company's business.
Insurance
The Company carries a broad range of general liability, comprehensive
property damage, worker's compensation, professional liability, automobile and
other insurance coverage that management considers adequate for the protection
of its assets and operations, although there can be no assurance that the
coverage limits of such policies will be adequate. A successful claim against
the Company in excess of its insurance coverage could have a material adverse
effect on the Company and its financial condition. Claims against the Company,
regardless of their merit or outcome, may also have an adverse effect on the
Company's reputation and business. The Company is also subject to accident
claims as a result of the normal operation of its fleet of vehicles.
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Equipment
As of December 31, 1996, the Company's fleet included 152 ambulettes
and 75 ambulances. Except for 7 leased vehicles, the Company owns all of its
vehicles.
Employees
As of December 31, 1996, the Company had a total of 677 employees of
which approximately 619 were full-time and 58 were part-time employees. Of
these, 607 employees were involved in medical transport services and 70
management, administrative and clerical personnel. Prior to the acquisition of
A-1, the Company was not a party to any collective bargaining agreements. The
drivers, EMTs and paramedics of A-1 are subject to a collective bargaining
agreement. Subsequent to December 31, 1996, ambulance drivers located in
Yonkers, and ambulette drivers located in Brooklyn and Yonkers voted to be
unionized. The number of employees may increase upon the completion of pending
acquisitions. The Company considers its relations with employees to be good.
Item 2. Description of Property
The Company leases approximately 20,000 square feet in a facility
located in Yonkers, New York, utilized for the Company's executive offices and
operations. The facility is used for administrative purposes (accounts
receivable collection, dispatch, and related functions) as well as for vehicle
basing, garaging and maintenance. The base rental expense for the facility is
$7,500 per month and will be $8,000 commencing in May 1999. The lease for the
facility expires in May 2004.
The Company is utilizing an additional facility in Brooklyn, New York,
consisting of approximately 10,000 square feet, at a monthly rental of $3,500.
The lease expires November 30,1997. The facility is utilized principally for the
storage of vehicles. In 1997 the Company leased a small office in Union, New
Jersey for the administration of its Union County para-transit contract.
In conjunction with the A-1, Hudson Valley and Elite acquisitions,
subsidiaries of the Company entered into leases for garage and operating
facilities in Bedford Hills, New York, Haverstraw, New York and Orange, New
Jersey. The facility in Bedford Hills is for a garage, maintenance and dispatch
facility and consists of 1600 square feet, including a building of 5,000 square
feet. A subsidiary of the Company leases 3,000 square feet, including a building
and garage of 10,000 square feet in Haverstraw, New York for the former
operations of Hudvalco. This lease is for five years and provides for a rental
of $72,000 annually. A subsidiary of the Company is also leasing 5,000 square
feet of office space in Haverstraw, New York at a monthly rental of $1600. The
Company contemplates terminating this lease. A subsidiary of the Company is
leasing 16,000 square feet of space in Orange, New Jersey as a garage and office
facility for Elite's former operations. The Company is in the process of
negotiating a lease for this facility.
12
<PAGE>
Upon the completion of one or more of the pending acquisitions, the
Company will acquire or enter into leases for additional facilities.
Item 3. Legal Proceedings
From time to time the Company is a party to litigation arising in the
ordinary course of business. There can be no assurance that the Company's
insurance coverage will be adequate to cover all liabilities occurring out of
such claims. In the opinion of management, the Company is not engaged in any
legal proceedings expected to have a material adverse effect on the financial
condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fourth quarter of the fiscal year ended December 31, 1996.
13
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Since October 1, 1994 and until July 1995 the Company's securities were
listed for trading on the Nasdaq SmallCap Market. Since July 1995 the Company's
common stock and redeemable warrants are currently traded on The Nasdaq National
Market under the symbols "CMTI" and "CMTIW", respectively.
Set forth below are the high and low bids for the Company's common
stock and redeemable warrants during the periods indicated, through the second
quarter of 1995. Such quotations reflect interdealer prices without retail
mark-up, mark-down or commissions, and may not reflect actual transactions.
Since July 1995, when the Company's securities have been listed on NASDAQ
National Market and prices below reflect actual sales.
<TABLE>
<CAPTION>
Common Stock Redeemable Warrants
----------------------------- -------------------------
High Low High Low
<S> <C> <C> <C> <C>
1996
First Quarter $8-3/4 $6-7/8 $3 $1-5/8
Second Quarter 8-5/8 5-1/8 2-11/16 1
Third Quarter 7 4-13/16 1-13/16 1-1/4
Fourth Quarter 5 2-15/16 1-7/16 27/32
1995
First Quarter $5-1/8 $3-7/8 $1-3/8 $3/4
Second Quarter 6 3-3/4 1-7/8 3/4
Third Quarter 6-5/8 5-3/4 1-7/8 1-1/8
Fourth Quarter 8-1/4 6-1/4 2-7/6 1-5/8
</TABLE>
As of December 31, 1996, there were approximately 66 recordholders
of the Company's common stock and 10 record holders of redeemable warrants,
although the Company believes that there are more than 1,000 beneficial owners
of its common stock.
14
<PAGE>
The Company plans to retain any future earnings for use in its
business and, accordingly, the Company does not anticipate paying dividends in
the foreseeable future to its common stockholders. Payment of dividends is
within the discretion of the Company's Board of Directors and will depend, among
other factors, upon the Company's earnings, financial condition and capital
requirements.
Item. 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Introduction
For all periods presented, the following financial information includes
the accounts of First Help, and Community Ambulette, wholly owned subsidiaries
of the Company.
The Company completed five acquisitions by wholly-owned subsidiaries of
the Company between June and August 1996. Each acquisition was accounted for by
purchase accounting. Therefore the total revenues and expenses for each of these
acquisitions is included only for the period after acquisition by the Company.
The Company's total revenue, which is comprised primarily of ambulette
and ambulance service fees charged to Medicare, Medicaid, other third party
payors such as private insurance carriers and health maintenance organizations,
and directly to patients, is presented net of contractual adjustments.
Results of Operations
Year Ended December 31, 1996 as Compared with Year Ended December 31,
1995
Revenues increased by $8,879,000, or 133.5%, to $15,532,000 in 1996
from $6,653,000 in 1995. The increase is due substantially to the additional
revenues resulting from the acquisitions, and to a lesser extent, increased
volume generated from additional customer base.
Operating expenses increased by $5,888,000, or 149.8%, to $9,819,000 in
1996 from $3,931,000 in 1995. This percentage increase was greater than the
percentage increase in volume due to the historically lower margins of the
acquired companies as well as disproportionate increases in insurance, personnel
and maintenance costs to accommodate anticipated expanded volume primarily as a
result of the acquisitions. Gross profit thereby decreased as a percentage of
revenue from 40.9% to 36.8%, even though gross profit increased by $2,991,000,
or 109.9%, to $5,713,000 in 1996 from $2,722,000 in 1995.
Selling, general and administrative expenses increased by $2,980,000,
or 169.3%, to $4,740,000 in 1996 from $1,760,000 in 1995. The increase included
substantial marketing costs not incurred in 1995. Since selling, general and
administrative expenses did not increase in the
15
<PAGE>
same proportion as revenues, the increase as a percentage of revenues
represented by these expenses rose only 4.0% from 26.5% to 30.5%.
Income from operations increased by $11,000, or 1.1%, to $973,000 in
1996 from $962,000 in 1995. This increase was a result of the factors described
above, mainly the additional revenues realized from the acquired companies which
has been offset by the lower margins experienced in the acquired companies and
the disproportionate increases in operating expenses. These expenses included
certain non-recurring acquisition-related expenses.
Other income increased to $42,000 in 1996 from zero in 1995. This was
due to a management fee for the operation of an ambulance company.
Interest expense increased by $392,000, or 552.1%, to $463,000 in 1996
from $71,000 in 1995. This increase is primarily due to the additional borrowing
and debt incurred in connection with acquisitions completed in 1995 and 1996.
Interest income decreased by $11,000, or 7.3%, to $140,000 in 1996 from
$151,000 in 1995 due to significant expenditures in connection with acquisitions
which reduced available cash.
Net income for 1996 was $394,000 compared to $592,000 in 1995. The
decrease of $198,000, or 33.4%, in net income was a result of an increase in
revenue which was more than offset by a disproportionate increase in operating
expenses mainly as a result of acquisitions described above.
The Company's net income amounted to $394,000, or $0.10, per share for
1996, as compared to $592,000, or $0.19, per share for 1995. This decrease is
attributable to both the additional expenses incurred for the acquisitions, as
well as the additional stock issued as a result of the private placement of
common stock and exercise and conversion of warrants and convertible securities
issued.
The Company's income taxes amounted to $298,000 for the year ended
December 31, 1996, representing an effective rate of 43.1% compared with
$450,000 for the year ended December 31, 1995 representing an effective rate of
43.2%.
A portion of operating expenses and selling, general and administrative
expenses in 1996 consisted of non-recurring items. In addition, as a result of
its consolidation of operations and other cost-cutting measures, the Company
believes it can reduce a substantial amount of expenses for 1997. There can be
no assurance that future net income will be positively impacted by the
foregoing. Moreover, the Company cannot assess the impact of any acquisitions
made during 1997 or of the full year's operations or acquired operations
completed in 1996.
Liquidity and Capital Resources
16
<PAGE>
Cash used in operating activities was $1,167,000 in 1996 compared with
$1,136,000 in 1995. The increase was largely the result of the increase in
accounts receivable due to increased volume, a rise in the prepaid insurance
premiums due to the timing of a change in insurance carriers, as well as a
change in the payment schedules of governmental agencies. This was offset by an
increase in accounts payable and accrued expenses due to the acquisitions.
Cash used in investing activities in 1996 and 1995 was $5,766,000 and
$865,000, respectively. The increase in cash used in investing activities in
1996 was largely the result of the acquisitions of the five medical
transportation companies completed during the year. For 1996, $1,111,000 of this
amount reflects the capital expenditures associated with the purchase of
vehicles and equipment as compared to $851,000 used for this purpose in 1995.
Cash provided by financing activities in 1996 reflect the receipt of
proceeds from bank borrowings, the sale of equity securities and the partial
exercise of warrants. The amount of increase provided from these sources was
slightly offset by principal payments on debt and capital lease obligations.
In May 1996, the Company completed a private placement and received net
proceeds of $1,337,000. In July and August 1996, the Company completed the sale
of Convertible Preferred Stock and received net proceeds of approximately
$5,918,000. At December 31, 1996, 2,423 shares of Convertible Preferred Stock
were outstanding with a liquidation value of $2,423,000.
In December 1996, the Company entered into a $10,000,000 credit
facility to replace its previously existing $3,200,000 credit facility for
working capital and capital expenditures. At December 31, 1996, there was
$5,600,000 outstanding under this facility. A portion of this facility consists
of a revolving credit arrangement which may only be drawn down if the Company
has sufficient qualified accounts receivable. The Company, in the past, and may
in the future, be temporarily unable to draw down desired amounts because of
slow payment by reimbursement agents and as a result of delays in collection
from recently acquired operations.
At December 31, 1996, the Company had working capital of $4,984,000.
The Company believes that internally generated funds and bank loans will provide
sufficient liquidity and enable it to meet its currently foreseeable working
capital requirements for operations for at least the next 12 months. The Company
was actively considering a number of acquisitions as of February 28, 1997, which
do not require significant cash payments. Additional financings, however, may be
required in the future in connection with the Company's acquisition program.
Inflation
The Company believes that the relatively moderate rates of inflation in
recent years have not had a significant impact on its net revenues or its
profitability.
17
<PAGE>
Item 7. Financial Statements
Reference is made to pages F-1 through F-23 comprising a portion of
this Annual Report on Form 10-KSB.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in accountants due to disagreements on
accounting and financial disclosure during the 24 months prior to December 31,
1996.
18
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The directors and executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Dean L. Sloane 51 President, Chairman of the Board, Chief Executive Officer and
Director
Donald J. Panos 36 Vice President of Finance, Chief Financial Officer
Craig V. Sloane 46 Vice President-Operations, Secretary and Director
Steven R. Fittante 42 Vice President, Corporate Development
Bernard M. Kruger, M.D. 54 Director
Lucius J. Riccio, Phd. 47 Director
</TABLE>
Dean L. Sloane has served as Chairman of the Board, President and Chief
Executive Officer, and a Director of the Company since December 1988. Mr. Sloane
served as Chief Executive Officer of Prime Medical Services Inc. (formerly known
as C.P. Rehab Corp.), a public specialty medical management service company from
1973 through 1988. Mr. Sloane co-founded and served as Chairman of the Board of
National Home Health Care Corp., a public medical management and home care
company, from 1983 to 1986. Mr. Sloane also served as a director of EPIC Health
Group, Inc., a public mail order pharmaceutical company, from 1984 to 1986. He
is currently a director of Community Care Services, Inc. a medical equipment and
goods supplier and Sunstar Healthcare, Inc. which is engaged in managed care.
Mr. Sloane has been a member of the Young Presidents Organization since 1985.
Mr. Sloane is a Certified Public Accountant but does not practice.
Donald J. Panos has been employed by the Company since November 1995
and is Vice President of Finance, and Chief Financial Officer. From August 1994
to November 1995, Mr. Panos was employed as a manager with an accounting firm,
Herman J. Dobkin & Company, L.L.P. From 1989 to 1994, Mr. Panos was employed by
Horsehead Industries, Inc., a $750 million private company with a public
subsidiary and publicly traded debt as Manager of Financial Reporting. From 1987
to 1989 he was a Senior Accountant with Ernst & Young. Mr. Panos is a CPA.
Craig V. Sloane has served as Vice President-Operations and a Director
of the Company since December 1990. From 1985 through October 1990, he was a
futures analyst at Smith Barney Harris & Upham. He is currently a director of
Community Care Services, Inc. a medical equipment and goods supplier.
Steven R. Fittante has been employed by the Company since July 1995 and
is Vice President of Corporate Development. From June 1993 until June 1995 he
was employed by Mayflower
19
<PAGE>
Laidlaw Transit, Inc., serving most recently as North East Regional Manager.
From 1985 to 1993 he was director of Monmouth County Department of
Transportation.
Bernard M. Kruger, M.D. has been in the private practice of internal
medicine and medical oncology since 1979, and is affiliated with Lenox Hill
Hospital, Beth Israel Hospital, Mount Sinai Hospital and the Orthopedic
Institute. He is currently a director of Community Care Services, Inc.
a medical equipment and goods supplier.
Lucius J. Riccio has served as a management consultant on
transportation issues since January 1994. From February 1990 to December 1993 he
served as Commissioner of the New York City Department of Transportation. From
1986 to 1990 he served as Deputy Commissioner, Highway Operations, of the New
York City Department of Transportation.
Dean L. Sloane and Craig V. Sloane are brothers.
Section 16(a) of the Securities Exchange Act of 1934 requires that
officers, directors and 10% or greater stockholders of the Company file reports
of their ownership with the Securities and Exchange Commission. No officer,
director or 10% or greater stockholder of the Company was late with his filings
other than Craig Sloane, Steven Fittante and Donald J. Panos.
Item 10. Executive Compensation
The following table sets forth information concerning compensation paid
or accrued by the Company or its subsidiaries for services rendered during the
fiscal years ended December 31, 1994, 1995 and 1996 to the Company's Chief
Executive Officer and to each executive officer whose compensation exceeded
$100,000 during its fiscal year ended December 31, 1996:
20
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Long Term
Compensation
Awards
Name and Principal Other Annual Securities Underlying
Position Year Salary Bonus Compensation (1) Options
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dean Sloane, President and 1996 $225,000 $37,240 0
Chief Executive Officer 1995 $225,000 $45,626 0
1994 $257,000 $40,374 0
Craig Sloane, Vice- 1996 $ 90,000 $15,000 $12,000 $10,000
President-Operations 1995 $ 85,000 $15,000 $12,000 0
1994 $ 85,000 $15,000 $ 2,000 0
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Consists of automobile lease payments.
The following table sets forth all grants of stock options to each of
the named executive officers of the Company during the fiscal year ended
December 31, 1996.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of Shares of Per Cent of Total
Common Stock Underlying Options Granted to
Options Granted Employees in Fiscal Exercise Price Expiration Date
Name Year
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dean Sloane 0 --- --- ---
Craig Sloane 10,000 14.5% $4.3125* May 28, 2006
</TABLE>
- ----------
* Such options were priced at $8.00 per share when granted on May 29, 1996, but
were repriced to $4.3125 on November 11, 1996
21
<PAGE>
The following table sets forth information as to options exercised by
each of the named executives during the fiscal year ended December 31, 1996 and
the value of in-the-money options held by such executives at December 31, 1996.
Option Exercises in Last Fiscal Year and Fiscal Year End Option Values
<TABLE>
<CAPTION>
Number of Shares
of Common Stock Number of Shares of Common Stock
Acquired on Value Underlyng Unexercised Options at
Name Exercise Realized 12/31/96 Value of In-the-Money Options at 12/31/96
---- ---------------- ---------- --------------------------------- ------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dean Sloane -- -- 0 0 -- --
Craig Sloane -- -- 90,000 5,000 $179,350 0
</TABLE>
- ------------------------
* Value is based on the excess of the closing bid price of the Company's Common
Stock as of December 31, 1996 ($3.00 per share) over the option price of the
in-the-money options.
Employment Agreements
Upon consummation of the Public Offering, the Company entered into an
employment agreement with Dean L. Sloane, President and Chief Executive Officer
of the Company. The agreement has a three-year term which renews for an
additional year on each anniversary of the agreement, and provides for an annual
base compensation of $225,000, with annual increases based on a published cost
of living index. In addition, Mr. Sloane is entitled to such bonuses as may be
awarded by the Board in its discretion. The agreement calls for payment of
benefits, including life insurance and automobile expenses, similar to that
received prior to execution of the agreement. In the event the Company
terminates Mr. Sloane's employment without cause or Mr. Sloane terminates the
agreement for "good reason" (as defined in the agreement), the Company has
agreed to pay to Mr. Sloane as severance, an amount equal to Mr. Sloane's
monthly salary multiplied by the greater of (i) the number of months remaining
between the date of termination and the then expiration date of the agreement,
and (ii) twelve. The Company is the beneficiary of a $1.0 million key man life
insurance policy with respect to Mr. Sloane. The agreement also contains a
non-competition provision covering the term of the agreement plus one year
following termination.
Upon consummation of the Public Offering the Company also entered into
an employment agreement with Craig V. Sloane, Vice President-Operations of the
Company. The agreement has a three-year term which renews for an additional year
on each anniversary of the agreement, and provides for an annual base
compensation of $85,000 subject to increase at least 5% per year. The agreement
calls for payment of benefits including health insurance and automobile
expenses. The agreement also contains a non-competition provision covering the
term of the agreement plus one year following termination.
22
<PAGE>
Stock Option Plans
The Company has adopted a 1992 Employee Stock Option Plan (the
"Employee Plan") for officers, employees, and consultants of the Company or any
of its subsidiaries. In February 1996 the Board of Directors authorized the
amendment of the Plan subject to stockholder approval, increasing the number of
shares subject to the Plan from 263,500 shares of the Company's Common Stock to
750,000 shares. As of the date hereof, 234,000 of such options have been
granted.
The Employee Plan is administered by a Stock Option Committee (the
"Committee"), consisting of two disinterested members of the Board of Directors.
In general, the Committee will select the persons to whom options will be
granted and will determine, subject to the terms of the Employee Plan, the
number, the exercise period and other provisions of such options. The options
granted under the Employee Plan will be exercisable in such installments as may
be provided in the grant.
Options granted to employees may be either incentive stock options
under the Internal Revenue Code ("ISOs") or non-ISOs. The Committee may
determine the exercise price provided that in the case of ISOs, such price may
not be less than 100% (110% in the case of ISOs granted to holders of 10% of the
voting power of the Company's stock) of the fair market value (as defined in the
Employee Plan) of the Company's Common Stock at the date of grant. The aggregate
fair market value (determined at time of option grant) of stock with respect to
which ISOs become exercisable for the first time in any year cannot exceed
$100,000.
The options are evidenced by a written agreement containing the above
terms and such other terms and conditions consistent with the Plan as the
Committee may impose. Each option, unless sooner terminated, shall expire no
later than 10 years (five years in the case of ISOs granted to holders of 10% of
the voting power of the Company's stock) from the date of the grant, as the
Committee may determine. The Committee has the right to amend, suspend or
terminate the Employee Plan at any time, provided, however, that unless ratified
by the Company's stockholders within 12 months thereafter, no amendment or
change in the Employee Plan will be effective: (a) increasing the total number
of shares which may be issued under the Employee Plan; (b) reducing below fair
market value on the date of grant the price per share at which any option which
is an ISO may be granted; (c) extending the term of the Employee Plan or the
period during which any option which is an ISO may be granted or exercised; (d)
altering in any way the class of persons eligible to participate in the Employee
Plan; (e) materially increasing the benefits accruing to participants under the
Employee Plan; or (f) with respect to options which are ISOs, amending the
Employee Plan in any respect which would cause such options to no longer qualify
for incentive stock option treatment pursuant to the Internal Revenue Code of
1986.
Compensation of Directors
Directors who are not employed by the Company will be paid a fee of
$1,000 for each board of directors meeting attended and $500 for each committee
meeting attended. All directors are reimbursed for expenses incurred on behalf
of the Company.
23
<PAGE>
The Company has adopted a 1994 Directors' Stock Option Plan (the
"Directors' Plan") for non-employee directors of the Company and any of its
subsidiaries. The Directors' Plan authorizes the granting of stock options to
purchase an aggregate of 50,000 shares of the Company's Common Stock. Options
granted under the Directors' Plan do not qualify as incentive stock options
within the meaning of Section 422 of the Internal Revenue Code. The Directors'
Plan provides for the automatic grant to each of the Company's non-employee
directors of options to purchase 1,000 shares (increased to 5,000 shares
commencing 1997) of Common Stock on the first day of the Company's fiscal year.
Each director received 5,000 options in lieu of 1997 options on November 11,
1996. The options will have an exercise price of 100% of the fair market value
of the Common Stock on the date of grant, have a ten (10) year term and become
exercisable in two (2) equal annual installments commencing on the first
anniversary of the grant thereof. The options may be exercised by payment in
cash of the full option exercise price. At the discretion of the Board, the
exercise price may be paid by tendering of shares of Common Stock having a fair
market value equal to the option exercise price or by tendering cash in an
amount equal to the aggregate par value of the shares being purchased, together
with an interest bearing note for the remainder of the purchase price in form,
and having terms satisfactory to the Board, in its sole discretion.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of December 31, 1996 by (i) each stockholder
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, (ii) each director of the Company, and (iii) all
directors and executive officers as a group. Except as otherwise indicated, the
Company believes that the beneficial owners of the Common Stock listed below,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable.
24
<PAGE>
Name and address of Number of Shares Percentage
Beneficial Owner Beneficially Owned of Class
---------------- ------------------ --------
Dean L. Sloane 1,380,596(1) 28.9%
45 Morris Street
Yonkers, N.Y. 10705
Craig V. Sloane 90,000(2) 1.9%
45 Morris Street
Yonkers, N.Y. 10705
Bernard M. Kruger 114,400(3) 2.4%
170 East 78th Street
New York, N.Y. 10021
Lucius J. Riccio 4,000(3) *
315 East 69th Street
New York, N.Y. 10021
All directors and 1,616,496(4) 33.0%
executive officers as
a group (6 persons)
- ----------
* Less than 1%
(1) Does not include 100,000 shares owned by Mary K. Sloane, Dean L.
Sloane's wife. Dean L. Sloane disclaims beneficial ownership of such
shares.
(2) Includes 90,000 shares of the Company's Common Stock subject to
presently exercisable options.
(3) Includes 4,000 shares of the Company's Common Stock subject to
presently exercisable options.
(4) Includes 123,000 shares subject to presently exercisable options.
Item 12. Certain Relationships and Related Transactions
Not Applicable.
25
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
a) Exhibits
3.01 -- Restated Certificate of Incorporation of the Company.(1)
3.02 -- Amended and Restated By-Laws of the Company.(1)
4.01 -- Specimen Certificate representing the Common Stock, par value
$.001 per share.(1)
10.01 -- Employee Stock Option Plan.*(1)
10.02 -- Form of Employee Stock Option Agreement.*(1)
10.03 -- Directors' Stock Option Plan.(1)
10.04 -- Form of Director Stock Option Agreement.(1)
10.05 -- Employment Agreement entered into between the Company and
Dean L. Sloane.*(1)
10.06 -- Form of Employment Agreement entered into between the
Registrant and Craig V. Sloane.*(1)
10.07 -- Lease dated November 29, 1993 by and between D.S.
Corporation and 45 Morris Street Corporation.(1)
10.08 -- Indemnification Agreement entered into between the Company
and each of its directors.(1)
10.09+ -- Agreement dated as of January, 1994 between the Company and
Beth Abraham Hospital.(1)
10.10+ -- Agreement dated as of January 1, 1994 between the Company
and Beth Abraham Hospital.(1).
10.11(i) -- Warrants to purchase 30,000 shares issued to the Equity Group
exercisable immediately.(2)
(ii) -- Warrant to purchase 30,000 shares issued to the Equity Group
exercisable November 1995.(2)
10.12 -- Asset Purchase Agreement dated September 25,1995 between
the Company and Medical Transportation Corporation (3)
10.13 -- Credit Agreement, dated as of December 18, 1996, among the
Company, Atlantic Bank of New York, Fleet Bank, N.A. and
Israel Discount Bank of New York, including collateral
documents.
21.01 -- Subsidiaries of the Company.(1)
23.01 -- Consent of Richard A. Eisner & Company, LLP
26
<PAGE>
- -------------
+Confidential treatment has been requested for the deleted portion of this
document.
*Management contract or compensatory plan or arrangement.
(1) Such Exhibits were filed with the Company's Registration Statement
(File No. 33-80338) declared effective September 30, 1994 and are
incorporated herein by reference.
(2) Such Exhibits were filed with the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1994 and are incorporated
herein by reference.
(3) Such Exhibit was filed with the Company's Current Report on Form 8-K,
dated November 1, 1995, and is incorporated herein by reference.
(b) Reports on Form 8-K
None
27
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
- I N D E X -
PAGE
NUMBER
------
REPORT OF INDEPENDENT AUDITORS F-2
CONSOLIDATED BALANCE SHEET AS AT
DECEMBER 31, 1996 F-3
CONSOLIDATED STATEMENTS OF INCOME FOR
THE YEARS ENDED DECEMBER 31, 1996 AND
DECEMBER 31, 1995 F-4
CONSOLIDATED STATEMENTS OF CHANGES IN
STOCKHOLDERS' EQUITY FOR THE YEARS ENDED
DECEMBER 31, 1996 AND DECEMBER 31, 1995 F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR
THE YEARS ENDED DECEMBER 31, 1996 AND
DECEMBER 31, 1995 F-6
NOTES TO FINANCIAL STATEMENTS F-7
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Community Medical Transport, Inc.
We have audited the accompanying consolidated balance sheet of
Community Medical Transport, Inc. and subsidiaries (the "Company") as at
December 31, 1996 and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years in the two-year period
ended December 31, 1996. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present
fairly, in all material respects, the consolidated financial position of
Community Medical Transport, Inc. and subsidiaries at December 31, 1996, and the
consolidated results of their operations, and their consolidated cash flows for
each of the years in the two-year period ended December 31, 1996, in conformity
with generally accepted accounting principles.
/s/ Richard A. Eisner & Company, LLP
- ------------------------------------
New York, New York
February 28, 1997
(with respect to
Note G[2] March
24, 1997)
F-2
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31, 1996
A S S E T S
Current assets:
Cash ......................................................... $ 1,037,000
Short-term investments (Note B[5]) ........................... 1,733,000
Accounts receivable - trade, less allowance for
doubtful accounts of $334,000 ............................. 5,071,000
Prepaid insurance ............................................ 608,000
Prepaid income taxes ......................................... 213,000
Other current assets ......................................... 873,000
-----------
Total current assets .................................. 9,535,000
Property, equipment and leasehold improvements - net
(Notes B[2] and C) ........................................... 3,047,000
License - net (Note B[3]) ....................................... 605,000
Customer lists - net (Notes B[3] and J) ......................... 2,993,000
Other assets .................................................... 1,379,000
Goodwill - net (Notes B[3] and J) ............................... 5,290,000
Covenant not to compete, net .................................... 167,000
-----------
T O T A L ............................................. $23,016,000
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note E) ................... $ 1,495,000
Accounts payable and accrued expenses ........................ 2,204,000
Deferred taxes payable (Note F) ............................. 852,000
-----------
Total current liabilities ............................. 4,551,000
Long-term debt - net of current portion (Note E) ............... 5,136,000
Deferred taxes payable (Note F) ................................. 119,000
-----------
Total liabilities ..................................... 9,806,000
-----------
Commitments and other matters (Notes E, H and I)
Stockholders' equity (Note G):
Preferred stock, 4% cumulative, $.001 par value,
5,000,000 shares authorized, 12,500 shares designated
as Series A and B convertible preferred stock, 2,423
Series B shares issued and outstanding (liquidation
value of $2,423,000)
Class A nonvoting common stock, $.001 par value,
10,000,000 shares authorized, none issued
Common stock, $.001 par value, 20,000,000 shares
authorized, 4,770,940 shares issued and outstanding ........ 5,000
Capital in excess of par value ............................... 12,322,000
Retained earnings ............................................ 883,000
-----------
Total stockholders' equity ............................ 13,210,000
-----------
T O T A L ............................................. $23,016,000
===========
The accompanying notes to financial statements
are an integral part hereof.
F-3
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Year Ended
December 31,
-------------------------
1996 1995
----------- ----------
Net revenue (Note H) ............................... $15,532,000 $6,653,000
----------- ----------
Expenses:
Salaries and benefits ........................... 6,779,000 2,571,000
Fleet maintenance ............................... 1,207,000 520,000
Insurance ....................................... 1,059,000 536,000
Rent ............................................ 257,000 87,000
Depreciation and amortization ................... 517,000 217,000
----------- ----------
Total operating expenses ................. 9,819,000 3,931,000
----------- ----------
Gross profit ............................. 5,713,000 2,722,000
Selling, general and administrative expenses ....... 4,740,000 1,760,000
----------- ----------
Income from operations ............................. 973,000 962,000
Other income (Note M) ............................. 42,000
Interest income .................................... 140,000 151,000
Interest expense ................................... (463,000) (71,000)
----------- ----------
Income before provision for income taxes ........... 692,000 1,042,000
----------- ----------
Provision for income taxes:
Current ......................................... 91,000
Deferred ........................................ 207,000 450,000
----------- ----------
298,000 450,000
----------- ----------
NET INCOME ......................................... $ 394,000 $ 592,000
=========== ==========
Net income available to common shareholders ........ $ 357,000 $ 592,000
=========== ==========
Net income per share ............................... $ .10 $ .19
=========== ==========
Weighted average number of common and common
equivalent shares outstanding used in
computing earnings per share .................... 3,419,200 3,145,300
=========== ==========
The accompanying notes to financial statements
are an integral part hereof.
F-4
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
4% Cumulative
Dividend
Convertible
Preferred Stock
------------------ Common Stock Capital in Retained
Series A Series B -------------------- Excess of Earnings
Shares Shares Shares Amount Par Value (Deficit) Total
-------- -------- -------- ------- ---------- ---------- ------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1994 ........... 3,002,866 $3,000 $ 4,428,000 $(103,000) $ 4,328,000
Net income ............................ 592,000 592,000
Exercise of common stock
warrants ........................... 30,805 165,000 165,000
--------- ------ ----------- --------- ---------
Balance - December 31, 1995 ........... 3,033,671 3,000 4,593,000 489,000 5,085,000
Net income ............................ 394,000 394,000
Exercise of common stock
warrants ........................... 79,280 476,000 476,000
Offering of common stock .............. 277,348 1,337,000 1,337,000
Offering of convertible
preferred stock .................... 3,437.5 5,000 5,918,000 5,918,000
Conversion of preferred stock
into common stock .................. (3,437.5) (2,577) 1,380,641 2,000 (2,000) - 0 -
-------- ------ --------- ------ ----------- --------- -----------
BALANCE - DECEMBER 31, 1996 ........... - 0 - 2,423 4,770,940 $5,000 $12,322,000 $ 883,000 $13,210,000
======== ====== ========= ====== =========== ========= ===========
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
F-5
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................................ $ 394,000 $ 592,000
Adjustments to reconcile net income to cash (used in)
operating activities:
Depreciation and amortization expense ............................................. 759,000 217,000
Imputed interest on note payable .................................................. 44,000
Increase in deferred taxes payable ................................................ 207,000 450,000
Changes in operating assets and liabilities:
(Increase) in accounts receivable ............................................... (2,205,000) (1,885,000)
(Increase) in prepaid insurance and other
current assets ................................................................ (1,055,000) (49,000)
(Increase) in other assets ...................................................... (881,000) (405,000)
Increase in accounts payable and accrued expenses ............................... 1,643,000 116,000
(Increase) in prepaid income taxes .............................................. (73,000) (172,000)
----------- -----------
Net cash (used in) operating activities ....................................... (1,167,000) (1,136,000)
----------- -----------
Cash flows from investing activities:
Acquisition of customer lists ......................................................... (242,000)
Acquisition of equipment - net of disposals ........................................... (1,111,000) (851,000)
Decrease in related parties receivables ............................................... 20,000
Acquisition of businesses (Note J) ................................................... (4,978,000) (689,000)
Decrease in short-term investments .................................................... 323,000 897,000
----------- -----------
Net cash (used in) investing activities ....................................... (5,766,000) (865,000)
----------- -----------
Cash flows from financing activities:
Proceeds of bank borrowings ........................................................... 7,122,000 1,897,000
Principal repayments of bank borrowings ............................................... (6,878,000) (261,000)
Principal payments on capital lease obligations ....................................... (30,000) (58,000)
Net proceeds from issuance of common stock ............................................ 1,337,000
Net proceeds from issuance of preferred stock ......................................... 5,918,000
Net proceeds from exercise of common stock warrants ................................... 476,000 165,000
----------- -----------
Net cash provided by financing activities ..................................... 7,945,000 1,743,000
----------- -----------
NET INCREASE (DECREASE) IN CASH .......................................................... 1,012,000 (258,000)
Cash - beginning of year ................................................................. 25,000 283,000
----------- -----------
CASH - END OF YEAR ....................................................................... $ 1,037,000 $ 25,000
=========== ===========
Supplementary disclosures of cash flow information:
Cash paid during the year for:
Interest ............................................................................ $ 386,000 $ 65,000
Taxes ............................................................................... 309,000 71,000
Supplementary disclosures of noncash investing and financing activities:
Acquisition of property and equipment ............................................... $ 818,000 $ 233,000
Acquisition of intangibles .......................................................... 8,015,000 855,000
Notes payable in connection with acquisition of
business .......................................................................... (3,855,000) (399,000)
----------- -----------
Cash paid to acquire assets ......................................................... $ 4,978,000 $ 689,000
=========== ===========
</TABLE>
The accompanying notes to financial statements
are an integral part hereof.
F-6
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - Organization and Basis of Presentation:
The accompanying financial statements include the accounts of Community
Medical Transport, Inc. (the "Company") and its five wholly owned subsidiaries,
Community Ambulette Service, Inc. ("Ambulette"), First Help Ambulance and
Ambulette Inc. ("First Help"), Empire Ambulance and Ambulette Inc. ("Empire"),
Century Ambulance and Ambulette, Inc. ("Century") and Elite Ambulance and
Medical Coach, Inc. ("Elite") (collectively the "Companies"). All intercompany
balances and transactions have been eliminated in consolidation.
The Company provides specialized transportation for the handicapped and
disabled, mentally retarded, elderly and chronically ill to and from day
treatment centers, day care programs, hospitals, nursing homes and other health
care facilities in the New York metropolitan area. This service is provided in
ambulettes, which are specialized vans that contain wheelchair lifts or ramps.
The Company also provides emergency and nonemergency ambulance
transportation of patients who require basic medical care or supervision during
transport to and from hospitals, nursing homes and other health care facilities.
(NOTE B) - Significant Accounting Policies:
Significant accounting policies in the preparation of the financial
statements are as follows:
[1] Revenue recognition:
Revenue is recognized on the date of transportation. Revenue
is reported at the realizable amount from patients, third-party payers and
others under contractual arrangements.
[2] Property, equipment and leasehold improvements:
Property, equipment and leasehold improvements are stated at
cost. The Company computed depreciation and amortization using the straight-line
method over the estimated useful lives of the assets acquired as follows:
Ambulette and Ambulance fleet . . 5 - 7 years
Machinery, equipment and office
furniture. . . . . . . . . . . 3 - 10 years
Leasehold improvements. . . . . . Life of lease or
assets, if shorter
(continued)
F-7
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE B) - Significant Accounting Policies: (continued)
[3] Intangible assets:
Intangible assets consist of goodwill, licenses, customer
lists and covenants not to compete. The goodwill is being amortized on a
straight-line basis over twenty five years. The licenses are being amortized on
a straight-line basis over forty years. The customer lists are being amortized
using the straight-line method over the period of expected benefit which is from
five to ten years. The covenants not to compete are being amortized using the
straight-line method over the period of the covenants which is three years.
Intangible assets are evaluated periodically, and adjusted if necessary, if
events and circumstances indicate that the carrying amount is impaired.
[4] Income taxes:
The Company's income tax accounting method has automatically
changed from the cash method of accounting to the accrual method in compliance
with Internal Revenue Code ("IRC") Section 448. In accordance with IRC Section
448 the Company has elected to recognize the impact of such change over a
four-year period commencing January 1, 1996.
The Company applies Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" which requires the use of the
liability method of accounting for income taxes. The liability method measures
deferred income taxes by applying enacted statutory rates in effect at the
balance sheet date to the differences between the tax bases of assets and
liabilities and their reported amounts in the financial statements. The
resulting asset or liability is adjusted to reflect changes in the tax laws as
they occur.
[5] Short-term investments:
Short-term investments consist primarily of United States
government obligations with original maturities less than one year when
purchased. These investments are readily convertible to cash and are accounted
for as available for sale securities. Such investments are stated at fair value
which approximates cost.
[6] Net income per share:
Net income per share amounts were computed by dividing net
income after deduction of cumulative preferred stock dividends of $37,000 in
1996 by the weighted average number of common stock and common stock equivalents
outstanding during the years. Common stock equivalent shares are excluded from
the calculation when they are not dilutive. For 1996 and 1995 the computation of
fully diluted net income per share was not dilutive. During February 1997, the
Financial Accounting Standards Board issued Statement No. 128 which will require
computing net income per share on a simplified basis. Basic net income per share
will exclude dilution effective for the December 31, 1997 financial statements.
(continued)
F-8
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE B) - Significant Accounting Policies: (continued)
[7] Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reported period. Actual results could differ from those
estimates.
[8] Stock-based compensation:
During 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"). The provisions of SFAS No. 123 allow companies to either expense the
estimated fair value of employee stock options or to continue to follow the
intrinsic value method set forth in Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma
effects on net income had the fair value of the opinions been expensed. The
Company has elected to continue to apply APB 25 in accounting for its employee
stock option incentive plans (see Note G to the financial statements for further
information).
[9] Impairment of long-lived assets:
The Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed Of" ("SFAS No. 121") during the year. SFAS No.
121 establishes accounting standards for the impairment of long-lived assets,
certain identifiable assets, and goodwill related to those assets. There was no
effect of adoption of SFAS No. 121 on the financial statements.
[10] Fair value of financial instruments:
The carrying value of the Company's cash, short-term
investments, accounts receivable and accounts payable approximate fair value due
to their short-term nature. The fair value of long-term debt approximates the
carrying amount as the current rates on similar instruments is similar to the
effective rates.
[11] Reclassification:
Certain items in the prior year have been reclassified to
conform to the current year's presentation.
(continued)
F-9
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE C) - Property, Equipment and Leasehold Improvements:
Property, equipment and leasehold improvements consist of the
following:
Ambulette and ambulance fleet ....................... $3,115,000
Machinery, equipment and
office furniture ................................. 1,046,000
Leasehold improvements .............................. 218,000
----------
4,379,000
Less accumulated depreciation
and amortization ................................. 1,332,000
----------
T o t a l ................................. $3,047,000
==========
(NOTE D) - Leases:
The Company is obligated under noncancelable operating leases for
premises and equipment expiring in various years through the year 2005.
Future minimum lease payments are as follows:
1997. . . . . . . . . . . . $ 584,000
1998. . . . . . . . . . . . 405,000
1999. . . . . . . . . . . . 354,000
2000. . . . . . . . . . . . 314,000
2001. . . . . . . . . . . . 281,000
Thereafter. . . . . . . . . 235,000
----------
T o t a l . . . . $2,173,000
==========
Rent expense for the years ended December 31, 1996 and December 31,
1995 was approximately $282,000 and $87,000, respectively.
(continued)
F-10
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE E) - Long-Term Debt:
Long-term debt consists of the following:
<TABLE>
<S> <C> <C>
$6,500,000 Revolving Credit Note to bank, collateralized principally by all
accounts receivable, inventory and equipment, bearing interest at prime
rate plus 1/2% (8.75% at December 31, 1996), due December 18, 1998 ....................... $3,600,000 (1)
Note payable to bank, collateralized principally by all
accounts receivable, inventory and equipment, bearing interest at the
prime rate plus 1/2%, (8.75% at December 31, 1996), payable in quarterly
principal payments of $166,666 due December 18, 1999 ..................................... 2,000,000 (1)
Note payable to Jenco Ambulette Service Inc., (net of imputed
interest at 9%) payable in quarterly principal payments of
$16,667 due June 15, 1999 (see Note J[3]) ............................................... 148,000
Note payable to A-1 Ambulance Service Inc., bearing interest
at 8.25%, payable in quarterly principal payments of
$18,125 due June 12, 1998 (see Note J[4]) ............................................... 109,000
Note payable for acquired businesses with an effective
interest rate of 8.25% payable in quarterly principal
payments of $22,500 due June 12, 1998 ................................................... 134,000
Note payable to Elite Ambulance and Medical Coach Inc.,
(selling corporation) bearing interest at 8%, due on
August 22, 1997 (see Note J[6]) ......................................................... 380,000
Note payable to Medical Transportation Corporation,
(net of imputed interest at 9%), due October 31, 1997
(see Note J[1]) ......................................................................... 212,000
Notes payable for vehicles collateralized by the underlying
vehicles, bearing interest at 9.9 - 12.8%, payable in
monthly payments of $1,097 due October 20, 2001 ......................................... 48,000
----------
6,631,000
Less current maturities ........................................................................ 1,495,000
----------
T o t a l ................................................................ $5,136,000
==========
</TABLE>
Future principal payments of long-term debt are as follows:
1997 ................................................ $1,495,000
1998 ................................................ 4,424,000
1999 ................................................ 691,000
2000 ................................................ 11,000
2001 ................................................ 10,000
----------
$6,631,000
==========
(continued)
F-11
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE E) - Long-Term Debt: (continued)
(1) The Company's revolving credit agreement dated December 18, 1996
permits borrowings by the Company of up to $6,500,000 through December 18, 1998
for general working capital purposes. In addition, the agreement permits
borrowings under separate facilities of a $1,500,000 line of credit for fixed
asset acquisitions, and a $2,000,000 term note financing existing equipment and
refinancing of existing bank debt. Borrowings under these agreements are secured
by substantially all property, plant and equipment, inventory and accounts
receivable, as well as a $1,000,000 personal guarantee of the president of the
Company. The agreement imposes certain restrictions on borrowings, prohibits the
payment of dividends and requires the Company to meet certain net worth and
working capital requirements and other financial ratios.
(NOTE F) - Income Taxes:
The differences between the tax provision and the amount that would be
computed by applying the statutory federal income tax rate to income before
taxes is attributable to the following:
Year Ended
December 31,
----------------------
1996 1995
--------- ---------
Income tax provision at 34% ...................... $ 235,000 $ 354,000
Nondeductible items .............................. 51,000 14,000
State and local taxes, net
of federal benefit ............................ 49,000 82,000
Other ............................................ (37,000)
--------- ---------
$ 298,000 $ 450,000
========= =========
Temporary differences which give rise to the net deferred tax liability
are as follows:
Deferred tax liabilities:
Unrecognized prior year differences
between the accrual basis of accounting
and the cash basis of accouting
(see Note B[4]) ..................... $ (996,000)
Depreciation on property, equipment
and leasehold improvements ........... (119,000)
-----------
(1,115,000)
Deferred tax asset:
Bad debt reserve ........................ 144,000
-----------
Net deferred tax liability ................. $ (971,000)
===========
(continued)
F-12
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Stockholders' Equity:
[1] Public offering:
In October 1994, the Company completed a public offering of
1,136,200 units at $4 per unit, each unit consisting of one share of common
stock and one redeemable "Warrant" pursuant to a registration statement which
was declared effective by the Securities Exchange Commission on October 1, 1994,
resulting in net proceeds of $3,343,000.
In addition the Company issued to the underwriters a warrant
to purchase 100,000 units at $5.80 per unit through September 30, 1999. Such
units are identical to those sold in the public offering.
The warrants are exercisable into one share of common stock,
at a price of $6.00 per share, for a period of five years commencing with the
effective date of the public offering. The warrants are redeemable at a price of
$.10 per warrant, if the closing bid quotation of the Company's common stock is
in excess of $8.00 per share for twenty consecutive trading days.
In November 1994, the Company issued warrants to purchase
60,000 shares of common stock at $5.00 per share to its public relations firm.
[2] Security offerings:
On May 31, 1996, the Company completed a private placement of
277,348 shares of common stock at a price of $6.40 per share, for net proceeds
of approximately $1,337,000. The placement agent of such offering received a
commission, a nonaccountable expense allowance, warrants to purchase up to
138,674 shares of common stock at $10.00 per share and unit purchase options to
purchase up to 27,734 units at $7.68 per unit. Each unit consists of one share
of common stock and one-half of a warrant, each full warrant entitling the
holder to purchase one share of common stock at $10.00 per share.
On July 31, 1996 and August 7, 1996, the Company completed an
equity financing from foreign investors, for 3,437.5 shares of Series A
convertible preferred stock with a liquidation value of $3,437,000 and 5,000
shares of Series B convertible preferred stock with a liquidation value of
$5,000,000, respectively, for net proceeds of approximately $5,918,000. The
preferred stockholders of each series is entitled to a 4% cumulative dividend on
the stated liquidation value, and each share is convertible into shares of
common stock at the lower of the market value for the five trading days prior to
conversion or $7.00 per share, and will automatically convert on
(continued)
F-13
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Stockholders' Equity: (continued)
[2] Security offerings: (continued)
July 31, 1998. All fees and commissions associated with such offerings are
recorded against paid in capital. All of the Series A have been converted into
common stock as of December 31, 1996 and 2,577 shares of Series B have been
converted into common stock. The liquidation value of Series B is $2,423,000. In
connection with such foreign financing, warrants to purchase up to 135,000
shares of common stock at $5.00 per share have been issued to a designee of a
consultant.
Subsequent to the balance sheet date, 467.5 shares of
preferred stock were converted into 145,286 common shares with 1955.5 shares
remaining to be converted. Subsequent to the above conversion, the Board of
Directors authorized the adoption of 7,500 shares of the Corporation to be
designated as Series BB preferred stock. Series BB shall have the same rights
and preferences as Series B except as follows: eleven percent of each
outstanding share shall be convertible into common stock at any time after April
1, 1997 with an additional eleven percent of each outstanding share to be
convertible on the first day of the next seven months and the final twelve
percent to be convertible at any time after December 1, 1997. All outstanding
shares will automatically convert on July 31, 1998.
The conversion will be based upon the liquidation value of the
preferred stock and will be exchangeable at $3.50 per share. Then, the remaining
1955.5 shares of Series B preferred stock were exchanged for 1955.5 shares of
Series BB preferred stock and 150,000 common stock purchase warrants. These
warrants are exercisable at an initial exercise price of $4.00 per share,
provided, however, that the purchase price may be adjusted under certain
circumstances. The expiration date of the common stock purchase warrant is
November 18, 2000.
[3] Stock option plans:
The Company applies APB 25 in accounting for its employee
stock option plans and accordingly, recognizes compensation expense for the
difference between the fair value of the underlying common stock and the
exercise price of the option at the date of the grant. The effect of applying
SFAS No. 123 on 1996 and 1995 pro forma net income as stated below is not
necessarily representative of the effects on reported net income for future
years due to, among other things: (1) the vesting period of the stock options
and the (2) fair value of additional stock options in future years. Had
compensation cost for the Company's stock option plans been determined based
upon the fair value at the grant date for awards under the plans consistent with
the methodology prescribed under SFAS No. 123, the Company's net
(continued)
F-14
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Stockholders' Equity: (continued)
[3] Stock option plans: (continued)
income in 1996 and 1995 would have been approximately $204,000 and $553,000 or
$.05 per share and $.18 per share, respectively. The fair value of the options
granted during 1996 and 1995 are estimated as $2.95 and $4.04 per share,
respectively, on the date of grant using the Black Scholes option pricing model
with the following assumptions: dividend yield 0%, volatility of 45%, risk free
interest rate of 6.2% for 1996 and 6.5% for 1995 and expected life of 10 years.
The 1992 Employees Stock Option Plan (the "Plan") provides for
the granting of options to purchase up to 263,500 shares of the Company's common
stock at a price for the incentive options, not less than the fair market value
of the common stock on the date of grant. In August 1996, an amendment was
approved to increase the number of shares available for issuance by 486,500
options to 750,000 options. The vesting period of the options is determined by
the Board of Directors and is generally one year. Outstanding options expire
after ten years.
The Plan is currently administered by a Stock Option Committee
(the "Committee"), consisting of two members of the Board of Directors. The
options granted under the Plan will be exercisable in such installments as may
be provided in the grant.
Options granted to employees may be either incentive stock
options under the Internal Revenue Code ("ISOs") or non-ISOs. The Committee may
determine the exercise price provided that in the case of ISOs, such price may
not be less than 100% (110% in the case of ISOs granted to holders of 10% of the
voting power of the Company's stock) of the fair market of the Company's common
stock at the date of grant. The aggregate fair market value (determined at time
of option grant) of stock with respect to which ISOs become exercisable for the
first time in any year cannot exceed $100,000.
Each option, unless sooner terminated, shall expire no later
than 10 years (five years in the case of ISOs granted to holders of 10% of the
voting power of the Company's stock) from the date of the grant. In 1992 options
for 150,000 shares exercisable at $.89 per share have been granted by the
Company. In 1995, 15,000 options were granted to executives of the Company. In
1996, 113,000 options were granted to certain employees of the Company,
including prior options that were canceled and reissued as of November 11, 1996.
(continued)
F-15
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Stockholders' Equity: (continued)
[3] Stock option plans: (continued)
Additional information with respect to options issued to
employees under the Plan activity is summarized as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Outstanding at beginning
of year ..................................... 165,000 $ 1.40 150,000 $ .89
Options granted ................................ 113,000 5.30 15,000 6.50
Options canceled ............................... (44,000) 7.25
------- -------
Outstanding at the end
of year ..................................... 234,000 $ 2.19 165,000 $ 1.40
======= =======
Options exercisable at
year-end .................................... 192,000 $ 1.68 157,000 $ 1.16
======= =======
</TABLE>
The following table summarizes information about stock options to
employees at December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------- ----------------------------
Weighted-
Average
Remaining Weighted- Weighted-
Contractual Average Average
Range of Number Life Exercise Number Exercise
Exercise Price Outstanding (In Years) Price Exercisable Price
-------------- ----------- ---------- ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$ .89 150,000 7.7 $ .89 150,000 $ .89
$3.19 to $4.75 74,000 9.5 4.23 37,000 4.23
$6.50 10,000 9.6 6.50 5,000 6.50
-------- --------
234,000 8.4 $2.19 192,000 $1.68
======== ========
</TABLE>
At December 31, 1996 516,000 options were available for future grant
under the Plan.
(continued)
F-16
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Stockholders' Equity: (continued)
[3] Stock option plans: (continued)
In June 1994, the Company adopted a directors' stock option
plan (the "Directors' Plan") for directors of the Company or any of its
affiliated companies. The Directors' Plan authorizes the granting of stock
options to purchase an aggregate of not more than 50,000 shares of the Company's
common stock. Each director of the corporation who is not an employee of the
corporation shall be eligible for options under this plan. Options to purchase
1,000 shares of stock shall automatically be granted under the Directors' Plan
each year on the first day of the Company's fiscal year, commencing January 1,
1995, to each eligible director. Each option granted shall be exercisable as to
50% of the number of shares of stock covered thereby on the first anniversary of
the grant of such option and as to the balance on the second anniversary of the
grant of such option. The exercise price of each option granted shall be the
fair market value of the stock on the date the option is granted. 2,000 options
were granted to directors in 1995 and 1996. In November 1996, the Board of
Directors authorized the amendment of the Directors' Plan increasing the options
to be granted from 1,000 shares each to 5,000 shares each to begin January 1,
1997 with the January 1, 1997 options being granted on November 11, 1996. In
addition, the options granted January 1, 1996 were canceled and reissued as of
November 11, 1996.
Additional information with respect to options issued to
outside directors under the Directors' Plan activity is summarized as follows:
Year Ended December 31,
-------------------------------------------
1996 1995
----------------- ------------------
Weighted- Weighted-
Average Average
Exercise Exercise
Shares Price Shares Price
------ ----- ------ -----
Outstanding at beginning
of year. . . . . . . . 2,000 $4.38
Options granted . . . . . 14,000 4.72 2,000 $4.38
Options canceled. . . . . (2,000) 7.44
------
Options at end of year. . 14,000 $4.32 2,000 $4.38
====== =====
Options exercisable at
year-end . . . . . . . 8,000 $4.33 1,000 $4.38
====== =====
(continued)
F-17
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE G) - Stockholders' Equity: (continued)
[3] Stock option plans: (continued)
The following table summarizes information about stock options
to directors outstanding at December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------------------------- ----------------------------
Weighted-
Average
Remaining Weighted- Weighted-
Contractual Average Average
Range of Number Life Exercise Number Exercise
Exercise Price Outstanding (In Years) Price Exercisable Price
-------------- ----------- ---------- ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$4.38 2,000 8 $4.38 2,000 $4.38
$4.31 12,000 9 4.31 6,000 4.31
------- ------
14,000 8.9 $4.35 8,000 $4.33
======= ======
</TABLE>
[4] Warrants:
In December 1995, 30,805 warrants were exercised at $6.00 per
unit, resulting in net proceeds of $165,000. During 1996, 79,280 warrants were
exercised at $6.00 per unit, resulting in net proceeds of $476,000.
(NOTE H) - Concentration of Risk:
Revenues from principal sources are as follows:
Year Ended
December 31,
------------
1996 1995
---- ----
Principal customer ..................................... 11% 19%
Medicaid and Medicare .................................. 60 69
Private insurance and other
nongovernment agencies .............................. 29 12
--- ---
T o t a l .................................... 100% 100%
=== ===
[1] Reliance on principal customers:
The Company provides services to a principal customer, a
hospital and its affiliates, pursuant to two written contracts renewed on
January 1, 1994. These four year contracts give the Company the exclusive right
to provide medical transportation services for the patients of this customer.
The contracts may be terminated by the hospital if the Company fails to perform
its obligations thereunder. These contracts can also be renegotiated by the
hospital if there is a decrease in services.
(continued)
F-18
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE H) - Concentration of Risk: (continued)
[2] Dependence on governmental reimbursement:
The Company derives the majority of its revenue from
reimbursement by third party payers, particularly Medicaid and Medicare,
typically invoicing and collecting payments directly from the third party payer.
Reimbursement can be influenced by the financial instability
of private third party payers and the budget pressures and cost shifting by
governmental payers. A reduction in coverage or reimbursement rates by third
party payers could have a material adverse effect on the Company's results of
operations.
The Company is subject to audits of its Medicaid and Medicare
reimbursement claims by third-party fiscal intermediaries and governmental
agencies. The Company was the subject of such a review. The Company believes
that it has complied with all regulations. The Company believes that the state
will make a claim in an amount not to exceed $105,000 for previous payments made
to the Company. In the opinion of management adjustments would not be material
to the financial position or results of operations of the Company. As a provider
of services under the Medicaid and Medicare programs, the Company is also
subject to the Medicaid and Medicare fraud and abuse laws.
At December 31, 1996, 44% of accounts receivable was due from
Medicaid and Medicare, 30% from the hospital facilities which includes its
principal customer and its affiliates and 26% from private insurers and other
nongovernmental sources.
(NOTE I) - Employment Agreements:
Upon consummation of the public offering, the Company entered into
employment agreements with the President and Vice President of the Company. The
agreements with the President has a three year term expiring in 1997 and
provides for annual base compensation of $225,000 (subject to annual increases
based on a published cost of living index). In the event the Company terminates
the employment agreement with the President without cause or if, under certain
circumstances, the President terminates the agreement, the Company has agreed to
pay termination pay of one years salary at December 31, 1996. The agreement with
the Vice President provides for an annual base compensation of $85,000 (subject
to annual 5% increases) and has a three year term expiring in 1997. As a normal
course of business the Company enters into employment agreements with key
personnel that are for less than a three year term.
(continued)
F-19
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE J) - Acquisitions:
[1] On November 1, 1995, the Company acquired 24 ambulettes, a customer
list and goodwill for $1,088,000 pursuant to an asset purchase agreement with
Medical Transportation Corporation ("Medical").
The Company paid $689,000 on or before the closing, with a
balance at December 31, 1996 of $212,000 (net of imputed interest of $16,000) to
be paid on October 31, 1997.
The purchase price was allocated as follows:
Vehicles. . . . . . . . $ 233,000
Customer lists. . . . . 304,000
Goodwill. . . . . . . . 551,000
----------
$1,088,000
==========
Unaudited pro forma summary of consolidated operations for
1995 assuming the acquisition of Medical had taken place on January 1, 1995 is
as follows:
Net revenue. . . . . . . . . $8,106,000
==========
Net income . . . . . . . . . $ 752,000
==========
Net income per common share. $.24
====
[2] In 1995, the Company has recorded $259,000 as customer list in
connection with the execution of service agreements with new health care
providers. The providers were introduced to the Company by a corporation which
the Company intended to acquire. The above amount represents cost of services
and advances to and expenses for the benefit of this corporation.
[3] On May 21, 1996, the Company purchased from an ambulette provider
in Brooklyn, New York, (Jenco) equipment and ambulettes for a cash payment of
$30,000 and a balance of $200,000 to be paid in twelve equal quarterly
installments commencing September 1996. The note is subject to reduction
depending upon certain factors, including revenues derived from former customers
of the provider.
[4] On June 12, 1996, the Company completed the acquisition of certain
assets from A-1 Ambulance Service Inc. ("A-1") through it's wholly owned
subsidiary, Empire. The Company acquired equipment, ambulances, customer lists,
a covenant not to compete and goodwill for a cash payment of $425,000 and a
balance of $325,000 to be paid in eight quarterly installments commencing
September 1996.
(continued)
F-20
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE J) - Acquisitions: (continued)
[5] On August 15, 1996, the Company acquired certain assets from
Hudvalco, Inc. and Harvey H. McGeorge, Inc. (collectively "Hudvalco") and all
the outstanding common stock of four entities related to Hudvalco through common
ownership, through its wholly owned subsidiary, Century. The Company acquired
ambulance equipment, licenses to operate an ambulance business previously
conducted by Hudvalco, customer lists and goodwill. The total consideration for
the acquisition was $5,950,000, subject to certain adjustments, of which
$3,000,000 was paid in cash, approximately $940,000 consisted of the assumption
of debt and $2,010,000 consisted of a ninety-day (90) promissory note.
Additionally, the Company will acquire all the common stock of
Richards Decker Operating Corp., ("RDO"), an entity also related to Hudvalco
through common ownership, for $1,150,000. The Company operates RDO under an
operating agreement which entitles the Company to the revenues earned and incurs
all costs relating to the operations of RDO.
[6] On August 22, 1996, a wholly owned subsidiary of the Company
completed the purchase from Elite Ambulance & Medical Coach, Inc. ("Elite") of
ambulettes and certain other assets, including accounts receivable and a license
to operate an ambulette service by the State of New Jersey. The assets were
acquired pursuant to an asset purchase agreement among the Company, Elite and
its shareholders. Elite operated an ambulette service from Orange, New Jersey
servicing Essex County, New Jersey and other nearby counties under the name
Elite. After the acquisition, the subsidiary changed its name to Elite Ambulance
and Medical Coach, Inc. and is operating the acquired ambulette service under
the name Elite. The consideration for the acquisition was $760,000 of which half
was paid in cash at the closing and the balance pursuant to a one year note (the
"Note"). In connection with the acquisition, the Company (i) assumed certain
debts related to the assets, including bank indebtedness of approximately
$19,500, (ii) entered into a contract with affiliates of Elite to acquire the
real estate facility containing Elite's operating facility for approximately
$1,200,000 in cash and short-term mortgage notes, and (iii) assumed a lease of
such facility until the closing of the real estate contracts of sale. The
Company terminated the agreement for the purchase of the property and is
negotiating for a long term lease of the facility. The Company has requested
return of $360,000 paid as a down payment on the building. The Company is also
seeking to renegotiate the purchase price of the assets acquired based on what
it believes to be inaccuracies and misrepresentations.
(continued)
F-21
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE J) - Acquisitions: (continued)
[7] In August 1996 a wholly owned subsidiary purchased from an
ambulette provider in New Jersey (First Invalid Coach Services, Inc.)
ambulettes, its customer list and goodwill for approximately $109,000. $59,000
was paid at the closing with an estimated amount of $50,000 to be paid in twelve
monthly payments based on a percentage of cash receipts generated from the
client base. Included in accrued expenses at December 31, 1996 is approximately
$35,000 of the balance to be paid.
[8] Unaudited pro forma summary of consolidated operations for 1996 and
1995 assuming the acquisitions had taken place on January 1, 1995 is as follows:
1996 1995
------ ------
Revenue. . . . . . . . . . . $23,373,000 $21,058,000
============ ===========
Net income . . . . . . . . . $ 651,000 $ 1,204,000
============ ===========
Net income per common share. $.14 $.38
===== ====
<TABLE>
<CAPTION>
First
Invalid
Acquisitions A-1 Century Elite Coach Jenco Total
-------------- ----- --------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Vehicles and equipment . . . $ 104,000 $ 537,000 $ 143,000 $ 34,000 $ 30,000 $ 848,000
Other current assets . . . . 187,000 187,000
Customer list. . . . . . . . 153,000 1,991,000 277,000 50,000 212,000 2,683,000
Goodwill . . . . . . . . . . 321,000 3,979,000 597,000 25,000 4,922,000
Noncompete covenants . . . . 200,000 200,000
Licenses . . . . . . . . . . 225,000 100,000 325,000
----------- ----------- ----------- --------- -------- ----------
Total assets . . . 1,003,000 6,607,000 1,204,000 109,000 242,000 9,165,000
Assumption of liabilities. . 166,000 166,000
----------- ----------- ----------- --------- --------- ----------
Net assets
acquired . . . . $1,003,000 $6,607,000 $1,038,000 $109,000 $242,000 $8,999,000
=========== =========== =========== ========= ========= ==========
Notes due former owners. . . $ 325,000 $2,010,000 $ 380,000 $ 50,000 $200,000 $2,965,000
Payments . . . . . . . . . . 425,000 3,000,000 400,000 59,000 30,000 3,914,000
Bank note. . . . . . . . . . 940,000 940,000
Liabilities assumed which
are recorded as additions
to the purchase price . . 106,000 419,000 95,000 620,000
Acquisition costs. . . . . . 147,000 238,000 163,000 12,000 560,000
----------- ----------- ----------- --------- --------- ----------
$1,003,000 $6,607,000 $1,038,000 $109,000 $242,000 $ 8,999,000
=========== =========== =========== ========= ========= ===========
</TABLE>
(continued)
F-22
<PAGE>
COMMUNITY MEDICAL TRANSPORT, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(NOTE K) - Pending Acquisitions:
The Company has signed several definitive agreements to acquire
ambulance and ambulette companies in the New York and New Jersey metropolitan
area. Closings of the transactions are subject to certain conditions including
the ability to arrange financing and due diligence reviews. Included in other
assets is approximately $443,000 of acquisition costs.
(NOTE L) - Employee Benefits:
[1] 401(k) Retirement Savings Plan:
In November 1996, the Board of Directors authorized the
adoption of a 401(k) Retirement Savings Plan (the "401(k) Plan") with an
effective date of adoption of January 1, 1997. The 401(k) Plan covers all
employees who meet the 401(k) Plan's eligibility requirements. Eligible
employees may elect to defer up to 15% of their yearly compensation. Employer
contributions are discretionary. A determination letter has not yet been
received from the Internal Revenue Service.
[2] Collective bargaining agreement:
Prior to the acquisition of "A-1" (see Note J) the Company was
not a party to any collective bargaining agreements. The drivers, emergency
medical technicians and paramedics of A-1 are party to a collective bargaining
agreement and are covered for sick and welfare benefits funded by the employer.
The employer makes a monthly contribution for each eligible employee towards the
Welfare Fund.
Subsequent to the balance sheet date the ambulance drivers
located in Yonkers and the ambulette drivers located in Brooklyn and Yonkers
voted to be unionized.
(NOTE M) - Management Agreement:
One of the Company's subsidiaries has entered into a management
agreement with an ambulance company to conduct, supervise and manage their daily
operations including personnel, finance and accounting, quality control and
other day to day functions. The subsidiary will be paid on a "cost-plus" basis.
The management fee included in other income represents 10% of the subsidiary's
direct and allocated indirect costs in performing services under the agreement.
The direct and allocated indirect costs are reimbursable and have been excluded
from the results of operations. The agreement is in effect until the closing of
a contemplated asset purchase agreement.
F-23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Yonkers, State of New York, on the 10th day of April, 1997.
COMMUNITY MEDICAL TRANSPORT, INC.
By: /s/ Dean Sloane
---------------------------------------------
Dean Sloane,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Capacity Date
- ---------- -------- ----
<S> <C> <C>
/s/ Dean L. Sloane Director, President and Chief April 10, 1997
- ------------------------------ Executive Officer (Principal
Dean L. Sloane Executive Officer, Principal
Financial and Accounting
Officer)
/s/ Donald J. Panos Chief Financial Officer, April 10, 1997
- ----------------------------- Principal Financial Officer
Donald J. Panos and Principal Accounting
Officer
/s/ Bernard M. Kruger Director April 10, 1997
- --------------------------
Bernard M. Kruger
/s/ Lucius J. Riccio Director April 10, 1997
- ------------------------------
Lucius J. Riccio
/s/ Craig V. Sloane Director April 10, 1997
- -----------------------------
Craig V. Sloane
</TABLE>
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of December 18, 1996, between
COMMUNITY MEDICAL TRANSPORT, INC., a Delaware corporation, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower"), and ATLANTIC BANK OF NEW YORK,
a New York banking corporation, with a principal office located at 960 Avenue of
the Americas, New York, New York, (hereinafter referred to as the "Bank"), for
itself and as agent (in which latter role it may be referred to as "Bank" or
"Agent") for Fleet Bank, N.A., a national banking association having an office
for the transaction of business at 244 Westchester Avenue, White Plains, New
York (hereinafter referred to as "Fleet") and Israel Discount Bank of New York,
a New York banking corporation with an office for the transaction of business
located at 511 Fifth Avenue, New York, New York (hereinafter referred to as
"IDB", and the Bank, Fleet and IDB, individually referred to as a "Lender" and
collectively referred to as the "Lenders").
ARTICLE I
AMOUNT AND TERMS OF CREDIT
1.1 LOANS, CLOSING DATE. Subject to and upon the terms and
conditions herein set forth, including the definitions contained in Article XII,
the Lenders shall lend to the Company and the Company shall borrow from the
Lenders the aggregate sum of $10,000,000.00 (the "Credit Amount"). Such
borrowing is being made simultaneously with the execution of this Agreement (the
"Closing Date").
1.2 REVOLVING CREDIT NOTE (FACILITY A). The Lenders shall
establish a Revolving Line of Credit in favor of the Company, pursuant to which
the Lenders will, in accordance with the terms of three Revolving Credit Notes
substantially in the form annexed hereto as Exhibit "A", lend and re-lend to the
Borrower amounts which shall not exceed at any one time the lesser of (i) SIX
MILLION FIVE HUNDRED THOUSAND DOLLARS ($6,500,000) or (ii) the Borrowing Base.
The Revolving Credit Notes shall mature on December 18, 1998.
1.3 TERM LOAN NOTES (FACILITIES B & C). $3,500,000 of the
total borrowing will be evidenced by six TERM LOAN NOTES substantially in the
forms annexed hereto as Exhibits "B" and "C". The Note evidencing Facility B
will be in the principal sum of $2,000,000 and will mature on December 18, 1999.
The Notes evidencing Facility C will be in the principal sum of $1,500,000 and
will mature on December 18, 2000.
<PAGE>
1.4 CONTRIBUTION AND ALLOCATION OF LENDERS' FUNDS.
The Credit Amount shall be apportioned among the Lenders as
follows: 60%, or $6,000,000 will be contributed by the Bank; 20%, or $2,000,000,
shall be contributed by Fleet, and 20%, or $2,000,000 shall be contributed by
IDB. The respective contributions of each Lender will be divided pro rata among
Facilities A, B & C, expressed as follows:
Bank Fleet IDB Total Facility
Facility A $3,900,000 $1,300,000 $1,300,000 $ 6,500,000
Facility B $1,200,000 $ 400,000 $ 400,000 $ 2,000,000
Facility C $ 900,000 $ 300,000 $ 300,000 $ 1,500,000
---------- ---------- ---------- -----------
Total per Grand Total
Lender $6,000,000 $2,000,000 $2,000,000 $10,000,000
1.5 INTEREST. The Notes shall bear interest from the date
thereof on the unpaid principal balance at each Lender's respective prime or
Benchmark Rate, as the case may be, as announced to be in effect from time to
time, plus one-half (0.5%) per cent, but in no event to exceed the maximum rate
permitted by law. Interest shall be payable monthly on the first day of each
month commencing on the first day of January, 1997, and continuing monthly
thereafter on the same day until the entire unpaid balance is repaid in full.
Interest shall be calculated on the basis of a 360-day year and actual days. In
the event the Bank shall elect to accelerate any or all Notes due to any Event
of Default as defined in Article IX hereto or other occurrence specified in this
Agreement or the accompanying Notes, the rate of interest accruing hereunder
shall be increased by three (3%) per cent per annum provided, however, that in
no event shall the rate of interest accruing hereunder exceed the maximum rate
allowable by law.
1.6 FEES. The following fees will apply to the credits
established herein:
(a) Agent fee - $25,000, payable to the Atlantic Bank of
New York on or before January 15, 1997.
(b) Up-front fee 3/8 of 1% of the Credit Amount, or $37,500.
The fee shall be allocated to the Lenders in proportion
to their respective contributions to the Credit Amount.
-2-
<PAGE>
(c) Unused fee - 1/4 of 1% of average daily unused portion
of Facility A, payable quarterly, and allocated to the
Lenders in proportion to their respective contributions
to Facility A.
1.7 MECHANISM FOR BORROWING. Borrower may request advances on
one business day's notice, only in writing sent via fax, hand delivery or mail
to the Bank. Upon receipt, the Bank will notify Fleet and IDB as to the amount
required from each of them. Fleet and IDB will, upon receipt of such notice from
the Bank, immediately wire transfer to the Bank their pro rata share of the
requested advance.
ARTICLE II
PREPAYMENTS
2.1 OPTIONAL PREPAYMENTS. Upon not less than five days prior
written notice to the Bank, the Company shall have the right to prepay any or
all of the Notes in whole or in part without penalty or premium. Unless
otherwise specified or agreed, all prepayments shall be applied to Facilities B
and C in inverse order of maturity. The Bank shall deliver to Lenders copies of
all such notices.
ARTICLE III
SECURITY AND GUARANTEE
As security for and to guarantee the full and timely payment
of the principal of and interest on the Notes and all other Indebtedness or
liabilities of the Company to the Lenders, whether now existing or hereafter
arising:
3.1 GUARANTEES. The Company shall cause to be duly executed
and delivered to the Bank a guarantee of the Company's Indebtedness to the
Lenders by Dean L. Sloane, Community Ambulette Service Inc., First Help
Ambulance and Ambulette Inc., Century Ambulance and Ambulette, Inc., Elite
Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette Inc. and all
future subsidiaries of the Company (the "Guarantors"). All guarantees shall be
unlimited as to time or amount except for the guarantee of Dean L. Sloane, which
shall be limited to $1,000,000.
3.2 SECURITY INTEREST. The Company and the Guarantors shall
duly execute and deliver to the Bank a security agreement, in form and substance
satisfactory to the Lenders and their counsel, evidencing the granting by the
Company of a security interest in and to the personal property set forth in the
schedule marked Exhibit "D" annexed hereto.
-3-
<PAGE>
3.3 ACCOUNT BALANCE. The Company and each Guarantor mentioned
in Section 3.1 hereby grant to the Lenders a security interest in and to any and
all account balances maintained with any of the Lenders to the extent of the
entire interest therein of the Company and/or Guarantor.
3.4 FILING AND RECORDING. The Company shall, at its cost and
expense, cause all instruments and documents given as security pursuant to this
Agreement to be duly recorded and/or filed in all places necessary, in the
opinion of the Lenders, to perfect and protect the lien interest of the Lenders
in the property covered thereby.
ARTICLE IV
CONDITIONS PRECEDENT
The effectiveness of this Agreement and the obligation of the
Lenders to consummate any of the transactions contemplated hereby shall be
subject to the satisfaction of the following conditions precedent at or prior to
the time of the closing date:
4.1 OPINION OF COUNSEL. The Bank shall have received from
counsel for the Company a favorable opinion addressed to the Lenders and dated
the closing date, in form and substance satisfactory to the Lenders.
4.2 SECURITY AND GUARANTEE INSTRUMENTS. The Bank shall have
received all the instruments, documents and property then required to be
delivered pursuant to Article III or pursuant to the instruments and documents
referred to in Article III, and the same shall be in full force and effect.
4.3 NOTES AND FEES. Each Lender shall receive three Notes in
accordance with Sections 1.2 and 1.3, and all fees, except that specified in
Section 1.6(a), shall be paid.
4.4 CORRECTNESS OF WARRANTIES. All representations and
warranties contained herein or otherwise shall be true and correct in all
material respects.
4.5 NO EVENT OF DEFAULT. There shall exist no event of
default, as defined in Article IX, and no condition, event or act which, with
notice or lapse or time, or both, would constitute an event of default.
4.6 OFFICERS' CERTIFICATE. There shall be delivered to each
Lender a certificate dated the closing date, signed by the chief executive
officer or chief
-4-
<PAGE>
financial officer of the Company, certifying in such detail as the Bank may
request, to the fulfillment of the conditions specified in Sections 4.4 and 4.5
and, with respect to such other Sections as may be requested by the Bank.
4.7 PROCEEDINGS, RECEIPT OF DOCUMENTS. All corporate and
legal proceedings and all documents and instruments in connection with the
borrowing and pursuant to Articles III and IV shall be satisfactory in form and
substance to the Bank and Olshan Grundman Frome & Rosenzweig, LLP, counsel to
the Bank. The Bank and its counsel shall have received all information and
copies of all documents, including records of corporate proceedings, which the
Bank or its counsel may have reasonably requested in connection therewith, such
documents where requested by the Bank or its counsel to be certified by
appropriate corporate or governmental authorities.
4.8 COLLATERAL AUDIT. There shall be delivered to the Lenders
prior to closing the collateral audit referred to in Section 7.7, which audit
shall be satisfactory for the Lenders in their sole discretion.
4.9 There shall be delivered to the Bank prior to the closing
satisfactory evidence of the insurance required by Section 7.3(A).
4.10 There shall be repaid to Fleet and Bank all amounts then
due and owing on its existing loan to the Borrower.
ARTICLE V
USE OF PROCEEDS
The Company agrees that the proceeds of the borrowing
hereunder shall be used solely as follows:
Facility A ($6,500,000) - Refinance existing bank and acquisition
debt, working capital and general
corporate purposes
Facility B ($2,000,000) - Finance existing equipment and
refinance existing bank debt
Facility C ($1,500,000) - Finance acquisition of additional
ambulances and ambulettes
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ARTICLE VI
FINANCIAL COVENANTS
The Company covenants and agrees that until the Notes,
together with interest and all its other Indebtedness to the Lenders under this
Agreement are paid in full, unless specifically waived by the Lenders in
writing:
6.1 Quick Assets will at all times constitute no less than 55%
of Borrower's net worth, as defined in Section 6.2.
6.2 The Borrower's and Guarantors' consolidated net worth
(defined for the purpose of Article 6 only as the book value of assets less all
liabilities) will be at least $12,500,000 until December 31, 1996. For the year
beginning January 1, 1997, net worth will be at least $13,000,000, and the
minimum net worth will increase by $500,000. The net proceeds of any warrants
exercised for each year that any portion of the Facility is outstanding shall be
included in the net worth calculation for that year.
6.3 The Borrower's and Guarantors' total debt will not exceed
150% of its net worth at any given time.
6.4 Dean Sloane will remain as Chief Executive Officer.
6.5 At all times, the ratio of EBITDA to all interest expense,
will be at least 2.5 to 1 and the ratio at EBITDA to all debt service (principal
and interest) will be at least 1.25 to 1, both measured on a rolling four
quarters basis.
6.6 Lenders' approval will be required for all acquisitions
involving cash payments of more than $500,000.
6.7 No cash dividends will be issued by the Borrower in
respect of any common stock.
6.8 Testing of the ratios required by Sections 6.1, 6.2, 6.3
and 6.5 will occur no less than four times per year, as of March 31, June 30,
September 30 and December 31.
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ARTICLE VII
OTHER AFFIRMATIVE COVENANTS
The Company covenants and agrees that until the Notes,
together with interest and all its other Indebtedness to the Lenders under this
Agreement are paid in full, unless specifically waived by the Bank in writing:
7.1 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Company
shall furnish to the Lenders:
(A) As soon as practicable and in any event within one
hundred twenty days after the close of each fiscal year of the Company, a copy
of the Form 10K as filed with the Securities and Exchange Commission, together
with a balance sheet of the Company and the related statements of operations,
retained earnings and cash flows for the year then ended, and management letter
on a consolidated and consolidating basis, all in reasonable detail and audited
by Richard A. Eisner & Co., the independent certified public accountants
currently retained by the Company or such other certified public accountants
selected by the Company and reasonably satisfactory to the Bank; and
concurrently with such financial statements, a written statement signed by such
independent accountants to the effect that, in making the examination necessary
for their certification of such financial statements, they have not obtained any
knowledge of the existence of any event of default or other act, condition or
event which, with the giving of notice or lapse of time, or both, as specified
in Article IX, would constitute an event of default, or, if such independent
accountants shall have obtained from such examination any such knowledge, they
shall disclose in such written statement the event of default or other act,
condition or event and the nature thereof. In addition, the Company shall
furnish a copy of the Form 10Q for each fiscal quarter filed with the Securities
and Exchange Commission, within sixty days subsequent to the end of the
respective fiscal quarter. The Company shall, in addition, furnish monthly,
within 15 days of the first of the month, accounts receivable summaries and
aging schedules in form and substance acceptable to the Lenders.
(B) Promptly upon receipt thereof, copies of all
financial reports, if any, submitted to the Company by its auditors in
connection with each annual or interim audit of its books by such auditors;
(C) Promptly upon the commencement thereof, written
notice of any litigation, including arbitrations, and of any proceedings before
any governmental agency (including but not limited to Medicare or Medicaid
related organizations or fiscal intermediaries) which would, if successful,
materially adversely affect the Company, or where the amount involved exceeds,
in the aggregate, $10,000.00, and is not
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acknowledged by the insurance carrier to be covered in full by insurance
required to be maintained under Section 6.3;
(D) Furnish, before the 15th of each month, a Borrowing
Base Certificate together with supporting summary accounts receivable schedules
on the form annexed as Exhibit "E";
(E) Furnish, within one hundred twenty days after the
close each calendar year, a personal financial statement of Dean L. Sloane which
reflects his financial condition as of a date no earlier than November 30 of
such preceding calendar year; and
(F) With reasonable promptness, such other information
respecting the business, operations and financial condition of the Company, as
any Lender may, from time to time, request. Each Lender is hereby authorized to
deliver a copy of any financial statement or any other information relating to
the business, operations or financial condition of the Company which may be
furnished to it or come to its attention pursuant to this Agreement or
otherwise, to any regulatory body or agency having jurisdiction over such Lender
or to any person which shall, or shall have any right or obligation to, succeed
to all or any part of such Lender's interest in the Note, this Agreement and any
security herein provided for or otherwise securing the Note.
7.2 TAXES AND CLAIMS. The Company shall duly pay and discharge
(a) all taxes, assessments and governmental charges upon or against the Company
or its subsidiaries or their respective properties or assets prior to the date
on which penalties attach thereto, unless and to the extent that such taxes are
being diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established, and (b) all lawful claims,
whether for tort damages, labor, materials, supplies, services, repairs, wages
or otherwise, which would, if unpaid, become a lien or charge upon the
properties or assets of the Company or its subsidiaries in excess of $10,000.00,
unless and to the extent only that the same are being diligently contested in
good faith and by appropriate proceedings and appropriate reserves therefor have
been established.
7.3 INSURANCE.
(A) The Company shall (1) keep all of its properties and
those of the Guarantors adequately insured at all times with responsible
insurance carriers against loss or damage by fire and other hazards (2) maintain
adequate insurance at all times with responsible insurance carriers against
liability on account of damage to persons and property and under all applicable
workmen's compensation laws; (3) insure the life of Dean L. Sloane in an amount
not less than $1,000,000 and assign
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such policy to the Lenders as additional security for the obligation established
by this Agreement; and (4) maintain adequate insurance covering such other risks
as the Lenders may reasonably request. For the purposes of this Section 7.3 (A),
insurance shall be deemed adequate if the same is not less extensive in coverage
and amount than is customarily maintained by other persons engaged in the same
or similar business similarly situated.
(B) The Company shall, from time to time, upon request of
any Lender, promptly furnish or cause to be furnished to such Lender, evidence,
in form and substance satisfactory to it, of the maintenance of all insurance
required by this Section 7.3 to be maintained, including, but not limited to,
such originals or copies as such Lender may request of policies, certificates of
insurance, riders and endorsements relating to such insurance and proof of
premium payments.
(C) The Company shall, on all insurance policies name the
Agent as loss payee or mortgagee or secured party or lienholder, or other
suitable designation depending upon the nature of the property and the Lenders'
security interest therein. All such policies shall contain provisions that the
same may not be cancelled or terminated without first giving at least ten days
written notice to the Lenders.
7.4 BOOKS AND RESERVES. The Company shall:
(A) Maintain at all times true and complete books,
records and accounts in which true and correct entries shall be made of its
transactions in accordance with generally accepted accounting principles
consistently applied and consistent with those applied in the preparation of the
financial statements referred to in Section 10.7; and
(B) By means of appropriate entries, reflect in its
accounts and in all financial statements furnished pursuant to Section 7.1
proper liabilities for all taxes and proper reserves for depreciation, renewals
and replacements, obsolescence and amortization of its properties and bad debts,
all in accordance with generally accepted accounting principles consistently
applied, as above described.
7.5 PROPERTIES IN GOOD CONDITION. The Company shall keep its
properties in good repair, working order and condition and shall, from time to
time, make all necessary and proper repairs, renewals, replacements, additions
and improvements thereto so that the business carried on may be properly and
advantageously conducted at all times in accordance with prudent business
management.
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7.6 INSPECTION BY LENDERS. Upon reasonable notice, the
Company shall allow any representative of any Lender during normal business
hours to visit and inspect any of the properties of the Company, to examine the
books of account and other records and files of the Company, to make copies
thereof and to discuss the affairs, business, finances and accounts of the
Company with the officers and employees, all at such reasonable times and as
often as such Lender may reasonably request. Furthermore, the Company shall,
within ninety (90) days of the date on which the closing of this transaction
occurs, cause to be delivered to Lenders, or allow Lenders to perform, at
Lenders' option, an appraisal of all motor vehicles owned by the Company and its
subsidiaries, such appraisal to be performed by an appraiser satisfactory to the
Lenders.
7.7 COLLATERAL AUDITS. In addition to any other inspection,
it is specifically agreed that the Bank may perform a collateral audit prior to
closing and thereafter annually and at such time as the Bank may reasonably
request, at the Company's expense. Such audit shall be performed by an
independent entity acceptable to the holder of 66 2/3% of the Credit Amount.
7.8 BUSINESS OF COMPANY. The Company shall continue to
conduct its business and activities as presently actively engaged in.
7.9 PAY INDEBTEDNESS TO LENDERS AND PERFORM OTHER COVENANTS.
The Company shall (a) make full and timely payment of the principal of and
interest on the Notes and all other Indebtedness of the Company to the Lenders,
whether now existing or hereafter arising (b) duly comply with all the terms and
covenants contained in each of the instruments and documents given to the Lender
in connection with or pursuant to this Agreement, all at the times and places
and in the manner set forth therein; and (c) at all times maintain the liens and
security interests provided for under or pursuant to this Agreement as valid and
perfected liens and security interests on the property intended to be covered
thereby.
7.10 FURTHER ASSURANCES. The Company shall, at its cost and
expense, upon request of any Lender, duly execute and deliver to the Lenders
such further instruments and do and cause to be done such further acts as may be
necessary or proper, in the reasonable opinion of the Lenders, to carry out more
effectually the provisions and purposes of this Agreement.
ARTICLE VIII
NEGATIVE COVENANTS
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The Company covenants and agrees that until the Notes,
together with interest and all its other Indebtedness to the Lenders under this
or any other Agreement, is paid in full, the Company shall not, without the
prior written consent of the Lenders in accordance with Section 11.4:
8.1 SUBSIDIARIES. Cause to be created or acquired subsidiary
or subsidiaries without the express written consent of the Bank, unless such
subsidiaries are 100% owned by the Company, consolidated in the Company's
financial statements, and execute a guarantee of the obligations established in
this Credit Agreement.
8.2 MORTGAGE, LIENS, ETC. Create, incur, assume or suffer to
exist any mortgage pledge, security interest, encumbrance, lien or charge of any
kind upon or defect in title to or restriction which has a material adverse
effect upon the use of any of the Company's property or assets of any character
considered as a whole, (including but not limited to inventory), whether owned
at the date hereof or hereafter acquired, or hold or acquire any property or
assets of any character under conditional sales, finance lease or other title
retention agreements, except:
(A) Mortgages, liens, pledges and security interests in
favor of the Lenders; or created in connection with an acquisition.
(B) (1) Liens arising out of judgments or awards in
respect of which the Company shall in good faith be prosecuting an appeal or
proceeding for review and in respect of which the Company shall have secured a
subsisting stay of execution pending such appeal or proceeding for review,
provided the Company shall have set aside on its books adequate reserves with
respect to judgments or awards in excess of $10,000.00; (2) liens for taxes,
assessments or governmental charges or levies provided payment thereof shall not
at the time be required in accordance with the provisions of Section 6.2; (3)
deposits, liens or pledges to secure payment of workmen's compensation,
unemployment insurance, pensions or other social security obligations, public or
statutory obligations, surety, stay or appeal bonds, or other similar
obligations arising in the ordinary course of business; (4) mechanics',
workmen's, repairmen's, warehousemen's, vendors' or carriers' liens, or other
similar liens arising in the ordinary course of business and securing sums which
are not past due, or deposits or pledges to obtain the release of any such
liens; (5) statutory landlord's liens under leases to which the Company is a
party; and (6) zoning restrictions, easements, licenses, restrictions on the use
of real property or minor irregularities in title thereto, which do not
materially impair the use of such property in the operation of the business of
the Company or the value of such property in the operation of the business of
the Company or the value of such property for the purpose of such business;
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8.3 INDEBTEDNESS. Create, incur, assume or suffer to exist,
contingently or otherwise, any Indebtedness for monies borrowed or secured debt,
except:
(A) Indebtedness of the Company to the Lenders; or
created in connection with an acquisition.
(B) All Indebtedness of the Company existing as of the
date hereof:
(C) Indebtedness (not overdue) secured by mortgages,
liens or security interests permitted by Section 8.2, if any;
(D) Unsecured Subordinated Debt;
8.4 MERGER, SALE OF ASSETS, DISSOLUTION, ETC. Enter into any
transaction of merger or consolidation or transfer, sell, assign, lease or
otherwise dispose of all or a substantial part of its properties or assets or
its Notes or accounts receivable or any stock (other than directors' qualifying
shares) or Indebtedness or any assets or properties necessary or desirable for
the proper conduct of its business, or change the nature of its business, or
wind up, liquidate or dissolve, or agree to do any of the foregoing;
8.5 FIXED ASSETS. Acquire fixed assets (other than
acquisition assets and assets acquired through Facility "C") in excess of
$250,000 in any fiscal year, such limits to be non-cumulative. Fixed assets
shall include motor vehicles.
8.6 SALE OF ASSETS. Conduct a bulk sale of any of its fixed
assets (including motor vehicles) in excess of $100,000.00 in any fiscal year.
Any assets sold by the Company for a price in excess of $25,000 per year shall
be applied to the repayment of the unpaid principal balance.
8.7 AFFILIATED DEBT. Repay, directly or indirectly, any loan
or advance made by an officer, shareholder or director of the Company to the
Company.
8.8 DIVIDEND. Pay, directly or indirectly, dividends or
distributions to holders of common stock of the Company.
8.9 ACQUISITIONS. Acquire any business, directly or
indirectly, that is (1) outside of the medical transportation field or (2) where
the acquisition requires a cash payment of $500,000 or more.
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8.10 STOCK PURCHASE. Repurchase any of its issued and
outstanding capital stock, provided, however, that the agreement currently in
existence with the holders of Series B preferred shares may be honored, provided
that no violation of Article VI occurs as a result.
8.11 GUARANTEES. The Company or any Guarantor of the Company
shall guarantee the indebtedness of any third party.
8.12 OFFICERS' LOANS. Make any loans to officers of the
Company or third party, except that loans in the normal course of business or
which do not exceed $25,000 in the aggregate, shall be permitted and provided
further, that officers may exercise stock options on a credit basis.
ARTICLE IX
EVENTS OF DEFAULT
9.1 DEFAULTS. "Event of Default" shall mean the occurrence
of any of the events specified in the definition of "Default" set forth in the
following sentence and, except for the default specified in Section 9.1(A), as
to which no cure period shall be applicable, the continuance of such event
unremedied for a period of five (5) Business Days after the Bank shall have
given written notice to the Borrowers. "Default" shall mean any of the following
events:
(A) The Borrower shall fail to make any payment of
principal of, or interest on, or any other amount owing in respect of the Notes
when due and payable and declared due and payable; or
(B) The Borrower shall fail to make any payment to the
Bank as required under this Agreement or any other document executed as part of
this loan transaction (hereinafter, "Loan Document(s)"); or
(C) Any Person shall breach any material terms,
provisions or condition of this Agreement or of any other Loan Document; or
(D) Any material representation, covenant or warranty
made or deemed made by any Person in this Agreement or any other Loan Document,
or which is contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement or
any other Loan Document shall prove to have been false in any material respect
on or as of the date made or deemed made; or
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(E) Any Person shall breach in the material observance
or performance of any warranty, covenant or representation contained in this
Agreement or any other Loan Document; or
(F) Any Person's failure to permit inspection of
(i) any books or records of the Borrower under the provisions of this Agreement
or any other Loan Document or (ii) the business, assets and operations of the
Borrower as provided under this Agreement; or
(G) The Security Agreement or any document executed in
connection therewith or pursuant thereto shall for any reason cease to be in
full force and effect; or
(H) A Guarantor delivers to the Bank a notice
purporting to terminate or disclaim any liabilities or Obligations under the
Guarantee or Security Agreement; or
(I) The Guarantees or Security Agreement shall for any
reason cease to be in full force and effect; or
(J) The Company or any Guarantor shall commence any
case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or shall make a general
assignment for the benefit of its creditors; or (ii) there shall be commenced
against the Company or any Guarantor any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (b) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii)
there shall be commenced against the Company or any Guarantor any case,
proceeding or other action seeking issuance of warrant of attachment, execution,
restraint or similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which shall have not
been vacated, discharged, or stayed or bonded pending appeal within thirty (30)
days from the entry thereof; or (iv) The Company or any Guarantor shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) of this
paragraph (r) of this subsection 8.1; or (v) the Company or any Guarantor shall
generally not, or shall be unable to, or shall admit in writing its inability to
pay its debts as they become due; or
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(K) the rendition by any court of a final judgment in
an amount in excess of $50,000 against the Company or any Guarantor which shall
not be satisfactorily stayed, discharged, vacated or set aside within thirty
(30) days of the making thereof; of the attachment of any property of the
Company or any Guarantor which has not been released or provided for to the
reasonable satisfaction of the Lenders within thirty (30) days after the making
thereof; or
(L) the institution of any litigation, suit, or
proceeding or filing of any motion in a litigation, suit, action or proceeding
to set aside or to compel the Lenders to repay or turnover to a trustee,
receiver, custodian, debtor-in-possession or any other Person or entity under
any bankruptcy or insolvency law, state or federal law, common law or equitable
doctrine, monies paid by the Company or Guarantor to the Lenders; or
(M) any litigation, action, suit or proceeding is
instituted, joined, answered, or participated in by the Company and/or a
Guarantor to obtain a ruling, determination or judgment that any terms and
conditions of this Agreement or any other Loan Document or any security
interest, lien, assignment or pledge under this Agreement or any other Loan
document is unenforceable, invalid, unperfected or void in any respect; or
(N) the Lenders shall have reasonably determined in
their sole and absolute discretion that one or more conditions exist or events
have occurred which have resulted or may result in a material adverse effect on
the business operations, properties or assets or in the condition, financial or
otherwise of the Company or any of the Guarantors.
9.2 REMEDIES. Upon any occurrence of an Event of Default, and
in accordance with the provisions of Article XI any or all of the following
actions may be taken: (i) the Lenders may, at their option, declare the Notes
hereunder (with accrued interest thereon) and all other amounts or charges owing
under this Agreement and any other Loan Document to be immediately and fully due
and payable and the same, and all interest accrued thereon, shall forthwith
become due and payable without presentment, demand, protest or notice of any
kind, all of which are hereby waived, anything contained herein or in any
instrument evidencing the Loans to the contrary notwithstanding; (ii) the
Lenders may, at their option, exercise all rights and remedies under this
Agreement, any other Loan Document or any Security Document or applicable law;
(iii) the Lenders may, at their option, without notice or demand, collect,
receive, appropriate and realize upon the Collateral or any part thereof of
sell, lease, assign or otherwise dispose of the Collateral or any part thereof;
(iv) each Lender may immediately (and without notice) hold, apply, freeze or
offset, funds on deposit with such Lender in any account, fund or certificate
maintained by the Borrower or any
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Guarantor; and (vi) the Lenders may obtain a receiver or other trustee or
fiduciary to conduct and operate the business of the Company.
9.3 AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT. The Company
hereby irrevocably constitutes and appoints the Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Company and the name of the Company, or in its own name, from time
to time in the Agent's discretion upon the occurrence and during the continuance
of an Event of Default, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement or to protect the rights of the
Lenders under this Agreement or any other Loan Document or in furtherance of the
exercise of any remedies provided under this Agreement or any other Loan
Document. All powers of attorney granted under this Agreement are coupled with
an interest and are irrevocable.
9.4 (A) The Company and Guarantors appoint the firm of Parker
Duryee, Rosoff & Haft, a professional corporation, New York, New York , or any
successor in interest thereof, or any other agent which the Borrowers and
Guarantor may designate in writing in the manner provided in subsection , as
their agent to receive service of any process which may be required (the
"Borrower's Agent"). (B) The Company and Guarantors represent and warrant that
the Borrower's Agent has agreed to accept such appointment. (C) Process may be
served in any suit, action or proceeding by mailing a copy thereof via overnight
express mail or hand delivery to the Borrower's Agent, and the Company and
Guarantors agree that such service shall be deemed in every respect effective
service of process upon the Company and/or the Guarantors, as the case may be.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement
and to make the loan as herein provided for, the Company and Guarantors make the
following representations and warranties which shall survive the execution and
delivery of this Agreement and the Note and shall apply irrespective of any
inspection or examination at any time made by or on behalf of the Lenders.
10.1 CORPORATE STATUS. The Company is a duly organized
corporation in good standing under the laws of the state of its incorporation,
with perpetual corporate existence and has the corporate power and authority to
own its properties and to transact the business in which it is engaged or
presently proposes to engage. The Company is duly qualified as a foreign
corporation and in good standing
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in all states where the nature of its business or the ownership or use of
property requires such qualification.
10.2 CORPORATE POWER AND AUTHORITY. The Company and each other
corporation, if any, executing any of the documents delivered or to be delivered
pursuant to Article III has the corporate power to borrow and to execute,
deliver and carry out the terms and provisions of this Agreement, the Notes and
all instruments and documents delivered by it pursuant to this Agreement, and
the Company and each such corporation has taken or caused to be taken all
necessary corporate action (including but not limited to the obtaining of any
consent of stockholders required by law or by the Articles or Certificate of
Incorporation or By-Laws of the Company, any subsidiary or any such corporation)
to authorize the execution, delivery and performance of this Agreement, the
borrowing hereunder, the making and delivery of the Notes, and the execution,
delivery and performance of the instruments and documents delivered by it
pursuant to this Agreement.
10.3 NO VIOLATION OF AGREEMENT. The Company is not in default,
under any indenture, mortgage, deed of trust, agreement or other instrument to
which it is a party or by which it may be bound. Neither the execution and
delivery of this Agreement, the Notes or any of the instruments and documents to
be delivered pursuant to this Agreement, nor the consummation of the
transactions herein and therein contemplated, nor compliance with the provisions
hereof or thereof will violate any law or regulation or any order or decree of
any court or governmental instrumentality, or will conflict with or result in
the breach of or constitute a default under any indenture, mortgage, deed of
trust, agreement or other instrument to which the Company is a party or by which
it may be bound, which default, if any, would have a material adverse effect on
the business or condition (financial or otherwise) of the Company or any of its
properties, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property of the Company, other than the lien created
hereby, or violate any provision of the Articles or Certificate of Incorporation
or By-Laws of the Company or any subsidiary.
10.4 NO BURDENSOME AGREEMENTS. The Company is not a party to
any agreement or instrument or subject to any corporate restriction (including
any restriction set forth in its Articles or Certificate of Incorporation)
materially and adversely affecting its operations, business, properties or
financial condition.
10.5 NO LITIGATION. Except as set forth in Schedule A annexed
hereto, there are no actions, suits or proceedings pending or, to the knowledge
of the Company, threatened against or affecting the Company before any court,
arbitrator or governmental or administrative body or agency which might result
in any material adverse change in the business, operations, properties or assets
or in the condition, financial or otherwise of the Company and Guarantors.
Neither the Company nor any
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subsidiary is in default in any material respect under any applicable statute,
rule, order, decree or regulation of any court, arbitrator or governmental body
or agency having jurisdiction over the Company or any subsidiary.
10.6 GOOD TITLE TO PROPERTIES. The Company and its
subsidiaries have good and marketable title to all their respective properties
and assets subject to no liens, mortgages, pledges, security interests,
encumbrances or charges of any kind except such as would be permitted under the
provisions of this Agreement.
10.7 FINANCIAL STATEMENTS. The audited consolidated balance
sheet of the Company as at December 31, 1995 and the related statements of
operations, retained earnings and cash flows for the year then ended, including
in each case the related schedules and notes heretofore delivered to the
Lenders, are all true and correct and presently fairly in all material respects
(1) the financial position of the Company as at the date of such balance sheet
and (2) the results of the operations of the Company and its consolidated
subsidiaries for said fiscal year. The Company did not have any direct or
contingent liabilities as of such date which are not provided for or reflected
in such balance sheets or referred to in the Notes thereto. All such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a basis consistently maintained throughout the period
involved. There has been no material adverse change in the assets, liabilities,
properties, business and condition, financial or otherwise, of the Company and
its consolidated subsidiaries considered as one enterprise since September 30,
1996.
10.8 TAX RETURNS. The Company has filed all tax returns which
are required to be filed, taking into account all extensions of time for paying
and filing of taxes, and has paid all taxes which have become due pursuant to
such returns or pursuant to any assessment received by them.
10.9 TRADEMARKS, PATENTS, LICENSES, ETC. The Company is the
owner of all the trademarks and patents represented to be owned by the Company
and, to the knowledge of the Company, there are no actions or proceedings in
existence, threatened or otherwise, contesting the validity or ownership of any
trademarks, patents or other intangible assets owned by the Company. Further,
the Company is the holder of all Federal, State, Municipal and non-governmental
licenses represented to be held by the Company, such licenses have not been
revoked, suspended, or otherwise restricted and there are no actions or
proceedings in existence, threatened or otherwise (other than any renewal
applications which may be required) which would in any way affect the Company's
rights in and to such licenses.
10.10 GOVERNMENT ACTION. No action of, or filing with, any
governmental or public body or authority (other than normal reporting
requirements or filing under the provisions of Section 3.4) is required to
authorize, or is otherwise
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required in connection with the execution, delivery and performance of this
Agreement, the Note or any other instruments or documents to be delivered
pursuant to this Agreement.
10.11 DISCLOSURE. Neither the schedules hereto, nor the
financial statements referred to in Section 10.7, nor any certificate statement,
report or other document furnished to the Lenders by the Company in connection
herewith or in connection with any transaction contemplated hereby, nor this
Agreement, contain any untrue statement of a material fact or omit to state any
material fact in order to make the statements contained therein not misleading.
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ARTICLE XI
PARTICIPATING LENDERS
11.1 APPOINTMENT, POWER AND IMMUNITIES OF AGENT. Each Lender
hereby irrevocably appoints and authorizes the Agent to act as its agent
hereunder and under any other Loan Document with such powers as are specifically
delegated to the Agent by the terms of this Agreement and any other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document, and shall not by reason of
this Agreement be a trustee for any Lender. The Agent shall not be responsible
to the Lenders for any recitals, statements, representations or warranties made
by the Borrower or any officer or official of the Borrower or any other Person
contained in this Agreement or any other Loan Document, or in any certificate or
other document or instrument referred to or provided for in, or received by any
of them under, this Agreement or any other Loan Document, or for the value,
legality, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document or any other document or instrument
referred to or provided for herein or therein, for the perfection or priority of
any collateral security for the Loans except to the extent that failure to
perfect is due to the act of or failure to act by, Agent or its Agents,
resulting from the willful misconduct and from negligence of the Agent and its
Agents or for any failure by the Borrower to perform any of its obligations
hereunder or thereunder. The Agent may employ agents and attorneys-in-fact and
shall not be responsible, except as to money or securities received by it or its
authorized agents, for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither the Agent nor any
of its directors, officers, employees or agents shall be liable or responsible
for any action taken or omitted to be taken by it or them hereunder or under any
other Loan Documents or in connection herewith or therewith, except for its or
their own gross negligence or willful misconduct.
11.2 RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any thereof by
telephone, telex, telegram or cable) reasonably believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Agent. The Agent may deem and
treat each Lender as the holder of the Loan made by it for all purposes hereof
unless and until a notice of the assignment or transfer thereof satisfactory to
the Agent signed by such Lender shall have been furnished to the Agent but the
Agent shall not be required to deal with any Person who has acquired a
participation in any Loan from a lender. As to any matters not expressly
provided for by this Agreement or any other Loan Document, the Agent shall in
all
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cases be fully protected in acting, or in refraining from acting, hereunder in
accordance with instruments signed by the Lenders, and such instruments of the
Lenders and any action taken or failure to act pursuant thereto shall be binding
on all of the Lenders and any other holder of all or any portion of any Loan.
11.3 DEFAULTS. The Agent shall take such action with respect
to such Default or Event of Default which is continuing as shall be directed or
authorized by the holders of 662/3% of the Credit Amount; provided that, unless
and until the Agent shall have received such directions, the Agent may take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interest of the Lenders;
and provided further that the Agent shall not be required to take any such
action which it determines to be contrary to law.
11.4 AUTHORIZATIONS. No change to the Credit Amount, Interest
Rate, fees, maturing date for payment of any principal amount, amortization
schedules, definitions of Borrowing Base and Eligible Accounts, or the
collateral or any waiver of any conditions precedent shall be made unless
authorized in writing by the holders of 100% of the dollar amount of the
obligations established by this Credit Agreement. No other changes to this
Credit Agreement shall be made unless authorized in writing by the holders of
662/3% of the Credit Amount.
11.5 INDEMNIFICATION OF AGENT. The Lenders agree to indemnify
the Agent, pro-rata, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement, any
other Loan documents or any other documents contemplated by or referred to
herein or the transactions contemplated hereby or thereby or the enforcement of
any of the terms hereof or thereof or of any such other documents or
instruments; provided that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
party to be indemnified.
11.6 NON-RELIANCE ON AGENT AND OTHER LENDERS. Each of the
Lenders agrees that it has, independently and without reliance on the Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and its Subsidiaries
and decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement
or any other loan document. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the
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affairs, financial condition or business of the Borrower or any subsidiary (or
any of their affiliates) which may come into the possession of the Agent.
11.7 LIABILITY OF AGENT. The Agent shall not have any
liabilities or responsibilities to the Borrower on account of the failure of any
Lender to perform its obligations under this Agreement or any other loan
document.
11.8 AGENT SOLE REPRESENTATIVE. Borrower agrees that only the
Bank, as Agent, is authorized to represent the Lenders with respect to this
transaction, and that neither the Bank (in its capacity as a Lender), Fleet nor
IDB has any independent authority to take any action with respect to this credit
or to modify or terminate any of the provisions of this Credit Agreement or any
of the Loan Documents. Borrower agrees that it will not cite any action,
representation, or communication by any participant as authority or
justification for any legal position or action which Borrower may take.
ARTICLE XII
DEFINITIONS
For all purposes of this Agreement, unless the context
otherwise requires:
"Account" shall mean any obligation owed to the Borrower or
any Guarantor, regardless of whether such obligation is matured or unmatured,
disputed or undisputed, liquidated or contingent.
"Account Debtor" shall mean any person liable for payment of
an Account.
"Agent" shall mean the Bank, acting in its capacity as Agent
for the Lenders.
"Borrowing Base" shall mean, on any date of determination
thereof, the amount in Dollars equal to 85% of the aggregate net amount of
Eligible Accounts of the Borrower and Guarantors on such date (less such
reserves as the Lenders in their sole discretion elects to establish against
such Eligible Accounts).
"Cash Equivalents" shall mean (a) securities issued or
directly and fully guaranteed or insured by the United States Government or any
agency or instrumentality thereof, (b) time deposits and certificates of deposit
of the Bank or any domestic commercial bank having capital and surplus of at
least $100,000,000 and (c) commercial paper of any Person organized under the
laws of the United States or any
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State thereof that is not a Subsidiary or an Affiliate of the Company rated in
the highest category by Standard & Poor's Ratings Group or Moody's Investors
Service, Inc.
"Current Assets" shall be determined in accordance with
generally accepted accounting principles for the Company and shall include, but
not be limited to, the following items: (1) cash in bank, or hand and in
transit; (2) customers' accounts receivable acquired in the ordinary course of
business; (3) inventories at not in excess of cost or current market value,
whichever is lower; (4) readily marketable, direct obligations of the United
States of America, certificates of deposit, securities, money market funds, and
commercial paper of a corporation designated AA by Moody's, in each case at not
in excess of cost or current market value, whichever is lower; (5) cash
surrender value of any insurance policies on the lives of the Company's
officers, of which the Company is both owner and beneficiary; (6) loans
permitted to be made under Section 7.12; and (7) prepaid expenses, all after
deduction of adequate reserves provided such reserve(s) is proper, in accordance
with generally accepted accounting principles, provided, however, that any of
such assets (other than those assets pledged to the Bank) which are subject to a
pledge, lien or security interest to secure payment of any Indebtedness which is
not included in Current Liabilities shall be excluded from current assets to the
extent of such Indebtedness.
"Current Liabilities" shall be determined in accordance with
generally accepted accounting principles for the Company and shall include, as
of the date of determination thereof, (1) all Indebtedness payable on demand or
maturing within one year after such date without any option on the part of the
obligor to extend or renew beyond such year; (2) final maturities, installments
and required prepayments of Indebtedness required to be made within one year
after such date; and (3) all other items (including taxes accrued as estimated
and reserves for deferred income taxes) which, in accordance with generally
accepted accounting principles, would be included on a balance sheet as Current
Liabilities.
"EBITDA" shall mean, with respect to the Borrowers (and their
Subsidiaries) for any period, earnings before interest expense, taxes,
depreciation and amortization on a consolidated basis for such period, computed
in accordance with GAAP.
"Eligible Accounts" shall mean, at any date, as reasonably
determined by the Lenders, Accounts of any Borrower or Guarantor(i) (a) which
are bona fide, valid and legally enforceable obligations of the parties thereto
or the Account Debtor in respect thereof and arise from the actual sale and
delivery of goods, inventory or rendition of services in the ordinary course of
business to such parties or Account Debtor, (b) as to which the Borrower,
Guarantor, Account Debtor or any other party to such Account is not in default
or is not likely to become in default in the performance or observance of any
terms thereof in any material respect; (c) as to which such Account
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Debtor and the Borrower or have fully performed all its obligations then
required to be performed under each such Account, and the right, title and
interest of such Person in any such Account is not subject to any reduction,
discount, chargeback, defense, offset, counterclaim or claim; (d) which do not
contravene, or arise from sales which contravene, any law, rule or regulation
applicable thereto, (e) which Account Debtor is not insolvent; provided, the
Bank determines such Account Debtor is acceptable; (f) which Account Debtor is
not the subject of any bankruptcy or insolvency proceeding unless such Account
Debtor is a recognized domestic or foreign air line or air carrier; provided,
the Bank determines such Account Debtor is acceptable; (ii) which conform in all
other material respects to the representations and warranties contained herein
and the Loan Documents; (iii) which have been invoiced by such Borrower and
which have not been outstanding for a period of more than one hundred twenty
(120) days after the date of the related invoice or in the absence of an
expressed date, the date as provided by customary practice; provided, however,
the Lenders may include as eligible accounts invoices outstanding for more than
120 days; (iv) which are owned by such Borrower free and clear of all Liens or
other rights or claims of any Person (except in favor of or for the benefit of
the Lenders), (v) which arise from sales in respect of which all sales, excise
or similar taxes have been paid in full or have otherwise been provided for so
as not to be included in the outstanding amount of such Accounts; (vi) which are
denominated in Dollars and payable only in Dollars and only in the United
States; (vii) which Account Debtor is organized under the laws of (a) the
United States of America (or any state thereof) or (b) Canada (or any province
thereof), Puerto Rico and U.S Virgin Islands; provided, the Bank determines that
any Account Debtor under this subparagraph (vii)(b) is acceptable; (viii) which
are not owed by any Account Debtor which is an Affiliate or Subsidiary of any
Borrower or Guarantor; and (ix) the Account is determined by the Bank in its
absolute discretion to constitute adequate collateral to support the advance
requested by the Borrowers.
"Indebtedness" shall mean all items which, in accordance with
generally accepted principles of accounting, would be included in determining
total liabilities as shown on the liability side of a balance sheet as at the
date Indebtedness is to be determined and, in any event, shall include any
liability secured by any mortgage, pledge, lien or security interest on property
owned or acquired, whether or not such liability shall have been assumed, and
guarantees, endorsements (other than for collection in the ordinary course of
business).
A "Person" shall include an individual, a corporation, an
association, a joint stock company, a business trust, a partnership, a joint
venture, an unincorporated organization or a government or any agency or
political subdivision thereof.
"Quick Assets" shall mean cash and cash equivalents plus
accounts receivable.
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<PAGE>
"Subordinated Debt" shall mean all Indebtedness of the Company
for borrowed money, none of the principal amount of which shall, by its terms,
be due and payable prior to the latest final maturity date of the Notes, which
shall have been subordinated to the prior payment in full of the Company's
Indebtedness to the Lenders by its terms or by the execution and delivery to the
Lenders by such subordinated lender and the Company prior to the creation of
such Indebtedness of agreements of subordination, in form and substance
reasonably satisfactory to the Lenders.
"Tangible Net Worth" shall mean the total of all assets
appearing on a balance sheet prepared in accordance with generally accepted
accounting principles for the Company after deducting therefrom (without
duplication of deductions): (1) any write-up in the book carrying value of any
asset resulting from a re-evaluation thereof subsequent to the termination of
the Company's latest fiscal year; (2) all reserves including, but not limited
to, reserves for liabilities, fixed or contingent, deferred income taxes,
obsolescence, depletion, insurance and inventory valuation, which are not
deducted from assets; (3) the amount, if any, at which shares of stock of the
Company appear of the asset side of such balance sheet; (4) all Indebtedness of
the Company (after eliminating intercompany items); and (5) all goodwill,
research and development and other intangible items of any kind appearing on the
asset side of such balance sheet.
"Working Capital" shall mean the amount by which Current
Assets exceed Current Liabilities.
ARTICLE XIII
MISCELLANEOUS
13.1 COLLECTION COSTS. In the event that Bank shall retain or
engage an attorney or attorneys to collect, enforce or protect the Lenders'
interests with respect to this Agreement, the Note or any instrument or document
delivered pursuant to this Agreement, the Company shall pay all of the costs and
expenses of such collection, enforcement or protection, including reasonable
attorneys fees, and the Bank may seek a judgment for all such amounts, in
addition to the unpaid principal balance of the Note and accrued interest
thereon.
13.2 MODIFICATION AND WAIVER. No modification or waiver of
any provision of the Note or of this Agreement and no consent by the Lenders to
any departure therefrom by the Company (which consent must be obtained in
accordance with Section 11.4) shall be effective unless such modification or
waiver shall be in writing and signed by a duly authorized officer of the Bank,
acting with the appropriate consent of the requisite Lenders, and the same shall
then be effective only for the period, on the conditions and for the specific
instances and purposes specified in such
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writing. No notice to or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
13.3 NEW YORK LAW. The Note and this Agreement shall be
construed in accordance with and governed by the laws of the State of New York.
13.4 NOTICES. All notices, requests, demands or other
communications provided for herein shall be in writing and shall be deemed to
have been given when (1) sent by registered or certified mail, postage prepaid,
return receipt requested, addressed, as the case may be, to the Bank at 960
Avenue of the Americas, New York, New York 10001; Attn: Corporate Lending
Department or to the Company at 45 Morris Street, Yonkers, New York 10705, Attn:
Dean L. Sloane (2) delivered personally, (3) delivered by an overnight courier
of recognized reputation (such as Federal Express) or (4) teletransmitted by
telecopier to the Bank at (212) 695-6907 or to the Company at (914) 963-7896, or
to such other person, address or telecopier number as either party shall
designate to the other from time to time in writing, forwarded in like manner.
13.5 FEES AND EXPENSES. Whether or not any loans are made
hereunder, the Company shall pay all out-of-pocket expenses incurred by the Bank
in connection with the transactions contemplated hereunder, including, but not
limited to, travel expenses, filing fees, appraisal costs, and the reasonable
fees and expenses of Olshan Grundman Frome & Rosenzweig LLP, counsel to the
Bank.
13.6 CROSS-DEFAULT. The Company and each Guarantor agrees
that any default by the Company or a Guarantor with respect to this Agreement
and any Note delivered hereunder shall, after giving effect to any applicable
cure periods, be deemed a default of any other Agreement, loan arrangement or
Note made by the Company or a Guarantor to the Lenders, and to like effect, a
default by the Company or Guarantor under any other obligation of the Company or
Guarantor to the Lenders shall be deemed a default hereunder.
13.7 WAIVER OF JURY TRIAL AND SETOFF. The Company and the
Guarantors hereby waive trial by jury in any litigation in any court with
respect to, in connection with or arising out of this Agreement, or the Notes or
any instrument or document delivered pursuant to this Agreement, or the
validity, protection, interpretation, collection or enforcement thereof, or any
other claim or dispute howsoever arising between the Company and the Guarantors
and the Lenders; and the Company and the Guarantors hereby waive the right to
interpose any setoff or counterclaim or cross-claim in connection with any such
litigation, irrespective of the nature of such setoff, counterclaim or
cross-claim, and further agree not to attempt to consolidate or join any other
action or proceeding with an action or proceeding commenced by the Lenders.
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13.8 BANK DEPOSITORY. The Bank shall be designated and shall
continue to be the prime depository of the funds of the Company.
13.9 LIEN; SETOFF BY LENDERS; SHARING OF PAYMENTS. The
Company hereby grants to each of the Lenders a continuing lien for all
Indebtedness of the Company to the Lenders upon any and all monies, securities
and other property of the Company and the proceeds thereof, now or hereafter
held or received by or in transit to any of the Lenders from or for the Company,
whether for safekeeping, custody, pledge, transmission, collection or otherwise,
and also upon any and all deposits (general or special) and credits of the
Company with, and any and all claims of the Company against, any of the Lenders
at any time existing. Upon the occurrence of any event of default, each of the
Lenders is hereby authorized, at any time and from time to time, without notice
to the Company, to set off, appropriate and apply any or all items hereinabove
referred to against all Indebtedness of the Company to the Lenders, documented
in this Agreement, the Notes or otherwise, and whether now existing or hereafter
arising. Any setoff made by any of the Lenders will be credited to each of the
Lenders on a pro rata basis. In the event that any Lender receives more than its
pro rata share of any payment, it will promptly distribute such overpayment to
each of the other Lenders, pro rata.
13.10 PAYMENT DUE ON HOLIDAY. Whenever any payment to be made
hereunder or on the Notes shall become due and payable on a Saturday, Sunday or
a legal holiday under the laws of the State of New York, such payment may be
made on the next succeeding business day, and such extension of time shall, in
such case, be included in computing interest on such payment.
13.11 CAPTIONS. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience. Such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
13.12 BENEFIT OF AGREEMENT. This Agreement shall be binding
upon and inure to the benefit of the Company and the Bank and their respective
successors and assigns and all subsequent holders of the Notes.
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IN WITNESS WHEREOF, the Company and the Bank have caused this
Agreement to be duly executed by their respective officers, thereunto duly
authorized as of the day and year first above written.
COMMUNITY MEDICAL TRANSPORT, INC. ATLANTIC BANK OF NEW YORK
as a Lender and as Agent
By_________________________________ By_______________________________________
Donald J. Panos Assistant Vice President
Vice President Finance and Chief
Financial Officer
ATLANTIC BANK OF NEW YORK FLEET BANK, N.A.
as a Lender and as Agent
By_________________________________ By_______________________________________
Senior Vice President
ISRAEL DISCOUNT BANK OF NEW YORK
By_______________________________________
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EXHIBIT D
SCHEDULE OF COLLATERAL
All present and future accounts, contract rights, instruments, documents,
chattel paper, general intangibles, now owned or hereafter acquired or created,
as defined in the Uniform Commercial Code, and all patents and trademarks,
wherever located, and all returned and other goods relative thereto; excluding,
however, all licenses and permits to conduct an ambulance business, and all
other rights based on the possession of such licenses and permits.
All inventory now owned or hereafter acquired, wherever located, whether or not
in transit, including raw materials, work in process, or materials used or
consumed in Debtor's business, or finished goods and supplies customarily
classified as inventory.
All equipment, machinery, furniture, fixtures, dies, tools, machine parts, motor
vehicles and other tangible personal property of Debtor, wherever located, and
whether now owned or hereafter acquired by Debtor, and all accessions and
attachments thereto.
Any and all products and proceeds of the above, in any form (including, without
limitation, any claims by Debtor against third parties for loss or damage to or
destruction of any or all of the foregoing).
All deposit accounts maintained by Debtor with Secured Party.
The insurance policy on the life of Dean L. Sloane required by Section 7.3(A) of
the Credit Agreement.
All proceeds of the conversion, voluntary of involuntary, of any of the
foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards and all right, title and interest
of Debtor in and to all unearned premiums accrued, accruing and to accrue under
any or all insurance policies obtained by Debtor.
All books, records and other property, including motor vehicle title
certificates, relating to or referring to any of the above.
The above is intended to include any and all personal property of the Debtor now
owned, hereafter acquired or created and wherever located, and the proceeds of
any of the foregoing.
<PAGE>
EXHIBIT E
ACCOUNTS RECEIVABLE BORROWING BASE CERTIFICATE AS OF __________
(due by the 15th of the Month)
FOR MONTH OF ________
________________________________________________________________________________
Total Accounts Receivable $_______________
Less: Accounts Receivable over
120 days from invoice date (______________)
Plus: Eligible A/R's over 120 days
from invoice date _______________
Eligible Accounts Receivable $_______________
Maximum Availability $6,500,000
Eligible A/R x Advance Rate = A/R Borrowing Base
______________ x 85% = $_______________
(Less Loan Outstanding) $_______________
Borrowing Availability or (Required pay down) $_______________
The undersigned, hereby certifies that the above certificate, including, without
limitation, the accounts receivable aging schedule attached hereto, is true,
accurate and complete as of ____________, 199__, and that Atlantic Bank of New
York (the "Bank"), Fleet Bank, N.A., ("Fleet") and Israel Discount Bank of New
York ("IDB") (collectively, the "Lenders") have a first, prior and sole
perfected lien upon the collateral reflected on this certificate, except as
expressly permitted by the credit and security agreements, each dated as of
December 17, 1996 between the undersigned and the Lenders.
Community Medical Transport, Inc.
By:_________________________________
Name:
Title:
<PAGE>
SCHEDULE A
Litigations Against Borrower and
Guarantors as Defined in Section 10.5
None
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT made as of this ____ day of December, 1996,
by and between COMMUNITY MEDICAL TRANSPORT, INC., a Delaware corporation,
COMMUNITY AMBULETTE SERVICE, INC., a New York corporation, FIRST HELP AMBULANCE
AND AMBULETTE, INC., a New York corporation, ELITE AMBULANCE & MEDICAL COACH,
INC., a New Jersey corporation, EMPIRE AMBULANCE AND AMBULETTE, INC., a New York
corporation, and, CENTURY AMBULANCE AND AMBULETTE, INC., a New York corporation,
all of the above entities having an office for the transaction of business at 45
Morris Street, Yonkers, New York 10705, (collectively hereinafter referred to as
the "Debtor"), and ATLANTIC BANK OF NEW YORK, a New York banking corporation
having an office for the transaction of business at 960 Avenue of the Americas,
New York, New York 10001, (hereinafter referred to as the "Bank"), for itself
and as agent for Fleet Bank, N.A., a national banking association having an
office for the transaction of business at 244 Weschester Avenue, White Plains,
New York (hereinafter referred to as "Fleet") and Israel Discount Bank of New
York, a New York banking corporation with an office for the transaction of
business located at 511 Fifth Avenue, New York, New York (hereinafter referred
to as "IDB", and the Bank, Fleet and IDB collectively referred to as the
"Secured Party").
<PAGE>
IT IS HEREBY AGREED between the parties hereto as follows:
1. SECURITY INTEREST
Debtor hereby grants to the Agent and the Lenders a
security interest ("Security Interest") in the goods described below and in all
increases, parts, accessories, attachments, special tools, additions,
replacements, substitutions and accessions thereto or theretofore and in all
proceeds thereof in any form ("Collateral"): A first priority security interest
in all of the personal property now owned or hereafter acquired by the Debtor or
hereinafter created and the proceeds thereof, as described in the Schedule of
Collateral annexed hereto and made a part hereof.
2. INDEBTEDNESS SECURED.
This Security Interest secures all obligations
arising in connection with the payment of Nine Promissory Notes of even date
herewith made by Community Medical Transport, Inc. ("Community") in favor of the
Secured Party in the total principal amount of $10,000,000, which Notes are
delivered by COMMUNITY MEDICAL TRANSPORT, INC. to the Secured Party pursuant to
a certain Credit Agreement, of even date, in the amount of $10,000,000, between
the parties, and the Secured Party shall be entitled to the benefits thereof.
3. REPRESENTATIONS AND WARRANTIES OF DEBTOR.
Debtor represents and warrants and, so long as this
Security Agreement is in effect, shall be deemed continuously to represent and
warrant, that (a) Debtor is the legal and beneficial owner of the Collateral
free of all security
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<PAGE>
interests or other encumbrances except the Security Interest, liens permitted
under Section 8.2 (B) of the Credit Agreement and except as may be specified
hereinbelow; (b) this agreement creates a valid and perfected first priority
security interest in the Collateral, securing the payment of the Obligations,
and all filings and other actions necessary or desirable to perfect and protect
such security interest have been duly taken; (c) no consent of any other person
and no authorization, approval or other action by any governmental authority or
regulatory body is required for the grant by the Debtor of the security interest
herein or for the execution, delivery or performance of this agreement by the
Debtor; (d) Debtor is authorized to enter into this Security Agreement; (e) the
Collateral is created as a result of business operations or used or bought for
use primarily for business operations; and (f) Debtor's records concerning the
Collateral are kept at the address specified above or in the Schedule of
Collateral unless the Secured Party is otherwise notified pursuant to Section
(4)(b) hereof; and any and all trade names, division names, assumed names or
other names under which Debtor transacts any part of its business are specified
in an appropriate schedule hereto.
4. COVENANTS OF DEBTOR.
So long as this Security Agreement is in effect,
Debtor (a) will defend the Collateral against the claims and demands of all
other parties; will keep the Collateral free from all security interests or
other encumbrances, except as otherwise specified herein; and will not sell,
transfer, lease, assign, deliver or otherwise dispose of any Collateral or any
interest therein except as otherwise
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<PAGE>
permitted by any agreement between the Debtor and the Secured Party without the
prior written consent of the Secured Party; (b) will keep the Collateral in the
State in which its operations are presently conducted; and will notify the
Secured Party promptly in writing of any change in Debtor's address specified
above, any change in the address at which records concerning the Collateral are
kept and any change in Debtor's name, identity or corporate or other structure;
(c) will furnish to the Secured Party financial statements in such form and at
such intervals as may be specified in an Agreement between the Debtor and the
Secured Party; will keep, in accordance with generally accepted accounting
principles consistently applied, accurate and complete books and records
including, without limitation, records concerning the Collateral; at the Secured
Party's request, will mark any and all such books and records to indicate the
Security Interest; upon reasonable notice will permit, during normal business
hours, the Secured Party or its agents to inspect the Collateral and to audit
and make extracts from or copies of such books and records pertaining to the
Collateral; and will duly account to the Secured Party's satisfaction, at such
time or times as the Secured Party may reasonably require, for any of the
Collateral; (d) will keep the Collateral in good condition and repair, ordinary
wear and tear expected; and will not use the Collateral in violation of any
provisions of this Security Agreement, of any applicable statute, regulation or
ordinance or of any policy insuring the Collateral; (e) in connection herewith,
will execute and deliver to the Secured Party such financing statements,
assignments and other documents and do such other things relating to the
Collateral and the Security Interest as the Secured Party
-4-
<PAGE>
may reasonably request, and pay all costs of title searches and filing financial
statements, assignments and other documents in all public offices requested by
the Secured Party; and will not, without the prior written consent of the
Secured Party, file or authorize or permit to be filed in any public office any
financing statement with respect to the Collateral naming the Debtor as debtor
and not naming the Secured Party as the secured party; (f) will pay all taxes,
assessments and other charges of every nature which may be imposed, levied or
assessed against the Debtor or any of the Debtor's assets, prior to the date of
attachment of any penalties or liens with respect thereto (other than liens
attaching prior to the payment becoming due, so long as paid prior to imposition
of penalties); (g) will insure the Collateral against risks, in coverage, form
and amount, and by an insurer, as is customary for businesses of the same type
as the Debtor and, at the Secured Party's request, will cause each policy to be
payable to the Secured Party as a named insured or loss payee, as its interest
may appear, and deliver each policy or certificate of insurance to the Secured
Party; (h) will prevent the Collateral or any part thereof from being or
becoming an accession to other goods not covered by this Security Agreement; (i)
if the Collateral is not a fixture, will prevent the Collateral or any part
thereof from becoming a fixture.
5. DEFAULT.
(a) Any default pursuant to the terms and conditions
of the aforesaid Notes and/or Agreement, as referred to in Paragraph (2)
hereinabove, shall be deemed a default hereunder.
(b) The Secured Party's rights and remedies with
respect to the Collateral shall be those of a Secured Party under the Uniform
Commercial Code and under any other applicable law, as the same may, from time
to time, be in effect, in
-5-
<PAGE>
addition to those rights granted herein and in any other agreement
now or hereafter in effect between the Debtor and the Secured Party. Upon the
existence or occurrence of an event of default, the Secured Party may require
the Debtor to assemble the Collateral and make it available to the Secured Party
at a place or places designated by the Secured Party, and the Secured Party may
use and operate the Collateral.
(c) Without in any way requiring notice to be given
in the following time and manner, the Debtor agrees that any notice by the
Secured Party of sale, disposition or other intended action hereunder or in
connection herewith, whether required by the Uniform Commercial Code or
otherwise, shall constitute reasonable notice to the Debtor if such notice is
mailed by certified mail, postage prepaid, return receipt requested, at least
five business days prior to such action, to the Debtor's address specified
above, or to any other address which the Debtor has specified in writing to the
Secured Party as the address to which notices hereunder shall be given to the
Debtor.
(d) The Debtor agrees to pay on demand all reasonable
costs and expenses incurred by any Secured Party in enforcing this Security
Agreement, in realizing upon or protecting any Collateral and in enforcing and
collecting any indebtedness or any guarantee thereof including, without
limitation, if the Secured Party retains counsel for advice, suit, appeal,
insolvency or other proceedings under the federal Bankruptcy Code or otherwise,
or for any of the above purposes, the reasonable attorneys fees incurred by the
Secured Party. Payment of all moneys hereunder is secured by the Collateral.
-6-
<PAGE>
6. MISCELLANEOUS.
(a) The Debtor hereby authorizes the Secured Party,
at the Debtor's expense, to file such financing statement or statements relating
to the Collateral without the Debtor's signature thereon as the Secured Party,
at its option, may deem appropriate, and appoints the Secured Party as the
Debtor's attorney-in-fact (without requiring the Secured Party) to execute any
such financing statement or statements in the Debtor's name and to perform all
other acts which the Secured Party deems appropriate to perfect and continue the
Security Interest and to protect, preserve and realize upon the Collateral in
compliance with and subject to applicable law. This power of attorney shall be
affected by the subsequent disability or incompetence of the Debtor. A carbon,
photographic or other reproduction of this Security Agreement or of a financing
statement shall be sufficient as a financing statement.
(b) (1) As further security for payment of the
Indebtedness, the Debtor hereby grants to the Secured Party a security interest
in and lien on any and all deposit and other accounts and all moneys owed or to
be owed by the Secured Party to the Debtor; and with respect to all of such
property, the Secured Party shall have the same rights hereunder as it has with
respect to the Collateral.
(2) Without limiting any other right of the
Secured Party, whenever the Secured Party has the right to declare any
Indebtedness to be due and payable (whether or not it has so declared), the
Secured Party, at its sole election, may set off against the indebtedness any
and all moneys then or thereafter owed to the Debtor by the Secured Party in any
capacity, whether or not the Indebtedness or the
-7-
<PAGE>
obligation to pay such moneys owed by the Secured Party is then due, and the
Secured Party shall be deemed to have exercised such right to setoff immediately
at the time of such election even though any charge therefor is made or entered
on the Secured Party's records subsequent thereto.
(c) Upon the Debtor's failure to perform any of its
duties hereunder, the Secured Party may, but shall not be obligated to, perform
any or all such duties including, without limitation, payment of taxes,
assessments, insurance and other charges and expenses as herein provided, and
the Debtor shall pay an amount equal to the cost thereof to the Secured Party on
demand by the Secured Party. Payment of all moneys hereunder is secured by the
Collateral.
(d) No course of dealing between the Debtor and the
Secured Party and no delay or omission by the Secured Party in exercising any
right or remedy hereunder or with respect to any indebtedness shall operate as a
waiver thereof or of any other right or remedy, and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right or remedy. The Secured Party may remedy any default
by the Debtor hereunder or with respect to any indebtedness in any reasonable
manner without waiving the default remedied and without waiving any other prior
or subsequent default by the Debtor. All rights and remedies of the Secured
Party hereunder are cumulative.
(e) The Secured Party shall have no obligation to
take, and the Debtor shall have the sole responsibility for taking, any and all
steps to preserve rights against any and all prior parties to any instrument or
chattel paper relating to the
-8-
<PAGE>
Collateral, whether or not in the Secured Party's possession as proceeds in
connection with this Security Agreement. The Secured Party shall not be
responsible to the Debtor for loss or damage resulting from the Secured Party's
failure to enforce or collect any such Collateral or to collect any moneys due
or to become due thereunder. The Debtor waives protest of any instrument
constituting Collateral at any time held by the Secured Party on which the
Debtor is in any way liable and waives notice of any other action taken by the
Secured Party.
(f) The Debtor authorizes the Secured Party, without
notice or demand and without affecting the Debtor's obligations hereunder, from
time to time (1) to exchange, enforce or release any Collateral or any part
thereof (other than the Collateral) taken from any party for payment of the
Indebtedness or any part thereof; (2) to release, substitute or modify any
obligation of any endorser, guarantor or other party in any way obligated to pay
the indebtedness or any part thereof, or any party who has given any security,
mortgage or other interest in any other collateral as security for the payment
of the Indebtedness or any part thereof; (3) upon the occurrence of any event of
default, as provided herein or in the Credit Agreement executed
contemporaneously herewith, to direct the order or manner of disposition of the
Collateral and any and all other collateral and the enforcement of any and all
endorsements, guarantees and other obligations relating to the Indebtedness or
any part thereof as the Secured Party, in its sole discretion, may determine;
and (4) to determine how, when and what application of payments and credits, if
any, shall be made on the Indebtedness or any part thereof, as permitted by
applicable law.
-9-
<PAGE>
(g) The rights and benefits of the Secured Party
hereunder shall, if the Secured Party so directs, inure to any party acquiring
any interest in the indebtedness or any part thereof.
(h) The Secured Party and the Debtor, as used herein,
shall include the heirs, executors or administrators, or successors or assigns,
of those parties.
(i) If more than one Debtor executes this Security
Agreement, the term "Debtor" shall include each as well as all of them and their
obligations, warranties and representations hereunder shall be joint and
several.
(j) No modification, rescission, waiver, release or
amendment of any provision of this Security Agreement shall be made except by a
written agreement subscribed by the Debtor and by a duly authorized officer of
each Secured Party.
(k) This Security Agreement and the transactions
evidenced hereby shall be construed under the laws of New York State, as the
same may from time to time be in effect.
(l) All terms, unless otherwise defined in this
Security Agreement, shall have the definitions set forth in the Credit Agreement
or the Uniform Commercial Code adopted in New York State as the same may, from
time to time, be in effect.
(m) This Security Agreement is and is intended to be
a continuing Security Agreement and shall remain in full force and effect until
the officer
-10-
<PAGE>
in charge of the Lending Office, Department or Division of each Secured Party
indicated above shall actually have received from the Debtor written notice of
its discontinuance provided, however, that this Security Agreement shall remain
in full force and effect thereafter until all of the indebtedness outstanding or
contracted or committed for (whether or not outstanding) before the receipt of
such notice by the Secured Party, and any extensions or renewals thereof
(whether made before or after receipt of such notice), together with interest
accruing thereon after such notice, shall be finally and irrevocably paid in
full. If, after receipt of any payment of all or any part of the indebtedness,
the Secured Party is for any reason compelled to surrender such payment to any
person or entity because such payment is determined to be void or voidable as a
preference, impermissible setoff or a diversion of trust funds or for any other
reason, this Security Agreement shall continue in full force notwithstanding any
contrary action which may have been taken by the Secured Party in reliance upon
such payment, and any such contrary action so taken shall be without prejudice
to the Secured Party's rights under this Security Agreement and shall be deemed
to have been conditioned upon such payment having become final and irrevocable.
(n) After any default by the Debtor under this
Security Agreement, the Secured Party may notify any or all parties obligated to
pay proceeds of the Security Interest and may also direct any or all such
parties to make all payments of proceeds to the Agent for distribution to the
Secured Party.
(o) The Secured Party may demand, collect and sue for
any and all proceeds (in either the Debtor's or Secured Party's name at the
latter's option);
-11-
<PAGE>
may enforce, compromise, settle or discharge any proceeds without the
Indebtedness or any part thereof; and may endorse the Debtor's name on any and
all checks, commercial paper and any other instruments pertaining to or
constituting the proceeds.
-12-
<PAGE>
IN WITNESS WHEREOF, the Debtor has executed this Security
Agreement as of the date first above written.
CENTURY AMBULANCE AND AMBULETTE, INC.,
By____________________________________
COMMUNITY MEDICAL TRANSPORT, INC.,
By____________________________________
COMMUNITY AMBULETTE SERVICE, INC.,
By____________________________________
FIRST HELP AMBULANCE AND AMBULETTE,
INC.,
By____________________________________
ELITE AMBULANCE & MEDICAL COACH, INC.
By____________________________________
EMPIRE AMBULANCE AND AMBULETTE, INC.,
By____________________________________
-13-
<PAGE>
SCHEDULE OF COLLATERAL
All present and future accounts, contract rights, instruments, documents,
chattel paper, general intangibles, now owned or hereafter acquired or created,
as defined in the Uniform Commercial Code, and all patents and trademarks,
wherever located, and all returned and other goods relative thereto; excluding,
however, all licenses and permits to conduct an ambulance business, and all
other rights based on the possession of such licenses and permits.
All inventory now owned or hereafter acquired, wherever located, whether or not
in transit, including raw materials, work in process, or materials used or
consumed in Debtor's business, or finished goods and supplies customarily
classified as inventory.
All equipment, machinery, furniture, fixtures, dies, tools, machine parts, motor
vehicles and other tangible personal property of Debtor, wherever located, and
whether now owned or hereafter acquired by Debtor, and all accessions and
attachments thereto.
Any and all products and proceeds of the above, in any form (including, without
limitation, any claims by Debtor against third parties for loss or damage to or
destruction of any or all of the foregoing).
All deposit accounts maintained by Debtor with Secured Party.
The insurance policy on the life of Dean L. Sloane required by Section 7.3(A) of
the Credit Agreement.
All proceeds of the conversion, voluntary of involuntary, of any of the
foregoing into cash or liquidated claims, including, without limitation,
proceeds of insurance and condemnation awards and all right, title and interest
of Debtor in and to all unearned premiums accrued, accruing and to accrue under
any or all insurance policies obtained by Debtor.
All books, records and other property, including motor vehicle title
certificates, relating to or referring to any of the above.
The above is intended to include any and all personal property of the Debtor now
owned, hereafter acquired or created and wherever located, and the proceeds of
any of the foregoing.
-14-
<PAGE>
REVOLVING CREDIT NOTE
New York, New York
$3,900,000 December __, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to ATLANTIC BANK
OF NEW YORK, a New York banking corporation, having its principal office at 960
Avenue of the Americas, New York, New York, 10001, (hereinafter referred to as
the "Bank"), or order, at the Bank's principal office or such other place as may
be designated in writing by the holder of this Note, the lesser of (i)
$3,900,000 or (ii) the principal sum outstanding pursuant to Section 1.2 of the
Credit Agreement of even date herewith, between the parties hereto, with
interest thereon at the Benchmark Rate of Atlantic Bank of New York, as
announced to be in effect from time to time, plus one-half (0.50%) per cent, but
in no event to exceed the maximum rate permitted by law, the principal and
interest to be paid as follows:
Principal shall be paid not later than the
day of December, 1998, when the
entire unpaid balance of said principal and
all accrued interest shall be due and payable;
provided, however, that if at any time the
outstanding principal shall exceed the maximum
amount available pursuant to Section 1.2 of the
Credit Agreement, the Borrower shall immediately
repay such excess.
Interest shall be paid monthly upon the
outstanding balance commencing on the last
<PAGE>
day of December, 1996, and continuing monthly
thereafter on the last day of each month.
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The Benchmark Rate is currently 8.25%.
This Note is issued pursuant to a Credit Agreement
dated as of the date hereof between the Company and the Lenders, as it may be
amended from time to time, reference to which is made, among other things, as to
rights of required and optional prepayments and for rights as to acceleration of
the unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
-2-
<PAGE>
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which, under the terms of the Credit
Agreement and Security Agreement securing this Note, said principal sum may or
shall become due and payable; also, that all of the covenants, conditions and
agreements contained in said Credit Agreement and Security Agreement are hereby
made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in excess of the maximum rate which the maker is
permitted by law to contract or agree to pay. If, by the terms of this Note, the
maker is at any time required or obligated to pay interest on the principal
balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable
-3-
<PAGE>
hereunder shall be computed at such maximum rate, and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to any of the Lenders,
direct, indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lenders' option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lender pursuant to the
terms of this Note.
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
-4-
<PAGE>
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security for the indebtedness evidenced by this
Note, e.g., Security Agreement, etc., and waives the right to interpose any
setoff or counterclaim or crossclaim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lenders,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By__________________________________
-5-
<PAGE>
REVOLVING CREDIT NOTE
New York, New York
$1,300,000 December __, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to FLEET BANK,
N.A., a national banking association having an office for the transaction of
business at 244 Westchester Avenue, White Plains, New York (hereinafter referred
to as "Fleet"), or order, at the Bank's principal office or such other place as
may be designated in writing by the holder of this Note, the lesser of (i)
$1,300,000 or (ii) the principal sum outstanding pursuant to Section 1.2 of the
Credit Agreement of even date herewith, between the parties hereto, with
interest thereon at the Prime Rate of Fleet Bank ("Fleet Prime"), as announced
to be in effect from time to time, plus one-half (0.50%) per cent, but in no
event to exceed the maximum rate permitted by law, the principal and interest to
be paid as follows:
Principal shall be paid not later than the
day of December, 1998, when the
entire unpaid balance of said principal and
all accrued interest shall be due and payable;
provided, however, that if at any time the
outstanding principal shall exceed the maximum
amount available pursuant to Section 1.2 of the
Credit Agreement, the Borrower shall immediately
repay such excess.
Interest shall be paid monthly upon the
outstanding balance commencing on the last
<PAGE>
day of December, 1996, and continuing monthly
thereafter on the last day of each month.
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The Fleet Prime is currently 8.25%.
This Note is issued pursuant to a Credit Agreement
dated as of the date hereof between the Company and the Lenders, as it may be
amended from time to time, reference to which is made, among other things, as to
rights of required and optional prepayments and for rights as to acceleration of
the unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
-2-
<PAGE>
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which, under the terms of the Credit
Agreement and Security Agreement securing this Note, said principal sum may or
shall become due and payable; also, that all of the covenants, conditions and
agreements contained in said Credit Agreement and Security Agreement are hereby
made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in excess of the maximum rate which the maker is
permitted by law to contract or agree to pay. If, by the terms of this Note, the
maker is at any time required or obligated to pay interest on the principal
balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable
-3-
<PAGE>
hereunder shall be computed at such maximum rate, and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to any of the Lenders,
direct, indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lenders' option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lender pursuant to the
terms of this Note.
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
-4-
<PAGE>
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security for the indebtedness evidenced by this
Note, e.g., Security Agreement, etc., and waives the right to interpose any
setoff or counterclaim or crossclaim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lenders,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By____________________________________
-5-
<PAGE>
REVOLVING CREDIT NOTE
New York, New York
$1,300,000 December __, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a Delaware
corporation authorized to do business in New York, having an office for the
transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to ISRAEL
DISCOUNT BANK OF NEW YORK, a New York banking corporation with an office for the
transaction of business located at 511 Fifth Avenue, New York, New York
(hereinafter referred to as "IDB"), or order, at the Bank's principal office or
such other place as may be designated in writing by the holder of this Note, the
lesser of (i) $1,300,000 or (ii) the principal sum outstanding pursuant to
Section 1.2 of the Credit Agreement of even date herewith, between the parties
hereto, with interest thereon at the Prime Rate of IDB ("IDB Prime"), as
announced to be in effect from time to time, plus one-half (0.50%) per cent, but
in no event to exceed the maximum rate permitted by law, the principal and
interest to be paid as follows:
Principal shall be paid not later than the
day of December, 1998, when the entire
unpaid balance of said principal and all
accrued interest shall be due and payable;
provided, however, that if at any time the
outstanding principal shall exceed the
maximum amount available pursuant to
Section 1.2 of the Credit Agreement, the
Borrower shall immediately repay such
excess.
Interest shall be paid monthly upon the
outstanding balance commencing on the last
<PAGE>
day of December, 1996, and continuing monthly
thereafter on the last day of each month.
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The IDB Prime is currently 8.25%.
This Note is issued pursuant to a Credit Agreement dated as of
the date hereof between the Company and the Lenders, as it may be amended from
time to time, reference to which is made, among other things, as to rights of
required and optional prepayments and for rights as to acceleration of the
unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
-2-
<PAGE>
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which, under the terms of the Credit
Agreement and Security Agreement securing this Note, said principal sum may or
shall become due and payable; also, that all of the covenants, conditions and
agreements contained in said Credit Agreement and Security Agreement are hereby
made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in excess of the maximum rate which the maker is
permitted by law to contract or agree to pay. If, by the terms of this Note, the
maker is at any time required or obligated to pay interest on the principal
balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable
-3-
<PAGE>
hereunder shall be computed at such maximum rate, and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments in reduction of the principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to any of the Lenders,
direct, indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lenders' option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lender pursuant to the
terms of this Note.
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
-4-
<PAGE>
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security for the indebtedness evidenced by this
Note, e.g., Security Agreement, etc., and waives the right to interpose any
setoff or counterclaim or crossclaim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lenders,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By_______________________________
-5-
<PAGE>
TERM PROMISSORY NOTE
New York, New York
$1,200,000 December 18, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to ATLANTIC BANK
OF NEW YORK, a New York banking corporation, having its principal office at 960
Avenue of the Americas, New York, New York, 10001, (hereinafter referred to as
the "Bank"), or order, at the Bank's principal office or such other place as may
be designated in writing by the holder of this Note, the principal sum of
$1,200,000, with interest thereon at the Benchmark Rate of Atlantic Bank of New
York, as announced to be in effect from time to time, plus one-half (0.50%) per
cent, but in no event to exceed the maximum rate permitted by law, the principal
and interest to be paid as follows:
Principal shall be paid in equal quarterly
installments of $100,000.00 each,
commencing on the 31st day of March, 1997,
and continuing quarterly thereafter on the
last day of each quarter until the 18th
day of December, 1999, when the entire
unpaid balance of said principal and all
accrued interest shall be due and payable.
Interest shall be paid monthly upon the
unpaid balance commencing on the last day
of December, 1996, and continuing monthly
thereafter on the last day of each month
until the entire unpaid balance is repaid
in full.
<PAGE>
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The Benchmark Rate is currently 8.25%.
This Note is issued pursuant to a Credit Agreement
dated as of the date hereof between the Company and the Lenders, as it may be
amended from time to time, reference to which is made, among other things, as to
rights of required and optional prepayments and for rights as to acceleration of
the unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which,
-2-
<PAGE>
under the terms of the Credit Agreement and Security Agreement securing this
Note, said principal sum may or shall become due and payable; also, that all of
the covenants, conditions and agreements contained in said Credit Agreement and
Security Agreement are hereby made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in excess of the maximum rate which the maker is
permitted by law to contract or agree to pay. If, by the terms of this Note, the
maker is at any time required or obligated to pay interest on the principal
balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable hereunder shall be computed at such maximum rate, and the
portion of all prior interest payments in excess of such maximum rate
-3-
<PAGE>
shall be applied and shall be deemed to have been payments in reduction of the
principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to Atlantic Bank of New
York, direct, indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lender's option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lenders pursuant to the
terms of this Note.
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security
-4-
<PAGE>
for the indebtedness evidenced by this Note, i.e. Security Agreement, etc., and
waives the right to interpose any setoff or counterclaim or crossclaim in
connection with any such litigation, irrespective of the nature of such setoff,
counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lender,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By_________________________________
-5-
<PAGE>
TERM PROMISSORY NOTE
New York, New York
$400,000 December 18, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to ISRAEL
DISCOUNT BANK OF NEW YORK, a New York banking corporation with an office for the
transaction of business located at 511 Fifth Avenue, New York, New York
(hereinafter referred to as "IDB"), or order, at the Bank's principal office or
such other place as may be designated in writing by the holder of this Note, the
principal sum of $400,000, with interest thereon at the Prime Rate of IDB ("IDB
Prime"), as announced to be in effect from time to time, plus one-half (0.50%)
per cent, but in no event to exceed the maximum rate permitted by law, the
principal and interest to be paid as follows:
Principal shall be paid in equal quarterly
installments of $33,333.33 each,
commencing on the 31st day of March, 1997,
and continuing quarterly thereafter on the
last day of each quarter until the 18th
day of December, 1999, when the entire
unpaid balance of said principal and all
accrued interest shall be due and payable.
Interest shall be paid monthly upon the
unpaid balance commencing on the last day
of December, 1996, and continuing monthly
thereafter on the last day of each month
until the entire unpaid balance is repaid
in full.
<PAGE>
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The IDB Prime is currently 8.25%.
This Note is issued pursuant to a Credit Agreement
dated as of the date hereof between the Company and the Lenders, as it may be
amended from time to time, reference to which is made, among other things, as to
rights of required and optional prepayments and for rights as to acceleration of
the unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which,
-2-
<PAGE>
under the terms of the Credit Agreement and Security Agreement securing this
Note, said principal sum may or shall become due and payable; also, that all of
the covenants, conditions and agreements contained in said Credit Agreement and
Security Agreement are hereby made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in excess of the maximum rate which the maker is
permitted by law to contract or agree to pay. If, by the terms of this Note, the
maker is at any time required or obligated to pay interest on the principal
balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable hereunder shall be computed at such maximum rate, and the
portion of all prior interest payments in excess of such maximum rate
-3-
<PAGE>
shall be applied and shall be deemed to have been payments in reduction of the
principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to Atlantic Bank of New
York, direct, indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lender's option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lenders pursuant to the
terms of this Note.
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security
-4-
<PAGE>
for the indebtedness evidenced by this Note, i.e. Security Agreement, etc., and
waives the right to interpose any setoff or counterclaim or crossclaim in
connection with any such litigation, irrespective of the nature of such setoff,
counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lender,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By___________________________________
-5-
<PAGE>
TERM PROMISSORY NOTE
New York, New York
$400,000 December 18, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to FLEET BANK,
N.A., a national banking association having an office for the transaction of
business at 244 Westchester Avenue, White Plains, New York (hereinafter referred
to as "Fleet") or order, at the Bank's principal office or such other place as
may be designated in writing by the holder of this Note, the principal sum of
$400,000, with interest thereon at the Prime Rate of Fleet Bank ("Fleet Prime"),
as announced to be in effect from time to time, plus one-half (0.50%) per cent,
but in no event to exceed the maximum rate permitted by law, the principal and
interest to be paid as follows:
Principal shall be paid in equal quarterly
installments of $33,333.33 each,
commencing on the 31st day of March, 1997,
and continuing quarterly thereafter on the
last day of each quarter until the 18th
day of December, 1999, when the entire
unpaid balance of said principal and all
accrued interest shall be due and payable.
Interest shall be paid monthly upon the
unpaid balance commencing on the last day
of December, 1996, and continuing monthly
thereafter on the last day of each month
until the entire unpaid balance is repaid
in full.
<PAGE>
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The Fleet Prime is currently 8.25%.
This Note is issued pursuant to a Credit Agreement
dated as of the date hereof between the Company and the Lenders, as it may be
amended from time to time, reference to which is made, among other things, as to
rights of required and optional prepayments and for rights as to acceleration of
the unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which,
-2-
<PAGE>
under the terms of the Credit Agreement and Security Agreement securing this
Note, said principal sum may or shall become due and payable; also, that all of
the covenants, conditions and agreements contained in said Credit Agreement and
Security Agreement are hereby made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in excess of the maximum rate which the maker is
permitted by law to contract or agree to pay. If, by the terms of this Note, the
maker is at any time required or obligated to pay interest on the principal
balance at a rate in excess of such maximum rate, the rate of interest under
this Note shall be deemed to be immediately reduced to such maximum rate and
interest payable hereunder shall be computed at such maximum rate, and the
portion of all prior interest payments in excess of such maximum rate
-3-
<PAGE>
shall be applied and shall be deemed to have been payments in reduction of the
principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to Atlantic Bank of New
York, direct, indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lender's option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lenders pursuant to the
terms of this Note.
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security
-4-
<PAGE>
for the indebtedness evidenced by this Note, i.e. Security Agreement, etc., and
waives the right to interpose any setoff or counterclaim or crossclaim in
connection with any such litigation, irrespective of the nature of such setoff,
counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lender,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By_____________________________________
-5-
<PAGE>
TERM PROMISSORY NOTE
New York, New York
$900,000 December 18, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to ATLANTIC BANK
OF NEW YORK, a New York banking corporation, having its principal office at 960
Avenue of the Americas, New York, New York, 10001, (hereinafter referred to as
the "Bank"), or order, at the Bank's principal office or such other place as may
be designated in writing by the holder of this Note, the principal sum of
$900,000, with interest thereon at the Benchmark Rate of Atlantic Bank of New
York, as announced to be in effect from time to time, plus one-half (0.50%) per
cent, but in no event to exceed the maximum rate permitted by law, the principal
and interest to be paid as follows:
Principal may be drawn, at any time prior
to December 18, 1997, in amounts not to
exceed 75% of the cost, as recorded on the
books of the Borrower or Guarantor, as the
case may be, of newly-acquired vehicles
(whether through direct purchase or as
part of a corporate acquisition. The
procedure for borrowing will be governed
by Section 1.7 of the Credit Agreement
except that 1) each draw will total not
less than $100,000, distributed among the
Lenders pro rata, and 2) the written
request shall include a statement
identifying the precise vehicle(s) for
which the draw is requested and the booked
cost of such vehicle(s). No more than one
draw per vehicle shall be permitted. The
<PAGE>
principal outstanding as of December 18,
1997 shall be paid in equal quarterly
installments commencing on the 31st day of
March, 1998, and continuing thereafter
until the 18th day of December, 2000, when
the entire unpaid balance of said
principal and all accrued interest shall
be due and payable.
Interest shall be paid monthly upon the
unpaid balance commencing on the last day
of December, 1996, and continuing monthly
thereafter on the last day of each month
until the entire unpaid balance is repaid
in full.
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The Benchmark Rate is currently 8.25%.
This Note is issued pursuant to a Credit Agreement
dated as of the date hereof between the Company and the Lenders, as it may be
amended from time to time, reference to which is made, among other things, as to
rights of required and optional prepayments and for rights as to acceleration of
the unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
-2-
<PAGE>
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which, under the terms of the Credit
Agreement and Security Agreement securing this Note, said principal sum may or
shall become due and payable; also, that all of the covenants, conditions and
agreements contained in said Credit Agreement and Security Agreement are hereby
made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in
-3-
<PAGE>
excess of the maximum rate which the maker is permitted by law to contract or
agree to pay. If, by the terms of this Note, the maker is at any time required
or obligated to pay interest on the principal balance at a rate in excess of
such maximum rate, the rate of interest under this Note shall be deemed to be
immediately reduced to such maximum rate and interest payable hereunder shall be
computed at such maximum rate, and the portion of all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of the principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to the Lenders, direct,
indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lenders' option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lenders pursuant to the
terms of this Note.
-4-
<PAGE>
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security for the indebtedness evidenced by this
Note, i.e. Security Agreement, etc., and waives the right to interpose any
setoff or counterclaim or crossclaim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lender,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By_____________________________________
-5-
<PAGE>
TERM PROMISSORY NOTE
New York, New York
$300,000 December 18, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to FLEET BANK,
N.A., a national banking association having an office for the transaction of
business at 244 Westchester Avenue, White Plains, New York (hereinafter referred
to as "Fleet") or order, at the Bank's principal office or such other place as
may be designated in writing by the holder of this Note, the principal sum of
$300,000, with interest thereon at the Prime Rate of Fleet Bank ("Fleet Prime"),
as announced to be in effect from time to time, plus one-half (0.50%) per cent,
but in no event to exceed the maximum rate permitted by law, the principal and
interest to be paid as follows:
Principal may be drawn, at any time prior
to December 18, 1997, in amounts not to
exceed 75% of the cost, as recorded on the
books of the Borrower or Guarantor, as the
case may be, of newly-acquired vehicles
(whether through direct purchase or as
part of a corporate acquisition. The
procedure for borrowing will be governed
by Section 1.7 of the Credit Agreement
except that 1) each draw will total not
less than $100,000, distributed among the
Lenders pro rata, and 2) the written
request shall include a statement
identifying the precise vehicle(s) for
which the draw is requested and the booked
cost of such vehicle(s). No more than one
draw per vehicle shall be permitted. The
<PAGE>
principal outstanding as of December 18,
1997 shall be paid in equal quarterly
installments commencing on the 31st day of
March, 1998, and continuing thereafter
until the 18th day of December, 2000, when
the entire unpaid balance of said
principal and all accrued interest shall
be due and payable.
Interest shall be paid monthly upon the
unpaid balance commencing on the last day
of December, 1996, and continuing monthly
thereafter on the last day of each month
until the entire unpaid balance is repaid
in full.
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The Fleet Prime is currently 8.25%.
This Note is issued pursuant to a Credit Agreement dated as of
the date hereof between the Company and the Lenders, as it may be amended from
time to time, reference to which is made, among other things, as to rights of
required and optional prepayments and for rights as to acceleration of the
unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
-2-
<PAGE>
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which, under the terms of the Credit
Agreement and Security Agreement securing this Note, said principal sum may or
shall become due and payable; also, that all of the covenants, conditions and
agreements contained in said Credit Agreement and Security Agreement are hereby
made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in
-3-
<PAGE>
excess of the maximum rate which the maker is permitted by law to contract or
agree to pay. If, by the terms of this Note, the maker is at any time required
or obligated to pay interest on the principal balance at a rate in excess of
such maximum rate, the rate of interest under this Note shall be deemed to be
immediately reduced to such maximum rate and interest payable hereunder shall be
computed at such maximum rate, and the portion of all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of the principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to the Lenders, direct,
indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lenders' option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lenders pursuant to the
terms of this Note.
-4-
<PAGE>
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security for the indebtedness evidenced by this
Note, i.e. Security Agreement, etc., and waives the right to interpose any
setoff or counterclaim or crossclaim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lender,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By______________________________________
-5-
<PAGE>
TERM PROMISSORY NOTE
New York, New York
$300,000 December 18, 1996
FOR VALUE RECEIVED, COMMUNITY MEDICAL TRANSPORT, INC., a
Delaware corporation authorized to do business in New York, having an office for
the transaction of business at 45 Morris Street, Yonkers, New York, (hereinafter
referred to as the "Company" or the "Borrower") promises to pay to ISRAEL
DISCOUNT BANK OF NEW YORK, a New York banking corporation with an office for the
transaction of business located at 511 Fifth Avenue, New York, New York
(hereinafter referred to as "IDB"), or order, at the Bank's principal office or
such other place as may be designated in writing by the holder of this Note, the
principal sum of $300,000, with interest thereon at the Prime Rate of IDB ("IDB
Prime"), as announced to be in effect from time to time, plus one-half (0.50%)
per cent, but in no event to exceed the maximum rate permitted by law, the
principal and interest to be paid as follows:
Principal may be drawn, at any time prior
to December 18, 1997, in amounts not to
exceed 75% of the cost, as recorded on the
books of the Borrower or Guarantor, as the
case may be, of newly-acquired vehicles
(whether through direct purchase or as
part of a corporate acquisition. The
procedure for borrowing will be governed
by Section 1.7 of the Credit Agreement
except that 1) each draw will total not
less than $100,000, distributed among the
Lenders pro rata, and 2) the written
request shall include a statement
identifying the precise vehicle(s) for
which the draw is requested and the booked
cost of such vehicle(s). No more than one
draw per vehicle shall be permitted. The
<PAGE>
principal outstanding as of December 18,
1997 shall be paid in equal quarterly
installments commencing on the 31st day of
March, 1998, and continuing thereafter
until the 18th day of December, 2000, when
the entire unpaid balance of said
principal and all accrued interest shall
be due and payable.
Interest shall be paid monthly upon the
unpaid balance commencing on the last day
of December, 1996, and continuing monthly
thereafter on the last day of each month
until the entire unpaid balance is repaid
in full.
Interest shall be calculated on the basis of a 360-day year,
and actual days.
The IDB Prime is currently 8.25%.
This Note is issued pursuant to a Credit Agreement dated as of
the date hereof between the Company and the Lenders, as it may be amended from
time to time, reference to which is made, among other things, as to rights of
required and optional prepayments and for rights as to acceleration of the
unpaid principal balance hereof before stated maturity upon the happening of
certain events.
Any principal which shall not be paid upon maturity, whether
maturing by lapse of time or by reason of default or by reason of acceleration
under the provisions herein stated in the Credit Agreement delivered
concurrently herewith, shall bear interest at the above rate of interest plus
three (3%) per cent provided, however, that in no event shall the rate of
interest accruing hereunder exceed the maximum rate allowable by law.
-2-
<PAGE>
All payments made hereunder shall be applied first to late
charges, then to accrued interest and the balance, if any, to reduction of
principal.
Upon not less than five days prior written notice to the
holder, the maker shall have the right to prepay the Note in whole or in part
without penalty or premium.
IT IS HEREBY EXPRESSLY AGREED that the said principal sum
secured by this Note shall become due at the option of the holder thereof on the
happening of any default or event by which, under the terms of the Credit
Agreement and Security Agreement securing this Note, said principal sum may or
shall become due and payable; also, that all of the covenants, conditions and
agreements contained in said Credit Agreement and Security Agreement are hereby
made part of this instrument.
Presentment for payment, notice of dishonor, protest and
notice are hereby waived.
This Note is secured by a Security Agreement, and Guarantees
of Dean L. Sloane (limited to $1,000,000), Community Ambulette Service, Inc.,
Century Ambulance and Ambulette, Inc., First Help Ambulance and Ambulette, Inc.,
Elite Ambulance & Medical Coach, Inc., Empire Ambulance and Ambulette, Inc. and
the Lenders are entitled to the benefits thereof.
This Note is subject to the express condition that at no time
shall the maker be obligated or required to pay interest or the principal
balance at a rate which could subject the payee to either civil or criminal
liability as a result of being in
-3-
<PAGE>
excess of the maximum rate which the maker is permitted by law to contract or
agree to pay. If, by the terms of this Note, the maker is at any time required
or obligated to pay interest on the principal balance at a rate in excess of
such maximum rate, the rate of interest under this Note shall be deemed to be
immediately reduced to such maximum rate and interest payable hereunder shall be
computed at such maximum rate, and the portion of all prior interest payments in
excess of such maximum rate shall be applied and shall be deemed to have been
payments in reduction of the principal balance.
In the event any installment required hereunder is not made
within fifteen days of the due date thereof, then and in that event the holder
reserves the right to assess and collect a late charge equal to six (6%) percent
of the delinquent payment.
Any default by the maker or any of the maker's guarantors,
after giving effect to all applicable cure periods, with respect to any other
obligation that the maker or the guarantors may have to the Lenders, direct,
indirect, or contingent, shall be deemed a default hereunder.
Upon default in the payment of any installment of principal or
interest, or any sum due hereunder, the aggregate amount of the Note, remaining
unpaid, at the Lenders' option, shall, without notice or demand, at once become
due together with interest, late charges and reasonable attorneys fees, and any
other sums required to be paid by the undersigned to the Lenders pursuant to the
terms of this Note.
-4-
<PAGE>
In the event that the holder hereof employs counsel to collect
this Note or to protect or foreclose the security given for this Note, the
undersigned also agrees to pay to the holder hereof a reasonable attorney's fee
for the services of such counsel, whether or not suit be brought.
The undersigned waives trial by jury in any litigation in any
court with respect to, in connection with or arising out of the execution hereof
and any instrument delivered as security for the indebtedness evidenced by this
Note, i.e. Security Agreement, etc., and waives the right to interpose any
setoff or counterclaim or crossclaim in connection with any such litigation,
irrespective of the nature of such setoff, counterclaim or crossclaim.
This Note is made, executed and delivered pursuant to a
certain Credit Agreement of even date between the maker herein and the Lender,
and the terms, covenants and conditions thereof are incorporated herein by
reference as if set forth at length verbatim.
This Note may not be changed or terminated orally.
COMMUNITY MEDICAL TRANSPORT, INC.
By_______________________________
-5-
<PAGE>
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the post-effective
amendment of the Registration Statement on Form S-3 to Form SB-2 (33-80338), and
the Registration Statements on Form S-3 (333-11069), Form S-8 (333-20639) and
Form S-8 (333-23793) of our report dated February 28, 1997 (with respect to Note
G[2], March 24, 1997) on the consolidated financial statements of Community
Medical Transport, Inc. and subsidiaries included in the 1996 Annual Report on
Form 10-KSB. We also consent to the reference to our Firm under the caption
"Experts" in the prospectuses.
/s/ Richard A. Eisner & Company, LLP
- ------------------------------------
New York, New York
April 9, 1997
