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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No.1
on
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange
Act of 1934. For the quarterly period ended June 30, 1997.
[_] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934. For the transition period from _______ to ________.
Commission file number: 0-26502
COMMUNITY CARE OF AMERICA, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1823411
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3050 North Horseshoe Drive, Suite 260,
Naples, Florida 34104
(Address of principal executive offices)
Registrant's telephone number, including area code: (941) 435-0085
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
As of July 31, 1997, there were outstanding 7,597,801 shares of common stock,
$.0025 par value, per share.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description
2 Agreement and Plan of Merger dated August 1, 1997, by and
among IHS, Inc., IHS Acquisition XXVI, Inc., and the
Company (incorporated herein by reference to schedule
14D-1 filed with the Securities and Exchange Commission on
August 7, 1997).
3* Secured Subordinate Note and Revolving Credit Agreement II
between the Company and IHS Financial Holdings, Inc. Dated
July 18, 1997.
27+ Financial Data Schedule
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* Filed herewith.
+ Filed with the initial filing of this Report.
(b) Reports on Form 8-K:
On April 14, 1997, the Company filed a Report on Form 8-K dated (date of
earliest event reported): March 31, 1997, reporting under Item 5, Other Events,
and Item 7, Financial Statements, Pro Forma Financial Information and Exhibits.
No financial statements were filed with that report.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
COMMUNITY CARE OF AMERICA, INC.
(Registrant)
Date: August 15, 1997 By: /s/ Deborah A. Lau
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Deborah A. Lau
President, Chief Executive Officer
and Chief Financial Officer
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EXHIBIT INDEX
(a) Exhibits:
Exhibit
Number Description
2 Agreement and Plan of Merger dated August 1, 1997, by and
among IHS, Inc., IHS Acquisition XXVI, Inc., and the
Company (incorporated herein by reference to schedule
14D-1 filed with the Securities and Exchange Commission on
August 7, 1997).
3* Secured Subordinate Note and Revolving Credit Agreement II
between the Company and IHS Financial Holdings, Inc. Dated
July 18, 1997.
27+ Financial Data Schedule
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* Filed herewith.
+ Filed with the initial filing of this Report.
REVOLVING CREDIT AGREEMENT II
THIS REVOLVING CREDIT AGREEMENT II (this "Agreement") is made as of the
___ day of July, l997, by and between COMMUNITY CARE OF AMERICA, INC, a Delaware
Corporation, having an address at 3050 North Horseshoe Drive, Naples, Florida
33942 ("Borrower") and IHS FINANCIAL HOLDINGS, INC., a Delaware Corporation,
having an address at 10065 Red Run Boulevard, Owings Mills, Maryland 21117
("Lender").
WITNESSETH:
WHEREAS, Borrower and Integrated Health Services, Inc. ("Manager")
entered into a certain Management Agreement dated as of December 27, l996 (the
"Management Agreement") pursuant to which Borrower has engaged the services of
Manager to manage various functions of the Borrower's business; and
WHEREAS, Lender is a wholly owned subsidiary of Manager; and
WHEREAS, Lender made available to the Borrower a revolving line of
credit in the maximum aggregate amount of $5,000,000.00, as evidenced by that
certain Subordinated Note and governed by that certain Amended and Restated
Revolving Credit Agreement, both dated as of December 26, l996 ("IHS Line of
Credit I"); and
WHEREAS, Lender is willing to make available to the Borrower an
additional revolving line of credit in the maximum aggregate amount of
$5,000,000.00 and Borrower wishes to obtain such additional revolving line of
credit, all upon the terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the premises, the mutual promises
hereinafter set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree that:
1. IHS REVOLVING LINE OF CREDIT II.
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties of the Borrower herein set forth, Lender hereby
makes available to Borrower a revolving line of credit ("IHS Line of Credit II")
in the aggregate maximum principal amount outstanding at any time of FIVE
MILLION and 0/100 ($5,000,000.00) DOLLARS. It is contemplated that, subject to
the terms and conditions hereof, the Borrower will be permitted to effect draws
under the IHS Line of Credit II at any time and from time to time during the
period that commences on the date hereof and ends on the second anniversary of
the date hereof.
(b) All advances under the IHS Line of Credit II shall be made directly
to creditors of Borrower, including, but not limited to, Manager, on behalf of
Borrower, in payment of valid obligations of Borrower to said creditors. Under
no circumstances shall any advance under the IHS
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Line of Credit II to be made directly to Borrower.
(c) Lender shall not be required to make any advances under the IHS
Line of Credit II unless all of the following conditions shall have been
satisfied at the time the advance is requested and at the time such advance is
to be made:
(i) all of the representations and warranties made by the Borrower
in this Agreement and the Management Agreement shall be true and correct in all
respects at and as of the date on which such advance is to be made with the same
force and effect as if each such representation or other warranty were made at
and as of such time, and in furtherance thereof, the Borrower shall
automatically be deemed to have remade each of such representations and
warranties on each such date;
(ii) the Borrower shall have performed and complied with all
covenants, agreements and obligations required to be performed or complied with
by it under this Agreement and the Management Agreement, on or prior to the date
on which such advance is to be made;
(iii) no Event of Default (as defined in Section 5) shall have
occurred and be continuing;
(iv) the Borrower shall have complied with the procedure set forth
in subsection (c) below with respect to such advance; and
(v) Lender shall have consented, in its sole and absolute
discretion, to the making of such advance, provided however, that Lender's
consent to the making of an advance shall not be required if the proceeds of
such advance are applied to payment of fees due Manager under the Management
Agreement.
(c)(i) If the Borrower shall desire that Lender make an advance , it
shall provide Lender with a written request, certified to be true, complete and
correct by its President or Chief Financial Officer, at least forty-eight (48)
hours prior to the date on which the borrowing is to be made. Such request shall
set forth: (A) the amount of the requested advance; (B) the creditor of the
Borrower to which the requested advance is to be made by Lender; (C) the
obligation of the Borrower to be paid by the requested advance in reasonable
detail; and (D) shall contain a statement that: (I) all of the representations
and warranties made in this Agreement and the Management Agreement are true and
correct in all respects as if made on the date of the request; (II) the Borrower
is in compliance with all of its covenants and obligations under this Agreement
and the Management Agreement; and (III) no Event of Default has occurred. Such
request shall also contain an undertaking by the individual executing same to
immediately notify Lender if any of the statements made therein shall become
untrue, incomplete or incorrect after the date of delivery and on or prior to
the date of the requested borrowing. Such request shall be accompanied by the
written invoice or other credible written evidence of the obligation to be paid
by the requested advance.
(ii) If the Manager shall desire that an advance is to be made on
behalf of the
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Borrower, it shall provide the Borrower with notice (which notice may be oral)
thereof at least forty-eight (48) hours prior to the date on which the borrowing
is to be made. Such request shall set forth: (A) the amount of the requested
advance; and (B) the creditor of the Borrower to which the requested advance is
to be made by Lender; and (C) the obligation of the Borrower to be paid by the
requested advance in reasonable detail. No such advance shall be made at
Manager's request (unless pursuant to Section 5.3 of the Management Agreement)
without the consent of the Borrower, which consent shall not be unreasonably
withheld and shall be deemed given unless Borrower shall otherwise notify
Manager (which notice may be oral) within forty-eight hours of said request.
(d) The proceeds of each advance shall be used to pay obligations of
the Borrower as directed by the Manager in accordance with the terms of the
Management Agreement.
(e) Lender shall have no obligation to make any further advances if the
payment of the Note (as defined below) shall have been accelerated.
2. LOAN NOTE.
The obligation of the Borrower to repay the unpaid principal amount of
the IHS Line of Credit II, together with interest thereon and Lender's fees and
costs in connection therewith, shall be evidenced by that certain Secured
Subordinated Note (the "Note") of Borrower, of even date herewith, payable to
the order of Lender, in a face amount equal to the maximum loan amount set forth
in Section I, above, and having a maturity date which is on the second
anniversary of the date hereof (the "Maturity Date").
3. REPAYMENT OF IHS LINE OF CREDIT II.
Interest on the IHS Line of Credit II shall be payable monthly during
the period commencing on the date hereof and ending on the Maturity Date. Such
interest shall be payable at a rate per annum equal to the annual rate of
interest set forth in the Revolving Credit Agreement by and between Manager, as
Borrower, and Citibank, N.A., as Lender, dated May 16, l996, plus four (4%)
percent.
Manager shall have the right, and is hereby authorized by the Borrower,
to pay over to Lender, without further consent of the Borrower, all amounts due
to the Borrower and received by Manager on behalf of the Borrower pursuant to
the Management Agreement. Said amounts received by Lender shall be applied to
the repayment of IHS Line of Credit I and IHS Line of Credit II in whatever
priority Lender, in its sole discretion, shall desire. This consent shall be
irrevocable until such time as all amounts due Lender under IHS Line of Credit I
and IHS Line of Credit II have been paid in full.
4. ADDITIONAL COVENANTS OF BORROWER.
Until all of the Borrower's obligations under this Agreement and the
Note are satisfied in full, subject to the provisions of Section 5 below, the
Borrower agrees that it will do or perform each
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of the following (except to the extent that any of the following are the
responsibility of Manager pursuant to the Management Agreement):
(a) furnish or cause to be furnished to the Lender any financial or
other information that the Lender may reasonably deem necessary or desirable;
(b) duly pay and discharge all taxes, assessments and governmental
charges owed by or against the Borrower or any of its subsidiaries or any of
their respective properties, prior to the date on which penalty will attach
thereto unless an only to the extent that any such taxes are contested in good
faith by appropriate proceedings by the Borrower;
(c) take whatever actions are necessary to comply with all statutes and
regulations governing the operation of the Borrower's business;
(d) promptly cure any defects in the execution and delivery of this
Agreement and all other instruments executed in connection with this
transaction;
(e) execute and deliver or cause to be executed and delivered any other
instruments or documents which the Lender may reasonably request; and
(f) promptly notify the Lender of any Event of Default discovered by
the Borrower.
5. EVENTS OF DEFAULT.
At the option of Lender, all or any part of the obligations shall
immediately become due and payable irrespective of any agreed maturity upon the
happening of any of the following events of default ("Events of Default"): (a)
any Acceleration Event occurs under the Note: (b) any breach by the Borrower of
any of its representations or warranties under this Agreement or the Management
Agreement; (c) a change in the ownership of twenty (20%) percent or more of the
voting stock of the Borrower; (d) any other breach of this Agreement which
breach continues for a period of thirty (30) days following notice from Lender
to the Borrower; (e) any default under IHS Line of Credit I which continues
beyond any applicable grace period; (f) any default under the Management
Agreement which continues beyond any applicable grace period; (g) any default
under any guaranty or collateral document securing Borrower's obligations under
the Note and this Agreement which continues beyond any applicable grace period;
(h) a material adverse change in the business of the Borrower or any subsidiary
thereof; or (i) if Lender deems itself insecure.
6. WAIVERS.
The Lender shall not be deemed to have waived any of its rights upon or
under any of the obligations unless such waiver be in writing, shall expressly
refer to this Section 6 and shall be signed by the Lender. No delay or omission
on the part of the Lender on obligations, whether evidenced hereby or by any
other instrument or papers, shall be cumulative and may be exercised separately
or concurrently.
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7. TRANSFERS BY LENDER.
Subject to the same limitations as are set forth in Section 11.1 of the
Management Agreement, Lender may transfer any or all of the obligations.
8. DEFINITION OF BORROWER.
The term "Borrower" as used throughout this Agreement shall include (a)
its successors and assigns; (b) any individual, association, trust, partnership,
corporation, or other entity to which all or substantially all of the business
or assets of the Borrower shall have been transferred or with or into which any
of them shall have been merged, consolidated, reorganized or absorbed; and (c)
in the case of a partnership or joint venture, any general or limited
partnership or joint venture which shall have been created by reason of, or
continued in existence after, the admission of any new partner, partners or
joint venturers therein or the dissolution of the existing partnership or joint
venture by the death, resignation or other withdrawal of any partner or joint
venturer.
9. MAXIMUM INTEREST.
All agreements between the Borrower and Lender are hereby expressly
limited so that in no contingency or event whatsoever whether by reason of
deferment in accordance with this Agreement or advancement of the loan proceeds,
acceleration of maturity of the obligations or otherwise, shall the amount paid
or agreed to be paid to Lender for the use, forbearance or detention of the
money to be loaned hereunder exceed the maximum permissible under applicable
law. If, from any circumstance whatsoever, fulfillment of any provision hereof,
at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity, and
if from any circumstance Lender should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal of the obligations
and not to the payment of interest. This provision shall control over other
provision of all agreements between the Borrower and Lender.
10. BORROWER'S REPRESENTATIONS AND WARRANTIES.
To induce the Lender to lend monies pursuant to the Note, the Borrower
represents and warrants to lender that:
(a) The Borrower is a corporation, duly organized, validly existing and
in good standing under the laws of the State of Delaware and is duly authorized
to do business in each other jurisdiction where its ownership of property or
conduct of business so requires;
(b) The Borrower was and is duly authorized to execute and deliver this
Agreement, the Note and the Management Agreement and to perform its obligations
hereunder and thereunder;
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(c) The execution and delivery by the Borrower of this Agreement, the
Note and the Management Agreement and the performance by the Borrower of its
obligations hereunder and thereunder do not and will not conflict with any
provision of the charter or by-laws of the Borrower;
(d) This Agreement, the Note and the Management Agreement are, or when
duly executed and delivered will be, the legal, valid and binding obligation of
Borrower enforceable against it in accordance with their terms;
(e) Neither the execution and delivery of this Agreement, the Note or
the Management Agreement, nor the performance by Borrower of its obligations
hereunder and thereunder, have resulted or will result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of the Borrower, except as contemplated or provided
herein or therein and such execution, delivery and performance have not and will
not conflict with or result in the breach or violation of or a default (with due
notice or passing of time or both) under the terms, conditions or provisions of:
(a) any indenture, evidence of indebtedness, loan or financing agreement or
other agreement or instrument of whatever nature to which the Borrower is a
party or by which the Borrower is bound; or (b) any provision of any existing
law, rule, regulation, order, writ, injunction or decree of any court or
federal, state, county or municipal governmental authority to which the Borrower
is subject;
(f) Each representation and warranty contained in Sections 6.4, 6.5,
6.6 and 6.7 of the Management Agreement continues to be true and correct.
(g) No person is entitled to receive from the Borrower any brokerage
commission, finder's fee or similar fee or payment in connection with the
consummation of the transactions contemplated by this Agreement, the Note or the
Management Agreement.
11. NOTICES.
Any notices or other communication by either party to the other shall
be in writing (except as otherwise expressly provided in this Agreement) and
shall be given and be deemed to have been duly given, upon the date delivered if
delivered personally or upon the date received if mailed postage pre-paid,
registered or certified mail or upon confirmation of receipt if sent by
facsimile transmission or one business day after sent if sent by nationally
recognized overnight courier service, in each case addressed as follows:
To the Borrower: Community Care of America, Inc.
3050 North Horseshoe Drive
Naples, Florida 33942
Attn: Deborah A. Lau, President
Fax: (941)435-0087
With a copy to: J. Allen Miller, Esq.
Chadbourne & Parke, LLP
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30 Rockefeller Plaza
New York, New York 10022
Fax: (212)541-5369
To the Lender: IHS Financial Holdings, Inc.
10065 Red Run Boulevard.
Owings Mills, Maryland. 21117
Attn: Eleanor Harding
Fax: (410)998- 8716
With a copy to: Integrated Health Services, Inc.
10065 Red Run Boulevard.
Owings Mills, Maryland. 21117
Attn: Marshall A. Elkins, Esq.
Fax: (410)998-8747
-and-
Frank Agostino, Esq.
Calo Agostino, P.C.
27 Warren Street.
Hackensack, New Jersey 07601
Fax: (201)488-5855
or to such other address and to the attention of such other person or officer as
either party may designate in writing by notice.
12. APPLICABLE LAW.
The substantive laws of the State of New York shall govern the
validity, construction, enforcement and interpretation of this Agreement and all
other documents and instruments referred to herein, unless otherwise specified
therein. The Borrower consents to jurisdiction in the State of New York.
13. COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which, together, shall constitute
one and the same instrument.
14. CONSTRUCTION.
The parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be
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construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement. If any party has breached any
representation, warranty or covenant contained herein, in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
party has not breached, shall not detract from or mitigate the fact that the
party is in breach of the first representation, warranty or covenant.
15. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS.
Neither party shall issue any press release nor make any public
announcement relating to the subject matter of this Agreement, the Note or the
Management Agreement without the prior written approval of an officer of the
Borrower and the Lender; provided, however, that any party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing party will use its best efforts to advise and consult with
the other party before making the disclosure).
16. ARBITRATION.
If any controversy should arise between the parties in performance,
interpretation or application of this Agreement or the Note which involves any
matter, either party may serve upon the other a written notice stating that such
party desires to have the controversy reviewed by an arbitrator. If the parties
cannot agree within fifteen (15) days from the service of such notice upon the
selection of such arbitrator, an arbitrator shall be selected or designated by
the American Arbitration Association upon written request of either party
hereto. Arbitration of such controversy, disagreement or dispute shall be
conducted in accordance with the Commercial Arbitration Rules, then in force, of
the American Arbitration Association and its decision and award of the
arbitrator so selected shall be binding upon the Lender and Borrower. The
arbitration will be held in New York, New York.
As a condition precedent to the appointment of any arbitrator, both
parties shall be required to make a good faith effort to resolve the controversy
which effort shall continue for a period of thirty (30) days prior to any demand
for arbitration. The cost of any such arbitration shall be shared equally by the
parties. Each party shall pay its own costs incurred as a result of its
participation in any such arbitration.
The Arbitrator shall have no authority to award punitive damages or any
other damages in excess of the prevailing party's actual damages and may not
make any ruling, finding or award that does not conform to the terms and
conditions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Revolving Credit Agreement II as of the day and year first above written.
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Borrower:
ATTEST: COMMUNITY CARE OF AMERICA, INC.
By: /s/ By: /s/
-------------------------- ---------------------------
Name: Name: Deborah A. Lau
Title: Title: President
Lender:
ATTEST: IHS FINANCIAL HOLDINGS, INC.
By: /s/ By: /s/
-------------------------- --------------------------
Name: Name:
Title: Title:
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