EXHIBIT 10.1
(AMENDMENT AGREEMENT)
AMENDMENT AGREEMENT
This AMENDMENT AGREEMENT (this "Agreement"), dated as of June 28, 2002, is
to take effect if and when the Closing (defined below) takes place on the
Closing Date (defined below) and is entered into by and among Med Diversified,
Inc., a Nevada corporation ("Med"); American Reimbursement, LLC, a Delaware
limited liability company ("ARL"); Private Investment Bank Limited, Nassau,
Bahamas ("PIBL"); TEGCO Investments, LLC, a Delaware limited liability company
("TEGCO"); Chartwell Diversified Services, Inc., a Delaware corporation
("Chartwell"); Tender Loving Care Health Care Services, Inc., a Delaware
corporation ("TLCS"); Trestle Corporation, a Delaware corporation; Resource
Pharmacy, Inc., a Nevada corporation; and each of the other Med Subsidiaries
(defined below) that is now, or that, after the Closing Date (defined below),
becomes, a party to this Agreement by executing a signature page hereto.
RECITALS:
A. Med has issued to PIBL, with PIBL acting in its name but on behalf of
certain clients of PIBL, certain subordinated debentures, dated as of December
28, 2001, in the aggregate principal amount of $70,000,000, as listed on
EXHIBITS A-1 through A-5 hereto (collectively, the "Original Debentures").
B. The due date for the Original Debentures is June 28, 2002 and Med has
determined that it would be in the best interests of Med to enter into five (5)
amended debentures (collectively, the "Amended Debentures") in the aggregate
principal amount of $57,500,000, in order to, among other things, extend the
maturity date of the Original Debentures to June 28, 2004 (such date, the
"Maturity Date"), subject to acceleration upon certain Events of Default (as
defined and set forth below).
C. Pursuant to the Debenture Purchase and Subordination Agreement
(defined below), TEGCO has agreed to purchase from PIBL one of the Original
Debentures (such debenture, the "Transferred Debenture") for a purchase price of
$12,500,000 and, as provided in the Transferred Debenture and in the Debenture
Purchase and Subordination Agreement, to subordinate to PIBL any and all rights
to payment or interest in collateral securing such Transferred Debenture that
TEGCO would otherwise have as Holder of the Transferred Debenture.
D. ARL has been established as a special purpose entity that is designed
to provide a discrete pool of additional collateral for the Amended Debentures.
In connection therewith, ARL has purchased various accounts receivable
(collectively, the "Purchased A/R") from five (5) entities (each, a "Seller"
and, collectively, the "Sellers") pursuant to Receivables Purchase Agreements
(collectively, the "Existing Purchase Agreements") entered into between ARL and
each respective Seller, each dated as of March 29, 2002.
E. Med has previously provided a guaranty (the "Existing Med Guaranty")
of ARL's obligations to pay the Purchase Price (as defined in the relevant
Purchase Agreement) under each of the Purchase Agreements.
F. In exchange for the Existing Med Guaranty executed and delivered by
Med, ARL granted to Med a first priority security interest in all of the
Purchased A/R and any other receivables
held by ARL pursuant to a Security Agreement, dated as of March 29, 2002 (the
"Existing Med/ARL Security Agreement"), which security interest shall be
assigned by Med to PIBL.
G. In order for PIBL to accept and agree to the amendment and extension
of the Original Debentures that is requested by Med, PIBL has required of Med
and the other parties to this Agreement, and Med, and Med and such other parties
to this Agreement have agreed to, the other terms and conditions that are set
forth in this Agreement and certain other documents referred to in this
Agreement. PIBL has also required, and Med and such other parties to this
Agreement have agreed, that Med and various entities related to Med shall
execute and deliver various documents, instruments and agreements that are
described in this Agreement.
NOW, THEREFORE, in consideration of the premises, of the mutual covenants
and conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
AGREEMENT:
1. DEFINITIONS. For purposes of this Agreement, the following terms, when
used herein, shall have the meanings set forth below:
"Acknowledgment and Agreement of Rescission" means that certain
Acknowledgment and Agreement of Rescission entered into by and between Med and
PIBL as of June 14, 2002, pursuant to which Med and PIBL cancelled and treated
as void AB INITIO any and all prior documentation and agreements concerning a
"fiduciary loan" in the principal amount of $80,000,000.
"Agreement" shall have the meaning set forth in the Preamble.
"Amended Debentures" shall have the meaning set forth in the Recitals.
"ARL" shall have the meaning set forth in the Preamble.
"ARL Accounts" shall have the meaning set forth in Section 3(a).
"ARL Account Value Threshold" shall have the meaning set forth in Section
3(a).
"ARL Collection Account" means that certain collection account, bearing
account number 3293007778, established by or on behalf of ARL at the Depositary
Bank.
"ARL Control Agreement" shall have the meaning set forth in Section 3(a).
"ARL Debenture Collateral" shall have the meaning set forth in Section
3(a).
"ARL Guaranty" shall have the meaning set forth in Section 4.
"ARL Operating Agreement" means that certain Amended and Restated Limited
Liability Company Agreement of ARL, dated as of June 28, 2002.
"ARL Security Agreement" shall have the meaning set forth in Section 3(a).
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"Asset Sale" means any offering of securities or other transaction other
than (i) sales of goods or the provision of services in the ordinary course of
business, (ii) the offering or sale of any debt securities unaccompanied by any
equity rights (such as warrants or conversion rights) or (iii) any sale of
accounts receivable under financing arrangements with NCFE and its affiliates.
"Chartwell" shall have the meaning set forth in the Preamble.
"Closing" means the consummation of the transactions contemplated by this
Agreement and the other Modification Documents, including the satisfaction or
waiver of the closing conditions set forth in Section 11 and 12 of this
Agreement.
"Closing Date" means the date upon which the Closing hereunder occurs;
PROVIDED that, if the Closing does not occur on or before August 15, 2002, there
shall be no Closing Date hereunder and this Agreement and the other Modification
Documents (other than the Acknowledgment and Agreement of Rescission, which
shall remain valid and in full force and effect) shall be null and void and of
no further force and effect.
"Collateral Shares" shall have the meaning set forth in Section 2(a).
"Debenture Collateral" shall have the meaning set forth in Section 3.
"Debenture Purchase and Subordination Agreement" means that certain
Debenture Purchase and Subordination Agreement entered into by TEGCO, PIBL and
Med, as of the Closing Date, pursuant to which TEGCO is purchasing the
Transferred Debenture from PIBL upon the terms and conditions set forth therein.
"Depositary Bank" means Three Rivers Bank & Trust Company, or another major
U.S. bank designated as a successor or replacement therefor from time to time by
PIBL (or another agent for the Holders of the Amended Debentures designated by
the Holders in writing to Med from time to time).
"Event of Default" shall have the meaning set forth in Section 13.
"Excluded Med Subsidiary" shall mean any Subsidiary of Med that: (i) has
assets with a value of less than $500,000.00, (ii) has annual gross revenues of
less than $500,000.00 and (iii) is not otherwise material to the business,
operations and income of Med and its consolidated subsidiaries, taken as a
whole. "Excluded Med Subsidiaries" means all such Subsidiaries.
"Existing Med/ARL Security Agreement" shall have the meaning set forth in
the Recitals.
"Existing Med Guaranty" shall have the meaning set forth in the Recitals.
"Existing Purchase Agreements" shall have the meaning set forth in the
Recitals.
"Financial Statements" means the financial statements of Med and its
consolidated subsidiaries (including ARL), prepared in accordance with GAAP and
SEC requirements for public company financial statements, in a manner consistent
with the prior Financial Statements of Med;
"Forbearance and Tolling Agreement" shall have the meaning set forth in
Section 11(j).
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"GAAP" means generally accepted accounting principals as in effect from
time to time in the United States of America, applied on a consistent basis over
the time period in question as to classification of items and amounts.
"Holder" means PIBL or any other holder or beneficial owner of one or more
of the Amended Debentures, from time to time; and "Holders" means all of such
parties taken together.
"Indebtedness Schedule" means an itemized schedule of all indebtedness of
Med and its consolidated subsidiaries, showing any item of indebtedness (or
related group of such items) in excess of $500,000 individually, and identifying
for each such item of indebtedness (i) the creditor(s) to whom it is owed, (ii)
the principal terms thereof (including the principal amount and rate of
interest, current maturity, schedule for payments of interest and amortization
of principal thereon, and subordination or seniority provisions thereof), (iii)
any security interests granted or collateral pledged to secure such
indebtedness, and (iv) any guarantees thereof or other credit support
arrangements relating thereto.
"Leverage Ratio" has the meaning set forth in Section 7(b).
"Leverage Ratio Accounts Receivable" means private and government medical
accounts of Med or any Med Subsidiaries that have an aging of less than one
hundred and eighty (180) days.
"Leverage Ratio Certificate" means certificate of both the Chief Financial
Officer and chief accounting officer of Med, setting forth and certifying as
accurate and complete (i) a calculation of the Leverage Ratio for Med as of the
end of the relevant fiscal period, and (ii) an Indebtedness Schedule as of the
end of the relevant fiscal period.
"Mandatory ARL Prepayments" shall have the meaning set forth in Section
2(a).
"Mandatory Med Prepayment Commencement Date" shall have the meaning set
forth in Section 2(a).
"Mandatory Med Prepayments" shall have the meaning set forth in Section
2(a).
"Material Adverse Effect" means any change(s) or effect(s) that,
individually or in the aggregate, are materially adverse to: (i) the assets,
business, operations, income, prospects or condition (financial or otherwise) of
Med and its consolidated Subsidiaries, taken as a whole, or to ARL or TEGCO,
individually; (ii) the ability of Med and the other Med Parties to perform their
respective obligations under this Agreement, the Amended Debentures, and the
other Modification Documents to which they may be parties; or (iii) the validity
or enforceability of this Agreement, the Amended Debentures, or the other
Modification Documents, in any manner that would materially impair the practical
realization by PIBL or the Holders of their rights, benefits or remedies under
the Modification Documents.
"Maturity Date" shall have the meaning set forth in the Recitals.
"Med" shall have the meaning set forth in the Preamble.
"Med Collection Account" means that certain collection account, bearing
account number 3293007751, established by Med at the Depositary Bank.
"Med Control Agreement" shall have the meaning set forth in Section 3(b).
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"Med Debenture Collateral" shall have the meaning set forth in Section
3(b).
"Med Eligible Accounts Receivable" means private and government medical
accounts of Med or any Med Subsidiaries that have an aging of less than one
hundred and eighty (180) days PROVIDED that Med Eligible Accounts Receivable
shall not include any receivables that have been sold or otherwise transferred
to any purchaser(s) under financing arrangements with NCFE or its affiliates,
regardless of whether such transaction is deemed to be a sale or a secured
financing.
"Med Parties" means Med, ARL, TEGCO and the Med Subsidiaries, and each, a
"Med Party".
"Med Reserve Account Interests" shall have the meaning set forth in Section
3(b).
"Med Reserve Account Value Threshold" shall have the meaning set forth in
Section 3(b).
"Med Security Agreement" shall have the meaning set forth in Section 3(b).
"Med Security Interest Assignment Agreement" shall have the meaning set
forth in Section 3(b).
"Med Subsidiary" means and includes each present or future, direct or
indirect Subsidiary of Med, other than any Excluded Med Subsidiary and "Med
Subsidiaries" means and includes all such Subsidiaries (other than any Excluded
Med Subsidiaries).
"Med Subsidiaries Collateral Agent" means Citibank, N.A., a national
banking association, or another major U.S. bank designated as a successor or
replacement therefor, from time to time, by PIBL (or another agent for the
Holders of the Amended Debentures designated by the Holders, from time to time,
in a writing delivered to Med).
"Med Subsidiaries Debenture Collateral" shall have the meaning set forth in
Section 3(c).
"Med Subsidiaries Collateral Agency Agreement" shall have the meaning set
forth in Section 3(c).
"Med Subsidiaries Pledge and Security Agreement" shall have the meaning set
forth in Section 3(c).
"Modification Documents" means and includes this Agreement, the
Acknowledgment and Agreement of Rescission, each of the Amended Debentures, the
ARL Control Agreement, the ARL Guaranty, the ARL Security Agreement, the ARL
Operating Agreement, the Debenture Purchase and Subordination Agreement, the Med
Control Agreement, the Med Security Agreement, the Med Security Interest
Assignment Agreement, the Med Subsidiaries Collateral Agency Agreement, the Med
Subsidiaries Pledge and Security Agreement, the Forbearance and Tolling
Agreement, the UCC Financing Statements, any Mortgages, and all other
agreements, instruments, certificates and other documents executed by the
parties hereto in connection herewith and therewith, and each, a "Modification
Document".
"NCFE" shall have the meaning set forth in Section 3(a).
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"Net Asset Sale Proceeds" means the net proceeds received by Med (net of
the reasonable and customary costs of the relevant Asset Sale), whether directly
or indirectly, via a distribution from any of the Med Subsidiaries, from any
sale or other transfer of any assets or equity securities of Med or any of the
Med Subsidiaries (whether such equity securities are outstanding or
newly-issued) in any Asset Sale; PROVIDED, that "Net Asset Sale Proceeds" shall
NOT include the proceeds from any Asset Sale relating to any of the Med
Subsidiaries unless and until, and only to the extent that, the proceeds of the
relevant Asset Sale have been, directly or indirectly, distributed or otherwise
paid to, or for the benefit of, Med.
"New Subsidiary" shall have the meaning set forth in Section 7(d).
"Notice of Extension" shall have the meaning set forth in Section 16.
"Original Debentures" shall have the meaning set forth in the Recitals.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
department thereof, or any other entity, whether acting in an individual,
fiduciary or other capacity.
"PIBL" shall have the meaning set forth in the Preamble.
"Purchase Agreements" shall mean and include the Existing Purchase
Agreements and any other such agreement for the purchase of accounts receivable
that has been individually and expressly approved, in writing, by the managers
of ARL.
"Purchased A/R" shall have the meaning set forth in the Recitals.
"SEC" means the United States Securities and Exchange Commission and any
other agency or governmental body that may hereafter succeed to the functions
thereof.
"Seller" and "Sellers" shall have the meaning set forth in the Recitals.
"Sellers Override" means the percentage amount due to the Seller that sold
the relevant ARL Accounts to ARL pursuant to a Purchase Agreement.
"Servicing Costs" means reasonable and documented servicing and
administrative fees and costs of collection on such accounts, such Servicing
Costs not to exceed in any event: (i) in the case of ARL Accounts, five percent
(5%) of the gross collection proceeds from the relevant ARL Accounts, or (ii) in
the case of the Med Eligible Accounts Receivable, one percent (1%) of the gross
collection proceeds from the relevant Med Eligible Accounts Receivable.
"Subsidiary" means, as to any Person (a) a corporation of which outstanding
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
Board of Directors of such corporation are at the time owned, whether directly
or through one or more intermediaries, or both, by such Person and (b) any
partnership, limited liability company, association, joint venture or other
business entity the controlling interest of which is at the time owned, directly
or through one or more intermediaries, or both, by such Person.
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"Subsidiary Joinder" shall have the meaning set forth in Section 7(d).
"TEGCO" shall have the meaning set forth in the Preamble.
"Termination Date" shall have the meaning set forth in Section 16.
"TLCS" shall have the meaning set forth in the Preamble.
"Total Consolidated Indebtedness" means the total consolidated indebtedness
of Med and its consolidated Med Subsidiaries, determined in accordance with GAAP
in a manner consistent with the Financial Statements of Med.
"Transferred Debenture" shall have the meaning set forth in the Recitals.
"UCC Financing Statements" shall have the meaning set forth in Section 3.
2. AMENDMENT OF ORIGINAL DEBENTURES; PURCHASE AND SALE OF TRANSFERRED
DEBENTURE. Upon the terms and conditions described in this Agreement and the
other Modification Documents, the parties hereto hereby amend and restate the
Original Debentures (other than the Transferred Debenture) in order to extend
the maturity to June 28, 2004 and modify the other terms and conditions of the
Original Debentures as set forth in this Agreement and the other Modification
Documents. Specifically, in connection with such amendment and restatement of
the Original Debentures, on or prior to the Closing Date, each of the following
shall occur:
(a) AMENDED DEBENTURES. Med shall issue five (5) Amended Debentures,
in substantially the form of EXHIBITS B-1 through B-5 attached hereto and
incorporated herein by this reference, in the aggregate principal value of
$57,500,000. Among other terms and conditions, the parties agree, that the
previously existing right to convert the Original Debentures into shares of
common stock of Med shall be deleted and shall not form a part of any of
the Amended Debentures. In exchange for the Amended Debentures, PIBL will
surrender to Med (i) the executed originals of each of the Original
Debentures (other than the Transferred Debenture) and (ii) the stock
certificates representing 13,200,000 shares of common stock of Med received
by PIBL in connection with the Original Debentures (such shares,
collectively, the "Collateral Shares").
The Amended Debentures are subject to the following prepayment
obligations of Med, all of which obligations shall be incorporated by
reference into the terms and conditions of each of the Amended Debentures,
with a pro rata share of the relevant amounts being paid to the Holder(s)
of each of Amended Debentures:
(i) mandatory cash prepayments by Med, to be made out of
realizations on the Med Debenture Collateral, or from other sources of
cash, in an aggregate amount of at least $6,000,000 prior to the
Maturity Date for the Amended Debentures (such regular monthly
payments by Med, together with the prepayment by Med required by
clause 3(a)(iii) below, collectively, "Mandatory Med Prepayments"), on
September 16, 2002 (such date, the "Mandatory Med Prepayment
Commencement Date"), which Mandatory Med Prepayments shall (other than
the first such prepayment) be made on the last business day of each
calendar month, on the dates and in the amounts set forth in SCHEDULE
2(a)(i), with payments being made at the rate of (A) $100,000 per
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month for the first twelve (12) months following the Closing
(including August 2002, the prepayment for which shall be made on the
Mandatory Med Prepayment Commencement Date), (B) $400,000 per month
thereafter, commencing in August of 2003, for a period of six (6)
consecutive months and (C) $600,000 per month thereafter, commencing
in February of 2004, for a period of four (4) consecutive months, or
until such time as there has been payment in full, or some other form
of complete satisfaction and discharge, of the Amended Debentures;
(ii) mandatory cash prepayments of principal to be made solely
out of collections by ARL on the ARL Debenture Collateral (net of
applicable Servicing Costs and the Sellers Override), including any
collections received during and after June of 2002 (such payments by
ARL, "Mandatory ARL Prepayments"), which Mandatory ARL Prepayments
shall be payable monthly in arrears on or prior to the tenth (10th)
business day of each month, commencing on September 16, 2002, and
shall continue until such time as there has been payment in full, or
some other form of complete satisfaction and discharge, of the Amended
Debentures;
(iii) a mandatory cash prepayment of $25,000,000 (less the sum of
any prepayments previously received from ARL Accounts under clause
3(a)(ii)) to be made on or before July 30, 2003; and
(iv) Special Mandatory Prepayments, from time to time, from Net
Asset Sale Proceeds, as described in Section 3(b)(iii).
(b) TRANSFERRED DEBENTURE. Upon execution and delivery of the
Debenture Purchase and Subordination Agreement, in substantially the form
of EXHIBIT C attached hereto, by each of the parties thereto, and payment
of the purchase price of $12,500,000, subject to the terms and conditions
of the Debenture Purchase and Subordination Agreement, PIBL shall deliver
to TEGCO the Transferred Debenture, in substantially the form of EXHIBIT
B-6 attached hereto.
3. GRANT OF SECURITY INTERESTS TO PIBL. As security for the payment
obligations represented by the Amended Debentures, pursuant to the relevant
documentation referred to below, the following parties hereby grant to PIBL, in
its capacity as agent for the Holders of the Amended Debentures, a first
priority (except as otherwise noted below) lien and security interest in and to
the relevant collateral described below and all proceeds thereof (collectively,
the "Debenture Collateral"):
(a) ARL SECURITY INTEREST. ARL hereby grants to PIBL a first priority
security interest in (i) medical accounts receivable owned by ARL
(collectively, the "ARL Accounts") having an aggregate face value of not
less than $100,000,000 (such value, the "ARL Account Value Threshold"), as
identified on SCHEDULE 3(a)(i) attached hereto and incorporated herein by
this reference, with all collections on the ARL Accounts, net of Servicing
Costs and the Sellers Override, being directed to the ARL Collection
Account to be used exclusively for payments on the Amended Debentures; (ii)
all servicing, collateral and collection arrangements relating to the ARL
Accounts, with the documentation related thereto specifying that PIBL (or
such other agent as the Holders may, from time to time, designate in a
writing provided to ARL) shall be the sole beneficiary of such ARL
Accounts; PROVIDED that such security interest shall not apply to the
portion of the Servicing Costs that are
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payable to National Century Financial Enterprises, an Ohio corporation
("NCFE") and its affiliates in connection with the ARL Accounts nor to the
servicing, collateral and collection arrangements with NCFE and its
affiliates related thereto; and (iii) any other assets that may be acquired
or otherwise held by ARL on or after the date of this Agreement
(collectively, the "ARL Debenture Collateral"). Such security interest in
the ARL Debenture Collateral shall be evidenced by a security agreement,
substantially in the form of EXHIBIT D attached hereto (the "ARL Security
Agreement"), executed and delivered by ARL for the benefit of PIBL.
Moreover, pursuant to an account control agreement, substantially in the
form of EXHIBIT E attached hereto (the "ARL Control Agreement"), to be
executed and delivered by ARL to PIBL, ARL hereby grants to PIBL a first
priority security interest in the ARL Collection Account and the contents
of the ARL Collection Account.
(b) MED SECURITY INTEREST. Except as otherwise noted below, Med
hereby grants to PIBL (as agent for the Holders of the Amended Debentures)
a first priority security interest in:
(i) any and all rights of Med or any of the Med Subsidiaries to
receive, upon the terms and conditions set forth in the relevant Sale
and Subservicing Agreement(s), $20,000,000 of funds (such amount, the
"Med Reserve Account Value Threshold") that are currently held in
reserves, in certain accounts as identified on SCHEDULE 3(b)(i)
attached hereto and incorporated herein by this reference (the rights
of Med and the Med Subsidiaries in such accounts, collectively, the
"Med Reserve Account Interests"), for the benefit of NCFE and its
affiliates pursuant to the relevant Sale and Subservicing
Agreement(s), with all distributions on account of, or in relation to,
the Med Reserve Account Interests being directed to the Med Collection
Account to be used exclusively for payments on the Amended Debentures;
(ii) all of the Med Eligible Accounts Receivable; PROVIDED,
HOWEVER, that PIBL's security interest in the Med Eligible Accounts
Receivable is subject to and (A) subordinate to a security interest in
favor of the financing source(s) for the purchase of the Transferred
Debenture and (B) subordinate to a security interest in favor of NCFE
or its affiliates as the purchaser(s) of accounts receivable in
various financing transactions, which security interest
collateralizes, among other things, a repurchase right for rejected
receivables under the relevant documents for such financing
arrangements;
(iii) the Net Asset Sale Proceeds, all of which shall be
deposited in the Med Collection Account; PROVIDED, HOWEVER, that
nothing in this Agreement or in any other Modification Documents shall
require Med or any of the Med Subsidiaries to consummate any Asset
Sale, or to sell any equity securities or other assets for its own
account or to cause or make any distribution to be made in connection
with any such Asset Sale; and
(iv) all other assets that are now or may in the future be
acquired or otherwise held by Med on or after the date of this
Agreement (all of the foregoing set forth in clauses (i) through (iv),
collectively, the "Med Debenture Collateral");
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PROVIDED that such security interest in the Med Debenture Collateral (x)
shall not attach or otherwise apply with respect to any Medicaid, Medicare,
CHAMPUS and CHAMPVA receivables and (y) shall cease to attach or otherwise
apply to any receivables that have been sold or otherwise transferred to
any purchaser(s) under financing arrangements with NCFE or its affiliates,
regardless of whether such transaction is deemed to be a sale or a secured
financing. Such security interest in the Med Debenture Collateral shall be
evidenced by a security agreement, substantially in the form of EXHIBIT F
attached hereto (the "Med Security Agreement"), executed and delivered by
Med for the benefit of PIBL. In addition, pursuant to an assignment
agreement, substantially in the form of EXHIBIT G attached hereto (the "Med
Security Interest Assignment Agreement") by and between Med and PIBL, and
acknowledged and agreed to by ARL, Med shall assign, convey and transfer to
PIBL (as agent for the Holders of the Amended Debentures) all of the rights
that Med holds in the Purchased A/R under the Existing Med/ARL Security
Agreement. Moreover, pursuant to an account control agreement,
substantially in the form of EXHIBIT H attached hereto (the "Med Control
Agreement"), to be executed and delivered by Med to PIBL, Med hereby grants
to PIBL (as agent for the Holders of the Amended Debentures) a first
priority security interest in the Med Collection Account and the contents
of the Med Collection Account.
(c) MED SUBSIDIARIES SHARE PLEDGE AND GRANT OF SECURITY INTEREST IN
OTHER DEBENTURE COLLATERAL. Each of Med and each of the Med Subsidiaries
hereby pledge and grant to PIBL (as agent for the Holders of the Amended
Debentures) a first priority security interest in (i) any and all capital
stock or other equity securities of any of the Med Subsidiaries, (ii) any
and all rights of any of the Med Subsidiaries to receive, upon the terms
and conditions set forth in the relevant Sale and Subservicing
Agreement(s), any portion of the Med Reserve Account Interests in amount up
to the Med Reserve Account Value Threshold, and (iii) any interest of any
of the Med Subsidiaries in the Med Eligible Accounts Receivable
(collectively, the amounts referred to in clauses (i), (ii) and (ii), the
"Med Subsidiaries Debenture Collateral"). Such security interest in the Med
Subsidiaries Debenture Collateral shall be evidenced by a security
agreement, substantially in the form of EXHIBIT I attached hereto (the "Med
Subsidiaries Pledge and Security Agreement"), executed and delivered by the
Med Subsidiaries for the benefit of PIBL (as agent for the Holders of the
Amended Debentures), and the certificates, instruments or other evidence
representing the relevant Med Subsidiaries Debenture Collateral shall be
delivered to the Med Subsidiaries Collateral Agent, in its capacity as
collateral agent for PIBL and the Holders of the Amended Debentures, upon
terms and conditions that are set forth in a collateral agency agreement
substantially in the form of EXHIBIT J attached hereto (the "Med
Subsidiaries Collateral Agency Agreement"), by and among Med, the Med
Subsidiaries and PIBL (as agent for the Holders of the Amended Debentures).
The parties further agree that PIBL (as agent for the Holders of the Amended
Debentures) is hereby authorized to file any such UCC financing statements
(collectively, the "UCC Financing Statements") as PIBL deems appropriate in
order to perfect and continue its security interest in any of the
above-described Debenture Collateral. In addition, to the extent that any of the
Debenture Collateral described above constitutes real property, the relevant Med
Party shall execute and file a mortgage or deed of trust, substantially in the
form of EXHIBIT K attached hereto (each, a "Mortgage") in favor of PIBL (as
agent for the Holders of the Amended Debentures). Each of Med, the Med
Subsidiaries and PIBL (as agent for the Holders of the Amended Debentures)
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acknowledges and agrees that (i) the financing source(s) for the purchase of the
Transferred Debenture shall have a security interest, which security interest
shall be subordinate to the security interest of PIBL with respect to the Med
Subsidiaries Debenture Collateral and all other assets of Med other than any
accounts receivable of Med and (ii) pursuant to Section 9.2 of the relevant Sale
and Subservicing Agreement(s) between the relevant Med Parties and NCFE and its
affiliates, NCFE and its affiliates shall have a security interest, which
security interest shall be (A) senior to the security interest of PIBL with
respect to the accounts receivable of Med and the Med Subsidiaries and (B)
subordinate to the security interest of PIBL with respect to the Med
Subsidiaries Debenture Collateral and all other assets of Med other than any
accounts receivable of Med.
4. ARL GUARANTY. In consideration of the Existing Med Guaranty and other
good and valuable consideration provided to ARL by Med, ARL has agreed to
provide a secured guaranty for the benefit of PIBL (as agent for the Holders of
the Amended Debentures), substantially in the form of EXHIBIT L attached hereto
(the "ARL Guaranty"). The ARL Guaranty shall be secured by the ARL Debenture
Collateral, as further described in the ARL Security Agreement.
5. REPRESENTATIONS AND WARRANTIES OF MED, ARL AND OTHER MED PARTIES.
(a) Each of Med, ARL and each of the other Med Parties, hereby make
the following representations and warranties to PIBL (for PIBL itself and
as agent for the Holders of the Amended Debentures) as of the date hereof
and as of the Closing Date:
(i) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Such Med
Party is an entity duly organized, validly existing and in good
standing under its jurisdiction of formation, has full power and
authority to own, lease and operate its properties and assets and to
conduct its business as now being conducted, and is duly qualified or
licensed to do business as a foreign entity, and is in good standing,
in all jurisdictions where the character of the properties it owns,
leases or operates, or the conduct of its business, requires such
qualification or licensing.
(ii) DUE AUTHORIZATION, VALIDITY AND ENFORCEABILITY. Such Med
Party has full legal right, power and authority, and all approvals
required by law, to enter into this Agreement and the other
Modification Documents, and to consummate such transactions and
perform such obligations contemplated hereby and thereby as are
applicable to such party. The execution, delivery and performance of
each of this Agreement and the other Modification Documents to which
such Med Party is a party and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all
necessary corporate or other action by or on behalf of such Med Party,
and each of this Agreement and the other Modification Documents to
which such Med Party is a party constitute the legal, valid and
binding obligation of such Med Party, enforceable in accordance with
its terms.
(iii) FAIR VALUE. Such Med Party is receiving fair equivalent
value for the agreements and undertakings being made by it hereunder
and the other Modification Documents to which it is a party.
(iv) NO CONFLICTS WITH AGREEMENTS, ETC. Neither the execution
and delivery of this Agreement, the Amended Debentures nor any of the
other
11
Modification Documents contemplated by this Agreement, nor the
fulfillment of, or compliance with, the terms and conditions hereof
and thereof, will conflict with, or result in a breach or violation of
any of the terms, conditions or provisions of, or constitute a default
under, the charter, by-laws, operating agreement or other governing or
constituent document of any such Med Party any material contract,
agreement, mortgage, indenture, lease, instrument, court order,
statute, law, rule or regulation to which any such Med Party or its
assets is subject, which conflict, breach, violations, or defaults,
would constitute a Material Adverse Effect.
(v) TITLE TO RELEVANT DEBENTURE COLLATERAL. Such Med Party has
good and marketable title to (other than assets leased from other
Persons), or a valid interest in, all of the relevant Debenture
Collateral that has been pledged to PIBL or the Holders of the Amended
Debentures by such Med Party under this Agreement.
(vi) CONSENTS AND APPROVALS. Other than the consent of the
Holders of the Amended Debentures, no consent, approval or
authorization of or declaration, registration or filing with any
governmental body or any non-governmental Person is required in
connection with the execution or delivery of this Agreement, the
Amended Debentures or the other Modification Documents by the relevant
Med Party or the performance by such Med Party of its respective
obligations hereunder or thereunder, or in connection with the
consummation of the transactions contemplated hereby and thereby, or
as a condition to the legality, validity or enforceability of this
Agreement, the Amended Debentures or the other Modification Documents
with respect to such Med Party, except for such consents, approvals,
authorizations, declarations, registrations or filings as are required
by the SEC and any securities listing exchange or similar body
applicable to the equity securities of Med, the absence of which would
not constitute, individually or in the aggregate, a Material Adverse
Effect.
(b) Med makes the following representations and warranties to PIBL
(for PIBL itself and as agent for the Holders of the Amended Debentures),
as of the date hereof and as of the Closing Date:
(i) SUBSIDIARIES. Med does not have any Subsidiaries, except as
set forth on SCHEDULE 5(b)(i) attached hereto. Each Subsidiary of Med,
other than Excluded Med Subsidiaries, is a party to this Agreement,
the Med Subsidiaries Pledge and Security Agreement, and each of the
other Modification Documents to which all of the other Med
Subsidiaries are required to be a party.
(ii) TAXES. Except as set forth on SCHEDULE 5(b)(ii), Med has
prepared and timely filed, or caused to be filed, on behalf of Med and
each Person that is included as part of the consolidated group of Med,
or has validly extended, all required federal, state, local and
foreign tax returns that are required to have been filed by or on
behalf of such Persons, which tax returns were prepared on a basis
consistent with its financial records and all taxes shown thereon to
be due have been timely paid in full or validly extended.
12
(iii) LABOR MATTERS. Med is in material compliance with all
applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, and is not engaged
in any unlawful labor or employment practice nor has Med received any
notice of a complaint, charge or allegation to the contrary, except
for such practices and instances of non-compliance as do not
constitute, individually or in the aggregate, a Material Adverse
Effect. There is no (A) labor strike, dispute, slowdown or work
stoppage pending or, to Med's best knowledge after due inquiry,
threatened against or affecting any Med or any other Med Party, (B)
pending material grievance or arbitration proceeding arising out of or
under any collective bargaining agreement to which any Med or any
other Med Party is a party, or is subject, or (C) rightful claim of
wrongful discharge on the part of any present or former employee of
Med or any other Med Party against any of such Persons, except for
such instances referred to in the foregoing clauses (A), (B) and (C)
as do not constitute, individually or in the aggregate, a Material
Adverse Effect.
(iv) NO VIOLATION OF GOVERNMENTAL ORDERS OR LAWS. Med is not in
default under or in violation of any order of any court, arbitrator or
governmental body or any statute or law or any rule or regulation of
any governmental body (including, without limitation, any building,
zoning, environmental or other ordinance, code or rule), which default
or violation constitutes a Material Adverse Effect; and Med is not
subject to, or a party to, any order of any court or governmental body
arising out of any action, suit or proceeding under any statute or
other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters.
(v) FINANCIAL STATEMENTS. Each of the Financial Statements of
Med delivered to PIBL at or prior to the Closing pursuant to Section
11(e), and the Financial Statements of Med that have been filed with
the SEC as part of the most recent Form 10-K and Form 10-Q of Med have
been prepared in accordance with GAAP (except as noted thereon),
consistently applied throughout the periods involved, and present
fairly, in all material respects, the consolidated financial position
of Med as at the relevant dates of the balance sheets contained
therein and the respective results of operations and cash flows of Med
for each of the respective periods then ended. As of the date of each
of the balance sheets included in such Financial Statements, Med did
not have any material indebtedness or liability, absolute or
contingent, liquidated or unliquidated, that, in accordance with GAAP,
would be reflected on such Financial Statements, except indebtedness
and liabilities reflected or reserved against on such balance sheets
or described in the notes thereto.
6. REPRESENTATIONS AND WARRANTIES OF PIBL. PIBL, for itself and as agent
for the Holders of the Amended Debentures, hereby makes the following
representations and warranties to each Med Party, as of the date hereof and as
of the Closing Date:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. PIBL is an entity
duly organized, validly existing and in good standing under its
jurisdiction of formation, has full power and authority to own, lease and
operate its properties and assets and to conduct its business as now being
conducted, and is duly qualified or licensed to do business as a foreign
13
entity, and is in good standing, in all jurisdictions where the character
of the properties it owns, leases or operates, or the conduct of its
business, requires such qualification or licensing.
(b) DUE AUTHORIZATION, VALIDITY AND ENFORCEABILITY. PIBL has full
legal right, power and authority, and all approvals required by law, to
enter into this Agreement and the other Modification Documents to which it
is a party, and to consummate such transactions and perform such
obligations contemplated hereby and thereby as are applicable to PIBL. The
execution, delivery and performance of each of this Agreement and the other
Modification Documents to which PIBL is a party and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate or other action by or on behalf of PIBL and each of
this Agreement and the other Modification Documents to which PIBL is a
party constitutes the legal, valid and binding obligation of PIBL,
enforceable in accordance with its terms.
(c) CONSENTS AND APPROVALS. Other than the consent of the Holders of
the Amended Debentures, no consent, approval or authorization of or
declaration, registration or filing with any governmental body or any
non-governmental Person is required in connection with the execution or
delivery of this Agreement, the Amended Debentures or the other
Modification Documents by PIBL, as agent for the Holders of the Original
Debentures and the Amended Debentures, or the performance by PIBL of its
respective obligations hereunder or thereunder, or in connection with the
consummation of the transactions contemplated hereby and thereby, or as a
condition to the legality, validity or enforceability of this Agreement,
the Amended Debentures or the other Modification Documents with respect to
PIBL.
(d) FAIR VALUE. PIBL (as agent for the Holders of the Amended
Debentures) is receiving fair equivalent value for the agreements and
undertakings being made by PIBL hereunder.
(e) COLLATERAL SHARES. The stock certificates evidencing the
13,200,000 Collateral Shares that are being delivered to Med by PIBL (as
agent for the Holders of the Amended Debentures) in accordance with the
terms and conditions of this Agreement represent the only certificates
evidencing equity securities of Med that have been received by PIBL, the
Holders, or their respective affiliates in connection with the Original
Debentures.
7. COVENANTS OF MED. Until such time as the Amended Debentures are repaid
in full or otherwise satisfied and discharged, and unless PIBL (or such other
agent as the Holders of the Amended Debentures may, from time to time, designate
in a writing delivered to Med) shall otherwise consent in writing, Med shall,
and, where applicable, shall cause each of the Med Parties to, comply with the
following covenants:
(a) FINANCIAL STATEMENTS. Med shall provide to PIBL, for itself and
for each of the Holders (or such other agent as the Holders of the Amended
Debentures may, from time to time, designate in a writing delivered to
Med): (i) within ninety (90) days after the end of each fiscal year of Med
(it being understood that the time period is extended to December 1, 2002
in the case of the fiscal year of Med ended March 31, 2002), Financial
Statements of Med for such fiscal year, certified by Med's independent
auditors,
14
together with an Indebtedness Schedule and a Leverage Ratio Certificate for
such fiscal year; and (ii) within forty-five (45) days after the end of
each fiscal quarter of Med (it being understood that the time period is
extended to August 30, 2002 in the case of the fiscal quarter ended June
30, 2002), Financial Statements of Med for such fiscal quarter, together
with an Indebtedness Schedule and a Leverage Ratio Certificate for such
fiscal quarter; PROVIDED that the required time for delivery of such
Financial Statements under the foregoing clauses (i) or (ii) may be
extended to the same extent that Med's required time of filing its Form
10-K or 10-Q, respectively, for such period is extended pursuant to SEC
Rule 12b-25. PIBL agrees that, so long as Med continues as a reporting
company under the Securities Exchange Act of 1934, delivery of Med's
periodic reports filed with the SEC shall satisfy this requirement.
(b) LEVERAGE RATIO. Except as provided below, Med will, at all times,
maintain the ratio of the amount of its Total Consolidated Indebtedness as
compared to the total Leverage Ratio Accounts Receivable (such ratio, the
"Leverage Ratio") at or below 5.5 to 1.0; PROVIDED that Med shall be
permitted to obtain debt financing from NCFE or its affiliates, or to
pledge assets of Med and its Subsidiaries in any such financing arrangement
entered into by TEGCO, where such financing occurs in connection with the
purchase of the Transferred Debenture or to refinance such debt, in each
case on reasonable terms and conditions customary for such types of
financing, and any such financing or refinancing shall not be included in
the calculation of the Leverage Ratio. In connection with acquisitions from
unaffiliated sellers, Med will be permitted to incur additional
indebtedness incurred to such Sellers as part of the purchase in connection
with any such acquisition and to grant first priority security interests in
any assets and in stock that is acquired in such an acquisition; PROVIDED
that PIBL, as agent for the Holders of the Amended Debentures, will have a
perfected security interest in all such assets or stock acquired in an
acquisition that is second in priority only to such security interest
granted to such sellers. In addition, Med may incur indebtedness in an
amount not to exceed $5,000,000 for the settlement and resolution of
certain litigation involving an entity referred to as "Network
Pharmaceuticals", which litigation has been disclosed to PIBL.
(c) CHANGE OF BUSINESS. Med shall not engage in any business other
than providing alternative site health care services, and ancillary
products and services, in North America and Europe.
(d) NEW SUBSIDIARIES. Med shall not, after the date of this
Agreement, directly or indirectly create or acquire any Subsidiary (each, a "New
Subsidiary") unless such New Subsidiary executes and delivers to PIBL a
counterpart signature page to (i) this Agreement, (ii) a Subsidiary Joinder in
substantially the form that is attached as EXHIBIT A to the Med Subsidiaries
Pledge and Security Agreement (a "Subsidiary Joinder"), and (iii) such other
agreements, instruments and other documents as are reasonably necessary and
appropriate in connection therewith, such that any such New Subsidiary is
thereby bound by the terms and conditions hereof and thereof, including, without
limitation, the grant to PIBL of a security interest in all of the capital stock
or other equity securities of such New Subsidiary and any other Debenture
Collateral held by such New Subsidiary; PROVIDED that these requirements shall
not apply to any New Subsidiary during the time that it is an Excluded
Subsidiary. Med shall not, after the date of this Agreement, directly or
indirectly, acquire or hold, or cause or permit any Subsidiary to acquire or
hold, any shares of stock or other equity security of a Med Subsidiary that is
not subject to the pledge of the Med Subsidiaries Pledge and Security Agreement.
15
(e) MAINTENANCE OF ARL. Med shall ensure that ARL shall, at all
times, be maintained as a single-purpose Delaware limited liability company
whose sole purpose is to provide collateral to secure and funds to pay the
Amended Debentures such that Med shall ensure that ARL shall:
(i) refrain from engaging in any business other than: (A) the
collection and liquidation of the ARL Debenture Collateral for the
benefit of PIBL (as agent for the Holders of the Amended Debentures)
and the Sellers; (B) the acquisition of such additional assets to
serve as ARL Debenture Collateral as the managers of ARL may from time
to time approve, and (C) such other activities as are incidental or
necessary to the performance of ARL's collection and liquidation
activities referred to above;
(ii) not incur any funded debt other than indebtedness under the
Amended Debentures or the Purchase Agreements with Sellers, or
encumber any of its assets other than for liens in favor of the
Holders or their designated agent; and
(iii) be governed by the ARL Operating Agreement, in
substantially the form of EXHIBIT M attached hereto, which ARL
Operating Agreement shall not be amended without the advance written
consent of PIBL, in its capacity as the designated representative of
the Holders.
(f) ASSET SALES. Med shall not, and will not permit any of the Med
Subsidiaries to, engage in any Asset Sale, unless either (i) the proceeds
or, in the case of any Med Subsidiaries, the Net Asset Sale Proceeds, are
applied to pay amounts due under the Amended Debentures or (ii) Med shall
pledge, or cause to be pledged, for the benefit of PIBL, additional assets
as collateral for the Amended Debentures of a value that is equal to or
greater than the value of the Debenture Collateral that is disposed of in
connection with such Asset Sale; PROVIDED that no such additional
collateral will need to be pledged after the occurrence of an Asset Sale in
the event that, after taking into account the effect of the relevant Asset
Sale, the then existing Debenture Collateral securing the Amended
Debentures is sufficient to provide Debenture Collateral coverage that is
equal to or greater than one hundred and forty percent (140%) of the then
outstanding principal balance of the Amended Debentures.
(g) SUBSTITUTE FINANCING USED TO REPAY AMENDED DEBENTURES. In the
event that, after the Closing Date, Med or any other Med Party is able to
obtain funds from a third party for the purpose of repaying all, or a
significant portion of the then outstanding principal balance of, and
accrued but unpaid interest on, the Amended Debentures, Med shall pay, or
cause the source of such financing to pay directly, to PIBL (as agent for
the Holders of the Amended Debentures) the proceeds from any such
substitute financing transaction (net of customary and reasonable third
party expenses of such transaction) which payment shall be applied against
payments of principal owing under the Amended Debentures in reverse order
of maturity (starting first with the final payment of principal that is due
on June 28, 2004), together with accrued and unpaid interest on the
principal amount so repaid; PROVIDED that any such substitute financing
transaction must (i) take place on reasonable terms and conditions, as are
customary for such types of financing transactions; (ii) be in amount that
will result in a repayment to the Holders of the Amended
16
Debentures of at least ten million dollars ($10,000,000) of the then
outstanding principal balance of the Amended Debentures, together with
accrued but unpaid interest on such portion of the principal balance; and
(iii) as between the Med Parties and PIBL, acting on behalf of the Holders
of the Amended Debentures, not result in a final and irrevocable release of
any material portion of the Debenture Collateral until the ninety-first
(91st) day following the payment of the relevant proceeds to PIBL, on
behalf of the Holders of the Amended Debentures.
(h) CONSEQUENCES OF RETURN OF PURCHASE PRICE FOR TRANSFERRED
DEBENTURE. In the event that a court of competent jurisdiction or a
governmental body with jurisdiction over the relevant parties issues an
order, writ or decree that requires or otherwise causes PIBL or the Holders
of the Amended Debentures to, in whole or in part, repay or otherwise
return the purchase price that is paid for the Transferred Debenture under
the Debenture Purchase and Subordination Agreement, and the obligation to
repay the corresponding portion of the principal amount of the Original
Debentures represented by the Transferred Debentures is not otherwise paid,
satisfied or discharged with respect to the Med Parties on or prior to the
date thereof, Med shall thereupon promptly pay to PIBL, as agent for the
Holders of the Amended Debentures, the amount of any such portion of the
purchase price for the Transferred Debenture that is so repaid or otherwise
returned by PIBL or the Holders of the Amended Debentures.
(i) AMENDMENTS TO SALES AND SUBSERVICING AGREEMENT(S). Except with
the advance written consent of PIBL (or such other agent as the Holders of
the Amended Debentures may designate in a writing delivered to Med), which
consent shall not be unreasonably withheld or delayed, Med shall not, nor
shall it allow any Med Subsidiary to, agree to any amendments, consents,
waivers or other modifications to or authorizations under any Sales and
Subservicing Agreement relating to the Med Reserve Account Interests that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect upon the Med Reserve Account Interests or their
value as Debenture Collateral.
(j) NOTICE OF EVENTS OF DEFAULT. Promptly following Med's discovery
or knowledge thereof, Med shall provide to PIBL, for itself and for each of
the Holders, or to such other agent as the Holders may from time to time
designate, written notice of any Event of Default under this Agreement.
8. COVENANTS OF ARL. Until such time as the Amended Debentures are
repaid in full or otherwise satisfied and discharged, and unless PIBL shall
otherwise consent in writing, ARL shall comply with the following
covenants:
(a) SPECIAL PURPOSE NATURE. ARL shall, at all times, be maintained as
a single-purpose Delaware limited liability company whose sole purpose is
to provide collateral to secure and funds to pay the Amended Debentures
such that ARL shall:
(i) refrain from engaging in any business other than: (A) the
collection and liquidation of the ARL Debenture Collateral for the
benefit of PIBL (as agent for the Holders) and the Sellers; (B) the
acquisition of such additional assets to serve as ARL Debenture
Collateral as the managers of ARL may from time to time approve, and
17
(C) such other activities as are incidental or necessary to the
performance of ARL's collection and liquidation activities referred to
above;
(ii) not incur any funded debt other than indebtedness under the
Amended Debentures or the Purchase Agreements with Sellers, or
encumber any of its assets other than for liens in favor of the
Holders or their designated agent; and
(iii) be governed by the ARL Operating Agreement, which ARL
Operating Agreement shall not be amended without the advance written
consent of PIBL, in its capacity as the designated representative of
the Holders.
9. COVENANTS OF PIBL. Until such time as the Amended Debentures are
repaid in full or otherwise satisfied and discharged, and unless Med shall
otherwise consent in writing, PIBL, for itself and as agent for the Holders of
the Amended Debentures, shall comply with the following covenants:
(a) COOPERATION WITH SECURITIES LISTING EXCHANGE OF MED. Subject to
applicable governmental and regulatory restrictions and procedures governing the
disclosure of information regarding its clients, as may be requested directly by
such securities listing exchange constituting a self-regulatory organization
under the federal securities laws of the United States PIBL shall (i) provide
information regarding the identity of the Holders of the Original Debentures and
the Amended Debentures directly to the relevant United States securities listing
exchange on which the equity securities of Med are quoted and (ii) otherwise
make reasonable efforts to help ensure compliance with the requirements of such
securities listing exchange that relate to, and are triggered as the result of,
the relations between Med and PIBL.
(b) SUBSTITUTE FINANCING USED TO REPAY AMENDED DEBENTURES. Provided that
Med or the relevant Med Party complies with all of the relevant requirements of
Section 7(g) set forth above, PIBL, as agent for the Holders of the Amended
Debentures, shall (i) accept the proceeds of any substitute financing of the
type described in Section 7(g) and apply any such proceeds that are received in
connection therewith as a repayment of the relevant portion of the then
outstanding principal balance of the Amended Debentures and (ii) upon the terms
and subject to the conditions set forth in Section 7(g), release from the lien
held by PIBL, as agent for the Holders of the Amended Debentures, a portion of
the Debenture Collateral equal to one hundred and forty percent (140%) of the
principal amount of the Amended Debentures so repaid, provided that the
Debenture Collateral remaining subject to the lien held by PIBL following such
release shall be equal to at least one hundred and forty percent (140%) of the
principal amount of the Amended Debentures remaining outstanding immediately
following payment of the proceeds of such substitute financing to PIBL.
10. INTENTIONALLY RESERVED.
11. CLOSING CONDITIONS OF PIBL. All of the obligations of PIBL under this
Agreement and the other Modification Documents with respect to the issuance of
the Amended Debentures and the other transactions described herein and therein
shall be subject to the satisfaction of each of the following conditions, any or
all of which may be waived, in whole or in part, by PIBL on or prior to the
Closing Date:
18
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each of the Med Parties contained in this Agreement and any
other Modification Documents shall be true and correct in all material
respects when made and as of the Closing Date.
(b) MODIFICATION DOCUMENTS. Each of the Med Parties and all third
parties other than PIBL (including the Med Subsidiaries Collateral Agent
and the Depositary Bank) shall have delivered to PIBL such party's duly
executed original signatures to this Agreement and each of the Modification
Documents to which such Med Party is a party and every other agreement,
instrument, certificate or other document required in connection herewith
and therewith to be delivered at or before the Closing Date.
(c) GOOD STANDING CERTIFICATES. PIBL shall have received a
certificate of good standing for each of Med, ARL, TEGCO, Chartwell and
TLCS issued by the office of the Secretary of State of the state of
formation of such entity not more than ten (10) business days prior to the
Closing Date.
(d) SUBSIDIARY STOCK CERTIFICATES. PIBL shall have received written
confirmation from the Med Subsidiaries Collateral Agent that, as agent for
PIBL and the Holders of the Amended Debentures and subject to the terms and
conditions of the Med Subsidiaries Collateral Agency Agreement, the Med
Subsidiaries Collateral Agent holds all of the original stock certificates
representing the Med Subsidiaries Debenture Collateral.
(e) FINANCIAL STATEMENTS. (i) Prior to the Closing Date, PIBL shall
have received the latest available draft of the annual Financial Statements
of Med for the fiscal year of Med ended March 31, 2002 (lacking only the
certification of KPMG, LLC, as the auditors of Med, thereon), together with
an Indebtedness Schedule and a Leverage Ratio Certificate for such fiscal
year and (ii) the final versions of such Financial Statements, Indebtedness
Schedule and Leverage Ratio Certificate provided to PIBL at Closing shall
not differ from the drafts thereof provided to PIBL in any respects that,
individually or in the aggregate, are, in the reasonable judgment of PIBL,
material and adverse to the interests of the Holders of the Amended
Debentures.
(f) ACCRUED INTEREST ON ORIGINAL DEBENTURES. PIBL shall have received
payment, in cash, of the amount of $2,450,000, representing all accrued but
unpaid interest on the Original Debentures through June 28, 2002.
(g) PRICE FOR TRANSFERRED DEBENTURE. PIBL shall have received
payment, in cash, of the $12,500,000 purchase price for the Transferred
Debenture.
(h) EXTENSION FEE. PIBL shall have received payment, in cash, of an
extension fee of $350,000.
(i) LEGAL OPINIONS. PIBL shall have received the legal opinion of
Manatt, ββββββ & ββββββββ, LLP, counsel to Med and ARL, in the form of
EXHIBIT N attached hereto and incorporated herein by this reference.
19
(j) FORBEARANCE AND TOLLING AGREEMENT. Each of Med, βββββ β.
ββββββββββββ, ββ., an individual, and NCFE shall have delivered to PIBL
such party's duly executed original signatures to a forbearance and tolling
agreement (such document, the "Forbearance and Tolling Agreement") in
substantially the form of EXHIBIT O attached hereto and incorporated herein
by this reference.
12. CLOSING CONDITIONS OF THE MED PARTIES. All of the obligations of any
of the Med Parties under this Agreement and the other Modification Documents
with respect to the issuance of the Amended Debentures and the other
transactions described herein and therein shall be subject to the satisfaction
of each of the following conditions, any or all of which may be waived, in whole
or in part, by the relevant Med Party on or prior to the Closing Date:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each of the PIBL contained in this Agreement and any other
Modification Documents shall be true and correct in all material respects
when made and as of the Closing Date.
(b) MODIFICATION DOCUMENTS. PIBL shall have delivered to Med, as
representative of the Med Parties, PIBL's duly executed original signatures
to this Agreement and each of the Modification Documents to which PIBL is a
party and every other agreement, instrument, certificate or other document
required in connection herewith and therewith to be delivered at or before
the Closing Date.
(c) SURRENDER OF ORIGINAL DEBENTURES. PIBL shall have delivered to
Med the instruments representing the executed originals of the Original
Debentures (other than the Transferred Debenture), together with bond
powers therefor executed in blank.
(d) COLLATERAL SHARES. PIBL shall have delivered to Med all of the
original stock certificates representing the Collateral Shares, together
with stock powers therefor executed in blank.
(e) TRANSFERRED DEBENTURE. PIBL shall have delivered, or caused to be
delivered, the Transferred Debenture to TEGCO, together with bond powers
therefor executed in blank.
(f) FORBEARANCE AND TOLLING AGREEMENT. Each of PIBL and its
affiliates that are a party thereto, shall have delivered to Med such
party's duly executed original signatures to the Forbearance and Tolling
Agreement.
13. EVENTS OF DEFAULT. Subject to any applicable cure period described
below, any one or more of the following events shall constitute an event of
default by Med or another relevant Med Party under this Agreement (each, an
"Event of Default"), any:
(a) failure to make timely any payment of interest or principal
(including Mandatory Med Prepayments, Mandatory ARL Prepayments or Special
Mandatory Prepayments) due to the Holders or their agent under the Amended
Debentures within five (5) business days of the due date;
(b) failure to maintain continuously the priority and perfection of
the lien upon the Debenture Collateral (other than failures affecting, in
the aggregate, less than five percent
20
(5%) of the total value of such Debenture Collateral, provided that such
failures do not continue for longer than thirty (30) days);
(c) failure by Med or ARL to maintain the Med Reserve Account
Interests or the ARL Accounts, respectively, equal to or above the Med
Reserve Account Value Threshold or the ARL Account Value Threshold (subject
to adjustment to take into account any amounts previously collected and
paid over to PIBL as of the relevant date of measurement), as the case may
be (other than any failures that result, in the aggregate, in a shortfall
equal to less than ten percent (10%) of such Account Value Threshold
provided that such shortfall does not continue for a period of longer than
sixty (60) days);
(d) failure to comply with the Leverage Ratio that is not cured more
than sixty (60) days after notice thereof;
(e) bankruptcy, dissolution, receivership, assignment for the benefit
of creditors, insolvency, or any similar event or proceeding affecting Med,
ARL or any material Med Subsidiary;
(f) default by Med, ARL or any material Med Subsidiary on other
indebtedness, which indebtedness, individually or collectively, has an
aggregate principal amount in excess of $5,000,000; PROVIDED that, if such
defaulted indebtedness has not been accelerated, there shall be no "Event
of Default" unless such indebtedness continues in default for a period of
at least sixty (60) days;
(g) judgment, writ or warrant of attachment or similar process
affecting Med, ARL, any material Med Subsidiary or the respective
properties thereof, involving: (i) in the aggregate, at any time, in excess
of $5,000,000; PROVIDED that, if there has been no writ or warrant of
attachment or similar process issued with respect to such judgment, there
shall be no "Event of Default" unless such judgment continues unstayed for
a period of at least sixty (60) days, or (ii) an order, judgment or decree
of dissolution or split up of such entity;
(h) material breach or default by (i) Med, ARL or any Med Subsidiary
of those representations, warranties, covenants or other agreements to PIBL
or the Holders in this Agreement or any of the other Modification Documents
or (ii) any "Med Party" (as defined in the Forbearance and Tolling
Agreement) or any "NCFE Party" (as defined in the Forbearance and Tolling
Agreement) under the Forbearance and Tolling Agreement; PROVIDED that, if
such breach or violation is reasonably subject to being cured, there shall
be no Event of Default if such breach or violation is cured within (30)
days after notice of such breach or violation); PROVIDED FURTHER that (A)
there shall be no such opportunity to cure (x) a breach or violation of
Section 7(j) or (y) any violation by Med, any other Med Party or βββββ β.
ββββββββββββ of the Forbearance and Tolling Agreement and (B) Med or any
other relevant Med Parties shall have fifteen (15) days to cure any breach
or violation of Section 7(a) before such breach or violation constitutes an
Event of Default; and
(i) merger, consolidation or sale of all or substantially all of the
assets of, either Med or ARL, the result of which is that either (i) Med or
ARL, as the case may be, will own, after such transaction, less than fifty
percent (50%) of the asset value that Med or ARL, as the case may be, owned
prior to such transaction or (ii) the shareholders of Med prior to such
21
transactions, will own less than fifty percent (50%) of the outstanding
voting shares of the resulting corporation after such transaction.
Upon the occurrence of any Event of Default described in the foregoing
clause (e), each of (x) the unpaid principal amount of and accrued interest on
the Amended Debentures, and (y) all other obligations under the Modification
Documents shall automatically become immediately due and payable, without
presentment, demand, protest or other requirements of any kind, all of which are
hereby expressly waived by Med and each other Med Party. Upon the occurrence and
during the continuation of any other Event of Default, PIBL (as agent for the
Holders of the Amended Debentures or any other agent that the Holders of the
Amended Debentures, from time to time, designate in a writing delivered to Med)
or a majority in interest of the Holders may, at any time, by written notice to
Company, declare all or any portion of the amounts described in clauses (x) and
(y) of the foregoing sentence to be, and the same shall forthwith become,
immediately due and payable. Upon any such acceleration, PIBL (as agent for the
Holders of the Amended Debentures or any other agent that the Holders of the
Amended Debentures, from time to time, designate in a writing delivered to Med)
or a majority in interest of the Holders may pursue any and all rights and
remedies legally available to them, subject to the provisions of Section 14.
14. REMEDIES UPON AN EVENT OF DEFAULT. Upon the occurrence of an Event of
Default, PIBL shall have the following rights:
(a) In the event that the Amended Debentures are not repaid in full on
the Maturity Date, or when otherwise due in accordance with the terms and
conditions of this Agreement, or upon the occurrence of:
(i) an Event of Default described in Section 13(a) (involving
payment defaults of greater than $100,000 in the aggregate), or
(ii) after the expiration of applicable cure periods, an Event
of Default described in Sections 13(b) through (h),
the Holders and their agents (including PIBL in its capacity as agent for
the Holders of the Amended Debentures) shall have the right to pursue any
and all remedies legally available to them under the Modification Documents
or under applicable law, in any order or priority that they may elect, and
without notice to or consultation with Med, ARL or any other Person, except
as may be required under applicable law.
(b) Upon the occurrence of any other Event of Default (including an
Event of Default under Section 13(i) of this Agreement), the Holders and
their agents (including PIBL in its capacity as agent for the Holders of
the Amended Debentures) shall have the right to pursue any and all remedies
legally available to them under the Modification Documents or under
applicable law, in the order and priority described below:
(i) to receive the net proceeds, after payment of Servicing Costs
and the Sellers Override, of any collections on the ARL Accounts;
22
(ii) to enforce the pledge of and liquidate the proceeds
contained in the ARL Collection Account;
(iii) to receive the net proceeds, after payment of Servicing
Costs, of any collections on the Med Eligible Accounts Receivable,
subject to the prior right and interest (if any) of (A) the financing
source(s) for the purchase of the Transferred Debenture and (B) the
purchaser(s) of accounts receivable under financing arrangements with
NCFE or its affiliates in such Med Eligible Accounts Receivable;
(iv) to seek payment from, or otherwise proceed against the other
assets of Med, the Med Subsidiaries or ARL; and
(v) any other remedies or recourse available under the
Modification Documents or applicable law.
(c) No failure or delay on the part of any Holder or any agent of the
Holders (including PIBL in its capacity as agent for the Holders of the
Amended Debentures) in the exercise of any power, right or privilege
hereunder or under any other Modification Document shall impair such power,
right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of
any other power, right or privilege. Except as otherwise provided in this
Agreement, all rights and remedies existing under this Agreement and the
other Modification Documents are cumulative to, and not exclusive of, any
rights or remedies that are otherwise available.
15 FURTHER ASSURANCES. Each of the parties hereto agrees at any time and
from time to time, upon request, to do, execute, acknowledge and deliver, or to
cause to be done, executed, acknowledged and delivered, all such further acts,
assignments, transfers, powers of attorney and assurances as may be required in
order to carry out or give effect to the terms and conditions of this Agreement.
16. EFFECTIVENESS, TERM AND TERMINATION. This Agreement and the other
Modification Documents shall take effect only if the Closing occurs on or before
August 15, 2002. In the event that the Closing does not occur on or prior to
such date, this Agreement and the other Modification Documents (other than the
Acknowledgment and Agreement of Rescission, which shall remain valid and in full
force and effect) shall be null and void and be of no further force and effect.
Except as otherwise provided in this Agreement, and unless expressly extended
pursuant to a written notice of extension (a "Notice of Extension") executed and
delivered by each of the parties to this Agreement, any and all obligations and
agreements of the parties under this Agreement shall terminate, and be of no
further force and effect, as of the later of (i) June 28, 2004 and (ii) the
ninety-first day after the date on which all of the obligations owed to PIBL (as
agent for the Holders of the Amended Debentures) under the Amended Debentures
have been fully paid, or are otherwise satisfied and discharged (such date, the
"Termination Date"). It being understood that, in the event that any Notice of
Extension is executed and delivered, the Termination Date shall be deemed to
refer to the subsequent date referenced in such Notice of Extension.
23
17. PAYMENTS TO PIBL AND THE HOLDERS.
(a) All payments to be made at the Closing to PIBL (for itself or on
behalf of the Holders of the Amended Debentures), whether of principal,
interest, fees or the purchase price for the Transferred Debenture, and
whether from Med, TEGCO or any other source, shall, at the discretion of
Med, be made by either (i) a bank cashier's check made out to the order of
"Private Investment Bank Limited" issued by and drawn upon a U.S. money
center bank reasonably acceptable to PIBL, and delivered in person at the
Closing to a representative of PIBL designated in writing by PIBL to Med
and TEGCO or (ii) a wire transfer that satisfies the requirements of
Section 17(b) below.
(b) Following the Closing, any and all payments principal, interest,
fees or other obligations (including, without limitation, prepayments made
pursuant to Section 2(a) of this Agreement) on or in connection with the
Amended Debentures shall be made to PIBL (as the agent for the Holders of
the Amended Debentures), or such other agent that the Holders of the
Amended Debentures shall designate in a writing delivered to Med, by wire
transfer of funds to a bank account designated in writing to Med by PIBL
(or such other agent that the Holders of the Amended Debentures shall
designate in a writing delivered to Med), from time to time, for such
purpose. Until Med is otherwise instructed pursuant to this Agreement, all
such payments shall be made to:
The Northern Trust International Banking Corporation
Fedwire ABA # βββββββββ
CHIPS # 0112/UID 220337
ββ βββββ ββββββ, ββββ βββββ
βββ ββββ, βββ ββββ βββββ
SWIFT ββββββββ
REF: For the Account # 107862-20230
of Private Investment Bank Limited
SWIFT ββββββββ
(c) All such payments shall be made in United States Dollars in same
day funds, without defense, setoff or counterclaim, free of any restriction
or condition, and delivered to PIBL (or such other agent that the Holders
of the Amended Debentures shall designate in a writing delivered to Med)
not later than 10:00 A.M. (New York time) on the date due.
(d) The foregoing instructions for payments on the Amended Debentures
for the benefit of the Holders may be changed by written notice to Med,
pursuant to this Agreement, by either PIBL (or such other agent that the
Holders of the Amended Debentures shall designate in a writing delivered to
Med) or, in the case of any individual Amended Debenture, by the Holder(s)
of such Amended Debenture.
18. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained herein shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
remain in full force and effect, notwithstanding any investigation at any time
made by or on behalf of the parties.
24
19. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure only to the benefit of the parties to this Agreement and their respective
successors and permitted assigns, and no other parties shall have any rights or
obligations under this Agreement. This Agreement may not be assigned or
delegated by any party without the consent of the other parties.
20. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing (including telecopier or
similar writing) and shall be deemed to have been given at the time when mailed
in any general or branch office of the United States Postal Service, enclosed in
a registered or certified postpaid envelope, or sent by Federal Express or other
similar overnight courier service, addressed to the recipient at the address set
forth beneath its signature to this Agreement or, if given by telecopier, when
such telecopy is transmitted and the appropriate answer back is received (or to
such changed address or telecopy number as such party may have specified by
notice given as aforesaid).
21. GOVERNING LAW; VENUE. This Agreement shall be governed by the laws of
the State of New York, without giving effect to the principles of conflicts of
law. The parties agree that all actions or proceedings initiated by any party
hereto arising directly or indirectly out of this Agreement shall be litigated
in federal or state court in New York, New York. The parties hereto expressly
submit and consent in advance to such jurisdiction and agree that service of
summons and complaint or other process papers may be made by registered or
certified mail addressed to the relevant party at the address(es) set forth
below. The parties hereto waive any claim that a federal or state court in New
York, New York is an inconvenient or an improper forum.
22. ENTIRE AGREEMENT. This Agreement, the other Modification documents and
the other documents referenced herein and therein set forth the entire agreement
among the parties with respect to its subject matter. This Agreement may not be
amended or otherwise modified except in writing duly executed by all of the
parties. No waiver of any provision or breach of this Agreement shall be
effective unless such waiver is in writing and signed by the party against which
enforcement of such waiver is sought. A waiver by any party of any breach or
violation of this Agreement shall not be deemed or construed as a waiver of any
subsequent breach or violation thereof.
23. ATTORNEY'S FEES. The prevailing party in any suit, arbitration or
other proceeding brought to enforce any provisions of this Agreement, shall be
entitled to recover all costs and expenses of the proceeding and investigation
(not limited to court costs), including reasonable attorneys' fees.
24. AMENDMENT AND WAIVER. This Agreement may be amended, modified or
supplemented only by a writing executed by each of the parties. Any party may in
writing waive any provision of this Agreement to the extent such provision is
for the benefit of the waiving party. No waiver by any party of a breach of any
provision of this Agreement shall be construed as a waiver of any subsequent or
different breach, and no forbearance by a party to seek a remedy for
noncompliance or breach by any other party shall be construed as a waiver of any
right or remedy with respect to such noncompliance or breach.
25. SEVERABILITY. Should any part, term or condition hereof be declared
illegal or unenforceable or in conflict with any other law, the validity of the
remaining portions or provisions of this Agreement shall not be affected
thereby, and the illegal or unenforceable portions of the
25
Agreement shall be and hereby are redrafted to conform with applicable law,
while leaving the remaining portions of this Agreement intact.
26. CONTRACTUAL NOMENCLATURE. All references herein to "Dollars" or "$"
shall mean Dollars of the United States of America, its legal tender for all
debts public and private. Wherever used herein and to the extent appropriate,
the masculine, feminine or neuter gender shall include the other two genders,
the singular shall include the plural, and the plural shall include the
singular.
27. AMBIGUITIES. The parties to this Agreement agree and understand that
the general rule that ambiguities are to be construed against the drafter shall
not apply to this Agreement. In the event that any language of this Agreement is
found to be ambiguous, each party shall have an opportunity to present evidence
as to the actual intent of the parties with respect to any such ambiguous
language, consistent with the parole evidence rule.
28. COUNTERPARTS. This Agreement may be executed in counterparts
(including counterparts delivered by facsimile), each of which shall be deemed
an original, but all of which, taken together, shall constitute one and the same
document.
29. HEADINGS. Any section and subsection headings that are included in
this Agreement are for convenience only and shall not control or affect the
meaning or interpretation of any terms or provisions of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
26
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first above written.
MED DIVERSIFIED, INC.
By: /s/ βββββ β. ββββββββββββ, ββ.
--------------------------------------
Name: βββββ β. ββββββββββββ, ββ.
Title: Chairman & CEO
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn:
-----------------------------------
AMERICAN REIMBURSEMENT, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn:
-----------------------------------
TEGCO INVESTMENTS, LLC
By: /s/ βββββ β. ββββββββββββ, ββ.
--------------------------------------
Name: βββββ β. ββββββββββββ, ββ.
Title: President
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn:
-----------------------------------
PRIVATE INVESTMENT BANK LIMITED
By: /s/ ββββ-ββββββββ ββββββ
--------------------------------------
Name: ββββ-ββββββββ ββββββ
Title: Director
Address: ββββββββββ βββββ, βββββ ββββββ,
β.β. βββ β-ββββ
Nassau, Bahamas
Telecopy: (βββ) βββ-ββ-ββ
Attn:
-----------------------------------
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
27
CHARTWELL DIVERSIFED SERVICES, INC.
By: /s/ βββββ β. ββββββββββββ, ββ.
--------------------------------------
Name: βββββ β. ββββββββββββ, ββ.
Title: President
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: βββ-βββ-ββββ
Attn:
-----------------------------------
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By: /s/ βββββ β. ββββββββββββ, ββ.
--------------------------------------
Name: βββββ β. ββββββββββββ, ββ.
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: βββ-βββ-ββββ
Attn:
-----------------------------------
TRESTLE CORPORATION
By: /s/ βββββ β. ββββββββββββ, ββ.
--------------------------------------
Name: βββββ β. ββββββββββββ, ββ.
Title: Chairman
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: βββ-βββ-ββββ
Attn:
-----------------------------------
RESOURCE PHARMACY, INC.
By: /s/ βββββ β. ββββββββββββ, ββ.
--------------------------------------
Name: βββββ β. ββββββββββββ, ββ.
Title: President
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: βββ-βββ-ββββ
Attn:
-----------------------------------
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
28
CHARTWELL COMMUNITY SERVICES, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL CARE GIVERS, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL MANAGEMENT COMPANY, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
T.L.C. HOME HEALTH CARE, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
29
CHARTWELL HOME THERAPIES, L.P.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL PENNSYLVANIA, L.P.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL MIDWEST INDIANA, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL SOUTHERN NEW ENGLAND, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
30
CHARTWELL ROCKY MOUNTAIN REGIONAL SERVICES
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL U.C. βββββ HEALTH SYSTEMS, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL MICHIGAN, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
NORTHWEST HOME CARE, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
31
INNOVA HOME THERAPIES, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL WISCONSIN ENTERPRISES, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL-MIDWEST WISCONSIN, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CHARTWELL-MIDWEST WISCONSIN HEALTH
RESOURCES, LLC
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
32
ββββββ ββββββββ HOME CARE, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
CARECO, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
T.L.C. MIDWEST, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
T.L.C. MEDICARE SERVICES OF DADE, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
33
T.L.C. MEDICARE SERVICES OF BROWARD, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
TENDER LOVING CARE HOME CARE SERVICES, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
U.S. ETHICARE CORPORATION
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
U.S. ETHICARE CHAUTAUQUA CORPORATION
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
34
U.S. ETHICARE ERIE CORPORATION
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
U.S. ETHICARE NIAGARA CORPORATION
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
ETHICARE CERTIFIED SERVICES, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
STAFF BUILDERS, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
35
S.B.H.F., INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
STAFF BUILDERS SERVICES, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
STAFF BUILDERS HOME HEALTH CARE, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
ST. LUCIE HOME HEALTH AGENCY, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Telecopy: (βββ) βββ-ββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
36
A RELIABLE HOMEAKER OF ββββββ-ST. LUCIE
COUNTY, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Attn: βββββ β. ββββββ
STAFF BUILDERS INTERNATIONAL, INC.
By: /s/ βββββ β. ββββββ
--------------------------------------
Name: βββββ β. ββββββ
Title: Agent
Address: βββ ββββββββββ ββββββ, βββββ βββ
βββββββ, βββββββββββββ βββββ
Attn: βββββ β. ββββββ
[SIGNATURE PAGE TO AMENDMENT AGREEMENT]
37
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES:
SCHEDULE 2(a)(i) Amounts and Dates of Monthly Prepayments
SCHEDULE 3(a)(i) Listing of ARL Accounts
SCHEDULE 3(b)(i) Listing of Med Reserve Account Interests
SCHEDULE 5(b)(i) Listing of Med Subsidiaries
SCHEDULE 5(b)(ii) Exceptions with Respect to Taxes and Tax Returns
EXHIBITS:
EXHIBITS A-1 TO A-5 Original Debentures
EXHIBIT B-1 TO B-5 Form of Amended Debentures
EXHIBIT B-6 Form of Transferred Debenture
EXHIBIT C Form of Debenture Purchase and Subordination Agreement
EXHIBIT D Form of ARL Security Agreement
EXHIBIT E Form of ARL Control Agreement
EXHIBIT F Form of Med Security Agreement
EXHIBIT G Form of Med Security Interest Assignment Agreement
EXHIBIT H Form of Med Control Agreement
EXHIBIT I Form of Med Subsidiaries Pledge and Security Agreement
EXHIBIT J Form of Med Subsidiaries Collateral Agency Agreement
EXHIBIT K Form of Mortgage
EXHIBIT L Form of ARL Guaranty
EXHIBIT M Form of ARL Operating Agreement
EXHIBIT N Form of Manatt, ββββββ & ββββββββ LLP Legal Opinion
EXHIBIT O Form of Forbearance and Tolling Agreement
38
SCHEDULE 2(a)(i)
AMOUNTS AND DATES OF MONTHLY PREPAYMENTS
NO. DATE MONTHLY PREPAYMENT AMOUNT
--------- ----------------------------------------------------------------------
1. Monday, September 16, 2002 $ 100,000.00
2. Monday, September 30, 2002 $ 100,000.00
3. Thursday, October 31, 2002 $ 100,000.00
4. Friday, November 29, 2002 $ 100,000.00
5. Tuesday, December 31, 2002 $ 100,000.00
6. Friday, January 31, 2003 $ 100,000.00
7. Friday, February 28, 2003 $ 100,000.00
8. Monday, March 31, 2003 $ 100,000.00
9. Wednesday, April 30, 2003 $ 100,000.00
10. Friday, May 30, 2003 $ 100,000.00
11. Monday, June 30, 2003 $ 100,000.00
12. Thursday, July 31, 2003 $ 100,000.00
13. Friday, August 29, 2003 $ 400,000.00
14. Tuesday, September 30, 2003 $ 400,000.00
15. Friday, October 31, 2003 $ 400,000.00
16. Friday, November 28, 2003 $ 400,000.00
17. Wednesday, December 31, 2003 $ 400,000.00
18. Friday, January 30, 2004 $ 400,000.00
19. Friday, February 27, 2004 $ 600,000.00
20. Wednesday, March 31, 2004 $ 600,000.00
21. Friday, April 30, 2004 $ 600,000.00
22. Monday, May 31, 2004 $ 600,000.00
--------------
TOTAL: $ 6,000,000.00
--------------
39
SCHEDULE 3(a)(i)
LISTING OF ARL ACCOUNTS
See attached document.
40
[ββββββ ββββββββ HEALTHCARE CONSULTING LETTER HEAD]
March 27, 2002
The following information represents the methodology used to conduct the
audit of the facilities/sites listed on Attachment A.
The sample for each site represents at least 10% of total claims. A cross
section of payor classes was chosen to ensure an appropriate
representation. Once a sample was established, access into the appropriate
billing system was initiated. Eleven different billing systems are
represented in our sample. The history for each claim was accessed and
printed. The individual claim totals were compared to the A/R balance to
ensure accuracy.
As part of our methodology, we choose 10% of all contracted services
applicable to the sample, and ensured that contractual amounts, fee
screens, and rate schedules were adhered to.
It is important to note that there is approximately five million dollars in
credit balances. We spoke with βββββ at the Mission site and she confirmed
the fact that these credits do exist. Further she reported that one point
seven million of the total has already been identified as credits by the
insurer. βββββ reported to us that both she and βββββ are preparing refunds
as requested.
In total, we have reviewed 253 sites. The total net dollar value associated
with these sites is (Ninety nine million five hundred eight thousand one
hundred fifty five dollars and twenty-six cents) 99,508,155.26 net of the
five million credit referred to above. Attached you will find a listing of
each site with the total confirmed Receivable. In addition, we are
providing you with the supporting documentation concerning our audit. In
total, we have prepared and completed analysis on more that 100,000 claims.
A full scope management company providing clinical, administrative and financial
support for the healthcare industry.
βββ ββββ ββββββββ ββββ, βββββ ββββ, ββββββ ββ βββββ-ββββ
Phone: βββ-βββ-ββββ * Toll Free: βββ-βββ-ββββ
Web: βββ.ββββββββββββ.βββ * Fax: βββ-βββ-ββββ
The methodology used is a standard approach when reviewing a sample of this
size. Our sample supports the fact that the Receivable is true. The
attached documentation confirms this.
If you have questions regarding any aspect of this audit, or require any
further information, please do not hesitate to contact me directly.
Sincerely,
/s/ ββββββ ββββββββ
ββββββ ββββββββ
President
JAB/hs
Attachments
3/27/02
A/R BALANCE BY FACILITY
FACILITY A/R BALANCE
-------- -----------
Abilene 191,281.09
Abilene add in 22,882.76
Abilene AI 61,726.87
Abilene IA add in 993.35
Albany 717,891.??
Albany add in 108,410.35
Albany/Plattsburg 515,129.15
Albany/Plattsburg add in 37,164.57
Albuqerque 292,027.17
Albuqerque add in 136,616.83
Albuqerque AI 393,323.29
Albuqerque AI add in 106,983.62
Anaheim 393,022.65
Anaheim add in 60,385.81
Appleton 3,891.90
Appleton add in 11,184.40
Atlanta 18,980.06
Austin 390,124.67
Austin add in 318,756.77
Austin AI 300,849.60
Austin AI add in 25,838.13
Bakersfield 604.10
Bakersfield add in 1,890.78
Baltimore 215,611.93
Baltimore add in 73,257.81
Beaverton 9,994.05
Beaverton add in 2,120.00
Birmingham 9,875.20
Birmingham add in 22,542.74
Brownwood 215,297.76
Brownwood add in 16,493.82
Brownwood AI 25,107.11
Brownwood add in 1,047.20
Buffalo 7,075.85
ββββ 17,033.33
ββββ add in 980.00
Casper 227,352.21
Casper add in 5,915.??
Channel Distribution 1,487.00
Charlotte 579,910.65
Charlotte add in 18,509.72
Charlotte IA 104,062.08
Charlotte IA add in 5,506.64
Chatsworth 324,663.76
Chatsworth add in 66,423.69
Chattanooga 24,083.95
Chattanooga add in 530.57
Prepared by JBHC, INC.
1 of 6
3/27/02
A/R BALANCE BY FACILITY
FACILITY A/R BALANCE
-------- -----------
Cherry Hill 98,752.25
Cherry Hill add in 37,443.76
Chicago 203,500.95
Chicago add in 15,514.10
Chicago HAI 3,689,517.39
Chicago Mest Med 998,562.82
Cincinnati 407,989.54
Cincinnati add in 118,524.94
Cleveland 1??,011.52
Cleveland add in 23,349.52
Colorado Springs 79,491.26
Colorado Springs add in 10,102.21
Colorado Springs IA 75,619.74
Colorado Springs IA add in 2,742.25
Columbus (Dublin) 261,059.57
Columbus (Dublin) add in 64,456.34
Cont. Care Wyoming 1,310.79
Cont. Care Wyoming add in 236.59
Coralville 4,805.03
Coralville add in 7,642.71
Corpus Christi add in 2,196.19
Dallas 702,980.69
Dallas add in 162,140.70
Dallas IA 680,237.38
Dallas IA add in 37,858.78
Deerfield 342,616.08
Deerfield add in 48,447.52
Deerfield MBI 2,981,599.98
Delta Cypress 272,365.62
Delta Palm Springs 190,234.73
Delta San Diego 136,415.17
Delta San Francisco 56,965.55
Denver 90,417.14
Denver add in 29,251.92
Denver IA 159,086.13
Denver IA add in 21,349.98
Des Moines 67,365.45
Des Moines add in 25,366.39
βββββββ 9,771.17
βββββββ add in 1,724.51
East IDPN add in 257,???.05
EI Paso 425,639.97
EI Paso add in 123,479.58
EI Paso IA 308,194.11
EI Paso IA add in 59,987.38
Fairfield 13,198.70
Fairfield add in 13,405.07
Prepared by JBHC, INC.
2 of 6
3/27/02
A/R BALANCE BY FACILITY
FACILITY A/R BALANCE
-------- -----------
Farmington 2,787.31
Farmington add in 392.64
Farmington IA add in 163.50
Fort Dodge 29,384.20
Fort Dodge add in 8,022.59
Fresenlus 48,779,426.00
Fresno 490,050.65
Fresno add in 268,362.02
Fresno βββββ Med 601,874.81
Grand Island 52,002.60
Grand Island add in 35,799.17
Grand Rapids 82,431.25
Grand Rapids add in 21,197.25
Harrisburg 22,854.64
Harrisburg add in 1,682.70
Hartford 263,240.76
Hartford add in 48,400.71
Hayward 422,357.60
Hayward add in 147,518.74
HMA/Waltham 859,729.97
HMA/Waltham add in 178,311.23
Houston 1,550,856.42
Houston add in 699,328.13
Houston IA 408,945.61
Houston IA add in 62,424.88
Inland Empire 454,350.65
Inland Empire add in 36,820.22
βββββββ 227,567.53
βββββββ add in 34,540.77
βββββββ IA 91,974.24
βββββββ IA add in 6,731.00
Jacksonville 758,268.58
Jacksonville add in 44,238.48
Jacksonville IA 1,085,820.24
Jacksonville IA add in 52,994.68
Joplin 119,563.??
Joplin add in 14,533.41
Kansas City 151,112.24
Kansas City add in 36,470.41
Kennewick 2,534.66
Kennewick add in 5,794.22
Lake βββββββ 2,818.02
Lake βββββββ add in 6,746.80
Lansing 375.02
Lansing add in 1,800.00
Las Vegas 275,558.45
Las Vegas add in 31,812.05
Prepared by JBHC, INC.
3 of 6
3/27/02
A/R BALANCE BY FACILITY
FACILITY A/R BALANCE
-------- -----------
Lewiston 181,932.73
Lewiston add in 14,135.51
ββββββββββ βββ 52,398.99
Longwood 60,497.50
Longwood add in 27,557.73
Los Angeles 3,912,130.02
Los Angeles add in 353,741.39
Lubbock 138,622.31
Lubbock add in 80,187.09
Lubbock AI 22,157.98
Lubbock IA add in 2,898.43
Madison 1,069.96
Madison add in 3,328.10
Medford 8,638.33
Medford add in 2,817.84
Medfour 478.88
Medfour add in 4,063.88
Mexico 43,113.14
Mexico add in 7,567.26
Miami 303,055.31
Miami add in 7,418.16
Milwaukee 4,923.35
Milwaukee add in 40,550.49
Mount βββββββ 7,497.60
Mount βββββββ add in 17,551.46
MW IDPN add in 316,923.??
Nashville 37,722.28
Nashville add in 36,974.10
New York 1,737,???.85
New York add in 162,380.58
North Platte 11,211.85
North Platte add in 6,591.77
Not Used 931.56
Not Used add in 36.10
Ogdensberg 840.17
Ogdensberg add in 2.82
Ohio HAI 326,930.74
Omaha 58,991.87
Omaha add in 19,790.51
β'βββββ 23,606.97
β'βββββ add in 10,442.46
PAC IDPN add in 479,385.89
Pasedena 181,230.12
Pasedena add in 22,940.71
Peoria 1,149.18
Peoria add in ?,867.20
Pheonix/Tuscon 170,629.36
Prepared by JBHC, INC.
4 of 6
A/R BALANCE BY FACILITY
FACILITY A/R BALANCE
-------- -----------
Pheonix/Tuscon add in 74,704.08
Phoenix add in 52,664.89
Phoenix AI 628,817.47
Phoenix AI add in 26,032.88
Philadelphia 17,604.85
Philadelphia add in 15,997.40
Pinebrook 1,239,986.12
Pinebrook add in 176,957.69
Pittsburg 352,477.30
Pittsburg add in 20,926.67
Prescott 1,466.02
Prescott add in 3,208.86
Prescott IA 37,863.84
Prescott IA add in 6,350.68
Richmond 334,043.10
Richmond add in 324,015.51
Sacramento 284,223.68
Sacramento add in 362,104.75
Sacramento/Rose 171,458.10
Sacramento/Rose add in 26,379.59
San Antonio 560,510.26
San Antonio add in 137,908.59
San Antonio IA 495,979.41
San Antonio IA add in 122,347.78
San Bernadino 101,259.36
San Bernadino add in 1,882.04
San Diego 691,???.12
San Diego add in 66,650.90
Santa Fe 316,820.65
Santa Fe add in 23,794.81
Santa Fe IA 123,047.60
Santa Fe IA add in 19,575.10
San ββββ 1,059.80
Seattle 141,135.59
Seattle add in 34,785.61
Sheridan 78,318.87
Sheridan add in 3,410.23
Sioux City 69,209.52
Sioux City add in 34,253.78
βββββββ 7,835.41
βββββββ add in 5,256.37
Spokane 553,109.67
Spokane add in 40,523.24
Springfield 98,243.95
Springfield add in 59,277.75
St. Rose 4,844.10
St. Rose add in 19,175.00
Prepared by JBHC, INC.
5 of 6
A/R BALANCE BY FACILITY 3/27/02
FACILITY A/R BALANCE
-------- -------------
Syracuse/Utica 3,325.52
Syracuse/Utica add in 415.??
Tacoma 3,585.14
Tacoma add in 996.00
Tampa 44,421.21
Tampa add in 35,008.47
Taos 76,214.70
Taos add in 11,978.19
Taos IA 30,197.46
Taos IA add in 4,970.10
TK 4,228,204.00
Toledo 5,893.24
Tulsa 412.82
Tulsa add in 73.72
Tuscon IA 314,659.89
Tuscon IA add in 58,124.19
Virginia Beach 414.63
99,508,115.26
Prepared by JBHC, INC.
6 of 6
SCHEDULE 3(b)(i)
LISTING OF MED RESERVE ACCOUNT INTERESTS
All reserve accounts maintained by Med and the other Med Parties with NPF
VI. or NPF XII pursuant to the following Sale and Subservicing Agreements, as
each such document may be amended from time to time:
1. Sale and Subservicing Agreement dated as of January 15, 2001, by and
among Med Diversified, Inc. (formerly β-βββββββ.βββ), NPF XII, Inc.
and National Premier Financial Services, Inc.
2. Sale and Subservicing Agreement dated as of July 11, 2000, by and
among Chartwell Care Givers, Inc., NPF VI, Inc. and National Premier
Financial Services, Inc.
3. Sale and Subservicing Agreement dated as of July 11, 2000, by and
among Chartwell Community Services, Inc., NPF VI, Inc. and National
Premier Financial Services, Inc.
4. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among A Reliable Homemaker of ββββββ-St. Lucie County, Inc., NPF XII,
Inc. and National Premier Financial Services, Inc.
5. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among ββββββ ββββββββ Home Care, Inc., NPF XII, Inc. and National
Premier Financial Services, Inc.
6. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among ββββββ ββββββββ Services Corporation, NPF XII, Inc. and National
Premier Financial Services, Inc. (ββββββ ββββββββ Services Corporation
was merged into Staff Builders Services, Inc., as its successor in
interest, on 10/27/00)
7. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Careco, Inc., NPF XII, Inc. and National Premier Financial
Services, Inc.
8. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Ethicare Certified Services, Inc., NPF XII, Inc. and National
Premier Financial Services, Inc.
9. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Home Health Care, Inc., NPF XII, Inc. and National Premier
Financial Services, Inc. (Home Health Care, Inc. was merged into Staff
Builders Home Health Care, Inc., as its successor in interest, on
9/21/00)
10. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Medvisit, Inc., NPF XII, Inc. and National Premier Financial
Services, Inc. (Medvisit, Inc. was merged into Staff Builders
Services, Inc., as its successor in interest, on 9/20/00)
41
11. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Personnel Industries, Inc., NPF XII, Inc. and National Premier
Financial Services, Inc. (Personnel Industries, Inc. was dissolved as
of 8/21/00)
12. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among S.B.H.F., Inc., NPF XII, Inc. and National Premier Financial
Services, Inc.
13. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Advanced Management Solutions, Inc. (formerly SBPP, Inc.), NPF
XII, Inc. and National Premier Financial Services, Inc. (Advanced
Management Solutions was dissolved as of 4/26/02)
14. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among St. Lucie Home Health Agency, Inc., NPF XII, Inc. and National
Premier Financial Services, Inc.
15. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Staff Builders Home Health Care, Inc., NPF XII, Inc. and
National Premier Financial Services, Inc.
16. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Staff Builders International, Inc., NPF XII, Inc. and National
Premier Financial Services, Inc.
17. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Staff Builders Services, Inc., NPF XII, Inc. and National
Premier Financial Services, Inc.
18. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among T.L.C. Medicare Services of Broward, Inc., NPF XII, Inc. and
National Premier Financial Services, Inc.
19. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among T.L.C. Medicare Services of Dade, Inc., NPF XII, Inc. and
National Premier Financial Services, Inc.
20 Sale and Subservicing Agreement dated as of December 8, 1999, by and
among T.L.C. Midwest, Inc., NPF XII, Inc. and National Premier
Financial Services, Inc.
21. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Tender Loving Care Health Care Services, Inc., NPF XII, Inc. and
National Premier Financial Services, Inc.
22. Sale and Subservicing Agreement date as of December 8, 1999, by and
among Tender Loving Care Home Care Services, Inc., NPF XII, Inc. and
National Premier Financial Services, Inc.
42
23. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among Tender Loving Care Private Patient Company, Inc., NPF XII, Inc.
and National Premier Financial Services, Inc. (Tender Loving Care
Private Patient Company, Inc., was merged into Staff Builders
Services, Inc., as its successor in interest, on 11/30/00)
24. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among U.S. Ethicare Albany Corporation, NPF XII, Inc. and National
Premier Financial Services, Inc. (U.S. Ethicare Albany Corporation was
merged into U.S. Ethicare Corporation, as its successor in interest,
on 7/20/00)
25. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among U.S. Ethicare Chautauqua Corporation, NPF XII, Inc. and National
Premier Financial Services, Inc., as may be amended from time to time.
26. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among U.S. Ethicare Erie Corporation, NPF XII, Inc. and National
Premier Financial Services, Inc.
27. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among U.S. Ethicare Niagara Corporation, NPF XII, Inc. and National
Premier Financial Services, Inc.
28. Sale and Subservicing Agreement dated as of December 8, 1999, by and
among U.S. Ethicare Onondaga Corporation, NPF XII, Inc. and National
Premier Financial Services, Inc. (U.S. Ethicare Onondaga Corporation
was merged into U.S. Ethicare Corporation, as its successor in
interest, on 5/03/02)
43
SCHEDULE 5(b)(i)
LISTING OF MED SUBSIDIARIES
MED SUBSIDIARIES:
1.) Chartwell Diversified Services, Inc., a Delaware corporation
(a) Chartwell Community Services, Inc., a Texas corporation
(b) Chartwell Care Givers, Inc., a Delaware corporation
(c) Chartwell Management Company, Inc., a Pennsylvania corporation
(d) Chartwell Home Therapies, L.P., a Massachusetts limited
partnership
(i) Chartwell Pennsylvania, L.P., a Delaware limited partnership
(ii) Chartwell Midwest Indiana, LLC, an Indiana limited liability
company
(iii) Chartwell Southern New England, LLC, a Delaware limited
liability company
(iv) Chartwell Rocky Mountain Regional Services, a Colorado
general partnership
(v) Chartwell U.C. βββββ Health Systems, LLC, a Delaware limited
liability company
(vi) Chartwell Michigan, LLC, a Michigan limited liability company
(vii) Northwest Home Care, LLC, an Oregon limited liability
company
(viii) Innova Home Therapies, LLC, a Delaware limited liability
company
(ix) Chartwell Wisconsin Enterprises, LLC, a Wisconsin limited
liability company
(A) Chartwell-Midwest Wisconsin, LLC, a Wisconsin limited
liability company
(B) Chartwell-Midwest Wisconsin Health Resources, LLC, a
Wisconsin limited liability company
2.) Tender Loving Care Health Care Services, Inc., a Delaware corporation
(a) ββββββ ββββββββ Home Care, Inc., a Delaware corporation
(b) Careco, Inc., a Massachusetts corporation
(c) T.L.C. Midwest, Inc., a Delaware corporation
(d) T.L.C. Home Health Care, Inc., a Florida corporation
(i) T.L.C. Medicare Services of Dade, Inc., a Florida corporation
(ii) T.L.C. Medicare Services of Broward, Inc., a Florida
corporation
(e) Tender Loving Care Home Care Services, Inc., a
New York corporation
(i) U.S. Ethicare Corporation, a Delaware corporation
(A) U.S. Ethicare Chautauqua Corporation, a
New York
corporation
(B) U.S. Ethicare Erie Corporation, a New York corporation
(C) U.S. Ethicare Niagara Corporation, a New York
corporation
(B) Ethicare Certified Services, Inc., a New York
corporation
(f) Staff Builders, Inc., a New York corporation
(i) S.B.H.F., Inc. a New York corporation
(ii) Staff Builders Services, Inc., a New York corporation
(iii) Staff Builders Home Health Care, Inc., a Delaware
corporation
(iv) St. Lucie Home Health Agency, Inc., a Florida corporation
(v) A Reliable Homemaker of ββββββ-St. Lucie County, Inc., a
Florida corporation
(g) Staff Builders International, Inc., a New York corporation
3.) Trestle Corporation, a Delaware corporation
4.) Resource Pharmacy, Inc., a Nevada corporation
5.) American Reimbursement, LLC, a Delaware limited liability company
44
EXCLUDED SUBSIDIARIES:
1.) CypherMedix, Inc., a Delaware corporation
2.) Illumea Corporation, a Delaware corporation
3.) Vidimedix Acquisition Corporation, a Nevada corporation
4.) VirTX Inc., a Delaware corporation
5.) E-Medsoft U.K. (A/K/A E-Net), a United Kingdom company
6) Securus LLC, a California limited liability company
45
SCHEDULE 5(b)(ii)
EXCEPTIONS WITH RESPECT TO TAXES AND TAX RETURNS
ENTITY NAME UNPAID TAXES/TAX RETURN AMOUNT DUE
----------- ----------------------- -----------
Chartwell Diversified Services Inc. 2000 Connecticut Income Tax $ 64
Med Diversified (f/k/a β-βββββββ.βββ) βββββ County, FL Property Taxes $ 889
Med Diversified (f/k/a β-βββββββ.βββ) 2001 Florida Sales Tax $ 5
46
