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[HEALTH PARTNERS LETTERHEAD]
EXHIBIT 10.97.1
October 4, 1996
VIA TELECOPY AND REGULAR MAIL
Mr. Xxxxx Xxxxx
Chief Financial Officer
Unison Healthcare Corporation
0000 Xxxx Xxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Re: Loan and Security Agreement dated as of February 16, 1996, as
amended (the "Loan Agreement") between HealthPartners Funding,
L.P. ("HPF") and Unison Healthcare Corporation and certain of
its Affiliates. Capitalized terms used herein shall have the
meanings given them in the Loan Agreement.
Dear Xx. Xxxxx:
Based on the review of our auditors, we believe that events of default have
occurred with respect to your obligations to HPF under the Loan Agreement.
Accordingly, we are now managing the Loan under the special asset department
protocol.
We are willing, however, to waive the events of default that have occurred
through the date of this letter based on your agreement, as evidenced by your
signature below, to the following modifications to the Loan Documents:
1. HPF shall provide Borrower with $2.5 million of bridge financing on
October 7, 1996, the proceeds of which will be used to pay any excess
advances arising from the overstated borrowing base certificates. To the
extent that this bridge financing would violate any debt covenants
binding on Borrower, the Maximum Loan Amount under the Loan Agreement
will be reduced to $7.5 million. The bridge financing will be evidenced
by a Secured Bridge Note that will be secured by the same collateral
securing the Loan Agreement, and will cross-default to the Loan
Agreement. The term of the Secured Bridge Note will be 90 days, and the
Base Rate will be the same rate prevailing under the Loan Agreement. On
the maturity date of the Secured Bridge Note (January 6, 1997),
Borrower will pay HPF (or its successor) a bridge financing fee equal to
$400,000.00. If the Loan Agreement remains in effect after the
obligations under the Secured Bridge Note have been repaid in full
(including the payment of the bridge financing fee), the Maximum Loan
Amount shall be restored to
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Mr. Xxxxx Xxxxx
October 4, 1996
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$10 million.
2. All outstanding Obligations under the Loan Agreement will be repaid in
full concurrent with the closing by Borrower of the proposed high yield
bond financing described in Exhibit A attached hereto; provided,
however, that the financing facility evidenced by the Loan Agreement
will remain in place at Borrower's option through March 31, 1997;
3. Irrespective of the timing of the repayment in full of the Obligations
under the Loan Agreement (including at the end of the Term), Borrower
shall pay HPF, in addition to the bridge financing set forth above, a
termination fee equal to $300,000.00 upon the termination of the Loan
Agreement and the release of HPF's liens thereunder with such
termination fee to supersede any other termination fee set forth in the
Loan Agreement or any amendments thereto executed prior to the date of
this letter);
4. The monthly Usage Fee, effective September 1, 1996, is one-twelfth
(1/12) of 6%, based on an overall credit availability of $10 million;
and
5. Whether or not the proposed high yield debt financing described in
Exhibit A attached hereto is consummated, Borrower agrees by executing
below that it is obligated to pay the bridge financing fee, the
termination fee and the monthly Usage Fees set forth in Paragraphs 2
through 4 immediately above.
In accordance with the foregoing, upon HPF's receipt of an original counterpart
of this letter executed in the space provided below by Unison Healthcare
Corporation for itself and all other entities comprising Borrower, HPF shall be
deemed to have waived any and all defaults and rights to declare an Event of
Default under the Loan Agreement or any of the other Loan Documents based on
any events or occurrences through the date of this letter. This waiver shall in
no way constitute a waiver or limitation of any of the other rights and
remedies of HPF under the Loan Documents based on events or occurrences
subsequent to the date of this letter.
Very truly yours,
HEALTHPARTNERS FUNDING, L.P.
By: HEALTHCARE FINANCIAL PARTNERS, INC.
General Partner
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Executive Vice-President
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Mr. Xxxxx Xxxxx
October 4, 1996
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FOR ITSELF AND ON BEHALF OF THE OTHER BORROWERS UNDER THE LOAN AGREEMENT, THE
FOREGOING (INCLUDING THE MODIFICATIONS TO THE LOAN DOCUMENTS) IS HEREBY
ACKNOWLEDGED AND AGREED AS OF THE 4TH DAY OF OCTOBER, 1996:
UNISON HEALTHCARE CORPORATION
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: EVP & CFO
