Exhibit 10.9
THIRD AMENDMENT TO LOAN DOCUMENTS
THIS THIRD AMENDMENT TO LOAN DOCUMENTS (the "Amendment") is
made and entered into effective as of March 22, 2004, by and between [i] ALMOST
FAMILY, INC., a Delaware corporation ("AFI"),[ii] each of the Subsidiaries of
AFI that is a party to this Agreement (all of which are Borrowers for the
purposes of the Loan Agreement and the other Loan Documents) and [iii] BANK ONE,
NA, a national banking association with its main office in Chicago, Illinois
that is successor by merger to Bank One, Kentucky, NA (in its individual
capacity, "BOK"), for itself as a Lender and as Agent for the Lenders ("Agent").
RECITALS
A. AFI, various Subsidiaries of AFI, and BOK, for itself as the Lender and in
its capacity as Agent for Lenders, are parties to a certain Loan and Security
Agreement dated August 3, 1999, as modified by an Omnibus Amendment to Loan
Documents dated as of May 30, 2001 ("2001 Amendment") and a Second Amendment to
Loan and Security Agreement ("Second Amendment") effective as of November 5,
2002 (collectively, the "Loan Agreement"; certain capitalized terms used in this
Amendment have the meanings set forth for them in the Loan Agreement unless
expressly otherwise defined herein), pursuant to which Lenders agreed to make
the Loans to, and issue Letters of Credit for the account of, Borrowers subject
to and in accordance with the provisions of the Loan Agreement and the other
Loan Documents.
B. Borrowers and Lenders have agreed, subject to and in accordance with the
provisions of this Amendment and the Loan Documents as modified pursuant to this
Amendment [i] to extend the expiration date of the Original Term to June 30,
2006, [ii] to modify the manner in which the Borrowing Base EBITDA Availability
is calculated, [iii] to modify the manner in which the Interest Rate and Unused
Line Fee are determined, [iv] to modify some and delete certain other of the
financial covenants, and [iv] as more particularly hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, and for
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, it is hereby agreed as follows:
ARTICLE I.
Amendments to Loan Agreement
Borrowers, Agent, and Lenders agree that, effective as of
March 22, 2002 in each case, the Loan Agreement shall be modified as follows:
1.1 The definition of Borrowing Base EBITDA Availability contained in Section
2.1A[4], as applied to the financial statements of Borrowers for periods ending
on December 31, 2003 and thereafter, is amended as follows:
[4] "Borrowing Base EBITDA Availability" means, during the
period from and including December 31, 2003, and at all times thereafter, the
EBITDA Multiple times Borrowing Base EBITDA for the immediately preceding twelve
(12) consecutive calendar months for which the monthly financial statements
required by the Reporting Rider have been delivered.
As used in this Agreement, the term "EBITDA Multiple" for
purposes of determining Borrowing Base EBITDA Availability under this Section
2.1A[4] means 3.25.
1.2 The Borrowing Base Exhibit (ss.11.1) in the form attached to and made a part
of this Amendment is substituted for the form thereof in effect immediately
prior to the execution and delivery of this Amendment.
1.3 The Interest Rate Margin Schedule (ss.2.2) in the form attached to and made
a part of this Agreement is substituted for the form thereof in effect
immediately prior to the execution and delivery of this Amendment.
1.4 Section 2.3A, entitled Arrangement and Annual Administrative Agent's Fee,
is deleted.
1.5 June 30, 2006 is agreed to be the expiration date of the Original Term
referred to in Section 2.5 of the Loan Agreement.
1.6 The Financial Covenants Rider (Article 6) attached to and made a part of
this Amendment is substituted for the form thereof in effect immediately prior
to the execution and delivery of this Amendment.
1.7 The Compliance Certificate Schedule (ss.11.1) in the form attached to and
made a part of this Amendment is substituted for the form thereof in effect
immediately prior to the execution and delivery of this Amendment.
1.8 Anything to the contrary notwithstanding contained in any of the Loan
Documents, Lenders hereby agree with Borrowers that, commencing March 31, 2004
and thereafter, Borrowers shall be entitled, for purposes of calculating the
amount of EBITDA to be included in the determination of Borrowing Base EBITDA,
Borrowing Base EBITDA Availability, compliance or noncompliance with the
financial covenants contained in the Financial Covenants Rider, and determining
the Base Rate Margin, LIBOR Margin and Unused Line Fee, to add to net income of
Borrowers the amount of all charges to income of Borrowers related to the
Kentucky Transportation Program and the Franklin Litigation, each as described
in the EBITDA Calculation Exception Schedule attached to and made a part of this
Amendment, up to a cumulative amount not exceeding $534,000 applicable to the
Kentucky Transportation Program and $1,154,000 applicable to the Franklin
Litigation.
1.9 The amount of "$500,000" is substituted for both the amount of "$100,000" in
the first line, and the amount of "$200,000" in the second line, of the
definition of "Acquisition Threshold" contained in Section 11.1 of the Loan
Agreement.
ARTICLE II.
Other Provisions
2.1 Borrowers agree to pay, at the time of execution and delivery of this
Amendment, a fee in the amount of $25,000.00 to BOK as consideration for its
entering into this Amendment.
2.2 Borrowers hereby restate and confirm each of the representations, warranties
and covenants contained in the Loan Agreement and the other Loan Documents, as
modified by this Amendment. Without limitation of the preceding sentence,
Borrowers represent and warrant that this Amendment has been executed and
delivered by a representative of AFI for itself and on behalf of each of the
Borrowers duly authorized to do so and is valid and binding on Borrowers.
2.3 Borrowers agree to reimburse Agent for all expenses incurred by Agent and
Lenders in connection with the preparation, execution, delivery and performance
of this Amendment, including, without limitation, for reasonable fees of legal
counsel to Agent.
2.4 Except as expressly modified by this Amendment, all terms and conditions of
the Note(s), the Loan Agreement, the Mortgages and the other Loan Documents
shall remain in full force and effect as they were immediately prior to the
execution and delivery of this Amendment, and those terms and conditions as
modified are incorporated herein by this reference and shall govern this
Amendment in all respects. Upon the effectiveness of this Amendment, each
reference in the Note(s), the Loan Agreement and the other Loan Documents to the
terms "Loan Agreement," "hereunder," "hereof, "herein" or words of like import
shall mean and be deemed a reference to the Loan Agreement as modified by this
Amendment.
2.5 This Amendment may not be modified in any respect except in writing signed
by the party charged with such modification. This Amendment constitutes the
final, complete and exclusive agreement among Agent, Lenders and Borrowers
concerning its subject matter and neither the Agent, Lenders nor the Borrowers
are relying on any oral agreements or understandings of any nature whatsoever
with respect thereto.
2.6 This Amendment shall be governed by and construed in accordance with the
laws of the Commonwealth of Kentucky.
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IN TESTIMONY WHEREOF, witness the signatures on behalf of
Borrowers, Agent and Lenders effective as of the date first above written.
"Borrowers"
ALMOST FAMILY, INC., a Delaware corporation, for itself as a
Borrower and as agent for each of the other Borrowers under
the Loan Agreement
By:_________________________________
C. Steven Guenthner, Senior Vice
President and CFO
"Agent" and "Lenders"
BANK ONE, NA, as Agent and for itself as a Lender
By:_____________________________________
Robert E. Miles, First Vice President
Attachments
- -- Borrowing Base Certificate Exhibit (ss.11.1)
- -- Interest Rate Margin Schedule (ss.2.2)
- -- Financial Covenants Rider (Article 6)
- -- Compliance Certificate Schedule (ss.11.1)
- -- EBITDA Calculation Exception Schedule
Attachment to
Third Amendment to Loan Documents
Borrowing Base Certificate Exhibit (ss.11.1)
BORROWING BASE CERTIFICATE
(Almost Family, Inc. and the other Borrowers)
(All amounts and calculations are determined on a
consolidated basis for all Borrowers as of the
Certificate Effective Date in each case)
(000s omitted throughout)
1. Revolving Loan Commitment(s) Availability
A. Revolving Loan Commitment(s) $22,500
Less
B. The sum of the following Mandatory Prepayments, if the effect
of same is to reduce the Revolving Credit Commitment
[1] Proceeds of Asset Dispositions (as described in
Section 2.4B[2] of the
Loan Agreement) $_______________
Less
C. The Letter of Credit Reserve calculated, without duplication, as
follows:
[1] All reimbursement and other liabilities of Borrowers
or any of their Subsidiaries with respect to each
Lender Letter of Credit, whether contingent or
otherwise including:
[a] Amount available to be drawn or which may
become available
to be drawn $_______________
[b] All amounts which have been paid or made
available by any Lender issuing a Lender
Letter of
Credit to the extent not reimbursed
$_______________
[c] All unpaid interest, fees and
expenses related thereto $_______________
[2] Letter of Credit Liability for Lender
Letters of Credit
(sum of C[1][a] through C[1][c]) $_______________
D. Revolving Loan Commitment Availability
(1A minus 1B minus 1C[2]) $_______________
2. Asset Availability
A. 85% of Eligible Accounts unpaid not more than
90/120 days (see attached Schedule) $ _______________
Plus
B. 60% of Eligible Accounts unpaid not more than
180/210 days $_______________
Plus
C. 50% of Eligible Inventory (not to exceed
$750) $_______________
D. Asset Availability (2A plus 2B plus 2C) $_______________
3. Borrowing Base EBITDA Availability
A. 3.25 times EBITDA for preceding 12 months $_______________
4. Borrowing Base Availability
A. Borrowing Base (greater of 2D or 3A) $_______________
-------
Less
B. Letter of Credit Liability for Lender
Letters of Credit (1C[2]) _______________
C. Borrowing Base Availability
(2A minus 2B) ______________
5. Maximum Revolving Loan Amount
A. Lesser of line 1D and line 4C $ _______________
B. Revolving Loans outstanding as of
Certificate Effective Date $ _______________
C. Availability as of Certificate Effective Date
(5A minus 5B) $ _______________
SCHEDULE OF ELIGIBLE ACCOUNTS RECEIVABLE
----------------------------------------
(All amounts and calculations are determined on a consolidated basis
for all Borrowers as of Calculation Effective Date in each case)
A. Gross Accounts Receivable $ _______________
Minus
B. Accounts that are not Eligible Accounts (See Section 2.1B for
complete criteria)
[1] Payable more than 180 days after date of
invoice issuance $ _______________
[2] Unpaid more than 180 days after due date specified in
invoice, or 210 days if no due
date was specified _______________
[3] Credits due from Borrowers to account
debtors of Borrowers _______________
[4] Account debtor located outside U.S. _______________
[5] Account debtor that an Agent has identified as having
unsatisfactory credit standing _______________
[6] Account (other than Medicare and Medicaid) for which
debtor is U.S. Government or instrumentality, and no
Assignment of Claims compliance _______________
[7] Account debtor is Affiliate of Borrowers or a
director, officer, agent, stockholder or employee of
any Borrower or any of their
Affiliates _______________
[8] Accounts as to which more than 25%
of aggregate accounts are unpaid more
than 180 days after due date
(210 if no due date specified) _______________
[9] Accounts subject to unresolved
dispute to extent of the dispute _______________
[10] Evidenced by instrument not in
possession of Agent, on behalf of
Lenders _______________
[11] Accounts not subject to first priority Lien of
Agent, on behalf of Lenders _______________
[12] Accounts subject to Lien of a Person other
than Agent not a Permitted
Encumbrance ________________
[13] Accounts from account debtors subject to
bankruptcy or insolvency ________________
[14] Accounts from an account debtor in excess of 20% of
all Accounts due from that same
account debtor at the Certificate
Date ________________
[15] Accounts for which account debtor's obligation
to pay is conditional (e.g., bill and hold;
consignment) _______________
[16] Account for which account debtor is located in
New Jersey or other applicable state and Borrower
hasn't either qualified there or filed Notice of
Business Activities Report or similar
filing _______________
[17] Accounts for which account debtor is creditor of
Borrower, to extent of credits owed by Borrower
_______________
[18] Subtotal [1 through 17] $ _______________
C. Eligible Accounts [A minus B18] $ _______________
AGING SUMMARY OF ACCOUNTS RECEIVABLE
------------------------------------
(All amounts and calculations are determined on a consolidated basis
for all Borrowers as of Certificate Effective Date in each case)
Current $___________________
1 to 30 days past due $___________________
31 to 60 days past due $___________________
61 to 90 days past due $___________________
91 to 120 days past due $___________________
121 to 150 days past due $___________________
151 to 180 days past due $___________________
Over 180 days past due $___________________
Total Accounts Receivable $___________________
(Reconcile to line 1 of calculation of
Eligible Accounts Receivable)
AGING SUMMARY OF ACCOUNTS PAYABLE
---------------------------------
(All amounts and calculations are determined on a consolidated basis
for all Borrowers as of Certificate Effective Date in each case)
Current $___________________
1 to 30 days past due $___________________
31 to 60 days past due $___________________
61 to 90 days past due $___________________
91 to 120 days past due $___________________
Over 120 days past due $___________________
Total Accounts Payable $___________________
Attachment to
Third Amendment to Loan Documents
Interest Rate Margin Schedule (ss.2.2)
to
Loan and Security Agreement
As of each Interest Calculation Date commencing March 31, 2004, the Base Rate
Margin and the LIBOR Margin and the Unused Line Fee, respectively, shall be
that percentage increment as set forth below according to the ratio (being the
Leverage Ratio as defined in the Financial Covenants Rider) of Total Funded Debt
of Borrowers as of such Interest Calculation Date divided by EBITDA of
Borrowers during the Applicable Calculation Period ending on such Interest
Calculation Date:
RATIO BASE RATE LIBOR UNUSED
----- MARGIN MARGIN LINE FEE
------ ------ -------
1. Less than or equal to 2.50 to 1.00 -0.75 2.00 0.250
2. Greater than 2.50 to 1.00 and less than
or equal to 3,25 to 1.00 -0.50 2.25 0.250
3. Greater than 3.25 to 1.00 -0.25 2.50 0.350
Attachment to
Third Amendment to Loan Documents
Financial Covenants Rider (Article 6)
to
Loan and Security Agreement
The consolidated financial statements of Borrowers shall, as of the end
of each fiscal quarter of Borrowers after December 31, 2003, reflect compliance
with the following financial covenants, determined in accordance with GAAP:
A. The Adjusted Fixed Charge Coverage Ratio for each Applicable Calculation
Period shall not be less than 1.75 to 1.00.
B. The ratio ("Leverage Ratio") of Total Funded Debt as of the date of
calculation divided by EBITDA during the Applicable Calculation Period ending on
such date of calculation shall not be greater than 4.00 to 1.00.
C. Net Worth shall never be less than the sum of [i] $10,500,000, plus [ii] 80%
of net income, without giving effect to any losses, during each fiscal quarter
of Borrowers beginning with the quarter ending March 31, 2004.
D. Capital Expenditure Limits. The aggregate amount of all Capital Expenditures,
Capital Leases with respect to fixed assets of Borrowers and their Subsidiaries
(which shall be considered to be expended in full on the date such Capital Lease
is entered into) and other contracts with respect to fixed assets initially
capitalized on Borrowers' or any Subsidiary's balance sheet prepared in
accordance with GAAP (which shall be considered to be expended in full on the
date such contract is entered into) (excluding, in each case, expenditures for
trade-ins and replacement of assets to the extent funded with casualty insurance
proceeds) will not exceed the amount of $5,000,000.00 during each Applicable
Calculation Period.
Attachment to
Third Amendment to Loan Documents
Compliance Certificate Schedule (ss.11.1)
to
Loan and Security Agreement
COMPLIANCE CERTIFICATE
This Compliance Certificate is being delivered to Bank One, NA, a national
banking association having its main office in Chicago, Illinois that is
successor by merger to Bank One, Kentucky, NA (in its individual capacity
"BOK"), for itself as a Lender and as Agent for the Lenders, as that term is
defined herein, pursuant to Section 5.6 of that certain Loan and Security
Agreement dated as of August 3, 1999, as amended, among [i] Almost Family, Inc.,
a Delaware corporation (f/k/a Caretenders Health Corp.) and each of the other
Borrowers that are parties thereto (referred to hereinafter each individually as
a "Borrower" and collectively as the "Borrowers"), [ii] the financial
institution(s) that are parties thereto and their respective successors and
Eligible Assignees (each individually a "Lender" and collectively "Lenders") and
[iii] BOK, for itself as a Lender and as agent ("Agent") for the Lenders
(together with all amendments, modifications and supplements thereto and all
restatements thereof, the "Loan Agreement"). All capitalized terms used herein
without definition shall have the meanings assigned to those terms in the Loan
Agreement. The undersigned Chief Financial Officer of Almost Family, Inc., for
itself as a Borrower and as agent for the other Borrowers, hereby certifies on
behalf of each of the Borrowers that, as of the last day of the most recently
ended fiscal quarter, ____________________ _____, 200__ (the "Compliance Date"):
1. Ratio Requirements.
A. The Adjusted Fixed Charge Coverage Ratio for the Applicable
Calculation Period in effect as of the Compliance Date (being
the four consecutive complete fiscal quarters of Borrowers
ending ____________ 200_), was _____ to 1.00 calculated as
follows (all amounts in the following calculations are
determined for Borrowers and their Subsidiaries on a
consolidated basis) [Reference Financial Covenants Rider to
the Loan Agreement and Section 11.1 of the Loan Agreement]:
[1] Net income determined in accordance with GAAP __________ plus,
to the extent included in the calculation of net income the
sum of
[2] Income and franchise taxes paid or accrued __________
[3] Interest expense, net of interest income, paid or
accrued __________
[4] Amortization and depreciation expense __________
[5] Extraordinary or non-recurring "cash" losses
acceptable to Agent __________
[6] Extraordinary or non-recurring non-cash charges
acceptable to Agent __________
[7] Charges related to Franklin Litigation
(may not exceed $1,154,000 cumulatively) __________
[8] Charges related to Kentucky Transportation Program account
receivable (may not exceed
$534,000 cumulatively) __________
less, to the extent included in the calculation of net income the sum of
[9] The income of any Person (other than wholly-owned Subsidiaries
of Borrowers) in which any Borrower or a wholly owned
Subsidiary of a Borrower has an ownership interest except to
the extent such income is received by Borrowers or such
wholly-owned Subsidiary in a cash distribution during such
period __________
[10] Gains from sales or other dispositions of assets (other than
Inventory in the normal
course of business) __________
[11] Extraordinary or non-recurring gains __________
[12] EBITDA: ([1]+([2]+[3] +[4]+[5]+[6])+[7]+[8]
-([9]+[10]+[11]) __________
[13] Interest expense __________
[14] Income tax expense __________
[15] Current maturities of long term debt __________
[16] Current maturities of payments due under
Capital Leases __________
[17] Dividends and distributions __________
[18] Adjusted Fixed Charges: (Total of [13]
through [17]) $_________
Calculation: [12] divided by [18] __________
Required: not less than 1.75 to 1.00
B. The ratio (the "Leverage Ratio") of Total Funded Debt divided
by EBITDA, for the Applicable Calculation Period in effect as
of the Compliance Date, was _____ to _____ calculated as
follows (all amounts in the following calculation are
determined for Borrowers and their Subsidiaries on a
consolidated basis) [Reference Financial Covenants Rider to
the Loan Agreement and Section 11.1 of the Loan Agreement]:
[1] Indebtedness for borrowed money __________
[2] Indebtedness under Capital Leases __________
[3] Subordinated Debt __________
[4] Mandatorily redeemable preferred stock __________
[5] Contingent debt obligations including under
letters of credit __________
[6] Total Funded Debt: [1]+[2]+[3]+[4]+[5] __________
[7] EBITDA: Section 1A [12] above __________
Calculation: [6] divided by [7] __________
Required: Not greater than 4.00 to 1.00.
C. The Net Worth of the Borrowers as of the Compliance Date was
_____________ ([3] below) [Reference Financial Covenants Rider
to Loan Agreement and Section 11.1 of the Loan Agreement]:
[1] Capital stock and additional paid-in
capital __________
[2] Retained earnings (or less accumulated deficit)
calculated in conformity with GAAP __________
[3] Net Worth [1]+[2] __________
Required: Not less than the sum of [i] $10,500,000, plus [ii]
80% of net income, without giving effect to any losses, during
each fiscal quarter of Borrowers, commencing with the fiscal
quarter of Borrowers that ends on March 31, 2004
[i] $10,500,000
+ [ii] ___________
Total: ___________
D. The aggregate amount of all Capital Expenditures, Capital
Leases with respect to fixed assets of Borrowers and their
Subsidiaries (which shall be considered to be expended in full
on the date such Capital Lease is entered into) and other
contracts with respect to fixed assets initially
capitalized on Borrowers' or any Subsidiary's balance sheet
prepared in accordance with GAAP (which shall be considered
to be expended in full on the date such contract is entered
into) (excluding, in each case, expenditures for trade-ins
and replacement of assets to the extent funded with casualty
insurance proceeds) during the Applicable Calculation Period
ending as of the Compliance Date was _____________ calculated
as follows [Reference Financial Covenants Rider to Loan
Agreement and Section 11.1 of the Loan Agreement]:
[1] Capital Expenditures __________
[2] Capital Leases with respect to fixed assets of|
Borrowers and their Subsidiaries (which shall be
considered to be expended in full on the date such
Capital Lease is entered into) __________
[3] Other contracts with respect to fixed assets
initially capitalized on Borrowers' or any
Subsidiary's balance sheet prepared in accordance
with GAAP (which shall be considered to be
expended in full on the date such contract is
entered into) (excluding, in each case, expenditures
for trade-ins and replacement of assets to
the extent funded with casualty
insurance proceeds) __________
Calculation: [1]+[2]+[3] __________
Required:
not greater than $5,000,000 during each Applicable Calculation
Period
2. Covenants.
Indebtedness and Liabilities. Since the immediately preceding Compliance
Date, no Borrower nor any Subsidiary of any Borrower has incurred or assumed any
new or additional Indebtedness in excess of the limits proscribed by
Section 7.1 of the Loan Agreement, other than [if any such new or additional
prohibited Indebtedness has been incurred or assumed by any Borrower or any
Subsidiary of any Borrower, described the amount and nature of the prohibited
Indebtedness, the assets securing the same, if any, and the holder thereof]
[Reference Section 7.1 of the Loan Agreement].
A. Guaranties. Since the immediately preceding Compliance Date,
no Borrower has consummated any of the transactions prohibited
by Section 7.2 of the Loan Agreement, other than [if any
Borrower consummated any of the transactions prohibited by
Section 7.2 of the Loan Agreement, describe such transactions
in detail] [Reference Section 7.2 of the Loan Agreement].
B. Transfers, Liens and Related Matters. Since the immediately
preceding Compliance Date, no Borrower has consummated any of
the transactions prohibited by Section 7.3 of the Loan
Agreement, other than [if any Borrower consummated any of the
transactions prohibited by Section 7.3 of the Loan Agreement,
describe such transactions in detail] [Reference Section 7.3
of the Loan Agreement].
C. Investments and Loans. Since the immediately preceding
Compliance Date, no Borrower has made or permitted to exist
any investments in or any loans to any other Person prohibited
by Section 7.4 of the Loan Agreement, other than [if any
Borrower made or permitted to exist any investments in or any
loans to any Person prohibited by Section 7.4 of the Loan
Agreement, describe such investments and/or loans in detail]
[Reference Section 7.4 of the Loan Agreement].
D. Restricted Junior Payments. Since the immediately preceding
Compliance Date, no Borrower has directly or indirectly
declared, ordered, paid, made or set apart any sum for any
Restricted Junior Payment prohibited by Section 7.5 of the
Loan Agreement, other than [if any Borrower declared, ordered,
paid, made or set apart any sum for any Restricted Junior
Payment prohibited by Section 7.5 of the Loan Agreement,
describe such transactions in detail] [Reference Section 7.5
of the Loan Agreement].
E. Restriction on Fundamental Changes. Since the immediately
preceding Compliance Date, no Borrower has consummated any of
the transactions prohibited by Section 7.6 of the Loan
Agreement, other than [if any Borrower consummated any of the
transactions prohibited by Section 7.6 of the Loan Agreement,
describe such transactions in detail] [Reference Section 7.6
of the Loan Agreement].
F. Changes Relating to Subordinated Debt. Since the immediately
preceding Compliance Date, no Borrower has changed or amended
the terms of the Subordinated Debt as prohibited by Section
7.7 of the Loan Agreement, other than [if any Borrower has
changed or amended the terms of the Subordinated Debt as
prohibited by Section 7.7 of the Loan Agreement, describe such
changes or amendments in detail] [Reference Section 7.7 of the
Loan Agreement].
G. Transactions with Affiliates. Since the immediately preceding
Compliance Date, no Borrower has consummated any of the
transactions prohibited by Section 7.8 of the Loan Agreement,
other than [if any Borrower consummated any of the
transactions prohibited by Section 7.8 of the Loan Agreement,
describe such transactions in detail] [Reference Section 7.8
of the Loan Agreement].
H. Conduct of Business. Since the immediately preceding
Compliance Date, no Borrower has engaged in any business other
than businesses of the type engaged in by any such Borrower on
the Closing Date, other than [if any Borrower has engaged in
any business other than businesses of the type engaged in by
any such Borrower on the Closing Date describe any such
business(es) in detail] [Reference Section 7.9 of the Loan
Agreement].
I. Tax Consolidations. Since the immediately preceding Compliance
Date, no Borrower has filed or consented to the filing of any
consolidated income tax return with any Person other than [if
any Borrower has filed or consented to the filing of any
consolidated income tax return with any Person describe such
filing in detail] [Reference Section 7.10 of the Loan
Agreement].
J. Subsidiaries. Since the immediately preceding Compliance Date,
no Borrower has established, created or acquired any
Subsidiaries other than [if any Borrower has established,
created or acquired any Subsidiaries describe such
Subsidiaries in detail] [Reference Section 7.11 of the Loan
Agreement].
K. Fiscal Year; Tax Designation. Since the immediately preceding
Compliance Date, no Borrower has changed its Fiscal Year or
elected to be designated as an entity other than a C
Corporation as defined in IRC other than [if any Borrower has
changed its Fiscal Year or elected to be designated as an
entity other than a C Corporation as defined in IRC describe
any such change(s) in detail] [Reference Section 7.12 of the
Loan Agreement].
L. Press Release; Public Offering Materials. Since the
immediately preceding Compliance Date, no Borrower has
disclosed the name of Agent or any Lender in any press
release or in any prospectus, proxy statement or other
materials filed with any governmental entity relating to
a public offering of the capital stock of any Loan Party
except as may be required by law other than [if any Borrower
has disclosed the name of Agent or any Lender in any
press release or in any prospectus, proxy statement or
other materials filed with any governmental entity relating
to a public offering of the capital stock of any Loan Party
except as may be required by law describe any such
disclosure(s) in detail] [Reference Section 7.13 of the
Loan Agreement].
M. Bank Accounts. Since the immediately preceding Compliance
Date, no Borrower has established any new bank accounts, or
attempted to amend or terminate any Blocked Account or lockbox
agreement without Agents' prior written consent other than [if
any Borrower has established any new bank accounts, or
attempted to amend or terminate any Blocked Account or lockbox
agreement without Agent's prior written consent describe any
such new bank accounts or amendments or terminations to any
Blocked Account or lockbox agreement in detail] [Reference
Section 7.14 of the Loan Agreement]
N. Operating Leases. Since the immediately preceding Compliance
Date, no Borrower has entered into any lease or rental
agreement that is not a Capital Lease except [if Borrower has
entered into such an agreement, describe in reasonable detail]
[Reference Section 7.15 of the Loan Agreement].
O. Environmental Compliance. No Borrower has, since the
immediately preceding Compliance Date, [i] failed to
comply with all Environmental Laws or [ii] as applicable,
created, permitted to exist, or obtained knowledge of any
claims, liabilities, Liens, investigations, litigation,
administrative proceedings, whether pending or threatened,
or judgments or orders relating to any Hazardous Materials
asserted or threatened against any Loan Party or relating to
any real property currently or formerly owned, leased
or operated by any Loan Party other than [if any Borrower has
created, permitted to exist or obtained knowledge of any such
matters describe any such matters in detail][Reference
Section 5.15 of the Loan Agreement].
The undersigned Chief Financial Officer of Almost Family, Inc.
executing and delivering this Compliance Certificate on behalf of Almost Family,
Inc., for itself as a Borrower and for the other Borrowers, further certifies
that ____________ has reviewed the Loan Agreement and has no knowledge of any
event or condition which constitutes an Event of Default under the Loan
Agreement or the other Loan Documents other than [if any Event of Default has
occurred, describe the same, the period of existence thereof and what action the
any Borrower has taken or proposes to take with respect thereto].
IN WITNESS WHEREOF, Almost Family, Inc., for itself as a
Borrower and as agent for the other Borrowers, through its duly authorized Chief
Financial Officer, has executed this Compliance Certificate this _____ day of
_______________, 200__.
ALMOST FAMILY, INC., a Delaware corporation,
for itself as a
Borrower and as agent for the other Borrowers
By: ______________________________
Name: ______________________________
Title: ______________________________
Attachment to
Third Amendment to Loan Documents
EBITDA Calculation Exception Schedule
Kentucky Transportation Program
Prior to July 1, 2002, the Medicaid program of the Commonwealth of Kentucky (the
Commonwealth) managed its transportation program internally. Effective July 1,
2002 the Medicaid program contracted with an independent broker (the Broker) for
the management of its transportation reimbursement program in the Louisville KY
area. The Broker then contracted with the Company, among others, for the
provision of transportation services to Medicaid beneficiaries. Company services
pursuant to the contract were limited to transportation of Medicaid
beneficiaries who also attend the Company's in-center adult day care programs.
The Broker almost immediately began to encounter significant financial
difficulties and has paid the Company for only a small portion of the amounts
due for services rendered. On October 22, 2002, three of the Broker's other
contracted providers filed a motion with the U.S. Bankruptcy Court to liquidate
the Broker under Chapter 7 of the Federal Bankruptcy Code. On November 25, 2002
the Broker voluntarily chose to convert their bankruptcy status to a Chapter 11
voluntary reorganization.
In May 2003, the Company, along with a group of other effected providers, filed
suit against the Commonwealth in Franklin Circuit Court seeking payment directly
from the Commonwealth. The Commonwealth objected to the lawsuit on the basis of
sovereign immunity and filed a motion to dismiss the lawsuit. In July 2003, a
hearing on the motion to dismiss was held and at the judge's request written
briefs were filed before the judge would make a decision. In August 2003, the
motion to dismiss was granted and after discussion with legal counsel, an appeal
of this decision was made to the Kentucky Court of Appeals. As of September 30,
2003 and December 31, 2002, the Broker owed the Company approximately $535,000,
which amount is included in "Accounts receivable - net" on the accompanying
balance sheets. Although the Company currently believes it will be successful in
ultimately collecting the amounts due under this arrangement, there can be no
assurance that such amounts will in fact be collected. Should it become evident
in the future that a material amount will not be collectible, the Company would,
at that time, record an additional provision for uncollectible accounts.
Franklin Litigation
In April 2000, Franklin Capital Associates L.P. (Franklin) filed suit in
Chancery Court of Williamson County, Tennessee, seeking damages in connection
with registration rights they received in the Company's acquisition of certain
home health operations in February 1991. Following a bench trial, in April 2003
the court issued a ruling in favor of the plaintiffs awarding damages of
$984,970. The Company believes the Court erred both in its finding of liability
and in its determination of the amount of damages. The Company is seeking
appellate review of the lower court decision. As a part of the appeal, the
Company was required to post cash of $1,154,241 in an escrow account with the
Tennessee Courts in lieu of a supersedeas appeal bond until the appeal court
issues a review order. This cash is reflected as "Cash held in escrow" in the
accompanying balance sheet and will remain in escrow until the matter reaches
its ultimate resolution.
Based on the advice of legal counsel, the Company's management believes that the
damage award by the lower court does not create a "probable" loss as set forth
in Statement of Financial Accounting Standards No. 5, "Accounting for
Contingencies." Accordingly, no provision for the damages award has been
recorded in the accompanying financial statements. Should the facts and
circumstances change in the future to the extent that such a loss appears
probable, the Company would record a provision at that time.
Based on the advice of legal counsel, the Company's management believes it has
strong grounds for appealing the trial court's decision and intends to
vigorously pursue its appeal. The Company can give no assurance that it will be
successful in its appeal.