Exhibit 10.1
AMENDED AND RESTATED FORBEARANCE
AND MODIFICATION AGREEMENT
This Amended and Restated
Forbearance and Modification Agreement (“Agreement”) is
made as of September 15, 2005 by and among World Health
Alternatives, Inc., a Florida corporation (“World
Health”), Better Solutions, Inc., a Pennsylvania corporation
(“BSI”), JC Nationwide, Inc. (f/k/a MedTech Medical
Staffing of Boca Raton, Inc.), a Delaware corporation
(“JC”), MedTech Medical Staffing of New England, Inc.,
a Delaware corporation (“MedTech Medical”), MedTech
Franchising, Inc., a Delaware corporation (“MedTech
Franchising”), World Health Staffing, Inc., a California
corporation (“World Health California”), World Health
Staffing, Inc. (f/k/a MedTech Medical Staffing of Orlando, Inc.), a
Delaware corporation (“World Health Delaware”; World
Health, BSI, JC, MedTech Medical, MedTech Franchising, World Health
California and World Health Delaware are referred to herein
individually and collectively, as “Borrower”), and
CapitalSource Finance LLC, a Delaware limited liability company
(“Lender”).
Recitals
A. Borrower and Lender are parties
to a Forbearance and Modification Agreement dated as of
August 25, 2005 (as amended, the “Forbearance
Agreement”).
B. Borrower and Lender desire to
amend and restate the Forbearance Agreement in its entirety by this
Agreement.
NOW THEREFORE
, in consideration of the mutual
covenants and agreements contained herein and for other good and
valuable consideration, the parties hereby agree as
follows:
SECTION 1 — DEFINITIONS
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1.1.
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“Cash
Flow Forecast” means the thirteen week cash flow forecast
attached hereto as Exhibit A which identifies anticipated
sources and uses of cash for such period.
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1.2.
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“Credit
Agreement” means that certain Revolving Credit, Term Loan and
Security Agreement between Borrower and Lender dated
February 14, 2005, as amended, restated, supplemented or
otherwise modified from time to time, pursuant to which Lender has
agreed to make certain loans and other financial accommodations to
Borrower.
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1.3.
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“Event of
Termination” means each and every event specified in
Section 6 of this Agreement or any other event described
herein that is designated an Event of Termination.
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1.4.
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“Forbearance Termination Date” means
the earliest to occur of (i) 5:00 p.m. (Eastern time) on
December 15, 2005, or such later date as provided by
Section 4.1 below and (b) the date of the occurrence of
any one or move Events of Termination.
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1.5.
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“All
capitalized terms used in this Agreement which are not defined
herein, but which are defined in or by reference in the Credit
Agreement, shall have the same meanings herein as
therein.
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1.6.
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To the extent
not defined in this Section 1, unless the context otherwise
requires, all accounting terms in this Agreement shall be construed
in accordance with GAAP, as of the date of this Agreement, to the
extent that same are used or defined therein.
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SECTION 2 — BACKGROUND
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2.1.
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Under the terms
and provisions of the Loan Documents, Borrower acknowledges and
agrees that as of the date hereof the outstanding Obligations
consist of:
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LOAN/COMMITMENT
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ORIGINAL PRINCIPAL
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TOTAL PRINCIPAL
OUTSTANDING ON
DATE OF
AGREEMENT
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Revolving Facility
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$
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35,000,000
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(Facility Cap)
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$
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22,639,733.01
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Term Loan
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$
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7,500,000
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$
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6,458,333
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The foregoing amounts do not include
all of the interest, fees and expenses to which Lender is entitled
under the terms and provisions of the Loan Documents. Borrower
acknowledges and agrees that the Obligations are outstanding, and
Borrower has no right of offset, defense, or counterclaim with
respect to such Obligations.
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2.2.
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To secure
repayment of the Obligations, Borrower granted Lender a Lien on and
security interest in certain Collateral, all as more fully
described in the Loan Documents. Borrower hereby acknowledges,
confirms and agrees that Lender has and shall continue to have
valid, enforceable and duly perfected first-priority liens upon and
security interests in the Collateral heretofore granted to Lender
pursuant to the Loan Documents or otherwise granted to or held by
Lender.
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2.3.
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Borrower
acknowledges and agrees the following Events of Default (the
“Designated Defaults”) have occurred and are continuing
as of the date hereof as a result of Borrower’s failure to
comply with certain terms of the Loan Documents:
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a.
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Borrower has
failed to pay amounts due on the Obligations in excess of
Availability as of the date hereof.
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b.
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Representations, statements, or warranties made
by Borrower, in writing, prior to the date hereof were not true in
all material respects or were false or misleading in a material
respect.
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c.
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One or more tax
assessments, judgments or decrees have been rendered as of the date
hereof against Borrower by the Internal Revenue Service in an
amount not in excess of $6,000,000.
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d.
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Borrower has
defaulted in the payment of Indebtedness as of the date
hereof.
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e.
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A Change of
Control has occurred.
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f.
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Lender has
received an indication or evidence that Borrower may have directly
or indirectly engaged in an activity which might result in a
forfeiture of property to a Governmental Authority as a result of
(c) above.
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g.
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Borrower has
granted an unpermitted Lien to Advance Payroll Funding, Ltd.
(“APF”) and incurred unpermitted Indebtedness to
APF.
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h.
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Borrower has
acquired the assets of Universal Staffing without the consent of
Lender and has failed to discharge a Lien on assets acquired from
Universal Staffing.
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i.
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Borrower has
acquired the assets of Curley & Associates, LLC without
the consent of Lender and has failed to discharge a Lien on such
assets.
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j.
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Borrower has
failed to pay the interest and principal on a $4,000,000 bridge
loan due August 31, 2005.
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k.
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Borrower has
accepted $2,000,000 from Palisades Master Fund, LP on
August 24, 2005, which has not resulted in an infusion of
equity into the Borrower, and which is now being asserted as a debt
obligation.
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l.
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Numerous class
action lawsuits have been filed against Borrower, its directors and
officers and its former directors and officers.
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m.
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Borrower has
dismissed its independent auditing firm and does not have certified
audited financial reports.
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n.
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Borrower is
delinquent in filing periodic reports with the Securities Exchange
Commission.
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2.4.
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As a result of
the Designated Defaults, Lender presently has the right to
accelerate payment and exercise all of its rights and remedies
under the Loan Documents and under applicable law. Borrower
acknowledges and agrees that, as a result of the existence of the
Designated Defaults, Lender has no obligation to make additional
loans or otherwise extend credit to Borrower under the Loan
Documents or otherwise. Borrower has now requested that Lender
forbear from accelerating the payment in full of Borrower’s
Obligations to the Lender under the Loan Documents and otherwise
exercising Lender’s rights and remedies under the Loan
Documents and under applicable law as a result of the existence of
the Designated Defaults, and the Borrower acknowledges that such
request is in the best interests of Borrower.
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2.5.
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In response to
Borrower’s request, Lender is willing to forebear until the
Forbearance Termination Date from exercising its rights and
remedies under the Loan Documents and under applicable law as a
result of the existence of the Designated Defaults provided that
such forbearance is on the terms and conditions set forth in this
Agreement (and, for the sake of clarity, in no event shall such
forbearance extend beyond December 15, 2005 unless extended
pursuant to Section 4.1) and, further provided, that such
forbearance does not waive the Designated Defaults or any other
Default or Event of Default that has arisen or may arise in the
future or otherwise prejudice the rights and remedies of
Lender.
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SECTION 3 – CONDITIONS
PRECEDENT
The Lender’s forbearance
obligations hereunder shall be subject to the satisfaction of the
following conditions precedent:
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a.
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the execution
and delivery of this Agreement by Borrower and Lender;
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b.
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no Default or
Event of Default, other than the Designated Defaults, shall have
occurred and be continuing;
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c.
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Borrower shall
have delivered to Lender a full and complete listing of all
Indebtedness, together with copies of all agreements, documents and
instruments evidencing same;
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d.
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Lender shall
have received a revised Borrowing Certificate, in form acceptable
to Lender;
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e.
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Borrower shall
have delivered to Lender lockbox and control account agreements for
each bank account maintained by Borrower, executed by Borrower and
the depository institution where such account is maintained, all in
form acceptable to Lender;
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f.
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Borrower shall
have provided Lender evidence of the termination of all Liens on
the Collateral (other than Permitted Liens); and
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g.
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Borrower shall
have provided Lender a complete summary of all pending litigation
in which Borrower is a party as of the date hereof in form
acceptable to Lender, together with the status of Borrower’s
response to such pending litigation.
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SECTION 4 – FORBEARANCE BY
LENDER
4.1 Subject to the satisfaction of
the terms and conditions set forth herein, and further subject to
the provisions of Section 4.2 below or any other limitation
set forth in this Agreement, the Lender will not exercise or
enforce its rights or remedies against Borrower to which Lender
would be entitled under the terms of the Loan Documents by reason
of the occurrence of the Designated Defaults; provided, that such
forbearance shall not act as a waiver of Lender’s right to
enforce any such right or remedy after the Forbearance Termination
Date, it being agreed to and understood that on the Forbearance
Termination Date, Lender’s agreement to forbear shall
automatically and without further action terminate and be of no
force and effect, and as a result thereof, Lender shall be
permitted to immediately exercise any and all of its rights and
remedies it may have as a result of the existence of the Designated
Defaults in accordance with the Credit Agreement and other Loan
Documents or applicable law. Furthermore, nothing contained herein
shall be construed as requiring Lender to extend the Forbearance
Termination Date. Lender specifically agrees that, prior to the
Forbearance Termination Date (and provided that no Default or Event
of Default (other than the Designated Defaults) under the Loan
Documents exists and all other conditions to funding are satisfied)
Lender shall continue to administer the lines of credit under the
Credit Agreement (the “Credit Lines”) and permit
advances (up to an aggregate amount not to exceed the lesser of the
(i) Availability or (ii) the amount of disbursements set
forth in the Cash Flow Forecast) and repayments in the same manner
and in accordance with the same terms as governed by the Loan
Documents. On the Forbearance Termination Date, all such
indebtedness as is then outstanding pursuant to the Credit Lines
shall be considered as part of the Obligations and shall thereupon
be immediately due and payable in full. It is expressly
acknowledged and agreed by the Borrower that Lender’s
agreement herein to continue administering the Credit Lines as
provided for hereby during the forbearance period shall not in any
manner be deemed to prejudice Lender or act as a waiver of its
otherwise applicable rights and remedies to collect and enforce the
full amount of the Obligations as of the Forbearance Termination
Date.
The following Events of Default
occurring after the date hereof (“Future Permitted
Defaults”) will not constitute Events of
Termination:
a. Borrower’s failure to
timely file its periodic reports with the Securities and Exchange
Commission (“SEC”) for any period prior to the earlier
of April 1, 2006, or such earlier date as may be required by
the SEC;
b. Borrower’s failure to
present auditor’s reviews of annual financial statements when
required by the Loan Documents for any period prior to the fiscal
period ending December 31, 2005 which have not been provided
to Lender.
If on December 15, 2005,
Borrower is in full compliance with this Agreement and the other
Loan Documents and no Event of Default (other than Designated
Defaults or Future Permitted Defaults exist) Borrower may request a
30 day extension of the Forbearance Termination Date to
January 14, 2006, provided such request is accompanied by
payment of an additional forbearance fee in the sum of $500,000,
whereupon the Forbearance Termination Date shall, absent any Event
of Termination, be so extended.
4.2 Notwithstanding anything to the
contrary contained in Section 4.1:
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a.
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the Designated
Defaults shall constitute existing Events of Default for the
purpose of determining whether or not certain actions or in-actions
may be taken or otherwise acquiesced to by or on behalf of the
Borrower, as set forth in the
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Loan Documents, and, accordingly,
any actions or in-actions taken or omitted by the Borrower in
violation of such provisions while any Event of Default (including
any Designated Default) exists will constitute additional Events of
Default under the Credit Agreement and the other Loan Documents, as
well as a breach of the terms of this Agreement;
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b.
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under no
circumstances shall the forbearance by Lender under this Agreement
be deemed to extend to any of Lender’s rights and remedies
under any Subordination Agreements to which Lender is a party, it
being agreed to and understood that Lender shall be entitled to
enforce any and all provisions of any Subordination Agreements to
the fullest extent provided therein in accordance with the terms
thereof, including, without limitation, invoking any rights that
arise as a result of the existence of the Designated Defaults to
block payments by Borrower to any subordinated creditor party
thereto on account of any debt owing to such subordinated creditor;
and
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c.
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under no
circumstances shall the forbearance by Lender under this Agreement
be deemed to extend to any rights of Lender under the Loan
Documents to charge a default rate of interest on account of the
Obligations due to the existence of the Designated Defaults or any
other Event of Default, it being agreed to and understood that
Lender shall retain all rights to charge such default interest in
accordance with the terms of the Loan Documents.
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4.3 Borrower acknowledges and agrees
that the outstanding Advances under the Revolving Facility exceed
Availability in the amount set forth in the Borrowing Certificate
dated September 15, 2005, executed and delivered by Borrower
to Lender (the “Overadvance”). The Parties hereby agree
that, the Overadvance shall not be included in the outstanding
amount of the Revolving Facility for purposes of calculating
Availability. Borrower agrees that Lender shall modify the
liquidity factors and reserves as reflected on the Borrowing
Certificate.
SECTION 5 – COVENANTS OF THE
BORROWER
Borrower jointly and severally
agrees that it shall comply with the following covenants, any
breach of which shall constitute an immediate Event of
Termination:
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a.
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On or before
September 30, 2005, Borrower shall deliver an updated Cash
Flow Forecast on a rolling thirteen week basis in form and
substance acceptable to Lender in its sole discretion, which shall
include a comparison between anticipated and actual results. Once
accepted by Lender such updated Cash Flow Forecast shall replace
the Cash Flow Forecast attached to this Agreement.
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b.
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Borrower shall
not expend any funds or monies for any purpose other than those
line items set forth in the Cash Flow Forecast or expressly agreed
to in writing by Lender. Borrower’s actual payment of the
individual line items and the cumulative disbursements shall not
exceed the projected amount set forth in the Cash Flow Forecast.
For the initial week of any three week period covered by the Cash
Flow Forecast, compliance shall be measured on the basis of the one
week period covered thereby. For the initial two week period of any
three week period covered by the Cash Flow Forecast, compliance
shall be measured on a rolling two week basis ending as of the end
of the second week. For the initial and any succeeding three week
period covered by the Cash Flow Forecast, compliance shall be
measured on a rolling three week basis as of the end of such three
week period.
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c.
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Borrower shall
comply with the cash receipt projections set forth in the Cash Flow
Forecast and verified by the actual amounts of cash posted in the
Lockbox Accounts. Compliance shall be measured on a one week basis
commencing on the date hereof and on each Tuesday
thereafter.
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d.
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Borrower shall,
at its sole cost and expense, continue to engage a chief
restructuring officer, the identity of which and scope of
engagement relating thereto to be acceptable to Lender in its sole
discretion. At any time and from time to time, Borrower shall make
its chief executive officer, chief financial officer, chief
restructuring officer or such other officers and consultants of
Borrower available to Lender, whether by telephone or in person, to
review and discuss Borrower’s financial condition, business,
refinancing the Obligations and/or capital market
alternatives
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