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REVOLVING CREDIT AND TERM LOAN AGREEMENT
BY AND BETWEEN
NETSMART TECHNOLOGIES, INC.
AND
BANK OF AMERICA, N.A.
DATED AS OF OCTOBER 7, 2005
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REVOLVING CREDIT
AND TERM LOAN AGREEMENT
THIS
AGREEMENT made as of the 7th day of October, 2005 by and
between
NETSMART TECHNOLOGIES, INC., a Delaware
corporation with its principal place of
business at 3500 Sunrise Highway, Suite
D122, Great River, New York 11739 (the
"Company") and BANK OF AMERICA, N.A., a
national banking association, having a
place of business located at 300 Broad
Hollow Road, Melville, New York 11747
(the "Bank").
W I T N E S S E T H:
SECTION 1: DEFINITIONS
1.1
Defined Terms: As used in this Agreement the following terms have
the
following meanings, unless the context
otherwise requires:
Adjusted EBITDA: shall mean (i) for the period from the date
hereof
up to and including June 30, 2006, the
consolidated EBITDA of the Company and
CSM (excluding up to $1,800,000 in the
aggregate in one-time costs and expenses
associated with the CMHC Acquisition) plus
the applicable CMHC EBITDA; and (ii)
at all times thereafter, the consolidated
EBITDA of the Company and the
Guarantors.
Affiliate: as applied to any Person, shall mean any other Person
(a)
which directly or indirectly controls, or
is controlled by, or is under common
control with that Person, (b) which
directly or indirectly beneficially owns or
holds five (5%) percent or more of any
class of voting stock of that Person, or
(c) five (5%) percent or more of the voting
stock of which is directly or
indirectly beneficially owned or held by
that Person. The term "control" means
the possession, directly or indirectly, of
the power to direct or cause the
direction of the management and policies of
a Person, whether through the
ownership of voting securities, by
contract, or otherwise.
Agreement: shall mean
this Revolving Credit and Term Loan Agreement,
as the same from time to time may be
amended, supplemented or modified.
Bank Obligations: shall mean all present and future obligations
and
Debt of the Company to the Bank under this
Agreement, any other Loan Document or
any other agreement, document, instrument
or otherwise owing to the Bank,
including, without limitation, the
obligation to pay the Debt evidenced by the
Notes, and the obligations to pay interest
(including interest accruing
subsequent to the commencement of
bankruptcy, insolvency or similar proceedings
with respect to the Company) and other
fees, expenses, and charges from time to
time owed hereunder or under any other Loan
Document.
Business Day: shall mean any day other than a Saturday, Sunday,
or
other day on which commercial banks in New
York are authorized or required to
close under the laws of New York, and, if
the applicable day relates to a LIBOR
Rate Loan or an Interest Period for a LIBOR
Rate Loan, the day on which dealings
in dollar deposits are also carried on in
the London interbank market and banks
are open for business in London.
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Capitalized Lease Obligations: shall mean as to any Person, the
obligations of such Person to pay rent or
other amounts under a lease of (or
other agreement conveying the right to use)
real and/or personal property which
obligations are required to be classified
and accounted for as a capital lease
on a balance sheet of such Person under
GAAP and, for purposes of this
Agreement, the amount of such obligations
shall be the capitalized amount
thereof, determined in accordance with
GAAP.
Cash Compensation: shall mean, in connection with Permitted
Acquisitions, the sum of Seller Notes plus
cash paid and assumed debt.
CMHC Acquisition: shall mean the Company's purchase of 100% of
the
common stock of CMHC Systems, Inc. for an
aggregate purchase price not to exceed
$22,000,000 (including costs and expenses
associated with said acquisition),
which purchase price shall be initially
funded as follows: (i) up to
approximately $15,400,000 in cash
(comprised of the Loans, gross cash equity
investment of not less than $4,400,000 and
approximately $5,400,000 of cash of
the Company) and (ii) approximately 435,750
shares of the Company's capital
stock valued at approximately
$4,900,000.
CMHC EBITDA: shall mean for the periods indicated below, the
corresponding amounts:
Period
Amount
------
------
Closing
$3,500,000
10/1/05 - 12/31/05
$2,625,000 plus EBITDA of
CMHC for quarter then-ended.
1/1/06 - 3/31/06
$1,750,000 plus EBITDA of
CMHC for rolling two quarters
then-ended.
4/1/06 - 6/30/06
$875,000 plus EBITDA of CMHC for
rolling three quarters then-ended.
CERCLA: shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, as amended,
42 U.S.C. Section 9601, et seq., as
amended from time to time, or any successor
thereto, and the rules and
regulations issued thereunder, as from time
to time in effect.
Collateral: shall mean the collateral as described in Section
8.2
hereof.
Commitment Period: shall mean the period from and including the
next
Business Day after the date hereof to, but
not including the Termination Date.
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Debt: shall mean (1) indebtedness or liability for borrowed money
or
for the deferred purchase price of property
or services (including trade
obligations); (2) obligations as lessee
under capital leases; (3) current
liabilities in respect of unfunded vested
benefits under any Plan; (4)
obligations under letters of credit issued
for the account of any Person; (5)
all guaranties, endorsements (other than
for collection or deposit in the
ordinary course of business), and other
contingent obligations to purchase, to
provide funds for payment, to supply funds
to invest in any Person, or otherwise
to assure a creditor against loss; and (6)
obligations secured by any Lien on
property owned by the Person, whether or
not the obligations have been assumed.
Default: shall mean any of the events specified in Section 7.1
hereof, whether or not any requirement for
notice or lapse of time or any other
has been satisfied.
EBITDA: shall mean net income before depreciation,
amortization,
interest, taxes, extraordinary gains or
losses and all non-cash financing costs.
Environmental Laws: shall mean all environmental, health and
safety
laws, rules and regulations, and
ordinances, including, without limitation: (i)
CERCLA and all other federal, state and
local rules and regulations, ordinances,
decrees, criteria and guidelines, and all
other similar documents and
instruments of all courts and Governmental
Authorities, bureaus and agencies,
whether issued by environmental regulatory
agencies or otherwise, and (ii) all
federal, state and local laws, regulations,
resolutions, ordinances and decrees,
in each case relating to Environmental
Matters.
Environmental Liability: shall mean any liability of a Person to
any
other Person under Environmental Laws and
Regulations and under any other
applicable law relating to any
Environmental Matter, and, including, without
limitation, any liability for the costs of
any investigation, clean-up or other
remedial action with respect to or in
connection with any Environmental Matter.
Environmental Matter: shall mean a release caused by the
seeping,
spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing of
hazardous wastes or other toxic or
chemical substance, pollutant or
contaminant into the environment or the
generation, treatment, storage or disposal
of any toxic or hazardous wastes or
other chemical substance, pollutant or
contaminant.
Environmental Proceeding: shall mean any judgment, action,
proceeding or investigation (including,
without limitation, any federal or state
investigation evaluating whether any
remedial action is needed to respond to an
Environmental Matter) pending before any
court or Governmental Authority, bureau
or agency, including, without limitation,
any environmental regulatory agency or
body, with respect to or threatened against
or affecting the assets or liability
of a Person, including, without limitation,
in respect of any "facility" owned,
leased or operated under CERCLA or under
each other Environmental Law in
connection with any Environmental
Matter.
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ERISA: shall mean the Employee Retirement Income Security Act
of
1974, as amended from time to time.
ERISA Affiliate: shall mean any trade or business (whether or
not
incorporated) which together with the
Company would be treated as a single
employer under Section 4001 of ERISA.
Event of Default: shall mean any of the events specified in
Section
7.1 hereof, provided that any requirement
for notice or lapse of time or any
other condition has been satisfied.
Fluctuating Rate Loans: shall mean Loans hereunder that bear
interest at a rate of interest based on the
Prime Rate.
Funded Debt: shall mean, with respect to the Company, the sum
of
Bank debt, lease obligations, Seller Notes
and other debt with maturities of
greater than one year reflected on the
Company's financial statements delivered
to the Bank.
GAAP: shall mean generally accepted accounting principles as
from
time to time in effect, including the
official interpretations thereof by the
Financial Accounting Standards Board,
consistently applied.
Governmental Authority: shall mean any foreign, federal, state,
municipal or other government, or any
department, commission, board, bureau,
agency, public authority or instrumentality
thereof or any court or arbitrator.
Guaranties: shall mean the guaranties (or reaffirmations
without
duplication thereof) of the Guarantors on
the Bank's standard form.
Guarantors: shall mean, collectively, Creative Socio-Medics
Corp.
("CSM"), Netsmart Ohio, Inc. formerly known
as CMHC Systems, Inc. ("CMHC") and
all other Subsidiaries of the Company, now
existing or hereafter acquired or
created.
Installment Payment Date: shall mean any date on which all or
any
portion of the principal amount of the Term
Loan is due and payable.
Interest Period: shall mean any period during which a Loan
bears
interest as a LIBOR Rate Loan as elected by
the Company in accordance with the
terms of this Agreement.
(a) If any Interest Period would otherwise end on a day which is
not
a Business Day, that Interest Period shall
be extended to the next succeeding
Business Day unless such Interest Period is
with respect to a LIBOR Rate Loan
and the result of such extension would be
to extend such Interest Period into
another calendar month, in which event such
Interest Period shall end on the
immediately preceding Business Day.
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(b) No Interest Period shall extend beyond a stated Maturity
Date.
LIBOR Rate: shall mean as applicable to any LIBOR Rate Loan,
the
rate per annum as determined on the basis
of the offered rates for deposits in
U.S. Dollars, for a period of time
comparable to such LIBOR Rate Loan which
appears on the Telerate page 3750 as of
11:00 a.m. London time on the day that
is two London Business Days preceding the
first day of such LIBOR Rate Loan;
provided, however, if the rate described
above does not appear on the Telerate
System on any applicable interest
determination date, the LIBOR rate shall be
the rate (rounded upward, if necessary, to
the nearest one hundred-thousandth of
a percentage point), determined on the
basis of the offered rates for deposits
in U.S. dollars for a period of time
comparable to such LIBOR Rate Loan which
are offered by four major banks in the
London interbank market at approximately
11:00 a.m. London time, on the day that is
two (2) London Business Days
preceding the first day of such LIBOR Rate
Loan as selected by the Bank. The
principal London office of each of the four
major London banks will be requested
to provide a quotation of its U.S. Dollar
deposit offered rate. If at least two
such quotations are provided, the rate for
that date will be the arithmetic mean
of the quotations. If fewer than two
quotations are provided as requested, the
rate for that date will be determined on
the basis of the rates quoted for loans
in U.S. dollars to leading European banks
for a period of time comparable to
such LIBOR Rate Loan offered by major banks
in New York City at approximately
11:00 a.m. New York City time, on the day
that is two London Business Days
preceding the first day of such LIBOR Rate
Loan. In the event that the Bank is
unable to obtain any such quotation as
provided above, it will be deemed that
LIBOR pursuant to a LIBOR Rate Loan cannot
be determined. In the event that the
Board of Governors of the Federal Reserve
System shall impose a Reserve
Percentage with respect to LIBOR deposits
of the Bank, then for any period
during which such Reserve Percentage shall
apply, LIBOR shall be equal to the
amount determined above divided by an
amount equal to 1 minus the Reserve
Percentage. "Reserve Percentage" shall mean
the maximum aggregate reserve
requirement (including all basic,
supplemental, marginal and other reserves)
which is imposed on member banks of the
Federal Reserve System against
"Euro-currency Liabilities" as defined in
Regulation D.
LIBOR Rate Loan: shall mean a Loan bearing interest at a LIBOR
based
rate.
Lien: shall mean any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of
any kind (including any agreement to
give any of the foregoing), any conditional
sale or other title retention or
trust agreement, any lease in the nature
thereof, and the filing or recording of
or agreement to give any financing
statement or other document to be filed or
recorded under the Uniform Commercial Code
of any jurisdiction.
Loan or Loans: shall mean, collectively, the Revolving Credit
Loans
and the Term Loan.
Loan Documents: shall mean the Notes, the Guaranties, the
Security
Agreements, UCC-1 financing statements, the
Master Agreement, the Subordination
Agreements and any other documents executed
by or on behalf of the Company or a
Guarantor in connection herewith or
therewith.
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Master Agreement: shall mean that certain ISDA Master Agreement
dated as of May 22, 2001 entered into
between the Company and the Bank as same
may be amended, revised and/or
reaffirmed.
Material Adverse Change: shall mean a material adverse change in
the
business, operations, results of
operations, assets, liabilities or financial
condition of the Company, a Subsidiary or
the Collateral, in each case as may be
reasonably determined by the Bank in its
sole discretion.
Maturity Date: shall mean the date that all or a portion of the
outstanding principal balance of a Loan is
due and payable pursuant to the terms
hereof which shall include without
limitation the Termination Date, each
Installment Payment Date and the final
maturity date of the Term Loan.
Multiemployer Plan: shall mean a Plan described in Section
4001(a)(3) of ERISA which covers employees
of the Company or an ERISA Affiliate.
Note or Notes: shall mean, collectively, the Revolving Credit
Note
and the Term Note.
Officers' Certificate: shall mean a certificate signed in the
name
of the Company or any Guarantor by its
President, or one of its Vice Presidents,
and by its Treasurer or Secretary.
PBGC: shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title
IV of ERISA.
Permitted Acquisitions: shall mean the CMHC Acquisition and any
acquisition after the date hereof, by the
Company or any Subsidiary, of a Person
within the same or related line of business
as the Company or its Subsidiaries
by: merger, consolidation, purchase of a
voting majority of the stock of another
Person, purchase of all or substantially
all of the assets of another Person or
purchase of all or substantially all of the
assets of a division or other
operating component of another Person (an
"Acquisition") if all of the following
conditions are met:
(i)The Cash Compensation does not exceed $250,000.00 per
Acquisition and not more than $500,000.00 in the aggregate for
Acquisitions within any fiscal year;
(ii)The Bank shall have received a set of projections setting
forth in
reasonable detail the pro forma effect of such Acquisition and
showing
compliance by the Company and its Subsidiaries with all
covenants
set forth
in this Agreement for the next succeeding year. The projections
to be
delivered hereunder shall include and specify the assumptions
used
to prepare
such projections regarding growth of sales, margins on sales
and cost
savings resulting from such Acquisition;
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(iii)The Bank shall have received a certificate signed by the
chief financial
officer of the Company to the effect that (and including
calculations indicating that) on a pro forma basis after giving
effect to
such
Acquisition: (a) all representations and warranties contained in
the
Loan
Documents will remain true and correct except those, if any, made
as
of a
specific time which shall have been true and correct when made,
(b)
the
Company is in compliance with and will remain in compliance with
all
covenants
contained in the Loan Documents, and (c) no Default or Event of
Default
has occurred and is continuing or will occur as a result of the
consummation of such Acquisition;
(iv)Such Acquisition, in the case of a corporation being
acquired,
has been (a) approved by the board of directors of such
corporation which is the subject of such Acquisition, (b)
recommended for
approval
by such board to the shareholders of such corporation and
subsequently approved by such shareholders as required under
applicable
law or the
by-laws or the certificate of incorporation of such corporation
or (c)
otherwise agreed to by all shareholders of such corporation;
and
(v)The Company has timely delivered the information required
pursuant
to Section 5.1 hereof.
Person: shall mean and include an individual, a partnership, a
firm,
a corporation, a trust, a joint venture, a
limited liability company, an
unincorporated organization and a
government or any department or agency
thereof.
Plan: shall mean any plan referred to in Section 4021(a) of ERISA
in
respect of which the Company, a Subsidiary
or an ERISA Affiliate is an
"employer" or a "substantial employer" as
said terms are defined in Sections
3(5) and 4001(a)(2) of ERISA,
respectively.
Post Default Rate: shall mean at any time a rate of interest
equal
to four (4%) percent per annum in excess of
the otherwise applicable rate.
Prime Rate: shall mean the variable per annum rate of interest
so
designated from time to time by the Bank as
its prime rate. The Prime Rate is a
reference rate and does not necessarily
represent the lowest or best rate being
charged to any customer. Changes in the
rate of interest resulting from changes
in the Prime Rate shall take place
immediately without notice or demand of any
kind.
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Prohibited Transaction: means any transaction set forth in
Section
406 of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended
from time to time.
Reportable Event: shall mean any of the events set forth in
Section
4043(b) of ERISA.
Requirement of Law: shall mean, with respect to any Person,
articles
of organization, the certificate of limited
partnership, partnership agreement,
charter and by-laws, or other
organizational or governing documents of such
Person, and any law, treaty, rule or
regulation, or determination of an
arbitrator or a court or other Governmental
Authority, in each case applicable
to or binding upon or affecting any such
Person or any of its property or to
which such Person or any of its property is
subject.
Revolving Credit Loan: shall have the meaning assigned in
Section
2.2 hereof.
Revolving Credit Note: shall have the meaning assigned in
Section
2.3 hereof.
Seller Notes: shall mean purchase money financing payable to
any
seller in connection with a Permitted
Acquisition or the prior permitted
acquisition of Shuttle Data Systems Corp.
not in excess of $750,000 in the
aggregate at any time outstanding,
consisting of: (i) the $500,000 Note of CSM
dated June 25, 2003 payable to Shuttle Data
Systems Corp., and (ii) in
connection with Permitted Acquisitions,
purchase money financing payable to any
seller but not in excess of $250,000 to
each such seller.
Security Agreements: shall have the meaning assigned in Section
4.1(b) hereof.
Subordinated Debt: shall mean indebtedness subordinated on
terms
acceptable to the Bank.
Subordination Agreements: shall have the meaning assigned in
Section
4.1(e).
Subsidiary: shall mean any corporation, association,
partnership,
joint venture or other business entity of
which the Company, directly or
indirectly, either (a) in respect of a
corporation, owns or controls 50% or more
of the outstanding stock having ordinary
voting power to elect a majority of the
board of directors or similar managing
body, irrespective of whether or not a
class or classes shall or might have voting
power by reason of the happening of
any contingency, or (b) in respect of an
association, partnership, joint venture
or other business entity, either (i) owns
50% or more of the ownership interests
therein or (ii) is otherwise entitled to
share in 50% or more of the profits and
losses, however determined, including
(without limitation) any Subsidiary of a
Subsidiary.
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Taxes: shall mean any federal, state, local or foreign income,
sales, use, transfer, payroll, personal,
property, occupancy, franchise or other
tax, levy, impost, fee, imposition, license
fee, assessment or similar charge,
together with any interest or penalties
thereon.
Term
Loan: shall mean the term loan made pursuant to Section 2.6
hereof.
Term Note: shall have the meaning assigned in Section 2.6
hereof.
Termination Date: shall mean October 1, 2008.
1.2
Accounting Terms: Each accounting term not defined in this
Agreement,
and each accounting term partly defined in
this Agreement, to the extent not
defined, shall have the meaning given to it
under GAAP consistently applied.
SECTION 2: AMOUNT AND TERMS OF LOANS
2.1 Loans:
Subject to the terms and conditions of this Agreement, the Bank
agrees to make Loans to the Company,
whether Revolving Credit Loans or the Term
Loan, as provided for herein.
2.2
Revolving Credit Commitment: Subject to the terms and
conditions
hereof, the Bank agrees to extend credit to
the Company for its working capital
needs by making loans (each such loan being
hereinafter called a "Revolving
Credit Loan") to the Company from time to
time during the Commitment Period,
provided that at any time the aggregate
principal amount of the Revolving Credit
Loans shall not exceed at any one time
outstanding the amount of $2,500,000.00
(the "Commitment"). During the Commitment
Period, the Company may use the
Commitment for obtaining Revolving Credit
Loans by borrowing, paying and
prepaying in whole or in part and
reborrowing, in accordance with the terms and
conditions hereof.
2.3
Revolving Credit Note: The Revolving Credit Loans made by the
Bank
pursuant to Section 2.2 hereof shall be
evidenced by a promissory note of the
Company, payable to the order of the Bank,
substantially in the form of Exhibit
A hereto, with blanks appropriately
completed (the "Revolving Credit Note")
representing the obligation of the Company
to pay the aggregate unpaid amount of
all Revolving Credit Loans made by the Bank
plus interest. The Revolving Credit
Note shall bear interest on the unpaid
principal balance thereof from time to
time outstanding at a rate per annum to be
elected by the Company in accordance
with the notice provisions set forth in
Section 2.5 hereof, and in the case of
LIBOR Rate Loans for Interest Periods of 1,
2 or 3 months as therein specified,
equal to either (1) the LIBOR Rate plus
2.00% or (2) the Prime Rate. The
Revolving Credit Note shall be dated the
date of this Agreement, be payable to
the order of the Bank and be stated to
mature on the Termination Date. The Bank
is hereby irrevocably authorized by the
Company to enter on the schedule
attached to the Revolving Credit Note the
amount of each Revolving Credit Loan
made by it, each payment thereon, and the
other information provided for on such
schedule; provided, however, that the
failure to make any such entry with
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respect to any Revolving Credit Loan shall
not limit or otherwise affect the
obligation of the Company to repay the same
and, in all events, the principal
amount owing by the Company in respect to
the Revolving Credit Note shall be the
aggregate amount of all Revolving Credit
Loans made by the Bank less all
payments of principal thereon made by the
Company. The Bank may attach one or
more continuations to such schedule as and
when required. The aggregate unpaid
principal balance of the Revolving Credit
Loans set forth on the schedule
attached to the Revolving Credit Note shall
be presumptive evidence of the
principal amount owing and paid
thereon.
2.4 Post
Closing Commitment Fees: The Company agrees to pay the Bank a
facility fee of 1/4 of 1% of the unused
portion of the Commitment, payable
quarterly in arrears up to and including
the Termination Date.
2.5
Procedure for Borrowing: The Company may borrow under the
Commitment
during the Commitment Period on any
Business Day by giving the Bank irrevocable
notice of a request for a Revolving Credit
Loan hereunder one (1) Business Day
before a proposed borrowing, or three (3)
Business Days if the Revolving Credit
Loan will be a LIBOR Rate Loan, or
continuation, setting forth (i) the amount of
the Loan request, which shall, in the case
of LIBOR Rate Loans, not be less than
Two Hundred Fifty Thousand ($250,000.00)
Dollars and integral multiples of One
Hundred Thousand ($100,000.00) Dollars in
excess thereof, and, in the case of
Fluctuating Rate Loans, not be less than
One Hundred Thousand ($100,000.00)
Dollars and integral multiples of One
Hundred Thousand ($100,000.00) Dollars in
excess thereof, (ii) whether the Revolving
Credit Loan shall be a Fluctuating
Rate Loan or a LIBOR Rate Loan, (iii) the
requested Interest Period commencement
date, and (iv) the length of the Interest
Period therefor which shall not extend
beyond the Termination Date. Such notice
shall be written (including, without
limitation, via facsimile transmission) and
shall be sufficient if received by
1:00 p.m. on the date on which such notice
is to be given. Unless notification
is otherwise furnished by the Company to
the Bank (in a manner consistent with
the requirements of this Section 2.5),
Loans will be made by credits to the
Company's demand deposit account maintained
with the Bank upon compliance with
the requirements of this Agreement. If the
Company furnishes such notice but no
election is made as to the Interest Period
to be applicable thereto, the Loan
will automatically then be made as a
Fluctuating Rate Loan until such required
information is furnished pursuant to the
terms hereof.
2.6 Term
Loan: Subject to the terms hereof, the Bank agrees to make a
term
loan to the Company on the date hereof in
the principal amount of Two Million
Five Hundred Thousand and 00/100
($2,500,000.00) Dollars for a term of five (5)
years (the "Term Loan"). The Term Loan
shall be evidenced by a promissory note
of the Company substantially in the form of
Exhibit B hereto with appropriate
insertions (the "Term Note") and dated the
date of the Term Loan. The principal
amount of the Term Note shall be payable in
sixty (60) consecutive monthly
installments, the first fifty-nine (59) of
which shall each be in the amount of
$41,667.00, and the final installment to be
in the amount equal to the then
unpaid principal balance, payable on the
first day of each month commencing on
the first such day to occur after the date
of the Term Loan until the entire
unpaid principal balance of the Term Note
together with all interest accrued and
unpaid shall be paid in full. The Term Note
shall bear interest on the unpaid
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principal amount thereof from time to time
outstanding at a rate per annum, to
be elected at least three (3) days prior to
the date of the Term Loan and
thereafter in accordance with the notice
provisions set forth in Section 2.7
hereof, and in the case of LIBOR Rate Loans
for Interest Periods of 1, 2, 3 or 6
months as therein specified, equal to
either (y) the LIBOR Rate plus 2.25%,
which may be swapped into a fixed rate
equivalent for the term of the Term Loan
in accordance with the Master Agreement, or
(z) the Prime Rate.
2.7
Continuation and Conversion of Loans: The Company shall have the
right
at any time on prior irrevocable written
notice to the Bank (i) to continue any
Loan into a subsequent Interest Period and
(ii) to convert any Loan into another
type of Loan permitted by this Agreement
(specifying, in the case of LIBOR Rate
Loans, the Interest Period to be applicable
thereto), subject to the following:
(a) in the case of a conversion of less than all of the
outstanding
Loans, the aggregate principal amount of
Loans converted shall not be less than
the minimum amounts and multiples thereof
specified in Section 2.5 hereof; and
(b) no Loan (other than a Fluctuating Rate Loan) shall be
converted
at any time other than at the end of an
Interest Period applicable thereto.
In the
event that the Company shall not give notice to continue a Loan
into a subsequent Interest Period, such
Loan (unless prepaid) shall
automatically be converted into a
Fluctuating Rate Loan. The Interest Period
resulting from a conversion shall be
specified by the Company in the irrevocable
notice delivered by the Company pursuant to
this Section and Section 2.5 hereof;
provided, however, that, if such notice
does not specify the Interest Period to
be applicable thereto, the Loan shall
automatically be converted into, or
continued as, as the case may be, a
Fluctuating Rate Loan until such required
information is furnished pursuant to the
terms hereof. Notwithstanding anything
to the contrary contained above, if an
Event of Default shall have occurred and
is continuing, no Loan may be continued
into a subsequent Interest Period and no
Fluctuating Rate Loan may be converted into
a LIBOR Rate Loan.
2.8
Payments:
(a) Interest accrued on each Loan shall be payable, without
duplication, on:
(i) the Maturity Date;
(ii) with respect to any portion of any Loan repaid or prepaid
pursuant
to this Agreement, the date of such repayment or prepayment, as
the case
may be; and
(iii) the first day of each month, commencing with the first
such date
following the date of the making of such Loans.
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(b) All payments (including prepayments) to be made by the
Company
on account of principal or interest with
respect to any Loan or on account of
fees or any other obligations of the
Company to the Bank hereunder shall be made
to the Bank at the offices of the Bank set
forth in Section 9.13 hereof, or at
such other place as the Bank may from time
to time designate in writing in
lawful currency of the United States of
America in immediately available funds,
without counterclaim or setoff and free and
clear of, and without any deduction
or withholding for, any taxes or other
payments. If any payment to be so made
hereunder, or under a Note, becomes due and
payable on a day other than a
Business Day, such payment shall be
extended to the next succeeding Business Day
and such extension of time shall be
included in computing interest and fees in
connection with such payment.
(c) If the entire amount of any required principal and/or
interest
payment is not paid in full within ten (10)
days after the same is due, the
Company shall pay to the Bank a late fee
equal to five (5%) percent of the
required payment.
(d) All payments shall be applied first to the payment of all
fees,
expenses and other amounts due to the Bank
(excluding principal and interest),
then to accrued interest, and the balance
on account of outstanding principal;
provided, however, that after default,
payments will be applied to the
obligations of the Company to the Bank as
the Bank determines in its sole
discretion.
2.9
Interest:
(a) The interest rate applicable to each Note, while a
fluctuating
rate is in effect, shall change when and as
the Prime Rate is changed, and any
such change in the Prime Rate shall become
effective on the day on which such
change is adopted.
(b) Interest on the Loans shall be computed on the basis of a
year
of three hundred sixty (360) days for
actual days elapsed (including the first
but excluding the last) occurring in the
period for which payable.
(c) Upon default (whether or not the Bank has accelerated
payment
hereunder),or after maturity or after
judgment has been rendered, the Company's
right to select pricing options shall
cease, the unpaid principal of all Loans,
shall bear interest (payable on demand, and
in any event on the first day of
each month, and computed daily on the basis
of a 360-day year for actual days
elapsed) at the Post Default Rate.
(d) All agreements between the Company and the Bank are hereby
expressly limited so that in no contingency
or event whatsoever, whether by
reason of acceleration of maturity of the
Notes or otherwise, shall the amount
paid or agreed to be paid to the Bank for
the use or the forbearance of the
Notes exceed the maximum permissible under
applicable law. As used herein, the
term "applicable law" shall mean the law in
effect as of the date hereof
provided, however, that in the event there
is a change in the law which results
in a higher permissible rate of interest,
then the Notes shall be governed by
such new law as of its effective date. In
this regard, it is expressly agreed
that it is the intent of the Company and
the Bank in the execution, delivery and
acceptance of the Notes to contract in
strict compliance with the laws of the
State of New York from time to time in
effect. If, under or from any
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circumstances whatsoever, fulfillment of
any provision hereof or of any of the
Loan Documents at the time of performance
of such provision shall be due, shall
involve transcending the limit of such
validity prescribed by applicable law,
then the obligation to be fulfilled shall
automatically be reduced to the limits
of such validity, and if under or from
circumstances whatsoever the Bank should
ever receive as interest an amount which
would exceed the highest lawful rate,
such amount which would be excessive
interest shall be applied to the reduction
of the principal balance evidenced hereby
and not to the payment of interest.
This provision shall control every other
provision of all agreements between the
Company and the Bank.
2.10
Optional Prepayments:
(a) Subject to the provisions of (b) below and the provisions
of
Section 2.14 hereof, the Company may at its
option at any time or from time to
time prepay a Loan in whole or in part,
without premium or penalty, upon at
least one (1) Business Day prior written
notice to the Bank specifying the date
and the amount of prepayment. Partial
prepayments shall be in the amount of Two
Hundred Fifty Thousand and 00/100
($250,000.00) Dollars or an integral multiple
thereof and each prepayment shall be made
together with interest accrued thereon
to and including the date of prepayment.
The Company may not prepay any Loan
(other than a Fluctuating Rate Loan) prior
to the last day of the Interest
Period therefor. Any partial prepayment of
the Term Loan shall be applied to the
last maturing installments in inverse order
of their respective maturities.
(b) The Company shall have the right to prepay LIBOR Rate Loans
in
accordance with Section 2.14 hereof and
upon payment of all of the amounts due
pursuant to Section 2.14 hereof.
If by reason of an Event of Default the Bank elects to declare
a
Note to be immediately due and payable,
then any amounts due pursuant to Section
2.14 hereof with respect to such Note shall
become due and payable in the same
manner as though the Company had exercised
such right of prepayment.
2.11
Mandatory Payments: If at any time prior to the Termination Date
or
the maturity of the Revolving Credit Note,
the aggregate unpaid principal
balance of the Revolving Credit Loans is in
excess of the amounts permitted
under the Commitment, the Company shall
immediately make a prepayment of
principal on the Revolving Credit Note, in
a principal amount equal to such
excess, together with accrued interest on
such amount being prepaid to the date
of such prepayment.
2.12
Regulatory Capital Requirements: If any existing or future law,
regulation, or guideline or the
interpretation thereof by any court or
administrative or Governmental Authority
charged with the administration
thereof, or compliance by the Bank with any
request or directive (whether or not
having the force of law) of any such
authority, imposes, modifies, deems
applicable or results in the application of
any capital maintenance, capital
ratio or similar requirement against loan
commitments made by the Bank (or
participations therein) or the Bank in
anticipation of the effectiveness of any
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<PAGE>
capital maintenance, capital ratio or
similar requirement takes reasonable
action to enable itself to comply
therewith, and the result thereof is to impose
upon the Bank or increase any capital
requirement applicable as a result of the
making or maintenance of the Commitment or
participations therein (which
imposition of or increase in capital
requirements may be determined by the
Bank's reasonable allocation of the
aggregate of such capital impositions or
increases) then, upon demand by the Bank,
the Company shall immediately pay to
the Bank from time to time as specified by
the Bank additional commitment fees
which shall be sufficient to compensate the
Bank for such impositions of or
increase in capital requirements, together
with interest on each such amount
from the date demanded until payment in
full thereof at the rate provided in
this Agreement with respect to commitment
fees not paid when due. A certificate
setting forth in reasonable detail the
amounts necessary to compensate the Bank
as a result of an imposition of or increase
in capital requirements submitted by
the Bank to the Company shall be
conclusive, absent manifest error or bad faith,
as to the amount thereof.
2.13
Increased Costs: If the Bank determines that the effect of any
applicable law or government regulation,
guideline or order or the
interpretation thereof by any Governmental
Authority charged with the
administration thereof (such as, for
example, a change in official reserve
requirements which the Bank is required to
maintain in respect of loans or
deposits or other funds procured for
funding such loans) is to increase the cost
to the Bank of making or continuing Loans
hereunder or to reduce the amount of
any payment of principal or interest
receivable by the Bank thereon, then the
Company will pay to the Bank on demand such
additional amounts as the Bank may
determine to be required to compensate the
Bank for such additional costs or
reduction. Any additional payment under
this Section will be computed from the
effective date at which such additional
costs have to be borne by the Bank. A
certificate as to any additional amounts
payable pursuant to this Section 2.13
setting forth the basis and method of
determining such amounts shall be
conclusive, absent manifest error, as to
the determination by the Bank set forth
therein if made reasonably and in good
faith. The Company shall pay any amounts
so certified to it by such Bank within ten
(10) days of receipt of any such
certificate. For purposes of this Section
2.13 all references to a "Bank" shall
be deemed to include any participant in the
Bank's Commitment and/or the Loans.
2.14
Indemnities: The Company may prepay a LIBOR Loan only upon at
least
three (3) Business Days prior written
notice to the Bank (which notice shall be
irrevocable), and any such prepayment shall
occur only on the last day of the
Interest Period for such LIBOR Loan. The
Company shall pay to the Bank, upon
request of the Bank, such amount or amounts
as shall be sufficient (in the
reasonable opinion of the Bank) to
compensate it for any loss, cost, or expense
incurred as a result of: (i) any payment of
a LIBOR Loan on a date other than
the last day of the Interest Period for
such Loan; (ii) any failure by the
Company to borrow a LIBOR Loan on the date
specified by the Company's written
notice; (iii) any failure by the Company to
pay a LIBOR Loan on the date for
payment specified in the Company's written
notice. Without limiting the
foregoing, the Company shall pay to the
Bank a "yield maintenance fee" in an
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<PAGE>
amount computed as follows: The current
rate for United States Treasury
securities (bills on a discounted basis
shall be converted to a bond equivalent)
with a maturity date closest to the term
chosen pursuant to the LIBOR Rate
Election as to which the prepayment is
made, shall be subtracted from the LIBOR
in effect at the time of prepayment. If the
result is zero or a negative number,
there shall be no yield maintenance fee. If
the result is a positive number,
then the resulting percentage shall be
multiplied by the amount of the principal
balance being prepaid. The resulting amount
shall be divided by 360 and
multiplied by the number of days remaining
in the term chosen pursuant to the
LIBOR Rate Election as to which the
prepayment is made. Said amount shall be
reduced to present value calculated by
using the above referenced United States
Treasury securities rate and the number of
days remaining in the term chosen
pursuant to the LIBOR Rate Election as to
which prepayment is made. The
resulting amount shall be the yield
maintenance fee due to the Bank upon the
prepayment of a LIBOR Loan. Each reference
in this paragraph to "LIBOR Rate
Election" shall mean the election by the
Company of the LIBOR Rate. If by reason
of an Event of Default, the Bank elects to
declare the Notes to be immediately
due and payable, then any yield maintenance
fee with respect to a LIBOR Loan
shall become due and payable in the same
manner as though the Company had
exercised such right of prepayment.
A
certificate as to any additional amounts payable pursuant to
this
Section 2.14 setting forth the basis and
method of determining such amounts
shall be conclusive, absent manifest error,
as to the determination by the Bank
set forth therein if made reasonably and in
good faith. The Company shall pay
any amounts so certified to it by such Bank
within ten (10) days of receipt of
any such certificate. For purposes of this
Section 2.14, all references to the
"Bank" shall be deemed to include any
participant in the Commitment or the Term
Loan.
2.15
Change in Legality:
(a) Notwithstanding anything to the contrary herein contained,
if
any change in any law or regulation or in
the interpretation thereof by any
Governmental Authority charged with the
administration or interpretation thereof
shall make it unlawful for a Bank to make
or maintain any LIBOR Rate Loan, then,
by written notice to the Company, the Bank
may:
(i)declare that LIBOR Rate Loans will not thereafter be made
by such
Bank hereunder, whereupon the Company shall be prohibited from
requesting
LIBOR Rate Loans from the Bank hereunder unless such
declaration is subsequently withdrawn; and
(ii)require that all outstanding LIBOR Rate Loans made by it
be
converted to Fluctuating Rate Loans, in which event (x) all such
Loans
made by
such Bank shall be automatically converted to Fluctuating Rate
Loans as
of the effective date of such notice as provided in paragraph
(b)
below and
(y) all payments and prepayments of principal which would
otherwise
have been applied to repay the converted LIBOR Rate Loans shall
instead be
applied to repay the Fluctuating Rate Loans resulting from the
conversion
of such Loans.
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<PAGE>
(b) For purposes of this Section 2.15, a notice to the Company
by
the Bank pursuant to paragraph (a) above
shall be effective on the day of
receipt by the Company and (ii) for
purposes of this Section 2.15 all references
to a "Bank" shall be deemed to include any
participant in the Commitment and/or
the Loans.
2.16 Use
of Proceeds: The Company hereby covenants and agrees that the
proceeds of the Revolving Credit Loan will
be used to partially finance the
purchase price for the CMHC Acquisition and
for working capital support. The
proceeds of the Term Loan will be used to
partially finance the purchase price
for the CMHC Acquisition.
SECTION 3: REPRESENTATIONS
In order
to induce the Bank to enter into this Agreement and to make the
Loans herein provided for, the Company
hereby represents and warrants to the
Bank that:
3.1
Financial Condition:
(a) The balance sheet of the Company and its Subsidiaries as at
December 31, 2004 and the related
statements of income, retained earnings and
cash flows for the fiscal year ended on
such date, audited by Marcum & Kliegman,
LLP, CPAs or any other certified public
accounting firm acceptable to the Bank,
copies of which certified statements have
heretofore been furnished to the Bank,
are complete and correct and present fairly
the financial condition of the
Company and its Subsidiaries for the fiscal
year then ended. Such certified
financial statements, including schedules
and notes thereto, have been prepared
in accordance with GAAP. Neither the
Company nor any of its Subsidiaries has any
material contingent obligations, contingent
liabilities or liabilities for
taxes, long-term leases or unusual forward
or long-term commitments, which are
not reflected in the foregoing certified
statements or in the notes thereto.
Since the date of the aforementioned
financial statements, there has been no
material adverse change in the business,
operations, assets or financial or
other condition of the Company or any
Subsidiary.
3.2
Subsidiaries: The Company does not have any Subsidiaries, other
than
Creative Socio-Medics Corp., a Delaware
corporation and Netsmart Ohio, Inc.
formerly known as CMHC Systems, Inc., an
Ohio corporation. Creative Socio-Medics
Corp. does not have any Subsidiaries.
Netsmart Ohio, Inc. formerly known as CMHC
Systems, Inc. does not have any
Subsidiaries other than as set forth in Schedule
3.2 hereof. The CMHC Subsidiaries
identified on Schedule 3.2 do not (i) engage
in any business activities, (ii) have any
material liabilities other than as set
forth in Schedule 3.2, and (iii) do not
have assets currently valued at greater
than $100,000.00 in aggregate.
3.3
Existence: The Company and each of its Subsidiaries is a
corporation
duly organized, validly existing and in
good standing under the laws of the
state of its incorporation, and has the
corporate power to own its assets and to
transact the business in which it is
presently engaged and as proposed to be
conducted and is duly qualified as a
foreign corporation to do business and is
in good standing in each jurisdiction in
which the character of the properties
owned by it therein or the transaction of
its business makes such qualification
necessary, except where the failure to
qualify as a foreign corporation doing
business in any such jurisdiction shall not
result in a Material Adverse Change.
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<PAGE>
3.4
Authority: The execution, delivery and performance of this
Agreement,
the borrowings hereunder and the execution
and delivery of the Loan Documents
and all other documents executed in
connection with this Agreement by the
Company and the Guarantors have been duly
authorized by all requisite corporate
action. No consent or approval of
stockholders or members or consent, approval,
license or authorization of, or
registration or declaration with, any
governmental or administrative authority,
instrumentality, bureau or agency is
required as a condition to the execution,
delivery, validity or enforceability
of this Agreement or the other Loan
Documents.
3.5
Binding Agreements: This Agreement and the other Loan Documents
to
which it is a party constitute the valid
and legally binding obligations of the
Company and the Guarantors (as applicable)
enforceable in accordance with their
respective terms except as may be limited
by bankruptcy, insolvency or other
similar laws affecting the enforcement of
creditors' rights.
3.6
Litigation: There are no actions, suits, proceedings or
investigations
pending or, to the best knowledge of the
Company, threatened by or against the
Company or its Subsidiaries at law or in
equity (whether or not purportedly on
behalf of the Company or any Subsidiary)
before or by any Federal or state
court, municipal or other governmental
department, commission, board, bureau,
agency or instrumentality, which (x) call
into question the enforceability or
validity of, or (y) individually or
together with such actions, suits,
proceedings and investigations, if
adversely determined, would, in the
aggregate, cause a Material Adverse Change,
or the ability of the Company or the
Subsidiaries to perform their respective
obligations under this Agreement or any
Loan Document. To the best of its
knowledge, neither the Company nor any
Subsidiary is in default with respect to
any order, decree or judgment of any
court, arbitrator or Governmental
Authority, bureau or agency.
3.7 No
Conflicting Law or Agreements: There is no charter, by-law or
provision of any preferred stock of the
Company or any Subsidiary, and no
provision of any existing mortgage,
indenture, contract, shareholder agreement
or other agreement binding on the Company
or any Subsidiary or affecting their
respective properties, nor is there any
existing statute, rule, regulation,
judgment, decree or order applicable to the
Company or any Subsidiary binding
thereon or affecting the property thereof
which would conflict with, result in a
breach of or constitute a default
thereunder or in any way prevent the
execution, delivery, or carrying out of the
terms of this Agreement or the Loan
Documents, or which would result in the
creation or imposition of, or the
obligation to create, any Lien upon the
property thereof. Neither the Company
nor any Subsidiary is a party to any
contract or agreement or subject to any
charge or other corporate restriction which
materially adversely affects its
business, property, assets or financial
condition.
3.8 No
Authorization: No authorization or approval or other action by,
and
no notice to or filing with, any
Governmental Authority is required for the due
execution, delivery and performance by the
Company or any Guarantor of this
Agreement or any other of the Loan
Documents.
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<PAGE>
3.9
Compliance with Applicable Laws: Neither the Company nor any
Subsidiary is in default under any
judgment, order, writ, injunction, decree or
decision of any Governmental Authority
applicable to the Company or any
Subsidiary. The Company and the
Subsidiaries are in compliance in all material
respects with all statutes and regulations
of all Governmental Authorities.
3.10
Governmental Regulations: Neither the Company nor any Subsidiary
is
subject to regulation under the Public
Utility Holding Company Act of 1935, the
Federal Power Act or the Investment Company
Act of 1940, and the Company is not
subject to any statute or
