[LETTERHEAD OF THE BANK OF NEW YORK]
February 20, 1999
Mr. Robert P. Heller, Vice President &
Chief Financial Officer
National Home Health Care Corp.
700 White Plains Road, Suite 363
Scarsdale, New York 10583
This letter confirms that The Bank of New York (the "Bank") holds available a
$2,000,000 secured advised line of credit to National Home Health Care Corp.
Advances under the line of credit shall be payable on demand and bear interest
at a rate per annum equal to the alternate base commercial lending rate of the
Bank as publicly announced to be in effect from time to time (the "Alternate
Base Rate"), such rate to change on the effective date of any change in the
Alternate Base Rate.
"Alternate Base Rate" shall mean, for any day, a rate per annum equal
to the higher of (i) the Prime Rate in effect on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.
For purposes of this definition:
"Prime Rate" shall mean, for any day, the weighted average of the rates
on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such
day (or if such day is not a business day, for the next preceding
business day, the average of quotations for such day on such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank.
All advances and all principal payments hereunder shall be endorsed by the Bank
on the sheet attached to the Promissory Grid Note and shall be secured by all
assets of the Borrower pursuant to a security agreement. The Borrower authorizes
the Bank to accept telephonic instructions from a duly authorized representative
of the Borrower, as indicated by the latest Corporate Resolution on file with
the Bank, to make an advance or receive a repayment hereunder and to endorse the
sheet attached to this Promissory Grid Note accordingly. All advances made
hereunder shall be credited to the Borrower's deposit account referred to above,
which credits shall be confirmed to the Borrower by standard advice of credit.
The Borrower agrees that the actual crediting of the sum of money so borrowed to
the Borrower's a deposit account shall constitute conclusive evidence that the
advance was made, and the failure of the Bank to endorse the amount of any
advance on the sheet attached to this note or to forward to
the Borrower an advice of credit shall not affect the obligation of the Borrower
to repay such advance.
In addition, all advances under the line of credit shall be jointly and
severally guaranteed by Health Acquisition Corp., New England Home Care, Inc.
and Accredited Health Services, Inc. Each guarantee shall be secured by all
assets of the respective guarantors pursuant to a security agreement. The form
of note, security agreement and guarantee to be furnished to the Bank shall be
in form and substance acceptable to the Bank and its counsel.
Advances under the line of credit are subject to the Bank's satisfaction with
(i) the specific purpose and expected time and source of repayment of each
advance, and (ii) the Borrower's and the guarantors' financial condition,
business prospects and operations at the time of each advance. As you know,
lines of credit may be cancelled by either party at any time, however, unless
cancelled earlier, the line of credit shall be held available until January 31,
Additionally, all outstanding advances under the line of credit shall be reduced
to zero for a period of 30 consecutive days during each twelve (12) month
calendar period in which the line of credit is held available.
THE BANK OF NEW YORK
/s/ Vito Caraccio
Assistant Vice President