SUBORDINATED REVOLVING LINE OF CREDIT AGREEMENT
Exhibit
10.1
This
Subordinated Revolving Line of Credit Agreement (this “Agreement”)
is made as of March 22, 2006 by and between Echo Healthcare Acquisition Corp.,
a
Delaware corporation (“Borrower”),
and the individuals and entities set forth on Schedule A (“Lenders”),
with reference to the following facts.
(a) Borrower
has been organized for the purpose of effecting a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business (a “Business
Combination”).
(b) Borrower
proposes to: (a) make a public offering (the “Public
Offering”)
of its securities pursuant to a registration statement (the “Registration
Statement”)
filed with and declared effective by the Securities and Exchange Commission
(the
“SEC”);
(b) deposit the proceeds from the Public Offering into a trust account (the
“Trust
Account”)
for the benefit of the purchasers of securities in the Public Offering, net
of
offering costs, underwriting discounts, to be held and disbursed in accordance
with the terms of the Investment Management Trust Agreement to be entered
into
between Borrower and Corporate Stock Transfer, Inc. as trustee (the
“Trust
Agreement”);
and (c) utilize the funds in the Trust Account in connection with a
Business Combination.
(c) Borrower
may need funds to pay costs and expenses prior to consummation of a Business
Combination.
(d) On
the terms and subject to the conditions set forth in this Agreement, Lenders
are
willing to make available to Borrower a revolving line of credit to pay certain
costs and expenses that may arise prior to a Business Combination (the
“Loan”).
AGREEMENT
1. The
Loan
1.1 Lenders
agree to make advances to Borrower, and Borrower agrees to repay such advances,
from time to time in accordance with the terms and conditions of this Agreement
and the form of revolving promissory note attached hereto as Exhibit A (the
“Note”);
provided, however, that notwithstanding anything to the contrary in this
Agreement, at no time shall the aggregate of all advances and readvances
outstanding under the Loan at any time exceed $750,000. This Agreement and
the
Note are each sometimes referred to in this Agreement individually as a
“Loan
Document,”
and are sometimes collectively referred to as the “Loan
Documents.”
1.2 Lenders’
obligation to make advances shall expire upon the first to occur of the
following:
1.2.1 Upon a material breach or default of any representation,
warranty or agreement of Borrower that is not cured or corrected within 20
days
of notice of such breach from Lender;
1.2.2 Upon
consummation of a Business Combination;
1.2.3 Upon
notice from any Lender at any time prior to the effectiveness of the
Registration Statement;
1.2.4 Two
years after the effective date of the Registration Statement, provided that
Borrower may request advances after that date solely to pay reasonable costs
and
expenses in connection with liquidation of Borrower;
1.2.5 Thirty days after Borrower provides written notice to Lender of its
termination of this Agreement and the Loan facility, and the payment of all
amounts due hereunder to Lender.
2. Conditions
of Advances. Upon
reasonable advance request from Borrower, Lenders shall make advances to
or as
directed by Borrower, provided that each and all of the following conditions
is
satisfied:
2.1 Borrower
shall have executed and delivered the Note to Lenders, as applicable;
2.2 The
aggregate amount of outstanding advances following such advance shall not
exceed
$750,000;
2.3 The
representations and warranties of Borrower in the Loan Documents shall be
true
and correct in all material respects;
2.4 Borrower
shall have complied in all material respects with each of its agreements
in the
Loan Documents;
2.5 The
advances shall be used only for such purposes as are set forth in
Section 4.1 of this Agreement; and
2.6 Prior
to the effectiveness of the Registration Statement, Lenders consent to the
advance.
3. Borrower
Representations
3.1 Borrower
represents and warrants as follows:
3.1.1 Borrower
has full power and authority to execute and deliver this Agreement and the
other
Loan Documents to be executed and delivered by it pursuant hereto and to
perform
its obligations hereunder and thereunder. This Agreement and such Loan Documents
constitute the valid and legally binding obligations of the Borrower and
are
enforceable against Borrower in accordance with their terms.
3.1.2 Neither
the execution and the delivery of the Loan Documents by Borrower, nor the
consummation of the transactions contemplated by the Loan Documents,
nor the borrowing by Borrower, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to
which
Borrower is subject or any provision of the Certificate of Incorporation
or
Bylaws of Borrower, or (b) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any entity or natural
person (each, a “Person”)
the right to accelerate, terminate, modify, or cancel, any agreement, contract,
lease, license, instrument, or other arrangement to which Borrower is a party
or
by which it is bound or to which any of its assets are subject (or result
in the
imposition of any security interest upon any of its assets), in each case
other
than where such violation, conflict, breach, default, acceleration or creation
of right would not reasonably be expected to have a material adverse effect
on
the ability of Borrower to repay amounts due under the Note in accordance
with
the terms of the Loan Documents. (a “Material
Adverse Effect”).
3.1.3 Borrower
does not need to give any notice to, make any filing with, or obtain any
authorization, permit, certificate, registration, consent, approval or order
of
any government or governmental agency in order for the parties to consummate
the
transactions contemplated by this Agreement, except where the failure would
not
reasonably be expected to have a Material Adverse Effect.
3.1.4 The
conditions to the obligation of Lenders to make the advance, as set forth
in
Section 2, shall be satisfied.
3.2 Each
and every representation and warranty made by Borrower in this Agreement
shall
be deemed renewed and remade upon the making of each and every advance or
readvance under the Note that Lenders may make.
4. Borrower
Covenants. For
as long as Lenders shall have a commitment to make advances or there shall
be
any outstanding balance on the Loan, without the prior consent of Lenders,
Borrower shall:
4.1 use
the proceeds of any advance made hereunder only for: (a) prior to the
closing of the Public Offering, costs and expenses of the Public Offering,
including legal, accounting, printing and “road show” expenses; and (b) after
the Closing of the Public Offering, ordinary and reasonable operating costs
and
expenses during the period Borrower seeks to identify, investigate, negotiate
and consummate a Business Combination, including Borrower’s reporting
obligations with the SEC, the audit and review of Borrower’s financial
statements, identifying and investigating potential targets for a Business
Combination, deposits, down payments or funding of “no-shop” provisions in
connection with a particular Business Combination, negotiating and closing
the
Business Combination, legal and other professional fees and expenses, fees,
salaries and compensation for directors, officers, employees, consultants
and
advisors, and insurance premiums;
4.2 not
declare or pay any dividend or distribution with respect to, or repurchase
or
redeem any shares of, the capital stock of Borrower, provided that this shall
not prohibit payments from the Trust Account to stockholders of Borrower
in
accordance with the Trust Agreement;
4.3 not
engage in any business other than identifying, investigating, negotiating
and
closing a Business Combination;
4.4 make
any material capital expenditure or purchase any material property or asset
(other than office supplies and equipment); and
4.5 upon
request of Lenders, provide to Lenders copies of all filings with the Securities
and Exchange Commission.
5. No
Recourse to Trust Account
Lenders,
on behalf of themselves and their successors and assigns, hereby acknowledge
and
agree that under no circumstance shall Lenders have any right, title or interest
in or to any of the funds in the Trust Account, notwithstanding the fact
that
such funds were received for the purchase and sale of securities of Borrower,
or
any funds distributed from the Trust Account other than in a Business
Combination Distribution (as defined below), and that their sole recourse
for
repayment of any and all amounts due under the Note shall be against the
assets
or properties of Borrower never deposited into the Trust Account or distributed
to Borrower from the Trust Account in a Business Combination Distribution.
Lenders hereby irrevocably waive any claim that they might have to funds
in the
Trust Account, and any funds distributed from the Trust Account other than
in a
Business Combination Distribution, at law or in equity, agree not to make
any
such claim, and agree to indemnify and hold Borrower harmless from any such
claim made by or on behalf of Lenders. For purposes of this Section 5, a
“Business
Combination Distribution”
means a distribution from the Trust Account in connection with the consummation
of a Business Combination pursuant to the Trust Agreement.
6. Events
of Default. The
occurrence of any of the following shall constitute an event of default (an
“Event
of Default”)
hereunder and under each and every other Loan Document:
6.1 The
Borrower shall fail to pay any principal, interest or any other amount as
and
when due and payable under any Loan Document;
6.2 Any
representation or warranty which is made or deemed made in any Loan Document
by
the Borrower shall prove to have been incorrect or misleading in any material
respect on or as of the date made or deemed made or remade;
6.3 The
Borrower shall fail to perform or observe any term, provision, covenant,
or
agreement contained in any Loan Document to be performed or observed by the
Borrower (other than any payment obligation) and such failure shall continue
more than 20 days after notice thereof from Lenders;
6.4 The Borrower shall (a) generally not, or be unable to, or
admit in writing its inability to, pay its debts as such debts become due,
only
after the Company has borrowed the entire $750,000 pursuant hereto; or
(b) make an assignment for the benefit of creditors, or petition or apply
to any tribunal for the appointment of a custodian, receiver, or trustee
for it
or a substantial part of its assets; or (c) commence any proceeding under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution,
or liquidation law or statute of any jurisdiction, whether now or hereafter
in
effect; or (d) have any such petition or application filed or any such
proceeding commenced against it in which an order for relief is entered or
adjudication or appointment is made and which remains undismissed for a period
of 30 days or more; or (e) by any act or omission to act indicate consent
to, approval of, or acquiescence in any such petition, application, or
proceeding, or order for relief, or the appointment of a custodian, receiver,
or
trustee for all or any such substantial part of its properties; or
(f) suffer any such custodianship, receivership, or trusteeship for all or
any substantial part of its properties; or (g) suffer any such
custodianship, receivership, or trusteeship to continue undischarged for
a
period of 30 days or more; or
6.5 At
any time after execution and delivery of this Agreement, and for any reason
at
no fault of Lender, any Loan Document shall cease to be in full force and
effect
and enforceable in accordance with its terms, or shall be declared null and
void.
7. Consequences
of Default. If
an Event of Default shall occur, Lenders:
7.1 shall
have no further obligation to make advances under the Loan Documents; and
7.2 may
declare the Note, all interest thereon, and all other amounts payable under
this
Agreement and any other Loan Document to be forthwith due and payable, whereupon
the Note, all such interest, and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest, or further notice
of any
kind, all of which are hereby expressly waived by Borrower.
8. Miscellaneous
Provisions
8.1 Notices. All
notices, requests, demands and other communications (collectively, “Notices”)
given pursuant to this Agreement shall be in writing, and shall be delivered
by
personal service, courier, facsimile transmission or by United States first
class, registered or certified mail, addressed to the following addresses:
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If to Borrower:
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0000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
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Xxxxxx,
XX 00000
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Attention:
Xxxx Xxxxxx
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Facsimile:
(000) 000-0000
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If to Lenders:
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0000
Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
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Xxxxxx,
XX 00000
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Attention:
Xxxx X. Xxxxxxxx
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Facsimile:
(000) 000-0000
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Any
Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails (or
on
the seventh day if sent to or from an address outside the United States).
Any
party may from time to time change its address for further Notices hereunder
by
giving notice to the other party in the manner prescribed in this Section.
8.2 No
Waivers; Remedies Cumulative.
No failure or delay by a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided
herein
shall be cumulative and not exclusive of any rights or remedies provided
by law.
8.3 Amendments
and Waivers.
Any provision of this Agreement may be amended or waived if, but only if,
such
amendment or waiver is in writing and is signed by Borrower and Lenders and
such
amendment is approved by the Board of Directors of Borrower.
8.4 Successors
and Assigns.
Borrower may not assign its right or duties hereunder without the prior written
consent of Lenders, which consent Lenders may deny, withhold or delay in
its
sole and absolute discretion.
8.5 Governing
Law.
This Agreement has been made and entered into in the State of Delaware and
shall
be construed in accordance with the laws of the State of Delaware without
giving
effect to the principles of conflicts of law thereof.
8.6 Prior
Understandings.
This Agreement supersedes all prior understandings and agreements (whether
written, oral or otherwise) pertaining to the subject matter hereof, and
constitutes the entire agreement between the parties hereto relating to the
subject matter hereof and the transactions provided for herein.
8.7 Counterparts.
This Agreement may be executed in any number of counterparts each of which
shall
be deemed an original and all of which shall constitute one and the same
agreement with the same effect as if all parties had signed the same signature
page. The parties shall accept facsimile signatures as the equivalent of
original ones.
8.8 Severability.
If any provision of this Agreement or the application of such provision to
any
Person or circumstance will be held invalid, the remainder of this Agreement
or
the application of such provision to Persons or circumstances other than
those
to which it is held invalid will not be affected thereby.
8.9 Additional
Documents and Acts.
Borrower shall execute and deliver such additional documents and instruments
and
shall perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions, and conditions
of this Agreement and the transactions contemplated by this Agreement.
8.10 Survival.
All indemnities, rights, remedies, representations and warranties contained
herein shall survive the expiration or termination of this Agreement, and
no
termination or expiration hereof shall relieve either party from liability
for
any breach of this Agreement.
8.11
No
Usury.
Regardless
of any other provision of this Agreement or the Note, if for any reason the
effective interest should exceed the maximum lawful interest, the effective
interest shall be deemed reduced to, and shall be, such maximum lawful interest,
and (i) the amount which would be excessive interest shall be deemed
applied
to the reduction of the principal balance
of the Note and not to the payment of interest, and (ii) if the loan evidenced
by the Note has been or is thereby paid in full, the excess shall be returned
to
the party paying same, such application to the principal balance of the Note
or
the refunding of excess to be a complete settlement and acquittance thereof.
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement to
one
another as of the date first above written.
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LENDERS:
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/s/
Xxxxxxx X. Xxxxxx
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Xxxxxxx
X. Xxxxxx, Ph.D.
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/s/
Xxxx X. Xxxxxxxx
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Xxxx
X. Xxxxxxxx
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Chicago
Investments, Inc.
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By:
/s/
Xxxx X. Xxxxxx
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Xxxx
Xxxxxx, President
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BORROWER:
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By:
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/s/
Xxxxx Xxxxxxxxxx
Xxxxx
Xxxxxxxxxx, Chief Financial Officer
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EXHIBIT
A
REVOLVING
LINE OF CREDIT NOTE
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Not
to Exceed $750,000 in Principal
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_________,
2006
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For
value received, the undersigned ECHO
HEALTHCARE ACQUISITION CORP.,
a Delaware corporation (“Borrower”),
promises to pay, in lawful money of the United States, to the order
of_______________, together with his successors and assigns (“Holder”),
at such address as Holder may direct, the principal sum of Seven Hundred
Fifty
Thousand Dollars ($750,000), or so much thereof as shall have been advanced
and
shall remain unpaid hereunder, together with interest from date of disbursement
at the rate equivalent to the interest rate payable on the funds held in
the
Trust Account for the periods corresponding to the periods any amounts are
outstanding hereunder (the “Interest
Rate”).
Interest shall be computed at the Interest Rate on the basis of the actual
number of days during which the principal balance is outstanding, divided
by
365, which shall, for interest computation purposes, be considered one year.
Notwithstanding anything to the contrary expressed or implied herein, all
payments made by Borrower hereunder (including, without limitation, any
prepayments) shall be applied first to accrued but unpaid interest and second
to
the reduction of the principal due hereunder.
This
Note is delivered pursuant to, and is subject to all of the terms and conditions
of, that certain Amended Subordinated Revolving Line of Credit Agreement
dated
_________, 2006 (the “Loan
Agreement”)
between Borrower and [ _______]. Unless otherwise defined in this Note,
capitalized terms used in this Note shall have the meanings ascribed to them
in
the Loan Agreement, and in the event of any conflict between the terms of
this
Note and the terms of the Loan Agreement, the terms of the Loan Agreement
shall
govern.
1. Maturity. This
Note shall mature and become due and payable as described in Section 1 of
the
Loan Agreement.
2. Prepayment. This
Note may be repaid in whole or in part at any time without penalty or premium.
3. Event
of Default. Should
an Event of Default (as defined in the Loan Agreement) occur, Lenders shall
have
the rights set forth in Section 7 of the Loan Agreement.
4. Borrower’s
Acknowledgement. Borrower
acknowledges that Holder is extending the credit contemplated hereby solely
as
an accommodation to Borrower, and is willing to do so in reliance upon
Borrower’s monetary and non-monetary covenants contained herein and in the Loan
Agreement.
5. Holder’s
Acknowledgement. The
Holder acknowledges and agrees that, as specified in Section 5 of the Loan
Agreement, the Holder has limited recourse against Borrower for repayment
of any
and all amounts due and owing under this Note.
6. Miscellaneous. If
this Note (or any payment due hereunder) is not paid when due, Borrower promises
to pay all costs and expenses of collection and reasonable attorneys’ fees
incurred by the Holder hereof on account of such collection, plus interest
at
the rate applicable to principal, whether or not suit is filed hereon. Borrower
consents to renewals, replacements and extensions of time for payment hereof,
before, at, or after maturity, consents to the acceptance, release or
substitution of security for this Note, and waives demand and protest. The
indebtedness evidenced hereby shall be payable in lawful money of the United
States. In any action brought under or arising out of this Note, Borrower,
including successor(s) or assign(s), hereby consents to the application of
Delaware law, to the jurisdiction of any competent court within the State
of
Delaware, and to service of process by any means authorized by Delaware law.
No
single or partial exercise of any power hereunder, or under any other Loan
Document in connection herewith, shall preclude other or further exercises
thereof or the exercise of any other such power.
IN
WITNESS WHEREOF, Borrower has executed and delivered this Note as of the
date
first above written.
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By
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Xxxxx
Xxxxxxxxxx, Chief Financial Officer
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