EXHIBIT 10.13
(FORM OF DEBENTURE PURCHASE AND SUBORDINATION AGREEMENT)
DEBENTURE PURCHASE AND SUBORDINATION AGREEMENT
This DEBENTURE PURCHASE AGREEMENT (this "AGREEMENT"), dated as of June 28,
2002, is made between Private Investment Bank Limited, Nassau, Bahamas or its
affiliates, acting in its name but on behalf and at the exclusive risk of
certain of Private Investment Bank Limited's clients (collectively, "PIBL" in
such capacity, "SELLER"), and TEGCO Investments, LLC, a Delaware limited
liability company ("TEGCO" in such capacity, "PURCHASER"), an affiliate of Med
Diversified, Inc., a Nevada corporation (the "COMPANY"), and is acknowledged by
the Company as set forth below.
RECITALS
WHEREAS, the Company issued to PIBL, with PIBL acting in its name but on
behalf of certain clients of PIBL, certain subordinated debentures, dated as of
December 28, 2001, in the aggregate principal amount of US$70,000,000
(collectively, the "ORIGINAL DEBENTURES");
WHEREAS, the due date for the Original Debentures is June 28, 2002 and the
Company has determined that it would be in the best interests of the Company to
enter into five (5) amended debentures (collectively, the "AMENDED DEBENTURES")
in the aggregate principal amount of US$57,500,000 in order to, among other
things, extend the maturity date of the Original Debentures to June 28, 2004,
subject to acceleration upon certain Events of Default; and
WHEREAS, Purchaser has agreed to purchase, and Seller has agreed to sell
all of Seller's right, title and interest in and to one of the Original
Debentures, identified as that certain Short Form Convertible Debenture, dated
December 28, 2001 (the "TRANSFERRED DEBENTURE"), issued by the Company in the
original principal amount of US$12,500,000, in accordance with the terms of this
Agreement and pursuant to that certain Amendment Agreement, dated as of even
date herewith (the "AMENDMENT AGREEMENT"; capitalized terms used herein and
without definition shall have the meanings ascribed to them in the Amendment
Agreement), by and among PIBL, the Company, American Reimbursement, LLC, a
Delaware limited liability company, TEGCO and the Med Subsidiaries.
NOW THEREFORE, in consideration of the premises, of the mutual covenants
and conditions herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this
Agreement hereby agree as follows:
1. SALE OF SECURITIES. Subject to the terms and conditions contained herein,
Seller hereby sells to Purchaser and Purchaser hereby purchases from Seller all
of Seller's right, title and interest in and to the Transferred Debenture. Such
purchase of the Transferred Debenture shall be made at a purchase price
consisting of (i) a cash payment at the Closing (defined below) equal to
US$12,500,000, representing the original principal amount of the Transferred
Debenture, (such payment, the "CASH AMOUNT"), and (ii) Purchaser's agreement to
subordinate its right of payment of the principal balance under the Transferred
Debenture to the prior payment in full of the outstanding principal amount and
interest due on the Amended Debentures and any other debentures issued by the
Company and held by Seller (the Amended Debentures and such other debentures, as
the same may be extended, supplemented, replaced, exchanged, amended or
otherwise modified from time to time, collectively, the "OTHER DEBENTURES")
pursuant to (i) Section 5 below and (ii) the terms of the Transferred Debenture
as amended at the Closing pursuant to the Amendment Agreement.
2. CLOSING. Closing of the sale and purchase under Section 1 of this Agreement
(the "CLOSING") shall take place on the Closing Date. In connection with the
Closing, Purchaser shall
make payment of the Cash Amount by wiring to Seller the US$12,500,000, to
Seller's bank account as follows:
The Northern Trust International Banking Corporation
Fedwire ABA # 000000000
CHIPS # 0112/UID 220337
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
SWIFT XXXXXX00
REF: For the Account #107862-20230
of Private Investment Bank Limited
SWIFT XXXXXXXX
The Cash Amount shall be shared on a pro rata basis by the holders of the
Original Debentures in accordance with the principal amount of the Original
Debentures issued for the benefit of such holders. At the Closing, Seller shall
deliver, or cause to be delivered to Manatt Xxxxxx & Xxxxxxxx LLP (11355 Xxxx
Xxxxxxx Xxxx, 00xx Xxxxx, Xxx Xxxxxxx, XX 00000; ATTN: Xxxxxx Xxxx), as agent
for Purchaser, the instrument evidencing the Transferred Debenture, together
with bond powers therefor duly endorsed in blank by the registered holder
thereof.
3. "AS IS, WHERE IS" SALE BY SELLER, WITHOUT RECOURSE AGAINST SELLER. The sale
of Seller's right, title and interest in and to the Transferred Debenture is on
an "as is, where is" basis without any representation or warranty by Seller
(except as set forth in this Section 3, below) and with no recourse whatsoever
by the Purchaser against Seller. Seller represents and warrants to Purchaser
that:
a) Seller has the unrestricted right (other than as such right may be
restricted by laws of general application, including the Securities
Act of 1933, as amended (the "ACT") or by the rights of the Company
under contract or otherwise) to transfer the Transferred Debenture to
Purchaser, free and clear of all liens, claims, charges and other
encumbrances created by Seller or the current beneficial owners of the
Transferred Debenture.
b) Seller has full right, power and authority to enter into this
Agreement and to transfer its interests in the Transferred Debenture
in accordance with the terms of this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of Seller.
c) Seller is not currently acting as an agent of the Company, or as an
underwriter or a dealer with respect to (or participating in a
distribution of) any securities of the Company and accordingly, Seller
is relying on the exemption from registration provided by Section 4(1)
of the Act.
4. REPRESENTATIONS OF PURCHASER. Purchaser represents and warrants to Seller
that:
a) Purchaser is not acquiring the Transferred Debenture with a view to a
distribution in violation of Section 5 of the Act and will resell such
Transferred Debenture only in transactions which would be permissible
under the securities laws of the United States of America or any state
thereof.
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b) Purchaser is an "accredited investor" as such term is defined in
Regulation 501(a) under the Act, and is acquiring Seller's interest in
the Transferred Debenture for its own account, for investment and not
with a view to any distribution thereof within the meaning of the Act.
Purchaser is aware that the purchase and sale of the Transferred
Debenture have not been registered under the Act, that the Transferred
Debenture are "restricted securities" under the Act, and that the
Transferred Debenture may be re-offered and sold by Purchaser only if
registered or qualified under the Act and other applicable securities
laws, or if appropriate exemptions from registration or qualification
under such laws are available.
c) Purchaser acknowledges and represents that: (i) Purchaser has made its
own investigation into the merits and risks of entering into the
transactions contemplated by this Agreement, (ii) Purchaser has the
capacity and financial expertise to evaluate the same, (iii) Purchaser
has not relied on any representations or warranties of Seller or its
agents or affiliates except for the representations and warranties of
Seller expressly provided in Section 3 above, (iv) Purchaser has
received all the information it considers necessary or appropriate for
deciding whether to acquire Seller's interest in the Transferred
Debentures and (in part through its or its parent's relationship with,
and special access to information about, the Company) has had an
opportunity to secure all such information as Purchaser deems
necessary regarding such interest, the Transferred Debenture and the
business, properties, prospects and financial condition of the
Company, (v) Purchaser has the financial capacity to bear the loss of
its entire investment in the Transferred Debenture, and (vi) both
before and after the consummation of the transactions contemplated by
this Agreement, Purchaser is "solvent" as that term is used in the
United States Bankruptcy Code and in any applicable fraudulent
conveyance, fraudulent transfer or similar laws.
d) Purchaser has full right, power and authority to enter into this
Agreement, and to purchase Seller's interest in the Transferred
Debenture from Seller on the terms described herein, and this
Agreement constitutes a legal, valid and binding obligation of
Purchaser.
5. SUBORDINATION OF TRANSFERRED DEBENTURE. Effective upon the Closing,
Purchaser, for itself and on behalf of all future holders of the Transferred
Debenture) covenants and agrees with Seller (for the benefit of Seller and all
future holders of the Other Debentures), that, so long as any of obligations
under or in connection with the Other Debentures (the "SENIOR OBLIGATIONS")
remain unpaid, in whole or in part, and whether or not the Transferred Debenture
may be its terms be due and payable, Purchaser agrees to subordinate its right,
title, and interest in and to those of the Senior Obligations, all pursuant to
(i) the terms of the Transferred Debenture as amended at the Closing pursuant to
the Amendment Agreement and (ii) the terms of this Section 5. If Purchaser or
any other holder of the Transferred Debenture shall receive any payments,
security interests, or other rights in any property of the Company in violation
of this Agreement, such payment or property shall be received in trust for the
holders of the Other Debentures and shall forthwith be delivered and transferred
to Seller as the agent for such holders. By its signature below, the Company
agrees to (i) abide by the foregoing agreements regarding the Transferred
Debenture and, among other things, agrees to make no payment on or in connection
with the Transferred Debenture if all Senior Obligations have not been paid when
due, and (ii) to place or cause to be placed on the face of the Transferred
Debenture, and on every other instrument representing or other evidence of the
Transferred Debenture, a legend stating that the payment thereof is subject to
the terms of this Agreement and is subordinate to the payment of all the Senior
Obligations.
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6. LAW GOVERNING. This Agreement shall be governed by and constructed in
accordance with the laws of the State of New York without reference to choice of
law doctrine.
7. PARTIES IN INTEREST. All the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
heirs, representatives, successors, and assigns of the parties hereto and (with
respect to Sections 5 and 9 hereof) the Company.
8. MISCELLANEOUS. This Agreement may be executed concurrently in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Each counterpart may be delivered by
facsimile transmission, which transmission shall be deemed delivery of an
originally executed document. The headings of the Sections hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof. This
Agreement constitutes the entire Agreement between the parties with respect to
the subject matter hereof and supersedes all the previous agreements, promise or
representations, whether written or oral, between the parties.
9. FEES AND EXPENSES. Each of the Company, Purchaser and Seller agrees to pay
its own expenses and disbursements incident to the performance of its
obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLER:
PRIVATE INVESTMENT BANK LIMITED
By:
---------------------------------
Name:
Title:
PURCHASER:
TEGCO INVESTMENTS, LLC
By:
---------------------------------
Name:
Title:
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THE COMPANY HEREBY ACKNOWLEDGES AND APPROVES THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREBY, AND EXPRESSLY
AGREES TO BE BOUND BY AND OBSERVE THE PROVISIONS OF SECTIONS
5 AND 9 HEREOF, AND THE SUBORDINATION PROVISIONS IN THE
TRANSFERRED DEBENTURE AS AMENDED AT THE CLOSING PURSUANT TO
THE AMENDMENT AGREEMENT:
COMPANY:
MED DIVERSIFIED, INC.
By:
-----------------------------------------
Name:
Title:
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