Exhibit 10.2
CONSENT AND FIRST AMENDMENT TO CREDIT AGREEMENT
THIS CONSENT AND FIRST AMENDMENT TO CREDIT AGREEMENT (this "Agreement"),
is made and entered into as of July 11, 2003, among CURATIVE HEALTH SERVICES,
INC., a Minnesota corporation ("Holdings"), XXXXXXXX.XXX, INC., a Delaware
corporation ("eBioCare"), HEMOPHILIA ACCESS, INC., a Tennessee corporation
("Hemophilia Access"), APEX THERAPEUTIC CARE, INC., a California corporation
("Apex"), CHS SERVICES, INC., a Delaware corporation ("CHS"), CURATIVE HEALTH
SERVICES OF NEW YORK, INC., a New York corporation ("CHSNY"), OPTIMAL CARE PLUS,
INC., a Delaware corporation ("Optimal Care"), INFINITY INFUSION, LLC, a
Delaware limited liability company ("Infinity"), INFINITY INFUSION ii, LLC, a
Delaware limited liability company ("Infinity II"), INFINITY INFUSION CARE,
LTD., a Texas limited partnership ("Infinity Infusion"), MEDCARE, INC., a
Delaware corporation ("Medcare"), CURATIVE PHARMACY SERVICES, INC., a Delaware
corporation ("CPS"), and such other Persons as become Additional Borrowers under
the Credit Agreement described below (Curative Health Services, Inc., eBioCare,
Hemophilia Access, Apex, CHS, CHSNY, Optimal Care, Infinity, Infinity II,
Infinity Infusion, Medcare, CPS and such Additional Borrowers are sometimes
collectively referred to herein as the "Borrowers" and individually as a
"Borrower"), the Lenders party to the Credit Agreement, and General Electric
Capital Corporation, as Agent.
Statement of Facts
A. Borrowers, Lenders and Agent are parties to that certain Credit
Agreement, dated June 9, 2003 (the "Credit Agreement"; capitalized terms used
but not defined in this Agreement have the meanings given in the Credit
Agreement, as amended by this Agreement), whereby the Lenders have made
available a term loan and a revolving credit facility to Borrowers, subject to
the terms and conditions contained in the Credit Agreement.
B. Holdings intends to issue up to $70,000,000 in aggregate principal
amount of its Convertible Senior Subordinated Notes due 2013 (the "Senior
Subordinated Notes"), pursuant to that certain Indenture to be dated on or about
July 18, 2003 (the "Indenture"), and entered into between Holdings and Xxxxx
Fargo Bank Minnesota, National Association (the "Indenture Trustee").
C. Holdings has provided to GE Capital a copy of the final form of the
Preliminary Offering Memorandum (the "Offering Memorandum") dated July 11, 2003,
including the description of Senior Subordinated Notes attached hereto as
Exhibit A (the "Description of Senior Subordinated Notes"), describing the terms
of the Indenture, the Senior Subordinated Notes and the offering relating
thereto.
D. Borrowers desire to obtain Agent's and Lenders' consent to the issuance
of the Senior Subordinated Notes and the incurrence of the related Indebtedness
and to the amendment of certain provisions of the Credit Agreement as set forth
herein, and Agent and Lenders are, subject to the terms and conditions provided
herein, willing to grant such consent and enter into such amendments as set
forth herein.
Statement of Terms
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendments to Credit Agreement. Subject to the terms and conditions of
this Agreement, including without limitation Section 5 hereof, the Credit
Agreement is hereby amended as follows:
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definitions of "Applicable Margin", "Commitment Termination Date", "Revolving
Credit Commitment", "Revolving Credit Commitment Termination Date" and "Term
Loan Maturity Date" set forth therein and replacing said definitions with the
following new definitions to read in their entirety as follows:
"Applicable Margin" means: (a) from the Closing Date to and
including December 6, 2003 (the "Initial Adjustment Date"), (i) 3.50% per
annum for LIBOR Loan Advances and 2.25% per annum for Base Rate Advances,
(ii) 4.00% per annum for Term Loans constituting LIBOR Loans and 2.75% per
annum for Term Loans constituting Base Rate Loans, (iii) 2.25% per annum
for Swingline Loans, and (iv) 3.50% per annum for the Letter of Credit Fee
Applicable Margin; and (b) commencing on the Initial Adjustment Date and
on the first day of each Fiscal Quarter thereafter that follows by at
least five (5) days the receipt of financial statements delivered pursuant
to Section 5.1(a), the Applicable Margin for each Class of Extension of
Credit shall be that determined from the chart below based on such
financial statements:
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Level of
If Senior Leverage Ratio is: Applicable Margins:
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(less than)1.50x Level I
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(equal or greater than)1.50x but (less than)2.00x Level II
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(equal or greater than)2.00x Level III
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Applicable Margins
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Level I Level II Level III
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Applicable Margin for 1.75% 2.00% 2.25%
Base Rate Advances
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Applicable Margin for LIBOR
Loan Advances 3.00% 3.25% 3.50%
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Applicable Margin for Term
Loans constituting Base Rate
Loans 2.25% 2.50% 2.75%
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Applicable Margin for Term
Loans constituting LIBOR
Loans 3.50% 3.75% 4.00%
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Applicable Margin for Letter
of Credit Fee 3.00% 3.25% 3.50%
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If there is a disparity between the financial tests described above, the
test resulting in the greater level of Applicable Margins will prevail.
Notwithstanding the foregoing, if a Default or Event of Default shall have
occurred and be continuing, any quarterly adjustment in the Applicable
Margins as provided for above in this definition which would result in a
decrease in any Applicable Margin shall be deferred until the first day of
the calendar month following the date that such Default or Event of
Default has been cured or waived.
"Commitment Termination Date" means the earliest of (a) July 15,
2007, (b) the date of termination of Lenders' obligations to make Advances
and to incur L/C Obligations or the date of acceleration of the maturity
date of all or any portion of the Obligations pursuant to Section 8.2(b),
and (c) the date of indefeasible payment in full by the Borrowers of the
Loans and the cancellation and return of (or issuance of a stand-by
guarantee or letter of credit with respect to) all Letters of Credit or
the cash collateralization of all L/C Obligations pursuant to Section
2.5(k), and the permanent reduction of all Commitments to Zero Dollars
($0).
"Revolving Credit Commitment" means (a) as of the Closing Date, with
respect to any Lender listed on the signature pages hereof, the amount (if
any) set forth thereon opposite the name of such Lender under the heading
"Revolving Credit Commitment", and as of the Original Note Issuance Date,
with respect to any Lender the amount set forth on the signature page to
the First Amendment opposite the name of such Lender under the heading
"Revolving Credit Commitment following Original Note Issuance Date", (b)
with respect to any assignee of a Revolving Credit Commitment, the amount
of the transferor Lender's Revolving Credit Commitment assigned to such
assignee pursuant to Section 11.6, and (c) as to all Lenders having a
Revolving Credit Commitment (i) during the period commencing on the
Closing Date through but not including the Original Note Issuance Date,
the aggregate commitment of all Lenders to make Revolving Credit Advances,
which aggregate commitment shall be Fifteen Million Dollars ($15,000,000),
and (ii) during the period on and after the Original Note Issuance Date,
the aggregate commitment of all Lenders to make Revolving Credit Advances,
which aggregate commitment shall be Forty Million Dollars ($40,000,000),
in each case in clause (i) and (ii) of this clause (c), as such amount may
be reduced from time to time pursuant to Section 2.8 or changed as a
result of an assignment pursuant to Section 11.6. The term "Revolving
Credit Commitment" does not include the Swingline Commitment.
"Revolving Credit Commitment Termination Date" means July 15, 2007.
"Term Loan Maturity Date" means July 15, 2007.
(b) Section 1.1 of the Credit Agreement is hereby amended by inserting the
following definitions for "First Amendment", "Indenture", "Original Note
Issuance Date", "Senior Subordinated Debt" and "Senior Subordinated Notes" to
read in their entirety as follows:
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"First Amendment" means that certain Consent and First Amendment to
Credit Agreement dated as of July 11, 2003 by and among Borrowers, Agent
and Lenders.
"Indenture" means that certain Indenture between Holdings and Xxxxx
Fargo Bank Minnesota, National Association, as Trustee, dated on or about
July 18, 2003, as amended, restated, modified or supplemented from time to
time.
"Original Note Issuance Date" means the date upon which (a) the
Senior Subordinated Notes are first issued and (b) the net proceeds of
such notes have been applied to repay in full the entire outstanding Term
Loan and Revolving Loan in accordance with Section 3(a) of the First
Amendment.
"Senior Subordinated Debt" means the Indebtedness of Holdings
incurred pursuant to the Indenture and evidenced by the Senior
Subordinated Notes.
"Senior Subordinated Notes" means the Convertible Senior
Subordinated Notes due 2013 issued by Holdings pursuant to the Indenture
in the aggregate principal amount not to exceed $50,000,000 (such
aggregate principal amount of debt may be increased from $50,000,000 up to
$70,000,000, subject to the terms and conditions set forth in the First
Amendment, on the date on which the Senior Subordinated Notes are first
issued or any date within not more than thirty days after such date so
long as no Default or Event of Default exists at the time of such proposed
increase or would result therefrom).
(c) Section 2.7(b) of the Credit Agreement is hereby amended by deleting
said Section in its entirety and substituting in lieu thereof the following
Section to read in its entirety as follows:
(b) Unused Line Fee. As additional compensation for the
Revolving Lenders, the Borrowers shall pay to Agent, for the ratable
benefit of such Revolving Lenders, in arrears, on the first Business Day
of each month prior to the Commitment Termination Date and on the
Commitment Termination Date, a fee (the "Unused Line Fee") for the
Borrowers' non-use of available funds in an amount equal to (i) during the
period commencing on the Closing Date through but not including October
31, 2003, the product of (A) 0.50% per annum multiplied by (B) the
difference between (x) the Maximum Commitment Amount (as it may be reduced
from time to time) minus (y) the average for the period of the daily
closing balances of the aggregate Revolving Loans and the Swingline Loans
outstanding during the period for which such Fee is due, and (ii) during
the period commencing on October 31, 2003 and at all times thereafter, the
product of (A) the Unused Line Fee Applicable Margin per annum set forth
in the chart below multiplied by (B) the difference between (x) the
Maximum Commitment Amount (as it may be reduced from time to time) minus
(y) the average for the period of the daily closing balances of the
aggregate Revolving Loans and the Swingline Loans outstanding during the
period for which such Fee is due.
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Facility Unused Line Fee
Usage Applicable Margin
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Less than or
equal to 1/3 1.00%
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Less than 2/3 but
greater than 1/3 0.75%
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Greater than or
equal to 2/3 0.50%
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"Facility Usage" means, during any period for which the Unused Line Fee is
due, a fraction, the numerator of which is (x) the average for the period
of the daily closing balances of the aggregate Revolving Loans and the
Swingline Loans outstanding during the period for which such Fee is due,
and the denominator of which is (y) the Maximum Commitment Amount (as it
may be reduced from time to time).
(d) Article VII of the Credit Agreement is hereby amended by adding a new
Section 7.21 at the end thereof to read in its entirety as follows:
Section 7.21. Indenture. Without the prior written consent of Agent
and the Required Lenders, no Credit Party will consent to or enter into
any amendment, modification or supplement to the Indenture that would (a)
adversely affect Agent or Lenders in any manner, or (b) have the effect,
directly or indirectly, of (i) modifying in any manner the subordination
provisions in Article XI of the Indenture or any defined terms, or
definitions of terms, used in Article XI of the Indenture, (ii) shortening
the maturity date of the Senior Subordinated Debt or any scheduled payment
date for fees or interest in respect thereof, (iii) increasing the
principal amount of or the interest rate or any fees accruing in respect
of the Senior Subordinated Debt or (iv) modifying the definition of
"Change in Control", "Termination of Trading" or "Repurchase Event" in the
Indenture or modifying any optional or mandatory repayment provisions in
the Indenture.
(e) Section 8.1(l) of the Credit Agreement is hereby amended by deleting
said Section in its entirety and substituting in lieu thereof the following new
Section to read in its entirety as follows:
(l) a Change of Control or any "Repurchase Event" (under and as
defined in the Indenture) shall occur;
(f) Section 8.1 of the Credit Agreement is hereby amended by deleting the
period at the end of Section 8.1(t) thereof and replacing it with "; or", and
adding a new clause (u) at the end of Section 8.1 to read in its entirety as
follows:
(u) the failure of Borrowers to timely comply with any of the
covenants set forth in Section 3 of the First Amendment.
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Except for the amendments set forth above in this Section 1, the Credit
Agreement shall remain unchanged and in full force and effect. Nothing in this
Agreement is intended, or shall be construed, to constitute a novation or an
accord and satisfaction of Borrowers' or any other Credit Party's Obligations
under or in connection with the Credit Agreement or to modify, affect or impair
the perfection or continuity of Agent's security interests in, security titles
to or other liens on any Collateral for the Obligations.
2. Consent. Subject to the terms and conditions of this Agreement,
including without limitation Section 5 hereof, the Agent and the Required
Lenders hereby consent to (a) Holdings entering into the Indenture and issuing
the Senior Subordinated Notes pursuant thereto, and (b) the incurrence of Senior
Subordinated Debt in connection with such issuance of Senior Subordinated Notes,
provided that the aggregate principal amount of all such Senior Subordinated
Debt shall not exceed $50,000,000, provided, further that such aggregate
principal amount of debt may be increased from $50,000,000 up to $70,000,000, on
the date on which the Senior Subordinated Notes are first issued or any date
within not more than thirty days after such date so long as no Default or Event
of Default exists at the time of such proposed increase or would result
therefrom.
3. Borrower Covenants. Each Borrower shall, and shall cause each Credit
Party to, comply with each of the following covenants:
(a) on the first issuance date of the Senior Subordinated Notes, Agent
shall have received from Holdings an amount of the net proceeds from such
issuance sufficient to repay the entire outstanding principal amount of the Term
Loan and the Revolving Loan on such date (the remaining net proceeds, if any,
may be used by the Borrowers for working capital purposes or for any other
purpose not prohibited under the Credit Agreement);
(b) on or prior to the first issuance date of the Senior Subordinated
Notes, the Agent shall have received from Holdings (i) a copy of the fully
executed Indenture (together with all exhibits thereto), and the terms and
provisions of such final Indenture and the Senior Subordinated Notes issued
pursuant thereto shall (A) be consistent in all material respects with the terms
and provisions of the Description of Senior Subordinated Notes and (B) in the
case of the subordination provisions, be in form and substance substantially the
same as the subordination provisions attached hereto as Exhibit B, and (ii) a
certificate of a senior officer of Holdings, in form and substance reasonable
satisfactory to Agent, demonstrating that Borrowers are in actual and pro forma
(assuming for purposes of such pro forma covenant compliance that $70,000,000 of
principal amount of Senior Subordinated Debt has been incurred by Holdings)
compliance with the financial covenants in Sections 7.15, 7.16 and 7.17 of the
Credit Agreement; and
(c) on the issuance date of any additional Senior Subordinated Notes in
connection with any increase in the aggregate principal amount of the Senior
Subordinated Debt from $50,000,000 to up to $70,000,000, Agent shall have
received from Holdings a sufficient amount of the net proceeds of such Senior
Subordinated Notes to repay the entire outstanding Revolving Loan, if any, and
the remaining net proceeds thereof, if any, may be used by the Borrowers for
working capital purposes or for any other purpose not prohibited under the
Credit Agreement.
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(d) The Company shall deliver a copy of any Repurchase Event Notice (as
defined in the Indenture) to Agent at the same time it delivers such notice to
the Indenture Trustee pursuant to Section 3.09 of the Indenture.
4. Representations and Warranties. Each Borrower hereby jointly and
severally represents and warrants to the Agent and the Lenders that (a) this
Agreement and the Confirmation of Guaranty attached hereto have each been duly
authorized, executed and delivered by Borrowers and each Credit Party signatory
thereto, (b) no Default or Event of Default has occurred and is continuing as of
this date, and (c) all of the representations and warranties made by Borrowers
or any Credit Party in the Credit Agreement are true and correct in all material
respects on and as of the date of this Agreement (except to the extent that any
such representations or warranties expressly referred to a specific prior date
or have changed based upon events expressly permitted by the Credit Agreement).
5. Conditions to Effectiveness. This Agreement shall be effective as of
the date of this Agreement upon the satisfaction in full of each of the
following conditions:
(a) the Agent shall have received counterparts of this Agreement, duly
executed, completed and delivered by the Agent, each of the Required Lenders,
and the Borrowers;
(b) the Agent shall have received counterparts of the attached
Confirmation of Guaranty, duly executed by each other Credit Party; and
(c) Agent shall have received payment from Borrower of an amendment fee in
the amount of $100,000 in connection with the amendments contemplated herein.
6. Reimbursement of Expenses. Each Borrower hereby agrees that it shall
reimburse the Agent and the Lenders on demand for all costs and expenses
(including without limitation attorney's fees) incurred by such parties in
connection with the negotiation, documentation and consummation of this
Agreement and the other documents executed in connection herewith and therewith
and the transactions contemplated hereby and thereby.
7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO BE PERFORMED
ENTIRELY WITHIN SAID STATE.
8. Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction. To the extent
permitted by applicable law, each Borrower hereby waives any provision of law
that renders any provision hereof prohibited or unenforceable in any respect.
9. Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be deemed to constitute but one original and
shall be binding upon all parties, their successors and permitted assigns.
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10. Effect of this Agreement. Except as specifically amended, modified,
consented to or waived pursuant to Sections 1 and 2 of this Agreement, no other
amendments, changes, modifications, consents or waivers to the Loan Documents
are intended or implied and in all other respects the Loan Documents are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Agreement and the other Loan Documents, the terms of this Agreement shall
control. The Credit Agreement and this Agreement shall be read and construed as
one agreement.
11. Entire Agreement. The Credit Agreement as amended by this Agreement
embodies the entire agreement between the parties hereto relating to the subject
matter hereof and supersedes all prior agreements, representations and
understandings, if any, relating to the subject matter hereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Consent and First
Amendment to Credit Agreement to be duly executed by their respective officers
thereunto duly authorized, as of the date first above written.
BORROWERS:
CURATIVE HEALTH SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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XXXXXXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: President
-----------------------------------
HEMOPHILIA ACCESS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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APEX THERAPEUTIC CARE, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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CHS SERVICES, INC.
By: /s/ Xxxx X. Prior
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Name: Xxxx X. Prior
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Title: President - SHS
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CURATIVE HEALTH SERVICES OF NEW YORK, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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OPTIMAL CARE PLUS, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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INFINITY INFUSION, LLC
By: Curative Health Services, Inc.,
its Sole Member
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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INFINITY INFUSION II, LLC
By: Curative Health Services, Inc.,
its Sole Member
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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INFINITY INFUSION CARE, LTD.
By: Infinity Infusion II, LLC, its Sole
General Partner
By: Curative Health Services, Inc., the
Sole Member of Infinity Infusion II, LLC
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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MEDCARE, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
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Title: President
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CURATIVE PHARMACY SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
-----------------------------------
Title: President
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AGENT AND REQUIRED LENDERS:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender and Agent
Revolving Credit Commitment By: /s/ Xxxx X. Xxxxx, III
following Original Note Issuance Date: --------------------------------
$40,000,000 Name: Xxxx X. Xxxxx, III
--------------------------------
Its Duly Authorized Signatory
CONFIRMATION OF GUARANTY
Each of the undersigned Guarantors hereby acknowledges, consents and
agrees to the terms of the foregoing Consent and First Amendment to Credit
Agreement and agrees and confirms that its obligations under the Guaranty to
which it is a party will continue in full force and effect and extend to all
Obligations now outstanding or hereafter incurred pursuant to the terms of the
Credit Agreement as amended and modified hereby.
As of this 11th day of July, 2003.
CURATIVE HOLDING CO.
By: /s/ Xxxx X. Prior
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Name: Xxxx X. Prior
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Title: President
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The following exhibits to the Consent and First Amendment to Credit Agreement
have been omitted. Curative Health Services, Inc. will furnish any such
exhibits to the Commission as supplemental information upon request:
EXHIBIT A - Description of Senior Subordinated Notes
EXHIBIT B - Form of Indenture Subordination Provisions
