EXHIBIT 10.12
($12,500,000 AMENDED AND RESTATED SHORT FORM
DEBENTURE DATED AS OF JUNE 28, 2002.)
$12,500,000 AMENDED AND RESTATED
AS OF JUNE 28, 2002 SHORT FORM DEBENTURE ANDOVER, MASSACHUSETTS
This Amended and Restated Short Form Debenture ("TEGCO AMENDED
DEBENTURE") is issued in connection with that certain Debenture Purchase and
Subordination Agreement, dated as of June 28, 2002 (the "DEBENTURE PURCHASE
AGREEMENT"), 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"), and
TEGCO Investments, LLC, a Delaware limited liability company ("TEGCO"), a copy
of which is attached hereto as EXHIBIT A and incorporated herein by this
reference, 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, Med Diversified, Inc., a Nevada corporation
("MED"), American Reimbursement, LLC, a Delaware limited liability company,
TEGCO and the Med Subsidiaries, a copy of which is attached hereto as EXHIBIT B
and incorporated herein by this reference.
This TEGCO Amended Debenture replaces and amends and restates in its
entirety that certain Short Form Debenture dated December 28, 2001 regarding the
advance made on December 28, 2001 of US$12,500,000 (the "PRINCIPAL SUM") by PIBL
to MED, a copy of which is attached hereto as EXHIBIT C and incorporated herein
by this reference (the "ORIGINAL DEBENTURE"), which was transferred by PIBL to
TEGCO pursuant to the Debenture Purchase Agreement.
This TEGCO Amended Debenture shall be subject to the following terms
and conditions and the parties executing this Amended Debenture shall be
obligated to perform in accordance with such terms and conditions:
1. TERMS OF PAYMENT. This TEGCO Amended Debenture shall have a
final maturity date of June 29, 2004 (the "TERM"). MED shall repay the Principal
Sum to TEGCO or its designee on the last day of the Term. MED shall pay to TEGCO
or its designees interest on the Principal Sum at the rate of seven percent (7%)
per annum, which interest shall be payable quarterly in arrears as of the last
Business Day (as defined below) of each March, June, September and December
during the Term, subject to default interest at an additional 100 basis points
(1% per annum) during the continuation of any Event of Default.
2. TRANSFERABILITY. The parties agree that, subject to the
restrictions set forth in Section 8, and to any restrictions imposed under the
Securities Act of 1933, as amended, and other applicable securities laws, this
TEGCO Amended Debenture is transferable by TEGCO or any other holder of this
TEGCO Amended Debenture from time to time (each such holder, individually, a
"HOLDER" and all such holders, collectively, the "HOLDERS").
3. SUBORDINATION. MED and the Holder hereby agree with PIBL, for
themselves and their respective successors and assigns, that the payment in
respect of this TEGCO Amended Debenture is and shall be expressly "subordinate
and junior in right of payment" (as defined below) to the prior payment in full
of all the Amended Debentures issued by MED for the benefit of PIBL pursuant to
the Amendment Agreement, to the extent and in the manner hereinafter set forth.
The subordination provisions in this TEGCO Amended Debenture are for
the benefit of and may be enforceable directly by the holders of Amended
Debentures or by PIBL for their benefit, and each such holder and PIBL shall be
deemed to have acquired such Amended Debentures in reliance upon such
subordination provisions.
The Holder agrees that so long as any Amended Debentures are
outstanding, it will not exercise any rights it may have under this TEGCO
Amended Debenture, or to accelerate, xxx for or collect the obligations of
MED with respect to this TEGCO Amended Debenture, or to realize upon any assets
of MED or to attach, levy upon or execute against any assets of MED, or to
initiate any bankruptcy proceedings of MED.
Upon any payment or distribution of all or any of the assets or
securities of MED or any of its subsidiaries of any kind or character, whether
in cash, property or securities, whether made pursuant to a bankruptcy,
insolvency, reorganization or similar proceeding relative to MED or any of its
subsidiaries or any of their respective properties, or a distribution of
proceeds of or upon sale of all or any part of MED or any of its subsidiaries or
any of their respective assets, then in such event:
(i) the holders of Amended Debentures shall be entitled to receive
payment in full, in cash, as provided herein of all amounts due or to become due
on or in respect of all Amended Debentures before any payment is made on account
of or applied to this TEGCO Amended Debenture.
(ii) any payment or distribution of assets of MED or any of its
subsidiaries of any kind or character, whether in cash, property or securities
(including any payment or other distribution that may be payable by reason of
the payment of any other indebtedness of MED or any of its subsidiaries being
subordinated to the payment of this TEGCO Amended Debenture), to which the
Holder would be entitled except for the subordination provisions of this TEGCO
Amended Debenture, shall be paid or delivered by any debtor, custodian,
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, directly to PIBL for application to the
payment or prepayment of all such Amended Debentures remaining unpaid to the
extent necessary to pay all such Amended Debentures in full, after giving effect
to any concurrent payment or distribution to such holders of Amended Debentures;
and
(iii) in the event that, notwithstanding the foregoing subordination
provisions of this TEGCO Amended Debenture, the Holder shall have received any
payment or distribution with respect to this TEGCO Amended Debenture contrary to
such foregoing subordination provisions, then and in such event such payment or
distribution shall be held in trust for the benefit of, an shall be immediately
paid or delivered by the Holder to PIBL for application to the payment or
prepayment of all Amended Debentures remaining unpaid, to the extent necessary
to pay all such Amended Debentures in full, after giving effect to any
concurrent payment or distribution to such holders of Amended Debentures.
So long as any Amended Debentures are outstanding, the Holder shall be
subrogated to the rights of the holders of Amended Debentures to receive
payments or distributions of assets of MED or any of its subsidiaries made on
account of the Amended Debentures until the Amended Debentures are paid in full,
in cash, and for purposes of such subrogation, no payment or distribution to the
holders of Amended Debentures of assets, whether in cash, property or
securities, distributable to the holders of Amended Debentures under the
provisions hereof to which the Holder would be entitled except for the
subordination provisions of this TEGCO Amended Debenture, and no payment
pursuant to the subordination provisions of this TEGCO Amended Debenture to the
holders of Amended Debentures by the Holder shall, as between MED or any of its
subsidiaries, their respective creditors other than the holders of Amended
Debentures, and the Holder, be deemed to be a payment by MED or such MED
subsidiary to or on account of such Amended Debentures, it being understood that
the subordination provisions of this TEGCO Amended Debenture are, and are
intended, solely for the purpose of defining the relative rights of the Holder,
on the one hand, and the holders of Amended Debentures, on the other hand.
So long as any Amended Debentures remain outstanding, none of MED or
its subsidiaries and the Holder will (i) establish a sinking fund for the
payment or prepayment of or otherwise arrange for the defeasance of this TEGCO
Amended Debenture, or (ii) amend, modify or alter in any way the terms of this
TEGCO Amended Debenture. The Holder agrees that it will not challenge, object to
or in any respect inhibit or otherwise interfere with the enforcement by PIBL of
any of its rights or remedies in respect of the Amended Debentures.
Neither PIBL nor any holder of Amended Debentures shall have any
liability whatsoever to the Holder with respect to, and the Holder waives any
claim or defense which it may now or hereafter have against PIBL or any holder
of Amended Debentures arising from (i) any and all actions which PIBL or the
holders of Amended Debentures take or omit to take (including, without
limitation, actions with respect to the creation,
perfection or continuation of liens upon any collateral securing any of the
Amended Debentures, actions with respect to the occurrence of any default under
any Amended Debentures, actions with respect to the foreclosure upon, sale,
release of, depreciation of or failure to realize upon any of such collateral,
and actions with respect to the collection of any claim for all or any part of
the Amended Debentures from any account debtor, guarantor or any other person)
with respect to the Amended Debentures or the valuation, use, protection or
release of any collateral now or hereafter securing same; (ii) any right, now or
hereafter existing, to require PIBL or the holders of Amended Debentures to
proceed against or exhaust any collateral at any time securing the Amended
Debentures or to marshal any assets in favor of the Holder; (iii) any notice of
the incurrence or increase of Amended Debentures, it being understood that PIBL
or the holders of Amended Debentures may make advances now or hereafter relating
to the Amended Debentures, without notice to or authorization from the Holder,
in reliance upon the agreements set forth in this TEGCO Amended Debenture,
including but not limited to the provisions of the immediately following
paragraph; or (iv) any defense based upon or arising by reason of (A) any
disability or other defense of MED or any other person or entity, or (B) any
lack of authority of any agent or any other person or entity acting or
purporting to act on behalf of MED or the Holder, or (C) any failure by PIBL or
any holder of Amended Debentures to properly perfect any lien in any asset of
any of the Med Subsidiaries or other obligor.
PIBL or the holders of the Amended Debentures may, at any time and
from time to time, without the consent of or notice to the Holder, without
incurring responsibility to the Holder, and without impairing or releasing any
of their rights, or any of the obligations of the Holder hereunder, do any of
the following:
(i) change the amount, manner, place, or terms of payment or change
or extend the time of payment of or increase, renew or alter the Amended
Debentures, or any part thereof, or enter into or amend in any manner any
agreement (including any related loan agreement, promissory notes and collateral
documents) relating to the Amended Debentures;
(ii) sell, exchange, release, or otherwise deal with all or any part
of any property by whomsoever at any time pledged or mortgaged to secure, or
howsoever securing, the Amended Debentures, or any part thereof;
(iii) release anyone liable in any manner for the payment or
collection of the Amended Debentures, or any part thereof or waive any rights
against any person;
(iv) exercise or refrain from exercising any rights against MED and
its subsidiaries; and
(v) apply any sums, by whomsoever paid or however realized, to the
Amended Debentures.
The Holder will advise any future holder that this TEGCO Amended
Debenture is subordinated to the Amended Debentures in the manner and to the
extent set forth herein, and will place a legend on each note issued in exchange
or substitution for this TEGCO Amended Debenture (whether upon transfer or
otherwise), indicating that such note, instrument, agreement and/or document is
subject to the foregoing subordination provisions, and that by accepting or
holding such other note, each holder is bound by the terms of such subordination
provisions to the same extent that the Holder is bound.
4. LOSS, THEFT, DESTRUCTION OR MUTILATION OF AMENDED DEBENTURE.
Upon receipt by MED of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this TEGCO Amended Debenture, and in case of
loss, theft or destruction, of indemnity reasonably satisfactory to it, and upon
surrender and cancellation of this TEGCO Amended Debenture, if mutilated, MED
will make and deliver a new debenture identical in tenor and date in lieu of
this TEGCO Amended Debenture.
5. COMPUTATION OF INTEREST. The amount of interest payable for any
period shall be computed on the basis of twelve 30-day months and a 360-day
year. The amount of interest payable for any partial period shall be computed on
the basis of the number of days elapsed in a 360-day year of twelve 30-day
months.
6. DEFINITIONS.
"BUSINESS DAY" means any day other than a Saturday or Sunday or
a day on which banking institutions in New York City are authorized or required
by law or executive order to remain closed.
"SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT" shall mean that the
Holder shall not have any claim to the assets of MED or any MED subsidiary on a
parity with or prior to the claim of any holder of any of the Amended
Debentures. So long as the Amended Debentures are outstanding, the Holder will
not take, retain, permit to exist, demand or receive from MED or any MED
subsidiary, and MED will not allow any MED subsidiary to make, give or permit,
directly or indirectly, by set-off, redemption, purchase or in any other manner,
(i) payment of the whole or any part of this TEGCO Amended Debenture (whether in
respect of principal, interest or any other amount, and whether prior to, at or
after the scheduled maturity hereof), except as permitted pursuant to Section 1
of this TEGCO Amended Debenture, (ii) any security or collateral for the whole
or any part of this TEGCO Amended Debenture or (iii) any guaranty of the whole
or any part of this TEGCO Amended Debenture. MED expressly agrees that it will
not make or allow any MED subsidiary to make any payment in respect of this
TEGCO Amended Debenture except to the extent expressly permitted by Section 1 of
this TEGCO Amended Debenture, or take any other action, in contravention of the
subordination provisions of this TEGCO Amended Debenture.
7. INTERPRETATION. The validity, interpretation and performance of
this TEGCO Amended Debenture shall be construed under and controlled by the laws
of the State of New York, without regard to choice-of-law principles.
8. COUNTERPARTS. This TEGCO Amended Debenture may be executed in
counterparts, each of which shall be deemed to be an original, but which
together shall be deemed to constitute a single document. Copies of the
Agreement shall have the same effect and enforceability as the original.
9. LEGEND.
THIS TEGCO AMENDED DEBENTURE HAS NOT BEEN REGISTERED UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED ("THE ACT") OR ANY STATE SECURITIES LAW. THE
AMENDED DEBENTURE HAS BEEN ACQUIRED FOR INVESTMENT AND NEITHER SAID TEGCO
AMENDED DEBENTURE NOR ANY INTEREST THEREIN MAY BE TRANSFERRED, SOLD OR OFFERED
FOR SALE UNLESS (1) THERE IS AN EFFECTIVE REGISTRATION STATEMENT FOR THE TEGCO
AMENDED DEBENTURE AS A SECURITY UNDER THE ACT AND QUALIFICATION UNDER ANY
APPLICABLE STATE SECURITIES LAW, OR (2) SUCH TRANSFER IS MADE IN COMPLIANCE WITH
RULE 144 UNDER THE ACT AND PURSUANT TO QUALIFICATION UNDER ANY APPLICABLE STATE
SECURITIES LAW OR EXEMPTION THEREFROM, OR (3) THERE IS AN OPINION OF COUNSEL
SATISFACTORY TO MED THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED AS
TO SAID TRANSFER, SALE OR OFFER.
Acknowledged, agreed to and accepted this 28th day of June, 2002, at Andover,
Massachusetts.
TEGCO INVESTMENTS, LLC MED DIVERSIFIED, INC.
By: By:
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