MEZZANINE CREDIT AGREEMENT
BETWEEN
LIFE CRITICAL CARE CORPORATION
AND
MANUFACTURERS AND TRADERS TRUST COMPANY
Dated as of , 1996
MEZZANINE CREDIT AGREEMENT
AGREEMENT dated as of , 1996 by and between Life Critical Care
Corporation, a Delaware corporation, having its principal office at 00000 Xxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxx 00000 (the "Borrower") and MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York banking corporation having its principal
office at One M&T Plaza, Buffalo, New York 14203 ("Bank").
WHEREAS, pursuant to an Asset Purchase Agreement dated as of March 1,
1996, as amended, the Borrower is acquiring substantially all of the assets of
ABC Medical Supply, Inc. (the "ABC Acquisition"); and
WHEREAS, pursuant to an Asset Purchase Agreement dated as of January
22, 1996, as amended, the Borrower is acquiring substantially all of the
assets of Blue Water Medical Supply, Inc. (the "Blue Water Acquisition"); and
WHEREAS, pursuant to an Asset Purchase Agreement dated as of March
1, 1996, as amended, the Borrower is acquiring substantially all of the assets
of Great Lakes Home Medical Supply, Inc. (the "Great Lakes Acquisition");
and
WHEREAS, in connection with the Acquisitions, the Borrower is
simultaneously making an initial public offering of its capital stock; and
WHEREAS, in order to partially fund the Acquisitions and to provide
general working capital to the Borrower thereafter, the Borrower has requested
the Bank to make available a term loan in the amount of two million dollars
($2,000,000); and
WHEREAS, the Bank, subject to the terms and conditions of this
Agreement, is willing to make available to the Borrower the requested term loan.
NOW, THEREFORE, the Borrower and the Bank agree as follows:
SECTION 1 DEFINITIONS
1.1 Defined Terms. The following terms (whether or not underscored)
when used in this Agreement, including its preamble and recitals, shall, except
where the context otherwise requires, have the following meanings:
"Affiliate": any Person (i) which directly or indirectly
controls, or is controlled by, or is under common control with the Borrower, or
(ii) forty (40) percent or more of the voting stock of which is directly or
indirectly beneficially owned or held by the Borrower, any current shareholder
of the Borrower or any member of such shareholderSs immediate family. The term
"control" means the possession of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Acquisitions": the collective reference to the ABC
Acquisition, Blue Water Acquisition and Great Lakes Acquisition.
"Acquisition Aqreements": the collective reference to
the asset purchase agreements for the Acquisitions.
"Aqreement": this Mezzanine Credit Agreement, as
supplemented, amended or modified from time to time.
"Audited Statements": see Subsection 4.1.
"Authorized Officers": shall mean of the Borrower.
"Bank": Manufacturers and Traders Trust Company.
"Borrower": Life Critical Care Corporation., a Delaware
corporation.
"Business Day": (a) for all purposes other than as covered
by clause (b) below, any day excluding Saturday, Sunday and any day on which
Bank is authorized by law or other governmental action to close and (b) with
respect to all notices and determinations in connection with LIBOR, any day
which is a Business Day described in clause (a) and which is also a day for
trading by and between banks in U.S. dollar deposits in the London interbank
market.
"Capitalized Lease": any lease the obligations under which
have been, or in accordance with GAAP are required to be, recorded on the books
of the Borrower as a capital lease liability.
"Change in Control": (a) the acquisition after the date
hereof by any Person or Persons (other than the officers and directors
referred to in clause (b) of this subparagraph and their respective spouses
and children) acting in concert of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, as amended, or any successor, replacement or
analogous rule or provision of law) of 20% or more of the outstanding shares
of the Borrower's voting stock or (b) the officers and directors of the
Borrower that, collectively, on the date hereof, own in excess of 80% of the
outstanding shares of the Borrower's voting stock, shall cease to own in
excess of 80% of the outstanding shares of the Borrower's voting stock (for
the purposes of this clause (b),
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voting stock owned by the respective spouses and children of such officers and
directors shall be deemed to be owned by such officers and directors).
"Code": the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Collateral: means all property which is subject or is to
be subject to the Lien granted by the Collateral Documents.
"Collateral Documents": the collective reference to
the Revolving Credit and Term Loan Agreement, the Security Agreement, the
Shareholders Pledge Agreement, the Subordination and Pledge Agreement and the
Environmental Indemnification Agreement.
"Consolidated" or "Consolidated Basis": the consolidation
of the accounts of the Borrower and its Subsidiaries in accordance with GAAP,
including principles of consolidation, consistent with those applied in the
preparation of the consolidated audited financial statements.
"Contingent Obligation": as to any Person, any obligation of
such Person guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person, whether or not
contingent, (a) to purchase any such primary obligation or any property
constituting direct or indirect security therefor, (b) to advance or supply
funds (i) for the purchase or payment of any such primary obligation or (ii)
to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (d) otherwise to
assure the owner of such primary obligation against loss in respect thereof;
provided, however, that the term Contingent Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course
of business.
"Contractual Obligation": as to any Person, any provision
of any security issued by such Person or of any mortgage, indenture, lease,
contract or other agreement, instrument or undertaking to which such Person is
or purports to be a party or by which it or any of its property is or purports
to be bound.
"Credit": all extensions of credit set forth in Section 2 of
this Agreement.
"Debt Service Coveraqe Ratio": means for any Fiscal Year
or four (4) consecutive Fiscal Quarters, the ratio of:
(a) Net Income for such Fiscal Year or four (4)
Fiscal Quarters, as the case may be,
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to
(b) aggregate current maturities of long-term debt
of the Borrower.
"Default": any Event of Default or any condition or event
which, after notice or lapse of time, or both, would become an Event of Default.
"ERISA": the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"Event of Default": any of the events described in Subsection
7.1.
"Fiscal Ouarter": any quarter of a Fiscal Year.
"Fiscal Year": any period of twelve consecutive calendar
months ending on the last day of December.
"Fixed Rate": twelve percent (12%) per annum.
"GAAP": the generally accepted accounting principles applied
in the preparation of the audited financial statements of the Borrower as (a)
shall be consistent with the theneffective principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors and successors
(other than any changes resulting from the implementation of F.A.S.B. 96) and
(b) shall be concurred in by the independent certified public accountants
certifying any financial statements of the Borrower.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled (through
stock or capital ownership or otherwise) by any of the foregoing.
"Indebtedness": of any Person, at a particular time, means
all items which, in conformity with GAAP, would be classified as liabilities on
a balance sheet of such Person as at such time and which constitute (a)
indebtedness for borrowed money or the deferred purchase price of property
(including, without limitation, all notes payable and drafts accepted
representing extensions of credit and all obligations evidenced by bonds,
debentures, notes or other similar instruments, but excluding trade payables
incurred in the ordinary course of business payable within ninety days of the
date thereof), (b) obligations with respect to any conditional sale agreement or
title retention agreement, (c) indebtedness arising under acceptance facilities,
in connection with surety or other similar bonds, and the outstanding amount of
all letters of credit
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issued for the account of such Person and, without duplication, all drafts
drawn thereunder, (d) all liabilities secured by any security interest in any
property owned by such Person even though it has not assumed or otherwise
become liable for the payment thereof, (e) obligations under Capitalized
Leases, (f) obligations with respect to interest rate protection agreements,
and (g) any asserted withdrawal liability of such Person or a commonly
controlled entity to a Multiemployer Plan.
"Independent Public Accountant": refers to Ernst & Young
LLP or any other public accounting firm selected by the Borrower and consented
to by the Bank, such consent not to be unreasonably withheld.
"Initial Public Offering": The offering for public sale of
2,000,000 shares of the Borrower's common stock pursuant to the terms of the
Borrower's Registration Statement as filed with the Securities and Exchange
Commission on October 24, 1996, as amended from time to time.
"Interest Expense": means, for any period, the sum of
the aggregate interest expense of the Borrower for such period in respect of
Indebtedness of the Borrower, as determined in accordance with GAAP.
"Interim Statements": see Subsection 4.1.
"Investments": see Subsection 6.7.
"Licenses": see Subsection 3.18
"Lien": any mortgage, security interest, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
any conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction other than any financing statement filed in
connection with consignments or leases not intended as security).
"Loan": any amount of the Mezzanine Term Loan bearing
interest at the Fixed Rate.
"Loan Documents": the collective reference to this
Agreement, the Mezzanine Term Loan Note and the Collateral Documents.
"Maturity Date": see Subsection 2.2.
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"Mezzanine Term Loan": the six year term loan, in the
principal amount of $2,000,000, made by the Bank to the Borrower pursuant to
the Mezzanine Term Loan Agreement.
"Mezzanine Term Loan Aqreements": The collective reference to
this Agreement, Mezzanine Term Loan Note and ancillary documents all dated the
date hereof pursuant to which the Bank is making the Mezzanine Term Loan to the
Borrower.
"Mezzanine Term Loan Note": The Mezzanine Term Loan Note
as defined in this Agreement.
"Multiemplover Plan": has the meaning assigned to such term
under section 3(37) of ERISA.
"Net Income": means, with respect to any period, all
amounts which, in conformity with GAAP, would be included under net income on
an income statement of the Borrower for such period.
"Note": The Mezzanine Term Loan Note.
"Obligations": see Subsection 7.1(e).
"PBGC": the Pension Benefit Guaranty Corporation and
any entity succeeding to any or all of its functions under ERISA.
"Person": any natural person, corporation, firm,
trust, partnership, business trust, joint venture, association,
government, governmental agency or authority, or any other entity, whether
acting in an individual, fiduciary, or other capacity.
"Plan": a "pension plan", as such term is defined in ERISA,
which is subject to Title IV of ERISA (other than a Multiemployer Plan) and
to which the Borrower or any corporation, trade or business that is, along
with the Borrower, a member of a controlled group of corporations or a
controlled group of trades or businesses (as described in sections 414(b) and
414(c), respectively, of the Code or section 4001 of ERISA) may have any
liability, including any liability by reason of having been a substantial
employer within the meaning of section 4063 of ERISA at any time during the
preceding five years, or by reason of being deemed to be a contributing
sponsor under section 4069 of ERISA.
"Principal Office": refers to the Bank's xxxxxx xx Xxx X&X
Xxxxx, Xxxxxxx, Xxx Xxxx 00000.
"Registration Statement": see Section 3.19.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"Requirement of Law": with respect to any matter or Person
means any law, rule, regulation, order, decree or other requirement having the
force of law relating to such matter or Person, and, where applicable, any
interpretation thereof by any
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authority having jurisdiction with respect thereto or charged with the
administration thereof.
"Security Aqreement": see Subsection 5.1(c).
"Security Interest": see Subsection 5.1(c).
"Sellers": the collective reference to ABC Medical Supply,
Inc. Blue Water Medical Supply, Inc. and Great Lakes Home Medical, Inc.
"Subordinated Debt": any unsecured Indebtedness of the
Borrower, the payment of the principal of and interest (including post-petition
interest) on which is subordinated, on terms and conditions acceptable to the
Bank, to the prior payment in full of all Indebtedness and other obligations of
the Borrower to the Bank arising under this Agreement and the Collateral
Documents.
"Subsidiary": any corporation, limited liability company,
partnership, joint venture or other entity of which at least 50% of the voting
stock or other applicable ownership interest is owned by the Borrower,
directly or indirectly, including through one or more Subsidiaries.
"Tangible Net Worth": at any time, all amounts which, in
accordance with GAAP, would be included under shareholders' equity on a balance
sheet of the Borrower at such time, excluding, however, any amounts representing
assets which would be classified as intangible assets in accordance with GAAP.
"Total Liabilities": at any time, all amounts which, in
accordance with GAAP, would be included as liabilities on a balance sheet of the
Borrower at such time.
"Total Senior Liabilities": at any time, all amounts which
in accordance with GAAP, would be included as liabilities on a balance sheet
of the Borrower other than Subordinated Debt at such time.
1.2 UCC Definitions. Unless otherwise defined in Section 1.1 or
elsewhere in this Agreement, capitalized words shall have the meanings set forth
in the New York Uniform Commercial Code as in effect on the date of this
Agreement.
1.3 Other Definitional Provisions. (a) All terms defined in this
Agreement shall have the defined meanings when used in the Mezzanine Term Loan
Note and the Collateral Documents or any certificate or other document made or
delivered pursuant hereto.
(b) As used herein and in the Mezzanine Term Loan Note, and
any certificate or other document made or delivered pursuant hereto, accounting
terms not defined in Subsection 1.1, and accounting terms partly defined in
Subsection 1.1 to the extent not defined, shall have the respective meanings
given to them under GAAP.
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(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, schedule and exhibit references are to this Agreement
unless otherwise specified.
(d) The definitions of all terms defined in this Agreement
shall be equally applicable to both the singular and plural forms of the terms
defined.
SECTION 2 AMOUNT AND TERMS OF THE CREDIT
2.1 Mezzanine Term Loan.
(a) Amount. Subject to the terms and conditions of this
Agreement, and relying upon the representations and warranties herein set forth,
the Bank agrees to make a loan (the "Mezzanine Term Loan") to the Borrower on
the date of this Agreement in a principal amount of Two Million Dollars
($2,000,000).
(b) Mezzanine Term Loan Note. The Mezzanine Term Loan shall
be evidenced by, and repaid with interest in accordance with, a single
promissory note (the "Mezzanine Term Loan Note") of the Borrower in
substantially the form of Exhibit B attached hereto and made a part hereof, duly
completed and with blanks appropriately filled in. The Mezzanine Term Loan Note
shall be dated as of the date of this Agreement and the principal amount of the
Mezzanine Term Loan Note will be repaid (i) with interest payments only in
arrears and at maturity and (ii) the entire principal balance due and payable on
________________ (the "Maturity Date").
2.2 Interest and Pricing. The entire principal balance of the
Mezzanine Term Loan Note shall bear interest until maturity (whether by
acceleration or otherwise) at the Fixed Rate.
(a) Computation of Interest. Interest on the Mezzanine Term
Loan Note shall be computed on the basis of a 360-day year for the actual number
of days elapsed, which will result in a higher effective annual rate. Interest
on the Mezzanine Term Loan Note shall be payable monthly on the first day of
each month during the term of the Mezzanine Term Loan Note, commencing the month
following the date of this Agreement, and on the date the Mezzanine Term Loan
Note is paid in full.
(b) Default Rate. After maturity of the Mezzanine Term Loan,
whether by acceleration or otherwise, the Borrower shall pay interest at a per
annum rate equal to four percent (4%) plus the interest rate otherwise in effect
thereon. After maturity, interest shall be payable on demand. In no event shall
the rate of interest exceed the maximum rate permitted by applicable law.
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(c) Late Charge. Upon failure to make any payment of interest
or principal on the Mezzanine Term Loan Note within ten (10) days of the due
date thereof, the Borrower agrees to pay to Bank, upon demand by Bank, a late
charge equal to five percent (5%) of the amount of any such overdue amount of
principal or interest. The assessment and/or collection of late charges shall in
no way impair the right of Bank to pursue any other remedies hereunder.
2.3 Prepayment.
(a) Borrower shall have the right to prepay at any time after
______________ [3 years from date of Agreement] without premium all or any
portion of the Mezzanine Term Loan, together with interest on the principal so
prepaid to the date of such prepayment. Any partial prepayment shall be
applied upon installments of principal in inverse order of maturity. Borrower
shall give to the Bank not less than two (2) Business Day's prior notice of each
prepayment, specifying the aggregate amount to be repaid. Any permitted partial
repayment of principal shall be in the amount of $100,000 or a whole multiple
thereof.
2.4 Taxes. If any taxes (other than taxes with respect to the income of
Bank), or duties of any kind shall be payable, or ruled to be payable, by or to
any taxing authority of or in the United States, or any foreign country, or any
political subdivision of any thereof, in respect of any of the transactions
contemplated by this Agreement (including, but not limited to, execution,
delivery, performance, enforcement, or payment of principal or interest of or
under the xezzanine Term Loan Note or this Agreement by reason of any now
existing or hereafter enacted statute, rule, regulation or other determination
(excluding any taxes imposed on or measured by the net income of Bank), the
Borrower will:
(a) pay on written request therefor all such taxes or duties,
including interest and penalty, if any,
(b) promptly furnish Bank with evidence of any such payment,
and
(c) indemnify and hold Bank and any holder or holders of the
Mezzanine Term Loan Note harmless and indemnified against any liability or
liabilities with respect to or in connection with any such taxes or the payment
thereof or resulting from any delay or omission to pay such taxes.
2.5 Fees. The Borrower shall pay the following fees to the Bank:
(a) Annual Supplemental Fee. The Borrower agrees to pay to
the Bank a fee ("Annual Supplemental Fee") on the principal balance of the
Mezzanine Term Loan until the Maturity Date at the rate of seven percent (7%)
per annum calculated on the basis of a year of 360 days, payable, in arrears, on
the first day of each month during the term of this Agreement, commencing on the
date of this Agreement and ending on the Maturity Date. Notwithstanding the
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foregoing, the Borrower may defer payment of the Annual Supplemental Fee
otherwise due on , , and for up to three
years. If the Borrower elects to defer such payment, then the amount of the
Annual Supplemental Fee so deferred will be increased by an additional one
percent (1%) for each year such payment is deferred. For example, if payment
of the Annual Supplemental Fee for year one is deferred until the end of year
four, the amount of such Annual Supplemental Fee would be ten percent (10%).
Notwithstanding the foregoing, payment of the Annual Supplemental Fee due on
, , and may not be deferred.
(b) Commitment Fee. The Borrower shall pay to the
Bank, on the date of this Agreement, a commitment fee of forty thousand
dollars ($40,000.00) with respect to Mezzanine Term Loan.
2.6 Method of Payment. The Borrower shall make each payment under
this Agreement and the Mezzanine Term Loan Note not later than 11:00 a.m.
Eastern Time on the date when due in lawful money of the United States to the
Bank at its Principal Office in immediately available funds. The Borrower hereby
authorizes the Bank to charge from time to time against the operating account of
the Borrower with the Bank the amount of any such payment. Whenever any payment
to be made under this Agreement or under the Mezzanine Term Loan Note shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of the payment of interest.
2.7 Use of Proceeds. The Borrower represents to and covenants with
the Bank that all proceeds of the Mezzanine Term Loan will be used to (i)
finance the Acquisitions and (ii) fund general working capital purposes.
SECTION 3 REPRESENTATIONS AND WARRANTIES
3.1 Financial Condition. (a) The Borrower has heretofore delivered to
the Bank [ ].
(b) All financial statements and other financial data which
have been or shall hereafter be furnished to the Bank for the purposes of or in
connection with this Agreement or any transaction contemplated hereby do and
will present fairly the financial condition of the Borrower, as the case may be,
as of the dates thereof and the results of its operations for the period(s)
covered thereby. A11 projections which have been or shall hereafter be furnished
to the Bank for the purposes of or in connection with this Agreement or any
transaction contemplated hereby have been, and will represent, management's best
estimate of future performance of the Borrower, based upon historical financial
information and reasonable assumptions of management.
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3.2 No Change. There have been no material adverse changes in the
business, operations, property or financial or other condition of the Borrower
since _____________, 1996.
3.3 Corporate Existence; Compliance with Law. The Borrower
(a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (b) has the corporate power,
authority and legal right to own or lease and operate its property and to
conduct the business in which it is currently engaged, (c) is duly qualified as
a foreign corporation and in good standing under the laws of each jurisdiction
where the failure so to qualify and remain in good standing could materially
and adversely affect the ability of the Borrower to own or lease and operate
its property or to conduct the business in which it is currently engaged or
will be engaged upon closing of the Acquisitions, and (d) is in compliance
with all Requirements of Law. The Borrower has no equity or ownership interest
in any Person.
3.4 Corporate Power; Authorization; Enforceable Obligations. The
Borrower has the corporate power, authority and legal right to make, deliver and
perform this Agreement, the Mezzanine Term Loan Note, and each of the
Collateral Documents, to borrow hereunder and has taken all necessary corporate
and shareholder action to authorize the borrowings on the terms and conditions
of this Agreement, and the Mezzanine Term Loan Note. No consent of
any other Person and no authorization of, notice to, or other act by or in
respect of any Governmental Authority, is required in connection with the
borrowings hereunder, except for filings or recordings in public offices
necessary in connection with the Collateral Documents. This Agreement, the
Mezzanine Term Loan Note and each of the Collateral Documents have been duly
executed and delivered on behalf of the Borrower and this Agreement, the
Mezzanine Term Loan Note, and each of the Collateral Documents constitute
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally.
3.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Mezzanine Term Loan Note, the Collateral Documents, the
borrowings hereunder and the use of the proceeds thereof, will not violate any
Requirement of Law or any Contractual Obligation of the Borrower and will not
result in, or require, the creation or imposition of any Lien on any of its
respective properties or revenues pursuant to any Requirement of Law or
Contractual Obligation.
3.6 No Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Borrower, threatened by or against the Borrower or any of
its properties or revenues (a) with respect to this Agreement, the Mezzanine
Term Loan Note, the Collateral Documents or any of the transactions contemplated
hereby
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or thereby or (b) which, if adversely determined, could have a material adverse
effect on the business, operations, property or financial or other condition of
the Borrower.
3.7 No Default. The Borrower is not in default under or with regard
to any Contractual Obligation in any respect which could be materially adverse
to the business, operations, property or financial or other condition of
the Borrower, or which could materially adversely affect the ability of the
Borrower to perform its obligations under this Agreement, the Mezzanine Term
Loan Note, or any of the Collateral Documents. No Default or Event of Default
has occurred.
3.8 Ownership of Property; Liens. The Borrower has good record and
marketable or insurable title in fee simple to or valid leasehold interests
in, all its real property, and good title to all its other property, and none
of such property is subject to any Lien, except as set forth on Schedule
3.8.
3.9 No Burdensome Restrictions. To the best of the
Borrower's knowledge, no Contractual Obligation of the Borrower and no
Requirement of Law materially adversely affects, or insofar as the Borrower may
reasonably foresee may so affect, the business, operations, property or
financial or other condition of the Borrower.
3.10 Taxes. The Borrower has filed or caused to be filed all tax
returns required to be filed, and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it and all other
taxes, fees or other charges imposed on it by any Governmental Authority
(other than those the amount or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower); and no
tax liens have been filed and no assessments are being asserted with respect
to any such taxes, fees or other charges.
3.11 Federal Regulations. The Borrower is not engaged and will not
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" (as each
such term is defined in Regulation U) any Margin Stock. No part of the
proceeds of the Revolving Credit Loan or the Term Loan hereunder will be used
for any purpose which violates, or which would be inconsistent with, the
provisions of the Regulations of the Board of Governors of the Federal Reserve
System or of the Investment Company Act of 1940, as amended.
3.12 Investment Company Act. The Borrower is not an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
3.13 Environmental Matters.
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(a) The Borrower has duly complied with, and its business,
operations, assets, equipment, property, leaseholds, or other facilities are in
compliance with, the provisions of all federal, state and local environmental,
health and safety laws, codes and ordinances, and all rules and regulations
promulgated thereunder.
(b) The Borrower has been issued and will maintain all
required federal, state and local permits, licenses, certificates and
approvals relating to (i) air emissions, (ii) discharges to surface water or
groundwater, (iii) noise emissions, (iv) solid or liquid waste disposal, (v)
the use, generation, storage, transportation, or disposal of toxic or
hazardous substances or wastes (intended hereby and hereafter to include any
and all such materials listed in any federal, state, or local law, code or
ordinance, and all rules and regulations promulgated thereunder, as hazardous
or potentially hazardous), or (vi) other environmental, health, or safety
matters.
(c) The Borrower has not received any notice of, and does
not know of or suspect, facts which might constitute any violations of any
federal, state or local environmental, health or safety laws, codes or
ordinances, and any rules or regulations promulgated thereunder with respect
to its business, operations, assets, equipment, property, leaseholds or other
facilities.
(d) Except in accordance with a valid governmental permit,
license, certificate, or approval issued to the Borrower, there has been no
emission, spill, release, or discharge into or upon (i) the air, (ii) soils or
any improvements located thereon, (iii) surface water or groundwater, or (iv)
the sewer, septic system or waste treatment, storage or disposal system
servicing the premises, of any toxic or hazardous substances or wastes at or
from any premises owned or occupied by the Borrower.
(e) There is no complaint, order, directive, claim,
citation, or notice by any governmental authority or any person or entity
pending with respect to (i) air emissions, (ii) spills, releases, or
discharges to soils or improvements located thereon, surface water,
groundwater or the sewer, septic system or waste treatment, storage
or disposal systems servicing the premises, (iii) noise emissions, (iv)
solid or liquid waste disposal, (v) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or waste,
or (vi) other environmental, health or safety matters affecting the Borrower
or its business, operations, assets, equipment, property, leaseholds, or
other facilities.
3.14 ERISA. The Borrower is in compliance with all
applicable provisions of ERISA. The Borrower has not (a) incurred any
accumulated funding deficiency within the meaning of ERISA, (b) incurred any
material unfunded vested liability under any Plan, (c) incurred any material
liability to the PBGC in connection with any Plan, or (d) engaged in a
prohibited transaction within the meaning
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of ERISA. No Reportable Event has occurred with respect to any Plan.
3.15 Acquisition Agreements. The Borrower has heretofore
furnished to the Bank true, complete and correct copies of the Acquisition
Agreements, as amended, including all schedules and exhibits thereto.
3.16 Acquisitions. As of the date of this Agreement, the
Borrower has consummated the Acquisitions in accordance with the terms of the
Acquisition Agreements.
3.17 Collateral Locations. All of the Borrower's assets
are located only at the locations set forth in Schedule 3.17 of this Agreement.
3.18 Licenses and Permits. Each license, permit, consent,
certificate, certification, registration, declaration, approval, Medicare and
Medicaid participation agreements, and filing with any governmental body or
authority, or other person or entity required for or in connection with the
Borrower's business (collectively "Licenses"), is in full force and effect.
The Borrower has complied with, and its business, operations, assets,
equipment, property, leaseholds or other facilities are in compliance with all
federal, state, and local laws, codes and regulations relating to the
maintenance of such Licenses.
3.19 Initial Public Offering. On or before the date of
this Agreement, the Borrower has consummated its Initial Public Offering in
accordance with the terms of its Registration Statement on Form SB-2 as filed
with the Securities and Exchange Commission on October 24, 1996, together with
all amendments and exhibits thereto, (the "Registration Statement").
3.20 Registration Statement. The Borrower has heretofore
furnished to the Bank a true, complete and correct copy of the Registration
Statement.
3.21 Subsidiaries. As of the date of this Agreement, the
Borrower has no Subsidiaries.
3.22 Preexisting Indebtedness. As of the date of this
Agreement, the Borrower has no Indebtedness other than the Preexisting Loans.
SECTION 4 CONDITIONS PRECEDENT
4.1 Conditions to Extension of Credit. The obligation of
the Bank to extend the Credit is subject to the satisfaction prior to or
concurrently therewith of the following conditions precedent:
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(a) Notes. The Bank shall have received the Mezzanine
Term Loan Note conforming to the requirements hereof and executed by an
Authorized Officer.
(b) Opinions. The Bank shall have received the opinion
of legal counsel to the Borrower, dated the date of this Agreement and addressed
to the Bank, in form and substance satisfactory to the Bank. Such opinion shall
address, without limitation, such matters incident to the transactions
contemplated by this Agreement, the Mezzanine Term Loan Note, the Collateral
Documents, the Acquisition Agreements, and the Initial Public Offering as the
Bank shall reasonably require.
(c) Security Agreement. The Borrower shall have
executed and delivered to the Bank the General Security Agreement ("Security
Agreement") in the form of Exhibit C granting to the Bank a security interest
(the "Security Interest") in all of its equipment, inventory, accounts, chattel
paper, general intangibles, documents, and instruments, whether now owned or
hereafter acquired, including, without limitation, pursuant to the Acquisition
Agreements, wherever located, and any and all products and proceeds thereof, and
shall secure the payment of any and all indebtedness and liabilities, whether
now existing or hereafter incurred, of the Borrower to the Bank; and the Bank
shall have received appropriate financing statements to perfect the Security
Interest, which Security Interest shall be superior in priority to all other
Liens.
(d) Environmental. The Borrower shall have executed
and delivered to the Bank an environmental indemnification agreement
("Environmental Indemnification Agreement") in the form of Exhibit D.
(e) Revolving Credit and Term Loan Agreement. The
Borrower shall have executed and delivered to the Bank the Revolving Credit and
Term Loan Agreement and the Borrower shall have taken all other action deemed
necessary and appropriate by the Bank to perfect its rights under such
Agreement.
(f) Corporate Documents. The Bank shall have received
a copy (in form and substance satisfactory to the Bank) certified by the
Secretary or an Assistant Secretary of the Borrower of the resolutions of the
Board of Directors authorizing all borrowings herein provided for and the
execution, delivery and performance of this Agreement, the Mezzanine Term Loan
Note, the Acquisition Agreements, the Initial Public Offering and the
Collateral Documents.
(g) Certificate of Incumbency. The Bank shall have
received a certificate (in form and substance satisfactory to the Bank) of the
Secretary or an Assistant Secretary of the Borrower as to the incumbency and
signature of the Officers of the Borrower ("Authorized Officers") authorized to
sign, this Agreement, the Term Loan Note, and the Collateral Documents and any
certificate or
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other document to be delivered pursuant to or in connection with this Agreement.
(h) Termination of Security Interests. All holders of
existing security interests in assets of the Borrower, including, without
limitation, all assets acquired by the Borrower from the Sellers pursuant to the
Acquisition Agreements, shall have executed and delivered to the Bank UCC-3
Termination Statements in form and content acceptable to the Bank or shall have
otherwise taken action required by the Bank, to terminate such security
interests.
(i) Payment of Facility Fee. The Bank shall have
received payment in full of the Facilities Fee.
(j) Appraisals. The Bank shall have received
appraisals of all equipment and inventory of the Sellers to be acquired by the
Borrower pursuant to the Acquisition Agreements, prepared by an independent
appraiser acceptable to the Bank, which appraisals shall indicate a fair market
value (in the case of the equipment) and a liquidation value (in the case of
inventory) in an amount acceptable to the Bank. The Bank also shall have
received a schedule of the equipment, real estate, and leases acquired from the
Sellers by the Borrower which corresponds to the equipment appraisal.
(k) Financial Statements. The Bank shall have received
and approved a pro forma balance sheet of the Borrower, prepared by the
Independent Certified Public Accountant, which reflects (i) payment in full of
the Preexisting Loans, (ii) cash proceeds from the Initial Public Offering,
(iii) the assets and liabilities of the Borrower after closing of the
Acquisitions pursuant to the Acquisition Agreements, (iv) compliance with each
applicable financial covenant contained in this Agreement and (v) a financial
condition acceptable to the Bank, in its sole discretion.
(l) Acquisition Agreements. The Acquisition Agreements
shall be in form and substance satisfactory to the Bank, and the Borrower shall
have acquired the assets of the Sellers in accordance with the terms of each of
the Acquisition Agreements (with only those amendments, modifications or waivers
thereof which are acceptable to the Bank) immediately prior to the making of
the initial Loans hereunder.
(m) Initial Public Offering. The Bank shall have
received evidence satisfactory to the Bank of cash equity injection into the
Borrower in an amount of not less than eleven million dollars ($11,000,000)
resulting from its Initial Public Offering, said equity injection to be
evidenced by in form and content acceptable to the Bank.
(n) Payment of Preexisting Loans. The Bank shall
have received evidence satisfactory to the Bank of the payment in full of
the Preexisting Loans.
-16-
(o) Certificate of Insurance. The Bank shall have
received certificates of insurance, in form and content acceptable to the Bank,
evidencing the insurance required to be carried by the Borrower pursuant to
Subsection 5.10 hereof with endorsements, satisfactory to the Bank, designating
the Bank as loss payee and further designating that each such insurance policy
contains a notice of cancellation provision satisfactory to the Bank.
(p) All other documents and legal matters in
connection with the transactions contemplated by this Agreement and the
Collateral Documents shall be satisfactory in form and substance to the Bank.
The Borrower shall have delivered such further documents to the Bank and taken
such further action respecting this Agreement as the Bank shall reasonably
request.
SECTION 5 AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Mezzanine Term Loan remains
outstanding and unpaid or any other amount is owing to the Bank hereunder or
under the Collateral Documents, the Borrower shall [and shall cause each of its
Subsidiaries, to do the following]:
5.1 Financial Statements. Furnish or cause to be furnished
to the Bank:
(a) as soon as available, but in any event within
ninety (90) days after the end of each Fiscal Year of the Borrower, a copy of
the audited financial statements of the Borrower at and as of the end of such
Fiscal Year, certified without qualification or exception by the Independent
Public Accountants; and
(b) as soon as available, but in any event not later
than forty-five (45) days after the end of each Fiscal Quarter of each Fiscal
Year of the Borrower, a copy of the unaudited balance sheet of the Borrower as
of the end of such Fiscal Quarter and the related unaudited statements of income
and retained earnings and cash flow, setting forth in each case in comparative
form the figures for the previous year.
All such financial statements to be true, complete and correct in all
material respects and be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein (except as
approved by such accountants or officer, as the case may be, and disclosed
therein and that quarterly statements shall be prepared without footnotes in
accordance with GAAP).
5.2 Certificates; Other Information. Furnish to the Bank:
(a) upon the request of the Bank, concurrently with
the delivery of the financial statements referred to in Subsection
-17-
5.1(a), a certificate of the Independent Public Accountants certifying such
financial statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except as
specified in such certificate;
(b) concurrently with the delivery of the financial
statements referred to in Subsections 5.1 (a) and (b), a certificate of an
Authorized Officer (i) stating that, to the best of his or her knowledge, the
Borrower during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition contained in this Agreement, the
Revolving Credit Note, Term Loan Note and the Collateral Documents to be
observed, performed or satisfied by it, and that such Authorized Officer has
obtained no knowledge of any Default or Event of Default except as specified in
such certificate, and (ii) showing in detail the calculations supporting such
statement in respect of the financial covenants contained in Subsection 7.3.
(c) within thirty (30) days after the end of each
Fiscal Year of the Borrower, a copy of the projections by the Borrower's
management of the operating budget and cash flow of the Borrower for the then
current Fiscal Year, such projections to be accompanied by a certificate of an
Authorized Officer to the effect that such projections have been prepared on the
basis of sound financial planning practice and that such Authorized Officer on
the date he or she renders such certificate has no reason to believe they are
incorrect or misleading in any material respect.
5.3 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before it becomes delinquent, as the case may
be, all its Indebtedness, taxes and other obligations of whatever nature,
except, in the case of Indebtedness or taxes when the amount or validity thereof
is currently being contested in good faith by appropriate proceedings and
reserves in conformity with GAAP with respect thereto have been provided on the
books of the Borrower.
5.4 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted by it,
and preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges, Licenses, and
franchises necessary or desirable in the normal conduct of its business.
5.5 Inspection of Property; Books and Records; Discussions.
Keep proper books of record and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and permit
representatives of the Bank to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired, and to discuss the business,
operations, properties and financial and other condition
-18-
of the Borrower with officers and employees of the Borrower and with the
Independent Public Accountants.
5.6 Notices. Give notice to the Bank of each of the following
promptly after the Borrower knows or reasonably should know thereof:
(a) of the occurrence of any Default or Event of
Default;
(b) of any (i) default or event of default under any
Contractual Obligation or Licenses of the Borrower which, if adversely
determined, could have a material adverse effect on the business, operations,
property or financial or other condition of the Borrower, or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower and
any Person or any Governmental Authority involving a claim against the Borrower
in an amount in excess of Fifty Thousand Dollars ($50,000), or, which, if
adversely determined, could have a material adverse effect on the business,
operations, property or financial or other condition of the Borrower;
(c) of the following events, as soon as possible and
in any event within 30 days after the Borrower knows or has reason to know
thereof: (i) the occurrence or expected occurrence of any Reportable Event with
respect to any Plan, or (ii) the institution of proceedings or the taking or
expected taking of any other action by PBGC or the Borrower to terminate or
withdraw from any Plan, and in addition to such notice, deliver to the Bank
whichever of the following may be applicable: (A) a certificate of the chief
financial officer of the Borrower setting forth details as to such Reportable
Event and the action that the Borrower proposes to take with respect thereto,
together with a copy of any notice of such Reportable Event that may be required
to be filed with PBGC, or (B) any notice delivered by PBGC evidencing its intent
to institute such proceedings or any notice to PBGC that such Plan is to be
terminated, as the case may be;
(d) of any proposed withdrawal by the Borrower from
any Multiemployer Plan;
(e) of any materially adverse change in the business,
operations, property or financial or other condition of the Borrower;
(f) of any representation or warranty contained in
this Agreement or the Collateral Documents which was or has proven to be
incorrect in any material respect on or as of the date made or deemed made.
Each notice pursuant to this Subsection shall be accompanied by a statement of a
Authorized Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto. For
all purposes of clause (d) of this Subsection, the Borrower shall be deemed to
have all
-19-
knowledge or knowledge of all facts attributable to the administrator of such
Plan.
5.7 Corporate Standing. Maintain its existence in good
standing, and remain or become duly licensed or qualified and in good
standing in each jurisdiction in which the conduct of its business requires
such qualification or licensing.
5.8 Discharge of Obligations. Cause to be paid and discharged
all obligations when due and all lawful taxes, assessments and governmental
charges or levies imposed upon the Borrower or upon any property, real, personal
or mixed, belonging to the Borrower or upon any part thereof, before the same
shall become in default, as well as all lawful claims for labor, materials and
supplies, which if unpaid become a lien or charge upon the property or any part
of it. Notwithstanding the previous sentence, the Borrower shall not be required
to cause to be paid and discharged any obligation, tax assessment, charge, levy
or claim so long as its validity is contested in the normal course of business
and in good faith by appropriate and timely proceedings and the Borrower, sets
aside on its books adequate reserves with respect to each tax, assessment,
charge, levy or claim so contested.
5.9 Insurance. (a) Keep all its property so insurable insured
at all times with responsible insurance carriers satisfactory to Bank against
fire, theft and other risks in coverage, form and amount satisfactory to Bank;
(b) keep adequately insured at all times in reasonable amounts with responsible
insurance carriers against liability on account of damage to persons or property
and under all applicable worker's compensation laws; (c) promptly deliver to
Bank certificates of insurance or any of those insurance policies required to be
carried pursuant hereto, with appropriate endorsements designating Bank as its
interests may appear as a named insured and loss payee as requested by Bank; and
(d) cause each such insurance policy to contain a thirty (30) day notice of
cancellation or material change in coverage provision satisfactory to Bank.
5.10 Fair Labor Standards Act. Comply with the provisions
of the Fair Labor Standards Act of 1938, as amended.
5.11 Guarantees By Subsidiaries and Affiliates. If the
Borrower forms a Subsidiary or Affiliate with the Bank's prior written consent
in accordance with the provisions of Section 6.12, cause such Subsidiary or
Affiliate to execute and deliver to the Bank, within thirty (30) days of
its organization, a Guaranty, Security Agreement, and Financial Statement
in a form and content acceptable to the Bank.
-20-
SECTION 6 NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Mezzanine Term Loan Note
remains outstanding and unpaid or any other amount is owing to the Bank
hereunder or under the Collateral Documents, the Borrower shall not directly or
indirectly:
6.1 Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness without the prior written consent of the Bank except:
(a) Indebtedness to the Bank; and
(b) Indebtedness for Capitalized Leases to the extent
permitted under Subsection 6.9.
6.2 Limitation on Liens. Create, incur, assume or suffer to
exist, any Lien upon any of the Collateral, whether now owned or hereafter
acquired, except:
(a) Liens for taxes not yet due or which are being
contested in good faith and by appropriate proceedings if adequate reserves
with respect thereto are maintained on the books of the Borrower in accordance
with GAAP;
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other like Liens arising in the ordinary
course of business which are not overdue for a period of more than 30 days
or which are being contested in good faith and by appropriate proceedings;
(c) pledges or deposits in connection with workmen's
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(e) Liens created or permitted under the terms of the
Security Agreement; and
(f) Liens created under Capitalized Leases to the
extent permitted under Subsection 6.9.
6.3 Financial Condition. Permit, as of the last day of
any Fiscal Quarter, its Debt Service Coverage Ratio measured for the four
(4) preceding fiscal auarters ending on such day to be less than 1.5:1.0.
6.4 Limitation on Contingent Obligations. Create, incur,
assume or suffer to exist any Contingent Obligations, except (a)
-21-
existing Contingent Obligations as set forth on Schedule 6.4 hereto and any
renewal or refinancing thereof provided the aggregate monetary liability of the
Borrower for any such renewed or refinanced Contingent Obligations does not
exceed the applicable aggregate monetary liability for such Contingent
Obligation set forth in Schedule 6.4.
6.5 Prohibition of Fundamental Changes. Make or permit to
be made any material change in the character or conduct of its business or
operations, including entering into any transaction of merger or consolidation
or amalgamation, or liquidation, winding up or dissolving itself (or suffer any
liquidation or dissolution), convey, sell, lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or substantially all of
its business or assets or acquiring by purchase or otherwise all or
substantially all the business or assets of, or stock or other evidences of
beneficial ownership of, any Person, or making any material change in its
present method of conducting business, except:
(a) Borrower may merge or consolidate with any other
Person provided in each case that immediately after giving effect thereto, no
Default or Event of Default shall occur and be continuing and, in the case of
any such merger, the Borrower is the surviving corporation; and
(b) Borrower may acquire the assets or capital stock
of other Persons provided the aggregate purchase price (whether payable in
cash or otherwise) of all such asset and capital stock acquisitions in any
Fiscal Year shall not exceed _______ Dollars ($00,000), provided, however, at
the time of any such acquisition no Default or Event of Default shall
have occurred and be continuing, and no Default or Event of Default shall
occur as the result of any such acquisition.
6.6 Prohibition on Sale of Assets. Sell, lease, assign,
transfer or otherwise dispose of any of its assets, excluding (i) obsolete
or worn out property and (ii) inventory disposed of in the ordinary course of
business.
6.7 Loans, Advances and Investments. Make or commit to
make, any advance, loan, extension of credit or capital contribution to, or
purchase of any stock, bonds, notes, debentures or other securities of, or make
any other investment in (by way of transfers of property, acquisitions of
evidences of indebtedness or otherwise), any Person (all such transactions
being herein called "Investments"), except:
[(a) trade credit extended in the ordinary course of
business in an amount not to exceed $________ ;]
(b) advance payments or deposits against purchases
made in the ordinary course of Borrower's business;
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(c) (i) direct obligations of the United States or
any agency thereof with maturities of one year or less from the date of
acquisition, (ii) commercial paper of a domestic issuer rated at least "A-1"
by Standard & Poor's Corporation or "P-1" by Xxxxx'x Investors Services,
Inc., (iii) time deposits and certificates of deposit with maturities of one
year or less from the date of acquisition issued by the Bank or any commercial
bank having capital and surplus in excess of Five Hundred Million Dollars
($500,000,000), and (iv) repurchase obligations within a term of not more
than thirty (30) days for underlying securities of the types described in
clauses (i), (ii) and (iii) above and entered into with any commercial bank
meeting the qualifications specified in clause (iii) above;
(d) existing Investments as set forth in Schedule 6.7;
6.8 Compliance with ERISA. (a) Terminate any Plan so as to
result in any material liability to PBGC, (b) engage in any "prohibited
transaction" (as defined in Section 4975 of the Internal Revenue Code of 1986,
as amended) involving any Plan which would result in a material liability for
an excise tax or civil penalty in connection therewith, (c) incur or suffer to
exist any material "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, involving any Plan, or (d) allow or suffer
to exist any event or condition, which presents a material risk of incurring a
material liability to PBGC by reason of termination of any such Plan.
6.9 Capital Expenditures. Make or be committed to make,
directly or indirectly, expenditures for fixed or capital assets (including,
without limitation, under Capitalized Leases) in excess of _______ ($ ,000,000)
in any Fiscal Year of the Borrower.
6.10 Lease Obligations. Enter into any agreement, or
become liable under any agreement, for the lease, hire or use of any real or
personal property, except that the Borrower may enter into any lease,
other than a Capitalized Lease, provided that immediately after giving effect
thereto, the aggregate annual lease obligations of the Borrower would not
exceed .
6.11 Dividends. Declare any dividends (other than dividends
payable solely in stock of the Borrower) on, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement or other acquisition of any shares of any
class of stock of the Borrower, whether now or hereafter outstanding, or make
any other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of the Borrower, or purchase or
otherwise acquire any shares of any class of stock of the Borrower from any
person (such declarations, payments, purchases, redemptions, retirements,
acquisitions or distributions being herein called "stock payments").
-23-
6.12 Subsidiaries and Affiliates. Organize, cause to
organize, or acquire or invest in, any Subsidiary or Affiliate, without the
prior written consent of the Bank.
6.13 Ownership Interests. Except with respect to the
Initial Public Offering, purchase or retire any of its capital stock or
issue any capital stock, or otherwise change the capital structure of the
Borrower or change the relative rights, preferences or limitations relating
to any of its capital stock.
6.14 Compensation. Pay, or obligate itself to pay, directly
or indirectly, any salaries, bonuses, dividends or other compensation to
the individuals who are executives of the Borrower in excess of $_______ in
the aggregate for all such individuals.
6.15 Affiliate Transactions. Directly or indirectly, enter
into, renew or extend any transaction (including, without limitation, the
purchase, sale, lease or exchange of property or assets, or the rendering of
any service) with any Affiliate (other than wholly owned Subsidiaries
consented to by the Bank pursuant to Section 6.12), except upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
could be obtained, at the time of such transaction or, if such transaction is
pursuant to a written agreement, at the time of the execution of the agreement
providing therefore, in a comparable arms' length transaction with a Person
that is not an Affiliate.
SECTION 7 EVENTS OF DEFAULT
7.1 Events of Default. The following shall be Events of
Default under this Agreement:
(a) Nonpayment. Borrower shall fail to pay any
principal of, or interest on, the Revolving Credit Note, the Term Loan Note or
the Mezzanine Term Loan Note when due in accordance with the terms thereof; or
shall fail to pay, within ten (10) days after written notice thereof from
the Bank, any other amount payable hereunder in accordance with the terms
hereof; or
(b) Representations. Any representation or warranty
made or deemed made by the Borrower herein, in the Collateral Documents, or in
the Revolving Credit and Term Loan Agreement, or which is contained in any
certificate, document or financial or
-24-
other statement furnished at any time under or in connection with this
Agreement or the Collateral Documents shall prove to have been incorrect in
any material respect on or as of the date made or deemed made; or
(c) Negative Covenants. The Borrower shall default
in the observance or performance of any covenant or agreement contained in
Section 6 of this Agreement; or
(d) Other Covenants. The Borrower shall default
in the observance or performance of any covenant or agreement contained
in this Agreement, the Collateral Documents or the Revolving Credit and
Term Loan Agreement (and not constituting an Event of Default under any of
the other provisions of this Section 7) and shall fail to fully cure such
default within fifteen (15) days after written notice thereof from the Bank; or
(e) Other Indebtedness. The Borrower shall (i)
default in the payment of principal of or interest on any Indebtedness in
excess of __________ Dollars ($_00,000) (other than the Term Loan Note) or
on any Contingent Obligations relating to such Indebtedness in excess of ____
Thousand Dollars ($ 0,000) (such Indebtedness and Contingent Obligations being
herein called the "Obligations") beyond the period of grace, if any, provided
in the instrument or agreement under which the Obligations were created; or
(ii) default in the observance or performance of any other agreement
contained in any such Obligation, or in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur, the effect of
which default or other event is to cause, or permit the holder or holders of
such Obligation (or a trustee or agent on behalf of such holder or
holders) to cause, such Obligation to become due prior to its stated maturity;
provided, however, such default described in clause (i) or (ii) above shall not
constitute an Event of Default so long as the Borrower, in good faith, is
contesting the collection or enforcement of such Obligations by appropriate
legal proceedings diligently pursued; or
(f) Insolvency Proceedings. (i) The Borrower
or any Subsidiary shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors,
seeking to have an order for relief entered with respect to it, or seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to its debts, or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or the Borrower shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against the Borrower or any Subsidiary any case, proceeding or
other action of a nature referred to in clause (i) above which (A) results
in the entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there
-25-
shall be commenced against the Borrower any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) the Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) the Borrower shall generally
not, or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) Pension Default. (i) Any Person shall engage
in any "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not waived,
shall exist with respect to any Plan, (iii) a Reportable Event shall occur
with respect to, or proceedings shall commence to have a trustee appointed, or
a trustee shall be appointed, to administer or to terminate, any Plan, which
Reportable Event or institution of proceedings is, in the reasonable opinion of
the Bank, likely to result in the termination of such Plan for purposes of Title
IV of ERISA, and, in the case of a Reportable Event, the continuance of such
Reportable Event unremedied for ten days after notice of such Reportable
Event pursuant to Section 4043(a), (c) or (d) of ERISA is given or the
continuance of such proceedings for ten days after commencement thereof, as
the case may be, (iv) any Plan shall terminate for purposes of Title IV of
ERISA, or (v) any other event or condition shall occur or exist; and in
each case in clauses (i) through (v) above, such event or condition, together
with all other such events or conditions, if any, could subject the Borrower to
any tax, penalty or other liabilities in the aggregate material in relation to
the business, operations, property or financial or other condition of the
Borrower; or
(h) Judgements. One or more judgments or decrees
shall be entered against the Borrower involving in the aggregate a liability
(not paid or fully covered by insurance) of two hundred fifty thousand dollars
($250,000) or more and all such judgments or decrees shall not have been
vacated, discharged, or stayed pending appeal within sixty (60) days from
the entry thereof; or
(i) Collateral Documents. Any of the Collateral
Documents shall cease to be in full force and effect at any time or the
occurrence of any Event of Default under any Collateral Document or a breach of
any term, condition or provision of any Collateral Documents.
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7.2 Effect of Event of Default. Upon the occurrence of any
Event of Default specified in Subsection 7.1, all amounts owing under or
evidenced by this Agreement the Mezzanine Term Loan Note and the Collateral
Documents shall immediately become due and payable. Upon the occurrence and
during the continuance of any other Event of Default, the Bank may, by notice of
default to the Borrower, declare all amounts owing under or evidenced by this
Agreement, the Mezzanine Term Loan Note and the Collateral Documents to be due
and payable forthwith, whereupon the same shall immediately become due and
payable. Any acceleration of payment pursuant to this Subsection 7.2 shall be
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the Mezzanine Term
Loan Note to the contrary notwithstanding.
SECTION 8 MISCELLANEOUS
8.1 Increased Costs/Capital Adequacy. In the event that at
any time or from time to time any Requirement of Law, or any interpretation or
application thereof, or compliance by the Bank with any request or directive
(whether or not having the force of law) from any central bank or monetary
authority or other governmental authority:
(a) does or shall subject the Bank to any tax of
any kind whatsoever, or change in the amount thereof, with respect to this
Agreement, the Mezzanine Term Loan Note, or change the basis of taxation of
payments to the Bank of principal, interest or any other amount payable
hereunder (except for changes in the rate of tax on the overall net income of
the Bank); or
(b) does or shall impose, modify or hold applicable
or change any reserve (including, without limitation, basic, supplemental,
marginal and emergency reserves), special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, advances or loans by, or other credit extended by, or any other
acquisition of funds or capital adequacy or maintenance requirement by the Bank;
or
(c) does or shall impose on the Bank any other
condition or change; and the result of any of the foregoing is to increase
the cost to the Bank of making or maintaining any of the Loans or to reduce
any amount receivable thereunder then, in any such case, the Borrower shall
promptly pay the Bank, upon its demand, such additional amount which will
compensate the Bank for such additional cost or reduced amount receivable. A
certificate showing in reasonable detail any additional amounts determined
by the Bank to be payable pursuant to this Subsection shall be submitted
by the Bank to the Borrower and, absent manifest error, shall be conclusive and
binding on the Borrower.
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8.2 Amendments, Waivers and Consents. No amendment or waiver
of any provision of this Agreement, the Mezzanine Term Loan Note or the
Collateral Documents, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Bank, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8.3 Notices. All notices, requests and demands required to be
given hereunder or under the Collateral Documents to or upon the respective
parties hereto or to the Collateral Documents to be effective shall, unless
otherwise expressly provided herein, be in writing or by telegraph and shall
be deemed to have been duly given or made, unless otherwise expressly
provided herein, two (2) days after deposited in the mail (certified or
registered mail return receipt requested, the failure to receive such return
receipt having no effect) or, in the case of telegraphic notice, when
delivered to the telegraph company, addressed as follows or to such address or
other address as may be hereafter designated in writing by the respective
parties hereto and any future holder of the Term Loan Note:
The Borrower: Life Critical Care Corporation
00000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxx 00000
Attn: President
The Bank: Manufacturers and Traders Trust Company
Xxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Vice President
8.4 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Bank, any right, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law.
8.5 Survival of Representations and Warranties. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement and the Mezzanine Term Loan Note.
8.6 Payment of Expenses and Taxes; Indemnity. The Borrower
agrees (a) to pay or reimburse the Bank on demand for all its out-of-pocket
costs and expenses incurred in connection with the preparation and execution
of, and any amendment, waiver, consent, supplement or modification to, this
Agreement, the Mezzanine Term Loan Note, the Collateral Documents and any other
documents
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prepared in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of legal counsel to the Bank, (b) to pay or reimburse
the Bank on demand for all its costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement,
the Mezzanine Term Loan Note, the Collateral Documents and any such other
documents, including, without limitation, fees and disbursements of legal
counsel to the Bank, (c) without limitation of the provision of clause (a) of
this subsection, to pay, indemnify, and to hold the Bank harmless from, any and
all recording and filing fees, intangibles taxes, UCC and other title or lien
searches, stamp and other taxes, if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation of
any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this
Agreement, the Mezzanine Term Loan Note, the Collateral Documents and any such
other documents, and (d) to pay, indemnify, and hold the Bank harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (including, without limitation, counsel fees and disbursements
in connection with any litigation, investigation, hearing or other proceeding)
with respect or in any way related to the existence, execution, delivery,
enforcement, performance of this Agreement, the Mezzanine Term Loan Note and the
Collateral Documents (all of the foregoing, collectively, the "Indemnified
Liabilities"), provided, that the Borrower shall not have any obligation
hereunder with respect to Indemnified Liabilities arising directly from the
gross negligence or willful misconduct of the Bank.
8.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Bank and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights under this Agreement without the prior written consent of the
Bank.
8.8 Counterparts. This Agreement may be executed by one or
more the parties to this Agreement on any number of separate counterparts
and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.9 Governing Law. This Agreement, the Mezzanine Term Loan
Note and the rights and obligations of the parties under this Agreement and the
Mezzanine Term Loan Note shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of New York
without regard to principles of conflicts of laws.
8.10 Inconsistent Provisions. The terms of this Agreement,
the Mezzanine Term Loan Note and the Collateral Documents shall be cumulative
except to the extent they are specifically inconsistent with each other, in
which case the terms of this Agreement shall prevail.
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8.11 Further Assurances. The Borrower hereby agrees that it
will, from time to time at its own expense, promptly execute and deliver all
further instruments, and take all further action, that may be necessary or
appropriate or that the Bank may reasonably request, in order to enable the Bank
to exercise and enforce their rights under this Agreement, the Mezzanine Term
Loan Note and the Collateral Documents and otherwise to carry out the intent of
this Agreement and the Collateral Documents.
8.12 Waiver of Jury Trial. THE BANK AND THE BORROWER HEREBY
KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, THE MEZZANINE TERM LOAN NOTE OR
ANY COLLATERAL DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE BANK OR THE BORROWER.
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THIS
AGREEMENT.
8.13 Consent to Jurisdiction. THE BORROWER AND BANK AGREE
THAT ANY ACTION OR PROCEEDING TO ENFORCE OR ARISING OUT OF THIS AGREEMENT, OR
THE MEZZANINE TERM LOAN NOTE MAY BE COMMENCED IN THE SUPREME COURT OF NEW YORK
IN ERIE COUNTY, OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX IN THE WESTERN
DISTRICT OF NEW YORK, AND THE BORROWER AND BANK WAIVE PERSONAL SERVICE OF
PROCESS AND AGREE THAT A SUMMONS AND COMPLAIN COMMENCING AN ACTION OR PROCEEDING
IN ANY SUCH COURT SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED BY REGISTERED OR CERTIFIED MAIL TO THE BORROWER OR BANK,
OR AS OTHERWISE PROVIDED BY THE LAWS OF THE SATE OF NEW YORK OR THE UNITED
STATES.
8.14 Headings. Headings to the sections of this Agreement
are solely for the convenience of the parties and are not an aid in the
interpretation of this Agreement or any part hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
LIFE CRITICAL CARE CORPORATION
By:
Name:
Title:
MANUFACTURERS AND TRADERS TRUST COMPANY
By:
Name:
Title:
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ENVIRONMENTAL INDEMNIFICATION AGREEMENT
THIS AGREEMENT, dated as of December _ , 1996, is given by Life
Critical Care Corporation, a Delaware corporation, ("Borrower"), to
MANUFACTURERS AND TRADERS TRUST COMPANY, a New York banking corporation
("Lender").
A. Definitions: As used in this Agreement, the following capitalized
terms shall have the meanings set forth below:
"Disposal" means the intentional or unintentional
abandonment, discharge, deposit, injection, dumping, spilling, leaking, storing,
burning, thermal destruction or placing of any substance so that it or any of
its constituents may enter the environment.
"Environment" means any water including but not limited to
surface water and ground water or water vapor; any land including land surface
or subsurface; stream sediments; air; fish, wildlife, plants; and all other
natural resources or environmental media.
"Environmental Laws" means all federal, state and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances, regulations, codes and rules relating to the
protection of the Environment and/or governing the use, storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances and the policies, guidelines, procedures, interpretations,
decisions, orders and directives of federal, state and local governmental
agencies and authorities with respect thereto.
"Environmental Permits" means all licenses, permits,
approvals, authorizations, consents or registrations required by any applicable
Environmental Laws and all applicable judicial and administrative orders in
connection with ownership, lease, purchase, transfer, closure, use and/or
operation of the property and/or as may be required for the storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances.
"Environmental Questionnaire" means a questionnaire and all
attachments thereto concerning: (i) activities and conditions affecting the
Environment at any property of the Borrower or (ii) the enforcement or possible
enforcement of any Environmental Law against Borrower.
"Environmental Report" means a written report prepared for
the Lender by an environmental consulting or environmental engineering firm.
"Hazardous Substances" means, without limitation, any
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances
and any other material defined as a hazardous substance in Section 101(14) of
the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601(14).
"Release" has the same meaning as given to that term in
Section 101(22) of the Comprehensive, Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Section 9601(22), and the regulations
promulgated thereunder.
B. Borrower represents and warrants that:
(i) The Environmental Questionnaire previously
provided to the Lender was and is accurate and complete and does not omit any
material fact the omission of which would make the information contained
therein materially misleading.
(ii) All underground storage tanks (including
any tanks no longer in use) on any property owned, leased or operated by
Borrower have been registered and are being maintained in accordance with all
Environmental Laws. Any leaks that have occurred have been repaired properly
and all substances that leaked from any such tank have been removed from
the property on which it was located and disposed of in accordance with
Environmental Laws.
(iii) No property owned, leased or operated by
Borrower is or has been used for the Disposal of any Hazardous Substance.
(iv) No Release of a Hazardous Substance has
occurred or is threatened on, at, from or near any property owned, leased or
operated by Borrower which could reasonably be expected, either presently or
in the future, to have a materially adverse effect on the financial condition,
operations or facilities of the Borrower.
(v) Borrower is not subject to any existing,
pending or threatened suit, claim, notice of violation or request for
information under any Environmental Law.
(vi) Borrower is in compliance in all respects with
all Environmental Laws.
C. Borrower covenants and agrees with the Lender that:
(i) Borrower shall comply with all Environmental
Laws.
(ii) Borrower shall not suffer, cause or permit the
Disposal of Hazardous Substances at any property owned, leased or operated by
it.
(iii) Borrower shall promptly notify the Lender
in the event of the Disposal of any Hazardous Substance at any property owned,
leased or operated by Borrower, or in the event of any Release, or threatened
Release, of a Hazardous Substance, from any such Property.
-2-
(iv) Borrower shall, at the Lender's request, provide,
at Borrower's expense, updated Environmental Questionnaires and/or Environmental
Reports, in such form and content as the Lender may reasonably request,
concerning any property now or hereafter owned, leased or operated by Borrower.
(v) Borrower shall deliver promptly to the Lender
(a) copies of any documents received from the United States Environmental
Protection Agency or any state, county or municipal environmental or health
agency concerning Borrower's operations; and (b) copies of any documents
submitted by Borrower to the United States Environmental Protection Agency or
any state, county of municipal environmental or health agency concerning its
operations.
D. Borrower agrees to indemnify, defend, and hold harmless
Lender from and against any and all liabilities, claims, damages, penalties,
expenditures, losses, or charges, including, but not limited to, all costs of
investigation, monitoring, legal representation, remedial response, removal,
restoration or permit acquisition, which may now or in the future be undertaken,
suffered, paid, awarded, assessed, or otherwise incurred by Lender or any other
person or entity as a result of the presence of, Release of or threatened
Release of Hazardous Substances on, in, under or near the property owned or
operated by the Borrower. The liability of the Borrower under the covenants of
this Section is not limited by any exculpatory provisions in this Agreement or
any other documents evidencing or securing any loans made by the Lender to the
Borrower and shall survive repayment of all such loans or any transfer or
termination of this Agreement regardless of the means of such transfer or
termination.
E. Borrower agrees that the Lender shall not be liable in any
way for the completeness or accuracy of any Environmental Report or the
information contained therein. Borrower further agrees that the Lender has no
duty to warn the Borrower or any other person or entity about any actual or
potential environmental contamination or other problem that may have become
apparent or will become apparent to the Lender.
LIFE CRITICAL CARE CORPORATION
By:
Name:
Title:
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