EXHIBIT
10.2
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
____________________________________
SECURITIES PURCHASE AGREEMENT
___________________________________
1,000 Units Consisting of an
8% Subordinated Note due January 1, 2005
($1,000,000) of Tender Loving Care Health Care Services, Inc.
and
Common Stock Warrants of Tender Loving Care Health Care
Services, Inc. (exercisable into 333,333 1/3 Shares of Common
Stock, $.01 par value)
Dated for Reference Purposes Only as of May 15, 2000
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF UNITS 1
1.1. ISSUANCE OF UNITS. 1
11. SALE AND PURCHASE OF UNITS 1
2. CLOSING OF SALE OF UNITS. 2
3. PURCHASER's CONDITIONS FOR CLOSING 2
3.1. REPRESENTATIONS AND WARRANTIES 2
3.2. NO MATERIAL JUDGMENT OR ORDER. 2
3.3. COMPLIANCE WITH SECURITIES LAWS. 2
3.4. APPROVALS AND CONSENTS. 2
3.5. PROCEEDINGS. 2
3.6. EXECUTED DOCUMENTS. 3
31. DOCUMENTS IN SATISFACTORY FORM. 3
4. COMPANY CONDITIONS FOR CLOSING. 3
4.1. RECEIPT OF PAYMENT AND EXECUTED AGREEMENT 3
4.2. REPRESENTATIONS AND WARRANTIES. 3
41. NO MATERIAL JUDGMENT OR ORDER. 3
5. PREPAYMENTS 4
5.1. OPTIONAL PREPAYMENTS. 4
51. NOTICE OF PREPAYMENTS. 4
6. COVENANTS. 4
6.1. PAYMENT OF NOTE. 4
6.2. CORPORATE EXISTENCE. 4
6.3. NOTICE OF DEFAULTS. 4
6.4. COMPLIANCE CERTIFICATE. 5
6.5. SEC REPORTS. 5
6.6. WAIVER OF STAY, EXTENSION OR USURY LAWS 5
6.7. PAYMENT OF TAXES AND OTHER CLAIMS 5
6.8. LIMITATION ON RESTRICTED PAYMENTS. 6
6.9. INSURANCE. 7
6.10.INSPECTION. 7
6.11.LIQUIDATION. 8
6.12.INVESTMENT COMPANY ACT. 8
6.13.LIMITATION ON LIENS SECURING CERTAIN INDEBTEDNESS. 8
6.14.LIMITATION ON TRANSACTIONS WITH AFFILIATES. 8
7. MERGER, ETC. 8
7.1. WHEN COMPANY OR SUBSIDIARY MAY MERGE, ETC. 8
7.2. SUCCESSOR CORPORATION SUBSTITUTED. 9
8. DEFAULTS AND REMEDIES. 9
8.1. EVENTS OF DEFAULT. 9
8.2. ACCELERATION. 10
81. OTHER REMEDIES. 10
9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. 11
9.1. ORGANIZATION AND POWERS. 11
9.2. AUTHORIZATION OF FINANCING, ETC. 11
9.3. SEC REPORTS. 12
9.4. NO ADVERSE MATERIAL CHANGE. 13
9.5. MARGIN REGULATIONS. 13
9.6. PROCEEDS OF FINANCING. 13
9.7. OFFERING OF UNITS. 13
9.8. INVESTMENT COMPANY ACT. 13
9.9. CAPITALIZATION. 13
10. REPRESENTATIONS AND COVENANTS OF THE PURCHASER. 14
11. SUBORDINATION. 16
11.1.NOTE SUBORDINATED TO SENIOR INDEBTEDNESS. 16
11.2.PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN
EVENTS. 17
11.3.RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO
BE IMPAIRED. 19
11.4.SUBROGATION. 19
11.5.OBLIGATIONS OF COMPANY UNCONDITIONAL. 19
11.6.HOLDER ENTITLED TO ASSUME PAYMENTS NOT
PROHIBITED IN ABSENCE OF NOTICE. 20
11.7.RIGHT OF NOTEHOLDER TO HOLD SENIOR
INDEBTEDNESS. 20
12. DEFINITIONS. 20
13. ORIGINAL ISSUE DISCOUNT. 26
14. JUDICIAL PROCEEDINGS. 27
14.1.CONSENT TO JURISDICTION. 27
14.2.ENFORCEMENT OF JUDGMENTS. 27
14.3.WAIVING OF JURY TRIAL. 27
11. NO LIMITATION ON SUIT. 27
15. MISCELLANEOUS. 27
15.1.PAYMENTS. 27
15.2.CONSENT TO AMENDMENTS. 28
15.3.TRANSFER AND EXCHANGE OF NOTE; LOST NOTE. 28
15.4.PERSONS DEEMED OWNERS. 29
15.5.SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT; SEVERABILITY. 29
15.6.SUCCESSORS AND ASSIGNS. 29
15.7.NOTICES. 29
15.8.DESCRIPTIVE HEADINGS. 30
15.9.EXHIBITS AND DISCLOSURE SCHEDULE. 30
15.10.GOVERNING LAW. 30
15.11.COUNTERPARTS. 30
▇▇.▇▇.▇▇ DISCHARGE. 30
15.13.PAYMENT ON BUSINESS DAYS. 30
11. RULE 144A INFORMATION. 30
LIST OF SCHEDULES
Schedule 9.6 (Proceeds of Financing)
Schedule 9.9 (Capitalization)
LIST OF EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Guarantee
Exhibit C Form of Warrant
Exhibit D Form of Warrant Share
SECURITIES PURCHASE AGREEMENT FOR SUBORDINATED NOTE AND WARRANTS,
dated for reference purposes only as of May 15, 2000 (the
"Agreement"), between Tender Loving Care Health Care Services,
Inc., a Delaware corporation (the "Company"), and Medline
Industries, Inc. whose principal offices are located at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Purchaser").
In consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. PURCHASE AND SALE OF UNITS.
1.1. ISSUANCE OF UNITS.
(a) The Company has authorized the issuance and delivery of an
8% Subordinated Note due January 1, 2005 in the principal amount
of $1,000,000 (the 'Note'). The Note will be substantially in the
form of the Note set forth as Exhibit A attached hereto. The Note
will be guaranteed pursuant to a Guarantee in the form of
Exhibit B attached hereto (the "Guarantee").
(b) The Company has authorized the issuance and delivery of
common stock warrants (the "Warrants") for the purchase of
333,333 1/3 shares (the "Warrant Shares") of its common stock,
$.01 par value per share. Such Warrants will have an exercise
price of $.20 per share and will be in substantially the form of
Exhibit C attached hereto. Each Warrant Share issued upon
exercise of a Warrant will be evidenced by a certificate in
substantially the form of Exhibit D attached hereto; and
(c) The Note and Warrants will be issued in units ("Units")
consisting of a Note in the principal amount of $1,000,000 and
Warrants to purchase 333,3331/3 Warrant Shares. The Note and
Warrants cannot be separately purchased, prepaid, redeemed, sold,
transferred, pledged, assigned or otherwise hypothecated.
1.2. SALE AND PURCHASE OF UNITS.
On the Closing Date (as hereinafter defined), subject to the
terms and conditions and in reliance upon the representations,
warranties and agreements contained herein, the Company hereby
agrees to issue and sell to the Purchaser and the Purchaser
agrees to purchase from the Company Units in the aggregate amount
set forth opposite the Purchaser's name on the signature page
hereto. The Note to be purchased by the Purchaser will be in the
form of a Note registered in the name of the Purchaser or (upon
48 hours prior notification) that of its nominee, as the
Purchaser shall request, in the principal amount and in the
denominations set forth on the signature page hereto, at a
purchase price of 100% of such principal amount. The Warrants to
be purchased by the Purchaser will be in the form of the Warrant
registered in the name of the Purchaser or (upon 48 hours prior
notification), that of its nominee, as the Purchaser shall
request, exercisable in the aggregate for the number of Warrant
Shares set forth on the signature pages hereto.
2. CLOSING OF SALE OF UNITS.
The purchase and delivery of the Units to be purchased by the
Purchaser shall take place at the offices of ▇▇▇▇▇▇▇▇ & ▇'▇▇▇▇,
LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at a closing (the
"Closing") to be held on May 22, 2000 or at such other place or
on such other date as the Purchaser and the Company may agree
upon (the "Closing Date"). The Company will give the Purchaser
(or its advisor or other representative) at least two (2)
Business Days' prior written notice of the Closing Date and the
time of Closing. At the Closing, the Company will deliver to the
Purchaser the Note (together with the Guarantee) and Warrants to
be purchased against payment of the purchase price therefor, by
transfer of immediately available funds to such bank as the
Company may request in writing at least two (2) Business Day
prior to the Closing Date for credit to such account or accounts
as the Company may specify in such request.
3. PURCHASER'S CONDITIONS FOR CLOSING.
The obligations of the Purchaser to purchase the Units to be
purchased by them at the Closing is subject to the satisfaction,
prior to the Closing Date, of the following conditions; provided
that any or all of the following conditions may be waived, in
whole or in part, by the Purchaser in its sole and absolute
discretion:
3.1. REPRESENTATIONS AND WARRANTIES; NO DEFAULT; NO ADVERSE
CHANGE.
The representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects
at and as of the Closing Date as if made on and as of such date,
except to the extent that such representations and warranties by
their terms speak as of an earlier date, in which case such
representations and warranties shall have been true and correct
in all material respects as of such earlier date, and there shall
not exist on the Closing Date any Event of Default or Default.
3.2. NO MATERIAL JUDGMENT OR ORDER.
There shall not be on the Closing Date any judgment or order of a
court of competent jurisdiction or any ruling of any agency of
the federal or any state or local government which, in the
reasonable judgment of the Purchaser, would prohibit the delivery
of the Units hereunder or subject the Purchaser to any material
penalty if the Units were to be delivered hereunder.
3.3. COMPLIANCE WITH SECURITIES LAWS.
The offering, issuance, and sale of the Units under this
Agreement shall have complied with all applicable requirements of
Federal securities laws and the Purchaser shall have received
evidence, if any, of such compliance in form and substance
satisfactory to it.
3.4. APPROVALS AND CONSENTS.
The Company shall have duly received all authorizations,
consents, approvals, licenses, franchises, permits and
certificates by or of all Federal, state and local governmental
authorities, in each case, necessary for the transactions
contemplated by this Agreement, including the issuance of the
Units.
3.5. PROCEEDINGS.
All corporate proceedings taken by the Company in connection with
the transactions contemplated hereby and all documents incident
hereto shall be reasonably satisfactory in form and substance to
the Purchaser and its counsel, and the Purchaser and its counsel
shall have received all such counterpart originals or certified
or other copies of such documents as it may reasonably request.
3.6. EXECUTED DOCUMENTS.
The Company shall have delivered, or shall have caused to be
delivered, to the Purchaser, the following documents, which
documents shall in each case be duly executed by all parties
thereto:
(a) the Note, executed by the Company, in the aggregate
principal amount of $1,000,000;
(b) a Guarantee of the Note, executed by the parties signatory
thereto; and
(c) the Warrant attached hereto in the form of Exhibit C,
executed by the Company.
3.7. DOCUMENTS IN SATISFACTORY FORM.
All documentation and all instruments in connection with the
transactions contemplated by this Agreement and all other
documents executed and delivered in connection with this
Agreement shall be reasonably satisfactory in form and substance
to the Purchaser (including, without limitation, all Certificates
and Schedules prepared in connection with this Agreement) and the
Purchaser shall have received all further information and
documents which any Purchaser may reasonably have requested, such
documents where appropriate to be counterpart originals and/or
certified by proper authorities and corporate officials and
parties.
4. COMPANY CONDITIONS FOR CLOSING.
The obligation of the Company to issue, sell and deliver the
Units to be sold by it to the Purchaser on the Closing Date is
subject to the satisfaction, prior to or at the Closing Date, of
the following conditions; provided that any or all of the
following conditions may be waived, in whole or in part, by the
Company in its sole and absolute discretion:
4.1. RECEIPT OF PAYMENT AND EXECUTED AGREEMENTS.
The Company shall have received the purchase price for the Units
and the Purchaser shall have executed and delivered (or caused
the registered holder thereof or its nominee to execute and
deliver) this Agreement.
4.2. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects
at and as of the Closing Date as if made on and as of such date,
except to the extent that such representations and warranties by
their terms speak as of an earlier date, in which case such
representations and warranties were true and correct in all
material respects as of such earlier date.
4.3. NO MATERIAL JUDGMENT OR ORDER.
There shall not be on the Closing Date any judgment or order of a
court of competent jurisdiction or any ruling of any agency of
the federal or any state or local government which, in the
reasonable judgment of the Company, would prohibit the delivery
of the Units or subject the Company to any material penalty if
the Units were to be delivered hereunder.
5. PREPAYMENTS.
5.1. OPTIONAL PREPAYMENTS.
The Note shall be subject to prepayment, at the option of the
Company, at any time and from time to time in whole or in part in
integral multiples of $100,000, at a price equal to 100% of the
principal amount being prepaid plus accrued and unpaid interest
to but not including the date the funds are available in the
Purchaser's account.
5.2. NOTICE OF PREPAYMENTS.
The Company shall give each Noteholder written notice of each
prepayment pursuant to Section 5.1 not less than fifteen (15) nor
more than sixty (60) days prior to the prepayment date. Such
notice shall specify the date of such prepayment and the
principal amount of the Note to be prepaid on such date and
accrued interest applicable to the prepayment. Notice of
prepayment having been given as aforesaid, the aggregate
principal amount of the Note specified in the notice shall become
due and payable on such prepayment date together, in each case,
with accrued and unpaid interest on the Note to be prepaid on the
prepayment date.
6. COVENANTS.
The Company covenants that so long as the Note remains
outstanding, it will perform all of its covenants in this
Section 6.
6.1. PAYMENT OF NOTE.
The Company shall pay the principal of and interest on the Note
on the dates and in the manner provided in the Note and in this
Agreement. The Company shall pay interest on overdue principal
at the rate then borne by the Note; it shall pay interest on
overdue installments of interest at the same rate to the extent
legally permitted.
6.2. CORPORATE EXISTENCE.
Subject to Section 6.11 and Section 7, the Company will do or
cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and the corporate,
partnership or other existence of each Subsidiary in accordance
with the respective organizational documents of each Subsidiary
and the rights (charter and statutory), licenses and corporate
franchises of the Company and its Subsidiaries; provided,
however, that the Company shall not be required to preserve any
such existence, right, license or franchise if the Board of
Directors of the Company, or of the Subsidiary concerned, shall
determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and its Subsidiaries
taken as a whole and that the loss thereof is not disadvantageous
in any material respect to the Noteholder.
6.3. NOTICE OF DEFAULTS.
In the event that any indebtedness of the Company or any
Subsidiary of the Company has been or could be declared due and
payable before its maturity because of the occurrence of any
default (or any event which, with notice or the lapse of time or
both, shall constitute such default) under such indebtedness
(including, without limitation, any Default or Event of Default
under this Agreement), the Company will give written notice
setting forth the material details thereof to the Noteholder
(i) in the case of any non-monetary default, promptly after the
Company becomes aware thereof, and (ii) in the case of any
monetary default, promptly following the occurrence thereof.
6.4. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Noteholder within 120 days after
the end of each fiscal year of the Company, an Officer's
Certificate stating that:
(a) a review of the activities of the Company during such year
and of performance under this Agreement has been made under his
supervision; and
(b) to the best of his knowledge, based on such review, the
Company has kept, observed, performed and fulfilled in all
material respects each and every covenant contained in this
Agreement throughout such year, or, if there has been a default
in the fulfillment of any such covenant, specifying each such
default known to him and the nature and status thereof.
The Company shall, so long as the Note is outstanding, deliver to
the Noteholder promptly following any Officer becoming aware of
any Default or Event of Default, an Officer's Certificate
specifying such Default or Event of Default and what action the
Company proposes to take with respect thereto.
6.5. SEC REPORTS.
The Company shall deliver to the Noteholder, within fifteen (15)
days after it files them with the SEC, copies of the annual
reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe), if any, which the Company is
required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act (excluding exhibits). So long as the Note
remains outstanding the Company shall cause each annual,
quarterly and other report mailed or otherwise furnished by it
generally to stockholders to be mailed to the Noteholder at its
address appearing in the records maintained by the Company, in
each case at the time of such mailing or furnishing to
stockholders.
6.6. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any
manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit
or forgive the Company from paying all or any portion of the
principal of and/or interest on the Note as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which
may affect the covenants or the performance of this Agreement;
and (to the extent that it may lawfully do so) the Company hereby
expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Noteholder, but will suffer
and permit the execution of every such power as though no such
law had been enacted.
6.7. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company shall, and shall cause each of its Subsidiaries to,
pay or discharge or cause to be paid or discharged, before they
become delinquent, (i) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary of
the Company or upon the income, profits or property of the
Company or any of its Subsidiaries, and (ii) all lawful claims
for labor, materials and supplies which, if unpaid, might by law
result in the imposition of a lien upon the Property of the
Company or any Subsidiary, in each case except to the extent the
failure to pay would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole; provided that the
Company shall not be required to pay or discharge or cause to be
paid or discharged any such tax, assessment, charge or claims the
amount, applicability or validity of which is being contested in
good faith by appropriate proceedings and for which adequate
provision has been made or where the failure to effect such
payment or discharge is not adverse in any material respect to
the Noteholder.
6.8. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, make any Restricted Payment unless (i) no
Default shall have occurred and be continuing at the time or as a
consequence of such Restricted Payment, (ii) the Consolidated
Adjusted Net Worth of the Company on a pro forma basis, after
giving effect to such Restricted Payment (to the extent not
otherwise reflected therein), shall be greater than $5,000,000
(the 'Minimum Net Worth'), and (iii) such Restricted Payment,
together with the aggregate of all other Restricted Payments,
made after the date of this Agreement shall not exceed the sum of
(A) 25% of Consolidated Net Income of the Company for the period
from the date of this Agreement to the end of the Quarter
immediately preceding such Restricted Payment, calculated on a
cumulative basis as if such period were a single accounting
period (after taking into account 100% of Consolidated Net Losses
to the extent that Consolidated Net Income shall be a deficit at
any time during such period) (the 'Cumulative Consolidated Net
Income'), and (B) the aggregate net proceeds, including cash and
the fair market value of property other than cash (as determined
in good faith by the Board of Directors of the Company and
evidenced by a Board Resolution), received after the date of this
Agreement by the Company from any Person other than a Subsidiary,
as a result of the issuance of Capital Stock of the Company
(other than any Redeemable Stock), including such Capital Stock
issued upon conversion or exchange of Indebtedness or upon
exercise of warrants, and any contributions to the capital of the
Company received by the Company from any such Person (all such
proceeds and contributions being hereinafter referred to as
'Stock Sale Proceeds'). For purposes of any calculation that is
required to be made after the declaration of a dividend by the
Company or any Subsidiary, such dividend shall be deemed to be
paid at the date of declaration and shall be included in
determining the aggregate amount of Restricted Payments, and the
subsequent payment of such dividend shall not be treated as an
additional payment.
The provisions of this Section 6.8 shall not be violated by
reason of (i) the payment of any dividend in respect of the
Company's Capital Stock within 60 days after the date of
declaration thereof, if at such date of declaration such payment
complied with the provisions hereof, (ii) the retirement of any
shares of the Company's Capital Stock, to the extent the Company
has received the cash proceeds of the substantially concurrent
sale or issuance (other than to a Subsidiary) of other shares of
Capital Stock (other than any Redeemable Stock) of the Company or
warrants, options or rights to purchase shares of the Company's
Capital Stock, in an amount equal to the amount to be expended to
retire the shares of the Company's Capital Stock, and (iii) the
acquisition of any other Indebtedness of the Company which is
subordinate or junior in right of payment to the Note requiring
sinking fund payments in anticipation of satisfying a sinking
fund obligation within 90 days. For purposes of determining the
aggregate amount of Restricted Payments in accordance with clause
(iii) of the first sentence of the first paragraph of this
Section 6.8, all amounts expended pursuant to clauses (i) (to the
extent deemed to have been paid and already included in
determining the aggregate amount of Restricted Payments pursuant
to the last sentence of the immediately preceding paragraph),
(ii) or (iii) of this paragraph shall be excluded.
For the purposes of this Section 6.8, the net proceeds from the
issuance of shares of Capital Stock of the Company upon
conversion of debt securities shall be deemed to be an amount
equal to the net book value of such debt securities (plus the
additional amount required to be paid upon such conversion, if
any), less any cash payment on account of fractional shares; the
'net book value' of a security shall be the amount received by
the Company on the issuance of such security, as adjusted on the
books of the Company to the date of conversion. The foregoing
shall not be interpreted to limit the authority of the Board of
Directors to determine the value of other securities of the
Company or other property received as net proceeds; provided,
however, that the value of the other property shall not exceed
the net book value of such property.
Prior to making any Restricted Payment under this Section 6.8,
the Company shall deliver to the Noteholder an Officers'
Certificate setting forth the computation by which the amount
available for the Restricted Payment was determined.
6.9. INSURANCE.
The Company will provide or cause to be provided, for itself and
its Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds customarily
insured against by corporations similarly situated and owning
like properties, including, but not limited to public liability
insurance, with reputable insurers or with the government of the
United States of America or an agency or instrumentality thereof,
in such amounts with such deductibles and by such methods as
shall be customary for corporations similarly situated in the
industry.
6.10. INSPECTION.
The Company will permit the Purchaser, so long as the Purchaser
shall hold the Note with three (3) Business Days' advance notice,
and any representative of any of the foregoing, at the
Purchaser's expense, to visit and inspect any of the Company's
properties, to examine its books and records and to make copies
and to take extracts therefrom, and to discuss its business
affairs and finances with its officers and key employees, all at
such reasonable times and during normal business hours and as
often as the Purchaser or representative may reasonably request;
provided that the Company shall not be required to provide any
information under this paragraph if to do so would cause the
Company to forfeit an attorney-client privilege that was
applicable with respect to such information; and provided,
further, that, prior to furnishing any such information, the
Company shall be entitled to require the Purchaser or
representative requesting such information to enter into a
confidentiality agreement in customary form and subject to
customary exceptions.
6.11. LIQUIDATION.
The Board of Directors or the stockholders of the Company shall
not adopt a plan of liquidation which provides for, contemplates
or the effectuation of which is preceded by (i) the sale, lease,
conveyance or other disposition of all or substantially all of
the assets of the Company and (ii) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance
or other disposition and of the remaining assets of the Company,
to the holders of Capital Stock of the Company unless the
Company, prior to making any liquidating distribution pursuant to
such plan, makes provision for the satisfaction of its respective
obligations hereunder and under the Note as to the payment of
principal and interest on such Note.
6.12. INVESTMENT COMPANY ACT.
The Company shall not become an investment company subject to
registration under the Investment Company Act of 1940, as
amended, or engage in any activities which would require it to
become so registered.
6.13. LIMITATION ON LIENS SECURING CERTAIN INDEBTEDNESS.
The Company will not, and will not permit any Subsidiary to,
create, incur, assume or suffer to exist upon any of their
respective assets or properties any liens securing any
indebtedness of the Company or of any Subsidiary which is not
Senior Indebtedness unless the Note is equally and ratably
secured; provided that if such indebtedness is expressly
subordinated to the Note, the lien securing such indebtedness
shall be subordinate and junior to the lien securing the Note,
with the same relative priority as such indebtedness will have
with respect to the Note.
6.14. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary of the
Company to enter into any transaction (or series of related
transactions) (a 'Transaction') with an Affiliate or an Affiliate
of any Subsidiary, involving payments by the Company or any
Subsidiary of the Company, including without limitation any sale,
purchase, lease, loan, license or any other direct or indirect
payment, transfer of assets or rights, or other disposition,
other than a Transaction or Transactions between the Company or a
Subsidiary or among Subsidiaries, unless each Transaction (i) is
completed on terms no less favorable to the Company than would be
available in a similar transaction completed on an arms-length
basis with a person who is not an Affiliate and (ii) is approved
by at least a majority of the independent members of the
Company's Board of Directors; provided, however that nothing
contained in this Section 6.14 shall limit the Company or any
Subsidiary of the Company from entering into or modifying any
employment arrangements with any of its employees or limit the
amount of compensation payable to any such employee.
7. MERGER, ETC.
7.1. WHEN COMPANY OR SUBSIDIARY MAY MERGE, ETC.
The Company shall not, and shall not permit any of its
Significant Subsidiaries to, consolidate or merge with or into,
or sell, assign, transfer or lease all or substantially all of
its properties and assets to, any Person unless:
(a) the resulting, surviving or transferee Person is a
corporation organized and existing under the laws of the United
States, any State thereof or the District of Columbia (although
it in turn may be owned by a foreign entity);
(b) such corporation assumes all the obligations of the Company
(or such Significant Subsidiary) under the Note and this
Agreement;
(c) the creditworthiness of such corporation is not materially
weaker than that of the Company or such Significant Subsidiary,
as the case may be, immediately prior to such transaction; and
(d) immediately after giving effect to the transaction, no Event
of Default and no Default shall have occurred and be continuing.
The Company shall deliver to the Noteholder prior to the proposed
transaction (unless the transaction is among the Company and any
Subsidiary or Subsidiaries or among Subsidiaries) an Officer's
Certificate stating that the proposed transaction complies with
this Agreement.
7.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets, of the Company, the successor
corporation formed by such consolidation or into which the
Company is merged or to which such transfer is made shall succeed
to, and be substituted for, and may exercise every right and
power of, and be subject to all the obligations of, the Company
under this Agreement with the same effect as if such successor
corporation had been named as the Company herein.
8. DEFAULTS AND REMEDIES.
8.1. EVENTS OF DEFAULT.
An 'Event of Default' occurs if:
(a) the Company defaults in the payment of interest on the Note
when the same becomes due and payable and the Default continues
for a period of five (5) Business Days;
(b) the Company defaults in the payment of the principal of the
Note when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise;
(c) the Company fails to comply with any of its other agreements
or covenants in the Note or this Agreement (other than an
agreement or covenant, a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with), or
a Significant Subsidiary fails to comply with any agreement or
covenant in the Guarantee, and the failure continues for the
period and after the notice specified below;
(d) any indebtedness of the Company or any Subsidiary of the
Company for borrowed money having an outstanding principal amount
of $2,500,000 or more, whether such indebtedness now exists or
shall hereafter be created, is declared to be due and payable
prior to its stated maturity and such declaration shall not be
rescinded or annulled or such indebtedness shall not be paid
within thirty (30) days after notice to the Company or such
Subsidiary of such declaration;
(e) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law (as defined below):
(i) commences a voluntary case or proceeding; (ii) consents to
the entry of an order for relief against it in an involuntary
case or proceeding; (iii) consents to the appointment of a
Custodian (as defined below) of it or for all or substantially
all of its property; or (iv) makes a general assignment for the
benefit of its creditors; or
(f) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against the
Company or any Significant Subsidiary in an involuntary case or
proceeding; (ii) appoints a Custodian of the Company or any
Significant Subsidiary or for all or substantially all of its
property; or (iii) orders the liquidation of the Company or any
Significant Subsidiary; and the order or decree remains unstayed
and in effect for at least ninety (90) days. The term
'Bankruptcy Law' means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors. The term 'Custodian'
means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
A Default under clause (c) is not an Event of Default until the
Noteholder notify the Company in writing of the Default and the
Company does not cure or cause the Significant Subsidiary to cure
the Default within sixty (60) days after receipt of the notice.
The notice must specify the Default, demand that it be remedied
and state that the notice is a 'Notice of Default'.
8.2. ACCELERATION.
If an Event of Default (other than an Event of Default specified
in clause (e) or (f) of Section 8.1) occurs and is continuing,
the Noteholder, by written notice to the Company, may declare all
unpaid principal of and accrued interest on the Note to be due
and payable as specified below. Upon a declaration of
acceleration, such principal and accrued interest shall be due
and payable upon the first to occur of (i) an acceleration under
any Senior Indebtedness or (ii) five (5) Business Days after
receipt by the Company of such written notice given hereunder.
If an Event of Default specified in clause (e) or (f) of
Section 8.1 occurs, all principal of and interest on the Note
then outstanding shall ipso facto become and be immediately due
and payable without any declaration or other act on the part of
the Noteholder.
8.3. OTHER REMEDIES.
Subject to Section 8.2, if any Event of Default shall occur and
be continuing the Noteholder may proceed to protect and enforce
its rights under this Agreement and the Note by exercising such
remedies as are available to such Noteholder in respect thereof
under this Agreement or under applicable law, either by suit in
equity or by action at law, or both, whether for the collection
of the payment of principal of or interest on the Note or to
enforce the specific performance of any covenant or other
agreement contained in this Agreement or in aid of the exercise
of any power granted in this Agreement. No remedy conferred in
this Agreement upon the Noteholder is intended to be exclusive of
any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.
9. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants that:
9.1. ORGANIZATION AND POWERS.
The Company and each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the state
of its incorporation, and has all requisite corporate power and
authority to own (or hold under lease) and operate its material
properties, to carry on its business as now conducted, to enter
into this Agreement, in the case of the Company, to issue the
Note, Warrants and the Warrant Shares, and in the case of the
Subsidiaries, the Guarantee, as applicable, and to carry out the
transactions contemplated hereby and thereby.
9.2. AUTHORIZATION OF FINANCING, ETC.
(a) Authorization of Financing. The execution, delivery and
performance of this Agreement, the issuance, delivery and payment
of the Note, the issuance and delivery of the Guarantee, the
issuance, sale and delivery of the Warrants and, upon the
exercise of the Warrants, the issuance of the Warrant Shares and
the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action by the Company and
the Subsidiaries.
(b) No Conflict. The execution, delivery and performance by the
Company of this Agreement, the issuance, delivery and payment of
the Note, the issuance and delivery of the Guarantee, the
issuance, sale and delivery of the Warrants and, upon exercise of
the Warrants, the issuance of the Warrant Shares, and
consummation of the transactions contemplated hereby and thereby
do not
(i) violate the certificate of incorporation or bylaws of the
Company or any Subsidiary as in effect on the date hereof,
(ii) violate any law, government rule or regulation applicable to
the Company or any Subsidiary or any order, ruling, judgment or
decree of any court or other governmental agency binding on the
Company or any Subsidiary or any property or asset of the Company
or any Subsidiary, except for violations which, individually or
in the aggregate, would not have a Material Adverse Effect,
(iii) conflict with, violate, constitute a default under, or give
rise to any right of termination under, any Contractual
Obligation of the Company or any Subsidiary or pursuant to which
any of its properties or assets are bound, except for conflicts,
violations, defaults or terminations which, individually or in
the aggregate, would not have a Material Adverse Effect,
(iv) result in or require the creation or imposition of any lien
upon any of the material properties or assets of the Company and
the Subsidiaries, taken as a whole, or (v) require any approval
or consent of any Person under any Contractual Obligation of the
Company or any Subsidiary, except for such approvals or consents
as have been obtained on or before the Closing Date, or such
approvals or consents the failure to obtain which, individually
or in the aggregate, would not have a Material Adverse Effect.
(c) Governmental Consents. The execution, delivery and
performance by the Company of this Agreement, the issuance,
delivery and payment of the Note, the issuance and delivery of
the Guarantee, the issuance, sale and delivery of the Warrants
and, upon exercise of the Warrants, the issuance of the Warrant
Shares, and the consummation of the transactions contemplated
hereby and thereby, do not and will not require any
authorization, registration or filing with, declaration, consent
or approval of, or notice to, or qualification or formal
exemption from, or other action relating to, with or by, any
federal, state or other governmental authority or regulatory body
except for filings required by federal or state securities laws,
other registrations, consents, approvals, notices and actions
that have been or will be obtained or taken on or before the
Closing Date, and such other items the absence of which,
individually or in the aggregate, could not interfere with the
operation of the Company's or any Subsidiary's business and would
not have a Material Adverse Effect. As of the Closing Date,
except for such items that, individually or in the aggregate,
could not interfere with the operation of the Company's or any
Subsidiary's business and would not have a Material Adverse
Effect, the Company and the Subsidiaries will have obtained all
consents or approvals from or notice to or registrations or
filings with any federal, state or other regulatory authorities
required to be obtained on or before such date in connection with
the transactions contemplated hereby.
(d) Due Execution and Delivery; Binding Obligations. This
Agreement has been duly authorized, executed and delivered by the
Company. This Agreement is, and on the Closing Date, the Note
and the Warrants (when issued and delivered in accordance
herewith) will be, legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their
respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable
principles. The Guarantee, when delivered in accordance
herewith, will be the legal, valid and binding obligation of the
Subsidiaries enforceable against them in accordance with its
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles.
9.3. SEC REPORTS.
The Company has heretofore delivered to the Purchaser a true and
complete copy of its (i) Amendment No. 5 to its Registration
Statement on Form 10; and (ii) Quarterly Reports on Form 10-Q for
the quarters ended August 31 and November 30, 1999, all as filed
with the SEC (but excluding exhibits). None of such registration
statements or reports, including, without limitation, any
financial statements or schedules included therein, at the time
filed contained any untrue statement of material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of any
circumstances under which they were made, not misleading.
9.4. NO ADVERSE MATERIAL CHANGE.
Since November 30, 1999, other than continuing losses from
operations, there has been (i) no event or circumstance which has
had a Material Adverse Effect and (ii) no material obligation or
liability (contingent or otherwise) incurred by the Company or
any of its Subsidiaries other than obligations and liabilities
incurred in the ordinary course of business.
9.5. MARGIN REGULATIONS.
The Company is not engaged in the business of extending credit
for the purposes of purchasing or carrying 'margin stock' within
the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (12 C.F.R. 221, as amended). The Company
will not, directly or indirectly, use any of the proceeds of the
issue and sale of the Units for the purpose, whether immediate,
incidental or ultimate, of maintaining, purchasing or carrying
any stock that is currently a 'margin stock', or otherwise take
or permit to be taken any action which would result in the issue
and sale of the Units or the carrying out of any of the other
transactions contemplated hereby or thereby, being violative of
such Regulation U, Regulation T (12 C.F.R. 220, as amended),
Regulation X (12 C.F.R. 224, as amended) or any other regulation
of such Board. No indebtedness that may be maintained, reduced
or retired with the proceeds from the sale of the Units was
incurred for the purpose of purchasing or carrying any 'margin
stock,' and the Company does not own or intend to acquire any
'margin stock' within the meaning of such Regulation U.
9.6. PROCEEDS OF FINANCING.
The proceeds of the issuance of the Units hereunder will be used
for one or more of the following purposes: (i) to pay overdue
obligations to vendors or lessors; (iii) for working capital
purposes; and (iv) to pay fees, costs, and expenses associated
with the execution of this Agreement, and the transactions
contemplated hereby.
9.7. OFFERING OF UNITS.
The offer and sale of the Units has been effected and is in
compliance with all Federal and state securities law and
regulations, including without limitation, the Securities Act;
and neither the Company nor any agent acting on behalf of the
Company, has taken or will take any action which would subject
the issuance or sale of any of the Units to the provisions of
Section 5 of the Securities Act or to the provisions of any
securities or blue sky laws of any applicable jurisdiction.
9.8. INVESTMENT COMPANY ACT.
The Company 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.
9.9. CAPITALIZATION.
The total authorized Capital Stock of the Company consists of
50,000,000 shares of common stock, of which 11,809,653 shares
will be issued and outstanding as of the Closing Date, and
5,000,000 shares of preferred stock, none of which will be issued
and outstanding as of the Closing Date. Immediately following
the Closing, all of the issued and outstanding shares of Common
Stock will be duly authorized and validly issued, fully paid and
non-assessable and free of any pre-emptive or other similar right
to subscribe for or to purchase any Capital Stock of the Company.
Except as contemplated by this Agreement, set forth in the SEC
Reports referred to in Section 9.3 or on Schedule 9.9, there are:
(x) no outstanding securities or obligations of the Company or
any other Person convertible or exchangeable into any shares of
the Company; (y) no outstanding warrants, other than the
Warrants, rights or options to subscribe for or purchase, or
obligations to issue, any such shares or any such convertible or
exchangeable securities or obligations; and (z) no voting trusts
or other agreements or undertakings to which the Company is a
party with respect to the voting of the Capital Stock of the
Company. Except as set forth on Schedule 9.9 and as provided
herein the Company has no obligation (contingent or otherwise) to
issue, register under the Securities Act, repurchase or otherwise
acquire or retire any shares of Capital Stock or any convertible
securities, rights, options or warrants of the type described
above.
10. REPRESENTATIONS AND COVENANTS OF THE PURCHASER.
The Purchaser represents as follows:
(a) The Purchaser, if a corporation, partnership, trust or other
business entity, represents to the Company (i) it is duly
organized, validly existing and in good standing under the laws
of the state of its organization, and has all requisite power and
authority to enter into this Agreement, to purchase the Units and
to carry out the transactions contemplated hereby; (ii) each
person executing this Agreement is a duly authorized officer,
general partner, trustee or other appropriate signatory of such
entity and has been duly authorized by all necessary action to
execute and deliver this Agreement and all other instruments and
documents delivered herewith; (iii) the execution, delivery and
performance by the Purchaser of this Agreement and consummation
of the transactions contemplated hereby (A) do not violate its
charter or any other instrument of organization to which it is a
party or by which it is bound as in effect on the date hereof and
(B) do not violate any law, government rule or regulation
applicable to it by virtue of the nature of its business or any
order, ruling, judgment or decree of any court or other
governmental agency binding on it or any of its properties or
assets, except for violations which, individually or in the
aggregate, would not have any adverse effect on the Purchaser's
ability to consummate the transactions contemplated hereby; and
(iv) this Agreement is the legal, valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance
with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.
(b) The Purchaser represents to the Company that it is
authorized to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby.
(c) The Purchaser represents to the Company that the address set
forth under its name on the signature page to this Agreement is
the Purchaser's true and correct residence or principal place of
business, and the Purchaser has no present intention of becoming
a resident of any other state or jurisdiction prior to the
anticipated Closing Date.
(d) The Purchaser represents to the Company that the Purchaser
is not acquiring the Units, Note or Warrants to be purchased by
it hereunder with a view to or for sale in connection with any
distribution or resale thereof and is acquiring the Units, Note
and Warrants for investment purposes within the meaning of the
Securities Act.
(e) The Purchaser understands and expressly acknowledges that it
is receiving the Units, Note and Warrants in a private placement
and that the Units, Note and Warrants are not registered under
the Securities Act. The Purchaser agrees that if the Purchaser
desires to sell or otherwise dispose of all or any part of the
Units, Note or Warrants (other than pursuant to an effective
registration statement under the Securities Act or a sale or
other distribution made pursuant to Rule 144 or 144A under the
Securities Act or a sale or other distribution subsequent to a
sale or other distribution made pursuant to an effective
registration statement or Rule 144 or 144A), the Purchaser shall
deliver to the Company a written opinion of counsel (which
counsel may include in-house corporate counsel of the Purchaser
which is reasonably satisfactory to the Company), addressed to
the Company, that an exemption from the registration requirements
under the Securities Act is available and that the proposed
disposition would comply with all applicable securities laws.
Upon original issuance thereof, and until such time as the same
is no longer required under the applicable requirements of the
Securities Act, the Units, Note and Warrants (and all securities
issued in exchange therefor or substitution thereof until such
time as the same is no longer required under the applicable
requirements of the Securities Act), shall bear a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR ASSIGNED, EXCEPT PURSUANT TO EITHER (i) A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER SUCH ACT, (ii) RULE 144 OR 144A UNDER SUCH ACT OR
(iii) ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES PROVIDED AN OPINION OF
COUNSEL IS FURNISHED, REASONABLY SATISFACTORY IN FORM AND
SUBSTANCE TO THE COMPANY, THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES.
(f) The Purchaser understands that it is purchasing the Note
without being furnished any offering literature or prospectus
other than the documents identified in Section 9.3, and
acknowledges that (i) neither the Company nor any of its
officers, directors, Affiliates, employees or agents has made any
representation or warranty except as set forth in such documents;
and (ii) no person, other than the Company, its officers,
directors, Affiliates, employees and agents, is authorized to
give any information or to make any representation not contained
in such documents and, if given or made, any such information or
representation must not be relied upon. The Purchaser represents
to the Company that it is not purchasing Units as a result of or
subsequent to (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or other
similar media or broadcast over television or radio; or (ii) any
seminar or meeting to which the Purchaser was invited by any
general solicitation or general advertising.
(g) The Purchaser further represents to the Company that it is
an 'accredited investor' (as such term is defined in Regulation D
under the Securities Act), that it or the person who exercises
full investment discretion to act on its behalf with regard to
the matters contemplated herein has received and read a copy of
the documents identified in Section 9.3 and that by reason of its
business and financial experience and the business and financial
experience of the persons retained by it to advise it with
respect to its investment in the Units, it, together with such
advisors, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment and is able to
bear the economic risk of such investment and, at the present
time, is able to afford a complete loss of such investment. The
Purchaser acknowledges that it or the person who exercises full
investment discretion to act on its behalf with regard to the
matters contemplated herein has been given the opportunity to ask
questions and receive answers concerning the terms and conditions
of the transactions contemplated hereby, the operations and
financial condition of the Company and its Subsidiaries and the
accuracy of the information contained in any document provided to
them or the person who exercises full investment discretion to
act on its behalf with regard to the matters contemplated herein
and have received adequate information concerning the Company,
the Subsidiaries, the Units, the Note and the Warrants to make
its investment decision.
(h) The Purchaser understands that these representations are
required in connection with the laws of the United States and the
states thereof. The Purchaser irrevocably authorizes the Company
to produce this Agreement to any interested party in any
administrative or legal proceeding or official inquiry with
respect to the matters covered in this Section 10.
(i) The Purchaser certifies that each of the foregoing
representations and warranties set forth in this Section 10 is
true and accurate as of the date hereof and shall survive such
date. If in any respect such representations and warranties
shall not be true and accurate on the Closing Date, the Purchaser
shall give written notice of such fact to the Company specifying
which representations and warranties are not true and accurate
and the reasons therefor, whereupon the Company may elect to
terminate this Agreement. Upon such termination, the Company
shall return to the Purchaser all sums paid by the Purchaser,
without interest, and this Agreement shall be void and of no
further effect.
11. SUBORDINATION.
11.1. NOTE SUBORDINATED TO SENIOR INDEBTEDNESS.
Notwithstanding the provisions of Section 8.2 hereof, the Company
covenants and agrees, and the Noteholder (whether upon original
issue or upon transfer or assignment thereof) by its acceptance
thereof likewise covenants and agrees, that all payments of the
principal of and interest on the Note by the Company shall be
subordinate and subject in right of payment in accordance with
the provisions of this Section 11 to the prior payment in full in
cash of all amounts then payable under Senior Indebtedness of the
Company whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed (including any interest
accruing subsequent to an event specified in Sections 8.1(e) and
8.1(f) to the extent that such interest is an allowed claim
enforceable against the debtor in a bankruptcy case under Title
11 of the United States Code).
11.2. PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN
EVENTS.
(a) No payment shall be made by the Company on account of
principal of or interest on the Note or on account of the
purchase or other acquisition of the Note, if there shall have
occurred and be continuing a default with respect to any Senior
Indebtedness permitting the acceleration thereof or with respect
to the payment of any Senior Indebtedness and (i) such default is
the subject of a judicial proceeding or (ii) notice of such
default in writing or by telegram has been given to the Company
by any holder or holders of any Senior Indebtedness (provided,
however, that in the case of Senior Indebtedness issued pursuant
to an indenture such notice may be validly given only by the
trustee under such indenture), unless and until such default or
event of default shall have been cured to the extent permitted
pursuant to the terms of the instrument creating or evidencing
such Senior Indebtedness or waived.
(b) Upon any payment by the Company or distribution of assets or
securities of the Company or any Subsidiary, as the case may be,
of any kind or character, whether in cash, property or
securities, upon any dissolution or winding up or total or
partial liquidation or reorganization of the Company or any
Subsidiary, whether voluntary or involuntary or in bankruptcy,
insolvency, receivership or other proceedings, all amounts
payable under Senior Indebtedness of the Company (including any
interest accruing subsequent to an event specified in
Sections 8.1(e) and 8.1(f) to the extent that such interest is an
allowed claim enforceable against the debtor in a bankruptcy case
under Title 11 of the United States Code), shall first be paid in
full in cash, or payment provided for in cash, before the
Noteholder shall be entitled to receive any payment of principal
of or interest on the Note or distribution of any assets or
securities on account of the Note. Before any payment or
distribution may be made by the Company of the principal of or
interest on the Note, and upon any such dissolution or winding up
or liquidation or reorganization, any payment or distribution of
assets or securities of the Company of any kind or character,
whether in cash, property or securities, to which the Noteholder
would be entitled, except for the provisions of this Section 11,
shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making
such payment or distribution, directly to the holders of Senior
Indebtedness of the Company or their representatives or to the
trustee or trustees under any indenture pursuant to which any
instruments evidencing any Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent
necessary to pay all such Senior Indebtedness in full, after
giving effect to any concurrent payment or distribution to or for
the holders of such Senior Indebtedness.
(c) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, the Noteholder shall
have received any payment on account of the principal of or
interest on the Note at a time when such payment is prohibited by
this Section 11.2 and before the principal of, premium, if any,
and interest on all Senior Indebtedness of the Company is paid in
full, then and in such event (subject to the provisions of
Section 11.7) such payment or distribution shall be received and
held in trust for the holders of Senior Indebtedness and shall be
paid over or delivered to the holders of Senior Indebtedness or
their representative or representatives, or to the trustee or
trustees under any indenture pursuant to which any instruments
evidencing any Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment
of all Senior Indebtedness remaining unpaid, to the extent
necessary to pay in full in cash the principal of, premium, if
any, and interest on such Senior Indebtedness in accordance with
its terms, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
(d) The consolidation of the Company with, or the merger of the
Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety,
to another corporation upon the terms and conditions provided in
Section 7 shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this
Section 11.2 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the
conditions stated in Section 7.
(e) The holders of Senior Indebtedness may, at any time and from
time to time, without the consent of or notice to the Noteholder,
without incurring responsibility to the Noteholder and without
impairing or releasing the rights of any holder of Senior
Indebtedness or in any way altering or affecting any of the
provisions of this Section 11: (i) change the amount, manner,
place or terms of payment or change or extend the time of payment
of, or renew or alter, Senior Indebtedness, or otherwise amend in
any manner Senior Indebtedness or any instrument evidencing the
same or any agreement under which Senior Indebtedness is
outstanding; (ii) sell, exchange, release or otherwise deal with
any property pledged, mortgaged or otherwise securing Senior
Indebtedness; (iii) release any Person liable in any manner for
the collection of Senior Indebtedness; (iv) exercise or refrain
from exercising any rights against the Company and any other
Person; and (v) take any other action which otherwise might be
deemed to impair the rights of the Noteholder.
If the Noteholder does not file a proper claim or proof of debt
in the form required in any proceeding referred to above prior to
thirty (30) days before the expiration of the time to file such
claim in such proceeding, then the holder of any Senior
Indebtedness is hereby authorized, and has the right, to file an
appropriate claim or claims for or on behalf of such Noteholder.
Nothing contained in this Section 11 will limit the right of the
Noteholder to take any action to accelerate the maturity of the
Note pursuant to Section 8.2 or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness of the Company
then and thereafter due or declared to be due shall first be paid
in full before the Noteholder is entitled to receive any payment
from the Company of principal of or interest on the Note.
Upon any payment or distribution of assets or securities referred
to in this Section 11, the Noteholder shall be entitled to rely
upon any order or decree of a court of competent jurisdiction in
which such dissolution, winding up, liquidation or reorganization
proceedings are pending, and upon a certificate of the receiver,
trustee in bankruptcy, liquidating trustee, agent or other person
making any such payment or distribution, delivered to the
Noteholder for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Section 11.
11.3. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO BE
IMPAIRED.
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired
by any act or failure to act in good faith by any such holder, or
by any noncompliance by the Company with the terms and provisions
and covenants herein regardless of any knowledge thereof any such
holder may have or otherwise be charged with.
The provisions of this Section 11 are intended to be for the
benefit of, and shall be enforceable directly by, the holders of
the Senior Indebtedness of the Company.
11.4. SUBROGATION.
Subject to the payment in full of all amounts payable under or in
respect of Senior Indebtedness of the Company, the Noteholder
shall be subrogated equally and ratably with other holders of the
Company's subordinated indebtedness (without any duty on the part
of the holder of Senior Indebtedness to warrant, create,
effectuate, preserve or protect such subrogation) to the rights
of the holders of such Senior Indebtedness to receive payments or
distributions of cash, property, assets or securities of the
Company made on such Senior Indebtedness until the Note shall be
paid in full; and for the purposes of such subrogation, no
payments or distributions to holders of such Senior Indebtedness
of any cash, property or securities to which Noteholder would be
entitled except for the provisions of this Section 11, and no
payment pursuant to the provisions of this Section 11 to holders
of such Senior Indebtedness by the Noteholder shall, as between
the Company, its creditors other than holders of such Senior
Indebtedness and the Noteholder be deemed to be a payment by the
Company to or on account of such Senior Indebtedness, it being
understood that the provisions of this Section 11 are solely for
the purpose of defining the relative rights of the holders of
such Senior Indebtedness, on the one hand, and the Noteholder, on
the other hand.
11.5. OBLIGATIONS OF COMPANY UNCONDITIONAL.
Nothing contained in this Section 11 or elsewhere in this
Agreement or in the Note is intended to, or shall, impair, as
between the Company, its creditors other than the holders of
Senior Indebtedness and the Noteholder, the obligations of the
Company, which are absolute and unconditional, to pay to the
Noteholder the principal of and interest on the Note as and when
the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of
the Noteholder and creditors of the Company other than the
holders of Senior Indebtedness of the Company, nor shall anything
herein or therein prevent the Noteholder from exercising all
remedies otherwise permitted by applicable law upon an Event of
Default under this Agreement, subject to the rights, if any,
under this Section 11 of the holders of such Senior Indebtedness
in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
The failure to make a payment on account of principal of or
interest on the Note by reason of any provision of this
Section 11 shall not be construed as preventing the occurrence of
an Event of Default under Section 8.1.
11.6. HOLDER ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Company shall give prompt written notice to the Noteholder of
any fact known to the Company which would prohibit the making of
any payments (including, without limitation, the payment of
principal or interest on the Note) where the same shall become
due and payable pursuant to this Section 11. The Noteholder
shall not at any time be charged with the knowledge of the
existence of any facts which would prohibit the receipt by such
Noteholder of any payment, unless and until the Noteholder shall
have received written notice thereof from the Company or one or
more holders of Senior Indebtedness of the Company or from any
trustee or agent therefor; provided, however, that if at least
three (3) Business Days prior to the date on which by the terms
of this Agreement any moneys are to be paid by the Company to the
Noteholder for any purpose (including, without limitation, the
payment of principal or interest on the Note), the Noteholder
shall not have received with respect to such moneys the notice
provided for in this sentence, the Noteholder shall have full
power and authority to receive such moneys and to apply the same
to the purpose for which they were received, and shall not be
affected by any notice to the contrary which may be received by
it on or after such date. Nothing contained in this Section 11.6
shall limit the right of the holders of Senior Indebtedness of
the Company to recover payments as contemplated by Section 11.2.
The Noteholder shall be entitled to rely on the delivery of a
written notice by a Person representing himself or itself to be a
holder of Senior Indebtedness (or a trustee on behalf of, or
other representative of, such holder) to establish that such
notice has been given by a holder of such Senior Indebtedness or
a trustee on behalf of any such holder.
11.7. RIGHT OF NOTEHOLDER TO HOLD SENIOR INDEBTEDNESS.
The Noteholder shall be entitled to all of the rights set forth
in this Section 11 in respect of any Senior Indebtedness of the
Company at any time held by it to the same extent as any other
holder of such Senior Indebtedness, and nothing in this Agreement
shall be construed to deprive such Noteholder of any of its
rights as such holder.
12. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have
the meanings specified with respect thereto below:
'Agreement' shall have the meaning specified in the introductory
paragraph hereof.
'Affiliate' means any Person (other than a Subsidiary), which
directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with the
Company or any of its Subsidiaries. Control may be by ownership,
contract or otherwise. Notwithstanding the foregoing, the term
Affiliate shall not include any Person solely because of such
Person's record or beneficial ownership of the Note acquired by
such Person solely in connection with the purchase of the Units.
'Bankruptcy Code' means Title 11 of the United States Code
entitled 'Bankruptcy' from time to time in effect, or any
successor statute.
'Bankruptcy Law' shall have the meaning specified in Section 8.1.
'Board of Directors' means the Board of Directors of any Person
or any duly authorized committee of such Board of Directors.
'Business Day' shall mean any day excluding Saturday, Sunday and
any day which either is a legal holiday under the laws of the
State of New York or is a day on which banking institutions
located in such state are authorized or required by law or other
governmental action to close.
'Capital Expenditures' means any expenditure that would be
classified as a capital expenditure on a consolidated statement
of cash flows of the Company and its Subsidiaries, prepared in
accordance with GAAP.
'Capital Stock' means any and all shares, interests,
participations or other equivalents (however designated) of
corporate stock.
'Closing' shall have the meaning specified in Section 2.
'Closing Date' shall have the meaning specified in Section 2.
'Company' means Tender Loving Care Health Care Services, Inc. a
Delaware corporation, and its successors and assigns.
'Consolidated' means, when used with reference to any amount,
such amount determined on a consolidated basis in accordance with
generally accepted accounting principles, after the elimination
of intercompany items.
'Consolidated Adjusted Net Worth' means, as of any date, the
total amount of stockholders' equity of the Company which would
appear on the consolidated balance sheet of the Company and its
Subsidiaries as of such date after excluding (to the extent
otherwise included therein) the following (the amount of such
stockholders' equity and deductions therefrom to be computed,
except as noted below, in accordance with GAAP):
(i) an amount attributable to interests (other than interests in
the Company) held by Persons other than the Company or its
Subsidiaries;
(ii) any revaluation or other write-up in book value of assets
subsequent to the date of this Agreement other than upon the
acquisition of assets or stock acquired in a transaction to be
accounted for by purchase accounting under GAAP, made within 12
months after the acquisition of such assets; and
(iii) treasury stock.
'Consolidated Net Income (Loss)' means, for any period, the
aggregate of the net income (loss) of the Company and its
Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP, provided, however, that there shall be
excluded from such net income (to the extent otherwise included
therein) (i) the net income (loss) of any Person which is not a
Subsidiary at such time and which is consolidated for accounting
purposes with the Company or accounted for by the equity method
of accounting, except to the extent of the amount of cash
dividends or distributions paid to the Company or to a
Subsidiary; (ii) except to the extent includable pursuant to
clause (i), the income (loss) of any Person accrued prior to the
date on which it becomes a Subsidiary of such Person or is merged
into or consolidated with such Person or any of its Subsidiaries;
and (iii) the income (loss) of any Subsidiary to the extent that
the declaration or payment of dividends or similar distributions
by that Subsidiary of that income (loss) is not at the time
permitted by operation of the terms of its charter or any
agreement, instrument (other than this Agreement), judgment,
decree, order, statute, rule or governmental regulation
applicable to the Subsidiary.
'Contractual Obligation' as applied to any Person, shall mean any
provision of any security issued by that Person or of any
indenture, mortgage, deed of trust, contract, undertaking,
agreement, or other instrument to which that Person is a party or
by which it or any of its properties (owned or leased) is bound
or to which it or any of its properties (owned or leased) is
subject.
'Cumulative Consolidated Net Income' shall have the meaning
specified in Section 6.8.
'Custodian' shall have the meaning specified in Section 8.1.
'Default' means any event which is, or after notice or lapse of
time or both would be, an Event of Default.
'Defaulting Purchaser' shall have the meaning specified in
Section 3.7.
'Event of Default'shall have the meaning provided in Section 8.1.
'Exchange Act' shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and the
rules and regulations promulgated thereunder.
'Fiscal Year' means, when used with reference to the Company or a
Subsidiary, the period commencing on the day following the last
Business Day in February and ending on the last Business Day of
the following February, or such other period (not to exceed 12
months or 53 weeks) as the Company may from time to time adopt as
its fiscal year.
'GAAP' shall mean generally accepted accounting principles and
practices set forth in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession that are
applicable to the circumstances as of the date of determination,
applied on a consistent basis.
'Guarantee' means the joint and several guaranty of payment under
the Note in the forms of the Guarantee by the Guarantors,
attached as Exhibit B hereto.
'Guarantors' means A Reliable Homemaker of ▇▇▇▇▇▇-St. Lucie
County, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Home Care, Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Services Corporation, Careco, Inc., Ethicare Certified Services,
Inc., S.B.H.F., Inc., SBPP, Inc., St. Lucie Home Health Agency,
Inc., Staff Builders Home Health Care, Inc., Staff Builders
Services, Inc., T.L.C. Medicare Services of Broward, Inc., T.L.C.
Medicare Services of Dade, Inc., T.L.C. Midwest, Inc., Tender
Loving Care Health Care Services, Inc., Tender Loving Care Home
Care Services, Inc., Tender Loving Care Private Patient Company,
Inc., U.S. Ethicare Albany Corporation, U.S. Ethicare Chautauqua
Corporation, U.S. Ethicare Erie Corporation, U.S. Ethicare
Niagara Corporation, and U.S. Ethicare Onondaga Corporation and
any of their respective subsidiaries and any future subsidiary of
the Company, and, in the event any successor replaces any of them
in accordance with Section 7, shall thereafter mean such
successor in place of each such company as the case may be.
'Investment' means, when used with reference to any Person, any
direct or indirect advances, loans or other extensions of credit
or capital contributions by such Person to (by means of transfers
of property to others or payments for property or services for
the account or use of others, or otherwise), or purchases or
acquisitions by such Person of Capital Stock, bonds, notes,
debentures or other securities issued by, any other Person.
'Lien' means any lien, security interest, charge or encumbrance
of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
'Material Adverse Effect' means a material adverse effect on
either the business, property, financial condition or results of
operations of the Company and its Subsidiaries as a whole, or the
ability of the Company to perform under this Agreement or the
ability of its Subsidiaries, as a whole, to perform the
Guarantee.
'Minimum Net Worth' shall have the meaning specified in
Section 6.8.
'Noteholder' means the Person in whose name the Note is
registered on the Company's books.
'Note' means the 8% Subordinated Note due January 1, 2005 issued
pursuant to the Securities Purchase Agreement, the form of which
Note is attached hereto as Exhibit A, as the same may be amended
or supplemented from time to time in accordance with their terms.
'Notice of Default' shall have the meaning specified in
Section 8.1.
'Officer' means the Chairman of the Board, the President, any
Senior Vice-President, any Vice-President, the Treasurer, the
Secretary or the Controller of any Person.
'Officer's [or Officers'] Certificate' means a certificate signed
by an Officer of any Person.
'Person' means any individual, corporation, trust, partnership,
limited liability company, joint venture, unincorporated
association or organization or any other entity.
'Property' means any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
'Purchaser' shall mean Medline Industries, Inc.
'Redeemable Stock' means, with respect to any Person, that
portion of any equity security of such Person that by its terms
or otherwise is required to be redeemed prior to the maturity of
the Note, or is redeemable at the option of the holder thereof at
any time prior to maturity of the Note.
'Restricted Debt Prepayment' means any purchase, redemption,
defeasance (including, but not limited to, in-substance or legal
defeasance) or other acquisition or retirement for value (other
than an exchange for Capital Stock other than Redeemable Stock)
(collectively a 'prepayment'), directly or indirectly, by the
Company or a Subsidiary, prior to scheduled maturity or prior to
any scheduled repayment of principal or sinking fund payment in
respect of Indebtedness of the Company which is subordinate
(whether pursuant to its terms or the operation of law) in right
of payment to the Note and which was scheduled to mature after
the maturity date of the Note, provided that any such prepayment
shall not be a Restricted Debt Prepayment if such prepayment is
financed with the proceeds of indebtedness incurred by the
Company.
'Restricted Investment' means any direct or indirect Investment
by the Company or any subsidiary in any Affiliate or the Company.
'Restricted Payment' means (i) any Stock Payment by the Company
or a Subsidiary, (ii) any Restricted Investment or (iii) any
Restricted Debt Prepayment. Notwithstanding the foregoing,
Restricted Payments shall not include:
(a) payments for goods and services, expenses, rental payments
in respect of leased property and payments in respect of loans,
provided that, in the case of transactions after the date of this
Agreement, the transactions giving rise to such payments are in
the ordinary course of business;
(b) payments by the Company to any Subsidiary or by any
Subsidiary to the Company or any other Subsidiary;
(c) any Restricted Investments that are no longer outstanding
(including Restricted Investments in any Affiliate from and after
the date that such Affiliate becomes a Subsidiary);
(d) payments by the Company or any Subsidiary of amounts
required or permitted to be paid under the Sale and Subservicing
Agreements and payments by the Company or any Subsidiary of
amounts required or permitted to be paid under any subsequent
agreement or agreements governing indebtedness incurred to
refund, refinance or replace the Sale and Subservicing
Agreements; and
(e) mandatory, scheduled or optional payments on the Note.
'Rule 144A' shall have the meaning specified in Section 15.14.
'Sale and Subservicing Agreements' shall mean the Sale and
Subservicing Agreements, dated as of December 8, 1999, by and
among the applicable Subsidiary, the Company, NPF XII Inc., and
National Premier Financial Services, Inc.
'SEC' means the Securities and Exchange Commission and any
government agency succeeding to its functions.
'Securities Act' means the Securities Act of 1933, as amended.
'Securities Purchase Agreement' means this Agreement.
'Senior Indebtedness' means the principal of, premium, if any,
and interest on, and any other payment due pursuant to the terms
of an instrument (including, without limitation, fees, expenses,
collection expenses (including attorneys'fees), interest yield
amounts, post-petition interest (whether or not earned) and
taxes) creating, securing or evidencing any of the following,
whether outstanding on the date of this Agreement or thereafter
incurred or created: (a) all indebtedness of the Company for
money borrowed or constituting reimbursement obligations with
respect to letters of credit and interest or currency swap
agreements including indebtedness secured by a mortgage,
conditional sales contract or other lien which is (i) for money
owing to banks, financial institutions or other recognized
institutional lenders of funds or
(ii) arising under a lease of property, equipment or other assets
which indebtedness, pursuant to GAAP is classified upon the
consolidated balance sheet of the Company and its Subsidiaries as
a liability, unless in the instrument creating or evidencing the
same or pursuant to which the same is outstanding it is provided
that such indebtedness is not superior in right of payment to the
Note, and (b) renewals, extensions, modifications and refundings
of such indebtedness.
'Significant Subsidiary' shall have the meaning provided in
Regulation S-X promulgated under the Exchange Act.
'Stock Payment' means (i) with respect to the Company, any
dividend, either in cash or in property (except dividends payable
in common stock of the Company), on, or the making by the Company
of any other distribution in respect of, its Capital Stock, now
or hereafter outstanding, or the redemption, repurchase,
retirement or other acquisition for value by the Company,
directly or indirectly, of its Capital Stock or any warrants
(other than the Warrants purchased pursuant to Section 5.1
hereof), rights (other than exchangeable or convertible
indebtedness of the Company) or options to purchase or acquire
shares of any class of its Capital Stock, now or hereafter
outstanding (other than through the issuance in exchange therefor
of Capital Stock which is not Redeemable Stock), and (ii) with
respect to any Subsidiary, any such dividend or distribution in
respect of, or any such redemption, repurchase, retirement or
other acquisition of, its Capital Stock or any warrants, rights
(other than exchangeable or convertible indebtedness of such
Subsidiary), or options to purchase or acquire shares of any
class of its Capital Stock, now or hereafter outstanding except
with respect to such Capital Stock or such warrants, rights or
options owned by the Company or a Subsidiary.
'Stock Sale Proceeds' shall have the meaning specified in
Section 6.8.
'Subsidiary' means, with respect to any Person, any corporation,
association or other business entity of which more than 50% of
the total voting power of equity entitled (without regard to the
occurrence of any contingency) to vote in the election of
directors, managers, officers or trustees thereof is at the time
owned in the aggregate, directly or indirectly, by such Person
and its subsidiaries.
'Transaction[s]' shall have the meaning specified in
Section 6.14.
'Units' shall have the meaning specified in Section 1.1(c) of
this Agreement.
'Warrants' shall mean the warrants issued pursuant to this
Agreement.
'Warrant Shares' shall mean the shares of Common Stock issuable
upon exercise of the Warrants.
'Yield' shall have the meaning specified in Section 13.
13. ORIGINAL ISSUE DISCOUNT.
The parties hereto agree (as contemplated by proposed Treasury
Regulation 1.1273-2(d)(2) (iv)) for United States Federal income
tax purposes that (a) the present value as of the Closing Date of
all payments under the Note using a discount rate ('Yield')
agreed to by the parties hereto, based on the original yields, of
comparable debt instruments of other issuers not issued as part
of an investment unit (which rate shall not be less than the
applicable Federal rate on the date such Note is issued), is
$100,000 per $100,000 principal amount, and, therefore, (b) the
'issue price' under 1273(b) of the Code of the Note to be
issued hereunder is $1,000 per $1,000 principal amount. The
parties hereto agree to use the foregoing issue prices and values
and the Yield which result from such issue price for U.S. Federal
income tax purposes with respect to this transaction.
14. JUDICIAL PROCEEDINGS.
14.1.CONSENT TO JURISDICTION.
The Company irrevocably submits to the non-exclusive jurisdiction
of any New York State or Federal court sitting in the City of New
York over any suit, action, or proceeding arising out of or
relating to this Agreement, the Units, the Note or the Warrants.
To the fullest extent it may effectively do so under applicable
law, the Company irrevocably waives and agrees not to assert, by
way of motion, as a defense or otherwise, any claim that it is
not subject to the jurisdiction of any such court, any objection
that they may now or hereafter have to the laying of the venue of
any such suit, action or proceeding brought in any such court,
and any claim that any such suit, action, or proceeding brought
in any such court has been brought in an inconvenient forum.
14.2.ENFORCEMENT OF JUDGMENTS.
The Company agrees, to the fullest extent it may effectively do
so under applicable law, that a judgment in any suit, action, or
proceeding of the nature referred to in Section 14.1 brought in
any such court shall be conclusive and binding upon the Company,
subject to rights of appeal, as the case may be, and may be
enforced in the courts of the United States of America or the
State of New York (or any other courts to the jurisdiction of
which the Company is or may be subject) by a suit upon such
judgment.
14.3.WAIVING OF JURY TRIAL.
ALL PARTIES TO THIS AGREEMENT IRREVOCABLY WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY JUDICIAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OBLIGATION.
▇▇.▇.▇▇ LIMITATION ON SUIT.
Nothing in this Section 14 shall limit any right that the
Purchaser may have to bring proceedings against the Company in
the courts of any jurisdiction or to enforce in any lawful manner
a judgment obtained in one jurisdiction in any other
jurisdiction.
15. MISCELLANEOUS.
15.1.PAYMENTS.
Notwithstanding any contrary provision herein or in the Note with
respect to the place of payment, payments of interest on, and all
or any portion of the principal of, the Note, other than the
final payment of principal, shall be made by the Company directly
to the Noteholder in immediately available funds (whether by
Federal funds, wire transfer or otherwise) by 12:00 noon, New
York City time, at the location of the Purchaser's bank account
on the date of payment, to such account as is specified beneath
the Purchaser's name on the signature page hereto or as shall
have been specified by separate written notice to the Company by
the Purchaser (providing sufficient information with respect to
such wire transfer to identify the source and application of the
funds and requesting the bank to send a credit advice thereof to
the Purchaser), or to such other account or in such other similar
manner as the Purchaser may designate to the Company in writing
in each case at least five (5) Business Days prior to the date of
payment. The Purchaser agrees that, before disposing of the
Note, the Purchaser will make a notation thereon (or on a
schedule attached thereto) of the date to which interest thereon
has been paid and the amount of all redemptions previously made
thereon. The Company agrees to afford the benefits of this
Section 15.1 to any institutional transferee which has made the
same agreements relating to such Note as the Purchaser has made
in this Section 15.1. Upon any partial prepayment of the Note,
such Note may at the option of the Noteholder thereof (a) be
surrendered to the Company in exchange for a new Note in a
principal amount remaining unpaid on the surrendered Note, or
(b) be made available to the Company for notation thereon of the
portion of the principal so prepaid. All final payments of the
principal amount of the Note may be made only upon presentment of
such Note to the Company. The Company agrees (for the benefit of
the Purchaser) to pay any and all stamp, transfer and other
similar taxes (together in each case with interest and penalties,
if any) payable or determined to be payable in connection with
the execution and delivery of this Agreement or the issuance of
the Units, Note and Warrants (but not in connection with a
transfer of any Unit, Note or Warrant).
15.2.CONSENT TO AMENDMENTS.
This Agreement may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to
be performed by it, only if the Company shall have obtained the
written consent to such amendment, action, or omission to act, of
the Purchaser, and each holder of the Note at the time or
thereafter outstanding shall be bound by any consent authorized
by this Section 15.2, whether such Note shall have been marked to
indicate such consent.
15.3.TRANSFER AND EXCHANGE OF NOTE; LOST NOTE.
Upon surrender for registration of transfer of the Note at the
principal office of the Company in accordance with the provisions
hereof, the Company shall, at its expense, execute and deliver
one or more new Notes of like tenor and of a like aggregate
principal amount, which Notes shall be registered in the name of
such transferee or transferees. At the option of the holder (or
nominee) of the Note, such Note may be exchanged for Notes of
like tenor and of denominations which are integral multiples of
$100,000, of a like aggregate principal amount, upon surrender of
the Note to be exchanged at the principal office of the Company.
Whenever the Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Note which the
holder making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of
transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. The Notes or Note
issued in exchange for the Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which
were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such
transfer or exchange. Upon receipt of written notice from the
holder of the Note (or nominee) and, in the case of any such
loss, theft, or destruction, upon receipt of an unsecured
indemnity agreement, or other indemnity reasonably satisfactory
to the Company from such holder, or in the case of any such
mutilation, upon surrender and cancellation of such Note, the
Company will make and deliver a new Note, of like tenor, in lieu
of the lost, stolen, destroyed, or mutilated Note.
15.4.PERSONS DEEMED OWNERS.
Prior to due presentment for registration of transfer, the
Company may treat the Person in whose name the Note is registered
as the owner and holder of such Note for the purpose of receiving
payment of principal and interest on, such Note and for all other
purposes whatsoever, whether such Note shall be overdue, and the
Company shall not be affected by notice to the contrary.
15.5.SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT; SEVERABILITY.
All representations, warranties, covenants and agreements
contained herein or made in writing by or on behalf of the
Company pursuant to or in connection herewith shall survive the
execution and delivery of this Agreement, the Note and Warrants,
the Closing of the purchase and sale of the Units hereunder, and
any investigation by the Purchaser. This Agreement, the Note,
the Warrants and any other agreement or instrument furnished
pursuant hereto or in connection herewith embody the entire
agreement and understanding between the Purchaser and the
Company, and supersede all prior agreements and understandings
relating to the subject matter hereof. Any provision of this
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provisions in any other
jurisdiction.
15.6.SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by or on behalf of
any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto
(including, without limitation, any transferee).
15.7.NOTICES.
All communications provided for hereunder or under the Note shall
be in writing and sent by certified or registered first class
mail or by facsimile transmission or delivered in person or by an
overnight delivery service (with charges prepaid) and (i) if to
the Purchaser, addressed or delivered to it at the address
specified for such communications on the signature page hereto or
to such other address as the Purchaser may have designated to the
Company in writing, (ii) if to any other holder of the Note,
addressed to such Noteholder at the registered address of such
Noteholder as set forth in the register kept by the Company at
its principal office, and (iii) if to the Company, addressed to
it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, with a
copy to ▇▇▇▇▇▇▇▇ & ▇'▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., or to such
other address or addresses as the Company shall have specified in
writing to the holder of each Note at the time outstanding. Each
such notice, request or other communication shall be effective
(i) if delivered in person or by an overnight delivery service,
on the date it is delivered; (ii) if sent by facsimile
transmission, on the date that transmission is received by a
responsible employee of recipient in legible form; or (iii) if
sent by certified or registered first class mail two (2) Business
Days after such communication is deposited in the U.S. mails with
first class postage prepaid, addressed as aforesaid.
15.8.DESCRIPTIVE HEADINGS.
The descriptive headings of the several paragraphs of this
Agreement are inserted for convenience only and do not constitute
a part of this Agreement.
15.9.EXHIBITS AND DISCLOSURE SCHEDULE.
Any Exhibits hereto and the Schedules attached hereto are
incorporated herein and shall be a part of this Agreement.
15.10.GOVERNING LAW.
This Agreement, the Note and the Warrants shall be construed and
enforced in accordance with, and the rights of the parties hereto
shall be governed by, the internal law of the State of New York.
15.11.COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
▇▇.▇▇.▇▇ DISCHARGE.
The respective obligations of the Company under this Agreement
shall be absolute and unconditional and shall remain in full
force and effect without regard to, and shall not be released,
discharged or in any way affected by: (i) any exercise or
nonexercise of any right, remedy, power or privilege under or in
respect of such agreements and instruments or applicable law; or
(ii) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceeding of,
or affecting, the Company.
15.13.PAYMENT ON BUSINESS DAYS.
Whenever any payment of principal or interest on the Note shall
be stated to be due, or whenever any date specified herein would
otherwise occur, on a day other than a Business Day, such payment
shall be made, and such other date shall be deemed to occur, on
the first succeeding Business Day. Any such extension of time
shall be included in the computation of interest payable.
15.14.RULE 144A INFORMATION.
The Company shall deliver to the Noteholder, within ten days
following receipt of a request by such Noteholder, the
information required by Section (d)(4) (or any other applicable
section) under Rule 144A, as it may be amended from time to time
('Rule 144A') under the Securities Act and any rules and
regulations thereunder. Such information shall be 'reasonably
current' as defined in Rule 144A.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in counterparts by their
respective officers thereunto duly authorized as of the date
first written above.
TENDER LOVING CARE HEALTH CARE SERVICES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title:President & COO
SECURITIES PURCHASE AGREEMENT FOR NOTE AND WARRANTS
PURCHASER SIGNATURE PAGE
Accepted and agreed as of the date first above written:
MEDLINE INDUSTRIES, INC.
(Name of Purchaser)
By: /s/ ▇▇▇▇▇▇▇ Abington
Name: ▇▇▇▇▇▇▇ Abington
Title: President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone:
Telecopy:
Telex:
Nominee (name which the Note or Warrants are to be registered, if
different than name of Purchaser):
Tax I.D. Number: 362596612
(if acquired in the name of a nominee, the taxpayer I.D. number
of such nominee)
Designated Bank:
Address:
ABA No.:
Account No.:
Attn: Aggregate Number and Purchase Price of Units to be
Purchased:
Number of Units: 1
Purchase Price: $1,000,000
Aggregate principal amount of Note of the Company to be
Purchased: $1,000,000
Aggregate number of Warrants of the Company to be Purchased:
333,333 1/3
Aggregate number of Warrant Shares Purchasable upon the Exercise
of the Warrants: 333,333 1/3
(Name of Joint Purchaser, if any)
(Signature)
Address:
Telephone:
Telecopy:
Telex:
Social Security
Number:
