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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report - May 29, 1998
(Date of earliest event reported)
MEDIQ INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 1-8147 51-0219413
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
One MEDIQ Plaza, Pennsauken, New Jersey 08110
(Address of principal executive offices, zip code)
Area Code (609) 662-3200
(Telephone number)
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Item 1. Changes in Control of Registrant.
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On May 29, 1998, pursuant to the terms of an Agreement and Plan of Merger dated
as of January 14, 1998 and amended as of April 27, 1998 (the "Merger Agreement")
between MEDIQ Incorporated (the "Company") and MQ Acquisition Corporation
("MQ"), MQ was merged with and into the Company (the "Merger") with the Company
continuing as the surviving corporation (the "Surviving Corporation"). MQ was a
Delaware corporation organized by Bruckmann, Rosser, Sherrill & Co., L.P.
("BRS") and certain other investors solely to effect the Merger. In connection
with the Merger, (i) the Company contributed certain of its assets and
liabilities (including the capital stock of all of the subsidiaries of the
Company other than MEDIQ/PRN Life Support Services, Inc. ("MEDIQ/PRN") to
MEDIQ/PRN (the "Reorganization"), (ii) MEDIQ/PRN entered into a new senior
secured credit facility with a syndicate of banks (the "New Credit Facility")
providing for up to $200.0 million of Term Loans (as defined herein), up to
$50.0 million of Revolving Loans (as defined herein) and up to $75.0 million of
Acquisition Loans (as defined herein), (iii) all indebtedness of the Company
except approximately $10.1 million of the Company's 7.5% exchangeable
subordinated debentures due 2003 (the "Exchangeable Debentures") and $2.0
million of MEDIQ/PRN's capital leases were repaid (the "Refinancing"), (iv) the
Company sold 140,885 units ("Units"), consisting of one 13% Senior Discount
Debenture due 2009 with a principal amount at maturity of $1,000 and one warrant
to purchase .6474 of a share of the common stock of the Company, for gross
proceeds aggregating $75.0 million in a Rule 144A private offering, and (v)
MEDIQ/PRN sold $190.0 million aggregate principal amount of 11% Senior
Subordinated Notes due 2008 (the "Notes") in the same Rule 144A private
offering.
On June 5, 1998, pursuant to the change of control provisions of the indenture
for the Exchangeable Debentures, the Company made a tender offer to repurchase
the remaining outstanding balance of approximately $10.1 million. The Units and
the Notes offered have not been registered under the Securities Act of 1933, as
amended, and may not be offered or sold in the United States absent registration
or an applicable exemption from registration. Capitalized terms not otherwise
defined herein have the meanings attributed to them in the operative documents
to which they relate and which are filed as exhibits hereto.
In order to finance a portion of the cash consideration paid pursuant to the
Merger, the Company's existing credit facility (the "Existing Credit Facility")
with a syndicate of banks was replaced by the $325.0 million New Credit
Facility.
The New Credit Facility consists of three facilities: (i) an eight-year senior
secured term loan facility in an aggregate principal amount equal to $200.0
million (the "Term Loan Facility"); (ii) a six-year revolving credit facility in
an aggregate principal amount not to exceed $50.0 million (the "Revolving Credit
Facility"); and (iii) a six-year senior secured acquisition facility in an
aggregate principal amount not to exceed $75.0 million (the "Acquisition
Facility"). Loans made under the Term Loan Facility are referred to herein as
"Term Loans", advances made under the Revolving Credit Facility are referred to
herein as "Revolving Loans" and loans made under the Acquisition Facility are
referred to herein as "Acquisition Loans".
Borrowings under the New Credit Facility bear interest at a floating rate based
upon, at MEDIQ/PRN's option, (i) the higher of the prime rate of Banque
Nationale de Paris, or the federal funds effective rate plus 0.5%, plus, in the
case of the Term Loans, a margin equal to 1.5%, and in the case of the Revolving
Loans and the
<PAGE>
Acquisition Loans, a margin equal to 1.0%, or (ii) the London Interbank Offered
Rate ("LIBOR") plus, in the case of the Term Loans, a margin equal to 2.75%, and
in the case of the Revolving Loans and the Acquisition Loans, a margin equal to
2.25%. MEDIQ/PRN may elect interest periods of one, two, three or six months for
LIBOR borrowings. Interest shall be payable at the end of each interest period
and, in any event, at least every three months.
In addition to paying interest on outstanding principal under the New Credit
Facility, MEDIQ/PRN is required to pay a commitment fee to the Senior Lenders
equal to 0.5% per annum of the undrawn portion of the commitments in respect of
the facilities (subject to adjustment as set forth below), commencing to accrue
upon the execution and delivery of the New Credit Facility and payable quarterly
in arrears and upon the termination of any commitment, in each case for the
actual number of days elapsed in a 365-day year. The New Credit Facility
contains provisions under which commitment fees and margins on interest rates
under the facilities will be adjusted in increments based on certain performance
goals.
The Term Loans amortize on a quarterly basis. Principal amounts outstanding
under the Revolving Credit Facility are due and payable in full at maturity.
Principal amounts outstanding under the Acquisition Facility at the Conversion
Date will amortize on a quarterly basis. The Term Loans, Revolving Loans and
Acquisition Loans are subject to mandatory prepayments and reductions in the
event of certain extraordinary transactions or issuances of debt and equity by
MEDIQ/PRN or any Facility Guarantor. Such loans will also be required to be
prepaid with 75% of the Excess Cash Flow of MEDIQ/PRN or, if the Company's ratio
of funded debt to pro forma EBITDA for the preceding 12-month period is less
than 5.0 to 1.0, 50% of such Excess Cash Flow.
The New Credit Facility contains representations and warranties, covenants,
events of default and other provisions customary for credit facilities of this
type. MEDIQ/PRN will pay the Senior Lenders certain syndication and
administration fees, reimburse certain expenses and provide certain indemnities,
in each case which are customary for credit facilities of this type.
The Notes, in the aggregate principal amount of $190.0 million, are unsecured
senior subordinated obligations of MEDIQ/PRN and mature on June 1, 2008. The
Notes will bear interest at the rate of 11% per annum, payable semiannually to
holders of record at the close of business on the May 15 or November 15
immediately preceding the interest payment date on June 1 and December 1 of each
year, commencing December 1, 1998. MEDIQ/PRN will pay interest on overdue
principal at 1% per annum in excess of such rate, and it will pay interest on
overdue installments of interest at such higher rate to the extent lawful.
The interest rate on the Notes is subject to increase in certain circumstances
if MEDIQ/PRN does not file a registration statement providing for a registered
exchange offer or if the registration statement is not declared effective on a
timely basis or if certain other conditions are not satisfied.
Upon a Change of Control, each holder of the Notes may require MEDIQ/PRN to
repurchase all or any portion of such holder's Notes at a purchase price equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of repurchase.
Each Unit consists of a Debenture with a principal amount at maturity of $1,000
and one Warrant. Each Warrant entitles the holder thereof to purchase .6474
shares of Common Stock from the Company, as the Surviving Corporation of the
Merger, at an exercise price of $0.01 per share, subject to adjustment. The
<PAGE>
Debentures and the Warrants will not trade separately until the commencement of
an exchange offer or the effectiveness of a shelf registration statement for the
Debentures or such earlier date after July 28, 1998, as the Initial Purchasers
may determine (the "Separation Date").
The Debentures will be unsecured senior obligations of the Company, limited to
$140.9 million aggregate principal amount at maturity, and will mature on June
1, 2009. No cash interest will accrue on the Debentures prior to June 1, 2003.
Cash interest will accrue on the Debentures at the rate of 13% per annum from
June 1, 2003, or from the most recent date to which interest has been paid or
provided for, payable on June 1 and December 1 of each year, commencing December
1, 2003 to holders of record at the close of business on the May 15 or November
15 immediately preceding the interest payment date. The Company will pay
interest on overdue principal at 1% per annum in excess of such rate, and it
will pay interest on overdue installments of interest at such higher rate to the
extent lawful.
The interest rate on the Debentures is subject to increase in certain
circumstances if the Company does not file a registration statement providing
for a registered exchange offer for the Debentures or if the registration
statement is not declared effective on a timely basis or if certain other
conditions are not satisfied.
Upon Change of Control, each holder of debentures may require the Company to
repurchase all or any portion of such holder's Debentures at a purchase price
equal to 101% of the Accreted Value thereof plus accrued and unpaid interest, if
any, to the date of repurchase.
Each Warrant, when exercised, will entitle the holder thereof to purchase .6474
shares of Common Stock from the Company, as the Surviving Corporation of the
Merger, at a price (the "Exercise Price") of $0.01 per share. The Exercise Price
and the number of shares of Common Stock issuable upon exercise of a Warrant are
both subject to adjustment in certain cases. The Warrants will initially entitle
the holders thereof to acquire, in the aggregate, 91,209 shares of Common Stock.
The Warrants may be exercised at any time after the first anniversary of the
Issue Date; provided, however, that holders of Warrants will be able to exercise
their Warrants only if a shelf registration statement relating to the Common
Stock underlying the Warrants is effective or the exercise of such Warrants is
exempt from the registration requirements of the Securities Act, and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
holders reside. Unless earlier exercised, the Warrants will expire on June 1,
2009 (the "Expiration Date"). The Warrants will not trade separately from the
Debentures until the Separation Date.
The aggregate consideration paid in connection with the Merger (the "Merger
Consideration") was approximately $390.7 million, which amount includes $20.0
million of Series A 13% Cumulative Compounding Preferred Stock, par value $.01
per share, of the Surviving Corporation ("Series A Preferred Stock"). In
addition, in connection with the Merger (i) certain controlling stockholders of
the Company (the "Rotko Entities") converted a portion of their preferred equity
in the Company into 1,340,219 shares of Series B 13.25% Cumulative Compounding
Perpetual Preferred Stock, par value $.01 per share ("Series B Preferred Stock")
and 109,781 shares of Common Stock, (ii) Thomas E. Carroll, Jay M. Kaplan and
certain other persons invested $4.2 million in common and preferred equity of
the Company, and (iii) BRS, certain entities and individuals affiliated with BRS
(together with BRS, the "BRS Entities") and certain funds affiliated with Ferrer
Freeman Thompson & Co. LLC and Galen Partners III, L.P. (the "Co-Investors")
<PAGE>
purchased $109.5 million of common and preferred equity of MQ (the "Equity
Contribution").
The authorized capital stock of the Surviving Corporation consists of (i) Common
Stock, par value $.01 per share ("Common Stock"), (ii) Series A Preferred Stock,
(iii) Series B Preferred Stock, and (iv) Series C 13.5% Cumulative Compounding
Preferred Stock, par value $.01 per share ("Series C Preferred Stock"). The BRS
Entities and Co-Investors hold 829,219 shares of the Common Stock, 5,624,565
shares of the Series A Preferred Stock, 1,602,363 shares of the Series B
Preferred Stock and 2,896,218 shares of the Series C Preferred Stock; the
Management Stockholders hold 61,000 shares of the Common Stock, 201,549 shares
of the Series A Preferred Stock, 57,419 shares of the Series B Preferred Stock
and 103,782 shares of the Series C Preferred Stock; the Rotko Entities hold
109,781 shares of the Common Stock, 632,360 shares of the Series A Preferred
Stock and 1,340,219 shares of the Series B Preferred Stock; and the existing
stockholders of the Company (other than the Rotko Entities) hold 1,365,030
shares of the Series A Preferred Stocks
Pursuant to the Merger Agreement, the previous Board of Directors was replaced
by a new Board comprised of Thomas E. Carroll, Bruce C. Bruckmann, Stephen C.
Sherrill, Robert T. Thompson, L. John Wilkerson, and Michael J. Rotko and may
include other individuals to be determined by BRS.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit 4.1 - Indenture for MEDIQ Incorporated 13% Senior Discount Debentures
Due 2009, dated as of May 15, 1998, by and between MEDIQ
Incorporated and United States Trust Company of New York.
Exhibit 4.2 - Indenture for MEDIQ/PRN Life Support Services, Inc. 11% Senior
Subordinated Notes Due 2008, dated as of May 15, 1998, among
MEDIQ/PRN Life Support Services, Inc., United States Trust
Company of New York, MEDIQ Investment Services, Inc., MEDIQ
Mobile X-Ray Services, Inc. and Value- Med Products, Inc.
Exhibit 4.3 - $325,000,000 Revolving Credit Facility and Term Loan Agreement,
dated as of May 29, 1998, among initial lenders named therein,
Banque Nationale de Paris, as administrative agent, NationsBank,
N.A., as syndication agent, Credit Suisse First Boston, as
documentation agent, and MEDIQ/PRN Life Support Services, Inc.
Exhibit 4.4 - Warrant Agreement, dated as of May 29, 1998, between MEDIQ
Incorporated and United States Trust Company of New York.
Exhibit 4.5 - Registration Rights Agreement, dated as of May 21, 1998, with
regard to the MEDIQ/PRN Life Support Services, Inc. $190,000,000
11% Senior Subordinated Notes Due 2008 and MEDIQ Incorporated
$140,885,000 Representing 140,885 Units consisting of 13% Senior
Discount Debentures Due 2009 and Warrants to Purchase 91,209
Shares of Common Stock.
<PAGE>
Exhibit 4.6 - Registration Rights Agreement, dated as of May 29, 1998, by and
among the investors named therein, MQ Acquisition Corporation and
MEDIQ Incorporated.
Exhibit 4.7 - Securities Purchase and Holders Agreement, dated as of May 29,
1998, by and among the investors named therein, MQ Acquisition
Corporation and MEDIQ Incorporated.
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MEDIQ INCORPORATED AND SUBSIDIARIES
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDIQ Incorporated
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(Registrant)
June 15, 1998
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(Date)
/s/ Jay M. Kaplan
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Jay M. Kaplan
Senior Vice-President - Finance
and Chief Financial Officer
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MEDIQ INCORPORATED
Issuer
13% Senior Discount Debentures Due 2009
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INDENTURE
Dated as of May 15, 1998
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UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
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310(a)(1) ........................... 7.10
(a)(2) ........................... 7.10
(a)(3) ........................... N.A.
(a)(4) ........................... N.A.
(b) ........................... 7.08; 7.10
(c) ........................... N.A.
311(a) ........................... 7.11
(b) ........................... 7.11
(c) ........................... N.A.
312(a) ........................... 2.05
(b) ........................... 10.03
(c) ........................... 10.03
313(a) ........................... 7.06
(b)(1) ........................... N.A.
(b)(2) ........................... 7.06
(c) ........................... 10.02
(d) ........................... 7.06
314(a) ........................... 4.02;
4.13; 10.02
(b) ........................... N.A.
(c)(1) ........................... 10.04
(c)(2) ........................... 10.04
(c)(3) ........................... N.A.
(d) ........................... N.A.
(e) ........................... 10.05
(f) ........................... 4.13
315(a) ........................... 7.01
(b) ........................... 7.05; 10.02
(c) ........................... 7.01
(d) ........................... 7.01
(e) ........................... 6.11
316(a)(last sentence) ........................... 10.06
(a)(1)(A) ........................... 6.05
(a)(1)(B) ........................... 6.04
(a)(2) ........................... N.A.
(b) ........................... 6.07
317(a)(1) ........................... 6.08
(a)(2) ........................... 6.09
(b) ........................... 2.04
318(a) ........................... 10.01
N.A. means Not Applicable.
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Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 Page
Definitions and Incorporation by Reference
SECTION 1.01. Definitions ............................ 1
SECTION 1.02. Other Definitions ...................... 28
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ........................ 29
SECTION 1.04. Rules of Construction .................. 29
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating ........................ 30
SECTION 2.02. Execution and Authentication ........... 30
SECTION 2.03. Registrar and Paying Agent ............. 31
SECTION 2.04. Paying Agent To Hold Money in Trust..... 32
SECTION 2.05. Securityholder Lists ................... 32
SECTION 2.06. Replacement Securities ................. 32
SECTION 2.07. Outstanding Securities ................. 33
SECTION 2.08. Temporary Securities ................... 33
SECTION 2.09. Cancelation ............................ 33
SECTION 2.10. Defaulted Interest ..................... 34
SECTION 2.11. CUSIP Numbers .......................... 34
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee ..................... 34
SECTION 3.02. Selection of Securities To Be
Redeemed ............................. 34
SECTION 3.03. Notice of Redemption ................... 35
SECTION 3.04. Effect of Notice of Redemption ......... 36
SECTION 3.05. Deposit of Redemption Price ............ 36
SECTION 3.06. Securities Redeemed in Part ............ 36
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2
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities .................. 37
SECTION 4.02. SEC Reports ............................ 37
SECTION 4.03. Limitation on Indebtedness ............. 37
SECTION 4.04. Limitation on Restricted Payments ...... 41
SECTION 4.05. Limitation on Restrictions on Dis-
tributions from Restricted
Subsidiaries ......................... 45
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock ..................... 47
SECTION 4.07. Limitation on Affiliate Transactions.... 51
SECTION 4.08. Limitation on the Sale or Issuance
of Capital Stock of Restricted
Subsidiaries ......................... 52
SECTION 4.09. Change of Control ...................... 52
SECTION 4.10. Limitation on Liens..................... 54
SECTION 4.11. Limitation on Sale/Leaseback
Transactions.......................... 54
SECTION 4.12. Compliance Certificates ................ 55
SECTION 4.13. Further Instruments and Acts ........... 55
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets ............................... 55
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default ...................... 56
SECTION 6.02. Acceleration ........................... 58
SECTION 6.03. Other Remedies ......................... 59
SECTION 6.04. Waiver of Past Defaults ................ 60
SECTION 6.05. Control by Majority .................... 60
SECTION 6.06. Limitation on Suits .................... 60
SECTION 6.07. Rights of Holders To Receive Payment ... 61
SECTION 6.08. Collection Suit by Trustee ............. 61
SECTION 6.09. Trustee May File Proofs of Claim ....... 61
SECTION 6.10. Priorities ............................. 61
SECTION 6.11. Undertaking for Costs .................. 62
SECTION 6.12. Waiver of Stay or Extension Laws ....... 62
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3
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee ...................... 62
SECTION 7.02. Rights of Trustee ...................... 64
SECTION 7.03. Individual Rights of Trustee ........... 64
SECTION 7.04. Trustee's Disclaimer ................... 65
SECTION 7.05. Notice of Defaults ..................... 65
SECTION 7.06. Reports by Trustee to Holders .......... 65
SECTION 7.07. Compensation and Indemnity ............. 65
SECTION 7.08. Replacement of Trustee ................. 66
SECTION 7.09. Successor Trustee by Merger ............ 67
SECTION 7.10. Eligibility; Disqualification .......... 68
SECTION 7.11. Preferential Collection of Claims
Against Company ...................... 68
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ........................... 68
SECTION 8.02. Conditions to Defeasance ............... 69
SECTION 8.03. Application of Trust Money ............. 71
SECTION 8.04. Repayment to Company ................... 71
SECTION 8.05. Indemnity for Government
Obligations .......................... 71
SECTION 8.06. Reinstatement .......................... 71
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders ............. 72
SECTION 9.02. With Consent of Holders ................ 72
SECTION 9.03. Compliance with Trust Indenture Act .... 73
SECTION 9.04. Revocation and Effect of Consents
and Waivers .......................... 73
SECTION 9.05. Notation on or Exchange of
Securities ........................... 74
SECTION 9.06. Trustee To Sign Amendments ............. 74
SECTION 9.07. Payment for Consent .................... 74
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4
ARTICLE 10
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls ........... 75
SECTION 10.02. Notices ................................ 75
SECTION 10.03. Communication by Holders with Other
Holders .............................. 76
SECTION 10.04. Certificate and Opinion as to
Conditions Precedent ................. 76
SECTION 10.05. Statements Required in Certificate
or Opinion ........................... 76
SECTION 10.06. When Securities Disregarded ............ 77
SECTION 10.07. Rules by Trustee, Paying Agent and
Registrar ............................ 77
SECTION 10.08. Legal Holidays ......................... 77
SECTION 10.09. Governing Law .......................... 77
SECTION 10.10. No Recourse Against Others ............. 77
SECTION 10.11. Successors ............................. 78
SECTION 10.12. Multiple Originals ..................... 78
SECTION 10.13. Table of Contents; Headings ............ 78
Rule 144A/Regulation S Appendix - Provisions Relating to Initial Securities,
Private Exchange Securities and Exchange Securities
Exhibit 1 to Rule 144A/Regulation S Appendix - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange Security
<PAGE>
INDENTURE dated as of May 15, 1998, between
MEDIQ INCORPORATED, a Delaware corporation (the
"Company"), and UNITED STATES TRUST COMPANY OF NEW
YORK, a New York banking corporation (the "Trustee"),
as Trustee.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of the Company's 13%
Senior Discount Debentures Due 2009 (the "Initial Securities") and, if and when
issued pursuant to a registered exchange for Initial Securities, the Company's
13% Senior Discount Debentures Due 2009 (the "Exchange Securities") and if and
when issued pursuant to a private exchange for Initial Securities, the Company's
13% Senior Discount Debentures Due 2009 (the "Private Exchange Securities",
together with the Exchange Securities and the Initial Securities, the
"Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that any
such Restricted Subsidiary described in clauses (ii) or (iii) above is primarily
engaged in a Related Business.
"Accreted Value" means, as of any date (the "Specified Date"),
the amount provided below for each $1,000 principal amount at maturity of
Securities:
(i) if the Specified Date occurs on one of the following dates
(each, a "Semi-Annual Accrual Date"),
<PAGE>
2
the Accreted Value will equal the amount set forth below for such
Semi-Annual Accrual Date:
Semi-Annual Accrual Date Accreted Value
------------------------ --------------
Issue Date................................. $ 532.350
June 1, 1998............................... 532.726
December 1, 1998........................... 567.353
June 1, 1999............................... 604.231
December 1, 1999........................... 643.506
June 1, 2000............................... 685.334
December 1, 2000........................... 729.881
June 1, 2001............................... 777.323
December 1, 2001........................... 827.849
June 1, 2002............................... 881.659
December 1, 2002........................... 938.967
June 1, 2003............................... 1,000.000
(ii) if the Specified Date occurs between two Semi-Annual
Accrual Dates, the Accreted Value will equal the sum of (a) the Accreted
Value for the Semi-Annual Accrual Date immediately preceding such Specified
Date and (b) an amount equal to the product of (1) the Accreted Value for
the immediately following Semi-Annual Accrual Date less the Accreted Value
for the immediately preceding Semi-Annual Accrual Date multiplied by (2) a
fraction, the numerator of which is the number of days elapsed from the
immediately preceding Semi-Annual Accrual Date to the Specified Date, using
a 360-day year of 12 30-day months, and the denominator of which is 180
(or, if the Semi-Annual Accrual Date immediately preceding the Specified
Date is the Issue Date, the denominator of which is 2); or
(iii) if the Specified Date occurs after the last Semi-Annual
Accrual Date, the Accreted Value will equal $1,000.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
<PAGE>
3
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions that
are part of a common plan) by the Company or any Restricted Subsidiary,
including any disposition by means of a merger, consolidation or similar
transaction (each referred to for the purposes of this definition as a
"disposition"), of (i) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares or shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary), (ii) all
or substantially all the assets of any division or line of business of the
Company or any Restricted Subsidiary or (iii) any other assets of the Company or
any Restricted Subsidiary outside of the ordinary course of business of the
Company or such Restricted Subsidiary (other than, in the case of (i), (ii) and
(iii) above, (x) a disposition by a Restricted Subsidiary to the Company or by
the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (y) for
purposes of Section 4.06 only, a disposition that constitutes a Restricted
Payment permitted by Section 4.04 and (z) disposition of assets with a fair
market value of less than $100,000); provided, however, that a disposition of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of Section 4.09
and/or the provisions of Section 5.01 and not by the provisions of Section 4.06.
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in such transaction, compounded annually) of the total
obligations of the lessee for net rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled
<PAGE>
4
principal payment of such Indebtedness or redemption or similar payment with
respect to such Preferred Stock multiplied by the amount of such payment by (ii)
the sum of all such payments.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the first public offering of common stock of the
Company, the Permitted Holders cease to be the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of the Company, whether as a result of issuance of securities
of the Company, any merger, consolidation, liquidation or dissolution of
the Company, any direct or indirect transfer of securities by the Company
or otherwise (for purposes of this clause (i) and clauses (ii) and (iv)
below, the Permitted Holders shall be deemed to beneficially own any Voting
Stock of any Person (the "specified entity") held by any other Person
<PAGE>
5
(the "parent entity") so long as the Permitted Holders beneficially own (as
so defined), directly or indirectly, in the aggregate a majority of the
voting power of the Voting Stock of the parent entity);
(ii) following the first public offering of common stock of
the Company, any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above, except that
for purposes of this clause (ii) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company; provided, however, that
the Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company than such other person and
do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors (for
the purposes of this clause (ii), such other person shall be deemed to
beneficially own any Voting Stock of a specified entity held by a parent
entity, if such other person is the beneficial owner (as defined in this
clause (ii)), directly or indirectly, of more than 35% of the voting power
of the Voting Stock of such parent entity and the Permitted Holders
beneficially own (as defined in clause (i) above), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent entity);
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with any new directors (A) whose election by such Board of
Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of a majority of the directors of the
Company then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved or (B) who are designees of one or more
<PAGE>
6
Permitted Holders) cease for any reason to constitute a majority of the
Board of Directors then in office; or
(iv) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the Company, or
the sale of all or substantially all the assets of the Company to another
Person (other than a Person that is controlled by the Permitted Holders),
and, in the case of any such merger or consolidation, the securities of the
Company that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent, immediately after such transaction,
at least a majority of the aggregate voting power of the Voting Stock of
the surviving corporation.
"CHI" means CH Industries, Inc., a Delaware corporation.
"CHI Acquisition" means the acquisition transactions
contemplated by the CHI Acquisition Agreement.
"CHI Acquisition Agreement" means the Asset Purchase Agreement
dated April 24, 1998, among the Company and the sellers named therein, as such
agreement is in effect on the Issue Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Investors" means Ferrer Freeman Thompson & Co. LLC and
Galen Partners III, L.P.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters for which financial statements are
available prior to the date of such determination to (ii) Consolidated
<PAGE>
7
Interest Expense for such four fiscal quarters; provided, however, that (1) if
the Company or any Restricted Subsidiary has Incurred any Indebtedness since the
beginning of such period that remains outstanding or if the transaction giving
rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence
of Indebtedness, or both, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the first day of such
period and the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period (except that, in making
such computation, the amount of Indebtedness under any revolving credit facility
outstanding on the date of such calculation shall be computed based on (A) the
average daily balance of such Indebtedness during such four fiscal quarters or
such shorter period when such facility was outstanding or (B) if such facility
was created after the end of such four fiscal quarters, the average balance of
such Indebtedness during the period from the date of creation of such facility
to the date of the computation), (2) if the Company or any Restricted Subsidiary
has repaid, repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the date
of the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall
be calculated on a pro forma basis as if such discharge had occurred on the
first day of such period and as if the Company or such Restricted Subsidiary has
not earned the interest income actually earned during such period in respect of
cash or Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness, (3) if since the beginning of such period
the Company or any Restricted Subsidiary shall have made any Asset Disposition,
the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
(if negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly
<PAGE>
8
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (4) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any such
Investment or acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, which constitutes all or
substantially all of a product line or an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any Indebtedness
and the application of the proceeds therefrom) as if such Investment or
acquisition occurred on the first day of such period and (5) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition, any
Investment or any acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).
<PAGE>
9
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, plus, to the extent not included in such total interest expense,
and to the extent incurred by the Company or its Restricted Subsidiaries,
without duplication, (i) interest expense attributable to Capital Lease
Obligations and the interest expense attributable to leases constituting part of
a Sale/Leaseback Transaction, (ii) amortization of debt discount and debt
issuance cost, (iii) capitalized interest, (iv) non-cash interest expenses, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) net costs associated with
Hedging Obligations (including amortization of fees), (vii) cash and
Disqualified Stock dividends in respect of all Preferred Stock of Restricted
Subsidiaries and Disqualified Stock of the Company held by Persons other than
the Company or a Wholly Owned Subsidiary, (viii) interest incurred in connection
with Investments in discontinued operations, (ix) interest accruing on any
Indebtedness of any other Person to the extent such Indebtedness is Guaranteed
by (or secured by the assets of) the Company or any Restricted Subsidiary and
(x) the cash contributions to any employee stock ownership plan or similar trust
to the extent such contributions are used by such plan or trust to pay interest
or fees to any Person (other than the Company or any Wholly Owned Subsidiary) in
connection with Indebtedness Incurred by such plan or trust and less, to the
extent included in such total interest expense, the amortization during such
period of debt issuance costs; provided, however, that the aggregate amount of
amortization relating to any such debt issuance costs deducted in calculating
Consolidated Interest Expense shall not exceed 5% of the aggregate amount of the
financing giving rise to such debt issuance costs.
"Consolidated Net Income" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(i) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that (A) subject to the
exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a
<PAGE>
10
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained
in clause (iii) below) and (B) the Company's equity in a net loss of any
such Person for such period shall be included in determining such
Consolidated Net Income;
(ii) for purposes of Section 4.04(a)(3)(A) only, any net
income (or loss) of any Person acquired by the Company or a Subsidiary in a
pooling of interests transaction for any period prior to the date of such
acquisition;
(iii) any net income of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly,
on the payment of dividends or the making of distributions by such
Restricted Subsidiary, directly or indirectly, to the Company, except that
(A) subject to the exclusion contained in clause (iv) below, the Company's
equity in the net income of any such Restricted Subsidiary for such period
shall be included in such Consolidated Net Income up to the aggregate
amount of cash that could have been distributed by such Restricted
Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution paid to another Restricted Subsidiary, to
the limitation contained in this clause) and (B) the Company's equity in a
net loss of any such Restricted Subsidiary for such period shall be
included in determining such Consolidated Net Income;
(iv) any gain or loss realized upon the sale or other
disposition of any assets of the Company or its consolidated Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not
sold or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or other disposition of any Capital
Stock of any Person;
(v) extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting
principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
loans or advances or other transfers of assets from Unrestricted Subsidiaries to
<PAGE>
11
the Company or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under Section
4.04(a)(3)(D).
"Credit Agreement" means the Credit Agreement to be entered
into by and among the Company, certain of its Subsidiaries, the lenders referred
to therein, Banque Nationale de Paris, as Administrative Agent, NationsBank,
N.A., as Syndication Agent, and Credit Suisse First Boston, as Documentation
Agent, together with the related documents thereto (including the term loans and
revolving loans thereunder, any guarantees, all security documents and any hedge
agreements), in each case, as amended, extended, renewed, restated, supplemented
or otherwise modified or refinanced (in whole or in part, and without limitation
as to amount, terms, conditions, covenants and other provisions) from time to
time, and any agreement (and related document) governing Indebtedness incurred
to Refinance, in whole or in part, the borrowings and commitments then
outstanding or permitted to be outstanding under such Credit Agreement or a
successor Credit Agreement, whether by the same or any other lender or group of
lenders.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable or must be purchased, upon the
occurrence of certain events or otherwise, by such Person at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the Stated Maturity of the Securities; provided, however, that
any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or
"change of control" occurring prior to the first anniversary of the
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12
Stated Maturity of the Securities shall not constitute Disqualified Stock if the
"asset sale" or "change of control" provisions applicable to such Capital Stock
are not more favorable to the holders of such Capital Stock than the provisions
of Sections 4.06 and 4.09.
"EBITDA" for any period means the sum of Consolidated Net
Income plus Consolidated Interest Expense plus the following to the extent
deducted in calculating such Consolidated Net Income: (a) all income tax expense
of the Company and its consolidated Restricted Subsidiaries, (b) depreciation
expense of the Company and its consolidated Restricted Subsidiaries, (c)
amortization expense of the Company and its consolidated Restricted Subsidiaries
(excluding amortization expense attributable to a prepaid cash item that was
paid in a prior period), (d) non-recurring severance and transaction costs
incurred in connection with any acquisition (including the Merger and the CHI
Acquisition) by the Company and its consolidated Restricted Subsidiaries and (e)
all other non-cash charges of the Company and its consolidated Restricted
Subsidiaries (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash expenditures in any future period),
in each case for such period. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and amortization
and non-cash charges of, a Restricted Subsidiary shall be added to Consolidated
Net Income to compute EBITDA only to the extent (and in the same proportion)
that the net income of such Restricted Subsidiary was included in calculating
Consolidated Net Income and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to such
Restricted Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" mean the notes issued in exchange for the
Notes pursuant to the Registration Rights Agreement.
"Exchangeable Debentures" mean the Company's 7.5% Exchangeable
Subordinated Debentures Due 2003.
<PAGE>
13
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness of any other
Person and any obligation, direct or indirect, contingent or otherwise, of such
other Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreements to
keep-well, to purchase assets, goods, securities or services, to take-or-pay or
to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Indebtedness
of the payment thereof or to protect such obligee against loss in respect
thereof (in whole or in part); provided, however, that the term "Guarantee"
shall not include endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.
The term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to
<PAGE>
14
be Incurred by such Subsidiary at the time it becomes a Subsidiary. The term
"Incurrence" when used as a noun shall have a correlative meaning. The accretion
of principal of a non-interest bearing or other discount security shall not be
deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication):
(i) the principal in respect of (A) indebtedness of such
Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable, including, in each case, any premium
on such indebtedness to the extent such premium has become due and payable;
(ii) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered into by
such Person;
(iii) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such Person and all obligations of such Person under any title retention
agreement (but excluding trade accounts payable arising in the ordinary
course of business) which purchase price or obligation is due more than six
months after the date of placing such property in service or taking
delivery and title thereto;
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (i)
through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the
tenth Business Day following payment on the letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock
or, with respect to any Subsidiary of such Person, the liquidation
preference with respect to, any Preferred Stock (but excluding, in each
case, any accrued dividends);
<PAGE>
15
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by
means of any Guarantee;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or asset
of such Person (whether or not such obligation is assumed by such Person),
the amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(viii) to the extent not otherwise included in this
definition, Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations described above at such date;
provided, however, that the amount outstanding at any time of any Indebtedness
issued with original issue discount shall be deemed to be the face amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Insolvency or Liquidation Proceeding" means (i) any
insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relating to the Company or any of its assets, (ii) any liquidation, dissolution
or other winding up of the Company, whether voluntary or involuntary or whether
or not involving insolvency or bankruptcy or (iii) any assignment for the
benefit of creditors or any other marshaling of assets or liabilities of the
Company.
"Interest Rate Agreement" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
<PAGE>
16
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of the
lender) or other extensions of credit (including by way of Guarantee or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the account
or use of others), or any purchase or acquisition of Capital Stock, Indebtedness
or other similar instruments issued by such Person; provided, however, that an
acquisition of assets, Capital Stock or other securities of any Person for
consideration consisting of common equity securities of the Company shall not be
deemed to be an "Investment". For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and Section 4.04, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"Issue Date" means the date on which the Securities are
originally issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Management Agreement" means the management services agreement
that becomes effective at the effective time of the Merger among Bruckmann,
Rosser, Sherrill & Co.,
<PAGE>
17
Inc., the Company, Galen Associates and Ferrer Freeman Thompson & Co. LLC, as
amended from time to time.
"MEDIQ/PRN" means MEDIQ/PRN Life Support Services, Inc., a
Delaware corporation and wholly owned subsidiary of the Company.
"Merger" means the merger of MQ Acquisition Corporation with
and into the Company pursuant to the Agreement and Plan of Merger dated as of
January 14, 1998, as amended as of April 27, 1998, between MQ Acquisition
Corporation and the Company.
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring Person
of Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of (i) all legal,
accounting, investment banking, title and recording tax expenses, commissions
and other fees and expenses incurred, and all Federal, state, provincial,
foreign and local taxes required to be paid or accrued as a liability under
GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon or other security agreement of any
kind with respect to such assets, or which must by its terms, or in order to
obtain a necessary consent to such Asset Disposition, or by applicable law, be
repaid out of the proceeds from such Asset Disposition, (iii) all distributions
and other payments required to be made to a Person owning a beneficial interest
in assets subject to sale or minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition, (iv) the deduction of
appropriate amounts provided by the seller as a reserve, in accordance with
GAAP, against any liabilities associated with the property or other assets
disposed in such Asset Disposition and retained by the Company or any Restricted
Subsidiary after such Asset Disposition and (v) any portion of the purchase
price from an Asset Disposition required by the terms of such Asset Disposition
to be placed in escrow (whether as a reserve for a purchase price adjustment,
for satisfaction of indemnities or otherwise); provided,
<PAGE>
18
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of the funds therein released to the Company or any
Restricted Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Non-Recourse", with respect to any Indebtedness of a
subsidiary, means Indebtedness (i) as to which neither the Company nor any of
its other Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) and (b) is directly or indirectly liable (as a Guarantor or
otherwise); and (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its other Restricted Subsidiaries.
"Note Indenture" means the Indenture dated the date hereof
among MEDIQ/PRN, the Subsidiary Guarantors and the Trustee with respect to the
Notes, as such Indenture is in effect on the Issue Date.
"Notes" mean the 11% Senior Subordinated Notes Due 2008 of
MEDIQ/PRN.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from
<PAGE>
19
legal counsel who is acceptable to the Trustee. The counsel may be an employee
of or counsel to the Company or the Trustee.
"Permitted Holders" means (i) BRS, Bruce C. Bruckmann, Harold
O. Rosser II, Stephen C. Sherrill and Stephen Edwards, the Co-Investors and the
Rotko Entities and any Person who on the Issue Date is an Affiliate of any of
the foregoing, (ii) Thomas S. Carroll, Jay M. Kaplan and any other Person who is
a member of the management of the Company or MEDIQ/PRN, and a shareholder of the
Company, on the Issue Date and (iii) any Related Party of any of the foregoing.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) the Company, a Restricted Subsidiary or a
Person that will, upon the making of such Investment, become a Restricted
Subsidiary; provided, however, that the primary business of such Restricted
Subsidiary is a Related Business; (ii) another Person if as a result of such
Investment such other Person is merged or consolidated with or into, or
transfers or conveys all or substantially all its assets to, the Company or a
Restricted Subsidiary; provided, however, that such Person's primary business is
a Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to
the Company or any Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business consistent with past practices of the Company or such
Restricted Subsidiary; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (viii) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to Section
4.06; and (ix) additional Investments in an aggregate amount which, together
with all other Investments made pursuant to this clause (ix) that are
outstanding, does not exceed $2.5 million.
<PAGE>
20
"Permitted Liens" means, with respect to any Person, (a)
pledges or deposits by such Person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person is
a party, or deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of business; (b)
Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in
each case for sums not yet due or being contested in good faith by appropriate
proceedings or other Liens arising out of judgments or awards against such
Person with respect to which such Person shall then be proceeding with an appeal
or other proceedings for review; (c) Liens for property taxes not yet subject to
penalties for non-payment or which are being contested in good faith and by
appropriate proceedings; (d) Liens in favor of issuers of surety bonds or
letters of credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; provided, however, that such
letters of credit do not constitute Indebtedness; (e) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of others for,
licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
real property or Liens incidental to the conduct of the business of such Person
or to the ownership of its properties which were not Incurred in connection with
Indebtedness and which do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the operation of the
business of such Person; (f) Liens securing Purchase Money Indebtedness or other
Indebtedness Incurred to finance the construction, purchase or lease of, or
repairs, improvements or additions to, property of such Person; provided,
however, that the Lien may not extend to any other property owned by such Person
or any of its Subsidiaries at the time the Lien is Incurred, and the
Indebtedness (other than any interest thereon) secured by the Lien may not be
Incurred more than 180 days after the later of the acquisition, completion of
construction, repair, improvement, addition or commencement of full operation of
the property subject to the Lien; (g) Liens to secure (A) Indebtedness permitted
under clauses (b)(1) and (b)(2) of Section 4.03 and (B) Indebtedness Incurred
pursuant to the Credit Agreement and permitted
<PAGE>
21
under the provisions of paragraph (a) of, or the provisions described in clause
(b)(16) under, Section 4.03; (h) Liens existing on the Issue Date; (i) Liens on
property or shares of Capital Stock of another Person at the time such other
Person becomes a Subsidiary of such Person; provided, however, that such Liens
are not created, incurred or assumed in connection with, or in contemplation of,
such other Person becoming such a Subsidiary; provided further, however, that
such Lien may not extend to any other property owned by such Person or any of
its Subsidiaries; (j) Liens on property at the time such Person or any of its
Subsidiaries acquires the property, including any acquisition by means of a
merger or consolidation with or into such Person or a Subsidiary of such Person;
provided, however, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such acquisition; provided further,
however, that the Liens may not extend to any other property owned by such
Person or any of its Subsidiaries; (k) Liens securing Indebtedness or other
obligations of a Subsidiary of such Person owing to such Person or a wholly
owned Subsidiary of such Person; (l) Liens securing Hedging Obligations so long
as such Hedging Obligations relate to Indebtedness that is, and is permitted to
be under this Indenture, secured by a Lien on the same property securing such
Hedging Obligations; and (m) Liens to secure any Refinancing (or successive
Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien
referred to in the foregoing clauses (f), (h), (i) and (j); provided, however,
that (x) such new Lien shall be limited to all or part of the same property that
secured the original Lien (plus improvements to or on such property) and (y) the
Indebtedness secured by such Lien at such time is not increased to any amount
greater than the sum of (A) the outstanding principal amount or, if greater,
committed amount of the Indebtedness described under clauses (f), (h), (i) or
(j) at the time the original Lien became a Permitted Lien and (B) an amount
necessary to pay any fees and expenses, including premiums, related to such
refinancing, refunding, extension, renewal or replacement. Notwithstanding the
foregoing, "Permitted Liens" will not include any Lien described in clauses (f),
(i) or (j) above to the extent such Lien applies to any Additional Assets
acquired directly or indirectly from Net Available Cash pursuant to Section
4.06. For purposes of this definition, the term "Indebtedness" shall be deemed
to include interest on such Indebtedness.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture,
<PAGE>
22
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"Post-Petition Interest" means all interest accrued or
accruing after the commencement of any Insolvency or Liquidation Proceeding (and
interest that would accrue but for the commencement of any Insolvency or
Liquidation Proceeding) in accordance with and at the contract rate (including,
without limitation, any rate applicable upon default) specified in the agreement
or instrument creating, evidencing or governing any Indebtedness, whether or
not, pursuant to applicable law or otherwise, the claim for such interest is
allowed as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"Public Equity Offering" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"Public Market" means any time after (x) a Public Equity
Offering has been consummated and (y) at least 10% of the total issued and
outstanding common stock of the Company has been distributed by means of an
effective registration statement under the Securities Act or sales pursuant to
Rule 144 under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated May
21, 1998, among the Company, MEDIQ/PRN, the Subsidiary Guarantors and the
Initial Purchasers.
"Purchase Money Indebtedness" means Indebtedness (including
Capital Lease Obligations) (i) consisting of the deferred purchase price of
property, conditional sale obligations, obligations under any title retention
<PAGE>
23
agreement, other purchase money obligations and obligations in respect of
industrial revenue bonds or similar Indebtedness, in each case where the
maturity of such Indebtedness does not exceed the anticipated useful life of the
asset being financed, and (ii) Incurred to finance the acquisition by the
Company or a Restricted Subsidiary of such asset, including additions and
improvements; provided, however, that any Lien arising in connection with any
such Indebtedness shall be limited to the specified asset being financed or, in
the case of real property or fixtures, including additions and improvements, the
real property on which such asset is attached; provided further, however, that
such Indebtedness is Incurred within 180 days after such acquisition of such
assets by the Company or any Restricted Subsidiary.
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in compliance with this Indenture, including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or (y) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement dated May 21, 1998, among the
<PAGE>
24
Company, MEDIQ/PRN, the Subsidiary Guarantors and the Initial Purchasers.
"Related Business" means any business related, ancillary or
complementary (as determined in good faith by the Board of Directors) to the
businesses of the Company and the Restricted Subsidiaries on the Issue Date.
"Related Party" means (i) any controlling stockholder, general
partner, 80% (or more) owned Subsidiary, or spouse or immediate family member
(in the case of an individual) of any Permitted Holder or (ii) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons holding an 80% or more controlling interest of which
consist solely of one or more Permitted Holders and/or such other Persons
referred to in the immediately preceding clause (i).
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and other
than dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held by any Person
or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than, in any such case, in exchange
for or into Capital Stock of the Company that is not Disqualified Stock), (iii)
the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition)
or (iv) the making of any Investment in any Person (other than a
<PAGE>
25
Permitted Investment). In determining the amount of any Restricted Payment made
in property other than in cash, such amount shall be the fair market value of
such property at the time of such Restricted Payment, as determined in good
faith by the Board of Directors.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the revolving credit
facility contained in the Credit Agreement and any other facility or financing
arrangement that Refinances or replaces, in whole or in part, any such revolving
credit facility.
"Rotko Entities" means (i) a trust established on November 18,
1983, by the late Bernard B. Rotko, (ii) Michael J. Rotko, (iii) Bessie G. Rotko
and (iv) Judith M. Shipon.
"Sale/Leaseback Transaction" means an arrangement
relating to property now owned or hereafter acquired whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means (i) Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter Incurred, and (ii) accrued
and unpaid interest (including Post-Petition Interest) in respect of (A)
Indebtedness of the Company for money borrowed and (B) Indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
the Company is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the Securities; provided, however, that Senior Indebtedness shall not
include (1) any obligation of the Company to any Subsidiary, (2) any liability
for Federal, state, local or other taxes owed or owing by the Company, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business
<PAGE>
26
(including guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness of the Company (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior by its terms to any other Indebtedness
or other obligation of the Company or (5) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of this Indenture.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the
Company (whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means any domestic Restricted
Subsidiary of MEDIQ/PRN that Guarantees MEDIQ/PRN's obligations with respect to
the Notes pursuant to the terms of the Note Indenture.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary
Guarantor of MEDIQ/PRN's obligations with respect to the Notes pursuant to the
terms of the Note Indenture.
<PAGE>
27
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$50,000,000 (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored by a
registered broker dealer or mutual fund distributor, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Company) organized and in existence
under the laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of which any
investment therein is made of "P-1" (or higher) according to Moody's Investors
Service, Inc. or "A-1" (or higher) according to Standard and Poor's Ratings
Group, and (v) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc.
"Term Loan Facility" means the term loan facilities (including
any delayed draw acquisition facilities) contained in the Credit Agreement and
any other facility or financing arrangement that Refinances or replaces in whole
or in part any such term loan facilities.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
ss.ss.77aaa-77bbbb) as in effect on the date of this Indenture.
<PAGE>
28
"Transactions" has the meaning specified in the Purchase
Agreement.
"Trustee" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of
its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on
any property of, the Company or any other Subsidiary of the Company that is not
a Subsidiary of the Subsidiary to be so designated; provided, however, that
either (A) the Subsidiary to be so designated has total assets of $1,000 or less
or (B) if such Subsidiary has assets greater than $1,000, such designation would
be permitted under Section 4.04. The Board of Directors may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could Incur
$1.00 of additional Indebtedness under Section 4.03(a) and (y) no Default shall
have occurred and be continuing. Any such designation by the Board of Directors
shall be evidenced to the Trustee by promptly filing with the Trustee a copy of
the resolution of the Board of Directors giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of
<PAGE>
29
America is pledged and which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction" ................ 4.07
"Bankruptcy Law" ....................... 6.01
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Event of Default" ..................... 6.01
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 10.08
"Offer" ................................ 4.06(b)
"Offer Amount" ......................... 4.06(c)(2)
"Offer Period" ......................... 4.06(c)(2)
"Paying Agent" ......................... 2.03
"Purchase Date" ........................ 4.06(c)(1)
"Registrar"............................. 2.03
"Successor Company" .................... 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
<PAGE>
30
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the issuer dated such date
prepared in accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater; and
(9) all references to the date the Securities were originally
issued shall refer to the date the Initial Securities were originally
issued.
<PAGE>
31
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Rule 144A/Regulation S Appendix attached hereto (the
"Appendix") which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form acceptable
to the Company). Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in the Appendix and Exhibit A are part of
the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the
<PAGE>
32
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
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SECTION 2.05. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list available
to it of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.07. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancelation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.06, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from
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34
paying such money to the Securityholders on that date pursuant to the terms of
this Indenture, then on and after that date such Securities (or portions
thereof) cease to be outstanding and interest on them ceases to accrue.
SECTION 2.08. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
SECTION 2.09. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and destroy (subject to the record retention requirements of the Exchange
Act) all Securities surrendered for registration of transfer, exchange, payment
or cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Trustee to deliver canceled Securities to the
Company. The Company may not issue new Securities to replace Securities it has
redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.10. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.11. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such
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35
numbers either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount at maturity of
Securities to be redeemed and the paragraph of the Securities pursuant to which
the redemption will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion shall deem to be fair and appropriate and in
accordance with methods generally used at the time of selection by fiduciaries
in similar circumstances. The Trustee shall make the selection from outstanding
Securities not previously called for redemption. The Trustee may select for
redemption portions of the principal amount at maturity of Securities that have
denominations larger than $1,000. Securities and portions of them the Trustee
selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company promptly of the Securities or portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of
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36
redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder's registered address.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts at maturity of the
particular Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and
after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date). Failure to give
notice or any defect in the notice to any Holder shall not affect the validity
of the notice to any other Holder.
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37
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount at maturity to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company
may not be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC (to the extent the SEC will
accept such filings) and provide the Trustee and Securityholders with such
annual reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and other
reports to be so filed and provided at the times
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38
specified for the filing of such information, documents and reports under such
Sections. The Company also shall comply with the other provisions of TIA
ss.314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company and its
Restricted Subsidiaries may Incur Indebtedness if, on the date of such
Incurrence and after giving effect thereto, the Consolidated Coverage Ratio
exceeds 1.80 to 1 if such Indebtedness is Incurred prior to June 1, 2000 or 2.00
to 1 if such Indebtedness is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company
and its Restricted Subsidiaries may Incur any or all of the following
Indebtedness:
(1) Indebtedness Incurred by MEDIQ/PRN or any Restricted
Subsidiary of MEDIQ/PRN pursuant to any Revolving Credit Facility;
provided, however, that, immediately after giving effect to any such
Incurrence, the aggregate principal amount of all Indebtedness Incurred
under this clause (1) and then outstanding does not exceed the greater
of (A) $50 million less the sum of all principal payments with respect
to such Indebtedness pursuant to clause (a)(ii)(A) of Section 4.06 and
(B) the sum of 60% of the book value of the inventory of the Company
and its Restricted Subsidiaries and 85% of the book value of the
accounts receivables of the Company and its Restricted Subsidiaries;
(2) Indebtedness Incurred by MEDIQ/PRN or any Restricted
Subsidiary of MEDIQ/PRN pursuant to any Term Loan Facility; provided,
however, that, after giving effect to any such Incurrence, the
aggregate principal amount of all Indebtedness Incurred under this
clause (2) and then outstanding does not exceed an amount equal to $200
million less the aggregate sum of all principal payments actually made
from time to time after the Issue Date with respect to such
Indebtedness (other than principal payments made in connection with any
permitted Refinancings thereof);
(3) Indebtedness owed to and held by the Company or a Wholly
Owned Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock which results in any such Wholly Owned
Subsidiary
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39
ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of
such Indebtedness (other than to the Company or a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Indebtedness by the obligor thereon;
(4) Indebtedness owed to and held by any Restricted Subsidiary
(other than a Wholly Owned Subsidiary); provided, however, that (i) any
such Indebtedness shall be unsecured Subordinated Obligations of the
Company or such Restricted Subsidiary, as applicable, and (ii) any
subsequent issuance or transfer of any Capital Stock of such Restricted
Subsidiary or any subsequent transfer of such Indebtedness (other than
to the Company, a Wholly Owned Subsidiary or another Restricted
Subsidiary) shall be deemed to constitute the Incurrence of such
Indebtedness by the issuer thereof;
(5) the Securities, the Notes and the Exchange Notes;
(6) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2), (3), (4) or (5) of this
Section 4.03(b));
(7) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (5) or (6)
of Section 4.03(b) or this clause (7);
(8) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary was
acquired by the Company or a Restricted Subsidiary (other than
Indebtedness Incurred as consideration in, in contemplation of or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant
to which such Subsidiary became a Subsidiary or was acquired by the
Company or a Restricted Subsidiary) and Refinancing Indebtedness in
respect thereof; provided, however, that such Indebtedness (including
Refinancing Indebtedness in respect thereof) is Non-Recourse to the
Company and its Restricted Subsidiaries, or to any of their respective
assets (other than the acquired Subsidiary and its Subsidiaries, as
applicable);
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(9) Indebtedness in respect of performance bonds and surety or
appeal bonds entered into by the Company and the Restricted
Subsidiaries in the ordinary course of their business;
(10) Hedging Obligations under or with respect to Interest Rate
Agreements and Currency Agreements entered into in the ordinary course
of business and not for the purpose of speculation;
(11) Purchase Money Indebtedness Incurred to finance the
acquisition by the Company or a Restricted Subsidiary of any assets in
the ordinary course of business; provided, however, at the time of such
Incurrence and after giving effect thereto, the aggregate principal
amount of all Indebtedness Incurred pursuant to this clause (11) and
then outstanding does not exceed $10 million;
(12) Subsidiary Guaranties of the Subsidiary Guarantors;
(13) the Guarantee of any Indebtedness otherwise permitted to be
Incurred pursuant to this Indenture or the Note Indenture (other than
Indebtedness Incurred pursuant to clause (8) above);
(14) Indebtedness of the Company or any Restricted Subsidiary
arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, provided that such Indebtedness is satisfied within
five Business Days of Incurrence;
(15) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case incurred in connection with the disposition
of any assets of the Company or any Restricted Subsidiary in a
principal amount not to exceed the gross proceeds actually received by
the Company or any Restricted Subsidiary in connection with such
disposition; and
(16) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness
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permitted by clauses (1) through (15) of this Section 4.03(b) or
Section 4.03(a)) does not exceed $50 million.
(c) Notwithstanding the foregoing, the Company shall not, and
shall not permit any Restricted Subsidiary to, Incur any Indebtedness pursuant
to Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities to at least the same extent as such Subordinated
Obligations.
(d) For purposes of determining compliance with this Section
4.03, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, the Company, in its sole
discretion, will classify such item of Indebtedness at the time of its
Incurrence and only be required to include the amount and type of such
Indebtedness in one of the above clauses and (ii) an item of Indebtedness may be
divided and classified in more than one of the types of Indebtedness described
above.
SECTION 4.04. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all
other Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Securities are originally
issued to the end of the most recent fiscal quarter for which
financial statements are available prior to the date of such
Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit);
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42
(B) the aggregate Net Cash Proceeds (or non-cash
proceeds when converted to cash) received by the Company from
the issuance or sale of its Capital Stock (other than
Disqualified Stock) and the aggregate cash received by the
Company as a capital contribution, in each case subsequent to
the Issue Date (other than an issuance or sale to a Subsidiary
of the Company and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the
Company or any of its Subsidiaries for the benefit of their
employees to the extent that the purchase by such plan or
trust is financed by Indebtedness of such plan or trust to the
Company or any Subsidiary or Indebtedness Guaranteed by the
Company or any Subsidiary);
(C) the amount by which Indebtedness of the Company
or its Restricted Subsidiaries is reduced on the Company's
consolidated balance sheet upon the conversion or exchange
(other than by a Subsidiary of the Company) subsequent to the
Issue Date of any Indebtedness of the Company or any
Restricted Subsidiary for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any
cash, or the fair value of any other property, distributed by
the Company or such Restricted Subsidiary upon such conversion
or exchange); and
(D) an amount equal to the sum of (i) the net
reduction in Investments in any Person resulting from
dividends, repayments of loans or advances or other transfers
of assets, in each case to the Company or any Restricted
Subsidiary from such Person, or resulting from the receipt by
the Company or any Restricted Subsidiary of proceeds realized
upon the sale of such Investment (other than a sale to an
Affiliate), and (ii) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair
market value of the net assets of an Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that the foregoing
sum shall not exceed, in the case of any Person, the amount of
Investments previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such
Person plus, to the extent not added pursuant to
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43
clause (3)(A) of Section 4.04(a), 50% of the excess, if any,
of the cash received upon the sale or other disposition of an
Investment over the amount of such Investment previously made
(and treated as a Restricted Payment).
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any Restricted Payment made out of the proceeds of the
substantially concurrent sale of, or capital contribution in respect
of, or made by exchange for, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the
benefit of their employees to the extent that the purchase by such plan
or trust is financed by Indebtedness of such plan or trust to the
Company or any Subsidiary or Indebtedness Guaranteed by the Company or
any Subsidiary); provided, however, that (A) such Restricted Payment
shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale or capital
contribution shall be excluded from the calculation of amounts under
clause (3)(B) of Section 4.04(a);
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness which is permitted to be Incurred pursuant to
Section 4.03; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value
shall be excluded in the calculation of the amount of Restricted
Payments;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that such dividend
shall be included in the calculation of the amount of Restricted
Payments;
(iv) the repurchase or other acquisition of shares of, or
options to purchase shares of, Capital Stock (other than Disqualified
Stock) of the Company,
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MEDIQ/PRN or any of its Subsidiaries from employees, former employees,
directors or former directors of the Company, MEDIQ/PRN or any of its
Subsidiaries (or permitted transferees of such employees, former
employees, directors or former directors), pursuant to the terms of the
agreements (including employment agreements) or plans or written
arrangements (or amendments thereto) approved by the Board of Directors
under which such individuals purchase or sell or are granted the option
to purchase or sell, shares of such common stock; provided, however,
that the aggregate amount of such repurchases and other acquisitions
shall not exceed the sum of (A) $5 million plus (B) the aggregate Net
Cash Proceeds received by the Company from the issuance of such Capital
Stock to, or the exercise of options to purchase such Capital Stock by,
employees or directors of the Company or any of its Subsidiaries that
occurs after the Issue Date (to the extent the Net Cash Proceeds from
the sale of such Capital Stock have not otherwise been applied to the
payment of Restricted Payments by virtue of clause (3)(B) of Section
4.04(a) or applied pursuant to Section 4.04(b)(i); provided further,
however, that such repurchases and other acquisitions shall be excluded
in the calculation of the amount of Restricted Payments;
(v) payments of dividends on the Company's common stock after
an initial public offering (other than an offering on Form S-8) of the
Company's common stock in an annual amount not to exceed 6% of the
aggregate gross proceeds to the Company from shares of common stock
sold for the account of the Company in such initial public offering;
provided, however, that such payments shall be included in the
calculation of the amount of Restricted Payments;
(vi) any purchase or redemption of Disqualified Stock of the
Company or a Restricted Subsidiary made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Disqualified Stock of
the Company or a Restricted Subsidiary which is permitted to be
Incurred pursuant to Section 4.03; provided, however, that such
purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments;
(vii) upon the occurrence of a Change of Control and within 60
days after the completion of the offer to
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repurchase the Securities pursuant to Section 4.09 (including the
purchase of the Securities tendered), any purchase or redemption of
Subordinated Obligations required pursuant to the terms thereof as a
result of such Change of Control at a purchase or redemption price not
to exceed the outstanding principal amount thereof, plus accrued and
unpaid interest (if any); provided, however, that (A) at the time of
such purchase or redemption no Default shall have occurred and be
continuing (or would result therefrom), (B) the Company would be able
to Incur an additional $1.00 of Indebtedness pursuant to Section
4.03(a) after giving pro forma effect to such Restricted Payment and
(C) such purchase or redemption shall be included in the calculation of
the amount of Restricted Payments;
(viii) any repurchase or other acquisition for value of
Capital Stock of a Restricted Subsidiary deemed to occur upon the
merger of such Restricted Subsidiary with or into the Company or a
Wholly Owned Subsidiary of the Company within one year following the
date on which such Restricted Subsidiary became a Restricted
Subsidiary; provided, however, that such repurchases or other
acquisitions shall be excluded in the calculation of the amount of
Restricted Payments;
(ix) payments required pursuant to the terms of the CHI
Acquisition Agreement to consummate the CHI Acquisition by the Company
or a Restricted Subsidiary pursuant to the terms of the CHI Acquisition
Agreement; provided, however, that such payments shall be excluded from
the calculation of the amount of Restricted Payments;
(x) repurchases of shares of Capital Stock in, and the payment
of fees and expenses, including deferred compensation which becomes
payable, in connection with, the Merger; provided, however, that such
payments shall be excluded in the calculation of the amount of
Restricted Payments;
(xi) Restricted Payments not exceeding $7.5 million in the
aggregate; provided, however, that (A) at the time of such Restricted
Payments, no Default shall have occurred and be continuing (or would
result therefrom) and (B) such Restricted Payments shall be included in
the calculation of the amount of Restricted Payments; or
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(xii) payments required in respect of the Exchangeable
Debentures when due at Stated Maturity; provided, however, that such
payments shall be included in the calculation of the amount of
Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:
(i) any encumbrance or restriction pursuant to an agreement,
including the Credit Agreement and the Note Indenture, in effect at or
entered into on the Issue Date;
(ii) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any Capital
Stock or Indebtedness Incurred by such Restricted Subsidiary on or
prior to the date on which such Restricted Subsidiary was acquired by
the Company or any of its Restricted Subsidiaries (other than
Indebtedness Incurred as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was acquired by
the Company or any of its Restricted Subsidiaries) and outstanding on
such date;
(iii) any encumbrance or restriction pursuant to an agreement
(A) evidencing Indebtedness Incurred without violation of this
Indenture or (B) effecting a Refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clause (i) or (ii) of this
Section 4.05 or this clause (iii) or contained in any amendment to an
agreement referred to in clause (i) or (ii) of this Section 4.05 or
this clause (iii); provided, however, that in the case of clauses (A)
and (B), the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such agreement or amendment are
no more restrictive in any
<PAGE>
47
material respect, as determined in good faith by the Board of
Directors, than encumbrances and restrictions with respect to such
Restricted Subsidiary contained in agreements of such Restricted
Subsidiary in effect at, or entered into on, the Issue Date;
(iv) any such encumbrance or restriction consisting of
customary non assignment or subletting provisions contained in leases
and other contracts entered into in the ordinary course of business and
consistent with past practices;
(v) in the case of clause (c) above, restrictions contained in
security agreements, mortgages or similar documents securing
Indebtedness of a Restricted Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such security
agreements, mortgages or similar documents;
(vi) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition;
(vii) any encumbrance or restriction arising under applicable
law; and
(viii) any encumbrance or restriction consisting of any
restriction on the sale or other disposition of assets or property
securing Indebtedness as a result of a Lien permitted to be Incurred
under this Indenture on such asset or property.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless (i) the
Company or such Restricted Subsidiary receives consideration at the time of such
Asset Disposition at least equal to the fair market value (including as to the
value of all non-cash consideration), as determined in good faith by the Board
of Directors, of the shares and assets subject to such Asset Disposition and at
least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents (provided that
such 75% requirement shall not apply to any Asset Disposition in which the cash
or cash equivalents portion of the
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48
consideration received therefor, determined in accordance with this covenant, is
equal to or greater than what the net after-tax proceeds would have been had the
Asset Disposition complied with such 75% requirement) and (ii) an amount equal
to 100% of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Restricted Subsidiary, as the case may be) (A) first, to the
extent the Company (or such Restricted Subsidiary, as the case may be) elects
(or is required by the terms of any Indebtedness), to prepay, repay, redeem or
purchase Senior Indebtedness of the Company or Indebtedness (other than any
Disqualified Stock) of a Wholly Owned Subsidiary (in each case other than
Indebtedness owed to the Company or an Affiliate of the Company) within one year
from the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (B) second, to the extent of the balance of such Net Available
Cash after application, if any, in accordance with clause (A), to the extent the
Company elects, to acquire Additional Assets within one year (or enter into a
binding commitment to acquire Additional Assets, provided that such commitment
shall be subject only to customary conditions (other than financing) and such
acquisition shall be consummated within two years from) from the later of the
date of such Asset Disposition or the receipt of such Net Available Cash; and
(C) third, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and (B), to make an Offer to the
holders of the Securities (and to holders of other Senior Indebtedness
designated by the Company) to purchase Securities (and such other Senior
Indebtedness) pursuant to and subject to the conditions of Section 4.06(b);
provided, however, that in connection with any prepayment, repayment or purchase
of Indebtedness pursuant to clause (A) or (C) above, the Company or such
Restricted Subsidiary shall permanently retire such Indebtedness and shall cause
the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased. Notwithstanding
the foregoing provisions of this Section 4.06, the Company and the Restricted
Subsidiaries shall not be required to apply any Net Available Cash in accordance
with this Section 4.06(a) except to the extent that the aggregate Net Available
Cash from all Asset Dispositions which are not applied in accordance with this
Section 4.06(a) exceeds $10 million. Pending application of Net Available Cash
pursuant to this Section 4.06(a), such Net Available Cash shall be invested in
Permitted Investments or used to temporarily reduce loans outstanding under any
Revolving Credit Facility.
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49
For the purposes of this Section 4.06, the following are
deemed to be cash or cash equivalents: (x) the assumption of Indebtedness of the
Company or any Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability on such Indebtedness in connection with
such Asset Disposition (in which case the Company shall, without further action,
be deemed to have applied such assumed Indebtedness in accordance with clause
(A) of the preceding paragraph) and (y) securities received by the Company or
any Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Indebtedness) pursuant to Section
4.06(a)(ii)(C), the Company shall be required to purchase Securities tendered
pursuant to an offer by the Company for the Securities (and other Senior
Indebtedness) (the "Offer") at a purchase price of 100% of their Accreted Value
(in the case of the Securities) or 100% of their principal amount, without
premium (in the case of other Senior Indebtedness), plus accrued but unpaid
interest (or, in respect of such other Senior Indebtedness, such lesser price,
if any, as may be provided for by the terms of such Senior Indebtedness) in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.06(c). The Company shall not be
required to make an Offer to purchase Securities (and other Senior Indebtedness)
pursuant to this Section 4.06 if the Net Available Cash available therefor is
less than $10 million (which lesser amount shall be carried forward for purposes
of determining whether such an Offer is required with respect to the Net
Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Securities purchased by the
Company either in whole or in part (subject to prorating as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount at maturity, at the applicable purchase price. The
notice shall specify a purchase date not less than 30 days nor more than 60 days
after the date of such notice (the "Purchase Date") and shall contain such
information concerning the business of the Company which the Company in good
faith believes will enable such Holders to
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50
make an informed decision (which at a minimum will include (i) the most recently
filed Annual Report on Form 10-K (including audited consolidated financial
statements) of the Company, the most recent subsequently filed Quarterly Report
on Form 10-Q and any Current Report on Form 8-K of the Company filed subsequent
to such Quarterly Report, other than Current Reports describing Asset
Dispositions otherwise described in the offering materials (or corresponding
successor reports), (ii) a description of material developments in the Company's
business subsequent to the date of the latest of such Reports, and (iii) if
material, appropriate pro forma financial information) and all instructions and
materials necessary to tender Securities pursuant to the Offer, together with
the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided above, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the amount of the Offer (the
"Offer Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) in Temporary Cash Investments, maturing on the last day prior to the
Purchase Date or on the Purchase Date if funds are immediately available by open
of business, an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancelation the Securities or portions thereof which
have been properly tendered to and are to be accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event that the aggregate
purchase price of the Securities delivered by the Company to the Trustee is less
than the Offer Amount applicable to the Securities, the Trustee shall deliver
the excess to the Company immediately after the expiration of the Offer Period
and such excess shall no longer be required to be applied pursuant to this
Section.
(3) Holders electing to have a Security purchased shall be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address
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51
specified in the notice at least three Business Days prior to the Purchase Date.
Holders shall be entitled to withdraw their election if the Trustee or the
Company receives not later than one Business Day prior to the Purchase Date, a
telex, facsimile transmission or letter setting forth the name of the Holder,
the principal amount at maturity of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. If at the expiration of the Offer
Period the aggregate principal amount at maturity of Securities (and any other
Senior Indebtedness included in the Offer) surrendered by holders thereof
exceeds the Offer Amount, the Company shall select the Securities and the other
Senior Subordinated Indebtedness to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Securities
and the other Senior Subordinated Indebtedness in denominations of $1,000, or
integral multiples thereof, shall be purchased). Holders whose Securities are
purchased only in part shall be issued new Securities equal in principal amount
at maturity to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this Section. A Security
shall be deemed to have been accepted for purchase at the time the Trustee,
directly or through an agent, mails or delivers payment therefor to the
surrendering Holder.
(d) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with any
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52
Affiliate of the Company (an "Affiliate Transaction") unless the terms thereof
(i) are no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained at the time of such transaction in arm's-length
dealings with a Person who is not such an Affiliate, (ii) if such Affiliate
Transaction involves an amount in excess of $1 million, have been approved by a
majority of the members of the Board of Directors having no personal stake in
such Affiliate Transaction and (iii) if such Affiliate Transaction involves an
amount in excess of $5 million (other than Affiliate Transactions in the
ordinary course of business of the Company and its Restricted Subsidiaries
between or among the Company or any Restricted Subsidiary of the Company and any
Person providing goods and/or services to the Company or any Restricted
Subsidiary in the ordinary course of business that is an Affiliate of the
Company or such Restricted Subsidiary solely by virtue of the fact that BRS, or
any Person controlling BRS, directly or indirectly controls both the Company or
such Restricted Subsidiary and such Affiliate; provided, however, that such
Affiliate Transaction shall comply with clause (i) above), have been determined
by (A) a nationally recognized investment banking firm to be fair, from a
financial standpoint, to the Company and its Restricted Subsidiaries or (B) an
accounting or appraisal firm nationally recognized in making such determinations
to be on terms that are not less favorable to the Company and its Restricted
Subsidiaries than the terms that could be obtained in an arm's-length
transaction from a Person that is not an Affiliate of the Company.
(b) The provisions of Section 4.07(a) shall not prohibit (i)
any Restricted Payment permitted to be paid pursuant to Section 4.04, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii) the
grant of stock options or similar rights to employees and directors of the
Company pursuant to plans approved by the Board of Directors, (iv) loans or
advances to employees in the ordinary course of business of the Company or its
Restricted Subsidiaries, but in any event not to exceed $2 million in the
aggregate outstanding at any one time, (v) the payment of reasonable
compensation or employee benefit arrangements to and indemnity provided for the
benefit of directors, officers or employees of the Company or its Restricted
Subsidiaries in the ordinary course of business, (vi) payments made in
connection with the Transactions, including the payment to BRS, the Co-Investors
or any of
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53
their respective Affiliates of (A) a transaction fee in connection with the
Merger in an aggregate amount not to exceed $6 million and (B) other fees
pursuant to the Management Agreement in an annual amount not to exceed in any
fiscal year an amount equal to the greater of (x) $1 million and (y) one and
one-half percent of the Company's EBITDA for such fiscal year, (vii) any
Affiliate Transaction between the Company and a Wholly Owned Subsidiary or
between Wholly Owned Subsidiaries and (viii) the issuance or sale of any Capital
Stock (other than Disqualified Stock) of the Company.
SECTION 4.08. Limitation on the Sale or Issuance of Capital
Stock of Restricted Subsidiaries. The Company shall not sell or otherwise
dispose of any Capital Stock of a Restricted Subsidiary (other than the pledge
of Capital Stock pursuant to the Credit Agreement), and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any of its Capital Stock except (i) to the Company or a Wholly Owned
Subsidiary, (ii) directors' qualifying shares or other shares required by
applicable law to be held by a Person other than the Company or a Restricted
Subsidiary, (iii) if, immediately after giving effect to such issuance, sale or
other disposition, neither the Company nor any of its Subsidiaries own any
Capital Stock of such Restricted Subsidiary or (iii) if, immediately after
giving effect to such issuance, sale or other disposition, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect thereto would have been permitted
to be made under Section 4.04 if made on the date of such issuance, sale or
other disposition.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase such Holder's Securities at a purchase price in cash equal to 101% of
the Accreted Value thereof on the date of purchase plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive interest on the relevant interest
payment date), in accordance with the terms contemplated in Section 4.09(b). In
the event that at the time of such Change of Control the terms of the Senior
Indebtedness of the Company restrict or prohibit the repurchase of Securities
pursuant to this Section, then prior to the mailing of the notice to Holders
provided for in Section 4.09(b) below but in any event within 30 days
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54
following any Change of Control, the Company shall (i) repay in full all such
Senior Indebtedness or offer to repay in full all such Senior Indebtedness and
repay such Senior Indebtedness of each lender who has accepted such offer or
(ii) obtain the requisite consent under the agreements governing such Senior
Indebtedness to permit the repurchase of the Securities as provided for in
Section 4.09(b).
(b) Within 30 days following any Change of Control, the
Company shall mail a notice to each Holder with a copy to the Trustee (the
"Change of Control Offer") stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the Accreted
Value thereof on the date of purchase plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant
interest payment date);
(2) the circumstances and relevant facts regarding such Change
of Control;
(3) the repurchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(4) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount at maturity of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered
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55
by the Trustee for cancelation, and the Company shall pay the purchase price
plus accrued and unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section,
the Company will not be required to make a Change of Control Offer upon a Change
of Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section and purchases all Securities validly tendered and not withdrawn under
such Change of Control Offer.
(f) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.10. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur or
permit to exist any Lien of any nature whatsoever on any of its properties
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter acquired, other than Permitted Liens, without effectively
providing that the Securities shall be secured equally and ratably with (or
prior to) the obligations so secured for so long as such obligations are so
secured.
SECTION 4.11. Limitation on Sale/Leaseback Transactions. The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction with respect to any property unless (i) the
Company or such Subsidiary would be entitled to (A) Incur Indebtedness in an
amount equal to the Attributable Debt with respect to such Sale/Leaseback
Transaction pursuant to Section 4.03 and (B) create a Lien on such property
securing such Attributable Debt without equally and ratably securing the
Securities pursuant to Section 4.10, (ii) the net proceeds received by the
Company or any Restricted Subsidiary in connection with such Sale/Leaseback
Transaction are at least equal to the fair value (as determined in good faith by
the Board of Directors) of such
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56
property and (iii) the Company applies the proceeds of such transaction in
compliance with Section 4.06.
SECTION 4.12. Compliance Certificates. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA ss.314(a)(4).
SECTION 4.13. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a)
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or
substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the
laws of the United States of America, or any State thereof or the
District of Columbia and the Successor Company (if not the Company)
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Subsidiary as a result of such transaction as having
been Incurred by such Successor Company or such Subsidiary at the time
of such transaction), no Default shall have occurred and be continuing;
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57
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, and the predecessor Company, except
in the case of a lease, shall be released from the obligation to pay the
principal of and interest on the Securities.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, and such default
continues for a period of 30 days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon declaration or otherwise or
(ii) fails to redeem or purchase Securities when required pursuant to
this Indenture or the Securities;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10 or 4.11 (other than a failure to
purchase Securities when required under Section 4.06 or 4.09) and such
failure continues for 30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clause (1), (2), (3) or (4)
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58
above) and such failure continues for 60 days after the notice
specified below;
(6) Indebtedness of the Company or any Significant Subsidiary
(other than Indebtedness owed to the Company or its Restricted
Subsidiaries) is not paid within any applicable grace period after
final maturity or is accelerated by the holders thereof because of a
default and the total amount of such Indebtedness unpaid or accelerated
exceeds $10.0 million and such default shall not have been cured or
such acceleration rescinded for 10 days after the notice specified
below;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
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59
(9) any judgment or decree (not subject to appeal) for the
payment of money in an uninsured amount in excess of $10.0 million is
entered against the Company or any Significant Subsidiary, remains
outstanding for a period of 60 days following the entry of such
judgment or decree and is not discharged, waived or the execution
thereof stayed within 10 days after the notice specified below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clauses (4), (5), or (9) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount at
maturity of the outstanding Securities notify the Company in writing of the
Default and the Company does not cure such Default within the time specified
after receipt of such notice. Such notice must specify the Default, demand that
it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in principal amount at maturity of the Securities by
notice to the Company and the Trustee, may declare the Accreted Value of and
accrued but unpaid interest, if any, on all the Securities to be due and
payable. Upon such a declaration, such Accreted Value and
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60
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company occurs and is continuing,
the Accreted Value of and interest on all the Securities shall ipso facto become
and be immediately due and payable without any declaration or other act on the
part of the Trustee or any Securityholders. The Holders of a majority in
principal amount at maturity of the outstanding Securities by notice to the
Trustee may rescind an acceleration and its consequences if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of acceleration. No such rescission shall affect any
subsequent Default or impair any right consequent thereto. In the event of any
Event of Default specified in 6.01(6), such Event of Default and all
consequences thereof (including, without limitation, any acceleration or
resulting payment default) shall be annulled, waived or rescinded, automatically
and without any action by the Trustee or the Securityholders, if within 20 days
after such Event of Default arose (x) the Indebtedness or guarantee that is the
basis for such Event of Default has been discharged in a manner that does not
violate the terms of this Indenture or (y) the holders thereof have rescinded or
waived the acceleration, notice or action (as the case may be) giving rise to
such Event of Default.
SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount at maturity of the Securities by notice to the
Trustee may waive an existing Default and its consequences except (i) a Default
in the payment of the principal of or interest on a Security (ii) a Default
arising from the failure to redeem or purchase any
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61
Security when required pursuant to this Indenture or (iii) a Default in respect
of a provision that under Section 9.02 cannot be amended without the consent of
each Securityholder affected. When a Default is waived, it is deemed cured, but
no such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount at maturity of the outstanding Securities may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or, subject to Section 7.01, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount at
maturity of the Securities make a written request to the Trustee to
pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount at maturity
of the Securities do not give the Trustee a direction inconsistent with
the request during such 60-day period.
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A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind,
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according to the amounts due and payable on the Securities for principal and
interest, respectively; and
THIRD: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than 10% in principal amount at maturity of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise such of the rights
and powers vested in it by this Indenture and use the same degree of care and
skill in their exercise as a prudent Person would exercise or use
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under the circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
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(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) Subject to Section 7.01(c), the Trustee shall not be
liable for any action it takes or omits to take in good faith which it believes
to be authorized or within its rights or powers.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become
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the owner or pledgee of Securities and may otherwise deal with the Company or
its Affiliates with the same rights it would have if it were not Trustee. Any
Paying Agent, Registrar, co-registrar or co-paying agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security,
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers determines that withholding the notice is not opposed to the interests
of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each June 1 beginning with the June 1 following the date of
this Indenture, and in any event prior to August 1 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of June 1 that
complies with TIA ss.313(a). The Trustee also shall comply with TIA ss.313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services.
The Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of
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collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including attorneys' reasonable fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder, unless such failure prejudices the
Company. The Company shall defend the claim and the Trustee may have separate
counsel and the Company shall pay the fees and expenses of such counsel. The
Company need not reimburse any expense or indemnify against any loss, liability
or expense incurred by the Trustee through the Trustee's own wilful misconduct,
negligence or bad faith. The Company shall not be obligated to pay for any
settlement made by the Trustee without the consent of the Company, such consent
not to be unreasonably withheld.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in Section 6.01(7) or (8) with
respect to the Company, the expenses are intended to constitute expenses of
administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount at maturity of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
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(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount at maturity of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount at maturity of the Securities may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided, however, that such
successor shall be eligible and qualified under Section 7.10.
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In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA ss.310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
ss.310(b); provided, however, that there shall be excluded from the operation of
TIA ss.310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA ss.310(b)(1)
are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been removed
shall be subject to TIA ss.311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.06) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such
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redemption date (other than Securities replaced pursuant to Section 2.06), and
if in either case the Company pays all other sums payable hereunder by the
Company, then this Indenture shall, subject to Sections 8.01(c), cease to be of
further effect. The Trustee shall acknowledge satisfaction and discharge of this
Indenture on demand of the Company accompanied by an Officers' Certificate and
an Opinion of Counsel and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10 or 4.11 and the operation
of Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) and the
limitations contained in Sections 5.01(a)(iii) and (iv) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in
the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Company to comply with Section
5.01(a)(iii) or (iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
this Article 8 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
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SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of
and interest on the Securities to maturity or redemption, as the case
may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Sections 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
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(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government
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Obligations in accordance with this Article 8 by reason of any legal proceeding
or by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to this Article 8 until
such time as the Trustee or Paying Agent is permitted to apply all such money or
U.S. Government Obligations in accordance with this Article 8; provided,
however, that, if the Company has made any payment of interest on or principal
of any Securities because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the money or U.S. Government Obligations held by the Trustee
or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company and the
Trustee may amend or supplement this Indenture or the Securities without notice
to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to add guarantees with respect to the Securities or to
secure the Securities;
(5) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company;
(6) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this Indenture
under the TIA; or
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(7) to make any change that does not adversely affect the
rights of any Securityholder.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.02. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount at maturity of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Securities). However, without the consent of each Securityholder affected
thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the Accreted Value or principal amount at maturity
of or extend the Stated Maturity of any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that stated
in the Security; or
(6) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
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therein, shall not impair or affect the validity of an amendment under this
Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
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SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Miscellaneous
SECTION 10.01. Trust Indenture Act Controls. If any provision
of this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 10.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
MEDIQ Incorporated
One Mediq Plaza
Pennsauken, NJ 08110
Telephone: (609) 662-3200
Facsimile: (609) 661-0958
Attention: Alan S. Einhorn, Esq.
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77
if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Telephone: (212) 852-1614
Facsimile: (212) 852-1626
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 10.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss.312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss.312(c).
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in
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78
the opinion of such counsel, all such conditions precedent have been
complied with.
SECTION 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 10.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount at maturity of Securities
have concurred in any direction, waiver or consent, Securities owned by the
Company or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
SECTION 10.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 10.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York.
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79
If a payment date is a Legal Holiday, payment shall be made on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
SECTION 10.09. Governing Law. This Indenture and the
Securities shall be governed by, and construed in accordance with, the laws of
the State of New York but without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
SECTION 10.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
SECTION 10.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
SECTION 10.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
SECTION 10.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
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80
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
MEDIQ INCORPORATED,
By:
--------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee,
By:
--------------------------------
Name:
Title:
<PAGE>
RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN
RELIANCE ON REGULATION S.
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Securities" means the 13% Senior Discount Debentures Due 2009 to
be issued pursuant to this Indenture in connection with a Registered Exchange
Offer pursuant to the Registration Rights Agreement.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
NationsBanc Montgomery Securities LLC and Banque Nationale de Paris.
"Initial Securities" means the 13% Senior Discount Debentures Due 2009,
issued under this Indenture on or about the date hereof.
"Private Exchange" means the offer by the Company, pursuant to the
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
each Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount at maturity of Private Exchange Securities.
"Purchase Agreement" means the Purchase Agreement dated May 21, 1998, among
the Company, MEDIQ/PRN, the Subsidiary Guarantors and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant to the
Registration Rights Agreement, to certain Holders of Initial Securities, to
issue and deliver to such Holders, in exchange for the Initial Securities, a
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like aggregate principal amount at maturity of Exchange Securities registered
under the Securities Act.
"Registration Rights Agreement" means the Registration Rights Agreement
dated May 29, 1998, among the Company, MEDIQ/PRN, the Subsidiary Guarantors and
the Initial Purchasers.
"Securities" means the Initial Securities, the Exchange Securities and the
Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary), or any successor person thereto and
shall initially be the Trustee.
"Shelf Registration Statement" means the registration statement issued by
the Company, in connection with the offer and sale of Initial Securities or
Private Exchange Securities, pursuant to the Registration Rights Agreement.
"Transfer Restricted Securities" means Definitive Securities and Securities
that bear or are required to bear the legend set forth in Section 2.3(e) hereto.
1.2 Other Definitions
Defined in
Term Section:
---- --------
"Agent Members"............................................... 2.1(b)
"Definitive Security"......................................... 2.1(c)
"Global Security"............................................. 2.1(a)
"Regulation S"................................................ 2.1(c)
"Rule 144A"................................................... 2.1(a)
2. The Securities.
2.1 Form and Dating.
The Initial Securities are being offered and sold by the Company pursuant
to the Purchase Agreement.
(a) Global Securities. Initial Securities offered and sold to a QIB in
reliance on Rule 144A under the Securities Act ("Rule 144A"), as provided in the
Purchase Agreement, shall be issued initially in the form of one or
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more permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Global Security"), which shall be
deposited on behalf of the purchasers of the Initial Securities represented
thereby with the Trustee, at its New York office, as custodian for the
Depositary (or with such other custodian as the Depositary may direct), and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount at maturity of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a Global
Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.1(b), authenticate and deliver initially one or more Global Securities
that (a) shall be registered in the name of the Depositary for such Global
Security or Global Securities or the nominee of such Depositary and (b) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
instructions or held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall have
no rights under this Indenture with respect to any Global Security held on their
behalf by the Depositary or by the Trustee as the custodian of the Depositary or
under such Global Security, and the Depositary may be treated by the Company,
the Trustee and any agent of the Company or the Trustee as the absolute owner of
such Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Global Security.
(c) Certificated Securities. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities. Initial Securities offered
and
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<PAGE>
sold in reliance on Regulation S under the Securities Act ("Regulation S"), as
provided in the Purchase Agreement, will be issued initially in the form of
individual certificates in definitive, fully registered form without interest
coupons and with the restricted securities legend set forth in Exhibit 1 hereto
(each, a "Definitive Security"); provided, however, that such Definitive
Securities shall be deemed "temporary global securities" for purposes of
Regulation S and shall not be exchangeable for other Definitive Securities until
expiration of the 40-day period following the last issue date for the securities
and until certification of beneficial ownership of such Definitive Security by a
non-U.S. person or a U.S. person who purchased such Definitive Security in a
transaction that did not require registration under the Securities Act; provided
further, however, that upon transfer of any such Definitive Security to a QIB in
accordance with the provisions of this Indenture, such Definitive Security will,
unless the Global Security has previously been exchanged, be exchanged for an
interest in a Global Security pursuant to the provisions of Section 2.3.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) Initial
Securities for original issue in an aggregate principal amount at maturity of
$140,885,000 and (2) Exchange Securities or Private Exchange Securities for
issue only in a Registered Exchange Offer or a Private Exchange, respectively,
pursuant to the Registration Rights Agreement, for a like principal amount at
maturity of Initial Securities, in each case upon a written order of the Company
signed by two Officers or by an Officer and either an Assistant Treasurer or an
Assistant Secretary of the Company. Such order shall specify the amount of the
Securities to be authenticated and the date on which the original issue of
Securities is to be authenticated and whether the Securities are to be Initial
Securities, Exchange Securities or Private Exchange Securities. The aggregate
principal amount at maturity of Securities outstanding at any time may not
exceed $140,885,000 except as provided in Section 2.06 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Definitive
Securities. When Definitive Securities are presented to the Registrar or a
co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal principal
amount of Definitive Securities of other authorized denominations,
4
<PAGE>
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar
or co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) are being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section 2.3(b)
or pursuant to clause (A), (B) or (C) below, and are accompanied by the
following additional information and documents, as applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse of the Security); or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse of the Security); or
(C) if such Definitive Securities are being transferred (w)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (x) in
reliance on another exemption from the registration requirements of
the Securities Act: (i) a certification to that effect (in the form
set forth on the reverse of the Security) and (ii) if the Company or
Registrar so requests, an opinion of counsel or other evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of
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<PAGE>
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is being transferred to a QIB
in accordance with Rule 144A; and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books
and records with respect to such Global Security to reflect an
increase in the aggregate principal amount at maturity of the
Securities represented by the Global Security, such instructions to
contain information regarding the Depositary account to be credited
with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal amount at maturity of Securities represented by the Global
Security to be increased by the aggregate principal amount at maturity of the
Definitive Security to be exchanged and shall credit or cause to be credited to
the account of the Person specified in such instructions a beneficial interest
in the Global Security equal to the principal amount at maturity of the
Definitive Security so canceled. If no Global Securities are then outstanding,
the Company shall issue and the Trustee shall authenticate, upon written order
of the Company in the form of an Officers' Certificate, a new Global Security in
the appropriate principal amount at maturity.
(c) Transfer and Exchange of Global Securities. (i) The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depositary, in accordance with this Indenture (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Depositary therefor. A transferor of a beneficial interest in a Global Security
shall deliver to the Registrar a written order given in accordance with the
Depositary's procedures containing information regarding the participant account
of the Depositary to credited with a beneficial interest in the Global Security.
The Registrar shall, in accordance with such instructions instruct the
Depositary to credit to the account of the Person specified in such instructions
a beneficial interest in the Global Security
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<PAGE>
and to debit the account of the Person making the transfer the beneficial
interest in the Global Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in Section 2.4), a Global Security
may not be transferred as a whole except by the Depositary to a nominee
of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such successor
Depositary.
(iii) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4 or
Section 2.09 of the Indenture, prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be
exchanged only in accordance with such procedures as are substantially
consistent with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the Initial
Securities intended to ensure that such transfers comply with Rule
144A or Regulation S, as the case may be) and such other procedures as
may from time to time be adopted by the Company.
(d) Transfer of a Beneficial Interest in a Global Security for a Definitive
Security.
(i) Upon the transfer of a beneficial interest in a Global
Security pursuant to Regulation S, subject to Section 2.3(e)(iii) and
(iv), the interest being transferred in the Global Security may not
continue to be held in book-entry form through the Depositary, will be
exchanged for a Definitive Security only and will require the delivery
by the transferee of a transfer certificate in the form set forth in
Exhibit 1 hereto.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.3(d) shall be
registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its participants or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to the persons in whose names such
Securities are so registered in accordance with the instructions of
the Depositary.
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<PAGE>
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Security certificate evidencing the Global Securities
and the Definitive Securities (and all Securities issued in exchange
therefor or in substitution thereof) shall bear a legend in
substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN
A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
ISSUER THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED ONLY (i) INSIDE THE UNITED STATES TO A
PERSON WHOM THE SELLER REASONABLE BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (ii) OUTSIDE THE UNITED STATES IN A TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND
(B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE."
Each Definitive Security will also bear the following additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
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<PAGE>
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a certificated Security that does not bear the
legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar
shall permit the Holder thereof to exchange such Transfer
Restricted Security for a certificated Security that does
not bear the legend set forth above and rescind any
restriction on the transfer of such Transfer Restricted
Security, if the Holder certifies in writing to the
Registrar that its request for such exchange was made in
reliance on Rule 144 (such certification to be in the form
set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities during the period of the effectiveness of a Shelf
Registration Statement with respect to such Initial Securities or
Private Exchange Securities, as the case may be, all requirements
pertaining to legends on such Initial Security or such Private
Exchange Security will cease to apply, the requirements requiring any
such Initial Security or such Private Exchange Security issued to
certain Holders be issued in global form will cease to apply, and a
certificated Initial Security or Private Exchange Security without
legends will be available to the transferee of the Holder of such
Initial Securities or Private Exchange Securities upon exchange of
such transferring Holder's certificated Initial Security or Private
Exchange Security or directions to transfer such Holder's interest in
the Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities pursuant to which Holders of such
Initial Securities are offered Exchange Securities in exchange for
their Initial
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Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will cease to apply and certificated Initial Securities
with the restricted securities legend set forth in Exhibit 1 hereto
will be available to Holders of such Initial Securities that do not
exchange their Initial Securities, and Exchange Securities in
certificated or global form will be available to Holders that exchange
such Initial Securities in such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to
the Initial Securities pursuant to which Holders of such Initial
Securities are offered Private Exchange Securities in exchange for
their Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply, and Private Exchange Securities in
global form with the Restricted Securities Legend set forth in Exhibit
1 hereto will be available to Holders that exchange such Initial
Securities in such Private Exchange.
(f) Cancelation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
certificated or Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to the Depositary for cancelation or retained
and canceled by the Trustee. At any time prior to such cancelation, if any
beneficial interest in a Global Security is exchanged for certificated or
Definitive Securities, redeemed, repurchased or canceled, the principal amount
of Securities represented by such Global Security shall be reduced and an
adjustment shall be made on the books and records of the Trustee (if it is then
the Securities Custodian for such Global Security) with respect to such Global
Security, by the Trustee or the Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate certificated
Securities, Definitive Securities and Global Securities at the
Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may
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require payment of a sum sufficient to cover any transfer tax,
assessments, or similar governmental charge payable in connection
therewith (other than any such transfer taxes, assessments or similar
governmental charge payable upon exchange or transfer pursuant to
Sections 3.06, 4.09 and 9.05).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any certificated or
Definitive Security selected for redemption in whole or in part
pursuant to Article 3 of this Indenture, except the unredeemed portion
of any certificated or Definitive Security being redeemed in part, or
(b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase or redeem Securities or
15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on
such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by
notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture shall evidence the same debt and shall
be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant
in the Depositary or other Person with respect to the accuracy of the
records of the Depositary or its nominee or of any participant or
member thereof, with respect to any ownership interest in the
Securities or with respect to the delivery to any participant, member,
beneficial owner or other Person (other than the Depositary) of any
notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all
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<PAGE>
payments to be made to Holders under the Securities shall be
given or made only to or upon the order of the registered Holders
(which shall be the Depositary or its nominee in the case of a Global
Security). The rights of beneficial owners in any Global Security
shall be exercised only through the Depositary subject to the
applicable rules and procedures of the Depositary. The Trustee may
rely and shall be fully protected in relying upon information
furnished by the Depositary with respect to its members, participants
and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depositary participants, members or
beneficial owners in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required
by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
2.4 Certificated Securities.
(a) A Global Security deposited with the Depositary or with the Trustee as
custodian for the Depositary pursuant to Section 2.1 shall be transferred to the
beneficial owners thereof in the form of certificated Securities in an aggregate
principal amount equal to the principal amount at maturity of such Global
Security, in exchange for such Global Security, only if such transfer complies
with Section 2.3 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of certificated Securities under
this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Trustee located in the Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon
12
<PAGE>
such transfer of each portion of such Global Security, an equal aggregate
principal amount at maturity of certificated Initial Securities of authorized
denominations. Any portion of a Global Security transferred pursuant to this
Section shall be executed, authenticated and delivered only in denominations of
$1,000 and any integral multiple thereof and registered in such names as the
Depositary shall direct. Any certificated Initial Security delivered in exchange
for an interest in the Global Security shall, except as otherwise provided by
Section 2.3(e), bear the restricted securities legend set forth in Exhibit 1
hereto.
(c) Subject to the provisions of Section 2.4(b), the registered Holder of a
Global Security may grant proxies and otherwise authorize any Person, including
Agent Members and Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Indenture or the
Securities.
(d) In the event of the occurrence of either of the events specified in
Section 2.4(a), the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
13
<PAGE>
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (iv)PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) through
(iv) IN
<PAGE>
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR PURPOSES OF
SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $532.35 AND THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT IS $1,252.92, IN EACH CASE PER $1,000 PRINCIPAL AMOUNT AT
MATURITY OF THIS SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE
DATE OF THIS SECURITY IS MAY 29, 1998. FOR PURPOSES OF SECTION 1272 OF THE CODE,
THE YIELD TO MATURITY (COMPOUNDED SEMI-ANNUALLY) IS 13%.
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER
AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.](1)
- ------------
(1) Include if a Definitive Security.
2
<PAGE>
No. $
CUSIP No.
ISIN No.
13% Senior Discount Debentures Due 2009
MEDIQ INCORPORATED, a Delaware corporation, promises to pay to
, or registered assigns, the principal sum of Dollars
on June 1, 2009.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated:
MEDIQ INCORPORATED,
By
-----------------------------
-----------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that this is one
of the Securities referred to in the Indenture.
By
-----------------------------
Authorized Signatory
3
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
13% Senior Discount Debenture Due 2009
1. Interest
MEDIQ Incorporated, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the Accreted Value of this
Security at the rate of 13% per annum. The Accreted Value of this Security will
increase in the manner provided in the Indenture. Interest on this Security
shall accrue from and including the most recent date to which interest has been
paid from and including June 1, 2003, through but excluding the date on which
interest is paid. Interest shall be payable semiannually in arrears on each June
1 and December 1, commencing December 1, 2003. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. Notwithstanding the foregoing,
if a Registration Default (as defined in the Registration Rights Agreement)
occurs, interest will accrue on this Security at a rate of 13-1/2% per annum
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.
Such interest will be paid semiannually on June 1 and December 1 of each year.
The Company shall pay interest on overdue principal at the rate borne by the
Securities plus 1% per annum, and it shall pay interest on overdue installments
of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on May 15 or November 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of the Securities represented by a Global
Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including
4
<PAGE>
principal, premium and interest) by mailing a check to the registered address of
each Holder thereof; provided, however, that payments on a certificated Security
will be made by wire transfer to a U.S. dollar account maintained by the payee
with a bank in the United States if such Holder elects payment by wire transfer
by giving written notice to the Trustee or the Paying Agent to such effect
designating such account no later than 30 days immediately preceding the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion).
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May 15,
1998 (the "Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company limited to
$140,885,000 aggregate principal amount at maturity (subject to Section 2.07 of
the Indenture). The Indenture limits, among other things, (i) the incurrence of
additional debt by the Company and certain of its subsidiaries, (ii) the payment
of dividends on capital stock of the Company and the purchase, redemption or
retirement of capital stock or subordinated indebtedness, (iii) investments,
(iv) certain transactions with affiliates, (v) sales of assets, including
capital stock of subsidiaries, and (vi) certain consolidations, mergers and
transfers of assets. The Indenture also prohibits certain restrictions on
distributions from certain subsidiaries.
5
<PAGE>
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to June 1, 2003. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount at
maturity), plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date), if redeemed during
the 12-month period beginning June 1 of the years set forth below,
Period Percentage
------ ----------
2003........................................................ 106.500%
2004........................................................ 104.333
2005........................................................ 102.167
2006 and thereafter......................................... 100.000
In addition, at any time and from time to time prior to June 1, 2001, the
Company may redeem in the aggregate up to 25% of the Accreted Value of the
Securities with the proceeds of one or more Public Equity Offerings following
which there is a Public Market, at a redemption price (expressed as a percentage
of Accreted Value) of 113% plus accrued interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that at least $105.6 million aggregate principal amount at maturity of the
Securities remains outstanding after each such redemption.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
6
<PAGE>
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right to
cause the Company to repurchase all or any part of the Securities of such Holder
at a repurchase price in cash equal to 101% of the Accreted Value of the
Securities to be repurchased plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) as
provided in, and subject to the terms of, the Indenture.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
principal amount at maturity of $1,000 and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
10. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the
7
<PAGE>
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount at maturity of the Securities then
outstanding and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
at maturity of the Securities then outstanding. Subject to certain exceptions
set forth in the Indenture, without the consent of any Securityholder, the
Company and the Trustee may amend or supplement the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, to comply with Article
5 of the Indenture, to provide for uncertificated Securities in addition to or
in place of certificated Securities, to add guarantees with respect to the
Securities, to secure the Securities, to add to the covenants of the Company for
the benefit of the Holders of the Securities or surrender any right or power
conferred upon the Company, to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the Act or to make any
change that does not adversely affect the rights of any Securityholder.
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest on the Securities; (ii) default in payment of principal on
the Securities when due at maturity, upon redemption pursuant to paragraph 5 of
the Securities, upon acceleration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds
$10.0 million; (v) certain events of bankruptcy or insolvency with respect to
the Company and the Significant Subsidiaries; and (vi) certain judgments or
decrees for the payment of money in excess of $10.0 million entered against
8
<PAGE>
the Company or a Significant Subsidiary. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount at
maturity of the outstanding Securities may declare all the Securities to be due
and payable immediately. Certain events of bankruptcy or insolvency are Events
of Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security against any
loss liability or expense. Subject to certain limitations, Holders of a majority
in principal amount at maturity of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in the interest of the
Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
9
<PAGE>
16. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
18. Holders' Compliance with Registration Rights Agreement
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including, without
limitation, the obligations of the Holders with respect to a registration and
the indemnification of the Company to the extent provided therein.
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to MEDIQ
Incorporated, One Mediq Plaza, Pennsauken, New Jersey 08110, Attention: Alan S.
Einhorn, Esq.
10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint_______________________________________ agent to transfer
this Security on the books of the Company. The agent may substitute another to
act for him.
Date: ________________ Your Signature: _____________________________
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) / / inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer to
whom notice is given that such transfer is
being made in reliance on Rule 144A, in each
case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
11
<PAGE>
(4) / / outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933; or
(5) / / pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
If such transfer is being made pursuant to an offshore transaction in
accordance with Rule 904 under the Securities Act, the undersigned further
certifies that:
(i) the offer of the Securities was not made to a person in the
United States;
(ii) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been prearranged with a buyer in the United States;
(iii) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903 or Rule 904 of
Regulation S, as applicable;
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(v) we have advised the transferee of the transfer restrictions
applicable to the Securities; and
(vi) if the circumstances set forth in Rule 904(B) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation
or other notice stating that the Securities may be offered and sold
during the distribution compliance period specified in Rule 903 of
Regulation S; pursuant to registration of the Securities under the
Securities Act; or pursuant to an available exemption from the
registration requirements under the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by
12
<PAGE>
this certificate in the name of any person other than the registered
holder thereof; provided, however, that if box (3) or (4) is checked,
the Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, additional certifications and other
information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act of 1933, such as the exemption provided by Rule 144
under such Act.
--------------------------
Signature
Signature Guarantee:
- ---------------------------- --------------------------
Signature must be Signature
guaranteed
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
13
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<CAPTION>
Date of Amount of decrease Amount of increase Principal Amount Signature of
Exchange in Principal in Principal at Maturity of authorized officer
Amount at Maturity Amount at Maturity this Global of Trustee or
of this Global of this Global Security following Securities
Security Security such decrease or Custodian
increase)
- -------- ------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
</TABLE>
14
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in
principal amount at maturity: $
Date: _______________ Your Signature: _________________________________
(Sign exactly as your name
appears on the other side of
this Security)
Signature Guarantee: ___________________________________________________________
(Signature must be guaranteed)
15
<PAGE>
EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY]
[*/]
[**/]
No. $
CUSIP No.
ISIN No.
13% Senior Discount Debentures Due 2009
MEDIQ INCORPORATED, a Delaware corporation, promises to pay to
, or registered assigns, the principal sum of Dollars
on June 1, 2009.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other side of
this Security.
Dated:
MEDIQ INCORPORATED,
By
----------------------------------
----------------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that this is one
of the Securities referred to in the Indenture.
By
-----------------------------
Authorized Signatory
<PAGE>
- ------------------------
*/ If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and the attachment
from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL SECURITY".
**/ If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to the Rule 144A/Regulation S
Appendix and replace the Assignment Form included in this Exhibit A with the
Assignment Form included in such Exhibit 1.
2
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY]
13% Senior Discount Debenture Due 2009
1. Interest
MEDIQ Incorporated, a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the Accreted Value of this
Security at the rate of 13% per annum. The Accreted Value of this Security will
increase in the manner provided in the Indenture. Interest on this Security
shall accrue from and including the most recent date to which interest has been
paid from and including June 1, 2003, through but excluding the date on which
interest is paid. Interest shall be payable semiannually in arrears on each June
1 and December 1, commencing December 1, 2003. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. [Notwithstanding the foregoing,
if a Registration Default (as defined in the Registration Rights Agreement)
occurs, interest will accrue on this Security at a rate of 13-1/2% per annum
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured]
***/. Such interest will be paid semiannually on June 1 and December 1 of each
year. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on May 15 or November 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before
- --------
***/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange Offer has
been consummated nor a Shelf Registration Statement has been declared effective
in accordance with the Registration Rights Agreement.
3
<PAGE>
the interest payment date. Holders must surrender Securities to a Paying Agent
to collect principal payments. The Company will pay principal and interest in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. Payments in respect of the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and interest)
by mailing a check to the registered address of each Holder thereof; provided,
however, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such account no
later than 30 days immediately preceding the relevant due date for payment (or
such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May 15,
1998 (the "Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms
defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company limited to
$140,885,000 aggregate principal amount at maturity (subject to Section 2.07 of
the Indenture). The
4
<PAGE>
Indenture limits, among other things, (i) the incurrence of additional debt by
the Company and certain of its subsidiaries, (ii) the payment of dividends on
capital stock of the Company and the purchase, redemption or retirement of
capital stock or subordinated indebtedness, (iii) investments, (iv) certain
transactions with affiliates, (v) sales of assets, including capital stock of
subsidiaries, and (vi) certain consolidations, mergers and transfers of assets.
The Indenture also prohibits certain restrictions on distributions from certain
subsidiaries.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to June 1, 2003. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount at
maturity), plus accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date), if redeemed during
the 12-month period beginning June 1 of the years set forth below,
Period Percentage
------ ----------
2003....................................................... 106.500%
2004 .................................................. 104.333
2005....................................................... 102.167
2006 and thereafter........................................ 100.000
In addition, at any time and from time to time prior to June 1, 2001, the
Company may redeem in the aggregate up to 25% of the Accreted Value of the
Securities with the proceeds of one or more Public Equity Offerings following
which there is a Public Market, at a redemption price (expressed as a percentage
of Accreted Value) of 113% plus accrued interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest payment date); provided, however,
that at least $105.6 million aggregate principal amount at maturity of the
Securities remains outstanding after each such redemption.
6. Notice of Redemption
5
<PAGE>
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right to
cause the Company to repurchase all or any part of the Securities of such Holder
at a repurchase price in cash equal to 101% of the Accreted Value of the
Securities to be repurchased plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) as
provided in, and subject to the terms of, the Indenture.
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
principal amount at maturity of $1,000 and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
9. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
6
<PAGE>
10. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Securities to redemption or maturity, as the
case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount at maturity of the Securities then
outstanding and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal amount
at maturity of the Securities then outstanding. Subject to certain exceptions
set forth in the Indenture, without the consent of any Securityholder, the
Company and the Trustee may amend or supplement the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, to comply with Article
5 of the Indenture, to provide for uncertificated Securities in addition to or
in place of certificated Securities, to add guarantees with respect to the
Securities, to secure the Securities, to add to the covenants of the Company for
the benefit of the Holders of the Securities or surrender any right or power
conferred upon the Company, to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the Act or to make any
change that does not adversely affect the rights of any Securityholder.
13. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest on the
7
<PAGE>
Securities; (ii) default in payment of principal on the Securities when due at
maturity, upon redemption pursuant to paragraph 5 of the Securities, upon
acceleration or otherwise, or failure by the Company to redeem or purchase
Securities when required; (iii) failure by the Company to comply with other
agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (iv) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company if the amount accelerated (or so unpaid) exceeds $10.0 million; (v)
certain events of bankruptcy or insolvency with respect to the Company and the
Significant Subsidiaries; and (vi) certain judgments or decrees for the payment
of money in excess of $10.0 million entered against the Company or a Significant
Subsidiary. If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount at maturity of the outstanding
Securities may declare all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security against any
loss liability or expense. Subject to certain limitations, Holders of a majority
in principal amount at maturity of the Securities may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Securityholders
notice of any continuing Default (except a Default in payment of principal or
interest) if it determines that withholding notice is in the interest of the
Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
8
<PAGE>
15. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
16. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
17. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
18. Holders' Compliance with Registration Rights Agreement
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including, without
limitation, the obligations of the Holders with respect to a registration and
the indemnification of the Company to the extent provided therein.
19. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a
9
<PAGE>
copy of the Indenture which has in it the text of this Security in larger type.
Requests may be made to MEDIQ Incorporated, One Mediq Plaza, Pennsauken, New
Jersey 08110, Attention: Alan S. Einhorn, Esq.
10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
- -------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _______________________________________ agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
Date: ________________________ Your Signature: _________________________________
- -------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or 4.09 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.06 or 4.09 of the Indenture, state the amount in
principal amount at maturity: $
Date: ________________________ Your Signature: _________________________________
(Sign exactly as your
name appears on the other
side of the Security)
Signature Guarantee:_________________________________________________
(Signature must be guaranteed)
12
================================================================================
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
Issuer
THE SUBSIDIARY GUARANTORS NAMED HEREIN
Subsidiary Guarantors
11% Senior Subordinated Notes Due 2008
--------------------
INDENTURE
Dated as of May 15, 1998
---------------------
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
================================================================================
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- --------
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.08; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.05
(b) .............................. 13.03
(c) .............................. 13.03
313(a) .............................. 7.06
(b)(1) .............................. N.A.
(b)(2) .............................. 7.06
(c) .............................. 13.02
(d) .............................. 7.06
314(a) .............................. 4.02;
4.12; 13.02
(b) .............................. N.A.
(c)(1) .............................. 13.04
(c)(2) .............................. 13.04
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 13.05
(f) .............................. N.A.
315(a) .............................. 7.01
(b) .............................. 7.05; 13.02
(c) .............................. 7.01
(d) .............................. 7.01
(e) .............................. 6.11
316(a)(last sentence) .............................. 13.06
(a)(1)(A) .............................. 6.05
(a)(1)(B) .............................. 6.04
(a)(2) .............................. N.A.
(b) .............................. 6.07
(c) .............................. 6.07
317(a)(1) .............................. 6.08
(a)(2) .............................. 6.09
(b) .............................. 2.04
318(a) .............................. 13.01
N.A. means Not Applicable.
- -------------------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 Page
Definitions and Incorporation by Reference
SECTION 1.01. Definitions ............................ 1
SECTION 1.02. Other Definitions ...................... 27
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ........................ 27
SECTION 1.04. Rules of Construction .................. 28
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating ........................ 29
SECTION 2.02. Execution and Authentication ........... 29
SECTION 2.03. Registrar and Paying Agent ............. 30
SECTION 2.04. Paying Agent To Hold Money in Trust..... 30
SECTION 2.05. Securityholder Lists ................... 31
SECTION 2.06. Replacement Securities ................. 31
SECTION 2.07. Outstanding Securities ................. 31
SECTION 2.08. Temporary Securities ................... 32
SECTION 2.09. Cancelation ............................ 32
SECTION 2.10. Defaulted Interest ..................... 32
SECTION 2.11. CUSIP Numbers .......................... 32
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee ..................... 33
SECTION 3.02. Selection of Securities To Be Redeemed . 33
SECTION 3.03. Notice of Redemption ................... 33
SECTION 3.04. Effect of Notice of Redemption ......... 34
SECTION 3.05. Deposit of Redemption Price ............ 35
SECTION 3.06. Securities Redeemed in Part ............ 35
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities .................. 35
SECTION 4.02. SEC Reports ............................ 35
SECTION 4.03. Limitation on Indebtedness ............. 36
<PAGE>
SECTION 4.04. Limitation on Restricted Payments ...... 39
SECTION 4.05. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries ......................... 45
SECTION 4.06. Limitation on Sales of Assets and
Subsidiary Stock ..................... 47
SECTION 4.07. Limitation on Affiliate Transactions.... 51
SECTION 4.08. Limitation on the Sale or Issuance
of Capital Stock of Restricted
Subsidiaries ......................... 52
SECTION 4.09. Change of Control ...................... 53
SECTION 4.10. Future Guarantors ...................... 55
SECTION 4.11. Compliance Certificates ................ 55
SECTION 4.12. Further Instruments and Acts ........... 55
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets ............................... 55
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default ...................... 57
SECTION 6.02. Acceleration ........................... 59
SECTION 6.03. Other Remedies ......................... 60
SECTION 6.04. Waiver of Past Defaults ................ 60
SECTION 6.05. Control by Majority .................... 61
SECTION 6.06. Limitation on Suits .................... 61
SECTION 6.07. Rights of Holders To Receive Payment ... 62
SECTION 6.08. Collection Suit by Trustee ............. 62
SECTION 6.09. Trustee May File Proofs of Claim ....... 62
SECTION 6.10. Priorities ............................. 62
SECTION 6.11. Undertaking for Costs .................. 63
SECTION 6.12. Waiver of Stay or Extension Laws ....... 63
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee ...................... 64
SECTION 7.02. Rights of Trustee ...................... 65
SECTION 7.03. Individual Rights of Trustee ........... 66
SECTION 7.04. Trustee's Disclaimer ................... 66
2
<PAGE>
SECTION 7.05. Notice of Defaults ..................... 66
SECTION 7.06. Reports by Trustee to Holders .......... 66
SECTION 7.07. Compensation and Indemnity ............. 66
SECTION 7.08. Replacement of Trustee ................. 67
SECTION 7.09. Successor Trustee by Merger ............ 68
SECTION 7.10. Eligibility; Disqualification .......... 69
SECTION 7.11. Preferential Collection of Claims
Against Company ...................... 69
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ........................... 69
SECTION 8.02. Conditions to Defeasance ............... 71
SECTION 8.03. Application of Trust Money ............. 72
SECTION 8.04. Repayment to Company ................... 72
SECTION 8.05. Indemnity for Government Obligations ... 72
SECTION 8.06. Reinstatement .......................... 72
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders ............. 73
SECTION 9.02. With Consent of Holders ................ 74
SECTION 9.03. Compliance with Trust Indenture Act .... 75
SECTION 9.04. Revocation and Effect of Consents
and Waivers .......................... 75
SECTION 9.05. Notation on or Exchange of Securities .. 76
SECTION 9.06. Trustee To Sign Amendments ............. 76
SECTION 9.07. Payment for Consent .................... 76
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate .............. 77
SECTION 10.02. Liquidation, Dissolution, Bankruptcy .. 77
SECTION 10.03. Default on Senior Indebtedness ........ 77
SECTION 10.04. Acceleration of Payment of Securities . 79
3
<PAGE>
SECTION 10.05. When Distribution Must Be Paid Over ... 79
SECTION 10.06. Subrogation ........................... 79
SECTION 10.07. Relative Rights ....................... 79
SECTION 10.08. Subordination May Not Be Impaired
by Company .......................... 80
SECTION 10.09. Rights of Trustee and Paying Agent .... 80
SECTION 10.10. Distribution or Notice to
Representative ...................... 80
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To Accelerate. 80
SECTION 10.12. Trust Moneys Not Subordinated ......... 81
SECTION 10.13. Trustee Entitled To Rely .............. 81
SECTION 10.14. Trustee To Effectuate Subordination ... 82
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness .............. 82
SECTION 10.16. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions .......................... 82
ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Guaranties ............................ 82
SECTION 11.02. Limitation on Liabilities ............. 85
SECTION 11.03. Successors and Assigns ................ 85
SECTION 11.04. No Waiver ............................. 85
SECTION 11.05. Modification .......................... 86
SECTION 11.06. Release of Subsidiary Guarantor ....... 86
ARTICLE 12
Subordination of Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate .............. 86
SECTION 12.02. Liquidation, Dissolution, Bankruptcy .. 87
SECTION 12.03. Default on Senior Indebtedness of
Subsidiary Guarantor ................ 87
SECTION 12.04. Demand for Payment .................... 88
SECTION 12.05. When Distribution Must Be Paid Over ... 89
SECTION 12.06. Subrogation ........................... 89
SECTION 12.07. Relative Rights ....................... 89
SECTION 12.08. Subordination May Not Be Impaired by
Company ............................. 89
4
<PAGE>
SECTION 12.09. Rights of Trustee and Paying Agent .... 90
SECTION 12.10. Distribution or Notice to
Representative ...................... 90
SECTION 12.11. Article 12 Not To Prevent Defaults
Under a Subsidiary Guaranty or Limit
Right to Demand Payment ............. 90
SECTION 12.12. Trustee Entitled to Rely .............. 90
SECTION 12.13. Trustee To Effectuate Subordination ... 91
SECTION 12.14. Trustee Not Fiduciary for Holders
of Senior Indebtedness of Subsidiary
Guarantor ........................... 91
SECTION 12.15. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions .......................... 92
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls .......... 92
SECTION 13.02. Notices ............................... 92
SECTION 13.03. Communication by Holders with Other
Holders ............................. 93
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent ................ 93
SECTION 13.05. Statements Required in Certificate
or Opinion .......................... 94
SECTION 13.06. When Securities Disregarded ........... 94
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar ........................... 94
SECTION 13.08. Legal Holidays ........................ 94
SECTION 13.09. Governing Law ......................... 95
SECTION 13.10. No Recourse Against Others ............ 95
SECTION 13.11. Successors ............................ 95
SECTION 13.12. Multiple Originals .................... 95
SECTION 13.13. Table of Contents; Headings ........... 95
Rule 144A/Regulation S Appendix - Provisions Relating to Initial Securities,
Private Exchange Securities and Exchange Securities
Exhibit 1 to Rule 144A/Regulation S Appendix - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange Security
5
<PAGE>
INDENTURE dated as of May 15, 1998, among MEDIQ/PRN LIFE SUPPORT
SERVICES, INC., a Delaware corporation (the "Company"), the SUBSIDIARY
GUARANTORS (as defined herein) identified on the signature page hereto and
UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking corporation, as
Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of the Company's 11% Senior
Subordinated Notes Due 2008 (the "Initial Securities") and, if and when issued
pursuant to a registered exchange for Initial Securities, the Company's 11%
Senior Subordinated Notes Due 2008 (the "Exchange Securities") and if and when
issued pursuant to a private exchange for Initial Securities, the Company's 11%
Senior Subordinated Notes Due 2008 (the "Private Exchange Securities", together
with the Exchange Securities and the Initial Securities, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock of
a Person that becomes a Restricted Subsidiary as a result of the acquisition of
such Capital Stock by the Company or another Restricted Subsidiary; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that any such Restricted
Subsidiary described in clauses (ii) or (iii) above is primarily engaged in a
Related Business.
<PAGE>
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of Sections 4.04, 4.06 and 4.07 only, "Affiliate" shall also mean any
beneficial owner of Capital Stock representing 10% or more of the total voting
power of the Voting Stock (on a fully diluted basis) of the Company or of rights
or warrants to purchase such Capital Stock (whether or not currently
exercisable) and any Person who would be an Affiliate of any such beneficial
owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions that are part of
a common plan) by the Company or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition"), of (i) any
shares of Capital Stock of a Restricted Subsidiary (other than directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Restricted Subsidiary), (ii) all or substantially
all the assets of any division or line of business of the Company or any
Restricted Subsidiary or (iii) any other assets of the Company or any Restricted
Subsidiary outside of the ordinary course of business of the Company or such
Restricted Subsidiary (other than, in the case of (i), (ii) and (iii) above, (x)
a disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Wholly Owned Subsidiary, (y) for purposes of Section
4.06 only, a disposition that constitutes a Restricted Payment permitted by
Section 4.04 and (z) disposition of assets with a fair market value of less than
$100,000); provided, however, that a disposition of all or substantially all of
the assets of the Company and its Restricted Subsidiaries taken as a whole will
be governed by the provisions of Section 4.09 and/or the provisions of Section
5.01 and not by the provisions of Section 4.06.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
implicit in such transaction, compounded annually) of the total obligations of
the lessee for net rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which such
lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
2
<PAGE>
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Banks" has the meaning specified in the Credit Agreement.
"Bank Indebtedness" means all Obligations pursuant to or in respect of the
Credit Agreement.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"BRS" means Bruckmann, Rosser, Sherrill & Co., L.P.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Change of Control" means the occurrence of any of the following events:
(i) prior to the earlier to occur of (A) the first public offering of
common stock of Holdings or (B) the first public offering of common stock
of the Company, the Permitted Holders cease to be the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or
indirectly, of a majority in the aggregate of the total voting power of the
Voting Stock of the Company, whether as a result of issuance of securities
of Holdings or the Company, any merger, consolidation, liquidation or
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dissolution of Holdings or the Company, any direct or indirect transfer of
securities by Holdings or otherwise (for purposes of this clause (i) and
clauses (ii) and (iv) below, the Permitted Holders shall be deemed to
beneficially own any Voting Stock of any Person (the "specified entity")
held by any other Person (the "parent entity") so long as the Permitted
Holders beneficially own (as so defined), directly or indirectly, in the
aggregate a majority of the voting power of the Voting Stock of the parent
entity);
(ii) following the earlier to occur of (A) the first public offering
of common stock of Holdings or (B) the first public offering of common
stock of the Company, any "person" (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act), other than one or more Permitted Holders,
is or becomes the beneficial owner (as defined in clause (i) above, except
that for purposes of this clause (ii) such person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 35% of the total
voting power of the Voting Stock of the Company; provided, however, that
the Permitted Holders beneficially own (as defined in clause (i) above),
directly or indirectly, in the aggregate a lesser percentage of the total
voting power of the Voting Stock of the Company than such other person and
do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors (for
the purposes of this clause (ii), such other person shall be deemed to
beneficially own any Voting Stock of a specified entity held by a parent
entity, if such other person is the beneficial owner (as defined in this
clause (ii)), directly or indirectly, of more than 35% of the voting power
of the Voting Stock of such parent entity and the Permitted Holders
beneficially own (as defined in clause (i) above), directly or indirectly,
in the aggregate a lesser percentage of the voting power of the Voting
Stock of such parent entity and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a majority
of the board of directors of such parent entity);
(iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors (together
with any new directors (A) whose election by such Board of Directors or
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whose nomination for election by the stockholders of the Company was
approved by a vote of a majority of the directors of the Company then still
in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved or (B)
who are designees of one or more Permitted Holders) cease for any reason to
constitute a majority of the Board of Directors then in office; or
(iv) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale of all or substantially all the assets of the Company to another
Person (other than a Person that is controlled by the Permitted Holders),
and, in the case of any such merger or consolidation, the securities of the
Company that are outstanding immediately prior to such transaction and
which represent 100% of the aggregate voting power of the Voting Stock of
the Company are changed into or exchanged for cash, securities or property,
unless pursuant to such transaction such securities are changed into or
exchanged for, in addition to any other consideration, securities of the
surviving corporation that represent, immediately after such transaction,
at least a majority of the aggregate voting power of the Voting Stock of
the surviving corporation.
"CHI" means CH Industries, Inc., a Delaware corporation.
"CHI Acquisition" means the acquisition transactions contemplated by the
CHI Acquisition Agreement.
"CHI Acquisition Agreement" means the Asset Purchase Agreement dated April
24, 1998, among the Company and the sellers named therein, as such agreement is
in effect on the Issue Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Co-Investors" means Ferrer Freeman Thompson & Co. LLC and Galen Partners
III, L.P.
"Company" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
indenture securities.
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"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of EBITDA for the period of the most recent
four consecutive fiscal quarters for which financial statements are available
prior to the date of such determination to (ii) Consolidated Interest Expense
for such four fiscal quarters; provided, however, that (1) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or
both, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such period and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period (except that, in making such
computation, the amount of Indebtedness under any revolving credit facility
outstanding on the date of such calculation shall be computed based on (A) the
average daily balance of such Indebtedness during such four fiscal quarters or
such shorter period when such facility was outstanding or (B) if such facility
was created after the end of such four fiscal quarters, the average balance of
such Indebtedness during the period from the date of creation of such facility
to the date of the computation), (2) if the Company or any Restricted Subsidiary
has repaid, repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged (in each case other than
Indebtedness Incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid and has not been replaced) on the date
of the transaction giving rise to the need to calculate the Consolidated
Coverage Ratio, EBITDA and Consolidated Interest Expense for such period shall
be calculated on a pro forma basis as if such discharge had occurred on the
first day of such period and as if the Company or such Restricted Subsidiary has
not earned the interest income actually earned during such period in respect of
cash or Temporary Cash Investments used to repay, repurchase, defease or
otherwise discharge such Indebtedness, (3) if since the beginning of such period
the Company or any Restricted Subsidiary shall have made any Asset Disposition,
the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
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(if negative), directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Restricted Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Restricted Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such Indebtedness after such
sale), (4) if since the beginning of such period the Company or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in any
Restricted Subsidiary (or any person which becomes a Restricted Subsidiary) or
an acquisition of assets, including any such Investment or acquisition of assets
occurring in connection with a transaction requiring a calculation to be made
hereunder, which constitutes all or substantially all of a product line or an
operating unit of a business, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness and the application of the proceeds therefrom) as
if such Investment or acquisition occurred on the first day of such period and
(5) if since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period) shall have made any Asset
Disposition, any Investment or any acquisition of assets that would have
required an adjustment pursuant to clause (3) or (4) above if made by the
Company or a Restricted Subsidiary during such period, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto as if such Asset Disposition, Investment or acquisition occurred
on the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest of such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
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been the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its consolidated Restricted Subsidiaries, plus, to
the extent not included in such total interest expense, and to the extent
incurred by the Company or its Restricted Subsidiaries, without duplication, (i)
interest expense attributable to Capital Lease Obligations and the interest
expense attributable to leases constituting part of a Sale/Leaseback
Transaction, (ii) amortization of debt discount and debt issuance cost, (iii)
capitalized interest, (iv) non-cash interest expenses, (v) commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (vi) net costs associated with Hedging
Obligations (including amortization of fees), (vii) cash and Disqualified Stock
dividends in respect of all Preferred Stock of Restricted Subsidiaries and
Disqualified Stock of the Company held by Persons other than the Company or a
Wholly Owned Subsidiary, (viii) interest incurred in connection with Investments
in discontinued operations, (ix) interest accruing on any Indebtedness of any
other Person to the extent such Indebtedness is Guaranteed by (or secured by the
assets of) the Company or any Restricted Subsidiary and (x) the cash
contributions to any employee stock ownership plan or similar trust to the
extent such contributions are used by such plan or trust to pay interest or fees
to any Person (other than the Company or any Wholly Owned Subsidiary) in
connection with Indebtedness Incurred by such plan or trust and less, to the
extent included in such total interest expense, the amortization during such
period of debt issuance costs; provided, however, that the aggregate amount of
amortization relating to any such debt issuance costs deducted in calculating
Consolidated Interest Expense shall not exceed 5% of the aggregate amount of the
financing giving rise to such debt issuance costs.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated Subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(i) any net income of any Person (other than the Company) if such
Person is not a Restricted Subsidiary, except that (A) subject to the
exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such
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Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a
Restricted Subsidiary as a dividend or other distribution (subject, in the
case of a dividend or other distribution paid to a Restricted Subsidiary,
to the limitations contained in clause (iii) below) and (B) the Company's
equity in a net loss of any such Person for such period shall be included
in determining such Consolidated Net Income;
(ii) for purposes of Section 4.04(a)(3)(A) only, any net income (or
loss) of any Person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(iii) any net income of any Restricted Subsidiary if such Restricted
Subsidiary is subject to restrictions, directly or indirectly, on the
payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Company, except that (A) subject
to the exclusion contained in clause (iv) below, the Company's equity in
the net income of any such Restricted Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash
that could have been distributed by such Restricted Subsidiary during such
period to the Company or another Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution paid to another Restricted Subsidiary, to the limitation
contained in this clause) and (B) the Company's equity in a net loss of any
such Restricted Subsidiary for such period shall be included in determining
such Consolidated Net Income;
(iv) any gain or loss realized upon the sale or other disposition of
any assets of the Company or its consolidated Subsidiaries (including
pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain or
loss realized upon the sale or other disposition of any Capital Stock of
any Person;
(v) extraordinary gains or losses; and
(vi) the cumulative effect of a change in accounting principles.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any dividends, repayments of
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loans or advances or other transfers of assets from Unrestricted Subsidiaries to
the Company or a Restricted Subsidiary to the extent such dividends, repayments
or transfers increase the amount of Restricted Payments permitted under Section
4.04(a)(3)(D).
"Credit Agreement" means the Credit Agreement to be entered into by and
among the Company, certain of its Subsidiaries, the lenders referred to therein,
Banque Nationale de Paris, as Administrative Agent, NationsBank, N.A., as
Syndication Agent, and Credit Suisse First Boston, as Documentation Agent,
together with the related documents thereto (including the term loans and
revolving loans thereunder, any guarantees, all security documents and any hedge
agreements), in each case, as amended, extended, renewed, restated, supplemented
or otherwise modified or refinanced (in whole or in part, and without limitation
as to amount, terms, conditions, covenants and other provisions) from time to
time, and any agreement (and related document) governing Indebtedness incurred
to Refinance, in whole or in part, the borrowings and commitments then
outstanding or permitted to be outstanding under such Credit Agreement or a
successor Credit Agreement, whether by the same or any other lender or group of
lenders.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or beneficiary.
"Debentures" mean the 13% Senior Discount Debentures Due 2009 of Holdings.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Designated Senior Indebtedness" in respect of a Person means (i) the Bank
Indebtedness and (ii) any other Senior Indebtedness of such Person which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $25 million and is specifically designated by such Person
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which by its terms (or by the terms of any security into which it is convertible
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or for which it is exchangeable) or upon the happening of any event (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable or must be purchased, upon the occurrence of certain events
or otherwise, by such Person at the option of the holder thereof, in whole or in
part, in each case on or prior to the first anniversary of the Stated Maturity
of the Securities; provided, however, that any Capital Stock that would not
constitute Disqualified Stock but for provisions thereof giving holders thereof
the right to require such Person to purchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of control" occurring prior to the
first anniversary of the Stated Maturity of the Securities shall not constitute
Disqualified Stock if the "asset sale" or "change of control" provisions
applicable to such Capital Stock are not more favorable to the holders of such
Capital Stock than the provisions of Sections 4.06 and 4.09.
"EBITDA" for any period means the sum of Consolidated Net Income plus
Consolidated Interest Expense plus the following to the extent deducted in
calculating such Consolidated Net Income: (a) all income tax expense of the
Company and its consolidated Restricted Subsidiaries, (b) depreciation expense
of the Company and its consolidated Restricted Subsidiaries, (c) amortization
expense of the Company and its consolidated Restricted Subsidiaries (excluding
amortization expense attributable to a prepaid cash item that was paid in a
prior period), (d) non-recurring severance and transaction costs incurred in
connection with any acquisition (including the Merger and the CHI Acquisition)
by the Company and its consolidated Restricted Subsidiaries and (e) all other
non-cash charges of the Company and its consolidated Restricted Subsidiaries
(excluding any such non-cash charge to the extent that it represents an accrual
of or reserve for cash expenditures in any future period), in each case for such
period. Notwithstanding the foregoing, the provision for taxes based on the
income or profits of, and the depreciation and amortization and non-cash charges
of, a Restricted Subsidiary shall be added to Consolidated Net Income to compute
EBITDA only to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in calculating Consolidated Net Income
and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
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its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the Issue Date, including those set forth in (i)
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession and (iv) the rules and regulations of the SEC governing
the inclusion of financial statements (including pro forma financial statements)
in periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such other Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain
financial statement conditions or otherwise) or (ii) entered into for the
purpose of assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning. The
term "Guarantor" shall mean any Person Guaranteeing any obligation.
"Guaranty Agreement" means a supplemental indenture, in a form satisfactory
to the Trustee, pursuant to which a Subsidiary Guarantor or any other Person
guarantees the Company's obligations with respect to the Securities on the terms
provided for in this Indenture.
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"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Interest Rate Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.
"Holdings" means MEDIQ Incorporated, Inc., a Delaware corporation, and any
successor corporation.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication):
(i) the principal in respect of (A) indebtedness of such Person for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such Person is
responsible or liable, including, in each case, any premium on such
indebtedness to the extent such premium has become due and payable;
(ii) all Capital Lease Obligations of such Person and all Attributable
Debt in respect of Sale/Leaseback Transactions entered into by such Person;
(iii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person
and all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of
business) which purchase price or obligation is due more than six months
after the date of placing such property in service or taking delivery and
title thereto;
(iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
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securing obligations (other than obligations described in clauses (i)
through (iii) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon or, if
and to the extent drawn upon, such drawing is reimbursed no later than the
tenth Business Day following payment on the letter of credit);
(v) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock or,
with respect to any Subsidiary of such Person, the liquidation preference
with respect to, any Preferred Stock (but excluding, in each case, any
accrued dividends);
(vi) all obligations of the type referred to in clauses (i) through
(v) of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(vii) all obligations of the type referred to in clauses (i) through
(vi) of other Persons secured by any Lien on any property or asset of such
Person (whether or not such obligation is assumed by such Person), the
amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured; and
(viii) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations described above at such date;
provided, however, that the amount outstanding at any time of any Indebtedness
issued with original issue discount shall be deemed to be the face amount of
such Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such time as determined in conformity with
GAAP.
"Indenture" means this Indenture as amended or supplemented from time to
time.
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"Insolvency or Liquidation Proceeding" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding in connection therewith, relating to the
Company or any of its assets, (ii) any liquidation, dissolution or other winding
up of the Company, whether voluntary or involuntary or whether or not involving
insolvency or bankruptcy or (iii) any assignment for the benefit of creditors or
any other marshaling of assets or liabilities of the Company.
"Interest Rate Agreement" means in respect of a Person any interest rate
swap agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect such Person against fluctuations in interest
rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of Guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock, Indebtedness or other
similar instruments issued by such Person; provided, however, that an
acquisition of assets, Capital Stock or other securities of any Person for
consideration consisting of common equity securities of the Company shall not be
deemed to be an "Investment". For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and Section 4.04, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
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"Issue Date" means the date on which the Securities are originally issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Management Agreement" means the management services agreement that becomes
effective at the effective time of the Merger among Bruckmann, Rosser, Sherrill
& Co., Inc., the Company, Galen Associates and Ferrer Freeman Thompson & Co.
LLC, as amended from time to time.
"Merger" means the merger of MQ Acquisition Corporation with and into
Holdings pursuant to the Agreement and Plan of Merger dated as of January 14,
1998, as amended as of April 27, 1998, between MQ Acquisition Corporation and
Holdings.
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise and proceeds
from the sale or other disposition of any securities received as consideration,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form), in each case net of (i) all legal, accounting, investment
banking, title and recording tax expenses, commissions and other fees and
expenses incurred, and all Federal, state, provincial, foreign and local taxes
required to be paid or accrued as a liability under GAAP, as a consequence of
such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to a Person owning a beneficial interest in assets subject
to sale or minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Disposition, (iv) the deduction of appropriate amounts
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provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets disposed in such Asset
Disposition and retained by the Company or any Restricted Subsidiary after such
Asset Disposition and (v) any portion of the purchase price from an Asset
Disposition required by the terms of such Asset Disposition to be placed in
escrow (whether as a reserve for a purchase price adjustment, for satisfaction
of indemnities or otherwise); provided, however, that upon the termination of
such escrow, Net Available Cash shall be increased by any portion of the funds
therein released to the Company or any Restricted Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Recourse", with respect to any Indebtedness of a subsidiary, means
Indebtedness (i) as to which neither the Company nor any of its other Restricted
Subsidiaries (a) provides credit support of any kind (including any undertaking,
agreement or instrument that would constitute Indebtedness) and (b) is directly
or indirectly liable (as a Guarantor or otherwise); and (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its Stated Maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its other Restricted Subsidiaries.
"Obligations" means with respect to any Indebtedness all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
and other amounts payable pursuant to or in respect of the documentation
governing such Indebtedness.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
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"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Holders" means (i) BRS, Bruce C. Bruckmann, Harold O. Rosser II,
Stephen C. Sherrill and Stephen Edwards, the Co-Investors and the Rotko Entities
and any Person who on the Issue Date is an Affiliate of any of the foregoing,
(ii) Thomas S. Carroll, Jay M. Kaplan and any other Person who is a member of
the management of the Company or Holdings, and a shareholder of Holdings, on the
Issue Date and (iii) any Related Party of any of the foregoing.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) the Company, a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is a Related
Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary;
(vii) stock, obligations or securities received in settlement of debts created
in the ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments; (viii) any Person to the extent such
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Investment represents the non-cash portion of the consideration received for an
Asset Disposition as permitted pursuant to Section 4.06; and (ix) additional
Investments in an aggregate amount which, together with all other Investments
made pursuant to this clause (ix) that are outstanding, does not exceed $2.5
million.
"Permitted Junior Securities" means (i) Capital Stock of the Company and
(ii) any debt securities of the Company or any Subsidiary Guarantor, as the case
may be, that are subordinated to all Senior Indebtedness of the Company or such
Subsidiary Guarantor, as the case may be, to at least the same extent as the
Securities or the applicable Subsidiary Guaranty are subordinated to Senior
Indebtedness of the Company or such Subsidiary Guarantor.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Post-Petition Interest" means all interest accrued or accruing after the
commencement of any Insolvency or Liquidation Proceeding (and interest that
would accrue but for the commencement of any Insolvency or Liquidation
Proceeding) in accordance with and at the contract rate (including, without
limitation, any rate applicable upon default) specified in the agreement or
instrument creating, evidencing or governing any Indebtedness, whether or not,
pursuant to applicable law or otherwise, the claim for such interest is allowed
as a claim in such Insolvency or Liquidation Proceeding.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Public Equity Offering" means an underwritten primary public offering of
common stock of Holdings or the Company pursuant to an effective registration
statement under the Securities Act.
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"Public Market" means any time after (x) a Public Equity Offering has been
consummated and (y) at least 10% of the total issued and outstanding common
stock of Holdings or the Company, as applicable, has been distributed by means
of an effective registration statement under the Securities Act or sales
pursuant to Rule 144 under the Securities Act.
"Purchase Agreement" means the Purchase Agreement dated May 21, 1998, among
Holdings, the Company, the Subsidiary Guarantors and the Initial Purchasers.
"Purchase Money Indebtedness" means Indebtedness (including Capital Lease
Obligations) (i) consisting of the deferred purchase price of property,
conditional sale obligations, obligations under any title retention agreement,
other purchase money obligations and obligations in respect of industrial
revenue bonds or similar Indebtedness, in each case where the maturity of such
Indebtedness does not exceed the anticipated useful life of the asset being
financed, and (ii) Incurred to finance the acquisition by the Company or a
Restricted Subsidiary of such asset, including additions and improvements;
provided, however, that any Lien arising in connection with any such
Indebtedness shall be limited to the specified asset being financed or, in the
case of real property or fixtures, including additions and improvements, the
real property on which such asset is attached; provided further, however, that
such Indebtedness is Incurred within 180 days after such acquisition of such
assets by the Company or any Restricted Subsidiary.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such indebtedness. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with this Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
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Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced and (iii) such Refinancing Indebtedness has an aggregate
principal amount (or if Incurred with original issue discount, an aggregate
issue price) that is equal to or less than the aggregate principal amount (or if
Incurred with original issue discount, the aggregate accreted value) then
outstanding or committed (plus fees and expenses, including any premium and
defeasance costs) under the Indebtedness being Refinanced; provided further,
however, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary that Refinances Indebtedness of the Company or (y) Indebtedness of
the Company or a Restricted Subsidiary that Refinances Indebtedness of an
Unrestricted Subsidiary.
"Registration Rights Agreement" means the Registration Rights
Agreement dated May 21, 1998, among Holdings, the Company, the Subsidiary
Guarantors and the Initial Purchasers.
"Related Business" means any business related, ancillary or
complementary (as determined in good faith by the Board of Directors) to the
businesses of the Company and the Restricted Subsidiaries on the Issue Date.
"Related Party" means (i) any controlling stockholder, general
partner, 80% (or more) owned Subsidiary, or spouse or immediate family member
(in the case of an individual) of any Permitted Holder or (ii) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons holding an 80% or more controlling interest of which
consist solely of one or more Permitted Holders and/or such other Persons
referred to in the immediately preceding clause (i).
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness of the Company; provided, however,
that if and for so long as any Senior Indebtedness lacks such a representative,
then the Representative for such Senior Indebtedness shall at all times be the
holders of a majority in outstanding principal amount of such Senior
Indebtedness.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than dividends or distributions
payable solely in its Capital Stock (other than Disqualified Stock) and other
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than dividends or distributions payable solely to the Company or a Restricted
Subsidiary, and other than pro rata dividends or other distributions made by a
Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held by any Person
or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than, in any such case, in exchange
for or into Capital Stock of the Company that is not Disqualified Stock), (iii)
the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations (other than the
purchase, repurchase or other acquisition of Subordinated Obligations purchased
in anticipation of satisfying a sinking fund obligation, principal installment
or final maturity, in each case due within one year of the date of acquisition)
or (iv) the making of any Investment in any Person (other than a Permitted
Investment). In determining the amount of any Restricted Payment made in
property other than in cash, such amount shall be the fair market value of such
property at the time of such Restricted Payment, as determined in good faith by
the Board of Directors.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"Revolving Credit Facility" means the revolving credit facility contained
in the Credit Agreement and any other facility or financing arrangement that
Refinances or replaces, in whole or in part, any such revolving credit facility.
"Rotko Entities" means (i) a trust established on November 18, 1983, by the
late Bernard B. Rotko, (ii) Michael J. Rotko, (iii) Bessie G. Rotko and (iv)
Judith M. Shipon.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
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"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company or a
Subsidiary Guarantor, as the case may be, secured by a Lien.
"Securities" means the Securities issued under this Indenture.
"Senior Indebtedness" means, with respect to any Person, (i) Indebtedness
of such Person, whether outstanding on the Issue Date or thereafter Incurred
(including the Indebtedness of such Person under the Credit Agreement or any
Guarantee thereof), and (ii) accrued and unpaid interest (including
Post-Petition Interest) in respect of (A) Indebtedness of such Person for money
borrowed and (B) Indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable unless, in the case of (i) and (ii), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate in right of payment to the Securities or
the applicable Subsidiary Guaranty; provided, however, that Senior Indebtedness
shall not include (1) any obligation of such Person to any Subsidiary of such
Person, (2) any liability for Federal, state, local or other taxes owed or owing
by such Person, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities), (4) any Indebtedness of such Person
(and any accrued and unpaid interest in respect thereof) which is subordinate or
junior by its terms to any other Indebtedness or other obligation of such Person
or (5) that portion of any Indebtedness which at the time of Incurrence is
Incurred in violation of this Indenture (but as to any such Indebtedness under
the Credit Agreement, no such violation shall be deemed to exist if the
Representative of the Banks shall have received an Officers' Certificate of the
Company to the effect that the issuance of such Indebtedness does not violate
such covenant and setting forth in reasonable detail the reasons therefor).
"Senior Subordinated Indebtedness" means (i) with respect to the Company,
the Securities and any other Indebtedness of the Company that specifically
provides that such Indebtedness is to rank pari passu with the Securities in
right of payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligation of the Company which is not Senior Indebtedness
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of the Company and (ii) with respect to each Subsidiary Guarantor, its
Subsidiary Guaranty of the Securities and any other indebtedness of such Person
that specifically provides that such Indebtedness rank pari passu with its
applicable Subsidiary Guaranty in respect of payment and is not subordinated by
its terms in respect of payment to any Indebtedness or other obligation of such
Person which is not Senior Indebtedness of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company or any
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities
or, in the case of a Subsidiary Guarantor, its Subsidiary Guaranty pursuant to a
written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means any domestic Restricted Subsidiary of the
Company that Guarantees the Company's obligations with respect to the Securities
pursuant to the terms of this Indenture.
"Subsidiary Guaranty" means a Guarantee by a Subsidiary Guarantor of the
Company's obligations with respect to the Securities pursuant to the terms of
this Indenture.
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"Temporary Cash Investments" means any of the following: (i) any investment
in direct obligations of the United States of America or any agency thereof or
obligations guaranteed by the United States of America or any agency thereof,
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 180 days of the date of acquisition thereof
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50,000,000 (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor, (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause (i)
above entered into with a bank meeting the qualifications described in clause
(ii) above, (iv) investments in commercial paper, maturing not more than 90 days
after the date of acquisition, issued by a corporation (other than an Affiliate
of the Company) organized and in existence under the laws of the United States
of America or any foreign country recognized by the United States of America
with a rating at the time as of which any investment therein is made of "P-1"
(or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher)
according to Standard and Poor's Ratings Group, and (v) investments in
securities with maturities of six months or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States of America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by Standard & Poor's Ratings Group or "A" by Moody's
Investors Service, Inc.
"Term Loan Facility" means the term loan facilities (including any delayed
draw acquisition facilities) contained in the Credit Agreement and any other
facility or financing arrangement that Refinances or replaces in whole or in
part any such term loan facilities.
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"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.77aaa-77bbbb) as
in effect on the date of this Indenture.
"Transactions" shall have the meaning set forth in the Purchase Agreement.
"Trustee" means the party named as such in this Indenture until a successor
replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.04. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness under Section 4.03(a) and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
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which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction" ................ 4.07
"Bankruptcy Law" ....................... 6.01
"Blockage Notice" ...................... 10.03
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Event of Default" ..................... 6.01
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 13.08
"Offer" ............................... 4.06(b)
"Offer Amount" ........................ 4.06(c)(2)
"Offer Period" ........................ 4.06(c)(2)
"pay the Securities" ................... 10.03
"Paying Agent" ......................... 2.03
"Payment Blockage Period" .............. 10.03
"Purchase Date" ....................... 4.06(c)(1)
"Registrar"............................. 2.03
"Successor Company" .................... 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC;
"indenture securities" means the Securities;
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"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with GAAP;
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such Preferred Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Preferred Stock, whichever is greater; and
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(9) all references to the date the Securities were originally issued
shall refer to the date the Initial Securities were originally issued.
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in the Rule 144A/Regulation S Appendix attached hereto (the "Appendix")
which is hereby incorporated in and expressly made part of this Indenture. The
Initial Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 1 to the Appendix which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities, the Private Exchange Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in the Appendix and Exhibit A are part of the terms of this
Indenture.
SECTION 2.02. Execution and Authentication. Two Officers shall sign the
Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
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Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any of its domestically incorporated Wholly Owned Subsidiaries may
act as Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due date
of the principal and interest on any Security, the Company shall deposit with
the Paying Agent a sum sufficient to pay such principal and interest when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the Company
or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
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for any funds disbursed by the Paying Agent. Upon complying with this Section,
the Paying Agent shall have no further liability for the money delivered to the
Trustee.
SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies
any other reasonable requirements of the Trustee. If required by the Trustee or
the Company, such Holder shall furnish an indemnity bond sufficient in the
judgment of the Company and the Trustee to protect the Company, the Trustee, the
Paying Agent, the Registrar and any co-registrar from any loss which any of them
may suffer if a Security is replaced. The Company and the Trustee may charge the
Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.07. Outstanding Securities. Securities outstanding at any time
are all Securities authenticated by the Trustee except for those canceled by it,
those delivered to it for cancelation and those described in this Section as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.06, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities (or
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portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.08. Temporary Securities. Until definitive Securities are ready
for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.09. Cancelation. The Company at any time may deliver Securities
to the Trustee for cancelation. The Registrar and the Paying Agent shall forward
to the Trustee any Securities surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel and destroy
(subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver canceled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancelation.
SECTION 2.10. Defaulted Interest. If the Company defaults in a payment of
interest on the Securities, the Company shall pay defaulted interest (plus
interest on such defaulted interest to the extent lawful) in any lawful manner.
The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
SECTION 2.11. CUSIP Numbers. The Company in issuing the Securities may use
"CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
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however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers.
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 60 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than all the
Securities are to be redeemed, the Trustee shall select the Securities to be
redeemed pro rata or by lot or by a method that complies with applicable legal
and securities exchange requirements, if any, and that the Trustee in its sole
discretion shall deem to be fair and appropriate and in accordance with methods
generally used at the time of selection by fiduciaries in similar circumstances.
The Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but not more than 60
days before a date for redemption of Securities, the Company shall mail a notice
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of redemption by first-class mail to each Holder of Securities to be redeemed at
such Holder's registered address.
The notice shall identify the Securities to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portion thereof)
called for redemption ceases to accrue on and after the redemption date;
and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is
mailed, Securities called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon surrender
to the Paying Agent, such Securities shall be paid at the redemption price
stated in the notice, plus accrued interest to the redemption date (subject to
the right of Holders of record on the relevant record date to receive interest
due on the related interest payment date). Failure to give notice or any defect
in the notice to any Holder shall not affect the validity of the notice to any
other Holder.
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SECTION 3.05. Deposit of Redemption Price. Prior to the redemption date,
the Company shall deposit with the Paying Agent (or, if the Company or a
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest on all Securities
to be redeemed on that date other than Securities or portions of Securities
called for redemption which have been delivered by the Company to the Trustee
for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate for the Holder (at the Company's expense) a new Security equal in
principal amount to the unredeemed portion of the Security surrendered.
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities. The Company shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the SEC (to the extent the SEC will accept such
filings) and provide the Trustee and Securityholders with such annual reports
and such information, documents and other reports as are specified in Sections
13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections, such information, documents and other reports to be so filed and
provided at the times specified for the filing of such information, documents
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and reports under such Sections. The Company also shall comply with the other
provisions of TIA s.314(a).
SECTION 4.03. Limitation on Indebtedness. (a) The Company shall not, and
shall not permit any Restricted Subsidiary to, Incur, directly or indirectly,
any Indebtedness; provided, however, that the Company and its Restricted
Subsidiaries may Incur Indebtedness if, on the date of such Incurrence and after
giving effect thereto, the Consolidated Coverage Ratio exceeds 2.00 to 1 if such
Indebtedness is Incurred prior to June 1, 2000 or 2.25 to 1 if such Indebtedness
is Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company and the
Restricted Subsidiaries may Incur any or all of the following Indebtedness:
(1) Indebtedness Incurred by the Company or any Restricted Subsidiary
pursuant to any Revolving Credit Facility; provided, however, that,
immediately after giving effect to any such Incurrence, the aggregate
principal amount of all Indebtedness Incurred under this clause (1) and
then outstanding does not exceed the greater of (A) $50 million less the
sum of all principal payments with respect to such Indebtedness pursuant to
clause (a)(ii)(A) of Section 4.06 and (B) the sum of 60% of the book value
of the inventory of the Company and its Restricted Subsidiaries and 85% of
the book value of the accounts receivables of the Company and its
Restricted Subsidiaries;
(2) Indebtedness Incurred by the Company or any Restricted Subsidiary
pursuant to any Term Loan Facility; provided, however, that, after giving
effect to any such Incurrence, the aggregate principal amount of all
Indebtedness Incurred under this clause (2) and then outstanding does not
exceed an amount equal to $200 million less the aggregate sum of all
principal payments actually made from time to time after the Issue Date
with respect to such Indebtedness (other than principal payments made in
connection with any permitted Refinancings thereof);
(3) Indebtedness owed to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock which results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or a Wholly Owned Subsidiary) shall
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be deemed, in each case, to constitute the Incurrence of such Indebtedness
by the obligor thereon;
(4) Indebtedness owed to and held by any Restricted Subsidiary (other
than a Wholly Owned Subsidiary); provided, however, that (i) any such
Indebtedness shall be unsecured Subordinated Obligations of the Company or
such Restricted Subsidiary, as applicable, and (ii) any subsequent issuance
or transfer of any Capital Stock of such Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company, a
Wholly Owned Subsidiary or another Restricted Subsidiary) shall be deemed
to constitute the Incurrence of such Indebtedness by the issuer thereof;
(5) the Securities;
(6) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2), (3), (4) or (5) of this Section
4.03(b));
(7) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or pursuant to clause (5) or (6) of Section
4.03(b) or this clause (7);
(8) Indebtedness of a Restricted Subsidiary Incurred and outstanding
on or prior to the date on which such Subsidiary was acquired by the
Company or a Restricted Subsidiary (other than Indebtedness Incurred as
consideration in, in contemplation of or to provide all or any portion of
the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company or a Restricted Subsidiary) and
Refinancing Indebtedness in respect thereof; provided, however, that such
Indebtedness (including Refinancing Indebtedness in respect thereof) is
Non-Recourse to the Company and its Restricted Subsidiaries, or to any of
their respective assets (other than the acquired Subsidiary and its
Subsidiaries, as applicable);
(9) Indebtedness in respect of performance bonds and surety or appeal
bonds entered into by the Company and the Restricted Subsidiaries in the
ordinary course of their business;
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(10) Hedging Obligations under or with respect to Interest Rate
Agreements and Currency Agreements entered into in the ordinary course of
business and not for the purpose of speculation;
(11) Purchase Money Indebtedness Incurred to finance the acquisition
by the Company or a Restricted Subsidiary of any assets in the ordinary
course of business; provided, however, at the time of such Incurrence and
after giving effect thereto, the aggregate principal amount of all
Indebtedness Incurred pursuant to this clause (11) and then outstanding
does not exceed $10 million;
(12) Subsidiary Guaranties of the Subsidiary Guarantors;
(13) the Guarantee of any Indebtedness otherwise permitted to be
Incurred pursuant to this Indenture (other than Indebtedness Incurred
pursuant to clause (8) above);
(14) Indebtedness of the Company or any Restricted Subsidiary arising
from the honoring by a bank or other financial institution of a check,
draft or similar instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of
business, provided that such Indebtedness is satisfied within five Business
Days of Incurrence;
(15) Indebtedness of the Company or any Restricted Subsidiary
consisting of indemnification, adjustment of purchase price or similar
obligations, in each case incurred in connection with the disposition of
any assets of the Company or any Restricted Subsidiary in a principal
amount not to exceed the gross proceeds actually received by the Company or
any Restricted Subsidiary in connection with such disposition; and
(16) Indebtedness in an aggregate principal amount which, together
with all other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the date of such Incurrence (other than Indebtedness
permitted by clauses (1) through (15) of this Section 4.03(b) or Section
4.03(a)) does not exceed $50 million.
(c) Notwithstanding the foregoing, the Company shall not, and shall not
permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant to Section
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4.03(b) if the proceeds thereof are used, directly or indirectly, to Refinance
any Subordinated Obligations unless such Indebtedness shall be subordinated to
the Securities or the applicable Subsidiary Guaranty, as the case may be, to at
least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03, (i) in
the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described above, the Company, in its sole discretion,
will classify such item of Indebtedness at the time of its Incurrence and only
be required to include the amount and type of such Indebtedness in one of the
above clauses and (ii) an item of Indebtedness may be divided and classified in
more than one of the types of Indebtedness described above.
(e) Notwithstanding paragraphs (a) or (b) of this Section 4.03, the Company
shall not, and shall not permit any Subsidiary Guarantor to, Incur (i) any
Indebtedness if such Indebtedness is by its terms subordinate or junior in
ranking in any respect to any Senior Indebtedness of the Company or such
Subsidiary Guarantor, as applicable, unless such Indebtedness is Senior
Subordinated Indebtedness or is expressly subordinated in right of payment to
Senior Subordinated Indebtedness or (ii) any Secured Indebtedness (other than
trade payables Incurred in the ordinary course of business) that is not Senior
Indebtedness of the Company or such Subsidiary Guarantor, as applicable, unless
contemporaneously therewith effective provision is made to secure the Securities
or the applicable Subsidiary Guaranty, as the case may be, equally and ratably
with such Secured Indebtedness for so long as such Secured Indebtedness is
secured by a Lien.
SECTION 4.04. Limitation on Restricted Payments. (a) The Company shall not,
and shall not permit any Restricted Subsidiary, directly or indirectly, to make
a Restricted Payment if at the time the Company or such Restricted Subsidiary
makes such Restricted Payment:
(1) a Default shall have occurred and be continuing (or would result
therefrom);
(2) the Company is not able to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
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(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the fiscal
quarter immediately following the fiscal quarter during which the
Securities are originally issued to the end of the most recent fiscal
quarter for which financial statements are available prior to the date
of such Restricted Payment (or, in case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit);
(B) the aggregate Net Cash Proceeds (or non-cash proceeds when
converted to cash) received by the Company from the issuance or sale
of its Capital Stock (other than Disqualified Stock) and the aggregate
cash received by the Company as a capital contribution, in each case
subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary of the Company and other than an issuance or sale to an
employee stock ownership plan or to a trust established by the Company
or any of its Subsidiaries for the benefit of their employees to the
extent that the purchase by such plan or trust is financed by
Indebtedness of such plan or trust to the Company or any Subsidiary or
Indebtedness Guaranteed by the Company or any Subsidiary);
(C) the amount by which Indebtedness of the Company or its
Restricted Subsidiaries is reduced on the Company's consolidated
balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any
Indebtedness of the Company or any Restricted Subsidiary for Capital
Stock (other than Disqualified Stock) of the Company (less the amount
of any cash, or the fair value of any other property, distributed by
the Company or such Restricted Subsidiary upon such conversion or
exchange); and
(D) an amount equal to the sum of (i) the net reduction in
Investments in any Person resulting from dividends, repayments of
loans or advances or other transfers of assets, in each case to the
Company or any Restricted Subsidiary from such Person, or resulting
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from the receipt by the Company or any Restricted Subsidiary of
proceeds realized upon the sale of such Investment (other than a sale
to an Affiliate), and (ii) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the fair market value of the
net assets of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided, however,
that the foregoing sum shall not exceed, in the case of any Person,
the amount of Investments previously made (and treated as a Restricted
Payment) by the Company or any Restricted Subsidiary in such Person
plus, to the extent not added pursuant to clause (3)(A) of Section
4.04(a), 50% of the excess, if any, of the cash received upon the sale
or other disposition of an Investment over the amount of such
Investment previously made (and treated as a Restricted Payment).
(b) The provisions of Section 4.04(a) shall not prohibit:
(i) any Restricted Payment made out of the proceeds of the
substantially concurrent sale of, or capital contribution in respect
of, or made by exchange for, Capital Stock of the Company (other than
Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or to a
trust established by the Company or any of its Subsidiaries for the
benefit of their employees to the extent that the purchase by such
plan or trust is financed by Indebtedness of such plan or trust to the
Company or any Subsidiary or Indebtedness Guaranteed by the Company or
any Subsidiary); provided, however, that (A) such Restricted Payment
shall be excluded in the calculation of the amount of Restricted
Payments and (B) the Net Cash Proceeds from such sale or capital
contribution shall be excluded from the calculation of amounts under
clause (3)(B) of Section 4.04(a);
(ii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations made by
exchange for, or out of the proceeds of the substantially concurrent
sale of, Indebtedness which is permitted to be Incurred pursuant to
Section 4.03; provided, however, that such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value
shall be excluded in the calculation of the amount of Restricted
Payments;
(iii) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend would
have complied with this covenant; provided, however, that such dividend
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shall be included in the calculation of the amount of Restricted
Payments;
(iv) the repurchase or other acquisition of shares of, or
options to purchase shares of, or dividends, distributions or advances
to Holdings to allow Holdings to repurchase or acquire shares of, or
options to purchase shares of, Capital Stock (other than Disqualified
Stock) of Holdings, the Company or any of its Subsidiaries from
employees, former employees, directors or former directors of Holdings,
the Company or any of its Subsidiaries (or permitted transferees of
such employees, former employees, directors or former directors),
pursuant to the terms of the agreements (including employment
agreements) or plans or written arrangements (or amendments thereto)
approved by the Board of Directors under which such individuals
purchase or sell or are granted the option to purchase or sell, shares
of such common stock; provided, however, that the aggregate amount of
such repurchases and other acquisitions (and dividends to Holdings for
such repurchases and other acquisitions) shall not exceed the sum of
(A) $5 million plus (B) the aggregate Net Cash Proceeds received by the
Company from the issuance of such Capital Stock to, or the exercise of
options to purchase such Capital Stock by, employees or directors of
Holdings, the Company or any of its Subsidiaries that occurs after the
Issue Date (to the extent the Net Cash Proceeds from the sale of such
Capital Stock have not otherwise been applied to the payment of
Restricted Payments by virtue of clause (3)(B) of Section 4.04(a) or
applied pursuant to Section 4.04(b)(i); provided further, however, that
such repurchases and other acquisitions shall be excluded in the
calculation of the amount of Restricted Payments;
(v) payments of dividends on the Company's common stock after
an initial public offering (other than an offering on Form S-8) of the
Company's common stock (or of Holdings' common stock) in an annual
amount not to exceed, in the case of an offering of the Company's
common stock, 6% of the aggregate gross proceeds to the Company from
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shares of common stock sold for the account of the Company in such
initial public offering, or, in the case of an offering of Holdings'
common stock, 6% of the amount contributed to the Company by Holdings
from the proceeds received by Holdings from a sale of common stock of
Holdings in an initial public offering (provided that the proceeds of
any such dividends to Holdings are immediately used to pay a dividend
on the class of common stock sold in Holdings' initial public
offering); provided, however, that such payments shall be included in
the calculation of the amount of Restricted Payments;
(vi) dividends, distributions or advances to Holdings to the
extent required to pay non-deferrable scheduled cash interest when due
on the Debentures and the Exchangeable Debentures and any additional
cash interest (at a rate not to exceed 1/2 of 1% per annum) payable
with respect to the Debentures as a result of Holdings' failure to
comply with its obligations to register the Debentures; provided,
however, that (A) no Default shall have occurred and be continuing (or
would result therefrom), (B) Holdings shall immediately apply any such
dividend to make such cash interest payment and (C) except in the case
of such additional interest on the Debentures, immediately after giving
effect to any such dividend, the Company would be able to Incur an
additional $1.00 of Indebtedness pursuant to Section 4.03(a); provided
further, however, that such dividends, distributions and advances shall
be included in the calculation of the amount of Restricted Payments;
(vii) dividends, distributions or advances to Holdings to the
extent required to pay the Exchangeable Debentures when due at Stated
Maturity; provided, however, that such dividends, distributions or
advances shall be included in the calculation of the amount of
Restricted Payments;
(viii) dividends, distributions or advances to Holdings to the
extent necessary to pay for general corporate and overhead expenses
incurred by Holdings in the ordinary course of business; provided,
however, that such dividends shall not exceed $500,000 in any fiscal
year of the Company; provided further, however, that such dividends,
distributions or advances shall be excluded in the calculation of the
amount of Restricted Payments;
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(ix) dividends, distributions or advances to Holdings to be
used by Holdings to pay Federal, state and local taxes payable by
Holdings and directly attributable to (or arising as a result of) the
operations of the Company and its Restricted Subsidiaries; provided,
however, that (A) the amount of such dividends shall not exceed the
amount that the Company and its Restricted Subsidiaries would be
required to pay in respect of such Federal, state and local taxes were
the Company to pay such taxes as a stand-alone taxpayer and (B) such
dividends pursuant to this clause (ix) are used by Holdings for such
purposes within 20 days of the receipt of such dividends by Holdings;
providing further, however, that such dividends shall be excluded in
the calculation of the amount of Restricted Payments;
(x) any purchase or redemption of Disqualified Stock of the
Company or a Restricted Subsidiary made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Disqualified Stock of
the Company or a Restricted Subsidiary which is permitted to be
Incurred pursuant to Section 4.03; provided, however, that such
purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments;
(xi) upon the occurrence of a Change of Control and within 60
days after the completion of the offer to repurchase the Securities
pursuant to Section 4.09 (including the purchase of the Securities
tendered), any purchase or redemption of Subordinated Obligations
required pursuant to the terms thereof as a result of such Change of
Control at a purchase or redemption price not to exceed the outstanding
principal amount thereof, plus accrued and unpaid interest (if any);
provided, however, that (A) at the time of such purchase or redemption
no Default shall have occurred and be continuing (or would result
therefrom), (B) the Company would be able to Incur an additional $1.00
of Indebtedness pursuant to Section 4.03(a) after giving pro forma
effect to such Restricted Payment and (C) such purchase or redemption
shall be included in the calculation of the amount of Restricted
Payments;
(xii) any repurchase or other acquisition for value of Capital
Stock of a Restricted Subsidiary deemed to occur upon the merger of
such Restricted Subsidiary with or into the Company or a Wholly Owned
Subsidiary of the Company within one year following the date on which
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such Restricted Subsidiary became a Restricted Subsidiary; provided,
however, that such repurchases or other acquisitions shall be excluded
in the calculation of the amount of Restricted Payments;
(xiii) payments required pursuant to the terms of the CHI
Acquisition Agreement to consummate the CHI Acquisition by the Company
or a Restricted Subsidiary pursuant to the terms of the CHI Acquisition
Agreement; provided, however, that such payments shall be excluded from
the calculation of the amount of Restricted Payments;
(xiv) dividends, distributions or advances to Holdings to
allow Holdings to repurchase shares of Capital Stock in, and to pay
fees and expenses, including deferred compensation which becomes
payable, in connection with, the Merger; provided, however, that such
dividends, distributions or advances shall be excluded in the
calculation of the amount of Restricted Payments;
(xv) dividends, distributions or advances to Holdings to the
extent required to pay amounts in respect of pension plan or similar
employee benefit plan contributions, severance obligations of Holdings
existing as of the Issue Date and insurance premiums and deductibles;
provided, however, that such dividends, distribution or advances shall
be excluded in the calculation of the amount of Restricted Payments; or
(xvi) Restricted Payments not exceeding $7.5 million in the
aggregate; provided, however, that (A) at the time of such Restricted
Payments, no Default shall have occurred and be continuing (or would
result therefrom) and (B) such Restricted Payments shall be included in
the calculation of the amount of Restricted Payments.
SECTION 4.05. Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company shall not, and shall not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to (a) pay dividends or make any other distributions on its Capital
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Stock to the Company or a Restricted Subsidiary or pay any Indebtedness owed to
the Company, (b) make any loans or advances to the Company or (c) transfer any
of its property or assets to the Company, except:
(i) any encumbrance or restriction pursuant to an agreement,
including the Credit Agreement, in effect at or entered into on the
Issue Date;
(ii) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Capital Stock or
Indebtedness Incurred by such Restricted Subsidiary on or prior to the
date on which such Restricted Subsidiary was acquired by the Company
or any of its Restricted Subsidiaries (other than Indebtedness
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the
Company or any of its Restricted Subsidiaries) and outstanding on such
date;
(iii) any encumbrance or restriction pursuant to an agreement (A)
evidencing Indebtedness Incurred without violation of this Indenture
or (B) effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this Section 4.05 or
this clause (iii) or contained in any amendment to an agreement
referred to in clause (i) or (ii) of this Section 4.05 or this clause
(iii); provided, however, that in the case of clauses (A) and (B), the
encumbrances and restrictions with respect to such Restricted
Subsidiary contained in any such agreement or amendment are no more
restrictive in any material respect, as determined in good faith by
the Board of Directors, than encumbrances and restrictions with
respect to such Restricted Subsidiary contained in agreements of such
Restricted Subsidiary in effect at, or entered into on, the Issue
Date;
(iv) any such encumbrance or restriction consisting of customary
non assignment or subletting provisions contained in leases and other
contracts entered into in the ordinary course of business and
consistent with past practices;
(v) in the case of clause (c) above, restrictions contained in
security agreements, mortgages or similar documents securing
Indebtedness of a Restricted Subsidiary to the extent such
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restrictions restrict the transfer of the property subject to such
security agreements, mortgages or similar documents;
(vi) any restriction with respect to a Restricted Subsidiary
imposed pursuant to an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary pending the closing of such sale or
disposition;
(vii) any encumbrance or restriction arising under applicable
law; and
(viii) any encumbrance or restriction consisting of any
restriction on the sale or other disposition of assets or property
securing Indebtedness as a result of a Lien permitted to be Incurred
under this Indenture on such asset or property.
SECTION 4.06. Limitation on Sales of Assets and Subsidiary Stock. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly, consummate any Asset Disposition unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset
Disposition at least equal to the fair market value (including as to the value
of all non-cash consideration), as determined in good faith by the Board of
Directors, of the shares and assets subject to such Asset Disposition and at
least 75% of the consideration thereof received by the Company or such
Restricted Subsidiary is in the form of cash or cash equivalents (provided that
such 75% requirement shall not apply to any Asset Disposition in which the cash
or cash equivalents portion of the consideration received therefor, determined
in accordance with this covenant, is equal to or greater than what the net
after-tax proceeds would have been had the Asset Disposition complied with such
75% requirement) and (ii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted Subsidiary,
as the case may be) (A) first, to the extent the Company elects (or is required
by the terms of any Indebtedness), to prepay, repay, redeem or purchase Senior
Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness (other
than any Disqualified Stock) of a Wholly Owned Subsidiary that is not a
Subsidiary Guarantor (in each case other than Indebtedness owed to the Company
or an Affiliate of the Company) within one year from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (B) second, to
the extent of the balance of such Net Available Cash after application, if any,
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in accordance with clause (A), to the extent the Company elects, to acquire
Additional Assets within one year (or enter into a binding commitment to acquire
Additional Assets, provided that such commitment shall be subject only to
customary conditions (other than financing) and such acquisition shall be
consummated within two years from) from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; and (C) third, to the
extent of the balance of such Net Available Cash after application in accordance
with clauses (A) and (B), to make an Offer to the holders of the Securities (and
to holders of other Senior Subordinated Indebtedness designated by the Company)
to purchase Securities (and such other Senior Subordinated Indebtedness)
pursuant to and subject to the conditions of Section 4.06(b); provided, however,
that in connection with any prepayment, repayment or purchase of Indebtedness
pursuant to clause (A) or (C) above, the Company or such Restricted Subsidiary
shall permanently retire such Indebtedness and shall cause the related loan
commitment (if any) to be permanently reduced in an amount equal to the
principal amount so prepaid, repaid or purchased. Notwithstanding the foregoing
provisions of this Section 4.06, the Company and the Restricted Subsidiaries
shall not be required to apply any Net Available Cash in accordance with this
Section 4.06(a) except to the extent that the aggregate Net Available Cash from
all Asset Dispositions which are not applied in accordance with this Section
4.06(a) exceeds $10 million. Pending application of Net Available Cash pursuant
to this Section 4.06(a), such Net Available Cash shall be invested in Permitted
Investments or used to temporarily reduce loans outstanding under any Revolving
Credit Facility.
For the purposes of this Section 4.06, the following are deemed to be cash
or cash equivalents: (x) the assumption of Indebtedness of the Company or any
Restricted Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on such Indebtedness in connection with such Asset
Disposition (in which case the Company shall, without further action, be deemed
to have applied such assumed Indebtedness in accordance with clause (A) of the
preceding paragraph) and (y) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the purchase of
Securities (and other Senior Subordinated Indebtedness) pursuant to Section
4.06(a)(ii)(C), the Company shall be required to purchase Securities tendered
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pursuant to an offer by the Company for the Securities (and other Senior
Subordinated Indebtedness) (the "Offer") at a purchase price of 100% of their
principal amount (without premium) plus accrued but unpaid interest (or, in
respect of such other Senior Subordinated Indebtedness, such lesser price, if
any, as may be provided for by the terms of such Senior Subordinated
Indebtedness) in accordance with the procedures (including prorating in the
event of oversubscription) set forth in Section 4.06(c). The Company shall not
be required to make an Offer to purchase Securities (and other Senior
Subordinated Indebtedness) pursuant to this Section 4.06 if the Net Available
Cash available therefor is less than $10 million (which lesser amount shall be
carried forward for purposes of determining whether such an Offer is required
with respect to the Net Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the Company becomes
obligated to make an Offer, the Company shall be obligated to deliver to the
Trustee and send, by first-class mail to each Holder, a written notice stating
that the Holder may elect to have his Securities purchased by the Company either
in whole or in part (subject to prorating as hereinafter described in the event
the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date") and shall contain such information concerning the business
of the Company which the Company in good faith believes will enable such Holders
to make an informed decision (which at a minimum will include (i) the most
recently filed Annual Report on Form 10-K (including audited consolidated
financial statements) of the Company, the most recent subsequently filed
Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company
filed subsequent to such Quarterly Report, other than Current Reports describing
Asset Dispositions otherwise described in the offering materials (or
corresponding successor reports), (ii) a description of material developments in
the Company's business subsequent to the date of the latest of such Reports, and
(iii) if material, appropriate pro forma financial information) and all
instructions and materials necessary to tender Securities pursuant to the Offer,
together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided above, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
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Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.06(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) in Temporary Cash Investments, maturing on the last day prior to the
Purchase Date or on the Purchase Date if funds are immediately available by open
of business, an amount equal to the Offer Amount to be held for payment in
accordance with the provisions of this Section. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee for cancelation the Securities or portions thereof which
have been properly tendered to and are to be accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event that the aggregate
purchase price of the Securities delivered by the Company to the Trustee is less
than the Offer Amount applicable to the Securities, the Trustee shall deliver
the excess to the Company immediately after the expiration of the Offer Period
and such excess shall no longer be required to be applied pursuant to this
Section.
(3) Holders electing to have a Security purchased shall be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
Purchase Date. Holders shall be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
Purchase Date, a telex, facsimile transmission or letter setting forth the name
of the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities (and any other Senior
Subordinated Indebtedness included in the Offer) surrendered by holders thereof
exceeds the Offer Amount, the Company shall select the Securities and the other
Senior Subordinated Indebtedness to be purchased on a pro rata basis (with such
adjustments as may be deemed appropriate by the Company so that only Securities
and the other Senior Subordinated Indebtedness in denominations of $1,000, or
integral multiples thereof, shall be purchased). Holders whose Securities are
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purchased only in part shall be issued new Securities equal in principal amount
to the unpurchased portion of the Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which are to
be accepted for purchase, the Company shall also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
SECTION 4.07. Limitation on Affiliate Transactions. (a) The Company shall
not, and shall not permit any Restricted Subsidiary to, enter into or permit to
exist any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with any Affiliate of the Company (an "Affiliate Transaction") unless the terms
thereof (i) are no less favorable to the Company or such Restricted Subsidiary
than those that could be obtained at the time of such transaction in
arm's-length dealings with a Person who is not such an Affiliate, (ii) if such
Affiliate Transaction involves an amount in excess of $1 million, have been
approved by a majority of the members of the Board of Directors having no
personal stake in such Affiliate Transaction and (iii) if such Affiliate
Transaction involves an amount in excess of $5 million (other than Affiliate
Transactions in the ordinary course of business of the Company and its
Restricted Subsidiaries between or among the Company or any Restricted
Subsidiary of the Company and any Person providing goods and/or services to the
Company or any Restricted Subsidiary in the ordinary course of business that is
an Affiliate of the Company or such Restricted Subsidiary solely by virtue of
the fact that BRS, or any Person controlling BRS, directly or indirectly
controls both the Company or such Restricted Subsidiary and such Affiliate;
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provided, however, that such Affiliate Transaction shall comply with clause (i)
above), have been determined by (A) a nationally recognized investment banking
firm to be fair, from a financial standpoint, to the Company and its Restricted
Subsidiaries or (B) an accounting or appraisal firm nationally recognized in
making such determinations to be on terms that are not less favorable to the
Company and its Restricted Subsidiaries than the terms that could be obtained in
an arm's-length transaction from a Person that is not an Affiliate of the
Company.
(b) The provisions of Section 4.07(a) shall not prohibit (i) any Restricted
Payment permitted to be paid pursuant to Section 4.04, (ii) any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors, (iii) the grant of stock
options or similar rights to employees and directors of the Company pursuant to
plans approved by the Board of Directors, (iv) loans or advances to employees in
the ordinary course of business of the Company or its Restricted Subsidiaries,
but in any event not to exceed $2 million in the aggregate outstanding at any
one time, (v) the payment of reasonable compensation or employee benefit
arrangements to and indemnity provided for the benefit of directors, officers or
employees of the Company or its Restricted Subsidiaries in the ordinary course
of business, (vi) payments made in connection with the Transactions, including
the payment to BRS, the Co-Investors or any of their respective Affiliates of
(A) a transaction fee in connection with the Merger in an aggregate amount not
to exceed $6 million and (B) other fees pursuant to the Management Agreement in
an annual amount not to exceed in any fiscal year an amount equal to the greater
of (x) $1 million and (y) one and one-half percent of the Company's EBITDA for
such fiscal year, (vii) any Affiliate Transaction between the Company and a
Wholly Owned Subsidiary or between Wholly Owned Subsidiaries and (viii) the
issuance or sale of any Capital Stock (other than Disqualified Stock) of the
Company.
SECTION 4.08. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company shall not sell or otherwise dispose of any
Capital Stock of a Restricted Subsidiary (other than the pledge of Capital Stock
pursuant to the Credit Agreement), and shall not permit any Restricted
Subsidiary, directly or indirectly, to issue or sell or otherwise dispose of any
of its Capital Stock except (i) to the Company or a Wholly Owned Subsidiary,
(ii) directors' qualifying shares or other shares required by applicable law to
be held by a Person other than the Company or a Restricted Subsidiary, (iii) if,
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immediately after giving effect to such issuance, sale or other disposition,
neither the Company nor any of its Subsidiaries own any Capital Stock of such
Restricted Subsidiary or (iii) if, immediately after giving effect to such
issuance, sale or other disposition, such Restricted Subsidiary would no longer
constitute a Restricted Subsidiary and any Investment in such Person remaining
after giving effect thereto would have been permitted to be made under Section
4.04 if made on the date of such issuance, sale or other disposition.
SECTION 4.09. Change of Control. (a) Upon the occurrence of a Change of
Control, each Holder shall have the right to require that the Company repurchase
such Holder's Securities at a purchase price in cash equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase (subject to the right of holders of record on the relevant record
date to receive interest on the relevant interest payment date), in accordance
with the terms contemplated in Section 4.09(b). In the event that at the time of
such Change of Control the terms of the Senior Indebtedness of the Company
restrict or prohibit the repurchase of Securities pursuant to this Section, then
prior to the mailing of the notice to Holders provided for in Section 4.09(b)
below but in any event within 30 days following any Change of Control, the
Company shall (i) repay in full all such Senior Indebtedness or offer to repay
in full all such Senior Indebtedness and repay such Senior Indebtedness of each
lender who has accepted such offer or (ii) obtain the requisite consent under
the agreements governing such Senior Indebtedness to permit the repurchase of
the Securities as provided for in Section 4.09(b).
(b) Within 30 days following any Change of Control, the Company shall mail
a notice to each Holder with a copy to the Trustee (the "Change of Control
Offer") stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive
interest on the relevant interest payment date);
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(2) the circumstances and relevant facts regarding such Change of
Control;
(3) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed); and
(4) the procedures determined by the Company, consistent with this
Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than one Business Day prior to the
purchase date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Security which was delivered
for purchase by the Holder and a statement that such Holder is withdrawing his
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under
this Section shall be delivered by the Trustee for cancelation, and the Company
shall pay the purchase price plus accrued and unpaid interest, if any, to the
Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section, the Company
will not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Section and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.
(f) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or regulations
conflict with provisions of this Section, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Section by virtue thereof.
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SECTION 4.10. Future Guarantors. The Company shall cause each domestic
Restricted Subsidiary to execute and deliver to the Trustee a Guaranty Agreement
pursuant to which such Restricted Subsidiary will Guarantee payment of the
Securities on the same terms and conditions as those set forth in this
Indenture.
SECTION 4.11. Compliance Certificates. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default and whether or not the signers know of any Default that
occurred during such period. If they do, the certificate shall describe the
Default, its status and what action the Company is taking or proposes to take
with respect thereto. The Company also shall comply with TIA s.314(a)(4).
SECTION 4.12. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a) The Company
shall not consolidate with or merge with or into, or convey, transfer or lease,
in one transaction or a series of transactions, all or substantially all its
assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, or any State thereof or the District of Columbia
and the Successor Company (if not the Company) shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Subsidiary as a result of such transaction as having been Incurred by
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such Successor Company or such Subsidiary at the time of such transaction),
no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a); and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, and the predecessor Company, except in the
case of a lease, shall be released from the obligation to pay the principal of
and interest on the Securities.
(b) The Company shall not permit any Subsidiary Guarantor to consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
a series of transactions, all or substantially all of its assets to any Person
unless: (i) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia, and
such Person shall expressly assume, by executing a Guaranty Agreement in a form
satisfactory to the Trustee, all the obligations of such Subsidiary, if any,
under its Subsidiary Guaranty; (ii) immediately after giving effect to such
transaction or transactions on a pro forma basis (and treating any Indebtedness
which becomes an obligation of the resulting, surviving or transferee Person as
a result of such transaction as having been issued by such Person at the time of
such transaction), no Default shall have occurred and be continuing; and (iii)
the Company delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
Guaranty Agreement, if any, complies with this Indenture. The provisions of
clauses (i) and (ii) shall not apply to any transactions that constitute an
Asset Disposition if the Company has complied with the applicable provisions of
Section 4.06.
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(c) The foregoing Sections 5.01(a) and (b) shall not prohibit any
consolidation or merger of, or transfer of all or part of the property and
assets of, any Restricted Subsidiary with or to the Company or any Subsidiary
Guarantor.
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall be
prohibited by Article 10, and such default continues for a period of 30
days;
(2) the Company (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon declaration or otherwise, whether or not such
payment shall be prohibited by Article 10, or (ii) fails to redeem or
purchase Securities when required pursuant to this Indenture or the
Securities, whether or not such redemption or purchase shall be prohibited
by Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07, 4.08, 4.09 or 4.10 (other than a failure to purchase Securities
when required under Section 4.06 or 4.09) and such failure continues for 30
days after the notice specified below;
(5) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in clause (1),
(2), (3) or (4) above) and such failure continues for 60 days after the
notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary (other
than Indebtedness owed to the Company or its Restricted Subsidiaries) is
not paid within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
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amount of such Indebtedness unpaid or accelerated exceeds $10.0 million and
such default shall not have been cured or such acceleration rescinded for
10 days after the notice specified below;
(7) the Company or any Significant Subsidiary pursuant to or within
the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree (not subject to appeal) for the payment of
money in an uninsured amount in excess of $10.0 million is entered against
the Company or any Significant Subsidiary, remains outstanding for a period
of 60 days following the entry of such judgment or decree and is not
discharged, waived or the execution thereof stayed within 10 days after the
notice specified below; or
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(10) any Subsidiary Guaranty ceases to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guaranty or as
contemplated in this Indenture) or a Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guaranty.
The foregoing will constitute Events of Default whatever the reason for any
such Event of Default and whether it is voluntary or involuntary or is effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clauses (4), (5), or (9) is not an Event of Default until
the Trustee or the holders of at least 25% in principal amount of the
outstanding Securities notify the Company in writing of the Default and the
Company does not cure such Default within the time specified after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (6) or (10) and any event which with the
giving of notice or the lapse of time would become an Event of Default under
clause (4), (5) or (9), its status and what action the Company is taking or
proposes to take with respect thereto.
SECTION 6.02. Acceleration. If an Event of Default (other than an Event of
Default specified in Section 6.01(7) or (8) with respect to the Company) occurs
and is continuing, the Trustee by notice to the Company, or the Holders of at
least 25% in principal amount of the Securities by notice to the Company and the
Trustee, may declare the principal of and accrued but unpaid interest, if any,
on all the Securities to be due and payable; provided, however, that so long as
any Designated Senior Indebtedness shall be outstanding, no such acceleration
shall be effective until the earlier of (i) acceleration of any such Designated
Senior Indebtedness or (ii) five Business Days after the giving of written
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notice to the company and the Representatives under the Designated Senior
Indebtedness of such acceleration. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.01(7) or (8) with respect to the Company occurs and is continuing,
the principal of and interest on all the Securities shall ipso facto become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any Securityholders. The Holders of a majority in principal
amount of the outstanding Securities by notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto. In the event of any Event of Default
specified in 6.01(6), such Event of Default and all consequences thereof
(including, without limitation, any acceleration or resulting payment default)
shall be annulled, waived or rescinded, automatically and without any action by
the Trustee or the Securityholders, if within 20 days after such Event of
Default arose (x) the Indebtedness or guarantee that is the basis for such Event
of Default has been discharged in a manner that does not violate the terms of
this Indenture or (y) the holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise to such Event of
Default.
SECTION 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
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principal of or interest on a Security (ii) a Default arising from the failure
to redeem or purchase any Security when required pursuant to this Indenture or
(iii) a Default in respect of a provision that under Section 9.02 cannot be
amended without the consent of each Securityholder affected. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority in principal
amount of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.06. Limitation on Suits. Except to enforce the right to receive
payment of principal, premium (if any) or interest when due, no Securityholder
may pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an
Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the Securities
make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable security or
indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the Securities do
not give the Trustee a direction inconsistent with the request during such
60-day period.
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A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment. Notwithstanding any
other provision of this Indenture, the right of any Holder to receive payment of
principal of and interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of Default specified
in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount then due and owing (together with interest on any unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and the Securityholders allowed in
any judicial proceedings relative to the Company, its creditors or its property
and, unless prohibited by law or applicable regulations, may vote on behalf of
the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any money or property
pursuant to this Article 6, it shall pay out the money or property in the
following order:
FIRST: to the Trustee for amounts due under Section 7.07;
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SECOND: to holders of Senior Indebtedness of the Company to the extent
required by Article 10;
THIRD: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any
right or remedy under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its discretion may require
the filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in
principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the extent
it may lawfully do so) shall not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
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ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise such of the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own wilful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
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(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur financial liability in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers,
if it shall have reasonable grounds to believe that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(h) Every provision of this Indenture relating to the conduct or affecting
the liability of or affording protection to the Trustee shall be subject to the
provisions of this Section and to the provisions of the TIA.
SECTION 7.02. Rights of Trustee. (a) The Trustee may rely on any document
believed by it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) Subject to Section 7.01(c), the Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
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liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible
for and makes no representation as to the validity or adequacy of this Indenture
or the Securities, it shall not be accountable for the Company's use of the
proceeds from the Securities, and it shall not be responsible for any statement
of the Company in the Indenture or in any document issued in connection with the
sale of the Securities or in the Securities other than the Trustee's certificate
of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the Default within 90 days after it occurs. Except in the case of a
Default in payment of principal of or interest on any Security, the Trustee may
withhold the notice if and so long as a committee of its Trust Officers
determines that withholding the notice is not opposed to the interests of
Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as practicable
after each June 1 beginning with the June 1 following the date of this
Indenture, and in any event prior to August 1 in each year, the Trustee shall
mail to each Securityholder a brief report dated as of June 1 that complies with
TIA s.313(a). The Trustee also shall comply with TIA s.313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall pay to the
Trustee from time to time reasonable compensation for its services. The
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Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' reasonable fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder, unless such failure
prejudices the Company. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith. The Company shall not be obligated
to pay for any settlement made by the Trustee without the consent of the
Company, such consent not to be unreasonably withheld.
To secure the Company's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall survive
the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(7) or (8) with respect to the
Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by
so notifying the Company. The Holders of a majority in principal amount of the
Securities may remove the Trustee by so notifying the Trustee and may appoint a
successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
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(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided, however, that such
successor shall be eligible and qualified under Section 7.10.
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In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times
satisfy the requirements of TIA s.310(a). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA
s.310(b); provided, however, that there shall be excluded from the operation of
TIA s.310(b)(1) any indenture or indentures under which other securities or
certificates of interest or participation in other securities of the Company are
outstanding if the requirements for such exclusion set forth in TIA s.310(b)(1)
are met.
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA s.311(a), excluding any creditor relationship
listed in TIA s.311(b). A Trustee who has resigned or been removed shall be
subject to TIA s.311(a) to the extent indicated.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities; Defeasance. (a) When
(i) the Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.06) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
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pursuant to Section 2.06), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Sections
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.04, 4.05, 4.06, 4.07, 4.08, 4.09 or 4.10 and the operation of Sections
6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of Sections
6.01(7) and (8), with respect only to Significant Subsidiaries) and the
limitations contained in Sections 5.01(a)(iii) and (iv) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default with respect
thereto. If the Company exercises its covenant defeasance option, payment of the
Securities may not be accelerated because of an Event of Default specified in
Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8) and 6.01(9) (but, in the case of
Sections 6.01(7) and (8), with respect only to Significant Subsidiaries) or
because of the failure of the Company to comply with Section 5.01(a)(iii) or
(iv). If the Company exercises its legal defeasance option or its covenant
defeasance option, each Subsidiary Guarantor, if any, shall be released from all
its obligations with respect to its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07 and 7.08 and in this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
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SECTION 8.02. Conditions to Defeasance. The Company may exercise its legal
defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal of and interest
on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Sections 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred;
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(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements satisfactory
to the Trustee for the redemption of Securities at a future date in accordance
with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust
money or U.S. Government Obligations deposited with it pursuant to this Article
8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall
promptly turn over to the Company upon request any excess money or securities
held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years, and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The Company shall pay
and shall indemnify the Trustee against any tax, fee or other charge imposed on
or assessed against deposited U.S. Government Obligations or the principal and
interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with this Article 8
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by reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this Article 8 until such time as the Trustee or Paying Agent is
permitted to apply all such money or U.S. Government Obligations in accordance
with this Article 8; provided, however, that, if the Company has made any
payment of interest on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guaranties or the Securities without notice to or consent of any
Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 that would limit or terminate the
benefits available to any holder of Senior Indebtedness (or Representatives
therefor) under Article 10;
(5) to add further guarantees with respect to the Securities,
including any Subsidiary Guaranties, to secure the Securities, or to
release guarantees with respect to the Securities when permitted under this
Indenture;
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(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company or any Subsidiary Guarantor;
(7) to comply with any requirements of the SEC in connection with
qualifying, or maintaining the qualification of, this Indenture under the
TIA; or
(8) to make any change that does not adversely affect the rights of
any Securityholder.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Indebtedness of the
Company or the Subsidiary Guarantors then outstanding unless the holders of such
Senior Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture, the Subsidiary Guaranties
or the Securities without notice to any Securityholder but with the written
consent of the Holders of at least a majority in principal amount of the
Securities then outstanding (including consents obtained in connection with a
tender offer or exchange for the Securities). However, without the consent of
each Securityholder affected thereby, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any Security or
change the time at which any Security may be redeemed in accordance with
Article 3;
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(5) make any Security payable in money other than that stated in the
Security;
(6) make any change in Section 6.04 or 6.07 or the second sentence of
this Section; or
(7) make any change in any Subsidiary Guaranty (including the
subordination provisions of such Subsidiary Guaranty) that would adversely
affect the Securityholders.
In addition, the Company shall not make any change in Article 10 or Article
12 that adversely affects the rights of any Securityholder thereunder without
the consent of the Holders of at least 75% in aggregate principal amount of the
Securities then outstanding.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Indebtedness then
outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company shall
mail to Securityholders a notice briefly describing such amendment. The failure
to give such notice to all Securityholders, or any defect therein, shall not
impair or affect the validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to this
Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent to
an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
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waiver becomes effective, it shall bind every Securityholder. An amendment or
waiver becomes effective upon the execution of such amendment or waiver by the
Trustee.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
SECTION 9.07. Payment for Consent. Neither the Company nor any Affiliate of
the Company shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
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offered to be paid to all Holders that so consent, waive or agree to amend in
the time frame set forth in solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment of all Senior
Indebtedness of the Company and that the subordination is for the benefit of and
enforceable by the holders of such Senior Indebtedness. The Securities shall in
all respects rank pari passu with all other Senior Subordinated Indebtedness of
the Company and only Indebtedness of the Company which is Senior Indebtedness
shall rank senior to the Securities in accordance with the provisions set forth
herein. All provisions of this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of the Company to creditors upon a total or partial
liquidation or a total or partial dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar Insolvency or Liquidation
Proceeding relating to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be entitled to
receive payment in full of such Senior Indebtedness before Securityholders
shall be entitled to receive any payment or distribution of principal of or
interest on the Securities; and
(2) until such Senior Indebtedness is paid in full in cash, any
payment or distribution to which Securityholders would be entitled but for
this Article 10 shall be made to holders of such Senior Indebtedness as
their interests may appear, except that Securityholders may receive
Permitted Junior Securities.
SECTION 10.03. Default on Senior Indebtedness. The Company may not pay the
principal of or interest on the Securities or make any deposit pursuant to
Section 8.01 and may not repurchase, redeem or otherwise retire any Securities
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(collectively, "pay the Securities") if (i) any Designated Senior Indebtedness
of the Company is not paid in full in cash when due or (ii) any other default on
Designated Senior Indebtedness of the Company occurs and the maturity of such
Designated Senior Indebtedness is accelerated in accordance with its terms
unless, in either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Designated Senior Indebtedness has
been paid in full in cash; provided, however, that the Company may pay the
Securities without regard to the foregoing if the Company and the Trustee
receive written notice approving such payment from the Representative of such
Designated Senior Indebtedness. During the continuance of any default (other
than a default described in clause (i) or (ii) of the preceding sentence) with
respect to any Designated Senior Indebtedness of the Company pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the
Securities (other than in Permitted Junior Securities) for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Designated Senior Indebtedness has been
repaid in full in cash). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume payments
on the Securities after the end of such Payment Blockage Period. The Securities
shall not be subject to more than one Payment Blockage Period in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness of the Company during such period. For purposes
of this Section, no default or event of default which existed or was continuing
on the date of the commencement of any Payment Blockage Period with respect to
the Designated Senior Indebtedness initiating such Payment Blockage Period shall
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be, or be made, the basis of the commencement of a subsequent Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 10.04. Acceleration of Payment of Securities. If payment of the
Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Indebtedness
(or their Representatives) of the acceleration. If any Designated Senior
Indebtedness of the Company is outstanding, the Company may not pay the
Securities until five Business Days after the Representatives of all the issues
of such Designated Senior Indebtedness receive notice of such acceleration and,
thereafter, may pay the Securities, only if this Article 10 otherwise permits
payments at that time.
SECTION 10.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article 10 should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold it in trust for holders of Senior Indebtedness of the
Company and pay it over to them as their interests may appear.
SECTION 10.06. Subrogation. After all Senior Indebtedness of the Company is
paid in full and until the Securities are paid in full, Securityholders shall be
subrogated to the rights of holders of such Senior Indebtedness to receive
distributions applicable to such Senior Indebtedness. A distribution made under
this Article 10 to holders of such Senior Indebtedness which otherwise would
have been made to Securityholders is not, as between the Company and
Securityholders, a payment by the Company on such Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the relative rights
of Securityholders and holders of Senior Indebtedness of the Company. Nothing in
this Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation
of the Company, which is absolute and unconditional, to pay principal of
and interest on the Securities in accordance with their terms; or
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(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
SECTION 10.08. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness of the Company to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding Section
10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Company has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any Senior Indebtedness of the Company which may
at any time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right
To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as preventing
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the occurrence of a Default. Nothing in this Article 10 shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary, payments from money or the proceeds of U.S.
Government Obligations held in trust under Article 8 by the Trustee for the
payment of principal of and interest on the Securities shall not be subordinated
to the prior payment of any Senior Indebtedness or subject to the restrictions
set forth in this Article 10, and none of the Securityholders shall be obligated
to pay over any such amount to the Company or any holder of Senior Indebtedness
of the Company or any other creditor of the Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 10, the Trustee and the Securityholders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such 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 Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of such Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 10, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
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SECTION 10.14. Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of the Company as provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if it shall
mistakenly pay over or distribute to Securityholders or the Company or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness of the
Company, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Guaranties. Each Subsidiary Guarantor hereby unconditionally
and irrevocably guarantees, jointly and severally, to each Holder and to the
Trustee and its successors and assigns (a) the full and punctual payment of
principal of and interest on the Securities when due, whether at maturity, by
acceleration, by redemption or otherwise, and all other monetary obligations of
the Company under this Indenture and the Securities and (b) the full and
punctual performance within applicable grace periods of all other obligations of
the Company under this Indenture and the Securities (all the foregoing being
hereinafter collectively called the "Obligations"). Each Subsidiary Guarantor
further agrees that the Obligations may be extended or renewed, in whole or in
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part, without notice or further assent from such Subsidiary Guarantor and that
such Subsidiary Guarantor will remain bound under this Article 11
notwithstanding any extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Obligations and also waives notice of
protest for nonpayment. Each Subsidiary Guarantor waives notice of any default
under the Securities or the Obligations. The obligations of each Subsidiary
Guarantor hereunder shall not be affected by (a) the failure of any Holder or
the Trustee to assert any claim or demand or to enforce any right or remedy
against the Company or any other Person under this Indenture, the Securities or
any other agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the terms or
provisions of this Indenture, the Securities or any other agreement; (d) the
release of any security held by any Holder or the Trustee for the Obligations or
any of them; (e) the failure of any Holder or the Trustee to exercise any right
or remedy against any other guarantor of the Obligations; or (f) any change in
the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guaranty
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
Each Subsidiary Guaranty is, to the extent and in the manner set forth in
Article 12, subordinated and subject in right of payment to the prior payment in
full of the principal of and premium, if any, and interest on all Senior
Indebtedness of the Subsidiary Guarantor giving such Subsidiary Guaranty and
each Subsidiary Guaranty is made subject to such provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06, the
obligations of each Subsidiary Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
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obligations of each Subsidiary Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the obligations, or by any other act or thing or omission or delay to do any
other act or thing which may or might in any manner or to any extent vary the
risk of such Subsidiary Guarantor or would otherwise operate as a discharge of
such Subsidiary Guarantor as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Guarantee herein shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of principal of or interest on any Obligation is
rescinded or must otherwise be restored by any Holder or the Trustee upon the
bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
which any Holder or the Trustee has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Obligation when and as the same shall become due, whether
at maturity, by acceleration, by redemption or otherwise, or to perform or
comply with any other Obligation, each Subsidiary Guarantor hereby promises to
and will, upon receipt of written demand by the Trustee, forthwith pay, or cause
to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of
(i) the unpaid amount of such Obligations, (ii) accrued and unpaid interest on
such Obligations (but only to the extent not prohibited by law) and (iii) all
other monetary Obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to any right
of subrogation in respect of any Obligations guaranteed hereby until payment in
full of all Obligations and all obligations to which the Obligations are
subordinated as provided in Article 12. Each Subsidiary Guarantor further agrees
that, as between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations Guaranteed hereby may be
accelerated as provided in Article 6 for the purposes of such Subsidiary
Guarantor's Subsidiary Guaranty herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
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such obligations as provided in Article 6, such Obligations (whether or not due
and payable) shall forthwith become due and payable by such Subsidiary Guarantor
for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by the Trustee or
any Holder in enforcing any rights under this Section with respect to the
Subsidiary Guarantors.
SECTION 11.02. Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum, aggregate amount of the
Obligations guaranteed hereunder by any Subsidiary Guarantor, after giving
effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor (including, without limitation, any guarantees under the Credit
Agreement) and after giving effect to any collections from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of all obligations of
such other Subsidiary Guarantor under its Subsidiary Guaranty or pursuant to its
contribution obligations under this Indenture, shall not exceed the maximum
amount that can be hereby guaranteed without rendering this Indenture, as it
relates to such Subsidiary Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
SECTION 11.03. Successors and Assigns. This Article 11 shall be binding
upon each Subsidiary Guarantor and its successors and assigns and shall inure to
the benefit of the successors and assigns of the Trustee and the Holders and, in
the event of any transfer or assignment of rights by any Holder or the Trustee,
the rights and privileges conferred upon that party in this Indenture and in the
Securities shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of this Indenture.
SECTION 11.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
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rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
SECTION 11.05. Modification. No modification, amendment or waiver of any
provision of this Article 11, nor the consent to any departure by any Subsidiary
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Trustee, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice to or demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the same,
similar or other circumstances.
SECTION 11.06. Release of Subsidiary Guarantor. Upon the sale or other
disposition (including by way of consolidation or merger) of all the Capital
Stock, or the sale or disposition of all or substantially all the assets, of a
Subsidiary Guarantor (in each case other than to the Company or an Affiliate of
the Company) permitted by this Indenture, such Subsidiary Guarantor shall be
deemed released from all obligations under this Article 11 without any further
action required on the part of the Trustee or any Holder. At the request of the
Company, the Trustee shall execute and deliver an appropriate instrument
evidencing such release.
ARTICLE 12
Subordination of Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate. Each Subsidiary Guarantor agrees,
and each Securityholder by accepting a Security agrees, that the Obligations of
such Subsidiary Guarantor are subordinated in right of payment, to the extent
and in the manner provided in this Article 12, to the prior payment of all
Senior Indebtedness of such Subsidiary Guarantor and that the subordination is
for the benefit of and enforceable by the holders of such Senior Indebtedness.
The Obligations of a Subsidiary Guarantor shall in all respects rank pari passu
with all other Senior Subordinated Indebtedness of such Subsidiary Guarantor and
only Senior Indebtedness of such Subsidiary Guarantor (including such Subsidiary
Guarantor's Guarantee of Senior Indebtedness of the Company) shall rank senior
to the Obligations of such Subsidiary Guarantor in accordance with the
provisions set forth herein.
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SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of any Subsidiary Guarantor to creditors upon a total
or partial liquidation or a total or partial dissolution of such Subsidiary
Guarantor or in a bankruptcy, reorganization, insolvency, receivership or
similar Insolvency or Liquidation Proceeding relating to such Subsidiary
Guarantor or its property:
(1) holders of Senior Indebtedness of such Subsidiary Guarantor shall
be entitled to receive payment in full of such Senior Indebtedness in cash
or cash equivalents before Securityholders shall be entitled to receive any
payment or distribution pursuant to any Obligations of such Subsidiary
Guarantor; and
(2) until the Senior Indebtedness of any Subsidiary Guarantor is paid
in full in cash, any payment or distribution to which Securityholders would
be entitled but for this Article 12 shall be made to holders of such Senior
Indebtedness as their interests may appear, except that Securityholders may
receive Permitted Junior Securities.
SECTION 12.03. Default on Senior Indebtedness of Subsidiary Guarantor. No
Subsidiary Guarantor may make any payment pursuant to any of its Obligations or
repurchase, redeem or otherwise retire or defease any Securities or other
Obligations (collectively, "pay its Subsidiary Guaranty") if (i) any Designated
Senior Indebtedness of such Subsidiary Guarantor is not paid in full in cash
when due or (ii) any other default on Designated Senior Indebtedness of such
Subsidiary Guarantor occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Designated Senior Indebtedness has been paid in full in
cash; provided, however, that any Subsidiary Guarantor may pay its Subsidiary
Guaranty without regard to the foregoing if such Subsidiary Guarantor and the
Trustee receive written notice approving such payment from the Representatives
of such Designated Senior Indebtedness. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Designated Senior Indebtedness of a Subsidiary Guarantor
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
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acceleration) or the expiration of any applicable grace periods, such Subsidiary
Guarantor may not pay its Subsidiary Guaranty (other than in Permitted Junior
Securities) for a period (a "Subsidiary Guarantor Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to such Subsidiary
Guarantor) of written notice (a "Subsidiary Guarantor Blockage Notice") of such
default from the Representative of the holders of such Designated Senior
Indebtedness specifying an election to effect a Subsidiary Guarantor Payment
Blockage Period and ending 179 days thereafter (or earlier if such Subsidiary
Guarantor Payment Blockage Period is terminated (i) by written notice to the
Trustee and such Subsidiary Guarantor from the Person or Persons who gave such
Subsidiary Guarantor Blockage Notice, (ii) because the default giving rise to
such Subsidiary Guarantor Blockage Notice is no longer continuing or (iii)
because such Designated Senior Indebtedness has been repaid in full in cash).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section),
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders shall have accelerated the maturity of such Designated Senior
Indebtedness, any Subsidiary Guarantor may resume payments pursuant to its
Subsidiary Guaranty after the end of such Subsidiary Guarantor Payment Blockage
Period. No Subsidiary Guaranty shall be subject to more than one Subsidiary
Guarantor Payment Blockage Period in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness of the relevant Subsidiary Guarantor during such period. For
purposes of this Section, no default or event of default which existed or was
continuing on the date of the commencement of any Subsidiary Guarantor Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Subsidiary Guarantor Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Subsidiary Guarantor Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
SECTION 12.04. Demand for Payment. If a demand for payment is made on a
Subsidiary Guarantor pursuant to Article 11, the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness (or their Representatives) of
such demand. If any Designated Senior Indebtedness of a Subsidiary Guarantor is
outstanding, such Subsidiary Guarantor may not pay its Subsidiary Guaranty until
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five Business Days after the Representatives of all the issues of such
Designated Senior Indebtedness receive notice of such demand, and thereafter,
may pay its Subsidiary Guaranty only if this Article 12 otherwise permits
payments at that time.
SECTION 12.05. When Distribution Must Be Paid Over. If a payment or
distribution is made to Securityholders that because of this Article 12 should
not have been made to them, the Securityholders who receive the payment or
distribution shall hold it in trust for holders of the relevant Senior
Indebtedness and pay it over to them or their Representatives as their interests
may appear.
SECTION 12.06. Subrogation. After all Senior Indebtedness of a Subsidiary
Guarantor is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article 12 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
relevant Subsidiary Guarantor and Securityholders, a payment by such Subsidiary
Guarantor on such Senior Indebtedness.
SECTION 12.07. Relative Rights. This Article 12 defines the relative rights
of Securityholders and holders of Senior Indebtedness of a Subsidiary Guarantor.
Nothing in this Indenture shall:
(1) impair, as between a Subsidiary Guarantor and Securityholders, the
obligation of such Subsidiary Guarantor, which is absolute and
unconditional, to pay the Obligations to the extent set forth in Article 11
or the relevant Subsidiary Guaranty; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by such Subsidiary Guarantor under the
Obligations, subject to the rights of holders of Senior Indebtedness of
such Subsidiary Guarantor to receive distributions otherwise payable to
Securityholders.
SECTION 12.08. Subordination May Not Be Impaired by Company. No right of
any holder of Senior Indebtedness of any Subsidiary Guarantor to enforce the
subordination of the Obligations of such Subsidiary Guarantor shall be impaired
by any act or failure to act by such Subsidiary Guarantor or by its failure to
comply with this Indenture.
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SECTION 12.09. Rights of Trustee and Paying Agent. Notwithstanding Section
12.03, the Trustee or Paying Agent may continue to make payments on any
Subsidiary Guaranty and shall not be charged with knowledge of the existence of
facts that would prohibit the making of any such payments unless, not less than
two Business Days prior to the date of such payment, a Trust Officer of the
Trustee receives written notice satisfactory to it that payments may not be made
under this Article 12. The Company, the relevant Subsidiary Guarantor, the
Registrar or co-registrar, the Paying Agent, a Representative or a holder of
Senior Indebtedness of any Subsidiary Guarantor may give the notice; provided,
however, that, if an issue of Senior Indebtedness of any Subsidiary Guarantor
has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not the Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 12 with respect to any Senior Indebtedness of any Subsidiary Guarantor
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any
of its rights as such holder. Nothing in this Article 12 shall apply to claims
of, or payments to, the Trustee under or pursuant to Section 7.07.
SECTION 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of any Subsidiary Guarantor, the distribution may be made and the notice given
to their Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Defaults Under a Subsidiary
Guaranty or Limit Right To Demand Payment. The failure to make a payment
pursuant to a Subsidiary Guaranty by reason of any provision in this Article 12
shall not be construed as preventing the occurrence of a default under such
Subsidiary Guaranty. Nothing in this Article 12 shall have any effect on the
right of the Securityholders or the Trustee to make a demand for payment on any
Subsidiary Guarantor pursuant to Article 11 or the relevant Subsidiary Guaranty.
SECTION 12.12. Trustee Entitled To Rely. Upon any payment or distribution
pursuant to this Article 12, the Trustee and the Securityholders shall be
entitled to rely (i) upon any order or decree of a court of competent
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jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of any Subsidiary Guarantor for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
such Senior Indebtedness and other indebtedness of such Subsidiary Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 12. In the
event that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness of any
Subsidiary Guarantor to participate in any payment or distribution pursuant to
this Article 12, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
of such Subsidiary Guarantor held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article 12, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 12.
SECTION 12.13. Trustee To Effectuate Subordination. Each Securityholder by
accepting a Security authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination between the Securityholders and the holders of Senior Indebtedness
of any Subsidiary Guarantor as provided in this Article 12 and appoints the
Trustee as attorney-in-fact for any and all such purposes.
SECTION 12.14. Trustee Not Fiduciary for Holders of Senior Indebtedness of
Subsidiary Guarantor. The Trustee shall not be deemed to owe any fiduciary duty
to the holders of Senior Indebtedness of any Subsidiary Guarantor and shall not
be liable to any such holders if it shall mistakenly pay over or distribute to
Securityholders or the Company or any other Person, money or assets to which any
holders of such Senior Indebtedness shall be entitled by virtue of this Article
12 or otherwise.
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SECTION 12.15. Reliance by Holders of Senior Indebtedness on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Indebtedness of any
Subsidiary Guarantor, whether such Senior Indebtedness was created or acquired
before or after the issuance of the Securities, to acquire and continue to hold,
or to continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold, or in continuing to hold, such
Senior Indebtedness.
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 13.02. Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:
if to the Company or any Subsidiary Guarantor:
MEDIQ/PRN Life Support Services, Inc.
One Mediq Plaza
Pennsauken, NJ 08110
Telephone: (609) 662-3200
Facsimile: (609) 661-0958
Attention: Alan S. Einhorn, Esq.
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if to the Trustee:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Telephone: (212) 852-1614
Facsimile: (212) 852-1626
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.03. Communication by Holders with Other Holders. Securityholders
may communicate pursuant to TIA ' 312(b) with other Securityholders with respect
to their rights under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA '
312(c).
SECTION 13.04. Certificate and Opinion as to Conditions Precedent. Upon any
request or application by the Company to the Trustee to take or refrain from
taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
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SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 13.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 13.07. Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Securityholders. The
Registrar and the Paying Agent may make reasonable rules for their functions.
SECTION 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or
a day on which banking institutions are not required to be open in the State of
New York. If a payment date is a Legal Holiday, payment shall be made on the
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next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period. If a regular record date is a Legal Holiday, the
record date shall not be affected.
SECTION 13.09. Governing Law. This Indenture (including the Subsidiary
Guaranties) and the Securities shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby.
SECTION 13.10. No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 13.11. Successors. All agreements of the Company in this Indenture
and the Securities shall bind its successors. All agreements of the Trustee in
this Indenture shall bind its successors.
SECTION 13.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
SECTION 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
By:
------------------------------------
Name:
Title:
MEDIQ INVESTMENT SERVICES, INC.,
By:
------------------------------------
Name:
Title:
MEDIQ MOBILE X-RAY SERVICES, INC.,
By:
-------------------------------------
Name:
Title:
VALUE-MED PRODUCTS, INC.,
By:
-------------------------------------
Name:
Title:
MEDIQ MANAGEMENT SERVICES, INC.,
By:
-------------------------------------
Name:
Title:
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MEDIQ DIAGNOSTIC CENTERS, INC.,
By:
------------------------------------
Name:
Title:
MEDIQ DIAGNOSTIC CENTERS-I, INC.,
By:
-------------------------------------
Name:
Title:
MDTC HADDON, INC.,
By:
-------------------------------------
Name:
Title:
MEDIQ IMAGING SERVICES, INC.,
By:
-------------------------------------
Name:
Title:
AMERICAN CARDIOVASCULAR IMAGING LABS,
INC.,
By:
-------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee,
By:
-------------------------------------
Name:
Title:
<PAGE>
RULE 144A/REGULATION S APPENDIX
FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT TO
RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE TRANSACTIONS IN
RELIANCE ON REGULATION S.
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix the following terms shall have the
meanings indicated below:
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Securities" means the 11% Senior Subordinated Notes Due to be
issued pursuant to this Indenture in connection with a Registered Exchange Offer
pursuant to the Registration Rights Agreement.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
NationsBanc Montgomery Securities LLC and Banque Nationale de Paris.
"Initial Securities" means the 11% Senior Subordinated Notes Due 2008,
issued under this Indenture on or about the date hereof.
"Private Exchange" means the offer by the Company, pursuant to the
Registration Rights Agreement, to the Initial Purchasers to issue and deliver to
each Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means the 11% Senior Subordinated Notes
Dues 2008 to be issued pursuant to this Indenture in connection with a Private
Exchange.
"Purchase Agreement" means the Purchase Agreement dated May 21, 1998,
between the Company, the Subsidiary Guarantors and the Initial Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant to
the Registration Rights Agreement, to
<PAGE>
certain Holders of Initial Securities, to issue and deliver to such Holders, in
exchange for the Initial Securities, a like aggregate principal amount of
Exchange Securities registered under the Securities Act.
"Registration Rights Agreement" means the Registration Rights Agreement
dated May 21, 1998, among the Company, the Subsidiary Guarantors and the Initial
Purchasers.
"Securities" means the Initial Securities, the Exchange Securities and
the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a Global
Security (as appointed by the Depositary), or any successor person thereto and
shall initially be the Trustee.
"Shelf Registration Statement" means the registration statement issued
by the Company, in connection with the offer and sale of Initial Securities or
Private Exchange Securities, pursuant to the Registration Rights Agreement.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.3(d)hereto.
1.2 Other Definitions
Defined in
Term Section:
---- ----------
"Agent Members"........................................................2.1(b)
"Global Security"......................................................2.1(a)
"Regulation S".........................................................2.1(a)
"Rule 144A"............................................................2.1(a)
2. The Securities.
2.1 Form and Dating.
The Initial Securities are being offered and sold by the Company
pursuant to the Purchase Agreement.
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(a) Global Securities. Initial Securities offered and sold to a QIB in
reliance on Rule 144A under the Securities Act ("Rule 144A") or in reliance on
Regulation S under the Securities Act ("Regulation S"), in each case as provided
in the Purchase Agreement, shall be issued initially in the form of one or more
permanent global Securities in definitive, fully registered form without
interest coupons with the global securities legend and restricted securities
legend set forth in Exhibit 1 hereto (each, a "Global Security"), which shall be
deposited on behalf of the purchasers of the Initial Securities represented
thereby with the Trustee, at its New York office, as custodian for the
Depositary (or with such other custodian as the Depositary may direct), and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Global Securities may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply only to a
Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depositary for such
Global Security or Global Securities or the nominee of such Depositary and (b)
shall be delivered by the Trustee to such Depositary or pursuant to such
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depositary or by the Trustee as the custodian of the
Depositary or under such Global Security, and the Depositary may be treated by
the Company, the Subsidiary Guarantors, the Trustee and any agent of the
Company, the Subsidiary Guarantors or the Trustee as the absolute owner of such
Global Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished by the Depositary or impair, as between the
Depositary and its Agent Members, the operation of customary practices of such
Depositary governing the exercise
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of the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in Section 2.3 or 2.4,
owners of beneficial interests in Global Securities will not be entitled to
receive physical delivery of certificated Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) Initial
Securities for original issue in an aggregate principal amount of $190,000,000
and (2) Exchange Securities or Private Exchange Securities for issue only in a
Registered Exchange Offer or a Private Exchange, respectively, pursuant to the
Registration Rights Agreement, for a like principal amount of Initial
Securities, in each case upon a written order of the Company signed by two
Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Company. Such order shall specify the amount of the Securities
to be authenticated and the date on which the original issue of Securities is to
be authenticated and whether the Securities are to be Initial Securities,
Exchange Securities or Private Exchange Securities. The aggregate principal
amount of Securities outstanding at any time may not exceed $190,000,000 except
as provided in Section 2.07 of this Indenture.
2.3 Transfer and Exchange. (a) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depositary, in accordance
with this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depositary therefor. A
transferor of a beneficial interest in a Global Security shall deliver to
the Registrar a written order given in accordance with the Depositary's
procedures containing information regarding the participant account of the
Depositary to credited with a beneficial interest in the Global Security.
The Registrar shall, in accordance with such instructions instruct the
Depositary to credit to the account of the Person specified in such
instructions a beneficial interest in the Global Security and to debit the
account of the Person making the transfer the beneficial interest in the
Global Security being transferred.
(ii) Notwithstanding any other provisions of this Appendix (other than
the provisions set forth in Section 2.4), a Global Security may not be
transferred as
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<PAGE>
a whole except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary.
(iii) In the event that a Global Security is exchanged for Securities
in definitive registered form pursuant to Section 2.4 or Section 2.08 of
the Indenture, prior to the consummation of a Registered Exchange Offer or
the effectiveness of a Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with such
procedures as are substantially consistent with the provisions of this
Section 2.3 (including the certification requirements set forth on the
reverse of the Initial Securities intended to ensure that such transfers
comply with Rule 144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(b) Legend. (i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Security certificate evidencing the Global Securities (and
all Securities issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
ONLY (I) IN THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR
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(IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS
SECURITY FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, in the case of any
Transfer Restricted Security that is represented by a Global Security, the
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security for a certificated Security that does not bear the
legend set forth above and rescind any restriction on the transfer of such
Transfer Restricted Security, if the Holder certifies in writing to the
Registrar that its request for such exchange was made in reliance on Rule
144 (such certification to be in the form set forth on the reverse of the
Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities during the period of the effectiveness of a Shelf Registration
Statement with respect to such Initial Securities or Private Exchange
Securities, as the case may be, all requirements pertaining to legends on
such Initial Security or such Private Exchange Security will cease to
apply, the requirements requiring any such Initial Security or such Private
Exchange Security issued to certain Holders be issued in global form will
cease to apply, and a certificated Initial Security or Private Exchange
Security without legends will be available to the transferee of the Holder
of such Initial Securities or Private Exchange Securities upon exchange of
such transferring Holder's certificated Initial Security or Private
Exchange Security or directions to transfer such Holder's interest in the
Global Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with respect
to the Initial Securities pursuant to which Holders of such Initial
Securities are offered Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
cease to apply and certificated Initial Securities with the restricted
securities legend set forth in Exhibit 1 hereto will be
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available to Holders of such Initial Securities that do not exchange their
Initial Securities, and Exchange Securities in certificated or global form
will be available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect to the
Initial Securities pursuant to which Holders of such Initial Securities are
offered Private Exchange Securities in exchange for their Initial
Securities, all requirements pertaining to such Initial Securities that
Initial Securities issued to certain Holders be issued in global form will
still apply, and Private Exchange Securities in global form with the
Restricted Securities Legend set forth in Exhibit 1 hereto will be
available to Holders that exchange such Initial Securities in such Private
Exchange.
(c) Cancelation or Adjustment of Global Security. At such time as all
beneficial interests in a Global Security have either been exchanged for
certificated Securities, redeemed, repurchased or canceled, such Global
Security shall be returned to the Depositary for cancelation or retained
and canceled by the Trustee. At any time prior to such cancelation, if any
beneficial interest in a Global Security is exchanged for certificated or
Definitive Securities, redeemed, repurchased or canceled, the principal
amount of Securities represented by such Global Security shall be reduced
and an adjustment shall be made on the books and records of the Trustee (if
it is then the Securities Custodian for such Global Security) with respect
to such Global Security, by the Trustee or the Securities Custodian, to
reflect such reduction.
(d) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate certificated Securities,
Definitive Securities and Global Securities at the Registrar's or
co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge
payable upon exchange or transfer pursuant to Sections 3.06, 4.09, and
9.05 of this Indenture).
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(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any certificated or
Definitive Security selected for redemption in whole or in part
pursuant to Article 3 of this Indenture, except the unredeemed portion
of any certificated or Definitive Security being redeemed in part, or
(b) any Security for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase or redeem Securities or
15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer
of any Security, the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of and interest on
such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and none of the Company, the Trustee, the
Paying Agent, the Registrar or any co-registrar shall be affected by
notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant
to the terms of this Indenture shall evidence the same debt and shall
be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(e) No Obligation of the Trustee. (i) The Trustee shall have no
responsibility or obligation to any beneficial owner of a Global
Security, a member of, or a participant in the Depositary or other
Person with respect to the accuracy of the records of the Depositary
or its nominee or of any participant or member thereof, with respect
to any ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other Person
(other than the Depositary) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to
such Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Securities
shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of a
Global Security). The rights of beneficial owners in any Global
Security shall be exercised only through the Depositary subject to the
applicable rules and procedures of the Depositary. The Trustee may
rely and shall be fully protected in relying upon information
8
<PAGE>
furnished by the Depositary with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with
respect to any transfer of any interest in any Security (including any
transfers between or among Depositary participants, members or
beneficial owners in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required
by, the terms of this Indenture, and to examine the same to determine
substantial compliance as to form with the express requirements
hereof.
2.4 Certificated Securities. (a) A Global Security deposited with the
Depositary or with the Trustee as custodian for the Depositary pursuant to
Section 2.1 shall be transferred to the beneficial owners thereof in the form of
certificated Securities in an aggregate principal amount equal to the principal
amount of such Global Security, in exchange for such Global Security, only if
such transfer complies with Section 2.3 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for such Global
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
certificated Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Trustee located in the Borough of Manhattan, The City of New York, to be so
transferred, in whole or from time to time in part, without charge, and the
Trustee shall authenticate and deliver, upon such transfer of each portion of
such Global Security, an equal aggregate principal amount of certificated
Initial Securities of authorized denominations. Any portion of a Global Security
transferred pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 and any integral multiple thereof and
registered in such names as the Depositary shall direct. Any certificated
Initial Security delivered in exchange for an interest in the Global Security
shall, except as otherwise provided by
9
<PAGE>
Section 2.3(d), bear the restricted securities legend set forth in Exhibit 1
hereto.
(c) Subject to the provisions of Section 2.4(b), the registered Holder
of a Global Security may grant proxies and otherwise authorize any Person,
including Agent Members and Persons that may hold interests through Agent
Members, to take any action which a Holder is entitled to take under this
Indenture or the Securities.
(d) In the event of the occurrence of either of the events specified in
Section 2.4(a), the Company will promptly make available to the Trustee a
reasonable supply of certificated Securities in definitive, fully registered
form without interest coupons.
10
<PAGE>
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW
YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT
(A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
<PAGE>
THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO IN (A) ABOVE.
2
<PAGE>
No. $
CUSIP NO.
ISIN NO.
11% Senior Subordinated Notes Due 2008
MEDIQ/PRN LIFE SUPPORT SERVICES, INC., a Delaware corporation, promises
to pay to , or registered assigns, the principal sum of
Dollars on June 1, 2008.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other side
of this Security.
Dated:
MEDIQ/PRN LIFE SUPPORT SERVICES,
INC.,
by
----------------------
----------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that
this is one of the Securities
referred to in the Indenture.
by
-----------------------------
Authorized Signatory
3
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
11% Senior Subordinated Note Due 2008
1. Interest
MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, interest will accrue on this Security at a rate of 11-1/2%
per annum from and including the date on which any such Registration Default
shall occur to but excluding the date on which all Registration Defaults have
been cured. The Company will pay interest semiannually on June 1 and December 1
of each year. Interest on the Securities will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from May 29,
1998. Interest will be computed on the basis of a 360-day year of twelve 30-day
months. The Company shall pay interest on overdue principal at the rate borne by
the Securities plus 1% per annum, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are registered holders of Securities at the close
of business on May 15 or November 15 next preceding the interest payment date
even if Securities are canceled after the record date and on or before the
interest payment date. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest in money
of the United States that at the time of payment is legal tender for payment of
public and private debts. Payments in respect of the Securities represented by a
Global Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on a certificated Security will be made by wire
4
<PAGE>
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
15, 1998 (the "Indenture"), among the Company, the Subsidiary Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company limited
to $190,000,000 aggregate principal amount (subject to Section 2.07 of the
Indenture). The Indenture limits, among other things, (i) the incurrence of
additional debt by the Company and certain of its subsidiaries, (ii) the payment
of dividends on capital stock of the Company and the purchase, redemption or
retirement of capital stock or subordinated indebtedness, (iii) investments,
(iv) certain transactions with affiliates, (v) sales of assets, including
capital stock of subsidiaries, and (vi) certain consolidations, mergers and
transfers of assets. The Indenture also prohibits certain restrictions on
distributions from certain subsidiaries.
5
<PAGE>
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to June 1, 2003. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the related interest payment date), if redeemed during the 12-month period
beginning June 1 of the years set forth below,
Period Percentage
------ ----------
2003..........................................................105.500%
2004..........................................................103.667
2005..........................................................101.834
2006 and thereafter...........................................100.000
In addition, at any time prior to June 1, 2001, the Company may redeem
in the aggregate up to 25% of the original principal amount of Securities with
the proceeds of one or more Public Equity Offerings following which there is a
Public Market (provided that if the Public Equity Offering is an offering by
MEDIQ Incorporated, a portion of the Net Cash Proceeds thereof equal to the
amount required to redeem any such Securities is contributed to the equity
capital of the Company), at any time or from time to time, at a redemption price
(expressed as a percentage of principal amount) of 111% plus accrued interest,
if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that at least $142.5 million aggregate principal
amount of the Securities remains outstanding after each such redemption.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of Securities to be redeemed
at his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on
6
<PAGE>
such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions, to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subsidiary Guaranties
The payment by the Company of the principal of, and premium and
interest on, the Securities is fully and unconditionally guaranteed on a senior
subordinated basis by the Subsidiary Guarantors.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as defined in
the Indenture. To the extent provided in the Indenture, Senior Indebtedness must
be paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements or transfer documents
and to pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not register the transfer of or exchange any Securities selected
for redemption (except, in the case of a Security to be redeemed in part, the
portion of the Security not to be
7
<PAGE>
redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of
it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Company
at its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Subsidiary Guaranties or the Securities may be amended with the
written consent of the Holders of at least a majority in principal amount then
outstanding of the Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount then outstanding of the Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company, the Subsidiary Guarantors and the Trustee may amend
the Indenture, the Subsidiary Guaranties or the Securities to cure any
ambiguity, omission, defect or inconsistency, to comply with Article 5 of the
Indenture, to provide for uncertificated Securities in addition to or in place
of certificated Securities, to add further guarantees with respect to the
Securities, to release Subsidiary Guaranties when permitted by the Indenture, to
secure the
8
<PAGE>
Securities, to add additional covenants or surrender rights and powers conferred
on the Company or a Subsidiary Guarantor, to comply with any requirement of the
SEC in connection with the qualification of the Indenture under the Act or to
make any change that does not adversely affect the rights of any Securityholder.
However, no amendment may be made to the subordination provisions of the
Indenture that adversely affects the rights of any holder of Senior Indebtedness
of the Company or the Subsidiary Guarantors then outstanding unless the holders
of such Senior Indebtedness (or their Representative) consent to such change.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon required repurchase, upon acceleration or otherwise, or failure
by the Company to redeem or purchase Securities when required; (iii) failure by
the Company to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or any Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $10.0 million; (v) certain events of
bankruptcy or insolvency with respect to the Company and the Significant
Subsidiaries; (vi) certain judgments or decrees for the payment of money in
excess of $10.0 million; and (vii) certain events or defaults with respect to
the Subsidiary Guaranties. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities may declare all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a
9
<PAGE>
Default in payment of principal or interest) if it determines that withholding
notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and
agrees to the provisions of the Registration Rights Agreement, including,
without limitation, the
10
<PAGE>
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
21. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to MEDIQ
Incorporated, One Mediq Plaza, Pennsauken, New Jersey 08110, Attention: Alan S.
Einhorn, Esq.
11
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint _____________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
_______________________________________________________________________________
Date: ________________ Your Signature: ________________________________________
_______________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) o to the Company; or
(2) o pursuant to an effective registration statement
under the Securities Act of 1933; or
(3) o inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the Securities Act of 1933) that
purchases for its own account or for the
account of a qualified institutional buyer to
whom notice is given that such transfer is
being made in reliance on Rule 144A, in each
12
<PAGE>
case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(4) o outside the United States in an offshore
transaction within the meaning of Regulation S under
the Securities Act in compliance with Rule 904 under
the Securities Act of 1933; or
(5) o pursuant to another available exemption from
registration provided by Rule 144 under the
Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however that
if box (4) or (5) is checked, the Trustee may require, prior to
registering any such transfer of the Securities, such legal opinions,
certifications and other information as the Company has reasonably
requested to confirm that such transfer is being made pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.
__________________________
Signature
Signature Guarantee:
_____________________ __________________________
Signature must be Signature
guaranteed
13
<PAGE>
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ________________ ______________________________
NOTICE: To be executed by
an executive officer
14
<PAGE>
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Amount of decrease Amount of increase Principal amount Signature of
Exchange in Principal in Principal of this Global authorized officer
Amount of this Amount of this Security following of Trustee or
Global Security Global Security such decrease or Securities
increase) Custodian
- -------- ------------------ ------------------ ------------------ ------------------
</TABLE>
15
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by
the Company pursuant to Section 4.06 or 4.09 of the Indenture,
check the box:
o
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture,
state the amount in principal amount: $
Date: _______________ Your Signature: ____________________________________
(Sign exactly as your name appears
on the other side of this Security.)
Signature Guarantee: _______________________________________
(Signature must be guaranteed)
16
<PAGE>
EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE SECURITY]
[*/]
[**/]
No. $
CUSIP No.
ISIN No.
11% Senior Subordinated Notes Due 2008
MEDIQ/PRN LIFE SUPPORT SERVICES, INC., a Delaware corporation,
promises to pay to , or registered assigns, the principal sum of
Dollars on June 1, 2008.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
MEDIQ/PRN LIFE SUPPORT SERVICES,
INC.,
by
-----------------------
-----------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee, certifies that this is
one of the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
<PAGE>
- -----------------
*/ If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to the Rule 144A/Regulation S Appendix and the attachment
from such Exhibit 1 captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE
OF INCREASES OR DECREASES IN GLOBAL SECURITY".
**/ If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to the Rule 144A/Regulation S
Appendix and replace the Assignment Form included in this Exhibit A with the
Assignment Form included in such Exhibit 1.
2
<PAGE>
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY OR PRIVATE EXCHANGE
SECURITY]
11% Senior Subordinated Note Due 2008
1. Interest
MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above[; provided,
however that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, interest will accrue on this Security at a rate of 11-1/2%
per annum from and including the date on which any such Registration Default
shall occur to but excluding the date on which all Registration Defaults have
been cured] ***/. The Company will pay interest semiannually on June 1 and
December 1 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from May 29, 1998. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company shall pay interest on overdue principal at the
rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on May 15 or November 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of
- --------
***/ Insert if at the time of issuance of the Exchange Security or Private
Exchange Security (as the case may be) neither the Registered Exchange Offer has
been consummated nor a Shelf Registration Statement has been declared effective
in accordance with the Registration Rights Agreement.
3
<PAGE>
public and private debts. Payments in respect of the Securities represented by a
Global Security (including principal, premium and interest) will be made by wire
transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium and interest) by mailing a
check to the registered address of each Holder thereof; provided, however, that
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, United States Trust Company of New York, a New York banking
corporation (the "Trustee"), will act as Paying Agent and Registrar. The Company
may appoint and change any Paying Agent, Registrar or co-registrar without
notice. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May 15,
1998 (the "Indenture"), among the Company, the Subsidiary Guarantors and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture (the
"Act"). Terms defined in the Indenture and not defined herein have the meanings
ascribed thereto in the Indenture. The Securities are subject to all such terms,
and Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured obligations of the Company limited to
$190,000,000 aggregate principal amount (subject to Section 2.07 of the
Indenture). The Indenture limits, among other things, (i) the incurrence of
additional debt by the Company and certain of its subsidiaries, (ii) the payment
of dividends on capital stock of the Company and the purchase, redemption or
retirement of capital stock or
4
<PAGE>
subordinated indebtedness, (iii) investments, (iv) certain transactions with
affiliates, (v) sales of assets, including capital stock of subsidiaries, and
(vi) certain consolidations, mergers and transfers of assets. The Indenture also
prohibits certain restrictions on distributions from certain subsidiaries.
5. Optional Redemption
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to June 1, 2003. On and after that date, the Company may redeem
the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest, if any, to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the related interest payment date), if redeemed during the 12-month period
beginning June 1 of the years set forth below,
Period Percentage
------ ----------
2003...............................................................105.500%
2004...............................................................103.667
2005...............................................................101.834
2006 and thereafter................................................100.000
In addition, at any time prior to June 1, 2001, the Company may redeem in
the aggregate up to 25% of the original principal amount of Securities with the
proceeds of one or more Public Equity Offerings following which there is a
Public Market (provided that if the Public Equity Offering is an offering by
MEDIQ Incorporated, a portion of the Net Cash Proceeds thereof equal to the
amount required to redeem any such Securities is contributed to the equity
capital of the Company), at any time or from time to time, at a redemption price
(expressed as a percentage of principal amount) of 111% plus accrued interest,
if any, to the redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however that at least $142.5 million aggregate principal amount
of the Securities remains outstanding after each such redemption.
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each
5
<PAGE>
Holder of Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions, to cause the Company to repurchase all or any
part of the Securities of such Holder at a repurchase price equal to 101% of the
principal amount of the Securities to be repurchased plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subsidiary Guaranties
The payment by the Company of the principal of, and premium and interest
on, the Securities is fully and unconditionally guaranteed on a senior
subordinated basis by the Subsidiary Guarantors.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as defined in the
Indenture. To the extent provided in the Indenture, Senior Indebtedness must be
paid before the Securities may be paid. The Company agrees, and each
Securityholder by accepting a Security agrees, to the subordination provisions
contained in the Indenture and authorizes the Trustee to give it effect and
appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of
6
<PAGE>
$1,000. A Holder may transfer or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements or transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Registrar need not register
the transfer of or exchange any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or any Securities for a period of 15 days before a selection of
Securities to be redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner of it
for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains unclaimed for two
years, the Trustee or Paying Agent shall pay the money back to the Company at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Company
and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture if the Company
deposits with the Trustee money or U.S. Government Obligations for the payment
of principal and interest on the Securities to redemption or maturity, as the
case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture, the Subsidiary Guaranties or the Securities may be amended with the
written consent of the Holders of at least a majority in principal amount then
outstanding of the Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of a majority in
principal amount then outstanding of the Securities. Subject to certain
exceptions set forth in the Indenture, without the consent of
7
<PAGE>
any Securityholder, the Company, the Subsidiary Guarantors and the Trustee may
amend the Indenture, the Subsidiary Guaranties or the Securities to cure any
ambiguity, omission, defect or inconsistency, to comply with Article 5 of the
Indenture, to provide for uncertificated Securities in addition to or in place
of certificated Securities, to add further guarantees with respect to the
Securities, to release Subsidiary Guaranties when permitted by the Indenture, to
secure the Securities, to add additional covenants or surrender rights and
powers conferred on the Company or a Subsidiary Guarantor, to comply with any
requirement of the SEC in connection with the qualification of the Indenture
under the Act or to make any change that does not adversely affect the rights of
any Securityholder. However, no amendment may be made to the subordination
provisions of the Indenture that adversely affects the rights of any holder of
Senior Indebtedness of the Company or the Subsidiary Guarantors then outstanding
unless the holders of such Senior Indebtedness (or their Representative) consent
to such change.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days in
payment of interest on the Securities; (ii) default in payment of principal on
the Securities at maturity, upon redemption pursuant to paragraph 5 of the
Securities, upon required repurchase, upon acceleration or otherwise, or failure
by the Company to redeem or purchase Securities when required; (iii) failure by
the Company to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or any Significant Subsidiary if the amount
accelerated (or so unpaid) exceeds $10.0 million; (v) certain events of
bankruptcy or insolvency with respect to the Company and the Significant
Subsidiaries; (vi) certain judgments or decrees for the payment of money in
excess of $10.0 million; and (vii) certain events or defaults with respect to
the Subsidiary Guaranties. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the outstanding
Securities may declare all the Securities to be due and payable immediately.
Certain events of bankruptcy or insolvency are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default.
8
<PAGE>
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company or
the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in
9
<PAGE>
common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges and agrees to
the provisions of the Registration Rights Agreement, including, without
limitation, the obligations of the Holders with respect to a registration and
the indemnification of the Company to the extent provided therein.
21. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to MEDIQ
Incorporated, One Mediq Plaza, Pennsauken, New Jersey 08110, Attention: Alan S.
Einhorn, Esq.
10
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
_______________________________________________________________________________
(Print or type assignee's name, address and zip code)
_______________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
_______________________________________________________________________________
Date: ________________ Your Signature: ________________________________________
_______________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security
purchased by the Company pursuant to Section 4.06 or 4.09 of the Indenture,
check the box:
/ /
If you want to elect to have only part of this
Security purchased by the Company pursuant to Section 4.06 or 4.08 of the
Indenture, state the amount:
$
Date: __________________ Your Signature: ______________________________________
(Sign exactly as your name appears
on the other side of the Security)
Signature Guarantee:___________________________________________
(Signature must be guaranteed by a member
firm of the New York Stock Exchange or a
commercial bank or trust company)
12
COPY AS EXECUTED WITH EXHIBITS D, E
AND F AS SEPARATELY EXECUTED
$325,000,000
CREDIT AGREEMENT
Dated as of May 29, 1998
Among
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
as Borrower,
THE INITIAL LENDERS NAMED HEREIN,
and
BANQUE NATIONALE DE PARIS,
as Administrative Agent, Swing Line Bank, Initial Issuing Bank and Arranger,
NATIONSBANK, N.A.,
as Syndication Agent,
and
CREDIT SUISSE FIRST BOSTON,
as Documentation Agent
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
1.01. Certain Defined Terms ............................................................ 2
1.02. Computation of Time Periods; Other Definitional Provisions .......................33
1.03. Accounting Terms .................................................................33
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances and Letters of Credit ...............................................33
2.02. Making the Advances ..............................................................35
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit ...............37
2.04. Repayment of Advances ............................................................38
2.05. Termination or Reduction of the Commitments ......................................41
2.06. Prepayments ......................................................................42
2.07. Interest .........................................................................46
2.08. Fees .............................................................................46
2.09. Conversion of Advances ...........................................................47
2.10. Increased Costs, Etc. ............................................................48
2.11. Payments and Computations ........................................................49
2.12. Taxes ............................................................................50
2.13. Sharing of Payments, Etc. ........................................................52
2.14. Use of Proceeds ..................................................................53
2.15. Defaulting Lenders ...............................................................53
2.16. Evidence of Debt .................................................................56
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit ..............................57
3.02. Conditions Precedent to Each Borrowing, Swing Line Advance and Issuance ..........62
3.03. Additional Conditions to the Additional Term Advance .............................63
3.04. Determinations Under Section 3.01 ...............................................64
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01. Representations and Warranties of the Borrower ....................................65
</TABLE>
<PAGE>
ARTICLE V
<TABLE>
<CAPTION>
COVENANTS
<S> <C> <C>
5.01. Affirmative Covenants .............................................................71
5.02. Negative Covenants ................................................................76
5.03. Reporting Requirements ............................................................84
5.04. Financial Covenants ...............................................................88
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default .................................................................92
6.02. Actions in Respect of the Letters of Credit Upon Default ..........................95
ARTICLE VII
THE AGENTS
7.01. Authorization and Action ..........................................................96
7.02. Agents' Reliance, Etc. ............................................................96
7.03. BNP, NationsBank, CSFB and Affiliates .............................................97
7.04. Lender Party Credit Decision ......................................................97
7.05. Indemnification ...................................................................97
7.06. Successor Administrative Agents ...................................................99
7.07. Documentation Agent, Arranger and Syndication Agent ...............................99
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc. ..................................................................99
8.02. Notices, Etc. ....................................................................100
8.03. No Waiver; Remedies ..............................................................101
8.04. Costs and Expenses ..............................................................101
8.05. Right of Setoff ..................................................................102
8.06. Binding Effect ...................................................................103
8.07. Assignments and Participations ...................................................103
8.08. Execution in Counterparts ........................................................106
8.09. No Liability of the Issuing Bank .................................................106
8.10. Jurisdiction, Etc. ...............................................................106
8.11. Governing Law ....................................................................107
8.12. Waiver of Jury Trial .............................................................107
ii
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C> <C>
Schedule I - Commitments and Applicable Lending Offices
Schedule II - EBITDA
Schedule III - Capital Expenditures
Schedule 2.14 - Refinancing Debt
Schedule 3.01(i) - Surviving Debt
Schedule 3.01(k)(iv) - Jurisdictions
Schedule 3.01(k)(vii)(B) - UCC Filings
Schedule 3.01(k)(vii)(H) - Blocked Accounts
Schedule 3.01(k)(vii)(I) - Landlord Consents
Schedule 3.01(k)(ix) - Subsidiary Guarantors
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and Filings
Schedule 4.01(n) - Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(w) - Environmental Disclosure
Schedule 4.01(aa) - Open Years
Schedule 4.01(cc) - Tax Liabilities
Schedule 4.01(gg) - Existing Debt
Schedule 4.01(hh) - Owned Real Property
Schedule 4.01(ii) - Investments
Schedule 4.01(jj) - Intellectual Property
Schedule 5.01(e) - Shell Subsidiaries
Schedule 5.02(a)(iii) - Existing Liens
Schedule 5.02(d) - Permitted Asset Sales (to permit sale of imaging centers of Mediq
Diagnostic)
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C> <C>
Exhibit A-1 - Form of Term Note
Exhibit A-2 - Form of Acquisition Note
Exhibit A-3 - Form of Revolving Credit Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
Exhibit E - Form of Mortgage
Exhibit F - Form of Subsidiary Guaranty
Exhibit G - Form of Borrowing Base Certificate
Exhibit H-1 - Form of Opinion of Counsel to the Loan Parties
Exhibit H-2 - Form of Opinion of Local Counsel to the Loan Parties
Exhibit I - Form of Solvency Opinion
Exhibit J-1 - Form of Borrower Solvency Certificate
Exhibit J-2 - Form of Guarantor Solvency Certificate
</TABLE>
iv
<PAGE>
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of May 29, 1998 among MEDIQ/PRN LIFE SUPPORT
SERVICES, INC., a Delaware corporation (the "Borrower") the banks, financial
institutions and other institutional lenders listed on the signature pages
hereof as the Initial Lenders (the "Initial Lenders"), Banque Nationale de Paris
("BNP"), as administrative agent (the "Administrative Agent"), as the initial
issuing bank (the "Initial Issuing Bank"), as the swing line bank (the "Swing
Line Bank"), and as advisor and arranger (the "Arranger"), NationsBank, N.A.
("NationsBank"), as syndication agent (the "Syndication Agent"), and Credit
Suisse First Boston ("CSFB"), as documentation agent (the "Documentation Agent",
and, together with the Administrative Agent, the Syndication Agent and any
successors appointed pursuant to Article VIII hereof, the "Agents") for the
Lender Parties (as hereinafter defined).
PRELIMINARY STATEMENTS:
(1) The Borrower is a wholly owned subsidiary of MEDIQ Incorporated, a
Delaware corporation (the "Company").
(2) MQ Acquisition Corporation, a Delaware corporation ("MQ Acquisition"),
was organized by Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership ("BRS" and, together with certain other Persons affiliated with BRS,
other co-investors selected by BRS and certain members of management of the
Company, the "Investors"), to acquire in a recapitalization transaction (the
"Recapitalization") all of the common stock (other than the "Rolled Shares" as
defined in the Rollover Agreement referred to below) of the Company from the
existing common and preferred shareholders of the Company (the "Sellers") in
accordance with the terms of an Agreement and Plan of Merger dated as of January
14, 1998 between MQ Acquisition and the Company (as amended, supplemented or
otherwise modified in accordance with its terms, to the extent permitted under
the Loan Documents (as hereinafter defined), the "Merger Agreement").
(3) Pursuant to the Merger Agreement, MQ Acquisition has agreed to the
Recapitalization and to consummate a merger (the "Merger") with the Company in
which the Company will be the surviving corporation ("MEDIQ") and the Investors
will, together with the holders of the Rolled Shares, in the aggregate, own all
of the shares of common stock and a majority of the shares of Series A, B and C
Preferred Stock referred to below to be issued by MEDIQ.
(4) The Borrower has entered into an Asset Purchase Agreement dated as of
April 24, 1998 (the "Asset Purchase Agreement") with CH Industries, Inc.,
("CHI") certain direct and indirect Subsidiaries of CHI and certain other
parties (collectively, the "CHI Sellers") pursuant to which the Borrower agreed
to purchase certain assets (the "CH Assets") from the CHI Sellers (the "CH
Acquisition").
(5) The Borrower has requested that, in connection with the consummation of
the Recapitalization, the CH Acquisition and the Merger, the Lender Parties lend
to the Borrower up to $325,000,000 to finance the cash consideration payable in
connection with the Merger, in part, and the CH Acquisition, pay transaction
fees and expenses in connection with the Merger, the CH Acquisition and the
<PAGE>
other transactions contemplated hereby, refinance certain Existing Debt (as
hereinafter defined) of the Borrower and that, from time to time, the Lender
Parties lend to the Borrower and issue Letters of Credit for the benefit of the
Borrower to provide working capital for the Borrower and its Subsidiaries and
for other general corporate purposes permitted by this Agreement.
(6) The Lender Parties have indicated their willingness to agree to lend
such amounts on the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acquisition Advance" has the meaning specified in Section 2.01(b).
"Acquisition Borrowing" means a borrowing consisting of simultaneous
Acquisition Advances of the same Type made by the Acquisition Lenders.
"Acquisition Commitment" means, with respect to any Acquisition Lender at
any time, the amount set forth opposite such Lender's name on Schedule I hereto
under the caption "Acquisition Commitment" or, if such Lender has entered into
one or more Assignments and Acceptances, the amount set forth for such Lender in
the Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as such Lender's "Acquisition Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
"Acquisition Facility" means, at any time, the aggregate amount of the
Acquisition Lenders' Acquisition Commitments at such time.
"Acquisition Lender" means any Lender that has an Acquisition Commitment.
"Acquisition Note" means a promissory note of the Borrower payable to the
order of any Acquisition Lender, in substantially the form of Exhibit A-2
hereto, evidencing the indebtedness of the Borrower to such Lender resulting
from the Acquisition Advances made by such Lender to the extent required to be
issued pursuant to Section 2.16.
"Acquisition Reduction Amount" has the meaning specified in Section
2.06(b)(vi).
2
<PAGE>
"Administrative Agent" has the meaning specified in the recital of parties
to this Agreement.
"Administrative Agent's Account" means the account of the Administrative
Agent maintained by the Administrative Agent at the Federal Reserve Bank of New
York, 33 Liberty Street, New York, New York 10048, ABA No. 026007689, for
further credit to Account No. 750420-701-03, or such other account maintained by
the Administrative Agent and designated by the Administrative Agent in a written
notice to the Lender Parties and the Borrower.
"Advance" means a Term Advance, an Acquisition Advance, a Revolving Credit
Advance, a Swing Line Advance or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term "control" (including the terms "controlling", "controlled
by" and "under common control with") of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.
"Agents" has the meaning specified in the recital of parties to this
Agreement.
"Applicable Lending Office" means, with respect to each Lender Party, such
Lender Party's Domestic Lending Office in the case of a Base Rate Advance and
such Lender Party's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Applicable Margin" means (a) with respect to Advances outstanding under
the Acquisition Facility or the Revolving Credit Facility, a percentage per
annum determined by reference to the Leverage Ratio as set forth below:
3
<PAGE>
<TABLE>
<CAPTION>
Leverage Ratio Base Rate Advances Eurodollar Rate Advances
-------------- ------------------ ------------------------
<S> <C> <C>
Level I
Less than 4.50:1.00 0.50% 1.75%
Level II
Less than 5.25:1.00 0.75% 2.00%
But greater than or equal
to 4.50:1.00
Level III
1.00% 2.25%
Less than 6.00:1.00 but
greater than or equal
to 5.25:1.00
Level IV
Greater than 1.25% 2.50%
6.00:1.00
</TABLE>
4
<PAGE>
and (b) with respect to Advances outstanding under the Term Facility, a
percentage per annum determined by reference to the Leverage Ratio as set forth
below:
<TABLE>
<CAPTION>
Leverage Ratio Base Rate Advances Eurodollar Rate Advances
- -------------- ------------------ ------------------------
<S> <C> <C>
Level I
Less than 4.50:1.00 1.00% 2.25%
Level II
Less than 5.25:1.00
But greater than or equal 1.25% 2.50%
to 4.50:1.00
Level III
Less than 6.00:1.00 but 1.50% 2.75%
greater than or equal
to 5.25:1.00
Level IV
Greater than 1.75% 3.00%
6.00:1.00
</TABLE>
The Applicable Margin for each Advance shall be determined by reference to the
Leverage Ratio in effect from time to time; provided, however, that (A) no
change in the Applicable Margin shall be effective until three Business Days
after the date on which the Administrative Agent receives financial statements
pursuant to Section 5.03(c) or (d), or, as applicable, 5.02(e)(ii)(B)(3) and a
certificate of the chief financial officer of the Borrower and its Subsidiaries
demonstrating such ratio and (B) if the Borrower and its Subsidiaries has not
submitted to the Administrative Agent the information described in clause (A) of
this proviso as and when required under Section 5.03(c) or (d), as the case may
be, the Applicable Margin shall be at Level IV, for so long as such information
has not been received by the Administrative Agent. Until the delivery of
financial statements for the quarter ended September 30, 1998, the Applicable
Margin shall be no less than Level III.
"Applicable Percentage" means, as of any date, a percentage per annum
determined by reference to the Leverage Ratio as set forth below:
5
<PAGE>
Leverage Ratio Applicable Percentage
- -------------- ---------------------
Level I
Less than or equal to 0.375%
4.875:1.00
Level II
Greater than 4.875:1.00 0.500%
The Applicable Percentage for each Advance shall be determined by reference to
the Leverage Ratio in effect from time to time; provided, however, that (A) no
change in the Applicable Percentage shall be effective until three Business Days
after the date on which the Administrative Agent receives financial statements
pursuant to Section 5.03(c) or (d), or, as applicable, 5.02(e)(ii)(B)(3) and a
certificate of the chief financial officer of the Borrower and its Subsidiaries
demonstrating such ratio and (B) if the Borrower and its Subsidiaries has not
submitted to the Administrative Agent the information described in clause (A) of
this proviso as and when required under Section 5.03(c) or (d), as the case may
be, the Applicable Percentage shall be at Level II, for so long as such
information has not been received by the Administrative Agent. Until the
delivery of financial statements for the quarter ended September 30, 1998, the
Applicable Percentage shall be no less than Level II.
"Application Date" has the meaning specified in Section 2.06(b)(vii).
"Appropriate Lender" means, at any time, with respect to (a) any of the
Term, Acquisition or Revolving Credit Facilities, a Lender that has a Commitment
with respect to such Facility at such time, (b) the Letter of Credit Facility,
(i) the Issuing Bank and (ii) if the other Revolving Credit Lenders have made
Letter of Credit Advances pursuant to Section 2.03(c) that are outstanding at
such time, each such other Revolving Credit Lender and (c) the Swing Line
Facility, (i) the Swing Line Bank and (ii) if the other Revolving Credit Lenders
have made Swing Line Advances pursuant to Section 2.02(b) that are outstanding
at such time, each such other Revolving Credit Lender.
"Approved Fund" means, with respect to any Lender Party that is a fund that
invests in bank loans, any other fund, trust or any other entity that invests in
bank loans and is advised or managed by the same investment advisor as such
Lender Party or by an Affiliate of such investment advisor.
"Arranger" has the meaning specified in the recital of parties to this
Agreement.
"Asset Purchase Agreement" has the meaning specified in the Preliminary
Statements.
"Asset Sale Offer" has the meaning specified in Section 2.06(b)(vii).
"Assignment and Acceptance" means an assignment and acceptance entered into
by a Lender Party and an Eligible Assignee and accepted by the Administrative
Agent, in accordance with Section 8.07 and in substantially the form of Exhibit
C hereto.
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"Available Amount" of any Letter of Credit means, at any time, the maximum
amount available to be drawn under such Letter of Credit at such time (assuming
compliance at such time with all conditions to drawing).
"Bank Hedge Agreement" means any interest rate Hedge Agreement required or
permitted under Article V that is entered into by and between the Borrower and
any Hedge Bank.
"Base Rate" means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the higher of:
(a) the rate of interest announced publicly by BNP in New York, New
York, from time to time, as its prime rate (and such term shall not be
construed to be its best or most favorable rate); and
(b) 1/2 of 1% per annum above the Federal Funds Rate.
"Base Rate Advance" means an Advance that bears interest as provided in
Section 2.07(a)(i).
"BNP" has the meaning specified in the recital of parties to this
Agreement.
"Borrower" has the meaning specified in the recital of parties to this
Agreement.
"Borrower Group" has the meaning specified in Section 5.02(f).
"Borrower's Account" means the account of the Borrower maintained by the
Borrower with BNP at its office at 499 Park Avenue, New York, New York 10022,
Account No. 202330-001-48, or such other account as the Borrower and the
Administrative Agent may from time to time designate as the "Borrower's
Account".
"Borrowing" means a Term Borrowing, an Acquisition Borrowing, a Swing Line
Borrowing or a Revolving Credit Borrowing.
"Borrowing Base Certificate" means a certificate in substantially the form
of Exhibit G hereto, duly certified by the chief financial officer of the
Borrower.
"BRS" has the meaning specified in the Preliminary Statements.
"BRS Group" means BRS together with all funds for which BRS is a general
partner or otherwise controls, advises, sponsors or acts as manager.
"BRS Management Agreement" means the Management Agreement dated as of May
29, 1998 between the Borrower and BRS.
"Business Day" means a day of the year on which banks are not required or
authorized by law to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.
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"Canadian Subsidiary" means any wholly owned Subsidiary of the Borrower
organized under the laws of Canada or of a province of Canada.
"Capital Expenditures" means, for any Person for any period, the sum of,
without duplication, (a) all cash expenditures made, directly or indirectly, by
such Person or any of its Subsidiaries during such period for equipment, fixed
assets, real property or improvements, or for replacements or substitutions
therefor or additions thereto, that have been or should be, in accordance with
GAAP, reflected as additions to property, plant or equipment on a Consolidated
balance sheet of such Person (other than the use of insurance proceeds for any
such expenditure for the replacement of any item listed in this clause (a)) plus
(b) the aggregate principal amount of all Debt (including Obligations under
Capitalized Leases and Obligations secured by purchase money Liens permitted
under Section 5.02(a)(v)) assumed or incurred in connection with any such
expenditures less (c) the aggregate amount of any Investments permitted under
Section 5.02(e)(ii)(B) made after the date hereof that would otherwise qualify
as Capital Expenditures less (d) sales of rental equipment in the ordinary
course of business.
"Capitalized Leases" means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases.
"Carryover Amount" has the meaning specified in Section 5.04(e).
"Cash Collateral Account" has the meaning specified in the Security
Agreement.
"Cash Equivalents" means any of the following, to the extent owned by the
Borrower or any of its Subsidiaries free and clear of all Liens other than Liens
created under the Collateral Documents or to the extent permitted by Section
5.02(a) and having a maturity of not greater than 180 days from the date of
acquisition thereof: (a) readily marketable direct obligations of the Government
of the United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the Government of the
United States, (b) insured certificates of deposit of or time deposits with any
commercial bank that is a Lender Party or a member of the Federal Reserve
System, issues (or the parent of which issues) commercial paper rated as
described in clause (c), is organized under the laws of the United States or any
state thereof and has combined capital and surplus of at least $1 billion, (c)
commercial paper in an aggregate amount of no more than $5,000,000 per issuer
outstanding at any time, issued by any corporation organized under the laws of
any state of the United States and rated at least "Prime-1" (or the then
equivalent grade) by Moody's Investors Service, Inc. or "A-1" (or the then
equivalent grade) by Standard & Poor's Ratings Group, a division of the McGraw
Hill Companies, Inc., or (d) money market or mutual funds that invest solely in
Cash Equivalents of the types described in clauses (a), (b) and (c) above.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System maintained by the U.S. Environmental Protection
Agency.
"CH Acquisition" has the meaning specified in the Preliminary Statements.
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"CH Acquisition Closing Date" has the meaning specified in Section 3.03.
"CH Assets" has the meaning specified in the Preliminary Statements.
"CHI" has the meaning specified in the Preliminary Statements.
"CHI Sellers" has the meaning specified in the Preliminary Statements.
"Citibank Account" means the account in the name of the Borrower maintained
with Citibank, N.A. for purposes of funding certain obligations under the
Borrower's health plan.
"Collateral" means all "Collateral" referred to in the Collateral Documents
and all other property that is or is intended to be subject to any Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.
"Collateral Documents" means the Security Agreement, the Mortgage, the
landlord consents from the Persons listed on Schedule 3.01(k)(vii)(I) and any
other document or agreement that creates or purports to create a Lien in favor
of the Administrative Agent for the benefit of the Secured Parties.
"Commitment" means a Term Commitment, an Acquisition Commitment, a
Revolving Credit Commitment, a Swing Line Commitment or a Letter of Credit
Commitment.
"Company" has the meaning specified in the Preliminary Statements.
"Consolidated" refers, with respect to any Person, to the consolidation of
accounts of such Person and its Subsidiaries in accordance with GAAP.
"Conversion", "Convert" and "Converted" each refer to a conversion of
Advances of one Type into Advances of the other Type pursuant to Section 2.09 or
2.10.
"CSFB" has the meaning specified in the recital of parties to this
Agreement.
"Conversion Date" means the last day of the calendar month in the month
that is the 18th month following the month in which the Initial Extension of
Credit occurred.
"Current Assets" of any Person means all assets of such Person that would,
in accordance with GAAP, be classified as current assets of a company conducting
a business the same as or similar to that of such Person, after deducting
adequate reserves in each case in which a reserve is proper in accordance with
GAAP.
"Current Liabilities" of any Person means (a) all Debt of such Person that
by its terms is payable on demand or matures within one year after the date of
determination other than Funded Debt and (b) all other items that in accordance
with GAAP would be classified as current liabilities of a company conducting a
business the same as or similar to that of such Person.
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<PAGE>
"Debt" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money, (b) all Obligations, contingent or otherwise, of
such Person for the deferred purchase price of property or services (other than
trade payables not overdue by more than 60 days incurred in the ordinary course
of such Person's business), (c) all Obligations, contingent or otherwise, of
such Person evidenced by notes, bonds, debentures or other similar instruments,
(d) all Obligations, contingent or otherwise, of such Person created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all Obligations, contingent or
otherwise, of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance, letter of
credit or similar facilities, (g) all Obligations, contingent or otherwise, of
such Person to purchase, redeem, retire, defease or otherwise make any payment
in respect of any capital stock of or other ownership or profit interest in such
Person or any other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at the greater
of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Obligations of such Person in respect of Hedge Agreements
(other than for purposes of calculating the financial covenants in Section
5.04), (i) all Debt of others referred to in clauses (a) through (h) above or
clause (j) below guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person through an
agreement (1) to pay or purchase such Debt or to advance or supply funds for the
payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (3) to supply funds to or in any other manner invest in the
debtor (including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss, and (j) all Debt referred to in
clauses (a) through (i) above and other payment obligations of another Person
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt.
"Declining Lender" has the meaning specified in Section 2.06(c).
"Default" means any Event of Default or any event that would constitute an
Event of Default but for the requirement that notice be given or time elapse or
both.
"Defaulted Advance" means, with respect to any Lender Party at any time,
the portion of any Advance required to be made by such Lender Party to the
Borrower pursuant to Section 2.01 or 2.02 at or prior to such time which has not
been made by such Lender Party or by the Administrative Agent for the account of
such Lender Party pursuant to Section 2.02(e) as of such time. In the event that
a portion of a Defaulted Advance shall be deemed made pursuant to Section
2.15(a), the remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section 2.01 on the
same date as the Defaulted Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at any time, any
amount required to be paid by such Lender Party to the Agents or any other
Lender Party hereunder or under any other Loan Document at or prior to such time
which has not been so paid as of such time,
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including, without limitation, any amount required to be paid by such Lender
Party to (a) the Issuing Bank pursuant to Section 2.03(c) to purchase a portion
of a Letter of Credit Advance made by the Issuing Bank, (b) the Administrative
Agent pursuant to Section 2.02(e) to reimburse the Administrative Agent for the
amount of any Advance made by the Administrative Agent for the account of such
Lender Party, (c) any other Lender Party pursuant to Section 2.13 to purchase
any participation in Advances owing to such other Lender Party and (d) the
Administrative Agent or the Issuing Bank pursuant to Section 7.05 to reimburse
the Administrative Agent or the Issuing Bank for such Lender Party's ratable
share of any amount required to be paid by the Lender Parties to the
Administrative Agent or the Issuing Bank as provided therein. In the event that
a portion of a Defaulted Amount shall be deemed paid pursuant to Section
2.15(b), the remaining portion of such Defaulted Amount shall be considered a
Defaulted Amount originally required to be paid hereunder or under any other
Loan Document on the same date as the Defaulted Amount so deemed paid in part.
"Defaulting Lender" means, at any time, any Lender Party that, at such time
(a) owes a Defaulted Advance or a Defaulted Amount or (b) shall take any action
or be the subject of any action or proceeding of a type described in Section
6.01(f).
"Discount Debenture Indenture" means the Indenture dated as of May 15, 1998
between MEDIQ, as issuer, and United States Trust Company of New York, as
trustee, pursuant to which the Discount Debentures are issued.
"Discount Debentures" means the senior discount debentures due 2009 of
MEDIQ issued pursuant to the Discount Debenture Indenture including senior
discount debentures issued in exchange therefor pursuant to the terms of the
Registration Rights Agreement entered into by the Borrower and MEDIQ on the date
of issuance.
"Documentation Agent" has the meaning specified in the recital of parties
to this Agreement.
"Domestic Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant to
which it became a Lender Party, as the case may be, or such other office of such
Lender Party as such Lender Party may from time to time specify to the Borrower
and the Administrative Agent.
"EBITDA" means, for any period, the sum, determined on a Consolidated
basis, of (a) net income (or net loss), (b) Interest Expense, (c) income tax
expense, (d) depreciation expense, (e) amortization expense, (f) noncash charges
incurred in connection with stock options granted to employees of the Borrower,
(g) extraordinary or unusual losses deducted in calculating net income less
extraordinary or unusual gains added in calculating net income, (h) fees paid
under the BRS Management Agreement and (i) all one-time expenses of the Borrower
and its Subsidiaries incurred in connection with Investments made pursuant to
Section 5.02(e)(ii)(B) for acquisition expenses, lease related expenses,
facility closure expenses and professional and other fees, in each case of the
Borrower and its Subsidiaries determined in accordance with GAAP for such
period; provided that, for each month in any Rolling Period ending prior to one
year after the date of the Initial Extension of Credit, EBITDA for each month
prior to the date of the Initial Extension of Credit shall be the amount for
such month as set forth on Schedule II hereto.
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"Eligible Assignee" means with respect to any Facility: (i) a Lender; (ii)
an Affiliate or any Approved Fund of a Lender; (iii) a commercial bank organized
under the laws of the United States, or any State thereof, and having a combined
capital and surplus of at least $500,000,000; (iv) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof, and having a combined capital and surplus of at least
$500,000,000; (v) a commercial bank organized under the laws of any other
country that is a member of the OECD or has concluded special lending
arrangements with the International Monetary Fund associated with its General
Arrangements to Borrow or a political subdivision of any such country, and
having a combined capital and surplus of at least $500,000,000, so long as such
bank is acting through a branch or agency located in the United States; (vi) a
finance company, insurance company or other financial institution or fund
(whether a corporation, partnership, trust or other entity) that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having a combined capital and surplus of at least
$250,000,000; and (vii) any other Person approved by the Administrative Agent
and, so long as no Default has occurred and is continuing at the time any
assignment is effected pursuant to Section 8.07, the Borrower and, with respect
to any Eligible Assignee that becomes a Revolving Credit Lender, the Issuing
Bank, any such approval not to be unreasonably withheld or delayed; provided,
however, that neither any Loan Party nor any Affiliate of a Loan Party shall
qualify as an Eligible Assignee under this definition.
"Eligible Canadian Inventory" means Eligible Inventory of any Canadian
Subsidiary of the Borrower.
"Eligible Canadian Receivables" means Eligible Receivables of any Canadian
Subsidiary of the Borrower.
"Eligible Collateral" means, collectively, Eligible Inventory and Eligible
Receivables.
"Eligible Inventory" means any Inventory owned by the Borrower and its
wholly owned U.S. Subsidiaries and Canadian Subsidiaries free and clear of all
Liens (other than Permitted Liens and Liens in favor of the Secured Parties
securing the Secured Obligations) other than the following:
(a) Inventory consisting of "perishable agricultural commodities"
within the meaning of the Perishable Agricultural Commodities Act of 1930,
as amended, and the regulations thereunder, or on which a Lien has arisen
or may arise in favor of agricultural producers under comparable state or
local laws;
(b) Inventory located on leaseholds as to which the lessor has not
entered into a consent and agreement providing the Administrative Agent
with the right to receive notice of default, the right to repossess such
Inventory at any reasonable time pursuant to such consent and agreement and
such other rights as may be reasonably acceptable to the Administrative
Agent;
(c) Inventory that is obsolete, unusable or otherwise unavailable for
sale;
(d) Inventory with respect to which the representations and warranties
set forth in Section 8 of the Security Agreement applicable to Inventory
are not true and correct;
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(e) Inventory consisting of promotional, marketing, packaging or
shipping materials and supplies;
(f) Inventory that fails to meet all standards imposed by any
governmental agency, or department or division thereof, having regulatory
authority over such Inventory or its use or sale;
(g) Inventory that is subject to any licensing, patent, royalty,
trademark, trade name or copyright agreement with any third party from whom
any Loan Party or any of their Subsidiaries has received written notice of
a dispute in respect of any such agreement;
(h) Inventory located outside the United States or Canada;
(i) Inventory that is not in the possession of or under the sole
control of the Borrower or any of its wholly owned U.S. Subsidiaries or
Canadian Subsidiaries or not in a leased facility in respect of which the
owner has entered into a consent and agreement as may be reasonably
acceptable to the Administrative Agent;
(j) Inventory consisting of work in progress;
(k) Inventory in respect of which the Security Agreement, after giving
effect to the related filings of financing statements that have then been
made, if any, does not or has ceased to create a valid and perfected first
priority lien or security interest in favor of the Secured Parties securing
the Secured Obligations and as to which no other Liens exist, other than
Permitted Liens; and
(l) Inventory not recorded under a perpetual inventory system
reasonably acceptable to the Administrative Agent.
The value of such Eligible Inventory shall be its book value determined in
accordance with GAAP on a basis consistent with current practice of the Borrower
and its wholly owned U.S. Subsidiaries unless the Administrative Agent
determines, in its reasonable discretion that such Eligible Inventory shall be
valued at a lower value.
"Eligible Receivables" means any Receivables owned by the Borrower and any
of its wholly owned U.S. Subsidiaries and Canadian Subsidiaries free and clear
of all Liens (other than Permitted Liens and Liens in favor of the Secured
Parties securing the Secured Obligations) other than the following:
(a) Receivables that do not arise out of sales of goods or rendering
of services in the ordinary course of the business of the Borrower or any
of its wholly owned Subsidiaries;
(b) Receivables on terms other than those normal or customary in the
business of the Borrower or any of its wholly owned U.S. Subsidiaries or
Canadian Subsidiaries;
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(c) Receivables owing from any Person that is an Affiliate of the
Borrower or any of its wholly owned U.S. Subsidiaries or Canadian
Subsidiaries;
(d) Receivables more than 120 days past the original invoice date;
(e) Receivables owing from any Person from which an aggregate amount
of more than 50% of the Receivables owing are more than 120 days past the
original invoice date;
(f) Receivables owing from any Person that has asserted any claim,
demand or liability against any Loan Party, whether by action, suit,
counterclaim or other judicial or arbitral proceeding;
(g) Receivables owing from any Person that shall take or be the
subject of any action or proceeding of a type described in Section 6.01(f);
(h) Receivables (i) owing from any Person that is also a supplier to
or creditor of any Loan Party to the extent of the amount of any right of
setoff, unless such Person has waived all rights of setoff in a manner
acceptable to the Administrative Agent or (ii) representing any
manufacturer's or supplier's credits, discounts, incentive plans or similar
arrangements entitling any Loan Party to discounts on future purchases
therefrom;
(i) Receivables arising out of sales to account debtors outside the
United States or Canada, unless backed by a letter of credit issued by a
bank organized under the laws of the United States or Canada, or any State
thereof, and having a combined capital and surplus of at least
$500,000,000;
(j) Receivables arising out of sales on a bill-and-hold, guaranteed
sale, sale-or-return, sale on approval or consignment basis or subject to
any right of return, setoff or charge-back;
(k) Receivables owing from an account debtor that is an agency,
department or instrumentality of the United States, any State thereof or
Canada; and
(l) Receivables in respect of which the Security Agreement, after
giving effect to the related filings of financing statements that have then
been made, if any, does not or has ceased to create a valid and perfected
first priority lien or security interest in favor of the Secured Parties
securing the Secured Obligations and as to which no other Liens exist,
other than Permitted Liens.
The value of such Eligible Receivables shall be their book value determined in
accordance with GAAP unless the Administrative Agent determines, in its
reasonable discretion, that such Eligible Receivables shall be valued at a lower
value.
"Environmental Action" means any action, suit, demand, demand letter,
claim, notice of non-compliance or violation, notice of liability or potential
liability, investigation, proceeding, consent
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<PAGE>
order or consent agreement relating in any way to any Environmental Law, any
Environmental Permit or Hazardous Material or arising from alleged injury or
threat to health, safety or the environment, including, without limitation, (a)
by any governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages and (b) by any governmental or
regulatory authority or third party for damages, contribution, indemnification,
cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, writ, judgment, injunction,
decree or judicial or agency interpretation, policy or guidance relating to
pollution or protection of the environment, health, safety or natural resources,
including, without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials.
"Environmental Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"Equity Group" means the Health Care Group, the BRS Group and the Galen
Group.
"Equivalent" in U.S. Dollars of any foreign currency on any date means the
equivalent in U.S. Dollars of such foreign currency determined by using the
quoted spot rate for an equivalent amount at which BNP's principal office in New
York City offers to exchange U.S. Dollars for such foreign currency in New York
City prior to 11:00 A.M. (New York City time) on such date as is required
pursuant to the terms of this Agreement, and the "Equivalent" in any foreign
currency of U.S. Dollars means the equivalent in such foreign currency of U.S.
Dollars determined by using the quoted spot rate for an equivalent amount at
which BNP's principal office in London offers to exchange such foreign currency
for U.S. Dollars in New York City prior to 11:00 A.M. (New York City time) on
such date as is required pursuant to the terms of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated thereunder.
"ERISA Affiliate" means any Person that for purposes of Title IV of ERISA
is a member of the controlled group of any Loan Party, or under common control
with any Loan Party, within the meaning of Section 414 of the Internal Revenue
Code.
"ERISA Event" means (a) (i) the occurrence of a reportable event, within
the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC; or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is reasonably expected to occur with respect to such Plan within the following
30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Loan Party or any
ERISA Affiliate in the circumstances described in
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Section 4062(e) of ERISA; (e) the withdrawal by any Loan Party or any ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307 of
ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan; provided, however,
that the occurrence of the event or condition described in Section 4042(a)(4) of
ERISA shall be an ERISA Event only if the PBGC has given notice that it intends
to institute proceedings to terminate a Plan pursuant to such Section.
"Eurocurrency Liabilities" has the meaning specified in Regulation D of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"Eurodollar Lending Office" means, with respect to any Lender Party, the
office of such Lender Party specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender Party (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all Eurodollar Rate
Advances comprising part of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the average of the respective
rates per annum (rounded upward to the next whole multiple of 1/16th of 1%)
posted by each of the principal London offices of banks posting rates as
displayed on the Telerate screen, page 3750 or such other page as may replace
such page on such service for the purpose of displaying the London interbank
offered rate of major banks for deposits in U.S. Dollars, at approximately 11:00
A.M. (London time) two Business Days before the first day of such Interest
Period for deposits in an amount substantially equal to BNP's Eurodollar Rate
Advance comprising part of such Borrowing to be outstanding during such Interest
Period (or, if BNP shall not have such a Eurodollar Rate Advance, $1,000,000)
and for a period equal to such Interest Period by (b) a percentage equal to 100%
minus the Eurodollar Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest as provided
in Section 2.07(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing means the reserve
percentage applicable two Business Days before the first day of such Interest
Period under regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for a member bank of the Federal Reserve
System in New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurodollar Rate Advances is determined) having a term equal to such Interest
Period.
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"Events of Default" has the meaning specified in Section 6.01.
"Excess Amount" has the meaning specified in Section 5.04(e).
"Excess Cash Flow" means, for any period, the sum of (a) Consolidated net
income (or loss) of the Borrower and its Subsidiaries for such period plus (b)
an amount equal to the aggregate amount of all noncash charges (including
paid-in-kind interest accrued and accretion of original issue discount, if any,
on the Subordinated Notes) deducted in arriving at Consolidated net income (or
loss) for each such period plus (c) an amount (whether positive or negative)
equal to the change in deferred tax assets and liabilities of the Borrower and
its Subsidiaries for such period plus (d) an amount (whether positive or
negative) equal to the change in Consolidated Current Liabilities (only to the
extent not duplicated herein) of the Borrower and its Subsidiaries during such
period less (e) an amount equal to the aggregate amount of all noncash credits
included in arriving at such Consolidated net income (or loss) less (f) an
amount (whether positive or negative) equal to the change in Consolidated
Current Assets (excluding cash and Cash Equivalents) of the Borrower and its
Subsidiaries during such period less (g) an amount equal to the amount of all
Capital Expenditures of the Borrower and its Subsidiaries paid in cash during
such period to the extent permitted by this Agreement less (h) an amount equal
to the aggregate amount of all regularly scheduled principal payments of Funded
Debt made during such period, together with any optional prepayments of Term
Advances or Acquisition Advances made during such period in accordance with
Section 2.06(a) less (i) an amount equal to the aggregate amount of Consolidated
net income of the Borrower and its Subsidiaries resulting from any transaction
(other than asset sales in the ordinary course of business) creating Net Cash
Proceeds or Extraordinary Receipts for such period to the extent included in
pretax income of the Borrower and its Subsidiaries for such period less (j)
Investments in cash permitted by Section 5.02(e)(ii)(B) less (k) an amount
(whether positive or negative) equal to the difference between Consolidated
Current Assets and Consolidated Current Liabilities attributable to such
Investments on the date of any such Investment excluding cash and Cash
Equivalents less (l) dividends or advances paid to MEDIQ to pursuant to Section
5.02(f) plus (m) any cash received in respect of any Obligations secured by
purchase money Liens or Obligations under Capitalized Leases.
"Existing Debt" means Debt of the Borrower and its Subsidiaries outstanding
immediately before the Merger.
"Extraordinary Receipt" means any cash received by or paid to or for the
account of any Person not in the ordinary course of business, including, without
limitation, tax refunds, pension plan reversions, proceeds of insurance
(including, without limitation, the key man life insurance referred to in
Section 5.01(r) but excluding proceeds of business interruption insurance to the
extent such proceeds constitute compensation for lost earnings), condemnation
awards (and payments in lieu thereof) and cash received by any Loan Party from
the repayment of the NutraMax Note; provided, however, that an Extraordinary
Receipt shall not include cash receipts received from proceeds of insurance to
the extent that such proceeds (A) in respect of loss or damage to equipment,
fixed assets or real property are applied (or in respect of which expenditures
were previously incurred) to replace or repair the equipment, fixed assets or
real property in respect of which such proceeds were received in accordance with
the terms of the Loan Documents, so long as such application is made (or such
expenditures were incurred) within six months after the occurrence of such
damage or loss or (B) are received by a Person in respect of any third party
claim against such Person and applied to pay (or
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reimburse such Person for its prior payment of) such claim and the costs and
expenses of such Person with respect thereto.
"Facility" means the Term Facility, the Acquisition Facility, the Revolving
Credit Facility, the Swing Line Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period (i) to the rate published by the
Telerate service on page five of its daily report as the "ASK" rate as of 10:00
A.M. (New York City time) for such day (or, if such day is not a Business Day,
for the immediately preceding Business Day) or (ii) if the Telerate service
shall cease to publish or otherwise shall not publish such rates for any day
that is a Business Day, to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Fiscal Year" means a fiscal year of the Borrower and its Consolidated
Subsidiaries ending on September 30 in any calendar year.
"Fixed Charge Coverage Ratio" means, with respect to the Borrower and its
Subsidiaries, taken as a whole, for any Rolling Period, the ratio of (a)
Consolidated EBITDA for the Borrower and its Subsidiaries for such Rolling
Period less the sum of (i) Capital Expenditures of the Borrower and its
Subsidiaries during such Rolling Period and (ii) income taxes of the Borrower
and its Subsidiaries that have been paid in cash or distributed by dividend to
MEDIQ during such Rolling Period to (b) the sum of (i) Interest Expense of the
Borrower and its Subsidiaries for such Rolling Period (other than paid-in-kind
interest accrued and accretion of original issue discount, if any, in respect of
the Subordinated Notes), (ii) regularly scheduled principal payments of Funded
Debt of the Borrower and its Subsidiaries for such Rolling Period and (iii) any
dividends or advances paid to MEDIQ by the Borrower and its Subsidiaries which
are not otherwise included in the calculation of EBITDA of the Borrower and its
Subsidiaries. For purposes of this definition, the amount of Capital
Expenditures referred to in clause (a)(i) above shall equal $4,000,000 for the
Rolling Period ending on September 30, 1998, $8,000,000 for the Rolling Period
ending on December 31, 1998 and $12,000,000 for the Rolling Period ending on
March 31, 1999.
"Foreign Subsidiary" means a Subsidiary that is organized under the laws of
a jurisdiction other than the United States or any State thereof or the District
of Columbia.
"Funded Debt" of any Person means Debt of such Person that by its terms
matures more than one year after the date of creation or matures within one year
from such date but is renewable or extendible, at the option of such Person, to
a date more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year after such date, including, without limitation, all
amounts of Funded Debt of such Person required to be paid or prepaid within one
year after the date of determination.
"Galen Group" means Galen Partners III, L.P. together with all funds for
which Galen Partners III, L.P. is a general partner or otherwise controls,
advises, sponsors or acts as manager.
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"GAAP" has the meaning specified in Section 1.03.
"Hazardous Materials" means (a) petroleum or petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials, polychlorinated biphenyls and radon gas and (b) any other chemicals,
materials or substances designated, classified or regulated as hazardous or
toxic or as a pollutant or contaminant under any Environmental Law.
"Health Care Group" means Health Care Capital Partners, L.P. and Health
Care Executive Partners, L.P. together with all funds for which Health Care
Capital Partners, L.P. or Health Care Executive Partners, L.P. is a general
partner or otherwise controls, advises, sponsors or acts as manager.
"Hedge Agreements" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements, currency
future or option contracts and other hedging agreements.
"Hedge Bank" means any Lender Party or any of its Affiliates in its
capacity as a party to a Bank Hedge Agreement.
"Indemnified Costs" has the meaning specified in Section 7.05(a).
"Indemnified Party" has the meaning specified in Section 8.04(b).
"Information Memorandum" means the Offering Circular relating to the Senior
Subordinated Notes and the Discount Debentures dated May 21, 1998.
"Initial Extension of Credit" means the earlier to occur of the initial
Borrowing hereunder and the initial issuance of a Letter of Credit hereunder.
"Initial Issuing Bank" has the meaning specified in the recital of parties
to this Agreement.
"Initial Lenders" has the meaning specified in the recital of parties to
this Agreement.
"Insufficiency" means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.
"Interest Coverage Ratio" means, with respect to the Borrower and its
Subsidiaries, taken as a whole, for any Rolling Period, the ratio of (a)
Consolidated EBITDA of the Borrower and its Subsidiaries for such Rolling Period
to (b) Interest Expense of the Borrower and its Subsidiaries for such Rolling
Period (other than paid-in-kind interest accrued and accretion of original issue
discount, if any, in respect of the Subordinated Notes) and any dividends paid
to MEDIQ to pay interest on obligations of MEDIQ by the Borrower and its
Subsidiaries.
"Interest Expense" means, with respect to any Person for any period,
interest expense (including the interest component on obligations under
Capitalized Leases), whether paid or accrued, on all Debt of such Person and its
Subsidiaries for such period, including, without limitation and without
duplication, (a) interest expense in respect of Debt resulting from Advances,
(b) interest expense in respect of the Subordinated Notes, (c) commissions,
discounts and other fees and charges
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payable in connection with letters of credit (including, without limitation, any
Letters of Credit), (d) any net payment payable in connection with Hedge
Agreements less any net credits received in connection with Hedge Agreements,
(e) accretion of original issue discount, and (f) all other noncash interest but
excluding amortization with respect to deferred financing fees.
"Interest Period" means, for each Eurodollar Rate Advance comprising part
of the same Borrowing, the period commencing on the date of such Eurodollar Rate
Advance or the date of the Conversion of any Base Rate Advance into such
Eurodollar Rate Advance, and ending on the last day of the period selected by
the Borrower pursuant to the provisions below and, thereafter, each subsequent
period commencing on the last day of the immediately preceding Interest Period
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may, upon notice received by the
Administrative Agent not later than 11:00 A.M. (New York City time) on the third
Business Day prior to the first day of such Interest Period, select; provided,
however, that:
(a) the Borrower may not select any Interest Period with respect to
any Eurodollar Rate Advance under a Facility that ends after any principal
repayment installment date for such Facility unless, after giving effect to
such selection, the aggregate principal amount of Base Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on or prior to
such principal repayment installment date for such Facility shall be at
least equal to the aggregate principal amount of Advances under such
Facility due and payable on or prior to such date;
(b) Interest Periods commencing on the same date for Eurodollar Rate
Advances comprising part of the same Borrowing shall be of the same
duration;
(c) whenever the last day of any Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding Business Day, provided,
however, that, if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such
Interest Period shall occur on the immediately preceding Business Day; and
(d) whenever the first day of any Interest Period occurs on a day of
an initial calendar month for which there is no numerically corresponding
day in the calendar month that succeeds such initial calendar month by the
number of months equal to the number of months in such Interest Period,
such Interest Period shall end on the last Business Day of such succeeding
calendar month.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.
"Inventory" means all Inventory referred to in Section 1(d) of the Security
Agreement.
"Investors" has the meaning specified in the Preliminary Statements.
"Investment" means any loan or advance to any Person, any purchase or other
acquisition of any capital stock or other
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ownership or profit interest, warrants, rights, options, obligations or other
securities or the assets comprising a business or an operating division of a
business, any capital contribution to such Person or any other direct or
indirect investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types referred to
in clause (i) or (j) of the definition of "Debt" in respect of such Person.
"Issuing Bank" means the Initial Issuing Bank and each Eligible Assignee to
which a Letter of Credit Commitment hereunder has been assigned pursuant to
Section 8.07.
"L/C Cash Collateral Account" has the meaning specified in the Security
Agreement.
"L/C Related Documents" has the meaning specified in Section 2.04(e)(ii).
"Lender Party" means any Lender, the Swing Line Bank or the Issuing Bank.
"Lenders" means the Initial Lenders and each Person that shall become a
Lender hereunder pursuant to Section 8.07 for so long as such Initial Lender or
Person shall be a party to this Agreement.
"Letters of Credit" has the meaning specified in Section 2.01(e).
"Letter of Credit Advance" means an advance made by the Issuing Bank or any
Revolving Credit Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in Section 2.03(a).
"Letter of Credit Commitment" means, with respect to the Issuing Bank at
any time, the amount set forth opposite the Issuing Bank's name on Schedule I
hereto under the caption "Letter of Credit Commitment" or, if the Issuing Bank
has entered into an Assignment and Acceptance, set forth for the Issuing Bank in
the Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as the Issuing Bank's "Letter of Credit Commitment", as such amount may be
reduced at or prior to such time pursuant to Section 2.05.
"Letter of Credit Facility" means, at any time, an amount equal to the
amount of the Issuing Bank's Letter of Credit Commitment at such time, as such
amount may be reduced at or prior to such time pursuant to Section 2.05.
"Leverage Ratio" means, for any Rolling Period, the ratio of (a) Funded
Debt of the Borrower and its Subsidiaries (other than contingent obligations of
the type described in clause (f) or (h) in the definition of "Debt") as of the
last day of any Rolling Period to (b) Consolidated EBITDA of the Borrower and
its Subsidiaries for such Rolling Period, provided that if any Investment
pursuant to Section 5.02(e)(ii)(A) and (B) shall have occurred, such
Consolidated EBITDA shall include the Pro Forma EBITDA of or attributable to
such Investment, with respect to such Rolling Period.
"Lien" means any lien, security interest or other charge or encumbrance of
any kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.
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"Loan Documents" means (a) for purposes of this Agreement and the Notes, if
any, and any amendment, supplement or modification hereof or thereof, (i) this
Agreement, (ii) the Notes, if any, (iii) the Collateral Documents, (iv) each
Letter of Credit Agreement, (v) the Subsidiary Guaranty, (vi) any other
agreement, document or instrument issued pursuant to or in connection with any
of the foregoing and (vii) the undertaking referred to in Section 3.01(d) and
(b) for purposes of the Collateral Documents, (i) this Agreement, (ii) the
Notes, if any, (iii) the Collateral Documents, (iv) each Letter of Credit
Agreement, (v) the Subsidiary Guaranty, (vi) each Bank Hedge Agreement, (vii)
each agreement entered into between the any Loan Party and the Administrative
Agent or the Issuing Bank with respect to the payment of fees or other amounts
relating to the Facilities, (viii) any other agreement, document or instrument
issued pursuant to or in connection with any of the foregoing and, in each case
as amended, amended and restated, supplemented or otherwise modified from time
to time and (ix) the undertaking referred to in Section 3.01(d).
"Loan Parties" means the Borrower and the Subsidiary Guarantors.
"Loan Value" means an amount equal to the sum of the percentage of the
value of each item of Eligible Collateral of up to the following amounts:
(a) with respect to Eligible Inventory (other than Eligible Canadian
Inventory), up to 50% of the value of such Inventory;
(b) with respect to Eligible Canadian Inventory, up to 50% of the U.S.
Dollar Equivalent of the value of such Inventory;
(c) with respect to Eligible Receivables (other than Eligible Canadian
Receivables), up to 80% of the value of such Receivables; and
(d) with respect to Eligible Canadian Receivables, up to 80% of the
U.S. Dollar Equivalent of the value of such Receivables;
provided, however, that the Administrative Agent may, in its reasonable
discretion based on an analysis of changes in the operations of the Borrower and
its wholly owned U.S. Subsidiaries and Canadian Subsidiaries or credit and
collection experience arising after the date hereof that may dilute the value of
Eligible Collateral, revise from time to time the percentage of the value of any
individual item of Eligible Collateral that shall be used in determining Loan
Value; provided further that any increase in such percentage shall require the
approval of the Required Lenders; provided further that the Loan Value of the
sum of the Eligible Canadian Inventory and the Eligible Canadian Receivables
shall not exceed the amount owing from any Canadian Subsidiary to the Borrower
under any intercompany note to the extent permitted pursuant to Section
5.02(b)(xiii) at such time.
"Margin Stock" has the meaning specified in Regulation U and/or
Regulation G.
"Material Adverse Change" means any material adverse change in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or the Loan Parties and their
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or the Loan
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<PAGE>
Parties and their Subsidiaries taken as a whole, (b) the rights and remedies of
the Administrative Agent or any Lender Party under any Loan Document or Related
Document or (c) the ability of the Borrower or the Loan Parties and their
Subsidiaries taken as a whole to perform their Obligations under any Loan
Document or Related Document to which they are or are to become parties.
"MEDIQ" has the meaning specified in the Preliminary Statements.
"Merger" has the meaning specified in the Preliminary Statements.
"Merger Agreement" has the meaning specified in the Preliminary Statements.
"Mortgage" has the meaning specified in Section 3.01(k)(viii).
"MQ Acquisition" has the meaning specified in the recital of parties to
this Agreement.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which any Loan Party or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan
Party or any ERISA Affiliate and at least one Person other than the Loan Parties
and the ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section 4064 or
4069 of ERISA in the event such plan has been or were to be terminated.
"NationsBank" has the meaning specified in the recital of parties to this
Agreement.
"Net Cash Proceeds" means, with respect to any sale, lease, transfer or
other disposition of any asset other than in the ordinary course of business or
the sale or issuance of any Debt or capital stock or other ownership or profit
interest (including, without limitation, any capital contribution), any
securities convertible into or exchangeable for capital stock or other ownership
or profit interest or any warrants, rights, options or other securities to
acquire capital stock or other ownership or profit interest by any Person, or
any Extraordinary Receipt received by or paid to or for the account of any
Person, the aggregate amount of cash received from time to time (whether as
initial consideration or through payment or disposition of deferred
consideration) by or on behalf of such Person in connection with such
transaction (excluding, without limitation, any cash received in respect of any
Obligations under Capitalized Leases or any Obligations secured by purchase
money Liens included in clause (j) of the definition of "Excess Cash Flow"),
after deducting therefrom only (without duplication) (a) reasonable and
customary brokerage commissions, underwriting fees and discounts, legal fees,
finder's fees and other similar fees and commissions, (b) the amount of taxes
payable in connection with or as a result of such transaction and (c) the amount
of any Debt secured by a Lien on such asset that, by the terms of the agreement
or instrument governing such transaction, is required to be repaid upon such
disposition, in each case to the extent, but only to the extent, that the
amounts so deducted are properly attributable to such transaction or to the
asset that is the subject thereof and are, in the case of clauses (a) and (c),
at the time of receipt of such cash or when otherwise required by the terms of
the particular arrangement or entered into in connection therewith, actually
paid to a Person that is not an Affiliate of such Person or any Loan Party or
any Affiliate of any Loan Party
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<PAGE>
and, in the case of clause (b), on the earlier of the dates on which the tax
return covering such taxes is filed or required to be filed, provided, however,
that in the case of taxes that are deductible under clause (b) but for the fact
that at the time of receipt of such cash, such taxes have not been actually paid
or are not then payable, such Person may deduct an amount (the "Reserved
Amount") equal to the amount reserved in accordance with GAAP as a reasonable
estimate for such taxes, other than taxes for which such Person is indemnified,
provided further, however, that at the time such taxes are paid, an amount equal
to the amount, if any, by which the Reserved Amount exceeds the amount deducted
pursuant to clause (b) above is greater than the amount actually so paid, the
amount of such excess shall constitute "Net Cash Proceeds."
"Note" means a Term Note, an Acquisition Note or a Revolving Credit Note,
in each case to the extent required to be issued pursuant to Section 2.16.
"Notice of Borrowing" has the meaning specified in Section 2.02(a).
"Notice of Issuance" has the meaning specified in Section 2.03(a).
"NPL" means the National Priorities List under CERCLA.
"NutraMax" means NutraMax Products, Inc., a Delaware corporation.
"NutraMax Agreement" means the Stock Purchase Agreement dated as of
September 18, 1996 among the Company, MEDIQ Investment Services, Inc. and
NutraMax.
"NutraMax Letter of Credit" means the letter of credit dated December 30,
1996 and issued by BankBoston N.A. pursuant to the NutraMax Agreement.
"NutraMax Note" means the promissory note issued by NutraMax to MEDIQ
Investment Services, Inc. pursuant to the NutraMax Agreement.
"Obligation" means, with respect to any Person, any payment, performance or
other obligation of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any creditor
to payment in respect of such claim is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, disputed, undisputed, legal,
equitable, secured or unsecured, and whether or not such claim is discharged,
stayed or otherwise affected by any proceeding referred to in Section 6.01(f).
Without limiting the generality of the foregoing, the Obligations of any Loan
Party under the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees, attorneys' fees
and disbursements, indemnities and other amounts payable by such Loan Party
under any Loan Document, (b) the obligation of such Loan Party to reimburse any
amount in respect of any of the foregoing that any Lender Party, in its sole
discretion, may elect to pay or advance on behalf of such Loan Party and (c) the
obligation to pay the Administrative Agent pursuant to Section 2.08(c).
"OECD" means the Organization for Economic Cooperation and Development.
"Open Year" has the meaning specified in Section 4.01(aa).
"Other Taxes" has the meaning specified in Section 2.12(b).
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Payment Commitment Date" has the meaning specified in Section
2.06(b)(vii).
"Permitted Encumbrances" has the meaning specified in the Mortgage.
"Permitted Liens" means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed
by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's
Liens and other similar Liens arising in the ordinary course of business
securing obligations that (i) are not overdue for a period of more than 30 days
and (ii) either individually or when aggregated with all other Permitted Liens
outstanding on any date of determination, do not materially affect the use or
value of the property to which they relate; (c) pledges or deposits to secure
obligations under workers' compensation laws or similar legislation or to secure
public or statutory obligations; and (d) easements, rights of way and other
encumbrances (other than mortgages) on title to real property that do not render
title to the property encumbered thereby unmarketable or materially adversely
affect the use of such property for its present purposes.
"Person" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government or
any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
"Pledged Debt" has the meaning specified in Section 1(a)(ii) of the
Security Agreement.
"Pledged Shares" has the meaning specified in Section 1(a)(i) of the
Security Agreement.
"Preferred Stock" means, with respect to any corporation, capital stock
issued by such corporation that is entitled to a preference or priority over any
other capital stock issued by such corporation upon any distribution of such
corporation's assets, whether by dividend or upon liquidation.
"Prepayment Amount" has the meaning specified in Section 5.03(a).
"Prepayment Date" has the meaning specified in Section 5.03(a).
"Prepayment Notice" has the meaning specified in Section 5.03(a).
"Prior Fiscal Year" has the meaning specified in Section 5.04(e).
"Pro Forma EBITDA" means, for any period, the sum of (i) EBITDA, (ii) any
adjustments certified by the chief financial officer of the Borrower that would,
in the reasonable determination of the Borrower, satisfy the requirements of
Rule 11-02(a) of Regulation S-X, as if included in a registration statement
filed with the Securities and Exchange Commission and (iii) any other operating
expense reductions reasonably expected to result from any acquisition of stock
or assets of a related business, if such expected reductions are (1) set forth
in reasonable detail in a plan approved by and set forth in
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resolutions adopted by the Board of Directors of the Borrower, and (2) limited
to operating expenses specified in such plan (and, if any reductions are set
forth in a range, the lowest amount of such range) that would otherwise have
resulted in the payment of cash within twelve months after the date of
consummation of such transaction, net of any operating expenses (other than
extraordinary items, non-recurring or temporary charges and other similar
one-time expenses) reasonably expected to be incurred to implement such plan
(including, without limitation, personnel, occupancy and transportation
expenses), and that are to be paid in cash during such twelve-month period,
certified by the chief financial officer of the Borrower.
"Pro Rata Share" of any amount means, with respect to any Revolving Credit
Lender at any time, the product of such amount times a fraction the numerator of
which is the amount of such Lender's Revolving Credit Commitment at such time
(or if the Commitments shall have been terminated, such Lender's Revolving
Credit Commitment as in effect immediately prior to such termination) and the
denominator of which is the Revolving Credit Facility at such time (or if the
Commitments shall have been terminated, the Revolving Credit Facility as in
effect immediately prior to such termination).
"Recapitalization" has the meaning specified in the Preliminary Statements.
"Recapture Percentage" means, for purposes of Sections 2.06(b), with
respect to any Fiscal Year of the Borrower and its Subsidiaries, 75% or, if the
Leverage Ratio as at September 30 in any such Fiscal Year is less than 5.0 to
1.0 (but greater than 0.0), 50%.
"Receivables" means all Receivables referred to in Section 1(c) of the
Security Agreement.
"Redeemable" means, with respect to any capital stock or other ownership or
profit interest, Debt or other right or Obligation, any such right or Obligation
that (a) the issuer has undertaken to redeem at a fixed or determinable date or
dates prior to the Termination Date, whether by operation of a sinking fund or
otherwise, or upon the occurrence of a condition not solely within the control
of the issuer or (b) is redeemable at the option of the holder.
"Reduction Amount" has the meaning specified in Section 2.06(b)(v).
"Refinancing Debt" means the Debt identified as such on Schedule 2.14, in
an aggregate amount not to exceed the amount of such Debt set forth therein.
"Register" has the meaning specified in Section 8.07(d).
"Regulation S-X" means Regulation S-X of the Securities Act of 1933, as
amended.
"Regulation G" means Regulation G of the Board of Governors of the Federal
Reserve System, in effect from time to time.
"Regulation U" means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
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"Related Documents" means the Merger Agreement, the other documents
effecting the Recapitalization and the Merger, the Rollover Agreement, the
Stockholder Agreements, the Subordinated Debt Documents, the BRS Management
Agreement and the Stock Option Agreements.
"Required Lenders" means at any time Lenders owed or holding at least a
majority of the sum of (a) the aggregate principal amount of the Advances
outstanding at such time, (b) the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the aggregate unused Commitments under the
Term and Acquisition Facilities at such time and (d) the aggregate Unused
Revolving Credit Commitments at such time; provided, however, that if any Lender
shall be a Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (A) the aggregate principal
amount of the Advances owing to such Lender (in its capacity as a Lender) and
outstanding at such time, (B) such Lender's Pro Rata Share of the aggregate
Available Amount of all Letters of Credit issued by such Lender and outstanding
at such time, (C) the Unused Revolving Credit Commitment of such Lender at such
time and (D) the unused Commitments under the Term and Acquisition Facilities of
such Lender at such time. For purposes of this definition, the aggregate
principal amount of Swing Line Advances owing to the Swing Line Bank and of
Letter of Credit Advances owing to the Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving Credit
Lenders ratably in accordance with their respective Revolving Credit
Commitments.
"Responsible Officer" means the President, Chief Financial Officer, or any
Senior Vice-President of the Borrower.
"Revolving Credit Advance" has the meaning specified in Section 2.01(c).
"Revolving Credit Borrowing" means a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by the Revolving Credit Lenders.
"Revolving Credit Commitment" means, with respect to any Revolving Credit
Lender at any time, the amount set forth opposite such Lender's name on Schedule
I hereto under the caption "Revolving Credit Commitment" or, if such Lender has
entered into one or more Assignment and Acceptances, set forth for such Lender
in the Register maintained by the Administrative Agent pursuant to Section
8.07(d) as such Lender's "Revolving Credit Commitment", as such amount may be
reduced at or prior to such time pursuant to Section 2.05.
"Revolving Credit Facility" means, at any time, the aggregate amount of the
Revolving Credit Lenders' Revolving Credit Commitments at such time.
"Revolving Credit Lender" means any Lender that has a Revolving Credit
Commitment.
"Revolving Credit Note" means a promissory note of the Borrower payable to
the order of any Revolving Credit Lender, in substantially the form of Exhibit
A-3 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender
resulting from the Revolving Credit Advances made by such Lender to the extent
required to be issued pursuant to Section 2.16.
"Rolled Shares" has the meaning specified in the Preliminary Statements.
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"Rolling Period" means (a) for purposes of determining compliance with the
requirements of Sections 5.04(c) and (d) and 5.02(e)(ii)(B), (i) with respect to
any month ending on or prior to one year following the date of the Initial
Extension of Credit, the period commencing on the date of the Initial Extension
of Credit and ending on the last day of the month immediately prior to the
consecutive 12-month period following such date and (ii) with respect to any
month thereafter, the consecutive 12-month period ending on the last day of such
month and (b) for all other purposes, with respect to any month the consecutive
12-month period ending on the last day of such month.
"Rollover Agreement" means the Rollover Agreement dated as of January 14,
1998 between MQ Acquisition and certain other Persons listed therein.
"Secured Obligations" has the meaning specified in the Security Agreement.
"Secured Parties" means the Agents, the Lender Parties and the Hedge Banks.
"Security Agreement" has the meaning specified in Section 3.01(k)(vii).
"Sellers" has the meaning set forth in the Preliminary Statements.
"Senior Debt" means for any Person all Funded Debt of such Person and its
Subsidiaries other than the Subordinated Notes.
"Senior Leverage Ratio" means, for any Rolling Period, the ratio of (a)
Senior Debt (other than contingent obligations of the type described in clause
(f) or (h) in the definition of "Debt") of the Borrower and its Subsidiaries as
of the last day of such Rolling Period to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for such Rolling Period, provided that if any
Investment pursuant to Section 5.02(e)(ii)(A) and (B) shall have occurred, such
Consolidated EBITDA shall include the Pro Forma EBITDA of or attributable to
such Investment with respect to any Rolling Period.
"Senior Subordinated Notes" means the senior subordinated notes due 2008
issued by the Borrower outstanding in the original aggregate principal amount of
$190,000,000 including senior subordinated notes issued in exchange therefor
pursuant to the terms of the Registration Rights Agreement entered into by the
Borrower and MEDIQ on the date of issuance.
"Senior Subordinated Note Indenture" means the Indenture dated as of May
15, 1998 between the Borrower and United States Trust Company of New York, as
trustee.
"Series A Preferred Stock" means the Series A 13% Cumulative Compounding
Preferred Stock, par value $.01 per share, of MEDIQ.
"Series B Preferred Stock" means the Series B 13.25% Cumulative Compounding
Perpetual Preferred Stock, par value $.01 per share, of MEDIQ.
"Series C Preferred Stock" means the Series C 13.50% Cumulative Compounding
Preferred Stock, par value $.01 per share, of MEDIQ.
"7.50% Note Indenture" means the Indenture dated as of July 30, 1993
between the Company and First Fidelity Bank, N.A.
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"7.50% Notes" means the 7.50% exchangeable subordinated debentures due 2003
of the Company in an aggregate principal amount of $10,055,000 immediately after
giving effect to the Merger.
"Single Employer Plan" means a single employer plan, as defined in Section
4001(a)(15) of ERISA, that (a) is maintained for employees of any Loan Party or
any ERISA Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan Party or
any ERISA Affiliate could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value of
the assets of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured, (c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay such debts
and liabilities as they mature and (d) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute an unreasonably small capital. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"SpectraCair" means a division of the Borrower, formerly MEDIQ PRN/HNE,
LLC, a New Jersey limited liability company acquired by the Company and the
Borrower on September 1, 1997.
"Standby Letter of Credit" means any Letter of Credit issued under the
Letter of Credit Facility, other than a Trade Letter of Credit.
"Stockholder Agreements" means the Stockholder Agreements dated as of
January 14, 1998 between MQ Acquisition and certain other Persons listed
therein.
"Stock Option Agreements" means the Stock Option Agreements dated as of
January 14, 1998 between MQ Acquisition and certain Sellers as listed therein.
"Subordinated Debt" means the Subordinated Notes and any other debt of the
Loan Parties that is subordinated to the Obligations of the Loan Parties under
the Loan Documents on, and that otherwise contains, terms and conditions
satisfactory to the Required Lenders.
"Subordinated Debt Documents" means the 7.50% Note Indenture and the 7.50%
Notes, the Senior Subordinated Note Indenture and the Senior Subordinated Notes,
the Discount Debenture Indenture and the Discount Debentures, and all other
agreements, indentures and instruments delivered in connection with the issuance
of the Subordinated Notes or pursuant to which Subordinated Debt is issued.
"Subordinated Guaranties" means each "Subsidiary Guaranty" as such term is
defined in the Senior Subordinated Note Indenture.
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"Subordinated Notes" means the 7.50% Notes, the Senior Subordinated Notes
and the Discount Debentures.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate, is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Subsidiary Guarantors" means all Subsidiaries of the Borrower and each
other Subsidiary of the Borrower that shall be required to execute and deliver a
guaranty pursuant to Section 5.01(m).
"Subsidiary Guaranty" means a guaranty in substantially the form of Exhibit
F (together with each other guaranty delivered pursuant to Section 5.01(m), in
each case as amended, amended and restated, supplemented or otherwise modified
from time to time in accordance with its terms, the "Subsidiary Guaranty").
"Surviving Debt" has the meaning specified in Section 3.01(i).
"Swing Line Advance" means an advance made by (a) the Swing Line Bank
pursuant to Section 2.01(d) or 2.02(b) or (b) any Revolving Credit Lender
pursuant to Section 2.02(b).
"Swing Line Bank" means the Administrative Agent acting in its capacity as
Lender under Section 2.01(d).
"Swing Line Borrowing" means a borrowing consisting of a Swing Line Advance
made by the Swing Line Bank pursuant to Section 2.01(d) or the Revolving Credit
Lenders pursuant to Section 2.02(b).
"Swing Line Commitment" means, with respect to the Swing Line Bank at any
time, the amount set forth opposite the Swing Line Bank's name on Schedule I
hereto under the caption "Swing Line Commitment" or, if the Swing Line Bank has
entered into an Assignment and Acceptance, set forth for the Swing Line Bank in
the Register maintained by the Administrative Agent pursuant to Section 8.07(d)
as the Swing Line Bank's "Swing Line Commitment", as such amount may be reduced
at or prior to such time pursuant to Section 2.05.
"Swing Line Facility" has the meaning specified in Section 2.01(d).
"Syndication Agent" has the meaning specified in the recital of parties to
this Agreement.
"Taxes" has the meaning specified in Section 2.12(a).
"Term Advance" has the meaning specified in Section 2.01(a).
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"Term Borrowing" means a borrowing consisting of simultaneous Term Advances
of the same Type made by the Term Lenders.
"Term Commitment" means, with respect to any Term Lender, the amount set
forth opposite such Lender's name on Schedule I hereto under the caption "Term
Commitment" or, if such Lender has entered into one or more Assignment and
Acceptances, the aggregate amount set forth for such Lender in the Register
maintained by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Term Commitment".
"Termination Date" means (a) for purposes of the Revolving Credit Facility,
the Swing Line Facility and the Letter of Credit Facility, the earlier of (x)
May 31, 2004 and (y) the date of termination in whole of the Term Commitments,
the Swing Line Commitments, the Letter of Credit Commitments and the Revolving
Credit Commitments pursuant to Section 2.05 or 6.01 (the "Commitment Termination
Date"), and (b) for purposes of the Term Facility, the earlier of (x) June 30,
2006 and (y) the Commitment Termination Date, and (c) for purposes of the
Acquisition Facility, the earlier of (x) June 30, 2004 and (y) the Commitment
Termination Date.
"Term Facility" means, at any time, the aggregate amount of the Term
Lenders' Term Commitments at such time.
"Term Lender" means any Lender that has a Term Commitment.
"Term Note" means a promissory note of the Borrower payable to the order of
any Term Lender, in substantially the form of Exhibit A-1 hereto, evidencing the
indebtedness of the Borrower to such Lender resulting from the Term Advances
made by such Lender to the extent required to be issued pursuant to Section
2.16.
"Trade Letter of Credit" means any Letter of Credit that is issued under
the Letter of Credit Facility for the benefit of a supplier of Inventory to the
Borrower or any of its Subsidiaries to effect payment for such Inventory.
"Type" refers to the distinction between Advances bearing interest at the
Base Rate and Advances bearing interest at the Eurodollar Rate.
"Unused Revolving Credit Commitment" means, with respect to any Revolving
Credit Lender at any time, (a) such Lender's Revolving Credit Commitment at such
time minus (b) the sum of (i) the aggregate principal amount of all Revolving
Credit Advances, Swing Line Advances and Letter of Credit Advances made by such
Lender (in its capacity as a Lender) and outstanding at such time, plus (ii)
such Lender's Pro Rata Share of (A) the aggregate Available Amount of all
Letters of Credit outstanding at such time, (B) the aggregate principal amount
of all Letter of Credit Advances made by the Issuing Bank pursuant to Section
2.03(c) and outstanding at such time and (C) the aggregate principal amount of
all Swing Line Advances made by the Swing Line Bank pursuant to Section 2.01(d)
and outstanding at such time.
"U.S. Subsidiary" of any Person means a Subsidiary other than a Foreign
Subsidiary.
"Voting Stock" means capital stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for
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the election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of such
a contingency.
"Welfare Plan" means a welfare plan, as defined in Section 3(1) of ERISA,
that is maintained for employees of any Loan Party or in respect of which any
Loan Party could have a liability.
"Withdrawal Liability" has the meaning specified in Part I of Subtitle E of
Title IV of ERISA.
"Year 2000 Compliant" means the ability of the software and other
processing capabilities of the Borrower and its Subsidiaries, used to operate
the business (but excluding any rental equipment not manufactured by the
Borrower), correctly to interpret and manipulate all data, in whatever form,
including printed form, screen displays, financial records, calculations and
loan-related data, so as to avoid errors in processing that may otherwise occur
because of the inability of the software or other processing capabilities to
recognize accurately the year 2000 or subsequent dates.
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions.
In this Agreement and the other Loan Documents in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to but
excluding". References in the Loan Documents to any agreement or contract "as
amended" shall mean and be a reference to such agreement or contract as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms.
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
financial statements referred to in Section 4.01(f) ("GAAP").
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances and Letters of Credit. (a) The Term Advances.
Each Term Lender severally agrees, on the terms and conditions hereinafter set
forth, to make up to two advances (each, a "Term Advance") to the Borrower on
any Business Day during the period from the date hereof until July 30, 1998 in
an amount for either such Advance not to exceed such Lender's unused Term
Commitment at such time. Each Term Borrowing made on the date of the Initial
Extension of Credit shall be in an aggregate amount of $100,000,000 and each
Term Borrowing made in connection with the CH Acquisition shall be in an
aggregate amount not to exceed $50,000,000. Each Term Borrowing shall consist of
Term Advances made simultaneously by the Term Lenders ratably according to their
Term Commitments. Amounts borrowed under this Section 2.01(a) and repaid or
prepaid may not be reborrowed.
(b) The Acquisition Advances. Each Acquisition Lender severally agrees, on
the terms and conditions hereinafter set forth, to make advances (each, an
"Acquisition Advance") to the Borrower from time to time on any Business Day
during the period from the date hereof until the Conversion Date in an amount
for each such Advance not to exceed such Lender's unused Acquisition Commitment
at such time. Each Acquisition Borrowing shall be in an aggregate amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof and shall
consist of Acquisition Advances made simultaneously by the Acquisition Lenders
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ratably according to their Acquisition Commitments. Amounts borrowed under this
Section 2.01(b) and repaid or prepaid may not be reborrowed.
(c) The Revolving Credit Advances. Each Revolving Credit Lender severally
agrees, on the terms and conditions hereinafter set forth, to make advances
(each, a "Revolving Credit Advance") to the Borrower from time to time on any
Business Day during the period from the date hereof until the Termination Date
in an amount for each such Advance not to exceed such Lender's Unused Revolving
Credit Commitment at such time. Each Revolving Credit Borrowing shall be in an
aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess
thereof (other than a Borrowing the proceeds of which shall be used solely to
repay or prepay in full outstanding Letter of Credit Advances made by the
Issuing Bank) and shall consist of Revolving Credit Advances made simultaneously
by the Revolving Credit Lenders ratably according to their Revolving Credit
Commitments. Within the limits of each Revolving Credit Lender's Unused
Revolving Credit Commitment in effect from time to time, the Borrower may borrow
under this Section 2.01(c), prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(c).
(d) The Swing Line Advances. The Borrower may request the Swing Line Bank
to make, and the Swing Line Bank shall make, on the terms and conditions
hereinafter set forth, Swing Line Advances to the Borrower from time to time on
any Business Day during the period from the date hereof until the Termination
Date (i) in an aggregate amount not to exceed at any time outstanding $2,500,000
(the "Swing Line Facility") and (ii) in an amount for each such Swing Line
Borrowing not to exceed the aggregate of the Unused Revolving Credit Commitments
of the Revolving Credit Lenders at such time. No Swing Line Advance shall be
used for the purpose of funding the payment of principal of any other Swing Line
Advance. Each Swing Line Borrowing shall be in an amount of $250,000 or an
integral multiple of $100,000 in excess thereof and shall be made as a Base Rate
Advance. Within the limits of the Swing Line Facility and within the limits
referred to in clause (ii) above, so long as the Swing Line Bank makes Swing
Line Advances, the Borrower may borrow under this Section 2.01(d), repay
pursuant to Section 2.04(d) or prepay pursuant to Section 2.06(a) and reborrow
under this Section 2.01(d).
(e) Letters of Credit. The Issuing Bank agrees, on the terms and conditions
hereinafter set forth, to issue letters of credit (the "Letters of Credit") for
the account of the Borrower from time to time on any Business Day during the
period from the date hereof until 5 days before the Termination Date (i) in an
aggregate Available Amount for all Letters of Credit not to exceed at any time
the Issuing Bank's Letter of Credit Commitment at such time and (ii) in an
Available Amount for each such Letter of Credit not to exceed the lesser of (x)
the Letter of Credit Facility at such time and (y) the Unused Revolving Credit
Commitments of the Revolving Credit Lenders at such time. No Letter of Credit
shall have an expiration date (including all rights of the Borrower or the
beneficiary to require renewal) later than the earlier of 5 days before the
Termination Date and (A) in the case of a Standby Letter of Credit, one year
after the date of issuance thereof and (B) in the case of a Trade Letter of
Credit, 90 days after the date of issuance thereof. Within the limits of the
Letter of Credit Facility, and subject to the limits referred to above, the
Borrower may request the issuance of Letters of Credit under this Section
2.01(e), repay any Letter of Credit Advances resulting from drawings thereunder
pursuant to Section 2.03(c) and request the issuance of additional Letters of
Credit under this Section 2.01(e).
SECTION 2.02. Making the Advances. (a) Except as otherwise provided in
Section 2.03, each Borrowing shall be made on notice, given not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Borrowing in the case of a Borrowing consisting of Eurodollar Rate
Advances, or the first Business Day prior to the date of the proposed Borrowing
in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to
the Administrative Agent, which shall give
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to each Appropriate Lender prompt notice thereof by telex or telecopier. Each
such notice of a Borrowing (a "Notice of Borrowing") shall be in writing, or
telex or telecopier, in substantially the form of Exhibit B hereto, specifying
therein the requested (i) date of such Borrowing, (ii) Facility under which such
Borrowing is to be made, (iii) Type of Advances comprising such Borrowing, (iv)
aggregate amount of such Borrowing and (v) in the case of a Borrowing consisting
of Eurodollar Rate Advances, initial Interest Period for each such Advance. Each
Appropriate Lender shall, before 11:00 A.M. (New York City time) on the date of
such Borrowing, make available for the account of its Applicable Lending Office
to the Administrative Agent at the Administrative Agent's Account, in same day
funds, such Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such Lender and the
other Appropriate Lenders. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account; provided, however, that, in the case of any
Revolving Credit Borrowing, the Administrative Agent shall first make a portion
of such funds equal to the aggregate principal amount of any Swing Line Advances
and Letter of Credit Advances made by the Swing Line Bank or the Issuing Bank,
as the case may be, and by any other Revolving Credit Lender and outstanding on
the date of such Revolving Credit Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the Swing Line Bank and the Issuing
Bank and such other Revolving Credit Lenders for repayment of such Swing Line
Advances and Letter of Credit Advances.
(b) Each Swing Line Borrowing shall be made on notice, given not later than
11:00 A.M. (New York City time) on the date of the proposed Swing Line
Borrowing, by the Borrower to the Swing Line Bank and the Administrative Agent.
Each such notice, which shall be delivered by a Notice of Borrowing, shall be in
writing, by telex or telecopier, in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Borrowing (which shall be a
Business Day), (ii) amount of such Borrowing and (iii) maturity of such
Borrowing (which maturity shall be no later than the seventh day after the
requested date of such Borrowing). The Swing Line Bank will make the amount
thereof available to the Administrative Agent at the Administrative Agent's
Account, in same day funds. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account. Upon written demand by the Swing Line Bank
with a copy of such demand to the Administrative Agent, each other Revolving
Credit Lender shall purchase from the Swing Line Bank, and the Swing Line Bank
shall sell and assign to each such other Revolving Credit Lender, such other
Lender's Pro Rata Share of such outstanding Swing Line Advance as of the date of
such demand, by making available for the account of its Applicable Lending
Office to the Administrative Agent for the account of the Swing Line Bank, by
deposit to the Administrative Agent's Account, in same day funds, an amount
equal to the portion of the outstanding principal amount of such Swing Line
Advance to be purchased by such Lender. The Borrower hereby agrees to each such
sale and assignment. Each Revolving Credit Lender agrees to purchase its Pro
Rata Share of an outstanding Swing Line Advance on (i) the Business Day on which
demand therefor is made by the Swing Line Bank, provided that notice of such
demand is given not later than 11:00 A.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if notice of such
demand is given after such time. Upon any such assignment by the Swing Line Bank
to any other Revolving Credit Lender of a portion of a Swing Line Advance, the
Swing Line Bank represents and warrants to such other Lender that the Swing Line
Bank is the legal and beneficial owner of such interest being assigned by it,
but makes no other representation or warranty and assumes no responsibility with
respect to such Swing Line Advance, the Loan Documents or any Loan Party. If and
to the extent that any Revolving Credit Lender shall not have so made the amount
of such Swing Line Advance available to the Administrative Agent, such Revolving
Credit Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Swing Line Bank until the date such amount is paid to the Administrative
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Agent, at the Federal Funds Rate. If such Lender shall pay to the Administrative
Agent such amount for the account of the Swing Line Bank on any Business Day,
such amount so paid in respect of principal shall constitute a Swing Line
Advance made by such Lender on such Business Day for purposes of this Agreement,
and the outstanding principal amount of the Swing Line Advance made by the Swing
Line Bank shall be reduced by such amount on such Business Day.
(c) Anything in subsection (a) above to the contrary notwithstanding, (i)
the Borrower may not select Eurodollar Rate Advances for the initial Borrowing
hereunder and for the period from the date of such initial Borrowing to the
earlier of (x) three months from such date and (y) the completion of syndication
of the Facilities (as shall be specified by the Agents in a written notice to
the Borrower) or for any Borrowing if the aggregate amount of such Borrowing is
less than $5,000,000 or if the obligation of the Appropriate Lenders to make
Eurodollar Rate Advances shall then be suspended pursuant to Section 2.09 or
2.10 and (ii) with respect to Borrowings consisting of Eurodollar Rate Advances,
the Term Advances, the Acquisition Advances and the Revolving Credit Advances
may not be outstanding as part of more than six separate Borrowings in the
aggregate.
(d) Each Notice of Borrowing shall be irrevocable and binding on the
Borrower. In the case of any Borrowing that the related Notice of Borrowing
specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Appropriate Lender against any loss, cost or expense incurred by
such Lender as a result of any failure to fulfill on or before the date
specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice from an
Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's ratable portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) or (b) of this Section 2.02 and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have so
made such ratable portion available to the Administrative Agent, such Lender and
the Borrower severally agree to repay or pay to the Administrative Agent
forthwith on demand such corresponding amount and to pay interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid or paid to the Administrative Agent, at (i) in the
case of the Borrower, the interest rate applicable at such time under Section
2.07 to Advances comprising such Borrowing and (ii) in the case of such Lender,
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such corresponding amount, such amount so paid in respect of principal shall
constitute such Lender's Advance as part of such Borrowing for all purposes.
(f) The failure of any Lender to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Lender shall
be responsible for the failure of any other Lender to make the Advance to be
made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit. (a) Request for Issuance. Each Letter of Credit shall be issued upon
notice, given not later than 11:00 A.M.
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(New York City time) on the third Business Day prior to the date of the proposed
issuance of such Letter of Credit, by the Borrower to the Issuing Bank, which
shall give to the Administrative Agent prompt notice thereof by telex or
telecopier. Each such notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telex or telecopier, specifying therein the requested (A)
date of such issuance (which shall be a Business Day), (B) Available Amount of
such Letter of Credit, (C) expiration date of such Letter of Credit, (D) name
and address of the beneficiary of such Letter of Credit and (E) form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letter of credit as the Issuing Bank may specify to the Borrower for use in
connection with such requested Letter of Credit (a "Letter of Credit
Agreement"). If the requested form of such Letter of Credit is acceptable to the
Issuing Bank in its sole discretion, the Issuing Bank will, upon fulfillment of
the applicable conditions set forth in Article III, make such Letter of Credit
available to the Borrower at its office referred to in Section 8.02 or as
otherwise agreed with the Borrower in connection with such issuance. In the
event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with this Agreement, the provisions of this Agreement shall
govern. The letter of credit issued by BNP for the account of the Borrower under
a predecessor Credit Agreement shall be deemed to constitute a Letter of Credit
issued hereunder.
(b) Letter of Credit Reports. The Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each week a written
report summarizing issuance and expiration dates of Letters of Credit issued
during the previous week and drawings during such week under all Letters of
Credit, (B) to each Revolving Credit Lender on the first Business Day of each
calendar quarter a written report summarizing issuance and expiration dates of
Letters of Credit issued during the preceding calendar quarter and drawings
during such calendar quarter under all Letters of Credit and (C) to the
Administrative Agent and each Revolving Credit Lender on the first Business Day
of each calendar quarter a written report setting forth the average daily
aggregate Available Amount during the preceding calendar quarter of all Letters
of Credit.
(c) Drawing and Reimbursement. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. In the event of
any drawing under a Letter of Credit, the Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall promptly notify each
Revolving Credit Lender and each Revolving Credit Lender shall purchase from the
Issuing Bank, and the Issuing Bank shall sell and assign to each such Revolving
Credit Lender, such Lender's Pro Rata Share of such outstanding Letter of Credit
Advance as of the date of such purchase, by making available for the account of
its Applicable Lending Office to the Administrative Agent for the account of the
Issuing Bank, by deposit to the Administrative Agent's Account, in same day
funds, an amount equal to the portion of the outstanding principal amount of
such Letter of Credit Advance to be purchased by such Lender. Promptly after
receipt thereof, the Administrative Agent shall transfer such funds to the
Issuing Bank. The Borrower hereby agrees to each such sale and assignment. Each
Revolving Credit Lender agrees to purchase its Pro Rata Share of an outstanding
Letter of Credit Advance on (i) the Business Day on which notice of the drawing
under the related Letter of Credit is given by the Issuing Bank, provided such
notice is given not later than 1:00 P.M. (New York City time) on such Business
Day or (ii) the first Business Day next succeeding such demand if such notice is
given after such time. Upon any such assignment by the Issuing Bank to any other
Revolving Credit Lender of a portion of a Letter of Credit Advance, the Issuing
Bank represents and warrants to such other Lender that the Issuing Bank is the
legal and beneficial owner of such interest being assigned by it, free and clear
of any Liens, but makes no other representation or warranty and assumes no
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party. If and to the extent that any Revolving Credit Lender shall
not have so made the amount of such Letter of Credit Advance available to the
Administrative Agent, such Revolving
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Credit Lender agrees to pay to the Administrative Agent forthwith on demand such
amount together with interest thereon, for each day from the date of demand by
the Issuing Bank until the date such amount is paid to the Administrative Agent,
at the Federal Funds Rate for its account or the account of the Issuing Bank, as
applicable. If such Lender shall pay to the Administrative Agent such amount for
the account of the Issuing Bank on any Business Day, such amount so paid in
respect of principal shall constitute a Letter of Credit Advance made by such
Lender on such Business Day for purposes of this Agreement, and the outstanding
principal amount of the Letter of Credit Advance made by the Issuing Bank shall
be reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Advances. The
Borrower shall repay to the Administrative Agent for the ratable account of the
Term Lenders the aggregate outstanding principal amount of the Term Advances on
the following dates in the amounts indicated, determined as a percentage of the
aggregate amount of Term Advances outstanding on September 30, 1999 (which
amount shall be reduced as a result of the application of prepayments in
accordance with the order of priority set forth in Section 2.06):
Date Amount
---- ------
September 30, 1999 0.25%
December 31, 1999 0.25%
March 31, 2000 0.25%
June 30, 2000 0.25%
September 30, 2000 0.25%
December 31, 2000 0.25%
March 31, 2001 0.25%
June 30, 2001 0.25%
September 30, 2001 0.25%
December 31, 2001 0.25%
March 31, 2002 0.25%
June 30, 2002 0.25%
September 30, 2002 0.25%
December 31, 2002 0.25%
March 31, 2003 0.25%
June 30, 2003 0.25%
September 30, 2003 0.25%
December 31, 2003 0.25%
March 31, 2004 0.25%
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Date Amount
---- ------
June 30, 2004 0.25%
September 30, 2004 10.00%
December 31, 2004 10.00%
March 31, 2005 10.00%
June 30, 2005 10.00%
September 30, 2005 13.75%
December 31, 2005 13.75%
March 31, 2006 13.75%
June 30, 2006 13.75%
provided, however, that the final principal installment of the Term Facility
shall in any event and in each case be in an amount equal to the aggregate
principal amount of the Term Advances then outstanding.
(b) Acquisition Advances. The Borrower shall repay to the Administrative
Agent for the ratable account of the Acquisition Lenders the aggregate
outstanding principal amount of the Acquisition Advances on the following dates
in the amounts indicated, determined as a percentage of the aggregate amount of
Acquisition Advances outstanding on the Conversion Date (after giving effect to
any prepayments required by Section 2.06(b)(i) or (ii) and which amount shall be
reduced as a result of the application of further prepayments in accordance with
the order of priority set forth in the applicable paragraph of Section 2.06):
Date Amount
- ---- ------
March 31, 2000 3.75%
June 30, 2000 3.75%
September 30, 2000 3.75%
December 31, 2000 3.75%
March 31, 2001 3.75%
June 30, 2001 3.75%
September 30, 2001 5.00%
December 31, 2001 5.00%
March 31, 2002 5.00%
June 30, 2002 5.00%
September 30, 2002 5.625%
December 31, 2002 5.625%
March 31, 2003 5.625%
June 30, 2003 5.625%
September 30, 2003 8.750%
December 31, 2003 8.750%
March 31, 2004 8.750%
June 30, 2004 8.750%
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provided, however, that the final principal installment of the Acquisition
Facility shall in any event be in an amount equal to the aggregate principal
amount of the Acquisition Advances then outstanding.
(c) Revolving Credit Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Revolving Credit Lenders on
the Termination Date the aggregate outstanding principal amount of the Revolving
Credit Advances then outstanding.
(d) Swing Line Advances. The Borrower shall repay to the Administrative
Agent for the account of the Swing Line Bank and each other Revolving Credit
Lender that has made a Swing Line Advance the outstanding principal amount of
each Swing Line Advance made by each of them on the earlier of the maturity date
specified in the applicable Notice of Swing Line Borrowing (which maturity shall
be no later than the seventh day after the requested date of such Borrowing) and
the Termination Date.
(e) Letter of Credit Advances. (i) The Borrower shall repay to the
Administrative Agent for the account of the Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of the Termination Date and one Business Day after demand the outstanding
principal amount of each Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any Letter
of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of
Credit Agreement and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances:
(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(E) payment by the Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
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(F) any exchange, release or non-perfection of any Collateral
or other collateral, or any release or amendment or waiver of or
consent to departure from any guarantee, for all or any of the
Obligations of the Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a) Optional.
The Borrower may, upon at least five Business Days' notice to the Administrative
Agent, terminate in whole or reduce in part the unused portions of the Term
Commitments, the Swing Line Commitment and the Letter of Credit Facility, the
Unused Revolving Credit Commitments and the Unused Acquisition Commitments;
provided, however, that each partial reduction of a Facility (i) shall be in an
aggregate amount of $1,000,000 or an integral multiple of $500,000 in excess
thereof and (ii) shall be made ratably among the Appropriate Lenders in
accordance with their Commitments with respect to such Facility.
(b) Mandatory. (i) On the earlier of the Term Borrowings made in connection
with the CH Acquisition and July 30, 1998, after giving effect to each Term
Borrowing, and from time to time thereafter upon each repayment or prepayment of
the Term Advances, the aggregate Term Commitments of the Term Lenders shall be
automatically and permanently reduced, on a pro rata basis, by an amount equal
to the amount by which the aggregate Term Commitments immediately prior to such
reduction exceed the aggregate unpaid principal amount of the Term Advances then
outstanding.
(ii) Prior to the Conversion Date, the aggregate Acquisition Commitments of
the Acquisition Lenders shall be automatically and permanently reduced on the
date on which any prepayment is required to be made pursuant to Section
2.06(b)(i) or (ii) by an amount equal to the Acquisition Reduction Amount,
provided that each such reduction of the Acquisition Facility shall be made
ratably among the Acquisition Lenders in accordance with their Acquisition
Commitments. From and after the Conversion Date, the Acquisition Commitments of
the Acquisition Lenders shall be automatically and permanently reduced, on each
date on which prepayment thereof is required to be made pursuant to Section
2.06(b)(i) or (b)(ii) in an amount equal to the amount by which the aggregate
Acquisition Facility Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Acquisition Advances then outstanding,
provided that such reduction of the Acquisition Facility shall be made ratably
among the Acquisition Lenders in accordance with their Acquisition Commitments.
(iii) The Revolving Credit Facility shall be automatically and permanently
reduced on each date on which prepayment thereof is required to be made pursuant
to Section 2.06(b)(i) or (ii) in an amount equal to the applicable Reduction
Amount, provided that each such reduction of the Revolving Credit Facility shall
be made ratably among the Revolving Credit Lenders in accordance with their
Revolving Credit Commitments.
(iv) The Swing Line Facility and the Letter of Credit Facility shall each
be automatically and permanently reduced from time to time on the date of each
reduction in the Revolving Credit Facility by the amount, if any, by which each
such Facility exceeds the Revolving Credit Facility after giving effect to such
reduction of the Revolving Credit Facility.
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(v) Upon any payment by the Borrower (A) in respect of principal, or (B) in
respect of principal or interest during a Payment Blockage Period (as defined in
the Senior Subordinated Note Indenture), if no Term Advances shall be
outstanding the aggregate Commitments of the Lenders shall be automatically and
permanently reduced on a pro rata basis, by an amount equal to the amount by
which the aggregate commitments immediately prior to such payment exceed the
aggregate unpaid principal amount of the Advances then outstanding.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may, upon at least
one Business Day's notice in the case of Base Rate Advances and three Business
Days' notice in the case of Eurodollar Rate Advances, in each case to the
Administrative Agent (received not later than 11:00 A.M. (New York City time))
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of the Advances comprising part of the same Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the aggregate principal amount prepaid unless such prepayment is
with respect to a Swing Line Advance or a Revolving Credit Advance which is a
Base Rate Advance; provided, however, that (x) each partial prepayment (other
than prepayments of Swing Line Advances) shall be in an aggregate principal
amount of $1,000,000 or an integral multiple of $500,000 in excess thereof and
(y) if any prepayment of a Eurodollar Rate Advance shall be made other than on
the last day of an Interest Period therefor, the Borrower shall also pay any
amounts owing pursuant to Section 8.04(c). Each such prepayment of any Advances
shall be applied as follows:
first, ratably to the Term Advances and Acquisition Advances,
ratably to the principal installments of the Term Facility and, after
the Conversion Date to the Acquisition Facility,
second, to the extent that no Term Advances or Acquisition
Advances remain outstanding, permanently to reduce the Acquisition
Facility as set forth in Section 2.06(b)(vi), and
third, to the extent that no Term Advances remain outstanding
and the Acquisition Facility has been fully repaid and permanently
reduced in full, permanently to reduce the Revolving Credit Facility as
set forth in Section 2.06(b)(v).
(b) Mandatory. (i) The Borrower shall, no later than the 30th day
following the date on which it delivers the financial statements referred to in
Section 5.03(d) (but in any event within 120 days after the end of each Fiscal
Year), prepay an aggregate principal amount of the Advances comprising part of
the same Borrowings equal to the Recapture Percentage of the amount of Excess
Cash Flow for such Fiscal Year. Each such prepayment of any Advances shall be
applied as follows:
first, ratably to the Term Advances and Acquisition Advances,
ratably to the principal installments of the Term Facility and, after
the Conversion Date to the Acquisition Facility,
second, to the extent that no Term Advances or Acquisition
Advances remain outstanding, permanently to reduce the Acquisition
Facility as set forth in Section 2.06(b)(v), and
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third, to the extent that no Term Advances remain outstanding
and the Acquisition Facility has been fully repaid and permanently
reduced in full, permanently to reduce the Revolving Credit Facility as
set forth in Section 2.06(b)(v).
(ii) The Borrower shall, on the date of receipt of the Net Cash Proceeds by
any Loan Party or any of its Subsidiaries from (A) the sale, lease, transfer or
other disposition of any assets of any Loan Party or any of its Subsidiaries
(other than any sale, lease, transfer or other disposition of assets pursuant to
Section 5.02(d)), (B) the incurrence or issuance by any Loan Party or any of its
Subsidiaries of any Debt (other than Debt incurred or issued pursuant to Section
5.02(b)), (C) the sale or issuance by any Loan Party or any of its Subsidiaries
of any capital stock or other ownership or profit interest (including, without
limitation, any capital contribution), any securities convertible into or
exchangeable for capital stock or other ownership or profit interest or any
warrants, rights or options to acquire capital stock or other ownership or
profit interest other than the issuance of capital stock to members of
management pursuant to the Management Agreement in an amount not to exceed
$1,000,000 or (D) any Extraordinary Receipt received by or paid to or for the
account of MEDIQ, only with respect to tax refunds received by MEDIQ with
respect to taxes paid by the Borrower, any Loan Party or any of its Subsidiaries
and not otherwise included in clause (A), (B) or (C) above, prepay an aggregate
principal amount of the Advances comprising part of the same Borrowings equal to
the amount of such Net Cash Proceeds; provided, however that such prepayment
shall not be required so long as the aggregate amount of such Net Cash Proceeds
received by any Loan Party or any of its Subsidiaries in any Fiscal Year shall
not exceed $250,000. Each such prepayment shall be applied as follows:
first, ratably to the Term Advances and Acquisition Advances,
ratably to the principal installments of the Term Facility and, after
the Conversion Date to the Acquisition Facility,
second, to the extent that no Term Advances or Acquisition
Advances remain outstanding, permanently to reduce the Acquisition
Facility as set forth in Section 2.06(b)(vi), and
third, to the extent that no Term Advances remain outstanding
and the Acquisition Facility has been fully repaid and permanently
reduced in full, permanently to reduce the Revolving Credit Facility as
set forth in Section 2.06(b)(v).
(iii) The Borrower shall, on each Business Day, prepay an aggregate
principal amount of the Revolving Credit Advances comprising part of the same
Borrowings, the Swing Line Advances and the Letter of Credit Advances equal to
the amount by which (A) the sum of the aggregate principal amount of (x) the
Revolving Credit Advances, (y) the Swing Line Advances and (z) the Letter of
Credit Advances then outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding exceeds (B) the lesser of the Revolving
Credit Facility and the Loan Value of Eligible Collateral on such Business Day
(as determined based on the most recent Borrowing Base Certificate delivered to
the Lender Parties hereunder).
(iv) The Borrower shall, on each Business Day, pay to the Administrative
Agent for deposit in the L/C Cash Collateral Account an amount sufficient to
cause the aggregate amount on deposit in such Account to equal the amount by
which the aggregate Available Amount of all Letters of Credit then outstanding
exceeds the Letter of Credit Facility on such Business Day.
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(v) Prepayments of the Revolving Credit Facility made pursuant to clause
(i), (ii) or (iii) above shall be applied first ratably to prepay Swing Line
Advances and Letter of Credit Advances then outstanding until such Advances are
paid in full, second to prepay Revolving Credit Advances then outstanding
comprising part of the same Borrowings until such Advances are paid in full and
third deposited in the L/C Cash Collateral Account to cash collateralize 100% of
the Available Amount of the Letters of Credit then outstanding; and, in the case
of prepayments of the Revolving Credit Facility required pursuant to clause (i)
or (ii) above, the amount remaining (if any) after the prepayment in full of the
Revolving Credit Advances then outstanding and the cash collateralization of the
aggregate Available Amount of Letters of Credit then outstanding (the sum of
such prepayment amounts, cash collateralization amounts and remaining amount
being referred to herein as the "Reduction Amount") may be retained by the
Borrower and the Revolving Credit Facility shall be permanently reduced as set
forth in Section 2.05(b)(iii). Upon the drawing of any Letter of Credit for
which funds are on deposit in the L/C Cash Collateral Account, such funds shall
be applied to reimburse the Issuing Bank or Revolving Credit Lenders, as
applicable.
(vi) Prior to the Conversion Date, prepayments of the Acquisition Facility
pursuant to Section 2.06(b)(i) or (ii) shall be applied to prepay Acquisition
Advances then outstanding comprising part of the same Borrowings until such
Acquisition Advances are paid in full and the amount remaining (if any) after
the prepayment in full of the Acquisition Advances then outstanding (the sum of
such prepayment amounts and the remaining amount not required to prepay the
Acquisition Advances being referred to herein as the "Acquisition Reduction
Amount") shall be applied in accordance with Section 2.06(b)(v). In addition,
the Acquisition Facility shall be permanently reduced as set forth in Section
2.05(b)(ii).
(vii) Anything contained in this Section 2.06(b) to the contrary
notwithstanding, (A) if, following the occurrence of any "Asset Disposition" (as
such term is defined in either the Discount Debenture Indenture or the Senior
Subordinated Note Indenture) by any Loan Party or any of its Subsidiaries, the
Borrower is required to commit by a particular date (a "Payment Commitment
Date") to apply or cause its Subsidiaries to apply an amount equal to any of the
"Net Available Cash" (as defined in either such Indenture, as the case may be)
thereof in a particular manner, or to apply by a particular date (an
"Application Date") an amount equal to any such "Net Available Cash" in a
particular manner, in either case in order to excuse the Borrower from being
required to make an offer to the holders of the Senior Subordinated Notes or the
Discount Debentures pursuant to the Senior Subordinated Note Indenture or the
Discount Debenture Indenture, as the case may be, (an "Asset Sale Offer") in
connection with such "Asset Disposition," and the Borrower shall have failed to
so commit or to so apply an amount equal to such "Net Available Cash" at least
30 days before the applicable Payment Commitment Date or Application Date, as
the case may be, or (B) if the Borrower at any other time shall have failed to
apply or commit or cause to be applied an amount equal to any such "Net
Available Cash," and, within 30 days thereafter assuming no further application
or commitment of an amount equal to such "Net Available Cash" the Borrower would
otherwise be required to make an Asset Sale Offer in respect thereof, then in
either such case the Borrower shall immediately apply or cause to be applied an
amount equal to such "Net Available Cash" to the payment of the Advances in the
manner set forth in Section 2.06(b)(ii) in such amounts as shall excuse the
Borrower from making any such Asset Sale Offer.
(viii) All prepayments under this subsection (b) shall be made together
with accrued interest to the date of such prepayment on the principal amount
prepaid, together with any amounts owing pursuant to Section 8.04(c).
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(c) Term Opt-Out. With respect to any prepayment of the Term Advances, the
Administrative Agent shall ratably pay the Term Lenders; provided, however, that
any Term Lender, at its option, to the extent that any Term Advances are then
outstanding, may elect not to accept such prepayment (such Lender being a
"Declining Lender"), in which event the provisions of the next sentence shall
apply. On the prepayment date, an amount equal to that portion of the prepayment
amount available to prepay Term Lenders (less any amounts that would otherwise
be payable to Declining Lenders) shall be applied ratably to prepay Term
Advances (and, following the Conversion Date, Acquisition Advances) owing to
Term Lenders other than Declining Lenders (and, following the Conversion Date,
Acquisition Lenders) and any amounts that would otherwise have been applied to
prepay Term Advances owing to Declining Lenders shall instead be applied ratably
to prepay the remaining Term Advances (and Acquisition Advances) as provided in
Sections 2.06(a) and (b); provided further that on prepayment in full of Term
Advances owing to Term Lenders other than Declining Lenders (and, following the
Conversion Date, Acquisition Advances owing to Acquisition Lenders), the
remainder of any prepayment amount shall be applied ratably to prepay Term
Advances owing to Declining Lenders. Any Term Lender may elect not to accept its
ratable share of the prepayment referred to in any Prepayment Notice by giving
written notice to the Administrative Agent not later than 11:00 A.M. (New York
City time) on the Business Day immediately preceding the scheduled prepayment
date.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower shall pay
interest on the unpaid principal amount of each Advance owing to each Lender
from the date of such Advance until such principal amount shall be paid in full,
at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time plus (B) the Applicable
Margin in effect from time to time, payable in arrears on March 31,
June 30, September 30 and December 31 during such periods, on the date
such Base Rate Advance shall be Converted, on the date of any
prepayment thereof to the extent required under Section 2.06 and on the
Termination Date, commencing June 30, 1998.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Interest Period for such Advance plus (B)
the Applicable Margin, payable in arrears on the last day of such
Interest Period and, if such Interest Period has a duration of more
than three months, on each day that occurs during such Interest Period
every three months from the first day of such Interest Period and on
the date such Eurodollar Rate Advance shall be Converted or paid in
full.
(b) Default Interest. Upon the occurrence and during the continuance of any
Event of Default, the Administrative Agent may, and upon the request of the
Required Lenders shall, require that the Borrower pay interest on (i) the unpaid
principal amount of each Advance owing to each Lender, payable in arrears on the
dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per
annum equal at all times to 2% per annum above the rate per annum required to be
paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable under the Loan Documents that is not paid when due, from the date such
amount shall be due until such amount shall be paid in full, payable in arrears
on the date such amount shall be paid in full and on demand, at a rate per annum
equal at all times to 2% per annum above the rate per annum required to be paid,
in the case of
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interest, on the Type of Advance on which such interest has accrued pursuant to
clause (a)(i) or (a)(ii) above, and, in all other cases, on Base Rate Advances
pursuant to clause (a)(i) above; provided, however, that following acceleration
of the Advances pursuant to Section 6.01, interest shall accrue and be payable
at the rate required by this Section 2.07(b), whether or not requested by the
Administrative Agent or the Required Lenders. In addition, following a final
judgment with respect to any Obligation of the Loan Parties under the Loan
Documents, interest shall accrue at the higher of the statutory judgment rate or
the rate specified in the preceding sentence, payable on demand.
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay to the
Administrative Agent for the account of the Lenders a commitment fee, from the
date hereof in the case of each Initial Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Termination Date, payable in arrears
on March 31, June 30, September 30 and December 31, commencing June 30, 1998,
and on the Termination Date, at the rate per annum equal to the Applicable
Percentage in effect from time to time on the average daily unused portion of
each Appropriate Lender's Term Commitment and on the average daily unused
Acquisition Commitment (prior to the Conversion Date) and on the average daily
Unused Revolving Credit Commitment of such Lender; provided, however, that any
commitment fee accrued with respect to any of the Commitments of a Defaulting
Lender during the period prior to the time such Lender became a Defaulting
Lender and unpaid at such time shall not be payable by the Borrower so long as
such Lender shall be a Defaulting Lender except to the extent that such
commitment fee shall otherwise have been due and payable by the Borrower prior
to such time; and provided further that no commitment fee shall accrue on any of
the Commitments of a Defaulting Lender so long as such Lender shall be a
Defaulting Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears on March 31, June 30, September 30 and December
31, commencing June 30, 1998, and on the Termination Date, on such Lender's Pro
Rata Share of the average daily aggregate Available Amount during such quarter
of all Letters of Credit outstanding from time to time at the Applicable Margin
for Eurodollar Rate Advances under the Revolving Credit Facility.
(ii) The Borrower shall pay to the Issuing Bank, for its own account, such
commissions, issuance fees, fronting fees, transfer fees and other fees and
charges in connection with the issuance or administration of each Letter of
Credit as the Borrower and the Issuing Bank shall agree.
(c) Agents' Fees. The Borrower shall pay to each Agent for its own account
such fees as may from time to time be agreed between the Borrower and such
Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The Borrower may on any
Business Day, upon notice given to the Administrative Agent not later than 11:00
A.M. (New York City time) on the third Business Day prior to the date of the
proposed Conversion and subject to the provisions of Section 2.10, Convert all
or any portion of the Advances of one Type comprising the same Borrowing into
Advances of the other Type; provided, however, that (w) if any Conversion of
Eurodollar Rate Advances into Base Rate Advances is made other than on the last
day of an Interest Period for such Eurodollar Rate Advances the Borrower shall
also pay any amounts owing pursuant to Section 8.04(c), (x) any Conversion of
Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less
than the minimum amount specified in Section 2.02(c), (y) no Conversion of any
Advances shall result in more separate Borrowings than permitted under Section
2.02(c) and
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(z) each Conversion of Advances comprising part of the same Borrowing under any
Facility shall be made ratably among the Appropriate Lenders in accordance with
their Commitments under such Facility. Each such notice of Conversion shall,
within the restrictions specified above, specify (i) the date of such
Conversion, (ii) the Advances to be Converted and (iii) if such Conversion is
into Eurodollar Rate Advances, the duration of the initial Interest Period for
such Advances. Each notice of Conversion shall be irrevocable and binding on the
Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid principal
amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any Interest
Period for any Eurodollar Rate Advances in accordance with the provisions
contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
(iii) Upon the occurrence and during the continuance of any Event of
Default and upon notice from the Administrative Agent to the Borrower, (x) each
Eurodollar Rate Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Base Rate Advance and (y) the
obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining or participating in Letters of Credit or of
agreeing to make or of making or maintaining Letter of Credit Advances
(excluding for purposes of this Section 2.10 any such increased costs resulting
from (i) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (ii)
changes in the basis of taxation of overall net income or overall gross income
by the United States or by the foreign jurisdiction or state under the laws of
which such Lender Party is organized or has its Applicable Lending Office or any
political subdivision thereof), then the Borrower shall from time to time, upon
demand by such Lender Party (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender Party
additional amounts sufficient to compensate such Lender Party for such increased
cost. A certificate as to the amount of such increased cost, submitted to the
Borrower by such Lender Party, showing in reasonable detail the calculations
used to comprise said increased cost, shall be conclusive and binding for all
purposes, absent manifest error.
(b) If any Lender Party determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue or participate in Letters of
Credit hereunder and other commitments of such type or the issuance or
maintenance of or participation in the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party (with a copy of such demand
to the Administrative Agent), the Borrower shall pay to the Administrative Agent
for the account of such
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Lender Party, from time to time as specified by such Lender Party, additional
amounts sufficient to compensate such Lender Party in the light of such
circumstances, to the extent that such Lender Party reasonably determines such
increase in capital to be allocable to the existence of such Lender Party's
commitment to lend or to issue or participate in Letters of Credit hereunder or
to the issuance or maintenance of or participation in any Letters of Credit. A
certificate, showing in reasonable detail the calculations used to comprise said
increased cost, as to such amounts submitted to the Borrower by such Lender
Party shall be conclusive and binding for all purposes, absent manifest error.
Each Lender will determine the amount of any additional compensation requested
under this Section 2.10(b) on a basis consistent with that on which it requests
additional compensation from other similar borrowers with whom it has an
agreement similar to the agreement contained in this Section 2.10(b).
(c) If, with respect to any Eurodollar Rate Advances under any Facility,
Lenders owed at least 50% of the then aggregate unpaid principal amount thereof
notify the Administrative Agent that the Eurodollar Rate for any Interest Period
for such Advances will not adequately reflect the cost to such Lenders of
making, funding or maintaining their Eurodollar Rate Advances for such Interest
Period, the Administrative Agent shall forthwith so notify the Borrower and the
Appropriate Lenders, whereupon (i) each such Eurodollar Rate Advance under any
Facility will automatically, on the last day of the then existing Interest
Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lenders have determined that the circumstances causing such
suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if the
introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar Rate Advances hereunder,
then, on notice thereof and demand therefor by such Lender to the Borrower
through the Administrative Agent, (i) each Eurodollar Rate Advance under each
Facility under which such Lender has a Commitment will automatically, upon such
demand, Convert into a Base Rate Advance and (ii) the obligation of the
Appropriate Lenders to make, or to Convert Advances into, Eurodollar Rate
Advances shall be suspended until the Administrative Agent shall notify the
Borrower that such Lender has determined that the circumstances causing such
suspension no longer exist.
SECTION 2.11. Payments and Computations. (a) The Borrower shall make each
payment hereunder irrespective of any right of counterclaim or set-off (except
as otherwise provided in Section 2.15), not later than 11:00 A.M. (New York City
time) on the day when due in U.S. Dollars to the Administrative Agent at the
Administrative Agent's Account in same day funds, with payments being received
by the Administrative Agent after such time being deemed to have been received
on the next succeeding Business Day. The Administrative Agent will promptly
thereafter cause like funds to be distributed (i) if such payment by the
Borrower is in respect of principal, interest, commitment fees or any other
Obligation then payable hereunder to more than one Lender Party, to such Lender
Parties for the account of their respective Applicable Lending Offices ratably
in accordance with the amounts of such respective Obligations then payable to
such Lender Parties and (ii) if such payment by the Borrower is in respect of
any Obligation then payable hereunder to one Lender Party, to such Lender Party
for the account of its Applicable Lending Office, in each case to be applied in
accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in
the Register pursuant to Section 8.07(d), from and after the effective date of
such Assignment and Acceptance, the Administrative Agent shall make all payments
hereunder in respect of the
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interest assigned thereby to the Lender Party assignee thereunder, and the
parties to such Assignment and Acceptance shall make all appropriate adjustments
in such payments for periods prior to such effective date directly between
themselves.
(b) If the Administrative Agent receives funds for application to the
Obligations under the Loan Documents under circumstances for which the Loan
Documents do not specify the Advances or the Facility to which, or the manner in
which, such funds are to be applied, the Administrative Agent may, but shall not
be obligated to, elect, with the consent of the Borrower which shall not
unreasonably be withheld, to distribute such funds to each Lender Party ratably
in accordance with such Lender Party's proportionate share of the principal
amount of all outstanding Advances and the Available Amount of all Letters of
Credit then outstanding, in repayment or prepayment of such of the outstanding
Advances or other Obligations owed to such Lender Party, and for application to
such principal installments, as the Administrative Agent shall direct.
(c) After an Event of Default, the Borrower hereby authorizes each Lender
Party, if and to the extent payment owed to such Lender Party is not made when
due hereunder to charge from time to time against any or all of the Borrower's
accounts with such Lender Party any amount so due.
(d) All computations of interest, fees and Letter of Credit commissions
shall be made by the Administrative Agent on the basis of (x) with respect to
the Base Rate, a year of 365 days and (y) for all other purposes, a year of 360
days, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest, fees or
commissions are payable. Each determination by the Administrative Agent of an
interest rate, fee or commission hereunder shall be conclusive and binding for
all purposes, absent manifest error.
(e) Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of payment of interest or commitment fee, as the case may be;
provided, however, that, if such extension would cause any payment to be made in
the next following calendar month, such payment shall be made on the next
preceding Business Day and such adjustment of time shall in such case be
reflected in the computation of payment of interest or commitment fee, as the
case may be.
(f) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to any Lender Party
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each such Lender Party
on such due date an amount equal to the amount then due such Lender Party. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each such Lender Party shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
Party together with interest thereon, for each day from the date such amount is
distributed to such Lender Party until the date such Lender Party repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower hereunder
shall be made, in accordance with Section 2.11, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case
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of each Lender Party and the Administrative Agent, taxes that are imposed on its
overall net income by the United States and taxes that are imposed on its
overall net income (and franchise taxes in lieu thereof) by the state or foreign
jurisdiction under the laws of which such Lender Party or the Administrative
Agent (as the case may be) is organized or any political subdivision thereof
and, in the case of each Lender Party, taxes that are imposed on its overall net
income (and franchise taxes in lieu thereof) by the state or foreign
jurisdiction of such Lender Party's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder to any Lender Party or the Administrative Agent,
(i) the sum payable by the Borrower shall be increased as may be necessary so
that after the Borrower and the Administrative Agent have made all required
deductions (including deductions applicable to additional sums payable under
this Section 2.12) such Lender Party or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make all such deductions and (iii)
the Borrower shall pay the full amount deducted to the relevant taxation
authority or other governmental authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or from the execution, delivery or registration
of, performance under, or otherwise with respect to this Agreement (hereinafter
referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and the Administrative
Agent for and hold it harmless against the full amount of Taxes and Other Taxes,
and for the full amount of taxes of any kind imposed by any jurisdiction on
amounts payable under this Section 2.12, paid by such Lender Party or the
Administrative Agent (as the case may be) and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
such Lender Party or the Administrative Agent (as the case may be) makes written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to the Administrative Agent, at its address referred to in Section
8.02, the original or a certified copy of a receipt evidencing such payment. In
the case of any payment hereunder by or on behalf of the Borrower through an
account or branch outside the United States or on behalf of the Borrower by a
payor that is not a United States person, if the Borrower determines that no
Taxes are payable in respect thereof, the Borrower shall furnish, or shall cause
such payor to furnish, to the Administrative Agent, at such address, an opinion
of counsel acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of subsections (d) and (e) of this Section 2.12,
the terms "United States" and "United States person" shall have the meanings
specified in Section 7701 of the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a jurisdiction outside
the United States shall, on or prior to the date of its execution and delivery
of this Agreement in the case of each Initial Lender or Initial Issuing Bank, as
the case may be, and on the date of the Assignment and Acceptance pursuant to
which it becomes a Lender Party in the case of each other Lender Party, and from
time to time thereafter if requested in writing by the Borrower or the
Administrative Agent (but only so long thereafter as such Lender Party remains
lawfully able to do so), provide the Administrative Agent and the Borrower, if
such Lender Party is a "bank" within the meaning of Section 881(c)(3)(A) of the
Code, with Internal Revenue Service form 1001 or 4224, as
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appropriate, or any successor form prescribed by the Internal Revenue Service,
or (in the case of Lender Party that is claiming exemption from United States
withholding tax under Section 871(h) or 881(c) of the Internal Revenue Code with
respect to payments of "portfolio interest") two accurate and complete signed
original Forms W-8 or any successor form prescribed by the Internal Revenue
Service (and, if such Lender Party delivers Forms W-8, two signed certificates
certifying that such Lender Party is not (i) a "bank" for purposes of Section
881(c) of the Internal Revenue Code, (ii) is not a 10-percent shareholder
(within the meaning of Section 871(h)(3)(B) of the Internal Revenue Code) of the
Borrower, (iii) is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Internal Revenue Code) and (iv)
is not a conduit entity participating in a conduit financing arrangement (as
defined in Treasury Regulation Section 1.881-3) certifying that such Lender
Party is exempt from or is entitled to a reduced rate of United States
withholding tax on payments under this Agreement, or in the case of a Lender
Party providing Forms W-8, certifying that such Lender Party is a foreign
corporation, partnership or trust. If the forms provided by a Lender Party at
the time such Lender Party first becomes a party to this Agreement indicate a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from Taxes unless and until such
Lender Party provides the appropriate forms certifying that a lesser rate
applies, whereupon withholding tax at such lesser rate only shall be considered
excluded from Taxes for periods governed by such forms; provided, however, that,
if at the date of the Assignment and Acceptance pursuant to which a Lender Party
becomes a party to this Agreement, the Lender Party assignor was entitled to
payments under subsection (a) of this Section 2.12 in respect of United States
withholding tax with respect to interest paid at such date, then, to such
extent, if applicable to the Lender Party Assignee, the term Taxes shall include
(in addition to withholding taxes that may be imposed in the future or other
amounts otherwise includable in Taxes) United States withholding tax, if any,
applicable with respect to the Lender Party assignee on such date. If any form
or document referred to in this subsection (e) requires the disclosure of
information, other than information necessary to compute the tax payable and
information required on the date hereof by Internal Revenue Service form 1001 or
4224 or W-8 (or the related certificate described above), that the Lender Party
reasonably considers to be confidential, the Lender Party shall give notice
thereof to the Borrower and shall not be obligated to include in such form or
document such confidential information.
(f) For any period with respect to which a Lender Party has failed to
provide the Borrower with the appropriate form described in subsection (e) above
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under subsection (e) above), such Lender Party shall not be
entitled to indemnification under subsection (a) or (c) of this Section 2.12
with respect to Taxes imposed by the United States; provided, however, that
should a Lender Party become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrower shall take such steps as such Lender
Party shall reasonably request at such Lender Party's expense to assist such
Lender Party to recover such Taxes.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party shall obtain at
any time any payment (whether voluntary, involuntary, through the exercise of
any right of set-off, or otherwise, other than as a result of an assignment
pursuant to Section 8.07) (a) on account of Obligations due and payable to such
Lender Party hereunder at such time in excess of its ratable share (according to
the proportion of (i) the amount of such Obligations due and payable to such
Lender Party at such time to (ii) the aggregate amount of the Obligations due
and payable to all Lender Parties hereunder at such time) of payments on account
of the Obligations due and payable to all Lender Parties hereunder at such time
obtained by all the Lender Parties at such time or (b) on account of Obligations
owing (but not due and payable) to such Lender Party hereunder at such time in
excess
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of its ratable share (according to the proportion of (i) the amount of such
Obligations owing to such Lender Party at such time to (ii) the aggregate amount
of the Obligations owing (but not due and payable) to all Lender Parties
hereunder at such time) of payments on account of the Obligations owing (but not
due and payable) to all Lender Parties hereunder at such time obtained by all of
the Lender Parties at such time, such Lender Party shall forthwith purchase from
the other Lender Parties such interests or participating interests in the
Obligations due and payable or owing to them, as the case may be, as shall be
necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such Lender Party's ratable share (according to the proportion of (i)
the purchase price paid to such Lender Party to (ii) the aggregate purchase
price paid to all Lender Parties) of such recovery together with an amount equal
to such Lender Party's ratable share (according to the proportion of (i) the
amount of such other Lender Party's required repayment to (ii) the total amount
so recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the purchasing Lender Party in respect of the total amount so
recovered; provided further that, so long as the Obligations under the Loan
Documents shall not have been accelerated, any excess payment received by any
Appropriate Lender shall be shared on a pro rata basis only with other
Appropriate Lenders. The Borrower agrees that any Lender Party so purchasing a
participation from another Lender Party pursuant to this Section 2.13 may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender Party were the direct creditor of the Borrower in the amount of
such participation.
SECTION 2.14. Use of Proceeds. The proceeds of the Advances and issuances
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely as follows:
(a) from Term Advances, to finance, in part, the Recapitalization, the
Merger and the Investment permitted by Section 5.02(e)(ii)(E), to refinance
the Refinancing Debt and to pay transaction fees and expenses in connection
therewith and with the financing contemplated by the Loan Documents;
(b) from Revolving Credit Advances, to finance working capital
requirements of the Borrower and its wholly owned U.S. Subsidiaries and for
other general corporate purposes permitted by the Loan Documents, including
Investments permitted by Section 5.02(e)(ii); and
(c) from Acquisition Advances, to finance from time to time all or a
portion of Investments permitted by Section 5.02(e)(ii)(B), (F) and (G) and
to pay transaction fees and expenses in connection therewith.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at any one time,
(i) any Lender Party shall be a Defaulting Lender, (ii) such Defaulting Lender
shall owe a Defaulted Advance to the Borrower and (iii) the Borrower shall be
required to make any payment hereunder or under any other Loan Document to or
for the account of such Defaulting Lender, then the Borrower may, so long as no
Default shall occur or be continuing at such time and to the fullest extent
permitted by applicable law, set off and otherwise apply the Obligation of the
Borrower to make such payment to or for the account of such Defaulting Lender
against the obligation of such Defaulting Lender to make such Defaulted Advance.
In the event that, on any date, the Borrower shall so set off and otherwise
apply its obligation to make any such payment against the obligation
of such Defaulting Lender
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to make any such Defaulted Advance on or prior to such date, the amount so set
off and otherwise applied by the Borrower shall constitute for all purposes of
this Agreement and the other Loan Documents an Advance by such Defaulting Lender
made on the date of such set off under the Facility pursuant to which such
Defaulted Advance was originally required to have been made pursuant to Section
2.01. Such Advance shall be considered, for all purposes of this Agreement, to
comprise part of the Borrowing in connection with which such Defaulted Advance
was originally required to have been made pursuant to Section 2.01, even if the
other Advances comprising such Borrowing shall be Eurodollar Rate Advances on
the date such Advance is deemed to be made pursuant to this subsection (a). The
Borrower shall notify the Administrative Agent at any time the Borrower
exercises its right of set-off pursuant to this subsection (a) and shall set
forth in such notice (A) the name of the Defaulting Lender and the Defaulted
Advance required to be made by such Defaulting Lender and (B) the amount set off
and otherwise applied in respect of such Defaulted Advance pursuant to this
subsection (a). Any portion of such payment otherwise required to be made by the
Borrower to or for the account of such Defaulting Lender which is paid by the
Borrower, after giving effect to the amount set off and otherwise applied by the
Borrower pursuant to this subsection (a), shall be applied by the Administrative
Agent as specified in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted Amount to
the Administrative Agent or any of the other Lender Parties and (iii) the
Borrower shall make any payment hereunder or under any other Loan Document to
the Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) first, to the Administrative Agent for any Defaulted Amounts then
owing to the Administrative Agent, ratably in accordance with such
respective Defaulted Amounts then owing to the Administrative Agent; and
(ii) second, to the Issuing Bank and the Swing Line Bank for any
Defaulted Amounts then owing to them, in their capacities as such, ratably
in accordance with such respective Defaulted Amounts then owing to such
Issuing Bank and such Swing Line Bank; and
(iii) third, to any other Lender Parties for any Defaulted Amounts
then owing to such other Lender Parties, ratably in accordance with such
respective Defaulted Amounts then owing to such other Lender Parties.
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Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party shall be a
Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted Advance
or a Defaulted Amount and (iii) the Borrower, the Administrative Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with the Administrative Agent, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be the
Administrative Agent's standard terms applicable to escrow accounts maintained
with it. Any interest credited to such account from time to time shall be held
by the Administrative Agent in escrow under, and applied by the Administrative
Agent from time to time in accordance with the provisions of, this subsection
(c). The Administrative Agent shall, to the fullest extent permitted by
applicable law, apply all funds so held in escrow from time to time to the
extent necessary to make any Advances required to be made by such Defaulting
Lender and to pay any amount payable by such Defaulting Lender hereunder and
under the other Loan Documents to the Administrative Agent or any other Lender
Party, as and when such Advances or amounts are required to be made or paid and,
if the amount so held in escrow shall at any time be insufficient to make and
pay all such Advances and amounts required to be made or paid at such time, in
the following order of priority:
(i) first, to the Administrative Agent for any amounts then due and
payable by such Defaulting Lender to the Administrative Agent hereunder,
ratably in accordance with such amounts then due and payable to the
Administrative Agent;
(ii) second, to the Issuing Bank and the Swing Line Bank for any
amounts then due and payable to them hereunder, in their capacities as
such, by such Defaulting Lender, ratably in accordance with such amounts
then due and payable to such Issuing Bank and such Swing Line Bank;
(iii) third, to any other Lender Parties for any amount then due and
payable by such Defaulting Lender to such other Lender Parties hereunder,
ratably in accordance with such respective amounts then due and payable to
such other Lender Parties; and
(iv) fourth, to the Borrower for any Advance then required to be made
by such Defaulting Lender pursuant to a Commitment of such Defaulting
Lender.
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
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(d) The rights and remedies against a Defaulting Lender under this Section
2.15 are in addition to other rights and remedies that the Borrower may have
against such Defaulting Lender with respect to any Defaulted Advance and that
any Agent or any Lender Party may have against such Defaulting Lender with
respect to any Defaulted Amount.
SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in
accordance with its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each Advance owing to
such Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time hereunder. The Borrower agrees
that upon notice by any Lender Party to the Borrower (with a copy of such notice
to the Administrative Agent) to the effect that a Note is required or
appropriate in order for such Lender to evidence (whether for purposes of
pledge, enforcement or otherwise) the Advances owing to, or to be made by, such
Lender Party, the Borrower shall promptly execute and deliver to such Lender an
Acquisition Note, a Term Note or a Revolving Credit Note, as applicable, payable
to the order of such Lender Party in a principal amount equal to the Acquisition
Commitment, Term Commitment or Revolving Credit Commitment, respectively, of
such Lender Party. All references to Notes in the Loan Documents shall mean
Notes, if any, to the extent issued hereunder.
(b) The Register maintained by the Administrative Agent pursuant to Section
8.07(d) shall include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded (i) the date and
amount of each Borrowing made hereunder, the Type of Advances comprising such
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it, (iii)
the amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender Party hereunder, and (iv) the amount of
any sum received by the Administrative Agent from the Borrower hereunder and
each Lender Party's share thereof.
(c) Entries made in good faith by the Administrative Agent in the Register
pursuant to subsection (b) above, and by each Lender Party in its account or
accounts pursuant to subsection (a) above, shall be prima facie evidence of the
amount of principal and interest due and payable or to become due and payable
from the Borrower to, in the case of the Register, each Lender Party and, in the
case of such account or accounts, such Lender Party, under this Agreement,
absent manifest error; provided, however, that the failure of the Administrative
Agent or such Lender Party to make an entry, or any finding that an entry is
incorrect, in the Register or such account or accounts shall not limit or
otherwise affect the obligations of the Borrower under this Agreement.
(d) References herein to Notes shall mean and be references to the
Acquisition Notes, the Term Notes and the Revolving Credit Notes, unless
otherwise specifically indicated, in each case to the extent issued hereunder.
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ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of Credit. The
obligation of each Lender to make an Advance on the occasion of the Initial
Extension of Credit hereunder is subject to the satisfaction of the following
conditions precedent before or concurrently with the Initial Extension of
Credit:
(a) The Merger Agreement shall be in full force and effect and the
Recapitalization and the Merger shall have been consummated strictly in
accordance with all applicable law and with the terms and conditions of the
Merger Agreement, the Rollover Agreement and the Stockholders Agreements,
without any waiver or amendment not consented to by the Agents and the
Lender Parties of any term, provision or condition set forth therein, and
in compliance with all applicable laws, and the Administrative Agent shall
have received certified copies of a certificate of merger or other
confirmation from the Secretary of State of the State of Delaware of the
consummation of the Merger.
(b) The Lender Parties shall be satisfied (i) with the corporate and
legal structure and capitalization of the Loan Parties, both before and
after giving effect to the Recapitalization, including the terms and
conditions of the charter, bylaws and each class of capital stock of the
Loan Parties and of each agreement or instrument relating to such structure
or capitalization, (ii) that the amount of committed equity and debt
financing shall be sufficient to meet the financing requirements of the
Merger, the Recapitalization and the other transactions contemplated
thereby, (iii) with the terms and conditions of the Loan Documents and the
Related Documents and (iv) that the assets and earnings of the Borrower are
sufficient to support the Obligations of the Borrower under this Agreement
and the timely amortization of all Indebtedness and other Obligations of
the Borrower.
(c) Before and after giving effect to the Merger, the Recapitalization
and the other transactions contemplated by this Agreement, there shall have
occurred no Material Adverse Change since September 30, 1997.
(d) (x) MEDIQ shall have received at least $109,500,000 in gross cash
proceeds from the issuance of common and preferred stock to its equity
investors, $1,763,000 in gross cash proceeds from the issuance of common
and preferred stock to the equity holders of MEDIQ that are members of
management and an additional $14,500,000 in Rolled Shares and (y) evidence
that Thomas E. Carroll shall have entered into an unconditional
undertaking, for the benefit of the Lender Parties, dated the date hereof,
to purchase common and preferred shares of MEDIQ no later than June 8, 1998
in an amount equal to $2,437,000 minus any amounts contributed by members
of management of MEDIQ (other than Thomas E. Carroll and Jay M. Kaplan with
respect to purchases made on the date hereof) to purchase common and
preferred shares of MEDIQ prior to such date pursuant to the Investor
Management Agreement to be entered into among certain members of management
of MEDIQ.
(e) MEDIQ shall have received at least $75,000,000 in gross cash
proceeds from the sale of the Discount Debentures.
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(f) The Borrower shall have received at least $190,000,000 in gross
cash proceeds from the sale of the Senior Subordinated Notes and the
Borrower shall have advanced sufficient funds to MEDIQ to consummate the
Merger.
(g) There shall exist no action, suit, investigation, litigation or
proceeding affecting the Company or any Loan Party or any of their
Subsidiaries pending or threatened before any court, governmental agency or
arbitrator that (i) could reasonably be expected to have a Material Adverse
Effect or (ii) purports to affect the legality, validity or enforceability
of the Merger, the Recapitalization, this Agreement, any Note, any other
Loan Document, any Related Document or the consummation of the transactions
contemplated hereby.
(h) The Lender Parties shall have been given such access to the
management, records, books of account, contracts and properties of the
Company and its Subsidiaries as they shall have requested.
(i) The Existing Debt, other than the Debt identified on Schedule
3.01(i) (the "Surviving Debt"), has been prepaid, redeemed or defeased in
full or otherwise satisfied and extinguished and that all such Surviving
Debt shall be on terms and conditions satisfactory to the Lender Parties.
(j) All accrued fees and expenses of the Administrative Agent and the
Lender Parties (including the accrued fees and expenses of counsel to the
Administrative Agent and of local counsel to the Lender Parties) shall have
been paid.
(k) The Administrative Agent shall have received on or before the day
of the Initial Extension of Credit the following, each dated such day
(unless otherwise specified), in form and substance satisfactory to the
Administrative Agent (unless otherwise specified) and (except for any
Notes) in sufficient copies for each Lender Party:
(i) Notes payable to the order of the Lenders to the extent
requested by any Lender pursuant to Section 2.16.
(ii) Certified copies of the resolutions of the Board of
Directors of the Company and each Loan Party approving the Merger, the
Recapitalization, this Agreement, the Notes, each other Loan Document
and each Related Document to which it is or is to be a party, and of
all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Merger, the
Recapitalization, this Agreement, any Notes, each other Loan Document
and each Related Document and of the transactions contemplated hereby.
(iii) A copy of a certificate of the Secretary of State of the
jurisdiction of its incorporation, dated reasonably near the date of
the Initial Extension of Credit, in each case listing the charter of
the Company and each Loan Party and each amendment thereto on file in
his office and certifying that (A) such charter is a true and correct
copy thereof, (B) such amendments are the only amendments to such
charter on file in his office, (C) such Person has paid all franchise
taxes to the date of such certificate and (D) such Person is duly
incorporated and in good standing under the laws of the state of the
jurisdiction of its incorporation.
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(iv) A copy of a certificate of the Secretary of State of the
states listed on Schedule 3.01(k)(iv), dated reasonably near the date
of the Initial Extension of Credit, stating that the Company, the
Borrower and each other Loan Party as requested by the Administrative
Agent is duly qualified and in good standing as a foreign corporation
in such states and has filed all annual reports required to be filed
to the date of such certificate.
(v) A certificate of each of the Company and each Loan Party,
signed on behalf of such Person by its President or Senior Vice
President and its Secretary or Assistant Secretary, dated the date of
the Initial Extension of Credit (the statements made in which
certificate shall be true on and as of the date of the Initial
Extension of Credit), certifying as to (A) the absence of any
amendments to the charter of such Person since the date of the
Secretary of State's certificate referred to in Section 3.01(k)(iii),
(B) a true and correct copy of the bylaws of such Person as in effect
on the date of the Initial Extension of Credit, (C) the due
incorporation and good standing of such Person as a corporation
organized under the laws of the jurisdiction of its incorporation and
the absence of any proceeding for the dissolution or liquidation of
such Person, (D) the completeness and accuracy of the representations
and warranties contained in the Loan Documents as though made on and
as of the date of the Initial Extension of Credit and (E) the absence
of any event occurring and continuing, or resulting from the Initial
Extension of Credit, that constitutes a Default.
(vi) A certificate of the Secretary or Assistant Secretary of
each of the Company and each Loan Party certifying the names and true
signatures of the officers of such Persons authorized to sign this
Agreement, any Notes, each other Loan Document and each Related
Document to which they are or are to be parties and the other
documents to be delivered hereunder and thereunder.
(vii) A security agreement in substantially the form of Exhibit D
hereto (together with each other security agreement and security
agreement supplement delivered pursuant to Section 5.01(m), in each
case as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with its terms, the "Security
Agreement"), duly executed by the Borrower and each other Subsidiary
Guarantor, together with:
(A) certificates representing the Pledged Shares accompanied
by undated stock powers executed in blank and instruments
evidencing the Pledged Debt endorsed in blank,
(B) executed copies of proper financing statements, to be
duly filed on or before the day of the Initial Extension of
Credit under the Uniform Commercial Code of the states listed on
Schedule 3.01(k)(vii)(B) and all other jurisdictions that the
Administrative Agent may reasonably deem necessary or desirable
in order to perfect and protect the Liens created under the
Collateral Documents, covering the Collateral described in the
Security Agreement,
(C) completed requests for information, dated on or before
the date of the Initial Extension of Credit, listing the
financing statements referred to in clause (B)
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above and all other effective financing statements filed in the
jurisdictions referred to in clause (B) above that name any Loan
Party or the Company and its Subsidiaries as debtor, together
with copies of such other financing statements,
(D) evidence of the completion of all other recordings and
filings of or with respect to the Security Agreement that the
Administrative Agent may deem necessary or desirable in order to
perfect and protect the Liens created thereby,
(E) evidence of the insurance required by the terms of the
Security Agreement,
(F) copies of the Assigned Agreements referred to in the
Security Agreement, together with a consent to such assignment,
in substantially the form of Exhibit B to the Security Agreement,
duly executed by each party to such Assigned Agreements,
(G) executed termination statements (Form UCC-3 or a
comparable form), in proper form to be duly filed on the date of
the Initial Extension of Credit under the Uniform Commercial Code
of all jurisdictions that the Administrative Agent may deem
desirable in order to terminate or amend existing Liens on the
Collateral described in the Security Agreement, except as
contemplated in the Security Agreement,
(H) the Blocked Account Letters referred to in the Security
Agreement, duly executed by each Blocked Account Bank listed on
Schedule 3.01(k)(vii)(H) in form and substance satisfactory to
the Administrative Agent,
(I) Landlord consents, duly executed by each of the Persons
listed on Schedule 3.01(k)(vii)(I) in form and substance
satisfactory to the Administrative Agent, and
(J) evidence that all other action that the Administrative
Agent may deem necessary or desirable in order to perfect and
protect the Liens and security interests created under the
Security Agreement has been taken.
(viii) A mortgage in substantially the form of Exhibit E hereto
and covering the property listed on Schedule 4.01(hh) (together with
each other mortgage delivered pursuant to Section 5.01(m), in each
case as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with their terms, the
"Mortgage"), duly executed by the Borrower, together with evidence
that the Mortgage has been duly recorded in all filing or recording
offices that the Administrative Agent may deem desirable and all other
action that the Administrative Agent may deem necessary or desirable
including a title search in order to create valid first and subsisting
Liens on the property described in the Mortgage in favor of the
Secured Parties and that all filing and recording expenses and fees
have been paid.
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(ix) The Subsidiary Guaranty duly executed by each Subsidiary
Guarantor listed on Schedule 3.01(k)(ix).
(x) Certified copies of each of the Related Documents, duly
executed by the parties thereto and in form and substance satisfactory
to the Lender Parties, together with all agreements, instruments and
other documents delivered in connection therewith as the
Administrative Agent shall request.
(xi) Such financial, business and other information regarding the
Company and each Loan Party and its Subsidiaries as the Lender Parties
shall have requested, including, without limitation, information as to
possible contingent liabilities, tax matters, environmental matters,
obligations under Plans, Multiemployer Plans and Welfare Plans,
collective bargaining agreements and other arrangements with
employees, audited Consolidated and unaudited consolidating annual
financial statements (such unaudited consolidating financial
statements prepared in accordance with Regulation S-X and certified by
the chief financial officer of the Company) of the Company and its
Subsidiaries dated September 30, 1995, September 30, 1996 and
September 30, 1997, interim Consolidated and consolidating financial
statements dated December 31, 1997 (such financial statements prepared
in accordance with Regulation S-X and certified by the chief financial
officer of the Company), of the Company and its Subsidiaries and
forecasts prepared by management, in form and substance satisfactory
to the Lender Parties, of Consolidated balance sheets, income
statements and cash flow statements of MEDIQ and its Subsidiaries on a
monthly basis for the first two years following the day of the Initial
Extension of Credit and on an annual basis for each year thereafter
until the Termination Date.
(xii) An opinion, in substantially the form of Exhibit I,
attesting to the Solvency of the Borrower on a Consolidated basis and
MEDIQ on a Consolidated basis, after giving effect to the Merger, the
Recapitalization and the other transactions contemplated hereby, from
Murray, Devine & Co.
(xiii) Certificates, in substantially the form of Exhibits J-1
and J-2, attesting to the Solvency of the Borrower on a Consolidated
basis and MEDIQ on a Consolidated basis both before and after giving
effect to the Refinancing and the other transactions contemplated
hereby, signed on behalf of each of the Borrower and MEDIQ by their
respective chief financial officers, attesting to the solvency of the
Borrower on a Consolidated basis and MEDIQ on a Consolidated basis,
respectively.
(xiv) A certificate of the Borrower certifying that no event has
occurred or condition exists related to the real estate located at One
MEDIQ Plaza, Pennsauken, New Jersey that may result in material
liability pursuant to any Environmental Law and that is not disclosed
in the July 22, 1996 Phase I Environmental Site Assessment Report
prepared by Sadat Associates, Inc.
(xv) A letter, in form and substance satisfactory to the
Administrative Agent, from MEDIQ to Deloitte & Touche LLP, its
independent certified public accountants, advising such accountants
that the Administrative Agent and the Lender Parties have been
authorized to
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exercise all rights of MEDIQ and its Subsidiaries to require such
accountants to disclose any and all financial statements and any other
information of any kind that they may have with respect to MEDIQ and
its Subsidiaries and directing such accountants to comply with any
reasonable request of the Administrative Agent or any Lender Party
through the Administrative Agent for such information.
(xvi) Evidence of insurance naming the Administrative Agent as
additional insured and loss payee with such responsible and reputable
insurance companies or associations, and in such amounts and covering
such risks, as is satisfactory to the Lender Parties, including,
without limitation, business interruption insurance, product liability
insurance, and directors and officers insurance.
(xvii) A Borrowing Base Certificate dated as of the most recent
month end prior to the date of the Initial Extension of Credit;
provided, however that if such month end is less than 20 days prior to
the date of the Initial Extension of Credit, such Borrowing Base
Certificate may be dated as of the end of the next preceding month.
(xviii) Favorable opinions of Dechert, Price & Rhoades, special
counsel for the Loan Parties, in substantially the form of Exhibit
H-1, Haynes & Boone, Texas counsel to the Loan Parties, Foley &
Lardner, Florida counsel to the Loan Parties and Jeffer, Mangels,
Butler & Marmaro, California counsel to the Loan Parties, in
substantially the form of Exhibit H-2.
SECTION 3.02. Conditions Precedent to Each Borrowing, Swing Line Advance
and Issuance. The obligation of each Appropriate Lender to make an Advance
(other than a Letter of Credit Advance made by the Issuing Bank or a Revolving
Credit Lender pursuant to Section 2.03(c) and a Swing Line Advance made by a
Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion of each
Borrowing (including the Initial Extension of Credit), and the obligation of the
Issuing Bank to issue a Letter of Credit (including the initial issuance) and
the obligation of the Swing Line Bank to make Swing Line Advances, shall be
subject to the further conditions precedent that on the date of such Borrowing
(including a Swing Line Borrowing made by the Swing Line Bank), issuance or
Swing Line Borrowing (a) the following statements shall be true (and each of the
giving of the applicable Notice of Borrowing (including a Swing Line Borrowing
made by the Swing Line Bank), Notice of Issuance and the acceptance by the
Borrower of the proceeds of such Borrowing or of such Letter of Credit shall
constitute a representation and warranty by the Borrower that both on the date
of such notice and on the date of such Borrowing or issuance such statements are
true):
(i) the representations and warranties contained in each Loan Document
are correct on and as of such date, before and after giving effect to such
Borrowing or issuance and to the application of the proceeds therefrom, as
though made on and as of such date other than any such representations or
warranties that, by their terms, refer to a specific date other than the
date of such Borrowing or issuance, in which case as of such specific date;
(ii) no event has occurred and is continuing, or would result from
such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default;
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(iii) for each Acquisition Borrowing, (x) the Borrower shall be in
compliance with the provisions of Section 5.02(e)(ii)(B), (y) if requested
by the Administrative Agent or the Required Lenders, the Borrower will
provide for the Lender Parties certificates and letters of the type
referred to in Section 3.01(k)(xiii) after giving effect to the application
of proceeds from such Borrowing and (z) the Borrower shall be in compliance
with the covenants set forth in Section 4.03 of the Senior Subordinated
Note Indenture and Section 4.03 of the Discount Debenture Indenture and the
Administrative Agent shall have received a certificate of the chief
financial officer of the Borrower certifying such compliance, together with
a schedule in form satisfactory to the Administrative Agent of the
computations used by the Borrower in determining compliance therewith; and
(iv) for each Revolving Credit Advance, Swing Line Advance or issuance
of any Letter of Credit, the sum of the Loan Values of the Eligible
Collateral (as determined based on the most recent Borrowing Base
Certificate delivered to the Lender Parties hereunder) exceeds the
aggregate principal amount of the Revolving Credit Advances plus Swing Line
Advances plus Letter of Credit Advances to be outstanding plus the
aggregate Available Amount of all Letters of Credit then outstanding after
giving effect to such Advance or issuance, respectively;
and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as the Administrative Agent or the Required Lenders
through the Administrative Agent may reasonably request.
SECTION 3.03. Additional Conditions to the Additional Term Advance. The
obligation of each Appropriate Lender to make the Term Advance in connection
with the CH Acquisition on the occasion of such Term Borrowing is, in addition
to the conditions set forth in Section 3.02, subject to receipt by the
Administrative Agent, on or before the day of the closing of the CH Acquisition
(the "CH Acquisition Closing Date"), the following, each dated such day (unless
otherwise specified), in form and substance satisfactory to the Administrative
Agent (unless otherwise specified) in sufficient copies for each Lender Party:
(a) Completed requests for information, dated on or before the CH
Acquisition Closing Date, listing all effective financing statements filed
in the jurisdiction where the CH Assets are located that affect any of the
CH Assets, together with copies of such financing statements.
(b) Evidence of completion of all recordings and filings of or with
respect to the Security Agreement that the Administrative Agent may deem
necessary or desirable in order to perfect and protect the Liens created
thereby with respect to the CH Assets.
(c) Executed termination statements (Form UCC-3 or a comparable form),
in proper form to be duly filed on the CH Acquisition Closing Date under
the Uniform Commercial Code of all jurisdictions that the Administrative
Agent may deem desirable in order to terminate or amend existing Liens on
the CH Assets.
(d) A certified copy of the Asset Purchase Agreement.
(e) A landlord consent in form and substance satisfactory to the
Administrative Agent with respect to the real estate located at 1201 I-35,
Carrollton, Texas.
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(f) favorable opinions of Haynes & Boone, special Texas counsel for
the Loan Parties, in form and substance satisfactory to the Administrative
Agent.
(g) (x) certificates and letters of the type referred to in Section
3.01(k)(xiii) after giving effect to the CH Acquisition and (y) a
supplement to the opinion delivered pursuant to Section 3.01(xii) attesting
to the Solvency of the Borrower on a Consolidated basis and MEDIQ on a
Consolidated basis, after giving effect to the CH Acquisition.
(h) Environmental assessment reports, in form and substance
satisfactory to the Lender Parties, from J. McNutt Associates, Inc. dated
September 14, 1993 and October 28, 1997 as to any hazards, costs or
liabilities under Environmental Laws to which any Loan Party or any of its
Subsidiaries may be subject solely with respect to the real estate located
at 1201 N. Stemmons Freeway (Interstate 35) Carrollton, Texas, the amount
and nature of which and the Borrower's plans with respect to which shall be
acceptable to the Lender Parties. To the extent either the report or any
other information that may become available to the Lender Parties shall
disclose any hazards, costs or liabilities under Environmental Laws or
otherwise that the Lender Parties deem material, the Lender Parties shall
be satisfied that such hazards, costs or liabilities were adequately
reflected in MEDIQ's financial reserves shown on the financial statements
delivered pursuant to Section 3.01(k)(xi) or that, to the extent not so
reflected, the Borrower has made adequate provision for such hazards, costs
or liabilities.
SECTION 3.04. Determinations Under Section 3.01. For purposes of
determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. Each Loan
Party represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted except where the failure to have such corporate
power and authority is not
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reasonably likely to have a Material Adverse Effect. All of the outstanding
capital stock of the Borrower has been validly issued, is fully paid and
non-assessable and is owned by MEDIQ free and clear of all Liens, except
those created under the Loan Documents.
(b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
list of all Subsidiaries of each Loan Party as of the date hereof, showing
(as to each such Subsidiary) the jurisdiction of its incorporation, the
number of shares of each class of capital stock authorized, and the number
outstanding, on the date hereof and the percentage of the outstanding
shares of each such class owned (directly or indirectly) by such Loan Party
and the number of shares covered by all outstanding options, warrants,
rights of conversion or purchase and similar rights at the date hereof. All
of the outstanding capital stock of all of each Loan Party's Subsidiaries
has been validly issued, is fully paid and non-assessable and is owned by
such Loan Party or one or more of its Subsidiaries free and clear of all
Liens, except those created under the Loan Documents. Each such Subsidiary
(i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in each other
jurisdiction in which it owns or leases property or in which the conduct of
its business requires it to so qualify or be licensed except where the
failure to so qualify or be licensed is not reasonably likely to have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties and
to carry on its business as now conducted and as proposed to be conducted,
except where the failure to have such corporate power and authority is not
reasonably likely to have a Material Adverse Effect.
(c) The execution, delivery and performance by each Loan Party of this
Agreement, any Notes, each other Loan Document and each Related Document to
which it is or is to be a party, and the consummation of the Merger, the
Recapitalization and the other transactions contemplated hereby and
thereby, are within such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
such Loan Party's charter or bylaws, (ii) violate any law, rule, regulation
(including, without limitation, Regulation X of the Board of Governors of
the Federal Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of, or
constitute a default under, any contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting
any Loan Party, any of its Subsidiaries or any of their properties or (iv)
except for the Liens created under the Loan Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of any Loan Party or any of its Subsidiaries. No Loan Party or
any of its Subsidiaries is in violation of any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or in
breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which is
reasonably likely to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by any Loan Party of this Agreement, any Notes, any
other Loan Document or any Related Document to which it is or is to be a
party, or for the consummation of the Merger, the Recapitalization or the
other transactions contemplated hereby or thereby, (ii) the grant by any
Loan Party of the Liens granted by it pursuant to the Collateral Documents,
(iii) the perfection or maintenance of the Liens created under the
Collateral Documents (including the first priority nature
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thereof) or (iv) the exercise by the Administrative Agent or any Lender
Party of its rights under the Loan Documents or the remedies in respect of
the Collateral pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on Schedule
4.01(d) hereto, all of which have been duly obtained, taken, given or made
and are in full force and effect. All applicable waiting periods in
connection with the Merger, the Recapitalization and the other transactions
contemplated hereby and thereby have expired without any action having been
taken by any competent authority restraining, preventing or imposing
materially adverse conditions upon the Merger, the Recapitalization or the
rights of the Loan Parties or their Subsidiaries freely to transfer or
otherwise dispose of, or to create any Lien on, any properties now owned or
hereafter acquired by any of them.
(e) This Agreement has been, and each other Loan Document and each
Related Document when executed and delivered will have been, duly executed
and delivered by each Loan Party party thereto. This Agreement is, and each
other Loan Document and each Related Document when delivered hereunder will
be, the legal, valid and binding obligation of each Loan Party party
thereto, enforceable against such Loan Party in accordance with its terms.
(f) (i) The Consolidated and consolidating balance sheets of the
Company and its Subsidiaries and the Borrower and its Subsidiaries as at
September 30, 1995, September 30, 1996 and September 30, 1997, and the
related Consolidated and consolidating statements of income and
consolidated statements of cash flow of each of the Company and its
Subsidiaries and the Borrower and its Subsidiaries for the Fiscal Years
then ended, accompanied, as to the Consolidated statements, by an
unqualified opinion of Deloitte & Touche LLP, independent public
accountants, or, as to the consolidating statements, duly certified by the
chief financial officers of the Company and the Borrower, and
(ii) The Consolidated and consolidating balance sheets of the Company
and its Subsidiaries and the Borrower and its Subsidiaries as at March 31,
1998, and the related Consolidated and consolidating statements of income
and Consolidated statements of cash flow of each of the Company and its
Subsidiaries and the Borrower and its Subsidiaries for the six months then
ended, duly certified by the chief financial officers of the Company and
the Borrower,
in each case true and correct copies of which have been furnished to the
Lender Parties, fairly present, subject, in the case of clause (ii) to
year-end adjustments, the Consolidated and consolidating financial
condition and the consolidating results of the operations of the Company
and its Subsidiaries and the Borrower and its Subsidiaries as at the dates
or for the periods ended on such dates, all in accordance with generally
accepted accounting principles applied on a consistent basis, and since
September 30, 1997 there has been no Material Adverse Change.
(g) The pro forma condensed Consolidated balance sheet of the Company
and its Subsidiaries at September 30, 1997 and at March 31, 1998, which
were prepared in accordance with Regulation S-X and true and correct copies
of which have been furnished to the Lender Parties, fairly present,
subject, to the pro forma adjustments provided for therein, (A) the pro
forma condensed Consolidated financial condition and the pro forma
condensed Consolidated results of the operations of the Company and its
Subsidiaries giving effect to the acquisition of SpectraCair for the full
Fiscal Year, and (B) the Consolidated and consolidating financial condition
and the consolidating financial condition
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and the consolidating results of the operations of the Company and its
Subsidiaries, giving effect to the Merger and the Recapitalization in each
case, as at the dates or for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a
consistent basis.
(h) The Consolidated forecasted balance sheets, income statements and
cash flow statements of MEDIQ and its Subsidiaries delivered to the
Administrative Agent pursuant to Section 3.01(k)(x) or 5.03 were prepared
in good faith on the basis of the assumptions stated therein, which
assumptions were fair in the light of conditions existing at the time of
delivery of such forecasts and at the time of the Initial Extension of
Credit, and represented, at both such times of delivery, MEDIQ's and the
Borrower's best estimate of their future financial performance.
(i) Neither the Information Memorandum nor any other information,
exhibit or report (excluding any financial projections) furnished by or on
behalf of any Loan Party to the Administrative Agent or any Lender Party,
taken as a whole, contained any untrue statement of a material fact or
omitted to state a material fact necessary to make the statements made
therein not misleading in light of the circumstances under which such
information was provided as of the date such information was furnished and
on the date of the Initial Extension of Credit.
(j) There is no action, suit, investigation, litigation or proceeding
affecting any Loan Party or any of its Subsidiaries, including any
Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that (i) could reasonably be expected to have a
Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of the Merger, the Recapitalization, this Agreement, any
Note, any other Loan Document or any Related Document or the consummation
of the transactions contemplated hereby.
(k) No proceeds of any Advance or drawings under any Letter of Credit
will be used to acquire any equity security of a class that is registered
pursuant to Section 12 of the Securities Exchange Act of 1934.
(l) No Loan Party is engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock, and no proceeds of any
Advance or drawings under any Letter of Credit will be used to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock.
(m) Following application of the proceeds of each Advance or drawing
under each Letter of Credit, not more than 25% of the value of the assets
(either of the Borrower only or of the Borrower and its Subsidiaries on a
Consolidated basis) subject to the provisions of Section 5.02(a) or 5.02(d)
or subject to any restriction contained in any agreement or instrument
between the Borrower and any Lender Party or any Affiliate of any Lender
Party relating to Debt and within the scope of Section 6.01(e) will be
Margin Stock.
(n) Set forth on Schedule 4.01(n) hereto is a complete and accurate
list of all Plans, Multiemployer Plans and Welfare Plans in effect as of
the date of this Agreement.
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(o) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan which could reasonably be expected to have a
Material Adverse Effect.
(p) As of the last annual actuarial valuation date, the Loan Parties
and the ERISA Affiliates are in compliance with the funding requirements of
the Internal Revenue Code and ERISA with respect to each Plan except where
non compliance with the foregoing is not reasonably likely to have a
Material Adverse Effect.
(q) Schedule B (Actuarial Information) to the most recent annual
report (Form 5500 Series) for each Plan, copies of which have been filed
with the Internal Revenue Service and furnished to the Lender Parties, is
complete and accurate and fairly presents the funding status of such Plan,
and since the date of such Schedule B there has been no material adverse
change in such funding status.
(r) Neither any Loan Party nor any ERISA Affiliate has incurred or is
reasonably expected to incur any Withdrawal Liability to any Multiemployer
Plan.
(s) Neither any Loan Party nor any ERISA Affiliate has been notified
by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of ERISA
except where such reorganization or termination could not reasonably be
expected to have a Material Adverse Effect.
(t) Except as set forth in the financial statements referred to in
this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(u) Neither the business nor the properties of any Loan Party or any
of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other labor dispute, drought, storm, hail, earthquake, embargo,
act of God or of the public enemy or other casualty (whether or not covered
by insurance) that is reasonably likely to have a Material Adverse Effect.
(v) The operations and properties of each Loan Party and each of its
Subsidiaries comply in all material respects with all applicable
Environmental Laws and Environmental Permits, all past claims of
non-compliance with such Environmental Laws and Environmental Permits have
been resolved without ongoing obligations or costs, and no circumstances
exist that could (i) form the basis of an Environmental Action against any
Loan Party or any of its Subsidiaries or any of its properties that is
reasonably likely to have a Material Adverse Effect or (ii) cause any such
property to be subject to any material restrictions on ownership,
occupancy, use or transferability under any Environmental Law that is
reasonably likely to have a Material Adverse Effect.
(w) Except as is disclosed on Schedule 4.01(w), and with respect to
properties not owned by any Loan Party to the extent of the actual
knowledge of any Responsible Officer, none of the properties currently or
formerly owned or operated by any Loan Party or any of its Subsidiaries is
listed or proposed for listing on the NPL or on the CERCLIS or any
analogous foreign, state or local list or is
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adjacent to any such property; there are no and never have been any
underground or aboveground storage tanks or any surface impoundments,
septic tanks, pits, sumps or lagoons in which Hazardous Materials are being
or have been treated, stored or disposed on any property currently owned or
operated by any Loan Party or any of its Subsidiaries or, to the best of
its knowledge, on any property formerly owned or operated by any Loan Party
or any of its Subsidiaries; there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan Party or
any of its Subsidiaries; and Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries; except, in each
case, where the non-compliance with the foregoing is not reasonably likely
to have a Material Adverse Effect.
(x) Neither any Loan Party nor any of its Subsidiaries is undertaking,
and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or
remedial or response action relating to any actual or threatened release,
discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any governmental
or regulatory authority or the requirements of any Environmental Law which
could reasonably be expected to have a Material Adverse Effect; and all
Hazardous Materials generated, used, treated, handled or stored at, or
transported to or from, any property currently or formerly owned or
operated by any Loan Party or any of its Subsidiaries have been disposed of
in a manner not reasonably expected to result in material liability to any
Loan Party or any of its Subsidiaries.
(y) The Collateral Documents create a valid and perfected first
priority security interest in the Collateral (subject to Liens permitted
pursuant to Section 5.02(a)) securing the payment of the Secured
Obligations, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly taken. The Loan
Parties are the legal and beneficial owners of the Collateral free and
clear of any Lien, except for the Liens and security interests created or
permitted under the Loan Documents.
(z) Each Loan Party and each of its Subsidiaries and Affiliates has
filed, has caused to be filed or has been included in all tax returns
(federal, state, local and foreign) required to be filed and has paid all
taxes shown thereon to be due, together with applicable interest and
penalties except where being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained.
(aa) Set forth on Schedule 4.01(aa) hereto is a complete and accurate
list, as of the date hereof, of each taxable year of each Loan Party and
each of its Subsidiaries and Affiliates for which federal income tax
returns have been filed and for which the expiration of the applicable
statute of limitations for assessment or collection has not occurred by
reason of extension or otherwise (an "Open Year").
(bb) There is no unpaid amount, as of the date hereof, of adjustments
to the federal income tax liability of each Loan Party and each of its
Subsidiaries and Affiliates proposed by the Internal Revenue Service with
respect to Open Years. No issues have been raised by the Internal Revenue
Service in respect of Open Years that, in the aggregate, are reasonably
likely to have a Material Adverse Effect.
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(cc) There is no unpaid amount, as of the date hereof, of adjustments
to the state, local and foreign tax liability of each Loan Party and its
Subsidiaries and Affiliates proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to federal income
tax returns, if any) other than those being contested in good faith with
respect to contests applicable on the date hereof and listed on Schedule
4.01(cc). No issues have been raised by such taxing authorities that, in
the aggregate, are reasonably likely to have a Material Adverse Effect.
(dd) Neither the Merger nor the Recapitalization will be taxable to
MEDIQ or any of its Subsidiaries.
(ee) Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor the
application of the proceeds or repayment thereof by the Borrower, nor the
consummation of the other transactions contemplated hereby, will violate
any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(ff) The Borrower and its Subsidiaries and MEDIQ and its Subsidiaries
are Solvent.
(gg) Set forth on Schedule 4.01(gg) hereto is a complete and accurate
list of all Existing Debt (other than Surviving Debt) as of the date
hereof, showing the principal amount outstanding thereunder, the maturity
date thereof and the amortization schedule therefor.
(hh) Set forth on Schedule 4.01(hh) hereto is a complete and accurate
list of all real property owned by any Loan Party or any of its
Subsidiaries as of the date hereof, showing the street address, county or
other relevant jurisdiction, state and record owner. Each Loan Party or
such Subsidiary has good, marketable and insurable fee simple title to such
real property, free and clear of all Liens, other than Liens created or
permitted by the Loan Documents.
(ii) Set forth on Schedule 4.01(ii) hereto is a complete and accurate
list of all Investments held by any Loan Party or any of its Subsidiaries,
showing as of the date hereof the amount, obligor or issuer and maturity,
if any, thereof.
(jj) Set forth on Schedule 4.01(jj) hereto is a complete and accurate
list of all patents, registered trademarks and service marks and registered
copyrights, and all applications therefor and licenses thereof, of each
Loan Party as of the date hereof or any of its Subsidiaries, showing as of
the date hereof the jurisdiction in which registered or issued, the
registration or issuance number and the date of registration or issuance.
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ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, each Loan Party will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable laws,
rules, regulations and orders, such compliance to include, without
limitation, compliance with ERISA and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control Act of 1970.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent,
(i) all taxes, assessments and governmental charges or levies imposed upon
it or upon its property and (ii) all lawful claims that, if unpaid, might
by law become a Lien upon its property which is not otherwise permitted
hereunder; provided, however, that neither any Loan Party nor any of its
Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim (x) that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained, or (y) in respect of which the Lien resulting therefrom, if
any, attaches to its property and becomes enforceable against its other
creditors, to the extent that the aggregate amount of all such taxes,
assessments, charges or claims does not exceed $250,000.
(c) Compliance with Environmental Laws. Comply, and cause each of its
Subsidiaries and all lessees and other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws and Environmental Permits; obtain and renew and cause
each of its Subsidiaries to obtain and renew all Environmental Permits
necessary for its operations and properties, except if the failure to
obtain or renew such Environmental Permit is not reasonably likely to have
a Material Adverse Effect; and conduct, and cause each of its Subsidiaries
to conduct, any investigation, study, sampling and testing, and undertake
any cleanup, removal, remedial or other action necessary to remove and
clean up all Hazardous Materials from any of its properties, in accordance
with the requirements of all Environmental Laws, except if the failure to
remove or clean up such Hazardous Materials is not reasonably likely to
have a Material Adverse Effect; provided, however, that no Loan Party or
any of its Subsidiaries shall be required to undertake any such cleanup,
removal, remedial or other action to the extent that its obligation to do
so is being contested in good faith and by proper proceedings and
appropriate reserves are being maintained with respect to such
circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks
as is usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which such Loan Party or
such Subsidiary operates.
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(e) Preservation of Corporate Existence, Etc. Preserve and maintain,
and cause each of its Subsidiaries (other than those set forth on Schedule
5.01(e)) to preserve and maintain, its corporate existence, rights (charter
and statutory), permits, licenses, approvals, privileges and franchises,
except if the failure to preserve and maintain such permits, approvals or
licenses is not reasonably likely to have a Material Adverse Effect;
provided, however, that such Loan Party may consummate any merger or
consolidation permitted under Section 5.02(c).
(f) Visitation Rights. At any reasonable time and from time to time,
upon reasonable prior notice, permit the Administrative Agent or any of the
Lender Parties or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, such Loan Party and any of its Subsidiaries, and
to discuss the affairs, finances and accounts of such Loan Party and any of
its Subsidiaries with any of their officers or directors and with their
independent certified public accountants.
(g) Preparation of Environmental Reports. At the request of the
Administrative Agent at the following times: (i) upon the occurrence and
continuance of an Event of Default, (ii) upon the acquisition of real
property by any Loan Party or any of its Subsidiaries and (iii) at any time
when the Lenders have reason to believe that a condition exists or an event
has occurred with respect to any properties owned or operated by the Loan
Parties and their Subsidiaries that may result in material liability,
provide to the Lender Parties within 90 days after such request, at the
expense of the Borrower, a Phase I environmental site assessment report for
any of its or its Subsidiaries' owned properties described in such request,
prepared by an environmental consulting firm acceptable to the
Administrative Agent (and, if based upon the recommendation of such
environmental consulting firm, a Phase II environmental site assessment
report) indicating the presence or absence of Hazardous Materials and the
estimated cost of any compliance, removal or remedial action in connection
with any Hazardous Materials on such properties; without limiting the
generality of the foregoing, if the Administrative Agent determines at any
time that a material risk exists that any such report will not be provided
within the time referred to above, upon at least 10 days' written notice to
the Borrower, the Administrative Agent may retain an environmental
consulting firm to prepare such report at the expense of the Borrower, and
such Loan Party hereby grants and agrees to cause any Subsidiary that owns
any property described in such request to grant at the time of such
request, to the Administrative Agent or to any Lender Party who makes such
request through the Administrative Agent, such firm and any agents or
representatives thereof an irrevocable non-exclusive license, subject to
the rights of tenants, to enter onto their respective properties to
undertake such an assessment.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries to
keep, proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of
such Loan Party and each such Subsidiary in accordance with generally
accepted accounting principles.
(i) Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its properties
that are reasonably required in the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and except for
properties that have become obsolete or no longer fit for their intended
purposes.
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(j) Compliance with Terms of Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of real property
to which such Loan Party or any of its Subsidiaries is a party, keep such
leases in full force and effect and not allow such leases to lapse or be
terminated or any rights to renew such leases to be forfeited or canceled,
except if the failure to make such payment, perform such obligations or
keep such leases in full force and effect is not reasonably likely to have
a Material Adverse Effect.
(k) Performance of Related Documents. Perform and observe, in all
material respects, all of the terms and provisions of each Related Document
to be performed or observed by it, maintain each such Related Document in
full force and effect, enforce such Related Document in accordance with its
terms, take all such action to such end as may be from time to time
reasonably requested by the Administrative Agent and, upon request of the
Administrative Agent, make to each other party to each such Related
Document such demands and requests for information and reports or for
action as such Loan Party is entitled to make under such Related Document.
(l) Transactions with Affiliates. Conduct, and cause each of its
Subsidiaries to conduct, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are fair and
reasonable and no less favorable to such Loan Party or its Subsidiaries
than it would obtain in a comparable arm's-length transaction with a Person
not an Affiliate; provided, that so long as no Default shall have occurred
and be continuing, (i) fees under the Management Agreement may be paid and
(ii) payments permitted pursuant to Section 5.02(f) may be made.
(m) Covenant to Give Security. Upon (x) the request of the
Administrative Agent, (y) the formation or acquisition of any new direct or
indirect Subsidiary of any Loan Party or (z) the acquisition of any
property by any Loan Party, and such property, in the judgment of the
Administrative Agent, shall not already be subject to a perfected first
priority security interest in favor of the Administrative Agent for the
benefit of the Secured Parties, then the Borrower shall, in each case at
the Borrower's expense:
(i) within 10 days after the formation or acquisition of a
Subsidiary, cause each such Subsidiary and each direct and
indirect Subsidiary of such Subsidiary to duly execute and
deliver to the Administrative Agent a guaranty or guaranty
supplement, in form and substance satisfactory to the
Administrative Agent, (unless, in the case of any Foreign
Subsidiary, such guaranty would result in adverse tax
consequences to the Loan Parties) guaranteeing all the
Obligations of the Loan Parties under the Loan Documents,
(ii) within 10 days after such request, formation or
acquisition, furnish to the Administrative Agent a description of
the real and personal properties of the Borrower and its
Subsidiaries in detail satisfactory to the Administrative Agent,
(iii) within 15 days after such request, formation or
acquisition, duly execute and deliver, and cause each such
Subsidiary, and cause each direct and indirect Subsidiary of such
Subsidiary to duly execute and deliver to the Administrative
Agent mortgages, pledges, assignments, security agreement
supplements and other security agreements, as specified by and in
form and substance satisfactory to the Administrative Agent,
(unless, in the case of any Foreign Subsidiary, such mortgage,
pledge, assignment or security interest would result in
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adverse tax consequences to the Loan Parties) securing payment of
all the Obligations of the Loan Parties under the Loan Documents
and constituting first priority (other than with respect to
Permitted Liens) Liens on all such properties,
(iv) within 30 days after such request, formation or
acquisition, duly execute and deliver, and cause each such
Subsidiary, and cause each direct and indirect Subsidiary of such
Subsidiary to take whatever action (including, without
limitation, the recording of mortgages, the filing of Uniform
Commercial Code financing statements, the giving of notices and
the endorsement of notices on title documents) may be necessary
or advisable in the opinion of the Administrative Agent (unless,
in the case of any Foreign Subsidiary, such action would result
in adverse tax consequences to the Loan Parties) to vest in the
Administrative Agent (or in any representative of the
Administrative Agent designated by it) valid and subsisting first
priority (other than with respect to Permitted Liens) Liens on
the properties purported to be subject to the mortgages, pledges,
assignments, security agreement supplements and other security
agreements delivered pursuant to this Section 5.01(m),
enforceable against all third parties in accordance with their
terms,
(v) within 60 days after such request, formation or
acquisition, deliver to the Administrative Agent, upon the
request of the Administrative Agent in its sole discretion, a
signed copy of a favorable opinion, addressed to the
Administrative Agent and the other Secured Parties, of counsel
for the Loan Parties reasonably acceptable to the Administrative
Agent as to the matters contained in clauses (i), (iii) and (iv)
above, as to such mortgages, pledges, assignments, security
agreement supplements and other security agreements being legal,
valid and binding obligations of each such Loan Party enforceable
in accordance with their terms, as to the perfection of the
security interest created by such mortgage, pledge, assignment,
security agreement supplements or other security agreement and as
to such other matters as the Administrative Agent may reasonably
request,
(vi) at any time and from time to time, promptly execute and
deliver any and all further instruments and documents and take
all such other action as the Administrative Agent may deem
necessary or desirable in obtaining the full benefits of, or in
perfecting and preserving the Liens of, such guaranties,
mortgages, pledges, assignments, security agreement supplements
and security agreements, and
(vii) promptly upon organizing and within five days after
acquiring any Foreign Subsidiary, each Loan Party shall pledge to
the Administrative Agent on behalf of the Secured Parties 100%
(or 65% if such pledge would result in adverse tax consequences
to the Loan Parties) of the total outstanding shares or other
ownership interests of such Person owned by such Loan Party.
(n) Interest Rate Hedging. Enter into prior to July 15, 1998, and
maintain at all times thereafter, interest rate Hedge Agreements with
Persons acceptable to the Administrative Agent, covering a notional amount
of not less than 50% of the Term Facility on terms acceptable to the
Administrative Agent.
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(o) Further Assurances. (i) promptly upon the reasonable request by
the Administrative Agent, or any Lender Party through the Administrative
Agent, correct any material defect or error that may be discovered in any
Loan Document or in the execution, acknowledgment, filing or recordation
thereof;
(ii) promptly upon the reasonable request by the
Administrative Agent, or any Lender Party through the
Administrative Agent, do, execute, acknowledge, deliver, record,
re-record, file, refile, register and re-register any and all
such further acts, deeds, conveyances, pledge agreements,
mortgages, deeds of trust, trust deeds, assignments, financing
statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and
other instruments as the Administrative Agent, or any Lender
Party through the Administrative Agent, may reasonably require
from time to time in order to (A) carry out more effectively the
purposes of the Loan Documents, (B) to the fullest extent
permitted by applicable law, subject any Loan Party's or any of
its Subsidiaries' properties, assets, rights or interests to the
Liens now or hereafter intended to be covered by any of the
Collateral Documents, (C) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and
any of the Liens intended to be created thereunder and (D)
assure, convey, grant, assign, transfer, preserve, protect and
confirm more effectively unto the Administrative Agent and the
Lender parties the rights granted or now or hereafter intended to
be granted to the Administrative Agent and the Lender Parties
under any Loan Document or under any other instrument executed in
connection with any Loan Document to which any Loan Party or any
of its Subsidiaries is or is to be a party; and
(iii) prior to incurring any Debt that would qualify as
"Designated Senior Indebtedness" (as defined in the Senior
Subordinated Note Indenture), obtain the consent of the holders
of such Debt to designate the Administrative Agent as the
"Representative" (as defined in the Senior Subordinated Note
Indenture) of all "Designated Senior Indebtedness" so long as any
Obligation under or in respect of any Loan Document of any Loan
Party shall remain unpaid, any Letter of Credit shall be
outstanding, any Bank Hedge Agreement shall be in effect or any
Lender Party shall have any Commitment hereunder.
(p) Syndication. Take all actions which BNP may reasonably request to
assist it in forming a syndicate acceptable to it including, but not
limited to: (i) making senior management of the Loan Parties and BRS
available to participate in informational meetings with potential lenders
at such times and places as BNP may reasonably request; and (ii) timely
providing BNP with all information reasonably deemed necessary by it to
successfully complete the syndication, including, without limitation, a
summary of the operating prospects (including financial projections) of the
Loan Parties and their Subsidiaries.
(q) Year 2000 Compliance. Be, and cause each of its Subsidiaries to
be, Year 2000 Compliant with respect to its internal accounting procedures,
in all material respects, on or before December 31, 1998 and at all times
thereafter.
(r) Key Man Life Insurance. So long as available at commercially
reasonable terms, as soon as practicable and in any event within 90 days
after the date of the Initial Extension of Credit, on terms and conditions
reasonably satisfactory to the Administrative Agent, obtain key man life
insurance of at least $10,000,000 for the chief executive officer of the
Borrower, naming the Administrative Agent
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as insured, with such responsible and reputable insurance company or
association as is satisfactory to the Administrative Agent.
SECTION 5.02. Negative Covenants. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, no Loan Party will, at any
time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist, any
Lien on or with respect to any of its properties of any character
(including, without limitation, accounts) whether now owned or hereafter
acquired, or sign or file or suffer to exist, or permit any of its
Subsidiaries to sign or file or suffer to exist, under the Uniform
Commercial Code of any jurisdiction, a financing statement that names such
Loan Party or any of its Subsidiaries as debtor, or sign or suffer to
exist, or permit any of its Subsidiaries to sign or suffer to exist, any
security agreement authorizing any secured party thereunder to file such
financing statement, or assign, or permit any of its Subsidiaries to
assign, any accounts or other right to receive income, excluding, however,
from the operation of the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described on Schedule
5.02(a)(iii) hereto, each in an amount and for a duration not to
exceed the amount and duration of such Lien listed on such Schedule;
(iv) Liens arising in connection with Capitalized Leases
permitted under Sections 5.02(b)(iii) and (iv), provided that no such
Lien shall extend to or cover any Collateral or assets other than the
assets subject to such Capitalized Leases;
(v) purchase money Liens upon or in real property or equipment
acquired or any other property the purchase of which constitutes a
Capital Expenditure or held by the Borrower or any of its Subsidiaries
in the ordinary course of business to secure the purchase price of
such property or equipment or to secure Debt incurred solely for the
purpose of financing the acquisition of any such property or equipment
to be subject to such Liens, or Liens existing on any such property or
equipment at the time of acquisition (other than any such Liens
created in contemplation of such acquisition that do not secure the
purchase price), or such Liens placed on such property or equipment
within six months of the time of such acquisition (so long as such
transactions are consistent with past business practices), or
extensions, renewals or replacements of any of the foregoing for the
same or a lesser amount; provided, however, that no such Lien shall
extend to or cover any property other than the property or equipment
being acquired, and no such extension, renewal or replacement shall
extend to or cover any property not theretofore subject to the Lien
being extended, renewed or replaced; and provided further that the
aggregate principal amount of the Debt secured by Liens permitted by
this clause (v)
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shall not exceed the amount permitted under Section 5.02(b)(iv)
at any time outstanding and that any such Debt shall not otherwise be
prohibited by the terms of the Loan Documents;
(vi) the filing of financing statements solely as a precautionary
measure in connection with operating leases;
(vii) the replacement, extension or renewal of any Lien permitted
by clause (iii) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in
the amount or change in any direct or contingent obligor) of the Debt
secured thereby; and
(viii) Liens arising in connection with any judgment or order for
the payment of money in an amount not to exceed $1,000,000 rendered
against any Loan Party or any of its Subsidiaries, provided, that
enforcement proceedings shall not have been commenced by any creditor
upon such judgment or order and provided further, that there shall not
have occurred a period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, shall not be in effect.
(b) Debt. Create, incur, assume or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any Debt
other than:
(i) Debt under the Loan Documents,
(ii) Debt in respect of Hedge Agreements designed to hedge
against fluctuations in interest rates or foreign exchange rates
incurred in the ordinary course of business and consistent with
prudent business practice in an aggregate notional amount not to
exceed $125,000,000 for interest rate Hedge Agreements at any time
outstanding,
(iii) Capitalized Leases assumed pursuant to an Investment
permitted pursuant to Section 5.02(e)(ii)(B), so long as such
Capitalized Leases are not entered into in contemplation of such
Investment,
(iv) Capitalized Leases, so long as the aggregate principal
amount of such Capitalized Leases outstanding at any time plus the
aggregate principal amount of Liens permitted pursuant to Section
5.02(a)(v) outstanding at any time shall not exceed $10,000,000,
(v) Debt assumed or incurred in connection with Capital
Expenditures secured by Liens permitted by Section 5.02(a)(v),
(vi) unsecured Debt in an aggregate amount not to exceed
$3,000,000,
(vii) Surviving Debt,
(viii) Debt under the Senior Subordinated Notes and, with respect
to Loan Parties which are Subsidiaries of the Borrower, Subordinated
Guaranties,
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(ix) Debt consisting of take-or-pay contracts assumed by the
Borrower in connection with the acquisition of SpectraCair in an
aggregate amount not to exceed $7,500,000,
(x) Debt in respect of indemnities given by the Borrower in
connection with Investments permitted pursuant to Section
5.02(e)(ii)(B) and divestitures permitted pursuant to Section 5.02(f),
so long as such indemnities are customary for comparable transactions
and consistent with prior practice of the Borrower,
(xi) indorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business,
(xii) any Guaranty of Obligations under the Loan Documents,
(xiii) Debt to the Borrower or to its wholly owned U.S.
Subsidiaries, subject in each case to the extent permitted by Section
5.02(e)(ii)(A) and (B); provided that such Debt shall (x) constitute
Pledged Debt and (y) shall be evidenced by promissory notes in form
and substance satisfactory to the Administrative Agent and such
promissory notes shall be pledged as security for the Obligations
under the Loan Documents to the holder thereof, and
(xiv) subordinated Debt incurred solely in connection with an
Investment made pursuant to Section 5.02(e)(ii)(B), provided that (1)
such Debt shall mature not earlier than two years following the
Termination Date and shall not bear cash interest until such date, (2)
such Debt shall contain subordination terms acceptable to the Required
Lenders, (3) after giving effect to the incurrence of such Debt, the
Borrower shall be in compliance with the financial ratios referred to
in Section 5.02(e)(ii)(B) and (4) such Debt shall otherwise be on
terms acceptable to the Administrative Agent.
(c) Mergers, Etc. Merge into or consolidate with any Person or permit
any Person to merge into it, or permit any of its Subsidiaries to do so,
except that (i) any wholly owned Subsidiary of the Borrower may merge into
or consolidate with the Borrower or any other such Subsidiary, so long as
the surviving Person is the Borrower or, if the merger or consolidation is
with a Subsidiary other than the Borrower, such surviving Person is a
wholly owned U.S. Subsidiary of the Borrower, (ii) any wholly owned
Subsidiary of the Borrower may merge or consolidate with any Person to
effect the acquisition of such Person or its property in a transaction
permitted under Section 5.02(e)(ii)(A) and (B), so long as the surviving
Person is the Borrower or becomes a wholly owned U.S. Subsidiary of the
Borrower and complies with Section 5.01(m), and (iii) the Borrower may
merge into (A) any wholly owned U.S. Subsidiary of the Borrower acquired
pursuant to Section 5.02(e)(ii)(A) and (B), or (B) any wholly owned U.S.
Subsidiary previously merged or consolidated with any other wholly owned
Subsidiary acquired pursuant to Section 5.02(e)(ii)(A) and (B), so long as
the Person surviving such merger is the Borrower.
(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise dispose
of, or permit any of its Subsidiaries to sell, lease, transfer or otherwise
dispose of, any assets other than in the ordinary course of business, or
grant any option or other right to purchase, lease or otherwise acquire any
assets other
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than Inventory or rental equipment to be sold or leased in the
ordinary course of its business, except in a transaction authorized by
subsection (c) of this Section and as set forth on Schedule 5.02(d).
(e) Investments. Make or hold, or permit any of its Subsidiaries to
make or hold, any Investment, except, so long as no Default shall have
occurred and be continuing at the time of any action described below or
would result therefrom:
(i) in the case of any Loan Party,
(A) Investments existing on the date hereof and
described on Schedule 4.01(ii) hereto,
(B) loans and advances by any Loan Party to employees
(x) in the ordinary course of the business of the Borrower
as presently conducted in an aggregate principal amount not
to exceed $500,000 at any time outstanding and (y) in order
to permit equity holders that are members of senior
management to purchase stock in MEDIQ, provided that the
proceeds of such stock received by MEDIQ are promptly
contributed to the Borrower, and
(C) Investments in (x) demand deposit accounts
maintained in the ordinary course of business with any
Person of the type referred to in clause (i), (ii), (iii),
(iv) or (v) of the definition of "Eligible Assignee", (y)
Cash Equivalents, and (z) the Citibank Account; and
(ii) in the case of the Borrower,
(A) loans and advances by the Borrower to any Canadian
Subsidiary in an aggregate amount, together with Investments
permitted by clauses (B) and (G) of this Section 5.02(e)(ii)
in any Canadian Subsidiary or entity organized under the
laws of Canada, not to exceed $10,000,000 at any one time
outstanding;
(B) Investments directly by the Borrower or through a
wholly-owned U.S. Subsidiary to the extent permitted
pursuant to Section 5.02(e)(ii)(F) or Canadian Subsidiary in
100% of the capital stock of any Person organized under the
laws of the of United States or any State hereof or the
District of Columbia to the extent permitted pursuant to
Section 5.02(e)(ii)(F) or a province of Canada or in the
assets comprising a business or an operating division of a
business of any Person; provided that amounts invested
pursuant to this clause (B) in entities organized under the
laws of Canada, together with loans and advances permitted
by clause (A) of this Section 5.02(e)(ii) shall not exceed
the amount set forth in such clause (A), provided further
that:
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(1) such Investments are in the same or similar lines
of business in which the Borrower is involved on the date
hereof and after giving effect thereto, the capital stock or
the assets, as the case may be, acquired in connection with
such Investment are owned directly by the Borrower,
(2) for the Rolling Period ended as at the end of the
most recent period for which financial statements were
required to be furnished to the Administrative Agent
pursuant to Section 5.03(b), (c) or (d) and calculated
immediately before and after giving effect to such
Investment, (x) the Leverage Ratio shall not be more than
the lesser of 6.00:1.00 and the ratio set forth in Section
5.04(a) and (y) the Senior Leverage Ratio shall not be more
than the lesser of 3.50:1.00 and the ratio set forth in
Section 5.04(b), in each case, for such Rolling Period,
(3) the Administrative Agent has received (i) the
financial statements for such business or operating
division, (ii) the pro forma Consolidated balance sheet of
the Borrower and its Subsidiaries and such business or
operating division, in each case as of the most recently
ended Rolling Period and (iii) a schedule setting forth the
Pro Forma EBITDA for such business or operating division, on
a monthly basis for the most recently ended Rolling Period;
(C) Investments by the Borrower in Hedge Agreements
permitted under Section 5.02(b)(ii);
(D) Investments evidenced by promissory notes issued to
the Borrower, in the ordinary course of business, with
respect to amounts due to the Borrower;
(E) the CH Acquisition;
(F) Investments by the Borrower in wholly-owned U.S.
Subsidiaries; provided, however, that the aggregate
outstanding amount of equity Investments pursuant to this
clause (F) shall not exceed $10,000,000 at any one time
outstanding; and provided further, that any such additional
Investments that are for Investments described in Section
5.02(e)(ii)(B) shall meet all of the conditions set forth in
such Section;
(G) Investments in joint ventures in an amount not to
exceed $5,000,000; provided, however, that the aggregate
amount of Investments made pursuant to this clause (G)
together with the aggregate amount of Investments made
pursuant to clause (A) above of this Section
5.02(e)(ii)shall not exceed $10,000,000 at any one time
outstanding; and provided further, that any such Investments
that are for Investments described in Section 5.02(e)(ii)(B)
shall meet all of the conditions set forth in such Section;
and
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(H) Investments in MEDIQ pursuant to Section 5.02(f).
(f) Restricted Payments. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its capital
stock or any warrants, rights or options to acquire such capital stock, now
or hereafter outstanding, return any capital to its stockholders as such,
make any distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such capital
stock, or, in the case of the Borrower, permit any of its Subsidiaries to
purchase, redeem, retire, defease or otherwise acquire for value any
capital stock of such Loan Party or any warrants, rights or options to
acquire such capital stock or to issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, except that any
Subsidiary of the Borrower may declare and pay cash dividends to the
Borrower, and, so long as no Default shall have occurred and be continuing
at the time of any action described below or would result therefrom:
(i) the Borrower may pay or advance funds as and when needed to
MEDIQ (x) for operating expenses in the ordinary course of MEDIQ's
business, including, without limitation, expenses related to
severance, insurance (including health insurance), pension benefits,
401(k) plans and any other expenses of the Borrower and its
Subsidiaries that for administrative convenience are consolidated and
paid by MEDIQ, and (y) to pay the BRS management fee to the extent
permitted by Section 5.01(l); provided, that if MEDIQ shall acquire
any assets other than the stock of the Borrower, the Borrower shall
only be permitted to pay or advance funds as and when needed to MEDIQ
up to an amount not to exceed the total fair share of such fees and
expenses of the Borrower or the Borrower and each of its direct or
indirect Subsidiaries (collectively, the "Borrower Group");
(ii) the Borrower may pay cash dividends or advance funds as and
when needed in order to permit MEDIQ to make payments of taxes for
each Fiscal Year; provided, that if MEDIQ shall acquire any assets
other than the capital stock of the Borrower, the Borrower may pay
cash dividends or advance funds as and when needed in order to permit
MEDIQ to make payments of taxes for each Fiscal Year solely in an
amount not to exceed the total tax liability that the Borrower or the
Borrower Group, would have incurred if the Borrower or the Borrower
Group had filed a separate federal income tax return or separate
consolidated federal income tax return, as the case may be, for such
Fiscal Year; provided further, that the maximum tax liability of the
Borrower or the Borrower Group, as the case may be, shall not exceed
the tax liability calculated as if the Borrower or the Borrower Group
had filed a separate federal income tax return, or separate
consolidated federal income tax return taking into account such losses
and credits as may be attributable to the taxable years prior to the
date of the Initial Extension of Credit; provided further that if on
the basis of the computations of the separate tax liability made by
the Borrower or the Borrower Group, the Borrower or the Borrower Group
would have had a claim for refund of federal income taxes, then MEDIQ
shall pay to the Borrower an amount equal to the refund that the
Borrower would have been entitled to obtain from the Internal Revenue
Service;
(iii) the Borrower may pay cash dividends or advance funds
directly or indirectly to MEDIQ to permit MEDIQ to (x) prepay the
7.50% Notes, (y) to make scheduled interest
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payments on the Discount Debentures and the 7.50% Notes and (z)
to redeem the Series A Preferred Stock from the trustee of its 401(k)
plan in an aggregate amount not to exceed $450,000;
(iv) the Borrower may redeem the capital stock of MEDIQ from its
employees in an aggregate amount not to exceed $1,500,000 ,on an
annual basis, net of any amounts received from employees upon the sale
of capital stock of MEDIQ which are contributed to the Borrower; and
(v) the Borrower may pay additional cash dividends or advance
funds to MEDIQ in an aggregate amount not to exceed $250,000.
(g) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business as
carried on at the date hereof.
(h) Charter Amendments. Amend, or permit any of its Subsidiaries to
amend, its certificate of incorporation or bylaws, unless such change would
not have a Material Adverse Effect or does not adversely affect the rights
and remedies of the Administrative Agent or any Lender Party under any Loan
Document or any Related Document.
(i) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies or
reporting practices, except as required by generally accepted accounting
principles or (ii) Fiscal Year.
(j) Prepayments, Etc., of Debt. (i) Prepay, redeem, purchase, defease
or otherwise satisfy prior to the scheduled maturity thereof in any manner,
or make any payment in violation of any subordination terms of, any Debt,
other than:
(x) the prepayment of the Advances in accordance with the
terms of this Agreement, and
(y) if before and after giving effect to any such
prepayment, redemption, purchase, defeasance or other
satisfaction, no Default has occurred or would result therefrom,
the 7.5% Notes, or
(ii) amend, modify or change in any manner any term or condition
of the Subordinated Notes, or permit any of its Subsidiaries to do any
of the foregoing other than to prepay any Debt payable to the
Borrower.
(k) Amendment, Etc., of Related Documents. Cancel or terminate any
Related Document or consent to or accept any cancellation or termination
thereof, amend, modify or change in any manner any term or condition of any
Related Document or give any consent, waiver or approval thereunder, waive
any default under or any breach of any term or condition of any Related
Document, agree in any manner to any other amendment, modification or
change of any term or condition of any Related Document or take any other
action in connection with any Related Document that would impair the value
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of the interest or rights of the Borrower thereunder or that would impair
the rights or interests of the Administrative Agent or any Lender Party, or
permit any of its Subsidiaries to do any of the foregoing.
(l) Section 338 Election. Make an election under Section 338(g) of the
Internal Revenue Code with respect to the Merger.
(m) Negative Pledge. Enter into or suffer to exist, or permit any of
its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any
of its property or assets other than (i) in favor of the Secured Parties or
(ii) in connection with (A) any Surviving Debt, (B) any Debt secured by
purchase money Liens and Capitalized Leases, in each case, to the extent
permitted under Sections 5.02(b)(iii) and (iv), respectively, or (C) in
connection with the Discount Debentures and the Senior Subordinated Notes.
(n) Partnerships. Become a general partner in any general or limited
partnership or joint venture, or permit any of its Subsidiaries to do so.
(o) Other Transactions. Engage, or permit any of its Subsidiaries to
engage, in any transaction involving commodity options or futures contracts
or any similar speculative transactions (including, without limitation,
take-or-pay contracts) except for Hedge Agreements permitted under Section
5.02(b)(ii) and take-or-pay contracts permitted under Section 5.02(b)(ix).
SECTION 5.03. Reporting Requirements. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, the Borrower will furnish
to the Lender Parties (except for the notice required under Section 5.03(a),
which shall be given to the Administrative Agent):
(a) Default and Prepayment Notices. As soon as possible and (i)
in any event within two Business Days after the occurrence of each
Default or any event, development or occurrence reasonably likely to
have a Material Adverse Effect continuing on the date of such
statement, a statement of a Responsible Officer setting forth details
of such Default, event, development or occurrence and the action that
the Borrower has taken and proposes to take with respect thereto, and
(ii) in any event no later than 11:00 A.M. (New York City time) at
least three Business Days before any prepayment of Term Advances is to
be made by the Borrower pursuant to Section 2.06 (the "Prepayment
Date"), written notice of the principal amount of such prepayment (the
"Prepayment Amount") and the applicable Prepayment Date. Each such
notice (a "Prepayment Notice") shall be by telex or telecopier or
otherwise as provided in Section 8.02.
(b) Monthly Financials. As soon as available and in any event
within 30 days after the end of each month (other than for each month
on which a fiscal quarter is also ending, in which event such
financials shall be delivered within 45 days), commencing June 30,
1998, Consolidated and consolidating balance sheets the Borrower and
its Subsidiaries as of the end of such month and Consolidated and
consolidating statements of income of the Borrower and its
Subsidiaries and Consolidated statements of cash flow of the Borrower
and its Subsidiaries for the period commencing at the end of the
previous month and ending with the end of such month and Consolidated
and consolidating statements of income
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of the Borrower and its Subsidiaries and Consolidated statements of
cash flow of each of the Borrower and its Subsidiaries for the period
commencing at the end of the previous Fiscal Year and ending with the
end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding month of the preceding
Fiscal Year and the corresponding figures for the corresponding month
of the current annual forecast, all in reasonable detail and duly
certified (subject to year-end audit adjustments) by the chief
financial officers of the Borrower, together with (i) a certificate of
the chief financial officers of the Borrower stating that no Default
has occurred and is continuing or, if a Default has occurred and is
continuing, a statement as to the nature thereof and the action that
the Borrower has taken and proposes to take with respect thereto, and
(ii) in the event of any change from GAAP in the generally accepted
accounting principles used in the preparation of such financial
statements, a statement of reconciliation conforming such financial
statements to GAAP.
(c) Quarterly Financials. As soon as available and in any event
within 50 days after the end of each quarter of each Fiscal Year,
Consolidated balance sheets of MEDIQ and its Subsidiaries as of the
end of such quarter and Consolidated and consolidating statements of
income and Consolidated statements of cash flow of MEDIQ and its
Subsidiaries and the Borrower and its Subsidiaries for the period
commencing at the end of the previous fiscal quarter and ending with
the end of such fiscal quarter and Consolidated and consolidating
statements of income and a Consolidated and consolidating statements
of cash flow of MEDIQ and its Subsidiaries and the Borrower and its
Subsidiaries for the period commencing at the end of the previous
Fiscal Year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding period of the preceding Fiscal Year, all in reasonable
detail and duly certified (subject to year-end audit adjustments) by
the chief financial officers of MEDIQ and the Borrower as having been
prepared in accordance with generally accepted accounting principles
consistent with those applied in the most recent annual audit,
together with (i) a certificate of said officers stating that no
Default has occurred and is continuing or, if a Default has occurred
and is continuing, a statement as to the nature thereof and the action
that MEDIQ or the Borrower has taken and proposes to take with respect
thereto, (ii) a schedule in form satisfactory to the Administrative
Agent of the computations used by MEDIQ and the Borrower in
determining compliance with the covenants contained in Sections
5.04(a) through (d) and (iii) in the event of any change from GAAP in
the generally accepted accounting principles used in the preparation
of such financial statements, a statement of reconciliation conforming
such financial statements to GAAP.
(d) Annual Financials. As soon as available and in any event
within 95 days after the end of each Fiscal Year, a copy of the annual
audit report for such year for MEDIQ and its Subsidiaries and the
Borrower and its Subsidiaries, including therein Consolidated balance
sheets of MEDIQ and its Subsidiaries and the Borrower and its
Subsidiaries as of the end of such Fiscal Year and Consolidated and
consolidating statements of income and Consolidated statements of cash
flow of MEDIQ and its Subsidiaries and the Borrower and its
Subsidiaries for such Fiscal Year, accompanied as to such Consolidated
statements, by an opinion acceptable to the Required Lenders of
Deloitte & Touche LLP or other independent public accountants of
recognized standing reasonably acceptable to the Required Lenders,
together with (i) a certificate of the chief financial officers of
MEDIQ and the Borrower stating that no Default has occurred and is
continuing or, if a default has occurred and is continuing, a
statement as to the nature thereof and the action that MEDIQ or the
Borrower has taken and proposes to take with respect thereto, (ii) a
schedule in form satisfactory to the Administrative Agent of the
computations used
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by MEDIQ and the Borrower in determining compliance with the
covenants contained in Sections 5.04(a) through (c) and (iii) in the
event of any change from GAAP in the generally accepted accounting
principles used in the preparation of such financial statements, a
statement of reconciliation conforming such financial statements to
GAAP.
(e) Annual Forecasts. As soon as available and in any event no
later than the end of each Fiscal Year, forecasts prepared by
management of MEDIQ, in form satisfactory to the Administrative Agent,
of Consolidated balance sheets, income statements and cash flow
statements on a monthly basis for the Fiscal Year following such
Fiscal Year then ended.
(f) ERISA Events and ERISA Reports. (i) Promptly and in any event
within 10 days after any Loan Party or any ERISA Affiliate knows or
has reason to know that any ERISA Event which could reasonably be
expected to have a Material Adverse Effect has occurred, a statement
of the chief financial officer of MEDIQ describing such ERISA Event
and the action, if any, that such Loan Party or such ERISA Affiliate
has taken and proposes to take with respect thereto and (ii) on the
date any records, documents or other information must be furnished to
the PBGC with respect to any Plan pursuant to Section 4010 of ERISA, a
copy of such records, documents and information.
(g) Plan Terminations. Promptly and in any event within two
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating its intention
to terminate any Plan or to have a trustee appointed to administer any
Plan.
(h) Actuarial Reports. Promptly upon receipt thereof by any Loan
Party or any ERISA Affiliate, a copy of the most recent actuarial
valuation report of each Plan.
(i) Plan Annual Reports. Promptly and in any event within 30 days
after the filing thereof with the Internal Revenue Service, copies of
each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Plan.
(j) Multiemployer Plan Notices. Promptly and in any event within
five Business Days after receipt thereof by any Loan Party or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
each notice concerning (i) the imposition of Withdrawal Liability by
any such Multiemployer Plan, (ii) the reorganization or termination,
within the meaning of Title IV of ERISA, of any such Multiemployer
Plan or (iii) the amount of liability incurred, or that may be
incurred, by such Loan Party or any ERISA Affiliate in connection with
any event described in clause (i) or (ii) except where such imposition
or reorganization could not reasonably be expected to have a Material
Adverse Effect.
(k) Litigation. Promptly after the commencement thereof, notice
of all actions, suits, investigations, litigation and proceedings
before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, affecting any
Loan Party or any of its Subsidiaries of the type described in Section
4.01(j) or such action, suit, investigation, litigation or proceeding
alleges monetary damages in excess of $1,000,000.
(l) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that any Loan Party or any of its Subsidiaries sends to its
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stockholders, and copies of all regular, periodic and special
reports, and all registration statements, that any Loan Party or any
of its Subsidiaries files with the Securities and Exchange Commission
or any governmental authority that may be substituted therefor, or
with any national securities exchange.
(m) Creditor Reports. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries (including,
without limitation, the holders of the Subordinated Notes) pursuant to
the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to the Lender Parties pursuant
to any other clause of this Section 5.03.
(n) Agreement Notices. Promptly upon receipt thereof, copies of
all notices, requests and other documents received by any Loan Party
or any of its Subsidiaries under or pursuant to any Related Document
or indenture, loan or credit or similar agreement regarding or related
to any breach or default by any party thereto or any other event that
could materially impair the value of the interests or the rights of
any Loan Party or any of its Subsidiaries or otherwise have a Material
Adverse Effect and copies of any amendment, modification or waiver of
any provision of the NutraMax Note, the NutraMax Letter of Credit, any
Related Agreement or indenture, loan or credit or similar agreement
and, from time to time upon request by the Administrative Agent, such
information and reports regarding the Related Documents as the
Administrative Agent may reasonably request.
(o) Revenue Administrative Agent Reports. Within 10 days after
receipt, copies of all Revenue Administrative Agent Reports (Internal
Revenue Service Form 886), or other written proposals of the Internal
Revenue Service, that propose, determine or otherwise set forth
positive adjustments to the Federal income tax liability of the
affiliated group (within the meaning of Section 1504(a)(1) of the
Internal Revenue Code) of which the Borrower is a member aggregating
$250,000 or more.
(p) Environmental Conditions. Promptly after the assertion or
occurrence thereof, notice of any Environmental Action against or of
any condition or occurrence on any property of any Loan Party or any
of its Subsidiaries that results in a material noncompliance by any
Loan Party or any of its Subsidiaries with any Environmental Law or
Environmental Permit that (i) could be reasonably expected to have a
Material Adverse Effect or (ii) cause any property described in the
Mortgage to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law.
(q) Real Property. As soon as available and in any event within
30 days after the end of each Fiscal Year, a report supplementing
Schedule 4.01(hh), including an identification of all owned real
property disposed of by the Loan Parties or any of their Subsidiaries
during such Fiscal Year, a list and description (including the street
address, county or other relevant jurisdiction, state, record owner,
book value thereof) of all real property acquired during such Fiscal
Year and a description of such other changes in the information
included in such Schedules as may be necessary for such Schedule to be
accurate and complete.
(r) Insurance. As soon as available and in any event within 30
days after the end of each Fiscal Year, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for
the Loan Parties and their Subsidiaries and containing such additional
information as any Lender Party (through the Administrative Agent) may
reasonably specify.
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(s) Borrowing Base Certificate. As soon as available and in any
event within 20 days after the end of each month, a Borrowing Base
Certificate, as at the end of such month, certified by the chief
financial officer of the Borrower.
(t) Management Letter. Upon receipt, a copy of any management
letter prepared with respect to such Fiscal Year prepared by the
accounting firm that delivered the opinion referred to in Section
5.02(d) for such Fiscal Year.
(u) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries
as any Lender Party (through the Administrative Agent) may from time
to time reasonably request.
SECTION 5.04. Financial Covenants. So long as any Obligation under or in
respect of any Loan Document of any Loan Party shall remain unpaid, any Letter
of Credit shall be outstanding, any Bank Hedge Agreement shall be in effect or
any Lender Party shall have any Commitment hereunder, the Borrower and it
Subsidiaries will:
(a) Leverage Ratio. Maintain on a Consolidated basis for itself
and its Subsidiaries a Leverage Ratio for each Rolling Period ended as
at the end of the quarter (of the Fiscal Year) ending on the date set
forth below of not more than the amount set forth below for such
Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
September 30, 1998 6.35:1.00
December 31, 1998 6.35:1.00
March 31, 1999 6.35:1.00
June 30, 1999 6.25:1.00
September 30, 1999 6.25:1.00
December 31, 1999 6.00:1.00
March 31, 2000 5.75:1.00
June 30, 2000 5.50:1.00
September 30, 2000 5.25:1.00
December 31, 2000 5.00:1.00
March 31, 2001 4.75:1.00
June 30, 2001 4.50:1.00
September 30, 2001 4.25:1.00
December 31, 2001 4.00:1.00
March 31, 2002 4.00:1.00
June 30, 2002 4.00:1.00
September 30, 2002 4.00:1.00
December 31, 2002 4.00:1.00
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March 31, 2003 4.00:1.00
June 30, 2003 4.00:1.00
September 30, 2003 4.00:1.00
December 31, 2003 4.00:1.00
March 31, 2004 4.00:1.00
June 30, 2004 4.00:1.00
September 30, 2004 4.00:1.00
December 31, 2004 4.00:1.00
March 31, 2005 4.00:1.00
June 30, 2005 4.00:1.00
September 30, 2005 4.00:1.00
December 31, 2005 4.00:1.00
March 31, 2006 4.00:1.00
June 30, 2006 4.00:1.00
(b) Senior Leverage Ratio. Maintain on a Consolidated basis for
itself and its Subsidiaries a Senior Leverage Ratio for each Rolling
Period ended as at the end of the quarter (of the Fiscal Year) ending
on the date set forth below of not more than the amount set forth
below for such Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
September 30, 1998 3.75:1.00
December 31, 1998 3.75:1.00
March 31, 1999 3.75:1.00
June 30, 1999 3.75:1.00
September 30, 1999 3.50:1.00
December 31, 1999 3.50:1.00
March 31, 2000 3.25:1.00
June 30, 2000 3.25:1.00
September 30, 2000 3.25:1.00
December 31, 2000 3.00:1.00
March 31, 2001 3.00:1.00
June 30, 2001 2.75:1.00
September 30, 2001 2.75:1.00
December 31, 2001 2.50:1.00
March 31, 2002 2.50:1.00
June 30, 2002 2.25:1.00
September 30, 2002 2.25:1.00
December 31, 2002 2.25:1.00
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March 31, 2003 2.25:1.00
June 30, 2003 2.25:1.00
September 30, 2003 2.25:1.00
December 31, 2003 2.25:1.00
March 31, 2004 2.25:1.00
June 30, 2004 2.25:1.00
September 30, 2004 2.25:1.00
December 31, 2004 2.25:1.00
March 31, 2005 2.25:1.00
June 30, 2005 2.25:1.00
September 30, 2005 2.25:1.00
December 31, 2005 2.25:1.00
March 31, 2006 2.25:1.00
June 30, 2006 2.25:1.00
(c) Fixed Charge Coverage Ratio. Maintain on a Consolidated basis
for itself and its Subsidiaries a Fixed Charge Coverage Ratio for each
Rolling Period ended as at the end of each quarter (of the Fiscal
Year) ending on the date set forth below of not less than the amount
set forth below for such Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
December 31, 1998 1.00:1.00
March 31, 1999 1.05:1.00
June 30, 1999 1.05:1.00
September 30, 1999 1.10:1.00
December 31, 1999 1.10:1.00
March 31, 2000 1.10:1.00
June 30, 2000 1.10:1.00
September 30, 2000 1.15:1.00
December 31, 2000 1.15:1.00
March 31, 2001 1.15:1.00
June 30, 2001 1.15:1.00
September 30, 2001 1.15:1.00
December 31, 2001 1.15:1.00
March 31, 2002 1.15:1.00
June 30, 2002 1.15:1.00
September 30, 2002 1.15:1.00
December 31, 2002 1.15:1.00
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March 31, 2003 1.15:1.00
June 30, 2003 1.15:1.00
September 30, 2003 1.15:1.00
December 31, 2003 1.15:1.00
March 31, 2004 1.15:1.00
June 30, 2004 1.15:1.00
September 30, 2004 1.15:1.00
December 31, 2004 1.15:1.00
March 31, 2005 1.05:1.00
June 30, 2005 1.05:1.00
September 30, 2005 1.05:1.00
December 31, 2005 1.05:1.00
March 31, 2006 1.05:1.00
June 30, 2006 1.05:1.00
(d) Interest Coverage Ratio. Maintain on a Consolidated basis for
itself and its Subsidiaries an Interest Coverage Ratio for each
Rolling Period ended as at the end of the quarter (of the Fiscal Year)
ending on the date set forth below of not less than the amount set
forth below for such Rolling Period:
Rolling Period Ending On Ratio
------------------------ -----
December 31, 1998 1.50:1.00
March 31, 1999 1.70:1.00
June 30, 1999 1.70:1.00
September 30, 1999 1.70:1.00
December 31, 1999 1.80:1.00
March 31, 2000 1.90:1.00
June 30, 2000 2.00:1.00
September 30, 2000 2.00:1.00
December 31, 2000 2.00:1.00
March 31, 2001 2.25:1.00
June 30, 2001 2.25:1.00
September 30, 2001 2.50:1.00
December 31, 2001 2.50:1.00
March 31, 2002 2.50:1.00
June 30, 2002 2.50:1.00
September 30, 2002 2.50:1.00
December 31, 2002 2.50:1.00
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March 31, 2003 2.50:1.00
June 30, 2003 2.50:1.00
September 30, 2003 2.50:1.00
December 31, 2003 2.50:1.00
March 31, 2004 2.50:1.00
June 30, 2004 2.50:1.00
September 30, 2004 2.50:1.00
December 31, 2004 2.50:1.00
March 31, 2005 2.50:1.00
June 30, 2005 2.50:1.00
September 30, 2005 2.50:1.00
December 31, 2005 2.50:1.00
March 31, 2006 2.50:1.00
June 30, 2006 2.50:1.00
(e) Capital Expenditures. Not make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate of all such Capital Expenditures made by MEDIQ and its
Subsidiaries in any Fiscal Year to exceed the amount set forth on
Schedule III hereto for such Fiscal Year; provided, however, that if
any Investment pursuant to Section 5.02(e)(ii)(A), (B), (E) and (F)
shall have occurred, for each increment of $3,000,000 of Pro Forma
EBITDA, as determined at any time during such Fiscal Year on a
historical basis for the twelve month period ending on the date of
such determination, attributable to all such Investments, the amount
specified above shall be increased by an increment of $1,000,000, so
long as such total amount shall not exceed $5,000,000; provided
further that if, at the end of any Fiscal Year (the "Prior Fiscal
Year"), the amount specified above for such Fiscal Year exceeds the
amount of Capital Expenditures made by the Borrower during such Fiscal
Year (the amount of such excess being the "Excess Amount"), the
Borrower and its Subsidiaries shall be entitled to make additional
Capital Expenditures in the succeeding Fiscal Year in an amount (such
amount being referred to herein as the "Carryover Amount") equal to
the lesser of (i) the Excess Amount and (ii) 1/2 of the amount
specified above for the Prior Fiscal Year.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) the Borrower or any other Loan Party shall fail to pay any
principal of any Advance when the same becomes due and payable, or the
Borrower or any other Loan Party shall fail to pay any interest on any
Advance or make any other payment under any Loan Document within two
Business Days after the same becomes due and payable; or
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(b) any representation or warranty made by any Loan Party (or any
of its officers) under or in connection with any Loan Document shall
prove to have been incorrect in any material respect when made; or
(c) any Loan Party shall fail to perform or observe any term,
covenant or agreement contained in Section 2.14, 2.16, 5.01(e), (f),
(g), (l), (m) or (n), 5.02, 5.03 or 5.04; or
(d) any Loan Party shall fail to perform or observe any other
term, covenant or agreement contained in any Loan Document on its part
to be performed or observed if such failure shall remain unremedied
for 15 days after the earlier of the date on which (A) a Responsible
Officer of the Borrower becomes aware of such failure or (B) written
notice thereof shall have been given to the Borrower by the
Administrative Agent or any Lender Party; or
(e) any Loan Party or any of its Subsidiaries shall fail to pay
any principal of, premium or interest on or any other amount payable
in respect of any Debt that is outstanding in a principal or notional
amount of at least $1,000,000 either individually or in the aggregate
(but excluding Debt outstanding hereunder) of such Loan Party or such
Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period, if
any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate, or to permit the acceleration of,
the maturity of such Debt or otherwise to cause, or to permit the
holder thereof to cause, such Debt to mature; or any such Debt shall
be declared to be due and payable or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Subsidiaries shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against any Loan Party or any of its Subsidiaries
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it
or for any substantial part of its property and, in the case of any
such proceeding instituted against it (but not instituted by it) that
is being diligently contested by it in good faith, either such
proceeding shall remain undismissed or unstayed for a period of 30
days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, it or any substantial part of its property) shall occur;
or any Loan Party or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this
subsection (f); or
(g) any judgment or order for the payment of money in excess of
$1,000,000 (to the extent not fully paid or discharged) shall be
rendered against any Loan Party or any of its Subsidiaries and
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either (i) enforcement proceedings shall have been commenced by
any creditor upon such judgment or order or (ii) there shall be any
period of 10 consecutive days during which a stay of enforcement of
such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(h) any non-monetary judgment or order shall be rendered against
any Loan Party or any of its Subsidiaries that could have a Material
Adverse Effect, and there shall be any period of 10 consecutive days
during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(m) shall for any reason cease to be
valid and binding on or enforceable against any Loan Party to it, or
any such Loan Party shall so state in writing; or
(j) any Collateral Document after delivery thereof pursuant to
Section 3.01 or 5.01(m) shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first
priority lien on and security interest in the Collateral purported to
be covered thereby except as permitted hereunder; or
(k) (i) the Equity Group shall cease to be the record and
beneficial owner of at least 51% (on a fully diluted basis) of the
total number of shares of capital stock of MEDIQ issued and
outstanding or the BRS Group shall cease to be the record and
beneficial owner of at least 35% (on a fully diluted basis) of the
total number of shares of capital stock of MEDIQ issued and
outstanding; (ii) any Person or two or more Persons acting in concert
other than the Equity Group shall have acquired by contract or
otherwise, or shall have entered into a contract or arrangement that,
upon consummation, will result in its or their acquisition of the
power to exercise, directly or indirectly, a controlling influence
over the management or policies of MEDIQ; (iii) MEDIQ shall cease to
own 100% of the capital stock of the Borrower; (iv) any member of the
Equity Group shall create, incur, assume or suffer to exist any Lien
on the shares of common stock of MEDIQ owned by it (other than Liens
consisting of restrictions on the transfer of such stock contained in
the shareholders agreements of MEDIQ) which would not permit at least
51% (on a fully diluted basis) of the total number of shares of
capital stock of MEDIQ issued and outstanding to be free of any such
Lien or any member of the BRS Group shall create, incur, assume or
suffer to exist any Lien on the shares of common stock of MEDIQ owned
by it (other than Liens consisting of restrictions on the transfer of
such stock contained in the shareholders agreements of MEDIQ) which
would not permit at least 35% (on a fully diluted basis) of the total
number of shares of capital stock of MEDIQ issued and outstanding to
be free of any such Lien; or (v) any other event which would
constitute a "Change of Control" under the Senior Subordinated Note
Indenture or the Discount Debenture Indenture; or
(l) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Loan Parties and the
ERISA Affiliates related to such ERISA Event) exceeds $1,000,000; or
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(m) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that,
when aggregated with all other amounts required to be paid to
Multiemployer Plans by the Loan Parties and the ERISA Affiliates as
Withdrawal Liability (determined as of the date of such notification),
exceeds $250,000 or requires payments exceeding $50,000 per annum; or
(n) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, and as a result of such
reorganization or termination the aggregate annual contributions of
the Loan Parties and the ERISA Affiliates to all Multiemployer Plans
that are then in reorganization or being terminated have been or will
be increased over the amounts contributed to such Multiemployer Plans
for the plan years of such Multiemployer Plans immediately preceding
the plan year in which such reorganization or termination occurs by an
amount exceeding $50,000;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each Lender Party and the obligation of each Lender
to make Advances (other than Letter of Credit Advances by the Issuing Bank or a
Revolving Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a
Revolving Credit Lender pursuant to Section 2.02(b)) and of the Issuing Bank to
issue Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Advances, all interest
thereon and all other amounts payable under this Agreement, the Notes, if any,
and the other Loan Documents to be forthwith due and payable, whereupon the
Advances, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; provided,
however, that, in the event of an actual or deemed entry of an order for relief
with respect to any Loan Party or any of its Subsidiaries under the Federal
Bankruptcy Code, (x) the Commitments of each Lender Party and the obligation of
each Lender to make Advances (other than Letter of Credit Advances by the
Issuing Bank or a Revolving Credit Lender pursuant to Section 2.03(c) and Swing
Line Advances by a Revolving Credit Lender pursuant to Section 2.02(b) and of
the Issuing Bank to issue Letters of Credit shall automatically be terminated
and (y) the Advances, all such interest and all such amounts shall automatically
become and be due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit Upon Default. If
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, and upon the request of the Required Lenders shall, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, pay to the Administrative Agent on behalf of the Lender Parties in same
day funds at the Administrative Agent's office designated in such demand, for
deposit in the L/C Cash Collateral Account, an amount equal to the aggregate
Available Amount of all Letters of Credit then outstanding. If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to any right or claim of any Person other than the
Administrative Agent and the Lender Parties or that the total amount of such
funds is less than the aggregate Available Amount of all Letters of Credit, the
Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of
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funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent determines to be free and clear of any such right and
claim. Upon the drawing of any Letter of Credit for which funds are on deposit
in the L/C Cash Collateral Account, such funds shall be applied to reimburse the
Issuing Bank or Revolving Credit Lenders, as applicable, to the extent permitted
by applicable law.
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender Party (in its
capacities as a Lender, the Issuing Bank (if applicable) and a potential Hedge
Bank) hereby appoints and authorizes each Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this Agreement and
the other Loan Documents as are delegated to such Agent by the terms hereof and
thereof, together with such powers and discretion as are reasonably incidental
thereto. As to any matters not expressly provided for by the Loan Documents
(including, without limitation, enforcement or collection of the Debt resulting
from the Advances), no Agent shall be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding
upon all Lender Parties and all holders of Notes; provided, however, that no
Agent shall be required to take any action that exposes such Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender Party prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agents' Reliance, Etc. None of the Agents nor any of their
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct as
found in a final, non appealable judgment by a court of competent jurisdiction.
Without limitation of the generality of the foregoing, each Agent: (a) may treat
the Lender that made any Advance as the holder of the Debt resulting therefrom
until the Administrative Agent receives and accepts an Assignment and Acceptance
entered into by such Lender, as assignor, and an Eligible Assignee, as assignee,
as provided in Section 8.07; (b) may consult with legal counsel (including
counsel for any Loan Party), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
Party and shall not be responsible to any Lender Party for any statements,
warranties or representations (whether written or oral) made in or in connection
with the Loan Documents; (d) shall not have any duty to ascertain or to inquire
as to the performance or observance of any of the terms, covenants or conditions
of any Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any Lien or security interest created or purported to be created
under or in connection with, any Loan Document or any other instrument or
document furnished pursuant thereto; and (f) shall incur no liability under or
in respect of any Loan Document by acting upon any notice, consent, certificate
or other instrument or writing (which may be by telegram, telecopy or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
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SECTION 7.03. BNP, NationsBank, CSFB and Affiliates. With respect to its
Commitments, the Advances made by it and the Notes issued to it, each of BNP,
NationsBank and CSFB shall have the same rights and powers under the Loan
Documents as any other Lender Party and may exercise the same as though it were
not an Agent; and the term "Lender Party" or "Lenders Parties" shall, unless
otherwise expressly indicated, include BNP in its individual capacity. Each of
BNP, NationsBank and CSFB and its affiliates may accept deposits from, lend
money to, act as trustee under indentures of, accept investment banking
engagements from and generally engage in any kind of business with, any Loan
Party, any of its Subsidiaries and any Person who may do business with or own
securities of any Loan Party or any such Subsidiary, all as if BNP, NationsBank
and CSFB were not Agents and without any duty to account therefor to the Lender
Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party acknowledges
that it has, independently and without reliance upon any Agent or any other
Lender Party and based on the financial statements referred to in Section 4.01
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender Party
also acknowledges that it will, independently and without reliance upon any
Agent or any other Lender Party and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally agrees to
indemnify each of the Agents (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever (including, without limitation, reasonable fees and
expenses of counsel) that may be imposed on, incurred by, or asserted against
such Agent in any way relating to or arising out of the Loan Documents or any
action taken or omitted by such Agent under the Loan Documents (collectively,
the "Indemnified Costs"); provided, however, that no Lender Party shall be
liable for any portion of such Indemnified Costs resulting from such Agent's
gross negligence or willful misconduct as found in a final, non appealable
judgment by a court of competent jurisdiction. Without limitation of the
foregoing, each Lender Party agrees to reimburse such Agent promptly
upon demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under Section
8.04, to the extent that such Agent is not promptly reimbursed for such costs
and expenses by the Borrower. For purposes of this Section 7.05, the Lender
Parties' respective ratable shares of any amount shall be determined, at any
time, according to the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (b) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the aggregate unused portions of their
respective Term Commitments at such time and (d) their respective unused
Acquisition Commitments and Unused Revolving Credit Commitments at such time. In
the event that any Defaulted Advance shall be owing by any Defaulting Lender at
any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be considered
to be unused for the purposes of this Section 7.05(a) to the extent of the
amount of such Defaulted Advance. In the case of any investigation, litigation
or proceeding giving rise to any Indemnified Costs, this Section 7.05 applies
whether any such investigation, litigation or proceeding is brought by an Agent,
any Lender, any other Lender Party or a third party. The failure of any Lender
Party to reimburse an Agent promptly upon demand for its ratable share of any
amount required to be paid by the Lender Party to such Agent as provided herein
shall not relieve any other Lender Party of its obligation hereunder to
reimburse any Agent for its ratable share of such amount, but no Lender Party
shall be responsible for the failure of any other Lender Party to reimburse any
Agent for such other Lender Party's
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ratable share of such amount. Without prejudice to the survival of any other
agreement of any Lender Party hereunder, the agreement and obligations of each
Lender Party contained in this Section 7.05(a) shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under the
other Loan Documents.
(b) Each Lender severally agrees to indemnify the Issuing Bank (to the
extent not promptly reimbursed by the Borrower) from and against such
Lender's ratable share (determined as provided below) of any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever
that may be imposed on, incurred by, or asserted against the Issuing Bank
in any way relating to or arising out of the Loan Documents or any action
taken or omitted by the Issuing Bank under the Loan Documents; provided,
however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Issuing Bank's
gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender agrees to reimburse the Issuing Bank promptly upon
demand for its ratable share of any costs and expenses (including, without
limitation, fees and expenses of counsel) payable by the Borrower under
Section 8.04, to the extent that the Issuing Bank is not promptly
reimbursed for such costs and expenses by the Borrower. For purposes of
this Section 7.05(b), the Lender Parties' respective ratable shares of any
amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and
owing to the respective Lender Parties, (b) their respective Pro Rata
Shares of the aggregate Available Amount of all Letters of Credit
outstanding at such time, (c) their respective unused portions of their
Term Commitments at such time and (d) their respective Unused Acquisition
Commitments and Unused Revolving Credit Commitments at such time. In the
event that any Defaulted Advance shall be owing by any Defaulting Lender at
any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be
considered to be unused for purposes of this Section 7.05(b) to the extent
of the amount of such Defaulted Advance. The failure of any Lender Party to
reimburse the Issuing Bank promptly upon demand for its ratable share of
any amount required to be paid by the Lender Parties to the Issuing Bank as
provided herein shall not relieve any other Lender Party of its obligation
hereunder to reimburse the Issuing Bank for its ratable share of such
amount, but no Lender Party shall be responsible for the failure of any
other Lender Party to reimburse the Issuing Bank for such other Lender
Party's ratable share of such amount. Without prejudice to the survival of
any other agreement of any Lender Party hereunder, the agreement and
obligations of each Lender Party contained in this Section 7.05(b) shall
survive the payment in full of principal, interest and all other amounts
payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Administrative Agents. The Administrative Agent may
resign at any time by giving written notice thereof to the Lender Parties and
the Borrower and may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the
retiring Administrative Agent's giving of notice of resignation or the Required
Lenders' removal of the retiring Administrative Agent, then the retiring
Administrative Agent may, on behalf of the Lender Parties, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the United States or of any state thereof and having a combined capital and
surplus of at least $250,000,000. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor Administrative Agent and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such amendments or
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supplements to the Mortgage, and such other instruments or notices, as may be
necessary or desirable, or as the Required Lenders may request, in order to
continue the perfection of the Liens granted or purported to be granted by the
Collateral Documents, such successor Administrative Agent shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Administrative Agent, and the retiring Administrative Agent shall
be discharged from its duties and obligations under the Loan Documents. After
any retiring Administrative Agent's resignation or removal hereunder as
Administrative Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.
SECTION 7.07. Documentation Agent, Arranger and Syndication Agent. Neither
the Documentation Agent nor the Syndication Agent shall have duties except as
specifically provided by this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or any Notes or any other Loan Document, nor consent to any
departure by any Loan Party therefrom, shall in any event be effective unless
the same shall be in writing and signed (or, in the case of the Collateral
Documents, consented to) by the Required Lenders, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that (a) no amendment, waiver or
consent shall, unless in writing and signed by all of the Lenders, (other than
any Lender Party that is, at such time, a Defaulting Lender) do any of the
following at any time: (i) waive any of the conditions specified in Section 3.01
or, in the case of the Initial Extension of Credit, Section 3.02, (ii) change
the number of Lenders or the percentage of (x) the Commitments, (y) the
aggregate unpaid principal amount of the Advances or (z) the aggregate Available
Amount of outstanding Letters of Credit that, in each
case, shall be required for the Lenders or any of them to take any action
hereunder, (iii) release all or substantially all of the Collateral in any
transaction or series of related transactions or permit the creation,
incurrence, assumption or existence of any Lien on all or substantially all of
the Collateral in any transaction or series of related transactions to secure
any Obligations other than Obligations owing to the Secured Parties under the
Loan Documents or (iv) amend this Section 8.01 and (b) no amendment, waiver or
consent shall, unless in writing and signed by the Required Lenders and each
Lender that has a Commitment under the Term Facility, the Acquisition Facility
or Revolving Credit Facility if affected by such amendment, waiver or consent,
(i) increase the Commitments of such Lender or subject such Lender to any
additional obligations, (ii) reduce the principal of, or interest on, the
Advances payable to such Lender or any fees or other amounts payable hereunder
to such Lender, (iii) postpone any date fixed for any payment of principal of,
or interest on, the Advances payable to such Lender or any fees or other amounts
payable hereunder to such Lender or (iv) change the order of application of any
prepayment set forth in Section 2.06 in any manner that materially affects such
Lender; provided further that no amendment, waiver or consent shall, unless in
writing and signed by the Swing Line Bank or the Issuing Bank, as the case may
be, in addition to the Lenders required above to take such action, affect the
rights or obligations of the Swing Line Bank or the Issuing Bank, as the case
may be, under this Agreement; and provided further that no amendment, waiver or
consent shall, unless in writing and signed by any Agent in addition to the
Lenders required above to take such action, affect the rights or duties of such
Agent under this Agreement or the other Loan Documents.
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(b) Each Lender Party grants (x) to the Administrative Agent the right
to purchase all (but not less than all) of such Lender Party's Commitments
and Advances owing to it and all of its rights and obligations hereunder
and under the other Loan Documents at a price equal to the aggregate amount
of outstanding Advances owed to such Lender Party (together with all
accrued and unpaid interest and fees owed to such Lender), and (y) so long
as no Default has occurred and is continuing, to the Borrower the right to
cause an assignment of all (but not less than all) of such Lender Party's
Commitments and Advances owing to it and all of its rights and obligations
hereunder and under the other Loan Documents, which right may be exercised
by the Administrative Agent or the Borrower, as the case may be, if such
Lender Party refuses to execute any amendment, waiver or consent which
requires the written consent of all the Lenders and to which the Required
Lenders, the Administrative Agent and the Borrower have agreed. Each Lender
Party agrees that if the Administrative Agent or the Borrower, as the case
may be, exercises its option hereunder, it shall promptly execute and
deliver all agreements and documentation necessary to effectuate such
assignment as set forth in Section 8.07.
SECTION 8.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered by an
overnight courier of nationally recognized standing, if to the Borrower or any
other Loan Party, at its address at One MEDIQ Plaza, Pennsauken, New Jersey
08110, Attention: Chief Financial Officer and General Counsel, telecopier number
(609) 661-0958; if to any Initial Lender or any Initial Issuing Bank, at its
Domestic Lending Office specified opposite its name on Schedule I hereto; if to
any other Lender Party, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender Party; if to BNP,
at its address at 499 Park Avenue, New York, New York 10022, Attention:
Structured Finance Group, telecopier number (212) 418-8269; if to NationsBank,
at its address at 1 NationsBank Plaza, 5th Floor, Nashville, TN 37239-1697,
Attention: Health Care Finance Group, telecopier number (615) 749-4640 with a
copy to NationsBank, N.A., 100 North Tryon Street, NationsBank Corporate Center,
Charlotte, NC 28255, Attention: Health Care Finance Group, telecopier number
(704) 388-6002 and if to CSFB, at its address at Eleven Madison Avenue, New
York, New York, Attention: Corporate Banking Group, telecopier number (212)
325-8309; or, as to each party, at such other address as shall be designated by
such party in a written notice to the other parties. All such notices and
communications shall, when mailed, telegraphed, telecopied, telexed or sent by
courier, be effective when deposited in the mails, delivered to the telegraph
company, transmitted by telecopier, confirmed by telex answerback or delivered
to the overnight courier, respectively, except that notices and communications
to the Administrative Agent pursuant to Article II, III or VIII shall not be
effective until received by the Administrative Agent. Delivery by telecopier of
an executed counterpart of any amendment or waiver of any provision of this
Agreement or the Notes or of any Exhibit hereto to be executed and delivered
hereunder shall be effective as delivery of a manually executed counterpart
thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
Party or any Agent to exercise, and no delay in exercising, any right hereunder
or under any Note shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to pay on demand
(i) all reasonable costs and expenses of the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification and
amendment of the Loan Documents (including, without limitation,
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(A) all due diligence, collateral review, syndication, transportation, computer,
duplication, appraisal, audit, insurance, consultant, search, filing and
recording fees and expenses and (B) the reasonable fees and expenses of counsel
for the Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to its rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Loan Documents,
with respect to negotiations with any Loan Party or with other creditors of any
Loan Party or any of its Subsidiaries arising out of any Default or any events
or circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all reasonable costs and expenses of the
Agents, the Arranger, and the Lender Parties in connection with the enforcement
of the Loan Documents, whether in any action, suit or litigation, any
bankruptcy, insolvency or other similar proceeding affecting creditors' rights
generally (including, without limitation, the reasonable fees and expenses of
counsel for the Administrative Agent and each Lender Party with respect
thereto).
(b) The Borrower agrees to indemnify and hold harmless each Agent,
each Lender Party and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "Indemnified Party")
from and against any and all Indemnified Costs that may be incurred by or
asserted or awarded against any Indemnified Party, in each case arising out
of or in connection with or by reason of, or in connection with the
preparation for a defense of, any investigation, litigation or proceeding
arising out of, related to or in connection with (i) the Facilities, the
actual or proposed use of the proceeds of the Advances or the Letters of
Credit, the Loan Documents or any of the transactions contemplated thereby,
including, without limitation, any acquisition or proposed acquisition
(including, without limitation, the Merger, the Recapitalization and any of
the other transactions contemplated hereby) by the equity investors of
MEDIQ or any of their Subsidiaries or Affiliates of all or any portion of
the stock or debt securities or substantially all the assets of the Company
or any of its Subsidiaries or (ii) the actual or alleged presence of
Hazardous Materials on any property of any Loan Party or any of its
Subsidiaries or any Environmental Action relating in any way to any Loan
Party or any of its Subsidiaries except to the extent such Indemnified
Costs are found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. The Borrower also agrees not to assert
any claim against any Agent, any Lender Party or any of their Affiliates,
or any of their respective officers, directors, employees, attorneys and
agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facilities,
the actual or proposed use of the proceeds of the Advances or the Letters
of Credit, the Loan Documents or any of the transactions contemplated
thereby. In the case of an investigation, litigation or other proceeding to
which the indemnity in this Section 8.04(b) applies, such indemnity shall
be effective whether or not such investigation, litigation or proceeding is
brought by any Loan Party, its directors, shareholders or creditors or an
Indemnified Party or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated.
(c) If any payment of principal of, or Conversion of, any Eurodollar
Rate Advance is made by the Borrower to or for the account of a Lender
Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i)
or 2.10(d), acceleration of the maturity of the Advances pursuant to
Section 6.01 or for any other reason or by an Eligible Assignee to a Lender
Party other than on the last day of the Interest Period for such Advance
upon an assignment of rights and obligations under this Agreement pursuant
to Section 8.07 as a result of a demand by the Borrower pursuant to Section
8.07(a), the Borrower shall, upon demand by such Lender Party (with a copy
of such demand to the Administrative Agent), pay to the Administrative
Agent for the account of such Lender Party any amounts
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required to compensate such Lender Party for any additional losses, costs or
expenses that it may reasonably incur as a result of such payment, including,
without limitation, any loss (including loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by any Lender Party to fund or maintain such Advance.
(d) If any Loan Party fails to pay when due any costs, expenses or
other amounts payable by it under any Loan Document, including, without
limitation, fees and expenses of counsel and indemnities, such amount may
be paid on behalf of such Loan Party by the Administrative Agent or any
Lender Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement of any
Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this
Section 8.04 shall survive the payment in full of principal, interest and
all other amounts payable hereunder and under any of the other Loan
Documents.
SECTION 8.05. Right of Setoff. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Advances due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of setoff) that
such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by the Borrower and each Agent and when each Agent
shall have been notified by each Initial Lender and the Initial Issuing Bank
that such Initial Lender and the Initial Issuing Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, each
Agent and each Lender Party and their respective successors and assigns, except
that the Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender may and, so
long as no Default has occurred and is continuing, if demanded by the Borrower
(following a demand by such Lender pursuant to Section 2.10 or 2.12) upon at
least 10 Business Days' notice to such Lender and the Administrative Agent, will
assign to one or more Eligible Assignees all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment or Commitments, the Advances owing to it and the Note
or Notes held by it); provided, however, that (i) each such assignment shall be
of a uniform, and not a varying, percentage of all rights and obligations under
and in respect of one or more Facilities, (ii) except in the case of an
assignment to a Person that, immediately prior to such assignment, was a Lender
or
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an Affiliate or Approved Fund of a Lender or an assignment of all of a Lender's
rights and obligations under this Agreement, the aggregate amount of the
Commitments being assigned to such Eligible Assignee pursuant to such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000, or such other amount as
the Administrative Agent and the assigning Lender and, so long as no Event of
Default has occurred and is continuing, the Borrower shall agree, and shall be
in an integral multiple of $500,000, or, if the aggregate amount of the
Commitment of such assigning Lender is less than $5,000,000, all of such
Lender's Commitment, (iii) each such assignment shall be to an Eligible
Assignee, (iv) each such assignment made as a result of a demand by the Borrower
pursuant to this Section 8.07(a) shall be arranged by the Borrower after
consultation with the Administrative Agent and shall be either an assignment of
all of the rights and obligations of the assigning Lender under this Agreement
or an assignment of a portion of such rights and obligations made concurrently
with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement, (v)
no Lender shall be obligated to make any such assignment as a result of the
demand by the Borrower pursuant to this Section 8.07(a) unless and until such
Lender shall have received one or more payments from either the Borrower or one
or more Eligible Assignees in an aggregate amount at least equal to the
aggregate outstanding principal amount of the Advances owing to such Lender,
together with accrued interest thereon to the date of payment of such principal
amount and all other amounts payable to such Lender under this Agreement, (vi)
no such assignments shall be permitted without the consent of the Administrative
Agent until the Administrative Agent shall have notified the Lender Parties that
syndication of the Commitments hereunder has been completed as determined by the
Agents, and (vii) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance, together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000; provided, however,
that such fee shall not be required if any such assignment was made by a Lender
to an Affiliate of such Lender.
(b) Upon such execution, delivery, acceptance and recording, from and
after the effective date specified in such Assignment and Acceptance, (x)
the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing
Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's or Issuing
Bank's rights and obligations under this Agreement, such Lender or Issuing
Bank shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, each
Lender Party assignor thereunder and each assignee thereunder confirm to
and agree with each other and the other parties thereto and hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other
Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any
Lien or security interest created or purported to be created under or in
connection with, this Agreement or any other Loan Document or any other
instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or
any other Loan Party or the performance or observance by any Loan Party of
any of its obligations under any Loan Document or any other instrument or
document furnished pursuant thereto; (iii) such
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assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements referred to in Section 4.01 and
such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance
upon the Administrative Agent, such assigning Lender Party or any other
Lender Party and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee
confirms that it is an Eligible Assignee; (vi) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Documents
as are delegated to the Administrative Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender or Issuing Bank, as the case may
be.
(d) The Administrative Agent shall maintain at its address referred to
in Section 8.02 a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lender Parties and the Commitment under each Facility of,
and principal amount of the Advances owing under each Facility to, each
Lender Party from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lender Parties may treat each
Person whose name is recorded in the Register as a Lender Party hereunder
for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender Party and an assignee, together with any Note or Notes
requested by the Assignee subject to such assignment, the Administrative
Agent shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit C hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Borrower. In the case of any
assignment by a Lender, within five Business Days after its receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Note or Notes, if any,
a new Note to the order of such Eligible Assignee, if requested by such
Eligible Assignee, in an amount equal to the Commitment assumed by it under
a Facility pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment hereunder under such Facility, a new Note,
if requested by such Lender, to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or
Notes, if requested, shall be in an aggregate principal amount equal to the
aggregate principal amount of such Lender's or Eligible Assignee's
Commitment hereunder, as the case may be, shall be dated the effective date
of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit A-1, A-2 or A-3 hereto, as the case may be.
(f) The Issuing Bank may assign to an Eligible Assignee all of its
rights and obligations under the undrawn portion of its Letter of Credit
Commitment at any time.
(g) Each Lender Party may sell participations in or to all or a
portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitments, the Advances owing
to it and any Note or Notes held by it) to any Person other than any Loan
Party or any of its Subsidiaries or Affiliates; provided, however, that (i)
such Lender Party's obligations under this Agreement
101
<PAGE>
(including, without limitation, its Commitments) shall remain unchanged,
(ii) such Lender Party shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Lender Party
shall remain the holder of such Advances and any such Note for all purposes
of this Agreement, (iv) the Borrower, the Agents and the other Lender
Parties shall continue to deal solely and directly with such Lender Party
in connection with such Lender Party's rights and obligations under this
Agreement and (v) no participant under any such participation shall have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Advances or any fees or other amounts
payable hereunder, in each case to the extent subject to such
participation, postpone any date fixed for any payment of principal of, or
interest on, the Advances or any fees or other amounts payable hereunder,
in each case to the extent subject to such participation, or release all or
substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 8.07, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Lender Party by or on behalf of the Borrower.
(i) Notwithstanding any other provision set forth in this Agreement,
any Lender Party may at any time pledge, assign or create a security
interest in all or any portion of its rights under this Agreement
(including, without limitation, the Advances owing to it and the Note or
Notes held by it) in favor of (i) any Federal Reserve Bank in accordance
with Regulation A of the Board of Governors of the Federal Reserve System
or (ii) to secure obligations of such Lender Party; provided, that no such
pledge or assignment or creation of a security interest shall release a
Lender Party from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender Party as a party hereto.
SECTION 8.08. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence as determined in a final, non appealable
judgment by a court of competent jurisdiction in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful
102
<PAGE>
payment under a Letter of Credit after the presentation to it of a draft
and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing,
the Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
SECTION 8.10. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement or any of the other Loan Documents in the
courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection
that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of
the other Loan Documents to which it is a party in any New York State or
federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 8.11. Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 8.12. Waiver of Jury Trial. Each of the Loan Parties, the Agents
and the Lender Parties irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the Advances
or the actions of any Agent or any Lender Party in the negotiation,
administration, performance or enforcement thereof.
103
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
as Borrower
By
-----------------------------------------------
Title:
BANQUE NATIONALE DE PARIS, as
Administrative Agent, Swing Line Bank, Initial
Issuing Bank, Arranger and Initial Lender
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
NATIONSBANK, N.A., as
Syndication Agent and Initial Lender
By
-----------------------------------------------
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Documentation Agent and Initial Lender
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
<PAGE>
Additional Initial Lenders
TRANSAMERICA BUSINESS CREDIT CORPORATION
By
-----------------------------------------------
Name:
Title:
THE TRAVELERS INSURANCE COMPANY
By
-----------------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By
-----------------------------------------------
Name:
Title:
KZH-ING-2 CORPORATION
By
-----------------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By
-----------------------------------------------
Name:
Title:
<PAGE>
SUMMIT BANK
By
-----------------------------------------------
Name:
Title:
US TRUST
By
-----------------------------------------------
Name:
Title:
SANWA BUSINESS CREDIT CORPORATION
By
-----------------------------------------------
Name:
Title:
BANKBOSTON, N.A.
By
-----------------------------------------------
Name:
Title:
CREDITANSTALT CORPORATE FINANCE, INC.
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
<PAGE>
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By
-----------------------------------------------
Name:
Title:
TRUST COMPANY OF THE WEST
By
-----------------------------------------------
Name:
Title:
BHF-BANK AKTIENGESELLSCHAFT
By
-----------------------------------------------
Name:
Title:
By
-----------------------------------------------
Name:
Title:
HELLER FINANCIAL, INC.
By
-----------------------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By
-----------------------------------------------
Name:
Title:
<PAGE>
VAN KAMPEN AMERICAN PRIME RATE INCOME
By
-----------------------------------------------
Name:
Title:
KZH-IV CORPORATION
By
-----------------------------------------------
Name:
Title:
DEEPROCK & COMPANY
By: Eaton Vance Management,
as Investment Advisors
By
-----------------------------------------------
Name:
Title:
<PAGE>
KZH-CRESCENT CORPORATION
By
-----------------------------------------------
Name:
Title:
KZH-CRESCENT-2 CORPORATION
By
-----------------------------------------------
Name:
Title:
CRESCENT/MACH I PARTNERS, L.P.
By: TCW Asset Management Company
Its Investment Manager
By
-----------------------------------------------
Name:
Title:
NEW YORK LIFE INSURANCE COMPANY
By
-----------------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A-1 TO THE
CREDIT AGREEMENT
FORM OF TERM NOTE
$___________ Dated: _________, 1998
FOR VALUE RECEIVED, the undersigned, MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal amount of the
Term Advances (as defined below) owing to the Lender by the Borrower pursuant to
the Credit Agreement dated as of May 29, 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; terms defined
therein being used herein as therein defined) among the Borrower, the Lender and
certain other lender parties party thereto, Banque Nationale de Paris, as
Administrative Agent, Initial Issuing Bank, Swing Line Bank and Arranger,
NationsBank, N.A., as Syndication Agent, and Credit Suisse First Boston, as
Documentation Agent, on the dates and in the amounts specified in the Credit
Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Term Advance from the date of such Term Advance until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Banque Nationale de Paris, as Administrative Agent, at the
Administrative Agent's Account, in same day funds. Each Term Advance owing to
the Lender by the Borrower and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto, which is part of this
Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "Term Advances") by the Lender to
the Borrower in an amount not to exceed the U.S. dollar amount first above
mentioned, the indebtedness of the Borrower resulting from each such Term
Advance being evidenced by this Promissory Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
<PAGE>
maturity hereof upon the terms and conditions therein specified. The Obligations
of the Borrower under this Promissory Note, and the Obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By
--------------------------------
Name:
Title:
2
<PAGE>
EXHIBIT A-2 TO THE
CREDIT AGREEMENT
FORM OF ACQUISITION NOTE
$___________ Dated: _________, 1998
FOR VALUE RECEIVED, the undersigned, MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the principal amount of the
Acquisition Advances (as defined below) owing to the Lender by the Borrower
pursuant to the Credit Agreement dated as of May 29, 1998 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement";
terms defined therein being used herein as therein defined) among the Borrower,
the Lender and certain other lender parties party thereto, Banque Nationale de
Paris, as Administrative Agent, Initial Issuing Bank, Swing Line Bank and
Arranger, NationsBank, N.A., as Syndication Agent, and Credit Suisse First
Boston, as Documentation Agent, on the dates and in the amounts specified in the
Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount of
each Acquisition Advance from the date of such Acquisition Advance until such
principal amount is paid in full, at such interest rates, and payable at such
times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Banque Nationale de Paris, as Administrative Agent, at the
Administrative Agent's Account, in same day funds. Each Acquisition Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "Acquisition Advances") by the
Lender to the Borrower in an amount not to exceed the U.S. dollar amount first
above mentioned, the indebtedness of the Borrower resulting from each such
Acquisition Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated
<PAGE>
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified. The Obligations
of the Borrower under this Promissory Note, and the Obligations of the other
Loan Parties under the Loan Documents, are secured by the Collateral as provided
in the Loan Documents.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By
--------------------------------
Name:
Title:
2
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
================================================================================
Amount of Amount of Unpaid
Acquisition Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
================================================================================
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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3
<PAGE>
EXHIBIT A-3 TO THE
CREDIT AGREEMENT
FORM OF REVOLVING CREDIT NOTE
$___________ Dated: ________, 1998
FOR VALUE RECEIVED, the undersigned, MEDIQ/PRN LIFE SUPPORT SERVICES, INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
____________ (the "Lender") for the account of its Applicable Lending Office (as
defined in the Credit Agreement referred to below) the aggregate principal
amount of the Revolving Credit Advances (as defined below) owing to the Lender
by the Borrower pursuant to the Credit Agreement dated as of May 29, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"; terms defined therein being used herein as therein defined) among
the Borrower, the Lender and certain other lender parties party thereto, Banque
Nationale de Paris, as Administrative Agent, Initial Issuing Bank, Swing Line
Bank and Arranger, NationsBank, N.A., as Syndication Agent, and Credit Suisse
First Boston, as Documentation Agent, on the Termination Date.
The Borrower promises to pay interest on the unpaid principal amount of
each Revolving Credit Advance from the date of such Revolving Credit Advance
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Banque Nationale de Paris, as Administrative Agent, at the
Administrative Agent's Account, in same day funds. Each Revolving Credit Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto, which is part of
this Promissory Note.
This Promissory Note is one of the Notes referred to in, and is entitled to
the benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of advances (the "Revolving Credit Advances") by the
Lender to the Borrower from time to time in an aggregate amount not to exceed at
any time outstanding the U.S. dollar amount first above mentioned, the
indebtedness of the Borrower resulting from each such Revolving Credit Advance
being evidenced by this Promissory Note, and (ii) contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the
<PAGE>
terms and conditions therein specified. The Obligations of the Borrower under
this Promissory Note, and the Obligations of the other Loan Parties under the
Loan Documents, are secured by the Collateral as provided in the Loan Documents.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By_____________________________________________
Name:
Title:
<PAGE>
ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount of
Working Amount of Unpaid
Capital Principal Paid Principal Notation
Date Advance or Prepaid Balance Made By
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT B TO THE
CREDIT AGREEMENT
FORM OF NOTICE OF BORROWING
Banque Nationale de Paris,
as Administrative Agent under the
Credit Agreement referred to below
499 Park Avenue
New York, NY 10022 [Date]
Attention: Ms. Kimberly Williams
Ladies and Gentlemen:
The undersigned, MEDIQ/PRN Life Support Services, Inc., a Delaware
corporation (the "Borrower"), refers to the Credit Agreement dated as of
_______, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement", the terms defined therein being used herein as therein
defined), among the Borrower, MEDIQ Incorporated, a Delaware corporation (the
"Parent Guarantor"), the lender parties party thereto (the "Lender Parties"),
Banque Nationale de Paris, as Administrative Agent, Initial Issuing Bank, Swing
Line Bank and Arranger, NationsBank N.A., as Syndication Agent, and Credit
Suisse First Boston, as Documentation Agent, and hereby gives you notice,
irrevocably, pursuant to Section 2.02 of the Credit Agreement, that the Borrower
hereby requests a Borrowing under the Credit Agreement, and in that connection
sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.02(a) of the Credit Agreement:
(i) The Business Day of the Proposed Borrowing is _________ __, ____.
(ii) The Facility under which the Proposed Borrowing is requested is
the ___________________ Facility.
(iii) The Type of Advances comprising the Proposed Borrowing is [Base
Rate Advances] [Eurodollar Rate Advances].
(iv) The aggregate amount of the Proposed Borrowing is $__________.
[(v) The initial Interest Period for each Eurodollar Rate Advance made
as part of the Proposed Borrowing is __________ month[s].]
<PAGE>
The Borrower hereby certifies that the following statements are true on the
date hereof, and will be true on the date of the Proposed Borrowing:
(A) the representations and warranties contained in each Loan Document
are correct on and as of such date, before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom, as
though made on and as of such date other than any such representations or
warranties that, by their terms, refer to a specific date other than the
date of the Proposed Borrowing, in which case as of such specific date;
[and]
(B) no event has occurred and is continuing, or would result from the
Proposed Borrowing or from the application of the proceeds therefrom, that
constitutes a Default[;and] [.]
[(C) for each Revolving Credit Advance or Swing Line Advance, the sum
of the Loan Values of the Eligible Collateral (as determined based on the
most recent Borrowing Base Certificate delivered to the Lender Parties
under the Credit Agreement) exceeds the aggregate principal amount of the
Revolving Credit Advances plus Swing Line Advances plus Letter of Credit
Advances to be outstanding plus the aggregate Available Amount of all
Letters of Credit then outstanding after giving effect to the Proposed
Borrowing, as follows:]
(1) Total Revolving Credit Commitments _____________
(2) Total Borrowing Base Availability from the
most recent Borrowing Base Certificate _____________
(3) Lesser of (1) and (2) _____________
(4) Revolving Credit Advances Outstanding _____________
(5) Swing Line Advances Outstanding _____________
(6) Letter of Credit Advances Outstanding _____________
(7) Available Amount of all Letters of
Credit then Outstanding _____________
(8) Total Revolving Credit Availability
[(3) less (4) less (5) less (6) less (7)] _____________
2
<PAGE>
(9) Revolving Credit Advance
permitted under Section 2.01(a) _____________
Very truly yours,
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
By_________________________________
Title:
<PAGE>
EXHIBIT C TO THE
CREDIT AGREEMENT
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement dated as of ________, 1998 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement") among MEDIQ/PRN LIFE SUPPORT SERVICES, INC., a Delaware corporation
(the "Borrower"),MEDIQ Incorporated, a Delaware corporation, as Parent
Guarantor, the Lender Parties (as defined in the Credit Agreement), Banque
Nationale de Paris, as Administrative Agent, Initial Issuing Bank, Swing Line
Bank and Arranger, NationsBank N.A., as Syndication Agent, and Credit Suisse
First Boston, as Documentation Agent. Terms defined in the Credit Agreement are
used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 hereto agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, an interest in and to the
Assignor's rights and obligations under the Credit Agreement as of the date
hereof equal to the uniform percentage interest specified on Schedule 1 hereto
of all outstanding rights and obligations under the Credit Agreement Facility or
Facilities specified on Schedule 1 hereto. After giving effect to such sale and
assignment, the Assignee's Commitments and the amount of the Advances owing to
the Assignee will be as set forth on Schedule 1 hereto.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of, or the perfection or priority of any lien or security interest
created or purported to be created under or in connection with, the Loan
Documents or any other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Loan Party or the performance or observance by
any Loan Party of any of its obligations under any Loan Document or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note or
Notes held by the Assignor and requests that the Administrative Agent exchange
such Note or Notes for a new Note or Notes payable to the order of the Assignee
in an amount equal to the Commitments assumed by the Assignee pursuant hereto or
new Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitments retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto.
<PAGE>
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 4.01 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignor or any other Lender Party
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Loan Documents
as are delegated to the Administrative Agent by the terms thereof, together with
such powers and discretion as are reasonably incidental thereto; (v) agrees that
it will perform in accordance with their terms all of the obligations that by
the terms of the Credit Agreement are required to be performed by it as a Lender
Party; and (vi) attaches any U.S. Internal Revenue Service forms required under
Section 2.12 of the Credit Agreement.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance and recording by the
Administrative Agent. The effective date for this Assignment and Acceptance (the
"Effective Date") shall be the date of acceptance hereof by the Administrative
Agent, unless otherwise specified on Schedule 1 hereto, but in no event before
recording.
5. Upon such acceptance and recording by the Administrative Agent, as of
the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Lender Party thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement (and, if the Assignment
and Acceptance covers all or the remaining portion of the Assignor's rights and
obligations under the Credit Agreement, such Assignor shall cease to be a party
thereto).
6. Upon such acceptance and recording by the Administrative Agent, from and
after the Effective Date, the Administrative Agent shall make all payments under
the Credit Agreement and the Notes in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest and
commitment fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Credit Agreement
and the Notes for periods prior to the Effective Date directly between
themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of New York.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one
C-2
<PAGE>
and the same agreement. Delivery of an executed counterpart of Schedule 1 to
this Assignment and Acceptance by telecopier shall be effective as delivery of a
manually executed counterpart of this Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
C-3
<PAGE>
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
<TABLE>
<S> <C>
As to each _______ Facility in respect of which an interest is being assigned:
Percentage interest assigned: __________%
Assignee's Commitment: $__________
Aggregate outstanding principal amount of Advances assigned: $__________
Principal amount of Note payable to Assignee: $__________
Principal amount of Note payable to Assignor: $__________
Effective Date (if other than date of acceptance by Agent):
_________ __, ____ 1
</TABLE>
[NAME OF ASSIGNOR], as Assignor
By_____________________________
Title:
Dated: _________ __, ____
[NAME OF ASSIGNEE], as Assignee
By_____________________________
Title:
Dated:__________________, ____
Domestic Lending Office:
Eurodollar Lending Office:
- --------
1 This date should be no earlier than five Business Days after the
delivery of this Assignment and Acceptance to the Administrative Agent.
<PAGE>
Schedule I-2
ACCEPTED 2[AND APPROVED] this
______ day of _________, _____
BANQUE NATIONALE DE PARIS,
as Administrative Agent
By_____________________________
Title:
By_____________________________
Title:
2[APPROVED this ___ day of ______, _____
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By_____________________________
Title:]
- --------
2 Required if the Assignee is an Eligible Assignee solely by reason of
clause (vii) of the definition of Eligible Assignee.
<PAGE>
EXHIBIT D TO THE
CREDIT AGREEMENT
AS SEPARATELY
EXECUTED
SECURITY AGREEMENT
Dated May 29, 1998
from
THE PERSONS LISTED ON THE SIGNATURE PAGES HEREOF
as Grantors
to
BANQUE NATIONALE DE PARIS
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
1. Grant of Security....................................................... 1
2. Security for Obligations................................................ 6
3. Grantors Remain Liable.................................................. 7
4. Delivery and Control of Security Collateral, Account Collateral,
Agreement Collateral and Receivables.................................. 7
5. Maintaining the L/C Cash Collateral Account............................. 8
6. Maintaining the Blocked Accounts........................................ 8
7. Investing of Amounts in the L/C Cash Collateral Account................. 9
8. Representations and Warranties.......................................... 9
9. Further Assurances......................................................14
10. As to Equipment and Inventory...........................................15
11. As to Intellectual Property Collateral..................................16
12. Insurance...............................................................17
13. Place of Perfection; Records; Collection of Receivables.................18
14. Voting Rights; Dividends; Etc...........................................19
15. As to the Assigned Agreements...........................................20
16. Transfers and Other Liens; Additional Shares............................20
17. Administrative Agent Appointed Attorney-in-Fact.........................21
18. Administrative Agent May Perform........................................21
19. The Administrative Agent's Duties.......................................21
20. Remedies................................................................22
21. Indemnity and Expenses..................................................23
22. Security Interest Absolute..............................................23
23. Amendments; Waivers; Etc................................................24
24. Addresses for Notices...................................................24
25. Continuing Security Interest; Assignments...............................25
26. Release and Termination.................................................25
27. The Mortgages...........................................................26
28. Execution in Counterparts...............................................26
29. Governing Law...........................................................26
i
<PAGE>
Section Page
- ------- ----
Schedule I - Initial Pledged Shares and Initial Pledged Debt
Schedule II - Assigned Agreements
Schedule III - Locations of Equipment and Inventory
Schedule IV - Intellectual Property
Schedule V - Blocked Accounts and Other Bank Accounts
Exhibit A - Form of Blocked Account Letter
Exhibit B - Form of Consent and Agreement
Exhibit C - Form of Security Agreement Supplement
Exhibit D - Form of Intellectual Property Security Agreement
ii
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT dated May 29, 1998 made by the Persons listed on the
signature pages hereof and the Additional Grantors (as defined in Section 23(b))
(such Persons so listed and the Additional Grantors being, collectively, the
"Grantors") to BANQUE NATIONALE DE PARIS ("BNP"), as administrative agent (the
"Administrative Agent") for the Secured Parties (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS.
(1) MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the
"Borrower") has entered into a Credit Agreement dated as of May 29, 1998 (said
Agreement, as it may hereafter be amended, supplemented or otherwise modified
from time to time, being the "Credit Agreement"), with BNP, as Administrative
Agent, Swing Line Bank, Initial Issuing Bank and Arranger, NationsBank, N.A., as
Syndication Agent, and Credit Suisse First Boston, as Documentation Agent and
the Lender Parties party thereto. Capitalized terms used herein and not
otherwise defined are used herein as defined in the Credit Agreement.
(2) It is a condition precedent to the making of Advances and the issuance
of Letters of Credit by the Lender Parties under the Credit Agreement that each
Grantor shall have granted the assignment and security interest and made the
pledge and assignment contemplated by this Agreement.
(3) Each Grantor is the owner of the shares of stock set forth opposite
such Grantor's name in Part I of Schedule I hereto and issued by the
corporations indicated therein and of the indebtedness set forth opposite such
Grantor's name in Part II of Schedule I hereto and issued by the obligors
indicated therein.
(4) The Borrower has opened a non-interest bearing cash collateral account
(the "L/C Cash Collateral Account") with BNP at its office at 499 Park Avenue,
New York, New York 10022, Account No. 200875-001-77, in the name of the Borrower
but under the sole control and dominion of the Administrative Agent and subject
to the terms of this Agreement.
(5) Each Grantor will derive substantial direct and indirect benefit from
the transactions contemplated by the Credit Agreement.
(6) Unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the Uniform Commercial Code in effect in the
State of New York ("N.Y. Uniform Commercial Code") are used in this Agreement as
such terms are defined in such Article 8 or 9.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and to issue Letters of Credit under the Credit
Agreement and to induce the Hedge Banks to enter into Bank Hedge Agreements with
the Borrower from time to time, each Grantor hereby agrees with the
Administrative Agent for the ratable benefit of the Secured Parties as follows:
SECTION 1. Grant of Security. Each Grantor hereby assigns and pledges to
the Administrative Agent for the ratable benefit of the Secured Parties, and
hereby grants to the Administrative Agent for the ratable benefit of the Secured
Parties a security interest in, the following, in each case, as to each
<PAGE>
type of property described below, whether now owned or hereafter acquired by
such Grantor, wherever located and whether now or hereafter existing (the
"Collateral"):
(a) All of the following (the "Security Collateral"):
(i) the shares of stock set forth opposite such Grantor's name in Part
I of Schedule I hereto and issued by the corporations indicated therein
(collectively referred to herein as the "Initial Pledged Shares", and
together with the shares referred to in clause (iii) below, the "Pledged
Shares"), together with the certificates representing such Initial Pledged
Shares and all dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in
exchange for any or all of such Initial Pledged Shares;
(ii) the indebtedness (whether or not evidenced by instruments) set
forth opposite such Grantor's name in Part II of Schedule I hereto and
issued by the obligors indicated therein (collectively referred to herein
as the "Initial Pledged Debt", and together with the indebtedness referred
to in clause (iv) below, the "Pledged Debt") and the instruments (if any)
evidencing such Initial Pledged Debt, all security therefor and all
interest, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or
all of such Initial Pledged Debt;
(iii) all additional shares of stock of any issuer of any Initial
Pledged Shares or of any other Loan Party or any Subsidiary of any Loan
Party or of any other Person from time to time acquired by such Grantor in
any manner, and all additional shares of stock of each other Subsidiary of
such Grantor to the extent required pursuant to Section 5.01(m) of the
Credit Agreement, together with the certificates representing such
additional shares and all dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares, provided, however, that
such Grantor shall only be required to pledge 65% of the total outstanding
shares of stock or other equity interest owned by it in any Foreign
Subsidiary, if such pledge, would result in adverse tax consequences such
Grantor;
(iv) all additional indebtedness from time to time owed to such
Grantor by any obligor of the Initial Pledged Debt (whether or not
evidenced by instruments) and the instruments evidencing such indebtedness
(if any), and all additional indebtedness owed to such Grantor by any other
obligor to the extent required pursuant to Section 5.01(m) of the Credit
Agreement, all security therefor and all interest, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
indebtedness; and
(v) all investment property (including, without limitation, all (A)
securities, whether certificated or uncertificated, (B) security
entitlements, as defined in Section 8- 102(a)(17) of the N.Y. Uniform
Commercial Code or, in the case of any U.S. Treasury book-entry securities,
as defined in 31 C.F.R. Section 357.2, or, in the case of any U.S. federal
agency book-entry securities, as defined in the corresponding U.S. federal
regulations governing such book-entry securities, (C) securities accounts,
(D) commodity contracts and
2
<PAGE>
(E) commodity accounts) in which the Grantor has or acquires from time to
time any right, title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment property,
and all dividends, interest, distributions, value, cash, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such investment
property;
(vi) within five days after acquiring or organizing any foreign
Subsidiary or joint venture or any domestic joint venture, (A) in the case
of any foreign Subsidiary or joint venture, 65% of the total outstanding
shares or other ownership interests of such Person held by such Grantor and
(B) in the case of any domestic joint venture, 100% of the shares or other
ownership interests of such Person held by such Grantor;
(b) All of the following (collectively, the "Account Collateral"):
(i) the L/C Cash Collateral Account, all funds held therein and all
certificates and instruments, if any, from time to time representing or
evidencing the L/C Cash Collateral Account;
(ii) all Blocked Accounts (as hereinafter defined), all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing the Blocked Accounts;
(iii) all other deposit accounts of such Grantor, all funds held
therein and all certificates and instruments, if any, from time to time
representing or evidencing such deposit accounts;
(iv) all Collateral Investments (as hereinafter defined) from time to
time and all certificates and instruments, if any, from time to time
representing or evidencing the Collateral Investments;
(v) all notes, certificates of deposit, deposit accounts, checks and
other instruments from time to time hereafter delivered to or otherwise
possessed by the Administrative Agent for or on behalf of such Grantor,
including, without limitation, those delivered to or possessed in
substitution for or in addition to any or all of the then existing Account
Collateral; and
(vi) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the then existing Account Collateral;
(c) All of such Grantor's right, title and interest, in and to all
equipment in all of its forms (including, without limitation, (i) all adult and
infant ventilators, portable volume ventilators, adult, infant, neonatal and
fetal monitors, infant apnea monitors, phototherapy units, pediatric aerosol
tents, compressors, infusion and suction pumps and poles, incubators, infant
warmers, pulse oximeters, sequential compression devices and all other medical
equipment of every kind and nature, and (ii) all machinery, equipment, office
machinery, furniture, computers, computer hardware,
3
<PAGE>
automotive equipment, trucks and motor vehicles), wherever located, all fixtures
and all parts thereof and all accessions and additions thereto, parts and
appurtenances thereof, substitutions therefor and replacements thereof (any and
all such equipment, fixtures, accessions, additions, parts, appurtenances,
substitutions and replacements being the "Equipment");
(d) All of such Grantor's right, title and interest, in and to all
inventory in all of its forms, wherever located (including, but not limited to,
(i) all medical equipment and raw materials and work in process therefor,
finished goods thereof and materials used or consumed in the manufacture,
production or preparation thereof, (ii) goods in which such Grantor has an
interest in mass or a joint or other interest or right of any kind (including,
without limitation, goods in which such Grantor has an interest or right as
consignee) and (iii) goods that are returned to or repossessed by such Grantor),
and all accessions thereto and products thereof and documents therefor (any and
all such inventory, accessions, products and documents being the "Inventory");
(e) All of such Grantor's right, title and interest, in and to all
accounts, contract rights, chattel paper, instruments, deposit accounts and
general intangibles and all other obligations of any kind, now or hereafter
existing, whether or not arising out of or in connection with the sale or lease
of goods or the rendering of services and whether or not earned by performance
(including, without limitation, any rights with respect to workers' compensation
or other deposits made by such Grantor and any rights to receive tax refunds or
other refunds, reimbursements and payments from any federal, state or local
government or any political subdivision, agency or instrumentality thereof), and
all rights now or hereafter existing in and to all security agreements, leases
and other contracts securing or otherwise relating to any such accounts,
contract rights, chattel paper, instruments, deposit accounts, general
intangibles or obligations (any and all such accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles and obligations, to
the extent not referred to in clause (a), (b), (f) or (g) of this Section 1,
being the "Receivables", and any and all such leases, security agreements and
other contracts being the "Related Contracts");
(f) All of such Grantor's right, title and interest in and to each of the
agreements listed on Schedule II hereto, and each Hedge Agreement to which such
Grantor is now or may hereafter become a party, in each case as such agreements
may be amended, supplemented or otherwise modified from time to time
(collectively, the "Assigned Agreements"), including, without limitation, (i)
all rights of such Grantor to receive moneys due and to become due under or
pursuant to the Assigned Agreements, (ii) all rights of such Grantor to receive
proceeds of any insurance, indemnity, warranty or guaranty with respect to the
Assigned Agreements, (iii) claims of such Grantor for damages arising out of or
for breach of or default under the Assigned Agreements and (iv) the right of
such Grantor to terminate the Assigned Agreements, to perform thereunder and to
compel performance and otherwise exercise all remedies thereunder (all such
Collateral being the "Agreement Collateral");
(g) All of such Grantor's right, title and interest in and to the following
(collectively, the "Intellectual Property Collateral"):
(i) all United States, international, and foreign patents, patent
applications and statutory invention registrations, including, without
limitation, reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof, all inventions
4
<PAGE>
therein, all rights therein provided by international treaties or
conventions and all improvements thereto, and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto,
including, without limitation, the patents and patent applications set
forth on Schedule IV hereto (the "Patents");
(ii) all trademarks (including service marks), certification marks,
collective marks, trade dress, logos, domain names, product configurations,
trade names, business names, corporate names, and other source identifiers,
whether or not registered, whether currently in use or not, including all
common law rights, and registrations and applications for registration
thereof, including, but not limited to, all marks registered in the U.S.
Patent and Trademark Office or in any office or agency of any State or
Territory thereof or any foreign country, and all rights therein provided
by international treaties or conventions, all reissues, extensions and
renewals of any of the foregoing, together in each case with the goodwill
of the business connected therewith and symbolized thereby, and all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto, and
including, without limitation, the registrations and applications set forth
on Schedule IV hereto, but excluding any United States intent-to-use
trademark application prior to the filing of a Statement of Use or
Amendment to Allege Use in connection therewith to the extent that a valid
security interest may not be taken in such an intent-to-use trademark
application under applicable law (the "Trademarks");
(iii) all copyrights, copyright applications, copyright registrations
and like protections in each work of authorship, whether statutory or
common law, whether published or unpublished, any renewals or extensions
thereof, all copyrights of works based on, incorporated in, derived from,
or relating to works covered by such copyrights, including, without
limitation, each copyright registration and copyright application set forth
in Schedule IV hereto, and including, without limitation, all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of such Grantor accruing thereunder or pertaining thereto (the
"Copyrights");
(iv) confidential and proprietary information, including know-how,
trade secrets, manufacturing and production processes and techniques,
inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost information,
business and marketing plans, and customer and supplier lists and
information (the "Trade Secrets");
(v) all computer software programs and data bases (including source
code, object code and all related applications and data files), firmware,
and documentation and materials relating thereto, and all rights with
respect to the foregoing, including, without limitation, any and all
options, warranties, service contracts, program services, test rights,
maintenance rights, improvement rights, renewal rights and indemnifications
and any substitutions, replacements, additions or model conversions of any
of the foregoing (the "Computer Software");
(vi) all license agreements, permits, authorizations, and franchises,
whether with respect to the Computer Software, Patents, Trademarks,
Copyrights, Trade Secrets, or with
5
<PAGE>
respect to the computer software, patents, trademarks, copyrights, trade
secrets or other proprietary right of any other Person, including, without
limitation, the license agreements listed set forth in Schedule IV, and all
income, royalties, and other payments now or hereafter due and/or payable
to such Grantor with respect thereto, subject, in each case, to the terms
of such license agreements, permits, authorizations, and franchises,
including, without limitation, terms requiring consent to a grant of a
security interest (the "Licenses");
(vii) any and all claims for damages for past, present and future
infringement, misappropriation or breach with respect to the Computer
Software, Patents, Trademarks, Copyrights, Trade Secrets or Licenses, with
the right, but not the obligation to sue for and collect, or otherwise
recover, such damages; and
(viii) any and all proceeds of the foregoing.
(h) All other general intangibles of such Grantor (other than general
intangibles for moneys due or to become due which are covered by Section 1(e)
above, including, without limitation, (i) all partnership, corporate and other
interests in and to any Person (other than any Security Collateral), and (ii)
all governmental permits, licenses (and any subsequent renewals thereof),
franchises, registrations, authorizations and approvals; and
(i) All proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in clauses (a) through (h) of this Section 1) and, to the
extent not otherwise included, all (i) payments under insurance (whether or
not the Administrative Agent is the loss payee thereof), or any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise
with respect to any of the foregoing Collateral, and (ii) cash.
The foregoing shall not attach to items in which a purchase money lien permitted
under the Credit Agreement in favor of any Person (other than the Administrative
Agent) has been granted if the documents relating to such lien do not permit
other liens, or to any general intangible which specifically prohibits
assignment thereof but only to the extent of such prohibition.
SECTION 2. Security for Obligations. This Agreement secures, in the case of
each Grantor, the payment of all Obligations of such Grantor now or hereafter
existing under the Loan Documents, whether direct or indirect, absolute or
contingent, including any extensions, modifications, substitutions, amendments
and renewals thereof, whether for principal (including reimbursement for amounts
drawn under Letters of Credit), interest, premiums, penalties, fees,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations secured hereby being the "Secured Obligations"). Without
limiting the generality of the foregoing, this Agreement secures, as to each
Grantor, the payment of all amounts that constitute part of the Secured
Obligations of such Grantor and that would be owed by such Grantor to the
Secured Parties under the Loan Documents but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving such Grantor.
SECTION 3. Grantors Remain Liable. Anything contained herein to the
contrary notwithstanding, (a) each Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Administrative Agent of any of its
6
<PAGE>
rights hereunder shall not release any Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) no Secured Party shall have any obligation or liability under the contracts
and agreements included in the Collateral by reason of this Agreement or any
other Loan Document, nor shall any Secured Party be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 4. Delivery and Control of Security Collateral, Account Collateral,
Agreement Collateral and Receivables. (a) All certificates or instruments
representing or evidencing any Security Collateral, Account Collateral,
Agreement Collateral or Receivables (and, to the extent requested by the
Administrative Agent, representing or evidencing any other Collateral) shall be
delivered to and held by or on behalf of the Administrative Agent pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Administrative Agent; provided,
however, that this Section 4 shall not apply to any certificate of title
representing automotive equipment, trucks and motor vehicles referred to in
Section 1(c). Upon and after an Event of Default which is continuing, the
Administrative Agent shall have the right, at any time in its discretion and
without notice to any Grantor, to transfer to or to register in the name of the
Administrative Agent or any of its nominees any or all of the Security
Collateral and Account Collateral, subject only to the revocable rights
specified in Section 14(a) and similar rights with respect to certificates or
investments representing Account Collateral. In addition, upon and after an
Event of Default, the Administrative Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing the Security
Collateral or Account Collateral for certificates or instruments of smaller or
larger denominations.
(b) With respect to any Security Collateral that constitutes a security and
is not represented or evidenced by a certificate or an instrument, such Grantor
shall cause the issuer thereof either (i) to register the Administrative Agent
as the registered owner of such security or (ii) to agree in writing with such
Grantor and the Administrative Agent that such issuer will comply with
instructions with respect to such security originated by the Administrative
Agent without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Administrative Agent.
(c) With respect to any Security Collateral that constitutes a security
entitlement, such Grantor shall cause the securities intermediary with respect
to such security entitlement either (i) to identify in its records the
Administrative Agent as having such security entitlement against such securities
intermediary or (ii) to agree in writing with such Grantor and the
Administrative Agent that such securities intermediary will comply with
entitlement orders (that is, notifications communicated to such securities
intermediary directing transfer or redemption of the financial asset to which
such Grantor has a security entitlement) originated by the Administrative Agent
without further consent of such Grantor, such agreement to be in form and
substance satisfactory to the Administrative Agent.
(d) With respect to any Security Collateral that constitutes a commodity
contract, such Grantor shall cause the commodity intermediary with respect to
such commodity contract to agree in writing with such Grantor and the
Administrative Agent that such commodity intermediary will apply any value
distributed on account of such commodity contract as directed by the
Administrative Agent without further consent of such Grantor, such agreement to
be in form and substance satisfactory to the Administrative Agent.
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<PAGE>
(e) With respect to any Security Collateral that constitutes a securities
account or a commodity account, such Grantor will, in the case of a securities
account, comply with subsection (c) of this Section 4 with respect to all
security entitlements carried in such securities account and, in the case of a
commodity account, comply with subsection (d) of this Section 4 with respect to
all commodity contracts carried in such commodity account.
SECTION 5. Maintaining the L/C Cash Collateral Account. So long as any
Advance shall remain unpaid, any Letter of Credit or Bank Hedge Agreement shall
be outstanding or any Lender Party shall have any Commitment under the Credit
Agreement:
(a) The Borrower will maintain the L/C Cash Collateral Account with
BNP.
(b) It shall be a term and condition of the L/C Cash Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Cash Collateral Account, and except as
otherwise provided by the provisions of Section 20, that no amount
(including interest on Collateral Investments) shall be paid or released to
or for the account of, or withdrawn by or for the account of, the Borrower
or any other Person from the L/C Cash Collateral Account.
The L/C Cash Collateral Account shall be subject to such applicable laws, and
such applicable regulations of the Board of Governors of the Federal Reserve
System and of any other appropriate banking or governmental authority, as may
now or hereafter be in effect.
SECTION 6. Maintaining the Blocked Accounts. So long as any Advance shall
remain unpaid, any Letter of Credit or Bank Hedge Agreement shall be outstanding
or any Lender Party shall have any Commitment under the Credit Agreement:
(a) Each Grantor shall, to the extent such Grantor shall have at any
time an aggregate amount on deposit in excess of $250,000, maintain blocked
deposit accounts ("Blocked Accounts") only with banks ("Blocked Account
Banks") that have entered into letter agreements in substantially the form
of Exhibit A (or such other form as the Administrative Agent and such
Grantor shall agree) with such Grantor and the Administrative Agent
("Blocked Account Letters").
(b) At the end of each Business Day, the Grantors required to maintain
Blocked Accounts pursuant to the foregoing paragraph shall deposit all cash
in Blocked Accounts; provided, however, that the provisions of this Section
6(b) shall not apply to (i) the Citibank Account and payments required to
be made thereto and (ii) any deposit account held in the name of the
Borrower at PNC Bank for miscellaneous cash receipts and payments thereto
so long as the aggregate amount on deposit in such accounts shall not
exceed $25,000.
(c) Upon any termination of any Blocked Account Letter or other
agreement with respect to the maintenance of a Blocked Account by any
Grantor required to maintain any Blocked Account pursuant to Section 6(a)
or any Blocked Account Bank, such Grantor shall immediately notify all
Obligors that were making payments to such Blocked Account to make all
future payments to another Blocked Account. Following the occurrence and
during the continuance of an Event of Default, such Grantor agrees to
terminate any or all Blocked Accounts and Blocked Account Letters upon
request by the Administrative Agent.
8
<PAGE>
SECTION 7. Investing of Amounts in the L/C Cash Collateral Account. If
requested by the Borrower, the Administrative Agent will, subject to the
provisions of Section 20, from time to time (a) invest amounts on deposit in the
L/C Cash Collateral Account in such Cash Equivalents in the name of the
Administrative Agent or as to which all action required by Section 9 shall have
been taken as the Borrower may select and the Administrative Agent may approve
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents in the name of the
Administrative Agent or as to which all actions required by Section 9 shall have
been taken as the Borrower may select and the Administrative Agent may approve
(the Cash Equivalents referred to in clauses (a) and (b) above being
collectively "Collateral Investments"). Interest and proceeds that are not
invested or reinvested in Collateral Investments as provided above shall be
deposited and held in the L/C Cash Collateral Account.
SECTION 8. Representations and Warranties. Each Grantor represents and
warrants as follows:
(a) Such Grantor is the legal and beneficial owner of the Collateral
of such Grantor free and clear of any Lien, claim, option or right of
others, except for the liens and security interests created under this
Agreement or permitted by the Credit Agreement. No effective financing
statement or other instrument similar in effect covering all or any part of
such Collateral (including, without limitation, accounts and general
intangibles relating to the Collateral) or listing such Grantor or any of
its Subsidiaries or any trade name of such Grantor or any of its
Subsidiaries as debtor with respect to Collateral is on file in any
recording office, except such as may have been filed in favor of the
Administrative Agent relating to the Loan Documents or as permitted by
Section 5.02(a) of the Credit Agreement.
(b) The Pledged Shares owned by such Grantor have been duly authorized
and validly issued and are fully paid and non-assessable. The Pledged Debt
held by such Grantor has been duly authorized, authenticated or issued and
delivered, is the legal, valid and binding obligation of the issuers
thereof and is not in default.
(c) The Initial Pledged Shares owned by such Grantor constitute the
percentage of the issued and outstanding shares of stock of the issuers
thereof indicated on Schedule I hereto. The Initial Pledged Debt
constitutes all of the outstanding indebtedness owed to such Grantor for
money borrowed or for the deferred purchase price of property of the
issuers thereof.
(d) As of the date hereof no Grantor owns any of the investment
property.
(e) On the date hereof and thereafter on the most recent date on which
a revised Schedule III is required to be furnished to the Administrative
Agent pursuant to Section 10(d), all of the Equipment and Inventory of such
Grantor, other than such Equipment and Inventory as has been rented or
leased to such Grantor's customers or inventory sold in the ordinary course
of business, is located at the places specified in Schedule III hereto. The
chief place of business and chief executive office of such Grantor and the
office where such Grantor keeps its records concerning the Receivables, and
the original copies of each Assigned Agreement and all originals of all
Related Contracts and all chattel paper, if any, that evidence Receivables
(other than (i) those delivered to the
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Administrative Agent and (ii) rental contracts located in the ordinary
course of business at the Borrower's branch offices), are located at the
address set forth on the signature pages hereto beneath such Grantor's name
or at such other location permitted by Section 12(a). Such Grantor has
delivered to the Administrative Agent the originals of all agreements,
certificates or instruments representing or evidencing any Collateral and
all security therefor and guaranties thereof, in each case to the extent
that the delivery thereof to the Administrative Agent is required under
Section 4 above. None of the Receivables or Agreement Collateral is
evidenced by a promissory note or other instrument that is required to be
delivered to the Administrative Agent hereunder and has not been so
delivered (other than promissory notes issued to the Borrower with respect
to amounts due to the Borrower, in the ordinary course of business on a
basis consistent with current practice).
(f) The Assigned Agreements to which such Grantor is a party, true and
complete copies of which have been furnished to each Lender Party, have
been duly authorized, executed and delivered by all parties thereto, have
not been amended or otherwise modified, are in full force and effect and
are binding upon and enforceable against all parties thereto in accordance
with their terms. There exists no default under any Assigned Agreement to
which such Grantor is a party by such Grantor, or, to such Grantor's
knowledge, by any other party thereto. Each party to any Assigned Agreement
to which such Grantor is a party (other than such Grantor) has executed and
delivered to such Grantor a consent, in substantially the form of Exhibit B
hereto or otherwise in form and substance satisfactory to the
Administrative Agent, to the assignment of the Agreement Collateral to the
Administrative Agent for the benefit of the Secured Parties pursuant to
this Agreement.
(g) Subject to the provisions of Section 6 allowing for additional
Blocked Accounts, such Grantor has no Blocked Accounts or other deposit
accounts other than the Blocked Accounts listed on Part I of Schedule V
hereto and the other deposit accounts listed on Part II of Schedule V
hereto. Each Grantor has instructed all existing Obligors to make all
payments to a Blocked Account to the extent required by the terms hereof.
(h) This Agreement, the pledge of the Security Collateral pursuant
hereto and the pledge and assignment of the Account Collateral pursuant
hereto, and with respect to the Intellectual Property Collateral, upon
recordation of the Intellectual Property Security Agreements executed
pursuant to Section 11(g) hereof, as applicable, with the U.S. Patent and
Trademark Office, the U.S. Copyright Office and the appropriate state and
local government offices under the Uniform Commercial Code, create in favor
of the Administrative Agent for the benefit of the Secured Parties a valid
and perfected security interest in the Collateral of such Grantor, securing
the payment of the Secured Obligations of such Grantor, to the extent that
such security interests can be created and perfected. Such security
interest is subject in priority only to the prior liens permitted under
Section 5.02(a) of the Credit Agreement. Upon the release of the liens
referred to in the immediately preceding sentence, such security interest
shall be a first priority security interest.
(i) Other than for those Licenses listed on Schedule IV hereto, no
consent of any other Person and no authorization, approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body or other Person is required (i) for the grant by such
Grantor of the assignment and security interest granted hereby, for the
pledge by such Grantor of any Security Collateral hereunder or for the
execution, delivery or performance of this Agreement by such Grantor, (ii)
for the perfection or maintenance of the pledge, assignment and security
interest created
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hereunder (including the first priority nature of such pledge, assignment
and security interest, except as otherwise permitted), except for the
filing of financing and continuation statements under the Uniform
Commercial Code, and the recordation of the Intellectual Property Security
Agreements executed pursuant to Section 11(g) hereof, as applicable, with
the U.S. Patent and Trademark Office, the U.S. Copyright Office and the
appropriate state and local government offices under the Uniform Commercial
Code, or (iii) for the exercise by the Administrative Agent of its voting
or other rights provided for in this Agreement or the remedies in respect
of the Collateral pursuant to this Agreement, except as may be required in
connection with the disposition of any portion of the Security Collateral
by laws affecting the offering and sale of securities generally.
(j) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(k) Such Grantor has, independently and without reliance upon any
Secured Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement, and such Grantor has established adequate means of obtaining
from any other Loan Parties on a continuing basis information pertaining
to, and is now and on a continuing basis will be completely familiar with,
the financial condition, operations, properties and prospects of such other
Loan Parties.
(l) As to itself and its Intellectual Property Collateral:
(i) To the knowledge of such Grantor, the rights of such Grantor
in or to the Intellectual Property Collateral do not conflict with or
infringe upon the rights of any third party, and no claim has been
asserted that the use of such Intellectual Property Collateral does or
may infringe upon the rights of any third party.
(ii) Such Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to the Intellectual
Property Collateral or is otherwise entitled to use all such
Intellectual Property Collateral without limitation, subject only to
the license terms of the Licenses and such other agreements,
obligations, orders, and Judgments as may affect the use of such
Intellectual Property Collateral.
(iii) Other than for those Licenses listed on Schedule IV hereto,
to the knowledge of Grantors, there are no other agreements,
obligations, orders or judgments which affect the use of the
Intellectual Property Collateral as of the date of this Agreement.
(iv) To the knowledge of such Grantor, the Intellectual Property
Collateral set forth on Schedule IV hereto includes all of the
material patents, patent applications, trademark registrations and
applications, copyright registrations and applications, and Licenses
owned by such Grantor.
(v) Each of the patents, registered trademarks, registered
service marks and registered copyrights listed on Schedule IV hereto
is subsisting and has not been adjudged invalid or unenforceable in
whole or part, and to such Grantor's knowledge, is valid and
enforceable. Such Grantor is not aware of any uses of any material
item of Intellectual
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Property Collateral that could be reasonably expected to lead to such
item becoming invalid or unenforceable.
(vi) Such Grantor has performed all acts reasonably necessary and
has paid all required fees and taxes to maintain each and every
patent, registered trademark, registered service mark, and registered
copyright listed on Schedule IV hereto in full force and effect, and
to protect and maintain its interest therein.
(vii) To the knowledge of such Grantor, no Actions have been
asserted, are pending, or threatened against such Grantor (i) based
upon or challenging or seeking to deny or restrict the use of any of
the material Intellectual Property Collateral, or (ii) alleging that
any services provided by, processes used by, or products manufactured
or sold by such Grantor infringe any patent, trademark, copyright, or
any other right of any third party. To the knowledge of such Grantor,
no Person is engaging in any activity that infringes upon the material
Intellectual Property Collateral or upon the rights of such Grantor
therein. Except as set forth on Schedule IV hereto, such Grantor has
not granted any license, release, covenant not to sue, non-assertion
assurance, or other right to any person with respect to any part of
the Intellectual Property Collateral. To the knowledge of such
Grantor, the consummation of the transaction contemplated by this
Agreement will not result in the termination or impairment of any of
the Intellectual Property Collateral.
(viii) With respect to each material license of the Licenses: (A)
to the knowledge of such Grantor, such license is valid and binding
and in full force and effect and represents the entire agreement
between the respective licensor and licensee with respect to the
subject matter of such license; (B) except as specified in Schedule
IV, such license will not cease to be valid and binding and in full
force and effect on terms identical to those currently in effect as a
result of the rights and interest granted herein, nor will the grant
of such rights and interest constitute a breach or default under such
license or otherwise give the licensor or licensee a right to
terminate such license; (C) such Grantor has not received any notice
of termination or cancellation under such license; (D) such Grantor
has not received any notice of a material breach or default under such
license, which breach or default has not been cured; (E) such Grantor
has not granted to any other third party any rights, adverse or
otherwise, under such license; and (F) neither such Grantor, nor, to
the knowledge of such Grantor, any other party to such license is in
breach or default in any material respect, and, to the knowledge of
such Grantor, no event has occurred that, with notice or lapse of time
would constitute such a breach or default or permit termination,
modification or acceleration under such license.
(ix) Consistent with its reasonable business judgment, such
Grantor will use such reasonable efforts as it reasonably deems
appropriate to protect, defend, and maintain the validity and
enforceablity of the material Intellectual Property Collateral, and
will use reasonable efforts to detect material infringements of the
material Intellectual Property Collateral, provided, however, that
nothing herein shall be construed as to prevent such Grantor from
abandoning or ceasing to protect any Intellectual Property Collateral
consistent with the terms of Section 11(b).
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(x) To the knowledge of such Grantor, (A) none of the material
Trade Secrets of such Grantor has been used, divulged, disclosed or
appropriated to the detriment of such Grantor for the benefit of any
other Person other than such Grantor; (B) no employee, independent
contractor or agent of such Grantor has misappropriated any trade
secrets of any other Person in the course of the performance of his or
her duties as an employee, independent contractor or agent of such
Grantor; and (C) no employee, independent contractor or agent of such
Grantor is in material default or breach of any term of any employment
agreement, non-disclosure agreement, assignment of inventions
agreement or similar agreement or contract relating in any way to the
protection, ownership, development, use or transfer of such Grantor's
Intellectual Property Collateral.
(xi) No actions have been asserted, are pending, or threatened
against such Grantor challenging or seeking to deny or restrict the
use by such Grantor of any of the material licensed Intellectual
Property Collateral, or alleging that any material licensed
Intellectual Property Collateral is being licensed, sublicensed or
used in violation of any patent, trademark, copyright or any other
right of any third party.
SECTION 9. Further Assurances. (a) Each Grantor agrees that from time to
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
such Grantor believes may be necessary or reasonably desirable, or that the
Administrative Agent may reasonably request, in order to perfect and protect any
pledge, assignment or security interest granted or purported to be granted
hereby or to enable the Administrative Agent to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) mark conspicuously (A) each
invoice issued in connection with the rental or lease of any Equipment or
Inventory with the following legend: "THIS EQUIPMENT MAY BE SUBJECT TO A
SECURITY INTEREST GRANTED TO BANQUE NATIONALE DE PARIS AS ADMINISTRATIVE AGENT"
and (B) each Assigned Agreement of such Grantor included in the Collateral, and
each of its records pertaining to the Collateral, with a legend, in form and
substance satisfactory to the Administrative Agent, indicating that such
Collateral is subject to the security interest granted hereby, (ii) if any
Collateral shall be evidenced by a promissory note or other instrument (other
than promissory notes permitted pursuant to Section 5.02(e)(ii)(D) of the Credit
Agreement), deliver and pledge to the Administrative Agent for the benefit of
the Secured Parties hereunder such note or instrument duly indorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Administrative Agent, (iii) subject to the
provisos at the end of Section 1(a)(vii), deliver and pledge to the
Administrative Agent for the benefit of the Secured Parties hereunder
certificates representing the Pledged Shares accompanied by undated stock powers
executed in blank and evidence that all other action that the Administrative
Agent may deem necessary or reasonably desirable in order to perfect and protect
the liens and security interests created under this Agreement has been taken and
(iv) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
reasonably desirable, or as the Administrative Agent may reasonably request, in
order to perfect and preserve the pledge, assignment and security interests
granted or purported to be granted hereunder.
(b) Each Grantor hereby authorizes the Administrative Agent to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of such Grantor where
permitted by law. A photocopy or other reproduction of this
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Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.
(c) Each Grantor will furnish to the Administrative Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(d) The Borrower will furnish to the Administrative Agent, at any time
within six months prior to the fifth anniversary of the date hereof, opinions of
local counsel in Texas, California, New Jersey and Florida substantially in the
form of Exhibit H-2 to the Credit Agreement and acceptable to the Required
Lenders to the effect that all financing or continuation statements have been
filed, and all other action has been taken, to perfect and validate continuously
from the date hereof the pledge, assignment and security interests granted
hereunder in such jurisdiction (excluding, in the case of perfection, any
Collateral in which a security interest may not be perfected by the filing of a
financing statement under the Uniform Commercial Code of any jurisdiction).
SECTION 10. As to Equipment and Inventory. Each Grantor shall:
(a) On the date hereof and thereafter on the most recent date on which
a revised Schedule III is required to be furnished to the Administrative
Agent pursuant to Section 10(d), all of the Equipment and Inventory of such
Grantor, other than such Equipment and Inventory as has been rented or
leased to such Grantor's customers, shall be located at the places
specified in Schedule III hereto or at such other places in jurisdictions
where all action required by Section 9 shall have been taken with respect
to such Equipment and Inventory.
(b) Cause all of its Equipment and Inventory to be maintained and
preserved, as is reasonably required in the conduct of its business, in
good working order and condition, excluding (i) ordinary wear and tear and
(ii) properties that have become obsolete or no longer fit for their
intended purposes, and shall forthwith, or in the case of any loss or
damage to any of such Equipment or Inventory as soon as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or
desirable to such end.
(c) Pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Equipment and
Inventory; provided, however, that such Grantor shall not be required to
pay or discharge any such tax, assessment, charge, levy or claim (x) that
is being contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained, or (y) in respect of which the
Lien resulting therefrom, if any, attaches to its property and becomes
enforceable against its other creditors, to the extent that the aggregate
amount of all such taxes, assessments, charges or claims does not exceed
$250,000.
(d) Furnish to the Administrative Agent, at the same time as the
quarterly financial statements are required to be furnished to the
Administrative Agent pursuant to Section 5.03(c) of the Credit Agreement,
unless no revisions are required, a revised Schedule III specifying each
place where the Equipment and Inventory
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of such Grantor is located excluding such Equipment or Inventory rented or
leased to such Grantor's customers. Such revised Schedule III shall be
deemed to replace the then existing Schedule III and shall be of full force
and effect as of the date of delivery of such Schedule to the
Administrative Agent.
(e) In the event that Equipment and/or Inventory of the Grantors with
a book value equal to or greater than 10% of the aggregate book value of
all Equipment and Inventory of the Grantors' is relocated, in one move or
in a series of moves, from one county to another, furnish within five
Business Days after such relocation notice of such relocation to the
Administrative Agent (such notice to include the percentage book value of
the relocated Equipment and Inventory and the old and new locations of such
Equipment and Inventory).
(f) For each leased location at which at any time Equipment and
Inventory of the Grantors with a book value equal to or greater than 10% of
the aggregate book value of the Equipment and Inventory is located, use its
good faith efforts to furnish at such time to the Administrative Agent a
landlord access letter or consent on terms and conditions reasonably
acceptable to the Administrative Agent.
SECTION 11. As to Intellectual Property Collateral:
(a) Each Grantor agrees that, should it obtain an ownership interest
in any item of the type set forth in Section 1(g) hereof which is not now a
part of the Intellectual Property Collateral (the "After-Acquired
Intellectual Property"), (i) the provisions of Section 1 shall
automatically apply thereto, (ii) any such After-Acquired Intellectual
Property, and in the case of trademarks, the goodwill of the business
connected therewith or symbolized thereby, shall automatically become part
of the Intellectual Property Collateral, and (iii) it shall give written
notice of any such item which would otherwise be included on Schedule IV
hereto to the Administrative Agent on a semi-annual basis, provided that
failure to give such notice shall not be deemed an Event of Default nor
shall it limit the Administrative Agent's interest in such Collateral in
any way. Each Grantor authorizes the Administrative Agent to modify this
Agreement by amending Schedule IV hereto and to modify the Exhibits of any
Intellectual Property Security Agreement (and will cooperate with the
Administrative Agent in effecting either such amendment) executed pursuant
to Section 11(g) hereof to include any After-Acquired Intellectual Property
which becomes part of the Intellectual Property Collateral under this
Section, and to record any such modified agreement with the U.S. Patent and
Trademark Office, the U.S. Copyright Office, or other governmental
authority.
(b) Consistent with such Grantor's reasonable business judgment and
subject to the last sentence of this subsection, with respect to each
material item of its Intellectual Property Collateral, each Grantor agrees
to take, at its expense, all steps that such Grantor reasonably deems
necessary, including, without limitation, in the U.S. Patent and Trademark
Office, the U.S. Copyright Office or in any court, to (i) maintain each
such material item of Intellectual Property Collateral in full force and
effect, and valid and enforceable, and (ii) pursue the registration and
maintenance of each material patent, trademark, or copyright registration
or application, now or hereafter included in the Intellectual Property
Collateral of such Grantor, including, without limitation, the payment of
required fees and taxes, the filing of responses to office actions issued
by the U.S. Patent and Trademark Office and the U.S. Copyright Office, the
filing of applications for renewal or extension, the filing of affidavits
under Sections 8 and 15 of the U.S. Trademark Act, the filing of
divisional, continuation, continuation-in-part, reissue, and renewal
applications or extensions, the payment of maintenance fees, and the
participation in interference, reexamination, opposition, cancellation,
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infringement and misappropriation proceedings. No Grantor shall, without
the written consent of the Administrative Agent, discontinue use of or
otherwise abandon any Intellectual Property Collateral, or abandon any
right to file an application for letters patent, trademark, or copyright,
unless: (i) such Grantor shall have reasonably determined that such use or
the pursuit or maintenance of such Intellectual Property Collateral is no
longer desirable in the conduct of such Grantor's business, or (ii) the
loss thereof will not have a Material Adverse Effect.
(c) Each Grantor agrees to notify the Administrative Agent at least
annually and in writing if it learns (i) that any patent, registered
trademark, registered service mark, or registered copyright listed on
Schedule IV has been declared abandoned, placed in the public domain,
invalid or unenforceable, or of any adverse judicial or administrative
determination regarding such Grantor's ownership of any of the Intellectual
Property Collateral, its right to register the same or to keep and maintain
and enforce the same, or (ii) of the institution of any proceeding
(including, without limitation, the institution of any proceeding in the
U.S. Patent and Trademark Office or any court) regarding any item above.
(d) In the event that any Grantor becomes aware that any material item
of the Intellectual Property Collateral is being infringed or
misappropriated by a third party, such Grantor shall take such actions, at
its expense, as such Grantor deems reasonable and appropriate under the
circumstances to protect such Intellectual Property Collateral, including,
without limitation, suing for infringement or misappropriation and for an
injunction against such infringement or misappropriation.
(e) Except as otherwise provided in this Agreement, no Grantor shall
do or permit any act or knowingly omit to do any act whereby any of its
material Intellectual Property Collateral may lapse or become invalid or
unenforceable or placed in the public domain.
(f) Each Grantor shall take all steps which it deems reasonable and
appropriate under the circumstances to preserve and protect each item of
its Intellectual Property Collateral, including, without limitation, taking
all steps necessary to ensure that all licensed users of any of the
Trademarks use consistent standards of quality.
(g) With respect to its Intellectual Property Collateral, each Grantor
agrees to execute an Intellectual Property Security Agreement substantially
in the form set forth in Exhibit D for recording the security interest
granted to the Secured Parties herein with the U.S. Patent and Trademark
Office, the U.S. Copyright Office, and any other governmental authority.
SECTION 12. Insurance. (a) Each Grantor shall, at its own expense, maintain
insurance with respect to the Equipment and Inventory in such amounts, against
such risks, in such form and with such insurers, as shall be reasonably
satisfactory to the Administrative Agent from time to time. Each policy for
liability insurance shall provide for all losses to be paid on behalf of the
Administrative Agent and such Grantor as their interests may appear, and each
policy for property damage insurance shall provide for all losses (except for
losses of less than $1,000,000 per occurrence) to be paid directly to the
Administrative Agent, except to the extent permitted to be paid to a Grantor
pursuant to Section 12(b). Each such policy shall in addition (i) name such
Grantor and the Administrative Agent as insured parties thereunder (without any
representation or warranty by or obligation upon the Administrative Agent) as
their interests may appear, (ii) contain the agreement by the insurer that any
loss thereunder shall be payable to the Administrative Agent notwithstanding any
action, inaction or breach of representation or warranty by such Grantor, (iii)
provide that
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there shall be no recourse against the Administrative Agent for payment of
premiums or other amounts with respect thereto and (iv) provide that at least 10
days' prior written notice of cancellation or of lapse shall be given to the
Administrative Agent by the insurer. Each Grantor shall, if so requested by the
Administrative Agent, deliver to the Administrative Agent certificates
evidencing such insurance, make the original policies of such insurance
reasonably available for inspection by the Administrative Agent and, as often as
the Administrative Agent may reasonably request, a report of a reputable
insurance broker with respect to such insurance. Further, each Grantor shall, at
the request of the Administrative Agent, duly exercise and deliver instruments
of assignment of such insurance policies to comply with the requirements of
Section 9 and cause the insurers to acknowledge notice of such assignment.
(b) Reimbursement under any insurance maintained by any Grantor pursuant to
this Section 12 may be paid directly to the Person who shall have incurred
liability covered by such insurance. In case of any loss involving damage to
Equipment or Inventory when subsection (c) of this Section 12 is not applicable,
such Grantor shall make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
properly received by or released to such Grantor shall be used by such Grantor,
except as otherwise required or permitted hereunder or by the Credit Agreement
to pay or as reimbursement for the cost of such repairs or replacements.
(c) Upon the occurrence and during the continuance of any Event of Default,
all insurance payments in respect of such Equipment or Inventory shall be paid
to and applied by the Administrative Agent as specified in Section 20(b).
SECTION 13. Place of Perfection; Records; Collection of Receivables. (a)
Each Grantor shall keep its chief place of business and chief executive office
and the office where it keeps its records concerning the Collateral; and the
original copies of the Assigned Agreements of such Grantor, and all originals of
all chattel paper which evidences or constitutes Receivables (other than rental
contracts located in the ordinary course of business at the Borrower's branch
offices), at the location therefor specified in Section 8(e) or, upon 30 days'
prior written notice to the Administrative Agent, at such other locations in a
jurisdiction where all actions required by Section 9 shall have been taken with
respect to the Collateral. Each Grantor will hold and preserve such records,
Assigned Agreements and chattel paper and will permit representatives of the
Administrative Agent at any time during normal business hours to inspect and
make abstracts from such records and chattel paper.
(b) Except as otherwise provided in this subsection (b), such Grantor shall
continue to collect, at its own expense, all amounts due or to become due such
Grantor under the Receivables and Related Contracts. In connection with such
collections, upon and after an Event of Default which is continuing, such
Grantor may take (and, following an Event of Default which is continuing at the
Administrative Agent's direction, shall take) such action as such Grantor or the
Administrative Agent may deem necessary or advisable to enforce collection of
the Receivables and Related Contracts; provided, however, that the
Administrative Agent shall have the right upon the occurrence and during the
continuance of an Event of Default and upon written notice to the Borrower of
its intention to do so, to notify the Obligors under any Receivables or Related
Contracts of the assignment of such Receivables or Related Contracts to the
Administrative Agent and to direct such Obligors to make payment of all amounts
due or to become due to such Grantor thereunder directly to the Administrative
Agent and, upon such notification and at the expense of such Grantor, to enforce
collection of any such Receivables or Related Contracts, and to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by such
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Grantor of the notice from the Administrative Agent referred to in the proviso
to the preceding sentence, (i) all amounts and proceeds (including instruments)
received by such Grantor in respect of the Receivables or the Related Contracts
shall be received in trust for the benefit of the Administrative Agent
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent in the same form as so received
(with any necessary indorsement) to be applied as provided by the terms of the
Credit Agreement and (ii) such Grantor shall not adjust, settle or compromise
the amount or payment of any Receivable, release wholly or partly any obligor
thereof, or allow any credit or discount thereon.
SECTION 14. Voting Rights; Dividends; Etc. (a) So long as no Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default shall have
occurred and be continuing:
(i) Each Grantor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Security Collateral of such
Grantor or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the other Loan Documents; provided, however, that no
Grantor shall exercise or refrain from exercising any such right if, in the
Administrative Agent's judgment, such action would have a material adverse
effect on the value of the Security Collateral or any part thereof.
(ii) Each Grantor shall be entitled to receive and retain any and all
dividends, interest and other distributions paid in respect of the Security
Collateral of such Grantor if and to the extent that the payment thereof is
not otherwise prohibited by the terms of the Loan Documents; provided,
however, that any and all
(A) dividends, interest and other distributions paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Security Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Security Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of
capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Security
Collateral,
shall be, and shall be forthwith delivered to the Administrative Agent to
hold as, Security Collateral except as otherwise required under the Credit
Agreement and shall, if received by any Grantor, be received in trust for
the benefit of the Administrative Agent, be segregated from the other
property or funds of such Grantor and be forthwith delivered to the
Administrative Agent as Security Collateral in the same form as so received
(with any necessary indorsement).
(iii) The Administrative Agent shall execute and deliver (or cause to
be executed and delivered) to each Grantor all such proxies and other
instruments as such Grantor may reasonably request for the purpose of
enabling such Grantor to exercise the voting and other rights that it is
entitled to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments that it is authorized to receive and retain
pursuant to paragraph (ii) above.
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<PAGE>
(b) Upon the occurrence and during the continuance of any Default under
Section 6.01(a) or (f) of the Credit Agreement or Event of Default:
(i) All rights of each Grantor (A) to exercise or refrain from
exercising the voting and other consensual rights that it would otherwise
be entitled to exercise pursuant to Section 14(a)(i) shall, upon notice to
such Grantor by the Administrative Agent, cease, and (B) to receive the
dividends, interest and other distributions that it would otherwise be
authorized to receive and retain pursuant to Section 14(a)(ii) shall
automatically cease, and all such rights shall thereupon become vested in
the Administrative Agent, which shall thereupon have the sole right to
exercise or refrain from exercising such voting and other consensual rights
and to receive and hold as Security Collateral such dividends, interest and
other distributions.
(ii) All dividends, interest and other distributions that are received
by any Grantor contrary to the provisions of paragraph (i) of this Section
14(b) shall be received in trust for the benefit of the Administrative
Agent, shall be segregated from other funds of such Grantor and shall be
forthwith paid over to the Administrative Agent as Security Collateral in
the same form as so received (with any necessary indorsement).
SECTION 15. As to the Assigned Agreements. (a) Each Grantor shall at its
expense:
(i) perform and observe all the terms and provisions of the Assigned
Agreements to be performed or observed by it, maintain the Assigned
Agreements to which it is a party in full force and effect, enforce the
Assigned Agreements in accordance with the terms thereof in each case
consistent with its reasonable business judgment to the extent permitted
under the Credit Agreement and take all such action to such end as may be
reasonably requested from time to time by the Administrative Agent; and
(ii) furnish to the Administrative Agent promptly upon receipt thereof
copies of all notices, requests and other documents received by such
Grantor under or pursuant to the Assigned Agreements to which it is a party
which relate to any material obligation thereunder, and from time to time
(A) furnish to the Administrative Agent such information and reports
regarding the Assigned Agreements and such other Collateral of such Grantor
as the Administrative Agent may reasonably request, and (B) upon request of
the Administrative Agent make to each other party to any Assigned Agreement
to which it is a party such demands and requests for information and
reports or for action as such Grantor is entitled to make thereunder.
(b) Each Grantor agrees that it shall perform and observe in all material
respects and as required pursuant to the Credit Agreement the terms and
provisions of each Assigned Agreement to be performed or observed by it,
maintain each such Assigned Agreement in full force and effect, enforce such
Assigned Agreement in accordance with its terms subject to its reasonable
business judgment take all such action to such end as may be from time to time
reasonably requested by the Administrative Agent.
(c) Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Administrative Agent for the
ratable benefit of the Secured Parties of each Assigned Agreement to which it is
a party by any other Grantor hereunder.
19
<PAGE>
SECTION 16. Transfers and Other Liens; Additional Shares. (a) Each Grantor
agrees that it shall not (i) sell, assign (by operation of law or otherwise),
lease or otherwise dispose of, or grant any option with respect to, any of the
Collateral of such Grantor (other than sales, assignments, options, leases and
other dispositions permitted under the terms of the Credit Agreement including,
without limitation, Section 5.02(d) of the Credit Agreement) or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor, except for the Liens created under the Collateral Documents or
permitted under the Credit Agreement.
(b) Each Grantor agrees that it shall (i) cause each issuer of the Pledged
Shares owned by such Grantor not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares issued by such issuer,
except to such Grantor, and (ii) subject to the provisos at the end of Section
1(a)(vii) and to any other limitation set forth in Section 1(a), pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all additional shares of stock or other securities of each issuer of any
Pledged Shares.
SECTION 17. Administrative Agent Appointed Attorney-in-Fact. Each Grantor
hereby irrevocably appoints for the term that this Agreement is in effect the
Administrative Agent such Grantor's attorney-in-fact, with full authority in the
place and stead of such Grantor and in the name of such Grantor or otherwise,
from time to time in the Administrative Agent's discretion upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that the Administrative Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:
(a) to obtain and adjust insurance required to be paid to the
Administrative Agent pursuant to Section 12,
(b) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(c) to receive, indorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) or (b) above, and
(d) to file any claims or take any action or institute any proceedings
that the Administrative Agent may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with
the terms and conditions of any Assigned Agreement or the rights of the
Administrative Agent with respect to any of the Collateral.
SECTION 18. Administrative Agent May Perform. If any Grantor fails to
perform any agreement contained herein, the Administrative Agent may, but
without any obligation to do so and without further notice, itself perform, or
cause performance of, such agreement, and the expenses of the Administrative
Agent incurred in connection therewith shall be payable by such Grantor under
Section 20.
SECTION 19. The Administrative Agent's Duties. The powers conferred on the
Administrative Agent hereunder are solely to protect its and the other Secured
Parties' interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder, the
Administrative
20
<PAGE>
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Security Collateral, whether or not the
Administrative Agent or any other Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral. The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of any Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which it accords its own property.
SECTION 20. Remedies. If any Event of Default shall have occurred and be
continuing:
(a) The Administrative Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party
upon default under the N.Y. Uniform Commercial Code, whether or not the
N.Y. Uniform Commercial Code applies to the affected Collateral, and also
may (i) require any Grantor to, and each Grantor hereby agrees that it will
at its expense and upon request of the Administrative Agent forthwith,
assemble all or part of the Collateral as directed by the Administrative
Agent and make it available to the Administrative Agent at a place and time
to be designated by the Administrative Agent which is reasonably convenient
to both parties; (ii) without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private
sale, at any of the Administrative Agent's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the
Administrative Agent may deem commercially reasonable; (iii) occupy any
premises owned or leased by any Grantor where the Collateral or any part
thereof is assembled or located for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without
obligation to such Grantor in respect of such occupation; and (iv) exercise
any and all rights and remedies of any Grantor under or in connection with
the Assigned Agreements, the Receivables and the Related Contracts or
otherwise in respect of the Collateral, including, without limitation, any
and all rights of such Grantor to demand or otherwise require payment of
any amount under, or performance of any provision of, the Intellectual
Property Collateral, the Assigned Agreements, the Receivables and the
Related Contracts. Each Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Administrative
Agent shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. The Administrative Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(b) Any cash held by the Administrative Agent as Collateral and all
cash proceeds received by the Administrative Agent in respect of any sale
of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Administrative Agent, be held by
the Administrative Agent as collateral for, and/or then or at any time
thereafter applied (after payment of any amounts payable to the
Administrative Agent pursuant to Section 20) in whole or in part by the
Administrative Agent for the ratable benefit of the Secured Parties against
all or any part of the Secured Obligations as permitted or required by the
Credit Agreement. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of all the Secured
Obligations shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
(c) All payments received by any Grantor under or in connection with
any Assigned Agreement or otherwise in respect of the Collateral shall be
received in trust for the benefit of the
21
<PAGE>
Administrative Agent and the other Secured Parties, shall be segregated
from other funds of such Grantor and shall be forthwith paid over to the
Administrative Agent in the same form as so received (with any necessary
indorsement).
(d) The Administrative Agent may, without notice to the Borrower
except as required by law and at any time or from time to time, charge,
set-off and otherwise apply all or any part of the Secured Obligations
against the L/C Cash Collateral Account or any part thereof.
(e) In the event of any sale, assignment, or other disposition of any
of the Intellectual Property Collateral of any Grantor, the goodwill of the
business connected with and symbolized by any Trademarks subject to such
disposition shall be included, and such Grantor shall supply to the
Administrative Agent or its designee such Grantor's know-how and expertise,
and documents and things embodying the same, relating to the manufacture,
distribution, advertising and sale of products or the provision of services
relating to any Intellectual Property Collateral subject to such
disposition, and such Grantor's customer lists and other records and
documents relating to such Intellectual Property Collateral and to the
manufacture, distribution, advertising and sale of such products and
services.
SECTION 21. Indemnity and Expenses. (a) Each Grantor agrees to defend,
protect, indemnify and hold harmless each Secured Party from and against any and
all claims, damages losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except
to the extent that such claims, damages, losses or liabilities resulting from
such Secured Party's gross negligence or willful misconduct as determined by a
final judgment of a court of competent jurisdiction.
(b) Each Grantor will upon demand pay to the Administrative Agent the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that the Administrative
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral of such Grantor, (iii) the
exercise or enforcement of any of the rights of the Administrative Agent or any
other Secured Party against such Grantor, or (iv) the failure by such Grantor to
perform or observe any of the provisions hereof.
(c) Without prejudice to the survival of any other agreement of any Loan
Party hereunder or under any other Loan Document, the agreements and obligations
of the Grantors contained in this Section 21 shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under any of
the other Loan Documents.
SECTION 22. Security Interest Absolute. The obligations of each Grantor
under this Agreement are independent of the Secured Obligations, and a separate
action or actions may be brought and prosecuted against such Grantor to enforce
this Agreement, irrespective of whether any action is brought against the other
Grantors or whether the other Grantors are joined in any such action or actions.
All rights of the Administrative Agent and the pledge, assignment and security
interest hereunder, and all obligations of each Grantor hereunder, shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of any Loan Document, any
Hedge Agreement or any other agreement or instrument relating thereto;
22
<PAGE>
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from any Loan
Document or any Hedge Agreement, including, without limitation, any
increase in the Secured Obligations resulting from the extension of
additional credit to any Grantor or any of its Subsidiaries or otherwise;
(iii) any taking, exchange, release or nonperfection of any other
collateral, or any taking, release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured Obligations;
(iv) any manner of application of collateral, or proceeds thereof, to
all or any of the Secured Obligations, or any manner of sale or other
disposition of any collateral for all or any of the Secured Obligations or
any other assets of the Borrower or any of its Subsidiaries;
(v) any change, restructuring or termination of the corporate
structure or existence of any Grantor or any of its Subsidiaries; or
(vi) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, such Grantor or a third-party grantor of a
security interest.
This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.
SECTION 23. Amendments; Waivers; Etc. (a) No amendment or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Administrative Agent, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of the Administrative Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.
(b) Upon the execution and delivery by any Person of a security agreement
supplement in substantially the form of Exhibit C hereto (each a "Security
Agreement Supplement"), (i) such Person shall be referred to as an "Additional
Grantor" and shall be and become a Grantor and each reference in this Agreement
to "Grantor" shall also mean and be a reference to such Additional Grantor, and
(ii) the annexes attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I, II, III, IV
and V hereto, and the Administrative Agent may attach such annexes as
supplements to such Schedules; and each reference to such Schedules shall mean
and be a reference to such Schedules as supplemented pursuant hereto.
SECTION 24. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing (including telecopier, telegraphic or
telex communication) and, mailed, telecopied, telegraphed, telexed or delivered
to the Borrower or to the Administrative Agent, as the case may
23
<PAGE>
be, in each case addressed to it at its address specified in the Credit
Agreement or, as to either party at such other address as shall be designated by
such party in a written notice to each other party complying as to delivery with
the terms of this Section 24. All such notices and other communications shall,
when mailed, telecopied, telegraphed, telexed or cabled, respectively, be
effective when deposited in the mails, telecopied, delivered to the telegraph
company, confirmed by telex answerback or delivered to the cable company,
respectively, addressed as aforesaid.
SECTION 25. Continuing Security Interest; Assignments. This Agreement shall
create a continuing security interest in the Collateral and shall (a) remain in
full force and effect until the latest of the cash payment in full of the
Secured Obligations, the Termination Date and the termination or expiration of
all Bank Hedge Agreements, (b) be binding upon each Grantor, its successors and
assigns and (c) inure, together with the rights and remedies of the
Administrative Agent hereunder, to the benefit of the Secured Parties and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), any Lender Party may assign or otherwise transfer
all or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes held by it) to any other Person and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to such Lender Party herein or otherwise, in each case as
provided in Section 9.07 of the Credit Agreement. No Grantor shall have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Secured Parties.
SECTION 26. Release and Termination. (a) Upon any sale, lease, transfer or
other disposition of any item of Collateral (including, without limitation, as a
result of the sale, in accordance with the terms of the Loan Documents, of the
Person that owns such Collateral) in accordance with the terms of the Loan
Documents (other than sales or rentals of Equipment and Inventory in the
ordinary course of business), the Administrative Agent will, at such Grantor's
expense, execute and deliver to any Grantor such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby; provided, however, that (i) at
the time of such request and such release no Event of Default shall have
occurred and be continuing, (ii) the Borrower shall have delivered to the
Administrative Agent, at least five Business Days prior to the date of the
proposed release, a written request for release describing the item of
Collateral and the terms of the sale, lease, transfer or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Administrative
Agent and a certification by the Borrower to the effect that the transaction is
in compliance with the Loan Documents and as to such other matters as the
Administrative Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied in accordance with Section
2.06(b)(ii) of the Credit Agreement shall be paid to, or in accordance with the
instructions of, the Administrative Agent at the closing.
(b) With respect to the sale or other disposition of Equipment or Inventory
in the ordinary course of business permitted by the Loan Documents, so long as
at the time of such sale no Event of Default shall have occurred and be
continuing, such sale or other disposition may be made free from the lien of
this Agreement and the other Loan Documents without the necessity of any release
from or consent by the Administrative Agent and no purchaser of any such
property shall be bound to inquire into any question affecting the right of any
Grantor to sell or otherwise dispose of such Equipment or Inventory free from
the lien of this Agreement and the Loan Documents.
24
<PAGE>
(c) Upon the latest of the cash payment in full of the Secured Obligations,
the Termination Date and the termination or expiration of all Bank Hedge
Agreements, the pledge, assignment and security interest granted hereby shall
terminate and all rights to the Collateral shall revert to the Grantors. Upon
any such termination, the Administrative Agent will, at the Borrower's expense,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence such termination.
SECTION 27. The Mortgages. In the event that any of the Collateral
hereunder is also subject to a valid and enforceable Lien under the terms of any
Mortgage and the terms of such Mortgage are inconsistent with the terms of this
Agreement, then with respect to such Collateral, the terms of such Mortgage
shall be controlling in the case of fixtures and leases, letting and licenses
of, and contracts and agreements relating to the lease of real property, and the
terms of this Agreement shall be controlling in the case of all other
Collateral.
SECTION 28. Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 29. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of New York.
25
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ INVESTMENT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
1403 Faulk Road, Suite 102
Wilmington, DE 19803
Attention: Chief Financial Officer
MEDIQ MOBILE X-RAY SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ MANAGEMENT SERVICES, INC.
26
<PAGE>
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ IMAGING SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
VALUE-MED PRODUCTS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
27
<PAGE>
AMERICAN CARDIOVASCULAR IMAGING LABS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ DIAGNOSTIC CENTERS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ DIAGNOSTIC CENTERS-I, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
28
<PAGE>
MDTC HADDON, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
29
<PAGE>
SCHEDULE I
Initial Pledged Shares and Initial Pledged Debt
Initial Pledged Shares
Part I
Initial Pledged Debt
Part II
<PAGE>
SCHEDULE II
Assigned Agreements
<PAGE>
SCHEDULE III
Locations of Equipment and Inventory
<PAGE>
SCHEDULE IV
Intellectual Property
<PAGE>
SCHEDULE V
Blocked Accounts and Other Bank Accounts
<PAGE>
EXHIBIT A TO THE SECURITY AGREEMENT
FORM OF BLOCKED ACCOUNT LETTER
_________, 1998
[Blocked Account Bank Address]
Attn: [ ]
[Grantor]
Ladies and Gentlemen:
Reference is made to the deposit accounts listed on the attached Schedule I
into which certain monies, instruments and other properties are deposited from
time to time (the "Accounts") maintained with you by [Grantor], a ________
corporation (the "Company"). Pursuant to a Security Agreement dated as of
_______, 1998 (the "Security Agreement"), the Company has granted to Banque
Nationale de Paris, as administrative agent (the "Administrative Agent") for the
Secured Parties referred to in the Credit Agreement dated as of ________, 1998
(the "Credit Agreement") with the Company, a security interest in certain
property of the Company, including, among other things, the following (the
"Account Collateral"): the Accounts, all funds held therein and all certificates
and instruments, if any, from time to time representing or evidencing the
Accounts, all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or in
exchange for any or all of the then existing Account Collateral and all proceeds
of any and all of the foregoing Account Collateral and, to the extent not
otherwise included, all (i) payments under insurance (whether or not the
Administrative Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to
any of the foregoing Account Collateral and (ii) cash. It is a condition to the
continued maintenance of the Accounts with you that you agree to this letter
agreement.
By signing this letter agreement, you acknowledge notice of the Security
Agreement and confirm to the Administrative Agent that you have received no
notice of any other pledge or assignment of the Accounts. Further, you hereby
agree with the Administrative Agent that:
(a) Notwithstanding anything to the contrary in any other agreement
relating to the Accounts, the Accounts are and will be subject to the terms
and conditions of the Security Agreement, will be maintained solely for the
benefit of the Administrative Agent, will be entitled "Banque Nationale de
Paris, as Administrative Agent, Re: [Grantor]" and will be subject to
written instructions only from an officer of the Administrative Agent.
(b) Upon the written request of the Administrative Agent to you, which
request shall specify that an "Event of Default" under the Credit Agreement
has occurred and is continuing (which writing may be by telex or telecopy
and upon which you may conclusively rely, absent manifest error), you shall
immediately transfer (at the cost and expense of the Company) subject to
your usual deposit terms, all funds then or thereafter deposited in the
Accounts by wire transfer into the Administrative Agent's Account at the
Federal Reserve Bank of New York, 33 Liberty Street, New York, NY, 10048,
ABA No. 026007689, for further credit to Account No. 750420-701-03.
<PAGE>
(c) From and after the date that the Administrative Agent shall have
sent to you a written notice (which writing may be by telex or telecopy and
upon which you may conclusively rely, absent manifest error) that an "Event
of Default" under the Credit Agreement has occurred and until the date, if
any, that the Administrative Agent shall have advised you in writing (which
writing may be by telex or telecopy and upon which you may conclusively
rely, absent manifest error) that no Event of Default is continuing, you
shall not honor any withdrawal or transfer from, or any check, draft or
other item of payment on, the Accounts, other than any withdrawal,
transfer, check, draft or other item made in writing by the Administrative
Agent or bearing the written consent of the Administrative Agent, and, to
the extent of collected funds in the Accounts, you shall honor each such
withdrawal, transfer, check, draft or other item made in writing by the
Administrative Agent or bearing the written consent of the Administrative
Agent.
(d) You will follow your usual operating procedures for the handling
of the Accounts, including any remittance received in the Accounts that
contains restrictive endorsements, irregularities (such as a variance
between the written and numerical amounts), undated or postdated items,
missing signatures, incorrect payees, etc.
(e) You shall furnish to the Administrative Agent, promptly upon the
reasonable written request of the Administrative Agent in each instance,
all information regarding the Accounts, to the extent the same is provided
to the Company, for the period of time specified in such written notice,
and the Company hereby authorizes you to furnish same.
(f) You agree that you will not make, and you hereby waive all of your
rights to make, any charge, debit or offset to the Accounts for any reason
whatsoever, and waive any and all liens, whether contractual or provided
under law, which you may have or hereafter acquire on the Accounts or funds
therein, in each case, other than any charge, offset, debit or lien in
respect of your customary service charges relating to the Accounts.
(g) All service charges and fees with respect to the Accounts shall be
payable by the Company.
(h) After the giving of notice referred to in paragraphs (b) and (c)
above, the Administrative Agent shall be entitled to exercise any and all
rights of the Company in respect of the Accounts, and the undersigned shall
comply in all respects with such exercise.
This letter agreement shall be binding upon you and your successors and
assigns and shall inure to the benefit of the Administrative Agent, the other
Secured Parties and their successors, transferees and assigns. You may terminate
this letter agreement only upon thirty days' prior written notice to the Company
and the Administrative Agent. Upon such termination you shall close the Accounts
and transfer all funds in the Accounts to the Administrative Agent's Account
specified in paragraph (b) above.
2
<PAGE>
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York.
Very truly yours,
[GRANTOR]
By
-----------------------------------------------
Name:
Title:
BANQUE NATIONALE DE
PARIS, as Administrative Agent
By
-----------------------------------------------
Title:
By
-----------------------------------------------
Title:
Acknowledged and agreed to as of
the date first above written:
[BLOCKED ACCOUNT BANK NAME]
By
-----------------------------
-----------------------------
-----------------------------
Title:
<PAGE>
3
<PAGE>
SCHEDULE I TO EXHIBIT A TO THE
SECURITY AGREEMENT
Accounts
<PAGE>
EXHIBIT B TO THE SECURITY AGREEMENT
FORM OF CONSENT AND AGREEMENT
The undersigned hereby acknowledges notice of, and consents to the terms
and provisions of, the Security Agreement dated ________, 1998 (the "Security
Agreement", the terms defined therein being used herein as therein defined) from
MEDIQ/PRN Life Support Services, Inc. (the "Borrower") and certain other parties
thereto (together with the Borrower, the "Grantors") to Banque Nationale de
Paris as agent (the "Administrative Agent") for the Secured Parties referred to
therein, and hereby agrees with the Administrative Agent that:
(a) Upon written notice from the Administrative Agent, the undersigned
will make all payments to be made by it under or in connection with the
__________ Agreement dated _______________, 19__ (the "Assigned Agreement")
between the undersigned and the Borrower in accordance with the
instructions of the Administrative Agent.
(b) All payments referred to in paragraph (a) above shall be made by
the undersigned irrespective of, and without deduction for, any
counterclaim, defense, recoupment or set-off and shall be final, and the
undersigned will not seek to recover from the Administrative Agent or any
Lender for any reason any such payment once made.
(c) The Administrative Agent shall be entitled to exercise any and all
rights and remedies of the Borrower under the Assigned Agreement in
accordance with the terms of the Security Agreement, and the undersigned
shall comply in all respects with such exercise.
(d) The undersigned will not, without the prior written consent of the
Administrative Agent, (i) cancel or terminate the Assigned Agreement or
consent to or accept any cancellation or termination thereof, [or] (ii)
amend or otherwise modify the Assigned Agreement [, or (iii) make any
prepayment of amounts to become due under or in connection with the
Assigned Agreement, except as expressly provided therein].
This Consent and Agreement shall be binding upon the undersigned and its
successors and assigns, and shall inure, together with the rights and remedies
of the Administrative Agent hereunder, to the benefit of the Administrative
Agent, the other Secured Parties and their successors, transferees and assigns.
This Consent and Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
IN WITNESS WHEREOF, the undersigned has duly executed this Consent and
Agreement as of the date set opposite its name below.
Dated: _______________, ____ [NAME OF OBLIGOR]
By
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT C TO THE SECURITY AGREEMENT
FORM OF SECURITY AGREEMENT SUPPLEMENT
Banque Nationale de Paris, as Administrative Agent
under the Credit Agreement
referred to below
[Address]
[Date]
Attention: ________________________
Security Agreement dated as of ________, 1998
made by MEDIQ/PRN Life Support Services, Inc. and
the other Grantors to Banque Nationale de Paris, as Administrative Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Security Agreement (such Security
Agreement, as in effect on the date hereof and as it may hereafter be amended,
modified or otherwise supplemented from time to time, being the "Security
Agreement"). The terms defined in the Security Agreement (or in the Credit
Agreement referred to therein) and not otherwise defined herein are used herein
as therein defined.
The undersigned hereby agrees, as of the date first above written, to
become a Grantor under the Security Agreement as if it were an original party
thereto and agrees that each reference in the Security Agreement to "Grantor"
shall also mean and be a reference to the undersigned.
The undersigned hereby assigns and pledges to the Administrative Agent for
the ratable benefit of the Secured Parties, and hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties as security
for the Secured Obligations a lien on and security interest in, all of the
right, title and interest of the undersigned, whether now owned or hereafter
acquired, in and to the Collateral owned by the undersigned, including, but not
limited to, the property listed on Annex I hereto. Schedules I, II, III, IV and
V to the Security Agreement are hereby supplemented by Annexes I, II, III, IV
and V hereto, respectively. The undersigned hereby certifies that such Annexes
have been prepared by the undersigned in substantially the form of Schedules I,
II, III, IV and V to the Security Agreement and are accurate and complete as of
the date hereof.
The undersigned hereby makes each representation and warranty set forth in
Section 8 of the Security Agreement (as supplemented by the attached Annexes) to
the same extent as each other Grantor and hereby agrees to be bound as a Grantor
by all of the terms and provisions of the Security Agreement to the same extent
as each other Grantor.
This Security Agreement Supplement shall be governed by, and construed in
accordance with, the laws of the State of New York.
<PAGE>
Very truly yours,
[NAME OF ADDITIONAL
GRANTOR]
By
--------------------------------
Name:
Title:
Address of Chief Executive
Office and for Notices:
[Address]
Attention: Chief Financial Officer
2
<PAGE>
EXHIBIT D TO THE SECURITY AGREEMENT
FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as may be amended,
supplemented or otherwise modified from time to time, the "IP Security
Agreement") dated ________, 1998, is made by the Persons listed on the signature
pages hereof (collectively, the "Grantors") in favor of BANQUE NATIONALE DE
PARIS ("BNP"), as administrative agent (the "Administrative Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).
WHEREAS, MEDIQ/PRN Life Support Services, Inc., a Delaware corporation, has
entered into a Credit Agreement dated as of ________, 1998 (as may be amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
with BNP, as Administrative Agent, Swing Line Bank, Initial Issuing Bank and
Arranger, NationsBank, N.A., as Syndication Agent, and Credit Suisse First
Boston, as Documentation Agent and the Lender Parties party thereto. Capitalized
terms used herein and not otherwise defined are used herein as defined in the
Credit Agreement.
WHEREAS, as a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
each Grantor shall have executed that certain Security Agreement by and among
the Grantors and the Administrative Agent dated as of ________, 1998 (as may be
amended, supplemented or otherwise modified from time to time, the "Security
Agreement").
WHEREAS, under the terms of the Security Agreement, Grantors have granted a
security interest in certain intellectual property of Grantors to the
Administrative Agent for the ratable benefit of the Secured Parties, and have
agreed as a condition thereof to execute this IP Security Agreement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office, and other governmental entities.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantors agree as follows:
SECTION 1. Grant of Security. Each Grantor hereby grants to the
Administrative Agent for the ratable benefit of the Secured Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):
(i) The United States, international, and foreign patents, patent
applications, and patent licenses set forth on Exhibit A hereto including
reissues, divisions, continuations, continuations-in-part, extensions and
reexaminations thereof, and all rights therein provided by international
treaties or conventions (the "Patents");
(ii) The United States and foreign trademark and service mark
registrations, applications, and licenses set forth on Exhibit B hereto
(the "Trademarks");
(iii) The copyrights, associated United States and foreign copyright
applications and registrations, and copyright licenses set forth on Exhibit
C hereto (the "Copyrights");
(iv) any and all causes of action for past, present and future
infringement or breach of the Patents, Trademarks and Copyrights, with the
right, but not the obligation to sue for and collect, or otherwise recover,
damages for such infringement or breach; and
(v) any and all proceeds of the foregoing.
<PAGE>
SECTION 2. Recordation. Each Grantor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.
SECTION 3. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 4. Conflict Provision. This IP Security Agreement has been entered
into in conjunction with the provisions of the Security Agreement and the Credit
Agreement. The rights and remedies of each party hereto with respect to the
security interest granted herein are without prejudice to, and are in addition
to those set forth in the Security Agreement and the Credit Agreement, all terms
and provisions of which are incorporated herein by reference. In the event that
any provisions of this IP Security Agreement are in conflict with the Security
Agreement or the Credit Agreement, the provisions of the Security Agreement or
the Credit Agreement shall govern.
2
<PAGE>
IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
MEDIQ INCORPORATED
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
3
<PAGE>
PRN HOLDINGS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
1403 Faulk Road
Suite 102
Wilmington, DE 19803
Attention: Chief Financial Officer
MEDIQ INVESTMENT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
1403 Faulk Road, Suite 102
Wilmington, DE 19803
Attention: Chief Financial Officer
MEDIQ MANAGEMENT SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
4
<PAGE>
MEDIQ SURGICAL EQUIPMENT
SERVICES, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
VALUE-MED PRODUCTS, INC.
By
-----------------------------------------------
Name:
Title:
Address of Chief Executive Office and for Notices:
One MEDIQ Plaza
Pennsauken, NJ 08110
Attention: Chief Financial Officer
5
<PAGE>
EXHIBIT E
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS AND FIXTURE FILING
Dated as of May 29, 1998
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
Mortgagor
to
BANQUE NATIONALE DE PARIS,
as Administrative Agent for the Lender Parties,
as hereinafter defined, Mortgagee
<PAGE>
MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT
OF RENTS AND FIXTURE FILING
THIS MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE FILING
("Mortgage"), made as of the 29th day of May, 1998, by MEDIQ/PRN LIFE SUPPORT
SERVICES, INC., a Delaware corporation, having its principal office at One Mediq
Plaza, Pennsauken, NJ 08110 ("Mortgagor") to BANQUE NATIONALE DE PARIS, having
an office at 499 Park Avenue, New York, New York 10022 ("Mortgagee").
W I T N E S S E T H:
WHEREAS, Mortagor, MEDIQ Incorporated, has entered into that certain credit
agreement, dated as of May 29, 1998 with the banks, financial institutions and
other institutional lenders listed on the signature pages thereof as the Initial
Lenders, Mortgagee, as administrative agent for the Lender Parties, as defined
in the Credit Agreement, and as the initial issuing bank and NationsBank, N.A.
as syndication agent for the Lender Parties and Credit Suisse First Boston, as
documentation agent for the Lender Parties (said credit agreement, as it may
hereafter be amended or otherwise modified from time to time, being the "Credit
Agreement", the terms defined therein and not otherwise defined herein being
used herein as therein defined); and
WHEREAS, pursuant to the Credit Agreement and subject to the terms and
conditions therein set forth, the Lender Parties have agreed to make Advances to
Mortgagor; and
WHEREAS, the aggregate principal amount of Advances outstanding from time
to time under the Credit Agreement may not exceed $275,000,000, excluding
advances made to protect the lien and security of this Mortgage; and
WHEREAS, to evidence such indebtedness Mortgagor has executed and delivered
the Credit Agreement and certain of the Loan Documents; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Mortgagor hereby agrees that to secure the full and final payment
of any and all indebtedness and obligations due and owing or which may hereafter
become due and owing from Mortgagor to Mortgagee (and to the Lender Parties),
whether now existing or hereafter arising, of every nature, type and
description, together with any and all renewals, extensions, substitutions
thereto and modifications thereof and whether absolute or contingent, direct or
indirect, joint or several, matured or unmatured, including without limitation,
all indebtedness and obligations arising at any time and from time to time under
the Credit Agreement and other Loan Documents to be paid with interest thereon
pursuant thereto, Mortgagor hereby gives, grants, bargains, warrants, aliens,
premises, releases, conveys, assigns, transfers, mortgages, hypothecates,
deposits, pledges, sets over and confirms to Mortgagee, ALL that certain real
property, including without limitation all plots, pieces or parcels of land,
situate, lying and being in the Township of Pennsauken, County of Camden, the
State of New Jersey (hereinafter called the "Land"), more particularly bounded
and described in SCHEDULE A hereto annexed and made a part hereof;
<PAGE>
TOGETHER, ALSO, with all fixtures, equipment, machinery, chattels,
apparatus and articles of personal property now or hereafter attached to or
located in or upon the Premises (defined below), and used or usable in
connection with any present or future operation or letting of the Premises or
the activities at any time conducted therein and all substitutions and
replacements therefor (hereinafter called "Building Equipment"), including, but
not limited to, furnaces, boilers, oil burners, radiators and piping, coal
stokers, plumbing and bathroom fixtures, refrigeration, air conditioning and
sprinkler systems, wash-tubs, sinks, gas and electric fixtures, stoves, ranges,
awnings, screens, window shades, elevators, motors, dynamos, refrigerators,
kitchen cabinets, incinerators, plants and shrubbery and all other machinery,
vending machines, appliances, fittings, furniture, furnishings and fixtures of
every kind used in the operation of the buildings standing or hereafter erected
on the Premises, together with any and all replacements thereof and additions
thereto, and all right, title and interest of Mortgagor in and to any Building
Equipment which may be subject to any security agreements, as defined in
subdivision (1) (h) of Section 9-105 of the Uniform Commercial Code of the State
of New Jersey (hereinafter called "Security Agreements"), superior in lien to
the lien of this Mortgage; it being understood and agreed that all Building
Equipment is part and parcel of the Premises and appropriated to the use thereof
and, whether affixed or annexed to the Premises or not, shall for the purposes
of this Mortgage, be deemed conclusively to be real estate and mortgaged hereby;
TOGETHER, ALSO, with any and all awards, damages, payments and other
compensation and any and all claims therefor and rights thereto which may result
from taking or injury, including interest thereon, heretofore and hereafter made
to Mortgagor by virtue of the exercise of the power of eminent domain of or any
damage, injury or destruction in any manner caused to the whole or any part of
the Premises or any easement therein, including but not limited to insurance
proceeds, condemnation awards and settlements, any awards for changes of grade
of streets, all of which are hereby assigned to Mortgagee, who is hereby
authorized to collect and receive the proceeds of such items and to give proper
receipts and acquittances therefor, and to apply the same toward the payment of
the mortgage debt, notwithstanding the fact that the amount owing thereon may
not then be due and payable;
TOGETHER, ALSO, with all the estate, right, title, claim or demand
whatsoever of Mortgagor in and to all rents, income, profits and other benefits
to which Mortgagor may now or hereafter be entitled from the property described
above (such granting constituting an absolute and present assignment of such
property, subject to conditional permission of Mortgagor to collect such rents
as provided herein below);
TOGETHER, ALSO with the appurtenances, all estate and rights of Mortgagor
in and to the Premises and all right, title and interest, if any, of Mortgagor,
in and to the land lying in the streets, roads or avenues, open or proposed, in
front of or adjoining the Premises and of, in and to any strips or gores of land
adjoining the Premises;
TOGETHER, ALSO with all right, title and interest of Mortgagor in and to
all agreements, contracts, plans and specifications relative to the construction
of the improvements built or to be built on the Land; the sale including the
proceeds thereof, of the Premises; leasing, brokerage, management, sale and/or
operation of the Premises;
TOGETHER, ALSO, with all and singular the tenements,
hereditaments and appurtenances belonging to the Land or any part thereof, and
the buildings, structures, and improvements thereon, or in any way appertaining
thereto (including, but not limited to, all income, rents, issues and profits
arising therefrom), all streets, alleys, passages, ways, watercourses,
easements, all other rights, liberties and privileges of whatsoever kind or
character, the provisions and remainders, and all the estate, right, title,
2
<PAGE>
interest, property, possession, claim and demand whatsoever, as well at law as
in equity, of Mortgagor in and to all the foregoing or any or every part thereof
(all Land, buildings, structures, improvements, fixtures, equipment, machinery,
chattels, goods, apparatus, personal property, Building Equipment, tenements,
awards, damages, payments, compensation, claims, rights, rents, income, profits
and other property interests described and enumerated herein are hereinafter
collectively referred to as the "Premises") .
TO HAVE AND TO HOLD the Premises and other property, privileges, rights,
interests and franchises hereby granted or mortgaged, or intended so to be, unto
Mortgagee, its successors and assigns forever;
PROVIDED, HOWEVER, and these presents are upon the condition, that if
Mortgagor shall fully and finally pay or cause to be paid all of the Obligations
on the abovementioned Loan Documents, at the times and in the manner therein and
herein provided, and shall keep, perform and observe all and singular the
covenants, agreements and provisions in the abovementioned Loan Documents and in
this Mortgage expressed to be kept, performed and observed by or on the part of
Mortgagor, then this Mortgage and the estate and rights hereby granted shall
cease, determine and be void but otherwise shall be and remain in full force and
effect.
All capitalized terms used herein not defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
MORTGAGOR'S LIABILITY UNDER THE CREDIT AGREEMENT FOR THE OBLIGATIONS SHALL
NOT EXCEED THE PRINCIPAL AMOUNT OF $275,000,000 THEREOF, PLUS, FROM AND AFTER
THE DEMAND FOR PAYMENT THEREUNDER, INTEREST THEREON AT THE HIGHEST RATE THEN
APPLICABLE TO THE INDEBTEDNESS OF BORROWER TO MORTGAGEE SET FORTH IN THE CREDIT
AGREEMENT, PLUS ANY AND ALL COSTS, EXPENSES AND CHARGES OF COLLECTION THEREUNDER
(INCLUDING, BUT NOT LIMITED TO, ATTORNEYS' FEES AND LEGAL EXPENSES).
AND Mortgagor covenants and agrees with Mortgagee as follows:
1. Payment of Indebtedness. That Mortgagor will pay all indebtedness as
hereinbefore provided and if default shall be made in the payment of the said
indebtedness or in the interest which shall accrue thereon, or of any part of
either, Mortgagee shall have power to sell the Premises, including without
limitation the Building Equipment and other property covered hereby according to
law.
2. Insurance. (a) That Mortgagor will keep the buildings on the Premises
and the Building Equipment insured for the benefit of Mortgagee (i) against loss
by fire, (ii) by means of an extended coverage endorsement, against loss or
damage by windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicle and smoke, (iii) against loss of rentals due to any
of the foregoing causes, (iv) against loss by flood if the Premises are located
in an area identified by the Secretary of Housing and Urban Development as an
area having special flood hazards and in which flood insurance has been made
available under the National Flood Insurance Act of 1968, as amended, and (v)
when and to the extent required by Mortgagee, against any other risk insured
against by persons operating like properties in the locality of the Premises;
that Mortgagor will assign and deliver to Mortgagee the policies of such
insurance and the proceeds thereof; that Mortgagor will reimburse Mortgagee for
any premiums paid for insurance made by Mortgagee on Mortgagor's default in
3
<PAGE>
taking out such insurance, or in so delivering such policies, together with
interest thereon at the rate per annum specified in Article 4 hereof, and the
same shall be added to the indebtedness secured hereby and be secured by this
Mortgage;
(b) that such insurance shall be provided by policies written in terms and
amounts, and by companies, reasonably satisfactory to Mortgagee, and losses
thereunder shall be payable to Mortgagee pursuant to a standard non-contributory
mortgagee endorsement required by Mortgagee, which endorsement may only be
cancelled or modified upon not less than thirty (30) days prior written notice
to Mortgagee. Mortgagee shall not by the fact of approving, disapproving,
accepting, preventing, obtaining or failing to obtain any insurance incur any
liability for or with respect to the amount of insurance carried, the form or
legal sufficiency of insurance contracts, solvency of insurance companies, or
payment or defense of lawsuits, and Mortgagor hereby expressly assume full
responsibility therefor and all liability, if any, with respect thereto.
(c) that regardless of the types or amounts of insurance required and
approved by Mortgagee Mortgagor will deliver to Mortgagee certificates
evidencing all policies of insurance acquired by Mortgagor to insure against any
loss or damage to the Premises, as additional security for the indebtedness
secured hereby;
(d) that Mortgagee shall be entitled to retain and apply the proceeds of
any insurance, whether against fire or other hazard, to the payment of the
indebtedness secured hereby, or, if Mortgagee, in its sole discretion, shall so
elect, Mortgagee may hold any or all of such proceeds for application to payment
of the cost of restoration;
(e) that not less than fifteen (15) days prior to the expiration date of
each policy furnished by Mortgagor pursuant to this Article, Mortgagor will
deliver to Mortgagee a certificate evidencing a renewal policy or policies
marked "premium paid" or accompanied by other evidence of payment satisfactory
to Mortgagee; and
(f) that in the event of a foreclosure of this Mortgage the purchaser of
the Premises shall succeed to all the rights of Mortgagor, including any rights
to the proceeds of insurance and to unearned premiums, in and to all policies of
insurance certificates for which have been delivered to Mortgagee pursuant to
this Article.
3. Premises and Improvements. That no building or other property now or
hereafter covered by the lien of this Mortgage shall be removed, demolished or
materially altered without the prior written consent of Mortgagee, except that
Mortgagor shall have the right, without such consent, to remove and dispose of,
free from the lien of this Mortgage, such Building Equipment as from time to
time may become worn out or obsolete, provided that simultaneously with or prior
to such removal, any such equipment shall be replaced with other equipment of a
value at least equal to that of the replaced equipment and free from any
security agreement, and by such removal and replacement Mortgagor shall be
deemed to have subjected such Building Equipment to lien of this Mortgage.
4. Mortgagee's Optional Performance. That in the event of any default in
the performance of any of Mortgagor's covenants or agreements herein, Mortgagee
may, at the option of Mortgagee, perform the same and the cost thereof, with
interest at a rate per annum equal to the highest rate then applicable to the
indebtedness of Borrower to Mortgagee set forth in the Credit Agreement (but not
4
<PAGE>
in excess of the maximum rate allowed by law to be charged to Mortgagor), shall
immediately be due from Mortgagor to Mortgagee and secured by this Mortgage.
5. Taxes, Assessments and Escrows. (a) That Mortgagor will pay all taxes,
assessments, water rates, sewer rents fines, impositions and other claims and/or
charges now or hereafter levied and all charges for utilities with respect to or
against the Premises or any part thereof, and also any and all license fees or
similar charges which may be imposed by the municipality in which the Premises
are situated for the use of walks, chutes, areas and other space beyond the lot
line on or abutting the public sidewalks in front of or adjoining the Premises,
together with any penalties or interest on any of the foregoing (collectively
"Impositions"), and in default thereof Mortgagee may pay the same and Mortgagor
will repay the same with interest thereon at the rate per annum specified in
Article 4 hereof and the same shall be added to the indebtedness secured hereby
and be additionally secured by this Mortgage; that upon request of Mortgagee,
Mortgagor will exhibit to Mortgagee receipts for the payment of all items
specified in this Article within ten (10) days of the date when the same shall
become delinquent. If any law, rule, regulation or ordinance adopted hereafter
by any federal, state or local government, or any department, agency or bureau
thereof, imposes a tax on Mortgagee with respect to the Premises, the value of
Mortgagor's equity therein, the amount of the indebtedness secured hereby, or
this Mortgage, Mortgagee shall have the right at its election from time to time
to give Mortgagor sixty (60) days' written notice to pay such indebtedness
secured hereby, whereupon such indebtedness shall become due, payable and
collectible at the expiration of such period of sixty (60) days, unless prior
thereto, lawfully and without violation of usury or other laws, Mortgagor shall
have paid any such tax in full as the same became due and payable, in which
event such notice shall be deemed to have been rescinded with respect to any
right of Mortgagee hereunder arising by reason of the tax so paid. No prepayment
charge or premium shall apply to the payment of the indebtedness secured hereby
pursuant to any such notice, if the payment is made before the expiration of
such period of sixty (60) days.
(b) That Mortgagee will not permit Mortgagor to claim and Mortgagor will
not claim or demand any credit on or make any deduction from any secured
indebtedness hereunder including without limitation any interest or principal
of, on, or with respect to the Notes, by reason of the payment of any taxes
levied or to be levied upon the Premises or any part thereof during the
continuance of the lien of this Mortgage.
(c) That, after an event of default hereunder, Mortgagee may, at its option
to be exercised by twenty (20) days' written notice to Mortgagor, require that
Mortgagor deposit with Mortgagee, on the first day of each and every month, a
sum equal to one-twelfth (1/12) of the annual real estate taxes, assessments,
water rates, sewer rents and other charges specified in this Article 5
(hereinafter collectively referred to as "taxes") plus one-twelfth (1/12) of the
premiums required to keep in force for one year the insurance specified in
Article 2 hereof. If such deposits shall be so required, Mortgagor shall also
deposit with Mortgagee, at least thirty (30) days prior to the due date of each
installment of such taxes and each insurance premium, such additional amount as
may be determined by Mortgagee in order to provide Mortgagee with funds
sufficient to pay such installment or premium. It is the intention of the
parties that, if such deposits shall be so required, Mortgagor shall deposit
with Mortgagee the necessary funds so that Mortgagee, at all times until the
full payment and satisfaction of this Mortgage, shall have on hand sufficient
deposits covering the accrued amounts of such taxes and insurance premiums. The
amount of such taxes and premiums, when unknown, shall be reasonably estimated
by Mortgagee; any insufficiency to pay such charges when due shall be paid by
Mortgagor to Mortgagee on demand. If permitted by law, the said funds shall bear
no interest and shall not be deemed to be trust funds but may be commingled with
other funds of Mortgagee and no interest shall be payable upon any such funds.
5
<PAGE>
(The foregoing sentence shall not apply to any assignee of this Mortgage.)
Mortgagee shall have no obligation to use said funds to pay an installment of
taxes prior to the last day on which payment thereof may be made without penalty
or interest or to pay an insurance premium prior to the due date thereof. If the
whole of said principal sum and interest shall be declared due and payable by
Mortgagee pursuant to Article 20 hereof, all such deposits may, at the option of
Mortgagee, be applied in reduction of said principal sum and/or interest, as
Mortgagee shall elect. Upon an assignment of this Mortgage, Mortgagee shall have
the right to pay over the balance of such deposits in its possession to the
assignee and Mortgagee shall thereupon be completely released from all liability
with respect to such deposits and Mortgagor or owner of the Premises shall look
solely to the assignee or transferee in reference thereto. This provision shall
apply to every transfer of such deposited to a new assignee. Upon full payment
and satisfaction of this Mortgage or at any prior time, at the election of
Mortgagee, the balance of the deposits in its possession shall be paid over to
the record owner of the Premises and no other party shall have any right or
claim thereto in any event. Mortgagor agrees, at Mortgagee's request, to make
the aforesaid deposits with such service or financial institution as Mortgagee
shall from time to time designate.
6. Appointment of Receiver and Other Powers. That Mortgagee shall have the
right in case of failure of Mortgagor to perform any of the acts, covenants, or
conditions in this Mortgage or in the Credit Agreement, upon a complaint filed
or any proper action being commenced for the foreclosure of this Mortgage, to
apply for, and Mortgagee shall be entitled as a matter of right without
consideration of the value of the Premises as security for the amounts due
Mortgagee, or of the solvency of any person or persons obligated for the payment
of such amounts, to the appointment by any competent court or tribunal, without
notice to any party, of a receiver of the rents, issues, and profits of the
Premises, with power to lease the Premises, or such part thereof as may not then
be under lease, and with such other powers as may be deemed necessary, who,
after deducting all proper charges and expenses attending the execution of the
trust as receiver, shall apply the residue of the rents and profits to the
payment and satisfaction of the amount remaining secured hereby, or to any
deficiency which may exist after applying the proceeds of any judicially decreed
sale of the Premises to the payment of the amount due, including interest and
the costs of the foreclosure and sale.
7. Estoppel Certificate. That Mortgagor, within five (5) days upon request
in person or within ten (10) days upon request by mail, will furnish a written
statement duly acknowledged of the amount due on this Mortgage and whether any
offsets or defenses exist against the secured mortgage debt.
8. Notice. That notice and demand or request shall be made in accordance
with the Credit Agreement.
9. Title and Further Assurances. (a) That Mortgagor warrants that Mortgagor
has good title to the Premises, including without limitation the Building
Equipment and other property covered hereby free and clear of all liens and
encumbrances, except for current real property taxes not yet delinquent and this
Mortgage ("Permitted Encumbrances"), and has full power and lawful authority to
mortgage the same; that Mortgagor shall and will make, execute, acknowledge and
deliver, in due form required by applicable law, all such further assurances as
may at any time hereafter be reasonably required to effectuate the mortgaging of
the Premises and other property covered hereby or intended so to be, unto
Mortgagee, its successors or assigns, for the purpose aforesaid, and unto all
and every person or persons deriving any estate, right, title or interest
therein under this Mortgage; and that Mortgagor will warrant and defend title to
the Premises, including without limitation the Building Equipment and said other
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property against all persons whomsoever claiming the same or any part thereof,
including without limitation all persons claiming by, through or under
Mortgagor.
(b) That Mortgagor shall execute and deliver, from time to time, such
further instruments (including further security agreements and Uniform
Commercial Code financing statements) as may be requested by Mortgagee to
confirm the lien of this Mortgage on any Building Equipment.
(c) That Mortgagor upon request, shall make, execute and deliver any and
all instruments sufficient for the purpose of confirming the assignment to
Mortgagee of awards for the taking by eminent domain of the whole or any part of
the Premises or any easement therein, including any awards for changes of grade
of streets, free, clear and discharged of any encumbrances of any kind or nature
whatsoever.
(d) That Mortgagor shall not further encumber the Premises for debt and
hereby (1) represents as a special inducement to Mortgagee to make the loans
secured hereby that, as of the date hereof, this is a first mortgage and there
are no encumbrances to secure debt junior to this Mortgage and (2) covenants
that there are to be none as of the date when this Mortgage becomes of record
and thereafter will be none, except, in either case, encumbrances having the
prior written consent of Mortgagee.
(e) Mortgagor will promptly perform and observe, or cause to be performed
or observed, all of the terms, covenants and conditions of all instruments of
record affecting the Premises, non-compliance with which may affect the security
of this Mortgage or which may impose any duty or obligation upon Mortgagor or
any other occupant of the Premises or any part thereof, and Mortgagor shall do
or cause to be done all things necessary to preserve intact and unimpaired any
and all easements, appurtenances and other interest and rights in favor of or
constituting any portion of the Premises.
10. Sale by Parcel. That in case of any foreclosure sale, the Premises, or
so much thereof as may be affected by this Mortgage, may be sold in one or more
parcels.
11. Additional Lien. That if any action or proceeding be commenced
(including an action to foreclose this Mortgage or to collect the indebtedness
secured hereby), in which Mortgagee becomes a party or participates, by reason
of being the holder of this Mortgage or the debt secured hereby, all sums paid
by Mortgagee for the expense of so becoming a party or participating (including
reasonable counsel fees and disbursements) shall on notice and demand be paid by
Mortgagor, together with interest thereon at the rate per annum specified in
Article 4 hereof, and shall also be a lien on the Premises, prior to any right
or title to, interest in, or claim upon, the Premises subordinate to the lien of
this Mortgage, and shall be deemed to be additionally secured by this Mortgage
and that in any action or proceeding to foreclose this Mortgage, or to recover
or collect the debt secured hereby, the provisions of law respecting the
recovery of costs, disbursements and allowances shall apply in addition to the
foregoing.
12. Care and Maintenance of Premises. That the Premises and any buildings
on the Premises have not been damaged to any material extent and Mortgagor will
maintain the Premises and the Building Equipment in good condition and repair,
will not commit or suffer any waste thereof or the conduct of any nuisance or
unlawful occupation or business on, or use of, the Premises, and will comply
with, or cause to be complied with, all statutes, ordinances and requirements of
any governmental authority relating to the Premises; that Mortgagor will
promptly repair, restore, replace or rebuild any part of the Premises or the
Building Equipment now or hereafter subject to the lien of this Mortgage which
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may be damaged or destroyed by any casualty whatsoever or which may be affected
by any proceeding of the character referred to in Article 13; and that Mortgagor
shall not initiate, join in, or consent to any change in any private restrictive
covenant, zoning ordinance, or other public or private restrictions, limiting or
defining the uses which may be made of the Premises or any part thereof.
13. Eminent Domain and Condemnation. The proceeds of any award or claim for
damages, direct or consequential, in connection with any condemnation or other
taking of or damage or injury to the Premises, or any part thereof, or for
conveyance in lieu of condemnation, are hereby assigned to and shall be paid to
Mortgagee. In addition, all causes of action, whether accrued before or after
the date of this Mortgage, of all types for damages or injury or affecting the
Premises or any part thereof, including, without limitation, causes of action
arising in tort or contract and causes of action for fraud or concealment of a
material fact, are hereby assigned to Mortgagee as additional security and the
proceeds shall be paid to Mortgagee. Mortgagee may, at its option, appear in and
prosecute in its own name, any action or proceedings relating to condemnation or
other taking of or damage or injury to the Premises or any portion thereof. If
Mortgagor at any time suspects or has knowledge of any casualty damages to the
Premises or damage in any other manner, Mortgagor will immediately notify
Mortgagee in writing. Mortgagor may participate in any such proceedings and may
join Mortgagee in adjusting any loss covered by insurance.
That notwithstanding any taking by eminent domain or other governmental
action (of which there are no such pending proceedings) causing injury to, or
decrease in value of, the Premises and creating a right to compensation
therefor, including, without limitation, the change of the grade of any street,
Mortgagor shall continue to be fully liable for all indebtedness or liability
secured hereby.
All compensation, awards, proceeds, damages, claims, insurance recoveries,
rights of action and payments which Mortgagor may receive, or to which Mortgagor
may become entitled with respect to the Premises or any part thereof, shall be
paid over to Mortgagee and shall be applied first toward reimbursement of all
costs and expenses of Mortgagee in connection with recovery of the same.
Thereafter the same need not be applied by Mortgagee in reduction of principal
but may be applied in such proportions and priority as Mortgagee, in Mortgagee's
sole discretion, may elect, to the payment of principal, interest or other sums
secured by this Mortgage and/or to payment to Mortgagor, on such terms as
Mortgagee may specify, for the sole purpose of altering, restoring or rebuilding
any part of the Premises which may have been altered, damaged or destroyed as a
result of any such taking or other action; that if, prior to the receipt by
Mortgagee of such award or compensation, the Premises shall have been sold on
foreclosure of this Mortgage, Mortgagee shall have the right to receive said
award or compensation to the extent of any deficiency found to be due upon such
sale, with legal interest thereon, whether or not a deficiency judgment on this
Mortgage shall have been sought or recovered, together with reasonable counsel
fees and the costs and disbursements incurred by Mortgagee in connection with
the collection of such award or compensation. In the event Mortgagee elects to
permit Mortgagor to repair or restore the Premises following any damage or
injury to the Premises, or any part thereof, then the balance of such
compensation, awards, proceeds, damages, claims, insurance recoveries, rights of
action or payments shall be applied to the reimbursement of Mortgagor for
expenses incurred by it in such repair or restoration of the Premises, subject,
however, to the following conditions:
(i) any such work of repair or restoration shall be of such a
character as not to reduce, or otherwise adversely affect, the value of the
buildings, improvements and fixtures on the Premises immediately before
such damage or injury, nor to diminish the general utility of such
buildings, improvements or fixtures for the purposes the same were used
immediately prior to such damage;
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(ii) such work of repair or restoration shall be commenced as soon as
reasonably possible after such damage or injury occurs and shall be
completed by Mortgagor forthwith and with due diligence;
(iii) such work of repair or restoration shall be done in accordance
with plans, specifications and drawings submitted to and approved by
Mortgagee;
(iv) any such monies made available for such repair or restoration
shall be disbursed in accordance with standard construction lending
practices approved by Mortgagee or in any other manner approved by
Mortgagee; and
(v) in the event such compensation, awards, proceeds, damages, claims,
insurance recoveries, rights of action or payments are insufficient to
complete such repairs or restoration, Mortgagor shall provide the balance
of the cost of such repairs or restoration. Any balance of monies held by
Mortgagee and remaining after completion of such repair or restoration
shall be applied to the payment or prepayment (without premium) of the
indebtedness or liability secured hereby in such order as Mortgagee may
determine.
In the event Mortgagor does not elect to repair or restore the Premises
following any such damage or injury referred to herein, or if Mortgagor elects
to repair or restore the Premises but fails to comply with any of the conditions
hereinabove set forth, then all such compensation, awards, proceeds, damages,
claims, insurance recoveries, rights of action and payments, which remain after
the reimbursement of all costs and expenses of Mortgagee in connection with
recovery of the same, shall be applied, in the sole and absolute discretion of
Mortgagee and without regard to the adequacy of its security hereunder, to the
payment or prepayment (without premium) of the indebtedness or liability secured
hereby. Any application of such amounts or any portion thereof to any
indebtedness secured hereby shall not be construed to or waive any default or
notice of default hereunder or invalidate any act done pursuant to any such
default or notice.
14. Right to Inspect. That Mortgagee and any persons authorized by
Mortgagee shall have the right to enter and inspect the Premises at all
reasonable times and, prior to an event of default hereunder, upon reasonable
notice; and that if, at any time after default by Mortgagor in the performance
of any of the terms, covenants or provisions of this Mortgage, the management or
maintenance of the Premises shall be determined by Mortgagee to be
unsatisfactory, Mortgagor shall employ, for the duration of such default, as
managing agent of the Premises, such person or firm as from time to time shall
be approved by Mortgagee. That Mortgagee and its designated agents shall have
the right to inspect Mortgagor's books and records with respect to the Premises
at all reasonable times.
15. Financial Information. That Mortgagor, in addition to the financial
information required in the Credit Agreement, shall furnish to Mortgagee as
promptly as reasonably possible, such interim financial or other information
with respect to the operation of the Premises and with respect to Mortgagor as
Mortgagee may reasonably request. If Mortgagor shall have leased all or
substantially all of the Premises to another, such statements shall cover the
earnings and expenses in the latest fiscal year of the lessee under such lease.
In the case of such lease, if the lessee shall be an affiliate of Mortgagor,
Mortgagor will also furnish to Mortgagee the lessee's balance sheet as of the
end of the lessee's fiscal year and the lessee's statement of income and surplus
for such fiscal year, all in reasonable detail and stating in comparative form
the figures as of the end of and for the previous fiscal year, and prepared,
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audited and reported upon by an independent certified public accountant or, if
permitted by Mortgagee, verified by an authorized financial officer of the
lessee.
16. Assignment of Rents. That Mortgagor hereby assigns to Mortgagee the
rents, issues and profits of the Premises, together with all leases, licenses
and other documents evidencing such rents, issues and profits now or hereafter
in effect and any and all deposits held as security under said leases, and
shall, upon demand, deliver to Mortgagee an executed counterpart of each such
lease or other document. Nothing contained in the foregoing sentence shall be
construed to bind Mortgagee to the performance of any of the covenants,
conditions or provisions contained in any such lease or other document or
otherwise to impose any Paragraph 16 obligation on Mortgagee (including, without
limitation, any liability under the covenant of quiet enjoyment contained in any
lease in the event that any tenant shall have been joined as a party defendant
in any action to foreclose this Mortgage and shall have been barred and
foreclosed thereby of all right, title and interest and equity of redemption in
the Premises), except that Mortgagee shall be accountable for money actually
received pursuant to such assignment. Mortgagor hereby further grant to
Mortgagee the right (i) to enter upon and take possession of the Premises for
the purpose of collecting the said rents, issues and profits, (ii) to dispossess
by the usual summary proceedings any tenant defaulting in the payment thereof to
Mortgagee, (iii) to let the Premises, or any part thereof, and (iv) to apply
said rents, issues and profits, after payment of all necessary charges and
expenses, on account of said indebtedness. Such assignment and grant shall
continue in effect until all indebtedness secured by this Mortgage is fully and
finally paid, the execution of this Mortgage constituting and evidencing the
irrevocable consent of Mortgagor to the entry upon and taking possession of the
Premises by Mortgagee pursuant to such grant, whether foreclosure has been
instituted or not and without applying for a receiver. After an event of default
hereunder, Mortgagor shall be entitled to collect and receive the same until the
occurrence of a default by Mortgagor under any of the covenants, conditions or
agreements contained in this Mortgage. Mortgagor agrees to use said rents,
issues and profits in payment of principal and interest becoming due on this
Mortgage and in payment of taxes, assessments, water rates, sewer rents and
carrying charges becoming due against the Premises. Such rights of Mortgagor to
collect and receive said rents, issues and profits may be revoked by Mortgagee
upon any such default by Mortgagor, by giving written notice of such revocation.
17. Rents and Profits. That, in the event of any default under this
Mortgage, Mortgagor will pay monthly in advance to Mortgagee, on its entry into
possession pursuant to Article 16 hereof, or to any receiver appointed to
collect said rents, issues and profits, the fair and reasonable rental value for
the use and occupation of the Premises or of such part thereof as may be in the
possession of Mortgagor, and upon default in any such payment, will vacate and
surrender possession of the Premises or such part thereof, as the case may be,
to Mortgagee or to such receiver and, in default thereof, may be evicted by
summary proceedings or otherwise.
18. Leases. (a) That Mortgagor has no right or power, as against Mortgagee
without its consent, to cancel, abridge or otherwise modify in any material
respect any of the leases or subleases now or hereafter affecting the whole or
any part of the Premises or any of the terms, provisions or covenants thereof,
or to accept prepayments of installments of rent to become due thereunder and
Mortgagor shall not do so without such consent.
(b) That Mortgagor shall not enter into a lease of all or substantially all
of the Premises, unless (i) such lease shall expressly provide that the
leasehold estate created thereby shall be subject and subordinate to all
mortgages on the Premises and to the leasehold estates of subtenants created by
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existing subleases, notwithstanding any clause in any such sublease purporting
to subordinate such sublease and the rights of the subtenant thereunder to
ground or underlying leases, (ii) such lease shall require that each sublease
thereafter made and each renewal of any existing sublease shall provide that,
(A) in the event of the termination of the underlying lease, the sublease shall
not terminate or be terminable by the subtenant, (B) in the event of any action
for the foreclosure of this Mortgage, the sublease shall not terminate or be
terminable by the subtenant by reason of the termination of the underlying lease
unless the subtenant is specifically named and joined in any such action and
unless a judgment is obtained therein against the subtenant and (C) in the event
that the underlying lease is terminated as aforesaid, the subtenant shall attorn
to the lessor under the underlying lease or to the purchaser at the sale of the
Premises on such foreclosure, as the case may be, and (iii) the lessee in such
lease shall agree, and be authorized by Mortgagor, to direct and require the
subtenants and other occupants of space in the Premises to pay to Mortgagee on
its entry into possession pursuant to Article 16 hereof, or to a receiver
appointed to collect the rents, issues and profits of the Premises, the rents
payable by them under the terms of their subleases or occupancy agreements upon
being notified by Mortgagee of any default under this Mortgage and of
Mortgagee's entry into possession of the Premises, or of the appointment of any
such receiver, with the same force and with like effect as if said lease had not
been entered into and Mortgagor were entitled to receive the said space rents
directly.
19. Lease Assurances. That upon notice and demand, Mortgagor shall, from
time to time, execute, acknowledge and deliver or cause to be executed,
acknowledged and delivered to Mortgagee, in form satisfactory to Mortgagee, one
or more separate assignments (confirmatory of the general assignment provided in
Article 16 hereof) of the lessor's interest in any lease or sublease now or
hereafter affecting the whole or any part of the Premises and which shall also
restrict Mortgagor's right or power, as against Mortgagee, without its consent,
to cancel, abridge or otherwise modify, or accept prepayments of installments of
rent to become due under, any such lease or sublease; that Mortgagor shall pay
to Mortgagee the expenses incurred by Mortgagee in connection with the
preparation and recording of any such instrument; that Mortgagor will (i)
fulfill or perform each and every condition and covenant of each such lease or
sublease to be fulfilled or performed by the lessor thereunder, (ii) give prompt
notice to Mortgagee of any notice of default by the lessor thereunder received
by Mortgagor together with a complete copy of any such notice, and (iii)
enforce, short of termination thereof, the performance or observance of each and
every covenant and condition thereof by the lessee thereunder to be performed or
observed.
20. Default. The following shall constitute events of default hereunder:
(a) failure in the due and punctual payment of any indebtedness or
performance of any obligations secured hereunder, including any principal
or interest or any other amounts required to be paid or due or to become
due under this Mortgage, the Credit Agreement, or under any other
agreement(s) or instrument(s) now or hereafter securing the indebtedness
which is also secured hereunder; or
(b) non-payment of any tax, water rate, sewer rent, assessment or for
twenty (20) days after the same first becomes due and payable; or if
Mortgagor fails to furnish Mortgagee with receipted tax bills or other
proof of payment of the aforesaid items by no later than thirty (30) days
after the dates on which such items must be paid so as not to constitute a
default hereunder; or
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(c) breach, after notice and demand, either in Mortgagor's
responsibility for assigning and delivering the policies of insurance
herein described or referred to, or in reimbursing Mortgagee for premiums
paid on such insurance, as hereinbefore provided; or
(d) the actual or threatened material waste, removal or demolition of
any building or other property on the Premises, except as permitted by
Article 3 after thirty (30) days notice to Mortgagor and its failure to
cure; or
(e) assignment by Mortgagor of the whole or any part of the rents,
issues or profits arising from the Premises to any person without the
written consent of Mortgagee; or
(f) if the buildings on the Premises are not maintained in reasonably
good repair in any material respect after thirty (30) days' notice to
Mortgagor and its failure to cure; or
(g) failure to comply in any material respect with any requirement or
order or notice of violation of law or ordinance issued by any governmental
department claiming jurisdiction over the Premises within thirty (30) days
from the issuance thereof; or
(h) if, on application of Mortgagee, two or more fire insurance
companies lawfully doing business in the State of New Jersey refuse to
issue policies insuring the buildings on the Premises; or
(i) if Mortgagor shall fail to make payment of any other sums required
to be paid hereunder within the period required by specific provision of
this Mortgage or, if no such period is so provided, by not later than ten
(10) days after written notice; or
(j) if, without the prior consent of Mortgagee, the Premises or any
interest therein shall be sold, pledged, hypothecated, contracted to be
sold, leased with an option to purchase, conveyed, alienated or otherwise
disposed of or transferred or further encumbered for debt by Mortgagor; or
(k) if a lien for the performance of work or the supply of materials
is filed against the Premises or any portion thereof which shall not be
discharged or bonded within thirty (30) days from the filing thereof; or
(l) if an Event of Default shall occur under the Credit Agreement.
21. Remedies. Upon any default under paragraph 20, without notice or
presentment, each of which are hereby waived by Mortgagor, and without waiving
any rights and/or remedies Mortgagee may now or hereafter have under or in
connection with the Credit Agreement and under or in connection with any other
agreements Mortgagee may now or hereafter have with or concerning Mortgagor,
Mortgagee shall have the right to and may:
(a) declare the entire principal of all indebtedness secured hereunder
then outstanding (if not then due and payable), and all accrued and unpaid
interest thereon, and all other sums connected therewith, to be due and
payable immediately, and upon any such declaration all indebtedness secured
hereunder and said accrued and unpaid interest and other sums shall become
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and be immediately due and payable, anything in any of the Loan Documents
or in this Mortgage to the contrary notwithstanding;
(b) personally, or by its agents or attorneys, may enter into and upon
all or any part of the Premises, and each and every part thereof, with or
without force and with or without process of law and may exclude Mortgagor,
its agents and servants wholly therefrom and from having and holding the
same, may use, operate, manage and control the Premises or any part thereof
and all records, documents, leases, books, papers and accounts of Mortgagor
relating thereto and conduct the business thereof, either personally or by
its superintendents, managers, agents, servants, attorneys or receivers;
and likewise, from time to time, at the expense of Mortgagor, Mortgagee may
make all necessary or proper repairs, renewals and replacements and such
useful alterations, additions, betterments and improvements thereto and
thereon as to it may seem advisable; and in every such case Mortgagor
shall, at any time, or times, upon demand of Mortgagee forthwith surrender
possession of the Premises and Mortgagee shall have the right to manage and
operate the Premises and to carry on the business thereof and exercise all
rights and powers of Mortgagor with respect thereto either in the name of
Mortgagor or otherwise as it shall deem best; and Mortgagee shall be
entitled to collect and receive all gross receipts, earnings, revenues,
rents, issues, profits and income of the Mortgaged Property and every part
thereof, all of which shall for all purposes constitute property of
Mortgagee; and after deducting the expenses of conducting the business
thereof and of all maintenance, repairs, renewals, replacements,
alterations, additions, betterments and improvements and amounts necessary
to pay for taxes, assessments, insurance and prior or other proper charges
upon the Premises or any part thereof, as well as just and reasonable
compensation for the services of Mortgagee and for all attorneys, counsel,
agents, clerks, servants and other employees by it properly engaged and
employed, Mortgagee may apply the monies arising as aforesaid in such
manner, in such order and at such times as Mortgagee shall determine in its
discretion to the payment of any indebtedness secured hereby and the
interest thereon, when and as the same shall become payable and/or to the
payment of any other sums required to be paid by Mortgagor under this
Mortgage;
(c) (i) with or without entry, personally or by its agents or
attorneys, insofar as applicable, sell the Premises, including, without
limitation, the Building Equipment or any part thereof to the extent
permitted and pursuant to the procedures provided by law, and all estate,
right, title and interest, claim and demand therein, and right of
redemption thereof, at one or more sales as a single entity or in parcels,
and at such time and place, upon such terms and after such notice thereof
as may be required or permitted by law;
(ii) institute an action of judicial foreclosure on this Mortgage or
institute other proceedings according to law for the foreclosure hereof or
otherwise as may be allowed, at law or in equity, and may prosecute the
same to judgment, execution and sale for the collection of all of the
obligations secured hereby, and all interest with respect thereto, together
with all taxes and insurance premiums advanced by Mortgagee and other sums
payable by Mortgagor hereunder, and all fees, costs and expenses of such
proceedings, including reasonable attorneys' fees and expenses;
(iii) take such steps to protect and enforce its rights, whether by
action, suit or proceeding in equity or at law, for the specific
performance of any covenant, condition or agreement in the Credit Agreement
and/or in this Mortgage or in aid of the execution of any power herein or
therein granted, or for any foreclosure hereunder, or for the enforcement
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of any other appropriate legal or equitable remedy or otherwise as
Mortgagee shall elect;
(iv) exercise in respect of the Premises consisting of personal
property or fixtures, or both, all of the rights and remedies available to
a secured party upon default under the applicable provisions of the Uniform
Commercial Code in effect in the State of New Jersey; and
(v) exercise any or all other rights and remedies afforded Mortgagee
under the Loan Documents, or at law or in equity.
(d) (i) Mortgagee may adjourn from time to time any sale by it to be
made under or by virtue of this Mortgage by announcement at the time and
place appointed for such sale or for such adjourned sale or sales; and,
except as otherwise provided by any applicable provision of law, Mortgagee,
without further notice or publication, may make such sale at the time and
place to which the same shall be so adjourned.
(ii) Upon any sale, it shall not be necessary for Mortgagee or any
public officer acting under execution or order of court to have present or
constructive possession of any of the Premises.
(iii) The recitals contained in any conveyance made by Mortgagee to
any purchaser at any sale made pursuant hereto or under applicable law
shall be full evidence of the matters therein stated, and all prerequisites
to such sale shall be presumed to have been satisfied and performed.
(iv) To the extent permitted by law, any such sale or sales made under
or by virtue of this Mortgage, or under or by virtue of any judicial
proceedings, shall operate to divest all estate, right, title, interest,
claim and demand whatsoever, either at law or in equity, of Mortgagor in
and to the interest, rights, premises and property sold, and shall be a
perpetual bar, both at law and in equity, against Mortgagor, their
respective successors and assigns, and against any and all persons or
entities claiming the premises and property sold, or any part thereof,
from, through or under Mortgagor and their respective successors or
assigns.
(v) The receipt of Mortgagee for the purchase money paid at any such
sale, or the receipt of any other person authorized to receive the same,
shall be sufficient discharge therefor to any purchaser of the property, or
any part thereof, sold as aforesaid, and no such purchaser, or his
representatives, grantees or assigns, after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money or any part thereof upon or for any trust or purpose of this
Mortgage, or be liable for misapplication or nonapplication of any such
purchase money, or any part thereof, or be bound to inquire as to the
authorization, necessity, expediency or regularity of any such sale.
(vi) In case the liens or security interests hereunder, or by the
exercise of any other right or power, shall be foreclosed by Mortgagee's
sale or by other judicial action, the purchaser at any such sale shall
receive, as an incident to his ownership, immediate possession of the
property purchased, and if Mortgagor or its respective successors shall
hold possession of said property, or any part thereof, subsequent to
foreclosure, Mortgagor or its respective successors shall be considered as
tenants at sufferance of the purchaser at foreclosure sale, and anyone
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occupying the property after demand made for possession thereof shall be
guilty of forcible detainer and shall be subject to eviction and removal,
forcible or otherwise, with or without process of law, and all damages by
reason thereof are hereby expressly waived.
(vii) In the event a foreclosure hereunder shall be commenced by
Mortgagee, Mortgagee may at any time before the sale abandon the suit, and
may then institute suit for the collection of amounts due or to become due
under the Credit Agreement and for the foreclosure of the liens and
security interest hereof. If Mortgagee should institute a suit for the
collection of amounts due or to become due under the Credit Agreement and
for a foreclosure of the liens and security interest hereof, it may at any
time before the entry of a final judgment in said suit dismiss the same and
proceed to sell the Premises, or any part thereof, in accordance with
provisions of this Mortgage.
(viii) Should any default occur hereunder, any reasonable expenses
incurred by Mortgagee in consulting, negotiating, prosecuting, resettling
or settling the claim of Mortgagee, including, without limitation,
reasonable attorneys' fees and disbursements, shall become an additional
obligation of Mortgagor hereunder.
(ix) In the event of any sale made under or by virtue of this Mortgage
the entire principal of, interest on, and all other indebtedness secured
hereunder, if not previously due and payable, immediately thereupon shall,
anything in the Credit Agreement or in this Mortgage to the contrary
notwithstanding, become due and payable.
(x) The purchase money proceeds or avails of any sale made under or by
virtue of this Mortgage, together with any other sums which then may be
held by Mortgagee under this Mortgage, whether under the provisions hereof
or otherwise, shall be applied in accordance with the applicable law and,
to the extent not inconsistent therewith, as follows:
First: To the payment of the reasonable costs and expenses of
such sale, including reasonable compensation to Mortgagee, its agents
and counsel, and of any judicial proceedings wherein the same may be
made, and of all expenses, liabilities and advances made or incurred
by Mortgagee under this Mortgage, including without limitation any
such expenses, liabilities and/or advances to remedy default by
Mortgagor, or to otherwise establish, preserve or enforce any rights
hereunder, together with interest at the rate set forth in Article 4
on all advances made by Mortgagee and all taxes or assessments, except
any taxes, assessments or other charges subject to which the Premises
shall have been sold.
Second: To the payment of the whole amount then due, owing or
unpaid upon indebtedness secured hereunder in accordance with the
provisions of the Credit Agreement, including, without limitation, all
principal and interest due and to become due under or in connection
with the Credit Agreement, with interest on the unpaid principal at
the rate set forth in Article 4 from and after the happening of any
event of default described in paragraph 20, from the due date of any
such payment of principal until the same is paid.
Third: To the payment of any other sums required to be paid by
Mortgagor pursuant to any provision of this Mortgage or the Credit
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Agreement, all with interest at the rate set forth in Article 4, from
the date such sums were or are required to be paid under this
Mortgage.
Fourth: To the payment of the surplus, if any, to whomsoever may
be lawfully entitled to receive the same.
(xi) Upon any sale made under or by virtue of this Mortgage, by virtue
of judicial proceedings or of a judgment or decree of foreclosure and sale,
Mortgagee may bid for and acquire the Premises or any part thereof and in
lieu of paying cash therefor, and upon compliance with the terms of said
sale, may hold, retain and dispose of such property without further
accountability therefor. Mortgagee may also make settlement for the
purchase price by crediting upon the indebtedness of Mortgagor secured by
this Mortgage the net sales price after deducting therefrom the expense of
the sale and the costs of the action and any other sums which Mortgagee is
authorized to deduct under this Mortgage.
22. Non-Waiver by Mortgagee. That any failure by Mortgagee to insist upon
the strict performance by Mortgagor of any of the terms and provisions hereof
shall not be deemed to be a waiver of any of the terms and provisions hereof,
and Mortgagee, notwithstanding any such failure, shall have the right thereafter
to insist upon the strict performance by Mortgagor of any and all of the terms
and provisions of this Mortgage to be performed by Mortgagor; that neither
Mortgagor nor any other person now or hereafter obligated for the payment of the
whole or any part of the sums now or hereafter secured by this Mortgage shall be
relieved of such obligation by reason of the failure of Mortgagee to comply with
any request of Mortgagor, or of any other person so obligated, to take action to
foreclose this Mortgage or otherwise enforce any of the provisions of this
Mortgage or any obligations secured by this Mortgage, or by reason of the
release, regardless of consideration, of the whole or any part of the security
held for the indebtedness secured by this Mortgage, or by reason of any
agreement or stipulation between any subsequent owner or owners of the Premises
and Mortgagee extending the time of payment or modifying the terms of any
indebtedness secured hereunder or this Mortgage without first having obtained
the consent of Mortgagor or such other person, and in the latter event,
Mortgagor and all such other persons shall continue liable to make such payments
according to the terms of any such agreement of extension or modification unless
expressly released and discharged in writing by Mortgagee; that, regardless of
consideration and without the necessity for any notice to or consent by the
holder of any subordinate lien on the Premises, Mortgagee may release the
obligation of anyone at any time liable for any of the indebtedness secured by
this Mortgage or any part of the security held for the indebtedness without, as
to the security or the remainder thereof, in any way impairing or affecting the
lien hereof or the priority thereof over any subordinate encumbrance; and that
Mortgagee may resort for the payment of the indebtedness secured hereby to any
other security therefor held by Mortgagee in such order and manner as Mortgagee
may elect.
23. Taxation of Mortgagee or Indebtedness. That if at any time the United
States of America, any state thereof or any department, agency, bureau or
governmental subdivision thereof, having jurisdiction, shall require revenue
stamps to be affixed to any indebtedness secured hereunder, or other tax paid on
or in connection therewith, Mortgagor will pay the same with any interest or
penalties imposed in connection therewith.
24. Building Equipment, Fixtures and Personal Property. That Mortgagor
shall execute any and all such documents, including Financing Statements
pursuant to the Uniform Commercial Code of the State of New Jersey as Mortgagee
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may request, to preserve and maintain the priority of the lien created hereby on
property which may be deemed personal property or fixtures, and Mortgagor shall
pay to Mortgagee on demand any expenses incurred by Mortgagee in connection with
the preparation, execution and filing of any such documents. Mortgagor hereby
authorizes and empowers Mortgagee to execute and file, on Mortgagor's behalf,
all Financing Statements, and refilings and continuations thereof as Mortgagee
deems necessary or advisable to create, preserve and protect the lien granted to
Mortgagee herein. When and if Mortgagor and Mortgagee shall respectively become
Debtor and Secured Party in any Uniform Commercial Code Financing Statement
affecting Building Equipment or other property referred to or described herein,
this Mortgage shall be deemed the Security Agreement as defined in said Uniform
Commercial Code and the remedies for any violation of the covenants, terms and
conditions of the agreements herein contained shall be (i) as prescribed herein,
(ii) by general law or (iii) as to such part of the security which is also
reflected in said Financing Statement, by the specific statutory consequences
now or hereafter enacted and specified in said Uniform Commercial Code, all at
Mortgagee's sole election. The filing of such a Financing Statement in the
records normally having to do with personal property shall never be construed as
in any way derogating from or impairing this declaration and hereby stated
intention of the parties hereto, that all items of Building Equipment and other
property used in connection with the production of income from the Premises
(furniture only excepted) or adapted for use therein or which are described or
reflected in this Mortgage are, and at all times and for all purposes and in all
proceedings, both legal and equitable, shall be, regarded as part of the real
estate irrespective of whether or not (i) any such item is physically attached
to the improvement, serial numbers are used for the better identification of
certain equipment items capable of being thus identified in a recital contained
herein or in any list filed with Mortgagee or (iii) any such item is referred to
or reflected in any such Financing Statement so filed at any time. Similarly,
the mention in any such Financing Statement of (1) the rights in or the proceeds
of any fire and/or hazard insurance policy, (2) any award in eminent domain
proceedings for a taking or for loss of value or (3) the debtor's interest as
lessor in any present or future lease or rights to income growing out of the use
or occupancy of the Premises, whether pursuant to a lease or otherwise, shall
never be construed as in any way altering any of the rights of Mortgagee as
determined by this instrument or impugning the priority of Mortgagee's lien
granted hereby or by any other recorded document, but such mention in the
Financing Statement is declared to be for the protection of Mortgagee in the
event any court or judge shall at any time hold with respect to (1), (2) or (3)
that notice of Mortgagee's priority of interest, to be effective against a
particular class of persons, including but not limited to the Federal government
and any subdivisions or entity of the Federal government, must be filed in the
Uniform Commercial Code records.
25. Certain Waivers. That Mortgagor will not at any time insist upon, or
plead, or in any manner whatever claim or take any benefit or advantage of any
stay or extension or moratorium law, any exemption from execution or sale of the
Premises or any part thereof, wherever enacted, now or at any time hereafter in
force, which may affect the covenants and terms of performance of this Mortgage,
nor claim, take or insist upon any benefit or advantage of any law now or
hereafter in force providing for the valuation or appraisal of the Premises or
any part thereof, prior to any sale or sales thereof which may be made pursuant
to any provision herein, or pursuant to the decree, judgment or order of any
court of competent jurisdiction; nor, after any such sale or sales, claim or
exercise any right under any statute heretofore or hereafter enacted to redeem
the property so sold or any part thereof and Mortgagor hereby expressly waives
all benefit or advantage of any such law or laws and covenants not to hinder,
delay or impede the execution of any power herein granted or delegated to
Mortgagee, but to suffer and permit the execution of every power as though no
such law or laws had been made or enacted. Mortgagor, for itself and all who may
claim under it, waives, to the extent that it lawfully may, all right to have
the Premises marshaled upon any foreclosure hereof.
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26. Environmental Matters. (a) Definitions for this Section:
(i) "Environmental Laws" means and includes any federal, state or
local law, statute, regulation, charter, fire rule, code or ordinance,
concerning environmental, health or safety matters all as presently in
effect and as the same may hereafter be amended, including, without
limitation, the Industrial Site Recovery Act, as amended, N.J.S.A. 13:lK-6
et seq. ("ISRA"), the Spill Compensation and Control Act, as amended,
N.J.S.A. 58:10-23.11 et seq. (the "Spill Act"), the Federal Safe Drinking
Water Act, as amended, 42 U.S.C.A. ss.300F et seq. ("FSDWA"), the
Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C.A. ss.9601 et seq. ("CERCLA"), the New Jersey Underground
Storage of Hazardous Substances Act, as amended, N.J.S.A. 58:10A-21 et seq.
("USTA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C.A. ss.6901 et seq ("RCRA"), the Federal Water Pollution Control Act,
as amended, 33 U.S.C.A. ss.1251 et seq. ("FWPCA") and the Federal Clean Air
Act, as amended, 42 U.S.C.A. ss.7401 et seq. ("FCAA"), and the Federal
Toxic Substances Control Act, as amended, 15 U.S.C.A. ss.2601 et seq.
("FTSCA") and any rule, regulation, binding interpretation, binding policy,
permit, order, directive, court order or consent decree issued pursuant to
any of the following activities: (A) the emission, discharge, release or
spilling of any substance into the air, surface water, groundwater, soil or
substrata, (B) the manufacturing, processing, sale, generation, treatment,
storage, disposal, transportation, labeling or other management of any
waste, Hazardous Substance, Hazardous Waste, Pollutant or Contaminant as
those terms are hereinafter defined, or (C) any activity which involves any
Hazardous Substance, as that term is hereinafter defined.
(ii) "Hazardous Substances" means and includes any material or
substance that, whether by its nature or use, is subject to regulation
under any Environmental Laws.
(iii) "Premises" means the mortgaged premises.
(iv) "Release" means releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, disposing
or dumping.
(v) "Notice" means any summons, citation, directive, order, claim,
litigation, investigation, proceeding, judgment, letter or other
communication, written or oral, actual or threatened, from the New Jersey
Department of Environmental Protection ("NJDEP"), the United States
Environmental Protection Agency ("USEPA") or other federal, state or local
agency or authority, or any other entity or any individual, concerning any
intentional or unintentional act or omission which has resulted or which
may result in the Release of Hazardous Substances into the waters or onto
the lands of the State of New Jersey, or into water outside the
jurisdiction of the State of New Jersey or into the environment from or on
the Premises, and shall include the imposition of any lien on the Premises,
pursuant to Environmental Laws, or any violation of any Environmental Law
or any knowledge, after due inquiry and investigation, of any facts which
could give rise to any of the above.
(b) Mortgagor warrants and represents to Mortgagee as follows, knowing that
Mortgagee is relying on in entering into this these representations and
warranties, Mortgage:
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(i) To the best of Mortgagor's knowledge, after diligent inquiry and
investigation, no lien has been attached to any revenues or any real or
personal property owned by Mortgagor and located in the State of New
Jersey, including, but not limited to the Premises, in connection with any
Environmental Law.
(ii) Mortgagor has received no Notice.
(iii) In connection with the purchase of the Premises, and any other
ISRA-triggering transaction entered into by Mortgagor on or after January
1, 1984, (A) there has been obtained from NJDEP a letter certifying that
the transaction was not subject to the provisions of ISRA, or (B) Mortgagor
required that the party triggering ISRA comply with the provisions of ISRA
to the extent applicable to such transaction, and the party did comply
therewith, or (C) no interruption of Mortgagor's business, or any portion
thereof, will result from any ISRA-related issues and/or by reason of or in
connection with any ISRA compliance activities.
(iv) To the best of Mortgagor's knowledge, after diligent inquiry and
investigation, the Premises are in full compliance with all provisions of
Environmental Laws.
(v) Neither Mortgagor nor any other person or party (including prior
owner(s) or current or prior tenants) has caused or permitted the Premises
to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process Hazardous Substances, or
other hazardous, dangerous, toxic substances, or solid waste, has not
caused or permitted and has no knowledge of the Release of any Hazardous
Substances on or off-site of the Premises except in accordance with all
Environmental Laws.
(c) Mortgagor hereby covenants and agrees with Mortgagee as follows:
(i) If Mortgagor is presently an owner or operator of a "Major
Facility" in the State of New Jersey, or if Mortgagor ever becomes such an
owner or operator, then Mortgagor shall furnish to the NJEP all the
information required by N.J.S.A. 58:10-23.11d.
(ii) Mortgagor shall not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part, a Release of a
Hazardous Substance into waters of the State of New Jersey or onto the
lands from which it might flow or drain into said waters, or into waters
outside the jurisdiction of the State of New Jersey, where damage may
result to the lands, waters, fish, shellfish, wildlife, biota, air and
other resources owned, managed, held in trust or otherwise controlled by
the State of New Jersey, unless said Release is pursuant to and in
compliance with the conditions of a permit issued by the appropriate
federal and state governmental authorities.
(iii) So long as Mortgagor shall own or operate any real property
located in the State of New Jersey, which is used as a "Major Facility",
Mortgagor shall duly file or cause to be duly filed with the Director of
the Division of Taxation in the New Jersey Department of the Treasury, a
tax report or return and shall pay or make provision for the payment of all
taxes due therewith, all in accordance with and pursuant to N.J.S.A.
58:10-23.11h.
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(iv) In the event that there shall be filed a lien against the
Premises by NJDEP and/or USEPA, then Mortgagor shall, within thirty (30)
days after the date that Mortgagor is given notice that the lien has been
placed against the Premises or within such shorter period of time in the
event that the State of New Jersey has commenced steps to cause the
Premises to be sold pursuant to the lien, either (A) pay the claim and
remove the lien from the Premises, or (B) furnish a bond satisfactory to
Mortgagee in the amount of the claim out of which the lien arises or a cash
deposit in the amount of the claim out of which the lien arises or other
security reasonably satisfactory to Mortgagee in an amount sufficient to
discharge the claim out of which the lien arises.
(v) If Mortgagor receives any notice of (i) the happening of any event
involving the use, spill, discharge or cleanup of any Hazardous Substances,
any toxic substance or waste or any oil or pesticides on or about the
Premises (a "Hazardous Discharge") or (ii) any complaint, order, citation
or notice with regard to air emissions, water discharges, noise emissions
or any other environmental, health or safety matter affecting Mortgagor or
the Premises (an "Environmental Complaint") from any person or entity,
including, without limitation the NJDEP, then Mortgagor will give immediate
oral and written notice of same to Mortgagee.
(vi) Mortgagor agrees that, as landlord, it shall use its best efforts
to include the language stated below in all non-residential leases (which
shall include renegotiations of existing leases) of all or any portion of
the Premises that it enters into:
"ARTICLE ____: ENVIRONMENTAL OBLIGATIONS OF TENANT"
" -.1 Use of Hazardous Substances. Tenant agrees not to use any Hazardous
Substances at the demised premises unless it has first taken all necessary steps
to obtain any necessary permits governing the use, storage and disposal of such
substances and has made adequate arrangements to use, store and dispose of such
substances safely.
" -.2 Notices. If Tenant receives any notice of the happening of any event
involving the use, spill, discharge or cleanup of any Hazardous Substance, and
toxic substance or waste, or any oil or pesticide on or about the demised
premises or into the sewer, septic system or waste treatment system servicing
the demised premises (any such event is hereinafter referred to as a "Hazardous
Discharge") or of any complaint, order, citation, or notice with regard to air
emissions, water discharges, noise emissions or any other environmental, health
or safety matter affecting Tenant (an "Environmental Complaint") from any person
or entity, including, without limitation, the Department of Environmental
Protection of New Jersey ("DEP") and the United States Environmental Protection
Agency ("EPA"), then Tenant shall give immediate oral and written notice of same
to Landlord and Landlord's mortgagee, detailing all relevant facts and
circumstances.
" -.3 Landlord's Option. (a) Without limiting the foregoing, Landlord shall
have the right, but not the obligation, to exercise any of its rights as
provided in this Lease or to enter onto the Premises or to take such actions as
it deems necessary or advisable to clean up, remove, resolve or minimize the
impact of or otherwise deal with any Hazardous Discharge or Environmental
Complaint upon its receipt of any notice from any person or entity, including,
without limitation, the DEP and the EPA, asserting the happening of a Hazardous
Discharge or an Environmental Complaint on or pertaining to the
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demised premises. All costs and expenses incurred by Landlord in the exercise of
any such rights shall be deemed to be additional rent hereunder and shall be
payable by Tenant to Landlord upon demand.
" -.4 Insurance. To the extent available at reasonable rates, Tenant shall
at all times during the term of this Lease maintain in full force and effect
environmental impairment insurance satisfactory to Landlord and Landlord's
mortgagee as to carrier, amount, coverage and all other aspects.
" -.5 Default. The occurrence of any of the following events shall
constitute an Event of Default under this Lease:
"(a) If Tenant does not give Landlord notice of a Hazardous Discharge
or an Environmental Complaint on or pertaining to the demised premises
(which may be given in any oral or written form, provided same is followed
with all due dispatch by written notice given by certified mail, return
receipt requested) within three (3) business days of the time Tenant first
receives notice of such Hazardous Discharge or Environmental Complaint; or
"(b) If the DEP, EPA, or any other local, state or federal agency
asserts or creates a lien upon any or all of the demised premises by reason
of the occurrence of a Hazardous Discharge or an Environmental Complaint or
otherwise; or
"(c) If the DEP, EPA or any other local, state or federal agency
asserts a claim against the Tenant, the demised premises or Landlord for
damages or cleanup costs related to a Hazardous Discharge or an
Environmental Complaint on or pertaining to the demised premises; provided,
however, such claim shall not constitute a default if, within five (5) days
of the occurrence giving rise to the claim:
"(i) Tenant can prove to Landlord's satisfaction that Tenant has
commenced and is diligently pursuing either: (x) cure or correction of
the event which constitutes the basis for the claim, and continues
diligently to pursue such cure or correction to completion, or (y)
proceedings for an injunction, a restraining order or other
appropriate emergent relief preventing such agency or agencies from
asserting such claim, which relief is granted within ten (10) days of
the occurrence giving rise to the claim and the emergent relief is not
thereafter dissolved or reversed on appeal; and
"(ii) In either of the foregoing events, Tenant has posted a
bond, letter of credit or other security satisfactory in form,
substance and amount to Landlord and the agency or entity asserting
the claim to secure the proper and complete cure or correction of the
event which constitutes the basis for the claim.
" -.6 Indemnification. Tenant hereby agrees to defend, indemnify and hold
Landlord and Landlord's mortgagee, their agents, employees and contractors
harmless from and against any and all claims, losses, liabilities, damages and
expenses (including, without limitation, consequential damages, cleanup costs
and reasonable attorney's fees arising by reason of any of the aforesaid or any
action against Tenant under this indemnity) arising directly or indirectly from,
out of or by reason of any Hazardous Discharge or Environmental Complaint or
ISRA occurring either (i) during or attributable to the period
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of this Lease and any other period of possession of the demised premises by
Tenant or (ii) by reason of or attributable to Tenant's operations.
" -.7 ISRA Compliance. (a) If Tenant's operations on the Premises now or
hereafter constitute an "Industrial Establishment" subject to the requirements
of the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1k-6 et seq., and
the regulations pertaining thereto, N.J.A.C. 26B-1.1 et seq., as same may be
amended from time to time ("ISRA"), then prior to the expiration or sooner
termination of this Lease and upon any and every condemnation, assignment or
sublease (if permitted), change in ownership or control of Tenant or any other
closure or transfer by, Landlord or Tenant covered by ISRA, Tenant shall comply
with all requirements of ISRA pertaining to an Industrial Establishment closing
or transferring operations, at its sole cost and expense, to the satisfaction of
the DEPE and Landlord. Without limiting the foregoing, Tenant's obligations
shall include (i) the proper filing of the Initial Notice to the DEPE required
by ISPA, (ii) the performance to DEPE's and Landlord's satisfaction of all air,
soil, ground water and surface water sampling and tests required by ISRA, and
(iii) either (x) obtaining an approved "Negative Declaration" from the DEPE,
without qualification, or (y) obtaining a non-qualified final DEPE approval of
the complete implementation of all necessary cleanups and post cleanup sampling
pursuant to an approved final Cleanup Plan for the Premises, accomplished to
Landlord's reasonable satisfaction. Tenant shall immediately provide Landlord
with copies of all correspondence, reports, test results, notices, orders,
findings, declarations and other materials pertinent to Tenant's compliance and
DEPE's requirements under ISRA, as any of same are issued or received by Tenant
from time to time.
"(b) In no event shall any remedial action work plan or any remediation
required to be conducted by Tenant under ISRA, the Spill Act or any other state
or federal law involve or permit engineering or institutional controls, on,
under or about the demised premises, or any part thereof, including without
limitation, capping, a notice of contamination recorded on the land records, any
use or excess restriction or the posting of signs and in all respects, all
remedial remediation shall meet then current residential standards.
"(c) In the event that Landlord has reason to believe that there has been a
Hazardous Discharge on or about the demised premises, then notwithstanding that
Tenant is not obligated to comply with subparagraph ____.5(a) above for any
reason, including without limitation because Tenant is not an "Industrial
Establishment," then at least thirty (30) but not more than sixty (60) days
prior to the expiration or sooner termination of this Lease, Tenant shall:
"(i) prepare a detailed air, soil, ground water and surface water
sampling plan for the demised premises in form and substance satisfactory
to the Landlord;
"(ii) implement the landlord-approved sampling plan;
"(iii) submit the results of the sampling plan to the Landlord; and
"(iv) after the Landlord's review of the results of the sampling plan,
comply with Landlord's requirements for additional testing and/or cleanup
and site detoxification of any and all toxic or hazardous wastes or
substances identified by reason of the sampling plan, or conduct additional
testing, including, without limitation, any of Landlord's requirements
corresponding to those which the DEP could require under ISRA if same
applied to Tenant and/or the demised premises. All costs associated with
Tenant's compliance with this Article, including, without limitation,
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Landlord's costs in reviewing the sampling plan and test results and
developing a plan for and monitoring the cleanup and site detoxification,
shall be additional rent to be paid by Tenant to Landlord upon demand. Upon
completion of the cleanup and site detoxification to Landlord's
satisfaction expressed in writing, Tenant's obligations under this
subparagraph ____.5(b) shall cease.
" -.8 Performance by Landlord. In the event of Tenant's failure to comply
in full with this Article, Landlord may, at its option, perform any or all of
Tenant's obligations as aforesaid and all costs and expenses incurred by
Landlord in exercise of this right shall be deemed to be additional rent payable
on demand.
" -.9 General. This Article shall survive the expiration or termination of
the Lease."
(d) With regard to CERCLA and the Spill Act, Mortgagor agrees that if NJDEP
and/or USEPA shall serve upon Mortgagor a directive to remove or arrange for the
removal of any "Hazardous Substances" on the Premises, the repayment of the
indebtedness secured by this Mortgage may, at Mortgagee's election, be
accelerated, in the event that Mortgagor shall not comply with the directive
within thirty (30) days from its date or such other period as described therein,
to the satisfaction of NJDEP and/or USEPA, as applicable; provided, however,
that if Mortgagor shall furnish a bond, cash or other security reasonably
satisfactory to Mortgagee in an amount sufficient to pay the costs of taking the
actions required by said directive, then the debt shall not be accelerated.
(e) Mortgagor agrees to comply promptly with all applicable laws, rules
regulations and orders including, without limitation, Environmental Laws, and to
immediately notify Mortgagee, in writing, of (i) the discovery, discharge, or
release of any Hazardous Substances for which Mortgagor is in any way
responsible under CERCLA or the Spill Act or any similar federal or state
statute; or (ii) the use or proposed use of the Premises as a "Major Facility".
(f) Mortgagor agrees to indemnify, defend and hold harmless Mortgagee, its
agents, employees and contractors against any penalties, obligations, damages,
actions, judgments, suits, claims, disbursements, losses or liabilities, costs
or expenses of any kind (including, without limitation, reasonable attorneys'
fees and disbursements) which the Indemnitees may sustain as a result of or on
account of (1) any lien imposed upon the Premises pursuant to CERCLA or the
Spill Act or any amendments thereto; or (2) any other Environmental Law
governing Mortgagor or the Premises; or (3) the presence of asbestos- containing
materials at the Premises; or (4) the past, present or future operations of
Mortgagor or any of Mortgagor's subsidiaries or any of its or their predecessors
in interest. The provisions of this paragraph shall survive any transfer of the
Premises, including a transfer after a foreclosure of this Mortgage, and
delivery of the deed effecting such transfer, or a satisfaction, discharge,
release or termination of this Mortgage; and shall apply notwithstanding any
negligent or contributory conduct by or on the part of Mortgagee, its agents,
employees, contractors, third parties or other parties.
(g) In the event that there has been, or Mortgagee reasonably believes that
there has been, a Release of a Hazardous Substance at the Premises, Mortgagor
shall promptly arrange for an environmental audit and tests, as set forth in
subparagraph (j) below, of such representative soil, air and/or water samples of
the Premises as Mortgagee may require. Mortgagor agrees that the repayment of
the indebtedness secured hereby may, at Mortgagee's election, be accelerated if
Mortgagee shall have determined that, based on such soil, air and/or water
samples, there exists a violation under any applicable Environmental Law and
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Mortgagor shall not, within thirty (30) days (or a shorter period of time if
Mortgagee or its counsel shall determine, in their sole discretion, that such
shorter period is necessary to comply with any applicable law, rule or
regulation) of notice from Mortgagee that such violation exists, have remedied
such violation.
(h) At the option of Mortgagee, it shall constitute an Event of Default if
the effect of any Environmental Law that is modified or enacted after the date
hereof is to materially increase the liability that may be imposed on Mortgagee
as a result of any violation of an Environmental Law by Mortgagor or in respect
of the Premises.
(i) In addition to the rights of Mortgagee set forth above, all costs and
expenses incurred by Mortgagee pursuant to the terms of this Section shall be
paid by Mortgagor to Mortgagee upon demand, with interest at the rate set forth
in Article 4 hereof or at the maximum interest rate which Mortgagor may by law
pay, whichever is lower, for the period after notice from Mortgagee that such
cost or expense was incurred to the date of payment to Mortgagee. All such costs
and expenses incurred by Mortgagee pursuant to the terms of this Section, with
interest, shall be deemed to be secured by this Mortgage.
(j) Mortgagee may require that Mortgagor, at Mortgagor's expense, from time
to time promptly cause such audits, tests and procedures as Mortgagee deems
appropriate to be conducted, by such professionals and otherwise in a manner
satisfactory to Mortgagee, for the purpose of ensuring compliance with all
Environmental Laws. The results of such audits, tests and procedures shall be
promptly submitted to Mortgagee in writing and certified as true and complete by
such professionals. Such audits, tests and procedures shall be commenced
promptly after not less than ten (10) days notice from Mortgagee.
27. No Merger. In the event the holder of this Mortgage shall acquire the
fee title to the Premises or any part thereof or a leasehold interest, or any
other interest in the Premises, or any part thereof, by foreclosure or
otherwise, Mortgagor agrees that the title to the Premises or such leasehold or
any other interest in the Premises or any part thereof, shall not merge with the
interests conveyed and mortgaged hereunder as a result of such acquisition or
for any other reason, but shall remain separate and distinct states for all
purposes; provided, however, that in such event the holder of this Mortgage may,
at its option, elect to merge such interests.
28. Joint and Several Liability. That if Mortgagor consists of more than
one party, such parties shall be jointly and severally liable under any and all
obligations, covenants and agreements of Mortgagor contained herein.
29. Rights Cumulative. That the rights of Mortgagee arising under the
clauses and covenants contained in this Mortgage shall be separate, distinct and
cumulative and none of them shall be in exclusion of the others; that no act of
Mortgagee shall be construed as an election to proceed under any one provision
herein to the exclusion of any other provision, anything herein or otherwise to
the contrary notwithstanding.
30. Construction. That wherever used in this Mortgage, unless the context
clearly indicates a contrary intent or unless otherwise specifically provided
herein, the word "lease" shall mean "tenancy, subtenancy, lease or sublease",
the word "Mortgagor" shall mean "Mortgagor and any subsequent owner or owners of
the Premises" and shall be construed as if it read "Mortgagors" whenever the
sense of any agreement or instrument secured hereunder so requires, the word
"Mortgagee" shall mean "Mortgagee or any subsequent holder or holders of this
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Mortgage", the word "person" shall mean "an individual, corporation, partnership
or unincorporated association", and the word "Premises" shall mean any, all or
either of the parcels described in SCHEDULE A hereto, together with all Building
Equipment, condemnation awards and any other rights or property interests at any
time made subject to the lien of this Mortgage by the terms hereof. To the
extent there is any inconsistency between the terms of this Mortgage and the
terms of the Credit Agreement, except for the remedy provisions hereunder, the
terms thereof shall govern.
31. No Oral Modification. That this Mortgage cannot be changed or
terminated orally.
32. No Impairment. That Mortgagor: shall keep this Mortgage a valid
mortgage lien upon the Premises; shall not at any time create or allow to accrue
or exist any debt, lien or charge which would be prior to or on a parity with
the lien of this Mortgage upon any part of the Premises; and shall not cause or
permit the lien of this Mortgage to be diminished or impaired in any way.
33. Fees and Expenses. That Mortgagor shall pay all fees and charges
incurred in the procuring and making of the loans secured by this Mortgage,
including, without limitation, the reasonable fees and disbursements of
Mortgagee's attorneys, charges for appraisals, fees and expenses relating to
examination of title, title insurance premiums, surveys and mortgage recording
documents, transfer or other similar taxes and revenue stamps, and in default
thereof Mortgagee may pay the same and Mortgagor will repay the same with
interest thereon at the rate per annum specified in Article 4 hereof and the
same shall be added to the indebtedness secured hereby and be secured by this
Mortgage.
34. Governing Law. This Mortgage shall, in all respects, be governed,
construed, applied and enforced in accordance with the laws of the State of New
Jersey.
35. Severability. In case any one or more of the covenants, agreements,
terms or provisions contained in this Mortgage and Security Agreement or related
documents shall be invalid, illegal or unenforceable in any respect, the
validity of the remaining covenants, agreements, terms or provisions contained
herein and in the related documents shall be in no way affected, prejudiced or
disturbed thereby.
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36. Binding Effect. The covenants contained in this Mortgage shall run with
the land and bind Mortgagor, the heirs, personal representatives, successors and
assigns of Mortgagor and all subsequent encumbrances, tenants and subtenants of
the Premises and shall enure to the benefit of Mortgagee and their respective
successors and assigns.
37. Headings. The headings of this Mortgage are for the convenience of
reference only and are not to be considered a part hereof, and shall not limit
or expand or otherwise affect any of the terms hereof.
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BOTH MORTGAGOR AND MORTGAGEE HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION
WITH THIS INSTRUMENT, INCLUDING, BUT NOT LIMITED TO, ALL TORT ACTIONS.
IN WITNESS WHEREOF, this Mortgage has been duly executed by Mortgagor the
day and year first above written.
Mortgagor:
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
By:__________________________________
Name:
Title:
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ACKNOWLEDGMENT
STATE OF _________ )
) ss.:
COUNTY OF _______ )
I CERTIFY that on May ___, 1998, ____________ personally came before me and
this person acknowledged under oath, to my satisfaction that:
(a) this person signed, sealed and delivered the attached document as
______________ of MEDIQ/PRN Life Support Services, Inc. the corporation named in
this document; and
(b) this document was signed and made by the corporation as its voluntary
act and deed by virtue of authority from its Board of Directors.
___________________________
Notary Public
<PAGE>
SCHEDULE A
DESCRIPTION OF MORTGAGED PREMISES
Schedule A
Legal Description
All the real property located in the Township of Pennsauken, County of Camden,
State of New Jersey and more particularly described as follows:
Tract #1
BEGINNING at a point in the Northeasterly line of Suckle Highway (60 feet wide)
said point being distant 834.59 feet measured South 24 degrees 41 minutes 20
seconds East along the Northeasterly line of said Suckle Highway from the
Southeasterly line of National Highway (60 feet wide): and running thence
1. North 65 degrees 18 minutes 40 seconds East a distance of
550.00 feet to a point; thence
2. South 24 degrees 41 minutes 20 seconds East a distance of
395.99 feet to a point corner to lands of Pacific Coast Realty
Corporation of Delaware; thence
3. along same South 65 degrees 18 minutes 40 seconds West a
distance of 550.00 feet to a point in the Northeasterly line
of said Suckle Highway; thence
4. along same North 24 degrees 41 minutes 20 seconds West a
distance of 396.00 feet, to the point or place of BEGINNING.
Tract #2
BEGINNING at a point in the Northeasterly line of Suckle Highway (60.00 feet
wide) said point being distant 1255.59 feet measured South 24 degrees 41 minutes
20 seconds East along the Northeasterly line of said Suckle Highway from the
intersection of same with the Southwesterly line of National Highway (60.00 feet
wide), said beginning point also being corner to lands of Pacific Coast Realty
Corporation of Delaware: and running thence
1. along said lands North 65 degrees 18 minutes 40 seconds East a
distance of 330.00 feet to a point corner to same; thence
2. still along said lands South 24 degrees 41 minutes 20 seconds
East a distance of 60.00 feet to a point in same; thence
3. South 65 degrees 18 minutes 40 seconds West a distance of
330.00 feet to a point in the Northeasterly line of said
Suckle Highway; thence
<PAGE>
4. along said highway North 24 degrees 41 minutes 20 seconds West
a distance of 60.00 feet, to the point or place of BEGINNING.
Tract #3
BEGINNING at a point in the Northeasterly line of Suckle Highway (60 feet wide)
said point being distant 1315.59 feet measured South 24 degrees 41 minutes 20
seconds East along the Northeasterly line of said Suckle Highway from the
intersection of same with the Southeasterly line of National Highway (60.00 feet
wide): and running thence
1. North 65 degrees 18 minutes 40 seconds East a distance of
330.00 feet to a point in line of lands of Pacific Coast
Realty Corporation of Delaware; thence
2. along same South 24 degrees 41 minutes 40 seconds East a
distance of 309.81 feet to a point in the Northwesterly line
of New Jersey State Highway Route No. 130 (93.00 feet wide);
thence
3. along same South 65 degrees 18 minutes 40 seconds West a
distance of 169.00 feet to a point corner to same; thence
4. North 24 degrees 41 minutes 20 seconds West measured along the
Northeasterly line of said State Highway a distance of 2.50
feet to a point of curve; thence
5. in a general Westerly direction curving to the right with a
radius of 190.00 feet an arc distance of 166.36 feet to a
point of compound curve in the curved Northeasterly line of
said Route No. 130; thence
6. in a general Northwesterly direction curving to the right with
a radius of 65.00 feet an arc distance of 45.15 to a point of
tangency in the Northeasterly line of said Suckle Highway;
thence
7. along same North 24 degrees 41 minutes 20 seconds West a
distance of 197.37 feet, to the point or place of BEGINNING.
Together with a 25 foot wide easement for ingress and egress lying between
Tracts #1 and #2 for so long as the Tracts south and north of the 25 foot
easement are in common ownership as set forth and reserved in Deed Book 2907,
Page 82.
Being described in accordance with a survey made by Edward J. Martin P.L.S.
dated September 20, 1994 except for the beginning point distances from the
Southeasterly line of National Highway (60 feet wide) which were not indicated
on the survey.
FOR INFORMATION ONLY: Being known as Lot 4A, 4AB, 4ABB Block 251 as shown on the
tax assessment map of the Township of Pennsauken.
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EXHIBIT F
SUBSIDIARY GUARANTY
Subsidiary Guaranty dated ________, 1998 made by the parties listed on the
signature pages hereof (together with the Additional Subsidiary Guarantors as
defined in Section 8(b), each a "Subsidiary Guarantor"), in favor of the Secured
Parties (as defined in the Credit Agreement referred to below).
PRELIMINARY STATEMENT. The Lender Parties, Banque Nationale de Paris, as
Administrative Agent, Initial Issuing Bank, Swing Line Bank and Arranger,
NationsBank N.A., as Syndication Agent, and Credit Suisse First Boston, as
Documentation Agent, are parties to a Credit Agreement dated as of ________,
1998 (said Agreement, as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "Credit Agreement", the terms defined
therein and not otherwise defined herein being used herein as therein defined)
with MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the
"Borrower"), and MEDIQ Incorporated, a Delaware corporation (the "Parent
Guarantor"). Each Subsidiary Guarantor may receive a portion of the proceeds of
the Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement. It
is a condition precedent to the making of Advances and the issuance of Letters
of Credit by the Lender Parties under the Credit Agreement and the entry by the
Hedge Banks into Bank Hedge Agreements with the Borrower from time to time that
each Subsidiary Guarantor shall have executed and delivered this Subsidiary
Guaranty.
NOW, THEREFORE, in consideration of the premises and in order to induce the
Lender Parties to make Advances and to issue Letters of Credit under the Credit
Agreement, each Subsidiary Guarantor, jointly and severally with each other
Subsidiary Guarantor, hereby agrees as follows:
Section 1. Subsidiary Guaranty; Limitation of Liability. (a) Each
Subsidiary Guarantor hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations of each other Loan Party now or
hereafter existing under the Loan Documents, whether for principal, interest,
fees, expenses or otherwise (such Obligations being the "Guaranteed
Obligations"), and agrees to pay any and all reasonable expenses (including
counsel fees and expenses) incurred by the Administrative Agent or any other
Secured Party in enforcing any rights under this Subsidiary Guaranty or any
other Loan Document. Without limiting the generality of the foregoing, each
Subsidiary Guarantor's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by any other Loan Party to
the Administrative Agent or any other Secured Party under the Loan Documents but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving such Loan Party.
<PAGE>
(b) (i) Each Subsidiary Guarantor and by its acceptance of this
Subsidiary Guaranty, the Administrative Agent and each other Secured Party,
hereby confirms that it is the intention of all such parties that this
Subsidiary Guaranty not constitute a fraudulent transfer or conveyance for
purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to this Subsidiary Guaranty. To effectuate the foregoing
intention, the Administrative Agent, the other Secured Parties and the
Subsidiary Guarantors hereby irrevocably agree that the Obligations of each
Subsidiary Guarantor under this Subsidiary Guaranty shall not exceed the
greater of (A) the net benefit realized by such Subsidiary Guarantor from
the proceeds of the Advances made from time to time by the Borrower to such
Subsidiary Guarantor or any subsidiary of such Subsidiary Guarantor and (B)
the maximum amount that will, after giving effect to such maximum amount
and all other contingent and fixed liabilities of such Subsidiary Guarantor
that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by
or on behalf of any other Subsidiary Guarantor in respect of the
Obligations of such other Subsidiary Guarantor under this Subsidiary
Guaranty, result in the Obligations of such Subsidiary Guarantor under this
Subsidiary Guaranty not constituting a fraudulent transfer or conveyance.
For purposes hereof, "Bankruptcy Law" means Title 11, U.S. Code, or any
similar Federal or state law for the relief of debtors.
(ii) Each Subsidiary Guarantor agrees that in the event any payment
shall be required to be made to the Secured Parties under this Subsidiary
Guaranty or any other guaranty, such Subsidiary Guarantor will contribute,
to the maximum extent permitted by law, such amounts to each other
Subsidiary Guarantor and each other guarantor so as to maximize the
aggregate amount paid to the Secured Parties under the Loan Documents.
Section 2. Subsidiary Guaranty Absolute. Each Subsidiary Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law, regulation or order
now or hereafter in effect in any jurisdiction affecting any of such terms or
the rights of the Administrative Agent or any other Secured Party with respect
thereto but subject, however, to the provisions of Section 1 hereof. The
Obligations of each Subsidiary Guarantor under this Subsidiary Guaranty are
independent of the Guaranteed Obligations or any other Obligations of any other
Loan Party under the Loan Documents, and a separate action or actions may be
brought and prosecuted against such Subsidiary Guarantor to enforce this
Subsidiary Guaranty, irrespective of whether any action is brought against the
Borrower or any other Loan Party or whether the Borrower or any other Loan Party
is joined in any such action or actions. The liability of each Subsidiary
Guarantor under this Subsidiary Guaranty shall be irrevocable, absolute and
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unconditional irrespective of, and each Subsidiary Guarantor hereby irrevocably
waives any defenses it may now or hereafter have in any way relating to, any or
all of the following:
(a) any lack of validity or enforceability of any Loan Document or any
agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Guaranteed Obligations or any other
Obligations of any other Loan Party under the Loan Documents, or any other
amendment or waiver of or any consent to departure from any Loan Document,
including, without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to any Loan Party or any
of its Subsidiaries or otherwise;
(c) any taking, exchange, release or non-perfection of any Collateral,
or any taking, release or amendment or waiver of or consent to departure
from any other guaranty, for all or any of the Guaranteed Obligations;
(d) any manner of application of Collateral, or proceeds thereof, to
all or any of the Guaranteed Obligations, or any manner of sale or other
disposition of any Collateral for all or any of the Guaranteed Obligations
or any other Obligations of any other Loan Party under the Loan Documents
or any other assets of any Loan Party or any of its Subsidiaries;
(e) any change, restructuring or termination of the corporate
structure or existence of any Loan Party or any of its Subsidiaries;
(f) any failure of any Secured Party to disclose to any Loan Party or
such Subsidiary Guarantor any information relating to the financial
condition, operations, properties or prospects of any other Loan Party now
or in the future known to any Secured Party (such Subsidiary Guarantor
waiving any duty on the part of the Secured Parties to disclose such
information); or
(g) any other circumstance (including, without limitation, any statute
of limitations) or any existence of or reliance on any representation by
the Administrative Agent or any other Secured Party that might otherwise
constitute a defense available to, or a discharge of, the Borrower, any
Subsidiary Guarantor or any other guarantor or surety.
This Subsidiary Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned by any Secured Party or any other Person
upon the insolvency, bankruptcy or
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reorganization of the Borrower or any other Loan Party or otherwise, all as
though such payment had not been made.
Section 3. Waiver. (a) Each Subsidiary Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Subsidiary Guaranty and any requirement that the
Administrative Agent, or any other Secured Party protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right or take any
action against any Loan Party or any other Person or any Collateral. Each
Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by the Loan Documents and
that the waiver set forth in this Section 3 is knowingly made in contemplation
of such benefits.
(b) Each Subsidiary Guarantor hereby waives any right to revoke this
Subsidiary Guaranty, and acknowledges that this Subsidiary Guaranty is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.
Section 4. Subrogation. No Subsidiary Guarantor will exercise any rights
that it may now or hereafter acquire against any Loan Party or any other insider
guarantor that arise from the existence, payment, performance or enforcement of
such Subsidiary Guarantor's Obligations under this Subsidiary Guaranty or any
other Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Administrative Agent or any other
Secured Party against any Loan Party or any other insider guarantor or any
Collateral, whether or not such claim, remedy or right arises in equity or under
contract, statute or common law, including, without limitation, the right to
take or receive from any Loan Party or any other insider guarantor, directly or
indirectly, in cash or other property or by set-off or in any other manner,
payment or security on account of such claim, remedy or right, unless and until
all of the Obligations and all other amounts payable under this Subsidiary
Guaranty shall have been paid in full in cash and the Commitments shall have
expired or terminated. If any amount shall be paid to any Subsidiary Guarantor
in violation of the preceding sentence at any time prior to the later of the
payment in full in cash of the Guaranteed Obligations and all other amounts
payable under this Subsidiary Guaranty and the Termination Date, such amount
shall be held in trust for the benefit of the Administrative Agent and the other
Secured Parties and shall forthwith be paid to the Administrative Agent to be
credited and applied to the Guaranteed Obligations and all other amounts payable
under this Subsidiary Guaranty, whether matured or unmatured, in accordance with
the terms of the Loan Documents, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Subsidiary Guaranty thereafter
arising. If (i) any Subsidiary Guarantor shall make payment to the
Administrative Agent or any other Secured Party of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other
amounts payable under this Subsidiary Guaranty shall be paid in full in cash and
(iii) the Termination Date shall
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<PAGE>
have occurred, the Administrative Agent and the other Secured Parties will, at
such Subsidiary Guarantor's request and expense, execute and deliver to such
Subsidiary Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by subrogation to
such Subsidiary Guarantor of an interest in the Guaranteed Obligations resulting
from such payment by such Subsidiary Guarantor.
Section 5. Payments Free and Clear of Taxes, Etc. (a) Any and all payments
made by each Subsidiary Guarantor hereunder shall be made, in accordance with
Section 2.11 of the Credit Agreement, free and clear of and without deduction
for any and all present or future Taxes. If any Subsidiary Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Secured Party or the Administrative Agent, (i) the sum payable
by such Subsidiary Guarantor shall be increased as may be necessary so that
after such Subsidiary Guarantor and the Administrative Agent have made all
required deductions (including deductions applicable to additional sums payable
under this Section 5) such Secured Party or the Administrative Agent (as the
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Subsidiary Guarantor shall make all such
deductions and (iii) such Subsidiary Guarantor shall pay the full amount
deducted to the relevant taxation authority or other governmental authority in
accordance with applicable law.
(b) In addition, each Subsidiary Guarantor agrees to pay any present or
future Other Taxes.
(c) Each Subsidiary Guarantor shall indemnify the Administrative Agent and
each other Secured Party for and hold it harmless against the full amount of
Taxes and Other Taxes, (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 5) paid by the
Administrative Agent or such other Secured Party (as the case may be) and any
liability (including penalties, additions to tax, interest and expenses) arising
therefrom or with respect thereto. This indemnification shall be made within 30
days from the date the Administrative Agent or such other Secured Party (as the
case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, such Subsidiary
Guarantor shall furnish to the Administrative Agent, at its address referred to
in Section 9.02 of the Credit Agreement, the original or a certified copy of a
receipt evidencing such payment. If no Taxes are payable in respect of any
payment hereunder by any Subsidiary Guarantor through an account or branch
outside the United States or by or on behalf of such Subsidiary Guarantor by a
payor that is not a United States person, such Subsidiary Guarantor shall
furnish, or shall cause such payor to furnish, to the Administrative Agent, a
certificate from each appropriate taxing authority or authorities, or an opinion
of counsel acceptable to the Administrative Agent, in either case stating that
such payment is exempt from or not subject to
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Taxes. For purposes of this subsection (d) and subsection (e), the terms "United
States" and "United States person" shall have the meanings specified in Section
7701 of the Internal Revenue Code.
(e) Without prejudice to the survival of any other agreement of any
Subsidiary Guarantor hereunder, the agreements and obligations of each
Subsidiary Guarantor contained in this Section 5 shall survive the payment in
full of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty.
Section 6. Representations and Warranties. Each Subsidiary Guarantor hereby
represents and warrants as follows:
(a) Such Subsidiary Guarantor (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so qualify or be
licensed except where the failure to so qualify or be licensed is not
reasonably likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation, all
governmental licenses, permits and other approvals) to own or lease and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted except where the failure to have such corporate
power and authority is not reasonably likely to have a Material Adverse
Effect. All of the outstanding Capital Stock of such Subsidiary Guarantor
has been validly issued, is fully paid and non-assessable and each
Subsidiary Guarantor is owned by a Loan Party, free and clear of all Liens,
except those created under the Loan Documents.
(b) The execution, delivery and performance by such Subsidiary
Guarantor of this Subsidiary Guaranty are within such Subsidiary
Guarantor's corporate powers, have been duly authorized by all necessary
corporate action, and do not (i) contravene such Subsidiary Guarantor's
charter or bylaws, (ii) violate any law, rule, regulation (including,
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination
or award, (iii) conflict with or result in the breach of, or constitute a
default under, any contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument binding on or affecting such Subsidiary
Guarantor, any of its Subsidiaries or any of its or their properties or
(iv) except for the Liens created under the Loan Documents, result in or
require the creation or imposition of any Lien upon or with respect to any
of the properties of such Subsidiary Guarantor or any of its Subsidiaries.
Neither such Subsidiary Guarantor nor any of its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in
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breach of any such contract, loan agreement, indenture, mortgage, deed of
trust, lease or other instrument, the violation or breach of which is
reasonably likely to have a Material Adverse Effect.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body or any other
third party is required for (i) the due execution, delivery, recordation,
filing or performance by such Subsidiary Guarantor of this Subsidiary
Guaranty or any other Loan Document to which such Subsidiary Guarantor is a
party and (ii) the exercise by the Administrative Agent or any Secured
Party of its rights under this Subsidiary Guaranty or any other Loan
Document to which such Subsidiary Guarantor is a party.
(d) There is no action, suit, investigation, litigation or proceeding
affecting such Subsidiary Guarantor, including any Environmental Action,
pending or threatened before any court, governmental agency or arbitrator
that (i) could have a Material Adverse Effect or (ii) purports to affect
the legality, validity or enforceability of this Subsidiary Guaranty or any
other Loan Document to which such Subsidiary Guarantor is a party.
(e) This Subsidiary Guaranty and each other Loan Document to which it
is a party when executed and delivered will have been duly executed and
delivered by such Subsidiary Guarantor. Each of this Subsidiary Guaranty
and each other Loan Document to which it is a party is the legal, valid and
binding obligation of such Subsidiary Guarantor, enforceable against such
Subsidiary Guarantor in accordance with its terms.
(f) There are no conditions precedent to the effectiveness of this
Subsidiary Guaranty that have not been satisfied or waived.
(g) Such Subsidiary Guarantor has, independently and without reliance
upon the Administrative Agent or any Lender Party and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Subsidiary Guaranty, and such
Subsidiary Guarantor has established adequate means of obtaining from any
other Loan Parties on a continuing basis information pertaining to, and is
now and on a continuing basis will be completely familiar with, the
financial condition, operations, properties and prospects of such other
Loan Parties.
Section 7. Covenants. Each Subsidiary Guarantor covenants and agrees that,
so long as any part of the Guaranteed Obligations shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment, such Subsidiary Guarantor will at all times perform or observe, and
will cause each of its Subsidiaries to perform or
7
<PAGE>
observe, all of the terms, covenants and agreements that the Loan Documents
state that the Borrower is to cause such Subsidiary Guarantor or such
Subsidiaries to perform or observe.
Section 8. Amendments, Etc. (a) No amendment or waiver of any provision of
this Subsidiary Guaranty and no consent to any departure by any Subsidiary
Guarantor therefrom shall in any event be effective unless the same shall be in
writing and signed by the Administrative Agent and the Required Lenders, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; provided, however, that no amendment,
waiver or consent shall, unless in writing and signed by all of the Secured
Parties (other than any Lender Party that is, at such time, aDefaulting Lender),
(i) reduce or limit the liability of such Subsidiary Guarantor hereunder or
release any Subsidiary Guarantor hereunder, (ii) postpone any date fixed for
payment hereunder or (iii) amend this Section 8.
(b) Upon the execution and delivery by any Person of a guaranty supplement
in substantially the form of Exhibit A hereto (each a "Guaranty Supplement"),
such Person shall be referred to as an "Additional Subsidiary Guarantor" and
shall be and become a Subsidiary Guarantor, and each reference in this Agreement
to "Subsidiary Guarantor" shall also mean and be a reference to such Additional
Subsidiary Guarantor.
(c) (i) With the consent of the Required Lenders or (ii) upon the merger,
consolidation, sale or liquidation of any Subsidiary Guarantor in accordance
with the terms of the Credit Agreement, the Administrative Agent will, at such
Subsidiary Guarantor's expense, execute and deliver to such Subsidiary Guarantor
such documents as such Subsidiary Guarantor shall reasonably request to evidence
the release of such Subsidiary Guarantor from its obligations under this
Guaranty; provided, however, as to clause (ii) above, that (x) at the time of
such request and such release no Default shall have occurred and be continuing,
(y) such Subsidiary Guarantor shall have delivered to the Administrative Agent,
at least five Business Days prior to the date of the proposed release (or such
shorter period of time as may be acceptable to the Administrative Agent), a
written request for release identifying such Subsidiary Guarantor and, the terms
of the sale, liquidation, merger or consolidation in reasonable detail,
including, in the case of a sale, the price thereof and any expenses in
connection therewith, together, in all cases, with a form of release for
execution by the Administrative Agent and a certification by the Parent
Guarantor to the effect that the sale, liquidation, merger or consolidation, as
the case may be, is in compliance with the terms of the Credit Agreement and as
to such other matters as the Administrative Agent may reasonably request and (z)
in the case of a sale, any proceeds of any such sale required to be applied to
the prepayment of Advances or reduction of Commitments in accordance with the
terms of the Credit Agreement shall be so applied; provided further as to any
merger or consolidation in which the surviving corporation thereof is a
Subsidiary of the Parent Guarantor, such surviving
8
<PAGE>
corporation shall have assumed in a form satisfactory to the Administrative
Agent the Guaranteed Obligations of such Subsidiary Guarantor.
Section 9. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy or telex
communication) and mailed, telegraphed, telecopied, telexed or delivered to it,
if to any Subsidiary Guarantor, to the address set forth below such Subsidiary
Guarantor's signature on the signature pages hereof, or, in the case of any
Additional Subsidiary Guarantor, on the applicable Guaranty Supplement, if to
any Agent or any Lender Party, at its address specified in the Credit Agreement,
or at its address specified in the Assignment and Acceptance pursuant to which
it became a Lender Party, or as to any party at such other address as shall be
designated by such party in a written notice to each other party. All such
notices and other communications shall, when mailed, telegraphed, telecopied,
telexed or sent by courier, be effective when deposited in the mails, delivered
to the telegraph company, transmitted by telecopier, confirmed by telex
answerback or delivered to the overnight courier, respectively. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Subsidiary Guaranty shall be effective as delivery of a
manually executed counterpart thereof.
Section 10. No Waiver; Remedies. No failure on the part of the
Administrative Agent or any other Secured Party to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 11. Right of Set-off. Upon (a) the occurrence and during the
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 of the Credit Agreement to
authorize the Administrative Agent to declare the Notes, if any, due and payable
pursuant to the provisions of said Section 6.01, each Lender Party and each of
its respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and otherwise apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender Party or
such Affiliate to or for the credit or the account of any Subsidiary Guarantor
against any and all of the Obligations of such Subsidiary Guarantor now or
hereafter existing under this Subsidiary Guaranty, irrespective of whether such
Lender Party shall have made any demand under this Subsidiary Guaranty and
although such Obligations may be unmatured. Each Lender Party agrees promptly to
notify such Subsidiary Guarantor after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender Party and
its respective Affiliates under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) that such
Lender Party and its respective Affiliates may have.
9
<PAGE>
Section 12. Indemnification. Without limitation on any other Obligations of
any Subsidiary Guarantor or remedies of the Secured Parties under this
Subsidiary Guaranty, each Subsidiary Guarantor shall, to the fullest extent
permitted by law, indemnify, defend and save and hold harmless each Secured
Party from and against, and shall pay on demand, any and all losses,
liabilities, damages, costs, expenses and charges (including the fees and
disbursements of such Secured Party's legal counsel) suffered or incurred by
such Secured Party as a result of any failure of any Guaranteed Obligations to
be the legal, valid and binding obligations of any Loan Party enforceable
against such Loan Party in accordance with their terms.
Section 13. Continuing Subsidiary Guaranty; Assignments under the Credit
Agreement. This Subsidiary Guaranty is a continuing guaranty and shall (a)
remain in full force and effect until the later of the payment in full in cash
of the Guaranteed Obligations and all other amounts payable under this
Subsidiary Guaranty and the Termination Date, (b) be binding upon each
Subsidiary Guarantor, its successors and assigns and (c) inure to the benefit of
and be enforceable by the Administrative Agent and the other Secured Parties and
their successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), any Secured Party may assign or otherwise transfer all
or any portion of its rights and obligations under the Credit Agreement
(including, without limitation, all or any portion of its Commitments, the
Advances owing to it and the Note or Notes, if any, held by it) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or otherwise,
in each case as and to the extent provided in Section 9.07 of the Credit
Agreement. No Subsidiary Guarantor shall have the right to assign its
obligations hereunder or any interest herein without the prior written consent
of the Secured Parties.
Section 14. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc. (a)
This Subsidiary Guaranty shall be governed by, and construed in accordance with,
the laws of the State of New York.
(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party, or for recognition or
enforcement of any judgment, and each Subsidiary Guarantor hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each Subsidiary Guarantor
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this
10
<PAGE>
Subsidiary Guaranty shall affect any right that any party may otherwise have to
bring any action or proceeding relating to this Subsidiary Guaranty or any of
the other Loan Documents to which it is or is to be a party in the courts of any
jurisdiction.
(c) Each Subsidiary Guarantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Subsidiary Guaranty or any of the
other Loan Documents to which it is or is to be a party in any New York State or
federal court. Each Subsidiary Guarantor hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each Subsidiary Guarantor hereby irrevocably waives all right to trial
by jury in any action, proceeding or counterclaim (whether based on contract,
tort or otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Administrative Agent or
any other Secured Party in the negotiation, administration, performance or
enforcement thereof.
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this Subsidiary
Guaranty to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
MEDIQ INVESTMENT SERVICES, INC.
By __________________________
Name:
Title:
MEDIQ MANAGEMENT SERVICES, INC.
By __________________________
Name:
Title:
11
<PAGE>
MEDIQ SURGICAL EQUIPMENT
SERVICES, INC.
By __________________________
Name:
Title:
VALUE-MED PRODUCTS, INC.
By __________________________
Name:
Title:
MEDIQ MOBILE X-RAY SERVICES, INC.
By __________________________
Name:
Title:
HEALTH EXAMINETICS, INC.
By __________________________
Name:
Title:
THERA-KINETICS ACQUISITION
CORPORATION
By __________________________
Name:
Title:
12
<PAGE>
MDTC HADDON, INC.
By __________________________
Name:
Title:
MEDIQ DIAGNOSTIC CENTERS, INC.
By __________________________
Name:
Title:
MEDIQ DIAGNOSTICS CENTERS-I INC.
By __________________________
Name:
Title:
MEDIQ IMAGING SERVICES, INC.
By ___________________________
Name:
Title:
AMERICAN CARDIOVASCULAR
IMAGING LABS, INC.
By __________________________
Name:
Title:
13
<PAGE>
ALPHA HEALTH CONSULTANTS, INC.
By __________________________
Name:
Title:
P. I. CORPORATION
By __________________________
Name:
Title:
MEDIQ SERVICES, INC.
By __________________________
Name:
Title:
MEDIQ HOME THERAPY SERVICES OF
ARIZONA, INC.
By __________________________
Name:
Title:
14
<PAGE>
EXHIBIT A
to
Subsidiary Guaranty
FORM OF SUBSIDIARY GUARANTY SUPPLEMENT
_________, 19__
Banque Nationale de Paris,
as Agent
499 Park Avenue
New York, New York 10022
Attention: Structured Finance Group
Subsidiary Guaranty dated ________ __, 199_
made by __________ in favor of
the Secured Parties referred to therein
Ladies and Gentlemen:
Reference is made to the above-captioned Subsidiary Guaranty (as amended,
supplemented or otherwise modified, the "Subsidiary Guaranty"). Unless otherwise
defined herein, terms defined in the Subsidiary Guaranty and in the Credit
Agreement referred to therein are used herein as therein defined.
The undersigned affirms that it may receive a portion of the proceeds of
the Advances under the Credit Agreement and will derive substantial direct and
indirect benefit from the transactions contemplated by the Credit Agreement, in
consideration for the execution and delivery of this Subsidiary Guaranty
Supplement.
15
<PAGE>
The undersigned hereby agrees, as of the date first above written, to
become a Subsidiary Guarantor under the Subsidiary Guaranty as if it were an
original party thereto and agrees that each reference in the Subsidiary Guaranty
to a "Subsidiary Guarantor" shall also mean and be a reference to the
undersigned.
The undersigned hereby absolutely, unconditionally and irrevocably
guarantees the punctual payment when due, whether at stated maturity, by
acceleration or otherwise, of all Guaranteed Obligations of each other Loan
Party now or hereafter existing under the Loan Documents, whether for principal,
interest, fees, expenses or otherwise, and agrees to pay any and all reasonable
expenses (including counsel fees and other expenses) incurred by the Agent or
any other Secured Party in enforcing any rights under the Subsidiary Guaranty or
any other Loan Document.
The undersigned hereby makes each representation and warranty set forth in
Section 6 of the Subsidiary Guaranty to the same extent as each other Subsidiary
Guarantor and hereby agrees to be bound as a Subsidiary Guarantor by all of the
terms and provisions of the Subsidiary Guaranty to the same extent as all other
Subsidiary Guarantors.
This letter shall be governed by and construed in accordance with the laws
of the State of New York.
Very truly yours,
[NAME OF ADDITIONAL
SUBSIDIARY GUARANTOR]
By
Name:
Title:
Address:
16
<PAGE>
EXHIBIT G TO THE
CREDIT AGREEMENT
BORROWING BASE CERTIFICATE
To: Banque Nationale de Paris
499 Park Avenue
New York, New York 10022
Attn: Mr. Alan Mustacchi
Telecopy: (212) 418-8269
MEDIQ/PRN Life Support Services, Inc.
Date: ___________________
(1) Inventory Net Availability
[Total from Schedule I] $__________
(2) Accounts Receivable Net Availability
[Total from Schedule II] $__________
(3) Total Borrowing Base Availability
[1 plus 2] $__________
(4) Revolving Credit Facility $__________
(5) The lesser of (3) and (4) $__________
(6) Revolving Credit Advances Outstanding $__________
(7) Aggregate Principal Amount of
Letter of Credit Advances Outstanding $__________
(8) Total Available Amount of all
Letters of Credit Outstanding
a. Standby Letters of Credit $__________
b. Trade Letters of Credit $__________
<PAGE>
c. Total Letters of Credit [(a) + (b)] $__________
(9) Swing Line Advances Outstanding $__________
(10) Total Revolving Credit Availability
[(5) less (6) less (7) less (8) less (9)] $__________
This report is submitted pursuant to the Credit Agreement dated as of
________, 1998 among MEDIQ/PRN Life Support Services, Inc., a Delaware
corporation (the "Borrower"), MEDIQ Incorporated, a Delaware corporation (the
"Parent Guarantor"), the lender parties (the "Lender Parties") that are, or may
from time to time become, party thereto, Banque Nationale de Paris, as
administrative agent (the "Administrative Agent"), Swing Line Bank, Initial
Issuing Bank, and Arranger, NationsBank, N.A., as Syndication Agent, and Credit
Suisse First Boston, as Documentation Agent. All of the current accounts
referred to in this report (the "Accounts") have been assigned to the
Administrative Agent and the Administrative Agent has been granted a security
interest in the Accounts pursuant to the Loan Documents. Unless otherwise
indicated, capitalized terms used herein have the meanings ascribed to them in
the Credit Agreement.
The undersigned hereby certifies that (i) the amounts and the
representations set forth above are true and correct in all material respects,
(ii) the calculations determined herein are determined in accordance with the
Credit Agreement and (iii) except as noted, none of the Accounts referred to in
this report fall within the ineligible or prohibited categories as noted in the
Credit Agreement. We further confirm the above mentioned assignment and grant of
security interest in the Accounts to the Administrative Agent.
MEDIQ/PRN LIFE SUPPORT
SERVICES, INC.
Date: By:
------------------ -------------------------------
Name:
Title:
2
<PAGE>
SCHEDULE I
MEDIQ/PRN Life Support Services, Inc.
Inventory Net Availability
(a) Gross Inventory __________
Less: Ineligible Inventory
(b) Inventory consisting of "perishable agricultural
commodities" within the meaning of the Perishable
Agricultural Commodities Act of 1930, as amended, and the
regulations thereunder, or on which a Lien has arisen or
may arise in favor of agricultural producers under
comparable state or local laws __________
(c) Inventory located on leaseholds as to which the lessor
has not entered into a consent and agreement providing
the Administrative Agent with the right to receive notice
of default, the right to repossess such Inventory at any
reasonable time pursuant to such consent and agreement
and such other rights as may be reasonably acceptable to
the Administrative Agent __________
(d) Inventory that is obsolete, unusable or otherwise
unavailable for sale __________
(e) Inventory with respect to which the representations and
warranties set forth in Section 8 of the Security
Agreement applicable to Inventory are not true and
correct __________
(f) Inventory consisting of promotional, marketing, packaging
or shipping materials and supplies __________
(g) Inventory that fails to meet all standards imposed by any
governmental agency, or department or division thereof,
having regulatory authority over such Inventory or its
use or sale __________
3
<PAGE>
(h) Inventory that is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreement
with any third party from whom any Loan Party or any of
their Subsidiaries has received written notice of a
dispute in respect of any such agreement __________
(i) Inventory located outside the United States __________
(j) Inventory that is not in the possession of or under the
sole control of the Borrower or any of its wholly owned
U.S. Subsidiaries or not in a leased facility in respect
of which the owner has entered into a consent and
agreement as may be reasonably acceptable to the
Administrative Agent __________
(k) Inventory consisting of work in progress __________
(l) Inventory in respect of which the Security Agreement,
after giving effect to the related filings of financing
statements that have then been made, if any, does not or
has ceased to create a valid and perfected first priority
lien or security interest in favor of the Secured Parties
securing the Secured Obligations and as to which no other
Liens exist, other than Permitted Liens __________
(m) Inventory not recorded under a perpetual inventory system
reasonably acceptable to the Administrative Agent __________
(n) Total Ineligible Inventory
[sum of (b) through (m)] __________
(o) Total Eligible Inventory
[(a) less (n)] __________
Net Inventory Availability at 50% of
Eligible Inventory [(o) multiplied by 50%] __________
__________
4
<PAGE>
SCHEDULE II
MEDIQ/PRN Life Support Services, Inc.
Accounts Receivable Net Availability
(a) Gross Receivables _________
Less: Ineligible Receivables
(b) Receivables that do not arise out of sales of goods or
rendering of services in the ordinary course of the
business of the Borrower or any of its wholly owned
Subsidiaries _________
(c) Receivables on terms other than those normal or customary
in the business of the Borrower or any of its wholly
owned U.S. Subsidiaries __________
(d) Receivables owing from any Person that is an Affiliate of
the Borrower or any of its wholly owned U.S. Subsidiaries __________
(e) Receivables more than 120 days past the original invoice
date __________
(f) Receivables owing from any Person from which an aggregate
amount of more than 50% of the Receivables owing are more
than 120 days past the original invoice date __________
(g) Receivables owing from any Person that has asserted any
claim, demand or liability against any Loan Party,
whether by action, suit, counterclaim or other judicial
or arbitral proceeding __________
(h) Receivables owing from any Person that shall take or be
the subject of any action or proceeding of a type
described in Section 6.01(f) __________
<PAGE>
(i) Receivables (i) owing from any Person that is also a
supplier to or creditor of any Loan Party to the extent
of the amount of any right of setoff, unless such Person
has waived all rights of setoff in a manner acceptable to
the Administrative Agent or (ii) representing any
manufacturer's or supplier's credits, discounts,
incentive plans or similar arrangements entitling any
Loan Party to discounts on future purchases therefrom __________
(j) Receivables arising out of sales to account debtors
outside the United States or Canada, unless backed by a
letter of credit issued by a bank organized under the
laws of the United States or Canada, or any State
thereof, and having a combined capital and surplus of at
least $500,000,000 __________
(k) Receivables arising out of sales on a bill-and-hold,
guaranteed sale, sale-or-return, sale on approval or
consignment basis or subject to any right of return,
set-off or charge-back __________
(l) Receivables owing from an account debtor that is an
agency, department or instrumentality of the United
States or any State thereof __________
(m) Receivables in respect of which the Security Agreement,
after giving effect to the related filings of financing
statements that have then been made, if any, does not or
has ceased to create a valid and perfected first priority
lien or security interest in favor of the Secured Parties
securing the Secured Obligations and as to which no other
Liens exist, other than Permitted Liens __________
(n) Total Ineligible Receivables
[(sum of (b) through (m)] __________
(o) Eligible Receivables
[(a) less (n)] __________
Net Availability at 80% of
Eligible Receivables [(o) multiplied by 80%] __________
__________
2
<PAGE>
EXHIBIT H-1
LAW OFFICES OF
DECHERT PRICE & RHOADS
[DECHERT PRICE & RHOADS LETTERHEAD]
May 29, 1998
To the Lender Parties to the Credit
Agreement referred to below and to
Banque Nationale de Paris as
Administrative Agent, Swing Line Bank,
Initial Issuing Bank and Arranger, and
NationsBank, N.A., as Syndication Agent
and Credit Suisse First Boston, as
Documentation Agent
Re: MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to the MEDIQ/PRN Life Support Services,
Inc., a Delaware Corporation (the "Borrower") and the other Loan Parties in
connection with the preparation, execution and delivery of the Credit Agreement
dated as of May 29, 1998 (the "Credit Agreement") among the Borrower, the Lender
Parties party thereto, Banque Nationale de Paris, as Administrative Agent, Swing
Line Bank, Initial Issuing Bank and Arranger, NationsBank, N.A., as Syndication
Agent and Credit Suisse First Boston, as Documentation Agent.
This opinion is furnished to you pursuant to Section 3.01(k) (xviii)
of the Credit Agreement. Terms defined in the Credit Agreement and in the
Security Agreement referred to therein are used herein as therein defined.
The documents set forth on Schedule I are referred to herein as the
"Financing Statement."
<PAGE>
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 2
In connection with our representation as described above, we have
reviewed executed copies of the following documents (collectively, the "Loan
Documents"), each dated on or about the date hereof.
1. the Credit Agreement;
2. the Notes;
3. the Subsidiary Guaranty;
4. the Security Agreement; and
5. the Mortgage.
We have also examined the originals, or copies certified to our
satisfaction, of the documents listed in a certificate of an officer of the
Borrower, dated the date hereof (the "Certificate"), certifying that the
documents listed therein are all of the indentures, loan or credit agreements,
guarantees, mortgages, security agreements, bonds and notes and other agreements
or instruments, and all of the orders, writs, judgments, injunctions, decrees,
determinations and awards, that affect or purport to affect the obligations of
such Loan Party or any of its Subsidiaries under any Loan Document or the right
of such Loan Party or any of its Subsidiaries to borrow money, to guarantee the
obligations of other Persons, to create Liens on its property or to consummate
the transactions contemplated by the Loan Documents.
In rendering this opinion we have examined in addition to the Loan
Documents, such other documents and records pertaining to our clients as in our
judgment are necessary or appropriate to enable us to render the opinions
expressed below. As to matters of fact material to our opinions, we have relied
upon representations of the Loan Parties in the Loan Documents, and on
certificates of officers of the Loan Parties, and of public officials, and we
have made no independent inquiry into the accuracy of such representations.
For purposes of this opinion, we have assumed that:
(a) The execution and delivery of the Loan Documents and other documents
reviewed by us, and the entry into and performance of the transactions
contemplated by the Loan Documents, by all parties (other than the Loan Parties)
have been duly authorized by all necessary actions and constitute the valid and
binding obligations of all parties other than the Loan Parties.
(b) All natural persons who are signatories to the Loan Documents were
legally competent at the time of execution; all signatures on the Loan Documents
and other documents
<PAGE>
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 3
reviewed by us of parties other than the Loan Parties are genuine; the copies of
all documents submitted to us are accurate and complete and conform to
originals.
Our opinions set forth herein are based on our consideration of only
those statutes, rules, regulations and judicial decisions which, in our
experience, are normally applicable to or normally relevant in connection with
transactions of the type contemplated in the Loan Documents. Whenever our
opinion with respect to the existence or absence of facts is indicated to be
based on our knowledge or awareness, we are referring to the conscious awareness
of the Dechert Price & Rhoads attorneys who have rendered legal services to the
Loan Parties in connection with the transactions contemplated by the Loan
Documents, which knowledge has been obtained by such attorneys in their capacity
as such. Except as expressly set forth herein, we have not undertaken any
independent investigation to determine the existence or absence of such facts
and no inference as to our knowledge concerning such facts should be drawn from
the fact that such representation has been undertaken by us.
For purposes of paragraph 6 below, we have assumed (1) that the Loan
Parties have rights in the Collateral as to which our opinion is expressed,
within the meaning of the New Jersey Uniform Commercial Code (the "Code"), (2)
that the proceeds of the Advances have been disbursed to or as directed by the
Borrower, and (3) that all Collateral (as defined in the Security Agreement)
consisting of fixtures (as defined in the Code) is located in Camden County, New
Jersey. For purposes of paragraphs 6, 7 and 8 below, we have assumed that the
descriptions of the real estate in the Mortgage and in the Financing Statements
to be filed as fixture filings is an accurate and complete description of all
real estate on which any fixtures included in the Collateral are located.
Based upon the foregoing and upon such investigation as we have deemed
necessary, and subject to the qualifications set forth in this letter, we are of
the following opinion:
1. Each Loan Party (a) is a corporation validly existing and in good
standing under the laws of the State of its organization, and (b) has all
necessary corporate power to own or lease and operate its properties and to
carry on its business as, to our knowledge, it is now conducted and as proposed
to be conducted.
2. The execution, delivery and performance by each Loan Party of the
Credit Agreement, the Notes, and each other Loan Document to which it is a
party, and the other transactions contemplated by the Credit Agreement are
within such Loan Party's corporate powers, have been duly authorized by all
necessary corporate action, and do not as to each Loan Party (a) contravene such
Loan Party's charter or bylaws, (b) violate any law (including, without
limitation, the Securities Exchange Act of 1934 and the Racketeer Influenced and
Corrupt Organizations Chapter of the Organized Crime Control Act of 1970), rule,
regulation (including,
<PAGE>
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 4
without limitation, Regulation X of the Board of Governors of the Federal
Reserve System, subject to the assumptions contained in paragraph 12 below) or
any order, writ, judgment, injunction, decree, determination or award listed in
the Certificate, (c) conflict with or result in the breach of, or constitute a
default under, any agreement or instrument listed in the Certificate or (d)
except for the Liens created by the Collateral Documents, result in or require
the creation or imposition of any Lien upon or with respect to any of the
properties of any Loan Party or any of its Subsidiaries under any agreement or
instrument listed in the Certificate.
3. The Credit Agreement and the Loan Documents have been duly executed
and delivered by each Loan Party thereto.
4. Each Loan Document constitutes the legal, valid and binding
obligations of each Loan Party thereto, in each case enforceable against such
Loan Party in accordance with its respective terms.
5. No authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body of the State of
Delaware, the State of New Jersey or the United States of America, or any third
party that is party to any agreement or instrument listed in the Certificate to
which any of the Loan Parties is a party is required for (a) the due execution,
delivery, recordation, filing or performance by any Loan Party of any Loan
Documents to which it is a party, or for the consummation transactions
contemplated thereby, (b) the grant by any Loan Party of the Liens granted by it
pursuant to the Security Agreement and the Mortgage, (c) the perfection or
maintenance of Liens created by the Security Agreement and the Mortgage, or (d)
the exercise by any Agent or any Lender Party of its rights under the Loan
Documents or the remedies in respect of the Collateral pursuant to the Security
Agreement and the Mortgage, except for (i) in the case of clause (a) above, the
authorizations, approvals, actions, notices and filings listed on Schedule
4.0(1)(d) to the Credit Agreement, all of which have been duly obtained, taken,
given or made and are in full force and effect, (ii) in the case of the Security
Collateral (as defined in the Security Agreement), as may be required in
connection with any disposition of any portion of the Security Collateral by
laws affecting the offering and sale of securities generally, and (iii) in the
case of the exercise of remedies in respect of Collateral subject to the
Mortgage and the Fixtures, the exercise of such remedies requiring prior court
approval.
6. (a) The Security Agreement creates in favor of the Administrative
Agent a security interest under the Code in (1) so much of the inventory and
equipment (as those terms are defined in the Code) of the Loan Parties executing
the Security Agreement as is located in New Jersey, (2) the accounts, general
intangibles, chattel paper, and documents (as those terms are defined in the
Code) of such Loan Parties whose chief executive offices are located in New
Jersey, and (3) the Pledged Shares and the Pledged Debt.
<PAGE>
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 5
(b) Assuming that Financing Statements have been filed in the offices
listed on Schedule I, the security interest referred to in paragraph 6(a)(1) and
(2) in property of the Loan Parties identified as debtors on Schedule I is
perfected, to the extent a security interest in the property described in
paragraph 6(a)(1) and (2) can be perfected by filing financing statements under
the Code. The Administrative Agent's having possession and control of the
certificates representing the Pledged Shares and stock powers executed in blank
with respect to such Pledged Shares and instruments representing the Pledged
Debt and endorsements in blank with respect to the Pledged Debt results in the
perfection of such security interest in such Security Collateral.
7. The Mortgage creates a valid mortgage lien in favor of the
Administrative Agent (the "Mortgage Lien") on the Premises referred to therein,
and the Mortgage creates valid security interests in any goods located or to be
located thereon that now or may hereafter constitute "fixtures" within the
meaning of Article 9 of the Code (such goods being hereinafter referred to as
the "Fixtures"), in each case as security for the payment of the Secured
Obligations referred to therein, whether for principal, interest, fees,
commissions or otherwise. The Mortgage (including the acknowledgments) is in
appropriate form for recording in the State of New Jersey and upon due
recordation and indexing in the recording offices identified in Schedule II
hereto and will result in the perfection of the Mortgage Lien.
8. Filing of a Financing Statement to be filed as a fixture filing
pursuant to the Code, will result in the perfection of the security interests in
the Fixtures (the "Fixture Liens"), and no other or further or subsequent
filing, refiling, recording, re-recording, registration or reregistration of the
Mortgage or the Financing Statements or any other instrument will be necessary
to continue the Mortgage Liens or the perfection of the Fixture Liens other than
filing of continuation statements as required by the Code.
9. The criminal usury statute in effect in the State of New Jersey
provides, in pertinent part, that any loan made to a corporation with an
interest rate which exceeds fifty percent (50%) per annum shall not be a rate
authorized or permitted by law. The provisions of the Loan Documents would not
violate any applicable law in the State of Jersey relating to usury (to the
extent such laws are applicable to the Loan Documents) provided that the amount
of interest in any payments in nature of interest under the Loan Documents do
not exceed fifty percent (50%) in any year.
10. Neither any Loan Party nor any of its Subsidiaries is an "investment
company," or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
<PAGE>
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 6
11. Assuming Advances are made in accordance with the terms of the Credit
Agreement and undertakings of the Borrower in accordance with the Notice of
Borrowing, that the Lenders comply with the record-keeping requirements of
Regulations U and of Regulation G of the Board of Governors of the Federal
Reserve System ("Regulation U" and "Regulation G", respectively), and that any
Lenders that are G Lenders within the meaning of Regulation G have registered as
such under Regulation G, Advances under the Credit Agreement will not violate
Regulation U or Regulation G.
12. The provisions in the Loan Documents stating that they are governed
by New York law are enforceable as a matter of New Jersey law, except with
respect to (i) the perfection and effect of perfection of the Liens created
under the Loan Documents and the application of remedies in enforcing such Liens
with respect to property located in New Jersey, (ii) the remedies available in
New Jersey with respect to property located in New Jersey, and (iii) the
procedural rules governing or affecting any action in New Jersey to enforce the
Loan Documents, subject in all instances to the assumptions that the applicable
law of New York will not violate the public policy of New Jersey (including
public policy as expressed in its usury laws) and that New York has a
substantial relation to the parties in the transactions contemplated by the Loan
Documents.
13. To the best of our knowledge except as set forth in the Information
Memorandum, there is no action, suit, investigation, litigation or proceeding
affecting any Loan Party or any of its Subsidiaries pending or threatened before
any court, governmental agency or arbitrator that (a) would be reasonably likely
to have a Material Adverse Effect or (b) purports to affect the legality,
validity or enforceability of the Credit Agreement, any Note, any other Loan
Document or any Related Document or the consummation of the transactions
contemplated by the Credit Agreement.
The opinions set forth above are subject to the following qualifications:
(a) The opinions expressed herein are limited by principles of equity
which may limit the availability of certain rights and remedies and do not
reflect the effect of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
debtors' obligations or creditors' rights generally. The opinions expressed
above also do not reflect the effect of laws and equitable doctrines (including
requirements that the parties to agreements act reasonably and in good faith
and, with respect to collateral, in a commercially reasonable manner, and give
reasonable notice prior to exercising rights and remedies) which may limit the
availability of any particular remedy but which will not, in our judgment, make
the remedies available to Administrative Agent or Lender Parties under the
Collateral Documents inadequate for the practical realization of the benefits of
the security
<PAGE>
Lender Parties,
Banque Nationale de Paris,
NationsBank, N.A. and Credit
Suisse First Boston, as Agents
May 29, 1998
Page 7
provided for in the Collateral Documents, except for the economic consequence of
any delay which may be imposed thereby or result therefrom, and except that we
express no opinion as to the rights of any of the parties to the Loan Documents
to accelerate the due dates of any payment due thereunder or to exercise other
remedies available to them on the happening of a non-material breach of any such
document or agreement.
(b) Without limiting the generality of the foregoing, we express no
opinion with respect to: (1) the availability of specific performance or other
equitable remedies for noncompliance with any of the provisions contained in the
Loan Documents; (2) the enforceability of provisions in the Loan Documents
purporting to waive the effect of applicable laws to the extent such laws do not
permit such waiver; or (3) the effectiveness of any power-of-attorney given
under the Loan Documents which is intended to bind successors and assigns which
have not granted such powers by a power-of-attorney specifically executed by
them.
(c) We have made no examination of and express no opinion with respect
to: (1) the title to, ownership of or rights in personal property or fixtures;
(2) except as set forth in paragraphs 6 and 8 above the accuracy or sufficiency
of any descriptions of Collateral in any security agreement or financing
statements; (3) the validity or ownership of any trademarks, patents or
licenses; (4) the existence or absence of any liens, charges or encumbrances on
any Collateral and (5) except as set forth in paragraphs 6, 7 and 8 above, the
perfection or priority of any lien or security interest.
Our opinions expressed herein are limited to the General Corporation Law
of the State of Delaware, the laws of the States of New York and New Jersey and
the federal laws of the United States.
Our opinions are limited to the specific issues addressed and are limited
in all respects to laws and facts existing on the date hereof. By rendering our
opinions, we do not undertake to advise you of any changes in such laws or facts
which may occur after the date hereof.
The opinions set forth herein are expressed solely for your benefit and
for the benefit of any other parties which may subsequently become Lender
Parties under the Credit Agreement.
Very truly yours,
<PAGE>
EXHIBIT H-2 FORM OF OPINION
OF COUNSEL TO THE LOAN PARTIES
HAYNES AND BOONE, LLP
May 29, 1998
To the Initial Lenders party to the Credit
Agreement referred to below and to
Banque Nationale de Paris, NationsBank, N.A.,
and Credit Suisse First Boston,
as Agents for such Initial Lenders
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
Ladies and Gentlemen:
We have acted as special Texas counsel to MEDIQ/PRN Life Support
Services, Inc., a Delaware corporation (the "Borrower") with respect to the
preparation of the Security Agreement (hereinafter defined) in connection with
that certain financing transaction contemplated by the Credit Agreement dated as
of May 29, 1998 (the "Credit Agreement") among the Borrower, certain other Loan
Parties, and each of you. Capitalized terms used herein shall, unless otherwise
provided herein, have the respective meanings set forth in the Credit Agreement.
Scope of Examination and General
Assumptions and Qualifications
For the purpose of rendering the opinions expressed below, we have
reviewed copies marked "S&S Draft' dated as of May 22, 1998, of the following
(collectively, the "Opinion Documents"):
(i) The Credit Agreement; provided that, at your request, our review
has been limited to the following specific Sections thereof: Section 8.11
(with respect to the governing law provisions) and Section 1.01 (with
respect to definitions incorporated by reference and utilized in the
Security Agreement).
(ii) The Security Agreement (herein so called) by and between the
Borrower, certain other Loan Parties, and Banque Nationale de Paris (in its
capacity as Administrative Agent, 'Administrative Agent"); and
(iii) The form of Uniform Commercial Code - Financing Statement
Change-Form UCC-3 (in the form of Annex A hereto) amending the financing
statement previously filed with respect to the Credit Agreement, dated
October 1, 1996, among Borrower, Agents, and certain other Loan Parties and
Initial Lenders party thereto (the
<PAGE>
HAYNES AND BOONE, LLP
May 29, 1998
Page 2
"Former Credit Agreement"), under the Uniform Commercial Code as in
effect in the State of Texas (the "UCC") to be executed by the Borrower, as the
debtor, and Administrative Agent, as secured party, to be filed with the
Secretary of the state of Texas at the address indicated on Schedule I hereto
(the "Financing Statement").
As used herein, the term "Collateral" shall mean the non-fixture
"Equipment" and "Inventory" (as such terms are defined and described in the
Security Agreement) which are located in the State of Texas at the time of
perfection of the security interest therein.
In making such examination, we have assumed (i) the authenticity of all
documents submitted to us as originals, (ii) the conformity to original
documents of all documents submitted to us as copies, (iii) the due execution
and delivery, pursuant to due authorization, by authorized officers of the
respective parties thereto of the Opinion Documents submitted to us as drafts,
with all blanks properly completed, (iv) the proper attachment of all exhibits
to the Opinion Documents with all blanks properly completed, (v) each of the
Opinion Documents, when duly executed and delivered, will be or are in forms
identical in all material respects to those furnished to and examined by us as
final drafts, (vii) the correctness and accuracy of all the facts set forth in
all certificates and reports identified in this opinion, and (viii)
Administrative Agent is the valid and duly authorized agent and representative
of the Lenders.
We are qualified to practice law in the State of Texas, and our opinions
set forth below are limited solely to matters governed by the laws of the State
of Texas; we express no opinion as to questions concerning the laws of any other
jurisdiction.
Specific Limitations and Qualifications on
Opinions Regarding Perfection of Liens
and Security Interests in the Collateral
With respect to the opinions expressed below regarding the perfection of
your liens and security interests in the Collateral, we advise you that:
1. We express no opinion regarding (i) the accuracy or completeness of
any Collateral descriptions contained in the Opinion Documents, (ii) title to
the Collateral, (iii) the creation or perfection of your liens and security
interests in the Collateral insofar as the laws of a jurisdiction other than the
State of Texas govern the creation or perfection of such liens and security
interests, (iv) the creation or perfection of your liens and security interests
in any Collateral that is not described in the Security Agreement, or (v) the
priority of your liens and security interests in the Collateral.
<PAGE>
HAYNES AND BOONE, LLP
May 29, 1998
Page 3
2. We have assumed the following facts concerning the Collateral and the
Borrower: (i) the Borrower has good and sufficient title to the Collateral
described in the Security Agreement to which it is a party; (ii) the Borrower
has "rights in" (as that term is used in Section 9.203 of the UCC) the
Collateral described in the Security Agreement to which it is a party; (iii)
value has been given within the meaning of Section 9.203 of the UCC; (iv) the
information set forth in Section 8 of the Security Agreement as to the location
of the Equipment and Inventory, and as to the chief place of business of the
Borrower is accurate and complete; (v) the addresses of Administrative Agent and
the Borrower are correctly set forth in the Financing Statement; (vi) the
Borrower has not changed its name, whether by amendment of its charter, by
reorganization, or otherwise within the past four months; (vii) the Borrower has
not changed its chief executive office, chief place of business, or office where
it keeps its records concerning the Receivables within the past four months;
(viii) no Collateral will constitute fixtures under the laws of the State of
Texas; and (ix) all information in the Financing Statement with respect to the
"Original Financing Statement Number" and the "Original Date Filed" accurately
and completely reflects the financing statement previously filed with the
Secretary of State of the State of Texas in connection with the Former Credit
Agreement.
3. With respect to the opinions expressed in Paragraph 1 below, we
express no opinion as to the perfection of any security interests purportedly
granted by the Security Documents in any property (real, personal, or mixed),
other than the Collateral, expressly excluding any opinion as to the perfection
of liens with respect to the following (and we call your attention to the fact
that the security interest of the Administrative Agent (for the benefit of
Lenders) in certain of such property may not be perfected by filing financing
statements under the UCQ: (i) causes of action; (ii) any property or Collateral
subject to the jurisdiction of a regulatory body or agency whose consent is
required before such property may be subject to any lien; (iii) letters of
credit; (iv) any property or Collateral that consists or will consist of
consumer goods, farm products, crops, timber, minerals, and the like (including
oil and gas), or accounts resulting from the sale thereof, beneficial interests
in a trust or decedent's estate, or goods or items which are subject to (a) a
statute or treaty of the United States which provides for a national or
international registration or a national or international certificate of title
for the perfection of a security interest therein or which specifies a place of
filing different from that specified in the UCC for filing to perfect such
security interest, or (b) a certificate of title statute of any jurisdiction;
(v) any interest in or claim in or under any policy of insurance or unearned
premium, except a claim to proceeds payable by reason of loss or damage under
insurance policies maintained by the Borrower with respect to the Collateral as
required by and in compliance with Section 12 of the Security Agreement; or (vi)
other property transactions excluded from the coverage of the UCC pursuant to
Sections 9.102 and 9.104 thereof.
4. We advise you that (a) the continuation of any security interests and
perfection of any security interests in Collateral consisting of proceeds is
limited to the extent set forth
<PAGE>
HAYNES AND BOONE, LLP
May 29, 1998
Page 4
in Section 9.306 of the UCC, and (b) in the case of property which becomes
Collateral after the date hereof, Section 552 of the Federal Bankruptcy Code
limits the extent to which property acquired by a debtor after the commencement
of a case under the Federal Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor before the
commencement of the case.
5. We further advise you that: (a) the perfection of the security
interests evidenced by the Financing Statement will lapse five years after the
date of filing unless a continuation statement complying with the UCC is filed
with the filing office in which such Financing Statement was filed not more than
six months prior to the expiration of a five year period dating from the date of
filing of the Financing Statement (or otherwise within the time permitted by
Section 9.403 of the UCC) and subsequent continuation statements must be filed
within six months prior to the end of each subsequent five year period; (b) the
perfection of the security interests evidenced by the Financing Statement as to
any Collateral acquired by the Borrower more than four months after the Borrower
changes its name, identity, or corporate structure so as to make the Financing
Statement seriously misleading, unless a new appropriate financing statement
indicating the new name, identity, or corporate structure of the Borrower is
properly filed before the expiration of such four months; and (c) the perfection
of the security interests in the Collateral evidenced by the Financing Statement
becomes ineffective four months after the Borrower moves the Collateral from the
State of Texas (or upon such earlier date as the perfection of the security
interest in Texas expires), unless appropriate actions are taken in the new
jurisdiction to perfect such security interest in the Collateral on or before
the earlier of the expiration of such four month period or the expiration of the
original Financing Statement filing in the State of Texas relating to such
Collateral.
6. We also note that a security interest in after-acquired property may
attach and become enforceable and may become perfected only when the debtor has
obtained rights in such Collateral.
7. We note that the liens and security interests granted under the
Security Agreement attach only to the extent of the rights of the Borrower in
the properties described therein.
8. Despite the proper perfection of your security interests evidenced by
the Collateral, as described in our opinion below, the continued enforceability
and perfection of the security interests created under the Security Agreement
may be limited by various subsequent facts, events, or circumstances, including,
without limitation, those described in Article 9 of the UCC (e.g., UCC Sections
9.103, 9.306, 9.307, 9.308, 9.314, 9.315, 9.402(g), and 9.403), and we do not
opine as to the continued perfection or validity of such security interest.
<PAGE>
HAYNES AND BOONE, LLP
May 29, 1998
Page 5
Specific Limitations and Qualifications on
Opinions Regarding Choice of Law
The Opinion Documents provide that the laws of the State of New York
shall govern the interpretation and enforceability of the Security Agreement and
issues relative to usury in the Opinion Documents. Section 35.51 of the UCC
provides that if parties agree in writing that the law of a particular
jurisdiction governs an issue relating to the transaction (including the
validity or enforceability of any agreement relating to the transaction or a
provision of the agreement) and the transaction bears a "reasonable relation" to
that jurisdiction, then the law, other than the conflict of laws rules, of that
jurisdiction governs the issue regardless of whether the application of that law
is contrary to a fundamental or public policy of the State of Texas or of any
other jurisdiction. Section 35.51 of the UCC provides that a transaction bears a
"reasonable relation" to a particular jurisdiction if the transaction, the
subject matter of the transaction, or a party to the transaction is reasonably
related to that jurisdiction. In addition, Section 35.51 of the UCC contains
specific factual criteria, the presence of any one of which will satisfy the
"reasonable relation" test. Accordingly, for purposes of the opinion set forth
in Paragraph 4 below, and in light of the factual criteria specified in Section
35.51 of the UCC, we have assumed the following facts:
(a) Administrative Agent and one or more of the Lenders have their
principal place of business and chief executive offices in New York;
(b) a portion of the initial advances under the Credit Agreement will
be funded from, and payable to, Administrative Agent at its location in New
York;
(c) the Lenders have committed to extend to Borrower loans in an
amount exceeding $1,000,000 in the aggregate; and
(d) the choice of governing law contained in the Loan Documents was
willingly and knowingly agreed to by all parties thereto.
The statute also provides that Texas law will in any event govern whether
a qualified transaction ". . . transfers or creates an interest in real property
for security purposes or otherwise, the nature of an interest in real property
that is transferred or created by the transaction, the method for foreclosure of
a lien on real property, the nature of an interest in real property that results
from foreclosure, or the manner and effect of recording or failing to record
evidence of a transaction that transfers or creates an interest in real
property; . . ." For purposes of this opinion, the matters outlined in this
paragraph for which Texas law must govern shall be referred to as the "Mandatory
Texas Issues."
<PAGE>
HAYNES AND BOONE, LLP
May 29, 1998
Page 6
We note that the determination of applicable law as to specific issues
may vary from the choice of law expressed in the Opinion Documents, where
another statute of the State of Texas or a statute of the United States provides
that such issue is governed by the law of a particular jurisdiction. For
example, notwithstanding the choice of law contained in the Loan Documents,
certain matters pertaining to the power and authority of corporations will be
governed by the law of the jurisdiction of incorporation of each such
corporation.
Opinions
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. The Financing Statement is in proper form under the UCC for filing
in the filing office indicated on Schedule I hereto. The due filing and
indexing of the Financing Statement in the office listed on Schedule I, and
the payment of all necessary filing fees related thereto, will result in
the perfection of security interests in the Collateral in which a security
interest has been created under the Security Agreement.
2. No state or local mortgage recording tax, document tax, stamp tax,
or other fees, taxes, or governmental charges (other than statutory fees
for filing and recording the Financing Statement) are required to be paid
in Texas in connection with any of the transactions referred to in this
opinion; provided, that we express no opinion herein with respect to
whether any Agent or Lender is or may be subject to the payment of
franchise taxes in connection therewith. Any mortgage, documentary,
recording or filing taxes or charges that are to be paid at the time of the
recording or filing of the Financing Statements are nominal charges and are
not based upon the amount of the financing or the value of the property
encumbered.
3. In any action or proceeding arising out of or relating to any
Opinion Document in any court of the State of Texas or in any federal court
sitting in the State of Texas, such court would recognize and give effect
to a governing law provision of such Opinion Document wherein the parties
thereto agree (to the extent set forth in such Opinion Document) that such
Opinion Document shall be governed by, and be construed in accordance with,
the laws of the State of New York (except as to issues of perfection and
priority of laws and security interests on personal property and except
with respect to the Mandatory Texas Issues); provided that, such court may
apply the law of another jurisdiction with respect to an issue that another
statute of the State of Texas, or a statute of the United States provides
is governed by the law of a particular jurisdiction. Without limiting the
generality of the foregoing, a court of the State of Texas or a federal
court sitting in the State of Texas would apply the usury law of the
<PAGE>
HAYNES AND BOONE, LLP
May 29, 1998
Page 7
State of New York to an Opinion Document which provides that such
Opinion Document shall be governed by, and construed in accordance with,
the laws of the State of New York.
This opinion (i) has been furnished to you at your request, and we
consider it to be a confidential communication that may not be furnished,
reproduced, distributed or disclosed to anyone, other than Eligible Assignees,
without our prior written consent, (ii) is rendered solely for your information
and assistance in connection with the above transaction, and may not be relied
upon by any other person (other than Eligible Assignees) or for any other
purpose without our prior written consent, (iii) is rendered as of the date
hereof, and we undertake no, and hereby disclaim any kind of obligation to
advise you of any changes for any new developments that might affect any matters
or opinions set forth herein, and (iv) is limited to the matters stated herein
and no opinions may be inferred or implied beyond the matters expressly stated
herein.
Very truly yours,
<PAGE>
[JEFFER, MANGELS, BUTLER & MARMARO LLP LETTERHEAD]
May 29, 1998
To the Initial Lenders party to the Credit
Agreement listed on Schedule I below and to
Banque Nationale de Paris, NationsBank, N.A.,
and Credit Suisse First Boston,
as Agents for such Initial Lenders
Re: MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
-------------------------------------
Ladies and Gentlemen:
We have acted as special counsel in the State of California to MEDIQ/PRN
Life Support Services, Inc. (the "Borrower") in connection with certain aspects
of the preparation, execution and delivery of that certain Credit Agreement,
dated May 29, 1998 (the "Credit Agreement"), among Borrower and each of you. We
are rendering this opinion to you pursuant to the terms of the Credit Agreement.
Unless otherwise defined herein, capitalized terms have the meanings ascribed to
them in the Credit Agreement.
We have not participated in the negotiation or preparation of any
documents or rendered any advice to Borrower or any other party in connection
with the Credit Documents (as defined below) or the transactions contemplated
thereby. Further, we have rendered this opinion based solely upon our review of
the Documents (as defined below), and upon our examination of such statutes,
decisions and matters of law as we deem necessary to express the opinion set
forth below.
In connection with this opinion, we have examined and relied upon
originals or copies, certified or otherwise identified to our satisfaction as
being true copies, of the following documents, or specific excerpts of documents
hereinafter described (collectively, the "Documents")
(a) Each of Sections 2.0.7, 2.09, 2.10 and 2.11 of the Credit Agreement;
<PAGE>
JEFFER, MANGELS, BUTLER & MARMARO LLP
May 29, 1998
Page 2
(b) That certain Security Agreement, dated May 29, 1998 (the "Security
Agreement"), from Borrower and other parties listed on the signature pages
thereof, as grantors, to Banque Nationale de Paris, as Administrative Agent for
the Secured Parties (the "Administrative Agent"); and
(c) UCC-2 amendment statement (the "Amendment Statement") under the
Uniform Commercial Code as in effect in the State of California (the "UCC"),
executed by Borrower in favor of the Administrative Agent, amending the original
financing statement therein described (the "Financing Statement") which was
previously filed with respect to the Credit Agreement dated October 1, 1996,
among Borrower, the Company, the Administrative Agent, and the Syndication
Agent, which Amendment Statement is to be filed in the filing office listed on
Schedule II hereto.
The Documents, together with the entire Credit Agreement, are sometimes
collectively referred to herein as the "Credit Documents".
In our review and examination of the Documents, we have assumed (i) the
genuineness of all signatures; (ii) the authenticity of all documents submitted
to us as originals and the conformity to authentic original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
due execution and delivery thereof by all parties thereto, pursuant to due
authorization, where due execution and delivery are requisite to the
effectiveness thereof; (iii) that all signatories have adequate power and
authority and have taken all necessary actions to execute and deliver the Credit
Documents; and (iv) that each person signing on behalf of the parties executing
the Credit Documents is a competent adult person not operating under any legal
disability, duress or having been defrauded in the execution of the Credit
Documents.
For purposes of this opinion, we have made the following additional
assumptions:
(a) There are no documents, understandings or agreements between or
among the parties to the Credit Documents which would expand or otherwise
modify the obligations of the respective parties to the Credit Documents
regarding the transactions contemplated thereby and which would have an
adverse effect on the opinions rendered herein;
(b) The Credit Documents constitute legal, valid and binding
obligations of the parties thereto enforceable against such parties in
accordance with their terms;
(c) Value has been given to the Borrower and the Borrower has acquired
rights in the Collateral;
<PAGE>
JEFFER, MANGELS, BUTLER & MARMARO LLP
May 29, 1998
Page 3
(d) The representations and warranties of the Borrower in the Credit
Documents are true and correct in all respects;
(e) (i) Payments on the Notes (as defined in the Credit Agreement)
will be delivered to the Administrative Agent at its offices in New York,
(ii) the Administrative Agent's principal place of business in the United
States is in New York, and the Administrative Agent transacts business in
New York, (iii) Borrower's principal place of business is in New Jersey,
(iv) neither Borrower nor its controlling entity is organized under the
laws of the State of California and neither has its principal place of
business in the State of California, (v) a substantial part of the assets
of Borrower is located outside the State of California, and (vi) material
and substantial negotiations in the finalization of the terms of the Credit
Documents have taken place in New York; and
(f) (i) The selection of New York law was made by you and the Loan
Parties (as defined in the Credit Agreement) in good faith and not as a
device to evade the usury laws of California or any other state, (ii) you
and the Loan Parties freely agreed in the course of arms length
negotiations that New York law would apply to the Credit Documents, (iii)
you and Borrower desired to have the laws of a single state govern all
Advances to be made by you to Borrower pursuant to the Credit Agreement,
and (iv) Lenders, did not possess any superior bargaining power or use any
oppressive methods to cause the Borrower or any other party to the Credit
Documents to agree to select New York law to govern the Credit Documents.
We have noted that all Credit Documents select New York law to govern the
respective rights and obligations of the parties thereunder, thus reflecting the
intent of the parties to be so governed (except as to matters under the Security
Agreement respecting validity or perfection of the security interest thereunder,
or remedies thereunder, in respect of any particular Collateral that are
governed by the law of a jurisdiction other than the State of New York), and we
are not opining with respect to the laws of the State of New York.
We have also assumed that:
(A) None of the Collateral consists or will consist of consumer goods,
farm products, crops, timber, minerals and the like (including oil and gas)
or accounts resulting from the sale thereof, beneficial interests in a
trust or a decedent's estate, letters of credit or items that are subject
to (i) a statute or treaty of the United States that provides for a
national or international registration or a national or international
certificate of title for the perfection of a security interest therein or
that specifies a place of filing different from that specified in the UCC
of any jurisdiction for filing to perfect such security interest or (ii) a
certificate of title statute;
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(B) Borrower has not changed its name, whether by amendment of its
charter, by reorganization or otherwise within the past four months;
(C) Borrower has not changed its chief executive office, chief place
of business or office where it keeps its records concerning the Receivables
within the past four months; and
(D) No Collateral consisting of goods will constitute fixtures under
the law of the State of California.
On the basis of the foregoing, and in reliance thereon, and subject to
the qualifications set forth herein, we are of the opinion that:
1. The Amendment Statement is in suitable form for filing, and upon the
filing thereof pursuant to the UCC in the filing office listed on Schedule II
hereto, will amend the Financing Statement as therein provided with respect to
the security interest granted by the Borrower to the Administrative Agent,
pursuant to the Security Agreement, in the Equipment and Inventory located in
the State of California at this date, to the extent that a security interest in
such Collateral described in the Amendment Statement can be perfected by the
filing of a financing statement in the State of California.
Our opinion in this paragraph 1 is subject to the following
qualifications:
(i) In the case of proceeds, continuation of perfection of the
Administrative Agent's security interest therein is limited to the extent
set forth in Section 9306 of the UCC;
(ii) Division 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five
years from the date of the original filing of the Financing Statement in
order to maintain the effectiveness of the filings referred to in this
paragraph;
(iii) In the case of property that becomes Collateral after the date
hereof, Section 552 of the United States Bankruptcy Code limits the extent
to which property acquired by a debtor after the commencement of a case
under the United States Bankruptcy Code may be subject to a security
interest arising from a security agreement entered into by the debtor
before the commencement of such case;
(iv) To the extent Collateral is added by the Amendment Statement, the
Amendment Statement is effective as to the added Collateral only from the
date the Amendment Statement is filed; and
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(v) The filing of the Amendment Statement does not extend the period
of effectiveness of the Financing Statement.
We call to your attention that the perfection of the above security
interests will be terminated as to any Collateral acquired by the Borrower more
than four months after the Borrower so changes its name, identity or corporate
structure as to make the Financing Statement seriously misleading, unless a new
appropriate financing statement or an appropriate amendment to the Financing
Statement is properly filed before the acquisition of such Collateral by the
Borrower.
2. Aside from nominal filing fees required in connection with the filing
of the Amendment Statement, no other taxes or governmental fees or charges are
required to be paid in connection with the execution and delivery of the
Security Agreement or the execution, delivery or filing of the Amendment
Statement in the State of California.
3. You have asked us to render an opinion concerning the application of
California usury law to Sections 2.07, 2.09, 2.10 and 2.11 of the Credit
Agreement, without regard for any provisions thereof limiting the payment of
interest or any other sums thereunder to the highest rate permitted by
applicable law. Those sections provide for a variable interest rate which may,
from time to time, exceed the maximum rate of interest permitted by Article XV,
Section 1 of the California Constitution, which currently is ten percent per
annum.
Article XV, Section 1 of the California Constitution provides, and
permits the California Legislature to provide, for certain lenders (such as
banks and licensed financed companies) and transactions to be exempt from usury
limitations. We are not aware of facts that would indicate all of the Lenders or
the Advances are subject to these exemptions.
The lawfulness of a variable interest rate is based upon whether the
parties entered into the variable rate agreement in good faith and without
intent to avoid the usury laws. In McConnell v. Merrill Lynch, Pierce, Fenner &
Smith, Inc., 21 Cal.3d 365 (1978), a securities brokerage firm's practice of
charging a variable rate of interest based on the federal call money rate,
combined with a one and a half percent service charge on the account, was upheld
as not violative of the maximum interest rate allowed by Article XX, Section 22
(which was re-numbered Article XV, Section 1 after 1976) of the California
Constitution when an increase in the federal call money rate resulted in the
imposition of a total interest rate in excess of the ten percent maximum for a
period of two months. The trial court held that in the case of a variable
interest rate the lawfulness of the interest under Article XX, Section 22
depended upon the average interest charge over the full term of the loan, and
that the fact that the interest rate exceeded ten percent for a brief period did
not make the variable interest rate unlawful.
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Rejecting the trial court's holding, the California Supreme Court
reversed and remanded the case, holding that the fact that the average interest
charge on a variable rate loan does not exceed the maximum rate is not in itself
sufficient to establish that the loan complies with the usury laws if the
interest charged for a particular period of forbearance exceeds the legal limit.
The Court reasoned that no agreed total profit to the lender can be averaged
over the entire period of the loan, for the interest payable for each portion of
the loan term is the compensation to the lender for its forbearance from
requiring immediate payment of the principal sum during that specific portion of
the term. Citing the Court in Arneill Ranch v. Petit, 64 Cal.App.3d 277 (1976),
the California Supreme Court in McConnell stated:
As Arneill Rang explained [citation omitted], when an
agreement provides for a variable-interest rate, no agreed
total profit to the lender can be averaged over the entire
period of the loan. Under such circumstances, the interest
payable for each portion of the loan term is the compensation
to the lender for his forbearance from requiring immediate
payment of the principal sum during that specific portion of
the term. Thus the fact that the average interest charge on a
variable-rate loan does not exceed the maximum rate is not in
itself sufficient to establish that the loan complies with
the usury laws if the interest charged for a particular
period of forbearance exceeds the legal limit.
21 Cal.3d at 377.
The Court in McConnell proceeded to cite additional appellate opinions
pertaining to the legality of a variable interest agreement containing
contingencies which may cause the interest rate to exceed the constitutional
limit, and concluded that the variable interest agreement would be upheld if the
transaction was consummated in good faith without the intent to avoid the usury
laws. Id. at 378.
California usury law only limits the charges that can be imposed when the
borrower performs its obligations contained in the loan documents, and does not
apply to costs or charges imposed on the borrower as a result of his default.
Miller & Starr, Real Estate Law 2d ss.10:22. The law considers the borrower's
default as "voluntary" even though it may be caused by the borrower's economic
hardship, and, therefore, the usury laws do not apply to default rates of
interest which might be in excess of the legal limit. Lagorio v. Yerxa, 96 Cal.
App. 111, 117-118 (1929). In other words, a loan which is valid at its inception
cannot be rendered usurious by the acts of the borrower. Further, California
courts have stated that
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costs and charges incurred by the borrower because of its default are not
"interest" for the loan of money, but an expense the borrower has imposed on
itself by its own voluntary act. Heald v. Friis-Hansen, 52 Cal.2d 834 (1959);
American Title Ins. & Trust Co. v. Cook, 12 Cal.App. 3d 592, 596-597 (1970) (a
late charge imposed on a borrower who fails to pay an installment promptly as
required by the note is not "interest" and will not render an otherwise valid
loan usurious). Accordingly, the fact that a default rate of interest might
exceed the legal limit does make usurious a loan which is otherwise usurious.
The violation of California usury law may result in the forfeiture of all
future interest, not just the excess over the maximum rate, and also in the
recovery by the borrower of (a) interest paid within two years preceding the
commencement of any action (where the borrower commences the action against the
lender), or (b) all interest paid on the debt from the commencement of the loan
(where the lender brings an action to collect the debt or enforce its security,
and the borrower counterclaims), and (c) at the discretion of a court, treble
the amount of interest paid during the year preceding the commencement of the
action. In addition, payment of the principal amount of a usurious loan cannot
be declared due because of non-payment of interest. In an appropriate case,
where the lender's conduct is oppressive, fraudulent or malicious, the borrower
may also be able to recover punitive damages. Usury may also be prosecuted as a
felony in California, although we believe criminal prosecution is unlikely in
cases of commercial financings.
4. You have asked for our opinion with respect to the following
concerning the choice of law provisions of the Credit Documents: (a) generally
whether a California court would honor the contractual choice of New York law,
and (b) specifically, whether a California court would choose to apply
California usury law to the Advances.
With respect to the general question of application of New York law, the
California Supreme Court enunciated the standards for determining whether a
contractual choice of law provision will be honored in the case of Nedlloyd
Lines B.V, v. The Superior Court of San Mateo County, 3 Cal.4th 459, 11
Cal.Rptr.2d 330 (1992). In that case, the California Supreme Court adopted the
standards of the Restatement of Conflicts of Law, 2nd ("Restatement"), Section
187 for purposes of deciding such issues. The standards established by the
Nedlloyd court provide that the chosen law will apply unless:
(a) the chosen state has no substantial relationship to the
parties or the transaction and there is no other reasonable
basis for the parties' choice, or (b) the application of the
law of the chosen state would be contrary to a fundamental
policy of a state which has a materially greater interest
than the chosen state in the determination of the particular
issue and which, under
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the rule of [Restatement] ss. 188, would be the state of the
applicable law in the absence of an effective choice of law
by the parties.
Nedlloyd, 3 Cal.Ath at 465.
As described below, based upon the assumptions stated on pages 2-3 hereof
(subparagraphs (e) and (f)), it is our opinion that in the case of the Advances,
a substantial relationship with the State of New York or other reasonable basis
for choice of the laws of New York exists. However, with respect to the second
prong of the standards articulated in the Restatement and adopted in Nedlloyd,
the determination of the law to be applied is dependent upon the particular
issue before the court and the respective public policies of the state of the
chosen law and the other state or states involved. Consequently, it is our
opinion that a California court should honor the choice of New York law with
respect to a particular issue related to the Advances, if the application of the
laws of New York would not be contrary to a fundamental policy of the other
state which has a materially greater interest than New York in the determination
of the particular issue.
We next address the specific issue of whether a California court would
choose to apply California usury law to the Advances. We have both analyzed the
application of the California usury laws to the Advances (as provided in
Paragraph 3 above) and investigated the California choice of law and conflict
rules and policies related thereto in order to determine whether a California
court would apply the usury laws of California to the Advances.
In the absence of an exemption, we have assumed, for purposes of this
Paragraph 4, and based on our analysis in Paragraph 3, that the interest rate
payable on the Notes may exceed the maximum rate of interest that the Notes
could bear under the California usury laws.
We now turn to the issue of whether with respect to the specific issue of
usury, a California court would choose to apply California law to the Advances.
Whether a particular choice of law selected by the parties to a contract
will be honored by a California court with regard to a particular issue raised
is a question of fact in each case, Mencor Enterprises. Inc. v. Hets Equities
Corporation, 190 Cal.App.3d 432, 441 (1987). The determination will be made
based upon the two-prong test described above as delineated in the Restatement
Section 187 and adopted by the California Supreme Court in Nedlloyd. With
respect to issues of usury, Restatement Section 203 will also likely be
considered by a California court addressing the issue.
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In regard to the first test of the Restatement Section 187, ie., whether
the chosen state has a substantial relationship to the parties and/or the
transaction, the existence of such a relationship has been found where the
jurisdiction designated by the parties has had certain contacts with the
transaction such as the place where the last act necessary to establish a
contract was formed, the domicile of the lender, the residence of the borrower,
location of performance (receipt of payments), the place where the contract was
made, and other similar factors. See Nedlloyd, 3 Cal.4th at 467; Gamer v. DuPont
Glore Forgan. Inc., 65 Cal.App.3d 280, 288, 135 Cal.Rptr. 230, 234 (1976);
Rochester Capital Leasing Corp. v. K & L Litho Corp., 13 Cal.App.3d 697, 703,
91 Cal.Rptr. 827, 830; Ury v. Jewelers Acceptance Corp., 227 Cal.App.2d 11, 15,
38 Cal.Rptr. 376, 379 (1964); Sarlot-Kantarjian v. First Penn. Mortgage Trust,
599 F.2d 915, 917 (9th Cir. 1979). In the case of the Advances, it appears that
New York will have substantial contact with the transaction given the fact that,
among other things, the Administrative Agent has its principal place of business
in the United States in New York, payments of the Notes will be made to the
Administrative Agent in New York and material and substantial negotiations
respecting the terms of the Credit Documents have taken place in or from New
York.
The second prong of the Restatement's test and of California's
contractual choice of law rule regards public policy. The determination of
whether the provisions in question violate a California fundamental policy with
respect to usury is based upon a factual review requiring an evidentiary
hearing. Mencor Enterprises, 190 Cal.App.3d at 441. California courts of appeal
are in conflict as to whether the State of California has a strong public policy
against enforcing contracts valid under the chosen state law but usurious under
California law. Mencor Enterprises, 190 Cal.App.3d at 440 ("California has a
strong policy against usury . . . " (citing Gamer v. DuPont Glore Forgan. Inc.,
65 Cal.App.3d 280, 287); contra Ury v. Jewelers Acceptance Corp., 227
Cal.App.2d 11; 20, 38 Cal.Rptr. 346 (1964) (concluding that California does not
have a strong public policy against enforcing contracts valid under chosen law
but usurious under California law). In any case, California courts of appeal
that have passed judgment on this issue have considered several factors in
determining whether contractual choice of law provisions violate California
public policy with respect to usury. These factors include:
A. Whether the laws of the chosen state were selected "in good faith
and not as a device to evade the usury laws of California." Ury v.
Jewelers Acceptance Corp., 227 Cal.App.2d 11, 15, 38 Cal.Rptr. 376
(1964);
B. Whether both parties dealt with each other with the chosen "usury
laws before their eyes." Id. at 15;
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C. Whether the choice of law provision contravenes the stated
California usury policy of protecting persons against the oppressive use of
superior bargaining power. Mencor Enterprises, 190 Cal.App.3d at 437; and
D. Whether the amount of interest charged is so excessive as to offend
California's fundamental policy with respect to usury. Id. at 442.
Based on the assumptions set forth in this opinion, we have concluded
that the Credit Documents are not so one-sided as to violate the California
public policy against oppression of parties of unequal bargaining strength.
Furthermore, it is our opinion (based solely upon the assumptions set forth
above in this opinion) that the laws of the State of New York have been freely
chosen by you and the Borrower to govern the Advances, have been selected by you
and the Borrower in good faith and that the actions of you and the Borrower are
free of any purposeful intent to evade California usury law.
We believe it unlikely that a California court of competent jurisdiction
to which the matter was properly presented would find that the amounts due under
the Credit Documents would be subject to California's usury laws inasmuch as
California does not have a strong public policy requiring the application of
California usury law to the Advances for the following reasons, among others:
(i) Neither Borrower nor its controlling entity is organized under the
laws of or domiciled in the State of California;
(ii) The only relationship to the State of California is the location
of one of the Borrower's warehouses and a certain amount of the Collateral;
(iii) The interest rates under the Credit Agreement are not
unconscionable;
(iv) The Loan Parties are sophisticated in commercial transactions;
(v) No negotiations of the terms of the Credit Documents were
conducted in California;
(vi) None of the Agents has its principal place of business in the
State of California; and
(vii) None of the Advances are being funded in the State of
California.
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Our opinion set forth in paragraph 1 above is subject to further
qualifications that we express no opinion as to:
(i) Borrower's rights in or title to any Collateral;
(ii) The validity or perfection of the security interests referred to
in Paragraph 1 above as they relate to any interest in or claim in or under
any policy of insurance, except a claim to proceeds payable by reason of
loss or damage under insurance policies maintained by the Borrower with
respect to Equipment and Inventory as required by and in compliance with
Section 12 of the Security Agreement;
(iii) Except as expressly set forth in Paragraph 1 above, the
perfection of your security interest in any other Collateral, or the
priority of your security interest in any of the Collateral; and
(iv) We express no opinion as to the creation of any security interest
in (or other lien on) any personal property collateral to the extent that,
pursuant to Section 9104 of the UCC, the UCC does not apply thereto.
With respect to our opinion in Paragraph 1 above, we wish to point out
that the Ninth Circuit Court of Appeals, in Chemical Bank v. Security Pacific
National Bank, 20 F.3d 375 (9th Cir. 1994), suggested that each loan
participant or lender must be named in a financing statement in order for the
security interest in favor of that participant or lender to be perfected.
We are licensed to practice law only in the State of California.
Accordingly, the foregoing opinion applies only with respect to the laws of
California and federal law, and we express no opinion with respect to the laws
of any other jurisdiction.
This opinion is being rendered to you and is intended solely for your
benefit and any party as to which we are notified to whom the Lenders have
assigned all or any part of the Advances in accordance with the Credit
Agreement, for use in connection with the matters addressed herein. We wish to
advise you that we have in the past represented, and are currently representing,
several of the participant Lenders in transactions wholly unrelated to the
transactions contemplated by the Credit Agreement; we are not acting as counsel
to any of the Lenders in connection with the Credit Documents. By acceptance of
this letter, those Lenders which we have represented or currently represent
consent to our representation of the Borrower in connection with all
transactions contemplated by the Credit Documents. This opinion may not be
relied upon by any other person or entity for any purpose, without our prior
written consent. This opinion is stated as of the date hereof, and we assume no
responsibility to advise you or any other person or entity of (x) circumstances
affecting the
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continuation or perfection of any security interest, other than those expressly
described herein, or (y) changes which may hereafter be brought to our
attention.
Very truly yours,
<PAGE>
[FOLEY & LARDNER LETTERHEAD]
May 29, 1998
To the Initial Lenders party to the Credit
Agreement referred to below and to Banque
Nationale de Paris, NationsBank, N.A. and Credit
Suisse First Boston, as Agents for such Initial
Lenders
Re: MEDIQ/PRN Life Support Services, Inc.
-------------------------------------
Ladies and Gentlemen:
This opinion is furnished to you in connection with certain financing
transactions made pursuant to a Credit Agreement dated as of May 29, 1998 (the
"Credit Agreement") among MEDIQ/PRN Life Support Services, Inc. (the "Borrower")
and each of you. Unless otherwise defined herein, capitalized terms used herein
shall have the same meaning ascribed thereto in the Security Agreement referred
to in the Credit Agreement.
We have acted as special counsel in the State of Florida to the Loan
Parties in connection with the preparation, execution and delivery of the
Security Agreement. We have called to your attention that we have previously
represented, and may hereafter represent, certain of the addressees referenced
above in connection with matters unrelated to the Borrower or the transactions
contemplated by the Credit Agreement.
In that connection, we have examined counterparts of the Security
Agreement executed by each of the parties thereto, each of Sections 2.07, 2.09,
2.10 and 2.11 of the Credit Agreement, and copies of financing statements (the
"Financing Statements") under the Uniform Commercial Code as in effect in the
State of Florida (the "UCC") amending the financing statements previously filed
with respect to the Credit Agreement dated October 1, 1996 among the Borrower,
MEDIQ, the Administrative Agent and the Syndication Agent, naming the Loan
Parties listed in Schedule I hereto as debtors and the Administrative Agent as
secured party, which Financing Statements are to be filed in the filing offices
listed on Schedule II hereto.
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May 29, 1998
Page 2
In our examination of the documents referred to above, we have assumed
(i) the due execution and delivery, pursuant to due authorization, of each of
the documents referred to above, in the form submitted to us marked "Execution
Copies," by all parties thereto, (ii) the authenticity of all such documents
submitted to us as originals, and (iii) the conformity to originals of all such
documents submitted to us as copies.
In rendering the opinions expressed below, we have relied upon those
representations and warranties made to you by the Loan Parties as set forth in
Section 8 of the Security Agreement as to the location of the Equipment and
inventory. We have assumed that:
(A) none of the Collateral consists or will consist of consumer goods,
farm products, crops, timber, minerals and the like (including oil and gas)
or accounts resulting from the sale thereof, beneficial interests in a
trust or a decedent's estate, letters of credit or items that are subject
to (1) a statute or treaty of the United States that provides for a
national or international registration or a national or international
certificate of title for the perfection of a security interest therein or
that specifies a place of filing different from that specified in the UCC
of any jurisdiction for filing to perfect such security interest or (2) a
certificate of title statute;
(B) no Loan Party has changed its name, identity or corporate
structure, whether by amendment of its charter, by reorganization or
otherwise, within the past four months;
(C) the Financing Statements contain the correct corporate names of
the debtors and the secured party listed thereon and a mailing address of
the secured party from which information concerning the security interest
can be obtained;
(D) no Loan Party has changed its chief executive office, chief place
of business or office where it keeps its records concerning the Receivables
within the past four months;
(E) no Collateral consists of goods which constitute fixtures under
the law of the State of Florida;
(F) the Secured Obligations and the Loan Documents have been
negotiated in New York, the pricing and credit terms were established in
New York, the Loan Documents will be executed, delivered and held in New
York, the proceeds of the loan will be disbursed in New York and repaid in
New York, a portion of the Collateral is located in New York, and the
Administrative Agent maintains its principal domestic offices in New York;
and
(G) the Loan Documents will be made, executed and delivered outside
the State of Florida, and be held outside of the State of Florida; and that
the Administrative Agent will
<PAGE>
May 29, 1998
Page 3
not record or file the Security Agreement, any mortgage, trust deed or
other security agreement or other evidence of indebtedness in the State of
Florida (other than the Financing Statements).
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the following opinion:
1. The Financing Statements are in appropriate form to be accepted for
filing in the filing office listed on Schedule II hereto, and assuming a valid
security interest has been created in the Equipment and Inventory pledged
pursuant to the Security Agreement and that such security interest has attached,
upon the filing of the Financing Statements pursuant to the UCC in the filing
office listed on Schedule II hereto, will result in the perfection of such
security interest in the Equipment and Inventory located in the State of
Florida.
Our opinion in this paragraph 1 is subject to the following
qualifications:
(a) Perfection of the Administrative Agent's security interest in
proceeds is limited to the extent set forth in Section 9-306 of the UCC;
(b) In the case of all Collateral in which the security interest of
the Administrative Agent has been perfected by the filing of Financing
Statements, Article 9 of the UCC requires the filing of continuation
statements within the period of six months prior to the expiration of five
years from the date of the original filings in order to maintain the
effectiveness of the filings referred to in this paragraph;
(c) In the case of property that becomes Collateral after the date
hereof, Section 552 of the Federal Bankruptcy Code limits the extent to
which property acquired by a debtor after the commencement of a case under
the Federal Bankruptcy Code may be subject to a security interest arising
from a security agreement entered into by the debtor before the
commencement of such case;
(d) In the case of Collateral which consists of goods which are mobile
or which are of a type normally used in more than one jurisdiction (such as
motor vehicles, trailers, rolling stock, airplanes, shipping containers,
road building and construction machinery and commercial harvesting
machinery and the like) if the goods are equipment or inventory leased or
held for lease to others, the law (including the conflict of law rules) of
the jurisdiction in which the debtor is located governs the perfection and
effect of perfection or non-perfection of the security interest, and we
express no opinion as to the perfection of the Administrative Agent's
security interest in any such Collateral;
(e) We express no opinion herein as to the (i) perfection of any
security interest in consigned goods, (ii) perfection of any security
interest for which the State of
<PAGE>
May 29, 1998
Page 4
Florida is not the proper state for filing under the UCC; and (iii)
matters excluded from Article 9 of the UCC by virtue of Section 9-104; and
(f) We express no opinion as to:
(1) any Loan Party's rights in or title to any Collateral; and
(2) the validity or Perfection of the security interests referred
to in paragraph 1 above as they relate to any interest in or claim in
or under any policy of insurance, except a claim to proceeds payable
by reason of loss or damage under insurance policies maintained by the
Loan Parties with respect to Equipment and Inventory as required by
and in compliance with Section 12 of the Security Agreement
We call to your attention that the perfection of the above security
interests will be terminated as to any Collateral acquired by a Loan Party more
than four months after such Loan Party so changes its name, identity or
corporate structure as to make the Financing Statements seriously misleading,
unless new appropriate financing statements indicating the new name, identity or
corporate structure of such Loan Party are properly filed before the expiration
of such four months.
2. Upon payment of nominal filing fees due upon recordation of the
Financing Statements, all taxes and governmental fees and charges, the payment
of which is required in connection with the execution and delivery of the
Security Agreement or the execution, delivery or filing of the Financing
Statements in the State of Florida, shall have been paid.
We call to your attention that any sale, transfer or assignment of the
Loan Documents in the State of Florida would subject the Loan Documents to
Florida documentary stamp tax pursuant to Chapter 201, Florida Statutes.
3. Assuming that Sections 2.07, 2.09, 2.10 and 2.11 of the Credit
Agreement (collectively, the "Interest Provisions") are governed by the law of
the State of Florida for the purpose of the opinion set forth in this paragraph
3, and assuming further that all interest, including all charges, fees and
penalties in the nature of interest, charged or paid in respect of the Secured
Obligations will not exceed, in the aggregate, 25% per annum simple interest on
the actual principal outstanding from time to time, without regard for any
provisions thereof limiting the payment of interest or any other sums thereunder
to the highest rate permitted by applicable law, the Interest Provisions do not
violate any applicable law of the State of Florida relating to usury.
<PAGE>
May 29, 1998
Page 5
4. Based upon the facts described in paragraph (G) in the assumptions set
forth above, in any action or proceeding arising out of or relating to any Loan
Document in any court of the State of Florida or in any federal court sitting in
the State of Florida, such court would (except where the application of New York
law will violate Florida public policy) recognize and give effect to a governing
law provision of such Loan Document selecting the laws of the State of New York
(except as to issues of perfection and priority of laws and security interests
on personal property) as the governing law thereof and will apply the laws of
the State of New York, rather than the laws of the State of Florida, to the
construction thereof. We note, however, that the court's decision to enforce the
provisions in the Loan Documents selecting the law of New York as the governing
law turn on questions of fact and there can be no assurance that a court will
not reach a different conclusion based on the facts and circumstances present in
any particular case.
We are licensed to practice only in the State of Florida and no
opinion is expressed herein with respect to any laws other than the laws of
the State of Florida and the United States of America.
A copy of this letter may be delivered by you to any Eligible Assignee in
accordance with the provisions of the Credit Agreement and such Eligible
Assignee may rely on the opinions expressed above as of this opinion letter were
addressed and delivered to such Eligible Assignee on the date hereof.
Very truly yours,
<PAGE>
EXHIBIT I FORM OF
SOLVENCY OPINION
[MURRAY, DEVINE & CO. LETTERHEAD]
May 29, 1998
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC. and
MEDIQ INCORPORATED,
BANQUE NATIONALE DE PARIS,
as Administrative Agent and Initial Issuing Bank,
and the Lender Parties to
the Credit Agreement referred to below
Ladies and Gentlemen:
This letter is furnished at the request of MEDIQ/PRN Life Support Services, Inc.
(the "Borrower"), a wholly owned subsidiary of MEDIQ Incorporated (the
"Company"), pursuant to Section 3.01(k)(xii) of the $325.0 million Credit
Agreement (the "Credit Agreement"), dated as of May 29, 1998, among the
Borrower, the banks, financial institutions and other institutional lenders that
from time to time are parties to the Credit Agreement (collectively the "Lender
Parties" and individually as a "Lender Party"), Banque Nationale de Paris as
administrative agent (the "Administrative Agent"), Nationsbank, N.A. as
syndication agent (the "Syndication Agent"), and Credit Suisse First Boston as
documentation agent (the "Documentation Agent"). Unless defined herein, all
defined terms are as defined in the Credit Agreement.
Pursuant to the Merger Agreement between MQ Acquisition (a Delaware limited
partnership organized by BRS) and the Company, MQ Acquisition will acquire in a
recapitalization transaction (the "Recapitalization") all of the common stock
(other than the Rolled Shares) of the Company from the existing common and
preferred shareholders of the Company. Also pursuant to the Merger Agreement, MQ
Acquisition and the Company will consummate a merger (the "Merger") in which the
Company will be the surviving corporation ("MEDIQ") and the Investors will,
together with the holders of the Rolled Shares, in the aggregate, own all the
shares of common stock and a majority of the shares of the Series A, B and C
Preferred Stock of MEDIQ.
The Borrower has entered into an Asset Purchase Agreement dated as of April 24,
1998 with CH Industries, Inc., certain direct and indirect Subsidiaries of CHI
and certain other parties, pursuant
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 2
to which the Borrower agreed to purchase certain assets from the CHI Sellers
(the "CH Acquisition").
The Recapitalization, the Merger and the CH Acquisition will be financed by: (a)
$109.5 million of gross proceeds from the issuance of common and preferred stock
by MQ Acquisition to the Investors; (b) $75.0 million of gross proceeds from the
issuance by MEDIQ of the Discount Debentures; (c) $190.0 million of gross
proceeds from the issuance by the Borrower of the Senior Subordinated Notes; (d)
$201.0 million in Borrowings under the Credit Agreement; and (e) existing cash
of the Borrower of $4.0 million.
Proceeds from the above sources will be used to: (a) pay the net cash portion of
the merger consideration of $352.0 million; (b) refinance existing debt of the
Borrower of approximately $138.9 million; (c) pay the purchase consideration of
the CH Acquisition of approximately $50.0 million; and (d) pay transaction fees
and expenses of approximately $38.6 million.
The Credit Agreement consists of: (a) a $200.0 million Term Facility which will
be comprised of a $150.0 million Advance on the date of the Initial Extension of
Credit and a second Advance not to exceed $50.0 million prior to July 30, 1998
in connection with the CH Acquisition; (b) a $50.0 million Revolving Credit
Facility which includes a sublimit for Letter of Credit Advances in an aggregate
amount not to exceed $7.5 million and a sublimit for Swing Line Advances in an
aggregate amount not to exceed $2.5 million; and (c) a $75.0 million Acquisition
Facility which, on the Conversion Date, converts to an amortizing term facility.
The proceeds from the Term Advances will be used, to finance, in part, the
Recapitalization, the Merger and the CH Acquisition, to refinance the
Refinancing Debt and to pay transaction fees and expenses in connection
therewith and with the financing contemplated by the Loan Documents. The
proceeds from Revolving Credit Advance will be used to finance working capital
requirements of the Borrower and its wholly owned U.S. Subsidiaries and for
general corporate purposes permitted by the Loan Documents. The proceeds from
Acquisition Advances will be used to finance from time to time all or a portion
of Investments permitted by Sections 5.02(e)(ii)(B), (F) and (G) of the Credit
Agreement and to pay transaction fees and expenses in connection therewith.
Borrowings under the Credit Agreement may be Eurodollar Rate Advances, Base Rate
Advances or a combination thereof.
Interest on outstanding Base Rate Advances shall be payable commencing June 30,
1998, (a) in arrears quarterly on the last Business Day of each March, June,
September and December, (b) on the date of any prepayment thereof to the extent
required under Section 2.06(b) of the Credit Agreement and (c) on the
Termination Date, at a rate per annum equal at all times to the sum of
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 3
(a) the Base Rate in effect from time to time plus (b) the Applicable Margin in
effect from time to time. Interest on outstanding Eurodollar Rate Advances shall
be payable in arrears on the last day of such Interest Period and, if such
Interest Period has a duration of more than three months, on each day that
occurs during such Interest Period every three months from the first day of such
Interest Period and on the date such Eurodollar Rate Advance shall be Converted
or paid in full, at a rate per annum equal at all times to the sum of (a) the
Eurodollar Rate for such Interest Period plus (b) the Applicable Margin in
effect on the first day of such Interest Period.
The Term Advances shall be repaid by the Borrower commencing on September 30,
1999 in twenty eight consecutive quarterly installments on the dates and in the
amounts contained in Section 2.04(a) of the Credit Agreement, determined as a
percentage of the aggregate amount of Term Advances outstanding on September 30,
1999. The Acquisition Advances shall be repaid by the Borrower commencing March
31, 2000 on the dates and in the amounts indicated in Section 2.04(b) of the
Credit Agreement, determined as a percentage of the aggregate amount of
Acquisition Advances outstanding on the Conversion Date. The Revolving Credit
Advances, Swing Line Advances and Letter of Credit Advances shall be payable in
full on the Termination Date. The Borrower may also be subject to certain
mandatory commitment reductions and prepayments in accordance with Sections
2.05(b) and 2.06(b) of the Credit Agreement, respectively. The Borrower may
terminate in whole or reduce in part the unused portions of the Term
Commitments, the Swing Line Commitment, the Letter of Credit Facility, the
Revolving Credit Commitments and the Acquisition Commitments subject to various
terms and conditions as outlined in Section 2.05(a) of the Credit Agreement.
The Borrowings will be secured by: (i) first perfected liens on certain present
and future assets and property of the Borrower, including accounts receivable,
inventory, hedge agreements, cash, bank accounts, equity investments, property,
plant and equipment, intangibles, and other personal, intellectual and real
property (each of the aforementioned subject to any escrow balances or liens
required in connection with the sale of NutraMax); and (ii) a pledge of stock of
all existing and future domestic, and to the extent that no adverse tax
consequences would result, foreign subsidiaries of the Borrower. Borrowings will
be guaranteed by all existing and future subsidiaries of the Borrower and by
MEDIQ.
The Borrower will issue the Senior Subordinated Notes in an aggregate principal
amount of $190.0 million. The Senior Subordinated Notes will mature on the tenth
anniversary of the date of issuance and will bear interest from the date of
issuance at the then prevailing market rate, which interest will be payable
semi-annually. The Senior Subordinated Notes will be senior subordinated
obligations of the Borrower, subordinate to all existing and future senior
indebtedness, including indebtedness under the Credit Agreement. The Senior
Subordinated Notes will be unconditionally guaranteed by each subsidiary of the
Borrower that guarantees advances under the Credit Agreement.
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 4
In July 1993, the Company issued an aggregate of $34.5 million principal amount
of exchangeable debentures (the "Exchangeable Debentures"). As of the Closing
Date (as defined below), there will be approximately $10.1 million in principal
amount of Exchangeable Debentures still outstanding. The Exchangeable Debentures
mature on July 15, 2003. Interest on the Exchangeable Debentures accrues at a
rate of 7.5% annually and is payable semiannually. The Exchangeable Debentures
are general unsecured obligations of the Company and are subordinated to all
existing and future "Senior Indebtedness" as defined in the "Exchangeable
Debenture Indenture".
The Company will issue the Discount Debentures for aggregate gross proceeds of
$75.0 million. The Discount Debentures will (i) mature on the eleventh
anniversary of their date of issuance, (ii) be issued at a substantial original
issue discount, and (iii) accrete in value until five years after the date of
issuance. During the first five year period there will be no payment of
interest. Thereafter interest will accrue and be payable semi-annually. The
Discount Debentures will be senior obligations of the Company, ranking pari
passu in right of payment with all existing and future senior obligations of the
Company and will rank senior to all future subordinated debt of the Company.
The issuances of the Senior Subordinated Notes and the Discount Debentures is
expected to be consummated on the Closing Date. In the event that the issuances
are not completed by the Closing Date, the Company and the Borrower have
received commitments for bridge financing until such time as the issuances can
be consummated.
We have been provided with an estimated pro forma closing balance sheet of
MEDIQ, dated May 26, 1998 (the "Pro Forma Balance Sheet") which was prepared by
management of the Entities (as defined below). The Pro Forma Balance Sheet
indicates that MEDIQ's capitalization on the closing date (the "Closing Date"),
after giving effect to the Recapitalization, the Merger, the CH Acquisition and
all financings related thereto (collectively, the "Transactions"), will be
comprised of approximately $31.5 million of current liabilities, $478.9 million
of long-term debt, $24.2 million of other liabilities and total stockholders'
equity of negative $350.5 million. Management of the Entities has informed us
that the foregoing amounts were determined in accordance with generally accepted
accounting principles ("GAAP") and do not necessarily reflect fair market value.
Management of the Entities did not prepare a pro forma balance sheet of the
Borrower. Management of the Entities has informed us that if a pro forma balance
sheet of the Borrower on the Closing Date and after giving effect to the
Transactions were prepared, there would be no material difference between the
Pro Forma Balance Sheet described above and the pro forma balance sheet of the
Borrower except for those differences disclosed in "Footnote H to the Pro
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 5
Forma Condensed Consolidated Balance Sheets" on page 44 of the "Confidential
Offering Circular for the Senior Subordinated Notes". Giving effect to these
differences, the pro forma balance sheet of the Borrower as of the Closing Date
and after giving effect to the Transactions, if such a balance sheet were
prepared, would indicate that the Borrower's capitalization as of the Closing
Date and after giving effect to the Transactions will be comprised of $30.9
million of current liabilities, $390.4 million of long term debt, $27.1 million
of other liabilities and total stockholders' equity of negative $128.2 million.
Murray, Devine & Co., Inc. has been requested to provide its opinion that, on
the Closing Date as contemplated herein and after giving effect to the
Transactions, with respect to MEDIQ and the Borrower (individually, as an
"Entity" and together, as the "Entities") each on a consolidated basis:
1) the aggregate value of each Entity's assets, at fair value and
present fair saleable value, exceeds: (a) its total liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities); and (b) the amount required to pay such
liabilities as they become absolute and matured in the normal
course of business;
2) such Entity has the ability to pay its debts and liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) as they become absolute and matured in the normal
course of business; and
3) such Entity does not have an unreasonably small amount of
capital with which to conduct its business.
In evaluating the foregoing, the subject phrases and the definitions ascribed
thereto are as follows:
"aggregate value of each Entity's assets" - All assets of each
Entity, recorded on a consolidated basis, including, without
limitation, all current assets, all fixed assets such as property,
equipment and all intangible assets including contracts, tradenames,
trademarks, backlog and other intangible assets including those in
the nature of goodwill and going concern value.
"fair value" - The total amount at which the assets of each Entity,
recorded on a consolidated basis, would likely sell as part of a
going concern and for continued use as part of a going concern,
within a commercially reasonable period of time, between one or more
willing buyers and a willing seller with neither party being
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 6
under any compulsion to buy or sell and with all parties having
reasonable knowledge of all facts.
"present fair saleable value" - The price that could be obtained by an
independent willing seller from an independent willing buyer with
reasonable promptness in an arms-length transaction under present
conditions for the sale of comparable business enterprises.
"liabilities (including - contingent, subordinated. unmatured and
unliquidated liabilities)" - The pro forma debts and liabilities of
each Entity, recorded on a consolidated basis, as of the Closing Date,
as set forth on the Pro Forma Balance Sheet, including all fees,
expenses, and the principal amount of indebtedness being incurred in
the Transactions through borrowings under the Credit Agreement and such
Entity's estimated amount of reasonably anticipated liabilities that
may result from contingencies, which liabilities may or may not meet
the criteria for accrual under Statement of Financial Accounting
Standards ("FAS") No. 5 and, therefore, may not be included in
liabilities under GAAP, including: a) pending litigation, asserted
claims and assessments, guarantees, and other contingent liabilities
including, without limitation, employee benefit plan liabilities
relating to retiree benefits identified to us by responsible officers
of the Entities; as well as b) contingent liabilities relating to
environmental matters identified to us by responsible officers of the
Entities.
We have undertaken certain analyses and procedures relating to the preparation
of the requested opinion. The procedures undertaken, none of which extended
past the date of this letter, consisted solely of the following:
1. Read the Credit Agreement, dated as of May 29, 1998 (draft
5/26/98). Read the available Exhibits and Schedules thereto.
2. Read the information memorandum for the Company, prepared by the
Agents, dated May 1998.
3. Read Amendment No. 3 to Form S-4 for the Company filed with the
Securities and Exchange Commission on April 28, 1998.
4. Read the multi-year financial model for MEDIQ dated May 26, 1998
(the "Projections"), which includes the Pro Forma Balance Sheet,
that was prepared by management of the Entities and is contained
in the information memorandum prepared by the Agents. In this
regard, made
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 7
inquiries to certain officials of the Entities who have
responsibility for financial and accounting matters, with respect
to those assumptions which have been made in formulating the
Projections.
5. Performed a valuation of the Entities, on a consolidated basis,
using current standards of valuation including the discounted free
cash flow and comparable market multiples approaches, as a going
concern after giving effect to the Transactions.
6. Read the audited financial statements of the Company for the years
ending September 30, 1994 through 1997, audited by Deloitte &
Touche LLP, contained in the Company's form 10-K filings. In this
regard, officials of the Company have informed us that no other
audited financial statements for any date or period subsequent to
September 30, 1997 were available.
7. Read the audited financial statements of the Borrower for the years
ending September 30, 1995 through 1997, audited by Deloitte &
Touche LLP. In this regard, officials of the Borrower have informed
us that no other audited financial statements for any date or
period subsequent to September 30, 1997 were available.
8. Read the unaudited interim financial statements of the Company for
the six months ended March 31, 1998 contained in the Company's form
IO-Q filing. In this regard, officials of the Company have informed
us that no other unaudited interim financial statements for any
date or period subsequent to March 31, 1998 were available.
9. Read the unaudited interim financial statements of the Borrower for
the six months ended March 31, 1998. In this regard, officials of
the Borrower have informed us that no other unaudited interim
financial statements for any date or period subsequent to March 31,
1998 were available.
10. Read the Pro Forma Balance Sheet prepared by management of the
Entities. With respect to the amounts shown in the Pro Forma
Balance Sheet and accompanying notes and schedules thereto, we have
made inquiries of certain officers of the Entities who have
responsibility for financial and accounting matters regarding:
a) The basis for the assumptions and the information presented
in the Pro Forma Balance
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 8
Sheet and the consistency of such assumptions and
information with the Transactions and related indebtedness,
including the Credit Agreement.
b) Whether the Pro Forma Balance Sheet includes all material
assets and liabilities which it is anticipated will have to
be recorded under GAAP after giving effect to the
Transactions.
Based upon the foregoing, nothing has come to our attention which
leads us to believe that the assumptions underlying the Pro Forma
Balance Sheet are unreasonable or that the Pro Forma Balance Sheet
does not in fact include all such GAAP assets and liabilities.
11. Read the Offering Circular for the Senior Subordinated Notes
dated May 21,1998.
12. Read the Asset Purchase Agreement dated as of April 24, 1998 by
and among CH Industries, Inc. and the Borrower.
13. Inquired of certain officers of the Entities, as appropriate, who
have responsibility for financial and accounting matters regarding:
a) Whether they were aware of any material liabilities or loss
contingencies that are required to be accrued or disclosed
by Statement of FAS No. 5 or that would be material to the
Entities, whether or not required to be disclosed under FAS
No. 5, or any unasserted claims or assessments that their
legal counsel has advised them are probable of assertion and
must be disclosed in accordance with FAS No. 5; and
b) Whether they were aware of any events or conditions that,
as of the date thereof, would cause MEDIQ or the Borrower
after giving effect to the Transactions, not to be Solvent,
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 9
as defined in Section 1.01 of the Credit Agreement.
14. Read the executive summaries of the Environmental Due Diligence
Report on the Cardio Systems Site, dated October 28, 1997, and the
Environmental Site Assessment Report on the Carrollton, Texas
facility dated September 14, 1993, prepared by J. McNutt &
Associates, Inc.
15. Conducted interviews with those individuals responsible for the
management of the Entities for the purpose of reviewing their
operations and reviewing such operations in terms of their past
operating results, markets served and their ability to attain
operating results consistent with the forecasted results.
16. Conducted interviews with those responsible for the legal affairs
of the Entities regarding any litigation to which the Entities are
currently a party and any claims or causes of actions which may be
probable of legal assertion against them which would be reasonably
likely to have a material adverse effect on the business condition
(financial or otherwise), operations, performance, properties or
prospects of the Entities. We further discussed whether the
Entities are currently involved in, or are expected to be involved
in, any investigation or enforcement action by any governmental
body which may result in the imposition of any sanctions, fines, or
penalties, the effect of which could have a material adverse effect
on the business condition (financial or otherwise), operations,
performance, properties or prospects of the Entities.
17. Conducted interviews with the Entities' management to discuss their
assertions concerning contingent liabilities that are not recorded
in the Pro Forma Balance Sheet or the Projections.
18. Read the road show presentation prepared for the Company dated
May 1998.
19. Read the minutes of the meetings of the board of directors of
the Company from July 28, 1994 through May 21, 1998. Read the
minutes of the meetings of the board of directors of the Borrower
from January 3, 1994 through January 5, 1998.
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 10
We have not made any independent investigation in rendering this opinion other
than the examination described. Our opinion is, therefore, qualified by the
scope of that examination.
Based solely upon the foregoing, and subject to the other qualifications set
forth below, on the Closing Date and after giving effect to the Transactions and
other transactions contemplated therewith, we are of the opinion, with respect
to each Entity on a consolidated basis, that:
1) the aggregate value of each Entity's assets, at a fair value and
at present fair saleable value exceeds: (a) its total liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities); and (b) the amount required to pay such liabilities
as they become absolute and matured in the normal course of
business;
2) each Entity has the ability to pay its debts and liabilities
(including contingent, subordinated, unmatured and unliquidated
liabilities) as they become absolute and matured in the normal
course of business; and
3) each Entity does not have an unreasonably small amount of capital
with which to conduct its business.
In rendering the opinion set forth above, we call to your attention that
management of the Company has prepared Projections that do not extend to the
periods in which the Senior Subordinated Notes, Discount Debentures, Series A
Preferred Stock and Series C Preferred Stock mature. Management of the Company
believes that the amounts due under the Senior Subordinated Notes, Discount
Debentures, Series A Preferred Stock and Series C Preferred Stock at the time of
their respective maturities will be repaid through cash flows from operations, a
new financing, merger, sale of assets and/or sale of the Borrower's or MEDIQ's
common equity. We have assumed, with your consent, that the remaining amounts
under the Senior Subordinated Notes, Discount Debentures, Series A Preferred
Stock and Series C Preferred Stock will be repaid at the time of their
respective maturities through cash flows from operations, a new financing,
merger, sale of assets and/or sale of the Borrower's or MEDIQ's common equity.
We offer no opinion as to the ability of the Entities to pay such amounts or
otherwise raise funds in a timely manner or that the proceeds therefrom will be
sufficient to make all such payments when due.
In rendering the above opinion, we have relied upon certain past and current
unaudited financial information which has not been independently verified and
for which we assume no responsibility as to its accuracy. Further, we have
assumed good title to the assets of each Entity, and have made no inspection of
those assets for the purpose of determining the value of such assets, both
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 11
of which we expressly disclaim responsibility for in connection with the
rendering of this opinion.
This letter is intended solely for use of the addressees in connection with the
Transactions and is not to be relied upon by any other person or entity or for
any other purpose without our prior written consent. This letter is not to be
disclosed or otherwise circulated, quoted or referred to any persons or entities
other than the addressees and successor Agents pursuant to Section 8.07 of the
Credit Agreement without our written consent (which will not be unreasonably
withheld). Notwithstanding anything to the contrary in the immediately preceding
sentence, our consent shall not be required for any of the following: (i)
submitting information copies of this opinion to counsel or advisors to the
Agents, the Lender Parties or the Entities; (ii) furnishing this opinion upon
the demand or order of any court, administrative agency or regulatory body or as
may be required in response to any summons or subpoena; (iii) attaching this
opinion as an exhibit to the Credit Agreement; (iv) furnishing this opinion as
may be required or ordered in, or as may be necessary, to protect the Agents',
the Lender Parties' and, the Entities' interest in, any litigation, governmental
proceeding or investigation pertaining to the Credit Agreement, or related
transactions to which the Agents, any Lender Party or the Entities are or may be
subject; or (v) furnishing this opinion to a governmental agency as otherwise
required by any law, order, regulation or ruling applicable to such Agent,
Lender Party or Entity.
This letter is also delivered with the explicit understanding that it is based
on current standards of valuation and assessment and that standards of valuation
and assessment may change in the future. We disclaim any responsibility for any
impact any such changes may have on the valuation or assessment of the Entities
described in this letter. Except as contemplated by the Projections referred to
in paragraph 4, unforeseen future events which may change the current or
projected value of the Entities do not apply and have not been factored into the
opinion expressed in this letter.
This letter is a financial opinion only. We make no representations regarding
questions of legal interpretation and expressly disclaim that it be construed in
any way as a legal opinion. This opinion is delivered to each recipient subject
to the conditions, scope of the engagement, limitations and understandings set
forth in this opinion and subject to the understanding that the obligations of
Murray, Devine & Co., Inc. in the Transactions are solely corporate obligations
and no officer, director, employee, agent, shareholder or controlling person of
Murray, Devine & Co., Inc. shall be subject to any personal liability whatsoever
to any person, nor will any such claim be asserted by or on behalf of the
Entities or any of their Subsidiaries or Affiliates. Further it is understood
that in no event, regardless of the legal theory advanced, shall Murray, Devine
& Co., Inc. be held responsible to the Entities or any of their Subsidiaries or
Affiliates other than for its gross negligence, bad faith, willful misconduct or
reckless disregard of its obligations.
<PAGE>
Board of Directors
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
MEDIQ INCORPORATED
May 29, 1998
Page 12
We have no obligation to update or revise this letter for any events occurring
subsequent to the date of this letter.
Very truly yours,
MURRAY, DEVINE & CO.
<PAGE>
EXHIBIT J-1 TO
THE CREDIT
AGREEMENT
SOLVENCY CERTIFICATE
OF MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
I, Jay M. Kaplan, Senior Vice President and Chief Financial Officer of
MEDIQ/PRN Life Support Services, Inc., a Delaware corporation (the "Borrower"),
hereby certify that I am the Senior Vice President and Chief Financial Officer
of the Borrower, that I am familiar with its properties, businesses, assets,
finances and operations and that I am duly authorized to execute this Solvency
Certificate on behalf of the Borrower, which is being delivered pursuant to
Section 3.01(k)(xiv) of the Credit Agreement dated as of ______, 1998 (as it may
be hereafter amended, supplemented or otherwise modified from time to time in
accordance with its terms, the "Credit Agreement") among the Borrower, MEDIQ
Incorporated, a Delaware corporation (the "Parent Guarantor"), the lender
parties from time to time party thereto (the "Lender Parties"), Banque Nationale
de Paris, as administrative agent (the "Administrative Agent") for the Lender
Parties, Swing Line Bank, Initial Issuing Bank, and Arranger, NationsBank, N.A.
as syndication agent (the "Syndication Agent"), and Credit Suisse First Boston,
as documentation agent (the "Documentation Agent" and, together with the
Syndication Agent and the Administrative Agent, the "Agents") for the Lender
Parties. Unless otherwise defined herein, capitalized terms defined in the
Credit Agreement are used herein as therein defined.
I further certify that I am familiar with the properties, businesses and
assets of the Borrower and have carefully reviewed the Loan Documents, the
Related Documents and the contents of this Solvency Certificate and, in
connection herewith, have made such investigation and inquiries as I deem
necessary and prudent therefor. I further certify, as the Senior Vice President
and Chief Financial Officer of the Borrower, that the financial information and
assumptions which underlie and form the basis for the representations made in
this Solvency Certificate were reasonable when made and were made in good faith
and continue to be reasonable as of the date hereof.
To secure, among other things, the payment of the Borrower's Obligations
under the Loan Documents, the Borrower has granted a security interest in
certain Collateral, now owned or hereafter acquired by it, pursuant to the
Collateral Documents.
<PAGE>
The Borrower understands that the Agents and the Lender Parties are relying
on the truth and accuracy of this Solvency Certificate in connection with the
transactions contemplated by the Loan Documents.
I do hereby further certify, as the Senior Vice President and Chief
Financial Officer of the Borrower, that:
1. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the fair value of any and all property
of the Borrower is greater than the total amount of liabilities (including
contingent, subordinated, absolute, fixed, matured or unmatured and liquidated
or unliquidated liabilities) of the Borrower.
2. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the present fair saleable value of the
assets of the Borrower exceeds the amount that will be required to pay the
probable liabilities of the Borrower on its debts as they become absolute and
matured.
3. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the Borrower is not engaged in
business or in a transaction, and is not about to engage in business or in a
transaction, for which its capital would constitute unreasonably small capital
(after giving due consideration to the prevailing practice in the industry in
which it is engaged).
4. The Borrower does not intend or believe that it will incur debts and
liabilities that will be beyond its ability to pay as such debts or liabilities
mature.
5. The Borrower does not intend, in consummating the transactions
contemplated by the Credit Agreement, the other Loan Documents, or the Related
Documents, to hinder, delay or defraud either present or future creditors or any
other Person to which the Borrower is or will become, on or after the date
hereof, indebted.
6. In reaching the conclusions set forth in this Solvency Certificate, I
have considered, on behalf of the Borrower, among other things:
(a) the cash and other assets of the Borrower reflected in the
Financial Statements of the Borrower;
2
<PAGE>
(b) all contingent liabilities of the Borrower including, without
limitation, any claims arising out of pending or threatened litigation
against the Borrower, and in so doing, the Borrower has computed the amount
of such liabilities as the amount that, in light of all the facts and
circumstances existing on the date hereof, represents the amount that can
reasonably be expected to become an actual or matured liability (the
"Contingent Liabilities");
(c) all obligations and liabilities of the Borrower, whether matured
or unmatured, liquidated or unliquidated, disputed or undisputed, secured
or unsecured, subordinated, absolute, fixed or contingent (other than
Contingent Liabilities);
(d) historical and anticipated growth in sales volume of the Borrower
and income stream generated by the Borrower as reflected in, among other
things, the cash flow statements delivered as part of the Financial
Statements;
(e) the customary terms and trade payables of the Borrower;
(f) the amount of the credit extended by and to customers of the
Borrower;
(g) the amortization requirements of the Credit Agreement and the
Related Documents, the anticipated interest payable on the Advances and
fees payable under the Credit Agreement;
(h) the level of capital customarily maintained by the Borrower and
other entities engaged in the same or similar business as the business of
the Borrower; and
(i) the environmental assessment reports delivered pursuant to Section
3.01(k)(xv) of the Credit Agreement.
Delivery of an executed counterpart of a signature page to this Solvency
Certificate by telecopier shall be effective as delivery of a manually executed
counterpart of this Solvency Certificate.
I have given this Solvency Certificate (a) solely in my capacity as an
officer of the Borrower and not individually and (b) on the understanding, and
subject to the condition, that I will have no personal liability on account of
having given this Solvency Certificate.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf
of the Borrower this ___ day of _______, 1998.
By_________________________________
Name: Jay M. Kaplan
Title: Senior Vice Presient and
Chief Financial Officer
4
<PAGE>
EXHIBIT J-2 TO
THE CREDIT
AGREEMENT
FORM OF SOLVENCY CERTIFICATE
OF MEDIQ INCORPORATED
I, Michael F. Sandler, Chief Financial Officer of MEDIQ Incorporated, a
Delaware corporation ("MEDIQ"), hereby certify that I am the Chief Financial
Officer of MEDIQ, that I am familiar with the properties, businesses, assets,
finances and operations of MEDIQ and its Subsidiaries (collectively, the
"Company"), and that I am duly authorized to execute this Solvency Certificate
on behalf of MEDIQ, which is being delivered pursuant to Section 3.01(k)(xiv) of
the Credit Agreement dated as of ________, 1998 (as it may be hereafter amended,
supplemented or otherwise modified from time to time in accordance with its
terms, the "Credit Agreement") among MEDIQ/PRN Life Support Services, Inc., a
Delaware corporation (the "Borrower"), MEDIQ (the "Parent Guarantor"), the
lender parties from time to time party thereto (the "Lender Parties"), Banque
Nationale de Paris, as administrative agent (the "Administrative Agent") for the
Lender Parties, Swing Line Bank, Initial Issuing Bank, and Arranger,
NationsBank, N.A. as syndication agent (the "Syndication Agent"), and Credit
Suisse First Boston, as documentation agent (the "Documentation Agent" and,
together with the Syndication Agent and the Administrative Agent, the "Agents")
for the Lender Parties. Unless otherwise defined herein, capitalized terms
defined in the Credit Agreement are used herein as therein defined.
I further certify that I am familiar with the properties, businesses and
assets of the Company and have carefully reviewed the Loan Documents, the
Related Documents and the contents of this Solvency Certificate and, in
connection herewith, have made such investigation and inquiries as I deem
necessary and prudent therefor. I further certify, as the Senior Vice President
and Chief Financial Officer of MEDIQ, that the financial information and
assumptions which underlie and form the basis for the representations made in
this Solvency Certificate were reasonable when made and were made in good faith
and continue to be reasonable as of the date hereof.
To secure, among other things, the payment of the Company's Obligations
under the Loan Documents, the Company has granted a security interest in certain
Collateral, now owned or hereafter acquired by it, pursuant to the Collateral
Documents.
The Company understands that the Agents and the Lender Parties are relying
on the truth and accuracy of this Solvency Certificate in connection with the
transactions contemplated by the Loan Documents.
<PAGE>
I do hereby further certify, as the Senior Vice President and Chief
Financial Officer of MEDIQ, that:
1. Attached hereto as Annex A are the projected consolidated financial
statements of the Company on a monthly basis for the first two years following
the day of the Initial Extension of Credit and on an annual basis for each year
thereafter until the Final Maturity Date (the "Projected Financial Statements")
prepared by management in good faith. The Projected Financial Statements fairly
present the best estimate of the future financial performance of the Company and
are reasonable in light of the business conditions existing on the date hereof,
although actual results during the periods covered by the Projected Financial
Statements may differ materially from the projected results stated therein.
2. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the fair value of any and all property
of the Company is greater than the total amount of liabilities (including
contingent, subordinated, absolute, fixed, matured or unmatured and liquidated
or unliquidated liabilities) of the Company.
3. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the present fair saleable value of the
assets of the Company exceeds the amount that will be required to pay the
probable liabilities of the Company on debts as they become absolute and
matured.
4. On the date hereof, both before and after giving effect to the
consummation of the transactions contemplated by the Credit Agreement, the other
Loan Documents and the Related Documents, the Company is not engaged in any
business or transaction, and is not about to engage in any business or
transaction, for which the capital of the Company would constitute unreasonably
small capital (after giving due consideration to the prevailing practice in the
industry in which the Company is engaged).
5. The Company does not intend or believe that it will incur debts and
liabilities that will be beyond its ability to pay as such debts or liabilities
mature.
6. The Company does not intend, in consummating the transactions
contemplated by the Credit Agreement, the other Loan Documents, or the Related
Documents, to hinder, delay or defraud either present or future creditors or any
other Person to which the Company is or will become, on or after the date
hereof, indebted.
7. In reaching the conclusions set forth in this Solvency Certificate, I
have considered, on behalf of the Company, among other things:
2
<PAGE>
(a) the cash and other assets of the Company;
(b) all contingent liabilities of the Company including, without
limitation, any claims arising out of pending or threatened litigation against
the Company, and in so doing, the Company has computed the amount of such
liabilities as the amount that, in light of all the facts and circumstances
existing on the date hereof, represents the amount that can reasonably be
expected to become an actual or matured liability (the "Contingent
Liabilities");
(c) all obligations and liabilities of the Company, whether matured or
unmatured, liquidated or unliquidated, disputed or undisputed, secured or
unsecured, subordinated, absolute, fixed or contingent (other than Contingent
Liabilities);
(d) historical and anticipated growth in sales volume of the Company and
income stream generated by the Company as reflected in, among other things, the
cash flow statements delivered as part of the Projected Financial Statements;
(e) the customary terms and trade payables of the Company;
(f) the amount of the credit extended by and to customers of the Company;
(g) the amortization requirements of the Credit Agreement and the Related
Documents, the anticipated interest payable on the Advances and fees payable
under the Credit Agreement;
(h) the level of capital customarily maintained by the Company and other
entities engaged in the same or similar business as the business of the Company;
(i) the environmental assessment reports delivered pursuant to Section
3.01(k)(xv) of the Credit Agreement; and
(j) the Projected Financial Statements.
Delivery of an executed counterpart of a signature page to this Solvency
Certificate by telecopier shall be effective as delivery of a manually executed
counterpart of this Solvency Certificate.
I have given this Solvency Certificate (a) solely in my capacity as an
officer of MEDIQ and not individually and (b) on the understanding, and subject
to the condition, that I will have no personal liability on account of having
given this Solvency Certificate.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf
of the Company this ___ day of ________, 1998.
By
--------------------------------
Name: Michael F. Sandler
Title: Chief Financial Officer
4
================================================================================
WARRANT AGREEMENT
Dated as of
May 29, 1998
between
MEDIQ INCORPORATED
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent
---------------------------------------------
Warrants for
Common Stock of
MEDIQ Incorporated
---------------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions................................................... 1
SECTION 1.02. Other Definitions............................................. 5
SECTION 1.03. Rules of Construction......................................... 6
ARTICLE II
Warrant Certificates
SECTION 2.01. Form and Dating............................................... 6
SECTION 2.02. Execution and Countersignature................................ 8
SECTION 2.03. Certificate Register.......................................... 9
SECTION 2.04. Transfer and Exchange.........................................10
SECTION 2.05. Certificated Warrants.........................................17
SECTION 2.06. Replacement Certificates......................................17
SECTION 2.07. Outstanding Warrants..........................................18
SECTION 2.08. Temporary Certificates........................................18
SECTION 2.09. Cancelation...................................................18
SECTION 2.10. CUSIP Numbers.................................................19
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise......................................................19
SECTION 3.02. Exercise Periods..............................................19
SECTION 3.03. Expiration....................................................19
SECTION 3.04. Manner of Exercise............................................20
SECTION 3.05. Issuance of Warrant Shares....................................20
SECTION 3.06. Fractional Warrant Shares.....................................21
SECTION 3.07. Reservation of Warrant Shares.................................21
SECTION 3.08. Compliance with Law...........................................22
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock.......................................23
SECTION 4.02. Cash Dividends and Other Distributions........................23
<PAGE>
SECTION 4.03. Common Stock Issue............................................24
SECTION 4.04. Issuance of Rights or Options.................................25
SECTION 4.05. Combination; Liquidation......................................26
SECTION 4.06. Other Events..................................................27
SECTION 4.07. Superseding Adjustment........................................27
SECTION 4.08. Minimum Adjustment............................................28
SECTION 4.09. Notice of Adjustment..........................................28
SECTION 4.10. Notice of Certain Transactions................................29
SECTION 4.11. Adjustment to Warrant Certificate.............................30
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement.......................30
SECTION 5.02. Suspension....................................................32
SECTION 5.03. Blue Sky......................................................32
SECTION 5.04. Accuracy of Disclosure........................................33
SECTION 5.05. Indemnification...............................................33
SECTION 5.06. Additional Acts...............................................37
SECTION 5.07. Expenses......................................................38
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent..................................38
SECTION 6.02. Rights and Duties of Warrant Agent............................38
SECTION 6.03. Individual Rights of Warrant Agent............................40
SECTION 6.04. Warrant Agent's Disclaimer....................................40
SECTION 6.05. Compensation and Indemnity....................................40
SECTION 6.06. Successor Warrant Agent.......................................41
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports...................................................42
SECTION 7.02. Persons Benefitting...........................................43
SECTION 7.03. Rights of Holders.............................................43
SECTION 7.04. Amendment.....................................................42
SECTION 7.05. Notices.......................................................44
SECTION 7.06. Governing Law.................................................45
SECTION 7.07. Successors....................................................45
SECTION 7.08. Multiple Originals............................................45
SECTION 7.09. Table of Contents.............................................45
SECTION 7.10. Severability..................................................45
EXHIBIT A Form of Face of Warrant Certificate
<PAGE>
WARRANT AGREEMENT dated as of May 29, 1998 (this "Agreement"),
between MEDIQ INCORPORATED, a Delaware corporation (the "Company"),
and UNITED STATES TRUST COMPANY OF NEW YORK, a New York banking
corporation, as Warrant Agent (the "Warrant Agent").
The Company desires to issue the warrants (the "Warrants") described
herein. The Warrants will initially entitle the holders thereof (the "Holders")
to purchase, in the aggregate, 91,209 shares of Common Stock, par value $.01 per
share, of the Company ("Common Stock") in connection with an offering (the
"Offering") by the Company of 140,885 units (the "Units"). Each Unit consists of
(i) one 13% Senior Discount Debenture Due 2009 with a principal amount at
maturity of $1,000 (a "Debenture") and (ii) one warrant (each, a "Warrant") to
purchase .6474 shares of Common Stock.
The Warrants will not trade separately from the Debentures until the
earliest date (the "Separation Date") to occur of: (i) the commencement of a
registered exchange offer for the Debentures, (ii) the effective date of a shelf
registration statement with respect to the Debentures and (iii) such earlier
date after July 28, 1998, as may be determined by the Initial Purchasers (as
defined herein).
The Company further desires the Warrant Agent to act on behalf of the
Company in connection with the issuance of the Warrants as provided herein and
the Warrant Agent is willing to so act.
Each party agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders of Warrants:
ARTICLE I
Definitions
SECTION 1.01. Definitions.
"Affiliate" of any Person means (i) any other Person which, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person, or (ii) any other Person who is a director or executive officer
(A) of such Person, (B) of any subsidiary of such Person or (C) of any Person
described in clause (i) above.
<PAGE>
For purposes hereof, (a) "control" of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of
such Person whether by contract or otherwise and (b) beneficial ownership of 5%
or more of the voting common equity (on a fully diluted basis) or warrants to
purchase such equity (whether or not currently exercisable) of a Person shall be
deemed to be in control of such Person; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board" means the Board of Directors of the Company or any committee
thereof duly authorized to act on behalf of such Board of Directors.
"Business Day" means each day that is not a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
"Cashless Exercise Ratio" means a fraction, the numerator of which is the
excess of the Current Market Value per share of Common Stock on the Exercise
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Certificated Warrants" means certificated Warrants in fully registered
definitive form.
"Combination" means an event in which the Company consolidates with, merges
with or into, or sells all or substantially all of its assets to, another
Person.
"Current Market Value" per share of Common Stock or any other security at
any date means (i) if the security is not registered under the Exchange Act, (a)
the value of the security, determined in good faith by the Board and certified
in a board resolution, based on the most recently completed arm's-length
transaction between the Company and a Person other than an Affiliate of the
Company and the closing of which occurs on such date or shall have occurred
within the six-month period preceding such date, or (b) if no such transaction
shall have occurred on such date or within such six-month period, the value of
the security as determined by an independent financial expert or (ii) if the
2
<PAGE>
security is registered under the Exchange Act, the average of the daily closing
bid prices (or the equivalent in an over-the-counter market) for each Business
Day during the period commencing 15 Business Days before such date and ending on
the date one day prior to such date, or if the security has been registered
under the Exchange Act for less than 15 consecutive Business Days before such
date, the average of the daily closing bid prices (or such equivalent) for all
of the Business Days before such date for which daily closing bid prices are
available; provided, however, that if the closing bid price is not determinable
for at least ten Business Days in such period, the "Current Market Value" of the
security shall be determined as if the security were not registered under the
Exchange Act.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as amended.
"Exercise Date" means, for a given Warrant, the day on which such Warrant
is exercised pursuant to Section 3.04.
"Extraordinary Cash Dividend" means that portion, if any, of the aggregate
amount of all dividends paid by the Company on the Common Stock in any fiscal
year that exceeds $10 million.
"Indenture" means the Indenture dated as of May 15, 1998, among the
Company, the Subsidiary Guarantors named therein and the Trustee, with respect
to the Debentures, as it may be amended or supplemented from time to time.
"Initial Purchasers" means Credit Suisse First Boston Corporation,
NationsBanc Montgomery Securities LLC and Banque Nationale de Paris.
"Issue Date" means the date on which the Warrants are initially issued.
"MEDIQ/PRN" means MEDIQ/PRN Life Support Services, Inc., a Delaware
corporation and wholly owned subsidiary of the Company.
"Merger" means the merger of MQ Acquisition Corporation with and into the
Company pursuant to the Agreement and Plan of Merger dated as of January 14,
1998 (as amended as of April 27, 1998).
3
<PAGE>
"Offering Circular" means the Confidential Offering Circular dated May 21,
1998, of the Company and MEDIQ/PRN.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Warrant Agent. Such counsel may be an employee of
or counsel to the Company or the Warrant Agent.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the payment of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over shares of Capital Stock of any other class of such Person.
"Purchase Agreement" means the Purchase Agreement dated May 21, 1998 among
the Company, MEDIQ/PRN, the Subsidiary Guarantors named therein and the Initial
Purchasers.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Warrants and the Warrant Shares.
4
<PAGE>
"Securities Act" means the U.S. Securities Act of 1933, as amended.
"Transfer Restricted Securities" means the Warrants and the Common Stock
which may be issued to Holders upon exercise of the Warrants, whether or not
such exercise has been effected. Each such security shall cease to be a Transfer
Restricted Security when (i) it has been disposed of pursuant to a registration
statement of the Company filed with the SEC and declared effective by the SEC
that covers the disposition of such Transfer Restricted Security, (ii) it has
been distributed pursuant to Rule 144 promulgated under the Securities Act (or
any similar provisions under the Securities Act then in effect) or (iii) it may
be resold without registration under the Securities Act, whether pursuant to
Rule 144(k) under the Securities Act or otherwise.
"Trustee" means United States Trust Company of New York, or any successor
trustee under the Indenture.
"Warrant Certificates" mean the registered certificates (including the
Global Warrants) issued by the Company under this Agreement representing the
Warrants.
"Warrant Custodian" means the custodian with respect to a Global Warrant
(as appointed by the Depositary) or any successor person thereto and shall
initially be the Warrant Agent.
"Warrant Shares" mean the shares of Common Stock (and any other securities)
for which the Warrants are exercisable or which have been issued upon exercise
of Warrants.
SECTION 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Agreement"............................................ Recitals
"Agent Members"........................................ 2.01(b)
"Cashless Exercise".................................... 3.04
"Certificate Register"................................. 2.03
"Common Shelf Registration Statement".................. 5.01
"Common Stock"......................................... Recitals
"Company............................................... Recitals
"Exercise Price"....................................... 3.01
"Expiration Date"...................................... 3.02(b)
"Global Warrant"....................................... 2.01(a)
5
<PAGE>
"Holders".............................................. Recitals
"Indemnified Parties".................................. 5.05(a)
"Offering"............................................. Recitals
"Registration Statement"............................... 5.01
"Separability Legend".................................. 2.04(e)
"Separation Date"...................................... Recitals
"Stock Transfer Agent"................................. 3.05
"Successor Company".................................... 4.05(a)
"Units"................................................ Recitals
"Warrant".............................................. Recitals
"Warrant Agent"........................................ Recitals
"Warrant Shelf Registration Statement"................. 5.01
SECTION 1.03. Rules of Construction. Unless the text otherwise requires:
(i) a defined term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles as in
effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including, without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
Warrant Certificates
SECTION 2.01. Form an Dating. The Warrants shall be offered and sold by the
Company pursuant to the Purchase Agreement. Each Warrant shall initially be
issued as part of a Unit consisting of one Debenture and one Warrant. Prior to
the Separation Date, the Warrants may not be transferred or exchanged separately
from, but may be transferred or exchanged only together with, the Debentures
attached to such Warrants. Prior to the Separation Date, the transfer agent for
the Debentures shall act as transfer agent ("Debenture Transfer Agent") for both
the Warrants and the Debentures. Any request for transfer of a Warrant prior to
the Separation Date made to the Debenture Transfer Agent shall be accompanied by
the Debenture attached thereto and
6
<PAGE>
the Debenture Transfer Agent will not execute any such transfer without such
Debenture attached thereto. Such Debenture will be duly endorsed and accompanied
by a written instrument of transfer in form satisfactory to the Company, duly
executed by the Holder thereof or the Holder's attorneys duly authorized in
writing. In the event of the commencement of a registered exchange offer for the
Debentures or the effectiveness of a shelf registration statement with respect
to the Debentures, the Company shall provide notice to the Debenture Transfer
Agent and the Warrant Agent of the Separation Date not less than two Business
Days prior to such date and the Company will cause the Debenture Transfer Agent
to notify the Depositary of such date. In the event of a determination by the
Initial Purchasers to separate the Warrants and the Debentures, the Company
shall promptly, but in no event later than the next following Business Day after
receiving notice of such determination, provide notice to the Debenture Transfer
Agent and the Warrant Agent of the Separation Date and cause the Debenture
Transfer Agent to notify the Depositary of such date. In acting as the transfer
agent for the Warrants prior to the Separation Date, the Debenture Transfer
Agent shall be entitled to all the rights, privileges and immunities to which
the Warrant Agent is entitled in performing such role pursuant to the terms of
this Agreement.
(a) Global Warrants. Warrants offered and sold to a QIB in reliance on Rule
144A, as provided in the Purchase Agreement, shall be issued initially in the
form of one or more permanent global Warrants in definitive, fully registered
form with the global securities legend and restricted securities legend set
forth in Exhibit A hereto (each, a "Global Warrant"), which shall be deposited
on behalf of the Initial Purchasers with, subject to the first paragraph of this
Section 2.01, the Warrant Agent, as custodian for the Depositary (or with such
other custodian as the Depositary may direct), and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
countersigned by the Warrant Agent as hereinafter provided. The number of
Warrants represented by the Global Warrant may from time to time be increased or
decreased by adjustments made on the records of the Warrant Agent and the
Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. (i) This Section 2.01(b) shall apply only to a
Global Warrant deposited with or on behalf of the Depositary.
7
<PAGE>
The Company shall execute and the Warrant Agent shall, in accordance with
Section 2.02, countersign and deliver initially one or more Global Warrants that
(a) shall be registered in the name of the Depositary for such Global Warrant or
Global Warrants or the nominee of the Depositary and (b) shall be delivered by
the Warrant Agent to the Depositary or pursuant to the Depositary's instructions
or held by the Warrant Agent as custodian for the Depositary.
(ii) Members of, or participants in, the Depositary ("Agent Members") shall
have no rights under this Agreement with respect to any Global Warrant held on
their behalf by the Depositary or by the Warrant Agent as the custodian of the
Depositary or under such Global Warrant, and the Depositary may be treated by
the Company, the Warrant Agent and any agent of the Company or the Warrant Agent
as the absolute owner of such Global Warrant for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Warrant Agent or any agent of the Company or the Warrant Agent from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Warrant.
(c) Certificated Securities. Except as provided in this Section 2.01 or
Section 2.03 or 2.04, owners of beneficial interests in Global Warrants will not
be entitled to receive physical delivery of certificated Warrants. Warrants
offered and sold in reliance on Regulation S under the Securities Act
("Regulation S"), as provided in the Purchase Agreement, will be issued
initially in the form of individual certificates in definitive, fully registered
form and with the restricted securities legend set forth in Exhibit A hereto
(each, a "Definitive Warrant"); provided, however, that upon transfer of any
such Definitive Warrant to a QIB in accordance with the provisions of this
Agreement, such Definitive Warrant will, unless the Global Warrant has
previously been exchanged, be exchanged for an interest in a Global Warrant
pursuant to the provisions of Section 2.04.
SECTION 2.02. Execution and Countersignature. Two Officers shall sign the
Warrant Certificates for the Company by manual or facsimile signature.
If an Officer whose signature is on a Warrant Certificate no longer holds
that office at the time the Warrant Agent countersigns the Warrant Certificate,
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the Warrants evidenced by such Warrant Certificate shall be valid nevertheless.
The Warrant Agent shall initially countersign and deliver Warrant
Certificates entitling the Holders thereof to purchase in the aggregate not more
than 91,209 Warrant Shares upon a written order of the Company signed by two
Officers of the Company.
The Warrant Agent may appoint an agent reasonably acceptable to the Company
to countersign the Warrant Certificates. Unless limited by the terms of such
appointment, such agent may countersign Warrant Certificates whenever the
Warrant Agent may do so. Each reference in this Agreement to countersignature by
the Warrant Agent includes countersignature by such agent. Such agent will have
the same rights as the Warrant Agent for service of notices and demands.
At any time and from time to time after the execution of this Agreement,
the Warrant Agent or an agent reasonably acceptable to the Company shall upon
receipt of a written order of the Company signed by two Officers of the Company
manually countersign for original issue a Warrant Certificate evidencing the
number of Warrants specified in such order; provided that the Warrant Agent
shall be entitled to receive an Officers' Certificate and an Opinion of Counsel
of the Company that it may reasonably request in connection with such
countersignature of Warrants. Such order shall specify the number of Warrants to
be evidenced on the Warrant Certificate to be countersigned, the date on which
such Warrant Certificate is to be countersigned and the number of Warrants then
authorized.
The Warrants evidenced by a Warrant Certificate shall not be valid until an
authorized signatory of the Warrant Agent or its agent as provided above
manually countersigns the Warrant Certificate. The signature shall be conclusive
evidence that the Warrant Certificate has been countersigned under this
Agreement.
SECTION 2.03. Certificate Register. The Warrant Agent shall keep a register
("Certificate Register") of the Warrant Certificates and of their transfer and
exchange. The Certificate Register shall show the names and addresses of the
respective Holders and the date and number of Warrants evidenced on the face of
each of the Warrant Certificates. The Company and the Warrant Agent may deem and
treat the Person in whose name a Warrant Certificate is registered as the
absolute owner of such Warrant Certificate
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for all purposes whatsoever and neither the Company nor the Warrant Agent shall
be affected by notice to the contrary.
SECTION 2.04. Transfer and Exchange. (a) Transfer and Exchange of
Definitive Warrants. When Definitive Warrants are presented to the Warrant Agent
with a request:
(x) to register the transfer of such Definitive Warrants; or
(y) to exchange such Definitive Warrants for an equal number of
Definitive Warrants of other authorized denominations;
the Warrant Agent shall register the transfer or make the exchange as requested
if its reasonable requirements for such transaction are met; provided, however,
that the Definitive Warrants surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Warrant
Agent, duly executed by the Holder thereof or his attorney duly authorized
in writing; and
(ii) if being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to Section
2.04(b) or pursuant to clause (A), (B) or (C) below, shall be accompanied
by the following additional information and documents, as applicable:
(A) if such Definitive Warrants are being delivered to the
Warrant Agent by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect (in
the form set forth on the reverse of the Warrant); or
(B) if such Definitive Warrants are being transferred to the
Company, a certification to that effect (in the form set forth on the
reverse of the Warrant); or
(C) if such Definitive Warrants are being transferred (w)
pursuant to an exemption from registration in accordance with Rule
144A, Regulation S or Rule 144 under the Securities Act; or (x) in
reliance on another exemption from the registration requirements of
the Securities Act:
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(1) a certification to that effect (in the form set forth on
the reverse of the Warrant) and (2) if the Company or Warrant
Agent so requests, an opinion of counsel or other evidence
reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in Section
2.04(e)(i).
(b) Restrictions on Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. A Definitive Warrant may not be exchanged for a
beneficial interest in a Global Warrant except upon satisfaction of the
requirements set forth below. Upon receipt by the Warrant Agent of a Definitive
Warrant, duly endorsed or accompanied by appropriate instruments of transfer, in
form satisfactory to the Warrant Agent, together with:
(i) certification, in the form set forth on the reverse of the
Warrant, that such Definitive Warrant is being transferred to a QIB in
accordance with Rule 144A; and
(ii) written instructions directing the Warrant Agent to make an
adjustment on its books and records with respect to such Global Warrant to
reflect an increase in the aggregate number of the Warrants represented by
the Global Warrant, such instructions to contain information regarding the
Depositary account to be credited with such increase;
then the Warrant Agent shall cancel such Definitive Warrant and cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Warrant Agent, the aggregate number of Warrants represented
by the Global Warrant to be increased by the aggregate number of Definitive
Warrants to be exchanged and shall credit or cause to be credited to the account
of the Person specified in such instructions a beneficial interest in the Global
Warrant equal to the number of Definitive Warrants so canceled. If no Global
Warrants are then outstanding, the Company shall execute and the Warrant Agent
shall countersign and deliver, upon written order of the Company in the form of
an Officers' Certificate, a new Global Warrant in the appropriate number.
(c) Transfer and Exchange of Global Warrants. (i) The transfer and exchange
of Global Warrants or beneficial interests therein shall be effected through the
Depositary, in accordance with this Agreement (including applicable restrictions
on transfer set forth herein) and the procedures of the Depositary therefor. A
transferor of
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a beneficial interest in a Global Warrant shall deliver to the Warrant Agent a
written order given in accordance with the Depositary's procedures containing
information regarding the participant account of the Depositary to be credited
with a beneficial interest in the Global Warrant. The Warrant Agent shall, in
accordance with such instructions instruct the Depositary to credit to the
account of the Person specified in such instructions a beneficial interest in
the Global Warrant and to debit the account of the Person making the transfer
the beneficial interest in the Global Warrant being transferred.
(ii) Notwithstanding any other provisions of this Agreement (other than the
provisions set forth in Section 2.05), a Global Warrant may not be transferred
as a whole except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a nominee
of such successor Depositary.
(iii) In the event that a Global Warrant is exchanged for Warrants in
definitive registered form pursuant to Section 2.05 or Section 2.08, prior to
the effectiveness of a Shelf Registration Statement with respect to such
Warrants, such Warrants may be exchanged only in accordance with such procedures
as are substantially consistent with the provisions of this Section 2.04
(including the certification requirements set forth on the reverse of the
Warrants intended to ensure that such transfers comply with Rule 144A or
Regulation S, as the case may be) and such other procedures as may from time to
time be adopted by the Company.
(d) Transfer of a Beneficial Interest in a Global Warrant for a Definitive
Warrant. (i) Upon the transfer of a beneficial interest in a Global Warrant
pursuant to Regulation S, subject to Section 2.04(e)(iii), the interest being
transferred in the Global Warrant may not continue to be held in book-entry form
through the Depositary, will be exchanged for a Definitive Warrant only and will
require the delivery by the transferee of a transfer certificate substantially
in the form of the certifications set forth on the reverse of the Warrants.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 2.04(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its participants or indirect participants or otherwise, shall
instruct the Warrant Agent. The Warrant
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Agent shall deliver such Warrants to the persons in whose names such Warrants
are so registered in accordance with the instructions of the Depositary.
(e) Legend. (i) Except as permitted by the following paragraphs (ii) and
(iii), and to the extent permitted by applicable law, each Warrant certificate
evidencing the Global Warrants and Definitive Warrants (and all Warrants and
Warrant Shares issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
"THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. HEDGING TRANSACTIONS INVOLVING THE UNITS OR THE WARRANTS
MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
(I) INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (II) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (III) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (IV) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE
RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE WARRANT EVIDENCED BY THIS
CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT AND THE
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WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS
REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE."
Each Definitive Warrant will also bear the following legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH WARRANT AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
Each Warrant Certificate issued prior to the Separation Date will also bear
the following legend (the "Separability Legend"):
"THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART
OF AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13% SENIOR DISCOUNT
DEBENTURE DUE 2009 OF MEDIQ INCORPORATED WITH A PRINCIPAL AMOUNT AT
MATURITY OF $1,000 (A "DEBENTURE") AND ONE WARRANT. THE DEBENTURES AND
WARRANTS WILL NOT TRADE SEPARATELY UNTIL THE EARLIEST OF (I) THE
COMMENCEMENT OF A REGISTERED EXCHANGE OFFER FOR THE DEBENTURES, (II) THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT WITH RESPECT TO THE
DEBENTURES AND (III) SUCH EARLIER DATE AFTER JULY 28, 1998, AS THE INITIAL
PURCHASERS MAY DETERMINE."
(ii) Upon any sale or transfer of a Transfer Restricted Security (including
any Transfer Restricted Security represented by a Global Warrant) pursuant to
Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Warrant, the Warrant Agent shall permit the Holder thereof to
exchange such Transfer Restricted Security for a certificated Warrant that
does not bear the legends set forth above (other than the Separability
Legend) and rescind any restriction on the transfer of such Transfer
Restricted Security; and
(B) in the case of any Transfer Restricted Security that is
represented by a Global Warrant, the Warrant Agent shall permit the Holder
thereof to exchange such Transfer Restricted Security for a certificated
Warrant that does not bear the legends set
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forth above (other than the Separability Legend) and rescind any
restriction on the transfer of such Transfer Restricted Security, if
the Holder certifies in writing to the Warrant Agent that its request
for such exchange was made in reliance on Rule 144 (such certification
to be in the form set forth on the reverse of the Warrant).
(iii) After a transfer of any Warrants during the period of the
effectiveness of a Shelf Registration Statement with respect to such Warrants,
all requirements pertaining to legends on such Warrant (other than the
Separability Legend) will cease to apply, the requirements requiring any such
Warrant issued to certain Holders to be issued in global form will cease to
apply, and a certificated Warrant without legends (other than the Separability
Legend) will be available to the transferee of the Holder of such Warrants upon
exchange of such transferring Holder's certificated Warrant or directions to
transfer such Holder's interest in the Global Warrant, as applicable.
(iv) On or after the Separation Date, the Holder of a Warrant Certificate
containing a Separability Legend may surrender such Warrant Certificate
accompanied by a written application to the Warrant Agent, duly executed by the
Holder thereof, for a new Warrant Certificate or certificates not containing the
Separability Legend.
(f) Cancelation or Adjustment of Global Warrant. At such time as all
beneficial interests in a Global Warrant have been exchanged for certificated
Warrants, redeemed, repurchased or canceled, such Global Warrant shall be
returned to the Depositary for cancelation or retained and canceled by the
Warrant Agent. At any time prior to such cancelation, if any beneficial interest
in a Global Warrant is exchanged for certificated Warrants, redeemed, repur
chased or canceled, the number of Warrants represented by such Global Warrant
shall be reduced and an adjustment shall be made on the books and records of the
Warrant Agent (if it is then the Warrant Custodian for such Global Warrant) with
respect to such Global Warrant, by the Warrant Agent, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Warrants. (i) To
permit registrations of transfers and exchanges, the Company shall execute and
the Warrant Agent shall countersign certificated Warrants, Definitive Warrants
and Global Warrants as required pursuant to the provisions of Section 2.02 and
this Section 2.04.
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(ii) No service charge shall be made to a Holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax, assessments, or similar governmental charge payable in
connection therewith.
(iii) Prior to the due presentation for registration of transfer of any
Warrant, the Company and the Warrant Agent may deem and treat the Person in
whose name a Warrant is registered as the absolute owner of such Warrant, and
neither the Company nor the Warrant Agent shall be affected by notice to the
contrary.
(iv) All Warrants issued upon any transfer or exchange pursuant to the
terms of this Agreement shall be the valid obligations of the Company, entitled
to the same benefits under this Agreement as the Warrants surrendered upon such
transfer or exchange.
(h) No Obligation of the Warrant Agent. (i) The Warrant Agent shall have no
responsibility or obligation to any beneficial owner of a Global Warrant, a
member of, or a participant in the Depositary or other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest in the
Warrants or with respect to the delivery to any participant, member, beneficial
owner or other Person (other than the Depositary) of any notice or the payment
of any amount, under or with respect to such Warrants. All notices and
communications to be given to the Holders and all payments to be made to Holders
under the Warrants shall be given or made only to or upon the order of the
registered Holders (which shall be the Depositary or its nominee in the case of
a Global Warrant). The rights of beneficial owners in any Global Warrant shall
be exercised only through the Depositary subject to the applicable rules and
procedures of the Depositary. The Warrant Agent may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Warrant Agent shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer imposed
under this Agreement or under applicable law with respect to any transfer of any
interest in any Warrant (including any transfers between or among the Depositary
participants, members or beneficial owners in any Global Warrant) other than to
require delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when
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expressly required by, the terms of this Agreement, and to examine the same to
determine substantial compliance as to form with the express requirements
hereof.
(i) No Registration of Transfer. The Company shall not, and shall cause the
Warrant Agent not to, register any transfer of Warrants or Warrant Shares not
made in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act or pursuant to an available exemption from
registration.
SECTION 2.05. Certificated Warrants. (a) A Global Warrant deposited with
the Depositary or with the Warrant Agent as custodian for the Depositary
pursuant to Section 2.01 shall be transferred to the beneficial owners thereof
in the form of certificated Warrants in a number equal to the number of Warrants
represented by such Global Warrant, in exchange for such Global Warrant, only if
such transfer complies with Section 2.04 and (i) the Depositary notifies the
Company that it is unwilling or unable to continue as depositary for such Global
Warrant or if at any time the Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed by
the Company within 90 days of such notice or (ii) the Company, in its sole
discretion, notifies the Warrant Agent in writing that it elects to cause the
issuance of Certificated Warrants under this Agreement.
(b) Any Global Warrant that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depositary to the
Warrant Agent, to be so transferred, in whole or from time to time in part,
without charge, and the Warrant Agent shall countersign and deliver, upon such
transfer of each portion of such Global Warrant, an equal number of Certificated
Warrants. Any certificated Warrant delivered in exchange for an interest in the
Global Warrant shall, except as otherwise provided by Section 2.04(g), bear the
restricted securities legend set forth in Section 2.04(e) hereto.
(c) Subject to the provisions of Section 2.05(b), the registered Holder of
a Global Warrant may grant proxies and otherwise authorize any Person, including
Agent Members and Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this Agreement or the
Warrants.
(d) In the event of the occurrence of either of the events specified in
Section 2.05(a), the Company will promptly make available to the Warrant Agent a
reasonable
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supply of Certificated Warrants in definitive, fully registered form Warrants.
SECTION 2.06. Replacement Certificates. If a mutilated Warrant Certificate
is surrendered to the Warrant Agent or if the Holder of a Warrant Certificate
claims that the Warrant Certificate has been lost, destroyed or wrongfully
taken, the Company shall issue and the Warrant Agent shall countersign a
replacement Warrant Certificate if the reasonable requirements of the Warrant
Agent and of Section 8-405 of the Uniform Commercial Code as in effect in the
State of New York are met. If required by the Warrant Agent or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Warrant Agent to protect the Company and the Warrant Agent from any loss
which either of them may suffer if a Warrant Certificate is replaced. The
Company and the Warrant Agent may charge the Holder for their expenses in
replacing a Warrant Certificate. Every replacement Warrant Certificate evidences
an additional obligation of the Company.
SECTION 2.07. Outstanding Warrants. Warrants outstanding at any time are
all Warrants evidenced on all Warrant Certificates authenticated by the Warrant
Agent except for those canceled by it and those delivered to it for cancelation.
A Warrant does not cease to be outstanding because an Affiliate of the Company
holds the Warrant. A Warrant ceases to be outstanding if the Company holds the
Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.06, the Warrants
evidenced thereby cease to be outstanding unless the Warrant Agent and the
Company receive proof satisfactory to them that the replaced Warrant Certificate
is held by a bona fide purchaser.
SECTION 2.08. Temporary Certificates. Until definitive Warrant Certificates
are ready for delivery, the Company may prepare and the Warrant Agent shall
countersign temporary Warrant Certificates. Temporary Warrant Certificates shall
be substantially in the form of definitive Warrant Certificates but may have
variations that the Company considers appropriate for temporary Warrant
Certificates. Without unreasonable delay following the occurrence of either of
the events specified in Section 2.05(a), the Company shall prepare and the
Warrant Agent shall countersign definitive Warrant Certificates and deliver them
in exchange for temporary Warrant Certificates.
SECTION 2.09. Cancelation. (a) In the event the Company shall purchase or
otherwise acquire Certificated
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Warrants, the same shall thereupon be delivered to the Warrant Agent for
cancelation.
(b) The Warrant Agent and no one else shall cancel and destroy all Warrant
Certificates surrendered for transfer, exchange, replacement, exercise or
cancelation and deliver a certificate of such destruction to the Company unless
the Company directs the Warrant Agent to deliver canceled Warrant Certificates
to the Company. The Company may not issue new Warrant Certificates to replace
Warrant Certificates to the extent they evidence Warrants which have been
exercised or Warrants which the Company has purchased or otherwise acquired.
SECTION 2.10. CUSIP Numbers. The Company in issuing the Warrants may use
"CUSIP" numbers (if then generally in use) and, if so, the Warrant Agent shall
use "CUSIP" numbers in notices as a convenience to Holders; provided, however,
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Warrant Certificates or as
contained in any notice and that reliance may be placed only on the other
identification numbers printed on the Warrant Certificates.
ARTICLE III
Exercise Terms
SECTION 3.01. Exercise. Each Warrant shall initially entitle the Holder
thereof, subject to adjustment pursuant to the terms of this Agreement, to
purchase .6474 shares of Common Stock. The exercise price (the "Exercise Price")
of each Warrant is $.01 per share.
SECTION 3.02. Exercise Periods. (a) Subject to the terms and conditions set
forth herein, the Warrants shall be exercisable at any time and from time to
time on any Business Day after the first anniversary of the Issue Date;
provided, however, that holders of Warrants will be able to exercise their
Warrants only if (i) the Common Shelf Registration Statement relating to the
Warrant Shares is effective or (ii) the exercise of such Warrants is exempt from
the registration requirements of the Securities Act, and the Warrant Shares are
qualified for sale or exempt from qualification under the applicable securities
laws of the states or other jurisdictions in which such holders reside.
(b) No Warrant shall be exercisable after June 1, 2009 (the "Expiration
Date").
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SECTION 3.03. Expiration. A Warrant shall terminate and become void as of
the earlier of (i) the close of business on the Expiration Date or (ii) the date
such Warrant is exercised. The Company shall give notice not less than 90, and
not more than 120, days prior to the Expiration Date to the Holders of all then
outstanding Warrants to the effect that the Warrants will terminate and become
void as of the close of business on the Expiration Date; provided, however, that
if the Company fails to give notice as provided in this Section 3.03, the
Warrants will nevertheless expire and become void on the Expiration Date.
SECTION 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Agent at the office of the Warrant Agent of the related
Warrant Certificate, together with the form of election attached thereto to
purchase Common Stock on the reverse thereof duly filled in and signed by the
Holder thereof and (ii) payment to the Warrant Agent, for the account of the
Company, of the Exercise Price for each Warrant Share or other security issuable
upon the exercise of such Warrants then exercised. Such payment shall be made
(i) in cash or by certified or official bank check payable to the order of the
Company or by wire transfer of funds to an account designated by the Company for
such purpose or (ii) without the payment of cash, by reducing the number of
shares of Common Stock obtainable upon the exercise of a Warrant and payment of
the Exercise Price in cash so as to yield a number of shares of Common Stock
upon the exercise of such Warrant equal to the product of (a) the number of
shares of Common Stock issuable as of the Exercise Date upon the exercise of
such Warrant (if payment of the Exercise Price were being made in cash) and (b)
the Cashless Exercise Ratio. An exercise of a Warrant in accordance with the
immediately preceding sentence is herein called a "Cashless Exercise". Upon
surrender of a Warrant Certificate representing more than one Warrant in
connection with the holder's option to elect a Cashless Exercise, the number of
shares of Common Stock deliverable upon a Cashless Exercise shall be equal to
the number of shares of Common Stock issuable upon the exercise of Warrants that
the holder specifies are to be exercised pursuant to a Cashless Exercise
multiplied by the Cashless Exercise Ratio. All provisions of this Agreement
shall be applicable with respect to a surrender of a Warrant Certificate
pursuant to a Cashless Exercise for less than the full number of Warrants
represented thereby. Subject to Section 3.02, the rights represented by the
Warrants shall be exercisable at the election of the Holders thereof either in
full at any time or from time to time in part and in the event that a Warrant
Certificate is surrendered for exercise of less than all the Warrants
represented by such Warrant
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Certificate at any time prior to the Expiration Date, a new Warrant Certificate
representing the remaining Warrants shall be issued. The Warrant Agent shall
countersign and deliver the required new Warrant Certificates, and the Company,
at the Warrant Agent's request, shall supply the Warrant Agent with Warrant
Certificates duly signed on behalf of the Company for such purpose.
SECTION 3.05. Issuance of Warrant Shares. Subject to Section 2.06, upon the
surrender of Warrant Certificates and payment of the per share Exercise Price,
as set forth in Section 3.04, the Company shall issue and cause the Warrant
Agent or, if appointed, a transfer agent for the Common Stock ("Stock Transfer
Agent") to countersign and deliver to or upon the written order of the Holder
and in such name or names as the Holder may designate, a certificate or
certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants or other securities or property to which it is
entitled, registered or otherwise, to the Person or Persons entitled to receive
the same (including any depositary institution so designated by a Holder),
together with cash as provided in Section 3.06 in respect of any fractional
Warrant Shares otherwise issuable upon such exercise. Such certificate or
certificates shall be deemed to have been issued and any Person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrant Certificates and
payment of the per share Exercise Price, as aforesaid; provided, however, that
if, at such date, the transfer books for the Warrant Shares shall be closed, the
certificates for the Warrant Shares in respect of which such Warrants are then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificates for such Warrant Shares; provided further, however, that such
transfer books, unless otherwise required by law, shall not be closed at any one
time for a period longer than 20 calendar days.
SECTION 3.06. Fractional Warrant Shares. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant Shares which may be
purchasable pursuant thereto. If any fraction of a Warrant Share would, except
for the provisions of this Section 3.06, be issuable upon the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
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equal to the Current Market Value per Warrant Share, as determined on the day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such fraction, computed to the nearest whole cent.
SECTION 3.07. Reservation of Warrant Shares. The Company shall at all times
keep reserved out of its authorized shares of Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of all outstanding Warrants.
The registrar for the Common Stock (the "Registrar") shall at all times until
the Expiration Date reserve such number of authorized shares as shall be
required for such purpose. The Company will keep a copy of this Agreement on
file with the Stock Transfer Agent. The Company will supply such Stock Transfer
Agent with duly executed stock certificates for such purpose and will itself
provide or otherwise make available any cash which may be payable as provided in
Section 3.06. The Company will furnish to such Stock Transfer Agent a copy of
all notices of adjustments (and certificates related thereto) transmitted to
each Holder.
Before taking any action which would cause an adjustment pursuant to
Article IV to reduce the Exercise Price below the then par value (if any) of the
Common Stock, the Company shall take any and all corporate action which may, in
the opinion of its counsel, be necessary in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock at the
Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free of
preemptive rights, free from all taxes and free from all liens, charges and
security interests with respect to the issue thereof.
SECTION 3.08. Compliance with Law. (a) Notwithstanding anything in this
Agreement to the contrary, in no event shall a Holder be entitled to exercise a
Warrant unless (i) a registration statement filed under the Securities Act in
respect of the issuance of the Warrant Shares is then effective or (ii) in the
opinion of counsel to the Company addressed to the Warrant Agent the exercise of
such Warrants is exempt from the registration requirements of the Securities Act
and such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the states or other jurisdictions in which
such Holders reside.
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(b) If any shares of Common Stock required to be reserved for purposes of
the exercise of Warrants require, under any other Federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange before such shares may be issued upon
exercise, the Company will cause such shares to be duly registered or approved
by such governmental authority or listed on the relevant national securities
exchange, as the case may be.
ARTICLE IV
Antidilution Provisions
SECTION 4.01. Changes in Common Stock. In the event that at any time and
from time to time the Company shall (i) pay a dividend or make a distribution on
the Common Stock in shares of Common Stock or other shares of Capital Stock,
(ii) subdivide its outstanding shares of Common Stock into a larger number of
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) increase or decrease the
number of shares of Common Stock outstanding by reclassification of its Common
Stock, then the number of shares of Common Stock issuable upon exercise of each
Warrant immediately after the happening of such event shall be adjusted so that,
after giving effect to such adjustment, the Holder of each Warrant shall be
entitled to receive the number of shares of Common Stock upon exercise of such
Warrant that such Holder would have owned or have been entitled to receive had
such Warrants been exercised immediately prior to the happening of the events
described above (or, in the case of a dividend or distribution of Common Stock,
immediately prior to the record date therefor). An adjustment made pursuant to
this Section 4.01 shall become effective immediately after the distribution
date, retroactive to the record date therefor in the case of a dividend or
distribution in shares of Common Stock or other shares of Capital Stock, and
shall become effective immediately after the effective date in the case of a
subdivision, combination or reclassification.
SECTION 4.02. Cash Dividends and Other Distributions. In the event that at
any time and from time to time the Company shall distribute to all holders of
Common Stock (i) any dividend or other distribution (including any dividend or
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of cash, evidences of its
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indebtedness, shares of its Capital Stock or any other properties or securities
or (ii) any options, warrants or other rights to subscribe for or purchase any
of the foregoing (other than, in the case of clause (i) and (ii) above, (A) any
dividend or distribution described in Section 4.01, (B) any rights, options,
warrants or securities described in Section 4.03 or Section 4.04 and (C) any
cash dividends or other cash distributions from current or retained earnings
other than Extraordinary Cash Dividends), then the number of shares of Common
Stock issuable upon the exercise of each Warrant immediately prior to such
record date for any such dividend or distribution shall be increased to a number
determined by multiplying the number of shares of Common Stock issuable upon the
exercise of such Warrant immediately prior to such record date for any such
dividend or distribution by a fraction, the numerator of which shall be the
Current Market Value per share of Common Stock on the record date for such
dividend or distribution, and the denominator of which shall be such Current
Market Value per share of Common Stock less the sum of (x) the amount of cash,
if any, distributed per share of Common Stock and (y) the then fair value (as
determined in good faith by the Board, whose determination shall be evidenced by
a board resolution filed with the Warrant Agent, a copy of which will be sent to
Holders upon request) of the portion, if any, of the distribution applicable to
one share of Common Stock consisting of evidences of indebtedness, shares of
stock, securities, other property, warrants, options or subscription or purchase
rights; and subject to Section 4.08, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately prior to such
record date by the above fraction. Such adjustments shall be made, and shall
only become effective, whenever any dividend or distribution is made; provided,
however, that the Company is not required to make an adjustment pursuant to this
Section 4.02 if at the time of such distribution the Company makes the same
distribution to Holders of Warrants as it makes to holders of Common Stock pro
rata based on the number of shares of Common Stock for which such Warrants are
exercisable (whether or not currently exercisable). No adjustment shall be made
pursuant to this Section 4.02 which shall have the effect of decreasing the
number of shares of Common Stock issuable upon exercise of each Warrant or
increasing the Exercise Price.
SECTION 4.03. Common Stock Issue. In the event that at any time or from
time to time the Company shall issue shares of Common Stock for a consideration
per share that is less than the Current Market Value per share of Common Stock
as of the issuance date of such shares, the
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number of shares of Common Stock issuable upon the exercise of each Warrant
immediately after such issuance date shall be determined by multiplying the
number of shares of Common Stock issuable upon exercise of each Warrant
immediately prior to such issuance date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding immediately preceding
the issuance of such shares plus the number of additional shares of Common Stock
to be issued in such transaction, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately preceding the date for
the issuance of such shares plus the total number of shares of Common Stock
which the aggregate consideration expected to be received by the Company upon
the issuance of such shares (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) would purchase at
the Current Market Value per share of Common Stock as of the date of such
issuance; and, subject to Section 4.08, in the event of any such adjustment, the
Exercise Price shall be adjusted to a number determined by dividing the Exercise
Price immediately prior to such date of issuance by the aforementioned fraction;
provided, however, that no adjustment to the number of Warrant Shares issuable
upon the exercise of the Warrants or to the Exercise Price shall be made as a
result of (i) the issuance of shares of Common Stock in bona fide public
offerings that are underwritten or in which a placement agent is retained by the
Company, (ii) the issuance of shares of Common Stock (including upon exercise of
options) (A) pursuant to the terms of and in order to give effect to the
Management Investment Agreement (as defined in the Offering Circular) and (B) in
the amounts and on the terms contemplated under the heading "Certain
Relationships and Related Transactions--Additional Purchases of Common Stock" in
the Offering Circular or (iii) the issuance of shares of Common Stock in
connection with acquisitions of products and businesses other than to Affiliates
of the Company. Such adjustment shall be made, and shall only become effective,
whenever such shares are issued. No adjustment shall be made pursuant to this
Section 4.03 which shall have the effect of decreasing the number of shares of
Common Stock issuable upon exercise of each Warrant or increasing the Exercise
Price.
SECTION 4.04. Issuance of Rights or Options. In the event that at any time
or from time to time the Company shall issue to all holders of Common Stock (i)
rights, options or warrants to acquire (provided, however, that no adjustment
shall be made under Section 4.03 or 4.04 upon the exercise of such rights,
options or warrants), or
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(ii) securities convertible or exchangeable into (provided, however, that no
adjustment shall be made under Section 4.03 or 4.04 upon the conversion or
exchange of such securities (other than issuances specified in (i) or (ii) which
are made as the result of anti-dilution adjustments in such securities)), Common
Stock entitling the holders thereof to subscribe for or purchase shares of
Common Stock at a price per share that is less than the Current Market Value per
share of Common Stock in effect immediately prior to such issuance other than in
connection with the adoption of a shareholder rights plan by the Company, the
number of shares of Common Stock issuable upon the exercise of each Warrant
immediately after such issuance shall be determined by multiplying the number of
shares of Common Stock issuable upon exercise of each Warrant immediately prior
to such issuance by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to the issuance of such
rights, options, warrants or securities plus the number of additional shares of
Common Stock offered for subscription or purchase or into which such securities
are convertible or exchangeable, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to the issuance
of such rights, options, warrants or securities plus the total number of shares
of Common Stock which the aggregate consideration expected to be received by
the Company upon the exercise, conversion or exchange of such rights, options,
warrants or securities (as determined in good faith by the Board, whose
determination shall be evidenced by a board resolution filed with the Warrant
Agent, a copy of which will be sent to Holders upon request) would purchase at
the Current Market Value per share of Common Stock as of the record date; and,
subject to Section 4.08, in the event of any such adjustment, the Exercise Price
shall be adjusted to a number determined by dividing the Exercise Price
immediately prior to such date of issuance by the aforementioned fraction;
provided, however, that no adjustment to the number of Warrant Shares issuable
upon exercise of the Warrants or to the Exercise Price shall be made as a result
of the issuance of options in the amounts and on the terms contemplated under
the heading "Certain Relationships and Related Transactions--Additional
Purchases of Common Stock" in the Offering Circular. Such adjustment shall be
made, and shall only become effective, whenever such rights, options, warrants
or securities are issued. No adjustment shall be made pursuant to this Section
4.04 which shall have the effect of decreasing the number of shares of Common
Stock issuable upon exercise of each Warrant or increasing the Exercise Price.
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SECTION 4.05. Combination; Liquidation. (a) Except as provided in Section
4.05(b), in the event of a Combination, each Holder shall have the right to
receive upon exercise of the Warrants the kind and amount of shares of Capital
Stock or other securities or property which such Holder would have been entitled
to receive upon completion of or as a result of such Combination had such
Warrant been exercised immediately prior to such event or to the relevant record
date for any such entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide that the surviving or acquiring Person
(the "Successor Company") in such Combination will enter into an agreement with
the Warrant Agent confirming the Holders' rights pursuant to this Section
4.05(a) and providing for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article IV. The
provisions of this Section 4.05(a) shall similarly apply to successive
Combinations involving any Successor Company.
(b) In the event of (i) a Combination where consideration to the holders of
Common Stock in exchange for their shares is payable solely in cash or (ii) the
dissolution, liquidation or winding-up of the Company, the Holders of the
Warrants shall be entitled to receive, upon surrender of their Warrant
Certificates, such cash distributions on an equal basis with the holders of
Common Stock or other securities issuable upon exercise of the Warrants, as if
the Warrants had been exercised immediately prior to such event, less the
Exercise Price.
In the event of any Combination described in this Section 4.05(b), the
surviving or acquiring Person and, in the event of any dissolution, liquidation
or winding-up of the Company, the Company, shall deposit promptly with the
Warrant Agent the funds, if any, necessary to pay the Holders of the Warrants
the amounts to which they are entitled as described above. After such funds and
the surrendered Warrant Certificates are received, the Warrant Agent shall make
payment to the Holders by delivering a check in such amount as is appropriate
(or, in the case of consideration other than cash, such other consideration as
is appropriate) to such Person or Persons as it may be directed in writing by
the Holders surrendering such Warrants.
(c) The Warrants are being issued by the Company as the surviving
corporation in the Merger, and the provisions of this Section 4.05 shall not
apply to the Merger.
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SECTION 4.06. Other Events. If any event occurs as to which the foregoing
provisions of this Article IV are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board, fairly and
adequately protect the purchase rights of the Warrants in accordance with the
essential intent and principles of such provisions, then such Board shall make
such adjustments in the application of such provisions, in accordance with such
essential intent and principles, as shall be reasonably necessary, in the good
faith opinion of such Board, to protect such purchase rights as aforesaid, but
in no event shall any such adjustment have the effect of increasing the Exercise
Price or decreasing the number of shares of Common Stock issuable upon exercise
of the Warrants.
SECTION 4.07. Superseding Adjustment. Upon the expiration of any rights,
options, warrants or conversion or exchange privileges which resulted in
adjustments pursuant to this Article IV, if any thereof shall not have been
exercised, the number of Warrant Shares issuable upon the exercise of each
Warrant shall be readjusted pursuant to the applicable section of Article IV as
if (i) the only shares of Common Stock issuable upon exercise of such rights,
options, warrants, conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) shares of Common Stock
actually issued, if any, were issuable for the consideration actually received
by the Company upon such exercise plus the aggregate consideration, if any,
actually received by the Company for the issuance, sale or grant of all such
rights, options, warrants or conversion or exchange privileges whether or not
exercised and the Exercise Price shall be readjusted inversely; provided,
however, that no such readjustment (except by reason of an intervening
adjustment under Section 4.01) shall have the effect of decreasing the number of
Warrant Shares issuable upon the exercise of each Warrant or increasing the
Exercise Price by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion or exchange privileges.
SECTION 4.08. Minimum Adjustment. The adjustments required by the
preceding sections of this Article IV shall be made whenever and as often as any
specified event requiring an adjustment shall occur, except that no adjustment
of the Exercise Price or the number of shares of Common Stock issuable upon
exercise of the Warrants that would otherwise be required shall be made unless
and until such adjustment either by itself or with other adjustments not
previously made increases or decreases by at least 1% the
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Exercise Price or the number of shares of Common Stock issuable upon exercise of
the Warrants immediately prior to the making of such adjustment. Any adjustment
representing a change of less than such minimum amount shall be carried forward
and made as soon as such adjustment, together with other adjustments required by
this Article IV and not previously made, would result in a minimum adjustment.
For the purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence. In computing
adjustments under this Article IV, fractional interests in Common Stock shall be
taken into account to the nearest one-hundredth of a share.
SECTION 4.09. Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrants is adjusted, as herein provided, the Company shall
deliver to the Warrant Agent a certificate of a firm of independent accountants
selected by the Board (who may be the regular accountants employed by the
Company) setting forth, in reasonable detail, the event requiring the adjustment
and the method by which such adjustment was calculated (including a description
of the basis on which (i) the Board determined the then fair value of any
evidences of indebtedness, other securities or property or warrants, options or
other subscription or purchase rights and (ii) the Current Market Value of the
Common Stock was determined, if either of such determinations were required),
and specifying the Exercise Price and the number of shares of Common Stock
issuable upon exercise of the Warrants after giving effect to such adjustment.
The Company shall promptly cause the Warrant Agent to mail a copy of such
certificate to each Holder in accordance with Section 7.05. The Warrant Agent
shall be entitled to rely on such certificate and shall be under no duty or
responsibility with respect to any such certificate, except to exhibit the same
from time to time, to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holder to determine whether any facts exist which
may require any adjustment of the Exercise Price or the number of shares of
Common Stock or other stock or property issuable on exercise of the Warrants, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making such adjustment or the validity or
value of any shares of Common Stock, evidences of indebtedness, warrants,
options, or other securities or property.
SECTION 4.10. Notice of Certain Transactions. In the event that the Company
shall propose to (a) pay any
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dividend payable in securities of any class to the holders of its Common Stock
or to make any other non-cash dividend or distribution to the holders of its
Common Stock, (b) offer the holders of its Common Stock rights to subscribe for
or to purchase any securities convertible into shares of Common Stock or shares
of stock of any class or any other securities, rights or options, (c) issue any
(i) shares of Common Stock, (ii) rights, options or warrants entitling the
holders thereof to subscribe for shares of Common Stock or (iii) securities
convertible into or exchangeable or exercisable for Common Stock (in the case of
(i), (ii) and (iii), if such issuance or adjustment would result in an
adjustment hereunder), (d) effect any capital reorganization, reclassification,
consolidation or merger, (e) effect the voluntary or involuntary dissolution,
liquidation or winding-up of the Company or (f) make a tender offer or exchange
offer with respect to the Common Stock, the Company shall within five days after
any such action or offer send to the Warrant Agent a notice and the Warrant
Agent shall within five days after receipt thereof send the Holders a notice (in
such form as shall be furnished to the Warrant Agent by the Company) of such
proposed action or offer. Such notice shall be mailed by the Warrant Agent to
the Holders at their addresses as they appear in the Certificate Register, which
shall specify the record date for the purposes of such dividend, distribution or
rights, or the date such issuance or event is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to be
fixed, and shall briefly indicate the effect, if any, of such action on the
Common Stock and on the number and kind of any other shares of stock and on
other property, if any, and the number of shares of Common Stock and other
property, if any, issuable upon exercise of each Warrant and the Exercise Price
after giving effect to any adjustment pursuant to Article IV which will be
required as a result of such action. Such notice shall be given as promptly as
possible and (x) in the case of any action covered by clause (a) or (b) above,
at least 10 days prior to the record date for determining holders of the Common
Stock for purposes of such action or (y) in the case of any other such action,
at least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Common Stock, whichever shall be
the earlier.
SECTION 4.11. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are
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stated in the Warrant Certificates initially issued pursuant to this Agreement.
The Company, however, may at any time in its sole discretion make any change in
the form of Warrant Certificate that it may deem appropriate to give effect to
such adjustments and that does not affect the substance of the Warrant
Certificate, and any Warrant Certificate thereafter issued or countersigned,
whether in exchange or substitution for an outstanding Warrant Certificate or
otherwise, may be in the form as so changed.
ARTICLE V
Registration Rights; Indemnification
SECTION 5.01. Effectiveness of Registration Statement. Subject to Section
5.02, the Company shall cause to be filed pursuant to Rule 415 (or any successor
provision) of the Securities Act not later than 45 days after the Issue Date, a
shelf registration statement relating to the offer and sale of the Warrants by
the Holders from time to time in accordance with the methods of distribution
elected by such holders and set forth in such registration statement (the
"Warrant Shelf Registration Statement"), and shall use its best efforts to cause
the Warrant Shelf Registration Statement to be declared effective under the
Securities Act on or before 150 days after the Issue Date and a shelf
registration statement covering the issuance of Warrant Shares to the Holders
upon exercise of the Warrants by the Holders thereof (the "Common Shelf
Registration Statement", and together with the Warrant Shelf Registration
Statement, the "Registration Statements") and shall use its best efforts to
cause the Common Shelf Registration Statement to be declared effective on or
before 365 days after the Issue Date. The Company shall use its best efforts to
cause (a) the Warrant Shelf Registration Statement to remain effective until the
earliest of (i) such time as all Warrants have been sold thereunder, (ii) two
years after its effective date and (iii) until all Warrants can be sold without
restriction under the Securities Act and (b) the Common Shelf Registration
Statement to remain effective until the earlier of (i) such time as all Warrants
have been exercised and (ii) the Expiration Date. In connection with any
Registration Statement, (i) the Company shall furnish to the Warrant Agent,
prior to the filing with the Commission, a copy of any Registration Statement,
and each amendment thereof and each amendment or supplement, if any, to the
prospectus included therein and shall use its reasonable best efforts to reflect
in each such document, when filed with the Commission, such comments as the
Warrant Agent may reasonably propose, (ii) the Company shall furnish
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to each Holder, without charge, at least one copy of any Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits thereto
(including those incorporated by reference), (iii) the Company shall, for so
long as any Registration Statement is effective, deliver to each Holder, without
charge, as many copies of the prospectus (including each preliminary prospectus)
included in such Registration Statement and any amendment or supplement thereto
as such Holder may reasonably request, and the Company consents to the proper
use of the prospectus therein and any amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the Warrants or
the Warrant Shares, as the case may be, covered by such prospectus and any
amendment or supplement thereto, (iv) the Company may require each Holder of
Warrants to be sold pursuant to the Warrant Shelf Registration Statement or to
be exercised in connection with the Common Shelf Registration Statement to
furnish to the Company such information regarding the Holder and the
distribution of such Warrants or Warrant Shares as the Company may from time to
time reasonably request for inclusion in such Registration Statement, (v) the
Company shall, if requested, promptly incorporate in a prospectus supplement or
post-effective amendment to such Registration Statement such information as a
majority in interest of the Holders reasonably agree should be included therein
and shall make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be incorporated
in such prospectus supplement or post-effective amendment, (vi) the Company
shall enter into such agreements (including underwriting agreements) as are
appropriate, customary and reasonably necessary in connection with any such
Registration Statement and (vii) the Company shall (A) make available all
material customary for reasonable due diligence examinations in connection with
such Registration Statements, (B) make such representations and warranties to
the Holders of Warrants and the underwriters, if any, as are customary and
reasonable in connection with such Registration Statements, (C) obtain such
opinions of counsel to the Company addressed to and reasonably satisfactory to
the Holders as are customary and reasonable in connection with such Registration
Statements and (D) obtain such "comfort" letters and updates thereof from the
independent certified public accountants of the Company addressed to the Holders
as are customary and reasonable in connection with such Registration Statements.
The Company will furnish the Warrant Agent with current prospectuses meeting the
requirements of the Securities Act in sufficient quantity to permit the Warrant
Agent to deliver, at the Company's
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expense, a prospectus to each holder of a Warrant upon the exercise thereof. The
Company shall promptly inform the Warrant Agent of any change in the status of
the effectiveness or availability of any Registration Statement.
SECTION 5.02. Suspension. During any consecutive 365-day period, the
Company shall be entitled to suspend the availability of each of the Warrant
Shelf Registration Statement and the Common Shelf Registration Statement for up
to two 45 consecutive-day periods (except for the 45 consecutive-day period
immediately prior to the Expiration Date) if the Company's Board determines in
the exercise of its reasonable judgment that there is a valid business purpose
for such suspension and provides notice that such determination was made to the
Holders of the Warrants; provided, however, that in no event shall the Company
be required to disclose the business purpose for such suspension if the Company
determines in good faith that such business purpose must remain confidential.
SECTION 5.03. Blue Sky. The Company shall use its best efforts to register
or qualify the Warrants and the Warrant Shares under all applicable securities
laws, blue sky laws or similar laws of all jurisdictions in the United States
and Canada in which any holder of Warrants may or may be deemed to purchase
Warrants or Warrant Shares upon the exercise of Warrants and shall use its best
efforts to maintain such registration or qualification for so long as it is
required to cause the Warrant Shelf Registration Statement (in the case of the
Warrants) and the Common Shelf Registration Statement (in the case of the
Warrant Shares) to remain effective under the Securities Act pursuant to Section
5.01; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 5.03 or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
SECTION 5.04. Accuracy of Disclosure. The Company represents and warrants
to each Holder and agrees for the benefit of each Holder that (i) each of the
Warrant Shelf Registration Statement and the Common Shelf Registration Statement
and any amendment thereto will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading and (ii) each of the
prospectus furnished to such Holder for delivery in connection with the sale of
Warrants and the prospectus delivered to such Holder upon the
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exercise of Warrants and the documents incorporated by reference therein will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company shall have no liability under
clauses (i) or (ii) of this Section 5.04 with respect to any such untrue
statement or omission made in any Registration Statement in reliance upon and in
conformity with information furnished to the Company by or on behalf of the
Holders specifically for inclusion therein.
SECTION 5.05. Indemnification. (a) In connection with any Registration
Statement, the Company agrees to indemnify and hold harmless each Holder of the
Securities, and each person, if any, who controls such Holder within the meaning
of the Securities Act or the Exchange Act (each Holder and such controlling
persons being referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement, or arise
out of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and shall reimburse, as incurred, the Indemnified Parties for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action in
respect thereof; provided, however, that (i) the Company shall not be liable in
any such case to the extent that such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in a Registration Statement or prospectus or
in any amendment or supplement thereto or in any preliminary prospectus relating
to a Registration Statement in reliance upon and in conformity with written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein and (ii) with
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respect to any untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus relating to a Registration
Statement, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder from whom the person asserting any such
losses, claims, damages or liabilities purchased the Securities concerned, to
the extent that a prospectus relating to such Securities was required to be
delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the final prospectus if the Company had previously furnished copies thereof
to such Holder; provided further, however, that this indemnity agreement will be
in addition to any liability which the Company may otherwise have to such
Indemnified Party. The Company shall also indemnify underwriters, selling
brokers, dealer-managers and similar securities industry professionals
participating in the distribution (in each case as described in the Registration
Statement), their officers and directors and each person who controls such
persons within the meaning of the Securities Act or the Exchange Act to the same
extent as provided above with respect to the indemnification of the Holders of
the Securities if requested by such Holders.
(b) In connection with any Registration Statement, each Holder of the
Securities, severally and not jointly, will indemnify and hold harmless the
Company and each person, if any, who controls the Company within the meaning of
the Securities Act or the Exchange Act (and the directors, officers, agents and
employees of the Company and any such controlling person) from and against any
losses, claims, damages or liabilities or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which the Company
or any such controlling person (or the directors, officers, agents and employees
of the Company and any such controlling person) may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Registration Statement, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of
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the circumstances under which they were made, not misleading, but in each case
only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Company for any legal or other expenses reasonably incurred by the
Company or any such controlling person (or the directors, officers, agents and
employees of the Company and any such controlling person) in connection with
investigating or defending any loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have to the Company or any of its controlling
persons.
(c) Promptly after receipt by an indemnified party under this Section 5.05
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5.05,
notify the indemnifying party of the commencement thereof; but the failure to so
notify the indemnifying party will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above (except to the
extent that it is prejudiced or harmed in any material respect by failure to
give such prompt notice). In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party (who shall not, except with the consent of the
indemnified party, act as both counsel to the indemnified and indemnifying
parties in such action if, in the reasonable opinion of both counsel to the
indemnified party and the indemnifying party, a conflict exists which makes such
joint representation not advisable), and after notice from the indemnifying
party to such indemnified party of its election to so assume the defense thereof
the indemnifying party will not be liable to such indemnified party under this
Section 5.05 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified
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party, not to be unreasonably withheld, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. No indemnifying party shall be liable for any amounts paid in
settlement of any action or claim without its written consent, which consent
shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 5.05 is unavailable
or insufficient to hold harmless an indemnified party under subsections (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in subsection (a) or (b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the Registration Statement, or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holder or such other indemnified person, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5.05(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the
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Warrants pursuant to the Warrant Shelf Registration Statement or the Warrant
Shares pursuant to the Common Shelf Registration Statement exceeds the amount of
damages which such Holders have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this paragraph
(d), each person, if any, who controls such indemnified party within the meaning
of the Securities Act or the Exchange Act shall have the same rights to
contribution as such indemnified party and each person, if any, who controls the
Company within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as the Company.
(e) The agreements contained in this Section 5.05 shall survive the sale of
the Securities pursuant to the Registration Statements and shall remain in full
force and effect, regardless of any termination or cancelation of this Agreement
or any investigation made by or on behalf of any indemnified party.
SECTION 5.06. Additional Acts. If the sale of Warrants or the issuance or
sale of any Common Stock or other securities issuable upon the exercise of the
Warrants requires registration or approval of any governmental authority (other
than the registration requirements under the Securities Act), or the taking of
any other action under the laws of the United States or any political
subdivision thereof before such securities may be validly offered or sold in
compliance with such laws, then the Company covenants that it will, in good
faith and as expeditiously as reasonably possible, use its reasonable best
efforts to secure and maintain such registration or approval or to take such
other action, as the case may be. The Company shall promptly notify the Warrant
Agent in writing when (i) the Company has obtained all such governmental
approvals and authorizations and (ii) such approvals and authorizations
thereafter cease to be in effect.
SECTION 5.07. Expenses. All expenses incident to the Company's performance
of or compliance with its obligations under this Article V will be borne by the
Company, including without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. registration and filing fees, (ii) all
reasonable fees and expenses incurred in connection with the compliance with
state securities or blue sky laws, (iii) all expenses of any Persons incurred by
or on behalf of the Company in preparing
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or assisting in preparing, printing and distributing the Warrant Shelf
Registration Statement, the Common Shelf Registration Statement or any other
registration statement, prospectus, any amendments or supplements thereto and
other documents relating to the performance of and compliance with this Article
V, (iv) the fees and disbursements of the Warrant Agent as agreed, (v) the fees
and disbursements of counsel for the Company and the Warrant Agent as agreed and
(vi) the fees and disbursements of the independent public accountants of the
Company, including the expenses of any special audits or comfort letters
required by or incident to such performance and compliance.
ARTICLE VI
Warrant Agent
SECTION 6.01. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the provisions
of this Agreement and the Warrant Agent hereby accepts such appointment.
SECTION 6.02. Rights and Duties of Warrant Agent. (a) Agent for the
Company. In acting under this Warrant Agreement and in connection with the
Warrant Certificates, the Warrant Agent is acting solely as agent of the Company
and does not assume any obligation or relationship or agency or trust for or
with any of the holders of Warrant Certificates or beneficial owners of
Warrants.
(b) Counsel. The Warrant Agent may consult with counsel satisfactory to it
(who may be counsel to the Company), and the advice of such counsel shall be
full and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.
(c) Documents. The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance upon any Warrant Certificate, notice, direction, consent, certificate,
affidavit, statement or other paper or document reasonably believed by it to be
genuine and to have been presented or signed by the proper parties.
(d) No Implied Obligations. The Warrant Agent shall be obligated to perform
only such duties as are specifically set forth herein and in the Warrant
Certificates, and no implied duties or obligations of the
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Warrant Agent shall be read into this Agreement or the Warrant Certificates
against the Warrant Agent. The Warrant Agent shall not be under any obligation
to take any action hereunder which may tend to involve it in any expense or
liability for which it does not receive indemnity if such indemnity is
reasonably requested. The Warrant Agent shall not be accountable or under any
duty or responsibility for the use by the Company of any of the Warrant
Certificates countersigned by the Warrant Agent and delivered by it to the
Holders or on behalf of the Holders pursuant to this Agreement or for the
application by the Company of the proceeds of the Warrants. The Warrant Agent
shall have no duty or responsibility in case of any default by the Company in
the performance of its covenants or agreements contained herein or in the
Warrant Certificates or in the case of the receipt of any written demand from a
Holder with respect to such default, including any duty or responsibility to
initiate or attempt to initiate any proceedings at law or otherwise.
(e) Not Responsible for Adjustments or Validity of Stock. The Warrant Agent
shall not at any time be under any duty or responsibility to any Holder to
determine whether any facts exist that may require an adjustment of the number
of shares of Common Stock issuable upon exercise of each Warrant or the Exercise
Price, or with respect to the nature or extent of any adjustment when made, or
with respect to the method employed, or herein or in any supplemental agreement
provided to be employed, in making the same. The Warrant Agent shall not be
accountable with respect to the validity or value of any shares of Common Stock
or of any securities or property which may at any time be issued or delivered
upon the exercise of any Warrant or upon any adjustment pursuant to Article IV,
and it makes no representation with respect thereto. The Warrant Agent shall not
be responsible for any failure of the Company to make any cash payment or to
issue, transfer or deliver any shares of Common Stock or stock certificates upon
the surrender of any Warrant Certificate for the purpose of exercise or upon any
adjustment pursuant to Article IV, or to comply with any of the covenants of the
Company contained in Article IV.
SECTION 6.03. Individual Rights of Warrant Agent. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell or
deal in any of the Warrants or other securities of the Company or its affiliates
or become pecuniarily interested in transactions in which the Company or its
affiliates may be interested, or contract with or lend money to the Company or
its affiliates or otherwise act as fully and freely as though it were not
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the Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
SECTION 6.04. Warrant Agent's Disclaimer. The Warrant Agent shall not be
responsible for and makes no representation as to the validity or adequacy of
this Agreement or the Warrant Certificates and it shall not be responsible for
any statement in this Agreement or the Warrant Certificates other than its
countersignature thereon.
SECTION 6.05. Compensation and Indemnity. The Company agrees to pay the
Warrant Agent from time to time reasonable compensation for its services as
agreed and to reimburse the Warrant Agent upon request for all reasonable
out-of-pocket expenses incurred by it, including the reasonable compensation and
expenses of the Warrant Agent's agents and counsel as agreed. The Company shall
indemnify the Warrant Agent against any loss, liability or expense (including
reasonable agents' and attorneys' fees and expenses) incurred by it without
negligence or bad faith on its part arising out of or in connection with the
acceptance or performance of its duties under this Agreement. The Warrant Agent
shall notify the Company promptly of any claim for which it may seek indemnity.
The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Warrant Agent through wilful misconduct, negligence or
bad faith. The Company's payment obligations pursuant to this Section 6.05 shall
survive the termination of this Agreement.
To secure the Company's payment obligations under this Agreement, the
Warrant Agent shall have a lien prior to the Holders on all money or property
held or collected by the Warrant Agent.
SECTION 6.06. Successor Warrant Agent. (a) The Company To Provide and
Maintain Warrant Agent. The Company agrees for the benefit of the Holders that
there shall at all times be a Warrant Agent hereunder until all the Warrants
have been exercised or are no longer exercisable.
(b) Resignation and Removal. The Warrant Agent may at any time resign by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; provided,
however, that such date shall not be less than 60 days after the date on which
such notice is given unless the Company otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an
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instrument in writing signed by or on behalf of the Company and specifying such
removal and the date when it shall become effective, which date shall not be
less than 60 days after such notice is given unless the Warrant Agent otherwise
agrees. Any removal under this Section 6.06 shall take effect upon the
appointment by the Company as hereinafter provided of a successor Warrant Agent
(which shall be a bank or trust company authorized under the laws of the
jurisdiction of its organization to exercise corporate trust powers) and the
acceptance of such appointment by such successor Warrant Agent.
(c) The Company To Appoint Successor. In the event that at any time the
Warrant Agent shall resign, or shall be removed, or shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable U.S. Federal or state bankruptcy,
insolvency or similar law or shall consent to the appointment of or taking
possession by a receiver, custodian, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Warrant Agent or its property or affairs, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered in
respect of the Warrant Agent in an involuntary case under the Federal bankruptcy
laws, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency or similar law, or a decree or order by a court having
jurisdiction in the premises shall have been entered for the appointment of a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or similar
official) of the Warrant Agent or of its property or affairs, or any public
officer shall take charge or control of the Warrant Agent or of its property or
affairs for the purpose of rehabilitation, conservation, winding up or
liquidation, a successor Warrant Agent, qualified as aforesaid, shall be
appointed by the Company by an instrument in writing, filed with the successor
Warrant Agent. Upon the appointment as aforesaid of a successor Warrant Agent
and acceptance by the successor Warrant Agent of such appointment, the Warrant
Agent shall cease to be Warrant Agent hereunder; provided, however, that in the
event of the resignation of the Warrant Agent under this subsection (c), such
resignation shall be effective on the earlier of (i) the date specified in the
Warrant Agent's notice of resignation and (ii) the appointment and acceptance of
a successor Warrant Agent hereunder.
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(d) Successor To Expressly Assume Duties. Any successor Warrant Agent
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and to the Company an instrument accepting such appointment hereunder, and
thereupon such successor Warrant Agent, without any further act, deed or
conveyance, shall become vested with all the rights and obligations of such
predecessor with like effect as if originally named as Warrant Agent hereunder,
and such predecessor, upon payment of its charges and disbursements then unpaid,
shall thereupon become obligated to transfer, deliver and pay over, and such
successor Warrant Agent shall be entitled to receive, all monies, securities and
other property on deposit with or held by such predecessor, as Warrant Agent
hereunder.
(e) Successor by Merger. Any corporation into which the Warrant Agent
hereunder may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Warrant Agent shall be a party, or any
corporation to which the Warrant Agent shall sell or otherwise transfer all or
substantially all of its assets and business; provided, however, that it shall
be qualified as aforesaid, shall be the successor Warrant Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VII
Miscellaneous
SECTION 7.01. SEC Reports. The Company shall file with the Warrant Agent
for the benefit of the Holders of Warrants, within 15 days after it files them
with the SEC, copies of its annual and quarterly reports and other information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC (to the extent the SEC will accept such filings) and provide the
Warrant Agent and Holders with such annual reports and such information,
documents and other reports as are specified in Sections 13 and 15(d) of the
Exchange Act and applicable to a U.S. corporation subject to such Sections, such
information, documents and other reports to be so filed and provided at the
times specified for the filing of such information, documents and reports under
such Sections.
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SECTION 7.02. Persons Benefitting. Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the Company, the Warrant
Agent and the Holders any right, remedy or claim under or by reason of this
Agreement or any part hereof.
SECTION 7.03. Rights of Holders. Holders of unexercised Warrants are not
entitled to (i) receive dividends or other distributions, (ii) receive notice of
or vote at any meeting of the stockholders, (iii) consent to any action of the
stockholders, (iv) receive notice of any other proceedings of the Company, (v)
exercise any preemptive right or (vi) exercise any other rights whatsoever as
stockholders of the Company.
SECTION 7.04. Amendment. This Agreement may be amended by the parties
hereto without the consent of any Holder for the purpose of curing any
ambiguity, or of curing, correcting or supplementing any defective provision
contained herein or adding or changing any other provisions with respect to
matters or questions arising under this Agreement as the Company and the Warrant
Agent may deem necessary or desirable (including without limitation any addition
or modification to provide for compliance with the transfer restrictions set
forth herein); provided, however, that such action shall not adversely affect
the rights of any of the Holders. Any amendment or supplement to this Agreement
that has an adverse effect on the interests of the Holders shall require the
written consent of the Holders of a majority of the then outstanding Warrants.
The consent of each Holder affected shall be required for any amendment pursuant
to which the Exercise Price would be increased or the number of Warrant Shares
issuable upon exercise of Warrants would be decreased (other than pursuant to
adjustments provided herein). In determining whether the Holders of the required
number of Warrants have concurred in any direction, waiver or consent, Warrants
owned by the Company or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
be disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Warrant Agent shall be protected in relying on any such
direction, waiver or consent, only Warrants which the Warrant Agent knows are so
owned shall be so disregarded. Also, subject to the foregoing, only Warrants
outstanding at the time shall be considered in any such determination.
SECTION 7.05. Notices. Any notice or communication shall be in writing and
delivered in Person or mailed by first-class mail addressed as follows:
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if to the Company:
MEDIQ Incorporated
One Mediq Plaza
Pennsauken, NJ 08110
Telephone: (609) 662-3200
Facsimile: (609) 661-0958
Attention: Alan S. Einhorn, Esq.
with a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
Telephone: (212) 698-3531
Facsimile: (212) 698-3599
Attention: Bruce B. Wood, Esq.
if to the Warrant Agent:
United States Trust Company of New York
114 West 47th Street, 25th Floor
New York, NY 10036
Telephone: (212) 852-1614
Facsimile: (212) 852-1626
Attention: Corporate Trust Department
The Company or the Warrant Agent by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Holder shall be mailed to the
Holder at the Holder's address as it appears on the Certificate Register and
shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
SECTION 7.06. Governing Law. The laws of the State of New York shall govern
this Agreement and the Warrant Certificates.
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SECTION 7.07. Successors. All agreements of the Company in this Agreement
and the Warrant Certificates shall bind its successors. All agreements of the
Warrant Agent in this Agreement shall bind its successors.
SECTION 7.08. Multiple Originals. The parties may sign any number of copies
of this Agreement. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Agreement.
SECTION 7.09. Table of Contents. The table of contents and headings of the
Articles and Sections of this Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
SECTION 7.10. Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
MEDIQ INCORPORATED,
By
--------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Warrant Agent,
By
--------------------------------
Name:
Title:
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EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[Separability Legend]
THE WARRANTS EVIDENCED BY THIS CERTIFICATE WERE INITIALLY ISSUED AS PART OF
AN ISSUANCE OF UNITS, EACH OF WHICH CONSISTS OF ONE 13% SENIOR DISCOUNT
DEBENTURE DUE 2009 OF MEDIQ INCORPORATED WITH A PRINCIPAL AMOUNT AT MATURITY OF
$1,000 (A "DEBENTURE") AND ONE WARRANT. THE DEBENTURES AND WARRANTS WILL NOT
TRADE SEPARATELY UNTIL THE EARLIEST OF (I) THE COMMENCEMENT OF A REGISTERED
EXCHANGE OFFER FOR THE DEBENTURES, (II) THE EFFECTIVENESS OF A SHELF
REGISTRATION STATEMENT WITH RESPECT TO THE DEBENTURES AND (III) SUCH DATE AFTER
JULY 28, 1998, AS THE INITIAL PURCHASERS MAY DETERMINE.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. HEDGING
TRANSACTIONS INVOLVING THE UNITS OR THE WARRANTS MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I)
INSIDE THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (II) OUTSIDE THE
UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (III) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (IV) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE. THE WARRANT
EVIDENCED BY THIS CERTIFICATE AND THE SECURITIES TO BE ISSUED UPON ITS EXERCISE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND THE WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE
SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
[Definitive Warrants Legend]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE WARRANT
AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH WARRANT AGENT MAY
REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.](1)
[Global Securities Legend]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("THE DEPOSITARY"), NEW
YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
- --------
(1) To be included only if the Warrant is in definitive form.
<PAGE>
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE &
CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE,
BUT NOT IN PART, TO NOMINEES OF THE DEPOSITARY OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
WARRANT AGREEMENT REFERRED TO ON THE REVERSE HEREOF.](2)
- --------
(2) To be included only if the Warrant is in global form.
2
<PAGE>
No. [ ] Certificate for [ ] Warrants
WARRANTS TO PURCHASE COMMON STOCK OF
MEDIQ INCORPORATED
THIS CERTIFIES THAT [ ],
or its registered assigns, is the registered holder of the number of Warrants
set forth above (the "Warrants"). Each Warrant entitles the holder thereof (the
"Holder"), at its option and subject to the provisions contained herein and in
the Warrant Agreement referred to below, to purchase from MEDIQ INCORPORATED, a
Delaware corporation ("the Company"), .6474 shares of Common Stock, par value of
$0.01 per share, of the Company (the "Common Stock") at the per share exercise
price of $.01 (the "Exercise Price"), or by Cashless Exercise referred to below.
This Warrant Certificate shall terminate and become void as of the close of
business on June 1, 2009 (the "Expiration Date") or upon the exercise hereof as
to all the shares of Common Stock subject hereto. The number of shares issuable
upon exercise of the Warrants and the Exercise Price per share shall be subject
to adjustment from time to time as set forth in the Warrant Agreement.
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of May 29, 1998 (the "Warrant Agreement"), between the
Company and United States Trust Company of New York (the "Warrant Agent", which
term includes any successor Warrant Agent under the Warrant Agreement), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company, the Warrant Agent and the Holders of the
Warrants. Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Warrant Agreement. A copy of the Warrant Agreement may
be obtained for inspection by the Holder hereof upon written request to the
Warrant Agent at 114 West 47th Street, 25th Floor, New York, New York, 10036,
Attention: Corporate Trust Department.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Warrant Agent for the account of the Company at the office of the Warrant
Agent or (ii) by Cashless Exercise. Payment of the Exercise Price in cash shall
be made by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose. Payment by Cashless Exercise shall be made without the payment of cash
by reducing the amount of Common Stock that would be obtainable upon the
exercise of a Warrant and payment of the Exercise Price in cash so as to yield a
number of shares of Common Stock upon the exercise of such Warrant equal to the
product of (1) the number of shares of Common Stock for which such Warrant is
exercisable as of the Exercise Date (if the Exercise Price were being paid in
cash) and (2) a fraction, the numerator of which is the excess of the Current
Market Value per share of Common Stock on the Exercise Date over the Exercise
Price per share as of the Exercise Date and the denominator of which is the
Current Market Value per share of the Common Stock on the Exercise Date.
3
<PAGE>
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the first anniversary of the Issue
Date; provided, however, that Holders of Warrants will be able to exercise their
Warrants only if the Common Shelf Registration Statement relating to the Common
Stock underlying the Warrants is effective or the exercise of such Warrants is
exempt from the registration requirements of the Securities Act of 1933 and such
securities are qualified for sale or exempt from qualification under the
applicable securities laws of the states or other jurisdictions in which such
Holders reside; provided further, however, that no Warrant shall be exercisable
after June 1, 2009.
In the event of a Combination, the Holder hereof will be entitled to
receive upon exercise of the Warrants the kind and amount of shares of capital
stock or other securities or other property as the Holder would have received
had the Holder exercised its Warrants immediately prior to such Combination;
provided, however, that in the event that, in connection with such Combination,
consideration to holders of Common Stock in exchange for their shares is payable
solely in cash or in the event of the dissolution, liquidation or winding-up of
the Company, the Holder hereof will be entitled to receive such cash
distributions on an equal basis with the holders of Common Stock or other
securities issuable upon exercise of the Warrants, as if the Warrants had been
exercised immediately prior to such Combination, less the Exercise Price.
As provided in the Warrant Agreement, the number of shares of Common Stock
issuable upon the exercise of the Warrants and the Exercise Price are subject to
adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to Section 2.04 of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be countersigned and
issued to the Holder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged at
the office of the Warrant Agent by presenting this Warrant Certificate properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value per Warrant Share on the
day immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.
The holder in whose name the Warrant Certificate is registered may be
deemed and treated by the Company and the Warrant Agent as the absolute owner of
the Warrant Certificate for all purposes
4
<PAGE>
whatsoever and neither the Company nor the Warrant Agent shall be affected by
notice to the contrary.
The Warrants do not entitle any Holder hereof to any of the rights of a
stockholder of the Company.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
MEDIQ INCORPORATED,
By
--------------------------------
Name:
Title:
Attest:
- ----------------------------------
Name:
Title:
DATED:
Countersigned:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Warrant Agent,
By
-------------------------------
Authorized Signatory
5
<PAGE>
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
MEDIQ INCORPORATED
The undersigned hereby irrevocably elects to exercise __________________
Warrants to acquire shares of Common Stock, par value $.01 per share, of MEDIQ
Incorporated, at an exercise price per share of Common Stock of $.01, and
otherwise on the terms and conditions specified in the within Warrant
Certificate and the Warrant Agreement therein referred to, surrenders this
Warrant Certificate and all right, title and interest therein to MEDIQ
Incorporated and directs that the shares of Common Stock deliverable upon the
exercise of such Warrants be registered or placed in the name and at the address
specified below and delivered thereto.
Date: __________________, __
________________________________(3)
(Signature of Owner)
___________________________________
(Street Address)
___________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
___________________________________
- --------
(3) The signature must correspond with the name as written upon the face of the
within Warrant Certificate in every particular, without alteration or
enlargement or any change whatever, and must be guaranteed by a national bank or
trust company or by a member firm of any national securities exchange.
6
<PAGE>
Securities and/or check to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
7
<PAGE>
In connection with any transfer of any of the Warrants evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Warrants and the last date, if any, on which such Warrants were owned by
the Company or any Affiliate of the Company, the undersigned certifies that such
Warrants are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) / / to the Company; or
(2) / / pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) / / outside the United States in an offshore transaction within
the meaning of Regulation S under the Securities Act in
compliance with Rule 904 under the Securities Act of
1933; or
(4) / / pursuant to Rule 144A under the Securities Act of 1933; or
(5) / / pursuant to another available exemption from registration
provided by Rule 144 under the Securities Act of 1933.
If such transfer is being made pursuant to an offshore transaction in
accordance with Rule 904 under the Securities Act, the undersigned further
certifies that:
(i) the offer of the Warrants was not made to a person in the United
States;
(ii) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(iii) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903 or Rule 904 of Regulation
S, as applicable;
(iv) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(v) we have advised the transferee of the transfer restrictions
applicable to the Warrants;
(vi) if the circumstances set forth in Rule 904(b)(1) under the
Securities Act are applicable, either (a) neither we nor any person acting
on our behalf knows that the transferee is a U.S. person or (b) we have
complied with the additional conditions therein, including (if applicable)
sending a confirmation or other notice stating that the Warrants may be
offered and sold during the distribution compliance period specified in
Rule 903 of Regulation S only in accordance with Regulation S; pursuant to
registration of the Warrants under the Securities Act; or pursuant to an
available
8
<PAGE>
exemption from the registration requirements under the Securities Act; and
(vii) we have advised the transferee that hedging transactions
involving the Units or the Warrants may not be conducted unless in
compliance with the Securities Act.
Unless one of the boxes is checked, the Warrant Agent will refuse to
register any of the Warrants evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if box
(3) or (4) is checked, the Warrant Agent may require, prior to registering any
such transfer of the Warrants, such legal opinions, additional certifications
and other information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a transaction
not subject to, the registration requirements of the Securities Act of 1933,
such as the exemption provided by Rule 144 under such Act.
-----------------------------------
Signature
Signature Guarantee:
- ---------------------------- -----------------------------------
Signature must be guaranteed Signature
- -------------------------------------------------------------------------------
9
<PAGE>
SCHEDULE OF EXCHANGES OF CERTIFICATED WARRANTS(4)
The following exchanges of a part of this Global Warrant Certificate for
definitive Warrants have been made:
Amount of change Number of
in Number of Warrants in this
Warrants in Global Warrant Signature of
this Global Certificate authorized
Date of Warrant following officer of
Exchange Certificate such change Warrant Agent
- -------- ---------------- ---------------- -------------
- --------
(4) To be included only if the Warrant is in global form.
MEDIQ/PRN LIFE SUPPORT SERVICES, INC.
$190,000,000 11% Senior Subordinated Notes Due 2008
MEDIQ INCORPORATED
$140,885,000 Representing 140,885 Units
consisting of
13% Senior Discount Debentures Due 2009
and
Warrants to Purchase 91,209 Shares of Common Stock
REGISTRATION RIGHTS AGREEMENT
May 21, 1998
CREDIT SUISSE FIRST BOSTON CORPORATION
NATIONSBANC MONTGOMERY SECURITIES LLC
BANQUE NATIONALE de PARIS
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Dear Sirs:
MEDIQ/PRN Life Support Services, Inc., a Delaware corporation
("MEDIQ/PRN"), and MEDIQ Incorporated, a Delaware corporation ("Holdings" and
together with MEDIQ/PRN, the "Issuers"), propose to issue and sell to Credit
Suisse First Boston Corporation, NationsBanc Montgomery Securities LLC and
Banque Nationale de Paris (collectively, the "Initial Purchasers"), upon the
terms set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), $190,000,000 aggregate principal amount of MEDIQ/PRN's 11% Senior
Subordinated Notes Due 2008 (the "Senior Subordinated Notes") and 140,885 units
each consisting of one 13% Senior Discount Debenture Due 2009 with a principal
amount at maturity of $1,000 (each a "Debenture" and collectively the
"Debentures") and one warrant (a "Warrant") to purchase .6474 shares of common
stock, par value $.01 per share, of Holdings (the "Units" and together with the
Senior Subordinated Notes, the "Initial Securities"). The Senior Subordinated
Notes will be unconditionally guaranteed on a senior subordinated basis by each
domestic subsidiary of MEDIQ/PRN (the "Subsidiary Guarantors"). References
herein to the Senior Subordinated Notes shall be deemed, to the extent
<PAGE>
appropriate, to include the guarantees by the Subsidiary Guarantors. Each of the
Senior Subordinated Notes and Debentures will be issued pursuant to a separate
Indenture, dated as of May 15, 1998 (each, an "Indenture" and collectively, the
"Indentures"), among, in the case of the Indenture governing the Senior
Subordinated Notes, MEDIQ/PRN, the Subsidiary Guarantors and United States Trust
Company of New York, as trustee (the"Trustee"), and, in the case of the
Indenture governing the Debentures, Holdings and the Trustee. As an inducement
to the Initial Purchasers, the Issuers agree with the Initial Purchasers, for
the benefit of the holders of the Initial Securities (including, without
limitation, the Initial Purchasers), the Exchange Securities (as defined below)
and the Private Exchange Securities (as defined below) (collectively, the
"Holders"), as follows:
1. Registered Exchange Offer. The Issuers shall, at their cost, prepare
and, not later than 45 days after (or if the 45th day is not a business day, the
first business day thereafter) the date of original issue of the Initial
Securities (the "Issue Date"), file with the Securities and Exchange Commission
(the "Commission") a registration statement or statements (the "Exchange Offer
Registration Statement") on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to a proposed offer (each
a "Registered Exchange Offer" and collectively, the "Registered Exchange
Offers") to the Holders of each of the Transfer Restricted Securities (as
defined in Section 6 below) who are not prohibited by any law or policy of the
Commission from participating in such a Registered Exchange Offer, to issue and
deliver to such Holders, in exchange for their respective Initial Securities, a
like aggregate principal amount (or principal amount at maturity, as the case
may be) of debt securities (collectively the "Exchange Securities") of the
applicable Issuer issued under the relevant Indenture and identical in all
material respects to the Senior Subordinated Notes or the Debentures (except for
the transfer restrictions relating to such Initial Securities), as the case may
be, that would be registered under the Securities Act. The Issuers shall use
their best efforts to cause such Exchange Offer Registration Statement to become
effective under the Securities Act within 150 days (or if the 150th day is not a
business day, the first business day thereafter) after the Issue Date of the
Initial Securities and shall keep such Exchange Offer Registration Statement
effective for not less than 30 days (or longer, if required by applicable law)
after the date notice of the Registered Exchange Offers is mailed to the Holders
(such period being called the "Exchange Offer Registration Period").
2
<PAGE>
If the Issuers effect the Registered Exchange Offers, the Issuers will
be entitled to close such Registered Exchange Offers 30 days after the
commencement thereof provided that the applicable Issuer has accepted all the
Initial Securities theretofore validly tendered in accordance with the terms of
the relevant Registered Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Issuers shall promptly commence the Registered
Exchange Offers, it being the objective of such Registered Exchange Offers to
enable each Holder of the Initial Securities electing to exchange such Initial
Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Issuers within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offers) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.
The Issuers acknowledge that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in (a) Annex A hereto on the cover, (b)
Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of
the Exchange Offer" section and (c) Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to a Registered Exchange
Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities
acquired in exchange for Initial Securities constituting any portion of an
unsold allotment is required to deliver a prospectus containing the information
required by Item 507 or 508 of Regulation S-K under the Securities Act, as
applicable, in connection with such sale.
The Issuers shall use their best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
3
<PAGE>
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days after the expiration date of the Registered Exchange
Offer and the date on which all Exchanging Dealers and the Initial Purchasers
have sold all Exchange Securities held by them (unless such period is extended
pursuant to Section 3(j) below) and (ii) the Issuers shall make such prospectus
and any amendment or supplement thereto available to any broker-dealer for use
in connection with any resale of any Exchange Securities for a period of not
less than 90 days after the consummation of the Registered Exchange Offers.
If, upon consummation of the Registered Exchange Offers, any Initial
Purchaser holds Senior Subordinated Notes or Debentures acquired by it as part
of its initial distribution, the applicable Issuer, simultaneously with the
delivery of the Exchange Securities pursuant to the relevant Registered Exchange
Offer, shall issue and deliver to such Initial Purchaser upon the written
request of such Initial Purchaser, in exchange (each, a "Private Exchange" and,
collectively, the "Private Exchanges") for the respective Initial Securities
held by such Initial Purchaser, a like principal amount (or principal amount at
maturity) of debt securities of the applicable Issuer issued under the relevant
Indenture and identical in all material respects (including the existence of
restrictions on transfer under the Securities Act and the securities laws of the
several states of the United States) to the Senior Subordinated Notes or the
Debentures, as the case may be (collectively, the "Private Exchange
Securities"). The Initial Securities, the Exchange Securities and the Private
Exchange Securities are herein collectively called the "Securities".
In connection with each Registered Exchange Offer, the applicable
Issuer shall:
(a) mail to each Holder a copy of the prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than
30 days (or longer, if required by applicable law) after the date
notice thereof is mailed to the Holders;
(c) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York, which may be the Trustee or an affiliate of the Trustee;
4
<PAGE>
(d) permit Holders to withdraw tendered Initial Securities at
any time prior to the close of business, New York time, on the last
business day on which the Registered Exchange Offer shall remain open;
and
(e) otherwise comply in all material respects with all
applicable laws.
As soon as practicable after the close of a Registered Exchange Offer
or Private Exchange, as the case may be, the applicable Issuer shall:
(x) accept for exchange all the Initial Securities validly
tendered and not withdrawn pursuant to the Registered Exchange Offer or
the Private Exchange, as the case may be;
(y) deliver to the Trustee for cancelation all the Initial
Securities so accepted for exchange; and
(z) cause the Trustee to authenticate and deliver promptly to
each Holder that validly tendered Initial Securities, Exchange
Securities or Private Exchange Securities, as the case may be, equal in
principal amount, or, in the case of the Debentures (or the relevant
Exchange Securities or Private Exchange Securities), principal amount
at maturity, to the Initial Securities of such Holder so accepted for
exchange.
Each Indenture will provide that the Exchange Securities subject to
such Indenture will not be subject to the transfer restrictions set forth in
such Indenture and that all the Securities subject to such Indenture will vote
and consent together on all matters as one class and that none of the Securities
subject to such Indenture will have the right to vote or consent as a class
separate from one another on any matter.
Interest on each Exchange Security and Private Exchange Security issued
pursuant to a Registered Exchange Offer or Private Exchange will accrue from the
last interest payment date on which interest was paid on the Initial Security
surrendered in exchange therefor or, if no interest has been paid on such
Initial Security, from the date of original issue of such Initial Security.
Each Holder participating in a Registered Exchange Offer shall be
required to represent to the applicable Issuer that at the time of the
consummation of such Registered Exchange Offer (i) any Exchange Securities
5
<PAGE>
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Initial Securities or the Exchange
Securities within the meaning of the Securities Act, (iii) such Holder is not an
"affiliate," as defined in Rule 405 of the Securities Act, of such Issuer or if
it is an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Securities and (v) if such
Holder is a broker-dealer, that it will receive Exchange Securities for its own
account in exchange for Initial Securities that were acquired as a result of
market-making activities or other trading activities and that it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Issuers will ensure
that (i) any Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of any Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, an Issuer is
not permitted to effect the Registered Exchange Offer with respect to the
Initial Securities issued by such Issuer, as contemplated by Section 1 hereof,
(ii) the Registered Exchange Offer to be effected by an Issuer is not
consummated within 180 days of the Issue Date, (iii) any Initial Purchaser so
requests with respect to the Initial Securities (or the Private Exchange
Securities) not eligible to be exchanged for Exchange Securities in a Registered
Exchange Offer and held by it following consummation of the Registered Exchange
6
<PAGE>
Offers or (iv) any Holder (other than an Exchanging Dealer) is not eligible to
participate in the relevant Registered Exchange Offer or, in the case of any
Holder (other than an Exchanging Dealer) that participates in a Registered
Exchange Offer, such Holder does not receive freely tradeable Exchange
Securities on the date of the exchange, the relevant Issuer shall take the
following actions:
(a) The relevant Issuer shall, at its cost, as promptly as
practicable (but in no event more than 30 days after so required or
requested pursuant to this Section 2) file with the Commission and
thereafter shall use its best efforts to cause to be declared effective
a registration statement (the "Shelf Registration Statement" and,
together with the Exchange Offer Registration Statement, a
"Registration Statement") on an appropriate form under the Securities
Act relating to the offer and sale of the Transfer Restricted
Securities by the Holders thereof from time to time in accordance with
the methods of distribution set forth in the Shelf Registration
Statement and Rule 415 under the Securities Act (hereinafter, the
"Shelf Registration"); provided, however, that no Holder (other than an
Initial Purchaser) shall be entitled to have the Securities held by it
covered by such Shelf Registration Statement unless such Holder agrees
in writing to be bound by all the provisions of this Agreement
applicable to such Holder.
(b) The relevant Issuer shall use its best efforts to keep the
Shelf Registration Statement continuously effective in order to permit
the prospectus included therein to be lawfully delivered by the Holders
of the relevant Securities, until the expiration of the holding period
with respect to the Securities set forth in clause (k) of Rule 144
promulgated under the Securities Act (or for such longer period if
extended pursuant to Section 3(j) below) from the date of its
effectiveness or such shorter period that will terminate when all the
Securities covered by the Shelf Registration Statement (i) have been
sold pursuant thereto or (ii) are no longer restricted securities (as
defined in Rule 144 under the Securities Act, or any successor rule
thereof). The relevant Issuer shall be deemed not to have used its best
efforts to keep the Shelf Registration Statement effective during the
requisite period if it voluntarily takes any action that would result
in Holders of Securities covered thereby not being able to offer and
sell such Securities during that period, unless such action is required
by applicable law.
(c) Notwithstanding any other provisions of this Agreement to
the contrary, the relevant Issuer shall cause the Shelf Registration
7
<PAGE>
Statement and the related prospectus and any amendment or supplement
thereto, as of the effective date of the Shelf Registration Statement,
amendment or supplement, (i) to comply in all material respects with
the applicable requirements of the Securities Act and the rules and
regulations of the Commission and (ii) not to contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The applicable Issuer or Issuers shall (i) furnish to each
Initial Purchaser, prior to the filing thereof with the Commission, a
copy of the Registration Statement and each amendment thereof and each
supplement, if any, to the prospectus included therein and, in the
event that an Initial Purchaser (with respect to any portion of an
unsold allotment from the original offering) is participating in the
Registered Exchange Offer or the Shelf Registration Statement, the
Issuers shall use their best efforts to reflect in each such document,
when so filed with the Commission, such comments as such Initial
Purchaser reasonably may propose; (ii) include the information set
forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange
Offer" section and in Annex C hereto in the "Plan of Distribution"
section of the prospectus forming a part of the Exchange Offer
Registration Statement and include the information set forth in Annex D
hereto in the Letter of Transmittal delivered pursuant to such
Registered Exchange Offer; (iii) if requested by an Initial Purchaser,
include the information required by Item 507 or 508 of Regulation S-K
under the Securities Act, as applicable, in the prospectus forming a
part of the Exchange Offer Registration Statement; (iv) include within
the prospectus contained in the Exchange Offer Registration Statement a
section entitled "Plan of Distribution," reasonably acceptable to the
Initial Purchasers, which shall contain a summary statement of the
positions taken or policies made by the staff of the Commission with
respect to the potential "underwriter" status of any broker-dealer that
is the beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange
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Securities received by such broker-dealer in such Registered Exchange
Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the Commission
or such positions or policies, in the reasonable judgment of the
Initial Purchasers based upon advice of counsel (which may be in-house
counsel), represent the prevailing views of the staff of the
Commission; and (v) in the case of a Shelf Registration Statement,
include the names of the Holders who propose to sell Securities
pursuant to the Shelf Registration Statement as selling
securityholders.
(b) The Issuers shall advise (and confirm such advice in
writing if requested by the recipient of the advice) the Initial
Purchasers, the Holders of the Securities and any Participating
Broker-Dealer from whom the Issuers have received prior written notice
that it will be a Participating Broker-Dealer in a Registered Exchange
Offer (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made):
(i) when the Registration Statement or any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that
purpose;
(iv) of the receipt by the Issuers or their legal
counsel of any notification with respect to the suspension of
the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the
Issuers to make changes in the Registration Statement or the
prospectus in order that the Registration Statement or the
prospectus does not contain an untrue statement of a material
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fact nor omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the
case of the prospectus, in light of the circumstances under
which they were made) not misleading.
(c) The Issuers shall use their best efforts to obtain the
withdrawal at the earliest possible time of any order suspending the
effectiveness of the Registration Statement.
(d) The Issuers shall furnish to each Holder of Securities
included within the coverage of the Shelf Registration, without charge,
at least one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits
thereto (including those, if any, incorporated by reference).
(e) The Issuers shall deliver to each Exchanging Dealer and
each Initial Purchaser, and to any other Holder who so requests,
without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, and, if any Initial Purchaser or any such
Holder requests, all exhibits thereto (including those incorporated by
reference).
(f) The Issuers shall, during the Shelf Registration Period,
deliver to each Holder of Securities included within the coverage of
the Shelf Registration, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the
Shelf Registration Statement and any amendment or supplement thereto as
such person may reasonably request. The Issuers consent, subject to the
provisions of this Agreement, to the use of the prospectus or any
amendment or supplement thereto included in the Shelf Registration
Statement by each of the selling Holders of the Securities in
connection with the offering and sale of the Securities covered by the
prospectus, or any amendment or supplement thereto, included in the
Shelf Registration Statement.
(g) The Issuers shall deliver to each Initial Purchaser, any
Exchanging Dealer, any Participating Broker-Dealer and such other
persons required to deliver a prospectus following the Registered
Exchange Offers, without charge, as many copies of the final prospectus
included in the Exchange Offer Registration Statement and any amendment
or supplement thereto as such persons may reasonably request. The
Issuers consent, subject to the provisions of this Agreement, to the
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use of the prospectus or any amendment or supplement thereto by any
Initial Purchaser, if necessary, any Participating Broker-Dealer and
such other persons required to deliver a prospectus following the
Registered Exchange Offers in connection with the offering and sale of
the Exchange Securities covered by the prospectus, or any amendment or
supplement thereto, included in such Exchange Offer Registration
Statement.
(h) Prior to any public offering of the Securities pursuant to
any Registration Statement the Issuers shall register or qualify or
cooperate with the Holders of the Securities included therein and their
respective counsel in connection with the registration or qualification
of the Securities for offer and sale under the securities or "blue sky"
laws of such states of the United States as any Holder of the
Securities reasonably requests in writing and do any and all other acts
or things necessary or advisable to enable the offer and sale in such
jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Issuers shall not be required to (i)
qualify generally to do business in any jurisdiction where they are not
then so qualified or (ii) take any action which would subject them to
general service of process or to taxation in any jurisdiction where
they are not then so subject.
(i) The Issuers shall cooperate with the Holders of the
Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders may request a
reasonable period of time prior to sales of the Securities pursuant to
such Registration Statement.
(j) Upon the occurrence of any event contemplated by
paragraphs (ii) through (v) of Section 3(b) above during the period for
which the Issuers are required to maintain an effective Registration
Statement, the Issuers shall promptly prepare and file a post-effective
amendment to the Registration Statement or a supplement to the related
prospectus and any other required document so that, as thereafter
delivered to Holders of the Securities or purchasers of Securities, the
prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. If the Issuers notify the
Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through
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(v) of Section 3(b) above to suspend the use of the prospectus until
the requisite changes to the prospectus have been made, then the
Initial Purchasers, the Holders of the Securities and any such
Participating Broker-Dealers shall suspend use of such prospectus, and
the period of effectiveness of the Shelf Registration Statement
provided for in Section 2(b) above and the Exchange Offer Registration
Statement provided for in Section 1 above shall each be extended by the
number of days from and including the date of the giving of such notice
to and including the date when the Initial Purchasers, the Holders of
the Securities and any known Participating Broker-Dealer shall have
received such amended or supplemented prospectus pursuant to this
Section 3(j).
(k) Not later than the effective date of the applicable
Registration Statement, the Issuers will provide CUSIP numbers for the
Initial Securities, the Exchange Securities or the Private Exchange
Securities, as the case may be, and provide the applicable Trustee with
printed certificates for the Initial Securities, the Exchange
Securities or the Private Exchange Securities, as the case may be, in a
form eligible for deposit with The Depository Trust Company.
(l) The Issuers will comply with all rules and regulations of
the Commission to the extent and so long as they are applicable to the
Registered Exchange Offers or the Shelf Registration and will make
generally available to their respective securityholders (or otherwise
provide in accordance with Section 11(a) of the Securities Act)
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the
first month of the Issuers' first fiscal quarter commencing after the
effective date of the Registration Statement, which statement shall
cover such 12-month period.
(m) The Issuers shall cause the Indentures to be qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), in a timely manner and containing such changes, if any, as shall
be necessary for such qualification. In the event that such
qualification would require the appointment of a new trustee under
either of the Indentures, the Issuers shall appoint a new trustee
thereunder pursuant to the applicable provisions of such Indenture.
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(n) Each Holder of Securities to be sold pursuant to the Shelf
Registration Statement shall furnish to the Issuers such information
regarding the Holder and the distribution of the Securities as the
Issuers may from time to time reasonably require for inclusion in the
Shelf Registration Statement (and shall promptly correct any
information previously furnished if the inclusion of such information
in such Shelf Registration Statement would be materially misleading),
and the Issuers may exclude from such registration the Securities of
any Holder that unreasonably fails to furnish such information within a
reasonable time after receiving such request.
(o) The Issuers shall enter into such customary agreements
(including, if requested, an underwriting agreement in customary form)
and take all such other action, if any, as any Holder of the Securities
shall reasonably request in order to facilitate the disposition of the
Securities pursuant to any Shelf Registration.
(p) In the case of any Shelf Registration, the Issuers shall
(i) make reasonably available for inspection by the Holders of the
Securities, any underwriter participating in any disposition pursuant
to the Shelf Registration Statement and any attorney, accountant or
other agent retained by the Holders of the Securities or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Issuers and (ii) cause the
Issuers' officers, directors, employees, accountants and auditors to
supply all relevant information reasonably requested by the Holders of
the Securities or any such underwriter, attorney, accountant or agent
in connection with the Shelf Registration Statement, in each case, as
shall be reasonably necessary to enable such persons, to conduct a
reasonable investigation within the meaning of Section 11 of the
Securities Act; provided, however, that the foregoing inspection and
information gathering shall be coordinated on behalf of the Initial
Purchasers by you and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in
Section 4 hereof; and provided, further, that as to any information
that is designated in writing by the Issuers, in good faith, as
confidential at the time of delivery, such information shall be kept
confidential by the Holders or by any such underwriter, attorney,
accountant or other agent.
(q) In the case of any Shelf Registration, the Issuers, if
requested by any Holder of Securities covered thereby, shall cause (i)
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their counsel to deliver an opinion and updates thereof relating to the
Securities in customary form addressed to such Holders and the managing
underwriters, if any, thereof and dated, in the case of the initial
opinion, the effective date of such Shelf Registration Statement (it
being agreed that the matters to be covered by such opinion shall
include such matters as are customarily included in opinions requested
in underwritten offerings of such type); (ii) their officers to execute
and deliver all customary documents and certificates and updates
thereof requested by any underwriters of the applicable Securities and
(iii) their independent public accountants and the independent public
accountants with respect to any other entity for which financial
information is provided in the Shelf Registration Statement to provide
to the selling Holders of the applicable Securities and any underwriter
therefor a comfort letter in customary form and covering matters of the
type customarily covered in comfort letters in connection with primary
underwritten offerings, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing
Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested
by any Initial Purchaser or any known Participating Broker-Dealer, the
Issuers shall cause (i) their counsel to deliver to such Initial
Purchaser or such Participating Broker-Dealer a signed opinion in the
form set forth in Section 6(d) of the Purchase Agreement with such
changes as are customary in connection with the preparation of a
Registration Statement and (ii) their independent public accountants
and the independent public accountants with respect to any other entity
for which financial information is provided in the Registration
Statement to deliver to such Initial Purchaser or such Participating
Broker-Dealer a comfort letter, in customary form, meeting the
requirements as to the substance thereof as set forth in Sections 6(a)
and (b) of the Purchase Agreement, with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to
be consummated, upon delivery of the Initial Securities by Holders to
the Issuers (or to such other Person as directed by the Issuers) in
exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be, the Issuers shall mark, or cause to be
marked, on the Initial Securities so exchanged that such Initial
Securities are being canceled in exchange for the Exchange Securities
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or the Private Exchange Securities, as the case may be; in no event
shall the Initial Securities be marked as paid or otherwise satisfied.
(t) The Issuers shall use their best efforts to (a) if the
Initial Securities have been rated prior to the initial sale of such
Initial Securities, confirm such ratings will apply to the Securities
covered by a Registration Statement, or (b) if the Initial Securities
were not previously rated, cause the Securities covered by a
Registration Statement to be rated with the appropriate rating
agencies, if so requested by Holders of a majority in aggregate
principal amount (or principal amount at maturity) of Securities
covered by such Registration Statement, or by the managing
underwriters, if any.
(u) In the event that any broker-dealer registered under the
Exchange Act shall underwrite any Securities or participate as a member
of an underwriting syndicate or selling group or "assist in the
distribution" (within the meaning of the Conduct Rules (the ARules@) of
the National Association of Securities Dealers, Inc. ("NASD")) thereof,
whether as a Holder of such Securities or as an underwriter, a
placement or sales agent or a broker or dealer in respect thereof, or
otherwise, the Issuers shall use their best efforts to assist such
broker-dealer in complying with the requirements of such Rules,
including, without limitation, by (i) if such Rules, including Rule
2720, shall so require, engaging a "qualified independent underwriter"
(as defined in Rule 2720) to participate in the preparation of the
Registration Statement relating to such Securities, to exercise usual
standards of due diligence in respect thereto and, if any portion of
the offering contemplated by such Registration Statement is an
underwritten offering or is made through a placement or sales agent, to
recommend the yield of such Securities, (ii) indemnifying any such
qualified independent underwriter to the extent of the indemnification
of underwriters provided in Section 5 hereof and (iii) providing such
information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules.
(v) The Issuers shall use their best efforts to take all other
steps necessary to effect the registration of the Securities covered by
a Registration Statement contemplated hereby.
4. Registration Expenses. The Issuers shall bear all fees and expenses
incurred in connection with the performance of their obligations under Sections
1 through 3 hereof (including the reasonable fees and expenses, if any, of
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Cravath, Swaine & Moore, counsel for the Initial Purchasers, incurred in
connection with the Registered Exchange Offers), whether or not a Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear, or reimburse the Holders of the
Securities covered thereby for, the reasonable fees and disbursements of one
firm of counsel designated by the Holders of a majority in principal amount (or
principal amount at maturity) of the Securities covered thereby to act as
counsel for the Holders of the Securities in connection therewith.
5. Indemnification. (a) The Issuers jointly and severally agree to
indemnify and hold harmless (i) each Holder of the Securities, any Participating
Broker-Dealer and each person, if any, who controls such Holder or such
Participating Broker-Dealer within the meaning of the Securities Act or the
Exchange Act (each Holder, any Participating Broker-Dealer and such controlling
persons are referred to collectively as the "Indemnified Parties") from and
against any losses, claims, damages or liabilities, joint or several, or any
actions in respect thereof (including, but not limited to, any losses, claims,
damages, liabilities or actions relating to purchases and sales of the
Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto,
or arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse, as incurred, the
Indemnified Parties for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) the Issuers
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in a Registration
Statement or prospectus or in any amendment or supplement thereto or in any
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preliminary prospectus relating to a Shelf Registration in reliance upon and in
conformity with written information pertaining to such Holder and furnished to
the Issuers by or on behalf of such Holder specifically for inclusion therein;
(ii) the Issuers shall not be liable to any Indemnified Party pursuant to this
section with respect to the Registration Statement or prospectus to the extent
that any such loss, claim, damage or liability of such Indemnified Party results
solely from an untrue statement of a material fact contained in, or the omission
of a material fact from, the Registration Statement or prospectus, which untrue
statement or omission was corrected in an amended or supplemented Registration
Statement or prospectus if the Company had previously furnished copies thereof
to such Indemnified Party and delivery of a prospectus was required by the
Securities Act and if the person alleging such loss, claim, damage or liability
was not sent or given, at or prior to the written confirmation of the sale to
such person, a copy of the amended or supplemented Registration Statement or
prospectus; and (iii) with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus relating
to a Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder or Participating
Broker-Dealer from whom the person asserting any such losses, claims, damages or
liabilities purchased the Securities concerned, to the extent that a prospectus
relating to such Securities was required to be delivered by such Holder or
Participating Broker-Dealer under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder or
Participating Broker-Dealer results from the fact that there was not sent or
given to such person, at or prior to the written confirmation of the sale of
such Securities to such person, a copy of the final prospectus if the Issuers
had previously furnished copies thereof to such Holder or Participating
Broker-Dealer; provided further, however, that this indemnity agreement will be
in addition to any liability which the Issuers may otherwise have to such
Indemnified Party. The Issuers shall also indemnify underwriters, their officers
and directors and each person who controls such underwriters within the meaning
of the Securities Act or the Exchange Act to the same extent as provided above
with respect to the indemnification of the Holders of the Securities if
requested by such Holders.
(b) Each Holder of the Securities covered by a Registration Statement,
severally and not jointly, will indemnify and hold harmless (i) the Issuers and
each person, if any, who controls the Issuers within the meaning of the
Securities Act or the Exchange Act, (ii) each of their respective directors,
(iii) each of their respective officers who signs such Registration Statement
and (iv) each other person, if any who controls an Issuer within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Issuers to each such Holder from and
against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Issuers or any such persons may become subject under the
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Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Issuers by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Issuers for any legal or other expenses reasonably incurred by the
Issuers or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Issuers or any of their controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party (i) will
not be relieved from liability under paragraph (a) or (b) above unless and to
the extent it did not otherwise learn of such action and such failure results in
the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 5 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
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threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action. No indemnifying party shall be liable for any settlement of any
such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of the relevant
Securities, pursuant to the relevant Registered Exchange Offer, or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Issuers
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
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provision of this Section 5(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Securities pursuant to a
Registration Statement exceeds the amount of damages which such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Issuers within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Issuers.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in full
force and effect, regardless of any termination or cancelation of this Agreement
or any investigation made by or on behalf of any indemnified party.
6. Additional Interest Under Certain Circumstances. (a) Additional
interest (the "Additional Interest") with respect to Initial Securities (and
Private Exchange Securities) issued by an Issuer shall be assessed as follows if
any of the following events occur (each such event in clauses (i) through (iii)
below a "Registration Default"):
(i) If by July 13,1998, neither the Exchange Offer
Registration Statement nor a Shelf Registration Statement relating to
such Initial Securities has been filed with the Commission;
(ii) If by November 25,1998, neither the Registered Exchange
Offer relating to such Initial Securities is consummated nor, if
required in lieu thereof, a Shelf Registration Statement relating to
such Initial Securities is declared effective by the Commission; or
(iii) If, after November 25, 1998, and after either the
Exchange Offer Registration Statement or the Shelf Registration
Statement relating to such Initial Securities is declared effective (A)
such Registration Statement thereafter ceases to be effective; or (B)
such Registration Statement or the related prospectus ceases to be
usable (except as permitted in paragraph (b)) in connection with
resales of Transfer Restricted Securities during the periods specified
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herein because either (1) any event occurs as a result of which the
related prospectus forming part of such Registration Statement would
include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder.
Additional Interest shall accrue on Initial Securities over and above the
interest set forth in the title of such Initial Securities from and including
the date on which any such Registration Default shall occur to but excluding the
date on which all such Registration Defaults have been cured, at a rate of 0.50%
per annum.
(b) A Registration Default referred to in Section 6(a)(iii) hereof
shall be deemed not to have occurred and be continuing in relation to a Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to such Shelf Registration Statement to incorporate annual audited
financial information with respect to the Issuers where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events with respect
to the Issuers that would need to be described in such Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
relevant Issuer is proceeding promptly and in good faith to amend or supplement
such Shelf Registration Statement and related prospectus to describe such
events; provided, however, that in any case if such Registration Default occurs
for a continuous period in excess of 30 days, Additional Interest shall be
payable in accordance with the above paragraph from the day following such 30
day period until such Registration Default is cured.
(c) Any amounts of Additional Interest due pursuant to clause (a)(i),
(a)(ii) or (a)(iii) of Section 6 above will be payable in cash, (A) in the case
of the Senior Subordinated Notes and any Private Exchange Securities exchanged
therefor, on each scheduled interest payment date, commencing with the first
scheduled interest payment date following the applicable Registration Default,
and (B) in the case of the Debentures and any Private Exchange Securities
exchanged therefor, on each Semi-Annual Accrual Date (as defined in the
applicable Indenture) or scheduled interest payment date, as the case may be,
commencing with the first Semi-Annual Accrual Date following the applicable
Registration Default. The amount of Additional Interest will be determined by
multiplying the Additional Interest Rate by, (A) in the case of the Senior
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Subordinated Notes and any Private Exchange Securities exchanged therefor, the
principal amount of such Securities, in each case, multiplied by a fraction
(the"Additional Interest Fraction"), the numerator of which is the number of
days the Additional Interest Rate was applicable during such period (determined
on the basis of a 360-day year comprised of twelve 30-day months), and the
denominator of which is 360 and (B) in the case of the Debentures and any
Private Exchange Securities exchanged therefor, the Accreted Value of such
Securities on the date of payment of such Additional Interest, in each case,
multiplied by the Additional Interest Fraction.
(d) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferable Exchange Security in a Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in a Registered
Exchange Offer of such Security for an Exchange Security, the date on which such
Exchange Security is sold to a purchaser who receives from such broker-dealer on
or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Issuers shall use their best efforts to file
the reports required to be filed by them under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Issuers are not required
to file such reports, they will, upon the request of any Holder of Transfer
Restricted Securities, make publicly available other information so long as
necessary to permit sales of their securities pursuant to Rules 144 and 144A.
The Issuers covenant that they will take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Transfer Restricted
22
<PAGE>
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Issuers will provide a copy of this Agreement to
prospective purchasers of Initial Securities identified to the Issuers by the
Initial Purchasers upon request. Upon the request of any Holder of Transfer
Restricted Securities, the Issuers shall deliver to such Holder a written
statement as to whether they have complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Issuers to register any of its securities pursuant to the Exchange
Act.
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount (or principal amount at
maturity) of such Transfer Restricted Securities to be included in such
offering.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Issuers and the written
consent of the Holders of a majority in principal amount (or principal amount at
maturity) of the Securities affected by such amendment, modification,
supplement, waiver or consents (taken as a class).
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Issuers.
23
<PAGE>
(2) if to the Initial Purchasers:
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Telephone: (212) 325-2107
Telecopy: (212) 325-8029
Attention: Transactions Advisory Group
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telephone: (212) 474-1000
Telecopy: (212) 474-3700
Attention: Stephen L. Burns, Esq.
(3) if to the Issuers or any Subsidiary Guarantor:
MEDIQ Incorporated
MEDIQ/PRN Life Support Services, Inc.
One Mediq Plaza
Pennsauken, NJ 08110
Telephone: (609) 662-3200
Telecopy: (609) 661-0958
Attention: Alan S. Einhorn, Esq.
with copies to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telephone: (212) 698-3531
Telecopy: (212) 698-3599
Attention: Bruce B. Wood, Esq.
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, PA 19107
Telephone: (215) 988-2548
Telecopy: (215) 988-2757
Attention: F. Douglas Raymond, III, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
24
<PAGE>
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, entered into, nor shall they, on or after the date hereof, enter into,
any agreement with respect to their securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(d) Successors and Assigns. This Agreement shall be binding upon the
Issuers and their successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) Securities Held by the Issuers. Whenever the consent or approval of
Holders of a specified percentage of principal amount (or principal amount at
maturity) of Securities is required hereunder, Securities held by the Issuers or
their affiliates (other than subsequent Holders of Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
25
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Issuers a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Issuers in accordance with its
terms.
Very truly yours,
MEDIQ/PRN LIFE SUPPORT SERVICES INC.,
By:
------------------------------------
Name:
Title:
MEDIQ INCORPORATED,
By:
------------------------------------
Name:
Title:
MEDIQ INVESTMENT SERVICES, INC.,
By:
------------------------------------
Name:
Title:
MEDIQ MOBILE X-RAY SERVICES, INC.,
By:
------------------------------------
Name:
Title:
VALUE-MED PRODUCTS, INC.,
By:
------------------------------------
Name:
Title:
26
<PAGE>
MEDIQ MANAGEMENT SERVICES, INC.,
By:
------------------------------------
Name:
Title:
MEDIQ DIAGNOSTIC CENTERS, INC.,
By:
------------------------------------
Name:
Title:
MEDIQ DIAGNOSTIC CENTERS-I, INC.,
By:
------------------------------------
Name:
Title:
MDTC HADDON, INC.,
By:
-----------------------------------
Name:
Title:
MEDIQ IMAGING SERVICES, INC.,
By:
-----------------------------------
Name:
Title:
AMERICAN CARDIOVASCULAR IMAGING LABS, INC.,
By:
-----------------------------------
Name:
Title:
27
<PAGE>
The foregoing Registration Rights Agreement is hereby confirmed and
accepted as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
NATIONSBANC MONTGOMERY SECURITIES LLC
BANQUE NATIONALE de PARIS
By: CREDIT SUISSE FIRST BOSTON CORPORATION
--------------------------------------
By:
---------------------------------------
Name:
Title:
28
<PAGE>
ANNEX A
Each broker-dealer that receives Exchange Securities for its own account
pursuant to an Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Issuers have agreed
that, for a period of 180 days after the Expiration Date (as defined herein),
they will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
29
<PAGE>
ANNEX B
Each broker-dealer that receives Exchange Securities for its own account
in exchange for Initial Securities, where such Initial Securities were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
30
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to an Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Securities. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Issuers have
agreed that, for a period of 180 days after the Expiration Date, they will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until _______, 199_, all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.1
The Issuers will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to an Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to an Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
- ---------------
1 In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
31
<PAGE>
For a period of 180 days after the Expiration Date the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Exchange Offers (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
32
<PAGE>
ANNEX D
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
33
Execution Copy
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into May 29, 1998, by and among MEDIQ Incorporated, a Delaware corporation (the
"Company"), Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership ("BRS"), the co-investors listed on Schedule A hereto (the
"Co-Investors"), the management investors listed on Schedule B hereto (the
"Management Investors") and the persons listed on Schedule C hereto (the "Rotko
Investors"). BRS, the Co-Investors, the Management Investors and the Rotko
Investors are sometimes referred to herein collectively as the "Investors" and
each individually as the "Investor".
This Agreement is made pursuant to that certain Securities Purchase and
Holders Agreement of even date herewith among the parties hereto (the
"Shareholders Agreement"). In order to induce the Investors to enter into such
stockholders agreements, the Company has agreed to provide the registration
rights set forth in this Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Rules
promulgated by the Commission under the Exchange Act.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company, as adjusted for any stock dividend or distribution payable thereon or
stock split, reverse stock split, recapitalization, reclassification,
reorganization, exchange, subdivision or combination thereof.
"Demand Registration" has the meaning set forth is Section 4(a) of this
Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"HCCP Entities" means Health Care Capital Partners, L.P. together with
Health Care Executive Partners, L.P. and their Controlled Affiliates (as defined
in the Shareholders Agreement).
"Galen Entities" means Galen Partners III, L.P. together with Galen
International III, L.P. and Galen Employee Trust III, L.P. and their Controlled
Affiliates (as defined in the Shareholders Agreement).
"Long Form Registration has the meaning set forth in Section 4(a) of this
Agreement.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
"Prospectus" means the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
<PAGE>
"Registration Expenses" means the costs and expenses of all registrations
and qualifications under the Securities Act and any state's securities laws, and
of all other actions the Company is required to take in order to effect the
registration of Registrable Securities under the Securities Act pursuant to this
Agreement (including all federal and state registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company and the
fees and expenses of the Company's independent public accountants (including the
expenses of any special audit and "cold comfort" letters required by or incident
to such registration)) other than the costs and expenses of any Investors whose
Registrable Securities are to be registered pursuant to this Agreement
comprising underwriters' commissions, brokerage fees, transfer taxes or the fees
and expenses of any accountants or other representatives retained by any
Investor.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
"Registrable Securities" has the meaning set forth in Section 2 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Short Form Registration" has the meaning set forth in Section 4(a) of this
Agreement.
"Special Registration Statement" means (i) a registration statement on
Forms S-8 or S-4 or any similar or successor form or any other registration
statement relating to an exchange offer or an offering of securities solely to
the Company's employees or security holders; (ii) a registration statement
registering a Unit Offering or (iii) a registration statement to register either
the warrants or the underlying Common Stock issued in connection with the
financing transactions described on Schedule 2.1(f) to the Shareholders
Agreement.
"Unit Offering" means a public offering of a combination of debt and equity
securities of the Company in which (i) not more than 20% of the gross proceeds
received for the sale of such securities is attributed to such equity
securities, and (ii) after giving effect to such offering, the Company does not
have a class of equity securities required to be registered under the Exchange
Act.
"underwritten registration" or "underwritten offering" means a registration
in which securities of the Company are sold to an underwriter or group of
underwriters for reoffering to the public.
2. Registrable Securities. The securities entitled to the benefits of this
Agreement are the Registrable Securities. As used herein, "Registrable
Securities" means the shares of Common Stock and Preferred Stock that are issued
and outstanding on the date hereof and the shares of Common Stock and Preferred
Stock that become issued and outstanding after the date hereof, in each such
case, held by the parties hereto; provided, however, that Purchased Securities
(as defined in the Shareholder Agreement) issued to Management Investors which
are subject to the Purchase Option (as defined in the Shareholder Agreement)
shall be deemed not to be Registrable Securities until after the Lapse Date (as
defined in the Shareholders Agreement); and provided, further, that each share
of Common Stock and Preferred Stock shall cease to be a Registrable Security
when (i) it has been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering it; (ii) it
is distributed to the public pursuant to Rule 144 (or any similar provisions
then in force) under the Securities Act; or (iii) it has otherwise been
transferred and a new certificate or other evidence of ownership for it not
bearing a legend as set forth in the Shareholder Agreement (or other legend of
similar import) and not subject to any stop transfer order has been delivered by
or on behalf of the Company and no other restriction on transfer exists under
the Securities Act.
-2-
<PAGE>
3. Incidental Registration.
(a) Right to Include Common Stock. If the Company at any time following
the date which is six months after the date of consummation of a Public Offering
(as defined in the Shareholders Agreement) of the Common Stock proposes to
register any of its Common Stock under the Securities Act (other than on a
Special Registration Statement), whether or not for sale for its own account, it
will at each such time give at least 30 days prior written notice (the "Common
Stock Notice") to all holders of Registrable Securities of its intention to file
a registration statement under the Securities Act and of such holders' rights
under this Section 3. Upon the written request of any such holders of
Registrable Securities made within 15 days of the date of the Common Stock
Notice (which request shall specify the aggregate number of the Registrable
Securities to be registered and will also specify the intended method of
disposition thereof), the Company will effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holders thereof (a "Common Incidental
Registration"), to the extent required to permit the public disposition (in
accordance with such intended methods thereof) of the Registrable Securities to
be so registered; provided, that (i) if, any time after giving written notice of
its intention to register shares of Common Stock and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register the Company's Common
Stock, the Company shall give written notice of such determination to each
holder of Registrable Securities and, thereupon, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith); (ii) if a registration requested pursuant to this Section
3 shall involve an underwritten public offering, any holder of Registrable
Securities requesting to be included in such registration may elect, in writing
at least 20 days prior to the effective date of the registration statement filed
in connection with such registration, not to register such securities in
connection with such registration; and (iii) if, at any time after 180-days or
such shorter period as may be determined by the Board of Directors, the sale of
the securities has not been completed, the Company may withdraw from the
registration on a pro rata basis (based on the number of Registrable Securities
requested by each holder of Registrable Securities to be so registered) the
Registrable Securities which the Company has been requested to register and
which have not been sold.
(b) Right to Include Preferred Stock. If the Company at any time
proposes to register any series of Preferred Stock under the Securities Act
(other than on a Special Registration Statement), whether or not for sale for
its own account, it will at each such time give at least 30 days prior written
notice (the "Preferred Stock Notice") to all holders of Registrable Securities
of its intention to file a registration statement under the Securities Act and
of such holders' rights under this Section 3. Upon the written request of any
such holders of Registrable Securities made within 15 days of the date of the
Preferred Stock Notice (which request shall specify the aggregate number of the
Registrable Securities of such series of Preferred Stock to be registered and
will also specify the intended method of disposition thereof), the Company will
effect the registration under the Securities Act of all Registrable Securities
of such series of Preferred Stock which the Company has been so requested to
register by the holders thereof (a "Preferred Incidental Registration"), to the
extent required to permit the public disposition (in accordance with such
intended methods thereof) of the Registrable Securities to be so registered;
-3-
<PAGE>
provided, that (i) if, any time after giving written notice of its intention to
register shares of Preferred Stock and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to register the Company's Preferred Stock,
the Company shall give written notice of such determination to each holder of
Registrable Securities and, thereupon, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith); (ii) if a registration requested pursuant to this Section 3 shall
involve an underwritten public offering, any holder of Registrable Securities of
such series of Preferred Stock requesting to be included in such registration
may elect, in writing at least 20 days prior to the effective date of the
registration statement filed in connection with such registration, not to
register such securities in connection with such registration; and (iii) if, at
any time after 180 days or shorter period as may be determined by the Board of
Directors of the Company, the sale of the securities has not been completed, the
Company may withdraw from the registration on a pro rata basis (based on the
number of Registrable Securities of such series of Preferred Stock requested by
each holder of Registrable Securities to be so registered) the Registrable
Securities which the Company has been requested to register and which have not
been sold. Each of a Common Incidental Registration and a Preferred Incidental
Registration are referred to herein as "Incidental Registration."
(c) Priority in Incidental Registrations. If a registration pursuant to
Section 3(a) involves an underwritten offering and the managing underwriter
advises the Company in writing that, in its opinion, the total number of shares
of Common Stock or Preferred Stock, as the case may be, to be included in such
registration, including the Registrable Securities requested to be included
pursuant to this Section 3, exceeds the maximum number of shares of Common Stock
or Preferred Stock, as the case may be, specified by the managing underwriter
that may be distributed without adversely affecting the price, timing or
distribution of such shares of Common Stock, or Preferred Stock, as the case may
be, then the Company shall include in such registration only such maximum number
of Registrable Securities which, in the reasonable opinion of such underwriter
or underwriters, can be sold in the following order of priority: (i) first, all
of the shares of Common Stock that the Company proposes to sell for its own
account, if any, and (ii) second, the Registrable Securities of the other
holder(s) of Registrable Securities requested to be included in such Incidental
Registration. To the extent that shares of Common Stock or Preferred Stock, as
the case may be, to be included in the Incidental Registration must be allocated
among the holders(s) of Registrable Securities pursuant to clause (ii) above,
such shares shall be allocated pro rata among the holders(s) of Registrable
Securities based on the number of shares of Common Stock or Preferred Stock, as
the case may be, that such holders(s) of Registrable Securities shall have
requested to be included therein.
(d) Expenses. The Company will pay all Registration Expenses in
connection with any registration of Registrable Securities requested pursuant to
this Section 3.
(e) Liability for Delay. The Company shall not be held responsible for
any delay in the filing or processing of a registration statement which includes
any Registrable Securities due to requests by holders of Registrable Securities
pursuant to this Section 3 nor for any delay in requesting the effectiveness of
such registration statement.
(f) Participation in Underwritten Registrations. No holder of
Registrable Securities may participate in any underwritten registration
hereunder unless such holder (i) agrees to sell his or its Common Stock or
Preferred Stock, as the case may be, on the basis provided in any underwriting
arrangements approved by the persons who have selected the underwriter and (ii)
accurately completes in a timely manner and executes all questionnaires, powers
of attorney, underwriting agreements and other documents customarily required
under the terms of such underwriting arrangements.
-4-
<PAGE>
4. Demand Registration.
(a) Right to Demand Registration. Subject to the provisions hereof, (i)
BRS may request an unlimited number of registrations with the Commission under
and in accordance with the provisions of the Securities Act of all or part of
their Common Stock included in the Registrable Securities on (x) Form S-1 or any
similar or successor long-form registration ("Long-Form Registrations") and (y)
on Form S-2 or S-3 or any similar or successor short-form registration following
a Public Offering (as defined in the Shareholders Agreement) of Common Stock
("Short Form Registrations" and, together with Long Form Registrations, "Demand
Registrations"), if available; (ii) the HCCP Entities in the aggregate may
request three Short Form Registrations; (iii) the Galen Entities in the
aggregate may request three Short Form Registrations; and (iv) the Rotko
Investors in the aggregate may request three Short Form Registrations; provided
in each case that the aggregate proceeds reasonably expected from the sale of
Registrable Securities (including Registrable Securities being sold by holders
of Registrable Securities other than the party making the Demand Registration,
as well as any sales by the Company for its own account) (i) pursuant to a Long
Form Registration are $10 million or more and (ii) pursuant to a Short Form
Registration are $2 million or more and; provided further that (i) the Company
may, if the Board of Directors so determines in the exercise of its reasonable
judgment that due to a pending or contemplated acquisition or disposition or
public offering or other similar occurrence it would be inadvisable to effect
such Demand Registration at such time, defer such Demand Registration for a
single period not to exceed 180 days, and (ii) if the Company elects not to
effect the Demand Registration pursuant to the terms of this sentence, no Demand
Registration shall be deemed to have occurred for purposes of this Agreement.
Notwithstanding the foregoing, the Company shall have no obligation to effect
any Short Form Registration except to the extent the Company is able to effect
such Short Form Registration on Forms S-2 or S-3 or any similar or successor
Short Form Registration. In addition, the Company shall have no obligation to
effect any Demand Registration within one year of the date the Company shall
have effected any other Demand Registration. Demand Registrations shall be Short
Form Registrations whenever the Company is permitted to use any applicable Short
Form. The Registration Expenses shall be borne by the Company.
(b) Demand Registration Request. A party making a Demand Registration
shall make a written request (a "Demand Registration Request") to the Company,
which Demand Registration Request shall specify the intended number of
Registrable Securities to be disposed of by such holder and the intended method
of disposition thereof.
(c) Priority on Demand Registration. If any of the Registrable
Securities proposed to be registered pursuant to a Demand Registration are to be
sold in a firm commitment underwritten offering and the managing underwriter or
underwriters of a Demand Registration advise the Company and the holders of such
Registrable Securities in writing that in its or their reasonable opinion the
number of shares of Common Stock proposed to be sold in such Demand Registration
-5-
<PAGE>
exceeds the maximum number of shares specified by the managing underwriter that
may be distributed without adversely affecting the price, timing or distribution
of the Common Stock, the Company shall include in such registration only such
maximum number of Registrable Securities which, in the reasonable opinion of
such underwriter or underwriters can be sold in the following order of priority:
(i) except as provided in clause (ii) below, first, the Registrable Securities
requested to be included in such Demand Registration by the party who delivered
the Demand Registration Request to the Company (the "Requesting Party"); (ii)
second, shares of Common Stock held by other holders requested to be included in
such Demand Registration pursuant to Section 3 hereof, provided that such amount
shall be allocated among such other holders on a pro rata basis based upon their
respective percentage of ownership of the total number of shares of Common Stock
then outstanding and, if the Requesting Party is BRS and such Demand
Registration Request is made at any time when neither the HCCP Entities, the
Galen Entities nor the Rotko Investors would be entitled to make a Demand
Registration Request, the number of shares of the Requesting Party and of each
holder requesting to be included in such Demand Registration pursuant to Section
3 shall be allocated among all such holders pro rata based upon their respective
ownership of the total number of shares of Common Stock then outstanding and
(iii) third, shares of Common Stock to be offered by the Company in such Demand
Registration.
5. Registration Procedures. If and whenever the Company is required to
effect or cause the registration of any Registrable Securities under the
Securities Act as provided in this Agreement, the Company will, as expeditiously
as reasonably possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities, and use its best efforts to cause such
registration statement to become effective, provided, however, that the Company
may discontinue any registration of its securities which is being effected
pursuant to Section 3 herein at any time prior to the effective date of the
registration statement relating thereto;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than 180 days or such shorter period which will terminate when all
Registrable Securities covered by such registration statement have been sold
(but not before the expiration of the 90-day period referred to in Section 4(3)
of the Securities Act and Rule 174 thereunder, if applicable) and comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement;
(c) furnish to each seller of such Registrable Securities such number of
copies of such registration statement and of each such amendment and supplement
thereof (in each case including all exhibits), such number of copies of the
prospectus included in such registration statement (including each preliminary
prospectus and summary prospectus), in conformity with the requirements of the
Securities Act, and such other documents as such seller may reasonably request
in order to facilitate the disposition of the Registrable Securities by such
seller;
(d) use its best efforts to register or qualify such Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each seller shall request, and do any and
all other acts and things which may be necessary or advisable to enable such
seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, however, that the Company shall not
be required to qualify generally to do business in any jurisdiction where it is
not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject itself to general taxation in any jurisdiction where it is not then so
subject;
-6-
<PAGE>
(e) immediately notify each seller of any Registrable Securities covered
by such registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Act within the appropriate period
mentioned in clause (b) of this Section 5, of the Company becoming aware that
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing, and within ten
days prepare and furnish to all sellers a reasonable number of copies of an
amended or supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing;
(f) use its best efforts to list such Registrable Securities on any
securities exchange on which the Common Stock is then listed or NASDAQ if the
Common Stock is then quoted on NASDAQ, if such Registrable Securities are not
already so listed or quoted and if such listing is then permitted under the
rules of such exchange or NASDAQ, and provide an independent transfer agent and
registrar for such Registrable Securities covered by such registration statement
not later than the effective date of such registration statement;
(g) furnish to each seller of Registrable Securities covered by such
registration statement a signed counterpart, addressed to such seller (and the
underwriters, if any) of:
(i) an opinion of counsel for the Company, dated the effective
date of such registration statement (or, if such registration involves
an underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance
to the sellers of not less than 50% of such Registrable Securities (and
the managing underwriter, if any); and
(ii) a "comfort" letter, dated the effective date of such
registration statement (or, if such registration involves an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants
who have certified the Company's financial statements included in such
registration statement, covering such matters with respect to such
registration statement as are customarily covered in accountants'
letters delivered to the underwriters in underwritten offerings of
securities as may reasonably be requested by the sellers of not less
than 50% of such Registrable Securities (and the managing underwriter,
if any); and
(h) make available for inspection by any seller of such Registrable
Securities covered by such registration statement, by any underwriter
participating in any disposition to be effected pursuant to such registration
statement and by any attorney, accountant or other agent retained by any such
seller or any such underwriter (individually, an "Inspector" and collectively,
the "Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company as shall be reasonably
necessary to enable them to exercise their due diligence responsibility
(collectively, the "Records"), and cause all of the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement; provided that any Records that are designated by the
Company in writing as confidential shall be kept confidential by the Inspectors
unless (A) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (B) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or by any regulatory authority having jurisdiction. Each
Investor agrees that non-public information obtained by it as a result of such
Inspections shall be deemed confidential and acknowledges its obligations under
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<PAGE>
the Federal securities laws not to trade any securities of the Company on the
basis of material non-public information.
The Company may require each seller of Registrable Securities as to
which any registration is being effected promptly to furnish to the Company (i)
an opinion of counsel for such seller dated the effective date of the
registration statement relating to such seller's Registrable Securities (or, if
such registration involves an underwritten public offering, dated the date of
the closing under the underwriting agreement) concerning such matters as are
customarily requested from selling shareholders in public offerings and
reasonably satisfactory in form and substance to the Company (and the managing
underwriter, if any) and (ii) such information regarding the distribution of
such Registrable Securities as may be legally required. Such information shall
be furnished in writing and shall state that it is being furnished for use in
the registration statement.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in clause (e) of this Section 5,
such holder will forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by clause (e) of this Section 5, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's possession,
of the prospectus covering such Registrable Securities current at the time of
receipt of the Company's notice. In the event the Company shall give any such
notice, the period mentioned in clause (b) of this Section 5 shall be extended
by the number of days during the period from and including the date of the
giving of such notice pursuant to clause (e) of this Section 5 and including the
date when each seller of Registrable Securities covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus contemplated by clause (e) of this Section 5.
6. Indemnification.
(a) Indemnification by the Company. The Company hereby agrees to
indemnify and hold harmless each holder of Registrable Securities which shall
have been registered under the Securities Act, and such holder's officers,
directors and agents and each other Person, if any, who controls such holder
within the meaning of the Securities Act and each other Person (including
underwriters) who participates in the offering of such Registrable Securities
against any losses, claims, damages, liabilities, reasonable attorneys' fees,
costs or expenses (collectively, the "Damages"), joint or several, to which such
holder or controlling Person or participating Person may become subject under
the Securities Act or otherwise, insofar as such Damages (or proceedings in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact made by the Company or its agents
contained in any registration statement under which such Registrable Securities
are registered under the Securities Act, in any preliminary prospectus or final
prospectus contained therein, or in any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such holder of Registrable
Securities or such controlling Person or participating Person in connection with
investigating or defending any such Damages or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any such
Damages arise out of or are based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
said preliminary or final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished to the Company by such
holder or such controlling or participating Person, as the case may be,
specifically for use in the preparation thereof; or (ii) an untrue statement or
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<PAGE>
alleged untrue statement, omission or alleged omission in a prospectus if such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the prospectus which amendment or
supplement is delivered to such holder in a timely manner and such holder
thereafter fails to deliver such prospectus as so amended or supplemented prior
to or concurrently with the sale of such Registrable Securities to the Person
asserting such Damages.
(b) Indemnification by the Holders of Registrable Securities Which Are
Registered. It shall be a condition of the Company's obligations under this
Agreement to effect any registration under the Securities Act that there shall
have been delivered to the Company an agreement or agreements duly executed by
each holder of Registrable Securities to be so registered, whereby such holder
agrees to indemnify and hold harmless the Company, its directors, officers and
agents and each other Person, if any, which controls the Company within the
meaning of the Securities Act against any Damages, joint or several, to which
the Company, or such other Person or such Person controlling the Company may
become subject under the Securities Act or otherwise, but only to the extent
that such Damages (or proceedings in respect thereof) arise out of or are based
upon any untrue statements or alleged untrue statement of any material fact
contained, on the effective date thereof, in any registration statement under
which such Registrable Securities are registered under the Securities Act, in
any preliminary prospectus or final prospectus contained therein or in any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, which, in
each such case, has been made in or omitted from such registration statement,
said preliminary or final prospectus or said amendment or supplement in reliance
upon, and in conformity with, written information furnished to the Company by
such holder of Registrable Securities specifically for use in the preparation
thereof. The Company shall be entitled to receive indemnities from underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, at least to the same extent as provided
above, with respect to information furnished in writing by such Persons
specifically for inclusion in any prospectus or registration statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder shall (i) give prompt written notice to the
indemnifying party of the commencement of any action or proceeding involving a
claim referred to in the preceding paragraphs of this Section 6; and (ii) unless
the indemnified party has been advised by its counsel that a conflict of
interest exists between such indemnified and indemnifying parties under
applicable standards of professional responsibility, with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will consent to the entry
of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim or
litigation; provided, however, that no indemnifying party will consent to the
entry of any judgment or enter into any settlement (other than for the payment
of money only) without the consent of the indemnified party (which consent will
not be unreasonably withheld). An indemnifying party who is not entitled to, or
elects not to, assume the defense of the claim, will not be obligated to pay the
fees and expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels.
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<PAGE>
(d) Contribution. If for any reason the indemnification provided for in
the preceding Sections 6(a) or 6(b) is unavailable to an indemnified party in
respect of any Damages referred to therein, the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such Damages in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations. The relative fault of
such indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action; provided, however, that in no event shall the liability of any
selling holder of Registrable Securities hereunder be greater in amount than the
difference between the dollar amount of the proceeds received by such holder
upon the sale of the Registrable Securities giving rise to such contribution
obligation and all amounts previously contributed by such holder with respect to
such Damages. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of fraudulent misrepresentation.
7. Hold-Back Agreements.
(a) Restrictions on Public Sale by Holder of Registrable Securities.
Each holder of Registrable Securities whose Registrable Securities are eligible
for inclusion in a Registration Statement filed pursuant to Sections 3 or 4
agrees, if requested by the managing underwriter or underwriters in an
underwritten offering of any Registrable Securities, not to effect any public
sale or distribution of Registrable Securities, including a sale pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act
(except as part of such underwritten registration), during the 10-day period
prior to, and during the 90-day period (or such shorter period as may be agreed
to by the parties hereto) beginning on the effective date of such Registration
Statement, to the extent timely notified in writing by the Company or the
managing underwriter or underwriters.
The foregoing provisions shall not apply to any holder of Registrable
Securities if such holder is prevented by applicable statute or regulation from
entering into any such agreement; provided, however, that any such holder shall
undertake, in its request to participate in any such underwritten offering, not
to effect any public sale or distribution of Registrable Securities (except as
part of such underwritten registration) during the period referred to in this
Section 7(a) unless it has provided 45 days prior written notice of such sale or
distribution to the managing underwriter or underwriters.
(b) Restrictions on Public Sale by the Company and Others. The Company
shall (i) not effect any public sale or distribution of any of its Common Stock
for its own account during the 10-day period prior to, and during the 90-day
period beginning on, the effective date of a Registration Statement filed
pursuant to Sections 3 or 4 (except as part of a Special Registration
Statement), and (ii) use reasonable efforts to cause each holder of Common Stock
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration, if permitted).
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<PAGE>
8. Underwritten Registration.
If any of the Registrable Securities covered by any Incidental
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Company and, in the case of a Demand Registration, by
the Requesting Party.
Notwithstanding anything herein to the contrary, no Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwritten arrangements approved by the Persons entitled hereunder to approve
such arrangement and (b) accurately completes and executes all questionnaires,
powers of attorney, indemnities, custody agreements, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) Amendment and Modification. This Agreement may be amended or
modified, or any provision hereof may be waived, provided that such amendment or
waiver is set forth in a writing executed by (i) the Company, (ii) BRS (so long
as BRS and its Affiliates, officers, directors and employees own in the
aggregate at least 25% of the outstanding Common Stock on a fully diluted
basis), (iii) the holders of a majority of the shares of Common Stock included
in the Registrable Securities held by Investors other than BRS (or, if BRS and
its Affiliates, officers, directors and employees own in the aggregate less than
25% of the outstanding Common Stock on a fully diluted basis, the holders of a
majority of the shares of the Common Stock included in the Registrable
Securities held by all Investors), and (iv) in the case of any amendment which
materially and adversely affects any Investor differently from any other
Investor, such Investor. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify, amend
or discharge any part of this Agreement or any rights or obligations of any
person under or by reason of this Agreement.
(b) Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, regardless of any investigation made by an
Investor or on its behalf.
(c) Successors and Assigns; Entire Agreement. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns (other than
Permitted Transferees by virtue of Section 5.4(e)(iv) of the Shareholders
Agreement) and executors, administrators and heirs; provided that no rights to
Demand Registrations under Section 4(a) of this Agreement shall be assigned
except by a written instrument signed by the assignor specifically acknowledging
the assignment of such rights. This Agreement sets forth the entire agreement
and understandings among the parties as to the subject matter hereof and merges
and supersedes all prior discussions and understandings of any and every nature
among them.
(d) Separability. In the event that any provision of this Agreement or
the application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
(e) Notices. All notices provided for or permitted hereunder shall be
made in writing by hand-delivery, registered or certified first-class mail,
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<PAGE>
telex, telecopier or air courier guaranteeing overnight delivery to the other
party at the following addresses (or at such other address as shall be given in
writing by any party to the others):
If to the Company to:
MEDIQ Incorporated
One Mediq Way
Pennsauken, NJ 08110
with required copies to:
If to BRS, to:
Bruckmann, Rosser, Sherrill & Co., L.P.
126 E. 56th Street
New York, New York 10022
Attention: Bruce Bruckmann
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: William G. Lawlor
If to a Co-Investor, a Management Investor or a Rotko Investor, at the most
current address given by such Co-Investor, Management Investor or Rotko Investor
to the Company in accordance with this Section 10(e), which address initially
is, with respect to each Co-Investor, each Management Investor, and each Rotko
Investor the address set forth on Schedule A, Schedule B or Schedule C hereto.
All such notices shall be deemed to have been duly given: when delivered
by hand, if personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
(f) Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of Delaware, without giving effect to principles of conflicts of
law.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
(h) Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
(i) Further Assurances. Each party shall cooperate and take such action
as may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
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<PAGE>
(j) Termination. Unless sooner terminated in accordance with its terms,
this Agreement shall terminate on the fifteenth anniversary of the date of this
Agreement; provided that the indemnification rights and obligations set forth in
Section 6 hereof shall survive the termination of this Agreement.
(k) Remedies. In the event of a breach or a threatened breach by any
party to this Agreement of its obligations under this Agreement, any party
injured or to be injured by such breach, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement, it being
agreed by the parties that the remedy at law, including monetary damages, for
breach of such provision will be inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived.
(l) Party No Longer Owning Securities. If a party hereto ceases to own
any Securities, such party will no longer be deemed to be an Investor for
purposes of this Agreement; provided that the indemnification rights and
obligations set forth in Section 6 hereof shall survive any such cessation of
ownership.
(m) Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
(n) No Effect on Employment. Nothing herein contained shall confer on
any Investor the right to remain in the employ of the Company or any of its
subsidiaries or Affiliates.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Registration Rights Agreement as of the date first written above.
MEDIQ INCORPORATED
By: /s/ Thomas E. Carroll
-------------------------
Name: Thomas E. Carroll
Title: President
BRUCKMANN, ROSSER, SHERRILL & CO. L.P.
By: /s/ Stephen C. Sherrill
-------------------------
Name: Stephen C. Sherrill
Title: Managing Director of BRSE Associates, Inc.
BRUCE C. BRUCKMANN
By: /s/ Stephen C. Sherrill
-------------------------
Stephen C. Sherrill
Attorney-in-Fact
DONALD J. BRUCKMANN
By: /s/ Stephen C. Sherrill
-------------------------
Stephen C. Sherrill
Attorney-in-Fact
BCB FAMILY PARTNERS, L.P.
By: /s/ Stephen C. Sherrill
-------------------------
Stephen C. Sherrill
Attorney-in-Fact
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<PAGE>
NAZ FAMILY PARTNERS, L.P.
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-in-Fact
HAROLD O. ROSSER
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-in-Fact
H. VIRGIL SHERRILL
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-in-Fact
NANCY A. ZWENG
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-in-Fact
PAUL D. KAMINSKI
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-in-Fact
JOHN R. EDMONDS
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-In-Fact
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<PAGE>
SUSAN M. KAIDER
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-In-Fact
WALKER C. SIMMONS
By: /s/ Stephen C. Sherrill
-----------------------
Stephen C. Sherrill
Attorney-In-Fact
MARILENA TIBREA
By: /s/ Stephen C. Sherrill
Stephen C. Sherrill
Attorney-In-Fact
ROTKO INVESTORS
/s/ Bessie G. Rotko
-----------------------
Bessie G. Rotko
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
/s/ Judith Shipon
-----------------------
Judith Shipon
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
/s/ Michael J. Rotko
-----------------------
Michael J. Rotko
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
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<PAGE>
T/D BERNARD B. ROTKO DATED
NOVEMBER 18, 1983
By: /s/ Bessie G. Rotko
-------------------------
Bessie G. Rotko, Trustee
By: /s/ Judith M. Shipon
-------------------------
Judith M. Shipon, Trustee
By: /s/ Michael J. Rotko
-------------------------
Michael J. Rotko, Trustee
By: /s/ John D. Iskrant
-------------------------
John D. Iskrant, Trustee
By: PNC BANK, Trustee
By: /s/ Robert N. Troop, Jr.
-------------------------
Name: Robert N. Troop, Jr.
Title: Vice President
Address:
Phone:
HEALTHCARE CAPITAL PARTNERS, LP
By: /s/ Robert T. Thompson
-------------------------
HEALTHCARE EXECUTIVE PARTNERS, L.P.
By: /s/ Robert T. Thompson
-------------------------
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<PAGE>
GALEN PARTNERS INTERNATIONAL III, L.P.
By: /s/ Bruce F. Wesson
-------------------------
GALEN PARTNERS III, L.P.
By: /s/ Bruce F. Wesson
-------------------------
GALEN EMPLOYEE FUND III, L.P.
By: /s/ Bruce F. Wesson
-------------------------
/s/ Thomas E. Carroll
-------------------------
Thomas E. Carroll
/s/ Jay M. Kaplan
-------------------------
Jay M. Kaplan
-------------------------
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SCHEDULE A
- ----------
Name of Co-Investor Address
- -------------------- -------
<PAGE>
SCHEDULE B
- ----------
Name of Management Investor Address
- --------------------------- -------
<PAGE>
SCHEDULE C
- ----------
Name of Rotko Investor Address
- ---------------------- -------
<PAGE>
SECURITIES PURCHASE AND HOLDERS AGREEMENT
SECURITIES PURCHASE AND HOLDERS AGREEMENT, dated May 29, 1998 (the
"Agreement"), by and among MQ Acquisition Corporation, a Delaware corporation
("MQ"), MEDIQ Incorporated, a Delaware corporation ("MEDIQ"), Bruckmann, Rosser,
Sherrill & Co. L.P., a Delaware limited partnership ("BRS"), the persons listed
on Schedule A hereto under the caption "Co-Investors" (the "Co-Investors"), the
individuals and trusts listed on Schedule A hereto under the caption "Rotko
Investors" (the "Rotko Investors") and the individuals listed on Schedule A
hereto under the caption "Management Investors" (the "Management Investors"). As
used herein, BRS and the Co-Investors are sometimes referred to hereinafter
individually as a "New Investor" and collectively as the "New Investors," and
the New Investors, the Rotko Investors and the Management Investors are
sometimes referred to hereinafter individually as an "Investor" and collectively
as the "Investors."
Background
A. MQ and Mediq have entered into an Agreement and Plan of Merger dated as
of January 14, 1998 and amended as of April 27, 1998 (the "Merger Agreement").
Pursuant to the Merger Agreement, MQ will be merged with and into MEDIQ, with
MEDIQ the surviving corporation (the "Merger"), and each issued and outstanding
share of capital stock of MQ shall be converted into and exchanged for one share
of capital stock of MEDIQ of the corresponding class and/or series. As provided
in the Merger Agreement, the Merger is intended to be recorded as a
recapitalization for financial reporting purposes.
B. MQ desires to sell, and each of the New Investors desires to purchase
(i) the number of shares of Series A Preferred Stock, par value $.01 per share,
of MQ (the "MQ Series A Preferred Stock") set forth opposite such New Investor's
name on Schedule A hereto, (ii) the number of shares of Series B Preferred
Stock, par value $.01 per share, of MQ (the "MQ Series B Preferred Stock") set
forth opposite such New Investor's name on Schedule A hereto, (iii) the number
of shares of Series C Preferred Stock, par value $.01 per share, of MQ (the "MQ
Series C Preferred Stock" and together with the MQ Series A Preferred Stock and
the MQ Series B Preferred Stock, the "MQ Preferred Stock") set forth opposite
such New Investor's name on Schedule A hereto, and (iv) the number of shares of
Common Stock, par value $.01 per share, of MQ (the "MQ Common Stock") set forth
opposite such New Investor's name.
C. MQ desires to sell, and each of the Management Investors desires to
purchase (i) the number of shares of MQ Series A Preferred Stock set forth
opposite such Management Investor's name on Schedule A hereto, (ii) the number
of shares of MQ Series B Preferred Stock set forth opposite such Management
Investor's name on Schedule A hereto, (iii) the number of shares of MQ Series C
Preferred Stock set forth opposite such Management Investor's name on Schedule A
hereto, and (iv) the number of shares of MQ Common Stock set forth opposite such
Management Investor's name. The Management Investors have agreed to use a
portion of the Option Consideration (as defined in the Merger Agreement)
received by them in exchange for cancellation by the Company of their existing
MEDIQ stock options to purchase the MQ Common Stock and the MQ Preferred Stock
pursuant to Article I. In addition, the Company has agreed to issue additional
shares of MEDIQ Preferred Stock and MEDIQ Common Stock in the aggregate amounts
set forth on Schedule A and Schedule B hereto opposite the caption "Management
Pool" (the "Management Pool Shares") to such persons as are selected by the
Board of Directors and the Chief Executive Officer of the Company who shall be
entitled to purchase such Management Pool Shares upon their execution and
delivery of a joinder to this
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Agreement naming them as Management Investors hereunder or such other agreement
as may be reasonably acceptable to the Company.
D. Pursuant to the Merger, (i) each share of MQ Series A Preferred Stock
shall be converted into one share of Series A 13.0% Cumulative Compounding
Preferred Stock, par value $.01 per share, of MEDIQ (the "MEDIQ Series A
Preferred Stock"), (ii) each share of MQ Series B Preferred Stock shall be
converted into one share of Series B 13.25% Cumulative Compounding Perpetual
Preferred Stock, par value $.01 per share, of MEDIQ (the "MEDIQ Series B
Preferred Stock"), (iii) each share of MQ Series C Preferred Stock shall be
converted into one share of Series C 13.5% Cumulative Compounding Preferred
Stock, par value $.01 per share, of MEDIQ (the "MEDIQ Series C Preferred Stock"
and together with the MEDIQ Series A Preferred Stock and the MEDIQ Series B
Preferred Stock, the "MEDIQ Preferred Stock"), and (iv) each share of MQ Common
Stock shall be converted into one share of Common Stock, par value $.01 per
share, of MEDIQ (the "MEDIQ Common Stock"). The MQ Common Stock and MEDIQ Common
Stock are sometimes referred to hereinafter as the "Common Stock", the MQ
Preferred Stock and MEDIQ Preferred Stock are sometimes referred to hereinafter
as the "Preferred Stock," the MQ Series A Preferred Stock and the MEDIQ Series A
Preferred Stock are sometimes referred to hereinafter as the "Series A Preferred
Stock," the MQ Series B Preferred Stock and the MEDIQ Series B Preferred Stock
are sometimes referred to hereinafter as the "Series B Preferred Stock," and the
MQ Series C Preferred Stock and the MEDIQ Series C Preferred Stock are sometimes
referred to hereinafter as the "Series C Preferred Stock."
E. As used herein, "Rollover Securities" means the MEDIQ Common Stock and
MEDIQ Preferred Stock received by the Management Investors pursuant to the
Merger which MEDIQ Common Stock and MEDIQ Preferred Stock was acquired in
exchange for shares of MQ Common Stock and MQ Preferred Stock owned by the
Management Investors immediately prior to Effective Time, including shares of
MEDIQ Common Stock and MEDIQ Preferred Stock and all other securities of MQ or
MEDIQ (or a successor to either of them) received on account of ownership of the
shares of MEDIQ Common Stock or MEDIQ Preferred Stock received pursuant to the
Merger, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, reverse stock
split, stock combination, recapitalization, reclassification, subdivision,
conversion or similar transaction in respect thereof. The Management Pool Shares
described on Schedule A hereto shall be deemed to be Rollover Securities under
this Agreement. The term Rollover Securities shall not include shares of MEDIQ
Series A Preferred Stock acquired by the Management Investors as Merger
Consideration (as such term is defined in the Merger Agreement).
F. MEDIQ desires to sell, and each of the Management Investors desires to
purchase, the number of shares of MEDIQ Common Stock set forth opposite such
Management Investor's name on Schedule B hereto. As used herein, "Purchased
Securities" means the MEDIQ Common Stock purchased by the Management Investors
pursuant to Article III hereof, including shares of MEDIQ Common Stock and all
other securities of MQ or MEDIQ (or a successor to either of them) received on
account of ownership of the shares of MEDIQ Common Stock purchased pursuant to
Article III, including all securities issued in connection with any merger,
consolidation, stock dividend, stock distribution, stock split, reverse stock
split, stock combination, recapitalization, reclassification, subdivision,
conversion or similar transaction in respect thereof. The Management Pool Shares
described on Schedule B hereto shall be deemed to be Purchased Securities under
this Agreement.
G. In connection with the execution and delivery of the Merger Agreement,
MQ, MEDIQ and the Rotko Investors entered into the Agreement dated as of January
14, 1998
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(the "Rollover Agreement") pursuant to which the Rotko Investors agreed
to retain a continued equity investment in MEDIQ after the Effective Time (as
defined in the Merger Agreement) of the Merger.
H. As provided in the Rollover Agreement, the Rotko Investors desire to
convert, and MQ and MEDIQ desire that the Investors so convert, an aggregate of
1,000,000 shares (the "Rolled Shares") of Series A Preferred Stock, par value
$.50 per share, of MEDIQ which are issued and outstanding as of the date hereof
and immediately prior to the Effective Time (as defined in the Merger Agreement)
of the Merger, into an aggregate of 1,340,219 shares of the MEDIQ Series B
Preferred Stock and 109,781 shares of the MEDIQ Common Stock.
I. As used herein, the term "Company" shall refer to MQ prior to the
Effective Time of the Merger and shall refer to MEDIQ after the Effective Time
(as defined in the Merger Agreement) of the Merger. As used herein, the term
"Securities" shall mean the Common Stock and the Preferred Stock held or
hereafter acquired by any party hereto, including shares of Common Stock and
Preferred Stock and all other securities of MQ or MEDIQ (or a successor to
either of them) received on account of ownership of the Common Stock or
Preferred Stock, including the Rollover Securities, the Purchased Securities and
all securities issued in connection with any merger, consolidation, stock
dividend, stock distribution, stock split, reverse stock split, stock
combination, recapitalization, reclassification, subdivision, conversion or
similar transaction in respect thereof; provided that the term Securities shall
not include shares of MEDIQ Series A Preferred Stock acquired by the Management
Investors as Merger Consideration (as such term is defined in the Merger
Agreement). Capitalized terms used but not otherwise defined herein shall have
the same meaning as in the Merger Agreement.
J. The parties hereto wish to set forth certain agreements regarding their
future relationships and their rights and obligations with respect to the
Securities.
Terms
In consideration of the mutual covenants contained herein and intending to
be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE OF MQ SECURITIES
1.1 Sale and Purchase of MQ Securities. Subject to the terms and conditions
set forth herein, at the MQ Securities Closing (as defined below), MQ will issue
and sell to each of the New Investors and the Management Investors the number of
shares of MQ Common Stock and MQ Preferred Stock set forth opposite each such
Investor's name on Schedule A. The purchase price for the MQ Common Stock and
the MQ Preferred Stock shall be $10.00 per share, payable in cash.
1.2 MQ Securities Closing. The closing (the "MQ Securities Closing") of the
purchase and sale of the MQ Preferred Stock and the MQ Common Stock by the New
Investors and the Management Investors referred to in Section 1.1 will take
place immediately prior to the Effective Time of the Merger or at such other
time or on such other date as may be agreed by the parties hereto (the "MQ
Closing Date"). At the MQ Securities Closing, MQ will deliver to each New
Investor or Management Investor certificates for the number of shares of MQ
Common Stock and MQ Preferred Stock set forth opposite each such Investor's name
on Schedule A hereto, against payment of the
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purchase price therefor in cash, by federal wire transfer of immediately
available funds, with confirmed receipt. Pursuant to the Merger, at the
Effective Time, each share of MQ Common Stock or MQ Preferred Stock, as the case
may be, shall be converted into the shares of MEDIQ Common Stock or MEDIQ
Preferred Stock, as the case may be, as described in paragraph D above.
1.3 Conditions to the Obligations of New Investors and Management
Investors. The obligation of each New Investor and Management Investor to
purchase and pay for the MQ Common Stock and MQ Preferred Stock at the MQ
Securities Closing is subject to the satisfaction on or prior to the MQ Closing
Date of the following conditions:
(a) The representations and warranties of MQ and MEDIQ set forth in
Article IV shall be true and correct in all material respects on and as of the
MQ Closing Date as though then made, and all covenants of MQ and MEDIQ set forth
in Article IV required to be performed on or prior to the MQ Securities Closing
shall have been performed in all material respects.
(b) MQ's Certificate of Incorporation and Bylaws immediately prior to
the Effective Time shall be substantially in the forms of Exhibits A-l and A-2,
respectively, and MEDIQ's Certificate of Incorporation and Bylaws after the
Effective Time shall be substantially in the forms of Exhibits A-3 and A-4,
respectively.
(c) No preliminary or permanent injunction or order, decree or ruling
of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(d) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the Certificate of
Incorporation or Bylaws of MQ or MEDIQ, or any applicable laws or orders,
regulations, rules or requirements of a court, public body or authority by which
MQ or MEDIQ is bound.
(e) MQ shall have delivered to each such Investor certificates for the
Securities required pursuant to Section 1.1.
(f) All corporate and other proceedings, if any, taken or to be taken
by MQ or MEDIQ in connection with the transactions contemplated hereby to be
consummated at the MQ Securities Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to the New Investors and
the Management Investors and the New Investors and the Management Investors
shall have received from MQ and MEDIQ all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(g) MQ shall not have waived any material condition to its obligations
under the Merger Agreement set forth in Article V of the Merger Agreement.
1.4 Conditions to the Obligations of MQ. The obligation of MQ to issue the
securities referred to in Section 1.1 to each New Investor and Management
Investor as set forth herein at the MQ Securities Closing is subject to the
satisfaction on or prior to the MQ Securities Closing of the following
conditions:
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(a) The representations and warranties of each New Investor and
Management Investor set forth in Article V shall be true and correct in all
material respects at and as of the MQ Closing Date as though then made, and all
covenants of each New Investor and Management Investor required to be performed
at or prior to the MQ Securities Closing shall have been performed in all
material respects.
(b) The conditions set forth in Section 1.3(c) shall have been
satisfied, and the New Investors and Management Investors shall have purchased
or shall simultaneously purchase the Securities set forth opposite their
respective names on Schedule A.
(c) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the certificate of
incorporation, bylaws, declaration or deed of trust or other organizational or
governing instruments relating to each such Investor or any applicable laws or
orders, regulations, rules or requirements of a court, public body or authority
by which the respective Investor is bound.
(d) The conditions of the obligations of MQ and MEDIQ set forth in
Articles V and VI of the Merger Agreement shall have been satisfied or waived.
(e) All corporate and other proceedings, if any, taken or to be taken
by the New Investors or the Management Investors in connection with the
transactions contemplated hereby to be consummated at the MQ Securities Closing
and all documents incident thereto shall be reasonably satisfactory in form and
substance to MQ and MQ shall have received from the New Investors and the
Management Investors all such counterpart originals or certified or other copies
of such documents as they may reasonably request.
(f) The New Investors and the Management Investors shall have paid or
shall pay concurrently the purchase prices required of them pursuant to this
Article I.
1.5 Management Pool Shares. The Management Pool Shares set forth on
Schedule A which are subsequently issued by the Company will be issued to the
Management Investor purchasing such shares pursuant to this Article I. For this
purpose, the closing of the purchase and sale of such Management Pool Shares
will be deemed to be the MQ Securities Closing; the date of such closing shall
be deemed to be the MQ Closing Date.
ARTICLE II
THE ROLLOVER
2.1 Rolled Shares. Pursuant to Section 1.5(e) of the Merger Agreement, at
the Effective Time, the Rolled Shares shall be converted into an aggregate of
1,340,219 shares of MEDIQ Series B Preferred Stock and 109,781 shares of MEDIQ
Common Stock, allocated among the holders of the Rolled Shares as provided on
Schedule A hereto underneath the caption "Rotko Investors". As a result of their
conversion pursuant to Section 1.5(e) of the Merger Agreement, all of the Rolled
Shares shall cease to be outstanding and shall be automatically canceled and
retired and the holders of the certificates previously evidencing such Rolled
Shares shall cease to have any rights with respect to such Rolled Shares except
as otherwise provided in the Merger Agreement or by law.
2.2 Closing. The transactions referred to in Section 2.1 will take place at
the Effective Time of the Merger. After the Effective Time, MEDIQ will deliver
to each Rotko Investor
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<PAGE>
certificates evidencing the number of shares of MEDIQ Series B Preferred Stock
and MEDIQ Common Stock to be received by such Rotko Investor, registered in such
Rotko Investor's name upon delivery of the Rolled Shares as described in Section
2.1 hereof.
ARTICLE III
PURCHASE OF MEDIQ SECURITIES
3.1 Sale and Purchase of MEDIQ Securities. Subject to the terms and
conditions set forth herein, at the MEDIQ Securities Closing (as defined below),
MEDIQ will issue and sell to each of the Management Investors the number of
shares of MEDIQ Common Stock set forth opposite each such Investor's name on
Schedule B. Such shares of Purchased Securities shall remain unvested until they
vest in accordance with Section 3.5 hereof.
3.2 MEDIQ Securities Closing. The closing (the "MEDIQ Securities Closing")
of the purchase and sale of the MEDIQ Common Stock by the Management Investors
referred to in Section 3.1 will take place after the Effective Time of the
Merger at such time and on such date as may be agreed by the Company and the
Management Investors (the "MEDIQ Closing Date"). At the MEDIQ Securities
Closing, MEDIQ will deliver to each Management Investor certificates for the
number of shares of MEDIQ Common Stock set forth opposite each such Investor's
name on Schedule B hereto, against payment of the purchase price therefor in
cash, by federal wire transfer of immediately available funds, with confirmed
receipt.
3.3 Conditions to Investor's Obligations. The obligation of each Management
Investor to purchase and pay for the MEDIQ Common Stock at the MEDIQ Securities
Closing is subject to the satisfaction on or prior to the MEDIQ Closing Date of
the following conditions:
(a) The representations and warranties of MEDIQ set forth in Article IV
shall be true and correct in all material respects on and as of the MEDIQ
Closing Date as though then made, and all covenants of MEDIQ set forth in
Article IV required to be performed on or prior to the MEDIQ Securities Closing
shall have been performed in all material respects.
(b) MEDIQ's Certificate of Incorporation and Bylaws after the Effective
Time shall be substantially in the forms of Exhibits A-3 and A-4, respectively.
(c) No preliminary or permanent injunction or order, decree or ruling
of any nature issued by any court or governmental agency of competent
jurisdiction, nor any statute, rule, regulation or executive order promulgated
or enacted by any United States federal, state or local governmental authority,
shall be in effect, that would prevent the consummation of the transactions
contemplated by this Agreement or the Merger Agreement.
(d) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the Certificate of
Incorporation or Bylaws of MEDIQ, or any applicable laws or orders, regulations,
rules or requirements of a court, public body or authority by which MEDIQ is
bound.
(e) MEDIQ shall have delivered to each of the Management Investors
certificates for the Purchased Securities required pursuant to Section 3.1.
(f) All corporate and other proceedings, if any, taken or to be taken
by MEDIQ in connection with the transactions contemplated hereby to be
consummated at the
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<PAGE>
MEDIQ Securities Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Management Investors and the
Management Investors shall have received from MEDIQ all such counterpart
originals or certified or other copies of such documents as they may reasonably
request.
3.4 Conditions to the Obligations of MEDIQ. The obligation of MEDIQ to
issue the securities referred to in Section 3.1 to each Management Investor as
set forth herein at the MEDIQ Securities Closing is subject to the satisfaction
on or prior to the MEDIQ Securities Closing of the following conditions:
(a) The representations and warranties of each Management Investor set
forth in Article V shall be true and correct in all material respects at and as
of the MEDIQ Closing Date as though then made, and all covenants of each
Management Investor required to be performed at or prior to the MEDIQ Securities
Closing shall have been performed in all material respects.
(b) The conditions set forth in Section 3.3(c) shall have been
satisfied, and the Management Investors shall have purchased or shall
simultaneously purchase the Purchased Securities set forth opposite their
respective names on Schedule B.
(c) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby will not violate the certificate of
incorporation, bylaws, declaration or deed of trust or other organizational or
governing instruments relating to each such Management Investor or any
applicable laws or orders, regulations, rules or requirements of a court, public
body or authority by which the respective Management Investor is bound.
(d) All corporate and other proceedings, if any, taken or to be taken
by the Management Investors in connection with the transactions contemplated
hereby to be consummated at the MEDIQ Closing and all documents incident thereto
shall be reasonably satisfactory in form and substance to MEDIQ and MEDIQ shall
have received from the Management Investors all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
(e) The Management Investors shall have paid or shall pay concurrently
the purchase prices required of them pursuant to this Article III.
3.5 Vesting of Purchased Securities. Shares of Purchased Securities shall
vest as to a Management Investor as set forth in this Section 3.5.
(a) So long as on the first anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, 20% of the shares of Purchased Securities
held by such Management Investor or his Permitted Transferee shall vest on such
anniversary.
(b) So long as on the second anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
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(c) So long as on the third anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
(d) So long as on the fourth anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
(e) So long as on the fifth anniversary of the Effective Time the
Management Investor is an employee of the Company and has been an employee at
all times since the Effective Time, an additional 20% of the shares of Purchased
Securities held by such Management Investor or his Permitted Transferee shall
vest on such anniversary.
3.6 Management Pool Shares. The Management Pool Shares set forth on
Schedule B which are subsequently issued by the Company will be issued to the
Management Investors purchasing such shares pursuant to this Article III. For
this purpose, the closing of the purchase and sale of such Management Pool
Shares will be deemed to be the MEDIQ Securities Closing; the date of such
closing shall be deemed to be the MEDIQ Closing Date.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF MQ AND MEDIQ
4.1 Representations and Warranties of MQ. MQ represents and warrants to,
and covenants and agrees with, each of the Investors as follows:
(a) MQ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) MQ has full corporate power and corporate authority to make,
execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) MQ has taken such corporate action as is necessary or appropriate
to enable it to perform its obligations hereunder, including, but not limited
to, the issuance of the Securities to be issued by it pursuant to Section 1.1
hereof, and this Agreement constitutes the legal, valid and binding obligation
of MQ, enforceable against MQ in accordance with the terms hereof.
(d) The shares of capital stock of MQ to be issued hereunder when
issued in compliance with the provisions of this Agreement will be validly
issued, fully paid and non-assessable.
(e) As of the Effective Time of the Merger and immediately prior to
giving effect thereto (but after giving effect to the issuance of the shares of
MQ Preferred Stock and MQ Common Stock as set forth in Section 1.1 and assuming
the issuance of all of the Management Pool Shares referred to in Section 1.5),
the authorized capital stock of MQ will consist of (i) 30,000,000 shares of MQ
Common Stock, of which 890,898 will be issued and
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outstanding, (ii) 40,000,000 shares of Preferred Stock of which (x) 10,000,000
shares shall be designated as MQ Series A Preferred Stock, of which 5,828,457
will be issued and outstanding, (y) 5,000,000 shares shall be designated as MQ
Series B Preferred Stock, of which 1,660,450 will be issued and outstanding, and
(z) 5,000,000 shares shall be designated as MQ Series C Preferred Stock, of
which 3,001,206 will be issued and outstanding. Except as set forth in the
Merger Agreement and except in respect of the Management Pool Shares, the Rolled
Shares, the Management Options (as defined herein) and the Warrants (as defined
herein), there will be no rights, subscriptions, warrants, options, conversion
rights, or agreements of any kind outstanding to purchase from MQ, or otherwise
require MQ to issue, any shares of capital stock of MQ or securities or
obligations of any kind convertible into or exchangeable for any shares of
capital stock of MQ and MQ will not be subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of its
capital stock.
(f) Prior to the date hereof, MQ has not (i) incurred any liabilities
or obligations; (ii) engaged in any business or activities of any kind
whatsoever; (iii) entered into any agreement or arrangements with any person or
entity, or (iv) been subject to or bound by any obligation or undertaking,
except in each case as incurred in connection with its incorporation,
capitalization or the negotiation and consummation of the transactions
contemplated by this Agreement and the Merger Agreement including, but not
limited to, the financing relating to the consummation of the transactions
contemplated by the Merger Agreement. Set forth on Schedule 2.1(f) are the
material agreements and documents relating to the financing of the transactions
contemplated by the Merger Agreement. All such agreements are, or will be as of
the Effective Time of the Merger, binding on the parties thereto in accordance
with their terms and in full force and effect.
4.2 Representations and Warranties of MEDIQ. MEDIQ represents and warrants
to, and covenants and agrees with, each of the Investors as follows:
(a) MEDIQ is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) MEDIQ has full corporate power and corporate authority to make,
execute, deliver and perform this Agreement and to carry out all of the
transactions provided for herein.
(c) MEDIQ has taken such corporate action as is necessary or
appropriate to enable it to perform its obligations hereunder, including, but
not limited to, the issuance of the securities to be issued by it pursuant to
Sections 1.1, 2.1 and 3.1 hereof, and this Agreement constitutes the legal,
valid and binding obligation of MEDIQ, enforceable against MEDIQ in accordance
with the terms hereof.
(d) The shares of capital stock of MEDIQ to be issued to the holders of
shares of capital stock of MQ and the holders of the Rolled Shares in connection
with the Merger, when issued in compliance with the terms hereof and of the
Merger Agreement and the certificate of merger filed with the Secretary of State
of the State of Delaware effecting the Merger will be validly issued, fully paid
and non-assessable.
(e) As of the Effective Time of the Merger and after giving effect to
the Merger and the other transactions contemplated by the Merger Agreement,
including the transactions described on Schedule C hereof and assuming the
issuance of all of the Management Pool Shares referred to in Section 3.6 hereof,
the authorized capital stock of MEDIQ will consist
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of (i) 30,000,000 shares of MEDIQ Common Stock, of which 1,228,282 will be
issued and outstanding upon the issuance of all of the Management Pool Shares
and the issuance of shares pursuant to the Warrants and the Management Options
(subject to any antidilution adjustments), (ii) 40,000,000 shares of Preferred
Stock of which (x) 10,000,000 shares shall be designated as MEDIQ Series A
Preferred Stock, of which 7,825,847 (less amounts in respect of fractional
shares not issued in the Merger) will be issued and outstanding, (y) 5,000,000
shares shall be designated as MEDIQ Series B Preferred Stock, of which 3,000,669
shares will be issued and outstanding and (z) 5,000,000 shares shall be
designated as MEDIQ Series C Preferred Stock, of which 3,001,206 shares will be
issued and outstanding. Except as described on Schedule C as of the MEDIQ
Closing Date, and except in respect of the Management Pool Shares, the
Management Options and the Warrants, there will be no rights, subscriptions,
warrants, options, conversion rights, or agreements of any kind outstanding to
purchase from MEDIQ, or otherwise require MEDIQ to issue, any shares of capital
stock of MEDIQ or securities or obligations of any kind convertible into or
exchangeable for any shares of capital stock of MEDIQ; MEDIQ will not be subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock; and the shares of Common Stock and
Preferred Stock held by the Investors, together with the shares of MEDIQ Series
A Preferred Stock issued as Merger Consideration (as defined in the Merger
Agreement) and the shares of Common Stock and Preferred Stock issued in respect
of the Management Pool Shares, the Management Options and the Warrants, will
constitute all of the outstanding shares of MEDIQ's capital stock.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND
COVENANTS OF EACH INVESTOR
Representations, Warranties and Covenants of Each Investor. Each of the
Investors severally represents and warrants to, and covenants and agrees with,
MQ and MEDIQ that:
(a) Such Investor has full legal right, power and authority (including
the due authorization by all necessary corporate, fiduciary or other action in
the case of Investors who are not natural persons) to enter into this Agreement
and to perform such Investor's obligations hereunder without the need for the
consent of any other person; and this Agreement has been duly authorized,
executed and delivered and constitutes the legal, valid and binding obligation
of such Investor enforceable against such Investor in accordance with the terms
hereof.
(b) The Securities are being acquired by such Investor for investment
and not with a view to any distribution thereof that would violate the
Securities Act of 1933, as amended (the "Securities Act"), or the applicable
state securities laws of any state; and such Investor will not distribute the
Securities in violation of the Securities Act or the applicable securities laws
of any state.
(c) Such Investor understands that the Securities have not been
registered under the Securities Act or the securities laws of any state and may
not be sold unless registered under the Securities Act and any applicable state
securities laws or unless an exemption from such registration becomes or is
available.
(d) Such Investor is financially able to hold the Securities for
long-term investment, believes that the nature and amount of the Securities
being purchased are consistent with such Investor's overall investment program
and financial position, and recognizes that there are substantial risks involved
in the purchase of the Securities.
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(e) Such Investor confirms that (i) such Investor is familiar with the
proposed business of MQ and MEDIQ following the Merger, (ii) such Investor has
had the opportunity to ask questions of the officers and directors of MQ and
MEDIQ and to obtain (and that such Investor has received to its satisfaction)
such information about the business and financial condition of MQ and MEDIQ as
it has reasonably requested, and (iii) such Investor, either alone or with such
Investor's representative (as defined in Rule 501(h) promulgated under the
Securities Act), if any, has such knowledge and experience in financial and
business matters that such Investor is capable of evaluating the merits and
risks of the prospective investment in the Securities.
(f) Such Investor's residence, business address, business and residence
telephone numbers and taxpayer identification number are as set forth below such
Investor's signature to this Agreement.
(g) In formulating a decision to enter into this Agreement, such
Investor has relied upon an independent investigation of MQ's and MEDIQ's
respective businesses and upon consultations with such Investor's legal and
financial advisers with respect to this Agreement and the nature of such
Investor's investment; and that in entering into this Agreement no reliance was
placed upon any representations or warranties other than those contained in this
Agreement.
5.2 Additional Representations and Warranties of Each Rotko Investor. Each
of the Rotko Investors severally represents and warrants to MQ and MEDIQ that
such Rotko Investor is the sole beneficial owner of the Rolled Shares set forth
opposite such Rotko Investor's name on Schedule A and has good title to such
Rolled Shares, free and clear of any lien, security interest, restriction, right
of first refusal or encumbrance or claim of any kind, and at the Effective Time,
such Rotko Investor will be (or in the case of the Rotko Trust, the
beneficiaries of such trust is or are) the sole beneficial owner of such Rolled
Shares and will have good title to such Rolled Shares, free and clear of any
lien, security interest, restriction, right of first refusal or encumbrance or
claim of any kind.
5.3 Legend. The certificates representing the Securities to be issued
pursuant to this Agreement shall bear the following legend in addition to any
other legend required under applicable law:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE
TERMS AND CONDITIONS OF THE SECURITIES PURCHASE AND HOLDERS AGREEMENT BY
AND AMONG THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE,
TRANSFER OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF
SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE ONLY UPON PROOF OF
COMPLIANCE THEREWITH.
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5.4 Restrictions on Transfers of Securities. The following restrictions on
Transfer shall apply to all Securities owned by any Investor or Permitted
Transferee (as hereinafter defined) (except a Permitted Transferee by virtue of
Section 5.4(e)(iv) or (viii) hereof):
(a) No Investor or Permitted Transferee (except a Permitted Transferee
by virtue of Section 5.4(e)(iv) or (viii) hereof) shall exchange, sell, assign,
transfer, pledge, hypothecate, make gifts of or in any manner whatsoever dispose
of (other than in connection with a redemption or purchase by the Company) or
encumber or grant any rights or interests in or in respect of, create any voting
trust or other agreement or arrangement with respect to the transfer of voting
rights or any other beneficial interest in, create any other claim or make any
other transfer or disposition whatsoever, whether voluntary or involuntary,
affecting the right, title, interest or possession in or to (any such transfer,
disposition or encumbrance being hereinafter referred to as a "Transfer") any
Securities unless (i) such Transfer is to a person or entity approved in advance
in writing by the holders of at least fifty percent (50%) of the outstanding
Common Stock then held by the Investors (including shares held by the
transferor) and (ii) such Transfer complies with the provisions of Article VI
and this Section 5.4.
(b) Any purported Transfer in violation of the covenant set forth in
this Section 5.4 shall be null and void and of no force and effect and the
purported transferee shall have no rights or privileges in or with respect to
the Company.
(c) Prior to any proposed Transfer of any Securities by any Investor,
the holder thereof shall give written notice to the Company describing the
manner and circumstances of the proposed Transfer accompanied by a written
opinion of legal counsel, addressed to the Company and the transfer agent, if
other than the Company, and reasonably satisfactory in form and substance to
each addressee, to the effect that the proposed Transfer of the Securities may
be effected without registration under the Securities Act and applicable state
securities laws. Each certificate evidencing the Securities transferred shall
bear the legend set forth in Section 5.3, except that such certificate shall not
bear such legend if the opinion of counsel referred to above is to the further
effect that such legend is not required in order to establish compliance with
any provision of the Securities Act or applicable state securities laws.
(d) Nothing in this Section 5.4 shall prevent the Transfer of
Securities by an Investor to one or more of its Permitted Transferees, or to the
Company; provided, however, that each such Investor or Permitted Transferee
(except a Permitted Transferee by virtue of Section 5.4(e)(iv) or (viii) hereof)
shall take such Securities subject to and be fully bound by the terms of this
Agreement applicable to it with the same effect as if it were a party hereto;
and provided, further, that (i) no entity or person shall be a Permitted
Transferee (other than a Permitted Transferee by virtue of Section 5.4(e)(iv) or
(viii) hereof) unless such transferee executes a joinder to this Agreement
satisfactory in form and substance to holders of at least fifty percent (50%) of
the shares of Common Stock then held by the Investors (including shares held by
the transferor) and the Company which joinder states (A) that such entity or
person agrees to be fully bound by this Agreement as if it were an Investor
hereto and (B) with respect to any Permitted Transferee other than a natural
person, that such Permitted Transferee agrees to Transfer such Securities to the
Investor from whom such Permitted Transferee received such Securities
immediately prior to the occurrence of any event which would result in such
person no longer being a Permitted Transferee of such Investor, (ii) no entity
or person shall be a Permitted Transferee if such Transfer shall violate the
covenant set forth in this Section 5.4, and (iii) no Transfer shall be effected
except in compliance with the registration requirements of the Securities Act
and any applicable state's securities laws or pursuant to an available exemption
therefrom.
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Each Investor agrees to accept the Transfer of Securities to such Investor
pursuant to clause (B) of the preceding sentence at any time from a Transferee
of such Investor.
(e) As used herein, "Permitted Transferee" shall mean:
(i) in the case of any Investor or Permitted Transferee who is a
natural person, such Investor's spouse or issue (in each case, natural or
adopted), any trust for such Investor's benefit or the benefit of such
Investor's spouse or issue (in each case, natural or adopted), or any
corporation or partnership in which the direct and beneficial owner of all of
the equity interest is such individual Investor or Permitted Transferee or such
Investor's spouse or issue (in each case, natural or adopted) or any trust for
the benefit of such persons;
(ii) in the case of any Investor or Permitted Transferee who is, in
each case, a natural person, the heirs, executors, administrators or personal
representatives upon the death of such Investor or Permitted Transferee or upon
the incompetency or disability of such Investor or Permitted Transferee for
purposes of the protection and management of such Investor's assets;
(iii) in the case of a New Investor who is not a natural person,
any Controlled Affiliate (as hereinafter defined) of such New Investor;
(iv) in the case of any Investor or Permitted Transferee, any
person or other entity if such person or other entity takes such Securities
pursuant to a sale in connection with a Public Offering (as defined herein) of
the class or series of the Securities which are the subject of such Transfer or
following a Public Offering of the class or series of the Securities which are
the subject of such Transfer in open market transactions or under Rule 144 under
the Securities Act (which shares transferred pursuant to this clause (iv) to a
Person other than an Investor or one of its Affiliates shall no longer be
subject to the terms of this Agreement); provided that such person or entity,
together with its Affiliates will not, to the knowledge of the Investor or
Permitted Transferee or any of its affiliates beneficially own securities
representing 3% or more of the class or series to which the securities subject
to the Transfer belong;
(v) in the case of BRS or any Controlled Affiliate of BRS (the "BRS
Entities"), any of its employees, officers or directors, any trust for any such
employee, officer or director's benefit or the benefit of any such person's
spouse, or issue (in each case, natural or adopted) or any corporation,
partnership or other entity at least a majority of the equity in which is held
in the aggregate by BRS, its employees, officers or directors or any of their
respective Controlled Affiliates;
(vi) in the case of Health Care Capital Partners, L.P. and Health
Care Executive Partners, L.P. (collectively, the "HCCP Entities") or any
Controlled Affiliate of the HCCP Entities, any of their employees, officers or
directors, any trust for any such employee, officer or director's benefit or the
benefit of any such person's spouse, or issue (in each case, natural or adopted)
or any corporation, partnership or other entity at least a majority of the
equity in which is held in the aggregate by the HCCP Entities, their employees,
officers or directors or any of their respective Controlled Affiliates;
(vii) in the case of Galen Partners III, L.P., Galen Partners
International III, L.P. and Galen Employee Fund III, L.P. (collectively, the
"Galen Entities") or any Controlled Affiliate of the Galen Entities, any of
their employees, officers or directors, any trust for any such employee, officer
or director's benefit or the benefit of any such person's
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spouse, or issue (in each case, natural or adopted) or any corporation,
partnership or other entity at least a majority of the equity in which is held
in the aggregate by the Galen Entities, their employees, officers or directors
or any of their respective Controlled Affiliates;
(viii) any partner or member of BRS, the HCCP Entities or the Galen
Entities, as the case may be, in connection with a distribution of Securities to
such partners or members by BRS, the HCCP Entities or the Galen Entities, as the
case may be; provided that such distribution of Securities of a particular class
or series of Securities has occurred following a Public Offering of such class
or series of Securities and the termination of any lock-up restrictions imposed
by the underwriters of such offering which is the subject of such distribution
to the partners or members of BRS, the HCCP Entities or the Galen Entities, as
the case may be, and such transfer is made in accordance with the provisions of
paragraph (g) below;
(ix) in the case of Transfers by the Rotko Investors after the
fifth anniversary of the Effective Time, any transferee other than those
enumerated in the foregoing clauses (i), (ii) or (iv) pursuant to a Transfer
which otherwise complies with applicable law (including, without limitation,
applicable securities laws) and the other terms and provisions of this
Agreement; and
(x) in the case of Transfers pursuant to Approved Sales (as defined
herein), the exercise of Tag-Along Rights (as defined herein) or the exercise of
the Series B Purchase Option (as defined herein).
(f) Notwithstanding Section 5.4(a), (b), (c) and (d) above, nothing in
this Agreement shall prevent any Investor from granting any proxy to
representatives of BRS to vote Securities in accordance with the instructions of
BRS, or depositing of Securities with a voting trust where the trustee or
trustees of such trust are representatives of BRS.
(g) Notwithstanding any other provision to the contrary in this
Agreement, BRS, the HCCP Entities and the Galen Entities each agrees with each
of the others that it shall provide at least 20 days notice to the others prior
to making any distribution referred to in Section 5.4(e)(viii) to its partners
or members.
5.5 Notation. A notation will be made in the appropriate transfer records
of the Company with respect to the restrictions on transfer of the Securities
referred to in this Agreement.
5.6 Reliance. Each Investor acknowledges that each of the other parties
hereto is entering into this Agreement in reliance upon such Investor's
representations and warranties and other covenants and agreements contained
herein.
5.7 Limitation on Repurchase or Redemption of Company Stock. Each Investor
understands that in connection with the Merger, the Company has entered into or
will enter into certain financing agreements which will contain prohibitions,
restrictions and limitations on the ability of the Company to purchase or redeem
any of the Securities and to pay dividends on the Securities.
5.8 Payment of Option Consideration. Each Management Investor agrees, and
authorizes MQ and MEDIQ to instruct the exchange agent appointed by them to
disburse the Option Consideration, to withhold from the Option Consideration
payable to each Management Investor an amount of cash equal to the purchase
price required to be paid by such Management Investor pursuant to Article I for
the shares purchased by such Management Investor and to pay over such withheld
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amount to the Company as the purchase price required to be paid by such
Management Investor pursuant to Article I.
ARTICLE VI
OTHER COVENANTS AND REPRESENTATIONS
6.1 Observers' Rights. So long as the BRS Entities and their Controlled
Affiliates (considered as a single Investor) remain a Major Shareholder (as
defined herein), if no employee of the BRS Entities is a member of the Company's
Board of Directors, BRS shall have the right to designate two observers (the
"Observers") to attend meetings of the Company's Board of Directors and
committees thereof. If at least one employee of BRS is a member of the Company's
Board of Directors, BRS shall have the right to designate one Observer to attend
meetings of the Company's Board of Directors and committees thereof. So long as
the HCCP Entities and their Controlled Affiliates (considered as a single
Investor) remain a Major Shareholder, if no employee of the HCCP Entities is a
member of the Company's Board of Directors, the HCCP Entities shall have the
right to designate one Observer to attend meetings of the Company's Board of
Directors and committees thereof. So long as the Galen Entities and their
Controlled Affiliates (considered as a single Investor) remain a Major
Shareholder, if no employee of the Galen Entities is a member of the Company's
Board of Directors, the Galen Entities shall have the right to designate one
Observer to attend meetings of the Company's Board of Directors and committees
thereof. So long as the Rotko Investors and their Controlled Affiliates
(considered as a single Investor) remain a Major Shareholder, if the Rotko Trust
(as defined herein) has not designated a director pursuant to Section 6.3
hereof, the Rotko Trust shall have the right to designate one Observer to attend
meetings of the Company's Board of Directors and committees thereof. The
Observers shall not have the right to vote on any matter presented to the Board
of Directors or any committee thereof. The Company shall give each Observer
written notice of each meeting of the Board of Directors and committees thereof
at the same time and in the same manner as the members of the Board of Directors
or such committee receive notice of such meetings, and the Company shall permit
each Observer to attend as an observer all meetings of its Board of Directors
and committees thereof. Each Observer shall be entitled to receive all written
materials and other information given to the directors in connection with such
meetings at the same time such materials and information are given to the
directors, and each Observer shall keep such materials and information
confidential. If the Company proposes to take any action by written consent in
lieu of a meeting of its Board of Directors or a committee thereof, the Company
shall give written notice thereof to each Observer prior to the effective date
of such consent. The Company shall provide to each Observer all written
materials and other information given to the directors in connection with such
action by written consent at the same time such materials and information are
given to the directors, and each Observer shall keep such materials and
information confidential.
6.2 Financial Statements and Other Information. So long as an Investor
(together with its Controlled Affiliates) is a Major Shareholder, the Company
shall deliver to such Investor:
(a) as soon as available and in any event within 45 days after the end
of each of the first three quarters of each fiscal year of the Company,
consolidated balance sheets of the Company and its subsidiaries as of the end of
such period, and consolidated statements of income and cash flows of the Company
and its subsidiaries for the period then ended prepared in conformity with
generally accepted accounting principles applied on a consistent basis, except
as otherwise noted therein, and subject to the absence of footnotes and to
year-end adjustments; and
(b) as soon as available and in any event within 90 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its subsidiaries as of
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the end of such year, and consolidated statements of income and cash flows of
the Company and its subsidiaries for the year then ended prepared in conformity
with generally accepted accounting principles applied on a consistent basis,
except as otherwise noted therein, together with an auditor's report thereon of
a firm of established national reputation.
6.3 Directors and Voting Agreements. Each of the parties hereto and each
Permitted Transferee (other than a Permitted Transferee pursuant to Section
5.4(e)(iv)) agrees that it shall take, at any time and from time to time, all
action necessary (including voting any Securities owned by him, her or it,
calling special meetings of stockholders and executing and delivering written
consents) to ensure that the Board of Directors of the Company is composed at
all times of at least six persons and not more than nine (or such greater number
as may have been approved by the holders of a majority of the outstanding shares
of Common Stock then outstanding) persons (with the exact number to be
determined by BRS from time to time) as follows: (a) so long as the Rotko
Investors and their Controlled Affiliates (considered as a single Investor)
remain a Major Shareholder, one person designated by the trust known as T/D
Bernard B. Rotko Dated November 18, 1983 (the "Rotko Trust"), (b) so long as the
HCCP Entities and their Controlled Affiliates (considered as a single Investor)
remain a Major Shareholder, one person designated by the HCCP Entities, (c) so
long as the Galen Entities and their Controlled Affiliates (considered as a
single Investor) remain a Major Shareholder, one person designated by the Galen
Entities, (d) the chief executive officer of the Company and (e) such number of
persons as may be designated by BRS from time to time who shall constitute the
remainder of the Board of Directors; provided that if the number of directors
designated by BRS is more than three, such additional directors shall be
independent (within the meaning of Rule 3.03 of the rules of the New York Stock
Exchange) of the Company and each Investor, and shall have been approved by each
of the Galen Entities and the HCCP Entities (so long as they remain Major
Shareholders), such approval not to be unreasonably withheld, it being
understood that the parties will use their reasonable best efforts to identify
and cause to be elected to the Board of Directors two independent directors
pursuant to this proviso promptly following the Closing.
The right to designate a director is not transferable by the Rotko
Investors or the Rotko Trust, the HCCP Entities or the Galen Entities without
the prior written consent of BRS.
BRS agrees with the HCCP Entities and the Galen Entities that it will not
assign to third parties unaffiliated with BRS the right to designate one or more
of the remaining members of the Board of Directors without the prior written
consent of the HCCP Entities and the Galen Entities, which consent shall not be
unreasonably withheld. In the event BRS transfers to any person other than BRS
the right to designate one or more of the remaining members of the Board of
Directors, BRS agrees that it shall obtain from such transferee in the agreement
relating to the transfer of such right to designate director(s) an undertaking
by such transferee to vote any Securities owned by it in favor of the persons
designated pursuant to clauses (a), (b), (c) and (d) above.
So long as the HCCP Entities or the Galen Entities are entitled to
designate a director, each of their designees (i) shall be a member of the
executive committee, if any, of the Company or any committee performing
substantially similar functions, and (ii) shall be included on such other
committee of the Board of Directors as they may request.
Each Investor who is entitled to designate one or more directors shall be
entitled to designate a proxy or proxies to attend and vote at meetings of the
Board of Directors of the Company or such committees of the Board of Directors
in their stead, to the extent designation of such proxy is permitted under
applicable law.
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6.4 Right to Remove Certain of the Company's Directors. Each of BRS, the
Rotko Trust, the HCCP Entities and the Galen Entities, as the case may be, may
request that any director designated by it be removed (with or without cause) by
written notice to the other parties, and, in any such event, each Investor and
Permitted Transferee (other than a Permitted Transferee pursuant to Section
5.4(e)(iv)) shall promptly consent in writing or vote or cause to be voted all
Securities now or hereafter owned or controlled by them or it for the removal of
such person as a director and the Company shall take such actions as may be
necessary to effect such removal. In the event any person ceases to be a
director, such person shall also cease to be a member of any committee of the
Board of Directors of the Company.
6.5 Right to Fill Certain Vacancies in Company's Board. In the event that a
vacancy is created on the Company's Board of Directors at any time by the death,
disability, retirement, resignation or removal (with or without cause) of a
director designated by BRS, the Rotko Trust, the HCCP Entities or the Galen
Entities, as the case may be, or if otherwise there shall exist or occur any
vacancy on the Company's Board of Directors in a directorship subject to
designation by BRS, the Rotko Trust, the HCCP Entities or the Galen Entities, as
the case may be, such vacancy shall not be filled by the remaining members of
the Company's Board of Directors but each Investor and its Permitted Transferees
(other than a Permitted Transferee pursuant to Section 5.4(e)(iv)) hereby agree
promptly to consent in writing or vote or cause to be voted all Securities now
or hereafter owned or controlled by them or it to elect that individual
designated to fill such vacancy and serve as a director, as shall be designated
by the stockholder then entitled to designate such director pursuant to this
Article VI.
6.6 Sale of the Company.
(a) If (i) the holders of at least a majority of the outstanding shares
of the Company's Common Stock then held by the Investors approve in writing the
sale of the Company to any Person (other than transactions with an Affiliate of
the Company which are not approved by a majority of the directors of the Company
who are not designated by any such Affiliate) (whether by merger, consolidation,
sale of all or substantially all of its assets or sale of all of the outstanding
capital stock) (a "Sale of the Company") or (ii) the holders of at least a
majority of the outstanding shares of any class or series of the Company's
capital stock then held by the Investors approve in writing the sale of all of
such class or series of securities by the holders thereof to any Person (other
than transactions with an Affiliate of the Company which are not approved by a
majority of the directors of the Company who are not designated by any such
Affiliate), (the foregoing transactions described in (i) and (ii) above being an
"Approved Sale"), each Investor and Permitted Transferee will consent to, vote
for, and raise no objections against, and waive dissenters and appraisal rights
(if any) with respect to, the Approved Sale, and if the Approved Sale is
structured as a sale of stock, each Investor and Permitted Transferee will agree
to sell and will be permitted to sell all of such Investor's and Permitted
Transferee's Preferred or Common Stock or other Securities, as the case may be,
which are of the class or series which is the subject of the Approved Sale, on
the same terms and conditions approved by the holders of a majority of the
outstanding shares of the class or series then held by the Investors that is the
subject of the Approved Sale. Each Investor and Permitted Transferee will take
all necessary and desirable actions as may be reasonably requested by BRS and
the Company in connection with the consummation of an Approved Sale.
(b) The obligations of each of the Investors with respect to an
Approved Sale are subject to the satisfaction of the conditions that: (i) upon
the consummation of the Approved Sale all of the Investors and Permitted
Transferees (other than Permitted Transferees pursuant to Section 5.4(e)(iv))
will receive the same form and amount of
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consideration per share as that received by other holders of the same class or
series, as the case may be, and if any holder of a given class or series of
securities is given an option as to the form and amount of consideration to be
received, all Investors and Permitted Transferees holding the shares of the same
class or series will be given the same option; (ii) the terms of sale shall not
include any indemnification, guaranty or the similar undertaking of the Investor
(other than undertakings by management in respect of continued employment) that
is not made or given pro rata with other Investors on the basis of share
ownership; and (iii) nothing in this Section 6.6 shall obligate any designee of
an Investor serving on the Board of Directors of the Company to vote in favor of
any transaction which such person reasonably believes in good faith, upon advice
of counsel, would breach such director's fiduciary duties as a director of the
Company in a manner which could reasonably be expected to give rise to personal
liability on the part of such director.
(c) In the event that the written notice described in Section 6.6(a) is
delivered for an Approved Sale involving the sale of MEDIQ Series B Preferred
Stock to the Company or any person related to the Company within the meaning of
Section 351(g) of the Internal Revenue Code of 1986, as amended (the Company and
each such related person are hereinafter referred to as a "Disqualifed Person"),
then BRS shall either (x) designate a Person or Persons other than a
Disqualified Person (which such Persons may include BRS itself or an employee or
affiliate of BRS) or (y) designate the other Investors on a pro-rata basis, to
purchase from (i) the Rotko Investors who are original signatories hereto and
(ii) Persons who are Permitted Transferees of the Rotko Investors pursuant to
Sections 5.4(e)(i) and (ii), such shares of MEDIQ Series B Preferred Stock in
lieu of the Disqualified Person; provided that any such purchase shall not be
funded directly or indirectly by a Disqualified Person. Each Investor agrees
that it will, if requested by BRS or its assignee, purchase its pro rata portion
(based upon each Investors' ownership of the MEDIQ Series B Preferred Stock at
the time of the Approved Sale, excluding the shares of MEDIQ Series B Preferred
Stock held by the Rotko Investors) of the securities described in the preceding
sentence. By way of illustration, if BRS owns 40 shares of Series B Preferred
Stock, the HCCP Entities own 30 shares of MEDIQ Series B Preferred Stock, the
Galen Entities own 20 shares of MEDIQ Series B Preferred Stock and the
Management Investors own 10 shares of MEDIQ Series B Preferred Stock, and as a
result of the Approved Sale, the Investors are required to repurchase 50 shares
of the MEDIQ Series B Preferred Stock from the Rotko Investors pursuant to this
Section 6.6(c), BRS, the HCCP Entities, the Galen Entities and the Management
Investors will be obligated to repurchase 20, 15, 10 and 5 shares of MEDIQ
Series B Preferred Stock, respectively, from the Persons described in clauses
(i) and (ii) of the first sentence of this Section 6.6(c).
(d) The provisions of this Section 6.6 shall terminate with respect to
any class or series of securities upon the consummation of a Public Offering
with respect to such class or series of securities.
(e) Each Investor and Permitted Transferee shall, in connection with a
sale of its Securities pursuant to this Section 6.6, at the request of the
Company and without further cost and expense to the Company, execute and deliver
such other instruments of conveyance and transfer and take such other actions as
may reasonably be requested in order to consummate the Approved Sale. All
Investors will bear their pro rata share (based upon the number of shares sold)
of the reasonable costs and expenses of any Approved Sale to the extent such
costs and expenses are incurred for the benefit of all selling Investors and are
not otherwise paid by the Company or the acquiring party. Costs incurred by any
Investor on its own behalf will not be considered costs of the Approved Sale
hereunder.
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6.7 Tag-Along Rights.
(a) Each Investor agrees that in connection with the consummation of
any transaction or series of related transactions involving the Transfer of
shares of Preferred Stock or Common Stock that constitute a "Significant
Transfer" (as hereinafter defined), each of the Investors and their Permitted
Transferees (other than a Permitted Transferee pursuant to Section 5.4(e)(iv))
(collectively, the "Tag-Along Rightholders") will be offered an equal
opportunity (the "Tag-Along Right") to participate in such transaction or
transactions on a pro rata basis (based upon their respective ownership of
shares of the same series or class as the shares which are the subject of such
Significant Transfer) and on identical terms. As used herein, "Significant
Transfer" means a Transfer by an Investor to any Person or Persons (including
repurchases (but not redemptions) by the Company) of shares of Preferred Stock
or Common Stock, as the case may be, which are acquired by such Investor
pursuant to this Agreement and which represent more than 2% of the
then-outstanding shares of any series of Preferred Stock or Common Stock, as the
case may be, other than Transfers (i) following a Public Offering of such class
or series of Securities pursuant to an effective registration statement under
the Securities Act or pursuant to Rule 144 under the Securities Act, (ii)
pursuant to a bona fide pledge agreement (which pledge is with recourse), (iii)
by an Investor to a Permitted Transferee of such Investor, or (iv) pursuant to
an Approved Sale.
(b) In the event that a Significant Transfer by an Investor involves a
sale of shares of MEDIQ Series B Preferred Stock to a Disqualified Person, then
BRS shall either (x) purchase or designate a Person or Persons other than a
Disqualified Person (which such Persons may include BRS itself or an employee or
affiliate of BRS) who shall purchase (and if such designees fail to make such
purchase, BRS agrees to designate the other Investors pursuant to the following
clause (y)) or (y) designate the other Investors who have exercised their
Tag-Along Rights (as defined herein), together with the Tag-Along Seller (as
defined herein), who shall purchase, in lieu of the Disqualified Person, from
(i) the Rotko Investors who are original signatories hereto and (ii) Persons who
are Permitted Transferees of the Rotko Investors pursuant to Sections 5.4(e)(i)
and (ii), such shares of MEDIQ Series B Preferred Stock which have been
requested to be included in the Significant Transfer pursuant to the exercise of
Tag-Along Rights; provided that any such purchase shall not be funded directly
or indirectly by a Disqualified Person. Any such purchases required to be made
by the Investors pursuant to the foregoing clause (y) shall be pro rata based
upon the number of shares the Tag-Along Seller or the Investor exercising its
Tag-Along Rights has included in the Significant Transfer which is the subject
of this Section 6.7. Each Investor agrees that it will, if requested by BRS or
its assignee, purchase its pro rata portion (based upon the number of shares
included by each Investor (including the Tag-Along Seller) in the Significant
Transfer which is the subject of this Section 6.7). By way of illustration, if
BRS, the HCCP Entities, the Galen Entities and the Management Investors have
included (whether as part of the Significant Transfer giving rise to Tag-Along
Rights pursuant to this Section 6.7 or pursuant to the exercise of Tag-Along
Rights pursuant to this Section 6.7) 40, 30, 20, and 10 shares of MEDIQ Series B
Preferred Stock, respectively, in a transaction involving the sale to a
Disqualified Person pursuant to which the Rotko Investors are entitled to
include 10 shares of MEDIQ Series B Preferred Stock, then in connection with the
exercise of Tag-Along Rights by the Rotko Investors, BRS, the HCCP Entities, the
Galen Entities and the Management Investors will be required to purchase 4, 3, 2
and 1 share of MEDIQ Series B Preferred Stock, respectively, from the Rotko
Investors.
(c) Prior to any Significant Transfer subject to these provisions, the
seller (the "Tag-Along Seller") shall notify the Company in writing of the
proposed sale. Such notice (the "Tag-Along Sale Notice") shall set forth the
number of shares of Preferred Stock or Common Stock subject to the proposed sale
and the proposed amount of consideration and terms and conditions of payment
which are part of the proposed sale. The Company shall promptly, and
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in any event within 15 days, mail or cause to be mailed the Tag-Along Sale
Notice to the Tag-Along Rightholders. Each Tag-Along Rightholder may exercise
the Tag-Along Right by delivery of a written notice (the "Tag-Along Acceptance
Notice") to the Tag-Along Seller within 15 days of the date the Company mailed
or caused to be mailed the Tag-Along Sale Notice. The Tag-Along Acceptance
Notice shall state that the Tag-Along Rightholder proposes to include its pro
rata portion of Preferred Stock or Common Stock, as the case may be, in the
proposed sale. If no Tag-Along Acceptance Notice is received during the 15 day
period referred to above, the Tag-Along Seller shall have the right during the
subsequent six-month period to effect the proposed sale of shares of Preferred
Stock or Common Stock on terms and conditions no more favorable than those
stated in the Tag-Along Sale Notice.
(d) Each Tag-Along Rightholder acknowledges and agrees that BRS may
grant similar "tag-along" rights to other Persons and, in such event, such other
Persons shall be offered an equal opportunity to participate in such transaction
or transactions to the same extent as such Tag-Along Rightholders hereunder and
shall be included in the calculation of the pro rata basis upon which such
Tag-Along Rightholders may participate in such transaction or transactions.
(e) (i) Notwithstanding the requirements of this Section 6.7, a
Tag-Along Seller may sell Preferred Stock or Common Stock at any time without
complying with the requirements of Section 6.7(c) so long as the Tag-Along
Seller deposits into escrow with an independent third party at the time of sale
that amount of consideration received in the sale equal to the "Escrow Amount."
As used herein, the "Escrow Amount" shall equal that amount of consideration as
all Tag-Along Rightholders would have been entitled to receive if they had the
opportunity to participate in the sale on a pro rata basis, determined as if
each Tag-Along Rightholder (A) delivered a Tag-Along Notice to the Tag-Along
Seller in the time period set forth in Section 6.7(c) and (B) proposed to
include all of her, his or its shares of Preferred Stock or Common Stock in such
sale.
(ii) The Tag-Along Seller shall notify the Company in writing of
the sale pursuant to this Section 6.7(e) no later than 15 days after the date of
such sale. Such notice (the "Escrow Notice") shall set forth the information
required in the Tag-Along Sale Notice, and in addition, such notice shall state
the name of the escrow agent. The Company shall promptly, and in any event
within 15 days, mail or cause to be mailed the Escrow Notice to each Tag-Along
Rightholder. Such Tag-Along Rightholder may exercise the tag-along right by
delivery to the Tag-Along Seller, within 15 days of the date the Company mailed
or caused to be mailed the Escrow Notice, of (A) a written notice specifying the
number of shares of Preferred Stock or Common Stock it proposes to sell; and (B)
the certificates for such Preferred Stock or Common Stock, with stock powers
duly endorsed in blank and with signatures guaranteed.
(iii) Promptly after the expiration of the fifteenth day after the
Company has mailed or caused to be mailed the Preemptive Escrow Notice, (A) the
Tag-Along Seller shall purchase that number of shares of Preferred Stock or
Common Stock as the Tag-Along Seller would have been required to include in the
sale had the Tag-Along Seller complied with the provisions of Section 6.7(c),
(B) all shares of Preferred Stock or Common Stock not required to be purchased
by the Tag-Along Seller shall be returned to the Tag-Along Rightholders thereof
and (C) all funds and other consideration held in escrow shall be released to
the Tag-Along Seller. If the Tag-Along Seller received consideration other than
cash in her, his or its sale, the Tag-Along Seller shall purchase the shares of
Preferred Stock or Common Stock tendered by paying to the Tag-Along Rightholders
non-cash consideration and cash in the same proportion as received by the
Tag-Along Seller in the sale.
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(f) The Tag-Along Rights provided pursuant to this Section 6.7 shall
terminate with respect to any particular class or series of Securities upon
consummation of a Public Offering or an Approved Sale with respect to such class
or series.
(g) Each Tag-Along Rightholder that exercises its Tag-Along Rights
pursuant to this Section 6.7 shall, at the request of the Tag-Along Seller and
without further cost and expense to the Tag-Along Seller, execute and deliver
such other instruments of conveyance and transfer and take such other actions as
may reasonably be requested in order to consummate the proposed sale of
Preferred Stock or Common Stock by the Tag-Along Seller and the Tag-Along
Rightholders which have exercised their Tag-Along Rights pursuant to this
Section 6.7. Each Tag-Along Rightholder that exercises its Tag-Along Rights will
bear its pro rata share (based upon the number of shares sold) of the reasonable
costs and expenses of any sale of shares pursuant to this Section 6.7 to the
extent such costs are incurred for the benefit of all selling Investors and are
not otherwise paid by the Company or the acquiring party. Costs incurred by any
Investor on its own behalf will not be considered costs of the transaction
hereunder.
6.8 Redemptions by the Company.
(a) In the event that the Company redeems any shares of MEDIQ Series A
Preferred Stock (other than shares of MEDIQ Series A Preferred Stock which were
issued in the Merger as "Merger Consideration", as such term is defined in the
Merger Agreement) or MEDIQ Series C Preferred Stock pursuant to the optional or
mandatory redemption provisions of such securities, then BRS (or its assignee),
or an employee or Affiliate of BRS (or its assignee), or a third party (other
than a Disqualified Person) designated by BRS (or its assignee), including the
other Investors, or any combination of any of the foregoing shall offer to
purchase (the "Series B Purchase Option") from each of the Rotko Investors who
are original signatories hereto (or persons who are Permitted Transferees of
such Rotko Investors pursuant to clauses (i) or (ii) of Section 5.4(e)), on a
pro-rata basis, (i) the number of shares of MEDIQ Series B Preferred Stock owned
by such Rotko Investor (which, for purposes of this Section 6.8(a), shall be
reduced by the number of shares of MEDIQ Series B Preferred Stock which such
Rotko Investor has previously had the opportunity to exercise its rights to sell
pursuant to all previous Series B Purchase Options offered to it pursuant to
this Section 6.8, without regard to whether such Rotko Investor actually
exercised its rights to sell pursuant to the Series B Purchase Option)
multiplied by (ii) a fraction (the "Designated Percentage"), the numerator of
which is the aggregate liquidation preference of the MEDIQ Series A or Series C
Preferred Stock so redeemed and the denominator of which is the sum of the
aggregate liquidation preference of the Series A, B and C Preferred Stock then
outstanding (other than shares of MEDIQ Series A Preferred Stock which were
issued in the Merger as Merger Consideration) plus the original purchase price
(i.e., $10 per share) of the shares of Common Stock issued pursuant to Articles
I, II and III of this Agreement. The number of shares of MEDIQ Series B
Preferred Stock which are subject to the Series B Purchase Option are referred
to herein as the "Qualified Series B Shares"). The Investors acknowledge that,
as provided in Section 6.8(f), BRS may require some or all of the Investors
other than the Rotko Investors to make the offer to purchase required by the
Series B Purchase Option.
(b) The purchase price for the Qualified Series B Shares shall be equal
to (i) the sum of the aggregate redemption proceeds paid in respect of the
shares of MEDIQ Series A Preferred Stock (other than shares of MEDIQ Series A
Preferred Stock which were issued in the Merger as Merger Consideration) and the
shares of MEDIQ Series C Preferred Stock redeemed in the transaction which gives
rise to the Series B Purchase Option, times (ii) the Designated Percentage.
Promptly after the consummation of the redemption transaction, such
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other party or parties as may be designated by BRS, as provided in Sections 6.8
(a) and (f), prior to the closing of the Series B Purchase Option transaction,
or in the event such parties fail to purchase or no such parties are designated
by BRS, BRS shall purchase the Qualified Series B Shares tendered by paying to
such holders their proportionate share of the redemption proceeds as set forth
above.
(c) Prior to any redemption of MEDIQ Series A Preferred Stock or MEDIQ
Series C Preferred Stock which would give rise to the Series B Purchase Option
set forth above, the Company shall provide each Rotko Investor with written
notice of such redemption (the "Series B Purchase Option Notice"). The Company
shall promptly, and in any event within fifteen days, mail or cause to be mailed
the Series B Purchase Option Notice to the Investors. The Series B Purchase
Option Notice shall set forth with respect to each Rotko Investor the number of
shares of MEDIQ Series B Preferred Stock which are Qualified Series B Shares and
the Designated Percentage and the terms of the proposed redemption of MEDIQ
Series A or Series C Preferred Stock. Each Rotko Investor may exercise the
Series B Purchase Option by delivery of a written notice (the "Series B Purchase
Option Acceptance") to the Company and the other Investors within fifteen days
of the date the Company mailed or caused to be mailed the Series B Purchase
Option Notice. The Series B Purchase Option Acceptance shall state that the
Rotko Investor proposes to include all of its Qualified Series B Shares in the
proposed redemption. If no Series B Purchase Option Acceptance is received by
the Company and the other Investors during the ten-day period referred to above,
the Company shall have the right to effect the redemption proposed in the Series
B Purchase Option Notice and none of the Company, the other Investors or any
third party shall have any obligation to purchase the Qualified Series B Shares
from such Investor.
(d) (i) Notwithstanding the requirements of this Section 6.8, the
Company may effect a redemption of MEDIQ Series A Preferred Stock or MEDIQ
Series C Preferred Stock at any time without complying with the requirements of
Section 6.8(a), (b) and (c) so long as funds are deposited into escrow with an
independent third party at the time of the redemption in an amount equal to that
amount of the proceeds received in the redemption equal to the "Redemption
Escrow Amount." As used herein, the "Redemption Escrow Amount" shall equal that
amount of redemption as all Rotko Investors would have been entitled to receive
if they had the opportunity to exercise their rights pursuant to the Series B
Purchase Option, determined as if each such Rotko Investor (A) delivered a
Series B Purchase Option Acceptance to the Company and the other Investors in
the time period set forth in Section 6.8(c) and (B) proposed to include all of
such Rotko Investor's Qualified Series B Shares in such transaction.
(ii) The Company shall notify the Rotko Investors in writing of the
redemption pursuant to this Section 6.8(d) no later than fifteen days after the
date of such redemption. Such notice (the "Redemption Escrow Notice") shall set
forth the information required in the Series B Purchase Option Notice, and in
addition, such notice shall state the name of the escrow agent. Each Rotko
Investor with Qualified Series B Shares may exercise the Series B Purchase
Option by delivery to the Company and the other Investors, within fifteen days
of the date the Company mailed or caused to be mailed the Redemption Escrow
Notice, of (A) a written notice specifying that such Rotko Investor proposes to
include all of its Qualified Series B Shares in such redemption; and (B) the
certificates of such Qualified Series B Shares, with stock powers duly endorsed
in blank and with signatures guaranteed.
(iii) Promptly after the expiration of the fifteenth day after the
Company has mailed or caused to be mailed the Redemption Escrow Notice, (A) the
purchaser(s) of the Qualified Series B Shares proposed to be included in the
transaction by the Rotko Investors
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pursuant to Section 6.8(d)(ii) shall purchase such shares from such Rotko
Investors, (B) all shares of MEDIQ Series B Preferred Stock not required to be
purchased by such purchaser(s) shall be returned to the holder thereof and (C)
all funds and other consideration held in escrow shall be released as directed
by BRS and the Company.
(e) The rights provided to the Investors pursuant to this Section 6.8
shall terminate upon the earlier of (i) a successfully completed firm commitment
underwritten public offering or offerings pursuant to effective registration
statements under the Securities Act in respect of offers and sales of shares of
Series B Preferred Stock resulting in aggregate net proceeds to the Company and
any stockholder selling shares of Series B Preferred Stock in such offerings of
not less than $7.5 million; and (ii) the date on which BRS and its Affiliates
own less than 10% of the Common Stock.
(f) In the event that the Company redeems any shares of MEDIQ Series A
Preferred Stock (other than shares of MEDIQ Series A Preferred Stock which were
issued in the Merger as "Merger Consideration", as such term is defined in the
Merger Agreement) or MEDIQ Series C Preferred Stock pursuant to the optional or
mandatory redemption provisions of such securities, such that the Rotko
Investors are entitled to their rights pursuant to the Series B Purchase Option,
each Investor agrees that, if requested by BRS or its assignee, it shall
purchase its pro rata share (based upon each Investors' ownership of the series
of Securities which is the subject of the redemption) of the Securities which
are subject to the Series B Purchase Option. By way of illustration, if BRS owns
50 shares of MEDIQ Series C Preferred Stock, the HCCP Entities own 30 shares of
MEDIQ Series C Preferred Stock , the Galen Entities own 20 shares of MEDIQ
Series C Preferred Stock and the Management Investors own 20 shares of MEDIQ
Series C Preferred Stock, and as a result of the redemption, 12 shares of MEDIQ
Series B Preferred Stock are subject to the Series B Purchase Option, then in
connection with the exercise of the Series B Purchase Option by the Rotko
Investors, BRS, the HCCP Entities, the Galen Entities and the Management
Investors will be required to purchase 5, 3, 2 and 2 shares of MEDIQ Series B
Preferred Stock, respectively, from the Rotko Investors.
6.9 Repurchase of the Purchased Securities By the Company
(a) In the event that on or prior to the Lapse Date (as defined
herein), any Management Investor shall cease to be employed by the Company for
any reason (including, but not limited to, death, temporary or permanent
disability ("Disability"), retirement under the Company's retirement policies as
approved by a majority of the Board of Directors ("Retirement"), resignation or
termination by the Company, with or without Cause), other than by reason of a
leave of absence approved by the Company, such Management Investor (or his
heirs, executors, administrators, transferees, successors or assigns) shall give
prompt notice to the Company of such termination (except in the case of
termination by the Company with or without Cause), and the Company, or one or
more designee(s) selected by a majority of the members of the Board of
Directors, shall have the right and option at any time within 90 days after the
later of the effective date of such termination of employment (the "Termination
Date") or the date of the Company's receipt of the aforesaid notice, to purchase
from such Management Investor, or his heirs, executors, administrators,
transferees, successors or assigns, as the case may be, the Purchased Securities
then owned by such Management Investor described in this Section 6.9(b) or
6.9(c) below, as applicable. The Company or its designee(s) shall give notice to
the terminated Management Investor (or his heirs, executors, administrators,
transferees, successors or assigns) of its intention to purchase Purchased
Securities at any time not later than 90 days after the Termination Date. The
right of the Company and its designee(s) set forth in this Section 6.9 to
purchase a terminated Management Investor's Purchased Securities is hereinafter
referred to as
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the "Purchase Option." The Rollover Securities purchased by the Management
Investors pursuant to this Agreement shall not be subject to the Purchase
Option. To the extent the Purchased Securities have vested pursuant to Section
3.5 they are sometimes referred to herein as "Vested" and to the extent the
Securities have not vested pursuant to Section 3.5 they are sometimes referred
to herein as "Unvested".
(b) The Purchase Option shall be exercised by written notice to the
terminated Management Investor (or his heirs, executors, administrators,
transferees, successors or assigns) (the "Seller") signed by an officer of the
Company on behalf of the Company or by its designee(s), as the case may be. Such
notice shall set forth the number of shares of Purchased Securities desired to
be purchased and shall set forth a time and place of closing which shall be no
earlier than 10 days and no later than 30 days after the date such notice is
sent. At such closing, the Seller shall deliver the certificates evidencing the
number of shares of Purchased Securities to be purchased by the Company and/or
its designee(s), accompanied by stock powers duly endorsed in blank or duly
executed instruments of transfer, and any other documents that are necessary to
transfer to the Company and/or its designee(s) good title to such of the
Purchased Securities to be transferred, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature other than those imposed under this Agreement, and concurrently
with such delivery, the Company and/or its designee(s) shall deliver to the
Seller the full amount due the Seller pursuant to this Section 6.9 for such
Purchased Securities in cash by certified or bank cashier's check.
(c) If Thomas E. Carroll ("Carroll") is terminated for Cause prior to
the Lapse Date, the Company and/or its designee(s) shall have the right to (i)
repurchase his Unvested Purchased Securities at a price equal to their Adjusted
Cost Price (defined below) and (ii) repurchase his Vested Purchased Securities
at the CEO Adjusted EBITDA Price (defined below). If Carroll resigns from the
Company prior to the Lapse Date, or if his employment is terminated prior to the
Lapse Date due to his death, Retirement or Disability, the Company and/or its
designee(s) shall have the right to repurchase his Unvested Purchased Securities
at a price equal to their Adjusted Cost Price but shall not have any Purchase
Option with respect to his Vested Purchased Securities. If Carroll is terminated
without Cause prior to the Lapse Date, the Company and/or its designee(s) shall
have the right to repurchase at the CEO Adjusted EBITDA Price the number of
shares of Purchased Securities as is the lesser of (i) 50% of the shares of
Purchased Securities purchased by Carroll pursuant to Article III of this
Agreement, regardless of whether such shares are Vested or Unvested pursuant to
Section 3.5 and (ii) the number of Unvested Purchased Securities.
(d) If a Management Investor other than Carroll is terminated for Cause
or resigns prior to the Lapse Date, the Company and/or its designee(s) shall
have the right to repurchase all of such Management Investor's Purchased
Securities at a price equal to their Adjusted Cost Price. If a Management
Investor other than Carroll is terminated without Cause prior to the Lapse Date,
or such Management Investor's employment is terminated due to death, Retirement
or Disability prior to the Lapse Date, the Company and/or its designee(s) shall
have the right to repurchase his Unvested Purchased Securities at a price equal
to their Adjusted Cost Price and (ii) repurchase his Vested Purchased Securities
at the Management Investor Adjusted EBITDA Price (defined below).
(e) The Purchase Option shall lapse on the earliest to occur of (i) the
fifth anniversary of the MEDIQ Closing Date, (ii) consummation of a Public
Offering of the Common Stock and (iii) a Sale of the Company (whether by merger,
consolidation, sale of all or substantially all of its assets or sale of all of
the outstanding capital stock) to any Person, firm,
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entity or group which, together with its Affiliates, prior to such transaction,
did not own more than 20% of the outstanding Common Stock of the Company.
6.10 Certain Definitions. For purposes of this Agreement the following
terms shall have the following meanings:
(a) "Adjusted Cost Price" means, with respect to Securities being
repurchased pursuant to Section 6.9, the product of (i) the number of shares to
be repurchased and (ii) the original price per share of Purchased Securities
paid by the Management Investor to the Company pursuant to the Agreement,
including any shares of Purchased Securities which have been converted into
other shares of capital stock of the Company, and adjusted for any stock
dividend payable upon or subdivision or combination of, the Purchased
Securities.
(b) "Affiliate" shall have the meaning ascribed to such term under Rule
12b-2 promulgated under the Securities Exchange Act.
(c) "Cause" means (i) theft, misappropriation or embezzlement of
MEDIQ's funds, (ii) conviction of any felony, crime involving fraud or
misrepresentation, or of any other crime (whether or not connected with
employment) the effect of which is likely to adversely affect MEDIQ, except if a
Management Investor's actions which result in such a conviction were taken in
good faith and in a manner such Management Investor reasonably believed not to
be adverse to the interests of MEDIQ, or (iii) abuse of alcohol or other drugs
which materially interferes with the performance by a Management Investor of his
duties, provided that such Management Investor has been given 30 days notice by
MEDIQ of its intent to terminate such Management Investor pursuant to this
provision during which time such Management Investor has not demonstrated the
cessation of such abuse to the reasonable satisfaction of the Board of
Directors; provided, however, that a Management Investor shall not be deemed to
have been terminated for Cause unless there shall have been delivered to such
Management Investor a copy of a resolution duly adopted by the affirmative vote
of a majority of the entire Board of Directors of MEDIQ at a meeting of such
Board of Directors called and held for that purpose (after at least 15 days
prior written notice to such Management Investor and an opportunity for such
Management Investor, together with such Management Investor's counsel, to be
heard before such Board), finding that, in the good faith opinion of the Board
of Directors of MEDIQ, such Management Investor was guilty of conduct set forth
above and specifying the particulars thereof in reasonable detail.
(d) "CEO Adjusted EBITDA Price" means, with respect to Securities being
repurchased pursuant to Section 6.9, an amount equal to (i) the number of shares
to be repurchased multiplied by (ii) eight times EBITDA for the twelve-month
period ended the month immediately prior to the month in which the Termination
Date occurs less the average amount of outstanding debt (including capital lease
obligations) during such period and the amount of outstanding Preferred Stock
(including accrued but unpaid dividends thereof) divided by (y) the average
number of Common Shares outstanding on a fully diluted basis during such period,
all as certified by the Chief Financial Officer of the Company as determined in
accordance with generally accepted accounting principles from the books of the
Company.
(e) "Controlled Affiliate" means, with respect to any person, a
corporation, partnership or other business association in which such person
owns, directly or indirectly through one or more intermediaries, fifty percent
(50%) or more of the outstanding capital stock or other equity interests of such
corporation, partnership or other business association.
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(f) "EBITDA" means, with respect to any period, the Company's earnings
before interest, taxes, depreciation and amortization as certified by the Chief
Financial Officer of the Company as determined in accordance with generally
accepted accounting principles from the books of the Company.
(g) "Management Investor Adjusted EBITDA Price" means, with respect to
Securities being repurchased pursuant to Section 6.9, an amount equal to (i) the
number of shares to be repurchased multiplied by (ii) seven times EBITDA for the
twelve-month period ended the month immediately prior to the month in which the
Termination Date occurs less the average amount of outstanding debt (including
capital lease obligations) during such period and the amount of outstanding
Preferred Stock (including accrued but unpaid dividends thereof) divided by (y)
the average number of Common Shares outstanding on a fully diluted basis during
such period, all as certified by the Chief Executive Officer of the Company as
determined in accordance with generally accepted accounting principles from the
books of the Company.
(h) "Major Shareholder" means each Investor or Permitted Transferee, or
in the case of the Rotko Investors such Rotko Investors in the aggregate, (other
than a Permitted Transferee under Section 5.4(e)(iv) or (viii)) that (together
with its Controlled Affiliates) owns at least five percent (5%) of the issued
and outstanding shares of Common Stock, on a fully-diluted basis.
(i) "Management Options" means options to acquire, in the aggregate, up
to 34,091 shares of MEDIQ Common Stock to be issued after the Effective Time to
employees of the Company.
(j) "Public Offering" means a successfully completed firm commitment
underwritten public offering or offerings underwritten by a nationally
recognized underwriter (other than offerings registered on a Special
Registration Statement or a Unit Offering) pursuant to effective registration
statements under the Securities Act in respect of offers and sales of shares of
Securities for the account of the Company resulting in aggregate net proceeds to
the Company and any stockholder selling in such offerings shares of the class or
series of Securities which is the subject of such public offering of not less
than (i) in the case of MEDIQ Series A Preferred Stock, $10 million, (ii) in the
case of MEDIQ Series B Preferred Stock, $7.5 million, (iii) in the case of MEDIQ
Series C Preferred Stock, $7.5 million, and (iv) in the case of MEDIQ Common
Stock, $20 million; provided that, in connection with such public offering, if
any Investor is permitted to sell Securities of the same class or series in such
public offering all Investors shall have been permitted to sell their Securities
ratably in such public offering.
(k) A "Special Registration Statement" means (i) a registration
statement on Forms S-8 or S-4 or any similar or successor form or any other
registration statement relating to an exchange offer or an offering of
securities solely to the Company's employees or security holders or used in
connection with the acquisition of the business of another person or entity,
(ii) a registration statement registering a Unit Offering or (iii) a
registration statement to register either the Warrants or the underlying Common
Stock issued in connection with the financing transactions described on Schedule
2.1(f) hereof.
(l) "Warrants" means the warrants to acquire 91,209 shares of MEDIQ
Common Stock to be issued in connection with the financing transactions
described on Schedule 2.1(f) hereof on the terms described in the Confidential
Offering Circular dated May 21, 1998.
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(m) "Unit Offering" means an underwritten public offering of a
combination of debt securities and Common Stock of the Company in which (i) not
more than fifteen percent (15%) of the gross proceeds received for the sale of
such securities is attributed to Common Stock and (ii) after giving effect to
such offering, the Common Stock is not required to be registered under the
Securities Exchange Act.
6.11 Company's Right of First Refusal. Notwithstanding anything to the
contrary in Section 5.4 of this Agreement, in the event that any time after the
fifth anniversary and prior to the tenth anniversary of the Effective Time, a
Management Investor, or his Permitted Transferees, proposes to sell any or all
of such Management Investor's, or his Permitted Transferees' Common Stock to a
third party (other than a Permitted Transferee) in a bona fide transaction, the
Management Investor or his Permitted Transferees may not transfer such Common
Stock without first offering to sell such Common Stock to the Company pursuant
to this Section 6.11.
The Management Investor, or his Permitted Transferees, shall deliver a
written notice (a "Sale Notice") to the Company, describing in reasonable detail
the Securities being offered, the name of the offeree, the purchase price being
requested and all other material terms of the proposed Transfer. Upon receipt of
the Sale Notice, the Company, or a designee selected by a majority of the
non-employee members of the Board of Directors of the Company, shall have the
right and option to purchase all or any portion of the Securities being offered
at the price and on the terms of the proposed Transfer set forth in the Sale
Notice. Within 15 days after receipt of the Sale Notice, the Company shall
notify such Management Investor, or his Permitted Transferees, whether or not it
wishes to purchase any or all of the offered Securities.
If the Company elects to purchase any of the offered Securities, the
closing of the purchase and sale of such Securities shall be held at the place
and on the date established by the Company in its notice to the Management
Investor, or his Permitted Transferees, in response to the Sale Notice, which in
no event shall be less than 10 or more than 30 days (subject to any extension
reasonably required to obtain any necessary regulatory approval) from the date
of such notice. In the event that the Company does not elect to purchase all the
offered Securities, the Management Investor, or his Permitted Transferees, may,
subject to the other provisions of this Agreement, Transfer the remaining
offered Securities to the offeree specified in the Sale Notice at a price no
less than the price specified in the Sale Notice and on other terms no more
favorable to the transferee(s) thereof than specified in the Sale Notice during
the 180-day period immediately following the last date on which the Company
could have elected to purchase the offered Securities. Any such Securities not
transferred within such 180-day period will be subject to the provisions of this
Section 6.11 upon subsequent Transfer.
The provisions of this Section 6.11 shall terminate upon a Public Offering
of the Common Stock.
6.12 Involuntary Transfers, Notwithstanding anything to the contrary in
Section 5.4 of this Agreement, in the event that the Securities owned by any
Management Investor, or his Permitted Transferees, shall be subject to sale or
other Transfer (the date of such sale or Transfer shall hereinafter be referred
to as the "Transfer Date") prior to the tenth anniversary of the Effective Time
by reason of (i) bankruptcy or insolvency proceedings, whether voluntary or
involuntary, or (ii) distraint, levy, execution or other involuntary Transfer,
then such Management Investor, or his Permitted Transferees, shall give the
Company written notice thereof promptly upon the occurrence of such event
stating the terms of such proposed Transfer, the identity of the proposed
transferee, the price or other consideration, if readily determinable, for which
the Securities are proposed to be Transferred, and the number of shares of
Common Stock to be Transferred. After its receipt of such notice or, failing
such
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receipt, after the Company otherwise obtains actual knowledge of such a proposed
Transfer, the Company, or a designee selected by a majority of the non-employee
members of the Board of Directors of the Company, shall have the right and
option to purchase all, but not less than all of such Securities which right
shall be exercised by written notice given by the Company to such proposed
transferor within 60 days following the Company's receipt of such notice or,
failing such receipt, the Company obtaining actual knowledge of such proposed
Transfer. Any purchase pursuant to this Section 6.12 shall be at the price and
on the terms applicable to such proposed Transfer. If the nature of the event
giving rise to such involuntary Transfer is such that no readily determinable
consideration is to be paid for the Transfer of the Securities, the price to be
paid by the Company shall be the Option Purchase Price that would have been
applicable hereunder had the Management Investor incurred a Termination Date as
of the date of such proposed Transfer of the Securities. The closing of the
purchase and sale of Securities shall be held at the place and the date to be
established by the Company, which in no event shall be less than 10 or more than
60 days from the date on which the Company gives notice of its election to
purchase the Securities. At such closing, the Management Investor, or his
Permitted Transferees, shall deliver the certificates evidencing the number of
shares of Common Stock to be purchased by the Company, accompanied by stock
powers duly endorsed in blank or duly executed instruments of transfer, and any
other documents that are necessary to transfer to the Company good title to such
of the securities to be transferred, free and clear of all pledges, security
interests, liens, charges, encumbrances, equities, claims and options of
whatever nature other than those imposed under this Agreement, and concurrently
with such delivery, the Company shall deliver to the Management Investor, or his
Permitted Transferees, the full amount of the purchase price for such Securities
in cash by certified or bank cashier's check.
6.13 Rollover Agreement Repurchase Obligation. In the event designees of
BRS do not constitute a majority of the numbers of the Board of Directors and
BRS does not own a majority of the outstanding shares of Common Stock of the
Company, the Company agrees that it will, if requested by BRS, obtain the
agreement of a person other than a "Disqualified Person" as defined in the
Rollover Agreement to purchase any shares of Series B Preferred Stock which may
be subject to the Series B Purchase Option, including in those circumstances
described in Sections 6.6(c), 6.7(b) and 6.8.
6.14 Restrictions. The Company shall not, directly or indirectly, and shall
not permit any of its subsidiaries to, take any of the following actions without
the approval of a majority of the Company's Board of Directors.
(a) consolidate or merge with or into any Person or enter into any
similar business combination transaction (including a sale of substantially all
of its assets) or effect any transaction or series of transactions in which more
than 33-1/3% of the Company's voting securities are transferred by the Company
to another Person, except a Public Offering or any such transaction or series of
transactions, as the case may be, involving only wholly-owned subsidiaries of
the Company;
(b) amend or repeal any provisions of, or add any provisions to, the
certificate of incorporation or the by-laws;
(c) alter or change the preferences, rights, privileges or powers of
the Preferred Stock;
(d) increase the number of authorized members of the Board above nine;
provided however that this Section 6.14 shall not derogate from the rights of
the parties set forth in this Agreement, including Section 6.3 and 9.3 hereof.
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(e) voluntarily liquidate, dissolve or wind up;
(f) purchase, acquire or obtain any capital stock or other proprietary
interest, directly or indirectly, in any other entity or all or substantially
all of the business or assets of another Person for consideration in excess of
$100 million.
(g) enter into or commit to enter into any joint ventures (other than
in the ordinary course of business) or partnerships or establish any
non-wholly-owned subsidiaries, in each case, where the contributions or
investments by the Company exceed $50 million in cash or assets;
(h) sell, lease, transfer or otherwise dispose of any asset or group of
assets (other than in the ordinary course of business), for consideration in an
annual aggregate amount (as to the Company and any and all of its subsidiaries),
in excess of 25% of the book value of the Company's assets at the beginning of
such fiscal year;
(i) terminate the employment of the Chief Executive Officer of the
Company;
(j) materially amend or change the Company's business plan or enter
into a new business plan;
(k) agree or otherwise commit to take actions set forth in the
foregoing subparagraphs (a) through (j).
ARTICLE VII
CORPORATE ACTIONS
7.1 Certificate of Incorporation and Bylaws. Each Investor has reviewed the
Certificate of Incorporation and Bylaws of MQ and MEDIQ in the forms attached
hereto as Exhibits A-1 through A-4, respectively, and hereby approves and
ratifies the same.
7.2 Directors and Voting Agreements. Each Investor approves and ratifies
the election of Thomas E. Carroll, Bruce C. Bruckmann, Stephen C. Sherrill,
Robert T. Thompson, L. John Wilkerson and Michael J. Rotko as initial directors
of the Company. Each Investor agrees that it will vote for such additional
persons as may be designated from time to time by pursuant to Article VI hereof.
7.3 Amendment of Certificate and Bylaws. Each Investor agrees that it shall
not consent in writing or vote or cause to be voted any Securities now or
hereafter owned or controlled by it in favor of any amendment, repeal,
modification, alteration or rescission of, or the adoption of any provision in
the Company's Certificate of Incorporation or Bylaws inconsistent with, this
Agreement unless BRS consents in writing to such action or votes or causes to be
voted all of the Securities held by it in favor of such action.
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ARTICLE VIII
CERTAIN RIGHTS OF INVESTORS
8.1 Preemptive Rights. (a) If the Company proposes to issue and sell, other
than in an Exempted Issuance (as defined below), any of its shares of Common
Stock or any securities containing options or rights to acquire any shares of
Common Stock or any securities convertible into shares of Common Stock (such
shares and other securities are hereinafter collectively referred to as "Newly
Issued Stock") (hereinafter, a "Preemptive Issuance"), the Company will first
offer to each Major Shareholder (and its Affiliates who are also Investors) and
each Management Investor who was a Management Investor at the Effective Time who
is an "accredited investor" as defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended (each a "Qualified Investor") a portion of
the number or amount of such securities proposed to be sold in any such
transaction or series of related transactions equal to such Qualified Investor's
pro rata share of the proposed issue of Common Stock (or securities convertible
into or exchangeable for Common Stock), all for the same price and on the same
terms at which the Company has authorized the issuance of such securities. For
purposes of this Section 8.1, a Qualified Investor's "pro rata share" of an
issue of Common Stock (or securities convertible into or exchangeable for Common
Stock) shall be that number which is equal to the product of (i) the number of
shares of Common Stock which are to be issued by the Company in the transaction
which is the subject of this Section 8.1, times (ii) a fraction, the numerator
of which is the number of outstanding shares of Common Stock held by such
Qualified Investor, and the denominator of which is the aggregate number of
outstanding shares of Common Stock calculated on a fully diluted basis.
(b) The Company will cause to be given to the Qualified Investors a
written notice setting forth the terms and conditions upon which the Qualified
Investors may purchase such Common Stock or other securities (the "Preemptive
Notice"). After receiving a Preemptive Notice, the Qualified Investors must
reply, in writing, before the date specified in the Preemptive Notice, which
shall be a date no earlier than 15 days after the date of such Preemptive
Notice, that such persons agree to purchase all of such Qualified Investors'
allotted portion of such Common Stock or other securities offered pursuant to
this Section 8.1 on the date of sale (the "Preemptive Reply"). If any Qualified
Investor fails to make a Preemptive Reply in accordance with this Section 8.1,
the Common Stock or other securities offered to such Qualified Investor in
accordance with this Section 8.1 may thereafter, for a period not exceeding six
months following the expiration of such 15-day period, be issued, sold or
subjected to rights or options at a price not less than that at which they were
offered to the Qualified Investors. Any such Common Stock or other securities
not so issued, sold or subjected to rights or options during such six-month
period will thereafter again be subject to the preemptive rights provided for in
this Section 8.1.
(c) (i) Notwithstanding the requirements of this Section 8.1, the
Company may make a Preemptive Issuance at any time without complying with the
requirements of Section 8.1(a) and (b) so long as the Company deposits into
escrow with an independent third party at the time of sale a portion of the
Newly Issued Stock equal to the "Preemptive Escrow Amount." The "Preemptive
Escrow Amount" shall equal that amount of Newly Issued Stock which the Qualified
Investors would have been entitled to purchase if they had the opportunity to
participate in the Preemptive Issuance on a pro rata basis in accordance with
Section 8.1(a), determined as if each Qualified Investor delivered a Preemptive
Reply to the Company in the time period set forth in Section 8.1(b) agreeing to
purchase all of the Newly Issued Stock to which such Qualified Investor would
have been entitled to purchase pursuant to Section 6.1(a) had the Company given
such Qualified Investor a Preemptive Notice.
(ii) Within 10 days after the date of the Preemptive Issuance, the
Company shall notify the Qualified Investors in writing of the Preemptive
Issuance. Such notice (the "Preemptive Escrow Notice") shall set forth the terms
and conditions upon which the
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Qualified Investors may purchase shares of Newly Issued Stock, the pro rata
amount of Newly Issued Stock that such Qualified Investor is entitled to receive
(such amount to equal the amount of Newly Issued Stock that such Qualified
Investor would have been entitled to receive if they had the opportunity to
participate in the Preemptive Issuance on a pro rata basis in accordance with
Section 6.1(a)) and the name of the escrow agent.
(iii) A Qualified Investor may exercise the preemptive right by
delivery to the Company, within 10 days of the date the Preemptive Escrow Notice
is received by the Qualified Investor, of a written notice specifying the number
of shares of Newly Issued Stock it proposes to purchase of the number of shares
of Newly Issued Stock such Qualified Investor is entitled to purchase (the
"Preemptive Election").
(iv) Promptly after the expiration of the date specified in the
Preemptive Escrow Notice, which shall be a date no earlier than 15 days after
the date the Company has mailed or caused to be mailed the Preemptive Escrow
Notice, (A) the Company shall sell to each Qualified Investor that number of
shares of Newly Issued Stock that each such Qualified Investor proposed to
purchase pursuant to its Preemptive Election and (B) all remaining Newly Issued
Stock held in escrow may be sold upon the terms and conditions set forth in the
Preemptive Escrow Notice. Each Qualified Investor delivering a Preemptive Reply
shall be required to purchase the same strip of securities (including securities
other than Common Stock or securities convertible into or exchangeable for
Common Stock) that other purchasers of the offered securities are required to
purchase, on the same terms and conditions as such other purchasers.
(d) The rights granted to the Investors pursuant to this Section 8.1
shall expire upon the consummation of a Public Offering of the Common Stock.
8.2 Exempted Issuance. For purposes of Section 8.1 hereof, the term
"Exempted Issuance" shall mean the issuance by the Company of any equity
security (including, without limitation, any option, call, warrant or conversion
right): (i) upon the conversion or exercise of any securities of the Company or
any options or convertible securities issued by the Company, (ii) in connection
with the agreements set forth on Schedule C hereto (including in respect of the
Management Pool Shares, the Management Options and the Warrants), (iii) as a
dividend on the outstanding Common Stock or Preferred Stock, (iv) in
consideration, whether in whole or in part, for the extension of any credit or
the making of any loan to the Company or the issuance by the Company of any debt
security to any Person who is not an Investor, (v) in connection with any
merger, consolidation, recapitalization or other business combination which has
been approved by the board of directors of the Company, (vi) to any officer,
director or employee of the Company, (vii) in any transaction in respect of a
Security that is available to all holders of such Security on a pro rata basis
or (viii) in a Public Offering and in any subsequent public offering pursuant to
a registration statement filed pursuant to the Securities Act, including any
Unit Offering.
8.3 Registration Rights. The Investors shall have registration rights with
respect to the Securities as set forth in the Registration Rights Agreement
attached hereto as Exhibit B. Each of the Investors agrees not to effect any
public sale or distribution of any securities of the Company during the periods
specified in the Registration Rights Agreement, except as permitted by the
Registration Rights Agreement, and each such Investor agrees to be bound by the
rights of priority to participate in offerings as set forth therein.
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ARTICLE IX
MISCELLANEOUS
9.1 Purchaser Representative. If the Company or any Investor enters into
any negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities and Exchange Commission under the
Securities Act may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each Investor will,
at the request of the Company, appoint a purchaser representative (as such term
is defined in Rule 501(h) promulgated by the Securities and Exchange Commission
under the Securities Act) reasonably acceptable to the Company. If any Investor
appoints the purchaser representative designated by the Company, the Company
will pay the fees of such purchaser representative, but if any Investor declines
to appoint the purchaser representative designated by the Company such Investor
will appoint another purchaser representative (reasonably acceptable to the
Company), and such Investor will be responsible for the fees of the purchaser
representative so appointed.
9.2 Termination. This Agreement will terminate only upon the termination of
the written agreement of all of the Investors who are still parties hereto or
when all of the Investors except any one Investor no longer hold any equity
securities of the Company.
9.3 Amendment and Modification. This Agreement may be amended or modified,
or any provision hereof may be waived, provided that such amendment or waiver is
set forth in a writing executed by (i) the Company, (ii) BRS and each other
Major Shareholder, (iii) Investors (or their Permitted Transferees) holding a
majority of the outstanding Common Stock on a fully diluted basis held by the
Investors (or their Permitted Transferees) subject to this Agreement (including
Securities owned by BRS and other Major Shareholders); provided, however, that
(a) the provisions of Sections 5.4(e)(i), (ii), (vi) or (viii), 6.1, 6.2, 6.3,
6.4, 6.5, 6.14, 8.1, or 8.2 or this Section 9.3 which are for the express
benefit of the HCCP Entities can not be amended, modified or waived unless
Health Care Capital Partners, L.P. has also executed such amendment,
modification or waiver, (b) the provisions of Sections 5.4(e)(i), (ii), (vii) or
(viii), 6.1, 6.2, 6.3, 6.4, 6.5, 6.14, 8.1, or 8.2 this Section 9.3 which are
for the express benefit of the Galen Entities can not be amended, modified or
waived unless Galen Partners III, L.P. has also executed such amendment,
modification or waiver, (c) the provisions of Sections 3.5, 6.9, 6.11 or 6.12 or
this Section 9.3 which are for the express benefit of the Management Investors
can not be amended, modified or waived unless the holders of a majority of the
shares of Common Stock then held by the Management Investors have also executed
such amendment, modification or waiver, (d) the provisions of Sections
5.4(e)(i), (ii) or (ix), 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(c), 6.7(a) or (b), 6.8,
8.1 or 8.2 or this Section 9.3 which are for the express benefit of the Rotko
Investors can not be amended, modified or waived unless the holders of a
majority of the shares of Common Stock then held by the Rotko Investors have
also executed such amendment, modification or waiver and (e) the provisions of
Sections 5.4(e)(v) or (viii), 5.4(f), 6.1, 6.2, 6.3, 6.4, 6.5, 6.6(c), 6.7(a) or
(b), 6.8, 6.14, 8.1 or 8.2 or this Section 9.3 which are for the express benefit
of BRS can not be amended, modified or waived unless BRS has also executed such
amendment, modification or waiver; provided further that no amendment or waiver
which materially and adversely affects any Investor differently from any other
Investor shall be made unless such Investor executes such amendment or waiver.
No course of dealing between or among any persons having any interest in this
Agreement will be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any person under or by reason of
this Agreement.
9.4 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements set forth in this Agreement will survive
the execution and delivery of this Agreement and the MQ Closing Date, the
Effective Time and the MEDIQ Closing Date and the consummation of the
transactions contemplated hereby, regardless of any investigation made by an
Investor or on its behalf.
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9.5 Successors and Assigns; Entire Agreement. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns and executors,
administrators and heirs. This Agreement sets forth the entire agreement and
understanding among the parties as to the subject matter hereof and merges and
supersedes all prior discussions, agreements and understandings of any and every
nature among them.
9.6 Separability. In the event that any provision of this Agreement or the
application of any provision hereof is declared to be illegal, invalid or
otherwise unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that provision held
invalid shall substantially impair the benefits of the remaining portions of
this Agreement.
9.7 Notices. All notices provided for or permitted hereunder shall be made
in writing by hand-delivery, registered or certified first-class mail, telex,
telecopier or air courier guaranteeing overnight delivery to the other party at
the following addresses (or at such other address as shall be given in writing
by any party to the others):
If to MQ or BRS to:
c/o Bruckmann, Rosser, Sherrill & Co., Inc.
425 Park Avenue, 7th Floor
New York, New York 100223
Attention: Bruce C. Bruckmann
with a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: William G. Lawlor
If to MEDIQ to:
MEDIQ Incorporated
One Mediq Plaza
Pennsauken, NJ 08110
Attention: Thomas E. Carroll, President and Chief Executive Officer
with a required copy to BRS and its counsel as set forth above:
If to the other Investors or any of them, to their addresses as listed in
the books of the Company.
All such notices shall be deemed to have been duly given: when delivered by
hand, if personally delivered; five business days after being deposited in the
mail, postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
on the next business day, if timely delivered to an air courier guaranteeing
overnight delivery.
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9.8 Governing Law. The validity, performance, construction and effect of
this Agreement shall be governed by and construed in accordance with the
internal law of the State of Delaware, without giving effect to principles of
conflicts of law.
9.9 Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.
9.10 Counterparts. This Agreement may be executed in two or more
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same instrument.
9.11 Further Assurances. Each party shall cooperate and take such action as
may be reasonably requested by another party in order to carry out the
provisions and purposes of this Agreement and the transactions contemplated
hereby.
9.12 Remedies. In the event of a breach or a threatened breach by any party
to this Agreement of its obligations under this Agreement, any party injured or
to be injured by such breach, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties agree that
the provisions of this Agreement shall be specifically enforceable, it being
agreed by the parties that the remedy at law, including monetary damages, for
breach of such provision will be inadequate compensation for any loss and that
any defense in any action for specific performance that a remedy at law would be
adequate is waived.
9.13 Investor No Longer Owning Securities. If an Investor ceases to own any
Securities, such person will no longer be deemed to be an Investor for purposes
of this Agreement, except that such party will continue to be obligated to
reacquire Securities Transferred to a Permitted Transferee as required by
Section 5.4(d) and will be deemed to be an Investor at such time as such party
reacquires such Securities.
9.14 Pronouns. Whenever the context may require, any pronouns used herein
shall be deemed also to include the corresponding neuter, masculine or feminine
forms.
9.15 No Third Party Beneficiaries. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
9.16 Management Pool Shares. Carroll agrees that, in the event other
employees of the Company fail to purchase all of the Management Pool Shares, he
will purchase the Management Pool Shares on the terms and conditions set forth
herein, as more fully described in the Undertaking made by Carroll and dated as
of an even date herewith.
9.17 Unwind. In the event the Effective Time of the Merger does not occur,
the parties agree that they shall rescind the transactions contemplated by this
Agreement; provided that such recision shall not relieve the parties of any
obligations arising out of a breach of this Agreement.
9.18 Miscellaneous. The Management Investors shall not be obligated under
Section 6.6(c), 6.7(b) or Section 6.8 (in respect of the Series B Purchase
Option) to purchase shares of MEDIQ Series B Preferred Stock in amounts which
exceed the after-tax proceeds realized by such Management Investor in the
transaction which gives rise to the obligation to repurchase such MEDIQ Series B
Preferred Stock under the circumstances set forth in Sections 6.6(c), 6.7(b)
and 6.8.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
MQ ACQUISITION CORPORATION
By: /s/ Stephen C. Sherrill
--------------------------------------
Name: Stephen C. Sherrill
Title: Assistant Secretary
MEDIQ INCORPORATED
By: /s/ Jay M. Kaplan
--------------------------------------
Name: Jay M. Kaplan
Title: Senior Vice President - Finance
and Chief Financial Officer
BRUCKMANN, ROSSER, SHERRILL & CO. L.P.
By: /s/ Stephen C. Sherrill
--------------------------------------
Name: Stephen C. Sherrill
Title: Managing Director of
BRSE Associates, Inc.
BRUCE C. BRUCKMANN
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
DONALD J. BRUCKMANN
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
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BCB FAMILY PARTNERS, L.P.
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
NAZ FAMILY PARTNERS, L.P.
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
HAROLD O. ROSSER
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
H. VIRGIL SHERRILL
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
NANCY A. ZWENG
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
PAUL D. KAMINSKI
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-in-Fact
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JOHN R. EDMONDS
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-In-Fact
SUSAN M. KAIDER
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-In-Fact
WALKER C. SIMMONS
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-In-Fact
MARILENA TIBREA
By: /s/ Stephen C. Sherrill
--------------------------------------
Stephen C. Sherrill
Attorney-In-Fact
ROTKO INVESTORS
/s/ Bessie G. Rotko
------------------------------------------
Bessie G. Rotko
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
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/s/ Judith Shipon
------------------------------------------
Judith Shipon
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
/s/ Michael J. Rotko
------------------------------------------
Michael J. Rotko
SS#:
Residence Address:
Residence Ph:
Business Address:
Business Ph:
T/D BERNARD B. ROTKO DATED
NOVEMBER 18, 1983
By: /s/ Bessie G. Rotko
--------------------------------------
Bessie G. Rotko, Trustee
By: /s/ Judith M. Shipon
--------------------------------------
Judith M. Shipon, Trustee
By: /s/ Michael J. Rotko
--------------------------------------
Michael J. Rotko, Trustee
By: /s/ John D. Iskrant
--------------------------------------
John D. Iskrant, Trustee
By: PNC BANK, Trustee
By: /s/ Robert N. Tropp, Jr.
--------------------------------------
Name: Robert N. Tropp, Jr.
Title: Vice President
Address:
Phone:
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<PAGE>
HEALTHCARE CAPITAL PARTNERS, L.P.
By: /s/ Robert T. Thompson
--------------------------------------
HEALTHCARE EXECUTIVE PARTNERS, L.P.
By: /s/ Robert T. Thompson
--------------------------------------
GALEN PARTNERS INTERNATIONAL III, L.P.
By: /s/ Bruce F. Wesson
--------------------------------------
GALEN PARTNERS III, L.P.
By: /s/ Bruce F. Wesson
--------------------------------------
GALEN EMPLOYEE FUND III, L.P.
By: /s/ Bruce F. Wesson
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/s/ Thomas E. Carroll
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Thomas E. Carroll
/s/ Jay M. Kaplan
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Jay M. Kaplan
-39-
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EXHIBIT A-1
CERTIFICATE OF INCORPORATION
OF
MQ ACQUISITION CORPORATION
1. Name. The name of the Corporation is MQ Acquisition Corporation.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware
19801, in the County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware and to possess and exercise all of the
powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which the
Corporation shall have authority to issue is 1,000 shares, all of which are of
one class and are designated as Common Stock and each of which has a par value
of $0.01.
5. Incorporator. The name and mailing address of the incorporator are
Sandra Berenknopf, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia,
Pennsylvania 19103-2793.
6. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
7. Elections of Directors. Elections of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
8. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
9. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing
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violation of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit. Any repeal or modification of this Section 9 shall be
prospective only, and shall not affect, to the detriment of any director, any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
Dated: January 12, 1998
/s/ Sandra Berenknopf
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Sandra Berenknopf, Incorporator
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CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
MQ ACQUISITION CORPORATION
MQ Acquisition Corporation, a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company"), does hereby certify:
(i) the name of the Corporation is MQ Acquisition Corporation.
(ii) The Certificate of Incorporation of the Company hereby is amended by
striking out Article 4 thereof and by substituting in lieu thereof the following
new Article 4:
4. Authorized Capital. The aggregate number of shares of stock which
the Corporation shall have authority to issue is 70,000,000 shares, divided
into two (2) classes consisting of 40,000,000 shares of Preferred Stock,
par value $0.01 per share ("Preferred Stock"); and 30,000,000 shares of
Common Stock, par value $0.01 per share ("Common Stock").
The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative
rights granted to or imposed upon the shares of each such class:
a. Issue in Series. Preferred Stock may be issued from time to time
in one or more series, each such series to have the terms stated
herein and in the resolution of the Board of Directors of the
Corporation providing for its issue. All shares of any one series
of Preferred Stock will be identical, but shares of different
series of Preferred Stock need not be identical or rank equally
except insofar as provided by law or herein.
b. Creation of Series. The Board of Directors will have authority by
resolution to cause to be created one or more series of Preferred
Stock, and to determine and fix with respect to each series prior
to the issuance of any shares of the series to which such
resolution relates:
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(i) The distinctive designation of the series and the number of
shares which will constitute the series, which number may be
increased or decreased (but not below the number of shares
then outstanding) from time to time by action of the Board
of Directors;
(ii) The dividend rate and the times of payment of dividends on
the shares of the series, whether dividends will be
cumulative, and if so, from what date or dates;
(iii) The price or prices at which, and the terms and conditions
on which, the shares of the series may be redeemed at the
option of the Corporation;
(iv) Whether or not the shares of the series will be entitled to
the benefit of a retirement or sinking fund to be applied to
the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and
provisions relative to the operation thereof;
(v) Whether or not the shares of the series will be convertible
into, or exchangeable for, any other shares of stock of the
Corporation or other securities, and if so convertible or
exchangeable, the conversion price or prices, or the rates
of exchange, and any adjustments thereof, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
(vi) The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
(vii) Whether or not the shares of the series will have priority
over or be on a parity with or be junior to the shares of
any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of
shares of any other series or class having priority over or
being on a parity with the shares of such series in any
respect, or restricting the payment of dividends on or the
making of other distributions in respect of shares of any
other series or class ranking junior to the shares of the
series as to dividends or assets, or restricting the
purchase or redemption of the shares of any such junior
series or class, and the terms of any such restriction;
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(viii) Whether the series will have voting rights, in addition to
any voting rights provided by law, and, if so, the terms of
such voting rights; and
(ix) Any other preferences, qualifications, privileges, options
and other relative or special rights and limitations of that
series.
c. Dividends. Holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of
funds legally available for the payment thereof, dividends at the
rates fixed by the Board of Directors for the respective series,
and no more, before any dividends shall be declared and paid, or
set apart for payment, on Common Stock with respect to the same
dividend period.
d. Preference on Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation, holders of each series of Preferred Stock will be
entitled to receive the amount fixed for such series plus, in the
case of any series on which dividends will have been determined
by the Board of Directors to be cumulative, an amount equal to
all dividends accumulated and unpaid thereon to the date of final
distribution whether or not earned or declared before any
distribution shall be paid, or set aside for payment, to holders
of Common Stock. If the assets of the Corporation are not
sufficient to pay such amounts in full, holders of all shares of
Preferred Stock will participate in the distribution of assets
ratably in proportion to the full amounts to which they are
entitled or in such order or priority, if any, as will have been
fixed in the resolution or resolutions providing for the issue of
the series of Preferred Stock. Neither the merger nor
consolidation of the Corporation into or with any other
corporation, nor a sale, transfer or lease of all or part of its
assets, will be deemed a liquidation, dissolution or winding up
of the corporation within the meaning of this paragraph except to
the extent specifically provided for herein.
e. Redemption. The Corporation, at the option of the Board of
Directors, may redeem all or part of the shares of any series of
Preferred Stock on the terms and conditions fixed for such
series.
f. Voting Rights. Except as otherwise required by law, as otherwise
provided herein or as otherwise determined by the Board of
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Directors as to the shares of any series of Preferred Stock prior
to the issuance of any such shares, the holders of Preferred
Stock shall have no voting rights and shall not be entitled to
any notice of meeting of stockholders.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment as of this 27th day of May, 1998.
MQ Acquisition Corporation
By: /s/ Bruce C. Bruckmann
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Bruce C. Bruckmann, President
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CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS FOR
SERIES A 13.0% CUMULATIVE COMPOUNDING PREFERRED STOCK
OF
MQ Acquisition Corporation
MQ Acquisition Corporation, a Delaware corporation (hereinafter called the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that, pursuant to Article 4 of the Certificate of Incorporation
(which authorizes the creation and issuance of shares of Preferred Stock on such
terms as are determined by the Board of Directors), the Board of Directors
hereby fixes the designations and preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the following series of Preferred Stock:
A. Series A Preferred Stock.
1. Designation of Series. The designation of the series of Preferred
Stock authorized by this resolution shall be "Series A 13.0% Cumulative
Compounding Preferred Stock" ("Series A Preferred Stock") consisting of
10,000,000 shares. The par value of Series A Preferred Stock shall be $.01 per
share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series A Preferred Stock shall
rank (a) senior to the Common Stock of the Corporation, par value $.01 per share
("Common Stock"), the Series B Preferred Stock (defined in paragraph B below),
the Series C Preferred Stock (defined in paragraph B below), and each other
class of capital stock or class or series of preferred stock issued by the
Corporation after the date hereof the terms of which specifically provide that
such class or series shall rank junior to the Series A Preferred Stock as to
dividend distributions or distributions upon the liquidation, winding up and
dissolution of the Corporation (collectively referred to as "Series A Junior
Securities"), (b) on a parity with each other class of capital stock or class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which do not specifically provide that they rank junior to Series A
Preferred Stock or senior to Series A Preferred Stock as to dividend
distributions or distributions upon liquidation, winding up and dissolution of
the Corporation (collectively referred to as " Series A Parity Securities"), and
(c) junior to each other class of capital stock or other class or series of
preferred stock issued by the Corporation that by its terms is senior to the
Series A Preferred Stock with respect to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series A Senior Securities").
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3. Dividends.
(a) Each Holder of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cash dividends on each share of Series A Preferred
Stock at a rate equal to $1.30 per share per annum. All dividends shall be
cumulative, whether or not earned or declared, and shall accrue on a daily basis
from the date of issuance of Series A Preferred Stock, and shall be payable
semi-annually in arrears on each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of such Series A Preferred
Stock. Each dividend on Series A Preferred Stock shall be payable to the Holders
of record of Series A Preferred Stock as they appear on the stock register of
the Corporation on such record date as may be fixed by the Board of Directors,
which record date shall not be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to accrue in respect of
shares of Series A Preferred Stock on the date of their repurchase by the
Corporation unless the Corporation shall have failed to pay the relevant
repurchase price on the date fixed for repurchase. Notwithstanding anything to
the contrary set forth above, unless and until such dividends are declared by
the Board of Directors, there shall be no obligation to pay such dividends;
provided, that such dividends shall continue to cumulate and shall be added to
the Liquidation Preference (as provided in Paragraph A4(a) below) at the time of
repurchase as provided herein if not earlier declared and paid. Accrued
dividends on the Series A Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall thereafter accrue
additional dividends ("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.0% per annum.
(b) All dividends paid with respect to shares of Series A Preferred
Stock pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders
entitled thereto.
(c) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption pursuant to paragraph
A(5)(a) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the Holders of record on any date as may be fixed by
the Board of Directors, which date is not more than 60 days prior to the payment
of such dividends.
(d) As long as any Series A Preferred Stock is outstanding, no
dividends shall be declared by the Board of Directors or paid or funds set apart
for the payment of dividends or other distributions on any Series A Parity
Securities for any period, and no Series A Parity Securities may be repurchased,
redeemed or otherwise acquired, nor may funds be set apart for such payment
(other than dividends, other distributions, redemptions, repurchases or
acquisitions payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities in connection therewith),
unless (i) full Accumulated Dividends have been paid or set apart for such
payment on the Series A Preferred Stock and Series A Parity Securities for all
Dividend Periods terminating on or prior to the date of payment of such
dividends or distributions on, or such repurchase or redemption of, such Series
A Parity Securities (the "Series A Parity Payment Date") and (ii) any such
dividends are declared and paid pro rata so
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that the amounts of any dividends declared and paid per share on outstanding
Series A Preferred Stock and each other share of Series A Parity Securities will
in all cases bear to each other the same ratio that accrued and unpaid dividends
(including any Accumulated Dividends) per share of outstanding Series A
Preferred Stock and such other outstanding shares of Series A Parity Securities
bear to each other.
(e) The Holders shall be entitled to receive the dividends provided
for in paragraph A(3)(a) hereof in preference to and in priority over any
dividends upon any of the Series A Junior Securities. Such dividends on the
Series A Preferred Stock shall be cumulative, whether or not earned or declared,
so that if at any time full Accumulated Dividends on all shares of Series A
Preferred Stock then outstanding for all Dividend Periods then elapsed have not
been paid or set aside for payment, the amount of such unpaid dividends shall be
paid before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any shares of Series A
Junior Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared or
set apart for payment on any Series A Junior Securities (the date of any such
actions to be referred to as the "Series A Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series A Junior Securities from a holder thereof who is,
or was, a director or employee of the Corporation (or an affiliate of the
Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series A
Junior Securities payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities in connection therewith.
(f) Dividends payable on Series A Preferred Stock for any period less
than one year shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and the actual number of days elapsed in the period for
which such dividends are payable.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to $10.00 per share, plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and unpaid thereon, including
Additional Dividends, to the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is made on any Series A Junior
Securities. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all amounts available for
payments with respect to Series A Preferred Stock and all other Series A Parity
Securities would not result in payment in full of Series A Preferred Stock and
such other Series A Parity Securities, the Holders and holders of Series A
Parity Securities shall share equally and ratably in any distribution of assets
of the Corporation in proportion to the full liquidation preference to which
each is entitled. After payment in full pursuant to this paragraph A(4)(a), the
Holders shall not be entitled to any further participation in any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
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(b) For the purposes of this paragraph A(4), neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation, merger or other business combination of
the Corporation with one or more corporations (whether or not the Corporation is
the surviving corporation) shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
5. Redemption.
(a) Optional Redemption.
(i) The Corporation may, at its option, redeem at any time or from
time to time, from any source of funds legally available therefor, in whole or
in part, in the manner provided in paragraph A(5)(c) hereof, any or all of the
shares of Series A Preferred Stock, at a redemption prices set forth below, plus
an amount equal to full cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Additional Dividends, to the Redemption
Date (as defined in paragraph B). The redemption price for redemptions pursuant
to this paragraph 5(a) are as follows:
Redemption Price
Redemption Date Per Share
--------------- ----------------
on or before December 31, 1999 $11.00
on or after January 1, 2000 $10.50
but before January 1, 2002
on or after January 1, 2002 $10.00
(ii) No partial redemption of Series A Preferred Stock pursuant to
paragraph A(5)(a) hereof may be authorized or made unless prior thereto, full
accrued and unpaid dividends thereon for all Dividend Periods terminating on or
prior to the Redemption Date and an amount equal to a prorated dividend thereon
for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date have been or immediately prior to the
Redemption Notice are declared and paid in cash or are declared and there has
been a sum set apart sufficient for such cash payment on the Redemption Date.
(iii) In the event of a redemption pursuant to paragraph A(5)(a)
hereof of only a portion of the then outstanding shares of Series A Preferred
Stock, the Corporation shall effect such redemption pro rata according to the
number of shares held by each Holder of Series A Preferred Stock.
(b) Mandatory Redemption. All outstanding shares of the Series A
Preferred Stock shall be redeemed from funds legally available therefor on
December 31, 2011
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(the "Mandatory Redemption Date"), at a price per share equal to the Liquidation
Preference on such Mandatory Redemption Date.
(c) Procedures for Redemption.
(i) At least 30 days and not more than 60 days prior to the date
fixed for any redemption of Series A Preferred Stock, written notice (the
"Redemption Notice") shall be given by first class mail, postage prepaid, to
each Holder of record of Series A Preferred Stock on the record date fixed for
such redemption of Series A Preferred Stock at such Holder's address as set
forth on the stock register of the Corporation on such record date; provided
that no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of Series A Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective. In addition to any information required by law or by the
applicable rules of any exchange upon which shares of Series A Preferred Stock
may be listed or admitted to trading, the Redemption Notice shall state:
(A) the redemption price;
(B) whether all or less than all of the outstanding shares of
Series A Preferred Stock redeemable thereunder are to be redeemed and the
aggregate number of shares of Series A Preferred Stock being redeemed;
(C) the number of shares of Series A Preferred Stock held, as of
the appropriate record date, by the Holder that the Corporation intends to
redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Corporation, at the
place or places where certificates for shares of Series A Preferred Stock are to
be surrendered for redemption, in the manner and at the price designated, his,
her or its certificate or certificates representing the shares of Series A
Preferred Stock to be redeemed; and
(F) that dividends on the shares of Series A Preferred Stock to
be redeemed shall cease to accumulate on such Redemption Date unless the
Corporation defaults in the payment of the redemption price.
(ii) Each Holder shall surrender the certificate or certificates
representing such shares of Series A Preferred Stock being so redeemed to the
Corporation, duly endorsed, in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full redemption price for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
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(iii) If a Redemption Notice has been mailed in accordance with
paragraph A(5)(c) above, unless the Corporation defaults in the payment in full
of the redemption price, then, notwithstanding that the certificates evidencing
any shares of Series A Preferred Stock so called for redemption shall not have
been surrendered, (x) on the Redemption Date, the shares represented thereby so
called for redemption shall be deemed no longer outstanding and shall have the
status of authorized but unissued shares of Preferred Stock, undesignated as to
series, (y) dividends with respect to the shares so called for redemption shall
cease to accrue after the Redemption Date and (z) all rights with respect to the
shares so called for redemption or subject to conversion shall forthwith after
such date cease and terminate, except for the right of the holders to receive
the funds, if any, payable pursuant to this paragraph 5 without interest upon
surrender of their certificates therefor.
(d) Deposit of Funds. The Corporation's obligation to deliver funds in
accordance with this paragraph (5) shall be deemed fulfilled if, on or before a
Redemption Date, the Corporation shall deposit, with a bank or trust
Corporation, or an affiliate of a bank or trust Corporation such funds as are
required to be delivered by the Corporation pursuant to this paragraph (5) upon
the occurrence of the related redemption consideration sufficient to pay all
accrued and unpaid dividends on the shares to be redeemed, in trust for the
account of the Holders of the shares to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and authority
to such bank or trust Corporation that such shares and funds be delivered upon
redemption of the shares of Series A Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time to
time. Upon surrender of the certificates pursuant to paragraph A(5)(c)(ii), each
Holder shall thereupon be entitled to any funds payable pursuant to this
paragraph 5 following such surrender and following the date of such redemption.
6. Voting Rights.
(a) The Holders shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the shareholders of the Corporation,
except as otherwise required by Delaware law or this Certificate of Designation
except that, without the written consent of the holders of a majority of the
outstanding shares of Series A Preferred Stock or the vote of the holders of a
majority of the outstanding shares of Series A Preferred Stock at a meeting of
the holders of Series A Preferred Stock called for such purpose, the Corporation
shall not (a) create, authorize or issue any other class or series of stock
entitled to a preference prior to Series A Preferred Stock upon any dividend or
distribution or any liquidation, distribution of assets, dissolution or winding
up of the Corporation, or (b) amend, alter or repeal any provision of the
Corporation's Certificate of Incorporation so as to materially adversely affect
the relative rights and preferences of the Series A Preferred Stock.
(b) Without limiting the generality of the foregoing, in no event shall
the Holders be entitled to vote (individually or as a class) on any merger or
consolidation involving the Corporation, any sale of all or substantially all of
the assets of the Corporation or any similar transaction.
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(c) In any case in which the Holders shall be entitled to vote pursuant
to paragraph A(6)(a) above, each Holder shall be entitled to one vote for each
share of Series A Preferred Stock held unless otherwise required by applicable
law.
7. Conversion or Exchange. The Holders shall not have any rights hereunder
to convert such shares into or exchange such shares for shares of any other
class or classes or of any other series of any class or classes of Capital Stock
of the Corporation.
8. Reissuance of Series A Preferred Stock. Shares of Series A Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series A Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
9. Business Day. If any payment shall be required by the terms hereof to be
made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
10. No Preemptive Rights. No Holder will possess any preemptive rights to
subscribe for or acquire any unissued shares of Capital Stock of the Corporation
(whether now or hereafter authorized) or securities of the Corporation
convertible into or carrying a right to subscribe to or acquire shares of
Capital Stock of the Corporation.
11. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series A Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
B. Definitions. As used in this Resolution, the following terms shall have
the following meanings (with terms defined in the singular having comparable
meanings when used in the plural and vice versa), unless the context otherwise
requires:
"Accumulated Dividends" means (i) with respect to any share of Series A
Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series A Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
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"Additional Dividends" has the meaning given to such term in paragraph
A(3)(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in paragraph A(2)
"Dividend Payment Date" means June 30th and December 31st of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter, each
Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series A Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in paragraph
A(4)(a).
"Mandatory Redemption Date" has the meaning given to such term in paragraph
A(5)(b).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock Corporation, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred Stock, means the
date on which such shares of Preferred Stock are redeemed by the Corporation
pursuant to paragraph A(5).
"Redemption Notice" has the meaning given to such term in paragraph
A(5)(c).
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"Series A Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series A Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series A Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series A Parity Securities" has the meaning given to such term in
paragraph A(2).
"Semi-Annual Dividend Period" means the annual period commencing on each
January 1st and July 1st and ending on each Dividend Payment Date, respectively.
"Series A Preferred Stock" has the meaning given to such term in paragraph
A(1).
"Series A Senior Securities" has the meaning given to such term in
paragraph A(2).
"Series B Preferred Stock" means the Series B 13.25% Cumulative Compounding
Perpetual Preferred Stock of the Corporation.
"Series C Preferred Stock" means the Series C 13.5% Cumulative Compounding
Preferred Stock of the Corporation.
IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed
this Certificate of Designation as of the 27th day of May, 1998.
MQ ACQUISITION CORPORATION
By: /s/ Bruce C. Bruckmann
-------------------------------
Bruce C. Bruckmann, President
9
<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS FOR
SERIES B 13.25% CUMULATIVE COMPOUNDING PERPETUAL PREFERRED STOCK
OF
MQ Acquisition Corporation
MQ Acquisition Corporation, a Delaware corporation (hereinafter called the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that, pursuant to Article 4 of the Certificate of Incorporation
(which authorizes the creation and issuance of shares of Preferred Stock on such
terms as are determined by the Board of Directors), the Board of Directors
hereby fixes the designations and preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the following series of Preferred Stock:
A. Series B Preferred Stock.
1. Designation of Series. The designation of the series of Preferred
Stock authorized by this resolution shall be "Series B 13.25% Cumulative
Compounding Perpetual Preferred Stock" ("Series B Preferred Stock") consisting
of 5,000,000 shares. The par value of Series B Preferred Stock shall be $.01 per
share.
2. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series B Preferred Stock shall
rank (a) senior to the Common Stock of the Corporation, par value $.01 per share
("Common Stock"), the Series C Preferred Stock (defined in paragraph B below),
and each other class of capital stock or class or series of preferred stock
issued by the Corporation after the date hereof the terms of which specifically
provide that such class or series shall rank junior to the Series B Preferred
Stock as to dividend distributions or distributions upon the liquidation,
winding up and dissolution of the Corporation (collectively referred to as
"Series B Junior Securities"), (b) on a parity with each other class of capital
stock or class or series of preferred stock issued by the Corporation after the
date hereof the terms of which specifically provide that such class or series
shall rank neither senior nor junior to the Series B Preferred Stock as to
dividend distributions or distributions upon liquidation, winding up and
dissolution of the Corporation (collectively referred to as " Series B Parity
Securities"), and (c) junior to (i) the Series A Preferred Stock, (ii) each
other class of capital stock or other class or series of preferred stock issued
by the Corporation that by its terms is senior to the Series B Preferred Stock
with respect to dividend distributions or distributions upon the liquidation,
winding up and dissolution of the Corporation and (iii) each other class of
capital stock or class or series of preferred stock issued by the Corporation
after the date hereof
<PAGE>
the terms of which do not specifically provide that they rank junior to Series B
Preferred Stock or senior to Series B Preferred Stock as to dividend
distributions or distributions upon liquidation, winding up and dissolution of
the Corporation (collectively referred to as "Series B Senior Securities").
3. Dividends.
(a) Each Holder of Series B Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out of funds
legally available therefor, cash dividends on each share of Series B Preferred
Stock at a rate equal to $1.325 per share per annum. All dividends shall be
cumulative, whether or not earned or declared, and shall accrue on a daily basis
from the date of issuance of Series B Preferred Stock, and shall be payable
semi-annually in arrears on each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of such Series B Preferred
Stock. Each dividend on Series B Preferred Stock shall be payable to the Holders
of record of Series B Preferred Stock as they appear on the stock register of
the Corporation on such record date as may be fixed by the Board of Directors,
which record date shall not be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to accrue in respect of
shares of Series B Preferred Stock on the date of their repurchase by the
Corporation unless the Corporation shall have failed to pay the relevant
repurchase price on the date fixed for repurchase. Notwithstanding anything to
the contrary set forth above, unless and until such dividends are declared by
the Board of Directors, there shall be no obligation to pay such dividends;
provided, that such dividends shall continue to cumulate and shall be added to
the Liquidation Preference (as provided in paragraph A4(a) below) at the time of
repurchase as provided herein if not earlier declared and paid. Accrued
dividends on the Series B Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall thereafter accrue
additional dividends ("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.25% per annum.
(b) All dividends paid with respect to shares of Series B Preferred
Stock pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders
entitled thereto.
(c) Dividends on account of arrears for any past Dividend Period may
be declared and paid at any time, without reference to any regular Dividend
Payment Date, to the Holders of record on any date as may be fixed by the Board
of Directors, which date is not more than 60 days prior to the payment of such
dividends.
(d) As long as any Series B Preferred Stock is outstanding, no
dividends shall be declared by the Board of Directors or paid or funds set apart
for the payment of dividends or other distributions on any Series B Parity
Securities for any period, and no Series B Parity Securities may be repurchased,
redeemed or otherwise acquired, nor may funds be set apart for such payment
(other than dividends, other distributions, redemptions, repurchases or
acquisitions payable in Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities in connection therewith),
unless (i) full Accumulated Dividends have been paid or set apart for such
payment on the Series B Preferred Stock and Series B Parity Securities for all
Dividend Periods terminating on or prior to the date of payment of such
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<PAGE>
dividends or distributions on, or such repurchase or redemption of, such Series
B Parity Securities (the "Series B Parity Payment Date") and (ii) any such
dividends are declared and paid pro rata so that the amounts of any dividends
declared and paid per share on outstanding Series B Preferred Stock and each
other share of Series B Parity Securities will in all cases bear to each other
the same ratio that accrued and unpaid dividends (including any Accumulated
Dividends) per share of outstanding Series B Preferred Stock and such other
outstanding shares of Series B Parity Securities bear to each other.
(e) The Holders shall be entitled to receive the dividends provided
for in paragraph A(3)(a) hereof in preference to and in priority over any
dividends upon any of the Series B Junior Securities. Such dividends on the
Series B Preferred Stock shall be cumulative, whether or not earned or declared,
so that if at any time full Accumulated Dividends on all shares of Series B
Preferred Stock then outstanding for all Dividend Periods then elapsed have not
been paid or set aside for payment, the amount of such unpaid dividends shall be
paid before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any shares of Series B
Junior Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared or
set apart for payment on any Series B Junior Securities (the date of any such
actions to be referred to as the "Series B Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series B Junior Securities from a holder thereof who is,
or was, a director or employee of the Corporation (or an affiliate of the
Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series B
Junior Securities payable in Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities in connection therewith.
(f) Dividends payable on Series B Preferred Stock for any period less
than one year shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and the actual number of days elapsed in the period for
which such dividends are payable.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the Holders of all shares of Series B Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to $10.00 per share, plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and unpaid thereon, including
Additional Dividends, to the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is made on any Series B Junior
Securities. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all amounts available for
payments with respect to Series B Preferred Stock and all other Series B Parity
Securities would not result in payment in full of Series B Preferred Stock and
such other Series B Parity Securities, the Holders and holders of Series B
Parity Securities shall share equally and ratably in any distribution of assets
of the Corporation in proportion to the full liquidation preference to which
each is entitled. After payment in full pursuant to this paragraph A(4)(a), the
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<PAGE>
Holders shall not be entitled to any further participation in any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of this paragraph A(4), neither the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Corporation nor the consolidation, merger or other business combination of
the Corporation with one or more corporations (whether or not the Corporation is
the surviving corporation) shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
5. Redemption. The Company shall not have the right nor the power to,
and the Holders shall not have the right to require the Company to, redeem any
shares of Series B Preferred Stock. Notwithstanding the foregoing, this
Paragraph A(5) shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series B Preferred Stock held
by such Holder.
6. Voting Rights.
(a) The Holders shall not be entitled or permitted to vote on any
matter required or permitted to be voted upon by the shareholders of the
Corporation, except as otherwise required by Delaware law or this Certificate of
Designation except that, without the written consent of the holders of a
majority of the outstanding shares of Series B Preferred Stock or the vote of
the holders of a majority of the outstanding shares of Series B Preferred Stock
at a meeting of the holders of Series B Preferred Stock called for such purpose,
the Corporation shall not (a) create, authorize or issue any other class or
series of stock entitled to a preference prior to Series B Preferred Stock upon
any dividend or distribution or any liquidation, distribution of assets,
dissolution or winding up of the Corporation, or (b) amend, alter or repeal any
provision of the Corporation's Certificate of Incorporation so as to materially
adversely affect the relative rights and preferences of the Series B Preferred
Stock.
(b) Without limiting the generality of the foregoing, in no event
shall the Holders be entitled to vote (individually or as a class) on any merger
or consolidation involving the Corporation, any sale of all or substantially all
of the assets of the Corporation or any similar transaction.
(c) In any case in which the Holders shall be entitled to vote
pursuant to paragraph A(6)(a) above, each Holder shall be entitled to one vote
for each share of Series B Preferred Stock held unless otherwise required by
applicable law.
7. Conversion or Exchange. The Holders shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
8. Reissuance of Series B Preferred Stock. Shares of Series B Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of
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<PAGE>
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors or as part
of any other series of Preferred Stock, all subject to the conditions or
restrictions on issuance set forth in any resolution or resolutions adopted by
the Board of Directors providing for the issuance of any series of Preferred
Stock; except that the Corporation may reissue shares of Series B Preferred
Stock which are reacquired by the Corporation from a Holder who is, or was, an
employee or director of the Corporation (or its affiliates).
9. Business Day. If any payment shall be required by the terms hereof to
be made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
10. No Preemptive Rights. No Holder will possess any preemptive rights
to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
11. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series B Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
B. Definitions. As used in this Resolution, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of Series B
Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series B Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Additional Dividends" has the meaning given to such term in paragraph
A(3)(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
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<PAGE>
"Common Stock" shall have the meaning given to such term in paragraph
A(2)
"Dividend Payment Date" means June 30th and December 31st of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series B Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in paragraph
4(a).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock Corporation, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Semi-Annual Dividend Period" means the annual period commencing on each
January 1st and July 1st and ending on each Dividend Payment Date, respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative
Compounding Preferred Stock of the Corporation.
"Series B Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series B Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series B Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series B Parity Securities" has the meaning given to such term in
paragraph A(2).
"Series B Preferred Stock" has the meaning given to such term in
paragraph A(1).
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<PAGE>
"Series B Senior Securities" has the meaning given to such term in
paragraph A(2).
"Series C Preferred Stock" means the Series C 13.5% Cumulative
Compounding Preferred Stock of the Corporation.
IN WITNESS WHEREOF, the undersigned officers of the Corporation have
executed this Certificate of Designation as of the 27th day of May, 1998.
MQ ACQUISITION CORPORATION
By: \s\ Bruce C. Bruckmann
---------------------------------
Bruce C. Bruckmann, President
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<PAGE>
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS FOR
SERIES C 13.5% CUMULATIVE COMPOUNDING PREFERRED STOCK
OF
MQ Acquisition Corporation
MQ Acquisition Corporation, a Delaware corporation (hereinafter called the
"Corporation"), pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, does hereby make this Certificate of
Designation under the corporate seal of the Corporation and does hereby state
and certify that pursuant to the authority expressly vested in the Board of
Directors of the Corporation by the Certificate of Incorporation, the Board of
Directors has duly adopted the following resolutions:
RESOLVED, that, pursuant to Article 4 of the Certificate of Incorporation
(which authorizes the creation and issuance of shares of Preferred Stock on such
terms as are determined by the Board of Directors), the Board of Directors
hereby fixes the designations and preferences and relative, participating,
optional and other special rights and qualifications, limitations and
restrictions of the following series of Preferred Stock:
A. Series C Preferred Stock.
1. Designation of Series. The designation of the series of Preferred Stock
authorized by this resolution shall be "Series C 13.5% Cumulative Compounding
Preferred Stock" ("Series C Preferred Stock") consisting of 5,000,000 shares.
The par value of Series C Preferred Stock shall be $.01 per share.
2. Rank. With respect to dividend rights and rights on liquidation, winding
up and dissolution of the Corporation, Series C Preferred Stock shall rank (a)
senior to the Common Stock of the Corporation, par value $.01 per share ("Common
Stock"), and each other class of capital stock or class or series of preferred
stock issued by the Corporation after the date hereof the terms of which
specifically provide that such class or series shall rank junior to the Series C
Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up and dissolution of the Corporation (collectively
referred to as "Series C Junior Securities"), (b) on a parity with each other
class of capital stock or class or series of preferred stock issued by the
Corporation after the date hereof the terms of which specifically provide that
such class or series shall rank neither senior nor junior to the Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series C Parity Securities"), and (c) junior to (i) the Series A Preferred Stock
(defined in Paragraph B), (ii) the Series B Preferred Stock (defined in
Paragraph B), (iii) each other class of capital stock or other class or series
of preferred stock issued by the Corporation that by its terms is senior to the
Series C Preferred Stock with respect to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation and (iv)
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which do not specifically
<PAGE>
provide that they rank junior to Series C Preferred Stock or senior to Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as
"Series C Senior Securities").
3. Dividends.
(a) Each Holder of Series C Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors, out of funds legally
available therefor, cash dividends on each share of Series C Preferred Stock at
a rate equal to $1.35 per share per annum. All dividends shall be cumulative,
whether or not earned or declared, and shall accrue on a daily basis from the
date of issuance of Series C Preferred Stock, and shall be payable semi-annually
in arrears on each Dividend Payment Date, commencing on the second Dividend
Payment Date after the date of issuance of such Series C Preferred Stock. Each
dividend on Series C Preferred Stock shall be payable to the Holders of record
of Series C Preferred Stock as they appear on the stock register of the
Corporation on such record date as may be fixed by the Board of Directors, which
record date shall not be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to accrue in respect of
shares of Series C Preferred Stock on the date of their repurchase by the
Corporation unless the Corporation shall have failed to pay the relevant
repurchase price on the date fixed for repurchase. Notwithstanding anything to
the contrary set forth above, unless and until such dividends are declared by
the Board of Directors, there shall be no obligation to pay such dividends;
provided, that such dividends shall continue to cumulate and shall be added to
the Liquidation Preference (as provided in paragraph A4(a) below) at the time of
repurchase as provided herein if not earlier declared and paid. Accrued
dividends on the Series C Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall thereafter accrue
additional dividends ("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.5% per annum.
(b) All dividends paid with respect to shares of Series C Preferred Stock
pursuant to paragraph A(3)(a) shall be paid pro rata to the Holders entitled
thereto.
(c) Dividends on account of arrears for any past Dividend Period and
dividends in connection with any optional redemption pursuant to paragraph
A(5)(a) may be declared and paid at any time, without reference to any regular
Dividend Payment Date, to the Holders of record on any date as may be fixed by
the Board of Directors, which date is not more than 60 days prior to the payment
of such dividends.
(d) As long as any Series C Preferred Stock is outstanding, no dividends
shall be declared by the Board of Directors or paid or funds set apart for the
payment of dividends or other distributions on any Series C Parity Securities
for any period, and no Series C Parity Securities may be repurchased, redeemed
or otherwise acquired, nor may funds be set apart for such payment (other than
dividends, other distributions, redemptions, repurchases or acquisitions payable
in Series C Junior Securities and cash in lieu of fractional shares of such
Series C Junior Securities in connection therewith), unless (i) full Accumulated
Dividends have been paid or set apart for such payment on the Series C Preferred
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Stock and Series C Parity Securities for all Dividend Periods terminating on or
prior to the date of payment of such dividends or distributions on, or such
repurchase or redemption of, such Series C Parity Securities (the "Series C
Parity Payment Date") and (ii) any such dividends are declared and paid pro rata
so that the amounts of any dividends declared and paid per share on outstanding
Series C Preferred Stock and each other share of Series C Parity Securities will
in all cases bear to each other the same ratio that accrued and unpaid dividends
(including any Accumulated Dividends) per share of outstanding Series C
Preferred Stock and such other outstanding shares of Series C Parity Securities
bear to each other.
(e) The Holders shall be entitled to receive the dividends provided for in
paragraph A(3)(a) hereof in preference to and in priority over any dividends
upon any of the Series C Junior Securities. Such dividends on the Series C
Preferred Stock shall be cumulative, whether or not earned or declared, so that
if at any time full Accumulated Dividends on all shares of Series C Preferred
Stock then outstanding for all Dividend Periods then elapsed have not been paid
or set aside for payment, the amount of such unpaid dividends shall be paid
before any sum shall be set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of any shares of Series C
Junior Securities (either pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall be paid or declared or
set apart for payment on any Series C Junior Securities (the date of any such
actions to be referred to as the "Series C Junior Payment Date"); provided,
however, that the foregoing shall not (i) prohibit the Corporation from
repurchasing shares of Series C Junior Securities from a holder thereof who is,
or was, a director or employee of the Corporation (or an affiliate of the
Corporation) and (ii) prohibit the Corporation from making dividends, other
distributions, redemptions, repurchases or acquisitions in respect of Series C
Junior Securities payable in Series C Junior Securities and cash in lieu of
fractional shares of such Series C Junior Securities in connection therewith.
(f) Dividends payable on Series C Preferred Stock for any period less than
one year shall be computed on the basis of a 360-day year consisting of twelve
30-day months and the actual number of days elapsed in the period for which such
dividends are payable.
4. Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, the Holders of all shares of Series C Preferred Stock
then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders an amount in cash
equal to $10.00 per share, plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and unpaid thereon, including
Additional Dividends, to the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is made on any Series C Junior
Securities. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all amounts available for
payments with respect to Series C Preferred Stock and all other Series C Parity
Securities would not result in payment in full of Series C Preferred Stock and
such other Series C Parity Securities, the Holders and holders of Series C
Parity Securities shall share equally and ratably in any distribution of assets
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<PAGE>
of the Corporation in proportion to the full liquidation preference to which
each is entitled. After payment in full pursuant to this paragraph A(4)(a), the
Holders shall not be entitled to any further participation in any distribution
in the event of liquidation, dissolution or winding up of the affairs of the
Corporation.
(b) For the purposes of this paragraph A(4), neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business combination of the
Corporation with one or more corporations (whether or not the Corporation is the
surviving corporation) shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
5. Redemption.
(a) Optional Redemption.
(i) The Corporation may, at its option, redeem at any time or
from time to time, from any source of funds legally available
therefor, in whole or in part, in the manner provided in paragraph
A(5)(c) hereof, any or all of the shares of Series C Preferred Stock,
at a redemption price of $10.00 per share, plus an amount equal to
full cumulative dividends (whether or not earned or declared) accrued
and unpaid thereon, including Additional Dividends, to the Redemption
Date (as defined in paragraph B).
(ii) No partial redemption of Series C Preferred Stock pursuant
to paragraph A(5)(a) hereof may be authorized or made unless prior
thereto, full accrued and unpaid dividends thereon for all Dividend
Periods terminating on or prior to the Redemption Date and an amount
equal to a prorated dividend thereon for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the
Redemption Date have been or immediately prior to the Redemption
Notice are declared and paid in cash or are declared and there has
been a sum set apart sufficient for such cash payment on the
Redemption Date.
(iii) In the event of a redemption pursuant to paragraph A(5)(a)
hereof of only a portion of the then outstanding shares of Series C
Preferred Stock, the Corporation shall effect such redemption pro rata
according to the number of shares held by each Holder of Series C
Preferred Stock.
(b) Mandatory Redemption. All outstanding shares of the Series C Preferred
Stock shall be redeemed from funds legally available therefor on December 31,
2012 (the "Mandatory Redemption Date"), at a price per share equal to the
Liquidation Preference on such Mandatory Redemption Date.
(c) Procedures for Redemption.
(i) At least 30 days and not more than 60 days prior to the date
fixed for any redemption of Series C Preferred Stock, written notice
(the "Redemption Notice") shall be given by first class mail, postage
prepaid, to each Holder of record of Series C Preferred Stock on the
record date fixed for such redemption of Series C Preferred Stock at
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<PAGE>
such Holder's address as set forth on the stock register of the
Corporation on such record date; provided that no failure to give such
notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Series C Preferred Stock
to be redeemed except as to the Holder or Holders to whom the
Corporation has failed to give said notice or except as to the Holder
or Holders whose notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which
shares of Series C Preferred Stock may be listed or admitted to
trading, the Redemption Notice shall state:
(A) the redemption price;
(B) whether all or less than all of the outstanding shares
of Series C Preferred Stock redeemable thereunder are to be
redeemed and the aggregate number of shares of Series C Preferred
Stock being redeemed;
(C) the number of shares of Series C Preferred Stock held,
as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Corporation, at
the place or places where certificates for shares of Series C
Preferred Stock are to be surrendered for redemption, in the
manner and at the price designated, his, her or its certificate
or certificates representing the shares of Series C Preferred
Stock to be redeemed; and
(F) that dividends on the shares of Series C Preferred Stock
to be redeemed shall cease to accumulate on such Redemption Date
unless the Corporation defaults in the payment of the redemption
price.
(ii) Each Holder shall surrender the certificate or certificates
representing such shares of Series C Preferred Stock being so redeemed to
the Corporation, duly endorsed, in the manner and at the place designated
in the Redemption Notice, and on the Redemption Date the full redemption
price for such shares shall be payable in cash to the Person whose name
appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed
shares.
(iii) If a Redemption Notice has been mailed in accordance with
paragraph A(5)(c) above, unless the Corporation defaults in the payment in
full of the redemption price, then, notwithstanding that the certificates
evidencing any shares of Series C Preferred Stock so called for redemption
shall not have been surrendered, (x) on the Redemption Date, the shares
represented thereby so called for redemption shall be deemed no longer
outstanding and shall have the status of authorized but unissued shares of
Preferred Stock, undesignated as to series, (y) dividends with respect to
the shares so called for redemption shall cease to accrue after the
Redemption Date and (z) all rights with respect to the shares so called for
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redemption or subject to conversion shall forthwith after such date cease
and terminate, except for the right of the holders to receive the funds, if
any, payable pursuant to this paragraph 5 without interest upon surrender
of their certificates therefor.
(d) Deposit of Funds. The Corporation's obligation to deliver funds in
accordance with this paragraph (5) shall be deemed fulfilled if, on or before a
Redemption Date, the Corporation shall deposit, with a bank or trust
Corporation, or an affiliate of a bank or trust Corporation such funds as are
required to be delivered by the Corporation pursuant to this paragraph (5) upon
the occurrence of the related redemption consideration sufficient to pay all
accrued and unpaid dividends on the shares to be redeemed, in trust for the
account of the Holders of the shares to be redeemed (and so as to be and
continue to be available therefor), with irrevocable instructions and authority
to such bank or trust Corporation that such shares and funds be delivered upon
redemption of the shares of Series C Preferred Stock so called for redemption.
Any interest accrued on such funds shall be paid to the Corporation from time to
time. Upon surrender of the certificates pursuant to paragraph A(5)(c)(ii), each
Holder shall thereupon be entitled to any funds payable pursuant to this
paragraph 5 following such surrender and following the date of such redemption.
6. Voting Rights.
(a) The Holders shall not be entitled or permitted to vote on any matter
required or permitted to be voted upon by the shareholders of the Corporation,
except as otherwise required by Delaware law or this Certificate of Designation
except that, without the written consent of the holders of a majority of the
outstanding shares of Series C Preferred Stock or the vote of the holders of a
majority of the outstanding shares of Series C Preferred Stock at a meeting of
the holders of Series C Preferred Stock called for such purpose, the Corporation
shall not (a) create, authorize or issue any other class or series of stock
entitled to a preference prior to Series C Preferred Stock upon any dividend or
distribution or any liquidation, distribution of assets, dissolution or winding
up of the Corporation, or (b) amend, alter or repeal any provision of the
Corporation's Certificate of Incorporation so as to materially adversely affect
the relative rights and preferences of the Series C Preferred Stock.
(b) Without limiting the generality of the foregoing, in no event shall the
Holders be entitled to vote (individually or as a class) on any merger or
consolidation involving the Corporation, any sale of all or substantially all of
the assets of the Corporation or any similar transaction.
(c) In any case in which the Holders shall be entitled to vote pursuant to
paragraph A(6)(a) above, each Holder shall be entitled to one vote for each
share of Series C Preferred Stock held unless otherwise required by applicable
law.
7. Conversion or Exchange. The Holders shall not have any rights hereunder
to convert such shares into or exchange such shares for shares of any other
class or classes or of any other series of any class or classes of Capital Stock
of the Corporation.
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8. Reissuance of Series C Preferred Stock. Shares of Series C Preferred
Stock which have been issued and reacquired in any manner, including shares
purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series C Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
9. Business Day. If any payment shall be required by the terms hereof to be
made on a day that is not a Business Day, such payment shall be made on the
immediately succeeding Business Day.
10. No Preemptive Rights. No Holder will possess any preemptive rights to
subscribe for or acquire any unissued shares of Capital Stock of the Corporation
(whether now or hereafter authorized) or securities of the Corporation
convertible into or carrying a right to subscribe to or acquire shares of
Capital Stock of the Corporation.
11. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series C Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
B. Definitions. As used in this Resolution, the following terms shall have
the following meanings (with terms defined in the singular having comparable
meanings when used in the plural and vice versa), unless the context otherwise
requires:
"Accumulated Dividends" means (i) with respect to any share of Series C
Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series C Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Additional Dividends" has the meaning given to such term in paragraph
A(3)(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banking institutions in New York City are authorized by law or
executive order to close.
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"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in paragraph A(2)
"Dividend Payment Date" means June 30th and December 31st of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter, each
Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series C Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in paragraph
A(4)(a).
"Mandatory Redemption Date" has the meaning given to such term in paragraph
A(5)(b).
"Person" means any individual, corporation, partnership, joint venture,
incorporated or unincorporated association, joint-stock Corporation, trust,
unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred Stock, means the
date on which such shares of Preferred Stock are redeemed by the Corporation
pursuant to paragraph A(5).
"Redemption Notice" has the meaning given to such term in paragraph
A(5)(c).
"Semi-Annual Dividend Period" means the annual period commencing on each
January 1st and July 1st and ending on each Dividend Payment Date, respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative Compounding
Preferred Stock of the Corporation.
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"Series B Preferred Stock" means the Series B 13.25% Cumulative Compounding
Preferred Stock of the Corporation.
"Series C Junior Payment Date" has the meaning given to such term in
A(3)(e).
"Series C Junior Securities" has the meaning given to such term in
paragraph A(2).
"Series C Parity Payment Date" has the meaning given to such term in
A(3)(d).
"Series C Parity Securities" has the meaning given to such term in
paragraph A(2).
"Series C Preferred Stock" has the meaning given to such term in paragraph
A(1).
"Series C Senior Securities" has the meaning given to such term in
paragraph A(2).
IN WITNESS WHEREOF, the undersigned officer of the Corporation had executed
this Certificate of Designation as of the 27th day of May, 1998.
MQ ACQUISITION CORPORATION
By: /s/ Bruce C. Bruckmann
---------------------------------
Bruce C. Bruckmann, President
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EXHIBIT A-2
BYLAWS
OF
MQ ACQUISITION CORPORATION
ARTICLE I
STOCKHOLDERS
1.1 Meetings.
1.1.1 Place. Meetings of the stockholders shall be held at such place as
may be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the
election of directors and for other business shall be held on such date and at
such time as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be called
at any time by the president, or the board of directors, or the holders of a
majority of the outstanding shares of stock of the Company entitled to vote at
the meeting.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the
certificate of incorporation or by law, every stockholder shall have the right
at every meeting of stockholders to one vote for every share standing in the
name of such stockholder on the books of the Company which is entitled to vote
at such meeting. Every stockholder may vote either in person or by proxy.
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ARTICLE II
DIRECTORS
2.1 Number and Term. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors shall be held at such place
as may be designated by the board or in the notice of the meeting.
2.2.2 Regular Meetings. Regular meetings of the board of directors shall be
held at such times as the board may designate. Notice of regular meetings need
not be given.
2.2.3 Special Meetings. Special meetings of the board may be called by
direction of the president or any two members of the board on three days' notice
to each director, either personally or by mail, telegram or facsimile
transmission.
2.2.4 Quorum. A majority of all the directors in office shall constitute a
quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate of
incorporation or by law, the vote of a majority of the directors present at any
meeting at which a quorum is present shall constitute the act of the board of
directors.
2.2.6 Committees. The board of directors may, by resolution adopted by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board. Unless otherwise provided herein, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
Except as otherwise provided herein, in the certificate of incorporation or by
law, any such committee shall have and may exercise the powers of the full board
of directors to the extent provided in the resolution of the board directing the
committee.
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ARTICLE III
OFFICERS
3.1 Election. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
3.2 Authority, Duties and Compensation. The officers shall have such authority,
perform such duties and serve for such compensation as may be determined by
resolution of the board of directors. Except as otherwise provided by board
resolution, (i) the president shall be the chief executive officer of the
Company, shall have general supervision over the business and operations of the
Company, may perform any act and execute any instrument for the conduct of such
business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii) any vice president, or vice presidents in
the order determined by the board, shall in the absence of the president have
the authority and perform the duties of the president.
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority
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vote of a quorum consisting of directors not parties to such proceeding may, and
on request of any person seeking indemnification or advance of expenses shall be
required to, determine in each case whether the applicable standards in any
applicable statute have been met, or such determination shall be made by
independent legal counsel if such quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of disinterested directors so directs,
provided that, if there has been a change in control of the Company between the
time of the action or failure to act giving rise to the claim for
indemnification or advance of expenses and the time such claim is made, at the
option of the person seeking indemnification or advance of expenses, the
permissibility of indemnification or advance of expenses shall be determined by
independent legal counsel. The reasonable expenses of any director or officer in
prosecuting a successful claim for indemnification, and the fees and expenses of
any special legal counsel engaged to determine permissibility of indemnification
or advance of expenses, shall be borne by the Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6 Insurance and Other Indemnification. The board of directors shall have the
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
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ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby shall be
made on the books of the Company only by the registered holder or by duly
authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special meeting
of the board of directors by vote of a majority of all directors in office or at
any annual or special meeting of stockholders by vote of holders of a majority
of the outstanding stock entitled to vote. Notice of any such annual or special
meeting of stockholders shall set forth the proposed change or a summary
thereof.
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EXHIBIT A-3
CERTIFICATE OF INCORPORATION
OF
MEDIQ INCORPORATED
1. Name. The name of the Corporation is MEDIQ Incorporated.
2. Registered Office and Agent. The address of the Corporation's registered
office in the State of Delaware is 1209 Orange Street, Wilmington, Delaware
19801, in the County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
3. Purpose. The purposes for which the Corporation is formed are to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware and to possess and exercise all of the
powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital.
A. The aggregate number of shares of stock which the Corporation shall
have authority to issue is 70,000,000 shares, divided into two (2) classes
consisting of 40,000,000 shares of Preferred Stock, par value $0.01 per share
("Preferred Stock"); and 30,000,000 shares of Common Stock, par value $0.01 per
share ("Common Stock").
B. The following is a statement of the designations, preferences,
qualifications, limitations, restrictions and the special or relative rights
granted to or imposed upon the shares of each such class:
i. Issue in Series. Preferred Stock may be issued from time to time
in one or more series, each such series to have the terms stated herein and in
the resolution of the Board of Directors of the Corporation providing for its
issue. All shares of any one series of Preferred Stock will be identical, but
shares of different series of Preferred Stock need not be identical or rank
equally except insofar as provided by law or herein.
ii. Creation of Series. The Board of Directors will have authority by
resolution to cause to be created one or more series of Preferred Stock, and to
determine and fix with respect to each series prior to the issuance of any
shares of the series to which such resolution relates:
a. The distinctive designation of the series and the number of
shares which will constitute the series, which number may be
increased or decreased (but not below the number of shares
then outstanding) from time to time by action of the Board
of Directors;
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b. The dividend rate and the times of payment of dividends on
the shares of the series, whether dividends will be
cumulative, and if so, from what date or dates;
c. The price or prices at which, and the terms and conditions
on which, the shares of the series may be redeemed at the
option of the Corporation;
d. Whether or not the shares of the series will be entitled to
the benefit of a retirement or sinking fund to be applied to
the purchase or redemption of such shares and, if so
entitled, the amount of such fund and the terms and
provisions relative to the operation thereof;
e. Whether or not the shares of the series will be convertible
into, or exchangeable for, any other shares of stock of the
Corporation or other securities, and if so convertible or
exchangeable, the conversion price or prices, or the rates
of exchange, and any adjustments thereof, at which such
conversion or exchange may be made, and any other terms and
conditions of such conversion or exchange;
f. The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the Corporation;
g. Whether or not the shares of the series will have priority
over or be on a parity with or be junior to the shares of
any other series or class in any respect or will be entitled
to the benefit of limitations restricting the issuance of
shares of any other series or class having priority over or
being on a parity with the shares of such series in any
respect, or restricting the payment of dividends on or the
making of other distributions in respect of shares of any
other series or class ranking junior to the shares of the
series as to dividends or assets, or restricting the
purchase or redemption of the shares of any such junior
series or class, and the terms of any such restriction;
h. Whether the series will have voting rights, in addition to
any voting rights provided by law, and, if so, the terms of
such voting rights; and
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i. Any other preferences, qualifications, privileges, options
and other relative or special rights and limitations of that
series.
iii. Dividends. Holders of Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors, out of funds legally
available for the payment thereof, dividends at the rates fixed by the Board of
Directors for the respective series, and no more, before any dividends shall be
declared and paid, or set apart for payment, on Common Stock with respect to the
same dividend period.
iv. Preference on Liquidation. In the event of the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, holders
of each series of Preferred Stock will be entitled to receive the amount fixed
for such series plus, in the case of any series on which dividends will have
been determined by the Board of Directors to be cumulative, an amount equal to
all dividends accumulated and unpaid thereon to the date of final distribution
whether or not earned or declared before any distribution shall be paid, or set
aside for payment, to holders of Common Stock. If the assets of the Corporation
are not sufficient to pay such amounts in full, holders of all shares of
Preferred Stock will participate in the distribution of assets ratably in
proportion to the full amounts to which they are entitled or in such order or
priority, if any, as will have been fixed in the resolution or resolutions
providing for the issue of the series of Preferred Stock. Neither the merger nor
consolidation of the Corporation into or with any other corporation, nor a sale,
transfer or lease of all or part of its assets, will be deemed a liquidation,
dissolution or winding up of the corporation within the meaning of this
paragraph except to the extent specifically provided for herein.
v. Redemption. The Corporation, at the option of the Board of
Directors, may redeem all or part of the shares of any series of Preferred Stock
on the terms and conditions fixed for such series.
vi. Voting Rights. Except as otherwise required by law, as otherwise
provided herein or as otherwise determined by the Board of Directors as to the
shares of any series of Preferred Stock prior to the issuance of any such
shares, the holders of Preferred Stock shall have no voting rights and shall not
be entitled to any notice of meeting of stockholders.
C. Series A Preferred Stock.
i. Designation of Series. There shall be 10,000,000 shares of
Preferred Stock designated as "Series A 13.0% Cumulative Compounding Preferred
Stock" ("Series A Preferred Stock"). The par value of Series A Preferred Stock
shall be $.01 per share.
ii. Rank. With respect to dividend rights and rights on liquidation,
winding up and dissolution of the Corporation, Series A Preferred Stock shall
rank (a) senior to the Common Stock of the Corporation, par value $.01 per share
("Common Stock"), the Series B Preferred Stock (defined in paragraph 4.C.xii.
below), the Series C Preferred Stock (defined in
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paragraph 4.C.xii. below), and each other class of capital stock or class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to the Series A Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series A Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which do not specifically
provide that they rank junior to Series A Preferred Stock or senior to Series A
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series A Parity Securities"), and (c) junior to each other class of capital
stock or other class or series of preferred stock issued by the Corporation that
by its terms is senior to the Series A Preferred Stock with respect to dividend
distributions or distributions upon the liquidation, winding up and dissolution
of the Corporation (collectively referred to as "Series A Senior Securities").
iii. Dividends.
a. Each Holder of Series A Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors,
out of funds legally available therefor, cash dividends on
each share of Series A Preferred Stock at a rate equal to
$1.30 per share per annum. All dividends shall be
cumulative, whether or not earned or declared, and shall
accrue on a daily basis from the date of issuance of Series
A Preferred Stock, and shall be payable semi-annually in
arrears on each Dividend Payment Date, commencing on the
second Dividend Payment Date after the date of issuance of
such Series A Preferred Stock. Each dividend on Series A
Preferred Stock shall be payable to the Holders of record of
Series A Preferred Stock as they appear on the stock
register of the Corporation on such record date as may be
fixed by the Board of Directors, which record date shall not
be less than 10 nor more than 60 days prior to the
applicable Dividend Payment Date. Dividends shall cease to
accrue in respect of shares of Series A Preferred Stock on
the date of their repurchase by the Corporation unless the
Corporation shall have failed to pay the relevant repurchase
price on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and until
such dividends are declared by the Board of Directors, there
shall be no obligation to pay such dividends; provided, that
such dividends shall continue to cumulate and shall be added
to the Liquidation Preference (as provided in Paragraph
4.C.iv.a. below) at the time of repurchase as provided
herein if not earlier declared and paid. Accrued dividends
on the
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Series A Preferred Stock if not paid on the first or any
subsequent Dividend Payment Date following accrual shall
thereafter accrue additional dividends ("Additional
Dividends") in respect thereof, compounded annually, at the
rate of 13.0% per annum.
b. All dividends paid with respect to shares of Series A
Preferred Stock pursuant to paragraph 4.C.iii.a. shall be
paid pro rata to the Holders entitled thereto.
c. Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption
pursuant to paragraph 4.C.v.a. may be declared and paid at
any time, without reference to any regular Dividend Payment
Date, to the Holders of record on any date as may be fixed
by the Board of Directors, which date is not more than 60
days prior to the payment of such dividends.
d. As long as any Series A Preferred Stock is outstanding, no
dividends shall be declared by the Board of Directors or
paid or funds set apart for the payment of dividends or
other distributions on any Series A Parity Securities for
any period, and no Series A Parity Securities may be
repurchased, redeemed or otherwise acquired, nor may funds
be set apart for such payment (other than dividends, other
distributions, redemptions, repurchases or acquisitions
payable in Series A Junior Securities and cash in lieu of
fractional shares of such Series A Junior Securities in
connection therewith), unless (i) full Accumulated Dividends
have been paid or set apart for such payment on the Series A
Preferred Stock and Series A Parity Securities for all
Dividend Periods terminating on or prior to the date of
payment of such dividends or distributions on, or such
repurchase or redemption of, such Series A Parity Securities
(the "Series A Parity Payment Date") and (ii) any such
dividends are declared and paid pro rata so that the amounts
of any dividends declared and paid per share on outstanding
Series A Preferred Stock and each other share of Series A
Parity Securities will in all cases bear to each other the
same ratio that accrued and unpaid dividends (including any
Accumulated Dividends) per share of outstanding Series A
Preferred Stock and such other outstanding shares of Series
A Parity Securities bear to each other.
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e. The Holders shall be entitled to receive the dividends
provided for in paragraph 4.C.iii.a. hereof in preference to
and in priority over any dividends upon any of the Series A
Junior Securities. Such dividends on the Series A Preferred
Stock shall be cumulative, whether or not earned or
declared, so that if at any time full Accumulated Dividends
on all shares of Series A Preferred Stock then outstanding
for all Dividend Periods then elapsed have not been paid or
set aside for payment, the amount of such unpaid dividends
shall be paid before any sum shall be set aside for or
applied by the Corporation to the purchase, redemption or
other acquisition for value of any shares of Series A Junior
Securities (either pursuant to any applicable sinking fund
requirement or otherwise) or any dividend or other
distribution shall be paid or declared or set apart for
payment on any Series A Junior Securities (the date of any
such actions to be referred to as the "Series A Junior
Payment Date"); provided, however, that the foregoing shall
not (i) prohibit the Corporation from repurchasing shares of
Series A Junior Securities from a holder thereof who is, or
was, a director or employee of the Corporation (or an
affiliate of the Corporation) and (ii) prohibit the
Corporation from making dividends, other distributions,
redemptions, repurchases or acquisitions in respect of
Series A Junior Securities payable in Series A Junior
Securities and cash in lieu of fractional shares of such
Series A Junior Securities in connection therewith.
f. Dividends payable on Series A Preferred Stock for any period
less than one year shall be computed on the basis of a
360-day year consisting of twelve 30-day months and the
actual number of days elapsed in the period for which such
dividends are payable.
iv. Liquidation Preference.
a. Upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the Holders of all shares
of Series A Preferred Stock then outstanding shall be
entitled to be paid out of the assets of the Corporation
available for distribution to its stockholders an amount in
cash equal to $10.00 per share, plus an amount equal to full
cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Additional
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Dividends, to the date of final distribution (the
"Liquidation Preference") and no more, before any
distribution is made on any Series A Junior Securities. If
upon any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the application of all
amounts available for payments with respect to Series A
Preferred Stock and all other Series A Parity Securities
would not result in payment in full of Series A Preferred
Stock and such other Series A Parity Securities, the Holders
and holders of Series A Parity Securities shall share
equally and ratably in any distribution of assets of the
Corporation in proportion to the full liquidation preference
to which each is entitled. After payment in full pursuant to
this paragraph 4.C.iv.a., the Holders shall not be entitled
to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation.
b. For the purposes of this paragraph 4.C.iv., neither the
voluntary sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the
Corporation nor the consolidation, merger or other business
combination of the Corporation with one or more corporations
(whether or not the Corporation is the surviving
corporation) shall be deemed to be a voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation.
v. Redemption.
a. Optional Redemption.
(1) The Corporation may, at its option, redeem at any time
or from time to time, from any source of funds legally
available therefor, in whole or in part, in the manner
provided in paragraph 4.C.v.c. hereof, any or all of the
shares of Series A Preferred Stock, at a redemption
prices set forth below, plus an amount equal to full
cumulative dividends (whether or not earned or declared)
accrued and unpaid thereon, including Additional
Dividends, to the Redemption Date (as defined in
paragraph 4.C.xii.). The redemption price for
redemptions pursuant to this paragraph 4.C.v.a. are as
follows:
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Redemption Price
Redemption Date Per Share
--------------- ----------------
on or before December 31, 1999 $11.00
on or after January 1, 2000 $10.50
but before January 1, 2002
on or after January 1, 2002 $10.00
(2) No partial redemption of Series A Preferred Stock
pursuant to paragraph 4.C.v.a. hereof may be authorized
or made unless prior thereto, full accrued and unpaid
dividends thereon for all Dividend Periods terminating
on or prior to the Redemption Date and an amount equal
to a prorated dividend thereon for the period from the
Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date have been or
immediately prior to the Redemption Notice are declared
and paid in cash or are declared and there has been a
sum set apart sufficient for such cash payment on the
Redemption Date.
(3) In the event of a redemption pursuant to paragraph
4.C.v.a. hereof of only a portion of the then
outstanding shares of Series A Preferred Stock, the
Corporation shall effect such redemption pro rata
according to the number of shares held by each Holder of
Series A Preferred Stock.
b. Mandatory Redemption. All outstanding shares of the Series A
Preferred Stock shall be redeemed from funds legally
available therefor on December 31, 2011 (the "Mandatory
Redemption Date"), at a price per share equal to the
Liquidation Preference on such Mandatory Redemption Date.
c. Procedures for Redemption.
(1) At least 30 days and not more than 60 days prior to the
date fixed for any redemption of Series A
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Preferred Stock, written notice (the "Redemption
Notice") shall be given by first class mail, postage
prepaid, to each Holder of record of Series A Preferred
Stock on the record date fixed for such redemption of
Series A Preferred Stock at such Holder's address as set
forth on the stock register of the Corporation on such
record date; provided that no failure to give such
notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any
shares of Series A Preferred Stock to be redeemed except
as to the Holder or Holders to whom the Corporation has
failed to give said notice or except as to the Holder or
Holders whose notice was defective. In addition to any
information required by law or by the applicable rules
of any exchange upon which shares of Series A Preferred
Stock may be listed or admitted to trading, the
Redemption Notice shall state:
(A) the redemption price;
(B) whether all or less than all of the outstanding
shares of Series A Preferred Stock redeemable thereunder are to be redeemed and
the aggregate number of shares of Series A Preferred Stock being redeemed;
(C) the number of shares of Series A Preferred Stock
held, as of the appropriate record date, by the Holder that the Corporation
intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the Corporation,
at the place or places where certificates for shares of Series A Preferred Stock
are to be surrendered for redemption, in the manner and at the price designated,
his, her or its certificate or certificates representing the shares of Series A
Preferred Stock to be redeemed; and
(F) that dividends on the shares of Series A Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Corporation defaults in the payment of the redemption price.
(2) Each Holder shall surrender the certificate or
certificates representing such shares of Series A
Preferred Stock being so redeemed to the Corporation,
duly endorsed, in the manner and at the place designated
in the Redemption Notice, and on the Redemption Date the
full redemption price for
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such shares shall be payable in cash to the Person whose
name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be
canceled and retired. In the event that less than all of
the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing
the unredeemed shares.
(3) If a Redemption Notice has been mailed in accordance
with paragraph 4.C.v.e. above, unless the Corporation
defaults in the payment in full of the redemption price,
then, notwithstanding that the certificates evidencing
any shares of Series A Preferred Stock so called for
redemption shall not have been surrendered, (x) on the
Redemption Date, the shares represented thereby so
called for redemption shall be deemed no longer
outstanding and shall have the status of authorized but
unissued shares of Preferred Stock, undesignated as to
series, (y) dividends with respect to the shares so
called for redemption shall cease to accrue after the
Redemption Date and (z) all rights with respect to the
shares so called for redemption or subject to conversion
shall forthwith after such date cease and terminate,
except for the right of the holders to receive the
funds, if any, payable pursuant to this paragraph 5
without interest upon surrender of their certificates
therefor.
d. Deposit of Funds. The Corporation's obligation to deliver
funds in accordance with this paragraph v. shall be deemed
fulfilled if, on or before a Redemption Date, the
Corporation shall deposit, with a bank or trust Corporation,
or an affiliate of a bank or trust Corporation such funds as
are required to be delivered by the Corporation pursuant to
this paragraph v. upon the occurrence of the related
redemption consideration sufficient to pay all accrued and
unpaid dividends on the shares to be redeemed, in trust for
the account of the Holders of the shares to be redeemed (and
so as to be and continue to be available therefor), with
irrevocable instructions and authority to such bank or trust
Corporation that such shares and funds be delivered upon
redemption of the shares of Series A Preferred Stock so
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called for redemption. Any interest accrued on such funds
shall be paid to the Corporation from time to time. Upon
surrender of the certificates pursuant to paragraph
4.C.v.c.(2), each Holder shall thereupon be entitled to any
funds payable pursuant to this paragraph v. following such
surrender and following the date of such redemption.
vi. Voting Rights.
a. The Holders shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the
shareholders of the Corporation, except as otherwise
required by Delaware law or this Certificate of Designation
except that, without the written consent of the holders of a
majority of the outstanding shares of Series A Preferred
Stock or the vote of the holders of a majority of the
outstanding shares of Series A Preferred Stock at a meeting
of the holders of Series A Preferred Stock called for such
purpose, the Corporation shall not (a) create, authorize or
issue any other class or series of stock entitled to a
preference prior to Series A Preferred Stock upon any
dividend or distribution or any liquidation, distribution of
assets, dissolution or winding up of the Corporation, or (b)
amend, alter or repeal any provision of the Corporation's
Certificate of Incorporation so as to materially adversely
affect the relative rights and preferences of the Series A
Preferred Stock.
b. Without limiting the generality of the foregoing, in no
event shall the Holders be entitled to vote (individually or
as a class) on any merger or consolidation involving the
Corporation, any sale of all or substantially all of the
assets of the Corporation or any similar transaction.
c. In any case in which the Holders shall be entitled to vote
pursuant to paragraph 4.C.vi.a. above, each Holder shall be
entitled to one vote for each share of Series A Preferred
Stock held unless otherwise required by applicable law.
vii. Conversion or Exchange. The Holders shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
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<PAGE>
viii. Reissuance of Series A Preferred Stock. Shares of Series A
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series A Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
ix. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
x. No Preemptive Rights. No Holder will possess any preemptive rights
to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
xi. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series A Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
xii. Definitions. As used in this Section 4.C., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of Series
A Preferred Stock, the dividends that have accrued on such share as of such
specific date for Dividend Periods ending on or prior to such date and that have
not previously been paid in cash, and (ii) with respect to any Series A Parity
Security, the dividends that have accrued and are due on such security as of
such specific date.
"Additional Dividends" has the meaning given to such term in
paragraph 4.C.iii.a.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banking institutions in New York City are authorized by law
or executive order to close.
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"Capital Stock" means any and all shares, interests, participations,
rights, or other equivalents (however designated) of corporate stock including,
without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in paragraph
4.C.ii.
"Dividend Payment Date" means June 30th and December 31st of each
year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series A Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in
paragraph 4.C.iv.a.
"Mandatory Redemption Date" has the meaning given to such term in
paragraph 4.C.v.b.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock Corporation,
trust, unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred Stock,
means the date on which such shares of Preferred Stock are redeemed by the
Corporation pursuant to paragraph 4.C.v.
"Redemption Notice" has the meaning given to such term in paragraph
4.C.v.c.
"Series A Junior Payment Date" has the meaning given to such term in
4.C.iii.c.
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<PAGE>
"Series A Junior Securities" has the meaning given to such term in
paragraph 4.C.ii.
"Series A Parity Payment Date" has the meaning given to such term in
4.C.iii.d.
"Series A Parity Securities" has the meaning given to such term in
paragraph 4.C.ii.
"Semi-Annual Dividend Period" means the annual period commencing on
each January 1st and July 1st and ending on each Dividend Payment Date,
respectively.
"Series A Preferred Stock" has the meaning given to such term in
paragraph 4.C.i.
"Series A Senior Securities" has the meaning given to such term in
paragraph 4.C.ii.
"Series B Preferred Stock" means the Series B 13.25% Cumulative
Compounding Perpetual Preferred Stock of the Corporation as more fully described
in Section 4.D.
"Series C Preferred Stock" means the Series C 13.5% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.E.
D. Series B Preferred Stock.
i. Designation of Series. There shall be 5,000,000 shares of
Preferred Stock designated as "Series B 13.25% Cumulative Compounding Perpetual
Preferred Stock" ("Series B Preferred Stock"). The par value of Series B
Preferred Stock shall be $.01 per share.
ii. Rank. With respect to dividend rights and rights on
liquidation, winding up and dissolution of the Corporation, Series B Preferred
Stock shall rank (a) senior to the Common Stock of the Corporation, par value
$.01 per share ("Common Stock"), the Series C Preferred Stock (defined in
paragraph 4.D.xii. below), and each other class of capital stock or class or
series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to the Series B Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series B Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the Corporation after the date hereof the terms of which specifically provide
that such class or series shall rank neither senior nor junior to the Series B
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series B Parity Securities"), and (c) junior to (i) the Series A Preferred
Stock, (ii) each
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<PAGE>
other class of capital stock or other class or series of preferred stock issued
by the Corporation that by its terms is senior to the Series B Preferred Stock
with respect to dividend distributions or distributions upon the liquidation,
winding up and dissolution of the Corporation and (iii) each other class of
capital stock or class or series of preferred stock issued by the Corporation
after the date hereof the terms of which do not specifically provide that they
rank junior to Series B Preferred Stock or senior to Series B Preferred Stock as
to dividend distributions or distributions upon liquidation, winding up and
dissolution of the Corporation (collectively referred to as "Series B Senior
Securities").
iii. Dividends.
a. Each Holder of Series B Preferred Stock shall be
entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available
therefor, cash dividends on each share of Series B
Preferred Stock at a rate equal to $1.325 per share per
annum. All dividends shall be cumulative, whether or
not earned or declared, and shall accrue on a daily
basis from the date of issuance of Series B Preferred
Stock, and shall be payable semi-annually in arrears on
each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of
such Series B Preferred Stock. Each dividend on Series
B Preferred Stock shall be payable to the Holders of
record of Series B Preferred Stock as they appear on
the stock register of the Corporation on such record
date as may be fixed by the Board of Directors, which
record date shall not be less than 10 nor more than 60
days prior to the applicable Dividend Payment Date.
Dividends shall cease to accrue in respect of shares of
Series B Preferred Stock on the date of their
repurchase by the Corporation unless the Corporation
shall have failed to pay the relevant repurchase price
on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and
until such dividends are declared by the Board of
Directors, there shall be no obligation to pay such
dividends; provided, that such dividends shall continue
to cumulate and shall be added to the Liquidation
Preference (as provided in paragraph 4.D.iv.a. below)
at the time of repurchase as provided herein if not
earlier declared and paid. Accrued dividends on the
Series B Preferred Stock if not paid on the first or
any subsequent Dividend Payment Date following accrual
shall thereafter accrue additional dividends
("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.25% per annum.
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<PAGE>
b. All dividends paid with respect to shares of Series B
Preferred Stock pursuant to paragraph 4.D.iii.a. shall
be paid pro rata to the Holders entitled thereto.
c. Dividends on account of arrears for any past Dividend
Period may be declared and paid at any time, without
reference to any regular Dividend Payment Date, to the
Holders of record on any date as may be fixed by the
Board of Directors, which date is not more than 60 days
prior to the payment of such dividends.
d. As long as any Series B Preferred Stock is outstanding,
no dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of
dividends or other distributions on any Series B Parity
Securities for any period, and no Series B Parity
Securities may be repurchased, redeemed or otherwise
acquired, nor may funds be set apart for such payment
(other than dividends, other distributions,
redemptions, repurchases or acquisitions payable in
Series B Junior Securities and cash in lieu of
fractional shares of such Series B Junior Securities in
connection therewith), unless (i) full Accumulated
Dividends have been paid or set apart for such payment
on the Series B Preferred Stock and Series B Parity
Securities for all Dividend Periods terminating on or
prior to the date of payment of such dividends or
distributions on, or such repurchase or redemption of,
such Series B Parity Securities (the "Series B Parity
Payment Date") and (ii) any such dividends are declared
and paid pro rata so that the amounts of any dividends
declared and paid per share on outstanding Series B
Preferred Stock and each other share of Series B Parity
Securities will in all cases bear to each other the
same ratio that accrued and unpaid dividends (including
any Accumulated Dividends) per share of outstanding
Series B Preferred Stock and such other outstanding
shares of Series B Parity Securities bear to each
other.
e. The Holders shall be entitled to receive the dividends
provided for in paragraph 4.D.iii.a. hereof in
preference to and in priority over any dividends upon
any of the Series B Junior Securities. Such dividends
on the Series B Preferred Stock shall be cumulative,
whether or not earned or declared, so that if at any
time full Accumulated Dividends on all shares of Series
B Preferred Stock then outstanding
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<PAGE>
for all Dividend Periods then elapsed have not been
paid or set aside for payment, the amount of such
unpaid dividends shall be paid before any sum shall be
set aside for or applied by the Corporation to the
purchase, redemption or other acquisition for value of
any shares of Series B Junior Securities (either
pursuant to any applicable sinking fund requirement or
otherwise) or any dividend or other distribution shall
be paid or declared or set apart for payment on any
Series B Junior Securities (the date of any such
actions to be referred to as the "Series B Junior
Payment Date"); provided, however, that the foregoing
shall not (i) prohibit the Corporation from
repurchasing shares of Series B Junior Securities from
a holder thereof who is, or was, a director or employee
of the Corporation (or an affiliate of the Corporation)
and (ii) prohibit the Corporation from making
dividends, other distributions, redemptions,
repurchases or acquisitions in respect of Series B
Junior Securities payable in Series B Junior Securities
and cash in lieu of fractional shares of such Series B
Junior Securities in connection therewith.
f. Dividends payable on Series B Preferred Stock for any
period less than one year shall be computed on the
basis of a 360-day year consisting of twelve 30-day
months and the actual number of days elapsed in the
period for which such dividends are payable.
iv. Liquidation Preference.
a. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the
Holders of all shares of Series B Preferred Stock then
outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to
its stockholders an amount in cash equal to $10.00 per
share, plus an amount equal to full cumulative
dividends (whether or not earned or declared) accrued
and unpaid thereon, including Additional Dividends, to
the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is
made on any Series B Junior Securities. If upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all
amounts available for payments with respect to Series B
Preferred Stock and all other Series B Parity
Securities would not result in payment in full of
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Series B Preferred Stock and such other Series B Parity
Securities, the Holders and holders of Series B Parity
Securities shall share equally and ratably in any
distribution of assets of the Corporation in proportion
to the full liquidation preference to which each is
entitled. After payment in full pursuant to this
paragraph 4.D.iv.a., the Holders shall not be entitled
to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation.
b. For the purposes of this paragraph 4.D.iv., neither the
voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Corporation nor the
consolidation, merger or other business combination of
the Corporation with one or more corporations (whether
or not the Corporation is the surviving corporation)
shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation.
v. Redemption. The Company shall not have the right nor the power
to, and the Holders shall not have the right to require the Company to, redeem
any shares of Series B Preferred Stock. Notwithstanding the foregoing, this
Paragraph 4.D.v. shall not prohibit the Corporation from acquiring from any
Holder, with such Holder's consent, any shares of Series B Preferred Stock held
by such Holder.
vi. Voting Rights.
a. The Holders shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by
the shareholders of the Corporation, except as
otherwise required by Delaware law or this Certificate
of Designation except that, without the written consent
of the holders of a majority of the outstanding shares
of Series B Preferred Stock or the vote of the holders
of a majority of the outstanding shares of Series B
Preferred Stock at a meeting of the holders of Series B
Preferred Stock called for such purpose, the
Corporation shall not (a) create, authorize or issue
any other class or series of stock entitled to a
preference prior to Series B Preferred Stock upon any
dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of
the Corporation, or (b) amend, alter or repeal any
provision of the Corporation's Certificate of
Incorporation so as to materially adversely
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affect the relative rights and preferences of the
Series B Preferred Stock.
b. Without limiting the generality of the foregoing, in no
event shall the Holders be entitled to vote
(individually or as a class) on any merger or
consolidation involving the Corporation, any sale of
all or substantially all of the assets of the
Corporation or any similar transaction.
c. In any case in which the Holders shall be entitled to
vote pursuant to paragraph 4.D.vi.a. above, each Holder
shall be entitled to one vote for each share of Series
B Preferred Stock held unless otherwise required by
applicable law.
vii. Conversion or Exchange. The Holders shall not have any rights
hereunder to convert such shares into or exchange such shares for shares of any
other class or classes or of any other series of any class or classes of Capital
Stock of the Corporation.
viii. Reissuance of Series B Preferred Stock. Shares of Series B
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series B Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
ix. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
x. No Preemptive Rights. No Holder will possess any preemptive
rights to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
xi. Prohibitions and Restrictions Imposed by Senior Securities and
Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series B Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
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xii. Definitions. As used in this Section 4.D., the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of
Series B Preferred Stock, the dividends that have accrued on such share as of
such specific date for Dividend Periods ending on or prior to such date and that
have not previously been paid in cash, and (ii) with respect to any Series B
Parity Security, the dividends that have accrued and are due on such security as
of such specific date.
"Additional Dividends" has the meaning given to such term in
paragraph 4.D.iii.a.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banking institutions in New York City are authorized by
law or executive order to close.
"Capital Stock" means any and all shares, interests,
participations, rights, or other equivalents (however designated) of corporate
stock including, without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in
paragraph 4.D.ii.
"Dividend Payment Date" means June 30th and December 31st of each
year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series B Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on
the Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in
paragraph 4.D.iv.a.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock Corporation,
trust, unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
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"Preferred Stock" means the Preferred Stock of the Corporation.
"Semi-Annual Dividend Period" means the annual period commencing
on each January 1st and July 1st and ending on each Dividend Payment Date,
respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.C.
"Series B Junior Payment Date" has the meaning given to such term
in 4.D.iii.e.
"Series B Junior Securities" has the meaning given to such term in
paragraph 4.D.ii.
"Series B Parity Payment Date" has the meaning given to such term
in 4.D.iii.d.
"Series B Parity Securities" has the meaning given to such term in
paragraph 4.D.ii.
"Series B Preferred Stock" has the meaning given to such term in
paragraph 4.D.i..
"Series B Senior Securities" has the meaning given to such term in
paragraph 4.D.ii.
"Series C Preferred Stock" means the Series C 13.5% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.E.
E. Series C Preferred Stock.
i. Designation of Series. There shall be 5,000,000 shares of
Preferred Stock designated as "Series C 13.5% Cumulative Compounding Preferred
Stock" ("Series C Preferred Stock"). The par value of Series C Preferred Stock
shall be $.01 per share.
ii. Rank. With respect to dividend rights and rights on
liquidation, winding up and dissolution of the Corporation, Series C Preferred
Stock shall rank (a) senior to the Common Stock of the Corporation, par value
$.01 per share ("Common Stock"), and each other class of capital stock or class
or series of preferred stock issued by the Corporation after the date hereof the
terms of which specifically provide that such class or series shall rank junior
to the Series C Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series C Junior Securities"), (b) on a parity with
each other class of capital stock or class or series of preferred stock issued
by the
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Corporation after the date hereof the terms of which specifically provide that
such class or series shall rank neither senior nor junior to the Series C
Preferred Stock as to dividend distributions or distributions upon liquidation,
winding up and dissolution of the Corporation (collectively referred to as "
Series C Parity Securities"), and (c) junior to (i) the Series A Preferred Stock
(defined in Paragraph 4.E.xii.), (ii) the Series B Preferred Stock (defined in
Paragraph 4.E.xii.), (iii) each other class of capital stock or other class or
series of preferred stock issued by the Corporation that by its terms is senior
to the Series C Preferred Stock with respect to dividend distributions or
distributions upon the liquidation, winding up and dissolution of the
Corporation and (iv) each other class of capital stock or class or series of
preferred stock issued by the Corporation after the date hereof the terms of
which do not specifically provide that they rank junior to Series C Preferred
Stock or senior to Series C Preferred Stock as to dividend distributions or
distributions upon liquidation, winding up and dissolution of the Corporation
(collectively referred to as "Series C Senior Securities").
iii. Dividends.
a. Each Holder of Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available
therefor, cash dividends on each share of Series C
Preferred Stock at a rate equal to $1.35 per share per
annum. All dividends shall be cumulative, whether or
not earned or declared, and shall accrue on a daily
basis from the date of issuance of Series C Preferred
Stock, and shall be payable semi-annually in arrears on
each Dividend Payment Date, commencing on the second
Dividend Payment Date after the date of issuance of
such Series C Preferred Stock. Each dividend on Series
C Preferred Stock shall be payable to the Holders of
record of Series C Preferred Stock as they appear on
the stock register of the Corporation on such record
date as may be fixed by the Board of Directors, which
record date shall not be less than 10 nor more than 60
days prior to the applicable Dividend Payment Date.
Dividends shall cease to accrue in respect of shares of
Series C Preferred Stock on the date of their
repurchase by the Corporation unless the Corporation
shall have failed to pay the relevant repurchase price
on the date fixed for repurchase. Notwithstanding
anything to the contrary set forth above, unless and
until such dividends are declared by the Board of
Directors, there shall be no obligation to pay such
dividends; provided, that such dividends shall continue
to cumulate and shall be added to the Liquidation
Preference (as provided in paragraph 4.E.iv.a. below)
at the time of repurchase as provided herein if not
earlier declared and paid. Accrued dividends on the
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Series C Preferred Stock if not paid on the first or
any subsequent Dividend Payment Date following accrual
shall thereafter accrue additional dividends
("Additional Dividends") in respect thereof, compounded
annually, at the rate of 13.5% per annum.
b. All dividends paid with respect to shares of Series C
Preferred Stock pursuant to paragraph 4.E.iii.a. shall
be paid pro rata to the Holders entitled thereto.
c. Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional
redemption pursuant to paragraph 4.E.v.a. may be
declared and paid at any time, without reference to any
regular Dividend Payment Date, to the Holders of record
on any date as may be fixed by the Board of Directors,
which date is not more than 60 days prior to the
payment of such dividends.
d. As long as any Series C Preferred Stock is outstanding,
no dividends shall be declared by the Board of
Directors or paid or funds set apart for the payment of
dividends or other distributions on any Series C Parity
Securities for any period, and no Series C Parity
Securities may be repurchased, redeemed or otherwise
acquired, nor may funds be set apart for such payment
(other than dividends, other distributions,
redemptions, repurchases or acquisitions payable in
Series C Junior Securities and cash in lieu of
fractional shares of such Series C Junior Securities in
connection therewith), unless (i) full Accumulated
Dividends have been paid or set apart for such payment
on the Series C Preferred Stock and Series C Parity
Securities for all Dividend Periods terminating on or
prior to the date of payment of such dividends or
distributions on, or such repurchase or redemption of,
such Series C Parity Securities (the "Series C Parity
Payment Date") and (ii) any such dividends are declared
and paid pro rata so that the amounts of any dividends
declared and paid per share on outstanding Series C
Preferred Stock and each other share of Series C Parity
Securities will in all cases bear to each other the
same ratio that accrued and unpaid dividends (including
any Accumulated Dividends) per share of outstanding
Series C Preferred Stock and such other outstanding
shares of Series C Parity Securities bear to each
other.
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e. The Holders shall be entitled to receive the dividends
provided for in paragraph 4.E.iii.a. hereof in
preference to and in priority over any dividends upon
any of the Series C Junior Securities. Such dividends
on the Series C Preferred Stock shall be cumulative,
whether or not earned or declared, so that if at any
time full Accumulated Dividends on all shares of Series
C Preferred Stock then outstanding for all Dividend
Periods then elapsed have not been paid or set aside
for payment, the amount of such unpaid dividends shall
be paid before any sum shall be set aside for or
applied by the Corporation to the purchase, redemption
or other acquisition for value of any shares of Series
C Junior Securities (either pursuant to any applicable
sinking fund requirement or otherwise) or any dividend
or other distribution shall be paid or declared or set
apart for payment on any Series C Junior Securities
(the date of any such actions to be referred to as the
"Series C Junior Payment Date"); provided, however,
that the foregoing shall not (i) prohibit the
Corporation from repurchasing shares of Series C Junior
Securities from a holder thereof who is, or was, a
director or employee of the Corporation (or an
affiliate of the Corporation) and (ii) prohibit the
Corporation from making dividends, other distributions,
redemptions, repurchases or acquisitions in respect of
Series C Junior Securities payable in Series C Junior
Securities and cash in lieu of fractional shares of
such Series C Junior Securities in connection
therewith.
f. Dividends payable on Series C Preferred Stock for any
period less than one year shall be computed on the
basis of a 360-day year consisting of twelve 30-day
months and the actual number of days elapsed in the
period for which such dividends are payable.
iv. Liquidation Preference.
a. Upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the
Holders of all shares of Series C Preferred Stock then
outstanding shall be entitled to be paid out of the
assets of the Corporation available for distribution to
its stockholders an amount in cash equal to $10.00 per
share, plus an amount equal to full cumulative
dividends (whether or not earned or declared) accrued
and unpaid thereon, including Additional Dividends, to
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the date of final distribution (the "Liquidation
Preference") and no more, before any distribution is
made on any Series C Junior Securities. If upon any
voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the application of all
amounts available for payments with respect to Series C
Preferred Stock and all other Series C Parity
Securities would not result in payment in full of
Series C Preferred Stock and such other Series C Parity
Securities, the Holders and holders of Series C Parity
Securities shall share equally and ratably in any
distribution of assets of the Corporation in proportion
to the full liquidation preference to which each is
entitled. After payment in full pursuant to this
paragraph 4.E.iv.a., the Holders shall not be entitled
to any further participation in any distribution in the
event of liquidation, dissolution or winding up of the
affairs of the Corporation.
b. For the purposes of this paragraph 4.E.iv., neither the
voluntary sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other
consideration) of all or substantially all of the
property or assets of the Corporation nor the
consolidation, merger or other business combination of
the Corporation with one or more corporations (whether
or not the Corporation is the surviving corporation)
shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation.
v. Redemption.
a. Optional Redemption.
(1) The Corporation may, at its option, redeem at any
time or from time to time, from any source of funds
legally available therefor, in whole or in part, in
the manner provided in paragraph 4.E.v.c. hereof,
any or all of the shares of Series C Preferred
Stock, at a redemption price of $10.00 per share,
plus an amount equal to full cumulative dividends
(whether or not earned or declared) accrued and
unpaid thereon, including Additional Dividends, to
the Redemption Date (as defined in paragraph B).
(2) No partial redemption of Series C Preferred Stock
pursuant to paragraph 4.E.v.a. hereof may be
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authorized or made unless prior thereto, full
accrued and unpaid dividends thereon for all
Dividend Periods terminating on or prior to the
Redemption Date and an amount equal to a prorated
dividend thereon for the period from the Dividend
Payment Date immediately prior to the Redemption
Date to the Redemption Date have been or
immediately prior to the Redemption Notice are
declared and paid in cash or are declared and there
has been a sum set apart sufficient for such cash
payment on the Redemption Date.
(3) In the event of a redemption pursuant to paragraph
4.E.v.a. hereof of only a portion of the then
outstanding shares of Series C Preferred Stock, the
Corporation shall effect such redemption pro rata
according to the number of shares held by each
Holder of Series C Preferred Stock.
b. Mandatory Redemption. All outstanding shares of the
Series C Preferred Stock shall be redeemed from funds
legally available therefor on December 31, 2012 (the
"Mandatory Redemption Date"), at a price per share
equal to the Liquidation Preference on such Mandatory
Redemption Date.
c. Procedures for Redemption.
(1) At least 30 days and not more than 60 days prior to
the date fixed for any redemption of Series C
Preferred Stock, written notice (the "Redemption
Notice") shall be given by first class mail,
postage prepaid, to each Holder of record of Series
C Preferred Stock on the record date fixed for such
redemption of Series C Preferred Stock at such
Holder's address as set forth on the stock register
of the Corporation on such record date; provided
that no failure to give such notice nor any
deficiency therein shall affect the validity of the
procedure for the redemption of any shares of
Series C Preferred Stock to be redeemed except as
to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the
Holder or Holders whose notice was defective. In
addition to any information required by law or by
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the applicable rules of any exchange upon which
shares of Series C Preferred Stock may be listed or
admitted to trading, the Redemption Notice shall
state:
(A) the redemption price;
(B) whether all or less than all of the outstanding
shares of Series C Preferred Stock redeemable thereunder are to be redeemed and
the aggregate number of shares of Series C Preferred Stock being redeemed;
(C) the number of shares of Series C Preferred
Stock held, as of the appropriate record date, by the Holder that the
Corporation intends to redeem;
(D) the Redemption Date;
(E) that the Holder is to surrender to the
Corporation, at the place or places where certificates for shares of Series C
Preferred Stock are to be surrendered for redemption, in the manner and at the
price designated, his, her or its certificate or certificates representing the
shares of Series C Preferred Stock to be redeemed; and
(F) that dividends on the shares of Series C Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Corporation defaults in the payment of the redemption price.
(2) Each Holder shall surrender the certificate or
certificates representing such shares of Series C
Preferred Stock being so redeemed to the
Corporation, duly endorsed, in the manner and at
the place designated in the Redemption Notice, and
on the Redemption Date the full redemption price
for such shares shall be payable in cash to the
Person whose name appears on such certificate or
certificates as the owner thereof, and each
surrendered certificate shall be canceled and
retired. In the event that less than all of the
shares represented by any such certificate are
redeemed, a new certificate shall be issued
representing the unredeemed shares.
(3) If a Redemption Notice has been mailed in
accordance with paragraph 4.E.v.c. above, unless
the Corporation defaults in the payment in full of
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the redemption price, then, notwithstanding that
the certificates evidencing any shares of Series C
Preferred Stock so called for redemption shall not
have been surrendered, (x) on the Redemption Date,
the shares represented thereby so called for
redemption shall be deemed no longer outstanding
and shall have the status of authorized but
unissued shares of Preferred Stock, undesignated as
to series, (y) dividends with respect to the shares
so called for redemption shall cease to accrue
after the Redemption Date and (z) all rights with
respect to the shares so called for redemption or
subject to conversion shall forthwith after such
date cease and terminate, except for the right of
the holders to receive the funds, if any, payable
pursuant to this paragraph 5 without interest upon
surrender of their certificates therefor.
d. Deposit of Funds. The Corporation's obligation to
deliver funds in accordance with this paragraph v.
shall be deemed fulfilled if, on or before a Redemption
Date, the Corporation shall deposit, with a bank or
trust Corporation, or an affiliate of a bank or trust
Corporation such funds as are required to be delivered
by the Corporation pursuant to this paragraph v. upon
the occurrence of the related redemption consideration
sufficient to pay all accrued and unpaid dividends on
the shares to be redeemed, in trust for the account of
the Holders of the shares to be redeemed (and so as to
be and continue to be available therefor), with
irrevocable instructions and authority to such bank or
trust Corporation that such shares and funds be
delivered upon redemption of the shares of Series C
Preferred Stock so called for redemption. Any interest
accrued on such funds shall be paid to the Corporation
from time to time. Upon surrender of the certificates
pursuant to paragraph 4.E.v.c.(2), each Holder shall
thereupon be entitled to any funds payable pursuant to
this paragraph v. following such surrender and
following the date of such redemption.
vi. Voting Rights.
a. The Holders shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by
the shareholders of the Corporation, except as
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otherwise required by Delaware law or this Certificate
of Designation except that, without the written consent
of the holders of a majority of the outstanding shares
of Series C Preferred Stock or the vote of the holders
of a majority of the outstanding shares of Series C
Preferred Stock at a meeting of the holders of Series C
Preferred Stock called for such purpose, the
Corporation shall not (a) create, authorize or issue
any other class or series of stock entitled to a
preference prior to Series C Preferred Stock upon any
dividend or distribution or any liquidation,
distribution of assets, dissolution or winding up of
the Corporation, or (b) amend, alter or repeal any
provision of the Corporation's Certificate of
Incorporation so as to materially adversely affect the
relative rights and preferences of the Series C
Preferred Stock.
b. Without limiting the generality of the foregoing, in no
event shall the Holders be entitled to vote
(individually or as a class) on any merger or
consolidation involving the Corporation, any sale of
all or substantially all of the assets of the
Corporation or any similar transaction.
c. In any case in which the Holders shall be entitled to
vote pursuant to paragraph 4.E.vi.a. above, each Holder
shall be entitled to one vote for each share of Series
C Preferred Stock held unless otherwise required by
applicable law.
vii. Conversion or Exchange. The Holders shall not have any
rights hereunder to convert such shares into or exchange such shares for shares
of any other class or classes or of any other series of any class or classes of
Capital Stock of the Corporation.
viii. Reissuance of Series C Preferred Stock. Shares of Series C
Preferred Stock which have been issued and reacquired in any manner, including
shares purchased, redeemed or exchanged, shall have the status of authorized and
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors or as part of any other series of Preferred Stock, all subject to the
conditions or restrictions on issuance set forth in any resolution or
resolutions adopted by the Board of Directors providing for the issuance of any
series of Preferred Stock; except that the Corporation may reissue shares of
Series C Preferred Stock which are reacquired by the Corporation from a Holder
who is, or was, an employee or director of the Corporation (or its affiliates).
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ix. Business Day. If any payment shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment shall be
made on the immediately succeeding Business Day.
x. No Preemptive Rights. No Holder will possess any preemptive
rights to subscribe for or acquire any unissued shares of Capital Stock of the
Corporation (whether now or hereafter authorized) or securities of the
Corporation convertible into or carrying a right to subscribe to or acquire
shares of Capital Stock of the Corporation.
xi. Prohibitions and Restrictions Imposed by Senior Securities
and Indebtedness. To the extent that any action required to be taken by the
Corporation under this Certificate of Designation shall be prohibited or
restricted by the terms of any Series C Senior Securities or any contract or
instrument to which the Corporation is a party or by which it is bound in
respect of the incurrence of indebtedness, such Corporation's actions shall be
delayed until such time as such prohibition or restriction is no longer in
force.
xii. Definitions. As used in this Section 4.E., the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Accumulated Dividends" means (i) with respect to any share of
Series C Preferred Stock, the dividends that have accrued on such share as of
such specific date for Dividend Periods ending on or prior to such date and that
have not previously been paid in cash, and (ii) with respect to any Series C
Parity Security, the dividends that have accrued and are due on such security as
of such specific date.
"Additional Dividends" has the meaning given to such term in
paragraph 4.E.iii.a.
"Business Day" means any day except a Saturday, Sunday or other
day on which commercial banking institutions in New York City are authorized by
law or executive order to close.
"Capital Stock" means any and all shares, interests,
participations, rights, or other equivalents (however designated) of corporate
stock including, without limitation, partnership interests.
"Common Stock" shall have the meaning given to such term in
paragraph 4.E.ii.
"Dividend Payment Date" means June 30th and December 31st of
each year.
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"Dividend Period" means the Initial Dividend Period and,
thereafter, each Semi-Annual Dividend Period.
"Holder" means a holder of shares of Series C Preferred Stock.
"Initial Dividend Period" means the dividend period commencing
on the Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Issue Date" means May 29, 1998.
"Liquidation Preference" has the meaning given to such term in
paragraph 4.E.iv.a.
"Mandatory Redemption Date" has the meaning given to such term
in paragraph 4.E.v.b.
"Person" means any individual, corporation, partnership, joint
venture, incorporated or unincorporated association, joint-stock Corporation,
trust, unincorporated organization or government or other agency or political
subdivision thereof or any other entity of any kind.
"Preferred Stock" means the Preferred Stock of the Corporation.
"Redemption Date", with respect to any shares of Preferred
Stock, means the date on which such shares of Preferred Stock are redeemed by
the Corporation pursuant to paragraph 4.E.v.
"Redemption Notice" has the meaning given to such term in
paragraph 4.E.v.c.
"Semi-Annual Dividend Period" means the annual period commencing
on each January 1st and July 1st and ending on each Dividend Payment Date,
respectively.
"Series A Preferred Stock" means the Series A 13.0% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.C.
"Series B Preferred Stock" means the Series B 13.25% Cumulative
Compounding Preferred Stock of the Corporation as more fully described in
Section 4.D.
"Series C Junior Payment Date" has the meaning given to such
term in 4.E.iii.e.
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"Series C Junior Securities" has the meaning given to such term
in paragraph 4.E.ii.
"Series C Parity Payment Date" has the meaning given to such
term in 4.E.iii.d.
"Series C Parity Securities" has the meaning given to such term
in paragraph 4.E.ii.
"Series C Preferred Stock" has the meaning given to such term in
paragraph 4.E.i.
"Series C Senior Securities" has the meaning given to such term
in paragraph 4.E.ii.
5. Bylaws. The board of directors of the Corporation is authorized to
adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
6. Elections of Directors. Elections of directors need not be by written
ballot unless the bylaws of the Corporation shall so provide.
7. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
8. Limitation on Liability. The directors of the Corporation shall be
entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
no director of the Corporation shall be liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit. Any repeal or
modification of this Section 8 shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
9. Incorporator. The name and address of the Incorporator is: Ira S. Pim,
Jr., 2225 Land Title Building, Philadelphia, PA 19101.
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EXHIBIT A-4
BYLAWS
OF
MEDIQ INCORPORATED
ARTICLE I
STOCKHOLDERS
1.1 Meetings.
1.1.1 Place. Meetings of the stockholders shall be held at such place as may
be designated by the board of directors.
1.1.2 Annual Meeting. An annual meeting of the stockholders for the election
of directors and for other business shall be held on such date and at such time
as may be fixed by the board of directors.
1.1.3 Special Meetings. Special meetings of the stockholders may be called
at any time by the president, or the board of directors, or the holders of a
majority of the outstanding shares of stock of the Company entitled to vote at
the meeting.
1.1.4 Quorum. The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of stock of the Company entitled to vote on a
particular matter shall constitute a quorum for the purpose of considering such
matter.
1.1.5 Voting Rights. Except as otherwise provided herein, in the certificate
of incorporation or by law, every stockholder shall have the right at every
meeting of stockholders to one vote for every share standing in the name of such
stockholder on the books of the Company which is entitled to vote at such
meeting. Every stockholder may vote either in person or by proxy.
<PAGE>
ARTICLE II
DIRECTORS
2.1 Number and Term. The board of directors shall have authority to (i)
determine the number of directors to constitute the board and (ii) fix the terms
of office of the directors.
2.2 Meetings.
2.2.1 Place. Meetings of the board of directors shall be held at such place
as may be designated by the board or in the notice of the meeting.
2.2.2 Regular Meetings. Regular meetings of the board of directors shall be
held at such times as the board may designate. Notice of regular meetings need
not be given.
2.2.3 Special Meetings. Special meetings of the board may be called by
direction of the president or any two members of the board on three days' notice
to each director, either personally or by mail, telegram or facsimile
transmission.
2.2.4 Quorum. A majority of all the directors in office shall constitute a
quorum for the transaction of business at any meeting.
2.2.5 Voting. Except as otherwise provided herein, in the certificate of
incorporation or by law, the vote of a majority of the directors present at any
meeting at which a quorum is present shall constitute the act of the board of
directors.
2.2.6 Committees. The board of directors may, by resolution adopted by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more directors and such alternate members (also directors) as
may be designated by the board. Unless otherwise provided herein, in the absence
or disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another director
to act at the meeting in the place of any such absent or disqualified member.
Except as otherwise provided herein, in the certificate of incorporation or by
law, any such committee shall have and may exercise the powers of the full board
of directors to the extent provided in the resolution of the board directing the
committee.
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ARTICLE III
OFFICERS
3.1 Election. At its first meeting after each annual meeting of the
stockholders, the board of directors shall elect a president, treasurer,
secretary and such other officers as it deems advisable.
3.2 Authority, Duties and Compensation. The officers shall have such authority,
perform such duties and serve for such compensation as may be determined by
resolution of the board of directors. Except as otherwise provided by board
resolution, (i) the president shall be the chief executive officer of the
Company, shall have general supervision over the business and operations of the
Company, may perform any act and execute any instrument for the conduct of such
business and operations and shall preside at all meetings of the board and
stockholders, (ii) the other officers shall have the duties customarily related
to their respective offices, and (iii) any vice president, or vice presidents in
the order determined by the board, shall in the absence of the president have
the authority and perform the duties of the president.
ARTICLE IV
INDEMNIFICATION
4.1 Right to Indemnification. The Company shall indemnify any person who was or
is party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that such person is or was
a director or officer of the Company or a constituent corporation absorbed in a
consolidation or merger, or is or was serving at the request of the Company or a
constituent corporation absorbed in a consolidation or merger, as a director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or is or was a director or officer of the Company serving at its
request as an administrator, trustee or other fiduciary of one or more of the
employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceeding, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law.
4.2 Advance of Expenses. Expenses incurred by a director or officer of the
Company in defending a proceeding shall be paid by the Company in advance of the
final disposition of such proceeding subject to the provisions of any applicable
statute.
4.3 Procedure for Determining Permissibility. To determine whether any
indemnification or advance of expenses under this Article IV is permissible, the
board of directors by a majority
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vote of a quorum consisting of directors not parties to such proceeding may, and
on request of any person seeking indemnification or advance of expenses shall be
required to, determine in each case whether the applicable standards in any
applicable statute have been met, or such determination shall be made by
independent legal counsel if such quorum is not obtainable, or, even if
obtainable, a majority vote of a quorum of disinterested directors so directs,
provided that, if there has been a change in control of the Company between the
time of the action or failure to act giving rise to the claim for
indemnification or advance of expenses and the time such claim is made, at the
option of the person seeking indemnification or advance of expenses, the
permissibility of indemnification or advance of expenses shall be determined by
independent legal counsel. The reasonable expenses of any director or officer in
prosecuting a successful claim for indemnification, and the fees and expenses of
any special legal counsel engaged to determine permissibility of indemnification
or advance of expenses, shall be borne by the Company.
4.4 Contractual Obligation. The obligations of the Company to indemnify a
director or officer under this Article IV, including the duty to advance
expenses, shall be considered a contract between the Company and such director
or officer, and no modification or repeal of any provision of this Article IV
shall affect, to the detriment of the director or officer, such obligations of
the Company in connection with a claim based on any act or failure to act
occurring before such modification or repeal.
4.5 Indemnification Not Exclusive; Inuring of Benefit. The indemnification and
advance of expenses provided by this Article IV shall not be deemed exclusive of
any other right to which one indemnified may be entitled under any statute,
provision of the Certificate of Incorporation, these bylaws, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office, and shall inure to the benefit of the heirs, executors and
administrators of any such person.
4.6 Insurance and Other Indemnification. The board of directors shall have the
power to (i) authorize the Company to purchase and maintain, at the Company's
expense, insurance on behalf of the Company and on behalf of others to the
extent that power to do so has not been prohibited by statute, (ii) create any
fund of any nature, whether or not under the control of a trustee, or otherwise
secure any of its indemnification obligations, and (iii) give other
indemnification to the extent permitted by statute.
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ARTICLE V
TRANSFER OF SHARE CERTIFICATES
Transfers of share certificates and the shares represented thereby
shall be made on the books of the Company only by the registered holder or by
duly authorized attorney. Transfers shall be made only on surrender of the share
certificate or certificates.
ARTICLE VI
AMENDMENTS
These bylaws may be amended or repealed at any regular or special
meeting of the board of directors by vote of a majority of all directors in
office or at any annual or special meeting of stockholders by vote of holders of
a majority of the outstanding stock entitled to vote. Notice of any such annual
or special meeting of stockholders shall set forth the proposed change or a
summary thereof.
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