Exhibit 10.7
WAIVER AGREEMENT
THIS WAIVER AGREEMENT (this "Agreement"), dated as of November 7, 2005, is
entered into among CURATIVE HEALTH SERVICES, INC., a Minnesota corporation
formerly known as Curative Holding Co. ("Holdings"), XXXXXXXX.XXX, INC., a
Delaware corporation ("eBioCare"), HEMOPHILIA ACCESS, INC., a Tennessee
corporation ("Hemophilia Access"), APEX THERAPEUTIC CARE, INC., a California
corporation ("Apex"), CHS SERVICES, INC., a Delaware corporation ("CHS"),
CURATIVE HEALTH SERVICES OF NEW YORK, INC., a New York corporation ("CHSNY"),
OPTIMAL CARE PLUS, INC., a Delaware corporation ("Optimal Care"), INFINITY
INFUSION, LLC, a Delaware limited liability company ("Infinity"), INFINITY
INFUSION II, LLC, a Delaware limited liability company ("Infinity II"), INFINITY
INFUSION CARE, LTD., a Texas limited partnership ("Infinity Infusion"), MEDCARE,
INC., a Delaware corporation ("Medcare"), CURATIVE PHARMACY SERVICES, INC., a
Delaware corporation ("CPS"), CURATIVE HEALTH SERVICES CO., a Minnesota
corporation formerly known as Curative Health Services, Inc. ("CHSC"), CRITICAL
CARE SYSTEMS, INC., a Delaware corporation ("CCS") (Holdings, eBioCare,
Hemophilia Access, Apex, CHS, CHSNY, Optimal Care, Infinity, Infinity II,
Infinity Infusion, Medcare, CPS, CHSC and CCS are sometimes collectively
referred to herein as the "Borrowers" and individually as a "Borrower"),
CURATIVE HEALTH SERVICES III CO., a Minnesota corporation, and GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation ("GE Capital"), as Agent and Lender.
W I T N E S S E T H:
WHEREAS, the Borrowers and GE Capital are parties to that certain Amended
and Restated Credit Agreement, dated April 23, 2004, as amended by (i) that
certain First Amendment to Amended and Restated Credit Agreement and Collateral
Documents dated as of May 3, 2004, (ii) that certain Second Amendment to Amended
and Restated Credit Agreement dated as of June 30, 2004, (iii) that certain
Third Amendment to Amended and Restated Credit Agreement dated as of October 20,
2004 and (iv) that certain Fourth Amendment to Amended and Restated Credit
Agreement dated as of December 31, 2004 (as so amended, the "Credit Agreement";
capitalized terms used but not defined in this Agreement have the meanings given
in the Credit Agreement), whereby the Lenders have made available a revolving
credit facility and other financial accommodations to the Borrowers, subject to
the terms and conditions contained in the Credit Agreement;
WHEREAS, certain Events of Default have occurred under the Credit
Agreement prior to the date hereof, specifically (a) an Event of Default has
occurred under Sections 8.1(e) and 8.1(u) of the Credit Agreement as a result of
the failure of Curative to timely pay the interest payment due and payable
November 1, 2005 under the Senior Unsecured High Yield Note Indenture and the
Senior Unsecured High Yield Notes (such Event of Defaults are referred to herein
collectively as the "November Note Interest Payment Default"), (b) an Event of
Default has occurred under Section 8.1(b) of the Credit Agreement as a result of
the failure of the Borrowers to comply with the Total Leverage Ratio and Senior
Secured Leverage Ratio financial
covenants set forth in Sections 7.15 and 7.16, in each case for the Fiscal
Quarter ended September 30, 2005 (such financial covenant Events of Default are
referred to herein collectively as the "Specified Financial Covenant Defaults";
together with the November Note Interest Payment Default referred to herein
collectively as the "Specified Defaults");
WHEREAS, the Borrowers have requested that Agent and Lenders (a) grant a
permanent waiver of the Specified Financial Covenant Defaults, and (b) grant a
temporary waiver of the November Note Interest Payment Default, which may become
a permanent waiver upon satisfaction of certain conditions specified in Section
2.2 hereof; and
WHEREAS, subject to the terms and conditions specified herein, Agent and
Lenders are willing to (a) grant a permanent waiver of the Specified Financial
Covenant Defaults, and (b) grant a temporary waiver of the November Note
Interest Payment Default.
NOW, THEREFORE, in consideration of the foregoing, the respective
agreements, warranties and covenants contained herein, for $10 and other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. ACKNOWLEDGMENTS AND AGREEMENTS
1.1 Acknowledgment of Obligations. Each of the Borrowers hereby
acknowledges, confirms and agrees that the Borrowers are indebted to Lenders in
respect of the Revolving Credit Advances, Swingline Advances and Letter of
Credit Obligations outstanding on the date hereof. All such Obligations,
together with interest accrued and accruing thereon, and fees, costs, expenses
and other charges now or hereafter payable by the Borrowers to Lenders, are
unconditionally owing by the Borrowers to Lenders, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
1.2 Acknowledgment of Liens. Each Borrower hereby acknowledges, confirms
and agrees that Agent has and shall continue to have valid, enforceable and
perfected first-priority liens upon and security interests in the Collateral
granted to Agent for the benefit of the Lenders pursuant to the Loan Documents
or otherwise granted to or held by Agent for the benefit of the Lenders.
1.3 Binding Effect of Documents. Each Borrower hereby acknowledges,
confirms and agrees that: (a) each of the Loan Documents has been duly executed
and delivered to the Agent and the Lenders by each Borrower that is intended to
be a party thereto, and each is in full force and effect as of the date hereof,
(b) the agreements and obligations of each Borrower contained in such Loan
Documents and in this Agreement constitute the legal, valid and binding
obligations of such Borrower, enforceable against it in accordance with their
respective terms, and no Borrower has any valid defense to the enforcement of
such obligations, and (c) the Agent and the Lenders are and shall be entitled to
the rights, remedies and benefits provided for in the Loan Documents and
applicable law.
1.4 Acknowledgment of Defaults. Each Borrower hereby acknowledges and
agrees that (a) the Specified Defaults have occurred and, prior to the
effectiveness of this Agreement, are continuing and constitute Events of Default
which entitle the Agent and the Lenders to
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exercise their rights and remedies under the Loan Documents, applicable law or
otherwise, (b) Agent and the Lenders have the presently exercisable right to
cease funding and declare the Obligations to be immediately due and payable
under the terms of the Loan Documents.
SECTION 2. WAIVERS
2.1 Waiver of Specified Financial Covenant Defaults. In reliance upon the
representations, warranties and covenants of the Borrowers contained in this
Agreement, and subject to the terms and conditions of this Agreement and any
documents or instruments executed or delivered in connection herewith, the Agent
and the Lenders hereby waive the Specified Financial Covenant Defaults, in each
case solely for the fiscal quarter ending September 30, 2005.
2.2 Temporary Waiver of November Note Interest Payment Default. In
reliance upon the representations, warranties and covenants of the Borrowers
contained in this Agreement, and subject to the terms and conditions of this
Agreement and any documents or instruments executed or delivered in connection
herewith, the Agent and the Lenders hereby grant a temporary waiver of the
November Note Interest Payment Default, which temporary waiver shall remain in
effect only during the Waiver Period (defined below). As used herein, the term
"Waiver Period" shall mean the period commencing on the effective date of this
Agreement and ending on the earlier of (i) December 1, 2005 and (ii) the
occurrence of any other Event of Default under the Credit Agreement (other than
the Specified Defaults), including, without limitation, the occurrence of any
Event of Default under Section 8.1(e) or (u) of the Credit Agreement as a result
of the occurrence of any "Default" or "Event of Default" (as such terms are
defined under the Senior Unsecured High Yield Note Indenture) other than the
November Note Interest Payment Default. Upon the expiration of the Waiver
Period, the November Note Interest Payment Default shall automatically (without
notice or any other action on the party of Agent, Lenders or any other Person)
constitute an immediate Event of Default hereunder; provided, however that if
prior to December 1, 2005, Holdings shall have made payment in full to the
holders of Senior Unsecured High Yield Notes of all interest due and payable on
November 1, 2005 under the Senior Unsecured High Yield Notes and the Senior
Unsecured Note Indenture, together with any default interest and any other
amounts then due and payable by Holdings to the holders of the Senior Unsecured
High Yield Notes or the indenture trustee under the Senior Unsecured High Yield
Note Indenture, then the November Note Interest Payment Default shall be deemed
permanently waived by Agent and the Lenders.
2.3 No Other Waivers; Reservation of Rights.
(a) Neither the Agent nor any other Lender has waived, or is by this
Agreement waiving, (i) any Default or Event of Default which may be continuing
on the date hereof (other than the limited waiver of the Specified Defaults, in
each case to the extent expressly set forth herein) or (ii) any Default or Event
of Default which may hereafter arise (whether similar to the Specified Defaults
or otherwise), including, without limitation, any failure by the Borrowers to
comply with Sections 7.15 or 7.16 of the Credit Agreement for any Fiscal Quarter
ended prior to or after September 30, 2005 and any Event of Default as a result
of the occurrence of any "Default" or "Event of Default" as such terms are
defined in the Senior
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Unsecured High Yield Note Indenture (other than the November Note Interest
Payment Default which is the subject of the temporary waiver granted above under
Section 2.2 above).
(b) The Agent and the Lenders reserve the right, in their
discretion, to exercise any or all of their rights and remedies under the Credit
Agreement and the other Loan Documents as a result of any Default or Event of
Default (other than the Specified Financial Covenant Defaults and, solely during
the Waiver Period, the November Note Interest Payment Default, in each case to
the extent expressly set forth herein) which may be continuing on the date
hereof or any Default or Event of Default (other than the Specified Defaults
and, solely during the Waiver Period, the November Note Interest Payment
Default, in each case to the extent expressly set forth herein) which may occur
after the date hereof, and nothing in this Agreement, and no delay on the part
of the Agent or any Lender in exercising any such right or remedy, shall be
construed as a waiver of any such right or remedy.
SECTION 3. CONDITIONS TO EFFECTIVENESS
3.1 This Agreement shall become effective on the date upon which the
conditions specified below have been satisfied:
(a) Agent and Lenders shall have received an original of this
Agreement and the Confirmation of Guaranty, duly authorized, executed and
delivered by each of the Borrowers and the Guarantor, respectively.
(b) In order to induce GE Capital to grant the limited waivers of
the Specified Defaults provided for in Sections 2.1 and 2.2 above and to,
subject to the terms and conditions of this Agreement, the Credit Agreement and
the other Loan Documents, continue to make Loans to the Borrowers despite the
occurrence of the Specified Defaults, Borrowers shall have paid to GE Capital in
immediately available funds a waiver fee in the amount of $500,000, which fee
shall be fully earned and non-refundable when paid (the "Waiver Fee"). GE
Capital hereby agrees that if within one year after the date of this Agreement,
GE Capital as sole arranger provides a credit facility to the Borrowers, which
credit facility replaces or refinances in full or in part the credit facility
evidenced by the Credit Agreement (any such replacement or refinancing credit
facility, referred to herein as a "Replacement Facility"), GE Capital shall
credit toward the payment of any closing fees payable by Borrowers to GE Capital
in respect of such Replacement Facility up to $200,000 of the Waiver Fee
received by GE Capital.
SECTION 4. REPRESENTATIONS AND WARRANTIES
4.1 Each Borrower hereby further represents and warrants with and to Agent
and Lenders that after giving effect to the limited waivers in Section 2 hereof,
the Borrowers hereby represent and warrant that each of the representations and
warranties contained in the Loan Documents is true and correct on and as of the
date hereof, except for any representation and warranty that relates by its
terms only to a specified date (in which case, it shall be true on and as of
such date).
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SECTION 5. COVENANTS
5.1 In order to induce the Agent and the Lenders to enter into and grant
the limited waivers set forth in Section 2.1 and Section 2.2 hereof, the
Borrowers hereby covenant and agree with Agent and the Lenders as follows:
(a) The parties hereto acknowledge, confirm and agree that any
misrepresentation by any Credit Party in, or any failure of any Credit Party to
comply with the covenants, conditions and agreements contained in this Agreement
shall constitute an immediate Event of Default under the Credit Agreement;
(b) In addition to and not in limitation of any of the provisions of
Section 6.16 of the Credit Agreement, Borrowers hereby agree that they shall
not, and shall not cause or permit any Subsidiary thereof to, accumulate or
maintain cash in any disbursement accounts, payroll accounts or other deposit
accounts as of any date of determination in excess of checks outstanding against
such accounts as of that date and amounts necessary to meet minimum balance
requirements; and
(c) Borrowers agree that, in addition to the circumstances set forth in
Section 2.7(c) of the Credit Agreement, the circumstances set forth in this
Section 5.1(c) shall give rise to a prepayment fee under Section 2.7(c) of the
Credit Agreement. If at any time after the date hereof, without the prior
written consent of GE Capital, either (i) any Credit Party (including any
successor entity or debtor in possession) grants, or pursuant to applicable law
or the order of a court of law or equity, is deemed to have granted or provided,
a Lien on any of the Collateral in favor of any Person (other than GE Capital)
that lends money to any of the Credit Parties and such Lien or any portion
thereof is senior in priority to the Lien granted in favor of the Agent under
the Loan Documents on any Collateral, or (ii) any Credit Party (including any
successor entity or debtor in possession) grants, or pursuant to applicable law
or the order of a court of law or equity, is deemed to have granted or provided,
a Lien on any assets of any Credit Party (other than Collateral) that are of the
same or similar type or class of assets as the assets constituting Collateral
from time to time in favor of any Person (other than GE Capital) that lends
money to any of the Credit Parties, then in each such case, the Borrowers shall
pay to Agent, for the ratable benefit of Lenders as liquidated damages and
compensation for the costs of being prepared to make funds available under the
Credit Agreement, a prepayment fee in an amount equal to the Applicable
Percentage multiplied by an amount equal to (x) the entire amount of the
Revolving Credit Commitment then in effect or (y) if the Revolving Credit
Commitment has terminated, an amount equal to the entire Revolving Credit
Commitment in effect immediately prior to giving effect to such termination.
Nothing herein is intended to require borrower to pay more than one prepayment
fee, and upon indefeasible payment in full to GE Capital of any prepayment fee
under this Section 5.1(c), Borrowers shall not be obligated to pay any further
prepayment fee under Section 2.7(c) of the Credit Agreement and, conversely,
upon indefeasible payment in full to GE Capital of any prepayment fee under
Section 2.7(c) of the Credit Agreement, Borrowers shall not be obligated to pay
any further prepayment fee under this Section 5.1(c) of the Credit Agreement.
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SECTION 6. PROVISIONS OF GENERAL APPLICATION
6.1 Effect of this Agreement. Except as modified pursuant hereto, no other
changes or modifications to the Loan Documents are intended or implied and in
all other respects the Loan Documents are hereby specifically ratified, restated
and confirmed by all parties hereto as of the effective date hereof. To the
extent of conflict between the terms of this Agreement and the other Loan
Documents, the terms of this Agreement shall control. The Credit Agreement and
this Agreement shall be read and construed as one agreement.
6.2 Costs and Expenses. The Borrowers hereby agree that they shall
reimburse the Agent on demand for all costs and expenses (including, without
limitation, attorney's fees) incurred by such parties in connection with the
negotiation, documentation and consummation of this Agreement and any other
document executed in connection herewith and therewith.
6.3 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.
6.4 Survival of Representations and Warranties. All representations and
warranties made in this Agreement or any other document furnished in connection
with this Agreement shall survive the execution and delivery of this Agreement
and the other documents, and no investigation by Agent or any Lender or any
closing shall affect the representations and warranties or the right of Agent
and Lenders to rely upon them.
6.5 Release.
(a) Each Credit Party, on behalf of itself and its successors, assigns,
and other legal representatives, hereby absolutely, unconditionally and
irrevocably releases, remises and forever discharges GE Capital, Agent and
Lenders, and their successors and assigns, and their present and former
shareholders, affiliates, subsidiaries, divisions, predecessors, directors,
officers, attorneys, employees, agents and other representatives (GE Capital,
Agent, each Lender and all such other Persons being hereinafter referred to
collectively as the "Releasees" and individually as a "Releasee"), of and from
all demands, actions, causes of action, suits, controversies, sums of money,
accounts, bills, reckonings, damages and any and all other claims,
counterclaims, defenses, rights of set off, demands and liabilities whatsoever
(individually, a "Claim" and collectively, "Claims") of every name and nature,
known or unknown, suspected or unsuspected, both at law and in equity, which
such Credit Party or any of its successors, assigns, or other legal
representatives may now or hereafter own, hold, have or claim to have against
the Releasees or any of them for, upon, or by reason of any circumstance,
action, cause or thing whatsoever which arises at any time on or prior to the
date that this Agreement is executed by all parties, including, without
limitation, for or on account of, or in relation to, or in any way in connection
with the Credit Agreement or any of the other Loan Documents or transactions
thereunder or related thereto and which arise at any time on or prior to the
date that this Agreement is executed by all parties.
(b) Each Credit Party understands, acknowledges and agrees that its
release set forth above may be pleaded as a full and complete defense and may be
used as a basis for an
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injunction against any action, suit or other proceeding which may be instituted,
prosecuted or attempted in breach of the provisions of such release.
(c) Each Credit Party agrees that no fact, event, circumstance, evidence
or transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.
6.6 Covenant Not to Xxx. Each Credit Party, on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of each
Releasee that it will not xxx (at law, in equity, in any regulatory proceeding
or otherwise) any Releasee on the basis of any Claim released, remised and
discharged by such Credit Party pursuant to Section 6.5 above. If any Credit
Party or any of their respective successors, assigns or other legal
representations violates the foregoing covenant, each Credit Party, for
themselves and their successors, assigns and legal representatives, jointly and
severally agree to pay, in addition to such other damages as any Releasee may
sustain as a result of such violation, all attorneys' fees and costs incurred by
any Releasee as a result of such violation.
6.7 Severability. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement.
6.8 Reviewed by Attorneys. Each Borrower represents and warrants to Agent
and Lenders that it (a) understands fully the terms of this Agreement and the
consequences of the execution and delivery of this Agreement, (b) has been
afforded an opportunity to have this Agreement reviewed by, and to discuss this
Agreement and document executed in connection herewith with, such attorneys and
other persons as such Borrower may wish, and (c) has entered into this Agreement
and executed and delivered all documents in connection herewith of its own free
will and accord and without threat, duress or other coercion of any kind by any
Person. The parties hereto acknowledge and agree that neither this Agreement nor
the other documents executed pursuant hereto shall be construed more favorably
in favor of one than the other based upon which party drafted the same, it being
acknowledged that all parties hereto contributed substantially to the
negotiation and preparation of this Agreement and the other documents executed
pursuant hereto or in connection herewith.
6.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK FOR CONTRACTS TO
BE PERFORMED ENTIRELY WITHIN SAID STATE.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall be deemed to constitute but one original and
shall be binding upon all parties, their successors and permitted assigns.
Delivery of an executed signature page hereof by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, this Waiver Agreement is executed and delivered as of the
day and year first above written.
LENDER AND AGENT:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
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Name:
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Title: Its Duly Authorized Signatory
[BORROWERS' SIGNATURES CONTINUE ON NEXT PAGE]
BORROWERS:
CURATIVE HEALTH SERVICES, INC.,
a Minnesota corporation formerly known
as Curative Holding Co.
By:
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Name:
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Title:
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Date:
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XXXXXXXX.XXX, INC.
By:
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Name:
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Title:
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Date:
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HEMOPHILIA ACCESS, INC.
By:
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Name:
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Title:
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Date:
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APEX THERAPEUTIC CARE, INC.
By:
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Name:
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Title:
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Date:
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CHS SERVICES, INC.
By:
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Name:
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Title:
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Date:
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CURATIVE HEALTH SERVICES OF NEW YORK, INC.
By:
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Name:
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Title:
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Date:
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OPTIMAL CARE PLUS, INC.
By:
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Name:
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Title:
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Date:
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INFINITY INFUSION, LLC
By: Curative Health Services Co.,
its Sole Member
By:
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Name:
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Title:
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Date:
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INFINITY INFUSION II, LLC
By: Curative Health Services Co.,
its Sole Member
By:
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Name:
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Title:
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Date:
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INFINITY INFUSION CARE, LTD.
By: Infinity Infusion II, LLC,
its Sole General Partner
By: Curative Health Services Co., the Sole
Member of Infinity Infusion II, LLC
By:
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Name:
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Title:
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Date:
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MEDCARE, INC.
By:
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Name:
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Title:
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Date:
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CURATIVE PHARMACY SERVICES, INC.
By:
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Name:
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Title:
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Date:
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CURATIVE HEALTH SERVICES CO.,
a Minnesota corporation formerly known as
Curative Health Services, Inc.
By:
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Name:
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Title:
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Date:
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CRITICAL CARE SYSTEMS, INC.
By:
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Name:
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Title:
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Date:
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GUARANTORS:
CURATIVE HEALTH SERVICES III CO.
By:
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Name:
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Title:
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Date:
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CONFIRMATION OF GUARANTY
The undersigned Guarantor hereby (a) acknowledges, consents and agrees to
the terms of the foregoing Waiver Agreement (the "Agreement") including, without
limitation, the release and covenant not to xxx in Sections 6.5 and 6.6 of the
Agreement, and (b) agrees and confirms that its obligations under the Guaranty
Agreement to which it is a party will continue in full force and effect and
extend to all Obligations under and as defined in the Amended and Restated
Credit Agreement as amended and modified by (i) that certain First Amendment to
Amended and Restated Credit Agreement and Collateral Documents dated as of May
3, 2004, (ii) that certain Second Amendment to Amended and Restated Credit
Agreement dated as of June 30, 2004, (iii) that certain Third Amendment to
Amended and Restated Credit Agreement dated as of October 20, 2004 and (iv) that
certain Fourth Amendment to Amended and Restated Credit Agreement dated as of
December 31, 2004.
As of this 7th day of November, 2005.
CURATIVE HEALTH SERVICES III CO.
By:
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Name:
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Title:
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Date:
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