EXHIBIT 10.1
SECOND AMENDMENT TO CONSTRUCTION LOAN
AND PERMANENT FINANCING AGREEMENT
This Second Amendment to Construction Loan and Permanent Financing
Agreement (this "Amendment") is made and entered into as of July 30, 2002 by and
between CRYOLIFE, INC. (the "Borrower"), and BANK OF AMERICA, N.A. (the
"Lender");
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender have made and entered into that
Construction Loan and Permanent Financing Agreement, dated as of April 25, 2000,
as amended through the date hereof (the "Original Loan Agreement" and, as
amended hereby, the "Loan Agreement"; capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Loan
Agreement);
WHEREAS, the Borrower's obligations to the Lender are secured by that
certain Security Agreement, dated as of April 25, 2000, as amended through the
date hereof (the "Original Security Agreement" and, as so amended, the "Security
Agreement");
WHEREAS, pursuant to the Original Loan Agreement, the Lender has extended
to the Borrower a construction/permanent loan facility in the original principal
amount of up to $8,000,000;
WHEREAS, the Lender has previously extended to the Borrower a revolving
loan facility in the original principal amount of up to $2,000,000, which has
expired;
WHEREAS, Borrower desires to obtain a new revolving loan facility of up to
$10,000,000 and to make certain other changes to the Loan Agreement;
WHEREAS, the Borrower desires to amend certain provisions of the Loan
Agreement, and the Lender is willing to agree to the same on the terms and
conditions set forth herein;
NOW THEREFORE, for and in consideration of the foregoing and for ten
dollars ($10.00) and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1.
AMENDMENTS TO LOAN AGREEMENT
SECTION 1.1 DEFINITION AMENDMENTS. The following definitions in Section 1.1
of the Loan Agreement are hereby amended in their entirety to read as follows:
"Adjusted LIBO Rate" means:
(i) with respect to the Construction Loan (and Term Loan), the LIBO Rate
divided by a percentage equal to one (1) minus the then average stated
maximum amount (stated as a decimal) of all reserve requirements applicable
to any member of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D of the Board of Governors of the
Federal Reserve System (or any successor categories for such liabilities
under such Regulation D). The Adjusted LIBO Rate shall be set on the date
of Closing and shall be recalculated each thirtieth (30th) day thereafter.
The Adjusted LIBO Rate, once so calculated or recalculated, shall remain in
effect until the next scheduled recalculation date. If any recalculation
date for the Adjusted LIBO Rate is not a Business Day, the recalculation of
the Adjusted LIBO Rate shall be made on the next Business Day following
such date.
(ii) with respect to the Line of Credit, the fluctuating rate of interest
(rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the 1 month London interbank
offered rate for deposits in United States Dollars at approximately 11:00
a.m. (London time) on the second preceding business day, as adjusted from
time to time in Lender's sole discretion for then-applicable reserve
requirements, deposit insurance assessment rates and other regulatory
costs; if for any reason such rate is not available, the term "LIBOR Daily
Floating Rate" shall mean the fluctuating rate of interest equal to the
rate of interest (rounded upwards, if necessary to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the 1 month London interbank
offered rate for deposits in United States Dollars at approximately 11:00
a.m. (London time) on the second preceding day, as adjusted from time to
time in Lender's sole discretion for then-applicable reserve requirements,
deposit insurance assessment rates and other regulatory costs; provided,
however, if more than one rate is specified on Reuters Screen LIBO page,
the applicable rate shall be the arithmetic mean of all such rates (the
"Index"). The Index is not necessarily the lowest charged by Lender on its
loans, Lender may make loans based on other rates as well and if the Index
becomes unavailable during the term of this Line of Credit, Lender may
designate a substitute index after notice to Borrower. The interest rate
change applicable to the Line of Credit will not occur more often than each
date of such change in the Index.
"Advances" means, (i) with respect to the Construction Loan, any direct or
indirect advance made by Lender to Borrower pursuant to Article Two of this
Agreement, and (ii) with respect to the Line of Credit, any direct or
indirect advance made by Lender to Borrower pursuant to Article IIIA of
this Agreement.
"Commitment" means, (i) with respect to the Construction Loan (and Term
Loan), $8,000,000, and (ii) with respect to the Line of Credit,
$10,000,000.
"Commitment Letter" means, (i) with respect to the Construction Loan (and
Term Loan), that certain letter from Lender to Borrower dated March 9,
2000, a copy of which is attached hereto as Exhibit B, and (ii) with
respect to the Line of Credit, that certain letter from Lender to Borrower
dated June 18, 2002, a copy of which is attached hereto as Exhibit B-1.
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"Line of Credit" means the revolving line of credit extended by Lender to
Borrower pursuant to Section IIIA hereof.
"Loan" means (i) either the Construction Loan or the Term Loan, or both, as
the context may require, or (ii) the Line of Credit, or both (i) and (ii)
as the context may require.
"Note" means (i) with respect to the Construction Loan (and Term Loan), the
promissory note, dated as of April 25, 2000, from Borrower to Lender, in
the principal amount of $8,000,000, as amended, modified, supplemented,
restated or renewed from time to time, and (ii) with respect to the Line of
Credit, the promissory note, dated as of July 30, 2002, from Borrower to
Lender, in the principal amount of $10,000,000, as amended, modified,
supplemented, restated or renewed from time to time.
SECTION 1.2 NEW DEFINITIONS. The following definitions are hereby added in
Section 1.1 of the Loan Agreement to read in their entirety as follows:
"Line of Credit Commitment" means $10,000,000.
"Termination Date" means July 30, 2005.
SECTION 1.3 LOAN AGREEMENT AMENDMENT. The Loan Agreement is hereby amended
by adding a new Article IIIA to read in its entirety as follows:
3.01A The Line of Credit. (a) From time to time upon Borrower's request,
and subject to the terms and conditions of this Agreement, Lender agrees to
advance to Borrower prior to the Termination Date amounts which do not
exceed the Line of Credit Commitment in aggregate outstanding principal
amount at any one time. Notwithstanding anything in this Agreement to the
contrary, Lender shall not be obligated hereunder to make any Advance under
the Line of Credit on or after the earlier of (i) the Termination Date or
(ii) the occurrence of a Default or Event of Default hereunder. Subject to
the terms and conditions hereof, prior to the Termination Date, Borrower,
at its option, from time to time may borrow, repay and reborrow all or any
portion of the Line of Credit.
(b) The proceeds of the Line of Credit may be used by Borrower only to
finance Borrower's and its Subsidiaries' working capital and other general
corporate needs.
(c) The Advances under the Line of Credit shall bear interest at a floating
rate per annum equal to the Adjusted LIBO Rate plus one and one-quarter
percent (1.25%). To the extent permitted by law, any overdue interest on
the Advances under the Line of Credit shall bear interest, payable on
demand, for each day until paid at a rate equal to the Default Rate.
(d) Borrower shall pay to Lender unused facility fees for Borrower's Line
of Credit facility hereunder during the term hereof computed on the daily
average unused portion of the Line of Credit Commitment at a rate per annum
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of one-quarter of one percent (.25%). Such unused facility fees shall be
payable by Borrower to Lender monthly in arrears, commencing on August 31,
2002, and continuing to be due on the last Business Day of each month
thereafter as well as on the Termination Date.
(e) Interest on the principal amount of the Advances under the Line of
Credit shall be due and payable monthly in arrears on the first (1st) day
of each calendar month commencing September 1, 2002 with respect to all
interest accrued during the calendar month immediately preceding the
interest payment date, and on the Termination Date.
(f) The outstanding principal balance of the Advances under the Line of
Credit, together with all accrued but unpaid interest thereon, shall be due
and payable in full on the Termination Date.
(g) Borrower hereby authorizes Lender automatically to deduct from
Borrower's account numbered 6218199 the amount of any interest payments on
Line of Credit when and as due. If the funds in the account are
insufficient to cover any such interest payment, Lender shall not be
obligated to advance funds to cover the payment. At any time and for any
reason, Borrower or Lender may voluntarily terminate automatic payments of
interest on the Line of Credit. In the event that Borrower terminates the
automatic payment arrangement with Lender, Borrower agrees that the
interest rate for the Line of Credit will increase, at the discretion of
the Lender, by one-half percentage point (0.50%) per annum over the rate of
interest stated above, and the amount of each interest installment will be
increased accordingly. The effective rate of interest under the Line of
Credit shall not in any event exceed the maximum rate permitted by law.
(h) The Line of Credit may be prepaid, in whole or in part, by Borrower at
any time or from time to time hereafter without premium or penalty.
(i) All of the Advances under the Line of Credit shall constitute one loan
by Lender to Borrower. Lender shall maintain a loan account on its books in
which shall be recorded all Advances under the Line of Credit, all payments
made by Borrower on the Line of Credit and all other appropriate debits and
credits as provided in this Agreement and the Note with respect thereto,
including without limitation all charges, expenses and interests. All
entries in such account shall be made in accordance with the Lender's
customary accounting practices as in effect from time to time. Lender shall
render to Borrower a monthly statement setting forth the balance of such
account, including principal, interest, expenses and fees, and each such
statement shall, absence manifest error or omissions, be presumed correct
and binding upon Borrower and shall constitute an account stated unless,
within thirty (30) days after receipt of any such statement from Lender,
Borrower shall deliver to Lender a written objection thereto specifying the
error or errors of omission or omissions, if any, contained in such
statement.
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(g) All interest and fees owing by Borrower to Lender hereunder or under
the other Financing Documents shall be computed on the basis of a 360-day
year and the actual days elapsed.
SECTION 1.4 LOAN AGREEMENT AMENDMENT. Section 5.02 of the Loan Agreement
shall apply to the Construction Loan Advances only and the Loan Agreement is
hereby further amended by adding a new Section 5.03 to read in its entirety as
follows:
5.03 Conditions Precedent to Each Line of Credit Advance. The following
conditions, in addition to any other requirements set forth in this
Agreement, shall have been met or performed by the date of such Line of
Credit Advance with respect to any request for a Line of Credit Advance and
each request for an Advance (whether or not a written Advance request is
required) shall be deemed to be a representation that all such conditions
have been satisfied:
(a) All provisions of the Commitment Letter with respect to the Line of
Credit shall have been complied with;
(b) Borrower's representations and warranties set forth herein and in the
other Financing Documents shall remain true and correct in all material
respects;
(c) No Default or Event of Default shall have occurred under this Agreement
or under any other Financing Document;
(d) There shall have occurred no act, omission or undertaking which would,
singly or in the aggregate, have a materially adverse effect upon the
business, assets, liabilities, financial condition, results of operations
or financial prospects of Borrower, or upon the ability of Borrower to
perform any material obligations arising under the Financing Documents;
(e) The proposed Advance shall not cause the outstanding principal balance
of the Line of Credit to exceed the Line of Credit Commitment.
(f) Borrower shall have delivered such further documentation or assurances
as Lender may reasonably require.
SECTION 1.5 LOAN AGREEMENT AMENDMENT. The Loan Agreement is hereby amended
by adding new Section 7.25 to read in its entirety as follows:
7.25 New Subsidiaries. Within thirty (30) days after Borrower's creation or
acquisition of any Subsidiary, Borrower shall cause such Subsidiary to
guaranty the repayment of the Liabilities and Obligations to Lender,
pursuant to a Subsidiary Guaranty and other documents as are acceptable in
all respects to the Lender. Borrower also shall provide Lender with any and
all closing certificates, opinions of counsel and other closing documents
as the Lender may request with respect to such guaranty and other
documents.
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SECTION 1.6 LOAN AGREEMENT AMENDMENT. The reference to "$5,000,000" in
Section 8.03(iii)(e) of the Loan Agreement is hereby amended to read
"$10,000,000".
SECTION 1.7 LOAN AGREEMENT AMENDMENT. Section 8.08(c) of the Loan Agreement
is hereby amended in its entirety to read as follows:
(c) Borrower shall not permit its Leverage Ratio to exceed 0.5 to 1.0 at
any time.
SECTION 1.8 LOAN AGREEMENT AMENDMENT. Section 8.08(d) of the Loan Agreement
is hereby amended in its entirety to read as follows:
(d) Borrower shall not permit its Net Worth at any time after the date of
this Agreement to be less than $90,000,000 plus (i) 80% of the positive
amount of Net Income of Borrower for each fiscal quarter ending after the
date hereof and (ii) the amount of any increase in Net Worth resulting from
the issuance of stock, corporate reorganizations, recapitalizations or any
similar event.
SECTION 1.9 LOAN AGREEMENT AMENDMENT. The Loan Agreement is hereby amended
by adding a new Section 8.12 to read in its entirety as follows:
8.12 Investments. Borrower shall not make loans or advances to any Person,
or investments in any Person, except for (a) investments permitted by
Section 8.03 hereof, (b) U.S. dollar denominated time deposits and
certificates of deposit issued by Lender or another domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000, (c) securities issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality
thereof (provided the full faith and credit of the United States of America
is pledged in support thereof), (d) municipal bonds or equity securities
that have an investment grade rating from a nationally recognized ratings
service, and (e) loans and advances not in excess of $250,000 in the
aggregate at any time.
SECTION 1.10 LOAN AGREEMENT AMENDMENT. Notwithstanding anything to the
contrary herein, all notices and communications to the Lender shall be directed
to the following address:
Bank of America, N.A.
Jacksonville CLSC; Attn: Notice Desk
9000 Southside Blvd., 3rd Floor
Jacksonville, FL 32256
SECTION 1.11 EXHIBITS. The Loan Agreement is hereby amended by adding a new
Exhibit B-1 in the form attached hereto as Exhibit B-1, Exhibit E to the Loan
Agreement is hereby amended in its entirety to read in the form attached hereto
as Exhibit E, and Schedule 6.05 to the Loan Agreement is hereby amended in its
entirety to read in the form attached hereto as Schedule 6.05.
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ARTICLE 2.
CONDITIONS TO EFFECTIVENESS
SECTION 2.1 CONDITIONS. The amendments to the Loan Agreement set forth in
this Amendment shall become effective as of the date first above written (the
"Effective Date") after all of the conditions set forth in Sections 2.2 through
2.6 hereof shall have been satisfied.
SECTION 2.2 EXECUTION OF AMENDMENT. This Amendment shall have been executed
and delivered by the Borrower.
SECTION 2.3 EXECUTION OF REVOLVING NOTE. The Revolving Note shall have been
executed and delivered by the Borrower.
SECTION 2.4 GUARANTIES. Each of Cryolife Acquisition Corp., Cryolife
Europa, Ltd., Cryolife Technology, Inc., AuraZyme Pharmaceuticals Inc. and
Cryolife International, Inc. shall have executed and delivered a guaranty of
Borrower's Obligations and Liabilities.
SECTION 2.5 SECRETARIAL AND INCUMBENCY CERTIFICATE. The Lender shall have
received counterparts of a Secretarial and Incumbency Certificate from the
Borrower and each corporate Guarantor.
SECTION 2.6 REPRESENTATIONS AND WARRANTIES. (a) As of the Effective Date,
except as modified by Schedule 4.06 hereto, the representations and warranties
set forth in the Loan Agreement, and the representations and warranties set
forth in each of the Loan Documents, shall be true and correct in all material
respects; (b) as of the Effective Date, no Defaults or Events of Default shall
have occurred and be continuing; (c) the Lender shall have received from the
Borrower a certificate dated the Effective Date, certifying the matters set
forth in subsections (a) and (b) of this Section 2.6.
ARTICLE 3.
MISCELLANEOUS
SECTION 3.1 ENTIRE AGREEMENT; NO NOVATION OR RELEASE. This Amendment,
together with the Loan Documents, as in effect on the Effective Date, reflects
the entire understanding with respect to the subject matter contained herein,
and supersedes any prior agreements, whether written or oral. This Amendment is
not intended to be, and shall not be deemed or construed to be, a satisfaction,
novation or release of the Loan Agreement or any other Loan Document. Except as
expressly amended hereby, all representations, warranties, terms, covenants and
conditions of the Loan Agreement and the other Loan Documents shall remain
unamended and unwaived and shall continue in full force and effect.
SECTION 3.2 FEES AND EXPENSES. All fees and expenses of the Lender incurred
in connection with the issuance, preparation and closing of the transactions
contemplated hereby shall be payable by the Borrower promptly upon the
submission of the bill therefor. If the Borrower shall fail to promptly pay such
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bill, the Lender is authorized to pay such bill through an advance of funds
under the Loan.
SECTION 3.3 CHOICE OF LAW; SUCCESSORS AND ASSIGNS. This Amendment shall be
construed and enforced in accordance with and governed by the internal laws (as
opposed to the conflicts of laws provisions) of the State of Georgia. This
Amendment shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
WITNESS the hand and seal of each of the undersigned as of the date first
written above.
LENDER:
BANK OF AMERICA, N.A.
By: /s/ Ken Topham
-----------------------------------------
Title: Vice President
--------------------------------------
BORROWER:
CRYOLIFE, INC.
By: /s/ D. A. Lee
----------------------------------------
Title: VP & CFO
------------------------------------
Attest: /s/ Suzanne K. Gabbert
------------------------------------
Title: Asst. Corp. Secretary
-------------------------------------
[Seal]
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Exhibit "B-1"
9
[Bank of America Letterhead]
June 18, 2002
Mr. Ashley Lee
Chief Financial Officer
Cryolife, Inc.
1655 Roberts Boulevard, NW
Kennesaw, GA 30144
Re: Letter of Commitment
Dear Mr. Lee:
Bank of America (hereafter the "Bank") is pleased to offer you a commitment
(hereafter the "Commitment") for a loan (hereafter the "Loan"), subject to the
following terms and conditions:
1. BORROWER: Cryolife, Inc.
GENERAL CORPORATE USE LINE:
2A. LOAN AMOUNT: Up to Ten Million & 00/100 Dollars
($10,000,000.00).
2B. USE OF PROCEEDS: The proceeds from this loan will be used for
general corporate use including the funding of
future acquisitions by the Borrower.
2C. TERMS: The Terms of this proposed loan shall be for a
thirty-six (36) month period from closing.
Payments will be interest only with principal due
at maturity.
2D. INTEREST RATE: Interest on the daily unpaid balance from Loan
date until maturity at a floating rate of 30-Day
LIBOR, as determined by Bank of America and
adjusted for reserves, deposit insurance
assessments and other regulatory costs, plus
1.25%. This line shall bear a fee of 25 basis
points per annum based on the unused portion of
the Loan Amount.
3. LOAN ADVANCES: Borrower may borrow, repay, and reborrow funds
under the Loan at its option during the term of
the Loan.
4. COLLATERAL: The Acquisition Line shall be secured at all
Cryolife, Inc.
June 18, 2002
Page 2 of 8
times by a valid, perfected, first priority
security interest in all Accounts Receivable,
Inventory, Equipment and Leasehold Improvements
of the Borrower of every description now or
hereafter acquired or existing. Note that the
Bank will continue a negative pledge against the
intangible assets of the company.
The Acquisition Line shall be cross pledged
and collateralized by the existing Term Loan.
5. GUARANTORS: The Loan and the other Obligations shall be fully
guaranteed by the Subsidiaries of Borrower
pursuant to a Subsidiary Guaranty (or
confirmation of an existing Guaranty, as
applicable) which shall be duly executed and
delivered by each Subsidiary to Lender in
connection with this Agreement.
The list of guarantors is and is not limited to
the following:
Cryolife Acquisition Corp.
Cryolife Technology, Inc.
Cryolife Foreign Sales, Inc.
Cryolife Europa, LTD.
AuraZyme Pharmaceuticals, Inc.
6. SPECIAL PROVISIONS: a. Borrower will provide the Bank, annually,
within one hundred twenty (120) days of the end
of its fiscal year end, with CPA Audited
financial statements to include a statement of
revenues and expenditures as well as a balance
sheet. Three statements shall be presented on a
consolidated basis.
b. Borrower will provide the Bank with
quarterly internally-prepared financial
statements within forty-five (45) days of the end
of each quarter. These statements shall be
presented on a consolidated basis.
Cryolife, Inc.
June 18, 2002
Page 3 of 8
c. Each Financial statement submitted to the
Bank shall be accompanied by a duly completed
Compliance Certificate executed on behalf of
Borrower by its Chief Financial Officer.
d. Borrower will provide to the Bank from time
to time such financial or other information, as
the Bank shall reasonably request.
e. Borrower will maintain adequate property
damage insurance, naming the Bank as
mortgagee/loss payee, and furnish evidence
thereof at Loan closing.
f. Borrower will provide the Bank with certain
legal information at Loan closing to include
"Articles of Incorporation", "Certificate of
Incorporation", "Corporate Resolution", and a
"Certificate of Good Standing" with the Office of
the Secretary of State.
g. Borrower will maintain all primary operating
deposit accounts with Bank of America during the
life of the Loan.
h. Borrower will maintain certain financial
covenants as described on Exhibit "A" attached.
7. COSTS, EXPENSES,
AND ATTORNEY'S FEES: Borrower shall pay to Bank immediately upon
demand the full amount of all costs and expenses,
including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of
Bank's in-house counsel if permitted by
applicable law), incurred by Bank in connection
with negotiation and preparation of this
Agreement and each of the Loan Documents.
8. EXTENSIONS OF CREDIT: In an amount not to exceed $250,000.00, Borrower
can make loans or advances to any partnership,
corporation, individual or other entity,
including the normal extensions of trade credit
Cryolife, Inc.
June 18, 2002
Page 4 of 8
in the ordinary course of Borrower's business.
9. OUTSIDE BORROWING: Borrower shall not create, incur, assume or
become liable in any manner for any indebtedness
in excess of $250,000.00 (for borrowed money,
deferred payment for the purchase of assets,
lease payments, as surety or guarantor for the
debt of another, or otherwise) other than to
Bank, except for normal trade debts incurred in
the ordinary course of Borrower's business.
10. SUCCESSORS AND ASSIGNS: This Commitment shall be binding on all parties
thereto, their successors, assigns and
representatives.
11. COUNTERPARTS: This Commitment may be executed simultaneously in
two or more counterparts, each of which shall be
deemed an original for evidentiary purposes, but
all of which together shall constitute one and
the same instrument.
12. DEFAULT: Borrower shall be in default under this
Commitment and under any and all promissory notes
executed by Borrower in favor of Bank and any and
all other documents, instruments, deeds of trust,
mortgages, security agreements, guarantees
executed and/or delivered by Borrower in
connection with the Loan (collectively, the "Loan
Documents"), if it shall default in the payment
of any amounts due and owing under the Loan or to
some other party (if the default to some other
party would materially impact the Borrower's
ability to operate their business) or should it
fail to timely and properly perform, keep and
observe any term, covenant, agreement or
condition in this Commitment or any of the Loan
Documents.
13. CANCELLATION: The Bank reserves the right to cancel this
Cryolife, Inc.
June 18, 2002
Page 5 of 8
Commitment and terminate the obligation
thereunder at any time upon the occurrence of any
of the following: (a) Failure of the Borrower to
comply with any of the applicable conditions of
this Commitment within the time specified, (b)
Non-payment of any of the fees or expenses to be
paid by the Borrower in connection with this
Commitment, or (c) Any filing by or against the
Borrower of any petition in bankruptcy or
insolvency or for the appointment of a receiver,
or the reorganization of Borrower under such
conditions or the making of any assignment for
the benefit of creditors.
14. ERRORS OR OMISSIONS: Borrower agrees that should any inadvertent
errors or omissions later be discovered in any
documents executed at closing, Borrower shall
promptly execute such corrective documents and
remit such sums as may be required to adjust or
correct such errors or omissions.
15. MATERIAL ADVERSE
CHANGE: This Commitment is conditioned upon there having
occurred no act, omission or undertaking which
would, singly, or in the aggregate, have a
materially adverse effect upon the business,
assets, liabilities, financial condition, results
of operations or business prospects of the
Borrower, and any of its subsidiaries or of any
Guarantor, or upon the ability of the Borrower to
perform any material obligations arising under
the Loan Documents.
16. ARBITRATION: Any controversy or claim between or among the
parties hereto including but not limited to those
arising out of or relating to this Commitment or
any related instruments, agreements or documents
including any claim based on or arising from an
alleged tort, shall be determined by binding
arbitration in accordance with the Federal
Cryolife, Inc.
June 18, 2002
Page 6 of 8
Arbitration Act (or if not applicable, the
applicable state law), and the rules of practice
and procedure for the arbitration of commercial
disputes of Judicial Arbitration and Mediation
Services, Inc. (J.A.M.S.) as supplemented by any
special rules set forth in any of the Loan
Documents. Judgment upon any arbitration award
may be entered in any court having jurisdiction.
Any party to this Commitment may bring an action,
including a summary or expedited proceeding, to
compel arbitration of any controversy or claim to
which this Commitment applies in any court having
jurisdiction over such action.
17. LOAN AGREEMENT: Borrower shall execute a Loan Agreement at Loan
closing in form and substance satisfactory to
Bank.
18. INCORPORATION INTO
DOCUMENTATION: At the time of Loan closing, this executed Letter
of Commitment shall become a part of the Loan
documentation.
19. ENTIRE AGREEMENT: This Commitment, together with Loan Documents,
supersede all prior written or oral
understandings or agreements between Borrower and
Bank with respect to the matters addressed in the
Loan Documents.
If the terms and conditions of this Letter of Commitment meet with your
approval, please indicate your acceptance by signing and returning the original
to us.
This Letter of Commitment shall become null and void if not accepted within
fifteen (15) days of the date hereof, and closed within thirty (30) days of
acceptance of this Commitment.
Cryolife, Inc.
June 18, 2002
Page 7 of 8
Thank you for banking with Bank of America.
Sincerely,
/s/ Ken Topham
- --------------------------------------------
Ken Topham
Vice President
Signed and accepted the 19th day of June, 2002.
BORROWER:
Cryolife, Inc.
BY: /s/ D. A. Lee
------------------------------
NAME: D. Ashley Lee
------------------------------
TITLE: VP & CFO
------------------------------
Cryolife, Inc.
June 18, 2002
Page 8 of 8
EXHIBIT "A"
Debt Coverage Ratio: Borrower shall not permit its Debt Coverage Ratio for any
fiscal quarter or year-end to be less than 1.3 to 1.0. The Debt Coverage Ratio
is defined as, with respect to any particular fiscal period of Borrower, the
ratio of (a) Borrower's EBITDAR for the consecutive 4-quarter period ending
therewith to (b) the sum (without duplication) of (i) Borrower's Current
Maturities of Funded Debt for the immediately succeeding consecutive 4-quarter
period plus (ii) Borrower's Interest Expense for the consecutive 4-quarter
period ending therewith plus (iii) Borrower's Rental Expense for the immediately
succeeding consecutive 4-quarter period, all as determined on a consolidated
basis.
Leverage Ratio. Borrower agrees to maintain a ratio of Total Liabilities to its
Net Worth of no greater than 0.5 to 1.0 at all times. Total Liabilities shall
mean, as of any particular date, the amount which all liabilities of Borrower
would be shown on a consolidated balance sheet of Borrower at such date prepared
in accordance with generally accepted accounting principles consistently
applied. Net Worth means, as of any particular date, Borrower's total
shareholder's equity (including capital stock, additional paid-in capital, and
retained earnings after deducting treasury stock) which would appear as such on
a consolidated balance sheet of Borrower prepared in accordance with generally
accepted accounting principles as then in effect.
Net Worth Minimum. Borrower agrees to maintain a minimum net worth of
$90,000,000 at all times. Borrower shall increase its minimum net worth by 80%
of the positive amount of Net Income of Borrower for each fiscal year period
after the date hereof and the amount of any increase in Net Worth resulting from
the issuance of stock, corporate reorganizations, capitizations or similar
event. Net Worth means, as of any particular date, Borrower's total
shareholder's equity (including capital stock, additional paid-in capital, and
retained earnings after deducting treasury stock) which would appear as such on
a consolidated balance sheet of Borrower prepared in accordance with generally
accepted accounting principles as then in effect.
Maximum Annual Capital Expenditures. Borrower agrees to spend no more than
$5,000,000 annually on capital expenditures. Borrower shall not make Capital
Expenditures in excess of $5,000,000 in the aggregate in any fiscal year.
Exhibit "E"
FORM OF
COMPLIANCE CERTIFICATE
This Certificate is delivered pursuant to that certain Loan Agreement,
dated as of April 25, 2000, as amended (the "Agreement"), by and between
CRYOLIFE, INC., a Florida corporation (the "Borrower"), and BANK OF AMERICA,
N.A., a national banking association (the "Lender"). All capitalized terms used
in this Certificate which are defined in the Agreement are used in this
Certificate with the same meanings given such terms in the Agreement. Unless
otherwise defined in the Agreement, all accounting terms used herein shall have
the meaning given such terms under generally accepted accounting principles
consistently applied ("GAAP").
I hereby certify, to the best of my knowledge and believe and in my
representative capacity on behalf of the Borrower, to the Lender as follows:
1. I am the duly qualified and acting chief financial officer of the
Borrower.
2. I have prepared or reviewed the financial statements of the Borrower as
of and for the period ending _________________, _____, true, complete and
correct copies of which are attached hereto as Exhibit 1 (collectively, the
"Financial Statements").
3. The Financial Statements were prepared in accordance with GAAP and
fairly present the financial position and results of operations of the Borrower
(and its consolidated subsidiaries, if any) as of and for the period ending on
the date of the Financial Statements (subject to normal year-end adjustments).
4. I further certify that as of, and for the period ending on, the date of
the Financial Statements, and except as may be disclosed on Exhibit 2 attached
hereto (all of the following being calculated on a consolidated basis and in
accordance with GAAP and the Agreement):
(a) The Borrower's Leverage Ratio did not exceed 0.5 to 1.0 at any
time during such period;
(b) The Borrower's Debt Coverage Ratio was not less than 1.3 to 1.0
for such period;
(c) The Borrower's Net Worth was not less than __________________
[insert an amount equal to $90,000,000 plus 80% of the positive aggregate amount
of Net Income of Borrower for each fiscal quarter beginning with quarter ending
6/30/2002 plus aggregate proceeds from issuance of stock, corporate
reorganizations, recapitalization or any similar event]; and
(d) The Borrower's Capital Expenditures for such fiscal year (or for
the portion thereof ending with such period) did not exceed $5,000,000 in total.
Attached hereto as Exhibit 3 are calculations demonstrating whether or not
the Borrower was in compliance, as of and for the period ending on the date of
the Financial Statements, with the covenants in the Loan Agreement which are
summarized in items (a) through (e) above.
5. No Default or Event of Default has occurred and is continuing as of the
date of this Certificate other than those Defaults or Events of Defaults (if
any) which are described on the aforesaid Exhibit 2 attached hereto.
I represent the foregoing information to be true and correct to the best of
my knowledge and belief and I execute this Certificate in my representative
capacity on behalf of the Borrower as of this _____ day of ---------------,
- -----.
--------------------------------------------
Name:
Title:
Schedule 6.05
A. CryoLife as a Defendant:
1. Gregory A. Link and Diane Link, as Husband & Wife v. Abington Memorial
Hospital, V. Paul Addonizio, M.D. and CryoLife, Inc.
Date Filed: September 15, 2000
Case No. 2000-01095
Court of Common Pleas, Montgomery County, Pennsylvania
2. Ann Regner, Leo J. Regner, Michael Shawn Steele and Brandon Steele vs.
Inland Eye & Tissue Bank of Redlands; Inland Eye & Tissue Bank of Bakersfield;
Pacific Coast Tissue Bank; Doheny Eye & Tissue Transplant Bank; Northern
California Transplant Bank; University of California, San Diego, Regional Tissue
Bank; University of California, Irvine, Willed Body Program; Musculoskeletal
Transplant Foundation; American Red Cross; CryoLife, Inc.; Dr. Steven Burres;
Fascia Biosystems; Edwards Life Sciences, LLP; Tissue Banks International; TBI,
Inc. d/b/a Northern CA Transplant Bank; Gensci Orthobiologics, Inc.; Osteotech,
Inc.; Lifecell Corporation; and Does 1 to 400, Inclusive.
Date Filed: May 4, 2000
Case No. SCVSS 66746
Superior Court of California, San Bernardino County, Central District
3. Majid Sadeghi and Sandra Sadeghi, as Husband and Wife v. CryoLife, Inc.;
CryoLife International, Inc.; Jefferson Health System, Inc., d/b/a Bryn Mawr
Hospital; Main Line Health, Inc., d/b/a Bryn Mawr Hospital; Orthopaedic
Specialists; and William D. Emper, M.D.
Date Filed: June 21, 2001
Case No. 002695
Court of Common Pleas, Philadelphia County, Pennsylvania
4. Pamela Drahos, as Mother and Next Friend of Cassidy Dawn Chandler-Drahos
a/k/a Chandler v. CryoLife, Inc.; St. Francis Hospital, Inc.; and Dr. Richard D.
Ranne.
Date Filed: May 18, 2000
Case No. CJ 2000-281
District Court In and For Wagoner County, State of Oklahoma
5. Lee Travis Montgomery and wife, Ann Montgomery v. CryoLife, Inc.
Date Filed: January 22, 2002
Case No. 3:02-CV-29
United States District Court. Eastern District of Tennessee,
Northern Division
6. Alan J. Minvielle v. CryoLife, Inc., Jeffrey Carter, M.D., and Does 1
through 100, Inclusive.
Date Filed: April 10, 2002
Case No. CV 143210
Superior Court of California, County of Santa Cruz
7. Kenneth Alesescu and Pamela Alesescu v.CryoLife, Inc.; Midwest
Transplant Network; Mercy General Hospital; and Does 1-50, Inclusive.
Date Filed: July 2, 2002
Case No. 02AS04017
Superior Court of California, County of Sacramento
8. Julie S. Dayton v. CryoLife, Inc.; and Breg, Inc.
Date Filed: June 11, 2002
Case No. 3:02-CV-305
United States District Court, Eastern District of Tennessee,
Northern Division at Knoxville
9. William G. Karnes and wife Kelly C. Karnes v. CryoLife, Inc.
Date Filed: June 20, 2002
Case No. 3:02-CV-330
United States District Court, Eastern District of Tennessee,
Northern Division at Knoxville
10. Steve Lykins, as Trustee for the benefit of the next of kin of Brian
Lykins, Deceased v. CryoLife, Inc.; Intermountain Donor Services, Inc.; Michael
White, John Doe, Inc., 1 through 5, and John Does Individually, 1 through 5.
Date Filed: July 12, 2002
Case No. 0210561324
Superior Court of Cobb County, State of Georgia
11. Joann Savitt, individually and on behalf of all other persons similarly
situated v. Doheny Eye & Tissue Bank, Tissue Banks International, Lifecell
Corp.; CryoLife, Inc.; Osteotech, Inc.; and Does 1-199, Inclusive.
Date Filed: June 7, 2002
Case No. BC275521
Superior Court of California, County of Los Angeles
B. CryoLife Acquisition Corporation (f/k/a Ideas for Medicine) as defendant:
1. David A. Ganz, Dr. William I. Ganz and Cecelia Hecht as co-personal
representatives of the Estate of Jean Ganz, deceased v. Dr. Alan S. Livingstone;
Dr. Jorge De La Pedraja; University of Miami, a private University d/b/a
University of Miami School of Medicine; The Public Health Trust of Dade County
d/b/a Jackson Memorial Hospital; and CryoLife, Inc.
Date Filed: June 13, 2001
Case No. 00-13275 CA 06
Circuit Court of the Eleventh Judicial Circuit In and
For Dade County, FL, General Jurisdiction Division
2. Bernard Michaels, as Administrator of the estate of Irene Michaels v.
Our Lady of Victory Hospital of Lackawanna, Perala S. Rao, M.D., Perala S. Rao,
P.C., Frederick M. Occhino, M.D., Frederick M. Occhino, M.D., P.C., Leo M.
Michalek, M.D., and Ideas for Medicine, Inc.
Date filed: August 15, 2000
Case No. 12000/7109
Supreme Court of New York: Erie County
C. The following is a list of law firms that have filed or are contemplating
filing class actions alleging securities law violations by CryoLife, Inc.
CryoLife has not yet been served in any of these suits.
Berger & Montague, P.C.
Cauley Geller Bowman & Coates, LLP
Charles J. Piven, P.A.
Holzer & Holzer
Mark McNair, P.A.
Leo W. Desmond
Schiffrin & Barroway, LLP
Wolf Popper LLP
Chitwood & Harley
D. In addition, CryoLife is aware of the following suits that may be filed by
the following individuals, but CryoLife has not yet been served:
Hailey Moulton
Timothy C. Talton
Andrew T. Swanson, III and/or Andrew T. Swanson, Jr. (father)
Benjamin Saile
Ramona Pursley
Kevin Ryan Wheeler, a minor, and Kimberly Leahew, individually and parent and
next friend of Kevin Ryan Wheeler
Date Filed: July 2, 2002
Case No. 46834
Circuit Court for Rutherford County, Tennessee
E. On June 17, 2002 CryoLife, Inc. received a warning letter from the Food and
Drug Administration.
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