1
EXHIBIT 10.21
Fresenius USA, Inc. dated as of January 3, 1995
2637 Shadelands Dept.: LEX/dmq
Walnut Creek, CA 94598 Ref.: LAN/8979
Tel.: (213) 627-8200
Attn.: Mr. Heinz Schmidt
Vice President Finance
Ladies and Gentlemen:
We are pleased to advise you that Deutsche Bank AG Los Angeles Branch, New York
Branch and/or Cayman Islands Branch (the "Bank") holds available to Fresenius
USA, Inc., a Massachusetts corporation (the "Borrower"), a line of credit (the
"Facility") in the aggregate principal amount of US$20,000,000.00 (the
"Commitment") from the date hereof until January 2, 1998 (such date, or if
earlier, the date of termination of the Commitment hereunder, the "Final
Maturity Date"). Within the limits of the Commitment the Borrower may borrow,
repay or prepay and reborrow under this letter agreement (the "Agreement").
This Facility shall at all times be secured by a perfected first ranking
security interest in the Borrower's accounts receivable pursuant to the terms
and conditions in the Bank's Security Agreement (as defined below).
Subject to the terms and conditions of this Agreement, this Commitment may be
utilized by the Borrower in the form of loans and/or letters of credit provided
that the aggregate principal amount of loans outstanding at any one time,
credit extensions by way of letters of credit, and unreimbursed drawings under
letters of credit does not exceed US$20,000,000.00.
I. LOANS
1. Domestic dollar loans bearing a per annum interest rate equal
to the Bank's floating Base Rate (as defined in the attached
note); such loans shall be evidenced by a note in the form of
Exhibit A hereto (the "Note").
2. Alternatively, the Borrower may request the Bank to make, and,
subject to the satisfaction of the conditions precedent herein
contained the Bank shall make, one or more Eurodollar loans in
minimum amounts of $1,000,000 and multiples of $100,000 in
excess thereof thereafter with interest periods (each an
"Interest Period") up to one year in duration as requested by
the Borrower in the notice of borrowing (such notice in the
form of Exhibit G attached hereto, a "Notice of Borrowing")
delivered by the Borrower in connection with such loan and
agreed to by the Bank. The precise duration of each Interest
Period requested will be calculated by the Bank according to
its Eurodollar practices; provided that no Interest Period
shall end after the Final Maturity Date. Eurodollar loans
shall bear a per annum interest rate at a margin of 0.60
percent in excess of the rate at which Deutsche Bank AG Cayman
Islands Branch can obtain U.S. Dollar deposits for the
Interest Period requested, in the New York Market during New
York business hours. Interest shall be based on the bank
basis of a year of 360 days and the exact number of days
elapsed. Such loans shall be evidenced by the Note.
2
2
II. LETTERS OF CREDIT
Documentary and standby letters of credit, the terms and charges with respect
to which letters of credit will be mutually agreed upon on a case-by-case
basis. Such letters of credit will be subject to our commissions, fees and
out-of-pocket expenses as negotiated on a case-by-case basis.
In addition to the documents required pursuant to Section V below, the Borrower
shall have, prior to the issuance of a letter of credit, supplied the Bank with
(i) a duly completed application (specimen attached as Exhibit F) and (ii) the
respective text, in form and substance satisfactory to the Bank, of the
proposed standby letter of credit.
Subject to the terms of this Agreement, each letter of credit transaction will
be handled in accordance with the Bank's usual practice.
Effective as of the date hereof, (i) the CAD$3,000,000 letter of credit
(Number: 839-53110), issued by the Bank for the account of the Borrower on
September 26, 1994 (the "Canadian Letter of Credit") shall be deemed issued
and outstanding under the Facility, (ii) the Borrower's rights and obligations
with respect to the Canadian Letter of Credit shall be governed by the Loan
Documents, and (iii) the Borrower's obligations with respect to such letter of
credit shall be secured by the Collateral (as defined in the Security
Agreement). For purposes of any calculation of the amounts outstanding under
the Facility required to be made hereunder on any day (including, without
limitation, any calculation of outstanding obligations for purposes of
determining the amount of usage of the Commitment or for purposes of
determining compliance with financial ratios), the Bank will compute the United
States Dollar equivalent of the Canadian dollar obligations of the Bank with
respect to the Canadian Letter of Credit using a rate of exchange equal to the
rate of exchange which in accordance with normal banking procedures the Bank
could purchase Canadian dollars with United States Dollars on such day.
III. ORIGINATION FEE/COMMITMENT FEE
The Borrower agrees to pay to the Bank the following:
1. A one-time up-front fee in the amount of US$10,000.00, which
shall be due and payable on the date this Agreement is signed
by the Borrower;
2. A commitment fee (the "Commitment Fee") of 0.125% per annum of
the average daily unused portion of the Commitment, commencing
on the date this Agreement is signed by the Borrower. This
Commitment Fee, which shall be based on the actual number of
days elapsed on a 360-day year, shall commence to accrue
beginning on the date hereof and shall be payable quarterly in
arrears on the last business day of each calendar quarter; and
3. With respect to letters of credit, such commissions, fees and
out-of-pocket expenses as are negotiated on a case-by-case
basis at the time each letter of credit is issued.
IV. COVENANTS
The Borrower covenants and agrees from the date hereof until the Commitment has
terminated, each letter of credit issued hereunder has terminated, and any and
all obligations and liabilities hereunder, together with interest and other
costs and expenses, in each case owing to the Bank, have been paid in full
that:
3
3
A. AFFIRMATIVE COVENANTS
The Borrower shall, and, in the case of subparagraphs (a) through (i),
(m) and (p) of this paragraph IV. A., shall cause each subsidiary
(each such subsidiary, a "Restricted Subsidiary") having total assets
(determined in accordance with generally accepted accounting
principles, consistently applied) in excess of 5% of the total
consolidated assets (determined in accordance with generally accepted
accounting principles, consistently applied) of the Borrower and its
consolidated subsidiaries, to:
(a) maintain adequate insurance;
(b) duly pay and discharge all taxes or other claims which might
become a lien upon any of its property except to the extent
that such items are bring in good faith appropriately
contested;
(c) maintain, preserve and keep its properties in good repair,
working order and condition, and make all reasonable repairs,
replacements, additions, betterments and improvements thereto;
(d) conduct its business in substantially the same manner and in
substantially the same fields as such business is carried on
and conducted on the date hereof;
(e) except as otherwise provided in Section IV. B.(c) below,
maintain its corporate existence;
(f) pay all stamp or issuance taxes, if any, payable by reason of
the execution, delivery or issuance of the Loan Documents (as
defined below) under any applicable ordinance or statute now
existing or hereafter enacted, and the Borrower shall at all
times indemnify and hold harmless the Bank against any
liability in respect thereof;
(g) maintain its books and records in accordance with generally
accepted accounting principles, consistently applied, and
permit the Bank to make or cause to be made, at the Bank's
expense, inspections and audits of any books, records and
papers of the Borrower and its subsidiaries and to make
extracts therefrom at all such reasonable times and as often
as the Bank may reasonably require;
(h) use the proceeds of all loans made pursuant to this Agreement
for general corporate purposes;
(i) maintain as part of its corporate name the "Fresenius" name;
(j) maintain at the end of each calendar quarter a ratio of its
Consolidated EBITDA (computed for the previous twelve months)
to Consolidated Interest Expense (computed for the previous
twelve months) of at least 3:1 (all to be determined in
accordance with generally accepted accounting principles
consistently applied). "Consolidated EBITDA" shall mean, for
any period of determination thereof, the consolidated net
income (excluding any extraordinary gains) of the Borrower and
its subsidiaries on a consolidated basis for such period
before interest expenses, provision for federal and state
income taxes, depreciation and amortization, in each case for
such period. "Consolidated Interest Expense" shall mean, for
any period of determination thereof, the total interest
expense (including, without limitation, interest expense
attributable to capitalized leases in accordance with
generally accepted accounting principles, but excluding from
such total
4
4
interest expense, any interest paid to Fresenius AG) of the
Borrower and its subsidiaries for such period determined on a
consolidated basis;
(k) maintain at all times Consolidated Tangible Net Worth in an
amount not less than $15,000,000 plus (i) 100% of the net
proceeds of the issuance of any stock of the Borrower after
the date hereof and (ii) 50% of consolidated net income of
the Borrower and its subsidiaries, if positive, for each
fiscal quarter after March 31, 1994. "Consolidated Tangible
Net Worth" shall be equal to total stockholders' equity minus
intangibles (including, without limitation, patents,
copyrights, trademarks, and goodwill), all determined in
accordance with generally accepted accounting principles
consistently applied;
(l) maintain at all times a ratio of (i) total Debt (as defined
below) less the sum of (A) up to $10,000,000 in Debt of the
Borrower to Fresenius AG maturing within twelve (12) months of
the date of determination and (B) the aggregate principal
amount of any loans made by Fresenius AG to the Borrower and
not included in the preceding clause (A), to the extent such
loans shall have been subordinated to the Borrower's
obligations hereunder and under the other Loan Documents in a
manner satisfactory to the Bank to (ii) Consolidated Tangible
Net Worth of (x) from the date hereof through but not
including December 31, 1995, not more than 3.5 to 1 and (y) on
and after December 31, 1995, 3.0 to 1;
(m) comply with all applicable laws, rules, regulations and orders
of any governmental authority, non-compliance with which could
reasonably be expected to materially adversely affect the
business or credit of the Borrower and its consolidated
subsidiaries, taken as a whole, or the Borrower's ability to
perform its obligations under the Loan Documents;
(n) provide the Bank with financial statements for the first three
fiscal quarters of each fiscal year (within 60 days from the
closing of the respective quarterly period) and on an annual
basis. Annual statements shall be supplied within 120 days
from the closing of the respective annual fiscal period and
shall be audited by a nationally recognized, independent
accountant;
(o) provide the Bank within 45 days after the last day of each
calendar quarter with (i) lists of Eligible Receivables (as
defined below); (ii) an aging report for such Eligible
Receivables; and (iii) a certificate of the chief financial
officer of the Borrower in the form of Exhibit E attached
hereto and duly signed confirming (x) that such officer has
reviewed the terms of the Loan Documents and has concluded
that no Event of Default or event that would constitute such
an Event of Default but for the requirement that notice be
given or time elapse or both has occurred during such period
or, if any such default has occurred, specifying the nature
and extent thereof and, if continuing, the action the Borrower
proposes to take in respect thereof and (y) the Borrower's
compliance with the financial covenants set forth in this
Agreement as of the end of such calendar quarter; and
(p) provide the Bank with any other information the Bank may
reasonably request from time to time.
5
5
B. NEGATIVE COVENANTS
The Borrower shall not, and shall not permit any subsidiary to:
(a) incur, or permit to exist, any Debt other than (i) Debt
incurred from the Bank under the Loan Documents and any other
Debt of the Borrower or any subsidiary to the Bank whether now
existing or hereafter incurred; (ii) Debt existing on the date
hereof and described in Part A of the Disclosure Schedule
attached hereto; (iii) any extension, renewal, or refinancing
of the Debt referred to in clause (ii), provided that (x) if
such Debt is unsecured, such Debt as extended, renewed or
refinanced remains unsecured and (y) the terms of such Debt as
extended, renewed or refinanced are no more restrictive than
the terms of such Debt as of the date hereof; (iv) Debt of the
Borrower to Fresenius AG to the extent that such Debt either
(x) matures within twelve (12) months of the date of
incurrence or issuance thereof and does not exceed $10,000,000
in aggregate principal amount or (y) shall have been
subordinated to the Borrower's obligations hereunder in a
manner satisfactory to the Bank and (v) Debt in addition to
the Debt permitted under the preceding clauses (i) through
(iv) of this paragraph (a) incurred after the date hereof,
provided that the aggregate principal amount of such
additional Debt outstanding at any one time shall not exceed
$35,000,000. "Debt" shall mean, with respect to any person,
(i) all indebtedness of such person for borrowed money or for
the deferred purchase price of property or services (other
than trade payables incurred in the ordinary course of
business of such Person and not overdue and other than trade
payables payable by the Borrower to Fresenius AG) incurred in
the ordinary course of business of such Person), (ii) all
indebtedness of such Person evidenced by a note, bond,
debenture or similar instrument, (iii) the principal component
of all capitalized leases (as defined in accordance with
generally accepted accounting principles) of such Person, (iv)
the face amount of all letters of credit issued for the
account of such person and all unreimbursed amounts drawn
thereunder, (v) all indebtedness of any other person secured
by any lien on any property owned by such Person, whether or
not such indebtedness has been assumed, and (vi) all
Contingent Obligations (as defined below) of such Person;
(b) incur, or permit to exist, any Contingent Obligation other
than (i) any Contingent Obligation under the Loan Documents
and any other Contingent Obligation of the Borrower or any
subsidiary to the Bank whether now existing or hereafter
incurred; and (ii) Contingent Obligations existing on the date
hereof and described in Part B of the Disclosure Schedule
attached hereto. "Contingent Obligation" shall mean, as to
any person any obligation of such person guaranteeing or
intended to guarantee or having the effect of guaranteeing any
Debt, leases, dividends or other obligations ("primary
obligations") of any other person (the "primary obligor") in
any manner, whether directly or indirectly; provided, however,
that the term Contingent Obligation shall not include (i)
endorsements of instruments for deposit or collection in the
ordinary course of business or (ii) any guarantee by the
Borrower of the primary obligations of any wholly owned
subsidiary of the Borrower;
(c) enter into any merger or consolidation or sell or lease or
otherwise dispose of all or any substantial part of its
assets, other than sales in the ordinary course of business;
except that any subsidiary may merge into or consolidate with
any other subsidiary which is wholly owned by the Borrower,
and any subsidiary which is wholly owned by the Borrower may
merge with or consolidate into the Borrower provided that the
Borrower is the surviving corporation;
6
6
(d) lend or advance money, credit or property to or invest in (by
capital contribution, loan, purchase or otherwise) any firm,
corporation, or other person except investments in furtherance
of the Borrower's business in persons engaged in substantially
the same business as the Borrower and except investments in
Permitted Investments having maturities not in excess of one
year. "Permitted Investments" shall mean shall mean (i)
obligations of or directly and fully guaranteed by the United
States of America or any agency or instrumentality thereof
when such obligations are backed by the full faith and credit
of the United States; (ii) certificates of deposit, time
deposits or bankers acceptances issued by any domestic or
foreign commercial bank whose long-term credit rating is at
least A- or the equivalent by Standard & Poor's Rating Group
and A3 or the equivalent by Moody's Investors Service, Inc.;
(iii) direct obligations of, the principal of and interest on
which are unconditionally guaranteed by, and any other
obligations the interest on which is excluded from gross
income for federal income tax purposes issued by, any state of
the United States, the District of Columbia or the
Commonwealth of Puerto Rico, or any political subdivision,
agency, authority or other instrumentality of any of the
foregoing, which are rated at least AA or the equivalent by
Standard & Poor's Rating Group and Aa or the equivalent by
Moody's Investors Service, Inc.; (iv) commercial paper issued
by any corporation rated at least A-1 or the equivalent by
Standard & Poor's Rating Group and at least P-1 or the
equivalent by Moody's Investors Service, Inc.; (v) instruments
issued by investment companies having a portfolio 95% or more
consisting of the type described above; (vi) repurchase
agreements with banking institutions and securities dealers
recognized as primary dealers by the Federal Reserve Bank of
New York having a combined capital and surplus of not less
than $250 million with respect to any of the obligations
described in clauses (i) through (iii) above in which a
fiduciary shall have a perfected security interest and for
which a fiduciary shall hold as collateral the securities
purchased or a third party shall hold as collateral the
securities purchased for the benefit of the fiduciary; and
(vii) other investment grade instruments to be mutually agreed
upon by the Bank and the Borrower;
(e) create, assume, or permit to exist, any mortgage, pledge, lien
or encumbrance of or upon, or security interest in
(collectively, a "Lien"), any of its property or assets now
owned or hereafter acquired except (i) Liens in favor of the
Bank under the Loan Documents and any other Liens of the
Borrower or any subsidiary in favor of the Bank whether now
existing or hereafter created; (ii) Liens for taxes or other
governmental charges which are not delinquent or which are
being contested in good faith and for which a reserve shall
have been established in accordance with generally accepted
accounting principles; (iii) statutory Liens of landlords and
Liens of carriers, warehousemen, mechanics, materialmen and
other Liens imposed by Law (other than any Lien imposed under
the Employee Retirement Income Security Act or pursuant to any
environmental law) created in the ordinary course of business
for amounts not yet due or which are being contested in good
faith by appropriate proceedings diligently conducted and with
respect to which adequate bonds have been posted; (iv)
easements, rights-of-way, zoning and similar restrictions and
other similar charges or encumbrances not interfering with the
ordinary conduct of business and which do not detract
materially from the value of the property to which they attach
or impair materially the use thereof; (v) Liens created to
secure purchase money indebtedness or capital lease
indebtedness, in each case to the extent such Debt is
permitted under paragraph B(a) above, provided that (x) such
Liens are only in respect of the property or assets subject
to, and secure only, such Debt and (y) the aggregate amount of
such Debt secured by such Liens shall not exceed $12,500,000
in the aggregate at any time outstanding and (vi) customary
Liens arising from or created in connection with the issuance
of letters of credit for
7
7
the account of the Borrower; provided that in each case such
Liens apply only to the raw materials, inventory, machinery or
equipment in connection with the purchase of which such letter
of credit was issued or to the balance of any account of the
account party in respect of such letter of credit with the
bank issuing such letter of credit. Notwithstanding the
foregoing (i) there shall be no Liens on any of the Collateral
(as defined in the Security Agreement) other than Liens in
favor of the Bank and (ii) the restriction on Liens contained
in this paragraph (e) shall not be deemed to extend to any
Lien arising out of or deemed to arise out of any lease in
respect of which the Bank, any affiliate thereof or any
trustee acting on behalf of the Bank or such affiliate is the
lessor and the Borrower is the lessee;
(f) declare or pay any dividends on its capital stock (other than
dividends payable solely in shares of its own common stock),
or purchase, redeem, retire or otherwise acquire any of its
capital stock at any time outstanding, except that (i) any
subsidiary wholly-owned by the Borrower may declare and pay
dividends to the Borrower, and (ii) the Borrower may declare
or pay dividends on its capital stock so long as (x) no Event
of Default or event that would constitute such an Event of
Default but for the requirement that notice be given or time
elapse or both has occurred and is continuing at the time of
such declaration or payment and (y) the aggregate amount of
such dividends paid or declared in any fiscal year does not
exceed 50% of the consolidated net income (excluding any
extraordinary gains) of the Borrower and its subsidiaries on a
consolidated basis for the fiscal year immediately preceding
such fiscal year;
(g) create, assume, enter into, or permit to exist any operating
lease (as defined in accordance with generally accepted
accounting principles, consistently applied) if after giving
effect to such operating lease the aggregate amount of
payments required to be made by the Borrower and its
Restricted Subsidiaries under all operating leases (other than
any operating lease in respect of which the Bank, any
affiliate thereof or any trustee acting on behalf of the Bank
or such affiliate is the lessor) in any fiscal year will
exceed the Maximum Lease Amount. The "Maximum Lease Amount"
shall mean, for any fiscal year, an amount equal to (i) for
the fiscal years beginning January 1, 1994 and January 1,
1995, $6,000,000 and (ii) for each fiscal year thereafter, an
amount equal to the Maximum Lease Amount for the immediately
preceding fiscal year plus an amount equal to 5% of such
amount; and
(h) in the case of the Borrower only, move its chief executive
office, or change its name from, nor carry on business under
any name other than, "Fresenius USA, Inc.", until (i) it has
given to the Bank not less than 60 days' prior written notice
of its intention to do so, clearly describing such new
location or specifying such new name, as the case may be, and
providing such other information in connection therewith as
the Bank may reasonably request, and (ii) with respect to such
new location or such new name, as the case may be, it shall
have taken all action, satisfactory to the Bank to maintain
the security interest of the Bank in the Collateral intended
to be granted by the Security Agreement at all times fully
perfected and in full force and effect.
V. CONDITIONS PRECEDENT
A. The obligation of the Bank to permit the first utilization of the
Commitment (whether by way of advance or the issuance of a letter of
credit), shall be subject to the condition precedent that (i) the Bank
shall have received the following documents, each dated the date
hereof and each in form and substance
8
8
satisfactory to the Bank, and (ii) each of the other conditions
precedent referred to below shall have been met to the Bank's
satisfaction:
(a) a copy of this Agreement duly executed by the Borrower;
(b) the Note, duly executed by the Borrower;
(c) the Bank's standard Continuing Letter of Credit Agreement
(Security Agreement) in the form of Exhibit B, duly executed
by the Borrower (the "Letter of Credit Agreement");
(d) the Bank's Continuing General Security Agreement and Financing
Statement in the form of Exhibit C attached hereto and duly
executed by the Borrower (the "Security Agreement"), as well
as the duly signed UCC-1 financing statements enclosed
herewith (the "UCCs"), which UCCs shall have been filed in the
following filing offices: Secretary of State of California;
(e) copies of search reports from the Uniform Commercial Code
filing offices or other registers in each jurisdiction in
which the Borrower or predecessors in title of the Borrower
have an office or in which assets of the Borrower or
predecessors in title of the Borrower are located, as
certified by an authorized officer of the Borrower, showing no
filings or recordings with respect to any of the Collateral
(as defined in the Security Agreement) in favor of any Person
other than the Bank;
(f) copies of all documents evidencing all necessary corporate
action and governmental approvals, if any, with respect to
this Agreement, the Note, the Letter of Credit Agreement, the
Security Agreement, and the UCCs (each a "Loan Document" and
collectively the "Loan Documents");
(g) an Officer's Certificate of the Borrower to which is attached
(i) true and correct copies of the Borrower's charter, and
bylaws, (ii) a copy of a certificate as of a recent date of
the appropriate Massachusetts governmental officials attesting
to the Borrower's existence and good standing as a corporation
under Massachusetts law, and (iii) a copy of a certificate as
of a recent date of the appropriate California governmental
officials attesting to the Borrower's qualification to do
business as a foreign corporation in the State of California;
(h) a legal opinion from counsel acceptable to the Bank in the
form of Exhibit D attached hereto, duly executed by such
counsel; and
(i) receipt by the Bank of the up-front fee referred to in
paragraph III above.
B. The obligation of the Bank to make each advance hereunder or to issue
any letter of credit (including the first such advance or letter of
credit) shall be subject to the following conditions precedent:
(a) With respect to any loan, the Bank shall have received a duly
executed Notice of Borrowing; with respect to any letter of
credit, the Bank shall have received the documents referred to
in Section II above;
(b) On the date of the making of such advance or the issuance of
such letter of credit, the following statements shall be true,
and each of the request for such advance or the request for
issuance of any letter of credit and the acceptance by the
Borrower of the proceeds of such advance or the
9
9
issuance of such letter of credit shall constitute a
representation and warranty by the Borrower that on the date
of such advance or issuance (i) the representations and
warranties contained in each of the Loan Documents are correct
on and as of the date of such advance or issuance, before and
after giving effect to such advance or issuance and to the
application of the proceeds therefrom, as though made on and
as of such date, and (ii) no event has occurred and is
continuing, or would result from such advance or issuance, or
from the application of the proceeds therefrom, which
constitutes an Event of Default (as defined below) or would
constitute such an Event of Default but for the requirement
that notice be given or time elapse or both; and
(c) There has been no material adverse change in the consolidated
financial condition, operations, business or assets of the
Borrower since June 30, 1994;
VI. EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur and be
continuing:
(a) the Borrower shall fail to pay any principal of the Note when
the same becomes due and payable or interest on or any other
amount payable under the Loan Documents within five days of
the date the same becomes due and payable;
(b) any representation or warranty made by the Borrower (or any of
its officers) under or in connection with the Loan Documents
shall prove to have been incorrect in any material respect
when made or deemed made;
(c) the Borrower shall fail to perform or observe any term,
covenant or agreement contained in any Loan Document on its
part to be performed or observed;
(d) the Borrower or any of its Restricted Subsidiaries shall fail
to pay any principal of or premium or interest with respect to
any Debt in an amount exceeding $3,000,000 United States
Dollars (but excluding Debt evidenced by the Note) of the
Borrower 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 any such Debt
shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required
prepayment), redeemed, 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;
(e) the Borrower or any of its Restricted 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 the
Borrower or any of its Restricted 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,
10
10
insolvency or reorganization or relief of debtors, or seeking
the entry of an order for relief or the appointment of a
receiver, trustee, custodian 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), 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 for any substantial part of its property)
shall occur; or the Borrower or any Restricted Subsidiary
shall take any corporate action to authorize any of the
actions set forth above in this subsection (e);
(f) Fresenius AG shall no longer own, directly or indirectly, at
least 51% of the Borrower's voting capital stock;
(g) any material judgment or order for the payment of money shall
be rendered against the Borrower or any of its subsidiaries
and shall remain unpaid or unsatisfied for a period of 30
days;
(h) any default or event of default shall occur under any other
Loan Document and, in the case of a default, shall continue
past any applicable cure period specified therein;
(i) any of the Loan Documents shall for any reason cease to be in
full force and effect, or shall cease to give the Bank the
Liens, rights, powers and privileges purported to be created
thereby;
THEN AND IN ANY SUCH EVENT the Bank (i) may, by notice to the
Borrower, declare the Commitment and its obligation to make advances hereunder
to be terminated, whereupon the same shall forthwith terminate, and (ii) may,
by notice to the Borrower, declare the Note, all interest thereon and all other
amounts payable under the Loan Documents to be forthwith due and payable,
whereupon the Note, 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 the Borrower under the Federal Bankruptcy Code, (A)
the Commitment and the obligation of the Bank to make advances hereunder shall
automatically be terminated and (B) the advances, the Note, 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.
VII. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower hereby represents and warrants to the Bank that (a) the Borrower
and each of its Restricted Subsidiaries is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization; (b) each
of the Loan Documents has been duly authorized, executed and delivered and each
constitutes the valid and legally binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms; (c) the
execution and delivery and performance of the Loan Documents shall not violate
the charter, bylaws or any instrument or agreement to which the Borrower is a
party or any provision of any law, rule or regulation or any judgment
applicable to it; (d) neither the Borrower nor any subsidiary is a party to or
bound by, nor are any of the properties or assets owned by it or used in the
conduct of its business affected by, any agreement, ordinance, resolution,
decree, bond note, indenture, order or judgment, or subject to any
11
11
charter or other corporate restriction, which materially and adversely affects
its business, assets or condition, financial or otherwise; (e) there are no
material outstanding judgments, and there are no actions or proceedings pending
or threatened before any court or governmental authority, against or affecting
the Borrower or any of its subsidiaries which actions or proceedings,
individually or in the aggregate, if adversely determined, could have a
material adverse effect on the business, assets or condition, financial or
otherwise, of the Borrower; (f) neither the Borrower nor any of its
subsidiaries is in default under, or in violation of any term of, any material
agreement binding on it; (g) the balance sheets, profit and loss statements and
other financial information of the Borrower and its subsidiaries for the period
ending June 30, 1994 and heretofore furnished to the Bank present fairly the
financial condition of the Borrower and each of its subsidiaries as at the
dates thereof; (h) the financial condition, operations, business and assets of
the Borrower and its subsidiaries has not materially adversely changed since
the June 30, 1994 balance sheet and financial statements of the Borrower and
its subsidiaries heretofore furnished to the Bank; (i) no part of the proceeds
of any loan which is evidenced by the Note shall be used to purchase or carry
any margin stock as defined in Regulation U of the Board of Governors of the
Federal Reserve System; (j) the Security Agreement is effective to create, as
security for the Obligations (as defined therein), a legal, valid and
enforceable Lien on or security interest in all of the Collateral in favor of
the Bank; (k) the Borrower is, and as to Collateral acquired by it from time to
time after the date hereof, the Borrower will be, the owner of all Collateral
free from all Liens; (l) other than financing statements filed in connection
with the Loan Documents, there is no financing statement (or similar statement
or instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral; (m) the chief
executive office of the Borrower is located at 2637 Shadelands, Walnut Creek,
CA 94598; and (n) all necessary and appropriate recordings and filings have
been effected with the Secretary of State of the State of California and all
other necessary and appropriate public offices so that on the date hereof the
Lien created by the Security Agreement constitutes a perfected Lien on and
security interest in the Collateral prior and superior to all other Liens all
in accordance with the Uniform Commercial Code as enacted in any and all
relevant jurisdictions or any other relevant law.
VIII. REPAYMENT AND PREPAYMENT
A. MANDATORY
On the 45th day following the end of each fiscal quarter of the Borrower, the
Borrower shall prepay the outstanding loans by an amount equal to the excess,
if any, of (i) the aggregate principal amount of loans outstanding at such time
plus the aggregate credit extensions by way of letters of credit outstanding at
such time plus the unreimbursed drawings under letters of credit at such time
over (ii) an amount equal to 75% of the aggregate amount of the Borrower's
Eligible Receivables (determined as of the last day of such fiscal quarter).
"Eligible Receivables" shall mean, at any time, all trade receivables of the
Borrower at such time other than those that are due and owing more than 60 days
from the date of invoice (which date, for purposes of the foregoing, must occur
promptly after the date goods are shipped or service rendered) and other than
those receivable from Medicare or any other governmental, public or
quasi-public account debtor ("Government Receivables") (which Government
Receivables are currently designated as M2 in the Borrower's Receivables
report), to the extent such Government Receivables exceed 20% of Eligible
Receivables.
Notwithstanding anything in this Agreement or any Loan Document to the
contrary, any and all obligations and liabilities incurred under this Agreement
or any Loan Document outstanding on the Final Maturity Date shall be due and
payable on such date.
B. VOLUNTARY
12
12
The Borrower may on two days notice to the Bank prepay all or a portion (in
minimum principal amounts of $1,000,000 or more) of the outstanding principal
of any domestic dollar loan made hereunder, together with interest due through
the day of such prepayment.
The Borrower shall repay Eurodollar loans on the last day of the Interest
Period therefor, in accordance with the terms of the Note.
IX. INCREASED COSTS; BREAKAGE; CAPITAL ADEQUACY; FEES AND EXPENSES
In the event that a determination is made by the Bank in its sole discretion
that reserves must be maintained with any Federal Reserve Bank of the United
States, with any other governmental authority whatsoever or otherwise pursuant
to any Regulation of the Board of Governors of the Federal Reserve System or
otherwise, in connection with the Eurodollar loans evidenced hereby or the
funding thereof, the undersigned agrees to pay and hold the Bank harmless from
and against the cost of acquiring and/or maintaining any such reserves.
If any principal payment is made under the Note for any reason whatsoever on a
date other than the maturity date, the undersigned (i) shall pay interest
accrued thereon and (ii) shall, in the case of a Eurodollar loan, on demand
indemnify the Bank against all losses, including loss of profit and expenses,
suffered by it in liquidating or otherwise employing deposits acquired to fund
such loans until the stated maturity. A certificate of the Bank as to the
amount required to be paid by the undersigned under this paragraph shall
accompany such demand and shall be, except in the case of manifest error or in
the absence of good faith, final and conclusive.
In the event that a determination is made by the Bank in its sole discretion
that the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change therein or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by the Bank with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on the Bank's capital as a consequence of its obligations to the undersigned or
of the loans to the undersigned evidenced hereby to a level below that which
the Bank could have achieved but for such adoption, change, or compliance, the
undersigned promises to pay on demand to the Bank such additional amount or
amounts as shall compensate the Bank for such reduction. A certificate of the
Bank as to the amount required to be paid by the undersigned under this
paragraph shall accompany such demand and shall be, except in the case of
manifest error or in the absence of good faith, final and conclusive.
Except as provided in Section IV. A. (g) hereof, the Borrower shall pay the
Bank's costs and expenses (including reasonable attorney's fees) incurred in
the administration and enforcement of the Loan Documents and the loans
evidenced thereby. The Borrower agrees that the Bank may debit any of the
Borrower's accounts with the Bank (with prior notice to the Borrower) with
respect to amounts due under the Loan Documents (including, without limitation,
the Bank's commissions and fees) and all charges and expenses paid or incurred
by the Bank in connection with the Commitment.
X. GOVERNING LAW; SUBMISSION TO JURISDICTION
This letter agreement shall be governed by and construed in accordance with the
laws of the State of New York.
13
13
To the extent permitted by applicable law, any legal action or proceeding with
respect to this Agreement or any other Loan Document and any action for
enforcement of any judgment in respect thereof may be brought in the courts of
the State of New York or of the United States of America for the Southern
District of New York, and, by execution and delivery of this agreement, the
Borrower hereby accepts for itself and in respect of its property, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof to the extent permitted by applicable law,
the Borrower hereby irrevocably waives any objection which it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or any other
Loan Document brought in the courts referred to above and hereby further
irrevocably waives and agrees, to the extent permitted by applicable law, not
to plead or claim in any such court that any such action or proceeding brought
in any such court has been brought in an inconvenient forum. Nothing herein
shall affect the right of any party hereto to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed in any
other jurisdiction.
Each of the Borrower and the Bank hereby irrevocably waives all right of trial
by jury in any action, proceeding or counterclaim arising out of or in
connection with this Agreement or any other Loan Document or any matter arising
hereunder or thereunder.
Please signify your agreement with the foregoing terms and conditions by
signing and returning to the Bank the enclosed copy of this Agreement together
with the documentation referred to above.
Sincerely yours,
Deutsche Bank AG
Los Angeles Branch/
New York Branch/
Cayman Islands Branch
Michael U. Hotze Christine N. Lane
Managing Director Assistant Vice President
14
14
AGREED TO AND ACCEPTED BY:
FRESENIUS USA, INC.
By: By:
------------------------ -----------------------
Title: Title:
------------------------ -----------------------
Date: March , 1995
----
15
15
List of Attached Exhibits and Schedules
Disclosure Schedule
Part A: Existing Debt
Part B: Existing Contingent Liabilities
Exhibit A: Form of Note
Exhibit B: Form of Continuing Letter of Credit Agreement
Exhibit C: Form of Continuing General Security Agreement and Financing
Statement
Exhibit D: Form of Legal Opinion
Exhibit E: Form of Compliance Certificate
Exhibit F: Form of Letter of Credit Application
Exhibit G: Form of Notice of Borrowing