EXHIBIT 10.62
LOAN AND SECURITY AGREEMENT
among
MHOA TEXAS I, L.L.C.
Borrower
and
DVI BUSINESS CREDIT CORPORATION
Lender
Dated as of June 16, 1997
TABLE OF CONTENTS
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Page
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Section 1
DEFINITIONS ........................................................... 1
Section 1.1. Specific Definitions .................................... 1
Section 1.2. Generally Accepted Accounting Principles and Uniform
Commercial Code ...................................................... 6
Section 1.3. Construction ............................................ 6
Section 2
LOAN .................................................................. 6
Section 2.1. The Loan ................................................ 6
Section 2.2. Note .................................................... 7
Section 2.3. Borrowing Base .......................................... 7
Section 2.4. Notice of Borrowing ..................................... 7
Section 2.5. Use of Proceeds ......................................... 7
Section 2.6. Repayment of Loan Via Lock Box/Servicer Account ......... 7
Section 2.7. Term of Agreement ....................................... 8
Section 2.8. Lender's Fees ........................................... 9
Section 2.9. Interest on the Loans ................................... 9
Section 2.10. Late Payments .......................................... 9
Section 2.11. Conditions to the Closing .............................. 9
Section 3
SECURITY INTEREST ..................................................... 11
Section 3.1. Grant of Security Interest .............................. 11
Section 4
SPECIFIC REPRESENTATIONS .............................................. 11
Section 4.1. Name of Borrower ........................................ 11
Section 4.2. Mergers and Consolidations .............................. 11
Section 4.3. Purchase of Assets ...................................... 12
Section 4.4. Change of Name or Identity .............................. 12
Section 5
PROVISIONS CONCERNING ACCOUNTS ........................................ 12
Section 5.1. Office and Records of Borrower .......................... 12
Section 5.2. Representations ......................................... 12
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Section 5.3. Returns and Repossessions ............................... 12
Section 5.4. Borrowing Base Reports .................................. 12
Section 5.5. Compliance Certificate .................................. 13
Section 5.6. Lender's Rights ......................................... 13
Section 5.7. Disclaimer of Liability ................................. 13
Section 5.8. Post Default Rights ..................................... 13
Section 5.9. Accounts Owed by Federal Government ..................... 13
Section 5.10. Business Activity Reports .............................. 14
Section 6
PROVISIONS CONCERNING CONTRACTS ....................................... 14
Section 6.1. Contracts ............................................... 14
Section 7
PROVISIONS CONCERNING COLLATERAL ...................................... 14
Section 7.1. Further Assurances ...................................... 14
Section 7.2. Lender's Duty of Care ................................... 15
Section 7.3. Reinstatement of Liens .................................. 15
Section 7.4. Lender Expenses ......................................... 15
Section 7.5. Inspection of Records ................................... 16
Section 7.6. Waivers ................................................. 16
Section 8
REPRESENTATIONS AND WARRANTIES ........................................ 16
Section 8.1. Company Status .......................................... 16
Section 8.2. Authorization ........................................... 16
Section 8.3. No Breach ............................................... 17
Section 8.4. Taxes ................................................... 17
Section 8.5. Deferred Compensation Plans ............................. 17
Section 8.6. Litigation and Proceedings .............................. 17
Section 8.7. Business ................................................ 17
Section 8.8. Laws and Agreements ..................................... 17
Section 8.9. Ownership of Accounts ................................... 17
Section 8.10. Security Interest ...................................... 18
Section 8.11. Intentionally Deleted .................................. 18
Section 8.12. Origination ............................................ 18
Section 8.13. Legality ............................................... 18
Section 8.14. Consents ............................................... 18
Section 8.15. Financial Condition .................................... 18
Section 8.16. Health Care Laws ....................................... 18
Section 8.17. Cumulative Representations ............................. 19
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Section 8.18. Full Disclosure ........................................ 19
Section 9
COVENANTS ............................................................. 19
Section 9.1. Encumbrance of Collateral ............................... 19
Section 9.2. Business ................................................ 19
Section 9.3. Condition and Repair .................................... 19
Section 9.4. Taxes ................................................... 19
Section 9.5. Accounting System ....................................... 19
Section 9.6. Monthly Financial Statements ............................ 20
Section 9.7. Annual Financial Statements ............................. 20
Section 9.8. Further Information ..................................... 20
Section 9.9. ERISA Covenants ......................................... 20
Section 9.10. Restrictions on Merger, Consolidation, Sale of Assets,
Issuance of Stock, etc ............................................... 20
Section 9.11. Health Care Covenants .................................. 21
Section 9.12. Distributions .......................................... 21
Section 9.13. Subordinate Obligations ................................ 21
Section 9.14. Amendments ............................................. 21
Section 9.15. Cash Flow Ratio ........................................ 22
Section 9.16. Termination of Covenants ............................... 22
Section 10
EVENTS OF DEFAULT ..................................................... 22
Section 11
REMEDIES .............................................................. 24
Section 11.1. Specific Remedies ...................................... 24
Section 11.2. Power of Attorney ...................................... 25
Section 11.3. Expenses Secured ....................................... 25
Section 11.4. Equitable Relief ....................................... 25
Section 11.5. Remedies Are Cumulative ................................ 26
Section 12
INDEMNITY ............................................................. 26
Section 12.1. General Indemnity ...................................... 26
Section 13
MISCELLANEOUS ......................................................... 27
Section 13.1. Delay and Waiver ....................................... 27
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Section 13.2. Complete Agreement ..................................... 27
Section 13.3. Severability; Headings ................................. 27
Section 13.4. Binding Effect ......................................... 27
Section 13.5. Notices ................................................ 27
Section 13.6. Governing Law .......................................... 28
Section 13.7. Waiver of Trial by Jury ................................ 28
Section 13.8. Submission to Jurisdiction ............................. 28
SCHEDULES
1.1 Permitted Liens
4.2 Mergers and Consolidations
4.3 Purchase of Assets
6.1 Contracts
8.6 Litigation and Proceedings
9.12 Permitted Distributions
EXHIBIT
1.1 Net Collectible Percentage
2.2 Promissory Note
5.5 Borrowing Base Report Compliance Certification
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is dated and
effective as of June 16, 1997 (the "Effective Date") by and between DVI Business
Credit Corporation, a Delaware corporation ("Lender"), and MHOA Texas I, L.L.C.,
a Texas limited liability company ("Borrower").
In consideration of the mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and affirmed, the parties agree as
follows:
Section 1
DEFINITIONS
Section 1.1. Specific Definitions. The following definitions apply:
"Account Debtors" mean all customers, the insurance companies or other
payors responsible for their customers' obligations and other persons who are
obligated or indebted in any manner, whether directly or indirectly, primarily
or secondarily, contingently or otherwise, with respect to Accounts.
"Accounts" mean all accounts, accounts receivable, monies and debt
obligations in any form owing to or owned by Borrower arising out of the sale or
lease of goods or the rendition of services by Borrower, Seller or the Metroplex
Providers whether or not earned by performance; all credit insurance,
guaranties, letters of credit, advises of credit and other security for any of
the above; all merchandise returned to or reclaimed by Borrower, Seller or the
Metroplex Providers and Borrower's Books relating to any of the foregoing.
"Advance" means an advance of loan proceeds constituting all or a part
of the Loan.
"Affiliate" means with respect to any Person any other Person which
directly or indirectly Controls, is Controlled by or is under common Control
with that Person.
"Borrower's Books" means all of Borrower's books and records including
but not limited to: minute books; ledgers; records indicating, summarizing or
evidencing Borrower's assets, liabilities and the Accounts; all information
relating to Borrower's business operations or financial condition; and all
computer programs, disk or tape files, printouts, runs and other computer-
prepared information and the equipment containing such information; provided,
however, that confidential patient records are not included therein, except to
the extent otherwise permitted by law.
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"Borrowing Base" means, on the date of determination thereof, an
amount equal to eighty percent (80%) of the aggregate, for all Eligible
Accounts, of the Net Collectible Value for each type of Eligible Account.
"business day" means any day which is not a Saturday or Sunday, a
legal holiday or a banking holiday in the State of California.
"Cash Flow Ratio" means a fraction (a) the numerator of which is equal
to (i) the aggregate collections received during the two immediately preceding
calendar months in respect of Eligible Accounts divided by (ii) 2.0 and (b) the
denominator of which is an amount equal to the average daily aggregate Net
Collectible Value of Eligible Accounts during such two immediately preceding
calendar months.
"Closing Date" means the date of the first Advance of the Loan.
"Collateral" has the meaning specified in Section 3.1 hereof.
"Commitment Amount" means Five Million Dollars ($5,000,000).
"Distribution" means, with respect to any shares of capital stock or
any warrant or right to acquire shares of capital stock or any other equity
security, (i) the retirement, redemption, purchase or other acquisition,
directly or indirectly, for value by the issuer of any such security, except to
the extent that the consideration therefor consists of shares of stock, (ii) the
declaration or (without duplication) payment of any dividend in cash, directly
or indirectly, on or with respect to any such security, (iii) any investment in
the holder of five percent (5%) or more of any such security if a purpose of
such investment is to avoid characterization of the transaction as a
Distribution, and (iv) any other cash payment constituting a distribution under
applicable laws with respect to such security.
"DVIFS" means DVI Financial Services Inc., a Delaware corporation
which is an Affiliate of Lender.
"Eligible Accounts" means accounts receivable from commercial
insurance, Medicare, Medicaid, managed care providers, industrial authorized
("Retail Accounts"), which have been due and payable for one hundred fifty (150)
or fewer days from the date of service.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all references to sections thereof include such sections and any
predecessor provisions thereto, including any rules or regulations issued in
connection therewith.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) that together with Borrower would be deemed a "contributing
sponsor" to a single employee plan within the meaning of Section 4001 of ERISA.
"Event of Default" has the meaning specified in Section 10 hereof.
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"GAAP" means generally accepted accounting principles set forth in the
opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants or in statements of the Financial Accounting
Standards Board, consistently applied.
"Governmental Authority" means any governmental or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality thereof, or any court, tribunal, grand jury or
arbitrator, in any case whether foreign or domestic.
"Guaranty" means the Unconditional Continuing Guaranty executed by
Guarantor unconditionally guaranteeing Borrower's Obligations under this
Agreement.
"Guarantor" means Physician Health Corporation, a Delaware
corporation.
"Health Care Laws" mean all federal, state and local laws relating to
health care providers and health care services, including, Section 1877(a) of
the Social Security Act as amended by the Omnibus Budget Reconciliation Act of
1993, 42 USC (S) 1395nn.
"Indebtedness" of a Person means (i) all items (except items of
capital stock, capital or paid-in surplus or of retained earnings) which, in
accordance with GAAP, would be included in determining total liabilities as
shown on the liability side of the balance sheet of such Person as at the date
as of which Indebtedness is to be determined, including any lease which, in
accordance with GAAP, would constitute indebtedness; (ii) all indebtedness
secured by any mortgage, pledge, security, lien or conditional sale or other
title retention agreement to which any property or asset owned or held by such
Person is subject, whether or not the indebtedness secured thereby has been
assumed; and (iii) all indebtedness of others which such Person has directly or
indirectly guaranteed, endorsed (otherwise than for the collection or deposit in
the ordinary course of business), discounted or sold with recourse or agreed
(contingently or otherwise) to purchase or repurchase or otherwise acquire, or
in respect of which such Person has agreed to supply or advance funds (whether
by way of loan, stock or equity purchase, capital contribution or otherwise) or
otherwise to become directly or indirectly liable.
"Lender Expenses" means (i) all costs or expenses (including taxes and
insurance premiums) required to be paid by Borrower under this Agreement or
under any of the other Loan Documents that are paid or advanced by Lender; (ii)
filing, recording, publication and reasonable search fees paid or incurred by
Lender in connection with Lender's transactions with Borrower; (iii) costs and
expenses reasonably incurred by Lender to correct any Event of Default or
enforce any provision of the Loan Documents or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, and preparing for
sale or advertising to sell the Collateral, whether or not a sale is
consummated, after the occurrence of an Event of Default; (iv) costs and
expenses of suit reasonably incurred by Lender in enforcing or defending the
Loan Documents or any portion thereof; (v) all costs or expenses paid by Lender
to third parties to convert any data submitted to Lender by Borrower to an
acceptable form; and (vi) Lender's reasonable attorneys' fees and expenses
incurred (before or after execution of this Agreement) in advising Lender with
respect to, or in structuring, drafting, reviewing, negotiating, amending,
terminating, enforcing, defending or otherwise concerning, the Loan Documents or
any portion thereof, irrespective of whether suit is brought.
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"Lien" means any security interest, mortgage, pledge, assignment, lien
or other encumbrance of any kind, including any interest of a vendor under a
conditional sale contract or consignment and any interest of a lessor under a
capital lease.
"Loan" means the loan, in one or more Advances, made by Lender to
Borrower pursuant to this Agreement.
"Loan Availability" means the lesser of (i) the Commitment Amount or
(ii) the Borrowing Base minus the aggregate Advances and other monetary
Obligations outstanding under this Agreement.
"Loan Documents" mean (i) this Agreement; (ii) the Note; (iii) the
Security Documents; (iv) the Lock Box Agreements; (v) the Subordination
Agreement; and (vi) any other certificates, documents, or instruments or
financing statements delivered by Borrower to Lender pursuant to the terms of
this Agreement.
"Lock Box Accounts" means the deposit accounts with Servicer, or any
subsequent lockbox bank, established and maintained pursuant to either Lock Box
Agreement.
"Lock Box Agreement" means those two (2) certain Lock Box Agreements
dated on or about the date hereof between Borrower, NationsBank ("Servicer") and
Lender, any amendments, renewals, extensions or replacements thereof and the
letter of instructions with respect thereto.
"Management Agreement" means that certain Management Services
Agreement dated as of June 1, 1997, among Borrower, Seller and the physicians
which are a party to such agreement.
"Metroplex Providers" has the meaning set forth in the Management
Agreement.
"Net Collectible Percentage" means the percentage described on Exhibit
1.1 attached hereto for each type of Eligible Account. Pursuant to Section 5.4
the Net Collectible Percentage may change from time to time in Lender's sole and
absolute discretion, written notification of which must be given to Borrower by
Lender.
"Net Collectible Value" means, for each type of Eligible Account, the
Net Collectible Percentage times the aggregate current outstanding amount of all
Eligible Accounts that are such type of Eligible Account.
"Note" means the Secured Promissory Note executed by Borrower pursuant
to Section 2.2.
"Obligations" mean all obligations (monetary or otherwise) of Borrower
to Lender or DVIFS under or in connection with this Agreement, the Note and the
Other Loan Documents.
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"Other Loan Agreements" means those six (6) certain Loan and Security
Agreements dated as of the date hereof among Borrower and DVIFS.
"Permitted Liens" mean (i) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or demands of mechanics
and materialmen, provided that payment thereof is not yet due or is being
contested as permitted in this Agreement; (ii) Liens and priority claims
incidental to the conduct of business or the ownership of properties and assets
(including warehouse's and attorney's Liens and statutory landlord's Liens);
deposits, pledges or Liens to secure the performance of bids, tenders, or trade
contracts, or to secure statutory obligations; and surety or appeal bonds or
other Liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money; provided that in each case
the obligation secured is not overdue or, if overdue, is being contested in good
faith by appropriate actions or proceedings; and further provided that any such
warehouse's or statutory landlord's Liens are subordinate or have been
subordinated to the Liens of Lender in a manner satisfactory to Lender; (iii)
Liens granted to Lender or any Affiliate of Lender; and (iv) Liens existing on
the date of this Agreement that secure indebtedness outstanding on such date and
that are disclosed on Schedule 1.1 hereto.
"Person" means an individual, corporation, partnership, limited
liability company, trust, unincorporated association, joint venture, joint-stock
company, government (including political subdivisions), Governmental Authority
or any other entity.
"Proceeds" mean all proceeds and products of Collateral and documents
covering Collateral; all property received wholly or partly in trade or exchange
for Collateral; all claims against third parties arising out of a decrease in
value of the Collateral; and all rents, revenues, issues, profits and proceeds
arising from the sale, lease, license, encumbrance, collection or any other
temporary or permanent disposition of the Collateral or any interest therein.
"Reference Rate" means the rate of interest announced publicly by Bank
of America, NT&SA in San Francisco, California, from time to time as its
reference rate.
"Security Documents" means the Guaranty, and any agreement or
instrument entered into between Borrower or Guarantors and Lender or executed by
Borrower or Guarantor and delivered to Lender in connection with this Agreement
to secure repayment of the Loan.
"Seller" means Metroplex Hematology/Oncology Associates, L.L.P., a
Texas limited liability partnership.
"Subordinate Obligations" means all Indebtedness of Borrower
subordinated to the Obligations pursuant to a subordination or intercreditor
agreement in form satisfactory to Lender.
"Subordination Agreement" means the Subordination Agreement dated on
or about the date hereof between Lender, Borrower, Guarantor and Seller.
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"Termination Date" means the last day of any term as to which a
written notice of non-renewal pursuant to Section 2.7 has been received.
"Unmatured Default" means any event or condition that, with notice,
passage of time, or a determination by Lender or any combination of the
foregoing would constitute an Event of Default.
Section 1.2. Generally Accepted Accounting Principles and Uniform
Commercial Code. All financial terms used in this Agreement other than those
defined in Section 1, have the meanings accorded to them under GAAP. All other
terms used in this Agreement, other than those defined in this Section 1, have
the meanings accorded to them in the Uniform Commercial Code as is enacted in
any applicable jurisdiction.
Section 1.3. Construction.
(a) Unless the context of this Agreement clearly requires otherwise,
the plural includes the singular, the singular includes the plural, the part
includes the whole, "including" is not limiting, and "or" has the inclusive
meaning of the phrase "and/or." The words "hereof," "herein," "hereby,"
"hereunder," and other similar terms in this Agreement refer to this Agreement
as a whole and not exclusively to any particular provision of this Agreement.
(b) Neither this Agreement nor any uncertainty or ambiguity herein may
be construed or resolved against any party hereto, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
each of the parties and their respective counsel and is entitled to be construed
and interpreted according to the ordinary meaning of the words used so as to
accomplish the purposes and intentions of all parties hereto fairly.
Section 2
LOAN
Section 2.1. The Loan. Subject to the terms and conditions and
relying on the representations and warranties set forth herein, Lender shall
advance to Borrower from time to time, and Borrower shall borrow from Lender, a
revolving loan in an amount not to exceed Loan Availability. Within the limits
of the Loan Availability, Borrower may borrow, make repayments pursuant to
Section 2.6 and reborrow. If, at any time, the aggregate Advances and other
Obligations outstanding exceed the then Loan Availability, then Borrower shall
pay to Lender a sum sufficient to reduce the Advances and other Obligations
outstanding to an amount not greater than the Loan Availability. Lender's
commitment to make Advances expires and the amount of the Loan then outstanding
matures and must be repaid by Borrower, without further action on the part of
Lender, on the Termination Date.
Section 2.2. Note. All Advances made by Lender under this Agreement
are evidenced by, and must be repaid with interest in accordance with a single
promissory note of
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Borrower in substantially the form of Exhibit 2.2, duly completed, in the
original principal amount equal to the Commitment Amount, dated the Effective
Date, payable to the Lender and maturing as to principal on the Termination Date
(the "Note"). The amount of each Advance and payment of principal amount
received by the Lender will be recorded in the books and records of the Lender,
which books and records, in the absence of manifest error, are conclusive as to
the outstanding balance of and other information related to the Loan. Lender is
entitled at any time to endorse on a schedule attached to the Note the amount
and type of each Advance and information relating thereto.
Section 2.3. Borrowing Base. On a weekly basis, the Borrowing Base
will be recalculated by adding weekly xxxxxxxx to the prior week's Eligible
Accounts and subtracting deposits and adjustments, if applicable, and then
multiplying this amount by the Net Collectible Percentage. The Borrowing Base
will be calculated on the basis of the reports delivered to Lender pursuant to
Sections 2.6 and 5.4.
Section 2.4. Notice of Borrowing. Whenever Borrower desires to
borrow under Section 2.1, Borrower shall deliver to Lender a Drawdown Request
Form, in a form reasonably satisfactory to Lender, signed by an authorized
officer no later than 2:00 p.m. Pacific Standard Time at least one (1) business
day in advance of the proposed funding date. The Drawdown Request Form must
specify (i) the funding date (which shall be a business day) with respect to the
requested Loan and (ii) the amount of the proposed Advance.
Section 2.5. Use of Proceeds. The proceeds of the Loan must be used
by Borrower for any proper corporate purposes in connection with Borrower's
business as described in Section 9.2.
Section 2.6. Repayment of Loan Via Lock Box/Servicer Account.
(a) Upon the execution hereof, Borrower shall become a party to the
Lock Box Agreement which provides for the receipt and processing of Account
payments. Borrower shall irrevocably direct: (i) all non-government payors to
remit payment to the Servicer's post office box in Lender's name and control;and
(ii) all government payors to remit payment to a second post office box of such
Servicer in Borrower's name. Prior to funding and upon receipt of the lock box
post office box numbers, Borrower shall provide Lender re-direct letters (in a
form satisfactory to Lender) to all of Borrower's and Seller's payors on
Borrower's or Seller's letterhead, including envelopes for Lender to process and
mail (Lender will add postage which will be charged to Borrower). The Lock Box
Agreement provides for the Servicer to deposit daily all receipts of the post
office boxes into deposit accounts, with non-government payor receipts paid into
an account subject to Lender's control, and government payor receipts paid into
an account in Borrower's name; such accounts must be (i) at a financial
institution acceptable to Lender, and (ii) governed by terms and conditions
acceptable to Lender. All government payor receipts will be immediately
transferred to an account in the name and control of Lender. Any receipts from
Accounts received by Borrower must be deposited in the Lock Box Account promptly
upon receipt. On a weekly basis Borrower shall provide Lender a reconciliation
statement for the prior week (providing in a reasonable detail a breakdown of
the prior week's receipts between accounts receivable generated prior to and
after the
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Effective Date) acceptable in form and substance to Lender. Upon receipt of
such reconciliation statement and upon collectibility, deposits will be (x)
remitted to Seller to the extent of receipts for accounts receivable generated
prior to the Effective Date, and (y) applied to reduce the Loan balance
including Advances, interest, fees, all charges and other payments, if
applicable, and if generated after the Effective Date. Collected receipts
applicable to accounts receivable generated prior to the Effective Date will be
paid to Seller on a weekly basis within 24 hours of receipt of the
reconciliation statement. Deposits/receipts and adjustments (net of fees and
payments pursuant to the preceding sentence), will reduce the Borrowing Base in
accordance with Section 2.3 above. Any excess collected receipts for accounts
receivable generated after the Effective Date (net of fees) remaining after all
such payments will be paid to Borrower on a weekly basis within 24 hours of
receipt of such reconciliation statement. Upon Lender's and Seller's collective
determination that reconciliation statements are no longer necessary, provisions
in this Section 2.6 relating to the preparation of reconciliation statements and
receipts related to accounts receivable generated prior to the Effective Date
will no longer apply. In addition, thereafter all payments and application of
the receipts, as well as reduction of the Borrowing Base, will be made on a
daily basis within 24 hours of collectibility of receipts. Borrower shall pay
all charges for establishing and maintaining the post office box accounts and
all bank charges for such deposit accounts. Lender shall deduct from the
deposit accounts all sums Borrower owes to it hereunder, including fees,
interest, reimbursements and principal payments. Borrower shall satisfy any
Obligations to Lender not paid by such deduction by direct payment to Lender at
0000 XxxXxxxxx Xxxx., Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000.
(b) Borrower is indebted to DVIFS pursuant to the Other Loan
Agreements. Borrower will make payments on the Other Loan Agreements ("DVIFS
Payments") by having Lender deduct from the Lock Box Accounts the amount of each
of the DVIFS Payments when due according to the Other Loan Agreements, in
addition to the payments required under this Agreement. Borrower agrees that
Lender will first deduct from the Lock Box Accounts payments due to Lender under
this Agreement, and then, to the extent that there are sufficient funds
remaining, deduct the DVIFS Payments and remit such payments to DVIFS. Any
funds remaining in the deposit accounts after all such payments have been made
shall be remitted to Borrower as provided in Section 2.6(a).
Section 2.7. Term of Agreement. The Term of this Agreement is two
(2) years from the Effective Date and is noncancellable during such two year
period. This Agreement will be renewed for consecutive one (1) year terms;
provided that during any such additional terms after the initial two year term
either Lender or Borrower may terminate this Agreement effective as of the last
day of a term by written notice by Lender or Borrower no later than thirty (30)
days before the expiration of such term; provided, further, that during any such
additional terms after the initial two year term Borrower may terminate this
Agreement as of the last day of any calendar month by the (30) days written
notice to Lender. All of Lender's obligations, responsibilities and duties
shall cease upon the date of termination of this Agreement, except for its
obligation to remit excess receipts from the lock box deposit accounts in
accordance with the terms of this Agreement. Upon termination of this Agreement
and payment in full of the Obligations of Borrower to Lender, Lender shall
transfer the Lockbox Accounts and all funds therein to Borrower and Lender's
Liens will be released.
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Section 2.8. Lender's Fees. Upon execution hereof, Borrower shall pay
Lender an origination fee equal to one and one-half percent (1.5%) of the
Commitment Amount. Increases to the Commitment Amount during the term will be
charged on the incremental increase at the same origination percentage.
Following the Effective Date and on or before the first day of each month
Borrower shall pay Lender a monthly maintenance fee of Four Thousand Five
Hundred Dollars ($4,500). Following the Effective Date and on or before the
first day of each month, Borrower shall pay Lender an unutilized loan fee of
equal to one-quarter percent (.25%) of the difference between the Commitment
Amount and the average outstanding Loan amount for the immediately previous
month. Lender's fees will be deducted, when due, directly from receipts from
accounts receivable deposited in accordance with Section 2.6.
Section 2.9. Interest on the Loans. All Advances bear interest on the
unpaid principal amount thereof from the date made until paid in full at a
fluctuating rate equal to the Reference Rate plus two and one-half percent
(2.5%). Interest is payable monthly in arrears on the first day of each month
for the preceding month. Interest is calculated on the basis of a year of 360
days, but for the actual number of days elapsed. Interest accrued but not paid
pursuant to Section 2.6 is treated as an Advance if not otherwise paid within
five (5) days of the end of the month in which it accrues.
Section 2.10. Late Payments. If Borrower fails to make any payment of
interest or principal, including the payment due upon maturity, when the same is
due and payable and such failure continues for five (5) days after nonpayment, a
late charge by way of damages to the extent provided in this Section 2.10 is
immediately due and payable. Borrower recognizes that default by Borrower in
making the payments herein agreed to be paid when due will result in the Lender
incurring additional expenses, in loss to the Lender of the use of the money due
and in frustration to the Lender in meeting its other commitments. Lender is
entitled to damages for the detriment caused thereby, but it is extremely
difficult and impractical to ascertain the extent of such damages. Borrower
shall pay on demand a sum equal to five cents ($.05) for each one dollar ($1.00)
of each payment which is not received within five (5) days after the date it is
due and payable is a reasonable estimate of the damages to the Lender.
Section 2.11. Conditions to the Closing. The obligation of Lender to
make an Advance on the Closing Date is subject to Lender's determination that
Borrower has satisfied the following conditions on the Closing Date:
(a) The representations and warranties set forth in this Agreement
and the other Loan Documents are true and correct on and as of the date hereof
and are true and correct in all material respects as of the Closing Date and
Borrower has performed all obligations required to have been performed by it
hereunder prior to Closing Date.
(b) Borrower has executed and delivered to Lender (or caused to be
executed and delivered to Lender by the appropriate Persons) the following:
(i) this Agreement;
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(ii) the Note;
(iii) UCC-1 Financing Statements;
(iv) the Guaranty;
(v) the Lock Box Agreement;
(vi) the Subordination Agreement;
(vii) payor redirect letters;
(viii) evidence satisfactory to Lender that Borrower is a
limited liability company and Guarantor is a corporation duly formed, validly
existing and in good standing in the state in which it was formed and in each
state in which it is authorized to do business;
(ix) pay-off letters, UCC Termination Statements and Lien
Releases as required to grant Lender a first priority security interest other
than Permitted Liens in Collateral pledged as security for repayment of the
Loan;
(x) signature and incumbency certificate of Borrower and
Guarantor;
(xi) certified copies of resolutions of the members of
Borrower and the Board of Directors of Guarantor authorizing the execution and
delivery of the Loan Documents to be executed by Borrower and Guarantor;
(xii) copies of the Articles of Organizations of Borrower
and the Articles of Incorporation of Guarantor certified by the Secretary of
State of each such Person's jurisdiction of incorporation;
(xiii) the written opinion of counsel to Borrower and
Guarantor issued on the Closing Date and satisfactory to Lender in scope and
substance; and
(xiv) a certificate from an officer of Borrower indicating
that the representations and warranties contained herein are true and correct as
of the Closing Date.
(c) Borrower has paid closing fees to Lender including Lender's
reasonable legal fees incurred by Lender for the negotiation and preparation of
the Loan Documents.
(d) Neither an Event of Default nor an Unmatured Default has
occurred and is continuing.
(e) Neither Borrower nor any Guarantor has suffered a material or
adverse change in its business, operations or financial condition from that
reflected in the financial statements of Borrower delivered to Lender or
otherwise.
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(f) Lender has received such additional supporting documents,
certificates and assurances as Lender reasonably requests which are satisfactory
to Lender in form and substance.
Section 3
SECURITY INTEREST
Section 3.1. Grant of Security Interest. In order to secure prompt
payment and performance of the Obligations, Borrower hereby grants to Lender a
continuing first-priority pledge and security interest in all right, title and
interest of Borrower in and to the Management Agreement and the Accounts and any
Proceeds thereof (the "Collateral"), together with such third-party consents,
lien waivers and estoppel certificates as Lender reasonably requires, whether
now owned or existing or hereafter acquired or arising and regardless of where
located, subject only to Permitted Liens. This security interest in the
Collateral attaches to all Collateral without further action on the part of
Lender or Borrower.
Section 4
SPECIFIC REPRESENTATIONS
Section 4.1. Name of Borrower.
The exact name of Borrower is MHOA Texas I, L.L.C. Borrower was
formed under the laws of the State of Texas. The following are all previous
legal names of Borrower: None. Borrower uses the following trade names: None.
The following are all other trade names used by Borrower in the past: None.
Section 4.2. Mergers and Consolidations. Except as disclosed on
Schedule 4.2, no entity has merged into Borrower or been consolidated with
Borrower.
Section 4.3. Purchase of Assets. Except as disclosed on Schedule 4.3,
no entity has sold substantially all of its assets to Borrower or sold assets to
Borrower outside the ordinary course of such seller's business at any time in
the past.
Section 4.4. Change of Name or Identity. Borrower shall not change
its name, business structure, or identity or use any new trade name without
prior notification of Lender.
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Section 5
PROVISIONS CONCERNING ACCOUNTS
Section 5.1. Office and Records of Borrower. Borrower's principal
place of business and chief executive offices are located at: 000 Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxx, Xxxxx 00000. Borrower maintains all of their records with
respect to Accounts at 000 Xxxx Xxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxxx 00000.
Borrower has not at any time within the past four (4) months maintained their
chief executive office or their records with respect to Accounts at any other
location and shall not do so hereafter except with the prior written consent of
Lender.
Section 5.2. Representations. Borrower represents and warrants that
each Account at the time of its assignment to Lender (a) will be owned solely by
Borrower or Metroplex and Borrower will have a security interest in all Accounts
owned by Metroplex, (b) will be for a liquidated amount maturing as stated in
Borrower's Books; (c) will be a bona fide existing obligation created by the
rendition of services to Account Debtors or their insured by Borrower, Metroplex
or the Metroplex Providers in the ordinary course of its business; and (d) will
not be subject to any known deduction, offset, counterclaim, return privilege,
or other condition, except as reflected on Borrower's Books. Borrower shall
neither redate any invoices nor reissue new invoices in full or partial
satisfaction of old invoices. Allowances, if any, as between Borrower and its
customers will be on the same basis and in accordance with the usual customary
practices of Borrower as they exist on the date of this Agreement.
Section 5.3. Returns and Repossessions. Borrower shall notify Lender
within five (5) business days of occurrence of all material claims asserted by
Account Debtors.
Section 5.4. Borrowing Base Reports. Borrower shall on a weekly basis
execute and deliver to Lender, in a form satisfactory to Lender, (i) a Borrowing
Base report; (ii) a summary by payor class aging of Accounts; and (iii) a
charges, collections and adjustment summary for the preceding week. Borrower
shall upon the request of Lender execute and deliver to Lender an updated
Borrowing Base report reflecting additional xxxxxxxx, writeoffs and deposits and
all of Borrower's accounts receivable data in a computer disc or tape format
acceptable to Lender. On a monthly basis, and no later than the 10th day of each
month, Borrower shall submit to Lender (i) a month-end Borrowing Base Report,
(ii) a detailed accounts receivable aging report as of the last day of the
preceding month, (iii) charges, collections and adjustments summary for the
preceding month, and (iv) a payor concentration schedule. Lender shall
periodically review Borrower's actual adjustments to cash receipts and
writeoffs, as well as Borrower's payor profile. To the extent Borrower's
adjustments, writeoffs and payor profile materially changes, Lender may, based
on a reasonable review of such criteria, in its sole discretion, change the Net
Collectible Percentage attributable to each type of Account by written notice to
Borrower of such change.
Section 5.5. Compliance Certificate. With each final month-end
Borrowing Base report which Borrower delivers to Lender, Borrower shall deliver
to Lender a Compliance Certificate in the form of Exhibit 5.5 attached hereto,
completed and signed by an officer of Borrower.
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Section 5.6. Lender's Rights. Any officer, employee or agent of
Lender has the right, at any time or times hereafter, in the name of Lender or
its nominee (including Borrower), with prior notice to Borrower, to verify the
validity, amount or any other matter relating to any Accounts by mail, telephone
or otherwise; and all reasonable costs thereof are payable by Borrower to
Lender. Lender, or its designee may at any time after the occurrence and during
the continuance of an Event of Default notify customers or Account Debtors that
Accounts have been assigned to Lender or of Lender's security interest therein
and collect the same directly and charge all reasonable collection costs and
expenses to Borrower's account.
Section 5.7. Disclaimer of Liability. Lender shall not be liable to
Borrower or any third person for the correctness, validity or genuineness of any
instruments or documents released or endorsed to Borrower by Lender (which shall
automatically be deemed to be without recourse to Lender in any event) or for
the existence, character, quantity, quality, condition, value or delivery of any
goods purporting to be represented by any such documents; and Lender, by
accepting a Lien on the Collateral or by releasing any Collateral to Borrower,
shall not be deemed to have assumed any obligation or liability to any supplier
or creditor of Borrower or to any other third party. Borrower agrees to
indemnify and defend Lender and hold it harmless in respect to any claim or
proceeding arising out of any matter referred to in this Section 5.7.
Section 5.8. Post Default Rights. If an Event of Default has occurred
and is continuing hereunder, no discount, credit or allowance may be granted or
permitted by Borrower to any Account Debtor; provided, however, that,
notwithstanding the existence of an Event of Default, (i) Borrower may continue
to invoice and xxxx Account Debtors under discount, credit and allowance
arrangements that Borrower maintained in the ordinary course of business prior
to such Event of Default occurring, and (ii) Account Debtors may, during the
continuance of an Event of Default, utilize discount, credit and allowance
arrangements that Borrower extended to them in the ordinary course of business.
Lender may, if an Event of Default has occurred and is continuing, settle or
adjust disputes and claims directly with Account Debtors for amounts and upon
terms that Lender considers advisable, and in such cases, Lender will credit
Borrower's account with only the net amounts received by Lender in payment of
such disputed Accounts, after deducting all Lender Expenses incurred in
connection therewith.
Section 5.9. Accounts Owed by Federal Government. If any Accounts
(other than Medicare and Medicaid accounts or payments) arise out of a contract
with the United States of America or any department, agency, subdivision or
instrumentality thereof, Borrower shall promptly notify Lender thereof in
writing and take all other action reasonably requested by Lender to protect
Lender's Lien on such Accounts under the provisions of the federal laws on
assignment of claims.
Section 5.10. Business Activity Reports. Borrower and its Affiliates
have filed and shall file all legally required notices and reports of its
business activities with all appropriate state taxing authorities and the
appropriate Governmental Authority of each other jurisdiction in which Borrower
or an Affiliate is legally required to file such a notice or report.
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Section 6
PROVISIONS CONCERNING CONTRACTS
Section 6.1. Contracts.
(a) Schedule 6.1. is a true and complete list of all material
contracts and agreements to which Borrower is a party.
(b) Borrower shall not amend, modify or supplement any contract or
agreement included in the Collateral or waive any provision thereof other than
in accordance with Borrower's standard business practice, nor may such standard
business practice be materially changed without Lender's consent, which shall
not be unreasonably withheld.
(c) Borrower shall remain liable to perform all of its duties and
obligations under any contracts and agreements included in the Collateral to the
same extent as if this Agreement had not been executed; and Lender shall not
have any obligation or liability under such contracts and agreements by reason
of this Agreement or otherwise.
(d) Borrower need not pay any amount due under any contract or
agreement listed on Schedule 6.1, nor otherwise perform any action required
under the terms of any such contract or agreement, if such payment or
performance is being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted, if Lender is notified in advance of such
contest, and if Borrower establishes any reserve or other appropriate provision
required by GAAP and deposits with Lender cash or an acceptable bond reasonably
requested by Lender.
Section 7
PROVISIONS CONCERNING COLLATERAL
Section 7.1. Further Assurances. Borrower shall execute and deliver
to Lender, concurrent with Borrower's execution of this Agreement and at any
time or times hereafter at the request of Lender, all financing statements,
continuation financing statements, security agreements, chattel mortgages,
assignments, endorsements of certificates of title, applications for titles,
affidavits, reports, notices, schedules of accounts, letters of authority and
all other documents Lender may reasonably request, in form satisfactory to
Lender, to perfect and maintain perfected Lender's Liens in the Collateral and
in order to consummate fully all of the transactions contemplated under the Loan
Documents. Borrower hereby irrevocably make, constitute, and appoint Lender
(and any of Lender's officers, employees or agents designated by Lender) as
Borrower's true and lawful attorney with power to sign the name of Borrower on
any of the above-described documents or on any other similar documents that need
to be executed, recorded, or filed in order to perfect or continue perfected
Lender's Liens in the Collateral. The appointment of Lender as Borrower's
attorney is irrevocable as long as any Obligations are outstanding. Any person
dealing with Lender is entitled to rely conclusively on any written or oral
statement of Lender that this power of attorney is in effect.
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Section 7.2. Lender's Duty of Care. Lender has no duty of care with
respect to the Collateral except that Lender shall exercise reasonable care with
respect to the Collateral in Lender's custody. Lender will be deemed to have
exercised reasonable care if such property is accorded treatment substantially
equal to that which Lender accords its own property or if Lender takes such
action with respect to the Collateral as the Borrower requests or agrees to in
writing, provided that no failure to comply with any such request nor any
omission to do any such act requested by the Borrower may be deemed a failure to
exercise reasonable care. Lender's failure to take steps to preserve rights
against any parties or property may not be deemed to be failure to exercise
reasonable care with respect to the Collateral in Lender's custody. All risk,
loss, damage or destruction of the Collateral is borne by Borrower, except to
the extent Lender breaches the standard of care set forth in this Section 7.2.
Section 7.3. Reinstatement of Liens. If, at any time after payment in
full by Borrower of all Obligations and termination of Lender's Liens, any
payments on Obligations previously made by Borrower or any other Person must be
disgorged by Lender for any reason whatsoever (including, the insolvency,
bankruptcy, or reorganization of Borrower or such other Person), this Agreement
and Lender's Liens granted hereunder are reinstated as to all disgorged payments
as though such payments had not been made, and Borrower shall sign and deliver
to Lender all documents and things necessary to perfect all terminated Liens.
Section 7.4. Lender Expenses. If Borrower fails to pay any moneys
(whether taxes, assessments, insurance premiums or otherwise) due to third
persons or entities, fails to make any deposits or furnish any required proof of
payment or deposit or fails to discharge any Lien not permitted hereby, all as
required under the terms of this Agreement, then Lender may, to the extent that
it determines that such failure by Borrower could have a material adverse effect
on Lender's interest in the Collateral, in its discretion and without prior
notice to Borrower, make payment of the same or any part thereof; provided,
however, Lender shall a make reasonable attempt to provide Borrower with prior
notice if the delay caused by providing such notice would not have a material
adverse impact on Lender's interest in the Collateral. Any amounts paid or
deposited by Lender constitute Advances, become part of the Obligations, bear
interest at the rate of eighteen percent (18%) per annum and are secured by the
Collateral. Any payments made by Lender do not constitute (a) an agreement by
Lender to make similar payments in the future or (b) a waiver by Lender of any
Event of Default under this Agreement. Lender need not inquire as to, or
contest the validity of, any such expense, tax, security interest, encumbrance
or Lien, and the receipt of the usual official notice for the payment of moneys
to a governmental entity is conclusive evidence that the same was validly due
and owing.
Borrower shall immediately and without demand reimburse Lender for all
sums expended by Lender that constitute Lender Expenses, and Borrower hereby
authorizes and approves all advances and payments by Lender for items
constituting Lender Expenses.
Section 7.5. Inspection of Records. During usual business hours,
Lender may inspect Borrower's Books in order to verify the amount or condition
of, or any other matter relating to, the Collateral and Borrower's financial
condition and to copy and make extracts therefrom. Borrower waives the right to
assert a confidential relationship, if any, it may have with any
15
accounting firm or service bureau in connection with any information requested
by Lender pursuant to this Agreement. Lender may directly contact any such
accounting firm or service bureau in order to obtain such information.
Section 7.6. Waivers. Except as specifically provided for herein,
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper, and
guaranties at any time held by Lender on which Borrower may in any way be
liable.
Section 8
REPRESENTATIONS AND WARRANTIES
As of the date hereof Borrower hereby warrants and represents to
Lender the following:
Section 8.1. Company Status. Borrower is a limited liability company
validly existing and in good standing under the laws of the state of its
formation; and is qualified and licensed to do business and is in good standing
in any state in which the conduct of its business or its ownership of property
requires that it be so qualified or licensed, and has the power and authority
(corporate and otherwise) to execute and carry out the terms of the Loan
Documents to which it is a party, to own its assets and to carry on its business
as currently conducted.
Section 8.2. Authorization. The execution, delivery, and performance
by Borrower of this Agreement and each other Loan Document to which it is a
party have been duly authorized by all necessary company action. Borrower has
duly executed and delivered this Agreement and each such Loan Document to which
it is a party, and each of them constitutes a valid and binding obligation of
Borrower enforceable according to its terms.
Section 8.3. No Breach. The execution, delivery and performance by
Borrower of this Agreement and each Loan Document to which it is a party (a)
will not contravene any law or any governmental rule or order binding on
Collateral; (b) will not violate any provision of the articles of organization
or regulations of Borrower; (c) will not violate any agreement or instrument by
which Borrower or its assets, is bound; (d) do not require any notice to consent
by any Governmental Authority; and (e) will not result in the creation of a Lien
on any assets of Borrower except the Lien to Lender granted herein.
Section 8.4. Taxes. All assessments and taxes, whether real, personal
or otherwise, due or payable by or imposed, levied or assessed against Borrower,
or its property have been paid in full before delinquency or before the
expiration of any extension period; and Borrower has made due and timely payment
or deposit of all federal, state, and local taxes, assessments, or contributions
required of it by law, except only for items that Borrower is currently
contesting diligently and in good faith and that have been fully disclosed in
writing to Lender.
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Section 8.5. Deferred Compensation Plans. Borrower and each ERISA
Affiliate have made all required contributions to all deferred compensation
plans to which such person is required to contribute, and neither Borrower nor
any ERISA Affiliate has any liability for any unfunded benefits of any single-
employer or multi-employer plans. Neither Borrower nor any ERISA Affiliate is
or at any time has been a sponsor of, provided, or maintained for any employees
any defined benefit plan.
Section 8.6. Litigation and Proceedings. Except as set forth on
Schedule 8.6 attached hereto, there are no outstanding judgments against
Borrower or its assets and there are no actions or proceedings pending by or
against Borrower before any court or administrative agency. Borrower has no
knowledge of any pending, threatened, or imminent litigation, governmental
investigations, or claims, complaints, actions, or prosecutions involving
Borrower except for ongoing collection matters in which Borrower is the
plaintiff and except as set forth in Schedule 8.6 hereto.
Section 8.7. Business. Borrower has all franchises, authorizations,
patents, trademarks, copyrights and other rights necessary to conduct its
business. They are all in full force and effect and are not in known conflict
with the rights of others. Borrower is not a party to or subject to any
agreement or restriction that is so unusual or burdensome that it might have a
material adverse effect on Borrower's business, properties or prospects.
Section 8.8. Laws and Agreements. Borrower is in compliance with all
material contracts and agreements applicable to it, including obligations to
contribute to any employee benefit plan or pension plan regulated by ERISA.
Borrower is in material compliance with all laws applicable to it.
Section 8.9. Ownership of Accounts. Prior to the Lender making any
Advance, Borrower or Metroplex will be the sole owner of, or Borrower will have
a valid security interest in, the Accounts.
Section 8.10. Security Interest. After giving effect to each Advance
contemplated by this Agreement, the Lender will be the holder of a valid
perfected first priority security interest in Borrower's right, title and
interest in the Accounts. The Collateral will be free and clear of all liens
other than Permitted Liens.
Section 8.11. Intentionally Deleted.
Section 8.12. Origination. Each Account will have been originated by
Borrower or Metroplex in the ordinary course of its business in accordance with
its regular credit approval process and does not contravene any laws, rules or
regulations applicable thereto.
Section 8.13. Legality. No Eligible Account will have been originated
in, or be subject to the laws of, any jurisdiction whose laws would make the
terms hereof or any transaction contemplated hereby unlawful.
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Section 8.14. Consents. No consent or approval is required for the
pledging of any Collateral to the Lender pursuant to the terms of this
Agreement, except for such consents or approvals as have been obtained prior to
the Closing Date.
Section 8.15. Financial Condition. All financial statements and
information relating to Borrower or its assets that have been or may hereafter
be delivered by Borrower to Lender are accurate and complete in all material
respects and have been prepared in accordance with GAAP. Borrower has no
material obligations or liabilities of any kind not disclosed in that financial
information, and there has been no material adverse change in the financial
condition of Borrower since the date of the most recent financial statements
submitted to Lender.
Section 8.16. Health Care Laws.
(a) Borrower has obtained all permits, licenses and other
authorizations that are required under Health Care Laws applicable to Borrower
and is in compliance in all material respects with all terms and conditions of
the required permits, licenses and authorizations, and are also in compliance in
all material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in such Health Care Laws.
(b) Borrower is not aware of, and has not received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans that may interfere with or prevent
compliance or continued compliance in any material respect with Health Care
Laws.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or to the best knowledge of Borrower
threatened against Borrower, relating in any way to Health Care Laws.
Section 8.17. Cumulative Representations. The warranties,
representations and agreements set forth herein are cumulative and in addition
to any and all other warranties, representations and agreements that Borrower
gives, or cause to be given, to Lender, either now or hereafter.
Section 8.18. Full Disclosure. No representation, warranty or
statement by Borrower contained in this Agreement, any Schedule or any document,
instrument or certificate furnished by or on behalf of any of them pursuant to
this Agreement contains any untrue, incorrect, incomplete or misleading
statement of material fact, or knowingly omits to state a material fact
necessary to make the statements contained therein not misleading.
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Section 9
COVENANTS
Section 9.1. Encumbrance of Collateral. Borrower shall not create,
incur, assume or permit to exist any Lien on any Collateral now owned or
hereafter acquired by Borrower except for Permitted Liens.
Section 9.2. Business. Borrower shall engage primarily in business of
physician practice management and related services.
Section 9.3. Condition and Repair. Borrower shall maintain in good
repair and working order all material properties used in its business and from
time to time shall make all appropriate repairs and replacements thereof.
Section 9.4. Taxes. Borrower shall pay all taxes, assessments and
other governmental charges imposed upon it or its assets or in respect of any of
its franchises, business, income or profits before any penalty or interest
accrues thereon, and all claims (including, without limitation, claims for
labor, services, materials and supplies) for sums that have become due and
payable and that by law have or might become a Lien or charge upon any of their
assets, provided that (unless any material item or property would be lost,
forfeited or materially impaired as a result thereof) no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted, if Lender is notified in advance of
such contest, and if Borrower establishes any reserve or other appropriate
provision required by GAAP. Borrower shall make timely payment or deposit of all
FICA payments and withholding taxes required of it by applicable laws and will,
upon request, furnish Lender with proof satisfactory to Lender indicating that
Borrower has made such payments or deposits.
Section 9.5. Accounting System. Borrower at all times hereafter shall
maintain a standard and modern system of accounting in accordance with GAAP,
with ledger and account cards or computer tapes, disks, printouts, and records
that contain information pertaining to the Collateral that may from time to time
be requested by Lender. Borrower shall not modify or change its method of
accounting or enter into any agreement hereafter with any third-party accounting
firm or service bureau for the preparation or storage of Borrower's accounting
records without the accounting firm's or service bureau's agreeing to provide to
Lender information regarding the Collateral and Borrower's financial condition.
Section 9.6. Monthly Financial Statements. Borrower shall furnish
Lender as soon as practicable but in no event later than thirty (30) days after
the end of each month with unaudited monthly financial statements in form and
substance as reasonably required by Lender, including a balance sheet, an income
statement and a statement of cash flows, prepared in accordance with GAAP,
together with a certificate executed by the chief financial officer of Borrower
attesting that to the best of such officer's knowledge the financial statements
fairly present the financial condition of Borrower as of the date and for the
periods covered and that as of the date of such certificate there
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has not been a violation of any provision of this Agreement and no Event of
Default or Unmatured Default has occurred and is continuing.
Section 9.7. Annual Financial Statements. Borrower shall furnish
Lender as soon as practicable but in no event later than one hundred twenty
(120) days after the close of each fiscal year with audited annual financial
statements, which financial statements are prepared in accordance with GAAP and
certified without qualification by an independent certified public accounting
firm reasonably satisfactory to Lender. With the annual financial statements,
Borrower shall deliver a certificate of its chief financial officer attesting
that to the best of such officer's knowledge there has not been a violation of
any provision of this Agreement and no Event of Default or Unmatured Default
under the Agreement has occurred and is continuing.
Section 9.8. Further Information. Borrower shall promptly supply
Lender with such other information concerning its affairs as Lender may
reasonably request from time to time hereafter and shall promptly notify Lender
of any material adverse change in Borrower's financial condition and any
condition or event that constitutes an Event of Default under, this Agreement.
In addition, Borrower authorizes Lender to contact credit reporting agencies
concerning Borrower's credit standing. Borrower also authorizes Lender to
utilize Borrower's name in Lender's marketing materials.
Section 9.9. ERISA Covenants. Borrower shall, and shall cause each
ERISA Affiliate to, comply with all applicable provisions of ERISA and all other
laws applicable to any deferred compensation plans with which Borrower or any
ERISA Affiliate is associated, and shall promptly notify Lender of the
occurrence of any event that could result in any material liability of Borrower
to any person to any person whatsoever with respect to any such plan.
Section 9.10. Restrictions on Merger, Consolidation, Sale of Assets,
Issuance of Stock, etc. Unless authorized by Lender, Borrower may not:
(a) merge or consolidate with any Person;
(b) sell, lease or otherwise dispose of its assets having an
aggregate value greater than $100,000 in any twelve month period in any
transaction or series of related transactions other than (i) sales in the
ordinary course of business (ii) if being replaced by items of comparable or
greater value, provided Borrower receives the consent of Lender which will not
be unreasonably withheld, to any such transfer having a value greater than
$100,000 or (iii) to Metroplex pursuant to the terms of that certain Assumption
Agreement dated as of the date hereof among Metroplex and DVIFS;
(c) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(d) acquire interests in any entity in excess of $100,000 in the
aggregate in any calendar year (whether by purchase of assets, purchase of stock
merger or otherwise);
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(e) become subject to any agreement or instrument which by its terms
would restrict Borrower's right or ability to perform any of its obligations to
Lender pursuant to the terms of the Loan Documents; or
(f) authorize or issue any additional member interests or other
equity interest.
Section 9.11. Health Care Covenants.
(a) Borrower and its Subsidiaries shall comply in all material
respects with, and will obtain all permits required by, all Health Care Laws
applicable to it.
(b) Borrower shall promptly furnish to Lender a copy of any
communication from any governmental authority concerning any possible violation
of any Health Care Laws or any occurrence of which Borrower would be required to
notify any Governmental Authority with jurisdiction over Health Care Laws.
Section 9.12. Distributions. Except as set forth on Schedule 9.12
hereto, Borrower may not make any Distributions, without the prior written
consent of Lender, which consent may not be unreasonably withheld and which
consent will not be deemed to authorize any Distributions while an Event of
Default is continuing or if such Distribution would cause an Event of Default to
occur.
Section 9.13. Subordinate Obligations. Borrower shall not voluntarily
prepay any principal (including the making of any sinking fund payment),
interest or any other amount in respect of Subordinate Obligations.
Section 9.14. Amendments. Borrower shall not amend any provision of
any Subordinate Obligation if such amendment would (i) affect any of the
subordination provisions thereof, (ii) advance the date of any required payment
or prepayment thereunder, (iii) make covenants therein more burdensome, when
considered in their entirety, to Borrower, (iv) reduce any default or grace
period therein provided, or (v) otherwise have a material adverse effect on the
interests of Lender.
Section 9.15. Cash Flow Ratio. In any three (3) consecutive calendar
month period, Borrower's Cash Flow Ratio must be twenty percent (20%) or greater
for one of the calendar months in such period. This Section does not apply
during the first three (3) calendar months after the Effective Date.
Section 9.16. Termination of Covenants. If Guarantor (i) successfully
completes a public offering of its common stock and other securities registered
under the Securities Exchange Act of 1933, as amended, which results in
Guarantor receiving net proceeds of Thirty-Five Million Dollars ($35,000,000) or
more, or (ii) at the end of any fiscal quarter Guarantor or its successor, by
merger or otherwise, attains a net worth of Fifty Million Dollars or more, then
the covenants contained in Section 9.12 will no longer apply to the Loan and
thereafter will be considered deleted from the Agreement.
21
Section 10
EVENTS OF DEFAULT
An Event of Default is deemed to exist if any of the following events
have occurred and is continuing:
(a) Borrower fails to make any payment of principal or interest or
any other payment on the Note or any other Obligation when due and payable, by
acceleration or otherwise, and such failure continues for five (5) days after
notice of non-payment is received by Borrower;
(b) Borrower or a Guarantor fails to observe or perform any material
covenant, condition or agreement to be observed or performed pursuant to the
terms hereof or any Loan Document to which it is a party and such failure is not
cured as soon as reasonably practicable and in any event within thirty (30) days
after written notice thereof by Lender;
(c) A court enters a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency, or
other similar law then in effect, or appoints a receiver, liquidator, assignee,
custodian, trustee, or sequestrator (or other similar official) of Borrower or
for any substantial part of their property, or orders the windup or liquidation
of Borrower's affairs; or a petition initiating an involuntary case under any
such bankruptcy, insolvency, or similar law is filed against Borrower and is
pending for sixty (60) days without dismissal;
(d) Borrower commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law then in effect, makes any general
assignment for the benefit of creditors, fails generally to pay its debts as
such debts become due, or takes corporate action in furtherance of any of the
foregoing;
(e) Final judgment for the payment of money on any claim in excess
of $100,000 is rendered against Borrower and remains undischarged for thirty
(30) days during which execution is not effectively stayed;
(f) Guarantor revokes or attempts to revoke its guaranty of any of
the Obligations, or becomes the subject of an insolvency proceeding of the type
described in clauses (c) or (d) above with respect to Borrower or fails to
observe or perform any material covenant, condition or agreement to be performed
under any Loan Document to which it is a party;
(g) Borrower makes any payment on account of any Subordinate
Obligations, other than payments specifically permitted by the terms of such
subordination or this Agreement.
(h) Any Person holding any Subordinate Obligations becomes the
subject of any proceeding resulting in the termination of the Subordination
Arrangement, terminates the subordination arrangement or asserts that it is
terminated.
22
(i) Any Collateral or any part thereof is sold, agreed to be sold,
conveyed or allocated by operation of law or otherwise other than as permitted
by Section 9.10;
(j) Borrower defaults under the terms of any Indebtedness or lease
involving total payment obligations of Borrower excess of $100,000 and such
default is not cured within the time period permitted pursuant to the terms and
conditions of such Indebtedness or lease, or an event occurs that gives any
creditor or lessor the right to accelerate the maturity of any such indebtedness
or lease payments;
(k) Demand is made for payment of any Indebtedness in excess of
$100,000 that was not originally payable upon demand when incurred but the terms
of which were later changed to provide for payment upon demand;
(l) Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs and such court order is not revoked or overturned within 5 days;
(m) A judgment or other claim in excess of $100,000 becomes a Lien
upon any or all of Borrower's assets or the Collateral, other than a Permitted
Lien;
(n) A notice of Lien, levy or assessment in excess of $100,000 is
filed of record with respect to any or all of Borrower's assets or the
Collateral by any Governmental Authority or any tax or debt owing at any time
hereafter to any one or more of such entities becomes a Lien upon any or all of
Borrower's assets or the Collateral and the same is not paid on the payment date
thereof, except to the extent such tax or debt is being contested by Borrower as
permitted in Section 8.4;
(o) There is a material impairment of the value of the Collateral or
priority of Lender's Liens on the Collateral;
(p) Any of Borrower's assets in excess of $100,000 or any Collateral
are seized, subjected to a distress warrant, levied upon or come into the
possession of any judicial officer;
(q) Any representation or warranty made in writing to Lender by any
officer of Borrower in connection with the transaction contemplated in this
Agreement is materially incorrect when made;
(r) Guarantor is in default under the Guaranty or an Event of
Default occurs under the Other Loan Documents;
(s) If the aggregate dollar value of all judgments, defaults,
demands, claims and notices of Liens under clauses (e), (j), (k), (m), (n) and
(p) hereof exceeds $250,000; or
(t) Borrower fails to direct all receipts for Accounts to the
Lockbox Accounts.
23
Section 11
REMEDIES
Section 11.1. Specific Remedies. Upon the occurrence and during the
continuance of any Event of Default:
(a) Lender may cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement, under any other Loan Document, or
under any other agreement between Borrower and Lender.
(b) Lender may declare all Obligations to be due and payable
immediately, whereupon they shall immediately become due and payable without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrower.
(c) Lender may set off against the Obligations all Collateral,
balances, credits, deposits, accounts, or moneys of Borrower then or thereafter
held with Lender, including amounts represented by certificates of deposit.
(d) Lender may pay, purchase, contest, or compromise any encumbrance,
charge or Lien that, in the opinion of Lender, appears to be prior or superior
to its Lien and pay all reasonable expenses incurred in connection therewith.
(e) Lender may (i) notify Account Debtors to make payment on Account
directly to Lender; (ii) settle, adjust, compromise, extend or renew Accounts,
whether before or after legal proceedings to collect such Accounts have
commenced; (iii) prepare and file any bankruptcy proofs of claim or similar
documents against any Account Debtor; (iv) prepare and file any notice,
assignment, satisfaction, or release of Lien, UCC termination statement or any
similar document; (v) sell or assign Accounts, individually or in bulk, upon
such terms, for such amounts, and at such time or times as Lender deems
advisable; and (vi) complete the performance required of Borrower or a Guarantor
under any contract or agreement to which Borrower is a party and out of which
Accounts arise or may arise.
(f) Lender may (i) endorse Borrower's name on all checks, notes,
drafts, money orders or other forms of payment of or security for Accounts or
other Collateral; (ii) sign Borrower's name on drafts drawn on Account Debtors
or issuers of letters of credit; and (iii) notify the postal authorities in
Borrower's name to change the address for delivery of Borrower's mail to an
address designated by Lender, receive and open all mail addressed to Borrower,
copy all mail, return all mail relating to Collateral, and hold all other mail
available for pickup by Borrower.
Section 11.2. Power of Attorney. Borrower hereby appoints Lender
(and any of Lender's officers, employees, or agents designated by Lender) as
Borrower's attorney, with power after the occurrence of an Event of Default: (a)
to endorse Borrower's name on any checks, notes, acceptances, money orders,
drafts or other forms of payment or security that may come into Lender's
possession; (b) to sign Borrower's name on drafts against Account Debtors, on
schedules and
24
assignments of Accounts, on verifications of Accounts, and on notices to Account
Debtors; (c) to notify the post office authorities to change the address for
delivery of Borrower's mail to an address designated by Lender, to receive and
open all mail addressed to Borrower and to retain all mail relating to the
Collateral and forward all other mail to Borrower; (d) to send requests for
verification of Accounts; (e) to execute UCC Financing Statements; and (f) to do
all things necessary to carry out this Agreement. The appointment of Lender as
Borrower's attorney and each and every one of Lender's rights and powers, being
coupled with an interest, are irrevocable as long as any Obligations are
outstanding. Lender shall not exercise the power granted in clause 11.2(b)
unless an Event of Default has occurred and is continuing and shall not exercise
the power granted in clause 11.2(d) prior to notification of Borrower of its
intent to do so, but such limitations do not limit the effectiveness of such
power of attorney at any time. Any person dealing with Lender is entitled to
rely conclusively on any written or oral statement of Lender that this power of
attorney is in effect. Lender may also use Borrower's stationery in connection
with exercising its rights and remedies and performing the Obligations of
Borrower.
Section 11.3. Expenses Secured. All expenses, including reasonable
attorney fees, incurred by Lender in the exercise of its rights and remedies
provided in this Agreement, or by law shall be payable by Borrower to Lender,
are part of the Obligations, and are secured by the Collateral.
Section 11.4. Equitable Relief. Borrower recognizes that in the
event Borrower fails to perform, observe, or discharge any of its Obligations or
liabilities under this Agreement, in certain cases no remedy of law will provide
adequate relief to Lender, and Lender is entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
Section 11.5. Remedies Are Cumulative. No remedy set forth herein is
exclusive of any other available remedy or remedies, but each is cumulative and
in addition to every other right or remedy given under this Agreement or under
any other agreement between Lender and Borrower or now or hereafter existing at
law or in equity or by statute. Lender may pursue its rights and remedies
concurrently or in any sequence, and no exercise of one right or remedy may be
deemed to be an election. No delay by Lender constitutes a waiver, election, or
acquiescence by it. Borrower on its behalf waives any rights to require Lender
to proceed against Guarantor or any other party; or proceed against or exhaust
any security held from any Guarantor. Lender may at any time and from time to
time, without notice to, or consent of, Borrower, and without affecting or
impairing the obligation of Borrower hereunder do any of the following: (i)
renew or extend any obligations of Guarantor, or of any other party at any time
directly or contingently liable for payment of any of the obligations of
Guarantor; (ii) accept partial payments of the obligations of Guarantor; (iii)
settle, release (by operation of law or otherwise), compound, compromise,
collect or liquidate any of the obligations of Guarantor and the security
therefor in any manner; or (iv) consent to the transfer or sale of any security
or bid and purchase at any sale of any security of Guarantor. The validity of
this Agreement and the Obligations of Borrower are not terminated, affected or
impaired by reason of the waiving, delaying, exercising or non-exercising, of
any of Lender's rights against Guarantor or as a result of the substitution,
release, repossession, sale, disposition or destruction of any Collateral
securing any obligations of Guarantor. Borrower is not released or discharged,
either in whole or
25
in part, by Lender's failure or delay to perfect or continue the perfection of
any security interest in any Collateral which secures the obligations of any
Guarantor or to protect the property covered by such security interest.
Section 12
INDEMNITY
Section 12.1. General Indemnity. BORROWER SHALL PROTECT, INDEMNIFY
AND DEFEND AND SAVE HARMLESS LENDER AND ITS DIRECTORS, OFFICERS, AGENTS AND
EMPLOYEES FROM AND AGAINST ANY AND ALL LOSS, COST, LIABILITY (INCLUDING
NEGLIGENCE, TORT AND STRICT LIABILITY), EXPENSE, DAMAGE, SUITS OR DEMANDS
(INCLUDING FEES AND DISBURSEMENTS OF COUNSEL) ON ACCOUNT OF ANY SUIT OR
PROCEEDING BEFORE ANY GOVERNMENTAL AUTHORITY WHICH ARISES FROM THE TRANSACTIONS
CONTEMPLATED IN THIS AGREEMENT OR OTHERWISE ARISING IN CONNECTION WITH OR
RELATING TO THE LOAN AND ANY SECURITY THEREFOR, UNLESS SUCH SUIT, CLAIM OR
DAMAGES ARE CAUSED BY THE GROSS NEGLIGENCE OR INTENTIONAL MALFEASANCE OF LENDER
OR ITS DIRECTORS, OFFICER, AGENTS OR EMPLOYEES. Upon receiving knowledge of any
suit, claim or demand asserted by a third-party that Lender believes is covered
by this indemnity, Lender shall give Borrower timely notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel acceptable to Lender. Lender may, at its option, also require Borrower
to so defend the matter. This obligation on the part of Borrower survives the
termination of this Agreement and the repayment of the Note.
Section 13
MISCELLANEOUS
Section 13.1. Delay and Waiver. No delay or omission to exercise any
right impairs any such right or be a waiver thereof, but any such right may be
exercised from time to time and as often as may be deemed expedient. A waiver
on one occasion is limited to that particular occasion.
Section 13.2. Complete Agreement. This Agreement, the Schedules and
the other Loan Documents are the complete agreement of the parties hereto and
supersede all previous understandings relating to the subject matter hereof.
This Agreement may be amended only by an instrument in writing that explicitly
states that it amends this Agreement and is signed by the party against whom
enforcement of the amendment is sought. This Agreement may be executed in
counterparts, each of which will be an original and all of which will constitute
a single agreement.
Section 13.3. Severability; Headings. If any part of this Agreement
or the application thereof to any person or circumstance is held invalid, the
remainder of this Agreement
26
is unaffected thereby. The section headings herein are included for convenience
only and may not be deemed to be a part of this Agreement.
Section 13.4. Binding Effect. This Agreement is binding upon and
inures to the benefit of the respective legal representatives, successors and
assigns of the parties hereto; provided however, Borrower may not assign any of
its rights or delegate any of its Obligations hereunder. Lender (and any
subsequent assignee) may transfer and assign this Agreement and deliver the
Collateral to the assignee, who thereupon has all of the rights of Lender; and
Lender (or such subsequent assignee who in turn assigns as aforesaid) is then
relieved and discharged of any responsibility or liability with respect to this
Agreement and said Collateral.
Section 13.5. Notices. Any notices under or pursuant to this
Agreement are deemed duly sent when delivered in hand or when mailed by
registered or certified mail, return receipt requested, or when delivered by
courier or when transmitted by telex, telecopy, or similar electronic medium to
the following addresses:
To Borrower: MHOA Texas I, L.L.C.
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copies To: Xxxxxxx & Xxxxxx, L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxx III, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Lender: DVI Business Credit Corporation
0000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
27
Copies to: DVI Business Credit Corporation
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may change such address by sending notice of the change to
the other parties; such change of address is effective only upon actual receipt
of the notice by the other parties.
Section 13.6. Governing Law. ALL ACTS AND TRANSACTIONS HEREUNDER AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED, CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF CALIFORNIA WITHOUT GIVING EFFECT
TO CONFLICTS OF LAW PRINCIPLES.
Section 13.7. Waiver of Trial by Jury. LENDER AND BORROWER HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
ANY OF THE LOAN DOCUMENTS OR THE RELATIONSHIP BETWEEN LENDER AND BORROWER.
Section 13.8. Submission to Jurisdiction.
(a) BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
CALIFORNIA OR FEDERAL COURT SITTING IN ORANGE COUNTY, CALIFORNIA, OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. BORROWER
HEREBY AGREES THAT SERVICE OF COPIES OF SUMMONS AND COMPLAINTS AND ANY OTHER
PROCESS WHICH MAY BE SERVED IN ANY ACTION OR PROCEEDING ARISING HEREUNDER MAY BE
MADE BY MAILING OR DELIVERING A COPY OF SUCH PROCESS BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS SET FORTH AT THE BEGINNING OF
THIS AGREEMENT.
(b) NOTHING IN THIS PARAGRAPH 13.8 SHALL AFFECT THE RIGHT OF LENDER
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT
OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ANY OF ITS
PROPERTIES IN THE COURTS OF OTHER JURISDICTIONS TO THE EXTENT OTHERWISE
PERMITTED BY LAW.
(c) TO THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE (i) ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OF CALIFORNIA OR ANY FEDERAL COURT
SITTING IN ORANGE COUNTY,
28
CALIFORNIA OR FROM ANY LEGAL PROCESS OUT OF ANY SUCH COURT (WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION,
EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, OR (ii) ANY
OBJECTION TO THE LAYING OF THE VENUE OR OF AN INCONVENIENT FORUM OF ANY SUIT,
ACTION OR PROCEEDING, IF BROUGHT IN CALIFORNIA OR FEDERAL COURT SITTING IN
ORANGE COUNTY, CALIFORNIA UNDER PROCESS SERVED IN ACCORDANCE WITH SUBPARAGRAPH
(a) ABOVE, BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY OR OBJECTION IN
RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE LOANS.
29
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement
by their duly authorized officers as of the date first above written.
BORROWER: LENDER:
MHOA TEXAS I, L.L.C. DVI BUSINESS CREDIT CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxx
------------------------------ ----------------------------------
Xxxxx X. Xxxxxx, President Xxxxxxx X. Xxxx, Executive Vice
President
30
Schedule 1.1
Permitted Liens
1. Those liens listed on Schedule 3.16 of that certain Asset Purchase and
Contribution Agreement dated as of June 16, 1997, executed by and between
Borrower, Seller and certain other parties (the "Purchase Agreement"), and all
other Permitted Encumbrances, as defined therein.
2. Liens and security interest granted to DVI FS, with respect to the
Collateral pursuant to the terms of the six Loan and Security Agreements dated
on or about the date hereof, which Liens and security interests are intended by
all parties to be second to the Liens and security interests of this Agreement.
31
Schedule 4.2
Mergers and Consolidations
Merger with Xxxxxx Texas I, Inc. formerly known as MHOA Texas I, Inc.
32
Schedule 4.3
Purchase of Assets
Purchase of assets of Metroplex Hematology/Oncology Associates, L.L.P. pursuant
to the Purchase Agreement.
33
Schedule 6.1
Contracts
1. The Management Agreement.
2. The Benefit Agreements, Employee/Contract Labor Agreements, Real Property
Leases (for business space only) and Services Contracts listed on Schedule 3.20
of the Purchase Agreement and assumed by Borrower thereunder.
34
Schedule 8.6
Litigation and Proceedings
None
35
Schedule 9.12
Permitted Distributions
Borrower is permitted to make Distributions to Guarantor provided after
such payment Borrower maintains a debt service coverage ratio of no less than
1.5 to 1 for the previous twelve calendar month period.
"Debt service coverage" means (i) the sum of net income plus depreciations
plus amortization plus interest expense, divided by (ii) the sum of capitalized
lease payments plus loan payments plus interest expense.
36
Exhibit 1.1
Net Collectible Percentage
--------------------------
37
Exhibit 2.2
SECURED PROMISSORY NOTE
Due July 1, 1999
FOR VALUE RECEIVED, MHOA TEXAS I, L.L.C.., a Texas limited liability
company ("Maker"), hereby promises to pay to DVI BUSINESS CREDIT CORPORATION
("Holder") or order, the principal sum of FIVE MILLION DOLLARS ($5,000,000), or
such amount as may be advanced thereon from time to time, with interest on the
unpaid principal balance from time to time outstanding at the fluctuating rate
of interest announced publicly by Bank of America, NT&SA in San Francisco,
California, from time to time as its reference rate plus two and one-half
percent (2.5%) per annum, computed on the basis of a 360-day year and actual
days elapsed, until paid. Interest is payable on the first business day of each
calendar month for the preceding month, will all unpaid principal and interest
due and payable in full on July 1, 1999.
1. This Note is made pursuant to, and secured by that certain Loan and
Security Agreement dated as of the date hereof between Holder as Lender and
Maker as Borrower (the "Agreement"). All capitalized terms used but not defined
herein have the meanings ascribed to them in the Agreement, the terms of which
are incorporated herein by reference thereto. This Note is also secured by the
Security Documents referred to in the Agreement. The Agreement and the Security
Documents create a lien on and security interest in the personal property
described therein ("Collateral"). The Agreement and the Security Documents are
collectively referred to as the "Loan and Security Documents" and are hereby
incorporated herein by reference thereto and made a part of this Note.
2. This Note may be prepaid or redeemed in whole or in part at any time
without penalty or premium. Notwithstanding the foregoing, the Agreement may not
be terminated, and is not terminated by any prepayment.
3. Principal and interest are payable to Holder at 0000 XxxXxxxxx Xxxx.,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or such other place as the Holder
may, from time to time in writing, designate.
4. If any part of the principal or interest of the Note is not paid when
due, it will be added to the principal amount of this Note and thereafter bear
interest at the rate provided above. If the specified interest rate at any time
exceeds the maximum rate allowed by law, then the applicable interest rate is
reduced to the maximum rate allowed by law.
5. The occurrence of an Event of Default under the Agreement may, at the
election of the Holder, make the entire unpaid balance of the principal amount
of this Note and accrued interest thereon immediately due and payable without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or other notices or demands of any kind or character.
6. Failure of the Holder to exercise the acceleration option of paragraph
5 of this Note on the occurrence of an Event of Default does not constitute a
waiver of the right to exercise such option on the subsequent occurrence of an
Event of Default.
7. Principal and interest is payable in lawful money of the United States
of America which is legal tender in payment of all debts and dues, public and
private, at the time of payment. If any payment of principal or interest under
this Note becomes due on a Saturday, Sunday or legal or banking holiday, such
payment is due on the next succeeding business day. Maker waives presentment,
demand for payment, notice of nonpayment, protest, and notice of protest, and
all other notices and demands in connection with the delivery, acceptance,
performance, default, or enforcement of this Note. Maker consents to any and all
assignments of this Note, extensions of time, renewals, and waivers that may be
made or granted by the Holder. Maker expressly agrees that such assignments,
extensions of time, renewals, or waivers do not affect Maker's liability
hereunder. Maker agrees that Holder may, without notice to Maker and without
affecting the liability of Maker, accept additional or substitute security for
this Note, or release any security or any party liable for this Note, or extend
or renew this Note.
8. If Maker fails to make any payment of interest or principal under this
Note, including the payment due upon maturity, when the same is due and payable
and such failure continues for five (5) days after nonpayment, a late charge by
way of damages to the extent provided in this paragraph is immediately due and
payable. Maker recognizes that default by Maker in making the payments herein
agreed to be paid when due will result in the Holder incurring additional
expenses, in loss to the Holder of the use of the money due and in frustration
to the Holder in meeting its other commitments. Maker agrees that, if for any
reason Maker fails to pay any amount due under this Note when due, the Holder is
entitled to damages for the detriment caused thereby, but that it is extremely
difficult and impractical to ascertain the extent of such damages. Maker
therefore agrees that a sum equal to five cents ($.05) for each one dollar
($1.00) of each payment which is not received within five (5) days after the
date it is due and payable is a reasonable estimate of the damages to the
Holder, which sum Maker agrees to pay on demand.
9. If action is instituted on this Note (including without limitation,
any proceedings for collection hereof in any bankruptcy or probate matter or
case), or if proceedings are commenced on or under any of the Loan and Security
Documents, and Holder prevails in such proceedings Maker promises to pay the
Holder all costs of collection and enforcement including, without limitation,
reasonable attorneys' fees plus interest on any defaulted amount at the rate of
eighteen percent (18%) per annum.
10. Any and all notices or other communications or payments required or
permitted to be given hereunder are effective when received or refused if given
or rendered in writing, in the manner provided in the Agreement.
2
11. This Note inures to the benefit of and is binding upon the
Holder's successors and assigns. References to the "Holder" are deemed to refer
to the holders of this Note at the time such reference becomes relevant.
12. If any term, provision, covenant, or condition of this Note is
held by a court of competent jurisdiction to be invalid, void, or unenforceable,
the rest of this Note remains in full force and effect to the greatest extent
permitted by law and is in no other way affected, impaired or invalidated.
13. Nothing contained herein or in the Loan and Security Documents may
be deemed to prevent recourse to and the enforcement against Maker and the
Collateral of all liabilities, obligations and undertakings contained herein and
in the Loan and Security Documents.
14. THIS NOTE IS GOVERNED BY AND MUST BE CONSTRUED UNDER THE LAWS OF
THE STATE OF CALIFORNIA AND MAKER AGREES TO SUBMIT TO THE JURISDICTION OF THE
STATE OR FEDERAL COURTS IN THE STATE OF CALIFORNIA.
Dated: June 16, 1997
MHOA TEXAS I, L.L.C.,
By:
----------------------------------
Xxxxx X. Xxxxxx, President
3
Exhibit 5.5
Borrowing Base Report
Compliance Certification
------------------------
In connection with the Borrowing Base report dated the date hereof
delivered by MHOA Texas I, L.L.C. ("Borrower") pursuant to that certain Loan and
Security Agreement by and among Borrower and DVI Business Credit Corporation,
the undersigned hereby certifies as follows:
1. Borrower has complied and is in compliance in all material respects
with all of the terms, covenants and conditions of the Loan and
Security Agreement;
2. No Default or Event of Default exists under the Loan and Security
Agreement; and
3. The representations, warranties and covenants contained in Section 8
of the Loan and Security Agreement are true in all material respects
as of the date hereof.
Capitalized terms used herein not otherwise defined shall have the
respective earnings ascribed thereto in the Loan and Security Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be duly
executed and delivered as of the ______ day of _______________, 199__.
Borrower:
MHOA TEXAS I, L.L.C.
By:
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Name:
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Title:
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