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EXHIBIT 4.2(K)
SEVENTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT
THIS SEVENTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT (this
"Seventh Amendment to Loan Agreement" or this "Seventh Amendment") is entered
into on January 7, 1999 between NBD Bank ("NBD" or "Bank"), as lender, with
offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000; Universal Standard
Healthcare, Inc., formerly known as Universal Standard Medical Laboratories,
Inc., a Michigan corporation ("USML"); Universal Standard Healthcare of
Michigan, Inc., formerly known as Universal Standard Managed Care of Michigan,
Inc., a Michigan corporation ("Michigan Managed Care"); Universal Standard
Healthcare of Ohio, Inc., formerly known as Universal Standard Managed Care of
Ohio, Inc., an Ohio corporation ("Ohio Managed Care"); Universal Standard
Healthcare of Delaware, Inc., formerly known as Universal Standard Managed Care,
Inc., a Delaware corporation ("Delaware Managed Care"); T.P.A., Inc., a Michigan
corporation ("Processing"); and A/R Credit, Inc., a Michigan corporation ("AR
Credit"), all of whose addresses are 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000.
RECITALS
This Seventh Amendment to Loan Agreement is based on the following
recitals ("Recitals"), which are incorporated into and made a part of this
Seventh Amendment:
1. USML, Delaware Managed Care, Ohio Managed Care, Michigan
Managed Care, Processing, AR Credit (each, an "Obligor" and
collectively, the "Obligors"), and NBD are parties to a Revolving
Credit and Loan Agreement dated April 30, 1997, as amended by a First
Amendment to Revolving Credit and Loan Agreement dated September 26,
1997, by a Second Amendment to Revolving Credit and Loan Agreement
dated November 30, 1997, by a Third Amendment to Revolving Credit and
Loan Agreement dated February 2, 1998, by a Fourth Amendment to
Revolving Credit and Loan Agreement dated March 12, 1998, by a Fifth
Amendment to Revolving Credit and Loan Agreement dated June 5, 1998, by
a letter agreement dated July 21, 1998, by a Sixth Amendment to
Revolving Credit and Loan Agreement dated August 3, 1998, and by a
letter agreement dated October 8, 1998 (as amended, and as may be
further amended or restated from time to time, the "Loan Agreement").
In addition to the Loan Agreement, Bank and Obligors are parties to
various other loan and security documents and guaranties more
particularly described in or executed in connection with the Loan
Agreement (which are defined as the "Loan Documents" in the Loan
Agreement). Capitalized terms used but not defined in this Seventh
Amendment have the same meanings given to those terms in the Loan
Documents.
2. Simultaneously with the execution of the Sixth Amendment
USML entered into the Labcorp Transaction.
3. In connection with the October 8, 1998 letter agreement, USML
executed a Master Demand Business Loan Note dated October 8, 1998 in
the original principal
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amount of $2,000,000 (the "Demand Note"). NBD made certain loans and
advances to USML, which are evidenced by the Demand Note.
4. Obligors have requested and, subject to the terms hereof,
Bank has agreed to amend the Loan Agreement as set forth in this
Seventh Amendment.
AGREEMENT
Based on the foregoing Recitals (which are incorporated herein as
representations, warranties, acknowledgments and agreements of the parties, as
the case may be) and for other good and valuable consideration, the receipt and
adequacy of which is mutually acknowledged by the parties hereto, Obligors and
Bank agree as follows:
A. The following defined terms in Section 1.1 of the Loan
Agreement are amended in their entirety to read as follows:
"Adjusted Line of Credit Floating Rate" means the per annum
rate of interest equal to the sum of (a) the Prime Rate in effect from
time to time, plus, (b) one percent. The Adjusted Line of Credit
Floating Rate changes simultaneously with any change in the Prime Rate.
"Borrowing Base" means as of the date of determination, the
sum of (1) the following applicable percentage of Qualified Accounts,
multiplied by, a person's Qualified Accounts reported in a Collateral
Activity Report delivered in accordance with Section 6.4(b), plus, (2)
the following applicable percentage of Qualified Equipment, multiplied
by, a person's Qualified Equipment reported in a Collateral Activity
Report delivered in accordance with Section 6.4(b:
Qualified Accounts up to the Applicable Amount
Qualified Equipment up to 80%
All Qualified Accounts reported in the Borrowing Base must be
net of reserves for contractual reimbursement levels and bad debt
expense, and these reserves must be satisfactory to NBD in its sole
discretion. "Applicable Amount" means 40% during October, November, and
December, 1998; 30% during January and February, 1999; and 25% during
March, 1999.
"Termination Date" means the earlier to occur of (a) March 31,
1999 and (b) at NBD's option and in its sole discretion, any time
before that.
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B. Clause (ii) of the definition of Qualified Account in
section 1.1 of the Loan Agreement is amended in its entirety to read as
follows: "(ii) [Intentionally omitted.]"
C. Section 2.1 of the Loan Agreement is amended in its
entirety to read as follows:
"2.1 LINE OF CREDIT. From time to time prior to the Termination Date
and subject to the terms and conditions set forth in this Agreement,
NBD agrees, in its sole and absolute discretion, to make Loans to USML
in such amounts as USML may request, provided that the aggregate
principal amount of all borrowings made by USML under this line of
credit at any one time outstanding may not exceed the lesser of (a)
$2,000,000 minus the face amount of the Litigation Letter of Credit
(the "Line Limit") or (b) the Borrowing Base minus the face amount of
the Litigation Letter of Credit (the "Line of Credit" or the
"Credit"). The outstanding loans and advances made in connection with
and evidenced by the Demand Note, in the principal amount of
$____________ on the date of the Seventh Amendment, are rolled into
and consolidated with the Line of Credit. Advances under the Line of
Credit will only be made at the Adjusted Line of Credit Floating Rate,
and no Advances under the Line of Credit will be made at the Adjusted
LIBOR Rate.
All such Loans are evidenced by a single promissory note of USML (the
"Line of Credit Note"), payable to the order of NBD and dated as of
the date of the Seventh Amendment, in substantially the form of
Exhibit 2.1 attached to the Seventh Amendment. The Line of Credit Note
must be executed by USML and delivered to NBD prior to or
simultaneously with the initial Loan under this Line of Credit."
D. By January 15, 1999, NBD and the Obligors agree to meet to
discuss and attempt to agree on amending and setting financial
covenants through the latest maturity date of any of the Loans. If for
any reason NBD and the Obligors are unable to agree on the amended and
reset financial covenants by January 15, 1999, then such event
constitutes an Event of Default under all of the Loan Documents for
which there is no cure period. The foregoing provision amends any prior
provisions in the Loan Documents dealing with this issue, and waives
any Event of Default created by the failure to agree on amended and
reset financial covenants by October 2, 1998.
E. Simultaneously with the execution of this Seventh
Amendment, Borrower must pay to NBD a $5,000 facility fee, which fee
is fully earned upon NBD's execution of this Seventh Amendment.
F. The Obligors have advised that Delaware Managed Care has
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established Universal Standard Healthcare of Florida, Inc., a Florida
corporation ("Florida Managed Care") as a 100% owned subsidiary that
will be licensed to do business in Florida. Notwithstanding anything
to the contrary contained in the Loan Documents, NBD consents to
Delaware Managed Care's creation of Florida Managed Care if (1)
Obligors' investment in the New Subsidiary does not exceed $150,000;
(2) Delaware Managed Care pledges to NBD 100% of the issued and
outstanding capital stock of the Florida Managed Care in accordance
with the Stock Pledge Agreement (the "Florida Managed Care Stock
Pledge Agreement") in the form attached as Exhibit A; and (3) the
Obligors take such other further actions and execute such other
documents as NBD may reasonably request in connection with Florida
Managed Care. Subject to Section 9.27 of the Loan Agreement (as
amended by this Seventh Amendment), Florida Managed Care assumes the
obligations of the Obligors under the Loan Documents and is an Obligor
under the Loan Documents for all purposes. In connection therewith (1)
Florida Managed Care represents and warrants that all representations
and warranties (including those in Article IV of the Loan Agreement
are true, correct and complete with respect to it; (2) the
parenthetical "(other than Michigan Managed Care and Ohio Managed
Care)" appearing in several places in the Loan Agreement is amended to
read as follows: "(other than Michigan Managed Care, Ohio Managed
Care, and Florida Managed Care)"; (3) the parenthetical in the first
sentence of Section 6.11 of the Loan Agreement is amended to read as
follows: "(including Michigan Managed Care, Ohio Managed Care, and
Florida Managed Care)"; and (4) Section 9.27 of the Loan Agreement is
amended to read as follows: "Notwithstanding any other term or
condition of this Agreement or the other Loan Documents, Michigan
Managed Care's, Ohio Managed Care's and Florida Managed Care's
liability with respect to the Loans is limited to that portion of the
Loan's arising in connection with Standby Letters of Credit issued for
their respective accounts in connection with their managed care
business."
G. Obligors have advised NBD that they intend to dissolve A/R
Credit. Based on each Obligor's representation and warranty that A/R
Credit has no assets, NBD waives any Event of Default under the Loan
Documents due to A/R Credit's dissolution.
H. The Loan Documents are amended, effective as of July 14,
1998, to provide that the maturity date of the Term Note is amended
from July 15, 1998 to August 4, 1998.
I. NBD waives through December 31, 1998 the default under the
Loan Documents due to Obligors' failure to deliver to NBD the Managed
Care Reports.
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J. From and after the date of this Seventh Amendment,
references in the Loan Documents (i) to the "Loan Agreement" are to be
treated as referring to the Loan Agreement as amended by this Seventh
Amendment; (ii) to "obligations" and "Obligations" are to be treated as
referring to all indebtedness and obligations referred to in this
Seventh Amendment (including the Obligations evidenced by the Line of
Credit Note; (iii) to "Loan Documents" includes, without limitation,
the Warrant Documents, the Line of Credit Note and the Florida Managed
Care Stock Pledge Agreement; (iv) to "Obligors" includes Florida
Managed Care; (v) to "Collateral" includes, without limitation, the
collateral granted to NBD under the Florida Managed Care Stock Pledge
Agreement.
K. Prior to or simultaneously with execution and delivery of
this Seventh Amendment, Obligors must cause to be executed and
delivered to Bank such financing statements, resolutions and other
agreements that Bank may require to effectuate the transactions
contemplated by this Seventh Amendment. Obligors must pay all costs and
expenses (including attorneys' fees) incurred by Bank in connection
with this Seventh Amendment.
L. Obligors expressly acknowledge and agree that all
collateral security and security interests, liens, pledges, guaranties,
and mortgages heretofore or hereafter granted Bank including, without
limitation, such collateral, security interests, liens, pledges, and
mortgages granted under the Loan Documents, extend to and cover all of
each Obligor's Obligations to Bank, now existing or hereafter arising
including, without limitation, those arising in connection with this
Seventh Amendment and under all guaranty agreements now or in the
future given by one or more of the Obligors in Bank's favor, upon the
terms set forth in such agreements, all of which security interests,
liens, pledges, and mortgages are ratified, reaffirmed, confirmed and
approved.
M. Obligors represent and warrant to NBD that:
(1) (a) The execution, delivery and performance of
this Seventh Amendment by the Obligors and all agreements and
documents delivered by Obligors in connection with this Seventh
Amendment have been duly authorized by all necessary corporate or
other organizational action and does not and will not require any
consent or approval of its stockholders or members, violate any
provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect
having applicability to it or of its articles of incorporation,
articles of organization, or bylaws, or result in a breach of or
constitute a default under any indenture or loan or credit
agreement or any other agreement, lease or instrument to which any
Obligor is a party or by which it or its properties may be bound
or affected.
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(b) No authorization, consent, approval,
license, exemption of or filing a registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to
the valid execution, delivery or performance by Obligors of this
Seventh Amendment and all agreements and documents delivered in
connection with this Seventh Amendment.
(c) This Seventh Amendment and all agreements and
documents delivered by Obligors in connection with this Seventh
Amendment are the legal, valid and binding obligations of Obligors
enforceable against each of them in accordance with the terms
thereof.
(2) After giving effect to the amendments contained
in this Seventh Amendment, except as set forth on Exhibit C, all
of the representations and warranties contained in the Loan
Documents (other than in Section 4.16 of the Loan Agreement) are
true and correct on and as of the date hereof with the same force
and effect as if made on and as of the date hereof.
(3) Obligors's financial statements furnished to NBD,
fairly present Obligors's financial condition as at such dates and
the results of Obligors's operations for the periods indicated,
all in accordance with generally accepted accounting principles
applied on a consistent basis, and since the date of the last such
financial statement there has been no material adverse change in
such financial condition.
(4) After giving effect to this Seventh Amendment no
Default or Event of Default has occurred and is continuing or will
exist on the date of this Seventh Amendment under the Loan
Agreement or any of the other Loan Documents.
N. The terms and provisions of this Seventh Amendment amend,
add to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Seventh Amendment, all of the
other terms and conditions of the Loan Agreement and the other Loan
Documents (including all guaranties, which, without limitation, extend
to and cover the Obligations arising in connection with the Lease
Transactions and the Lease Documents) remain in full force and effect
and are hereby ratified, reaffirmed, confirmed, and approved.
O. If there is an express conflict between the terms of this
Seventh Amendment to Loan Agreement and the terms of the Loan Agreement
or the other Loan Documents, the terms of this Seventh Amendment govern
and control.
P. This Seventh Amendment may be executed in any number of
counterparts
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with the same effect as if all signatories had signed the same
document. All counterparts must be construed together to constitute one
instrument.
Q. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
R. There are no promises or inducements which have been made
to any signatory hereto to cause such signatory to enter into this
Seventh Amendment other than those which are set forth in this Seventh
Amendment.
S. RELEASE. AS OF THE DATE HEREOF EACH OBLIGOR REPRESENTS AND
WARRANTS THAT IT IS UNAWARE OF, AND POSSESSES, NO CLAIMS OR CAUSES OF
ACTION AGAINST NBD. NOTWITHSTANDING THIS REPRESENTATION AND AS FURTHER
CONSIDERATION FOR THE AGREEMENTS AND UNDERSTANDINGS HEREIN, EACH
OBLIGOR INDIVIDUALLY, JOINTLY, SEVERALLY, AND JOINTLY AND SEVERALLY,
EACH OF THEIR EMPLOYEES, AGENTS, EXECUTORS (TO THE EXTENT PERMITTED BY
APPLICABLE LAW WITH RESPECT TO EMPLOYEES, AGENTS, AND EXECUTORS),
SUCCESSORS AND ASSIGNS HEREBY RELEASE NBD, ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, ATTORNEYS, AFFILIATES, SUBSIDIARIES, SUCCESSORS AND
ASSIGNS FROM ANY LIABILITY, CLAIM, RIGHT OR CAUSE OF ACTION WHICH NOW
EXISTS, OR HEREAFTER ARISES, WHETHER KNOWN OR UNKNOWN, ARISING FROM OR
IN ANY WAY RELATED TO FACTS IN EXISTENCE AS OF THE DATE HEREOF. BY WAY
OF EXAMPLE AND NOT LIMITATION, THE FORGOING INCLUDES ANY CLAIMS IN ANY
WAY RELATED TO ACTIONS TAKEN OR OMITTED TO BE TAKEN BY NBD UNDER THE
LOAN DOCUMENTS, AND THE BUSINESS RELATIONSHIP WITH NBD.
T. WAIVER OF JURY TRIAL AND ACKNOWLEDGMENT. THE PARTIES HERETO
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL RIGHT,
BUT THAT THIS RIGHT MAY BE WAIVED. NBD AND OBLIGORS EACH HEREBY
KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVE ALL RIGHTS TO A
TRIAL BY JURY OF ALL DISPUTES ARISING OUT OF OR IN RELATION TO THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENTS BETWEEN ANY OF
THE PARTIES. NO PARTY SHALL BE DEEMED TO HAVE RELINQUISHED THE BENEFIT
OF THIS WAIVER OF JURY TRIAL UNLESS SUCH RELINQUISHMENT IS IN A WRITTEN
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INSTRUMENT SIGNED BY THE PARTY TO WHICH SUCH RELINQUISHMENT WILL BE
CHARGED.
NBD BANK
By: Xxxxxx X. Xxxxxx
---------------------------------------------
Xxxxxx X. Xxxxxx
First Vice President
UNIVERSAL STANDARD
HEALTHCARE, INC.
By: Xxxx X. Xxx
---------------------------------------------
Xxxx X. Xxx
Vice President Finance and Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF MICHIGAN, INC.
By: Xxxx X. Xxx
---------------------------------------------
Xxxx X. Xxx, Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF OHIO, INC.
By: Xxxx X. Xxx
---------------------------------------------
Xxxx X. Xxx, Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF DELAWARE, INC.
By: Xxxx X. Xxx
---------------------------------------------
Xxxx X. Xxx, Treasurer
A/R CREDIT, INC.
By: Xxxx X. Xxx
---------------------------------------------
Xxxx X. Xxx, Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF FLORIDA, INC.
By: Xxxx X. Xxx
---------------------------------------------
Xxxx X. Xxx, Treasurer
Exhibit 2.1 Line of Credit Note
A Stock Pledge Agreement
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EXHIBIT 2.1
LINE OF CREDIT NOTE
$2,000,000 January 7, 0000
Xxxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, the undersigned, Universal Standard Healthcare, Inc.,
formerly known as Universal Standard Medical Laboratories, Inc., a Michigan
corporation ("Borrower"), promises to pay to the order of NBD Bank ("Bank"),
under the Revolving Credit and Loan Agreement, dated April 30, 1997, as amended
(as amended, and as may be further amended or restated from time to time, the
"Credit Agreement"), by and between Borrower, Bank, and others, at the main
office of the Bank in Detroit, Michigan in accordance with the Credit Agreement,
in lawful money of the United States of America and in immediately available
funds, the principal sum of $2,000,000, or such lesser amount as is recorded on
the books and records of Bank, on the earlier to occur of the Termination Date
(as defined in the Credit Agreement) or demand for payment by Bank, together
with interest on the outstanding balance thereof as provided in the Credit
Agreement.
The Bank is hereby authorized by Borrower to record on the schedule attached
to this Note, or on its books and records, the date, amount and type of each
Advance, the applicable interest rate (including any changes therein), the
amount of each payment of principal thereon and the other information provided
for on such schedule, which schedule or books and records, as the case may be,
constitute presumptive evidence of the information so recorded, provided,
however, that any failure by the Bank to record any such information shall not
relieve Borrower of its obligation to repay the outstanding principal amount of
all Advances made by the Bank, all accrued interest thereon, and any amount
payable with respect thereto in accordance with the terms of this Note and the
Credit Agreement.
This Note is in substitution and exchange for the Master Demand Business Loan
Note dated October 8, 1998 in the original principal amount of $2,000,000 (the
"Old Note") and shall not in any circumstances be deemed a novation or to have
paid, terminated, extinguished or discharged the undersigned's indebtedness
evidenced by the Old Note, all of which indebtedness shall continue under and be
evidenced and governed by this Note. The Old Note is amended and restated in its
entirety by this Note. Any reference in any other document or instrument
(including but not limited to the Loan Agreement) to the Old Note shall
constitute a reference to this Note
This Note is subject to, and evidences the Advances made by Bank under, the
Credit Agreement, to which reference is made for a statement of the
circumstances and terms under which this Note is subject to prepayment and under
which its due date may be accelerated and other terms applicable to this Note.
Capitalized terms used but not defined in this Note have the same meanings as in
the Credit Agreement.
Borrower and each endorser or guarantor hereof waive demand, presentment,
protest, diligence, notice of dishonor and any other formality in connection
with this Note. Borrower agrees to pay, in addition to the principal, interest
and other sums due and payable hereon, all costs of collecting this Note,
including reasonable attorneys' fees and expenses.
UNIVERSAL STANDARD HEALTHCARE,
INC., a Michigan Corporation
By: Xxxx X. Xxx
------------------------------------
Xxxx X. Xxx
Vice President Finance and Treasurer
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EXHIBIT A
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (this "Agreement ") is made as of December ,
1998, by Universal Standard Healthcare of Delaware, Inc., formerly known as
Universal Standard Managed Care, Inc., a Delaware corporation ("Pledgor"),
Universal Standard Healthcare of Florida, Inc., a Florida corporation,
("Florida Managed Care" or "Issuer"); in favor of NBD Bank ("Lender").
RECITALS
A. Pledgor is the legal and beneficial owner of the shares of capital
stock (the "Stock") listed on Schedule "A," which constitute all of the issued
and outstanding shares of capital stock of Issuer.
B. Issuer, Pledgor, and others are parties to a Revolving Credit and Loan
Agreement dated April 30, 1997, as amended by a First Amendment to Revolving
Credit and Loan Agreement dated September 26, 1997, by a Second Amendment to
Revolving Credit and Loan Agreement dated November 30, 1997, by a Third
Amendment to Revolving Credit and Loan Agreement dated February 2, 1998, by a
Fourth Amendment to Revolving Credit and Loan Agreement dated March 12, 1998, by
a Fifth Amendment to Revolving Credit and Loan Agreement dated June 5, 1998, by
a letter agreement dated July 21, 1998, by a Sixth Amendment to Revolving Credit
and Loan Agreement dated August 3, 1998, by a letter agreement dated October 8,
1998, and by a Seventh Amendment to Revolving Credit and Loan Agreement dated on
or about the same date as this Agreement (as amended and as may be further
amended or supplemented from time to time, the "Loan Agreement"), pursuant to
which Lender has agreed, subject to the terms and conditions of the Loan
Agreement, to make loans and advances (collectively, the "Loans") to or for the
benefit of the Issuer, Pledgor, and others as provided in the Loan Agreement.
C. It is a condition precedent to the obligations of Lender to make
further Loans that Pledgor shall have entered into this Agreement.
D. Capitalized terms used but not defined in this Agreement have the
meanings given them in the Loan Agreement.
THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby expressly acknowledged, Pledgor and the Issuer
agree with Lender as follows:
1. Definitions: In addition to the terms defined above or elsewhere
in this Agreement, the following terms shall have the following meanings:
(a) "Collateral" has the meaning assigned in Section 2 of this
Agreement.
(b) "Issuer Obligations" means all obligations or liabilities of
Issuer to
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Pledgor, now existing or hereafter incurred, including, without limitation, all
accounts payable, contract rights, chattel paper, book debts, notes, drafts,
instruments, documents, acceptances and other forms of present or future
obligations of Issuer to Pledgor, and all collateral security and any guarantees
of any kind given by any Person with respect to any of the foregoing.
(c) "Obligations" has the same meaning as in the Loan Agreement.
(d) "Proceeds" has the meaning assigned to it under the Michigan
Uniform Commercial Code and, in any event, includes, but not is not limited to
(i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to Pledgor from time to time with respect to any of the Collateral, (ii)
any and all payments (in any form whatsoever) made or due and payable to Pledgor
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental body, authority bureau or agency (or any person acting under color
of Governmental Authority), and (iii) any and all other amounts from time to
time paid or payable under or in connection with any of the Collateral,
including, without limitation, any and all dividends, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of, or in exchange for, any of the Stock.
2. Pledgor's Pledge: As security for the payment and performance of
any and all of the Obligations, Pledgor hereby delivers, pledges and grants to
Lender a continuing security interest in the following:
(a) the Stock listed on Schedule A and all other types or items
of property which is to be pledged to Lender and held as Collateral under this
Agreement;
(b) stock powers ("Powers") duly executed in blank;
(c) the Issuer Obligations; and
(d) the Proceeds of each of the foregoing. (The Stock, the
Powers, the Issuer Obligations and the Proceeds are collectively referred to as
the "Collateral").
3. Lender's Duties: Subject to Section 9-207 of the Michigan Uniform
Commercial Code ("Code"), Lender has no duty with respect to the Collateral.
Without limiting the generality of the foregoing, Lender shall be under no
obligation to take any steps necessary to preserve rights in the Collateral
against any other parties or to exercise any rights represented thereby;
provided, however, that Lender may, at its option, do so, and any and all
expenses incurred in connection therewith shall be for the sole account of
Pledgor.
4. Voting Rights; Dividends; Etc.: During the term of this Agreement:
(a) As long as no Default or Event of Default shall have occurred
and be continuing, Pledgor shall be entitled to exercise any and all voting and
other consensual rights
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pertaining to the Stock or any part thereof, and Lender shall execute and
deliver (or cause to be executed and delivered) to Pledgor all such proxies and
other instruments as Pledgor may reasonably request for the purpose of enabling
Pledgor to exercise those voting and other rights which it is entitled to
exercise pursuant to the foregoing; provided, however, that no vote shall be
cast or consent, waiver or ratification given or action taken which would
directly or indirectly impair the Collateral or be inconsistent with or violate
any provision of this Agreement, the Loan Agreement or any other Loan Document.
(b) If Pledgor shall become entitled to receive or shall receive
any dividends or other distributions on the Stock including any stock
certificate (including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital, or issued in connection with any reorganization), option
or rights, whether as an addition to, in substitution of, or in exchange for any
shares of any Stock, or otherwise, Pledgor agrees to accept the same as agent
for Lender and to hold the same in trust on behalf of and for the benefit of the
Lender and to deliver the same forthwith to the Lender in the exact form
received, with the endorsement of Pledgor when necessary and/or appropriate
undated stock powers duly executed in blank, to be held by Lender as additional
collateral security for the Obligations; provided, however, that until a Default
or an Event of Default occurs under the Loan Agreement Pledgor may use in the
ordinary course of its business cash dividends received from the Issuer.
(c) Pledgor will promptly deliver to Lender to hold as Collateral
any and all notes, drafts or other documents or instruments evidencing Issuer
Obligations, duly endorsed in blank or accompanied by an assignment to Lender,
and will also promptly deliver to Lender all Proceeds of Issuer Obligations,
also to be held as Collateral hereunder.
(d) If an Default or Event of Default shall have occurred and be
continuing, Pledgor shall not be entitled to receive or retain any dividends or
distributions paid in respect of the Stock whether paid or payable in cash or
other property, whether in redemption of, or in exchange for the Stock, whether
in connection with a partial or total liquidation or dissolution of the Stock,
or whether in connection with a reduction of capital, capital surplus or paid-in
surplus of the Stock or otherwise, and any and all such dividends or
distributions shall be forthwith delivered to Lender to hold as Collateral and
shall, if received by Pledgor, be received in trust for delivery to Lender, be
segregated from the other property or funds of Pledgor, and be forthwith
delivered to Lender as Collateral in the same form as so received (with
any necessary endorsement).
(e) If an Default or Event of Default shall have occurred and be
continuing, all rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to this Section
4 shall, at Lender's option, cease, and all such rights shall, at Lender's
option, thereupon become vested in Lender, so long as an Default or Event of
Default shall continue, and Lender shall, at its option, thereupon have the sole
right, but not the obligation, to exercise such voting and other consensual
rights.
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5. Pledgor Representations: Pledgor represents, wan-ants and agrees
that:
(a) There are no restrictions upon the transfer of any of the
Collateral and Pledgor has the right to pledge and grant a security interest in
or otherwise transfer such Collateral free of any Liens or rights of third
parties.
(b) Except for Permitted Liens (as defined in the Loan
Agreement), all of the Collateral is and shall remain free from all Liens,
claims, encumbrances, and purchase money or other security interests. Pledgor
shall not, without the Lender's prior written consent, sell or otherwise dispose
of any or all of the Collateral.
(c) This Agreement, and the delivery to Lender of the Stock,
creates a valid, perfected, and first priority security interest in the Stock in
favor of Lender, and all actions necessary or desirable to such perfection
have been duly taken.
(d) No authorization or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body is required either:
(i) for the grant by Pledgor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by Pledgor, (ii) for the
perfection of, or exercise by, Lender of its rights and remedies hereunder
(except as may have been taken by or at the direction of Pledgor or as may be
required in connection with a disposition of the Stock by laws affecting the
offering and sale of securities generally); or (iii) for the exercise by Lender
of the voting or other rights provided for in this Agreement or the remedies in
respect of the Stock pursuant to this Agreement (except as may be required in
connection with a disposition of the Stock by laws affecting the offering and
sale of securities generally).
(e) Pledgor has made its own arrangements for keeping informed of
changes or potential changes affecting the Collateral (including, but not
limited to, rights to convert, rights to subscribe, payment of dividends,
reorganization or other exchanges, tender offers and voting rights) and Pledgor
agrees that Lender shall not have any responsibility or liability for informing
Pledgor of any such changes or potential changes or for taking any action or
omitting to take any action with respect thereto.
(f) Schedule A is an accurate and current listing of all shares
of Stock of the Issuer presently owned or controlled by Pledgor. If Pledgor at
any time owns or controls any other shares of stock of Issuer, all such stock
shall without further act or deed be subject to all of the terms and conditions
of this Agreement and Pledgor must immediately take such action to perfect
Lender's lien and security interest as Lender may request, including executing
undated blank stock powers.
(g) Except as described in the Loan Agreement, there are no
options for the purchase of Stock nor are there any rights represented thereby,
warrants or other rights to acquire stock of any of the Issuer outstanding at
this time.
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(h) All of the outstanding shares of Stock have been duly and
validly issued by the Issuer, and they are fully paid and nonassessable.
(i) There are no existing agreements with respect to the
Collateral between Pledgor and any other person or entity (other than the
Lender).
(j) This Agreement and the Powers have been duly authorized;
executed and delivered by Pledgor and each constitutes a legal, valid and
binding obligation of Pledgor, enforceable in accordance with its terms.
6. Stock Adjustments: During the term of this Agreement and until the
Obligations have been paid in full, no reclassification, readjustment,
recapitalization or other change shall be declared or made in the capital
structure of Issuer, without the prior written consent of Lender.
7. Warrants: During the term of this Agreement and until the
Obligations have been paid in full, no subscriptions, warrants or any other
rights or options shall be issued in connection with the Stock, without the
prior written consent of Lender.
8. Consent: Subject to Lender's obligations to use reasonable care in
the custody and preservation of Collateral in its possession, Pledgor hereby
consents that, from time to time, before or after the occurrence or existence of
any Default or Event of Default, with or without notice to or assent from
Pledgor, any other security at any time held by or available to Lender for any
of the Obligations or any other security at any time held by or available to
Lender of any other person, firm or corporation secondarily or otherwise liable
for any of the Obligations, may be exchanged, surrendered, or released and any
of the Obligations may be changed, altered, renewed, extended, continued,
surrendered, compromised, waived or released, in whole or in part, as Lender may
see fit, and Pledgor shall remain bound under this Agreement notwithstanding any
such exchange, surrender, release, alteration, renewal, extension, continuance,
compromise, waiver or inaction, or extension of further credit.
9. Remedies Upon Default:
(a) Upon the occurrence of an Event of Default, Lender shall
have, in addition to any other rights given by law or the rights against Pledgor
hereunder, in the Loan Agreement, or other Loan Documents, all of the rights and
remedies with respect to the Collateral of a secured party under the Code.
(b) In addition, with respect to the Collateral, or any part
thereof, Lender may sell or cause the same to be sold at any public or private
sale, in one or more sales or lots, at such reasonable price as Lender may deem
best, and for cash or on credit or for future delivery, without assumption of
any credit risk, and the purchaser of any or all of the Collateral so sold shall
thereafter hold the same absolutely, free from any claim, encumbrance or right
of any kind whatsoever.
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(c) Pledgor hereby agrees that any transfer or sale of the
Collateral conducted in conformity with reasonable commercial practices of
banks, insurance companies or other financial institutions disposing of property
similar to the Collateral shall be deemed to be commercially reasonable. Any
requirements of reasonable notice shall be met if such notice is mailed to
Pledgor, at the address set forth below, at least ten (10) days before the time
of the sale or disposition; provided that no notification need be given to
Pledgor if it has signed, after default, a statement renouncing or modifying any
right to notification and provided further that no such notification shall be
required as to any of the Collateral which is of a type customarily sold in a
recognized market. Any other requirement of notice, demand or advertisement for
sale, is, to the extent not prohibited by law, waived.
(d) Lender may, in its own name, or in the name of a designee or
nominee, buy the Stock at any public sale of the Stock, and Lender may also buy
at private sale, if the Stock or other Collateral is sold in a recognized market
or is the subject of widely distributed standard price quotations and if
purchased at a price quoted by an independent third party in such market. Lender
shall have the right to execute any document or form, in its name or in the name
of Pledgor, which may be necessary or desirable in connection with any such sale
of Collateral.
(e) In view of the fact that federal and state securities laws
may impose certain restrictions on the method by which a sale of the Stock may
be effected after an Event of Default, Pledgor agrees that upon the occurrence
of an Event of Default, Lender may from time to time attempt to sell all or any
part of the Stock by a private placement, restricting the bidders and
prospective purchasers to those who will represent and agree that they are
"accredited investors" within the meaning of Regulation D promulgated pursuant
to the Securities Act of 1933, as amended ("Securities Act"), and are purchasing
for investment only and not for distribution. In so doing, Lender may solicit
offers to buy the Stock, or any part of it, for cash, from a limited number of
investors who might be interested in purchasing the Stock. If Lender hires a
firm of regional or national reputation that is engaged in the business of
rendering investment banking and brokerage services to solicit such offers and
facilitate the sale of the Stock, then Lender's acceptance of the highest offer
obtained through the efforts of such firm shall be deemed to be a commercially
reasonable method of disposition of such Stock.
10. Lender as Pledgor's Attorney-in-Fact: Pledgor hereby irrevocably
appoints Lender as its attorney-in-fact to arrange for the transfer, at any time
after the existence or occurrence of an Event of Default, of the Stock or other
Collateral on the books of Issuer to the name of Lender or to the name of
Lender's nominee.
11. Acts Not Affecting Obligations. None of the following shall affect
the liabilities of the Pledgor under this Agreement or otherwise, and of the
Obligations or the rights of the Lender with respect to any of the Collateral:
(a) acceptance or retention by the Lender of other property or interests as
security for the Obligations, or for the liability of any person for the
Obligations; (b) the release of any or all of the Collateral or other security
for any of the Obligations; (c) any release, extension, renewal, modification or
compromise of any of the Obligations or the liability of any obligor thereon;
(d) failure by the Lender to resort to other
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security or any person liable for any of the Obligations before resorting to the
Collateral; (e) any increase in the amount of the Obligations for any reason
whatsoever; (f) any exercise of, or failure to exercise, any remedy or taking or
failing to take any action with respect thereto; and (g) any act that would not
release Pledgor from its liability under the Guaranty dated the same date as
this Agreement that Pledgor executed and delivered to Lender.
12. Further Assurances: Pledgor agrees that it will cooperate with the
Lender and will execute and deliver, or cause to be executed and delivered, all
such other stock powers, proxies, instruments, and documents and will take all
such other action, as Lender may reasonably request from time to time in order
to carry out the provisions and purposes hereof.
13. Waiver; Cumulative Remedies. No delay on the part of the Lender or
any holder of a Note in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right, power or privilege hereunder preclude other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and remedies
herein specified are cumulative and not exclusive of any rights or remedies
which the Lender or the holder of a Note would otherwise have.
14. Successors and Assigns. This Agreement shall be binding upon
Pledgor and its successors and assigns. The Lender may, in its sole discretion,
assign its rights and delegate its obligations under this Agreement and further
may assign, or sell participations in, all or any part of the Loans or Notes or
any other interest herein to any other person.
15. Survival. All agreements, representations and warranties made
herein shall survive the execution of this Agreement.
16. Michigan Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Michigan.
17. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument.
18. Partial Invalidity. The unenforceability for any reason of any
provision of this Agreement shall not impair or limit the operation or validity
of any other provisions of this Agreement or any other agreements now or
hereafter existing between the Lender and Pledgor or any other person.
Signed, sealed and delivered on ___________, 1998.
UNIVERSAL STANDARD HEALTHCARE
OF DELAWARE, INC., a Delaware corporation
By: Xxxx X. Xxx
-------------------------------------------
Xxxx X. Xxx
Vice President Finance and Treasurer
UNIVERSAL STANDARD HEALTHCARE
OF FLORIDA, INC., a Florida corporation
By: Xxxx X. Xxx
-------------------------------------------
Xxxx X. Xxx
Vice President Finance and Treasurer
Schedule A - List of Stock
7
