(10) (i) Commercial Loan Agreement between Dialysis Corporation of
America and Heritage Community Bank, dated April 3, 2001.
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LOAN NUMBER LOAN NAME ACCT.NUMBER AGREEMENT DATE INITIALS
4670003369-101 Dialysis 04/03/01 TSJ
Corporation
of America
NOTE AMOUNT INDEX (w/Margin) RATE MATURITY DATE LOAN PURPOSE
$787,500.00 Not Applicable 8.290% 04/03/06 Commercial
Creditor Use Only
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COMMERCIAL LOAN AGREEMENT
Single Advance Loan
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DATE AND PARTIES. The date of this Commercial Loan Agreement (Agreement) is
April 3, 2001. The parties and their addresses are as follows:
LENDER:
HERITAGE COMMUNITY BANK
0000 Xxxxx Xxxxxxxxx Xxxx@
Xxxxxxxx, Xxxxxxx 00000
BORROWER:
DIALYSIS CORPORATION OF AMERICA
a Florida Corporation
00 Xxxxxx Xx
Xxxxxxx, Xxxxxxxxxxxx 00000
1. DEFINITIONS. For the purposes of this Agreement, the following terms have
the following meanings.
A. Accounting Terms. In this Agreement, any accounting terms that are
not specifically defined will have their customary meanings under
generally accepted accounting principles.
B. Insiders. Insiders include those defined as insiders by the United
States Bankruptcy Code, as amended; or to the extent left undefined,
include without limitation any officer, employee, stockholder or member,
director, partner, or any immediate family member of any of the
foregoing, or any person or entity which, directly or indirectly,
controls, is controlled by or is under common control with me.
C. Loan. The Loan refers to this transaction generally, including
obligations and duties arising from the terms of all documents prepared
or submitted for this transaction.
D. Pronouns. The pronouns "I", "me" and "my" refer to every Borrower
signing this Agreement, individually or together, and their heirs,
successors and assigns. "You" and "your" refers to the Loan's lender,
any participants or syndicators, or any person or company that acquires
an interest in the Loan and their successors and assigns.
E. Property. Property is any property, real, personal or intangible, that
secures my performance of the obligations of this Loan.
2. SINGLE ADVANCE. In accordance with the terms of this Agreement and other
Loan documents, you will provide me with a term note in the amount of
$787,500.00 (Principal). I will receive the funds from this Loan in one
advance. No additional advances are contemplated, except those made to
protect and preserve your interests as provided in this Agreement or other
Loan documents.
3. DEMAND. I agree to fully repay the Loan on demand, but if no demand is made,
I will repay the Loan by April 3, 2006.
4. WARRANTIES AND REPRESENTATIONS. I make to you the following warranties and
representations which will continue as long as this Loan is in effect, except
when this Agreement provides otherwise.
A. Power. I am duly organized, and validly existing and in good standing
in all jurisdictions in which I operate, I have the power and authority
to enter into this transaction and to carry on my business or activity
as it is now being conducted and, as applicable, am qualified to do so
in each jurisdiction in which I operate.
B. Authority. The execution, delivery and performance of this Loan and
the obligation evidenced by the Note are within my powers, have been
duly authorized, have received all necessary governmental approval,
will not violate any provisions of law, or order of court or govern-
mental agency, and will not violate any agreement to which I am a party
or to which I am or any of my property is subject.
C. Name and Place of Business. Other than previously disclosed in
writing to you I have not changed my name or principal place of
business within the last 10 years and have not used any other trade or
fictitious name. Without your prior written consent, I do not and will
not use any other name and will preserve my existing name, trade names
and franchises.
D. Loan Purpose. This Loan is for Commercial purposes.
E. No Other Liens. I own or lease all property that I need to conduct my
business and activities. I have good and marketable title to all
property that I own or lease. All of my Property is free and clear of
all liens, security interests, encumbrances and other adverse claims
and interests, except those to you or those you consent to in writing.
F. Compliance With Laws. I am not violating any laws, regulations,
rules, orders, judgments or decrees applicable to me or my property,
except for those which I am challenging in good faith through proper
proceedings after providing adequate reserves to fully pay the claim
and its challenge should I lose.
G. Legal Dispute. There are no pending or threatened lawsuits,
arbitrations or other proceedings against me or my property that singly
or together may materially and adversely affect my property, operations,
financial condition, or business.
H. Adverse Agreements. I am not a party to, nor am I bound by, any
agreement that is now or is likely to become materially adverse to my
business, Property or operations.
I. Other Claims. There are no outstanding claims or rights that would
conflict with the execution, delivery or performance by me of the terms
and conditions of this Agreement or the other Loan documents. No
outstanding claims or rights exist that may result in a lien on the
Property, the Property's proceeds and the proceeds of proceeds, except
liens that were disclosed to and agreed to by you in writing.
J. Solvency. I am able to pay my debts as they mature, my assets exceed
my liabilities and I have sufficient capital for my current and planned
business and other activities. I will not become insolvent by the
execution or performance of this Loan.
K. Tax Status. At the time of closing the loan, any existing election
of federal tax status as a subchapter S corporation as provided in 26
CFR Section 1.1361-1 et. seq is current and has not been terminated,
either by my action or inadvertently.
5. FINANCIAL STATEMENTS. I will prepare and maintain my financial records
using consistently applied generally accepted accounting principles then in
effect. I will provide you with financial information. In a form that you
accept and under the following terms.
A. Certification. I represent and warrant that any financial statements
that I provide you fairly represents my financial condition for the
stated periods, is current, complete, true and accurate in all material
respects, includes all of my direct or contingent liabilities and there
has been no material adverse change in my financial condition,
operations or business since the date the financial information was
prepared.
B. Frequency. In addition to the financial statements provided to you
prior to closing, I will provide you with current financial statements
on an annual basis, or as otherwise requested by you, until I have
performed all of. my obligations under the Loan and you terminate the
Loan in writing.
C. SEC Reports. I will provide you with true and correct copies of all
reports, notices or statements that I provide to the Securities and
Exchange Commission, any securities exchange or my stockholders, owners,
or the holders of any material indebtedness as soon as available or at
least within 30 days after issuance.
D. Requested Information. I will provide you with any other information
about my operations, financial affairs and condition within 30 days
after your request.
E. Additional Financial Statements Term. required within 90 days of
fiscal year-end.
6. COVENANTS. Until the Loan and all related debts, liabilities and obligations
are paid and discharged, I will comply with the following terms, unless you
waive compliance in writing.
A. Participation. I consent to you participating or syndicating the Loan
and sharing any information that you decide is necessary about me and the
Loan with the other participants or syndicators.
B. Inspection. Upon reasonable notice, I will permit you or your agents
to enter any of my premises and any location where my Property is located
during regular business hours to do the following.
(1) You may inspect, audit, check, review and obtain copies from my
books, records, journals, orders, receipts, and any correspondence
and other business related data.
(2) You may discuss my affairs, finances and business with any one
who claims to be my creditor.
(3) You may inspect my Property, audit for the use and disposition
of the Property's proceeds and proceeds of proceeds; or do whatever
you decide is necessary to preserve and protect the Property and
your interest in the Property.
After prior notice to me, you may discuss my financial condition and
business operations with my independent accountants, if any, or my
chief financial officer and I may be present during these discussions.
As long as the Loan is outstanding, I will direct all of my accountants
and auditors to permit you to examine my records in their possession and
to make copies of these records. You will use your best efforts to
maintain the confidentiality of the information you or your agents
obtain, except you may provide your regulator, if any, with required
information about my financial condition, operation and business or that
of my parent, subsidiaries or affiliates.
C. Business Requirements. I will preserve and maintain my present
existence and good standing in the jurisdiction where I am organized and
all of my rights, privileges and franchises. I will do all that is
needed or required to continue my business or activities as presently
conducted, by obtaining licenses, permits and bonds everywhere I engage
in business or activities or own, lease or locate my property. I will
obtain your prior written consent before I cease my business or before I
engage in any new line of business that is materially different from my
present business or before I voluntarily change my federal tax status as
a subchapter S corporation.
D. Compliance with Laws. I will not violate any laws, regulations, rules,
orders, judgments or decrees applicable to me or my Property, except for
those which I challenge in good faith through proper proceedings after
providing adequate reserves to fully pay the claim and its appeal should
I lose. Laws include without limitation the Federal Fair Labor Standards
Act requirements for producing goods, the federal Employee Retirement
Income Security Act of 1974's requirements for the establishment, funding
and management of qualified deferred compensation plans for employees,
health and safety laws, CD environmental laws, tax laws, licensing and
permit laws. On your request, I will provide you with written evidence
that I have fully and timely paid requested extension or waiver, or made
other proper arrangements for payment of my taxes, assessments and other
governmental charges levied or imposed on me, my income or profits and
my property. Taxes include without limitation sales taxes, use taxes,
personal property taxes, documentary stamp taxes, recordation taxes,
franchise taxes, income taxes, withholding taxes, FICA taxes and
unemployment taxes. I will adequately provide for the payment of these
taxes, assessments and other charges that have accrued but are not yet
due and payable.
E. New Organizations. I will obtain your written consent and any necessary
changes to the Loan documents before I merge into or consolidate with any
one, permit any one else to merge into me, acquire all or substantially
all of the assets of any one else or otherwise materially change my legal
structure, management, ownership by Medicore, or financial condition.
[Sections F. and G. deleted]
H. Other Debts. I will pay when due any and all other debts owed or
guaranteed by me and will faithfully perform, or comply with all the
conditions and obligations imposed on me concerning the debt or guaranty.
[Section I. deleted]
J. Notice to You. I will promptly notify you of any material change in
my financial condition, of the occurrence of a default under the terms
of this Agreement, or a default by me under any agreement between me
and any third party which materially and adversely affects my property,
operations, financial condition or business.
K. Certification of No Default. On your request, my chief financial
officer or my independent accountant will provide you with a written
certification that to the best of their knowledge no event of default
exists under the terms of this Agreement or the other Loan documents,
and that there exists no other action, condition or event which with
the giving of notice or lapse of time or both would constitute a default.
As requested, my chief financial officer or my independent accountant
will also provide you with computations demonstrating compliance with
any financial covenants and ratios contained in this Agreement. If an
action, condition or event of default does exist, the certificate must
accurately and fully disclose the extent and nature of this action,
condition or event and state what must be done to correct it.
L. Use of Loan Proceeds. I will not permit the loan proceeds to be used
to purchase, carry, reduce, or retire any loan incurred to purchase or
carry any margin stock.
M. Dispose of No Assets. Without your prior written consent or as the
Loan documents permit, I will not sell, lease, assign, transfer, dispose
of or otherwise distribute all or substantially all of my assets to any
person other than in the ordinary course of business for the assets'
depreciated book value or more.
N. No Other Liens. I will not create, permit or suffer any lien or
encumbrance upon property located at 0000 Xxxxx Xxxxxxxx Xxxxxx,
Xxxxxxxx, XX 00000 for or by anyone, other than you, except for:
nonconsensual liens imposed by law arising out of the ordinary course of
business on, obligations that are not overdue or which I am contesting in
good faith after making appropriate reserves; valid purchase money
security interests on personal property; or any other liens specifically
agreed to by you in writing.
0. Guaranties. I will not guaranty or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments in the
ordinary course of business) or accommodation endorser or otherwise for
the debt or obligations of any other person or entity, except to you or
as you otherwise specifically agree in writing.
P. No Default under Other Agreements. I will not allow to occur, or to
continue unremedied, any act, event or condition which constitutes a
material default, or which, with the passage of time or giving of
notice, or both, would constitute a material default under any agreement,
document, instrument or undertaking to which I am a party or by which I
may be bound.
Q. Legal Disputes. I will promptly notify you in writing of any
threatened or pending lawsuit, arbitration or other proceeding against
me or any of my property, not identified in my financial statements,
whose claim exceeds $$100000.00 or that singly or together with other
proceedings may materially and adversely affect my property, operations,
financial condition or business. I will use my best efforts to bring
about a favorable and speedy result of any of these lawsuits, arbitra-
tions or other proceedings.
R. Other Notices. I will immediately provide you with any information
that may materially and adversely affect my ability to perform this
Agreement and of its anticipated effect.
[Section S. deleted]
T. Dividend Limit. I will not pay or declare any dividends, like a cash
dividend or stock dividend, or similar distribution above 25 percent of
my net worth, as defined by consistently applied generally accepted
accounting principles.
U. Loan Obligations. I will comply with the terms and agreements
contained in this Agreement and in the other Loan documents.
V. Insurance. I will obtain and maintain insurance with insurers, in
amounts and coverages that are acceptable to you and customary with
industry practice. This may include without limitation insurance
policies for public liability, fire, hazard and extended risk, workers
compensation, and, at your request, business interruption and/or rent
loss insurance. At your request, I will deliver to you certified copies
of all of these insurance policies, binders or certificates. I will
obtain and maintain a mortgagee or loss payee endorsement for you when
these endorsements are available. I will immediately notify you of
cancellation or termination of insurance. I will require all insurance
policies to provide you with at least 1 0 days prior written notice to
you of cancellation or modification. I consent to you using or
disclosing information relative to any contract of insurance required
by the Loan for the purpose of replacing this insurance. I also
authorize my insurer and you to exchange all relevant information
related to any contract of insurance required by any document executed
as part of this Loan.
W. Property Maintenance. I will keep all tangible and intangible property
that I consider necessary or useful in my business in good working
condition by making all needed repairs, replacements and improvements
and by making all rental, lease or other payments due on this property.
X. Property Loss. I will immediately notify you, and the insurance
company when appropriate, of any material casualty, loss or depreciation
to the Property or to my other property that affects my business.
Y. Compensating Balance. For as long as I owe any amount under the Loan,
or you have an outstanding commitment to me, I agree to maintain an
average monthly balance of $$15,000 in one or more interest-bearing
accounts with you.
Z. Reserve Requirement. For the term of the Loan and any of its
extensions or renewals, I will maintain a reserve of $N/A
[Section AA. deleted]
BB. Leverage Ratio. I will maintain at all times a ratio of total
liabilities to tangible net worth, determined under consistently applied
generally accepted accounting principles, of 2:1 or less.
CC. Minimum Tangible Net Worth. I will maintain at all times a tangible
net worth, determined under consistently applied generally accepted
accounting principles, of $N/A or more. Tangible net worth is the,
amount that total assets exceed total liabilities. For determining
tangible net worth, total assets will exclude all intangible assets,
including without limitation goodwill, patents, trademarks, trade names,
copyrights, and franchises, and will also exclude all Accounts Receivable,
owned by my insiders, that do not provide for a repayment schedule.
DD. Minimum Current Ratio. I will maintain at all times a ratio of
current assets to current liabilities, determined under consistently
applied generally accepted accounting principles, of 1.20:1 or more.
EE. Minimum Working Capital. I will maintain at all times a working
capital, determined under consistently applied generally accepted
accounting principles by subtracting current liabilities from current
assets, of $N/A or more. Current liabilities include (1) all obliga-
tions payable on demand or within one year after the date on which the
determination is made, and (2) final maturities and sinking fund
payments required to be made within one year after the date on which
the determination is made, but exclude all liabilities or obligations
that I may review or extend to a date more than one year from the date
of this determination.
FF. Minimum After-Tax Net Income. During this Agreement's term, I will
maintain an after-tax net income of $0 or more as determined on the
last day of each fiscal year under consistently applied generally
accepted accounting principles. For this
determination, after-tax net income excludes any extraordinary gains or
losses and any, gains or losses from the sale or other disposition of
assets outside the ordinary course of business.
GG. Minimum Cash Flow. During this Agreement, I will maintain after-tax
net income, plus depreciation, amortization and other similar non-cash
expenses of $1.10:1 or more, determined on the last day of each fiscal
year under consistently applied generally accepted accounting principles.
For purposes of this determination, after tax net income excludes any
extraordinary gains or losses and any gains or losses from the sale or
other disposition of assets outside of the ordinary course of business.
7. DEFAULT. I understand that you may demand payment anytime at your
discretion. For example, you may demand payment in full if any of the
following occur:
A. Payments. I fail to make a payment in full when due.
B. Insolvency. I make an assignment for the benefit of creditors or
become insolvent, either because my liabilities exceed my assets or I
am unable to pay my debts as they become due.
C. Business Termination. I merge, dissolve, reorganize, end my business
or existence, or a partner or majority owner dies or is declared legally
incompetent.
D. Failure to Perform. I fail to perform any condition or to keep any
promise or covenant of this Agreement.
E. Other Documents. A default occurs under the terms of any other
transaction document.
F. Other Agreements. I am in default on any other debt or agreement I
have with you.
G. Misrepresentation. I make any verbal or written statement or provide
any financial information that I know is untrue, inaccurate, or conceals
a material fact at the time it is made or provided.
H. Judgment. I fail to satisfy or appeal any judgment against me.
I. Forfeiture. The Property is used in a manner or for a purpose that
threatens confiscation by a legal authority.
J. Name Change. I change my name or assume an additional name without
notifying you before making such a change.
K. Property Transfer. I transfer all or a substantial part of my money
or property.
L. Property Value. The value of the Property materially declines or is
materially impaired.
M. Material Change. Without first notifying you, there is a material
change in my business, including ownership, management, and financial
conditions.
N. Insecurity. You reasonably believe that you are insecure.
8. REMEDIES. After I default, and after you give any legally required notice
and opportunity to cure the default, you may at your option do any one or more
of the following.
A. Acceleration. You may make all or any part of the amount owing by the
terms of the Loan immediately due.
B. Sources. You may use any and all remedies you have under state or
federal law or in any instrument securing the Loan.
C. Insurance Benefits. You may make a claim for any and all insurance
benefits or refunds that may be available on my default.
D. Payments Made On My Behalf. Amounts advanced on my behalf will be
immediately due and may be added to the balance owing under the terms
of the Loan, and accrue interest at the highest post-maturity interest
rate.
E. Attachment. You may attach or garnish my wages or earnings.
F. Set-Off. You may use the right of set-off. This means you may set-off
any amount due and payable under the terms of the Loan against any right
I have to receive money from you.
My right to receive money from you includes any deposit or share account
balance I have with you; any money owed to me on an item presented to you
or in your possession for collection or exchange; and any repurchase
agreement or other nondeposit obligation. "Any amount due and payable
under the terms of the Loan" means the total amount to which you are
entitled to demand payment under the terms of the Loan at the time you
set-off.
Subject to any other written contract, if my right to receive money from
you is also owned by someone who has not agreed to pay the Loan, your
right of set-off will be limited to my proportionate interest in the
obligation. In the absence of reasonable proof of net contributions, my
proportionate interest equals the amount of such obligation divided
equally by all parties having present rights to receive such money.
Your right of set-off does not apply to an account or other obligation
where my rights arise only in a representative capacity. It also does
not apply to any Individual Retirement Account or other tax-deferred
retirement account.
You will not be liable for the dishonor of any check when the dishonor
occurs because you set-off against any of my accounts. I agree to hold
you harmless from any such claims arising as a result of your exercise
of your right of set-off.
G. Waiver. Except as otherwise required by law, by choosing any one or
more of these remedies you do not give up your right to use any other
remedy. You do not waive a default if 'you choose not to use a remedy.
By electing not to use any remedy, you do not waive your right to later
consider the event a default and to use any remedies if the default
Continues or occurs again.
9. COLLECTION EXPENSES AND ATTORNEYS' FEES. On or after Default, to the extent
permitted by law, I agree to pay reasonable expenses of collection, enforcement
or protection of your rights and remedies under this Agreement. Expenses
include, but are not limited to, attorneys' fees, court costs, and other legal
expenses. If this debt is collected by or through an attorney after maturity,
I agree to pay all reasonable attorneys fees. These expenses are due and
payable immediately. If not paid immediately, these expenses will bear
interest from the date of payment until paid In full at the highest interest
rate in effect as provided for in the terms of this Loan. All fees and
expenses will be secured by the Property I have granted to you, if any. To
the extent permitted by the United States Bankruptcy Code, I agree to pay the
reasonable attorneys' fees you incur to collect this debt as awarded by any
court exercising jurisdiction under the Bankruptcy Code.
10. APPLICABLE LAW. This Agreement is governed by the laws of Georgia, the
United States of America and to the extent required, by the laws of the
jurisdiction where the Property is located.
11. JOINT AND INDIVIDUAL LIABILITY AND SUCCESSORS. My obligation to pay this
Loan is independent of the obligation of any other person who has also agreed
to pay it. You may xxx me alone, or anyone else who is obligated on this
Loan, or any number of us together, to collect this Loan. Extending this
Loan or new obligations under this Loan, will not affect my duty under this
Loan and I will still be obligated to pay this Loan. the duties and benefits
of this loan will bind and benefit the successors and assigns of you and me.
12. AMENDMENT, INTEGRATION AND SEVERABILITY. This Agreement may not be
amended or modified by oral agreement. No amendment or modification of this
Agreement is effective unless made in writing and executed by you and me.
This Agreement is the complete and final expression of the understanding
between you and me. If any provision of this Agreement is unenforceable,
then the unenforceable provision will be severed and the remaining
provisions will still be enforceable.
13. INTERPRETATION. Whenever used, the singular includes the plural and the
plural includes the singular. The section headings are for convenience only
and are not to be used to interpret or define the terms of this Agreement.
14. NOTICE, FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS. Unless otherwise
required by law, any notice will be given by delivering it or mailing it by
first class mail to the appropriate party's address listed in the DATE AND
PARTIES section, or to any other address designated in writing. Notice to
one party will be deemed to be notice to all parties. I will inform you in
writing of any change in my name, address or other application information.
I will provide you any financial statement or information you request. All
financial statements and information I give you will be correct and complete.
I agree to sign, deliver, and file any additional documents or certifications
that you may consider necessary to perfect, continue, and preserve my
obligations under this Loan and to confirm your lien status on any Property.
Time is of the essence.
15. SIGNATURES. By signing under seal, I agree to the terms contained in
this Agreement. I also acknowledge receipt of a copy of this Agreement.
BORROWER:
Dialysis Corporation of America
/s/ Xxxxxx X. Xxxxx /s/ Xxxxxxxx X. Xxxxx
-------------------------------(Seal) ----------------------------
Xxxxxx X. Xxxxx, Vice President Xxxxxxxx X. Xxxxx, Secretary
LENDER:
Heritage Community Bank
/s/ Xxx X. Xxxxx
-------------------------------(Seal)
Xxx X. Xxxxx, President
