EXHIBIT 10.3
[Form of]
LOAN AND SECURITY AGREEMENT
among
MEDICAL DIAGNOSTICS, INC.
Borrower,
U.S. DIAGNOSTIC INC.
Guarantor
and
DVI FINANCIAL SERVICES INC.
Lender
Dated as of September 29, 1997
TABLE OF CONTENTS
PAGE
Section 1 DEFINITIONS...........................................................................1
Section 1.1. Specific Definitions.............................................................1
Section 1.2. GAAP and UCC.....................................................................5
Section 1.3. Construction.....................................................................5
Section 2 LOAN..................................................................................5
Section 2.1. The Loan.........................................................................5
Section 2.2. Term and Repayment of Loan.......................................................5
Section 2.3. Prepayment.......................................................................6
Section 2.4. Late Payments....................................................................6
Section 2.5. Conditions to the Closing........................................................6
Section 3 SECURITY INTEREST.....................................................................8
Section 3.1. Grant of Security Interest.......................................................8
Section 4 SPECIFIC REPRESENTATIONS..............................................................8
Section 4.1. Name of Borrower.................................................................8
Section 4.2. Mergers and Consolidations.......................................................8
Section 4.3. Purchase of Assets...............................................................8
Section 4.4. Change of Name or Identity.......................................................9
Section 4.5. Corporate Structure..............................................................9
Section 5 PROVISIONS CONCERNING COLLATERAL......................................................9
Section 5.1. Title............................................................................9
Section 5.2. No Warranties....................................................................9
Section 5.3. Further Assurances...............................................................9
Section 5.4. Additional Collateral...........................................................10
Section 5.5. Lender's Duty of Care...........................................................10
Section 5.6. Intentionally Deleted...........................................................10
Section 5.7. Reinstatement of Liens..........................................................10
Section 5.8. Lender Expenses.................................................................10
Section 5.9. Inspection of Collateral and Records............................................11
Section 5.10. Waivers........................................................................11
Section 6 REPRESENTATIONS AND WARRANTIES.......................................................11
Section 6.1. Corporate Status................................................................11
Section 6.2. Authorization...................................................................11
Section 6.3. No Breach.......................................................................12
Section 6.4. Taxes...........................................................................12
Section 6.5. Deferred Compensation Plans.....................................................12
Section 6.6. Litigation and Proceedings......................................................12
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Section 6.7. Business........................................................................12
Section 6.8. Laws and Agreements.............................................................12
Section 6.9. Financial Condition.............................................................12
Section 6.10. Insurance......................................................................13
Section 6.11. Ownership of Property..........................................................13
Section 6.12. Health Care Laws...............................................................13
Section 6.13. Solvency.......................................................................13
Section 6.14. Cumulative Representations.....................................................14
Section 6.15. Full Disclosure................................................................14
Section 7 COVENANTS............................................................................14
Section 7.1. Encumbrance of Collateral.......................................................14
Section 7.2. Business........................................................................14
Section 7.3. Condition and Repair............................................................14
Section 7.4. Taxes...........................................................................14
Section 7.5. Insurance.......................................................................15
Section 7.6. Accounting System...............................................................15
Section 7.7. Quarterly Financial Statements..................................................15
Section 7.8. Annual Financial Statements.....................................................15
Section 7.9. Further Information.............................................................15
Section 7.10. ERISA Covenants................................................................16
Section 7.11. Restrictions on Merger, Consolidation, Sale of Assets, Issuance of Stock,
etc...................................................................................16
Section 7.12. Health Care Covenants..........................................................16
Section 7.13. Distributions..................................................................17
Section 8 EVENTS OF DEFAULT....................................................................17
Section 9 REMEDIES.............................................................................19
Section 9.1. Specific Remedies...............................................................19
Section 9.2. Power of Attorney...............................................................20
Section 9.3. Expenses Secured................................................................20
Section 9.4. Equitable Relief................................................................20
Section 9.5. Remedies Are Cumulative.........................................................20
Section 10 INDEMNITY............................................................................21
Section 10.1. General Indemnity..............................................................21
Section 11 MISCELLANEOUS........................................................................21
Section 11.1. Delay and Waiver...............................................................21
Section 11.2. Complete Agreement.............................................................21
Section 11.3. Severability; Headings.........................................................21
Section 11.4. Binding Effect.................................................................22
Section 11.5. Notices........................................................................22
Section 11.6. Governing Law..................................................................23
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Section 11.7. Jurisdiction...................................................................23
Section 11.8. Waiver of Trial by Jury........................................................23
SCHEDULES
1.1. Permitted Liens
3.1 Personal Property
6.6. Litigation and Proceedings
6.10. Insurance
7.13. Permitted Distributions
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "AGREEMENT") is entered
into as of September 29, 1997 by and between DVI Financial Services Inc., a
Delaware corporation ("LENDER"), Medical Diagnostics, Inc., a Delaware
corporation ("BORROWER"), and U.S. Diagnostic Inc. ("GUARANTOR").
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:
"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 the books and records of
Borrower and Guarantor including but not limited to: minute books, ledgers;
records indicating, summarizing or evidencing the assets of Borrower and
Guarantor, liabilities; all information relating to the business operations or
financial condition of Borrower and Guarantor; 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.
"CLOSING DATE" means the date of the first Advance of the
Loan.
"COLLATERAL" has the meaning specified in Section 3.1 hereof.
"CONTROL" means (i) the ownership of a majority of the voting
power of all classes of voting stock of a corporation, or (ii) the ownership of
a majority of the beneficial interest in income and capital of a person other
than a corporation.
"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
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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.
"DVIBC" means DVI Business Credit Corporation, a Delaware
corporation.
"ENVIRONMENTAL LAWS" means all federal, state, local and
foreign laws relating to pollution or protection of the environment, including
laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes into the environment (including, ambient air, surface water, ground
water or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes, and any and all regulations, codes, plans, orders, decrees,
judgments, injunctions, notices, or demand letters issued, entered, promulgated,
or approved thereunder.
"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 8
hereof.
"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.
"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 U.S.C. Section 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 generally accepted accounting principles, 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 generally accepted
accounting principles 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 have been
assumed; and (iii) all
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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 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 incurred
by Lender in enforcing or defending the Loan Documents or any portion thereof;
(v) all costs or expenses incurred by Lender to convert any data submitted to
Lender by Borrower to an acceptable form; and (vi) Lender's reasonable attorney
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.
"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 made by Lender to Borrower pursuant to
this Agreement.
"LOAN DOCUMENTS" mean (i) this Agreement; (ii) the Note; (iii)
the Security Documents; and (iv) any other certificates, documents or
instruments delivered by Borrower to Lender pursuant to the terms of this
Agreement.
"NOTE" means the Secured Promissory Note executed by Borrower
pursuant to the terms of this Agreement.
"OBLIGATIONS" mean (i) the due and punctual payment of all
amounts due or become due under the Note; (ii) the performance of all
obligations of Borrower under this Agreement and the Note; (iii) all extensions,
renewals, modifications, amendments and refinancings of any of the foregoing;
(iv) all Lender Expenses; (v) all loans, advances, indebtedness and other
obligations owed by Borrower to Lender of every description whether now existing
or hereafter arising (including those owed by Borrower to others and acquired by
Lender by purchase, assignment, or otherwise) and whether direct or indirect,
primary or as guarantor or surety, absolute or contingent, liquidated or
unliquidated, matured or unmatured, whether or not secured by additional
collateral; and (vi) all loans, advances, indebtedness and other obligations
owed by Guarantor or its Affiliates to DVIBC or Lender under the Other Loan
Documents of every description whether now existing or hereafter arising
(including those owed by Guarantor to others and acquired by Lender or DVIBC by
purchase,
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assignment or otherwise) and whether direct or indirect, primary or as guarantor
or surety, absolute or contingent, liquidated or unliquidated, matured or
unmatured, whether or not secured by additional collateral. The Obligations of
Borrower under this Agreement are limited to an amount equal to the maximum
amount which, after giving effect to such maximum amount and all other
liabilities of Borrower's contingent or otherwise, result in the Obligations of
Borrower hereunder not constituting a fraudulent transfer, obligation or
conveyance.
"OTHER LOAN DOCUMENTS" means any and all loan and security
agreements or similar documents among Guarantor or any of its Affiliates and
Lender and any and all loan and security agreements or similar documents among
Guarantor or any of its Affiliates and DVIBC.
"PERMITTED LIENS" means (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 of or
resulting from any judgment or award, the time for the appeal or petition for
rehearing of which has not expired, or in respect of which Borrower is in good
faith prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review has been secured;
(iii) 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; (iv) Liens granted to Lender or its
Affiliates; and (v) Liens existing on the date of this Agreement 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
all additions and accessions to, replacements of, insurance or condemnation
proceeds of, and documents covering Collateral; all property received wholly or
partly in trade or exchange for Collateral; all claims against third parties
arising out of damage, destruction, or decrease in value of the Collateral; all
leases of 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.
"SECURITY DOCUMENTS" means the Guaranty, the Stock Pledge
Agreement, and any agreement or instrument entered into between Borrower and
Lender or executed by Borrower or Guarantor and delivered to Lender in
connection with this Agreement to secure repayment of the Loan.
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"STATED RATE" means Ten and 00/100 percent (10.00%) per annum
computed on the basis of a 360-day year and actual days elapsed.
"STOCK PLEDGE AGREEMENT" means the Stock Pledge Agreement
dated on or about the date hereof by and between Guarantor and Lender pledging
its shares of Medical Diagnostics, Inc. as security for the Guarantor's
Obligations under the Guaranty.
"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. GAAP AND UCC. All financial terms used in this
Agreement other than those defined in Section 1, have the meanings accorded to
them under generally accepted accounting principles. 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, and Borrower shall borrow from Lender, a senior secured
term loan in the amount of ___________________ Million Dollars ($__,000,000)
which is evidenced by the Note. The proceeds of the Loan must be used by
Borrower for general corporate purposes.
SECTION 2.2. TERM AND REPAYMENT OF LOAN. The "TERM" of the
Loan is sixty (60) months and is payable in sixty (60) consecutive monthly
installments of _________________ Dollars ($________) on November 1, 1997 and
the first day of each calendar month thereafter, with all unpaid principal and
interest due and payable in full on the final installment date. All payments
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of principal and interest must be paid in full without setoff, deduction or
counterclaim. Borrower shall make all payments by direct payment to Lender at
000 Xxxx Xxxx, Xxxxxxxxxx, XX 00000.
SECTION 2.3. PREPAYMENT. The Loan may be prepaid in whole, but
not in part, on any scheduled payment date after thirty days notice from
Borrower of its intent to make such payment. Notwithstanding the foregoing, if
Guarantor receives reimbursement or indemnification for any amounts paid,
previously or hereafter, in settlement of GOLDEN ET. AL. V. U.S. DIAGNOSTIC INC.
ET AL, Case No. 97-8010-CIV-XXXXX, or any case consolidated with such case,
Guarantor shall inform Lender of its receipt of such funds and offer to prepay
the Loan or any Indebtedness of Guarantor or its Affiliates to Lender or DVIBC.
Lender and DVIBC may accept such prepayment in their sole discretion and, if
accepted, may apply such amount to the prepayment at par of such Indebtedness
owed to either of them which they select.
SECTION 2.4. 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) business
days after nonpayment, a late charge by way of damages to the extent provided in
this Section 2.4 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) business days after the date it is due and payable is a reasonable estimate
of the damages to the Lender. If any part of the principal or interest is not
paid when due, it thereafter bears interest at the rate of eighteen percent
(18%) per annum from and as of the date of delinquency until paid, provided,
however, that any amount due pursuant to the preceding sentence must be deducted
from the amount due pursuant to this sentence. 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.
SECTION 2.5. 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 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;
(ii) the Note;
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(iii) UCC-1 Financing Statements;
(iv) the Guaranty;
(v) the Stock Pledge Agreement;
(vi) evidence satisfactory to Lender that Borrower
and Guarantor are each 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;
(vii) certificates of insurance that evidence the
insurance coverage and policy provisions required by this Agreement and in the
Loan Documents;
(viii) pay-off letters, UCC Termination Statement 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;
(ix) signature and incumbency certificate of
Borrower and Guarantor;
(x) certified copies of resolutions of the Board of
Directors of Borrower and Guarantor authorizing the execution and delivery of
the Loan Documents to be executed by Borrower and Guarantor;
(xi) copies of the Articles of Incorporation of
Borrower and Guarantor certified by the Secretary of State;
(xii) copies of the Bylaws of Borrower and Guarantor
certified by an officer thereof;
(xiii) the written opinion of counsel to Borrower and
Guarantor issued as of 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 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 Guarantor has suffered a material or
adverse change in its business, operations or financial condition from that
reflected in the Financial Statements of Borrower and Guarantor 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 and Guarantor hereby
grant to Lender a continuing first-priority pledge and security interest in the
following property (the "COLLATERAL"), 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. The
Collateral must be kept at the locations where it is presently located.
The Collateral consists of all equipment and machinery listed
on SCHEDULE 3.1 and all machine tools, motors, tools, parts, attachments,
accessories, accessions, replacements, upgrades, substitutions, additions and
improvements related thereto, wherever located, and the Proceeds of any of the
foregoing, including cash and non-cash Proceeds, together with such third-party
consents, lien waivers and estoppel certificates as Lender reasonably requires.
SECTION 4
SPECIFIC REPRESENTATIONS
SECTION 4.1. NAME OF BORROWER. The exact corporate name of
Borrower is Medical Diagnostics, Inc. Borrower was incorporated under the laws
of the State of Delaware. 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. No entity has merged
into Borrower or been consolidated with Borrower.
SECTION 4.3. PURCHASE OF ASSETS. 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 4.5. CORPORATE STRUCTURE. Guarantor holds one hundred
percent (100%) of the common stock of Borrower. Such common stock is the sole
authorized and outstanding class of stock in Borrower.
SECTION 5
PROVISIONS CONCERNING COLLATERAL
SECTION 5.1. TITLE. Borrower or Guarantor has good and
marketable title to the Collateral, and the Liens granted to Lender pursuant to
this Agreement are fully perfected first-priority Liens, in and to the
Collateral with priority over the rights of every person in the Collateral,
free, clear and unencumbered by any Liens in favor of any person other than
Lender except for Permitted Liens.
SECTION 5.2. NO WARRANTIES. This Agreement is solely a
financing agreement. Borrower and Guarantor acknowledges that with respect to
the appropriate Collateral: the Collateral has or will have been selected and
acquired solely by Borrower or Guarantor fr their own purposes; Lender is not
the manufacturer, dealer, vendor or supplier of the Collateral; the Collateral
is of a size, design, capacity, description and manufacturer selected by
Borrower or Guarantor; Borrower or Guarantor are satisfied that the Collateral
is suitable and fit for its purposes; and LENDER HAS NOT MADE AND DOES NOT MAKE
ANY WARRANTY OR REPRESENTATION WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE
FITNESS, CONDITION, MERCHANTABILITY, DESIGN OR OPERATION OF THE COLLATERAL, ITS
FITNESS FOR ANY PARTICULAR PURPOSE, THE VALUE OF THE COLLATERAL, THE QUALITY OR
CAPACITY OF THE MATERIALS IN THE COLLATERAL OR WORKMANSHIP IN THE COLLATERAL,
NOR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER.
SECTION 5.3. FURTHER ASSURANCES. Borrower and Guarantor shall
execute and deliver to Lender, concurrent with their 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 and Guarantor hereby irrevocably make,
constitute, and appoint Lender (and any of Lender's officers, employees or
agents designated by Lender) as their true and lawful attorney with power to
sign the name of Borrower and Guarantor 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 their 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 5.4. ADDITIONAL COLLATERAL. If there is a material
impairment of the value of the Collateral, Borrower or Guarantor shall grant a
security interest in additional assets satisfactory to Lender having a value at
least equal to the decline in value of the existing Collateral.
SECTION 5.5. 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 Borrower or Guarantor
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 or
Guarantor 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 or Guarantor.
SECTION 5.6. INTENTIONALLY DELETED.
SECTION 5.7. 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 then Lender's Liens granted hereunder are reinstated as to
all disgorged payments as though such payments had not been made, and Borrower
or Guarantor shall sign and deliver to Lender all documents and things necessary
to perfect all terminated Liens.
SECTION 5.8. LENDER EXPENSES. If Borrower or Guarantor 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 or Guarantor
could have a material adverse effect on Lender's interest in the Collateral, in
its discretion and without prior notice to Borrower or Guarantor, make payment
of the same or any part thereof; provided, however, Lender shall make a
reasonable attempt to make a prior notification of Borrower or Guarantor if a
delay in making such payment would not have a material advise impact on Lender's
interest in the Collateral. Any amounts paid or deposited by Lender constitute
Lender Expenses, 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.
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SECTION 5.9. INSPECTION OF COLLATERAL AND RECORDS. During
usual business hours, Lender may inspect and examine the Collateral and check
and test the same as to quality, quantity, value and condition and Borrower
shall reimburse Lender for its reasonable costs and expenses in so doing. Lender
also has the right at any time or times hereafter, during usual business hours
to inspect and verify Borrower's Books in order to verify the amount or
condition of, or any other matter relating to, the Collateral and the financial
condition of Borrower or Guarantor and to copy and make extracts therefrom.
Borrower and Guarantor waive the right to assert a confidential relationship, if
any, it may have with any 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 5.10. 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 6
REPRESENTATIONS AND WARRANTIES
As of the date hereof Guarantor and Borrower each hereby
warrants and represents to Lender the following:
SECTION 6.1. CORPORATE STATUS. Borrower and Guarantor are each
a corporation validly existing and in good standing under the laws of the state
of its incorporation; and each of such entities 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 6.2. AUTHORIZATION. The execution, delivery, and
performance by Borrower and Guarantor of this Agreement and each Loan Document
have been duly authorized by all necessary corporate action. Borrower and
Guarantor have duly executed and delivered this Agreement and each Loan Document
to which they are a party, and each such Loan Document constitutes a valid and
binding obligation of Borrower and Guarantor.
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SECTION 6.3. NO BREACH. The execution, delivery and
performance by Borrower and Guarantor of this Agreement and each Loan Document
to which they are 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 incorporation or bylaws of Borrower or Guarantor; (c) will not
violate any agreement or instrument by which Borrower or Guarantor or their
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 6.4. TAXES. All assessments and taxes, whether real,
personal or otherwise, due or payable by or imposed, levied or assessed against
Borrower or Guarantor, or their property have been paid in full before
delinquency or before the expiration of any extension period; and Borrower or
Guarantor 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 or Guarantor is currently contesting diligently and in
good faith and that have been fully disclosed in writing to Lender.
SECTION 6.5. DEFERRED COMPENSATION PLANS. Guarantor and each
ERISA Affiliate have made all required contributions to all deferred
compensation plans to which such person is required to contribute, and neither
Guarantor nor any ERISA Affiliate has any liability for any unfunded benefits of
any single-employer or multi-employer plans. Neither Guarantor 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 6.6. LITIGATION AND PROCEEDINGS. Except as set forth
on SCHEDULE 6.6 attached hereto, there are no outstanding judgments against
Guarantor or its assets and there are no actions or proceedings pending by or
against Guarantor before any court or administrative agency. Borrower has no
knowledge or belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower, except for ongoing collection matters in which Guarantor is
the plaintiff and except as set forth in SCHEDULE 6.6 hereto.
SECTION 6.7. BUSINESS. Borrower and Guarantor have 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. Neither Borrower nor Guarantor
is 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 their business,
properties or prospects.
SECTION 6.8. LAWS AND AGREEMENTS. Borrower and Guarantor are
in compliance with all material contracts and agreements applicable to them,
including obligations to contribute to any employee benefit plan or pension plan
regulated by ERISA. Borrower and Guarantor are in material compliance with all
laws applicable to them.
SECTION 6.9. FINANCIAL CONDITION. All financial statements and
information relating to Borrower, Guarantor or their assets that have been or
may hereafter be delivered by Guarantor to Lender are accurate and complete in
all material respects and have been prepared in accordance with
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generally accepted accounting principles consistently applied. Borrower and
Guarantor have 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 or Guarantor since the date of the most
recent financial statements submitted to Lender.
SECTION 6.10. INSURANCE. SCHEDULE 6.10 sets forth a complete
and accurate list of all policies of fire, liability, product liability,
workers' compensation, health, business interruption and other forms of
insurance currently in effect with respect to the business of Borrower and
Guarantor, true copies of which have heretofore been delivered to Lender. All
such policies are valid, outstanding and enforceable policies and, to the best
knowledge of Borrower and Guarantor, each will remain in full force and effect
at least through the respective dates set forth on SCHEDULE 6.10.
SECTION 6.11. OWNERSHIP OF PROPERTY. Borrower has good and
marketable title to all of its properties and assets, free and clear of all
liens, security interests and encumbrances, except Permitted Liens. Borrower has
the exclusive right to use all such assets.
SECTION 6.12. 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 threatened against Borrower, relating in
any way to Health Care Laws.
SECTION 6.13. SOLVENCY.
(a) Immediately following the execution of this Agreement and
the Loan Documents, and the completion of the transactions contemplated thereby
Borrower will be solvent, able to pay its debts as they mature, will have
capital sufficient to carry on its business and all businesses in which it is
about to engage, and will have assets which will have a present fair salable
value greater than the amount of its Indebtedness.
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(b) Borrower does not intend to incur debts beyond its ability
to pay them as they mature and the aggregate of each Borrower's property at a
fair valuation is sufficient in amount to pay its debts.
(c) Borrower does not is contemplating filing a petition in
bankruptcy or for an arrangement or reorganization under the Bankruptcy Reform
Act, Title 11 of the United States Code, as amended from time to time, or any
successor statute, nor is there any threatened bankruptcy or insolvency
proceedings against Borrower.
SECTION 6.14. 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 or
Guarantor gives, or cause to be given, to Lender, either now or hereafter.
SECTION 6.15. FULL DISCLOSURE. No representation, warranty or
statement by Borrower or Guarantor 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.
SECTION 7
COVENANTS
SECTION 7.1. ENCUMBRANCE OF COLLATERAL. Borrower and Guarantor
shall not create, incur, assume or permit to exist any Lien on any Collateral
now owned or hereafter acquired by except for Permitted Liens.
SECTION 7.2. BUSINESS. Borrower shall engage primarily in
business of the same general character as that now conducted by Borrower.
SECTION 7.3. CONDITION AND REPAIR. Borrower and Guarantor
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 7.4. TAXES. Borrower shall pay all taxes, assessments
and other governmental charges imposed upon it or any of 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 its 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 generally
14
accepted accounting principles. 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 7.5. INSURANCE. Borrower and Guarantor shall maintain,
with financially sound and reputable insurers, insurance with respect to its
properties and business against loss or damage of the kinds and in the amounts
customarily insured against by corporations of established reputation engaged in
the same or similar businesses. Each such policy must name Lender as an
additional insured and, where applicable, as loss payee under a lender loss
payable endorsement satisfactory to Lender and must provide for thirty (30)
days' written notice to Lender before such policy is altered or canceled.
SECTION 7.6. ACCOUNTING SYSTEM. Borrower and Guarantor at all
times hereafter shall maintain a standard and modern system of accounting in
accordance with generally accepted accounting principles consistently applied,
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 and Guarantor shall not modify or change their
method of accounting or enter into any agreement hereafter with any third-party
accounting firm or service bureau for the preparation or storage of their
accounting records without the accounting firm's or service bureau's agreeing to
provide to Lender information regarding the Collateral and Borrower's and
Guarantor's financial condition.
SECTION 7.7. QUARTERLY FINANCIAL STATEMENTS. Guarantor shall
furnish Lender as soon as practicable but in no event later than forty-five (45)
days after the end of each of the first three quarterly fiscal periods of each
fiscal year with unaudited quarterly 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 Guarantor stating that
the financial statements fairly present the financial condition of Guarantor as
of the date and for the periods covered and that as of the date of such
certificate there 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 7.8. ANNUAL FINANCIAL STATEMENTS. Guarantor shall
furnish Lender as soon as practicable but in no event later than ninety (90)
days after the close of each fiscal year commencing with fiscal 1996 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. Guarantor's
current certified public accounting firm, Xxxxxx Xxxxxxxx LLP, is satisfactory
to Lender. With the annual financial statements, Guarantor shall deliver a
certificate of its chief financial officer attesting that 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 7.9. FURTHER INFORMATION. Guarantor shall furnish
Lender as soon as practicable with copies of all documents or reports filed by
Guarantor with the Securities and
15
Exchange Commission. Borrower and Guarantor shall promptly supply Lender with
such other information concerning their affairs as Lender may reasonably request
from time to time hereafter and shall promptly notify Lender of any material
adverse change in Borrower's or Guarantor's financial condition and any
condition or event that constitutes an Event of Default or Unmatured Default
under this Agreement. In addition, Borrower and Guarantor authorize Lender to
contact credit reporting agencies concerning their credit standing.
SECTION 7.10. ERISA COVENANTS. Guarantor 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
Guarantor or any ERISA Affiliate is associated, the failure with which to comply
would have a material adverse effect on Guarantor's or Borrower's business or
financial condition and shall promptly notify Lender of the occurrence of any
event that could result in any material liability of Guarantor to any person to
any person whatsoever with respect to any such plan.
SECTION 7.11. RESTRICTIONS ON MERGER, CONSOLIDATION, SALE OF
ASSETS, ISSUANCE OF STOCK, ETC. Unless authorized by Lender or the Loan is
prepaid pursuant to Section 2.3, Borrower may not:
(a) merge or consolidate with any Person unless Borrower is
the surviving entity is wholly-owned by Guarantor;
(b) sell, lease or otherwise dispose of its assets in any
transaction or series of related transactions (other than sales in the ordinary
course of business);
(c) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(d) 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
(e) authorize or issue any additional stock or equity interest
other than to Guarantor; or
SECTION 7.12. HEALTH CARE COVENANTS.
(a) Borrower shall comply in all material respects with, and
will obtain all permits required by, all Health Care Laws applicable to them.
(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.
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SECTION 7.13. DISTRIBUTIONS. Borrower may not make any
Distributions other than a Distribution to Guarantor without the prior written
consent of Lender, which consent may not be unreasonably withheld and which
consent will not be deemed to authorize any Distribution while an Event of
Default is continuing or if such Distribution would cause an Event of Default.
SECTION 8
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 Guarantor fails to observe or perform any
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) Borrower or Guarantor fails to keep its assets insured as
required herein, or material uninsured damage to or loss, theft or destruction
of the Collateral occurs and such assets are not repaired or replaced with five
(5) days;
(d) 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 its 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;
(e) 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;
(f) Final judgment for the payment of money on any claim in
excess of $250,000 is rendered against Borrower or Guarantor and remains
undischarged for thirty (30) days during which execution is not effectively
stayed;
(g) 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 (d) or (e) above
17
with respect to Borrower or fails to observe or perform any covenant, condition
or agreement to be performed under any Loan Document to which it is a party;
(h) Any Collateral or any part thereof is sold, agreed to be
sold, conveyed or allocated by operation of law or otherwise, other than in the
ordinary course of business and if being replaced by items of comparable or
better value;
(i) Borrower or Guarantor defaults under the terms of any
Indebtedness or lease involving total payment obligations of Borrower or
Guarantor in excess of $250,000 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;
(j) Demand is made for payment of any Indebtedness in excess
of $250,000 that was not originally payable upon demand when incurred but the
terms of which were later changed to provide for payment upon demand;
(k) Borrower or Guarantor is enjoined, restrained or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs;
(l) A judgment or other claim in excess of $250,000 becomes a
Lien upon any or all of Borrower's or Guarantor's assets, other than a Permitted
Lien;
(m) A notice of Lien, levy or assessment in excess of $250,000
is filed of record with respect to any or all of Borrower's assets 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 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 6.4;
(n) There is a material impairment of the value of the
Collateral or priority of Lender's Liens on the Collateral;
(o) Any of Borrower's assets in excess of $250,000 or any
Collateral are seized, subjected to a distress warrant, levied upon or come into
the possession of any judicial officer;
(p) Any representation or warranty made in writing to Lender
by any officer of Borrower or Guarantor in connection with the transaction
contemplated in this Agreement is materially incorrect when made;
(q) Guarantor is in default under the Guaranty or this Loan
Agreement or an Event of Default occurs under the Other Loan Documents; or
(r) If the aggregate dollar value of all judgments, defaults,
demands, claims and notices of Liens under clauses (f), (i), (j), (l), (m) and
(o) hereof exceeds $1,000,000.
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SECTION 9
REMEDIES
SECTION 9.1. SPECIFIC REMEDIES. Upon the occurrence of any
Event of Default:
(a) Lender may declare all Obligations to be due and payable
immediately, whereupon they immediately become due and payable without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrower.
(b) 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.
(c) Lender may enter any premises of Borrower or Guarantor,
with or without judicial process, and take possession of the Collateral;
provided however, that Lender may only exercise such remedy if it may do so
without a breach of the peace. Lender may remove the Collateral and may remove
or copy all records pertaining thereto, or Lender may remain on such premises
and use the premises for the purpose of collecting, preparing and disposing of
the Collateral, without any liability for rent or occupancy charges. Borrower or
Guarantor shall, upon request of Lender, assemble the Collateral and any records
pertaining thereto and make them available at a place designated by Lender that
is reasonably convenient to both parties.
(d) Lender may dispose of the Collateral in its then-existing
condition or, at its election, may take such measures as it deems necessary or
advisable to improve, process, finish, operation, demonstrate and prepare for
sale the Collateral, and may store, ship, reclaim, recover, protect, advertise
for sale or lease, and insure the Collateral. Lender may use and operate
equipment of Borrower in order to process or finish inventory included in the
Collateral. If any Collateral consists of documents, Lender may proceed either
as to the documents or as to the goods represented thereby.
(e) 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.
(f) Lender may sell the Collateral at public or private sale
and is not required to repossess Collateral before selling it. Any requirement
of reasonable notice of any disposition of the Collateral is satisfied if such
notice is sent to Borrower or Guarantor, ten (10) days prior to such disposition
by any of the methods provided in Section 11.5 hereof. Borrower will be credited
with the net proceeds of such sale only when they are actually received by
Lender, and Borrower continues to be liable for any deficiency remaining after
the Collateral is sold or collected.
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(g) If the sale is to be a public sale, Lender shall also give
notice of the time and place by publishing a notice one time at least five (5)
days before the date of the sale in a newspaper of general circulation in the
county in which the sale is to be held.
(h) To the maximum extent permitted by applicable law, Lender
may be the purchaser of any or all of the Collateral at any public sale and is
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any public sale,
to use and apply all or any part of the Obligations as a credit on account of
the purchase price of any Collateral payable by Lender at such sale.
SECTION 9.2. POWER OF ATTORNEY. Borrower and Guarantor hereby
appoints Lender (and any of Lender's officers, employees, or agents designated
by Lender) as Borrower's and Guarantor's attorney, with power after the
occurrence of an Event of Default: (a) to execute UCC Financing Statements; and
(b) to do all things necessary to carry out this Agreement. The appointment of
Lender as attorney for Borrower and Guarantor 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. 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 or Guarantor's stationery
in connection with exercising its rights and remedies and performing the
Obligations of Borrower.
SECTION 9.3. EXPENSES SECURED. All expenses, including
reasonable attorney fees, incurred by Lender in the exercise of its rights and
remedies provided in this Agreement, in the Other Loan Documents or by law shall
be payable by Borrower to Lender, are part of the Obligations, and are secured
by the Collateral.
SECTION 9.4. 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 9.5. 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 Guarantor
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 Guarantor or any
other party. 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)
20
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 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 Guarantor
or to protect the property covered by such security interest.
SECTION 10
INDEMNITY
SECTION 10.1. GENERAL INDEMNITY. Borrower shall
unconditionally protect, indemnify, defend and hold harmless Lender and its
directors, officers, employees and agents from and against any loss, cost,
liability (including negligence, tort and strict liability), expense, damage,
suits, demands or claims (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 11
MISCELLANEOUS
SECTION 11.1. 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 11.2. COMPLETE AGREEMENT. This Agreement and the
Schedules 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 11.3. 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
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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 11.4. 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 11.5. 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, facsimile, or similar electronic medium to
the following addresses:
To Borrower
and Guarantor: c/o US Diagnostic Inc.
000 X. Xxxxxxx Xxxxx, #0000
Xxxx Xxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Lender: DVI Financial Services Inc.
000 Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Copies to: Xxxxxxx X. Xxxx, Esq.
Xxxxxx, White & Xxxxxx
000 Xxxxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
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.
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SECTION 11.6. GOVERNING LAW. ALL ACTS AND TRANSACTIONS
HEREUNDER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO ARE GOVERNED,
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF PENNSYLVANIA WITHOUT
RESORT TO PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 11.7. JURISDICTION. The state and federal courts in
Pennsylvania or any other court in which Lender initiates proceedings have
jurisdiction over all matters arising out of this Agreement and that service of
process in any such proceeding are effective if mailed to Borrower at its
address described in the Notices section of this Agreement. Borrower waives any
right it may have to assert the defense of forum non conveniens or to object to
such venue and hereby consents to any court-ordered relief.
SECTION 11.8. WAIVER OF TRIAL BY JURY. LENDER, GUARANTOR AND
BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF
THIS AGREEMENT OR ANY OF THE SECURITY DOCUMENTS OR THE CONDUCT OF THE
RELATIONSHIP BETWEEN LENDER, GUARANTOR AND BORROWER.
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IN WITNESS WHEREOF, Borrower, Guarantor and Lender have
executed this Agreement by their duly authorized officers as of the date first
above written.
BORROWER:
MEDICAL DIAGNOSTICS, INC.
By: /S/ XXXX XXXXXXX
---------------------------
Name: Xxxx Xxxxxxx
Title: Senior Vice President
GUARANTOR:
U.S. DIAGNOSTIC INC.
By: /S/ XXXX XXXXXXX
---------------------------
Name: Xxxx Xxxxxxx
Title: Executive Vice President
LENDER:
DVI FINANCIAL SERVICES INC.
By: /S/ XXXXXXX X. XXXXXX
---------------------------
Xxxxxxx X. Xxxxxx
President
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