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EXHIBIT 10.10
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMONG
MEDICAL TECHNOLOGY SYSTEMS, INC.,
CLEARWATER MEDICAL SERVICES, INC.,
MEDICAL TECHNOLOGY LABORATORIES, INC.,
MTS PACKAGING SYSTEMS, INC.,
PERFORMANCE PHARMACY SYSTEMS, INC.,
VANGARD LABS, INC.,
VANGARD PHARMACEUTICAL PACKAGING, INC.,
CART-XXXX, INC.,
MEDICATION MANAGEMENT SYSTEMS, INC.,
MEDICATION MANAGEMENT TECHNOLOGIES, INC.,
MTS SALES & MARKETING, INC., and
SYSTEMS PROFESSIONALS, INC.,
AS BORROWERS,
XXXX X. XXXXXX,
AS GUARANTOR
AND
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION,
AS LENDER
DATED AS OF
SEPTEMBER 5, 1996
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TABLE OF CONTENTS
PAGE
NO.
ARTICLE I. DEFINITIONS 3
1.1 Defined Terms 3
1.2 Accounting Terms 17
1.3 Construction of Terms 17
ARTICLE II. THE LOAN 17
2.1 History of the Loan 17
2.2 Assumption of Direct Liability by MTS Subsidiaries; Amendment
and Restatement 17
2.3 Amendment, Restatement and Consolidation of Indebtedness;
Agreement Not a Novation 17
2.4 Plan Note I 18
(E) Payment or Satisfaction of Remaining MTS Debt 20
(F) Satisfaction of Remaining MTS Debt 23
2.5 Plan Note II 23
2.6 Additional Terms of Plan Notes 25
2.7 Payment to the Lender 25
ARTICLE III. CONDITIONS PRECEDENT 26
3.1 Documents Required Before Closing 26
3.2 Certain Events 28
3.3 Legal Matters 28
ARTICLE IV. COLLATERAL SECURITY 29
4.1 Composition of the Collateral; Security Interests Granted
Pursuant to Original SouthTrust Loan Documents 29
4.2 Rights in Property Held by the Lender 29
4.3 Rights in Property Held by Any of the Borrowers or by the Lender 29
4.4 Priority of Liens 30
4.5 Financing Statements 30
4.6 Lien Waivers 31
4.7 Chattel Paper or Instruments 31
4.8 Release of Certain Collateral in Certain Events 32
ARTICLE V. REPRESENTATIONS AND WARRANTIES 34
5.1 Original 34
5.2 Survival 37
5.3 SouthTrust Closing Certificate Regarding Borrowers'
Representations and Warranties 37
ARTICLE VI. THE BORROWERS' COVENANTS 37
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6.1 Affirmative Covenants 37
6.2 Negative Covenants 43
6.3 Financial Covenants 47
ARTICLE VII. DEFAULT 48
7.1 Events of Default 48
7.2 Acceleration 52
7.3 Remedies 53
7.4 Right of Set-Off 54
7.5 Waiver of Right To Stay Foreclosure Upon Occurrence of
Major Default 55
7.6 Relief from Automatic Stay 55
7.7 Acknowledgment of the Borrowers and Guarantor 56
ARTICLE VIII. MISCELLANEOUS 56
8.1 Construction 56
8.2 Further Assurance 56
8.3 Indemnity 56
8.4 Enforcement and Waiver by the Lender 56
8.5 Expenses of the Lender 56
8.6 Notices 57
8.7 Waiver by the Borrowers 58
8.8 Participation 58
8.9 Governing Law 58
8.10 Submission to Jurisdiction; Waivers 58
8.11 Release 60
8.12 Binding Effect, Assignment 60
8.13 Entire Agreement, Amendments 60
8.14 Severability 60
8.15 Headings 61
8.16 Counterparts 61
8.17 Seal 61
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SCHEDULE OF EXHIBITS
Exhibit A - Plan Note I
Exhibit B - Plan Note II
Exhibit C - Closing Certificate
Exhibit D - Collateral Patent Assignment
Exhibit E - Amended and Restated Collateral Patent, Trademark,
Copyright and License Assignment
Exhibit F - Compliance Certificate
Exhibit G - Guaranty Agreement
Exhibit H - MTS Mortgage
Exhibit I - Existing Liens
Exhibit J - [Reserved]
Exhibit K - Second Amended and Restated Stock Pledge Agreement
Exhibit L - Existing Subordinated Indebtedness
Exhibit M - Subordination Agreement
Exhibit N - Vangard Mortgage
Exhibit O - Certificate of Secretary
Exhibit P - Opinion of Borrowers' Counsel
Exhibit Q - Amendment and Ratification of Royalty Subordination
Agreement
Exhibit R - Amendment and Ratification of Three-Party Agreement
Exhibit S - Qualification to Do Business
Exhibit T - Places of Business - Locations of the Collateral
Exhibit U - Mergers, Acquisitions and Certain Changes
Exhibit V - Claims, Litigation, Etc.
Exhibit W - Material Adverse Changes
Exhibit X - Certain Tax Matters
Exhibit Y - Compliance with Laws
Exhibit Z - Existing Indebtedness
Exhibit AA - Material Leases, Contracts and Commitments
Exhibit BB - Certain ERISA Matters
Exhibit CC - Compliance with Environmental Laws
Exhibit DD - Patents, Trademarks, Copyrights and Licenses
Exhibit EE - Certain Agreements Regarding Inventory
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SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT,
dated September ____, 1996, made by and among MEDICAL TECHNOLOGY SYSTEMS, INC.,
a Delaware corporation ("MTS"), the following subsidiaries of MTS: CLEARWATER
MEDICAL SERVICES, INC., a Florida corporation ("Clearwater Medical"), MEDICAL
TECHNOLOGY LABORATORIES, INC., a Florida corporation ("MTS Labs"), MTS
PACKAGING SYSTEMS, INC., a Florida corporation ("MTS Packaging"), PERFORMANCE
PHARMACY SYSTEMS, INC., a Florida corporation ("Performance Pharmacy"), VANGARD
LABS, INC., a Kentucky corporation ("Vangard Labs"), and VANGARD
PHARMACEUTICAL PACKAGING, INC., a Florida corporation ("Vangard
Pharmaceutical"), CART-XXXX, INC., a Florida corporation ("Cart-Xxxx"),
MEDICATION MANAGEMENT SYSTEMS, INC., a Florida corporation ("MMS"), MEDICATION
MANAGEMENT TECHNOLOGIES, INC., a Florida corporation ("MMT"), MTS SALES &
MARKETING, INC., a Florida corporation ("MTS Sales"), and SYSTEMS
PROFESSIONALS, INC., a Florida corporation ("Systems Professionals")
(collectively referred to herein as the "MTS Subsidiaries" and, together with
MTS, as the "Borrowers"), XXXX X. XXXXXX ("Xxxxxx" or the "Guarantor"), and
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION, a national banking
association (the "Lender" or "SouthTrust"),
W I T N E S E T H:
WHEREAS, MTS and, as guarantors, each of the MTS Subsidiaries
and Xxxxxx, are indebted to the SouthTrust for principal, accrued interest,
fees, charges and expenses totalling in excess of $28,257,857.67, under (i) the
Amended and Restated Revolving Loan Note, dated as of September 28, 1993,
issued by MTS and payable to the order of SouthTrust, as heretofore amended,
modified and increased (the "Original Revolving Note"), and (ii) the Amended
and Restated Term Loan Note, dated as of September 28, 1993, issued by MTS and
payable to the order of SouthTrust, as heretofore amended, modified and
increased (the "Original Term Note") (collectively, the "Original Notes"), and
(iii) all other obligations under the Amended and Restated Loan and Security
Agreement among SouthTrust, the Borrowers and Xxxxxx, dated as of September 28,
1993, as heretofore amended and modified by (a) the First Amendment to Amended
and Restated Loan and Security Agreement, dated as of Xxxxx 00, 0000, (x) the
Second Amendment to Amended and Restated Loan and Security Agreement, dated as
of May 18, 1994, (c) the Third Amendment to Amended and Restated Loan and
Security Agreement, dated as of March 28, 1995, and (d) the Master Loan
Modification Agreement, dated as of August 9, 1995, but effective as of March
28, 1995 (as so amended and modified, the "Original SouthTrust Loan Agreement"
and, together with all other instruments, security agreements, guaranties,
pledge agreements and related documents delivered in connection therewith, the
"Original SouthTrust Loan Documents"); and
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WHEREAS, Xxxxxx and each of the MTS Subsidiaries guaranteed
the full and timely payment of all amounts owed by MTS to SouthTrust pursuant
to the Original Notes and the other Original SouthTrust Loan Documents, and in
connection with the transactions contemplated in the Original SouthTrust Loan
Agreement and pursuant thereto, each of the Borrowers granted to the SouthTrust
a first priority security interest in all of the Borrowers' assets, all as more
fully described in the Original SouthTrust Loan Documents; and
WHEREAS, certain defaults and Events of Default occurred under
the Original SouthTrust Loan Documents prior to the filing of the petitions for
relief described below; and
WHEREAS, on January 3, 1996, MTS Labs, MTS Packaging and MTS
Sales filed voluntary petitions for relief under applicable provisions of the
United States Bankruptcy Code (as heretofore or hereafter amended, the
"Bankruptcy Code") in the United States Bankruptcy Court for the Middle
District of Florida, Tampa Division (the "Bankruptcy Court"), and on February
21, 1996, Vangard Labs filed a similar petition for relief in the Bankruptcy
Court; and
WHEREAS, on July 12, 1996, MTS Labs and MTS Packaging filed
their "First Amended and Restated Joint Plan of Reorganization Under Chapter 11
of the United States Bankruptcy Code" (the "Joint Plan") in the Bankruptcy
Court, and on August 6, 1996, Vangard Labs filed the "Amended and Restated
Liquidating Plan of Vangard Labs, Inc." in the Bankruptcy Court (the "Vangard
Plan"); and
WHEREAS, on September 4, 1996, the Bankruptcy Court entered
orders confirming the Joint Plan and the Vangard Plan (collectively, the
"Plans"), under applicable provisions of the Bankruptcy Code (the "Confirmation
Orders"), and also entered orders approving this Second Amended and Restated
Loan and Security Agreement and the other Plan Documents (as defined in the
Plans), and authorizing and directing the Borrowers to enter into the Plan
Documents and to consummate the transactions contemplated herein and therein;
and
WHEREAS, the Plans and the Confirmation Orders provide, among
other things, for (i) the amendment and restatement of the Original SouthTrust
Loan Documents in the manner provided herein, (ii) the MTS Subsidiaries'
assumption of direct liability, as co-obligors, for all amounts owed under the
Original Notes in the manner provided herein, and (iii) the execution and
delivery by Borrowers of amended and restated promissory notes in favor of
SouthTrust, designated in the Plans as "Plan Note I" and "Plan Note II";
NOW, THEREFORE, for and in consideration of the premises and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, each of the Borrowers, Xxxxxx and the Lender hereby
agree as follows:
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ARTICLE 1. DEFINITIONS
1.1 DEFINED TERMS.
As used herein:
"ACCOUNTS", "CHATTEL PAPER", "CONTRACTS", "DOCUMENTS",
"EQUIPMENT", "FIXTURES", "GENERAL INTANGIBLES", "GOODS", "INSTRUMENTS",
"INVENTORY" and other similar terms not specifically defined herein shall have
the same respective meanings as are given to those terms in the Uniform
Commercial Code as currently adopted and in effect in the State of Alabama.
"ACCOUNT DEBTOR" means any Person who is obligated on an
Account, Chattel Paper or General Intangible.
"ACCRUAL RATE" means 8.25% per annum.
"AFFILIATE" shall mean Xxxxxx, the Xxxxxx Family Trust, the
Xxxxxx Family Partnership, JADE Partners, and any other Person (A) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, any one or more of the
Borrowers, or (B) twenty percent (20%) or more of the equity interest of which
is held beneficially or of record by any one or more of the Borrowers, or (C)
any officer or director of any one or more of the Borrowers. The term
"CONTROL" means the possession, directly or indirectly, of the power to cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"AGREEMENT" means this Second Amended and Restated Term Loan
and Security Agreement, as amended or supplemented from time to time.
"BANKRUPTCY CASES" means the proceedings commenced in the
Bankruptcy Court by MTS Packaging, MTS Sales, MTS Labs and Vangard Labs, and
described in the Recitals to this Agreement.
"BANKRUPTCY CODE" has the meaning given to such term in the
Recitals to this Agreement.
"BANKRUPTCY COURT" has the meaning given to such term in the
Recitals to this Agreement.
"BENEFIT PLAN" means a defined benefit pension plan under
ERISA for the Unfunded Plan Liabilities of which the Borrowers, or any of them,
could be held liable by the Pension Benefit Guaranty Corporation upon
termination of the Plan.
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"BORROWER" and "BORROWERS" means MTS, Clearwater Medical, MTS
Labs, MTS Packaging, Performance Pharmacy, Vangard Labs, Vangard
Pharmaceutical, Cart-Xxxx, MMS, MMT, MTS Sales, and Systems Professionals.
"BUDGET" and "BUDGETS" means the operating budgets to be
prepared by the Borrowers and delivered to the Lender pursuant to Section
6.1(A)(8) hereof.
"CAPITAL TRANSACTION" means (A) any sale, transfer or
disposition of all or substantially all the assets or business of any of the
Borrowers, whether by merger, sale, transfer, exchange or other disposition of
capital stock or assets, consolidation, or otherwise, (B) any refinance of the
indebtedness evidenced by the Plan Notes, and (C) any offering, issuance or
sale of any capital stock or other securities of any of the Borrowers through a
private placement or public offering.
"CART-XXXX" means Cart-Xxxx, Inc., a Florida corporation.
"CASH FLOW" means, as to any Person, the aggregate of: (A) Net
income after taxes (or the net deficit, as applicable), and (B) Amounts that
were deducted for (i) Amortization of intangible assets, (ii) Depreciation and
depletion, and (iii) Income taxes and interest expense; all as shown by the
income statement of such Person, calculated in accordance with Generally
Accepted Accounting Principles.
"CAUSES OF ACTION" means all causes of action of any kind held
at any time by the Borrowers (or any of them), arising before the Closing Date,
against any party or parties, including all causes of action held by MTS
Packaging, MTS Labs, MTS Sales or Vangard Labs, under sections 542, 544, 545,
547, 548, 549 or 550 of the Bankruptcy Code.
"CLEARWATER MEDICAL" means Clearwater Medical Services, Inc.,
a Florida corporation.
"CLOSING" means the time and place of actual execution and
delivery of this Agreement, the Plan Notes, the Security Documents and the
other Plan Documents.
"CLOSING CERTIFICATE" means a certificate in the form of
EXHIBIT C to this Agreement, dated the date of Closing, and signed on behalf of
each of the Borrowers by the president or a vice-president of such Borrower.
"CLOSING DATE" means the date on which the Closing occurs.
"COLLATERAL" means the property and rights, and any proceeds,
in whatever form, thereof, described in Sections , , and hereof and in the
Security Documents.
"COLLATERAL PATENT ASSIGNMENT" means that certain Collateral
Patent Assignment duly authorized and executed by the Xxxxxx Family Trust and
in substantially the form of EXHIBIT
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D, attached hereto and incorporated herein as such Collateral Patent Assignment
may hereafter be supplemented and amended.
"COLLATERAL TRADEMARK ASSIGNMENT" means that certain Amended
and Restated Collateral Patent, Trademark, Copyright and License Assignment
duly authorized and executed by the Borrowers and in substantially the form of
EXHIBIT E, attached hereto and incorporated herein, as such Collateral
Trademark Assignment may hereafter be supplemented and amended.
"COMPLIANCE CERTIFICATE" means a certificate in the form of
EXHIBIT F to this Agreement which is delivered with respect to the Borrowers
pursuant to Section hereof.
"CONSOLIDATED" refers to the consolidation of the accounts of
a Person and its Consolidated Entities on a balance sheet and statement of
income and retained earnings in accordance with Generally Accepted Accounting
Principles.
"CONSOLIDATED ENTITIES" means any Person the financial
statements of which are appropriately consolidated with those of MTS under
GAAP, and "Consolidated Entities" means all of them.
"CURRENT ASSETS" and "CURRENT LIABILITIES" mean, at any time,
all assets or liabilities, respectively, that, in accordance with Generally
Accepted Accounting Principles consistently applied, should be classified as
current assets or current liabilities, respectively, on a balance sheet of a
Person.
"DEFAULT" and "EVENT OF DEFAULT" each mean the occurrence of
any event described in Section 7.1 hereof.
"DEFAULT RATE" means 10.75% per annum.
"DOLLARS" and "$" each mean United States Dollars.
"ENVIRONMENTAL LAWS" means the Comprehensive Environmental
Response Compensation and Liability Act of 1980 (CERCLA), as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Sections 1801, et seq.), the Resource Conservation and Recovery Act
(RCRA), as amended (42 U.S.C. Sections 6901, et seq.), the Clean Water Act, as
amended (33 U.S.C. Sections 1251, et seq.), the Clean Air Act, as amended (42
U.S.C. Sections 7401, et seq.), the Toxic Substances Control Act, as amended (15
U.S.C. Sections 2601, et seq.), the Emergency Planning and Community
Right-to-Know Act (EPCRA) (42 U.S.C. Sections 11001, et seq.), and the rules and
regulations adopted and publications promulgated pursuant thereto, and the rules
and regulations of the Occupational Safety and Health Administration (OSHA)
pertaining to occupational exposure to asbestos, as amended, and any other
federal, state or local environmental law, ordinance, rule, or regulation now or
hereafter in effect.
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"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time, and the regulations
promulgated by the Department of Labor or the Pension Benefit Guaranty
Corporation thereunder.
"EXCESS CASH FLOW" means the net sales of MTS Packaging and
MTS Labs, calculated and determined in accordance with Generally Accepted
Accounting Principles, less, in each case to the extent actually incurred by
MTS Packaging and MTS Labs (and without duplication), (i) cost of sales, (ii)
selling, general and administrative expenses, (iii) capital expenditures and
(iv) interest charges, but before taxes, depreciation and amortization charges,
in each case calculated and determined in accordance with GAAP; provided, that,
for purposes of determining Excess Cash Flow for any period, the amounts of
cost of sales, selling, general and administrative expenses, capital
expenditures and interest charges shall not exceed the respective amounts
thereof for such period as reflected in the Budgets required under Section
6.1(A)(8) of this Agreement to be delivered by the Borrowers to the Lender from
time to time.
"FINANCIAL STATEMENTS" means the (i) audited Consolidated
balance sheet of MTS and its Subsidiaries as of March 31, 1996, and
Consolidated statements of income and retained earnings and Cash Flow of MTS
and its Subsidiaries for the year ended on such date, and (ii) the unaudited
Consolidated balance sheet of MTS and its Subsidiaries as of June 30, 1996, and
the related Consolidated statements of income, retained earnings and Cash Flow
of MTS and its Subsidiaries for the quarter then ended, all as furnished to the
Lender, and shall also mean any such balance sheets and statements as may
hereafter be delivered by any of the Borrowers to Lender.
"FIXED ASSETS" means, at any time, all assets (other than
Current Assets) that should, in accordance with Generally Accepted Accounting
Principles consistently applied, be classified as assets on a balance sheet of
the Borrowers.
"FIXED CHARGE COVERAGE" means the quotient which is obtained
by dividing (i) the sum of the Consolidated net income of the Borrowers (after
provision for federal and state income taxes) for the 12-month period preceding
the applicable date plus the interest, lease and rental expenses of the
Borrowers for the same period plus the sum of non-cash expenses or allowances
for such period (including, without limitation, amortization or write-down of
intangible assets, depreciation, depletion and deferred taxes and expenses) by
(ii) the sum of the current portion of the Long-Term Liabilities of the
Borrowers as of the applicable date;
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" and "GAAP" each
mean generally accepted principles of accounting in effect from time to time in
the United States, applied in a manner which is, except as otherwise disclosed
to Lender in writing, consistent with those used in preparing such financial
statements as have theretofore been furnished to the Lender by the Borrowers.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or
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administrative functions of or pertaining to government, which has or asserts
jurisdiction over the Lender or any of the Borrowers, or over the property of
any of them.
"GUARANTOR" means Xxxx X. Xxxxxx and each other Person who has
guaranteed, or hereafter guarantees all or any portion of the Borrowers'
obligations hereunder, and "GUARANTORS" means all of such Persons,
collectively.
"GUARANTY AGREEMENT" means the guaranty of payment and
performance of the Obligations, substantially in the form of EXHIBIT G hereto,
made with the Lender by the Guarantor, as such Guaranty Agreement may be
hereafter supplemented or amended.
"HAZARDOUS MATERIALS" means any asbestos, urea formaldehyde
foam insulation, flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related or
unrelated substances or materials defined, regulated, controlled, limited or
prohibited in any Environmental Laws.
"INDEBTEDNESS" means, as to any Person, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or contingent, joint or several, including, but without
limitation:
(A) All indebtedness guaranteed, directly or indirectly,
in any manner, or endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise:
(1) to purchase such indebtedness; or
(2) to purchase, sell or lease (as lessee or lessor)
property, products, materials or supplies or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
indebtedness or to assure the owner of the indebtedness against loss; or
(3) to supply funds to or in any other manner invest
in the debtor;
(C) All indebtedness secured by (or for which the holder
of such indebtedness has a right, contingent or otherwise, to be secured by)
any mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance upon property owned or acquired subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness incurred as the lessee of Goods or
services under leases that, in accordance with Generally Accepted Accounting
Principles, should not be reflected on the lessee's balance sheet.
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"JADE PARTNERS" means JADE Partners, a Florida general
partnership.
"JOINT PLAN" has the meaning given such term in the Recitals
to this Agreement.
"LAWS" means all ordinances, statutes, rules, regulations,
orders, injunctions, judgments, writs or decrees of any government or political
subdivision or agency thereof, or any court or similar entity established by
any thereof.
"LENDER" means SouthTrust Bank of Alabama, National
Association, its successors and assigns.
"LIABILITIES" means all Indebtedness and all other items that,
in accordance with Generally Accepted Accounting Principles consistently
applied, should be classified as liabilities on a balance sheet of a Person.
"LONG-TERM LIABILITIES" means Liabilities less the portion
thereof that constitutes Current Liabilities.
"MAJOR DEFAULT" means an Event of Default described in Section
7.1(A) hereof.
"MATURITY DATE" means with respect to Plan Note I, September
1, 2006, and with respect to Plan Note II, March 15, 2002.
"MMS" means Medication Management Systems, Inc., a Florida
corporation.
"MMT" means Medication Management Technologies, Inc., a
Florida corporation.
"MTS" means Medical Technology Systems, Inc., a Delaware
corporation.
"MTS LABS" means Medical Technology Laboratories, Inc., a
Florida corporation.
"MTS LABS COLLATERAL" means all Collateral owned by MTS Labs
(or in which MTS Labs has any interest), all Pledged Notes of MTS Labs, and all
stock certificates of MTS Labs in the Lenders possession.
"MTS MORTGAGE" means that certain Real Estate Mortgage
substantially in the form attached hereto as EXHIBIT H, as such MTS Mortgage
may be hereafter supplemented or amended.
"MTS PACKAGING" means MTS Packaging Systems, Inc., a Florida
corporation.
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"MTS PACKAGING COLLATERAL" means all Collateral owned by MTS
Packaging (or in which MTS Packaging has any interest), all Pledged Notes of
MTS Packaging and all stock certificates of MTS Packaging in the Lender's
possession.
"MTS SALES" means MTS Sales & Marketing, Inc., a Florida
corporation.
"MTS SUBSIDIARIES" means Clearwater Medical, MTS Labs, MTS
Packaging, Performance Pharmacy, Vangard Labs, Vangard Pharmaceutical,
Cart-Xxxx, MMS, MMT, MTS Sales, and Systems Professionals.
"NET PROCEEDS" means,
(A) with respect to any Capital Transaction, the gross
proceeds received or derived from such Capital Transaction, whether in cash,
stock or other property, less (i) all expenses (not including any payments or
consideration of any kind paid to any Affiliate of any Borrower) which are
directly and actually incurred by Borrowers in connection with such Capital
Transaction, and which are approved in writing by the Lender, and (ii) if such
Capital Transaction constitutes a sale of all of the capital stock, or all or
substantially all of the assets, of MTS Labs or any of the Software Companies,
and if prior to such Capital Transaction, all or any portion of the
Amortization Principal Amount has been refinanced in compliance with all
applicable provisions of this Agreement (including Section 6.2(H)), the amount
required to repay such refinanced Indebtedness; provided, that the amount
deducted pursuant to this clause shall not exceed $2,000,000.00 in the case of
a Capital Transaction with respect to MTS Labs or $1,000,000.00 in the case of
a Capital Transaction with respect to one or more of the Software Companies;
and,
(B) with respect to any Causes of Action, "NET PROCEEDS"
means the gross proceeds derived from any such Cause of Action, whether
pursuant to jury verdict, judgment or settlement, less all reasonable legal
fees, expenses and court costs actually incurred by the Borrowers which are
directly related to the prosecution of such Causes of Action.
"NET WORKING CAPITAL" means, at any time, the amount by which
Current Assets exceed Current Liabilities.
"NET WORTH" means, at any time, Stockholders' Equity, less the
sum of:
(A) Any surplus resulting from any write-up of assets
subsequent to the date of Closing;
(B) Any amount at which shares of capital stock of the
Borrowers appear as an asset on the Borrowers' balance sheet; and
(C) Loans and advances to stockholders, directors,
officers or employees, of the Borrowers or any Affiliate.
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"NOTE PLEDGE AGREEMENT" means the duly authorized and executed
second amended and restated note pledge agreement, dated as of April 25, 1994,
as heretofore amended, as amended effective as of the Closing Date, and as the
same may be hereafter supplemented or amended.
"OBLIGATIONS" means the obligations, whether joint or several
of the Borrowers:
(A) To pay the principal of and interest on the Plan
Notes in accordance with the terms thereof and to satisfy all of their other
Liabilities to the Lender, whether hereunder or otherwise, whether now existing
or hereafter incurred, matured or unmatured, direct or contingent, joint or
several, including any extensions, modifications, and renewals thereof and
substitutions therefor;
(B) To repay to the Lender all amounts advanced by the
Lender hereunder, under any of the Security Documents or otherwise on behalf of
any of the Borrowers, including, but without limitation, advances for principal
or interest payments to prior secured parties, mortgagees, or lienors, or for
taxes, levies, insurance, rent, repairs to or maintenance or storage of any of
the Collateral;
(C) To reimburse the Lender, on demand, for all of the
Lender's expenses and costs, including the reasonable fees and expenses of its
counsel pursuant to Section 8.5 hereof, in connection with the preparation,
administration, amendment, modification, and enforcement of this Agreement and
the documents required or contemplated hereunder, including, without
limitation, any such fees and expenses incurred in connection with any
proceeding brought or threatened to enforce payment of any of the obligations
referred to in the foregoing paragraphs (A) and (B);
(D) To comply with each and every covenant of the
Borrowers (or any of them) contained in this Agreement, the Security Documents,
the other Plan Documents and the Plans.
"ORIGINAL SOUTHTRUST INDEBTEDNESS" means the Indebtedness of
the Borrowers to SouthTrust under the Original SouthTrust Loan Documents,
aggregating $28,257,857.67 as of the Petition Date.
"OTHER DEFAULT" means an Event of Default described in Section
7.1(B) hereof.
"PARTICIPANT" means The Daiwa Bank, Limited and any other
bank, financial institution, Affiliate of the Lender, or other entity which
has heretofore purchased an interest in the Original Notes or which purchases
an interest in the Plan Notes (or either of them), at any time.
"PAY RATE" means 7.5% per annum.
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"PERFORMANCE PHARMACY" means Performance Pharmacy Systems,
Inc., a Florida corporation.
"PERMITTED LIENS" means:
(A) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of
business to secure payment of utility and similar charges incurred in the
ordinary course of business, shipments of inventory purchased on normal trade
terms, and workers' compensation, or to participate in any fund in connection
with workers' compensation, unemployment insurance, old-age pensions or other
social security programs;
(C) Liens of mechanics, materialmen, warehousemen,
carriers, or other like liens, securing obligations incurred in the ordinary
course of business that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary
course of business to secure performance of bids, tenders, contracts (other
than for the repayment of borrowed money) or leases, not in excess of ten
percent (10%) of the aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;
(E) Encumbrances consisting of zoning restrictions,
easements or other restrictions on the use of real property, none of which
materially impairs the use of such property by any of the Borrowers in the
operation of their respective business, and none of which is violated in any
material respect by existing or proposed structures or land use;
(F) Liens in favor of the Lender;
(G) Existing liens set forth or described on EXHIBIT I
attached hereto and incorporated herein;
(H) Purchase money security interests granted to secure
not more than one hundred percent (100%) of the purchase price of assets the
purchase of which does not violate this Agreement or any instrument or document
contemplated hereunder; and
(I) The following, if the validity or amount thereof is
being contested in good faith by appropriate and lawful proceedings, so long as
levy and execution thereon have been stayed and continue to be stayed and they
do not, in the aggregate, materially detract from the value of the property of
any of the Borrowers, or materially impair the use thereof in the operation of
their respective business;
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(1) Claims or liens for taxes, assessments or
charges due and payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and
defects of title to, real or personal property, including any attachment of
personal or real property or other legal process prior to adjudication of a
dispute on the merits; and
(3) Claims or liens of mechanics, materialmen,
warehousemen, carriers, or other like liens.
"PERSON" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court or government or political subdivision or agency thereof, and
any other legal entity.
"PETITION DATE" means the date on which MTS Packaging, MTS
Labs and MTS Sales filed petitions for relief under Chapter 11 of the
Bankruptcy Code, which occurred on January 3, 1996.
"PLAN DOCUMENTS" means this Agreement, the Plan Notes, the
Security Documents, and the other documents, instruments and agreements defined
in either of the Plans as "Plan Documents."
"PLAN NOTE I" means the amended and restated promissory note
issued by the Borrowers under this Agreement, substantially in the form of
EXHIBIT A, hereto and described in Section 2.4 hereof, and includes any
amendment to such note and any promissory note given in extension or renewal
of, or in substitution for, such note.
"PLAN NOTE II" means the amended and restated promissory note
issued by the Borrowers under this Agreement, substantially in the form of
EXHIBIT B, hereto and described in Section 2.5 hereof, and includes any
amendment to such note and any promissory note given in extension or renewal
of, or in substitution for, such note.
"PLAN NOTES" means, collectively, Plan Note I and Plan Note II.
"PLANS" means, collectively, the Joint Plan and the Vangard
Plan.
"PLEDGED NOTES" has the meaning given to such term in the
Note Pledge Agreement.
"PLEDGED STOCK" has the meaning given to such term in the
Stock Pledge Agreement.
"RECORDS" means correspondence, memoranda, tapes, discs,
microfilm, microfiche, papers, books and other documents, or transcribed
information of any type, whether
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expressed in ordinary or machine language, and all filing cabinets, computer
hardware and other containers in which any of the foregoing is stored,
maintained or updated.
"REGULATION U" means Regulation U of the Board of Governors of
the Federal Reserve System as now or from time to time hereafter in effect and
shall include any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of
the Federal Reserve System.
"REMAINING MTS DEBT" has the meaning set forth in Section
2.4(E) of this Agreement.
"ROYALTY SUBORDINATION AGREEMENT" means that certain Royalty
Subordination Agreement dated as of April 25, 1994, between the Xxxxxx Family
Trust and the Lender, as heretofore amended, as amended on the Closing Date,
and as the same may be hereafter supplemented or amended.
"SECURITY DOCUMENTS" means the Guaranty Agreement, the MTS
Mortgage, the Collateral Trademark Assignment, the Stock Pledge Agreement, the
Subordination Agreement(s), the Note Pledge Agreement, the Collateral Patent
Assignment, the Vangard Mortgage, the Royalty Subordination Agreement, the
Three-Party Agreement, and any documents required or contemplated under Article
IV of this Agreement, whether delivered at or after the Closing, together with
any other documents or agreements, now or hereinafter in effect, which secure
(A) the payment of the Indebtedness evidenced by the Plan Notes or (B) the
performance of the Obligations of the Borrowers hereunder.
"XXXXXX" means Xxxx X. Xxxxxx, an individual.
"XXXXXX FAMILY PARTNERSHIP" shall mean the Xxxxxx Family
Limited Partnership, a Florida limited partnership.
"XXXXXX FAMILY TRUST" shall mean The Xxxxxx Family Revocable
Trust, and any successor trust(s) heretofore or hereafter formed pursuant to
trust documents originally executed by Xxxxxx Xxxxxx, including, without
limitation, The Xxxx Xxxxxx Q-TIP Trust, The Xxxxx Xx Xxxxx Q-TIP Trust, The
Xxxxxx Family Q-TIP Trust and The Xxxxxx Family By-Pass Trust.
"SOFTWARE COMPANIES" means, collectively, Cart-Xxxx, MMS, MMT
and Performance Pharmacy.
"SOFTWARE COMPANIES COLLATERAL" means all Collateral owned by
the Software Companies (or in which they, or any of them, have any interest),
all Pledged Notes of the Software Companies and all stock certificates of the
Software Companies in the Lender's possession.
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"STATED PRINCIPAL AMOUNT" has the meaning set forth in Section
2.4 of this Agreement.
"STOCK PLEDGE AGREEMENT" means the duly authorized and
executed second amended and restated stock pledge agreement substantially in
the form of EXHIBIT K, attached hereto and incorporated herein, as such Stock
Pledge Agreement may be hereafter supplemented or amended.
"STOCKHOLDERS' EQUITY" means, at any time, the sum of the
following accounts set forth in a balance sheet of any Borrower (or, in the
case of MTS, in a Consolidated balance sheet of MTS and all Consolidated
Entities), prepared in accordance with Generally Accepted Accounting Principles
consistently applied:
(A) The par or stated value of all outstanding capital
stock;
(B) Capital surplus; and
(C) Retained earnings.
"SUBORDINATED INDEBTEDNESS" means all Indebtedness incurred at
any time by the Borrowers or any of them, the repayment of which is
subordinated to the Obligations in form and manner satisfactory to the Lender.
All existing Subordinated Indebtedness is so specified in EXHIBIT L.
"SUBORDINATION AGREEMENT" means an agreement in the form of
EXHIBIT M, duly executed, or to be executed, by the purchasers and holders of
any debentures or similar securities issued pursuant to the Joint Plan, and the
"SUBORDINATION AGREEMENTS" means all of such agreements pursuant to which the
Indebtedness owing by the Borrowers to such Persons, and the liens of such
Persons on all collateral (if any) therefor, is subordinated to the Obligations
owing by the Borrowers to the Lender and the liens of Lender on all Collateral
therefor.
"SUBSIDIARY" means any corporation of which more than fifty
percent (50%) of the outstanding voting securities shall, at the time of
determination, be owned directly, or indirectly through one or more
intermediaries, by any of the Borrowers.
"SUBSIDIARY GUARANTY AGREEMENT" means collectively, the
Subsidiary Guaranty, dated as of September 28, 1993, among certain of the MTS
Subsidiaries in favor of SouthTrust, the Subsidiary Guaranty, dated as of April
25, 1994, among certain of the MTS Subsidiaries in favor of SouthTrust, and the
Subsidiary Guaranty, dated as of March 28, 1995, among all of the MTS
Subsidiaries in favor of SouthTrust.
"SYSTEMS PROFESSIONALS" means Systems Professionals, Inc., a
Florida corporation.
"TANGIBLE NET WORTH" means, at any time, Stockholders' Equity,
less the sum of:
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(A) Any surplus resulting from any write-up of assets
subsequent to the Closing Date;
(B) Goodwill, including any amounts, however designated
on a balance sheet of any of the Borrowers, representing the excess of the
purchase price paid for assets or stock acquired over the value assigned
thereto on the books of any Borrower;
(C) Patents, trademarks, trade names and copyrights;
(D) Any amount at which shares of capital stock of any
Borrower appear as an asset on any Borrowers' balance sheet;
(E) Loans and advances to stockholders, directors,
officers or employees of any of the Borrowers;
(F) Deferred expenses; and
(G) Any other amount in respect of an asset that, in
accordance with Generally Accepted Accounting Principles, is considered as an
intangible asset on a balance sheet of any of the Borrowers.
"THREE PARTY AGREEMENT" means that certain Three Party
Agreement among the Lender, MTS and the Xxxxxx Family Trust, dated as of March
28, 1995, as amended on the Closing Date, and as the same may be hereafter
supplemented or amended.
"UNFUNDED PLAN LIABILITIES" with regard to any Benefit Plan
means the excess of the current value of the Benefit Plan's benefits guaranteed
under ERISA over the current value of the Benefit Plan's assets allocable to
such benefits.
"VANGARD COLLATERAL" means (i) all Collateral owned by Vangard
Labs (or in which Vangard Labs has any interest), all Pledged Notes of Vangard
Labs and Vangard Pharmaceutical, all stock certificates of Vangard Labs,
Vangard Pharmaceutical and, if sold pursuant to the Vangard Plan, Glasgow
Pharmaceutical Corporation, which are in the Lender's possession, and (ii) if
sold pursuant to the Vangard Plan, the property subject to the MTS Mortgage.
"VANGARD EXCESS CASH FLOW" means all cash of Vangard Labs, as
of any date of determination, after payment of expenses incurred in compliance
with the Vangard Plan.
"VANGARD LABS" means Vangard Labs, Inc., a Kentucky
corporation.
"VANGARD MORTGAGE" that certain real estate mortgage
substantially in the form attached hereto as EXHIBIT N, as such Vangard
Mortgage may be hereafter supplemented or amended.
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"VANGARD PHARMACEUTICAL" means Vangard Pharmaceutical
Packaging, Inc., a Florida corporation.
"VANGARD PLAN" has the meaning given such term in the Recitals
to this Agreement.
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1.2 ACCOUNTING TERMS. Accounting terms used and not otherwise
defined in this Agreement have the meanings determined by, and all calculations
with respect to accounting or financial matters unless otherwise provided
herein shall be computed in accordance with, Generally Accepted Accounting
Principles.
1.3 CONSTRUCTION OF TERMS. Whenever used in this Agreement, the
singular number shall include the plural and the plural the singular, and
pronouns of one gender shall include all genders. References herein to
articles, sections, paragraphs or subparagraphs or the like shall refer to the
corresponding articles, sections, paragraphs or subparagraphs or the like of
this Agreement. The words "hereof", "herein", and terms of similar import
shall refer to this entire Agreement. Unless the context clearly requires
otherwise, the use of the words "including", "such as", or terms of similar
meaning, shall not be construed to imply the exclusion of any other particular
elements.
ARTICLE 2. THE LOAN
2.1 HISTORY OF THE LOAN. Pursuant to the provisions of the
Original SouthTrust Loan Agreement, the Lender has heretofore made certain
loans to MTS, which are evidenced by the Original Revolving Note and the
Original Term Note and the other Original SouthTrust Loan Documents. Certain
defaults and events of default have occurred under the Original SouthTrust Loan
Documents and, as reflected in the Recitals to this Agreement, MTS Packaging,
MTS Labs, MTS Sales and Vangard Labs have filed petitions for relief under
Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. As of January 3,
1996, the date on which the first of these petitions was filed in the
Bankruptcy Court, the outstanding principal, accrued interest, costs and
related charges under the Original Notes was $28,257,857.67.
2.2 ASSUMPTION OF DIRECT LIABILITY BY MTS SUBSIDIARIES; AMENDMENT
AND RESTATEMENT. MTS is primarily liable under the Original Notes, and each of
the MTS Subsidiaries is liable for all amounts owed under the Original Notes
pursuant to the Subsidiary Guaranty Agreement. Each of the MTS Subsidiaries
hereby (i) ratifies and confirms the Subsidiary Guaranty Agreement and its
obligations thereunder, and (ii) acknowledges its unconditional joint and
several liability under the Original Notes and the Original SouthTrust Loan
Documents. Each of the MTS Subsidiaries hereby assumes direct liability,
jointly and severally as co-obligors with each other and with MTS, under the
Original Revolving Note, the Original Term Note and the other Original
SouthTrust Loan Documents. In accordance with the Plans, the Borrowers, Xxxxxx
and SouthTrust have agreed to amend and restate the Original Notes and the
Original SouthTrust Loan Documents in the manner contemplated herein, and
otherwise to enter into the transactions contemplated by this Agreement.
2.3 AMENDMENT, RESTATEMENT AND CONSOLIDATION OF INDEBTEDNESS;
AGREEMENT NOT A NOVATION.
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(A) The parties hereby agree that the Original SouthTrust
Indebtedness shall be consolidated, and the Original Notes shall be amended and
restated in their entirety in the manner set forth herein and in the Plan
Notes. The parties agree further that this Agreement shall constitute an
amendment and restatement in its entirety of the Original SouthTrust Loan
Agreement. Notwithstanding any provision to the contrary contained herein, in
the Plans, in the Plan Notes or the other Plan Documents, or in any other
document or instrument, the execution and delivery of this Agreement, the Plan
Notes and the other instruments and documents executed in connection therewith
are not intended to, and shall not, constitute an accord and satisfaction of,
or a novation with respect to, the Original SouthTrust Indebtedness.
(B) From and after the date hereof, the Original
SouthTrust Indebtedness of the Borrowers shall be evidenced by Plan Note I and
Plan Note II, and shall be governed by this Agreement, the Plan Notes and the
Security Documents. The payment and other terms of Plan Note I and Plan Note
II shall be as set forth therein and in Sections 2.4 through 2.7 hereof.
2.4 PLAN NOTE I. At the Closing, the Borrowers shall execute and
deliver Plan Note I to the Lender to evidence the Borrowers' obligations to
repay a portion of the Original SouthTrust Indebtedness equal to the Stated
Principal Amount.
(A) Stated Principal Amount; Amortization Principal
Amount. Plan Note I shall be in the stated principal amount of $27,257,857.67
(the "Stated Principal Amount"). A portion of the Stated Principal Amount,
equal to $15,000,000.00 (the "Amortization Principal Amount"), together with
interest thereon at the Pay Rate, commencing on September 4, 1996, shall be
paid as follows:
(i) At the Closing, Borrowers shall pay to the
Lender an amount equal to accrued interest on the Amortization
Principal Amount at the Pay Rate from September 4, 1996, to
and including the Closing Date.
(ii) On October 1, 1996, and on the first day of
each calendar month thereafter through and including September
1, 1998, the Borrowers shall pay to the Lender accrued
interest on the then outstanding balance of the Amortization
Principal Amount at the Pay Rate.
(iii) Installments of principal and interest,
calculated in the manner provided in Section 2.4(A)(iv)
hereof, shall be due and payable on a monthly basis, with the
first such installment being due and payable on the first day
of October, 1998, and continuing thereafter on the first day
of each and every calendar month until September 1, 2006, at
which time the then-outstanding balance of the Amortization
Principal Amount, together with accrued and
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unpaid interest thereon at the Pay Rate, shall be due and
payable in full.
(iv) The monthly installments of the Amortization
Principal Amount and interest thereon under Plan Note I shall
be calculated based on the Amortization Principal Amount being
amortized in level monthly payments at an assumed interest
rate equal to the Pay Rate over an assumed period of twenty
(20) years.
(B) Mandatory Partial Prepayments Applied Against
Amortization Principal Amount. In addition to the monthly installments
referred to above, the Borrowers shall make mandatory partial prepayments of
the Amortization Principal Amount as follows:
(i) If, at any time prior to the Maturity Date,
any Capital Transaction occurs which involves, directly or indirectly,
any one or more of the Software Companies, then the Borrowers shall
pay to the Lender an amount equal to $1,000,000.00; provided, that
there shall be credited against such amount, an amount equal to
seventy-five percent (75%) of the aggregate amount of principal
payments theretofore made by Borrowers with respect to the
Amortization Principal Amount, up to a maximum credit amount of
$1,000,000.00 (the amount payable under this Section 2.4(B)(i) is
referred to as the "Software Companies Release Payment"); and
(ii) If, at any time prior to the Maturity Date,
any Capital Transaction occurs which involves, directly or indirectly,
MTS Labs (or any Subsidiary thereof), then the Borrowers shall pay to
the Lender an amount equal to $2,000,000.00; provided, that there
shall be credited against such amount, an amount equal to seventy-five
percent (75%) of the aggregate amount of principal payments
theretofore made by Borrowers with respect to the Amortization
Principal Amount in excess of $1,000,000.00, up to a maximum credit
amount of $2,000,000.00 (the amount payable under this Section
2.4(B)(ii) is referred to as the "MTS Labs Release Payment");
Mandatory prepayments made by Borrowers under this Section 2.4(B) shall be due
and payable on the date on which the relevant Capital Transaction is
consummated, shall be applied in the manner set forth in Section 2.4(C) hereof,
and shall have the effect set forth in Sections 4.8(B) and (C) hereof. The
Software Companies Release Payment and the MTS Labs Release Payment,
respectively, shall each be payable only once, upon the consummation of the
first Capital Transaction including any of the Software Companies or MTS Labs,
as the case may be.
(C) Application of Prepayments of Amortization Principal
Amount. All prepayments under Plan Note I with respect to the Amortization
Principal Amount (whether mandatory partial prepayments under Section 2.4(B) or
optional prepayments under Section 2.4(D)) shall be applied, first to accrued
interest on the then outstanding Amortization Principal Amount, and then to
installments of principal in inverse order of their maturity. In the event of a
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partial prepayment, the monthly installments of principal and interest due and
payable under Section 2.4(A) hereof after any such partial prepayment shall
continue in the aggregate amount calculated as set forth above, but the
portions of each such monthly installment which are applied to the payment of
interest and the reduction of principal shall be adjusted, based on the balance
of the Amortization Principal Amount which remains outstanding after such
partial prepayment.
(D) Optional Prepayment of Amortization Principal Amount.
The Borrowers shall have the right, at their option, without premium or
penalty, to prepay the Amortization Principal Amount of Plan Note I, in whole
or in part, and all unpaid accrued interest thereon (through the date of such
payment), at any time and from time to time; provided, that no such prepayment
shall be permitted unless (a) at the time of any such prepayment no default or
Event of Default hereunder, under Plan Note I, under Plan Note II, under any of
the Security Documents or under the Plans, shall have occurred and be
continuing, (b) the Lender shall have received at least 30 days' prior written
notice of each such prepayment, (c) all such prepayments shall be applied in
the manner specified in Section 2.4(C), and (d) no prepayment in full of the
Amortization Principal Amount under Plan Note I shall be permitted unless,
contemporaneously with such prepayment, all remaining amounts owed under Plan
Note II (if any) are also prepaid.
(E) Payment or Satisfaction of Remaining MTS
Debt. The difference between the Stated Principal Amount at any time
outstanding under Plan Note I and the outstanding amount of the Amortization
Principal Amount is referred to herein as the "Remaining MTS Debt." As of the
date hereof, the principal amount of the Remaining MTS Debt is $12,257,857.67.
In addition to all other payments called for in this Agreement, the Borrowers
shall make mandatory partial prepayments of the Remaining MTS Debt at the times
and in the amounts set forth in this Section 2.4(E).
(i) Payment and Application of Net Sales Proceeds
of the Vangard Assets; Vangard Excess Cash Flow. The parties acknowledge that
the Vangard Plan contemplates the sale of all of the Vangard Assets (as defined
in the Vangard Plan). The Borrowers shall pay, or cause to be paid, the Net
Sales Proceeds (as defined in the Vangard Plan) to the Lender within the time
period specified in the Vangard Plan and, upon such payment, the Stated
Principal Amount (and the Remaining MTS Debt) shall be reduced by the amount of
the Net Sales Proceeds so paid. In addition, from the Closing Date through the
date on which the Vangard Assets are sold in accordance with the Vangard Plan,
the Vangard Excess Cash Flow shall be paid to the Lender on a monthly basis, on
or prior to the 15th day of each month, and such payments shall be applied to
reduce the Stated Principal Amount (and the Remaining MTS Debt).
(ii) Mandatory Prepayment With Respect to Capital
Transactions.
(a) Upon the occurrence of any Capital
Transaction which involves, directly or indirectly, any one or more of the
Software Companies, then, in addition to any amounts payable under Section
2.4(B)(i) hereof, the Borrowers shall pay the following amounts to the Lender
on the date on which each such Capital Transaction is consummated:
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(1) If the Capital Transaction occurs on
or prior to September ___, 1997, an amount equal to (A) 50% of
the Net Proceeds from such Capital Transaction, or (B) if the
Software Companies Release Payment is also payable in
connection with such Capital Transaction, 50% of the portion
of the Net Proceeds from such Capital Transaction which is in
excess of the Software Companies Release Payment;
(2) If the Capital Transaction occurs
after September ____, 1997, but on or prior to September ____,
1998, an amount equal to (A) 40% of the Net Proceeds from such
Capital Transaction, or (B) if the Software Companies Release
Payment is also payable in connection with such Capital
Transaction, 40% of the portion of the Net Proceeds from such
Capital Transaction which is in excess of the Software
Companies Release Payment;
(3) If the Capital Transaction occurs
after September ____, 1998, but on or prior to September ____,
1999, an amount equal to (A) 30% of the Net Proceeds from such
Capital Transaction, or (B) if the Software Companies Release
Payment is also payable in connection with such Capital
Transaction, 30% of the portion of the Net Proceeds from such
Capital Transaction which is in excess of the Software
Companies Release Payment;
(4) If the Capital Transaction occurs
after September ____, 1999, but on or prior to September ____,
2000, an amount equal to (A) 20% of the Net Proceeds from such
Capital Transaction, or (B) if the Software Companies Release
Payment is also payable in connection with such Capital
Transaction, 20% of the portion of the Net Proceeds from such
Capital Transaction which is in excess of the Software
Companies Release Payment; and
(5) If the Capital Transaction occurs
after September ____, 2000, but on or prior to September ____,
2001, an amount equal to (A) 10% of the Net Proceeds from such
Capital Transaction, or (B) if the Software Companies Release
Payment is also payable in connection with such Capital
Transaction, 10% of the portion of the Net Proceeds from such
Capital Transaction which is in excess of the Software
Companies Release Payment.
(b) Upon the occurrence of any Capital
Transaction which involves, directly or indirectly, MTS Labs (or any Subsidiary
thereof), then, in addition to any amounts payable under Section 2.4(B)(ii)
hereof, the Borrowers shall pay the following amounts to the Lender on the date
on which each such Capital Transaction is consummated:
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(1) If the Capital Transaction occurs on
or prior to September ______, 1997, an amount equal to (A) 50%
of the Net Proceeds from such Capital Transaction, or (B) if
the MTS Labs Release Payment is also payable in connection
with such Capital Transaction, 50% of the portion of the Net
Proceeds from such Capital Transaction which is in excess of
the MTS Labs Release Payment;
(2) If the Capital Transaction occurs
after September ____, 1997, but on or prior to September ____,
1998, an amount equal to (A) 40% of the Net Proceeds from such
Capital Transaction, or (B) if the MTS Labs Release Payment is
also payable in connection with such Capital Transaction, 40%
of the portion of the Net Proceeds from such Capital
Transaction which is in excess of the MTS Labs Release Payment;
(3) If the Capital Transaction occurs
after September ____, 1998, but on or prior to September ____,
1999, an amount equal to (A) 30% of the Net Proceeds from such
Capital Transaction, or (B) if the MTS Labs Release Payment is
also payable in connection with such Capital Transaction, 30%
of the portion of the Net Proceeds from such Capital
Transaction which is in excess of the MTS Labs Release Payment;
(4) If the Capital Transaction occurs
after September ____, 1999, but on or prior to September ____,
2000, an amount equal to (A) 20% of the Net Proceeds from such
Capital Transaction, or (B) if the MTS Labs Release Payment is
also payable in connection with such Capital Transaction, 20%
of the portion of the Net Proceeds from such Capital
Transaction which is in excess of the MTS Labs Release Payment;
and
(5) If the Capital Transaction occurs
after September ____, 2000, but on or prior to September ____,
2001, an amount equal to (A) 10% of the Net Proceeds from such
Capital Transaction, or (B) if the MTS Labs Release Payment is
also payable in connection with such Capital Transaction, 10%
of the portion of the Net Proceeds from such Capital
Transaction which is in excess of the MTS Labs Release Payment.
(iii) Mandatory Prepayment With Respect to Certain
Causes of Action. If the Borrowers (or any one or more of them) commence the
litigation or other prosecution of any Causes of Action at any time or times
prior to the Maturity Date of Plan Note I, the Borrowers shall pay to the
Lender an amount equal to (1) 50% of the Net Proceeds derived from
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each such Cause of Action asserted or held by any of the Borrowers other than
Vangard Labs, and (2) 90% of the Net Proceeds derived from each such Cause of
Action asserted by, held by, or relating to Vangard Labs (including, without
limitation, any Cause of Action relating to Glasgow Pharmaceutical
Corporation), and in each case the amount to which the Lender is entitled shall
be paid within five (5) days after receipt thereof by any Borrower. If
litigation or other prosecution of any such Cause of Action is commenced prior
to the Maturity Date of Plan Note I, but as of such Maturity Date the Borrowers
have not received any recovery therefrom, the Borrowers' Obligation under this
Section 2.4(E)(iii) to pay the applicable portion of the Net Proceeds from such
Cause of Action to the Lender shall survive such Maturity Date and the
termination of this Agreement.
All amounts paid to the Lender under this Section 2.4(E) shall
be applied to reduce the Stated Principal Amount and the Remaining MTS Debt,
but shall not reduce or otherwise affect the Amortization Principal Amount.
(F) Satisfaction of Remaining MTS Debt. If, as of
September 1, 2006, the Borrowers shall have fully and timely paid to the Lender
(a) all payments required to be made under Plan Note I with respect to the
Amortization Principal Amount, including all accrued interest thereon and all
amounts due and payable under Section 2.4(B) hereof, (b) all amounts due and
payable under Section 2.4(E) hereof, (c) all amounts due and payable under Plan
Note II, and (d) all other fees, expenses and other similar amounts due under
this Agreement and the Plan Notes, and provided that no Major Default shall have
occurred and be continuing, then the portion of the Remaining MTS Debt which
remains unpaid, together with all accrued but unpaid interest thereon, shall be
deemed satisfied on and as of September 1, 2006. Upon the satisfaction of the
Remaining MTS Debt in the manner set forth above, the Borrowers shall have no
further Obligations to the Lender hereunder, except as expressly provided in
Sections 2.4(E)(iii) and 8.3 hereof.
2.5 PLAN NOTE II. At the Closing, the Borrowers shall execute and
deliver Plan Note II to the Lender to evidence the Borrowers' obligations to
repay a portion of the Original SouthTrust Indebtedness equal to $1,000,000.00.
(A) Payment Terms. Plan Note II shall be in the original
principal amount of $1,000,000.00, shall accrue interest at the Accrual Rate
(subject to forgiveness in certain events as set forth in Sections 2.5(E) and
2.6(A) hereof), and shall be paid as follows:
(i) At the Closing, the Borrowers shall pay to
the Lender the sum of $250,000.00; and
(ii) Borrowers shall pay to the Lender the sum of
$500,000.00, (a) within seven (7) Business Days after receipt by any
of the Borrowers of refunds of state or federal income taxes referable
to the 1996 tax year and any prior tax year, or (b) on the Closing
Date, if such refunds are received by the Borrowers prior to the
Closing Date; and
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(iii) On the fifteenth (15th) day of March, 1997,
and on the fifteenth (15th) day of each calendar month thereafter
through and including March 15, 2002, the Borrowers shall pay to the
Lender an amount equal to fifteen percent (15%) of the Excess Cash
Flow for the calendar month immediately preceding the date of payment.
(B) Discounted Pay-Off in Certain Events.
Notwithstanding the provisions of Section 2.5(A), if, on or prior to March 15,
1997, the payments theretofore received by the Lender under Plan Note II
aggregate $750,000.00, then, provided that no Major Default shall then have
occurred and be continuing under Plan Note II, under Plan Note I, under this
Agreement or under any of the Security Documents, the Borrowers shall not be
obligated to make any further payments under Plan Note II, and Plan Note II
shall be deemed fully satisfied, on and as of March 15, 1997 or, if earlier,
the date on which payments received by the Lender under Plan Note II aggregate
$750,000.00.
(C) Satisfaction of Plan Note II Prior to Maturity Date
in Certain Events. If the requirements of Section 2.5(B) are not satisfied,
but at any time prior to March 15, 2002, the payments theretofore received by
the Lender under Plan Note II aggregate $1,000,000.00, then, provided that no
Major Default shall then have occurred and be continuing under the Plan Notes,
under this Agreement or under any of the Security Documents, or under the
Plans, the Borrowers shall not be obligated to make any further payments under
Plan Note II, and Plan Note II shall be deemed fully satisfied, on and as of
the date on which the payments received by the Lender under Plan Note II
aggregate $1,000,000.00.
(D) Optional Prepayment. The Borrowers shall have the
right, at their option, without premium or penalty, to prepay Plan Note II, in
whole but not in part, at any time; provided, that (i) at the time of any such
prepayment no default or Event of Default under this Agreement, under the Plan
Notes or under any of the Security Documents, or under the Plans, shall have
occurred and be continuing, and (ii) the Lender shall have received at least
thirty (30) days' prior written notice of each such prepayment. Partial
prepayments shall not be permitted under Plan Note II, except that the
Borrowers may make partial prepayments of principal during the six (6) month
period ending on March 15, 1997, and if, as of March 15, 1997, the payments and
prepayments made by the Borrowers hereunder aggregate $750,000.00, such
payments will have the effect set forth in Section 2.5(B) hereof.
(E) Satisfaction of Plan Note II on Maturity Date. If
(i) all payments described in Section 2.5(A) are timely made and (ii) after
payment of the monthly installment of principal due on March 15, 2002, any
portion of the principal amount of Plan Note II remains unpaid, then, provided
that no Major Default shall have occurred and be continuing under the Plan
Notes, under this Agreement or under any of the Security Documents, then all
remaining principal, together with all accrued and unpaid interest under Plan
Note II, shall be deemed fully paid, and Plan Note II shall be deemed
satisfied, on and as of March 15, 2002.
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2.6 ADDITIONAL TERMS OF PLAN NOTES.
(A) Interest at the Accrual Rate. The Stated Principal
Amount of Plan Note I and the outstanding principal amount of Plan Note II
shall bear interest at the Accrual Rate, from the Petition Date until paid or
deemed satisfied in accordance with the terms of the Plan Notes and applicable
provisions of this Agreement. If, however, the provisions of Sections 2.4 and
2.5 of this Agreement are fully and timely complied with, and provided that no
Major Default shall have occurred and be continuing under the Plan Notes, under
this Agreement or under any of the Security Documents, then the amount
representing the difference between (i) accrued interest on the Stated
Principal Amount of Plan Note I and the outstanding principal amount of Plan
Note II, at the Accrual Rate, and (ii) accrued interest on the Amortization
Principal Amount at the Pay Rate (or the Default Rate, as applicable) which has
been paid by the Borrowers hereunder and under the Plan Notes, shall be
forgiven on and as of the date or dates on which the then remaining Stated
Principal Amount of Plan Note I and the outstanding principal amount of Plan
Note II, as the case may be, are deemed satisfied in accordance with Sections
2.4 and 2.5 of this Agreement.
(B) Calculation of Interest. Interest with respect to
the Plan Notes shall be calculated and payable in the manner set forth in Plan
Note I and Plan Note II, respectively.
(C) Default Rate. At the option of the Lender, if any
installment of interest or principal under Plan Note I, or any payment of
principal under Plan Note II shall not be made as the same becomes due and
payable, interest shall be payable on the principal portion of such defaulted
payment and, to the extent permitted by law, on the interest portion of such
defaulted payment (if any), at the Default Rate, and, if any payment of
principal or interest shall not be made on the date on which any such payment
becomes due, interest shall be payable on the whole of the principal balance
then outstanding of the Stated Principal Amount under Plan Note I, or the then
outstanding balance of Plan Note II, as the case may be, at the Default Rate
for the subsequent duration of such default, whether or not acceleration has
occurred in accordance with Article VII hereof.
(D) If, at any time, the Accrual Rate, the Pay Rate or
the Default Rate shall be deemed by any competent court of law, governmental
agency or tribunal to exceed the maximum rate of interest permitted by any
applicable Laws, then, for such time as such rates would be deemed excessive,
its application shall be suspended and there shall be charged instead the
maximum rate of interest permissible under such Laws, and any excess interest
or charges actually collected by the Lender shall be credited as a partial
prepayment of principal.
2.7 PAYMENT TO THE LENDER. All sums payable to the Lender
hereunder shall be paid directly to the Lender in United States Dollars and
immediately available funds at the place payment is due. If the Lender shall
send the Borrowers statements of amounts due hereunder, such statements shall
be considered correct and conclusively binding on the Borrowers unless the
Borrowers notify the Lender to the contrary within thirty (30) days of their
receipt of any statement which they deem to be incorrect. Alternatively, at
its sole discretion, the Lender may charge against any deposit account of any
of the Borrowers all or any part of any amount due hereunder.
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ARTICLE 3. CONDITIONS PRECEDENT
The obligation of the Lender to consummate the transactions
contemplated in this Agreement is subject to the following conditions precedent:
3.1 DOCUMENTS REQUIRED BEFORE CLOSING. Prior to the execution and
delivery of this Agreement by the Lender, the following instruments and
documents, duly executed by all proper Persons shall have been delivered to
the Lender:
3.1.1. This Agreement;
3.1.2. The Plan Notes;
3.1.3. The financing statements required by Section ;
3.1.4. The lien waivers required by Section ;
3.1.5. A certificate of the corporate secretary of
each of the Borrowers, substantially in the form of EXHIBIT O attached hereto,
dated as of the date of this Agreement, certifying as to the incumbency and
signatures of the officers of the Borrowers signing this Agreement, the Plan
Notes, the Security Documents, and each other document to be delivered pursuant
hereto, together with the following documents attached thereto:
3.1.5.1. A copy of resolutions of the
Borrowers' boards of directors
authorizing the execution, delivery
and performance of this Agreement,
the Plan Notes, the Security
Documents, and each other document
to be delivered pursuant hereto;
3.1.5.2. Copies of the Borrowers' articles or
certificates of incorporation,
certified as of the most recent date
practicable by the judge of probate
in the county in which each such
Borrower's articles or certificate
of incorporation is filed or the
secretary of state of the state
where each such Borrower is
incorporated, as appropriate; and
3.1.5.3. Copies of the bylaws of each of the
Borrowers, as in effect on the
Closing Date;
3.1.6. Certificates, as of the most recent dates
practicable, of the aforesaid secretaries of state, the secretary of state of
each state in which each of the Borrowers is qualified as a foreign corporation
and (to the extent necessary to evidence the good standing of Borrowers
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in such states) the department of revenue or taxation of each of the foregoing
states, as to the good standing of the Borrowers;
3.1.7. Written opinions of Massari & Xxxx, P.A., and
such other counsel reasonably satisfactory to the Lender, as legal counsel for
the Borrowers and the Guarantor, dated the date of this Agreement and addressed
to the Lender, covering the matters set forth on EXHIBIT P, attached hereto;
3.1.8. The Closing Certificates in the form of
EXHIBIT C to this Agreement.
3.1.9. Copies of all documents evidencing the terms
and conditions of any Indebtedness specified as Subordinated Indebtedness on
EXHIBIT L, including, without limitation, all documents relating to the
"debentures" referred to in Article VII of the Joint Plan;
3.1.10. The Subordination Agreement[s] in the form of
EXHIBIT M attached hereto;
3.1.11. The Guaranty Agreement set forth in EXHIBIT
G, attached hereto and incorporated herein;
3.1.12. The Second Amended and Restated Stock Pledge
Agreement set forth in EXHIBIT K, attached hereto and incorporated herein,
together with (to the extent not already in the possession of Lender)
certificates representing the shares pledged thereby, duly endorsed in blank;
3.1.13. The MTS Mortgage set forth in EXHIBIT H and
the Vangard Mortgage set forth in EXHIBIT N, each of which is attached hereto
and incorporated herein;
3.1.14. The Collateral Trademark Assignment set forth
in EXHIBIT E, the Collateral Patent Assignment set forth in EXHIBIT D, the
amendments to and ratifications of the Royalty Subordination Agreement and the
Three-Party Agreement set forth in EXHIBITS Q AND R, each of which is attached
hereto and incorporated herein;
3.1.15. Copies of all environmental site assessments,
if any, in the possession of Borrowers, of the real property and improvements
covered by the MTS Mortgage and the Vangard Mortgage;
3.1.16. Copies of all appraisals, if any, in the
possession of Borrowers, of the real property and improvements covered by the
MTS Mortgage and the Vangard Mortgage and the equipment owned by the Borrowers;
3.1.17. Copies of the insurance policies described in
Section of this Agreement;
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3.1.18. Certified copies of all required consents,
approvals, and filings, governmental or otherwise; and
3.1.19. The payment of accrued costs and expenses
under Section of this Agreement.
3.2. CERTAIN EVENTS. At the time of the Closing:
3.2.1. No Event of Default shall have occurred and
be continuing, and no event shall have occurred and be continuing that, with
the giving of notice or passage of time or both, would be an Event of Default;
3.2.2. No material adverse change shall have
occurred in the financial condition of any of the Borrowers or any Guarantor
since the Petition Date; and
3.2.3. All conditions to confirmation described in
Article XI of the Joint Plan and Article X of the Vangard Plan shall have been
satisfied; and
3.2.4. All of the Security Documents shall be in
full force and effect.
3.3. LEGAL MATTERS. At the time of the Closing, all legal matters
incidental thereto shall be satisfactory to Messrs. Bradley, Arant, Rose &
White, counsel to the Lender.
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ARTICLE 4. COLLATERAL SECURITY
4.1 COMPOSITION OF THE COLLATERAL; SECURITY INTERESTS GRANTED
PURSUANT TO ORIGINAL SOUTHTRUST LOAN DOCUMENTS. The property in which a
security interest is granted or acknowledged pursuant to the provisions of
Section and hereof or pursuant to the provisions of any Security Document is
herein collectively called the "Collateral." The Collateral, together with all
of the Borrowers' other property of any kind held by the Lender, shall stand as
one general, continuing collateral security for all Obligations and, except as
expressly provided in Section 4.8 hereof, may be retained by the Lender until
all Obligations have been satisfied in full. Each of the Borrowers hereby
acknowledges that, pursuant to the Original SouthTrust Loan Documents, each of
the Borrowers granted to the Lender valid, first priority security interests
and liens on all of the Collateral owned by them (or in which any of them has
any interest) as security for the Indebtedness and obligations evidenced by the
Original SouthTrust Loan Documents. Each of the Borrowers hereby ratifies and
confirms the grant of such security interests and liens in favor of the Lender,
as security for all the Obligations. Each of the Borrowers hereby agrees that
the provisions of Sections 4.2 and 4.3 hereof, in addition to providing for the
present grant of security interests and liens in the Collateral to secure the
full and prompt payment and performance of all Obligations, shall be construed
as (A) a ratification and restatement of their respective grants of security
interests and liens under and pursuant to the Original SouthTrust Loan
Documents as security for the Obligations, and (B) a representation and
warranty by Borrowers that all such security interests and liens remain in full
force and effect as of the Closing Date.
4.2. RIGHTS IN PROPERTY HELD BY THE LENDER. As security for the
prompt satisfaction of all Obligations, each of the Borrowers hereby assigns,
transfers and sets over to the Lender all of the Borrowers' right, title and
interest in and to, and grants the Lender a lien on and a security interest in,
all amounts that may be owing from time to time by the Lender to the Borrowers
in any capacity, including, but without limitation, any balance or share
belonging to the Borrowers (or any of them) of any deposit or other account
with the Lender, which lien and security interest shall be independent of any
right of set-off which the Lender may have.
4.3. RIGHTS IN PROPERTY HELD BY ANY OF THE BORROWERS OR BY THE
LENDER. As further security for the prompt satisfaction of all Obligations, in
addition to any other or further security provided under any of the Security
Documents, each of the Borrowers hereby assigns and transfers to the Lender all
of its right, title and interest in and to, and grants the Lender a lien upon
and security interest in, all of the following property and rights of such
Borrower, wherever located, whether now owned or hereafter acquired, together
with all replacements therefor and proceeds (including, but without limitation,
insurance proceeds) and products thereof (all of which shall constitute
original Collateral under this Agreement):
4.3.1. Accounts and accounts receivable;
4.3.2. Chattel Paper;
4.3.3. Contracts;
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4.3.4. Contract rights;
4.3.5. Documents;
4.3.6. Equipment, including all trucks, automobiles,
motor vehicles and machinery of all classes;
4.3.7. Fixtures;
4.3.8. General Intangibles;
4.3.9. Instruments;
4.3.10. Inventory, including all goods held for sale
or lease or to be furnished under contracts of service, raw materials, work in
process and materials to be used or consumed in Borrowers' business;
4.3.11. The Pledged Stock;
4.3.12. The Pledged Notes;
4.3.13. Furniture;
4.3.14. Patents, trademarks, copyrights and other
intellectual property (including software) and all rights under licenses with
respect to intellectual property of other Persons;
4.3.15. Leasehold improvements;
4.3.16. Interests in partnerships and joint ventures;
4.3.17. Rights as seller of Goods and rights to
returned or repossessed Goods; and
4.3.18. All Records pertaining to any of the
Collateral.
4.4. PRIORITY OF LIENS. The foregoing liens shall be first and
prior liens except for Permitted Liens.
4.5. FINANCING STATEMENTS.
4.5.1. Each of the Borrowers will:
4.5.1.1. Execute such financing statements
(including amendments
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thereto and continuation statements
thereof) in form satisfactory to the
Lender as the Lender may, from time
to time, specify;
4.5.1.2. Pay, or reimburse the Lender for
paying, all costs and taxes of
filing or recording the same in all
public offices designated by the
Lender after the Lender determines
in good faith that such filing or
recording is necessary or desirable
to perfect the Lender's security
interest in the Collateral; and
4.5.1.3. Take such other steps as the Lender
may, from time to time, direct,
including the noting of the Lender's
lien on the Collateral and on any
certificates of title therefor, all
to perfect the Lender's security
interest in the Collateral.
4.5.2. In addition to the foregoing, and not in limitation
thereof:
4.5.2.1. A carbon, photographic, or other
reproduction of this Agreement shall
be sufficient as a financing
statement and may be filed in any
appropriate office in lieu thereof;
and
4.5.2.2. To the extent lawful, the Borrowers
hereby appoint the Lender as their
respective attorney-in-fact (without
requiring the Lender to act as such)
to execute any financing statement
in the name of any of the Borrowers,
and to perform all other acts that
the Lender deems appropriate to
perfect and continue its security
interest in, and to protect and
preserve, the Collateral in
accordance with the provisions of
this Agreement.
4.6. LIEN WAIVERS. Each of the Borrowers will use its best efforts
to cause each landlord of all premises leased by such Borrower, and any
warehouseman or other bailee on whose premises any of the Collateral may be
located, to execute and deliver to the Lender instruments, in form and
substance satisfactory to the Lender, by which such mortgagee, landlord,
warehouseman, or bailee waives his or its rights, if any, in and to all Goods
composing a part of the Collateral.
4.7. CHATTEL PAPER OR INSTRUMENTS. Each of the Borrowers will
deliver immediately to the Lender any Chattel Paper or Instruments arising out
of the Collateral usually, but not exclusively, as proceeds. Further, the
parties hereby agree that such Chattel Paper or Instruments constitute original
Collateral rather than proceeds; but if proceeds, the Lender's security
interest created by this Agreement in the Chattel Paper or Instruments shall
not be claimed merely as proceeds.
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4.8. RELEASE OF CERTAIN COLLATERAL IN CERTAIN EVENTS.
(A) Vangard Labs. Provided that no Major Default
shall have occurred and be continuing hereunder, under the Plan Notes, or under
the Security Documents, the liens, security interests and pledges arising
hereunder or under the Security Documents in favor of the Lender with respect
to the Vangard Collateral shall be released in connection with, and effective
as of the consummation of, the sale of the Vangard Assets (as defined in the
Vangard Plan) in accordance with the Vangard Plan. In connection with such
sale, upon receipt of the Net Sales Proceeds (as defined in the Vangard Plan),
the Lender will execute any and all UCC-3 release statements necessary to
evidence such release which are presented to the Lender by Borrowers or the
purchaser of the Vangard Assets (provided that such release statements are in
form and substance reasonably acceptable to the Lender), and will deliver the
same to MTS or, at its option, to such purchaser, at the closing of such sale.
The Borrowers or the purchaser of the Vangard Assets shall be entitled, at its
or their sole expense, to record or file the same in the applicable filing
offices.
(B) The Software Companies. Provided that no
Major Default shall have occurred and be continuing hereunder, under the Plan
Notes, or under the Security Documents, on and as of the earlier of (i) the
date on which the requirements set forth in Section 4.8(D) have been satisfied,
or (ii) the date on which seventy-five percent (75%) of all principal payments
theretofore paid by the Borrowers to the Lender with respect to the
Amortization Principal Amount, plus all additional amounts (if any) paid to the
Lender pursuant to the provisions of Section 2.4(B)(i), equals, in the
aggregate, $1,000,000.00, the liens, security interests and pledges arising
hereunder or under the Security Documents in favor of the Lender with respect
to the Software Companies Collateral shall be released. Upon the occurrence of
such event, the Lender will execute any and all UCC-3 release statements
necessary to evidence such release which are presented to the Lender by
Borrowers (provided that such release statements are in form and substance
reasonably acceptable to the Lender), and will return the same, together with
the Pledged Notes issued by the Software Companies and all stock certificates
with respect to the Software Companies, to MTS within thirty (30) days after
the Lender's receipt of such release statements. The Borrowers shall be
entitled, at their sole expense, to record or file the same in the applicable
filing offices.
(C) MTS Labs. Provided that no Major Default
shall have occurred and be continuing hereunder, under the Plan Notes, or under
the Security Documents, the liens, security interests and pledges arising
hereunder or under the Security Documents in favor of the Lender with respect
to the MTS Labs Collateral shall be released on and as of the earlier of (i)
the date on which the requirements set forth in Section 4.8(D) have been
satisfied, or (ii) the date on which the following amounts aggregate
$2,000,000.00: (a) seventy-five percent (75%) of all principal payments
theretofore paid by the Borrowers to the Lender with respect to the
Amortization Principal Amount, excluding for purposes of this calculation all
amounts credited under Section 4.8(B), plus (b) all additional amounts (if any)
paid to the Lender pursuant to the provisions of Section 2.4(B)(ii). Upon the
occurrence of such event, the Lender will execute any and all UCC-3 release
statements necessary to evidence such release which are presented to the Lender
by Borrowers (provided that such release statements are in form and substance
reasonably
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acceptable to the Lender), and will return the same, together the Pledged Notes
issued by MTS Labs with all stock certificates with respect to MTS Labs, to MTS
within thirty (30) days after the Lender's receipt of such release statements.
The Borrowers shall be entitled, at their sole expense, to record or file the
same in the applicable filing offices.
(D) MTS Packaging. Provided that no Major
Default shall have occurred and be continuing hereunder, under the Plan Notes,
or under the Security Documents, on and as of the date on which:
(i) the Net Sales Proceeds from the sale of the Vangard
Assets (as such terms are defined in the Vangard Plan) shall have been
fully and timely paid to the Lender in accordance with the Vangard
Plan; and
(ii) the Amortization Principal Amount, and all accrued
interest thereon at the Pay Rate, under Plan Note I and all amounts
due under Plan Note II shall have been fully and timely paid to the
Lender in accordance with the Plan Notes and Sections 2.4 and 2.5
hereof;
the liens, security interests and pledges arising hereunder or under the
Security Documents in favor of the Lender with respect to the MTS Packaging
Collateral shall be released. Upon the occurrence of such event, the Lender
will execute any and all UCC-3 release statements or other documents necessary
to evidence such release which are presented to the Lender by Borrowers
(provided that such release statements and other documents are in form and
substance reasonably acceptable to the Lender), and will return the same,
together with all stock certificates with respect to MTS Packaging, to MTS
within thirty (30) days after the Lender's receipt of such release statements.
The Borrowers shall be entitled, at their sole expense, to record or file the
same in the applicable filing offices.
(E) Release of Collateral Not a Waiver or Release
of the Obligations. In no event shall the Lender's release of its interest in
any Collateral, under this Section 4.8 or otherwise, constitute or be deemed to
constitute a waiver, release or modification of the Obligations of the
Borrowers hereunder or under the Plan Notes or of the obligations of the
Guarantor under the Guaranty, nor shall any such release of Collateral impair
or have any effect upon the Lender's rights hereunder or under the Guaranty, or
its interests in any other Collateral not expressly released by the Lender. In
furtherance of the foregoing, the Guarantor and each of the Borrowers hereby
agree, jointly and severally, that (i) all Obligations then remaining hereunder
or under the Plan Notes shall remain in full force and effect after any such
release of Collateral, (ii) except as otherwise expressly provided in the
Guaranty, the Guaranty shall remain in full force and effect after any such
release of Collateral and will not be, and will not be deemed to be, impaired
by any such release of Collateral, and (iii) the Three-Party Agreement, the
Collateral Patent Assignment and the Subordination Agreement shall remain in
full force and effect after any such release of Collateral.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES
5.1. ORIGINAL. To induce the Lender to enter into this Agreement,
each of the Borrowers and Guarantor, jointly and severally, represents and
warrants to the Lender as follows:
5.1.1. Each of the Borrowers is a corporation duly
organized, validly existing and in good standing under the Laws of the state of
its incorporation; each of the Borrowers has the lawful power to own its
properties and to engage in the business it conducts, and is duly qualified and
in good standing as a foreign corporation in the jurisdictions wherein the
nature of the business transacted by it or property owned by it makes such
qualification necessary; the states in which the Borrowers are qualified to do
business are set forth in EXHIBIT S; the addresses of all places of business
and headquarters of the Borrowers are as set forth in EXHIBIT T and the
addresses of all places where the Collateral is located and a brief description
of the nature of the Collateral at each such location are set forth in EXHIBIT
T;
5.1.2. None of the Borrowers has used any corporate
or fictitious name other than the name for the Borrowers as is used in this
Agreement, which is the same as the name shown, respectively, on the Borrowers'
certificates or articles of incorporation through the date of filing of the
last amendment thereto;
5.1.3. None of the Borrowers is directly or
indirectly controlled by, or acting on behalf of, any Person which is an
"Investment Company," within the meaning of the Investment Company Act of 1940,
as amended;
5.1.4. None of the Borrowers has been the surviving
corporation in a merger, acquired any business, or changed its principal
executive office within five (5) years and one (1) month prior to the date
hereof, except as set forth in EXHIBIT U;
5.1.5. Except for the Defaults and Events of Default
under the Original SouthTrust Loan Documents with respect to which the
Borrowers have notified SouthTrust in writing, none of the Borrowers is in
default with respect to any of its existing Indebtedness, and the making and
performance of this Agreement, the Plan Notes, and the Security Documents will
not (immediately, or with the passage of time, the giving of notice, or both):
5.1.5.1. Violate the charter or by-law
provisions of any of the Borrowers,
or violate any Laws or result in a
default under any contract,
agreement, or instrument to which
any of the Borrowers is a party or
by which any of the Borrowers or its
property is bound; or
5.1.5.2. Result in the creation or imposition
of any security interest in, or lien
or encumbrance upon, any of the
assets of any of the Borrowers,
except in favor of the Lender;
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5.1.6. Each of the Borrowers has the power and
authority to enter into and perform this Agreement, the Plan Notes, and the
Security Documents, and to incur the obligations herein and therein provided
for, and has taken all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, the Plan Notes, and the Security
Documents;
5.1.7. This Agreement, the Plan Notes and the
Security Documents are, or when delivered will be, valid, binding, and
enforceable against each of the Borrowers in accordance with their respective
terms;
5.1.8. Except as disclosed in EXHIBIT V, hereto,
there is no pending order, notice, claim, litigation, proceeding or
investigation against or affecting any of the Borrowers, whether or not covered
by insurance, that would involve the payment of $50,000.00 or more if adversely
determined;
5.1.9. Each of the Borrowers has good and marketable
title to all of its assets, subject to no security interest, encumbrance or
lien, or claim of any third person except for Permitted Liens;
5.1.10. The Finanical Statements, including any
schedules and notes pertaining thereto, have been prepared in accordance with
Generally Accepted Accounting Principles consistently applied, and fully and
fairly present the financial condition of the Borrowers at the dates thereof
and the results of operations for the periods covered thereby, and there have
been no material adverse changes in the Consolidated financial condition or
business of the Borrowers, or in the financial condition of any of the
Borrowers separately, from the dates of the Financial Statements to the date
hereof, except as reflected on EXHIBIT W;
5.1.11. As of the date of the Financial Statements,
the Borrowers had no material Indebtedness of any nature, including, but
without limitation, liabilities for taxes and any interest or penalties
relating thereto, except to the extent reflected (in a footnote or otherwise)
and reserved against in the Financial Statements or as disclosed in or
permitted by this Agreement; none of the Borrowers knows or has any reasonable
ground to know of any basis for the assertion against it of any material
Indebtedness of any nature not fully reflected and reserved against in the
Financial Statements;
5.1.12. Except as described on EXHIBIT X hereto, or
as otherwise permitted herein, each of the Borrowers has filed all federal,
state and local tax returns and other reports that it is required by Laws to
file prior to the date hereof and which are material to the conduct of its
businesses, has paid or caused to be paid all taxes, assessments and other
governmental charges that are due and payable prior to the date hereof, and has
made adequate provision for the payment of such taxes, assessments or other
charges accruing but not yet payable; none of the Borrowers has any knowledge
of any deficiency or additional assessment in a materially important amount in
connection with any taxes, assessments or charges not provided for on its books
and disclosed in writing to the Lender;
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5.1.13. Except as otherwise disclosed in EXHIBIT Y
hereto, or except to the extent that the failure to comply would not materially
interfere with the conduct of the business of any Borrower, each of the
Borrowers has complied with all applicable Laws with respect to:
5.1.13.1. Any restrictions, specifications, or
other requirements pertaining to
products that any of the Borrowers
manufactures or sells or to the
services that any of the Borrowers
performs;
5.1.13.2. The conduct of their respective
businesses; and
5.1.13.2. The use, maintenance and operation
of the real and personal properties
owned or leased by it in the conduct
of its businesses;
5.1.14. No representation or warranty by the
Borrowers (or any of them) contained herein or in any certificate or other
document furnished by any of the Borrowers pursuant hereto contains any untrue
statement of material fact or omits to state a material fact necessary to make
such representation or warranty not misleading in light of the circumstances
under which it was made;
5.1.15. Each consent, approval or authorization of,
or filing, registration or qualification with, any Person that is required to
be obtained or effected by any of the Borrowers, or the Guarantor in connection
with the execution and delivery of this Agreement, the Plan Notes, and the
Security Documents or the undertaking or performance of any obligation
hereunder or thereunder has been duly obtained or effected;
5.1.16. All existing Indebtedness of the Borrowers:
(1) For money borrowed; or (2) Under any security agreement, mortgage, or
agreement covering the lease by any of the Borrowers as lessee of real or
personal property, is described in EXHIBIT Z, hereto;
5.1.17. Except as described in EXHIBIT AA, hereto,
none of the Borrowers has any material lease, contract or commitment of any
kind (such as employment agreements; collective bargaining agreements; powers
of attorney; distribution arrangements; patent license agreements; contracts
for future purchase or delivery of Goods or rendering of services; bonus,
pension and retirement plans; or accrued vacation pay, insurance and welfare
agreements); to the best of the Borrowers' knowledge, all parties (including
the Borrowers) to all such material leases, contracts and other commitments to
which any of the Borrowers is a party have complied with the provisions of such
leases, contracts and other commitments; no party is in default under any
material lease, contract, or other commitment thereof and no event has occurred
which, but for the giving of notice or the passage of time, or both, would
constitute a default;
5.1.18. The Borrowers' Consolidated federal tax
returns for all years of operation, including the year ended March 31, 1996,
have been filed with the Internal Revenue Service and have not been challenged;
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5.1.19. Except as otherwise described on EXHIBIT BB
hereto, all Pension Plans, as defined in ERISA, of the Borrowers, if any, meet,
as of the date hereof, the minimum funding standards of Section 302 of ERISA,
and no Reportable Event or Prohibited Transaction, each as defined in ERISA,
has occurred with respect to any such Plan;
5.1.20. Except as described in EXHIBIT CC hereto,
each of the Borrowers is in compliance with all Environmental Laws;
5.1.21. All of the Borrowers' stock is duly
authorized, validly issued, fully paid and nonassessable;
5.1.22. Each of the Borrowers owns or has the rights
to use, pursuant to written licenses, all patents, trademarks and copyrights
used or employed in its business and products, each of which is listed on
EXHIBIT DD hereto and copies of which have been delivered to Lender; and
5.1.23. Except as otherwise described on EXHIBIT EE
hereto, the Inventory of each of the Borrowers is not subject to any license
agreement relating to patents, trademarks or copyrights which could directly or
indirectly preclude or render impracticable the realization by the Lender of
the value of such Inventory.
5.2. SURVIVAL. All of the representations and warranties set forth
in Section shall survive until all Obligations are satisfied in full and there
remain no outstanding commitments hereunder.
5.3. SOUTHTRUST CLOSING CERTIFICATE REGARDING BORROWERS'
REPRESENTATIONS AND WARRANTIES. SouthTrust hereby agrees that, at the
Closing, it will deliver to the Borrowers a certificate, in which SouthTrust
will certify that, except as set forth in such certificate (or in any exhibit
thereto), it has no actual knowledge that any representation or warranty of
Borrowers contained in this Article V is false. For purposes of the
certificate described in this Section 5.3, SouthTrust's "knowledge" shall mean
the actual knowledge of J. Xxxxx Xxxxxx, Vice President of SouthTrust.
ARTICLE 6. THE BORROWERS' COVENANTS
The Borrowers, jointly and severally, hereby covenant and
agree with the Lender that, so long as any of the Obligations remains
unsatisfied, unless the Lender otherwise consents in writing, it will comply
and, in the case of MTS, it will cause the other Borrowers to comply, with the
following covenants:
6.1. AFFIRMATIVE COVENANTS.
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6.1.1. Each of the Borrowers will furnish the Lender:
6.1.1.1. Within thirty (30) days after the
close of each calendar month:
6.1.1.1.1. A Consolidated income
statement of all Borrowers
for such period; and
6.1.1.1.2. A Consolidated balance sheet
for all Borrowers as of the
end of such period all in
reasonable detail, subject to
normal year-end audit
adjustments, and certified by
MTS's president or principal
financial officer to have
been prepared in accordance
with Generally Accepted
Accounting Principles
consistently applied by the
Borrowers, except for any
inconsistencies explained in
such certificate;
6.1.1.2. Within sixty (60) days after the
close of each quarterly accounting
period in each fiscal year:
6.1.1.2.1. A Consolidated statement of
Stockholders' Equity and a
Consolidated and consolidating
statement of Cash Flows of
the Borrowers for such
quarterly period;
6.1.1.2.2. Consolidated and
consolidating income
statements of the Borrowers
for such quarterly period; and
6.1.1.2.3. Consolidated and consolidating
balance sheets of the
Borrowers as of the end of
such quarterly period
all in reasonable detail, subject to normal
year-end audit adjustments and certified by
MTS's president or principal financial
officer to have been prepared in accordance
with Generally Accepted Accounting Principles
consistently applied by the Borrowers, except
for any inconsistencies explained in such
certificate; and
6.1.1.2.4. A reconciliation reflecting
a comparison of actual items
of income and expense for
such quarterly period to
amounts reflected in each
Borrower's Budget (as
described in Section
6.1(A)(8) hereof) covering
such quarterly period;
6.1.1.3. Within one hundred five (105) days
after the close of each
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fiscal year, or on or prior to the
date of filing of MTS's Annual
Report on Form 10-K for such fiscal
year with the U.S. Securities and
Exchange Commission, whichever first
occurs:
6.1.1.3.1. A Consolidated statement of
Stockholders' Equity and a
Consolidated statement of
Cash Flows of the Borrowers
for such fiscal year;
6.1.1.3.2. Consolidated and
consolidating income
statements of the Borrowers
for such fiscal year; and
6.1.1.3.3. Consolidated and
consolidating balance sheets
of the Borrower as of the end
of such fiscal year
all in reasonable detail, including all
supporting schedules and comments; the
Consolidated statements and balance sheets to
be audited by an independent certified public
accountant selected by the Borrowers and
acceptable to the Lender, in its sole and
absolute discretion, and certified by such
accountants to have been prepared in
accordance with Generally Accepted Accounting
Principles consistently applied by the
Borrowers, except for any inconsistencies
explained in such certificate; in addition,
the Borrowers will obtain from such
independent certified public accountants and
deliver to the Lender, within the time period
specified above, their written statement that
in making the examination necessary to their
certification they have obtained no knowledge
of any Event of Default by any of the
Borrowers, or disclosing all Events of
Default of which they have obtained
knowledge; provided, however, that in making
their examination such accountants shall not
be required to go beyond the bounds of
generally accepted auditing standards for the
purpose of certifying financial statements;
the Lender shall have the right, from time to
time, to discuss the Borrowers' affairs
directly with the Borrowers' independent
certified public accountant after notice to
the Borrowers and opportunity of the
Borrowers to be present at any such
discussions;
6.1.1.4. Contemporaneously with each monthly,
quarterly and year-end financial
report required by the foregoing
paragraphs, a Compliance Certificate,
wherein in addition to the financial
information reported in such
Compliance Certificate, the
president or principal financial
officer of MTS shall certify that he
has individually reviewed the
provisions of this Agreement and
that a review of the activities of
the
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Borrowers during such year, monthly
or quarterly period, as the case may
be, has been made by or under the
supervision of the signer of such
certificate with a view to
determining whether the Borrowers
have kept, observed, performed and
fulfilled all their respective
obligations under this Agreement,
and that, to the best of his actual
knowledge after due inquiry, the
Borrowers have observed and
performed each and every undertaking
contained in this Agreement and are
not at the time in Default in the
observance or performance of any of
the terms and conditions hereof or,
if any of the Borrowers shall be so
in Default, specifying all such
Defaults and Events of Default of
which he may have knowledge;
6.1.1.5. Promptly after sending or making
available or filing of the same,
copies of all reports, proxy
statements and financial statements
that any of the Borrowers sends or
makes available to its stockholders
and all registration statements and
reports that any of the Borrowers
files with the U.S. Securities and
Exchange Commission or any successor
Person;
6.1.1.6. Within thirty (30) days after the
end of each calendar month, and
contemporaneously with the delivery
of the financial statements referred
to in Section 6.1(A)(1), a true,
accurate and complete aging report
as of the end of such month, in such
form and detail as shall be
satisfactory to the Lender, of all
Accounts of each of the Borrowers,
including an explanation of any
reserves for uncollectability,
discounts, charge-backs or rebates
with respect to such Accounts;
6.1.1.7. Within thirty (30) days after the
end of each calendar month, and
contemporaneously with the delivery
of the financial statements referred
to in Section 6.1(A)(1), a true,
accurate and complete report of each
of the Borrowers' Inventory, in such
form and detail as shall be
satisfactory to the Lender;
6.1.1.8. Not later than ten (10) Business
Days prior to the Closing Date, a
budget and cash flow projection for
each of the Borrowers, reflecting
the reasonably anticipated gross and
net sales, capital expenditures and
operating expenses of all kinds, in
such form and detail as shall be
satisfactory to the Lender, for the
remainder of the fiscal quarter
during which
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the Closing occurs (in each case, a
"Budget"), and after the Closing,
not later than ten (10) Business
Days prior to the expiration of the
then current Budget, a replacement
Budget for the next fiscal quarter;
and
6.1.1.9. Upon the Lender's request, from time
to time, copies of any or all
agreements, contracts, or commitments
of the type referred to in Section
hereof.
6.1.2. Each of the Borrowers will maintain its
Inventory, Equipment, real estate and other properties in good condition and
repair (normal wear and tear excepted), and will pay and discharge or cause to
be paid and discharged when due, the cost of repairs to or maintenance of the
same, and will pay or cause to be paid all rental or mortgage payments due on
such real estate. Each of the Borrowers hereby agrees that, in the event it
fails to pay or cause to be paid any such payments, the Lender may do so and on
demand be reimbursed therefor by the Borrowers. In addition, each of the
Borrowers agrees to reimburse the Lender for any reasonable expenses incurred
by the Lender after the occurrence and during the continuation of any Event of
Default to protect and preserve the Collateral pursuant to Section .
6.1.3. Each of the Borrowers will maintain, or cause
to be maintained, public liability insurance and fire and extended coverage
insurance, naming the Lender as mortgagee and loss payee, as appropriate, on
all tangible assets owned by it, all in such form and amounts as are consistent
with industry practices and with such insurers as may be satisfactory to the
Lender. Such policies shall contain a provision whereby they cannot be canceled
except after ten (10) days' written notice to the Lender. Each of the
Borrowers will furnish to the Lender such evidence of insurance as the Lender
may require. Each of the Borrowers hereby agrees that, in the event it fails
to pay or cause to be paid the premium on any such insurance, the Lender may do
so and be reimbursed by the Borrowers therefor. Each of the Borrowers hereby
assigns to the Lender any returned or unearned premiums that may be due such
Borrower upon cancellation of any such policies for any reason whatsoever and
directs the insurers to pay the Lender any amounts so due at any time when an
Event of Default shall have occurred and be continuing. The Lender is hereby
appointed the Borrowers' attorney-in-fact (without requiring the Lender to act
as such) to, from and after the occurrence and during the continuation of any
Event of Default, endorse any check which may be payable to any of the
Borrowers to collect such returned or unearned premiums or the proceeds of such
insurance, and any amount so collected may be applied by the Lender toward
satisfaction of any of the Obligations.
6.1.4. Each of the Borrowers will pay or cause to be
paid when due, all taxes, water rates, assessments (including assessments for
local improvements) and charges or levies imposed upon it or on any of its
property or which it is required to withhold and pay over, except that the
Borrowers shall be entitled to, in good faith and at their own expense,
diligently contest the same or the validity thereof by and in accordance with
appropriate legal proceedings, so long as such proceedings shall operate to
prevent (a) the collection of such taxes or levy upon and sale or forfeiture of
the subject property to satisfy such taxes or assessments and (b) the
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46
enforcement of such taxes or assessments against the Borrowers, or any of them,
or their respective assets.
6.1.5. Each of the Borrowers will, when requested so
to do, make available for inspection during such Borrower's normal business
hours by duly authorized representatives of the Lender any of its books and
Records, and will furnish the Lender any information regarding its business
affairs and financial condition within a reasonable time after written request
therefor.
6.1.6. Each of the Borrowers will take all necessary
steps to preserve its corporate existence and franchises and comply with all
present and future Laws applicable to it in the operation of its business, and
all material agreements to which it is subject.
6.1.7. Each of the Borrowers will collect its
Accounts and sell its Inventory only in the ordinary course of business.
6.1.8. Each of the Borrowers will keep accurate and
complete Records of its Accounts, Inventory and Equipment, consistent with
sound business practices.
6.1.9. Each of the Borrowers will give immediate
notice to the Lender of: (1) any litigation proceeding in which it is a party
if an adverse decision therein would require it to pay over more than
$50,000.00 or deliver assets the value of which exceeds such sum (whether or
not the claim is considered to be covered by insurance); and (2) the
institution of any other suit or proceeding involving it that might materially
and adversely affect its operations, financial condition, property or business
prospects.
6.1.10. Within ten (10) days of the Lender's request
therefor, each of the Borrowers will furnish the Lender with copies of federal
income tax returns filed by the Borrowers.
6.1.11. Except when the amount thereof is being
contested in good faith by appropriate proceedings and with adequate reserves
therefor being set aside on the books of the Borrowers, each of the Borrowers
will pay when due (or within applicable grace periods) all Indebtedness, other
than ordinary trade debt, owed to third Persons and, with respect to
Indebtedness which constitutes ordinary trade debt, each of the Borrowers will
pay such Indebtedness within sixty (60) days of its due date. If default be
made by any of the Borrowers in the payment of any principal (or installment
thereof) of, or interest on, any such Indebtedness, the Lender shall have the
right, in its sole and absolute discretion (but shall have no obligation), to
pay such interest or principal for the account of such Borrower and be
reimbursed by the Borrowers therefor.
6.1.12. Each of the Borrowers will notify the Lender
immediately if it becomes aware of the occurrence of any Event of Default or of
any fact, condition or event that only with the giving of notice or passage of
time or both, could become an Event of Default, or if it becomes aware of any
material adverse change in the business prospects, financial condition
(including, without limitation, proceedings in bankruptcy, insolvency,
reorganization, or the
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appointment of a receiver or trustee), or results of operations of any of the
Borrowers, or any Guarantor or of the failure of any of the Borrowers or any
Guarantor to observe any of its undertakings hereunder or under any of the
Security Documents.
6.1.13. Each of the Borrowers will notify the Lender
thirty (30) days in advance of any changes of its name or the name under which
its business is operated, any change in the location of any of its places of
business, and the establishment of any new, or the discontinuance of any
existing, place of business.
6.1.14. Each of the Borrowers will notify the Lender
thirty (30) days in advance of any change in the location or use of any of the
Collateral and within thirty (30) days after any change in condition, aside
from normal wear and tear, of any of the Collateral.
6.1.15. Each of the Borrowers will: (1) fund all its
Pension Plans, if any, as defined in ERISA, in accordance with no less than the
minimum funding standards of Section 302 of ERISA; (2) furnish the Lender,
promptly after the filing of the same, with copies of all reports or other
statements filed with the United States Department of Labor, the Pension
Benefit Guaranty Corporation, or the Internal Revenue Service with respect to
all such Plans; and (3) promptly advise the Lender of the occurrence of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, with
respect to any such Plan.
6.1.16. Each of the Borrowers will comply with all
Environmental Laws, and will handle, store, treat, discharge, and dispose of
any Hazardous Materials only in compliance with all Environmental Laws.
6.1.17. Each of the Borrowers will maintain its
primary deposit account relationship with the Lender.
6.1.18. Each of the Borrowers and the Guarantor will
comply in all respects with the Plans and the Confirmation Orders.
6.2. NEGATIVE COVENANTS. The Borrowers, jointly and severally, do
hereby covenant and agree with the Lender that, so long as any of the
Obligations remain unsatisfied, each of them will, except with the prior
written consent of the Lender, comply, and in the case of MTS, cause the other
Borrowers to comply, at all times with the following negative covenants:
6.2.1. None of Borrowers will enter into any merger,
consolidation, reorganization or recapitalization, reclassify its capital
stock, or liquidate, dissolve, or enter into any other Capital Transaction.
6.2.2. None of the Borrowers will sell, transfer,
lease or otherwise dispose of all or (except in the ordinary course of
business) any material part of its assets, except, with respect to Vangard
Labs, in accordance with the Vangard Plan.
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48
6.2.3. Except as expressly permitted by Section
6.2(B), none of the Borrowers will sell, lease, transfer, assign, or otherwise
dispose of any of the Collateral except in the ordinary course of business and
as permitted under this Agreement.
6.2.4. Except as expressly permitted by Section
6.2(B), none of the Borrowers will sell, or enter into any agreement to sell,
any of its Accounts.
6.2.5. Except as expressly permitted by Section
6.2(B), none of the Borrowers will sell, or otherwise dispose of, or for any
reason cease operating, any of its divisions or franchises.
6.2.6. None of the Borrowers will mortgage, pledge,
grant or permit to exist a security interest in or lien upon any of its assets
of any kind, now owned or hereafter acquired, except for Permitted Liens.
6.2.7. None of the Borrowers will become liable,
directly or indirectly, as guarantor or otherwise for any obligation of any
other Person, except for (i) the endorsement of commercial paper for deposit or
collection in the ordinary course of business, and (ii) guaranties by one
Borrower of the obligations or Indebtedness of one or more other Borrowers
which is incurred in the ordinary course of business and is permitted to be
incurred under this Agreement.
6.2.8. None of the Borrowers will incur, create,
assume, or permit to exist any Indebtedness except:
6.2.8.1. Existing Indebtedness as set forth
in EXHIBIT Z to the extent shown on
such EXHIBIT Z to be permitted to
exist after the Closing;
6.2.8.2. Trade Indebtedness incurred in the
ordinary course of business
(provided, that none of the
Borrowers shall purchase or
otherwise acquire Inventory except
for cash or upon open account unless
approved in each case by the Lender
in writing);
6.2.8.3. Contingent Indebtedness permitted by
Section;
6.2.8.4. Indebtedness secured by Permitted
Liens;
6.2.8.5. Lease obligations permitted by
Section ;
6.2.8.6. Indebtedness incurred in a
transaction constituting a refinance
of the then outstanding Amortization
Principal Amount under Plan Note I,
accrued interest thereon and all
amounts (if any) then outstanding
under Plan Note II; provided, that
(i) all such outstanding amounts
shall be paid
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49
in full to the Lender
contemporaneously with the
incurrence of any such Indebtedness,
(ii) the Lender shall have received
advance written notice of prepayment
(if applicable) in accordance with
Sections 2.4(D) and 2.5(D) hereof,
(iii) the Lender shall have received
copies of all agreements, instruments
and other documents evidencing or
relating to such Indebtedness at
least twenty (20) days prior to
incurrence of such Indebtedness, and
(iv) the prior written consent of
Lender to such refinance transaction
shall have been obtained, which
consent shall not be unreasonably
withheld or delayed. The Borrowers
hereby acknowledge and agree that,
if the Lender fails to provide its
prior consent to the incurrence of
such Indebtedness and such failure is
based upon Lender's good faith
determination that the terms and
conditions thereof are likely to (a)
impair or affect adversely the
Borrowers' ability to repay the
amounts owed under Plan Note I and
Section 2.4(E) hereof or (b)
otherwise prejudice the Lender's
remaining rights hereunder, then the
Lender's failure to grant such
consent will not be, and will not be
deemed to be, unreasonable; and
6.2.8.7. Indebtedness of one Borrower to one
or more other Borrowers if (i) such
Indebtedness is incurred in the
ordinary course of business and (ii)
such Indebtedness is expressly
subordinate to the Indebtedness
evidenced by the Plan Notes pursuant
to agreements containing terms
substantially similar to those
contained in the Subordination
Agreement.
6.2.9. None of the Borrowers will declare or pay any
dividends, or make any other payment or distribution on account of its capital
stock.
6.2.10. None of the Borrowers will form any
Subsidiary, make any investment in or, except for loans to other Borrowers
which are permitted by Section 6.2(H)(8) hereof, make any loan in the nature of
any investment to any Person.
6.2.11. None of the Borrowers will make any loan or
advance to any officer, shareholder, director or employee of any of the
Borrowers, except for business travel and similar temporary advances in the
ordinary course of business, nor pay salary to executive and other officers of
Borrowers aggregating more than $400,000.00 per year, on a consolidated basis.
6.2.12. None of the Borrowers will make payments on
account of the purchase or lease of Fixed Assets or otherwise make capital
expenditures that, in the aggregate, in any fiscal year (commencing with the
current fiscal year) will exceed $500,000.00, on a consolidated basis; as used
in this paragraph, the term "lease" means a lease reflected on a balance
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50
sheet of any of the Borrowers or a lease that should be so reflected under
Generally Accepted Accounting Principles.
6.2.13. None of the Borrowers will pay, in an
aggregate amount in any fiscal year (commencing with the current fiscal year),
lease obligations in excess of $505,000.00; as used in this paragraph, the term
"lease" means a lease that is not reflected on a Consolidated balance sheet of
the Borrowers and should not be so reflected under Generally Accepted
Accounting Principles.
6.2.14. None of the Borrowers will purchase or
otherwise invest in or hold securities, non-operating real estate or other
non-operating assets, except:
6.2.14.1 Direct obligations of the United
States of America;
6.2.14.2. The present investment as of the
Closing in any such assets; and
6.2.14.3. Operating assets that hereafter
become non-operating assets.
6.2.15. None of the Borrowers will (1) issue, redeem,
purchase or retire any of its capital stock or grant or issue any warrant,
right or option pertaining thereto or other security convertible into any of
the foregoing, including, without limitation, any issuance, redemption,
re-purchase or retirement of the "debentures" described in Article VII of the
Joint Plan, or (2) permit any transfer, sale, redemption, retirement, or other
change in the ownership of the outstanding capital stock of any of the MTS
Subsidiaries.
6.2.16. None of the Borrowers will prepay any
Subordinated Indebtedness, Indebtedness for borrowed money, or Indebtedness
secured by any of its assets (except the Obligations), or enter into or modify
any agreement as a result of which the terms of payment of any of the foregoing
Indebtedness are waived or modified.
6.2.17. None of the Borrowers will enter into any
sale-leaseback transaction.
6.2.18. None of the Borrowers will acquire any stock
in, or acquire all or substantially all of the assets of, any Person.
6.2.19. None of the Borrowers will furnish the Lender
any certificate or other document that will contain any untrue statement of
material fact or that will omit to state a material fact necessary to make it
not misleading in light of the circumstances under which it was furnished.
6.2.20. None of the Borrowers will treat, store,
handle, discharge, or dispose of any Hazardous Materials except in compliance
with all Environmental Laws.
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6.2.21. Except for (1) employment arrangements which
comply with the provisions of Section 6.2(K), (2) the payment of royalties to
the Xxxxxx Family Trust in accordance with the Royalty Subordination Agreement,
and (3) transactions which comply with the provisions of Sections 6.2(G),
(H)(8) and (J), none of the Borrowers will enter into any transaction or series
of transactions which involves in the aggregate $2,000.00 or more where any
Affiliate, officer, director or shareholder of any of the Borrowers, or any
family member or Affiliate of the foregoing, is a counter-party to such
transaction; provided that, in any case, such a transaction shall be
arms-length.
6.2.22. None of the Borrowers will enter into any
agreement whereby title to any of the Borrowers' inventory passes to any
transferee prior to delivery by the Borrower.
6.3. FINANCIAL COVENANTS. The Borrowers will maintain at all times:
6.3.1. Consolidated Net Working Capital in the
following minimum amounts:
From the Closing Date through
March 31, 1997.................... $2,000,000
During Fiscal 1998................ $2,500,000
During Fiscal 1999................ $3,000,000
During Fiscal 2000 and
thereafter........................ $3,500,000
6.3.2. Consolidated Tangible Net Deficit not to
exceed the following:
From the Closing Date through
March 31, 1997.................... $20,500,000
During Fiscal 1998................ $20,000,000
During Fiscal 1999................ $19,500,000
During Fiscal 2000 and
thereafter........................ $19,000,000
6.3.3. A ratio of Consolidated Current Assets to
Consolidated Current Liabilities of not less than 1.25 to 1.0; and
6.3.4. Fixed Charge Coverage of not less than 2.0 to
1.0.
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ARTICLE 7. DEFAULT
7.1. EVENTS OF DEFAULT.
(A) Major Defaults. The occurrence of any one or more of
the following events, each of which shall constitute an Event of Default, shall
also constitute a Major Default hereunder:
(1) The Borrowers shall fail to pay when due any
installment of principal, any interest, fee or other amount (including
mandatory prepayments) payable under this Agreement or under any of
the Security Documents or under the Plan Notes, unless such failure is
cured within five (5) days after such due date;
(2) The Borrowers (or any of them) shall fail to
comply with the provisions of Section 6.1(C): (a) which require the
delivery of evidence of insurance, unless such failure is cured within
fifteen (15) days after written notice from Lender, or (b) which
require the maintenance of insurance coverage as provided in Section
6.1(C);
(3) The Borrowers (or any of them) shall fail to
observe or perform the covenants contained in Sections 6.2(A), (B),
(C), (D), (F), (G), (H), (I), (J), (K), (L), (M), (O) or (Q);
(4) The Borrowers (or any of them) shall fail to
remove federal, state or local tax liens covering, in any one instance
or in the aggregate, in excess of $50,000.00 in taxes, assessments or
other governmental charges, on any of the Borrowers' real or personal
property within five (5) days after the earlier of: (a) the date on
which the applicable taxing authority levies on any asset or assets of
any of the Borrowers or otherwise commences enforcement action with
respect to such taxes, or (b) any Borrower receives notice from such
taxing authority of such levy or commencement of enforcement
proceedings;
(5) The Borrowers (or any of them) or any
Guarantor shall make a general assignment for the benefit of its or
any of its or their creditors;
(6) Proceedings in bankruptcy, or for
reorganization of any of the Borrowers or any Guarantor, or for the
readjustment of any of its debts, under the Bankruptcy Code, or any
part thereof, or under any other Laws, whether state or federal, for
the relief of debtors, now or hereafter existing (collectively,
"Bankruptcy Proceedings"), shall be commenced by any of the Borrowers
or any Guarantor, or against any of the Borrowers or any Guarantor by
any other Person, or which otherwise have jurisdiction over the
Indebtedness evidenced by the Plan Notes, this Agreement or the other
Plan Documents (as defined in the Plans) and any such Bankruptcy
Proceedings, or any action or omission by any of the Borrowers or
Guarantor in connection therewith (including, without limitation, any
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failure to timely comply with their payment and other Obligations
hereunder or under the Plan Notes), impairs or affects adversely the
Collateral or the rights and remedies of the Lender hereunder, under
the Plan Notes or under the Security Documents;
(7) Other than the appointment of the Plan
Trustee in accordance with the Vangard Plan, a receiver or trustee
shall be appointed for any of the Borrowers or for any substantial
part of their respective assets, or any proceedings shall be
instituted for the dissolution or the full or partial liquidation of
any of the Borrowers and (i) the Borrowers (or any of them) shall have
sought such appointment or proceedings or shall consent thereto or
not object thereto or (ii) such receiver or trustee shall not be
discharged within thirty (30) days of his appointment or such
proceedings shall not be discharged within thirty (30) days of their
commencement;
(8) The Borrowers (or any of them) shall suffer
final judgments for payment of money aggregating, in any one instance
or in the aggregate, in excess of $200,000.00 and shall not discharge
the same within five (5) days after the earlier of: (a) the date on
which any such judgment creditor or creditors shall commence action to
execute on any such judgment or judgments, or (b) any Borrower
receives notice that execution thereon is or will be commenced;
(9) A judgment creditor or judgment creditors of
any of the Borrowers shall obtain, in connection with the execution of
a final judgment or judgments aggregating, in any one instance or in
the aggregate, in excess of $200,000.00, possession of any of the
Collateral by any means, including, but without limitation, levy,
garnishment, distraint, detinue, replevin or self-help, and the
Borrowers shall not obtain the return of such Collateral within the
earlier of (a) five (5) days from the taking of such possession, or
(b) expiration of the five (5) day period described in Section
7.1(A)(8) hereof;
(10) A court or arbitration panel shall find that
the Borrowers (or any of them) or any Guarantor or any Affiliate
thereof which is a party to, or otherwise bound by, the
Non-Competition Agreement (as defined in the Vangard Plan) has
breached or defaulted in its obligations thereunder;
(11) The Borrowers (or any of them) shall
consummate any Capital Transaction in violation of Section 6.2(A)
hereof;
(12) The validity or enforceability of this
Agreement, the Plan Notes or any of the Security Documents against any
of the Borrowers or the Guarantor, in accordance with their respective
terms, shall be contested by any of the Borrowers, or any Guarantor,
or any Affiliate of MTS;
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(13) Any property of any of the Borrowers or any
Guarantor which has a fair market value in excess of $50,000.00 in the
aggregate is seized by a governmental authority, or a forfeiture
proceeding is commenced against any of the Borrowers or any Guarantor
or any property of any of the Borrowers or any Guarantor, and the
property subjected to such seizure or forfeiture proceeding is not
returned and the subject matter of such proceeding resolved within
five (5) days after the earlier of: (a) the date on which such seizure
or proceeding is commenced, or (b) the date on which any Borrower
receives notice of such seizure or such forfeiture proceeding;
(14) The Borrowers shall fail for any reason to
obtain the waiver of any Other Default in the manner and within the
time period specified in Section 7.2(C) hereof; or
(15) Any financial statement or any representation
or warranty contained in this Agreement or in any of the other Plan
Documents, or otherwise made or delivered by any of the Borrowers or
the Guarantor to SouthTrust, in order to induce SouthTrust to enter
into the transactions contemplated in this Agreement, shall be false,
incorrect or incomplete, in any material respect, when made.
(B) Other Defaults. The occurrence, prior to the date
which is ninety-five (95) days after the satisfaction of all of the
requirements set forth in Section 4.8(D) hereof, of any one or more of the
following events shall constitute a Default or Event of Default hereunder, but
shall not constitute a Major Default:
(1) Any default or event of default (other than a
default which constitutes a Major Default, as specified in Section
7.1(A) above) shall occur under either of the Plans;
(2) The Borrowers (or any of them) shall fail to
remove any federal, state or local tax lien or assessment on any of
the Borrowers' real or personal property within thirty (30) days after
the Borrowers receive notice thereof from any such taxing authority,
except that the Borrowers shall be entitled to, in good faith and at
their own expense, diligently contest the same or the validity thereof
by and in accordance with appropriate legal proceedings, so long as
such proceedings shall operate to prevent (a) the collection of such
taxes or levy upon and sale or forfeiture of the subject property to
satisfy such taxes and (b) the enforcement of such taxes against the
Borrowers, or any of them, or their respective assets;
(3) The Borrowers (or any of them) shall fail to
observe or perform any covenant or obligation to be observed or
performed by it hereunder or under any of the Security Documents
(other than those covenants and obligations that are specified in
other subsections of this Section 7.1), and such failure shall
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continue for five (5) days after the earliest of: (1) notice of such
failure from the Lender; or (2) the Lender is notified of such
failure; or (3) the Lender should have been notified of such failure
pursuant to the provisions of Section , unless such failure can be
cured and, within such five (5) day period, Borrowers either cure such
failure or, if such failure cannot reasonably be cured within such
period, Borrowers take affirmative, tangible and demonstrable steps to
commence such cure and, in fact, cure such failure within thirty (30)
days after the expiration of such five (5) day period;
(4) The Borrowers (or any of them) or any
Guarantor shall fail to pay when due any Indebtedness for borrowed
money to any third Persons and such failure shall continue beyond any
applicable grace period, or the Borrowers (or any of them) shall
suffer to exist any other event of default under any agreement binding
upon the Borrower if such event of default could result in liability
of the Borrowers (or any of them) in excess of $50,000.00;
(5) Any financial statement, representation,
warranty or certificate made or furnished by the Borrowers (or any of
them) to the Lender in connection with this Agreement, or in any
separate statement or document to be delivered hereunder to the
Lender, shall be materially false, incorrect, or incomplete when made;
(6) Other than the Bankruptcy Cases, as the same
are currently pending, Bankruptcy Proceedings shall be commenced (a)
by any of the Borrowers or any Guarantor, or (b) against any of the
Borrowers or any Guarantor by any other Person and such involuntary
proceedings shall not be discharged within sixty (60) days of their
commencement or an order for relief shall be entered within such
sixty-day period;
(7) The Borrowers (or any of them) shall suffer
final judgments for payment of money aggregating in excess of
$50,000.00 and shall not discharge the same within a period of thirty
(30) days unless, pending further proceedings, execution has not been
commenced or if commenced has been effectively stayed;
(8) A judgment creditor of any of the Borrowers
shall obtain possession of any item or items of the Collateral having
a fair market value or book value in excess of $50,000.00, by any
means, including, but without limitation, levy, garnishment, distraint,
detinue, replevin or self-help;
(9) The Borrowers (or any of them), any Guarantor
or any obligee of Subordinated Indebtedness shall fail to comply with
the subordination provisions of the Subordination Agreements or of the
instruments evidencing such Subordinated Indebtedness;
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(10) A Reportable Event, as defined in ERISA, with
respect to any Benefit Plan shall occur;
(11) Any Guarantor shall fail to comply fully with
the requirements of his or its Guaranty Agreement, or if any such
Guarantor is an individual, such Guarantor shall die, unless the
estate of such Guarantor remains obligated thereunder and the Guaranty
obligations remain legally enforceable against such estate; or
(12) A criminal investigation is commenced, in
connection with which any of the Borrowers or any Guarantor is named
as a "target" or a "subject".
7.2. ACCELERATION.
(A) Automatic Acceleration. Immediately and without
notice upon the occurrence of an Event of Default specified in Sections
7.1(A)(6), (A)(7) or (B)(6), all Obligations, whether arising hereunder, under
the Plan Notes or otherwise, shall immediately become due and payable without
further action of any kind on the part of the Lender, and the Lender may
exercise any rights or remedies available under this Agreement, the Security
Documents, at law or in equity.
(B) Acceleration at the Option of the Lender. Upon the
occurrence of any Event of Default specified in Section 7.1 hereof, other than
Section 7.1(A)(6), (A)(7) or (B)(6), then at any time thereafter if any such
Event of Default shall then be continuing, the Lender may (1) declare all
Obligations (whether arising hereunder, under the Plan Notes or otherwise) to
be, whereupon the same shall become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrowers, and (2) exercise any other rights or remedies
available under this Agreement, the Security Documents, at law or in equity.
(C) Borrowers' Right to Obtain a Waiver of Events of
Default Other Than Major Defaults. Upon the occurrence of any Event of Default
other than a Major Default, then, whether or not maturity of the Obligations
has been accelerated pursuant to Section 7.2(A) or (B), and whether or not the
Lender has commenced exercise of any of its rights or remedies hereunder, at
law or in equity, the Borrowers shall be entitled to obtain a waiver of such
Event of Default, but only in the manner, and within the time period, expressly
provided in this Section 7.2(C). In order to obtain such a waiver, within
thirty (30) days after notice of the occurrence of such Event of Default from
the Lender, the Borrowers shall pay to the Lender an amount, in cash or other
immediately available funds, equal to the sum of:
(a) All of the then outstanding Amortization
Principal Amount under Plan Note I, together with all accrued
interest thereon at the Pay Rate (or the Default Rate, if
applicable),
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(b) All amounts then outstanding (if any) under Plan
Note II, together with accrued interest thereon at the Default
Rate, if applicable, and
(c) All of the Lender's costs incurred as a result of
each such Event of Default, including, but without limitation,
all costs of acceleration of the Obligations, all fees and
expenses of counsel incurred in connection with the
enforcement of the Obligations, and all other costs and
expenses incurred in connection with the Lender's exercise of
any rights and remedies as a result of such Event of Default.
If, and only if, the amounts described in clauses (a), (b) and (c) above are
irrevocably paid to the Lender within the time period specified above, each
Event of Default (other than a Major Default) which exists at the time of such
payment shall be deemed to have been waived by the Lender, effective on the
date of such irrevocable payment; provided, that such waiver shall not extend
to any other Event of Default, or to the occurrence of any Event of Default
which may occur after any such payment. Nothing contained in this Section
7.2(C) shall, or shall be deemed to, prevent or delay the exercise by the
Lender of any of its rights and remedies under this Agreement or the Security
Documents, at law or in equity, upon the occurrence of any Event of Default.
Notwithstanding any provision to the contrary contained in this Section 7.2(C),
the Borrowers' right to obtain a waiver of Events of Default (other than Major
Defaults) pursuant to this Section 7.2(C) shall automatically and immediately
expire upon the occurrence of any Major Default.
7.3. REMEDIES.
7.3.1. Exercise of Remedies Generally. After the occurrence
of any Event of Default under Section 7.1 or any acceleration under Section ,
the Lender shall have, in addition to the rights and remedies given it by this
Agreement and the Security Documents, all those allowed by all applicable Laws,
including, but without limitation, the Uniform Commercial Code as enacted in
any jurisdiction in which any Collateral may be located. Without limiting the
generality of the foregoing, the Lender may immediately, without demand of
performance and without other notice (except as specifically required by this
Agreement or the Security Documents, or as required by Law and which cannot be
waived) or demand whatsoever to the Borrowers, all of which are hereby
expressly waived, and without advertisement, sell at public or private sale or
otherwise realize upon, in Birmingham, Alabama, or elsewhere, the whole or,
from time to time, any part of the Collateral, or any interest which the
Borrowers may have therein. After deducting from the proceeds of sale or other
disposition of the Collateral all expenses (including all reasonable expenses
for legal services), the Lender shall apply such proceeds toward the
satisfaction of the Obligations which are then due, whether by acceleration
pursuant to Section or otherwise, in such order as the Lender may elect. Any
remainder of the proceeds after satisfaction in full of the Obligations shall
be distributed as required by applicable Laws. Notice of any sale or other
disposition shall be given to the Borrowers at least five (5) days before the
time of any intended public sale or of the time after which any intended
private sale or other disposition of the Collateral is to be made, which the
Borrowers hereby agree shall be reasonable
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notice of such sale or other disposition. The Borrowers shall be liable for
any deficiency, jointly and severally. The Borrowers agree to assemble, or to
cause to be assembled, at its own expense, the Collateral at such place or
places as the Lender shall designate. At any such sale or other disposition,
the Lender may, to the extent permissible under applicable Laws, purchase the
whole or any part of the Collateral, free from any right of redemption on the
part of any of the Borrowers, which right is hereby waived and released.
Without limiting the generality of any of the rights and remedies conferred
upon the Lender under this paragraph, the Lender may, to the full extent
permitted by applicable Laws:
7.3.1.1. Enter upon the premises of any of
the Borrowers, exclude therefrom the
Borrowers or any Affiliate thereof,
and take immediate possession of the
Collateral, either personally or by
means of a receiver appointed by a
court of competent jurisdiction,
using all necessary force to do so;
7.3.1.2. At the Lender's option, use, operate,
manage and control the Collateral in
any lawful manner;
7.3.1.3. Collect and receive all rents,
income, revenue, earnings, issues
and profits therefrom; and
7.3.1.4. Maintain, repair, renovate, alter or
remove the Collateral as the Lender
may determine in its discretion.
7.3.2. Agreement to Delay Exercising Certain Remedies in
Certain Events. Notwithstanding the provisions of Section 7.3(A) hereof, the
Lender hereby agrees that, if an Event of Default, which does not constitute a
Major Default, occurs hereunder, then during the time period specified in
Section 7.2(C), the Lender will not (i) actually take possession or control of
any Collateral, (ii) dispose of any Collateral, (iii) direct the Borrowers'
Account debtors to make payments directly to the Lender, or (iv) exercise any
right of setoff with respect to any funds of Borrowers on deposit with the
Lender. Nothing contained in this Section 7.3(B) shall, or shall be deemed to,
prevent or delay the Lender from commencing any action leading to the taking of
any actions described in items (i) through (iv), above, or from exercising any
of its other available rights or remedies, as a result of the occurrence of an
Event of Default, including, without limitation, the commencement of litigation
on the Plan Notes, the commencement of foreclosure proceedings, seeking the
appointment of a receiver, exercising its rights under the Guaranty, or
commencing involuntary bankruptcy proceedings against one or more of the
Borrowers. Nothing contained in this Section 7.3(B) shall, or shall be deemed
to, prevent or delay the Lender from exercising any available rights and
remedies hereunder, under the Security Documents, at law or in equity
(including, without limitation, the rights and remedies described in items (i)
through (iv), above), upon the occurrence of any Major Default.
7.4. RIGHT OF SET-OFF. Upon the occurrence of any Event of
Default, except as expressly provided in Section 7.3(B) hereof, the Lender may,
and is hereby authorized by the Borrowers, at any time and from time to time
thereafter, to the fullest extent permitted by
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applicable Laws, and without advance notice to any of the Borrowers (any such
notice being expressly waived by the Borrowers), set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and any other Indebtedness at any time owing by the Lender to, or for the
credit or the account of, any of the Borrowers against any or all of the
Obligations of the Borrowers now or hereafter existing whether or not such
Obligations have matured and irrespective of whether the Lender has exercised
any other rights that it has or may have with respect to such Obligations,
including without limitation any acceleration rights. The aforesaid right of
set-off may be exercised by the Lender against the Borrowers (or any of them)
or against any trustee in bankruptcy, debtor in possession, assignee for the
benefit of the creditors, receiver, or execution, judgment or attachment
creditor of any of the Borrowers, or such trustee in bankruptcy, debtor in
possession, assignee for the benefit of creditors, receiver, or execution,
judgment or attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by the Lender prior to the making, filing
or issuance, or service upon the Lender of, or of notice of, any such petition,
assignment for the benefit of creditors, appointment or application for the
appointment of a receiver or issuance of execution, subpoena, order or warrant.
The Lender agrees to promptly notify the Borrowers after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Lender under this
Section 7.4 are in addition to the other rights and remedies (including,
without limitation, other rights of set-off) which the Lender may have.
7.5. WAIVER OF RIGHT TO STAY FORECLOSURE UPON OCCURRENCE OF MAJOR
DEFAULT. In order to induce SouthTrust to enter into the transactions
contemplated in this Agreement and in the Plans, each of the Borrowers and the
Guarantor hereby waives any right or ability any of them may have to seek to
stop or stay a future foreclosure action brought by, or any other exercise of
legal or equitable rights or remedies by, the Lender upon the occurrence of any
one or more of the Major Defaults described in Section 7.1 (A), and each such
Borrower and the Guarantor hereby agree with, and for the benefit of, the
Lender, that they shall not be entitled to take any action to seek to stop or
stay any such exercise of Lender's remedies in any such event.
7.6. RELIEF FROM AUTOMATIC STAY. In order to induce SouthTrust to
enter into the transactions contemplated in this Agreement and in the Plans,
each of the Borrowers and the Guarantor hereby agrees that, in the event that
(A) any Bankruptcy Proceeding is filed by or against any of the Borrowers or
Guarantor, or which otherwise has jurisdiction over the Indebtedness evidenced
by the Plan Notes, this Agreement or the other Plan Documents (as defined in
the Plans), and (B) any such Bankruptcy Proceeding, or any action or omission
by any of the Borrowers or any Guarantor in connection therewith (including,
without limitation, any failure to timely comply with their payment or other
Obligations hereunder or under the Plan Notes), impairs or affects adversely
the Collateral or the rights and remedies of the Lender hereunder, then the
Lender automatically shall be entitled to relief from the automatic stay
provisions of Section 362 of the Bankruptcy Code or any successor or similar
law, and each of the Borrowers and the Guarantor hereby consents and agrees not
to oppose, and the debtor in any such bankruptcy case shall, and shall be
deemed to, consent and agree not to oppose, the filing by the Lender of a
motion for such relief.
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7.7. ACKNOWLEDGMENT OF THE BORROWERS AND GUARANTOR. The Borrowers
and the Guarantors hereby acknowledge that the provisions contained in Sections
7.5 and 7.6 were bargained for by the Lender, are required by the terms of the
Plans to be included in this Agreement, and are being relied upon by the Lender
in connection with its agreement to enter into the transactions contemplated by
this Agreement and the Plans.
ARTICLE 8. MISCELLANEOUS
8.1. CONSTRUCTION. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by the Lender, all of which are incorporated herein
and shall be construed as complementary to each other. Nothing herein
contained shall prevent the Lender from enforcing any or all other notes,
guaranty, pledge or security agreements in accordance with their respective
terms.
8.2. FURTHER ASSURANCE. From time to time, the Borrowers will
execute and deliver to the Lender such additional documents and will provide
such additional information as the Lender may reasonably require to carry out
the terms of this Agreement and be informed of the status and affairs of the
Borrowers.
8.3. INDEMNITY. The Borrowers hereby agree to indemnify the
Lender, all Participants, and its or their respective officers, directors,
agents and attorneys against, and to hold the Lender, all Participants, and all
such other persons harmless from, any claims, demands, liabilities, costs,
damages, and judgments (including, without limitation, liability under any
Environmental Laws and costs of defense and attorneys' fees) resulting from any
representation or warranty made by Borrowers or on Borrowers' behalf pursuant
to Article V of this Agreement having been false when made, or resulting from
Borrowers' breach of any of the covenants set forth in Article VI of this
Agreement. This agreement of indemnity shall be a continuing agreement and
shall survive payment of the Indebtedness evidenced by the Plan Notes and
termination of this Agreement.
8.4. ENFORCEMENT AND WAIVER BY THE LENDER. The Lender shall have
the right at all times to enforce the provisions of this Agreement, the Plan
Notes, and the Security Documents in strict accordance with the terms hereof
and thereof, notwithstanding any conduct or custom on the part of the Lender in
refraining from so doing at any time or times. The failure of the Lender at
any time or times to enforce its rights under such provisions, strictly in
accordance with the same, shall not be construed as having created a custom in
any way or manner contrary to specific provisions of this Agreement or as
having in any way or manner modified or waived the same. All rights and
remedies of the Lender are cumulative and concurrent and the exercise of one
right or remedy shall not be deemed a waiver or release of any other right or
remedy.
8.5. EXPENSES OF THE LENDER. The Borrowers will, on demand,
reimburse the Lender for all expenses, including the fees and expenses of legal
counsel for the Lender, incurred (A) in connection with the preparation, and
negotiation of this Agreement and participation in the Closing, provided that
such fees and expenses of counsel shall not exceed $25,000.00, and (B) in
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connection with the administration, and any amendment, modification, renewal,
extension, or enforcement of this Agreement, the Plan Notes, the Security
Documents and any other documents related to this Agreement and the collection
or attempted collection of the Indebtedness evidenced by the Plan Notes.
8.6. NOTICES. Any notices or consents required or permitted by
this Agreement shall be in writing and shall be deemed delivered if delivered
in person or if sent by certified mail, postage prepaid, return receipt
requested, or telegraph, or facsimile, as follows, unless such address is
changed by written notice hereunder:
8.6.1. If to the Borrowers (or any of them):
Medical Technology Systems, Inc.
00000 Xxxxxxxxxx Xxxx.
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile #(000) 000-0000
Attention: President
with a copy to:
Massari & Xxxx, P.A.
One Urban Center, Suite 875
0000 Xxxx Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Facsimile #(000) 000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
8.6.2. If to the Lender:
SouthTrust Bank of Alabama, National Association
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile #(000) 000-0000
Attention: J. Xxxxx Xxxxxx
with a copy to:
Bradley, Arant, Rose & White
0000 Xxxx Xxxxx, Xxxxx 0000 [zip code 35203]
X.X. Xxx 000000 [zip code 35283-0709]
Birmingham, Alabama
Facsimile #(000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
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8.7. WAIVER BY THE BORROWERS. To the maximum extent permitted by
applicable Laws, each of the Borrowers:
8.7.1. Waives: (1) protest of all commercial paper at any
time held by the Lender on which the Borrower is any way liable; and (2)
notice, after acceleration in the manner provided in Section , before exercise
by the Lender of the remedies of self-help, set-off, or of other summary
procedures permitted by any applicable Laws or by any agreement with any of the
Borrowers and except where required hereby or by any applicable Laws, notice of
any other action taken by the Lender; and
8.7.2. Waives, in favor of the Lender and its successors and
assigns, any claims or defenses which any of the Borrowers or the Guarantor
have or may have with respect to this Agreement, the Plan Notes, the Original
SouthTrust Loan Documents or the Original SouthTrust Indebtedness, and each of
them hereby agrees further not to raise any such claims or defenses (if any)
against the Lender or its successors or assigns in any civil proceeding of any
kind or otherwise.
8.8. PARTICIPATION. Notwithstanding any other provision of this
Agreement, each of the Borrowers understands that the Lender has heretofore
entered into, and may hereafter enter into, participation agreements with The
Daiwa Bank, Limited and other Participants, whereby the Lender has allocated or
will allocate certain percentages of the Obligations to them. The Borrowers
acknowledge that, for the convenience of all parties, this Agreement is being
entered into with the Lender only and that its obligations under this Agreement
are undertaken for the benefit of, and as an inducement to each of any such
Participants as well as the Lender, and each of the Borrowers hereby grants to
each such Participant, to the extent of its participation in the Obligations,
the right to set off deposit accounts maintained by the Borrowers with such
bank.
8.9. GOVERNING LAW. This Agreement is entered into and performable
in Jefferson County, Alabama, and the substantive Laws of the United States and
the State of Alabama, without giving effect to its principles of conflict of
laws, shall govern the construction of this Agreement and the documents
executed and delivered pursuant hereto, and the rights and remedies of the
parties hereto and thereto, except to the extent that the location of any
Collateral in a state or jurisdiction other than Alabama requires that the
perfection of the Lender's security interest hereunder, and the enforcement of
certain of the Lender's remedies with respect to the Collateral, be governed by
the laws of such other state or jurisdiction.
8.10. SUBMISSION TO JURISDICTION; WAIVERS.
EACH OF THE BORROWERS HEREBY IRREVOCABLY AND UNCONDITIONALLY:
8.10.1. SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY
LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT
OF ANY JUDGMENT IN RESPECT
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THEREOF, TO THE NON-EXCLUSIVE GENERAL
JURISDICTION OF THE COURTS OF THE STATE OF
ALABAMA, THE COURTS OF THE UNITED STATES OF
AMERICA FOR THE NORTHERN DISTRICT OF ALABAMA,
AND APPELLATE COURTS FROM ANY THEREOF;
8.10.2. CONSENTS THAT ANY SUCH ACTION OR PROCEEDING
MAY BE BROUGHT IN SUCH COURTS, AND WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT
COURT AND AGREES NOT TO PLEAD OR CLAIM THE
SAME;
8.10.3. AGREES THAT SERVICE OF PROCESS IN ANY SUCH
ACTION OR PROCEEDING MAY BE EFFECTED BY
MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR
FORM OF MAIL), POSTAGE PREPAID, TO THE
BORROWERS AT THE ADDRESS SET FORTH IN SECTION
8.6(A) OR AT SUCH OTHER ADDRESS OF WHICH THE
LENDER SHALL HAVE BEEN NOTIFIED PURSUANT
THERETO; AND
8.10.4. AGREES THAT NOTHING HEREIN SHALL AFFECT THE
RIGHT TO EFFECT SERVICE OF PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO XXX IN ANY OTHER JURISDICTION.
EACH OF THE BORROWERS AND THE LENDER HEREBY:
IRREVOCABLY AND UNCONDITIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR PROCEEDING OR COUNTERCLAIM OF ANY TYPE AS TO ANY MATTER
ARISING DIRECTLY OR INDIRECTLY OUT OF OR WITH RESPECT TO THIS AGREEMENT, THE
PLAN NOTES, THE SECURITY DOCUMENTS OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION
HEREWITH OR THEREWITH; AND
AGREE THAT EITHER OF THEM MAY FILE A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED FOR
AGREEMENT BETWEEN THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY, AND THAT ANY
DISPUTE OR CONTROVERSY OF ANY KIND WHATSOEVER BETWEEN THEM SHALL INSTEAD OF
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TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
8.11. RELEASE. Each of the Borrowers and the Guarantor, for
themselves and their respective legal representatives, successors,
predecessors, heirs and assigns, and their respective officers, directors,
stockholders, agents, servants and employees, hereby release, acquit and
forever discharge the Lender and its Participants, officers, directors,
stockholders, agents, servants, employees, legal representatives, successors
and assigns, of and from any and all claims, demands, debts, actions and causes
of action of any kind which they or any of them now have or might hereafter
have against the Lender or any of its Participants, officers, directors,
stockholders, agents, servants, employees, legal representatives, successors or
assigns, by reason of any act, matter, contract, agreement or thing whatsoever
up to the date of this Agreement, including, without limitation, any claim,
counterclaim, demand, debt, action or cause of action of any kind arising,
directly or indirectly, under the Original SouthTrust Loan Documents or in
connection with the Original SouthTrust Indebtedness.
8.12. BINDING EFFECT, ASSIGNMENT. This Agreement shall inure to the
benefit of, and shall be binding upon, the respective successors and permitted
assigns of the parties hereto. The Borrowers and the Guarantor have no right
to assign any of their rights or obligations hereunder without the prior
written consent of the Lender.
8.13. ENTIRE AGREEMENT, AMENDMENTS. Each Recital to this Agreement
and each of the Exhibits hereto is incorporated herein by this reference. This
Agreement, the Plan Notes, the Security Documents, and the other instruments
and documents executed in connection herewith, (A) constitute the entire
agreement among the parties, (B) supersede all prior discussions, negotiations,
offers, understandings, and agreements with respect to the subject matter
hereof, and (C) may be amended only by a writing signed on behalf of each party
to this Agreement. There are no other understandings or agreements, and the
Lender has not made any representations or promises, unless specifically set
forth in this Agreement. Each party acknowledges that it has expressly
bargained for a prohibition of any implied or oral amendments or modifications
of any kinds, nature or character. Each party acknowledges and agrees that
this Agreement, together with the Plan Notes, the Security Documents and the
other instruments and documents executed in connection herewith, is fully
integrated and not in need of parol evidence in order to reflect the intentions
of the parties, and that the parties intend the literal words of this Agreement
and the other documents and instruments referred to in this Section 8.13 to
govern the transactions described herein, and for all prior negotiations,
drafts and other extraneous communications to have no significance or
evidentiary effect whatsoever.
8.14. SEVERABILITY. If any provision of this Agreement, the Plan
Notes, or the Security Documents shall be held invalid under any applicable
Laws, such invalidity shall not affect any other provision of this Agreement or
such other instrument or agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
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8.15. HEADINGS. The table of contents and paragraph and
subparagraph headings hereof are inserted for convenience of reference only,
and shall not alter, define, or be used in construing the text of such
paragraphs or subparagraphs.
8.16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
8.17. SEAL. This Agreement is intended to take effect as an
instrument under seal.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the duly authorized officers of the parties hereto
have executed this Agreement as of the day and year first above written.
THE BORROWERS:
MEDICAL TECHNOLOGY SYSTEMS, INC.
By: /s/ XXXX X. XXXXXX
Its: President
CLEARWATER MEDICAL SERVICES, INC.
By: /s/ XXXX X. XXXXXX
Its: President
MEDICAL TECHNOLOGY LABORATORIES, INC.
By: /s/ XXXX X. XXXXXX
Its: President
MTS PACKAGING SYSTEMS, INC.
By: /s/ XXXX X. XXXXXX
Its: President
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VANGARD LABS, INC.
By: /s/ XXXX X. XXXXXX
Its: President
By: /s/ XXXXX X. XXXXX
As Plan Trustee for Vangard Labs,
Inc., under the Vangard Plan
VANGARD PHARMACEUTICAL PACKAGING, INC.
By: /s/ XXXX X. XXXXXX
Its: President
PERFORMANCE PHARMACY SYSTEMS, INC.
By: /s/ XXXX X. XXXXXX
Its: President
CART-XXXX, INC.
By: /s/ XXXX X. XXXXXX
Its: President
MEDICATION MANAGEMENT SYSTEMS, INC.
By: /s/ XXXX X. XXXXXX
Its: President
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MEDICATION MANAGEMENT TECHNOLOGIES,
INC.
By: /s/ XXXX X. XXXXXX
Its: President
MTS SALES & MARKETING, INC.
By: /s/ XXXX X. XXXXXX
Its: President
SYSTEMS PROFESSIONALS, INC.
By: /s/ XXXX X. XXXXXX
Its: President
GUARANTOR:
By: /s/ XXXX X. XXXXXX
THE LENDER:
SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION
By: /s/ XXXXX XXXXXX [L.S.]
Its:
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