AGREEMENT OF SALE
This Agreement made this 2nd day of June 1997, by and between Xxxxxx
Xxxxxxx Xxxxxxx ("Seller") and NewCare Health Corporation or its assigns
("Buyer").
R E C I T A L S
A. Seller is the owner of that certain parcel of real property
described as Xxx 0, Xxxxxxx Xxxxxxx Xxxxxx Addition, an Addition to the
City of Xxxxxxx, Xxxxxxx County, Kansas, according to the recorded plat
thereof (the "Real Property").
B. The Real Property is leased to Meadowbrook Neurocare - Kansas
City, Inc., a Kansas corporation ("Tenant") pursuant to a certain Lease
Agreement between Seller and Tenant effective as of September 1, 1987, an
Addendum to Lease Agreement dated May 1, 1988, an Addendum to Lease
Agreement dated April 1, 1989, a Third Amendment to Lease dated July 1,
1991, and a Fourth Amendment to Lease dated January 2, 1992 (said Lease
Agreement as amended is referred to as the "Lease"). The performance of the
obligations of Tenant under the Lease are guaranteed by Meadowbrook
Rehabilitation Group, Inc., a Delaware corporation ("Guarantor").
C. Concurrently with the execution of this Agreement Buyer is
entering into an agreement to acquire all of the outstanding stock of
Tenant.
D. Seller wishes to Sell and Buyer wishes to buy the Real Property.
NOW, THEREFORE, the parties agree as follows:
AGREEMENT
1. The recitals set forth here and above are incorporated herein by
reference.
2. Subject to the terms and conditions hereof, Seller agrees to sell
and Buyer agrees to purchase the Real Property for a purchase price of
$3,500,000 payable in cash upon conveyance of the Real Property by Seller
to Buyer.
3. Chicago Title Insurance Company (the "Escrow Holder"), has issued
an ALTA Commitment for the issuance of an ALTA Loan policy dated May 15,
1997, Commitment No. 97-2376 which is attached hereto as Exhibit A (the
"Commitment"). Title to the Real Property shall be conveyed subject only to
exceptions 1, 8 (excluding 1996 taxes), 13, 14, 15, 16, 17, 18 shown in
Schedule B of the Commitment, and to the Lease (the "Permitted
Exceptions"). If Seller is unable or unwilling to remove the remaining
exceptions set forth in the Commitment, Buyer may elect to terminate the
obligations of the parties hereunder and any deposits made by Buyer shall
be immediately released to Buyer. Evidence of title shall be in the form of
an ALTA Lenders Title Insurance Policy (10/17/92) issued by the Escrow
Holder.
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4. Upon the execution of this Agreement, Buyer shall have the right
for a period ending June 25, 1997 to enter upon the Real Property and,
subject to the rights of Tenant, conduct such inspections and tests as
Buyer shall deem appropriate. If any test and inspection results in any
damage to the Real Property or the improvements thereon, Buyer agrees to
repair such damage. Buyer agrees to hold Seller harmless from any claim,
liability, damage or expense, arising on account of any injury to property,
or persons on account of any tests or inspections conducted by Buyer, its
employees or agents. Prior to performing any invasive tests, Buyer shall
provide evidence of liability insurance which will insure Seller and Buyer
against any claims for personal injury or property damage arising on
account of any tests or inspections.
If Buyer, for any reason, or for no reason, elects not to purchase
the Real Property and gives Seller written notice of such election, on or
before June 25, 1997, the obligations of the parties hereunder shall
terminate. If Buyer does not terminate this agreement, it shall deposit the
sum of one hundred thousand dollars ($100,000.00) with the Escrow Holder as
an advance upon the payment of the purchase price.
5. The parties shall open an escrow with the Escrow Holder. Prior to
the Closing Date, Seller shall deposit with the escrow holder, a Deed to
the Real Property, and all of the documents which may be required by the
Escrow Holder in order to convey title to the Real Property to Buyer
subject to the Permitted Exceptions. On or before the Closing Date Buyer
shall deposit the purchase price in cash. Both parties shall execute such
escrow instructions and other documents that may be required by the Escrow
Holder.
6. Rents and any expenses of the Real Property shall be pro-rated
between Seller and Buyer as of the date of the conveyance of the Real
Property. Seller shall pay all costs related to the removal of the
exceptions in the Commitment which are to be removed. Each party shall pay
one-half (1/2) of any taxes or fees payable upon conveyance of the Real
Property, escrow fees, and any other incidental expenses incurred in
connection with the conveyance of the Real Property. Buyer shall pay the
cost of an owners policy of title insurance insuring title to the Real
Property in the name of Buyer. Each party shall pay its own attorneys'
fees, accountants' fees, or other expenses incurred in connection with the
preparation of this Agreement, the conveyance of the property, or in
connection with any investigation or tests relating to the Real Property.
7. Seller represents and warrants to Buyer that: (a) Seller has not
received any notice of noncompliance of the property under any
environmental law or regulation and that Seller is not aware of any
hazardous substances on the Real Property as such substances are defined by
any environmental law or regulation of any governmental authority having
jurisdiction over the Real Property, except such hazardous substances as
may be used by the Tenant in the operation of the medical facilities on the
Real Property. Insofar as is known to Seller, all such substances used by
the Tenant are being used in accordance with applicable environmental laws
and regulations; (b) Seller has not received any notice of noncompliance
from any governmental authority and insofar as is known to Seller the Real
Property and the improvements thereon are currently being used in
accordance with all zoning laws, building codes, and other laws affecting
the use of the Real Property; and (c) Seller is not aware of any material
defect in the construction of the improvements upon the Real Property.
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Except as represented herein, Seller makes no other representation or
warranty with respect to the Real Property, and it will be conveyed in its
present condition, subject to the Permitted Exceptions. The warranties
provided herein shall survive the Closing.
8. The obligations of Buyer are conditioned upon Buyer acquiring the
stock of Tenant on or before July 31, 1997, and in the event that the stock
is not acquired on or before that date, the obligations of the parties
hereunder shall terminate and any deposits shall be immediately released to
Buyer. The Real Property shall be conveyed and the purchase price shall be
paid concurrently with the close of the escrow whereby Buyer acquires the
stock of Tenant (the "Closing Date").
Upon conveyance of the Real Property to Buyer the obligations of
Guarantor under the Lease shall terminate and both Buyer and Seller shall
deposit a release of the Guaranty in the escrow to be delivered to
Guarantor upon the closing.
9. The parties agree to cooperate with each other in the event that
a party wishes to enter into a tax deferred exchange in connection with the
acquisition or disposition of the Real Property. Provided that the party
making such an exchange shall bear all the additional costs incurred and
the other party shall not be required to incur any recourse liability.
10. In the event that either party shall default in the performance
of its obligations hereunder, and the other party shall commence a legal
action to enforce the provisions of this agreement, the party prevailing in
such action shall be entitled to receive from the other party all costs and
expenses incurred therein, including a reasonably attorney's fee to be
fixed by the Court.
11. Any notice which is required or which may be given hereunder may
be personally delivered, or may be sent by facsimile, or by certified or
priority mail postage prepaid, or by overnight courier. Any notice shall be
deemed to have been delivered upon receipt by the other party, at the
addresses set forth herein, or at such other addresses as the parties
designate by notice to the other party hereafter:
Seller: Xxxxxx Xxxxxxx Xxxxxxx
Western Hospital Properties
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxxxxx, 00000
Facsimile (000) 000-0000
Buyer: NewCare Health Corporation
0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: General Counsel
Facsimile (000) 000-0000
12. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their successors and interest. Buyer may assign
its rights under this Agreement without the consent of Seller, but such
assignment shall not relieve Buyer of its obligations hereunder in the
event of a default by the assignee.
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13. This Agreement constitutes the entire agreement of the parties
with respect to the option and conveyance of the Real Property.
IN WITNESS WHEREOF, the parties have executed this Agreement upon the
date above written.
Seller: Buyer:
NewCare Health Corporation
/s/ Xxxxxx Xxxxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx
Xxxxxx Xxxxxxx Xxxxxxx Xxxxx Xxxxxxx
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SECURED BRIDGE NOTE
$4,500,000.00 July 31, 1997
For value received, the undersigned, NEWCARE HOSPITAL CORPORATION, a
Georgia corporation ("Borrower"), promises to pay, in lawful money of the
United States, to the order of HCFP FUNDING II, INC., a Delaware
corporation, its successors and assigns ("Lender"), the principal sum of
FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($4,500,000.00) (the
"Principal Sum") together with interest, costs of collection and other fees
as further set forth in this Secured Bridge Note, to be paid in accordance
with the terms set forth below. All terms not defined in this Secured
Bridge Note shall have the meanings ascribed to them in the Security
Agreement of even date by and between Borrower and Lender (the "Security
Agreement").
1. Success Fee. Borrower acknowledges and agrees that the financing
provided by Lender pursuant to this Secured Bridge Note is essential to
Borrower in financing the operations of Borrower. Accordingly, in
consideration for the extension of credit by Lender as evidenced by this
Secured Bridge Note and as a material inducement to Lender to provide the
financing evidenced by this Secured Bridge Note, Borrower shall pay to
Lender, in cash, a success fee (the "Success Fee") equal to the greater of
(i) ten percent (10%) of the excess of the total consideration received
from any sale, financing, refinancing or other disposition (collectively a
"Disposition") of Meadowbrook Rehabilitation Hospital in Gardner, Kansas
(the "Facility") over $5,000,000.00, whether the consideration is in the
form of cash, seller take-back financing, offsets, reduction in
indebtedness, promissory note, or other form of non-cash consideration, or
(ii) (A) $150,000.00 if the Disposition is consummated on or before the
first anniversary of the date of this Secured Bridge Note, or (B)
$300,000.00 if the Disposition is consummated after the first anniversary
of the date of this Secured Bridge Note. The Success Fee shall be due and
payable on the date that the Disposition is consummated; if no such
Disposition is consummated before July 31, 1999 (the "Maturity Date"), then
the Success Fee shall be due and payable on the Maturity Date. If not paid
when due, the Success Fee shall be added to, and become a part of, the
Principal Sum.
2. Commitment Fee. In consideration for the extension of credit by
Lender as evidenced by this Secured Bridge Note, Borrower shall pay to
Lender a Commitment Fee equal to one percent (1%) of the Principal Sum, or
Forty-Five Thousand and No/100 Dollars ($45,000.00), which sum shall be
paid by a deduction from the initial funding. If all principal and
interest under this Secured Bridge Note, including, but not limited to the
Success Fee, is not paid on or before the first anniversary of the date of
this Secured Bridge Note, then Borrower shall pay to Lender on such
anniversary date an additional fee equal to one percent (1%) of the initial
Principal Sum, or Forty-Five Thousand and No/100 Dollars ($45,000.00).
3. Principal and Interest. If not sooner repaid, Borrower promises
to pay to Lender the entire Principal Sum on the Maturity Date. In
addition to the repayment of the Principal Sum, Borrower promises to pay
interest on the Principal Sum on a monthly basis from the date of this Secured
Bridge Note until the Maturity Date, at a fluctuating rate per annum (on the
basis of the actual number of days elapsed over a year of 360 days) equal to
three percent (3%) over the Prime Rate (the "Base Rate"), provided that after an
Event of Default (as defined in Section 12 of this Secured Bridge Note) the rate
shall be equal to the Base Rate plus five percent (5%) (the "Default Interest
Rate"). For purposes of the foregoing, the term "Prime Rate" means that rate of
interest designated as such by Fleet National Bank of Connecticut, N.A.,or any
successor thereto, as the same may from time to time fluctuate. Accrued
interest shall be payable monthly in arrears on the last Business Day (as
defined in Section 5 below) of each month, beginning on August 31, 1997 and
continuing through and including the Maturity Date. After the Maturity Date,
and thereafter until the full amount of the Principal Sum plus any other
amounts due and unpaid shall be paid in full, including but not limited to
the Success Fee, all outstanding amounts of the Principal Sum shall bear
interest, payable on demand, at the Default Interest Rate, but in no event
shall the interest payable exceed the maximum lawful rate.
4. Additional Payments. Borrower further promises to pay to Lender,
within five (5) business days after notice and demand, any and all other
sums and charges that may at the time become due and payable hereunder, and
all reasonable legal fees, costs, disbursements and documentation
preparation fees in connection with the preparation of this Secured Bridge
Note and the related documents described in Section 5 below, and in the
collection of any payments due under this Secured Bridge Note and in any
action, suit or proceeding to protect, sustain or enforce the rights and
remedies of Lender under this Secured Bridge Note or the other Loan
Documents (as defined in Section 5 below).
5. Conditions to Borrowing; Prepayment.
a. Subject to the terms and conditions hereof, Lender shall
make available to Borrower the Principal Sum, in immediately available
funds, not later than 12:00 Noon (Eastern time) on the Business Day on
which the following conditions precedent are satisfied: (i) Borrower shall
have executed and delivered to Lender this Secured Bridge Note, the
Security Agreement, the first priority Mortgage, Assignment of Leases and
Rents, Security Agreement and Fixture Filing of even date executed by
Borrower in favor of Lender encumbering that certain real property at 000
Xxxx Xxxx Xxxxxx, Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx 00000 (the "Mortgage"),
the Environmental Indemnity Agreement of even date with this Secured Bridge
Note (the "Environmental Indemnity Agreement"), and all other documents,
certificates and agreements executed or delivered in connection with this
transaction (this Secured Bridge Note, the Security Agreement, the
Mortgage, the Environmental Indemnity Agreement, and all such other
documents are collectively referred to in this Secured Bridge Note as the
"Loan Documents"); (ii) no Event of Default under this Secured Bridge Note
or the Security Agreement, no Default under the Mortgage, and no material
breach under any other Loan Documents shall have occurred and be
continuing; (iii) no Event of Default shall have occurred under that
certain Loan and Security Agreement dated June 30, 1997 between NewCare
Health Corporation, the parent of Borrower, and certain of its affiliates
and HCFP Funding, Inc., an affiliate of Lender ("HCFP"), as it may be
amended from time to time (the "Loan Agreement"); (iv) all warranties
contained in this Secured Bridge Note, the other Loan Documents or
otherwise made in writing in connection with this transaction by or on
behalf of Borrower or any party to any Loan Document shall be true and correct
in all material respects; (v) Lender shall have received Uniform Commercial Code
("UCC"), judgment and tax lien searches with the Secretary of State and local
filing offices of each jurisdiction where Borrower maintains a place of
business, which searches yield results consistent with the representations
and warranties contained in this Secured Bridge Note; (vi) Borrower shall
have provided title insurance covering Lender's interest in the real property
subject to the Mortgage, in the amount of Four Million Five Hundred Thousand
and No/100 Dollars ($4,500,000.00), and containing only those exceptions that
are acceptable to Lender in its sole discretion; (vii) Borrower shall have
contributed the
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sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) to the
purchase of the Facility, and (viii) Borrower shall have caused to be
executed and delivered to Lender the Amendment No. 1 to the Loan Agreement,
containing appropriate cross-default provisions.
b. Borrower hereby irrevocably authorizes Lender to disburse
the Principal Sum by wire transfer to such bank account as may be
designated by Borrower or elsewhere if pursuant to written direction from
Borrower.
c. Lender shall enter all advances of the Principal Sum as
debits to a loan account in the name of Borrower and shall also record as
credits in the loan account all payments made by Borrower and all proceeds
of Collateral that are indefeasibly paid to Lender, and may record in the
loan account, in accordance with customary accounting practice, other
debits and credits with respect to the extension of credit contemplated by
this Secured Bridge Note.
d. Lender will account to Borrower monthly with a statement of
advances, charges and payments made pursuant to this Secured Bridge Note,
and the account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower absent Borrower's demonstration to Lender's
reasonable satisfaction that an error has occurred.
e. Borrower may prepay all or any part of the Principal Sum
outstanding without penalty, together with all interest accrued on the
outstanding Principal Sum, and all other sums that are payable pursuant to
this Secured Bridge Note.
6. Payment Office. The Principal Sum, the interest on the Principal
Sum and any other amounts payable under this Secured Bridge Note, including
but not limited to the Success Fee, are payable in lawful money of the
United States of America at the office of Lender, at 0 Xxxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxx Xxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx,
President, or at such other place as Lender may specify in writing to
Borrower. Any payment by other than immediately available funds shall be
subject to collection. Interest shall continue to accrue until the funds
by which payment is made are available to Lender for its use. Any payment
stated to be due on a day on which banks in Maryland are required or
permitted to be closed for business shall be due and payable on the next
business day (each such day, a "Business Day") and such extension of time
shall be included in the computation of interest in connection with such
payment.
7. No Presentment; Acceleration. On the Maturity Date or upon the
occurrence and the declaration of an Event of Default (as defined in
Section 12 below), the outstanding Principal Sum, accrued and unpaid
interest on the Principal Sum, and all other sums owed by Borrower to
Lender in connection with this Secured Bridge Note or the other Loan
Documents shall, upon the giving to Borrower of written notice of
acceleration by Lender, immediately become due and payable. Borrower
hereby expressly waives any presentment for payment, demand for payment,
notice of nonpayment or dishonor, protest and notice of protest of any
kind.
8. Use of Funds. Borrower covenants and agrees that the Principal
Sum shall be used to acquire the Facility.
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9. Representations. Each entity constituting Borrower hereby
warrants and represents to Lender that:
a. Borrower is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Georgia, is in good
standing as a foreign corporation in each jurisdiction in which the
character of the properties owned or leased by it or the nature of its
business makes such qualification necessary, has the corporate power and
authority to own its assets and transact the business in which it is
engaged, and has obtained all certificates, licenses and qualifications
required under all laws, regulations, ordinances, or orders of public
authorities necessary for the ownership and operation of all of its
properties and transaction of all of its business.
b. Borrower has full corporate power and authority to enter
into, execute, and deliver this Secured Bridge Note and to perform its
obligations under this Secured Bridge Note and the other Loan Documents,
all of which have been duly authorized by all necessary corporate action.
This Secured Bridge Note constitutes a valid and binding obligation of
Borrower, enforceable in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights generally and general
principles of equity.
c. The execution, delivery or performance of or under this
Secured Bridge Note will not violate or conflict with any law, rule,
regulation, order, judgment, indenture, instrument, or agreement by which
Borrower or Borrower's properties or assets are bound or affect, or
conflict with or be inconsistent with, or result in any breach of, any of
the terms, covenants or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, security interest, charge
or other encumbrance upon any of the properties or assets of Borrower,
pursuant to the terms of any indenture, mortgage, deed of trust, agreement
or other instrument to which Borrower is a party or by which Borrower's
properties or assets may be bound or to which they may be subject other
than a lien, security interest, charge or other encumbrance in favor of
Lender.
d. There are no actions, suits or other proceedings pending,
including, without limitation, any condemnation proceeding, or to the
knowledge of Borrower, threatened against or adversely affecting Borrower's
properties or assets or the validity or enforceability of this Secured
Bridge Note. To the best of Borrower's knowledge, Borrower is not in
default with respect to any order, writ, injunction, decree or demand of
any court or governmental authority. There is no litigation or proceeding,
including, without limitation, any condemnation proceeding, pending or, to
the knowledge of Borrower, threatened against or affecting Borrower's
properties or assets, or any circumstances existing that would in any manner
have a material adverse effect on Borrower's properties or assets or on the
validity or ability of Borrower to perform any obligations under this Secured
Bridge Note.
e. The financial statements of Borrower previously delivered
to Lender are true, correct and complete and fairly present the financial
condition of Borrower as of the date thereof. No material adverse change
in the financial condition of Borrower has occurred since the date of such
financial statements.
f. Borrower is the sole owner of all right, title and interest
in and to all of the Note Collateral (which term shall include the
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"Collateral" as it is defined in the Security Agreement and also the real
property subject to the Mortgage), free and clear of any lien, security
interest, charge or encumbrance.
10. Affirmative Covenants.
Borrower covenants and agrees that until this Secured Bridge Note
shall be repaid in full:
a. Financial Statements. Borrower will furnish to Lender (i)
quarterly profit and loss statements, balance sheets, cash flow reports and
projections within sixty (60) days following the end of the applicable
period, (ii) internally prepared annual projections and annual financial
statements for Borrower within sixty (60) days after the end of each of
Borrower's fiscal years; (iii) audited financial statements for each of
Borrower's fiscal years, prepared by Xxxxx, Xxxxxxx & Xxxxxxxxx or another
accounting firm reasonably acceptable to Lender, within one hundred
thirty-five (135) days after the end of each such fiscal year; and (iv)
promptly upon receipt thereof, copies of any reports submitted to Borrower
by its independent accountants in connection with any interim audit of the
books of Borrower and copies of each management control letter provided to
Borrower by its independent accountants.
b. Existence, Good Standing, and Compliance with Laws.
Borrower will do or cause to be done all things necessary to obtain and
keep in full force and effect all corporate existence, rights, licenses,
privileges, and franchises of Borrower necessary to the ownership of its
property or the conduct of its business, and comply with all applicable
present and future laws, ordinances, rules, regulations, orders and decrees
of any governmental authority having or claiming jurisdiction over
Borrower.
c. Taxes and Charges. Borrower will timely file all tax
reports and pay and discharge all taxes, assessments and governmental
charges or levies imposed upon Borrower, or its income or profits or upon
its properties or any part thereof, before the same shall be in default and
before the date on which penalties attach thereto, as well as all lawful
claims for labor, material, supplies or otherwise that, if unpaid, might
become a lien or charge upon the properties, or any part, of Borrower;
provided, however, that Borrower shall not be required to pay and discharge
or cause to be paid and discharged any such tax, assessment, charge, levy
or claim so long as the validity or amount thereof shall be contested in
good faith and by appropriate proceedings by Borrower, and Borrower shall have
set aside on its books adequate reserve therefor; and provided further, that
such deferment of payment is permissible only so long as Borrower's title to,
and its right to use, the Note Collateral is not adversely affected thereby
and Lender's lien and priority on the Note Collateral are not adversely
affected, altered or impaired thereby.
d. Insurance. Borrower will carry adequate public liability
and professional liability insurance with licensed companies reasonably
satisfactory to Lender in such amounts and against such risks as is
customarily maintained by similar businesses and by owners of similar
property in the same general area.
e. Maintenance of Property. Borrower will maintain, keep and
preserve all of the Note Collateral in good repair, working order and
condition and from time to time make all necessary and proper repairs,
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renewals, replacements, betterments and improvements thereto, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times.
f. Litigation and Other Proceedings. Borrower shall give
prompt notice to Lender of any litigation, arbitration, or other proceeding
before any court or governmental authority against or affecting Borrower if
the uninsured amount claimed is more than $50,000.00.
g. Licensure; Medicare/Medicaid Cost Reports. Borrower will
maintain all certificates of need, provider numbers and licenses necessary
to conduct its business as presently conducted, and take any steps required
to comply with any such new or additional requirements that may be imposed
on providers of medical products and services. If required, all
Medicaid/Medicare cost reports will be properly filed.
h. Visits and Inspections. Borrower agrees to permit
representatives of Lender, from time to time, as often as may be reasonably
requested (but not more than four (4) times per year unless there is an
Event of Default), but only after reasonable advance written notice and
during normal business hours, to visit and inspect the properties of
Borrower, and to inspect, audit and make extracts from its books and
records, and discuss with its officers, its employees and its independent
accountants, Borrower's business, assets, liabilities, financial condition,
business prospects and results of operations.
i. Further Assurances. Borrower will defend its title to the
Note Collateral against all persons and will, upon request of Lender, (i)
furnish such further assurances of title as may be reasonably required by
Lender, (ii) deliver and execute or cause to be delivered and executed, in
form and content reasonably satisfactory to Lender, any financing
statements, notices, certificates of title, and other documents and pay the
cost of filing or recording the same in all public offices deemed
reasonably necessary by Lender, as well as any recordation, documentary, or
transfer tax required by law to be paid in connection with such filing or
recording, and (iii) do such other acts as Lender may reasonably request in
order to perfect, preserve, maintain, or continue the perfection of
Lender's security interest in the Note Collateral and/or its priority.
j. Debt Service Coverage. Beginning after the first
anniversary of the date of this Secured Bridge Note and continuing during
each calendar month while this Secured Bridge Note remains outstanding,
Borrower's EBITDA shall equal or exceed 1.25 times the aggregate of
Borrower's interest and principal obligations with respect to such month,
determined in accordance with GAAP, and based upon the financial statements
delivered to Lender in accordance with Section 10(a) above. "EBITDA" is
defined to mean, for any period, the net income or net loss of Borrower,
determined in accordance with generally accepted accounting principles
("GAAP"), plus the sum of (i) interest expense, (ii) income tax expense,
(iii) depreciation expense, and (iv) amortization expense of Borrower,
determined in each case in accordance with GAAP.
11. Negative Covenants.
Borrower covenants and agrees that until this Secured Bridge Note
shall be repaid in full:
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a. Borrowing. Borrower will not create, incur, assume or
suffer to exist any liability for borrowed money except: (i) indebtedness
to Lender or HCFP; (ii) indebtedness of Borrower secured by mortgages,
encumbrances or liens; (iii) accounts payable to trade creditors and
current operating expenses (other than for borrowed money) that are not
aged more than ninety (90) days from the billing date, in each case
incurred in the ordinary course of business and paid within such time
period, unless the same are being contested in good faith and by
appropriate and lawful proceedings, and Borrower shall have set aside such
reserves, if any, with respect thereto as are required by generally
accepted accounting principles and deemed adequate by Borrower and its
independent accountants; (iv) unsecured borrowings incurred in the
ordinary course of its business and not exceeding $250,000.00 in the
aggregate outstanding at any one time.
b. Joint Ventures. Borrower will not invest, directly or
indirectly, an aggregate of more than $50,000.00 in any joint venture for
any purpose without the prior written consent of Lender.
c. Liens and Encumbrances. Borrower will not create, incur,
assume or suffer to exist any mortgage, pledge, lien or other encumbrance
of any kind (including the charge upon property purchased under a
conditional sale or other title retention agreement) upon, or any security
interest in, any of the Note Collateral, whether now owned or hereafter
acquired, except those set forth on Schedule 11(c) to this Secured Bridge
Note.
d. Merger, Acquisition, or Sale of Assets. Borrower will not
enter into any merger or consolidation with or acquire all or substantially
all of the assets of any Person unless (i) Borrower gives prior written
notice of the proposed transaction to Lender and (ii) either (A) Borrower
is the surviving entity of such transaction for accounting purposes under
GAAP, or (B) Borrower holds a controlling interest in the surviving entity
and, in either case, the surviving legal entity executes and delivers to
Lender all documents deemed necessary by Lender (as determined solely by
Lender in its reasonable commercial judgment) to protect Lender's rights
under this Secured Bridge Note and the other Loan Documents and any other
of its rights to the Note Collateral, all at Borrower's cost (including,
without limitation, all lien search costs and recording fees). Borrower will
not sell, lease, or otherwise dispose of any of its assets except in the
ordinary course of its business without the prior written notice to, and the
prior express written consent of, Lender, which consent may be withheld in
Lender's discretion.
e. Intentionally deleted.
f. Distributions. Upon the occurrence, and during the
continuation of, an Event of Default, Borrower will not make, declare or
pay any dividends or distributions.
g. Loans. Without the prior written consent of Lender, which
consent will not be unreasonably withheld, Borrower will not make loans or
advances to any third person or entity other than (i) trade credit extended
in the ordinary course of its business, (ii) advances for business travel
and similar temporary advances in the ordinary course of business to
officers, members, directors, and employees, or (iii) loans or advances to
Affiliates in an aggregate amount less than $50,000.00.
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h. Contingent Liabilities. Borrower will not assume,
guarantee, endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any third person or entity, except (i) by the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business or (ii) for obligations of
Affiliates or Subsidiaries in an aggregate amount less than $50,000.00.
i. Intentionally deleted.
j. Certificates of Need. Borrower will not amend, alter,
suspend or terminate or make provisional in any material way, any
certificate of need or provider number without the prior written consent of
Lender, which consent shall not be unreasonably withheld.
k. Transactions with Affiliates and Subsidiaries. Borrower
will not enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property, or the loaning or giving of funds
to any Affiliate or subsidiary, except in the ordinary course of business
and pursuant to the reasonable requirements of Borrower's business and upon
terms substantially the same and no less favorable to Borrower as it would
obtain in a comparable arm's length transaction with any Person not a
subsidiary, and so long as the transaction is not otherwise prohibited
under this Secured Bridge Note.
For purposes of the foregoing, the term "Affiliate" means, with
respect to a specified Person, any Person directly or indirectly
controlling, controlled by, or under common control with the specified
Person, including without limitation their stockholders, members and any
Affiliates of such Persons. A Person shall be deemed to control a
corporation, limited liability company or other entity if the Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and business of the corporation or other
entity, whether through the ownership of voting securities, by contract, or
otherwise. For purposes of the foregoing definition, the term "Person"
means an individual, partnership, corporation, trust, joint venture, joint
stock company, limited liability company, association, unincorporated
organization, governmental authority, or any other entity.
l. Change in Capital Structure. There shall occur no change
in Borrower's ownership structure as set forth in Schedule 11(1) that would
cause any change in the control of Borrower without the prior written
consent of Lender.
m. Contracts and Agreements. Borrower will not become or be a
party to any contract or agreement that would breach this Secured Bridge
Note, or breach any other instrument, agreement, or document to which
Borrower is a party or by which it is or may be bound.
n. Truth of Statements and Certificates. Borrower will not
furnish to Lender any certificate or other document that contains any
untrue statement of a material fact or that omits to state a material fact
necessary to make it not misleading in light of the circumstances under
which it was furnished.
12. Events of Default. The following events are each an "Event of
Default " under this Secured Bridge Note:
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a. Borrower (i) fails to make any payment of principal within
five (5) days of the date due, or (ii) fails to make any payment of
interest, fees or other amounts owed to or for the account of Lender within
five (5) days of the date under this Secured Bridge Note and the payment of
such interest, fees or other amounts remains unpaid for five (5) days
after the date that the payment is due; or
b. Borrower has made any representations or warranties in this
Secured Bridge Note, the other Loan Documents, any financial statement
delivered to Lender or in any other writing in connection with this
transaction that contains any untrue statement of a material fact or omits
a material fact necessary to make the statements contained in this Secured
Bridge Note, the other Loan Documents, the financial statements or the
other documents not misleading; or
c. Borrower shall fail to perform or observe, or cause to be
performed or observed, any other term, obligation, covenant, condition or
agreement contained in this Secured Bridge Note, and any such failure shall
have continued for a period of twenty (20) days after Lender shall have
given written notice of the failure to Borrower; provided, however, that if
the default is susceptible to cure but cannot be cured within the twenty
(20) day period, but Borrower promptly commences the cure of the default
and diligently prosecutes the cure to completion, then no Event of Default
shall be deemed to occur under this Secured Bridge Note unless the default
remains uncured forty-five (45) days after the giving of the written notice
by Lender; or
d. Borrower shall (i) apply for, or consent in writing to, the
appointment of a receiver, trustee or liquidator; or (ii) file a voluntary
petition seeking relief under the Bankruptcy Code, or be unable, or admit
in writing Borrower's inability, to pay their debts as they become due; or
(iii) make a general assignment for the benefit of creditors; or (iv) file
a petition or an answer seeking reorganization or an arrangement or a
readjustment of debt with creditors, apply for or take advantage of any
insolvency, bankruptcy, suspension of payments, reorganization, debt
arrangement, liquidation, dissolution or similar event, under the law of
the United States or of any state in which Borrower is a resident; or (v)
file an answer admitting the material allegations of a petition filed against
Borrower in any such bankruptcy, reorganization or insolvency case or proceeding
or (vi) take any action authorizing, or in furtherance of, any of the foregoing;
or
e. (i) an involuntary case is commenced against Borrower and
the petition is not dismissed within sixty (60) days after the
commencement of the case or (ii) an order, judgment or decree shall be
entered by any court of competent jurisdiction on the application of a
creditor adjudicating Borrower bankrupt or insolvent, or appointing a
receiver, trustee or liquidator of Borrower or ordering the sale of all or
substantially all of the assets of Borrower, and the order, judgment or
decree shall continue unstayed and in effect for a period sixty (60) days
or shall not be discharged within ten (10) days after the expiration of any
stay thereof; or
f. Any obligation of Borrower for the payment of borrowed
money the outstanding amount of which is greater than $100,000 is not paid
when due or within any applicable grace period, or the obligation becomes
or is declared to be due and payable before its expressed maturity; or
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g. One or more final judgments against Borrower or attachments
against its property that are not fully and unconditionally covered by
insurance shall be rendered by a court of record and shall remain unpaid,
unstayed on appeal, undischarged, unbonded and undismissed for a period of
twenty (20) days; or
h. An Event of Default occurs under the Security Agreement
(as the term is defined in the Security Agreement), a Default occurs under
the Mortgage (as the term is defined in the Mortgage), or a breach occurs
under any of the other Loan Documents; or
i. An Event of Default occurs under the Loan Agreement; or
j. Borrower ceases any material portion of its business
operations as currently conducted; or
k. There shall occur a material adverse change in the
financial condition or business of Borrower, which change shall have
continued unremedied for a period of twenty (20) days after written notice
from Lender.
13. Lender's Rights.
a. Upon the occurrence of an Event of Default, Lender may, in
addition to the remedies set forth in Section 7 above, proceed, to the
extent permitted by law, to protect and enforce its rights either by suit
in equity or by action at law, or both, whether for the specific
performance of any covenant, condition or agreement contained in this
Secured Bridge Note or in aid of the exercise of any power granted in this
Secured Bridge Note, or proceed to enforce the payment of this Secured
Bridge Note or to enforce any other legal or equitable right of Lender. No
right or remedy in this Secured Bridge Note, the other Loan Documents or in
other agreement or instrument to the benefit of Lender is intended to be
exclusive of any other right or remedy, and each and every such right or
remedy shall be cumulative and shall be in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise.
b. If an Event of Default has occurred pursuant to this
Secured Bridge Note and Borrower has not paid all amounts outstanding,
together with interest accrued on such outstanding amounts, upon demand by
Lender, then Borrower shall pay to Lender interest on such outstanding
amounts at the Default Interest Rate until the date this Secured Bridge
Note is paid in full. Borrower promises to pay all costs of collection,
including reasonable attorneys' fees, if this Secured Bridge Note is
referred to an attorney for collection after the Event of Default.
14. No Defenses. Borrower's obligations under this Secured Bridge
Note shall not be subject to any set-off, counterclaim or defense to
payment that Borrower now has.
15. No Waiver. No failure or delay on the part of Lender in
exercising any right, power or privilege under this Secured Bridge Note or
the other Loan Documents, nor any course of dealing between Borrower and
Lender, shall operate as a waiver of the right, power or privilege nor
shall a single or partial exercise of any right, power or privilege
preclude any other or further exercise or the exercise of the right, power
or privilege.
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16. Writing Required. No modification or waiver of any provisions
of this Secured Bridge Note or any other Loan Document, nor consent to any
departure by Borrower, shall in any event be effective, irrespective of any
course of dealing between the parties, unless the modification, waiver or
consent shall be in a writing executed by Lender, and then the
modification, waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice
or demand in the same, similar or other circumstances.
17. Usury Limitation. Notwithstanding anything to the contrary in
this Secured Bridge Note, Lender shall never be entitled to receive,
collect or apply as interest any amount in excess of the maximum rate of
interest permitted to be charged by applicable law; and if Lender receives,
collects or applies as interest any such excess, the amount that would be
excessive interest shall be applied to the reduction of the Principal Sum;
and if the Principal Sum is paid in full, any remaining excess shall be
paid to Borrower. In determining whether or not the interest paid or
payable in any specific case exceeds the highest lawful rate, Lender and
Borrower shall, to the maximum extent permitted under applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather
than as interest; and (ii) "spread" the total amount of interest throughout
the entire term of the obligation so that the interest rate is deemed to
have been uniform throughout the entire term.
18. Notices. Any notice or demand given under this Secured Bridge
Note shall be given by delivering it, by mailing it by certified or
registered mail, postage prepaid, return receipt requested, or by sending
it by prepaid overnight courier service, in each case addressed to Borrower
at c/o NewCare Health Corporation, 0000 Xxxx Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxx 00000 Attention: President and General Counsel. Any
notice to be given to Lender under this Secured Bridge Note shall be given
by delivering it, by mailing it by certified or registered mail, return
receipt requested, or by sending it by prepaid overnight courier service,
in each case addressed to Lender at: 0 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxx
Xxxxx, Xxxxxxxx 00000, Attention: Xxxxx X. Xxxxx, President, or at such other
place as Lender may specify in writing to Borrower. Each party may designate a
change of address by notice to the other given in accordance with this Section
18 at least fifteen (15) days before the change of address is to become
effective. A notice given under this Secured Bridge Note shall be deemed
received five (5) days after it is sent by regular mail, or upon receipt when it
is delivered according to the requirements of this Section 18, or if sent by
courier on the next Business Day following deposit with the courier.
19. Section Headings. The headings of the several paragraphs of
this Secured Bridge Note are inserted solely for convenience of reference
and are not a part of and are not intended to govern, limit or aid in the
construction of any term or provision.
20. Severability. Any provision contained in this Secured Bridge
Note that is prohibited or unenforceable in any respect in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of the
prohibition or unenforceability without invalidating the remaining
provisions. Moreover, any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable the provision in
any other jurisdiction.
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21. Survival of Terms. All covenants, agreements, representations
and warranties made in this Secured Bridge Note or in any financial
statements delivered pursuant to this Secured Bridge Note shall survive
Borrower's execution and delivery of this Secured Bridge Note to Lender and
shall continue in full force and effect so long as this Secured Bridge Note
or any other obligation of Borrower under this Secured Bridge Note shall be
outstanding and unpaid or any other obligation of Borrower to Lender or its
affiliates shall remain unperformed.
22. Choice of Law; Consent to Jurisdiction. THIS SECURED BRIDGE NOTE
IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF MARYLAND WITHOUT RESPECT TO ANY OTHERWISE APPLICABLE CONFLICTS-OF-LAWS
PRINCIPLES, BOTH AS TO INTERPRETATION AND PERFORMANCE, AND THE PARTIES
EXPRESSLY CONSENT AND AGREE TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF MARYLAND AND THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF MARYLAND AND TO THE LAYING OF VENUE IN MARYLAND, WAIVING ALL
CLAIMS OR DEFENSES BASED ON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE,
INCONVENIENT FORUM OR THE LIKE. BORROWER HEREBY CONSENTS TO SERVICE OF
PROCESS BY MAILING A COPY OF THE SUMMONS TO BORROWER, BY CERTIFIED OR
REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER'S ADDRESS SET FORTH IN
SECTION 18 ABOVE.
23. Waiver of Trial by Jury. EACH OF BORROWER AND LENDER HEREBY (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUES TRIABLE OF
RIGHT BY A JURY, AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE
EXTENT THAT ANY SUCH RIGHT SHALL NOW HEREAFTER EXIST. THIS WAIVER OF RIGHT
TO TRIAL BY JURY IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY EACH OF
BORROWER AND LENDER, AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY
EACH INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD
OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT
THIS SECURED BRIDGE NOTE TO ANY COURT HAVING JURISDICTION OVER THE SUBJECT
MATTER AND THE PARTIES TO THIS NOTE, SO AS TO SERVE AS CONCLUSIVE EVIDENCE
OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, EACH OF
BORROWER AND LENDER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
IN WITNESS WHEREOF, the undersigned has executed this Secured Bridge Note
as of the day and year first above written.
BORROWER:
ATTEST: NEWCARE HOSPITAL CORPORATION.
a Georgia corporation
By: /s/ Xxxxxx X. Xxxx By: /s/ Xxxxx Xxxxxxx
Name: Xxxxxx X. Xxxx Name: Xxxxx Xxxxxxx
Its: Secretary Its: President
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made as of the 31st day
of July, 1997, by NEWCARE HOSPITAL CORPORATION, a Georgia corporation
("Pledgor"), in favor of HCFP FUNDING II, INC., a Delaware corporation
("Lender").
RECITALS
WHEREAS, Lender has agreed to make a loan (the "Loan") in the initial
principal amount of FOUR MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($4,500,000.00) to Pledgor, which loan is evidenced by that certain Secured
Bridge Note of even date executed by Pledgor in favor of Lender (the
"Secured Note"); and
WHEREAS, the proceeds of the Loan are to be used by Pledgor for the
purposes described in the Secured Note; and
WHEREAS, Lender has required, as a condition to extending these
financial accommodations, the execution and delivery of this Agreement by
Pledgor;
NOW, THEREFORE, to secure the prompt payment of all past, present,
and future indebtedness, liabilities, and obligations of Pledgor to Lender
of any nature whatsoever in connection with the Loan, together with all
obligations of Pledgor to Lender under this Agreement, the Secured Note,
the first priority Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing of even date executed by Pledgor in favor of
Lender encumbering that certain real property at 000 Xxxx Xxxx Xxxxxx,
Xxxxxxx, Xxxxxx 00000 (the "Mortgage") (this Agreement, the Secured Note,
the Mortgage are collectively referred to as the "Term Loan Documents"),
and under that certain Loan and Security Agreement dated June 30, 1997, as
amended, by and between Pledgor, NewCare Health Corporation and certain of
its affiliates and HCFP Funding, Inc. ("HCFP"), as it may be amended or
restated from time to time (the "Revolving Loan Agreement"), the Revolving
Credit Note of even date in favor of HCFP and the other documents related
to the Revolving Loan Agreement (collectively, the "Revolving Loan
Documents"), and the performance by Pledgor of all of the terms,
conditions, and provisions of the Term Loan Documents and the Revolving
Loan Documents (the Term Loan Documents and the Revolving Loan Documents
are collectively referred to as the "Loan Documents"), Pledgor agrees with
Lender as follows:
1. Collateral. To secure the payment and performance of Pledgor's
Liabilities and Pledgor's performance of its obligations under the Loan
Documents, Pledgor hereby grants to Lender a security interest in and a
lien upon the following property of Pledgor:
(a) Inventory. All of Pledgor's now owned or hereafter
acquired inventory of every description which is held by Pledgor for sale
or lease or is furnished by Pledgor under any contract of service or is
held by Pledgor as raw materials, work in process or materials used or
consumed in a business, whether now owned or hereafter acquired, wherever
located, and as the same may now and hereafter from time to time be
constituted, together with all cash and non-cash proceeds and products
thereof (the "Inventory").
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(b) Accounts. All of Pledgor's accounts (as defined in the
applicable Uniform Commercial Code) and each and every right of Pledgor to
(i) the payment of money or (ii) the receipt or disbursement of products,
goods, services or other valuable consideration, whether such right now
exists or hereafter arises, whether such right arises out of a sale, lease
or other disposition of property or out of a rendering of services, or any
other transaction or event, whether such right is created, generated or
earned by Pledgor or by some other person who subsequently transfers its
interest to Pledgor, whether such right is or is not already earned by
performance and howsoever such right may be evidenced, together with all
other rights and interests (including all liens and security interests)
which Pledgor may at any time by law or agreement have against any person
obligated to make any such payment or against any property of any such
person (including, without limitation, all notes, notes receivable, drafts,
acceptances, and similar instruments and documents) ("Accounts"), together
with (i) all cash and non-cash proceeds thereof, (ii) all of Pledgor's
right, title and interest in, to and in respect of all goods relating to,
or which by sale have resulted in, Accounts, including, without limitation,
all goods described in invoices or other documents or instruments with
respect to, or otherwise representing or evidencing, any Account, and all
returned, reclaimed or repossessed goods, and all cash and non-cash
proceeds and products of all such goods, and (iii) all of Pledgor's right,
title and interest, and all of Pledgor's rights, remedies, security and
liens, in, to and in respect of the Accounts, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or
secured party, guaranties or other contracts of suretyship with respect to
the Accounts, deposits or other security for the obligation of any Account
debtor, and credit and other insurance.
(c) Deposit Accounts. All of Pledgor's Deposit Accounts, as
that term is defined in the UCC.
(d) General Intangibles. All of Pledgor's general intangibles
(including, without limitation, any proceeds from insurance policies after
payment of prior interests), patents, unpatented inventions, trade secrets,
copyrights, contract rights, goodwill, literary rights, rights to
performance, rights under licenses, choses-in-action, claims, information
contained in computer media (such as data bases, source and object codes,
and information therein), things in action, trademarks and trademarks
applied for (together with the goodwill associated therewith) and
derivatives thereof, trade names, including the right to make, use, and
vend goods utilizing any of the foregoing, and permits, licenses,
certifications, authorizations and approvals, and the rights of Pledgor
thereunder, issued by any governmental, regulatory, or private authority,
agency, or entity whether now owned or hereafter acquired, together with
all cash and non-cash proceeds and products thereof.
(e) Chattel Paper. All of Pledgor's chattel paper, whether
now owned and hereafter existing, acquired, or created, together with (i)
all moneys due and to become due thereon, (ii) all cash and non-cash
proceeds thereof, and (iii) all returned, rejected, or repossessed goods,
the sale or lease of which shall have given or shall give rise to chattel
paper, and all cash and non-cash proceeds and products of all such goods.
Additionally, Pledgor assigns and grants to Lender a security interest in
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all property and goods both now owned and hereafter acquired by Pledgor
which are sold, leased, secured, are the subject of, or otherwise covered
by, Pledgor's chattel paper, together with all rights incident to such
property and goods and all cash and non-cash proceeds thereof (the "Chattel
Paper").
(f) Records. All books, records, ledger cards, computer
programs and other property at any time evidencing or relating to the
Accounts ("Records").
(g) All Furniture, Fixtures and Equipment. All of Pledgor's
machinery, equipment, computer equipment, tools, tooling, furniture,
fixtures, goods, supplies, materials and work in process, whether now owned
or hereafter acquired, together with (i) all additions, parts, fittings,
accessories, special tools, attachments, and accessions now and hereafter
affixed thereto and/or used in connection therewith, (ii) all replacements
thereof and substitutions therefor, and (iii) all cash and non-cash
proceeds and products thereof. All such fixtures are or will be attached to
the real property encumbered by the Mortgage. (Such equipment and fixtures
are collectively referred to as the "Fixtures and Equipment").
(h) Cash and Securities. Any and all moneys, reserves,
securities, cash, cash equivalents, balances, credits, investment property
and interest and dividends on and proceeds of any of the foregoing now or
hereafter held or received by, or in transit to, Lender from or for
Pledgor, whether for safekeeping, pledge, custody, transmission, collection
or otherwise, and all of Pledgor's deposits (general or special), balances,
sums and credits with Lender at any time existing ("Cash").
The term "Collateral" as used herein means each and all of the
items of Collateral described above, and the term "proceeds" as used herein
includes, without limitation, the proceeds of all insurance policies
covering all or any part of such items of Collateral.
2. Title to Collateral. Pledgor warrants and represents that (i) it
is the lawful owner of the Collateral, and has the full right, power, and
authority to convey, transfer, and grant the security title and security
interest in the Collateral granted herein to Lender; (ii) the Collateral is
not, and so long as this Agreement is in effect will not be, subject to any
liens, claims, security interests, encumbrances, taxes, or assessments,
however described or denominated, except as set forth on Schedule A to this
Agreement; (iii) no financing statement, mortgage, notice of lien, deed of
trust, deed to secure debt, security agreement, or any other agreement or
instrument creating an encumbrance, lien, or charge against any of the
Collateral is in existence or on file in any public office, other than as
set forth on Schedule A to this Agreement; and (iv) all information with
respect to the Collateral and Pledgor's Liabilities, or any of them, set
forth in any written schedule, certificate, or other document at any time
heretofore or hereafter furnished by Pledgor to Lender, and all other
written information heretofore or hereafter furnished by Pledgor to Lender,
is and will be true and correct in all material respects as of the date
furnished.
3. Further Assurances. Pledgor will defend its title to the
Collateral against all persons and will, upon request of Lender, (a)
furnish such further assurances of title as may be required by Lender,
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(b) deliver and execute or cause to be delivered and executed, in form and
content reasonably satisfactory to Lender, any financing statements,
notices, certificates of title, and other documents and pay the cost of
filing or recording the same in all public offices reasonably deemed
necessary by Lender, as well as any recordation, documentary, or transfer
tax required by law to be paid in connection with such filing or recording,
and (c) do such other acts as Lender may reasonably request in order to
perfect, preserve, maintain, or continue the perfection of Lender's
security interest in the Collateral and/or its priority.
4. Accounts, etc. Until such time as Lender shall notify Pledgor
in writing of the revocation of such power and authority, Pledgor will, at
its own expense, diligently attempt to collect, as and when due, all
amounts owing under the Accounts, and hold all funds received from the
Accounts separately and in trust for Lender. Until an Event of Default
shall occur, however, Pledgor may use or consume in the ordinary course of
its business any such collections on the Accounts, any Cash, and any other
proceeds of any Collateral that Pledgor has the right to sell under this
Agreement, in any lawful manner not inconsistent with this Agreement and
the other Loan Documents. After an Event of Default, upon request of
Lender, Pledgor will, at its own expense, notify any parties obligated on
any of the Accounts to make payments to Lender and will hold in trust and
immediately forward to Lender all payments received by Pledgor in the form
received, with all necessary endorsements thereon for collection by Lender.
Pledgor hereby indemnifies and holds Lender harmless from and against all
liabilities and expenses, including attorney's fees, on account of any
claim asserted against Lender with respect to any Account.
5. Transfer and Other Liens. Pledgor will not sell, lease,
transfer, exchange, or otherwise dispose of the Collateral, or any part
thereof, except for sales and dispositions of Collateral that is obsolete
and being replaced and of Inventory in the ordinary course of business,
without the prior written consent of Lender, and Pledgor will not permit
any lien, security interest, or other encumbrance to attach to the
Collateral, or any part thereof, other than those in favor of Lender or
those set forth on Schedule A to this Agreement or those specifically
permitted by Section 3(b) of the Mortgage.
6. Books and Records. Pledgor will furnish to Lender promptly upon
request, certified by an officer of Pledgor and in the form and content
specified by Lender, lists of purchasers of inventory, aging of accounts,
aggregate cost or wholesale market value of inventory, schedules of
equipment, and other data concerning the Collateral as Lender may from time
to time specify, and xxxx its books and records in a manner satisfactory to
Lender so that Lender's rights in and to the Collateral will be shown.
7. Name of Pledgor, Place(s) of Business, and Location of
Collateral. Pledgor represents and warrants that its correct legal name is
as specified on the signature lines of this Agreement, and each legal or
trade name of Pledgor for the previous five (5) years (if different from
Pledgor's current legal name) is as specified below the signature lines of
this Agreement. Without the prior written consent of Lender, which consent
shall not be unreasonably withheld, Pledgor will not change its name,
dissolve, merge, or consolidate with any other person. Pledgor warrants
that the address of Pledgor's chief executive office and the
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address of each other place of business of Pledgor are as specified below
the signature lines of this Agreement. Except for mobile equipment, the
Collateral and all books and records pertaining to the Collateral have
been, are, and will be located at Pledgor's chief executive office
specified below or at any other place of business which may be specified
below. Without the prior written consent of Lender, which consent shall
not be unreasonably withheld, Pledgor will not change the location of any
Collateral to any place not specified below.
Without prior written notice to Lender, Pledgor will not open any new place
of business. Pledgor will immediately advise Lender in writing of the
opening of any new place of business and of any change in the location of
the places where the Collateral or any part thereof, or the books and
records concerning the Collateral or any part thereof, are kept.
8. Care of Collateral. Pledgor will maintain the Collateral in good
condition, reasonable wear and tear excepted, and excepting any loss,
damage, or destruction that is fully covered by proceeds of insurance, and
will not do or permit anything to be done to the Collateral that may impair
its value or that may violate the terms of any insurance covering the
Collateral, or any part. Lender shall have no duty to, and Pledgor hereby
releases Lender from all claims for loss or damage caused by the failure
to, collect or enforce any Account or Chattel Paper or to preserve rights
against prior parties to the Collateral. Pledgor will use the Collateral
for lawful purposes only, with all reasonable care and caution and in
conformity in all material respects with all applicable laws, ordinances,
and regulations.
9. Insurance. Pledgor will maintain the insurance required by the
Note and the Mortgage.
10. Taxes. Subject to Pledgor's right to contest as provided in the
Secured Note, Pledgor will pay as and when due and payable all taxes,
levies, license fees, assessments, and other impositions levied on the
Collateral or any part thereof or for its use and operation.
11. Specific Assignments. After the occurrence of an Event of
Default, promptly upon request by Lender, Pledgor will execute and deliver
to Lender written assignments, endorsements, and/or schedules, in form and
content satisfactory to Lender, of specific Chattel Paper and Accounts or
groups of Accounts or Chattel Paper, but the security interest of Lender
hereunder shall not be limited in any way by such assignments.
12. Delivery of Chattel Paper. After the occurrence of an Event of
Default, promptly upon request by Lender, Pledgor will deliver, assign, and
endorse to Lender all Chattel Paper and all other documents held by Pledgor
in connection therewith.
13. Government Contracts. If any Account or Chattel Paper arises
out of a contract or contracts with the United States of America or any
department, agency, or instrumentality thereof, other than contracts of
the type specified on Schedule B to this Agreement, Pledgor shall promptly
notify Lender thereof in writing and execute any instruments or take any
steps required by Lender in order that all moneys due or to
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become due under such contract or contracts shall be assigned to Lender and
notice thereof given under the Federal Assignment of Claims Act or other
applicable law.
14. Collateral Account. If all or any part of the Collateral at any
time consists of Inventory, Accounts, or Chattel Paper, other than those
arising from contracts of the type specified on Schedule B to this
Agreement, Pledgor will, upon the request of Lender at any time and from
time to time after the occurrence, and during the continuation of, an Event
of Default hereunder, deposit or cause to be deposited to a bank account
designated by Lender and from which Lender alone has power of access and
withdrawal (the "Collateral Account") all checks, drafts, cash, and other
remittances in payment or on account of payment of such Inventory,
Accounts, or Chattel Paper and the cash proceeds of any returned goods, the
sale or lease of which gave rise to an Account or Chattel Paper (all of the
foregoing herein collectively referred to as "Items of Payment"). Pledgor
shall deposit the Items of Payment for credit to the Collateral Account
within two (2) business days of the receipt thereof, and in precisely the
form received, except for the endorsement of Pledgor where necessary to
permit the collection of the Items of Payment, which endorsement Pledgor
hereby agrees to make. Pending such deposit, Pledgor will not commingle
any of the Items of Payment with any of its other funds or property but
will hold them separate and apart. Lender may at any time and from time to
time apply the whole or any part of the collected funds credited to the
Collateral Account against Pledgor's Liabilities or credit such collected
funds to a banking account of Pledgor with Lender, the order and method of
such application to be in the sole discretion of Lender.
15. Rights of Lender and Duties of Pledgor. If all or any part of
the Collateral at any time consists of Inventory, Accounts, or Chattel
Paper, Lender may at any time and from time to time after the occurrence of
an Event of Default hereunder (a) notify the account debtors obligated on
any of the Collateral to make payments thereon directly to Lender, and to
take control of the cash and non-cash proceeds of any such Collateral; (b)
charge to any banking account of Pledgor with Lender any Item of Payment
credited to the Collateral Account which is dishonored by the drawee or
maker thereof; (c) compromise, extend, or renew any of the Collateral or
deal with the same as it may deem advisable; (d) release, make exchanges or
substitutions for, or surrender all or any part of the Collateral; (e)
place under Lender's control at Pledgor's place of business all books,
records, ledger sheets, correspondence, invoices, and documents relating to
or evidencing any of the Collateral or, without cost or expense to Lender,
make such use of Pledgor's place(s) of business as may be reasonably
necessary to administer, control, and collect the Collateral; (f) repair,
alter, or supply goods, if any, necessary to fulfill in whole or in part
the purchase order of any account debtor; (g) demand, collect, receipt for,
and give renewals, extensions, discharges, and releases of any of the
Collateral; (h) institute and prosecute legal and equitable proceedings to
enforce collection of, or realize upon, any of the Collateral; (i) settle,
renew, extend, compromise, compound, exchange, or adjust claims with
respect to any of the Collateral or any legal proceedings brought with
respect thereto; (j) endorse the name of Pledgor upon any Items of Payment
relating to the Collateral or upon any proof of claim in bankruptcy against
an account debtor; and (k) receive and open all mail addressed to Pledgor
and notify postal authorities to change the address for the delivery of
mail to Pledgor to such address as Lender may designate. For
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purposes of taking the actions described in subsections (a) through (k)
only, Pledgor hereby irrevocably appoints Lender as its attorney-in-fact
(which appointment being coupled with an interest is irrevocable while any
of Pledgor's Liabilities remain unpaid), with power of substitution, in the
name of Lender or in the name of Pledgor or otherwise, for the use and
benefit of Lender, but at the cost and expense of Pledgor and without
notice to Pledgor.
16. Performance by Lender. If Pledgor fails to perform, observe, or
comply with any of the conditions, terms, or covenants contained in this
Agreement, Lender, after twenty (20) days prior written notice to Pledgor
but without waiving or releasing any of Pledgor's Liabilities or any Event
of Default, may (but shall be under no obligation to) at any time
thereafter perform such conditions, terms, or covenants for the account and
at the expense of Pledgor, and may enter upon any place of business or
other premises of Pledgor for that purpose and take all such action
thereon as Lender may consider necessary or appropriate for such purpose.
All sums paid or advanced by Lender in connection with the foregoing and
all costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) incurred in connection therewith
(collectively, the "Expense Payments") together with interest thereon at a
simple per annum rate of interest which is equal to the then highest rate
of interest charged on the principal of any of Pledgor's Liabilities, plus
one percent (1%) per annum, (but in no event higher than the maximum
interest rate permitted by applicable law) from the date of payment until
repaid in full, shall be paid by Pledgor to Lender on demand and shall
constitute and become a part of Pledgor's Liabilities secured hereby.
17. Default. The occurrence of any one or more Events of Default
under the Secured Note or any Default under the Mortgage shall constitute
an event of default (an "Event of Default") under this Agreement.
18. Rights and Remedies upon Default. Upon the occurrence of an
Event of Default under this Agreement, (and in addition to all of its other
rights, powers, and remedies under this Agreement), Lender may, at its
option, and immediately upon delivery of notice to Pledgor, declare the
unpaid balance of Pledgor's Liabilities to be immediately due and payable.
The occurrence or non-occurrence of an Event of Default shall in no manner
impair the ability of Lender to demand payment of any portion of Pledgor's
Liabilities which are payable on demand. Lender shall have all of the
rights and remedies of a secured party under the applicable Uniform
Commercial Code. Upon the occurrence of an Event of Default hereunder,
Pledgor, upon demand by Lender, shall assemble the Collateral and make it
available to Lender at a place designated by Lender which is mutually
convenient to both parties. Upon the occurrence of an Event of Default
under this Agreement, Lender or its agents may enter upon Pledgor's
premises to take possession of the Collateral, to remove it, to render it
unusable, or to sell or otherwise dispose of it, all without judicial
process or proceedings.
Any written notice of the sale, disposition, or other intended
action by Lender with respect to the Collateral that is required by
applicable laws and that is sent by certified mail, postage prepaid, to
Pledgor at the address of Pledgor's chief executive office specified below,
or such other address of Pledgor that may from time to time be shown on
Lender's records, at least ten (10) business days prior to such sale,
disposition, or other action, shall constitute reasonable notice to
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Pledgor. Pledgor shall pay on demand all costs and expenses, including,
without limitation, reasonable attorneys' fees and expenses, incurred by or
on behalf of Lender (a) in enforcing Pledgor's Liabilities, and (b) in
connection with the taking, holding, preparing for sale or other
disposition, selling, managing, collecting, or otherwise disposing of the
Collateral. All of such costs and expenses (collectively, the "Liquidation
Costs") together with interest thereon at a simple per annum rate of
interest which is equal to the then highest rate of interest charged on the
principal of any of Pledgor's Liabilities, plus one percent (1%) per annum,
(but in no event higher than the maximum interest rate permitted by
applicable law) from the date of payment until repaid in full, shall be
paid by Pledgor to Lender on demand and shall constitute and become a part
of Pledgor's Liabilities secured hereby. Any proceeds of sale or other
disposition of the Collateral will be applied by Lender to the payment of
Liquidation Costs and Expense Payments, and any balance of such proceeds
will be applied by Lender to the payment of the remaining Pledgor's
Liabilities in such order and manner of application as Lender may from time
to time in its sole discretion determine.
19. Remedies Cumulative. Each right, power, and remedy of Lender as
provided for in this Agreement or in the other Loan Documents or now or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right,
power, or remedy provided for in this Agreement or in the other Loan
Documents or now or hereafter existing at law or in equity or by statute or
otherwise, and the exercise or beginning of the exercise by Lender or any
one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by Lender of any or all such other rights,
powers, or remedies.
20. Waiver. No failure or delay by Lender to insist upon the strict
performance of any term, condition, covenant, or agreement of this
Agreement or of the other Loan Documents, or to exercise any right, power,
or remedy consequent upon a breach thereof, shall constitute a waiver of
any such term, condition, covenant, or agreement or of any such breach, or
preclude Lender from exercising any such right, power, or remedy at any
later time or times. By accepting payment after the due date of any of
Pledgor's Liabilities, Lender shall not be deemed to have waived the right
either to require payment when due of all other Pledgor's Liabilities or to
declare an Event of Default for failure to effect such payment of any such
other Pledgor's Liabilities. Pledgor waives presentment, notice of
dishonor, and notice of non-payment with respect to Accounts and Chattel
Paper.
21. Governing Law. This Agreement shall be governed by the laws of
the State of Maryland, without respect to any other conflicts-of-laws
provisions.
22. Miscellaneous.
(a) Time is of the essence in this Agreement.
(b) The section headings of this Agreement are for convenience
only and shall not limit or otherwise affect any of the terms hereof.
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(c) Neither this Agreement nor any term, condition, covenant,
or agreement hereof may be changed, waived, discharged, or terminated
orally but only by an instrument in writing signed by the party against
whom enforcement of the change, waiver, discharge, or termination is
sought.
(d) This Agreement shall be binding upon Pledgor and its
heirs, executors, administrators, legal representatives, successors, and
assigns, and shall inure to the benefit of Lender and its successors and
assigns.
(e) As used herein, the singular number shall include the
plural, the plural the singular, and the use of the masculine, feminine, or
neuter gender shall include all genders, as the context may require, and
the term "person" shall include an individual, a corporation, an
association, a partnership, a trust, and an organization.
(f) Invalidation of any one or more of the provisions of this
Agreement shall in no way affect any of the other provisions hereof, which
shall remain in full force and effect.
(g) All references herein to any document, instrument, or
agreement shall be deemed to refer to such document, instrument, or
agreement as the same may be amended, modified, restated, supplemented, or
replaced from time to time.
(h) Unless varied by this Agreement, all terms used herein
which are defined by the applicable Uniform Commercial Code shall have the
same meaning hereunder as assigned to them by such Uniform Commercial Code.
(i) Upon full, final and irrevocable payment of all
obligations under the Note and other Loan Documents, and termination of any
further obligation of Lender to make advances or extensions of credit to
Pledgor under the Note, this Agreement shall terminate and Lender shall
immediately execute appropriate documents to evidence the termination.
IN WITNESS WHEREOF, Pledgor has caused its duly authorized officer to
execute this Agreement as of the day and year first written above.
PLEDGOR:
ATTEST: NEWCARE HOSPITAL CORPORATION
a Georgia corporation
By:/s/ Xxxxxx X. Xxxx By:/s/ Xxxxx Xxxxxxx
Name: Xxxxxx X. Xxxx Name: Xxxxx Xxxxxxx
Title: Secretary Title: President
Address of Pledgor's executive office:
0000 Xxxx Xxxxxxx Xxxxx #000
Xxxxxxx, Xxxxxxx 00000
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Addresses where Collateral is Addresses of other places
or is to be located: of business of Pledgor:
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
0000 Xxxx Xxxxxxx Xxxxx, #000
Xxxxxxx, Xxxxxxx 00000
Previous legal and/or trade
names of Pledgor:
ACKNOWLEDGMENT
STATE OF GEORGIA )
) ss:
COUNTY OF XXXXXX )
On this 23rd day of July, 1997, before me, the undersigned officer,
personally appeared Xxxxx Xxxxxxx, personally known to me,
or proved to me on the basis of satisfactory evidence, and who acknowledged
that he is the President of NEWCARE HOSPITAL CORPORATION and that
as such officer, being duly authorized to do so pursuant to the
corporation's bylaws or a resolution of its board of directors, executed,
subscribed and acknowledged the foregoing instrument for the purposes
therein contained, by signing the name of the corporation by himself in his
authorized capacity as such officer, as his free and voluntary act and deed
and the free and voluntary act and deed of the corporation.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
[NOTARIAL SEAL] /s/ Xxxxxxx Xxxxx
Notary Public
My Commission Expires:
2.14.98
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