LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into this 16th day
of July, 1997, between HEALTHCARE HEARING CLINICS, INC. (hereinafter called
"Borrower"), whose principal place of business is 000 XX Xxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxx, Xxxxxx 00000, and PHONAK, INC. (hereinafter called "Phonak").
1. DEFINITIONS. When used herein, the following terms shall have
the following meanings:
1.1. ACCOUNT OR ACCOUNTS RECEIVABLE - includes contract rights
and means all amounts due Borrower in the form of payments due and receivables
from whatever source, and all proceeds and products thereof, including all
causes of action thereon, and all of Borrower's rights and interests under the
terms of any and all agreements, whether written or oral, legally enforceable,
or conditionally provided for, including, but not limited to, all of Borrower's
rights and interests in any and all accounts, notes, policies of insurance,
drafts, leases, bills of lading, chattel papers and general intangibles
consisting of rights to payment and the proceeds or products thereof.
1.2. ACCOUNT BORROWER - shall mean any party who is obligated
to Borrower on any Account Receivable.
1.3. ADVANCE - means an amount of money requested and received
by Borrower from Phonak in any single transaction and which is charged against
the Line of Credit. All advances and repayments of advances shall be in United
States Dollars.
1.4. COLLATERAL - means the property in which the Borrower has
granted Phonak a continuing Security Interest which has been, is being or will
be delivered, pledged, assigned or otherwise tendered to Phonak as security for
payment of the Obligations. "Collateral" also includes any guaranty which has
been, is being or will be given to Phonak and all property in which any
guarantor has granted Phonak a security interest as security for the payment of
the Obligations.
1.5. CONTRACT RIGHTS - shall mean any right to payment under a
contract not yet earned by performance and not evidenced by an Instrument or
Chattel Paper.
1.6. GENERAL INTANGIBLES OR INTANGIBLES - shall have the
meaning assigned to such terms under the Illinois Commercial Code and shall mean
and include, but not be limited to, customer lists, books and records
(including, without limitation, correspondence, credit files, tapes, cards,
computer runs, computer programs and other papers and documents) whether in the
possession or control of the Borrower or any computer service bureau; rights in
franchises and sales contracts, patents, copyrights, trademarks, service marks,
goodwill, logos, trade names, label designs, royalties, brand names, plans,
blueprints, patterns, trade secrets, licenses, jigs, dies, molds and formulas;
credits, tax refunds, returned and unearned insurance premiums; and choses in
action.
1.7. CHATTEL PAPER, DOCUMENTS, GOODS AND INSTRUMENTS - shall
have the respective meanings assigned to such terms in the Illinois Commercial
Code as of the date of this Agreement.
1.8. INVOICE - shall mean a xxxx or claim form submitted to an
Account Borrower for goods sold or services rendered on or before the date it
bears. Each invoice shall indicate the time when, and the location where, such
goods where shipped or delivered, or the services performed, and the amounts due
therefore and shall (except with respect to claim forms submitted to insurance
companies or other third parties for reimbursement) on its face be due and
payable no more than 30 days after the date it bears.
1.9. LINE OF CREDIT - means an amount of principal not to
exceed $500,000 which Phonak shall make available to Borrower pursuant to the
terms of this Loan and Security Agreement.
1.10. OBLIGATIONS - means any and all indebtedness,
obligations, liabilities and contractual duties of every kind and nature of
Borrower to Phonak, whether nor existing or hereafter arising, due or to become
due, direct or indirect, absolute or contingent, joint or several, and however
created or arising and howsoever acquired by Phonak, and any and all renewals or
extensions thereof, and all expenses and charges, legal or otherwise, including
attorneys' fees, paid or incurred by Phonak in realizing upon or protecting the
Collateral, or collecting or enforcing the payment of any and all such
indebtedness, obligations, liabilities, expenses and charges.
1.11. PRIME RATE - means the interest rate described in the
"Money Rates" section of the Wall Street Journal as the "prime rate", in effect
from time to time. If the Wall Street Journal shall cease publication, then
Phonak shall notify Borrower of the business publication or financial
institution which shall define the prime rate for purposes of this Agreement.
1.12. REVOLVING CREDIT LOAN - means the outstanding balance
owed by Borrower to Phonak under the terms of this Loan and Security Agreement.
1.13. REVOLVING CREDIT NOTE - means the promissory note in the
form attached hereto as Exhibit A executed by Borrower evidencing Borrower's
obligation to repay the Revolving Credit Loan.
1.14. SECURITY INTEREST - means the interest set forth and
allowed in Article 9 of the Uniform Commercial Code. Although this Agreement is
entered into in the State of Illinois and the parties have agreed that the
substantive law of Illinois shall apply to this Agreement,
where the location of Borrower's Collateral requires the application of the
procedural law of any other state, territory or foreign country, the Security
Interest granted Phonak by Borrower shall include all rights and interests
allowed or required of Phonak in those locations.
1.15. DATES FOR DELIVERY OF FINANCIAL STATEMENTS - shall mean
(i) with respect to its annual reports on Form 10-K and its annual financial
statements a date within 90 days after the end of the fiscal year of Borrower
and (ii) with respect to its quarterly financial statements for each fiscal
quarter other than the last quarter of Borrower's fiscal year a date within 45
days after the close of each fiscal quarter.
2. LINE OF CREDIT. Phonak agrees to make available to Borrower a
line of credit as described herein.
2.1. Subject to the terms and conditions of this Agreement,
Phonak will make a line of credit available to Borrower ("line of credit"),
pursuant to which Phonak shall from time to time make revolving credit loan
Advances to Borrower. The aggregate amount of advances outstanding under the
line of credit shall at no time exceed Five Hundred Thousand ($500,000.00)
Dollars. The line of credit shall terminate, and all Advances and other sums due
hereunder shall become due and payable on July 1, 1998.
2.2. The proceeds of the line of credit shall be disbursed to
Borrower in accordance with written instructions of Borrower as and when same
are received by Phonak. Proceeds of the line of credit shall be used by Borrower
solely for business purposes.
2.3. All outstanding loan amounts, together with any accrued
but unpaid interest thereon, or other sums due thereunder, shall be repaid in
full no later than July 1, 1998. In addition, outstanding loans shall be repaid
upon demand if and to the extent they exceed Five Hundred Thousand ($500,000.00)
Dollars.
2.4. The Revolving Credit Loan shall be evidenced by the
Revolving Credit Note.
2.5. The Line of Credit shall bear interest at a floating
daily rate equal to the Prime Rate, in effect from time to time, with each
change in such prime rate to take effect on the same day as each published
change.
3. CONDITIONS PRECEDENT. The obligation of Phonak to make the
Loan is subject to Borrower's delivering or causing to be delivered to Phonak on
the date of, but prior to the disbursement of any portion of the loan the
following:
3.1 The Revolving Credit Note, duly executed by Borrower.
3.2 The Corporate Guaranty in the form attached hereto as
Exhibit B duly executed by Healthcare Capital Corp.
3.3 Resolutions of the Board of Directors of Borrower
approving the execution of the loan documents.
3.4 A certificate, dated as of the most recent date
practicable, of the Secretary of State of Washington as to the good standing of
the Borrower.
3.5 UCC Financing Statements regarding all Collateral, duly
executed by the Borrowers, as debtor, in a form acceptable to Phonak and filed
in such offices as Phonak shall require.
3.6 A certificate dated of the most recent date practicable,
of the appropriate governmental authority in a form acceptable to Phonak, as to
the good standing of Healthcare Capital Corporation.
3.7 An opinion of borrower's counsel substantially in the form
attached hereto as Exhibit C.
3.8 An opinion of Guarantor's counsel substantially in the
form attached hereto as Exhibit D.
3.9 Resolutions of the Board of Directors of Healthcare
Capital Corp. approving the execution of the Corporate Guaranty.
3.10 Payment for Lender's counsel fees and costs incurred in
connection with this transaction.
3.11 Such other documents, certificates or evidence as Phonak
may reasonably request to consummate the transactions contemplated hereby.
4. GRANT OF SECURITY INTEREST. To secure the payment of all the
Obligations, Borrower hereby grants to Phonak a continuing security interest in
the following property of Borrower, now existing or hereafter arising or
acquired, wherever now or hereafter located, except that no security interest is
granted by Borrower with respect to any such property held, owned, used or
acquired for use in association with Borrower's and HealthCare Capital Corp.'s
business in the States of Michigan and Illinois: all Accounts and Accounts
Receivable and all Goods whose sale, lease or other disposition by Borrower has
given rise to Accounts and have been returned to or repossessed or stopped in
transit by Borrower. The security interest in the Collateral granted to Phonak
hereunder is granted to secure Borrower's Obligations, and the parties agree
that Phonak shall have no obligation to perform any of Borrower's obligations
under any contract rights assigned hereunder.
5. GENERAL REPRESENTATIONS AND WARRANTIES OF BORROWER. To induce
Phonak to enter into this Agreement, Borrower represents and warrants as
follows:
5.1. Borrower has full power to enter into this Agreement, and
none of the terms hereof is in contravention of law, or violates any provision
of Borrower's charter or by-laws or any indenture, agreement or undertaking to
which Borrower is a party or by which Borrower is bound.
5.2. Borrower is, and as to all Collateral hereafter acquired
shall be, for so long as any Obligation to Phonak is outstanding, the owner of
all Collateral free of any liens, Security Interests or claims of any kind,
other than the Security Interest granted by this Agreement, and Borrower shall
at all times defend the Collateral against any claim or demand of any person
which is adverse to Phonak.
5.3. Borrower will not hereafter grant a Security Interest in
the Collateral to any other party, or otherwise permit the encumbrances or
disposition of Collateral without Phonak's prior written consent for so long as
Borrower is indebted to Phonak on any Obligation, or until this Agreement is
terminated according to its provisions.
5.4. The Collateral or records pertaining to the Collateral
(except any part thereof which prior to the execution of this Agreement,
Borrower shall have advised Phonak, in writing, consists of Collateral normally
used in more than one state) will be kept at Borrower's clinic locations as
identified on Exhibit E attached hereto, or at its main office: 000 XX Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000. Notwithstanding removal of the
Collateral or records pertaining thereto to any other location, Phonak's
security interest in the Collateral shall continue.
5.5. Borrower will comply with the terms and conditions of any
orders, ordinances, regulations, laws or statutes of the Federal government or
of any city, state or other governmental department having jurisdiction with
respect to the conduct of business thereon. Borrower will, within five days
after being notified, either orally or in writing, of any claim of violation of
any such order, ordinance, regulation, law or statute, notify Phonak in writing
of the assertion of such claim. When requested by Phonak, Borrower will execute
any written instruments and do any other acts necessary to effectuate more fully
the purpose and provisions of this Agreement.
5.6. Borrower will indemnify and save Phonak harmless from all
loss, costs, damages, liability or expenses, including attorney fees, that
Phonak may sustain or incur by reason of defending or protecting the Security
Interest herein granted or the priority thereof, or enforcing the Obligations or
the prosecution or defense of any action or proceeding concerning any matter
growing out of, or connected with this Agreement, the Obligations or the
Collateral.
6. COVENANTS AS TO ACCOUNTS RECEIVABLE. Borrower hereby promises
and agrees that so long as any Obligation of the Borrower to Phonak is
outstanding, the following covenants will be binding upon the Borrower:
6.1. As of the time any Account Receivable becomes subject to
the Security Interest provided for herein, Borrower shall be deemed to have
warranted as to each and all of
such Accounts Receivable, that each is, and all papers and documents relating
thereto are, genuine, and in all respects, what they purport to be; that each
Account Receivable for products or services sold or leased is valid and
subsisting and arises out of a bona fide sale or lease of goods, or out of and
for services theretofore actually rendered by Borrower to the Account Borrower
named in the Account; that the amount of the Account represented as owing is the
correct amount actually and unconditionally owing except for normal cash
discounts and to Borrower's knowledge is not disputed, and except for such
normal cash discounts and return rights is not subject to any set-offs, credits,
deductions or counter-charges; that Borrower is the owner thereof free and clear
of all liens, encumbrances and security interests of any nature whatsoever,
other than those granted to Phonak or otherwise noted hereunder; and that no
surety bond was required or given in connection with said Account or the
contract or purchase orders out of which the same arose.
6.2. At any time, after an Event of Default has occurred and
is continuing, Phonak may, after five days written notice to Borrower, notify
and any all Account Borrowers to make payment directly to Phonak. To the extent
that Phonak does not so elect, Borrower shall continue to collect the Accounts
Receivable.
6.3. Proceeds of Accounts Receivable when received by Phonak
shall, after payment of any of Phonak's expenses incurred, including attorneys
fees, be applied by Phonak in payment of the Obligations secured hereby, whether
or not such Obligations shall have by their terms matured, such application to
be made at such intervals and upon such of said Obligations as Phonak may
determine. Phonak need not apply or give credit for any such proceeds until
Phonak has received final payment thereof at its offices in cash or solvent
credits accepted by Phonak as such.
6.4. In making collection of any Account Receivable, Phonak
shall have the right in its own name or in the name of Borrower to demand,
collect, receive, receipt for, xxx for, compound or abandon any and all amounts
due or to become due on any of the Accounts Receivable and to endorse payment
thereof in its own name or that of Borrower, and in its discretion to file any
claim or take any other action or proceeding which Phonak may deem necessary or
appropriate to protect, preserve and realize upon the Security Interest of
Phonak in said Accounts Receivable and the proceeds thereof. Borrower expressly
waives notice from Phonak that any Account has been defended by the Account
Borrower or compromised by Phonak; it is expressly agreed that Phonak need not
provide Borrower with an itemized accounting unless Borrower has given Phonak
written notice requesting that accounting, within five business days after
Phonak exercises any of its rights hereunder.
6.5. Upon receipt by Borrower of instructions from Phonak,
Borrower at Borrower's expense, shall take all necessary action promptly to
collect the Accounts Receivable and shall pay or deliver all proceeds thereof
immediately upon receipt in the form received without mingling the same with
other property and during the time Borrower has that cash in its possession, it
shall be deemed to be held in Trust by Borrower for the benefit of Phonak. When
and to the extent required by Phonak upon the occurrence and continuation of an
Event of Default, Borrower shall (a) deposit all proceeds in a Collateral
Collection Account with Phonak
immediately upon receipt, or (b) notify Account Borrowers that their Accounts
and contract obligations have been assigned to Phonak and shall be paid directly
to Phonak.
6.6. Borrower shall furnish to Phonak at Borrower's expense,
at least monthly, a certificate signed by an officer of Borrower setting forth
balance of accounts receivable and a summary aging by clinic location of
Accounts.
7. GENERAL COVENANTS OF BORROWER.
7.1. Borrower agrees that, at Borrower's expense, Phonak or
its agent shall have the privilege at any time, upon request, to inspect during
regular business hours any of the business properties or premises of the
Borrower and the books and records of the Borrower relating not only to Accounts
Receivable and Inventory or the purchasing or collecting thereof, but also
relating to Borrower's general business affairs and financial condition.
7.2. At Phonak's request, Borrower agrees to furnish Phonak on
the Dates For Delivery Financial Statements specified in Paragraph 1.15 above,
(i) a copy of its annual report on Form 10-K and annual financial statements
(balance sheet and profit and loss statement at a minimum) of Borrower prepared
in conformity with generally accepted accounting principles; and (ii) a copy
similarly prepared of its financial statements for each fiscal quarter (except
the fourth quarter) signed by the proper accounting officer of Borrower.
Borrower further agrees to, from time to time, furnish such other reports, data
and financial statements, including audit reports by independent certified
public accountants, in respect to its business and financial condition, as
Phonak may reasonably require.
7.3. Borrower agrees to execute and deliver such financing
statement or statements, amendments thereof or supplements thereto, as Phonak
may require from time to time in order to comply with the appropriate provisions
of the relevant Uniform Commercial Code, and to preserve and protect the
Security Interest hereby granted. Borrower further agrees to execute such
further instruments and perform such further acts and things that Phonak may
reasonably require in order to maintain a perfected Security Interest in Phonak
with respect to the Collateral free of all other liens or claims whatsoever. In
addition, Borrower agrees to xxxx its books, records and contracts to reflect
the Security Interest of Phonak in and to all Collateral. Borrower hereby
irrevocably appoints Phonak its agent and attorney-in-fact to execute such
financing statements and other instruments and to do such other acts and things
as may be necessary to preserve and perfect Phonak's security interest in the
Collateral.
7.4. Borrower agrees to pay promptly when due all taxes,
assessments and governmental charges upon or against Borrower or the property or
obligations of Borrower in each case before the same become delinquent and
before penalties accrue thereon, unless and to the extent the same are being
contested in good faith by appropriate proceedings.
7.5. Borrower agrees that Phonak may, at its option, at any
time and without notice to Borrower, apply to the payment of any Obligations
secured hereby, either due or not, the balance of any deposits, checking,
savings, collateral reserve or other account of the Borrower at Phonak. As
additional security for payment of the Obligations, Phonak is hereby granted a
Security Interest in any other funds or property of the Borrower now or
hereafter in the possession of Phonak and, with respect thereto, Phonak will
have all rights and remedies specified herein.
7.6. Borrower agrees to pay Phonak, from time to time, upon
demand all reasonable costs incurred by Phonak to Phonak for supervising and
servicing the outstanding Obligations of Borrower and the Collateral securing
said Obligations, including employment of an outside servicing company, and the
making and maintaining by Phonak or its designated agent of records in
connection therewith. Each such item of cost shall become an Obligation of
Borrower and shall be secured by the Security Interest herein granted.
7.7. Borrower agrees that whenever the Uniform Commercial Code
and the local law of the jurisdiction where the affected Collateral is located
requires Borrower to sign a financing statement for filing purposes, Borrower
hereby appoints Phonak or any of Phonak's representatives as Borrower's attorney
and agent, with full power of substitution, to sign or endorse Borrower's name
on any such financing statement or other document and authorizes Phonak to file
such a financing statement in all places where necessary to perfect Phonak's
security interest in the Collateral; and Borrower hereby ratifies all acts of
said attorney and said substitute and agrees to hold Phonak and said attorney
harmless form any acts of commission or omission or any error judgement or
mistake of fact or law pertaining thereto. A photographic or other reproduction
of this Agreement, or any financing statement signed by Borrower, is sufficient
as a financing statement.
7.8. Additional Documents. Each of the parties hereto agrees
to execute and deliver to the other party any and all documents and/or
instruments, in addition to those otherwise provided for herein, that may be
necessary and/or appropriate to effectuate the provisions of this Agreement
(including but not limited to the execution of any and all Uniform Commercial
Code financing statements) whether before, on or after the date of execution of
this Agreement.
7.9. This Agreement and all its terms and provisions shall
inure to the benefit of Phonak and its successors and assigns and shall be
binding upon Borrower and the successors and assigns of Borrower. Each and every
of the terms hereof shall govern and apply to each and every Obligation of
Borrower to Phonak previously incurred, and to any Collateral therefor, to the
same extent as though such Obligations had been incurred, and the Collateral
therefor assigned, transferred and delivered, subsequent to the date of this
Agreement.
8. EVENTS OF DEFAULT. Borrower agrees that any one or more of the
following events, conditions or acts shall constitute an Event of Default under
this Agreement:
8.1. Failure of Borrower to make any timely payment of any
amount due under the Revolving Credit Note or any notice, instrument or
agreement which shall cause or permit the holder thereof to cause the
Obligations of Borrower to become due prior to maturity.
8.2. Failure of Borrower to make any timely payment of any
other Obligation when due.
8.3. Falsification in any material respect at any time of any
statement, application or agreement furnished to Phonak by Borrower or any
guarantor.
8.4. Failure of the Borrower or any guarantor, after request,
to furnish Phonak with annual, periodic or additional financial statements in
form satisfactory to Phonak or other financial information as required by
Phonak, from time to time.
8.5. Insolvency of the Borrower or any guarantor or the
inability of the Borrower or any guarantor to pay debts as they mature.
8.6. The execution of an Assignment for the Benefit of
Creditors by Borrower, or any guarantor, or the filing or commencement of any
proceedings for relief under Bankruptcy Code or insolvency laws or any laws
relating from debts by Borrower hereunder or any guarantor, whether voluntary or
involuntary.
8.7. The entry of any judgment, attachment, lien, execution or
levy against Borrower or any guarantor or against the property of Borrower or
guarantor in any amount which is not paid, discharged, released, bonded, stayed
on appeal or otherwise fully satisfied within 30 days thereafter.
8.8. Failure of Borrower or any guarantor to perform any of
the terms, conditions and provisions under this Agreement or any agreements
between Borrower or any guarantor and Phonak.
8.9. Failure of Borrower or any guarantor to pledge or grant
to cause to be pledged or granted to Phonak a continuing Security Interest in
the Collateral, or to furnish additional Collateral immediately upon request
from Phonak and Phonak, in its sole discretion, shall deem itself insecure for
any reason whatsoever.
8.10. Dissolution of Borrower or any guarantor whether by
voluntary or involuntary action.
8.11. Any admission, either orally or in writing, by Borrower
or any guarantor, of the inability to pay debts as they mature.
8.12. Any and all other events or circumstances that cause
Phonak in its sole discretion to deem itself insecure for any reason whatsoever,
including, but not limited to, fear of removal or waste of the Collateral, or
any part thereof.
9. REMEDIES OF PHONAK ON DEFAULT.
9.1. In the event that an Event of Default described in
Sections 8.1 through 8.13 of this Agreement has occurred and is continuing,
Phonak may, without notice or demand of any kind, declare the principal of, and
any interest accrued on, all outstanding Obligations of Borrower to Phonak
immediately due and payable, and thereupon all such Obligations shall become and
be immediately due and payable, notwithstanding the maturity date or dates
expressed in any evidence of those Obligations.
9.2. When any Obligation of Borrower is due and payable,
either by acceleration or otherwise, and is unpaid in whole or in part, Phonak,
in addition to all other rights and remedies, shall have all the rights and
remedies of a secured party under the Illinois Uniform Commercial Code. Without
limiting the foregoing, Phonak may require Borrower to assemble Collateral and
make it available to Phonak at a place designated by Phonak which is reasonably
convenient. Phonak may enter, with or without process of law and without breach
of the peace, any premises where the Collateral or the books and records of
Borrower related thereto is or may be located, and without charge or liability
to Phonak therefor seize and remove the Collateral (and copies of Borrower's
books and records in any way relating to the Collateral) from said premises
and/or remain upon said premises and use the same (together with said books and
records) for the purpose of collecting, preparing and disposing of the
Collateral, and Borrower hereby grants Phonak a security interest in said books
and records for the purpose above stated. Phonak may also, with or without
notice to Borrower, unless required by law, sell the Collateral at public or
private sale and Phonak or its nominee may purchase any Collateral at any sale.
Any requirement of the Code for reasonable notice to the Borrower shall be met
if such notice is mailed postage prepared to the Borrower at the address shown
at the commencement of this Agreement, at least five days before the sale or
other disposition or other event giving rise to the required notice.
10. NOTICE. Unless otherwise provided in this Agreement or by law,
any notice of any sale, disposition or other intended action by Phonak shall be
deemed reasonable if it is in writing and deposited in the United States mails
five business days in advance of the intended disposition or other intended
action, first class, postage prepaid, and addressed to the Borrower at the
address first hereinabove described or any other address designated in writing
by Borrower previously received by Phonak.
11. WAIVER. Waiver by Phonak of any Event of Default hereunder, or
of any breach of the provisions of this Agreement by Borrower, shall not
constitute a Waiver of any other Event of Default or breach, or of the same
Event of Default or breach occurring on a future occasion.
12. INVALIDITY OF ANY PROVISION. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under the applicable law. If any provision of this Agreement is prohibited
or determined to be invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision of the remaining provisions of this
Agreement.
13. GOVERNING LAW. This Agreement, its terms and provisions,
including matters of construction validity and performance, shall be governed by
the laws of the State of Illinois.
Dated at Naperville, Illinois, this 16th day of July, 1997.
HEALTHCARE HEARING CLINICS, INC.
By: /s/ Xxxxx X. Kawasaki
Print Name: Xxxxx X. Kawasaki
Title: Vice President of Finance
Attest: /s/ Xxxxx X. Xxxxxxxx
Title: Secretary
ACCEPTED this 16th day of July, 1997.
PHONAK, INC.
By: /s/ Xxxxx X. Xxxxxx
Print Name: Xxxxx X. Xxxxxx
Title: Director of Finance
GUARANTY
Loan Agreement made and entered into this 16th day of July, 1997, by
and between HEALTHCARE CAPITAL CORP., having its principal offices at 0000-000
Xxxx Xx. Xxxxxxxxx, Xxxxxxx Xxxxxxxx ("Guarantor") and PHONAK, INC., having its
principal offices at 000 X. Xxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx ("Phonak").
WHEREAS, Healthcare Hearing Clinics, Inc. ("Borrower") is a subsidiary
of Guarantor and is a party with Phonak to a Loan and Security Loan Agreement
and a Revolving Credit Note of even date herewith (which are referred to
collectively as the "Loan Agreement"); and
WHEREAS, Phonak has required, as a condition precedent to its
consummation of the transactions under the Loan Agreement, that Guarantor
execute and deliver this Guaranty; and
WHEREAS, all financial accommodations made by Phonak under the Loan
Agreement will inure to the direct and material benefit of Guarantor;
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce Phonak to consummate the transactions under the Loan
Agreement, Guarantor hereby represents, warrants, and agrees to and with Phonak
as follows:
1. In order to induce Phonak to enter into the Loan Agreement, and in
consideration thereof, Guarantor hereby guarantees the full, prompt and faithful
performance and discharge by Borrower of all the terms, warranties, conditions
and provisions of the Loan Agreement, including any modifications, amendments or
supplements thereto.
2. Guarantor further guarantees the payment of all obligations and
indebtedness of Borrower to Phonak arising under the Loan Agreement or the
assignment of accounts referred to therein at the time and in accordance with
the terms and provisions of said Loan Agreement, including any modifications,
amendments, or supplements thereto.
3. Guarantor hereby authorizes extensions of time or other indulgences
to Borrower, and agrees that Phonak may take, give up, modify, vary, exchange,
renew, or abstain from perfecting or taking advantage of any security, accept or
make compositions or other arrangements, discharge or release any party or
parties, release on any security, and otherwise deal with Borrower and other
parties and security as Phonak may deem expedient.
4. All demands, presentments, notices of protest and of dishonor, and
other notices of any kind or nature, including those of any action or nonaction
of Borrower, Phonak, any co-guarantor, creditor, or other person, are expressly
waived by Guarantor. Guarantor hereby waives the right to require Phonak to
proceed against Borrower or any other party or to proceed against or apply any
security it may hold, and waives the right to require Phonak to pursue any other
remedy for the benefit of Guarantor on this Guaranty without taking any action
against Borrower or any other party and without proceeding against or applying
any security it may hold.
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5. Guarantor hereby guarantees that Borrower, as well as directors,
officers, partners, associates, or other agents acting or purporting to act on
its behalf, are empowered to enter into the Loan Agreement, and that each of
them is acting within the scope of such power. Phonak shall not be required to
inquire into the existence, scope or exercise of such power.
6. Guarantor agrees to pay reasonable attorney's fees and all other
costs and expenses that may be incurred by Phonak in the enforcement of this
Guaranty or in the collection of any of said liabilities from Borrower or
Guarantor.
7. As one of the material inducements to Phonak to enter into the Loan
Agreement, Guarantor hereby covenants, warrants and represents that Guarantor is
now and at all times hereafter shall be solvent, and generally able to pay its
debts as such debts become due and Guarantor now owns and shall at all times
hereafter own property which at a fair valuation exceeds the sum of Guarantor's
debts.
8. Guarantor further agrees that in any action between Guarantor and
Phonak arising out of this Guaranty, the items of charge and debit in Phonak's
books and records relating to Borrower, and the books, records, documents, and
admissions of Borrower, shall be admissible against Guarantor to the same extent
as they would be admissible against Borrower.
This Guaranty is assignable by Phonak with respect to any one or
several or all of the indebtedness and obligations which it guarantees, and if
it is so assigned, guarantor shall be bound as above to the assignees without
affecting guarantor's liability to Phonak hereunder as to any such indebtedness
or obligation retained by Phonak.
This Guaranty shall inure to the benefit of and bind the successors and
assigns of Phonak and of Guarantor, and shall be construed as the joint and
several obligation of each of the Guarantor's signatories hereto when there are
more than one.
This Guaranty shall be governed, construed and interpreted by the law
of the State of Illinois and cannot be amended or modified orally.
Executed at Naperville, Illinois, on the day and year first above
written.
GUARANTOR:
HEALTHCARE CAPITAL CORP.
By:/s/ Xxxxx X. Kawasaki
Printed Name: Xxxxx X. Kawasaki
Title: Vice President-Finance
