EXHIBIT 10.6 TO FORM 10-QSB
LOAN AND SECURITY AGREEMENT
Loan #94-05-0128
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of the date
set forth below BETWEEN:
Secured Party: MEDICAL EQUIPMENT FINANCE COMPANY; and
Debtor: Phy. Med., Inc.
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1. Certain Definitions. The following terms shall have the following
respective meanings
(a) Advance. Advances of funds to the Debtor pursuant to Section 2
hereof and schedules which may be executed between Secured Party and Debtor
from time to time.
(b) Collateral. "Collateral" shall have the meaning set forth in
Section 2.2 hereof.
(c) Event of Default. Those events set forth in Section 11 hereof.
(d) Monthly Loan Repayment. The amount set forth in any Schedule
executed in connection with any Advance under this Agreement.
(e) Schedule(s). Any and all or each (as the context shall require) of
the Loan and Collateral Schedules of the Debtor, to be executed by the
parties under this Agreement.
(f) Secured Obligations. The payment of the principal and interest as
set forth in each and all of the Schedules, and the payment of all
additional amounts and other sums at any time due and owing under the
Schedules for this Agreement, and the performance and observance of all
covenants and conditions contained herein and therein.
(g) Supplier. The entity from whom the Debtor purchased the Collateral
including manufacturers, dealers, sellers and vendors.
2. Purpose of Financing and Description of Loans; Grant of Security
Interest Collateral.
(a) Secured Party agrees, subject to the terms and conditions of this
Agreement, to make Advances to the Debtor in an aggregate amount to be
determined by Secured Party in its sole and absolute discretion.
(b) Debtor agrees that the proceeds of any Advance will be used solely
to acquire the Collateral as described in the Schedule executed in
connection with said advance.
(c) The amount of any Advances to Debtor shall be set forth on the
Schedule executed in connection with said Advance.
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(d) The term of repayment of any Advance made under this Agreement
(the "Term") shall commence on the date set forth in the Schedule executed
in connection with said Advance and shall continue for the period set forth
in said Schedule, and for all extensions and renewals of such period.
(e) Debtor shall pay to Secured Party the Monthly Loan Repayment for
each Advance in amounts and on the dates set forth in the Schedule executed
in connection with said Advance, whether or not Secured Party has rendered
an invoice to Debtor. Debtor agrees to pay the Monthly Loan Repayment to
Secured Party at the office of the Secured Party set forth below, or to
such entity and/or at such other place as Secured Party may from time to
time designate by notice to Debtor. Any other amounts required to be paid
to Secured Party under this Agreement are due upon Debtor's receipt of
Secured Party's invoice and will be payable as directed in the invoice.
Payments under this Agreement may be applied to the Debtor's then accrued
Secured Obligations in such order as Secured Party may choose.
(f) The Advances shall not be subject to prepayment or redemption in
whole or in part prior to the expiration of the Term set forth in the
Schedule executed in connection with said Advance.
2.1 Grant of Security Interest. In consideration of the Advances to be
made by Secured Party to Debtor under this Agreement, and to secure the payment
and performance of the Security Obligations, Debtor hereby grants and assigns to
Secured Party, its successors and assigns, a security interest in the Collateral
described in Section 2.2 below.
2.2 Collateral. All equipment, inventory, accounts, accounts,
receivable, contract rights, chattel paper, cash and cash equivalents, fixtures
and intangibles of borrower including all furniture, fixtures, and equipment or
other property described in any and all Schedule(s) executed pursuant to this
Agreement whether now owned or hereafter acquired, and all substitutions,
renewals or replacements of and alterations, additions or improvements, if any,
to such Collateral, together with, in each and every case, all proceeds thereof.
Each item of collateral shall secure not only the specific Advances made by
Secured Party to Debtor as set forth in any Schedule, but also all other present
and future indebtedness or obligations of Debtor to Secured Party of every kind
and nature whatsoever. Debtor warrants and agrees that the Collateral will be
used primarily for business or commercial purposes and that regardless of the
manner of affixation, the Collateral shall remain personal property and shall
not become part of the real estate. Debtor agrees to keep the Collateral at the
locations set forth in the Schedule(s) covering said Collateral and will not
make any change in the location of the Collateral within such state, and will
not remove the Collateral from such state without the prior written consent of
Secured Party.
3. Time is of the Essence; Late Charges. Time is of the essence in this
Agreement and if any Monthly Loan Repayment is not paid within the ten (10) days
after the due date thereof, Secured Party shall have the right to add and
collect, and Debtor agrees to pay:
(a) A late charge on and in addition to, such Monthly Loan
Repayment equal to five percent (5%) of such Monthly Loan Repayment or
a lesser amount if established by any State or Federal statute
applicable thereto; and
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(b) Interest on such Monthly Loan Repayment from thirty (30) days
after the due date until paid at the rate of eighteen percent (18%)
per annum.
4. No Warranties. This Agreement is solely a financing agreement.
Debtor acknowledges that: The Collateral has or will have been selected and
acquired solely by Debtor for Debtor's purposes; Secured Party is not the
manufacturer, dealer, vendor or supplier of the Collateral; the Collateral is of
a size, design, capacity, description and manufacture selected by Debtor; Debtor
is satisfied that the Collateral is suitable and fit for its purposes; and
SECURED PARTY HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR REPRESENTATION
WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, CONDITION,
MERCHANTABILITY, DESIGN OR OPERATION OF THE COLLATERAL, ITS FITNESS FOR ANY
PARTICULAR PURPOSE, THE VALUE OF THE COLLATERAL, THE QUALITY OR CAPACITY OF THE
MATERIALS IN THE COLLATERAL OR WORKMANSHIP IN THE COLLATERAL, NOR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER.
4.1 No Agency. Debtor acknowledges and agrees that none of the
manufacturer, Vendor, dealer or supplier, nor any salesman, representative, or
other agent of the manufacturer, dealer, vendor or supplier, is an agent of
Secured Party. No salesman, representative or agent of the manufacturer, dealer,
vendor or supplier is authorized to waive or alter any term or condition of this
Agreement, and no representation as to the Collateral or any other matter by any
manufacturer, dealer, vendor or supplier shall in any way affect Debtor's duty
to pay the Monthly Loan Repayment and perform his other obligations as set forth
in this Agreement.
5. Acceptance. Execution by Debtor and Secured Party of the Schedule
covering the Collateral will conclusively establish that such Collateral has
been included under and will be subject to all of the terms and conditions of
this Agreement. If Debtor has not furnished Secured Party with an executed
Schedule by the earlier of fourteen (14) days after receipt thereof or
expiration of the commitment set forth in any applicable Equipment Financing
Commitment, Secured Party may terminate its obligation to make any Advances with
respect to any applicable Collateral.
6. Insurance and Risk of Loss. All risk of loss of, damage to, or
destruction of the Collateral shall at all times be borne by Debtor. Debtor will
procure forthwith and maintain property and general liability insurance with
extended or combined additional coverage on the Collateral for the full
insurable value thereof for the life of this Agreement and any Schedule(s) plus
such other insurance as Secured Party may specify, and promptly deliver each
policy to Secured Party with a standard long form endorsement attached showing
Secured Party or assigns as additional insureds and loss payees. Each insurer
shall agree by endorsement upon such policy issued by it or by independent
instrument furnished to Secured Party and Debtor that it will give Secured party
and Debtor thirty (30) days written notice before the policy in question shall
be materially altered or canceled. Secured Party's acceptance of policies in
lesser amounts or risks shall not be a waiver of Debtor's foregoing obligation.
7. Debtor's Representations and Warranties. Debtor represents and
warrants to Secured Party as follows:
(a) Debtor is duly organized and existing under the laws of the
State of its
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formation without limit as to the duration of its existence, and is authorized
and in good standing to do business in said State; Debtor has corporate powers
and adequate authority, rights and franchises to own its own property and to
carry on its business as now conducted, and is duly qualified and in good
standing in each state in which the character of the properties owned by it
therein or the conduct of its business makes such qualifications necessary; and
Debtor has the corporate power and adequate authority to make and carry out this
Agreement.
(b) The execution, delivery and performance of this Agreement are
duly authorized and do not, to the best of the Debtor's knowledge,
require the consent or approval of any governmental body or other
regulatory authority; are not in contravention of or in conflict with
any law, regulation or any term or provision of its articles of
formation or bylaws, and this Agreement is a valid and binding
obligation of Debtor legally enforceable in accordance with its terms.
(c) The execution, delivery and performance of this Agreement
will not contravene or conflict with any agreement, indenture of
undertaking to which Debtor is a party or by which it or any of its
property may be bound by or affected, and will not cause any lien,
charge or other encumbrance to be created or imposed upon any such
property by reason thereof.
(d) There is no material litigation or other proceeding pending
or threatened against or affecting Debtor, and it is not in default
with respect to any order, writ, injunction, decree or demand of any
court or other governmental or regulatory authority. The balance
sheets of Debtor and the related profit and loss statements and other
financial data as submitted in writing by Debtor to Secured Party in
connection with the Agreement, are true and correct, and said balance
sheets and profit and loss statements truly represent the financial
condition of Debtor as of the dates thereof.
(e) Debtor has good and valid title to the Collateral which is
free from and will be kept free from all liens, claims, security
interests and encumbrances, except for the security interest granted
hereby.
(f) No financing statement covering the Collateral or any
proceeds thereof is on file in favor of anyone other than Secured
Party, but if such other financing statement is on file, it will be
terminated or subordinated.
(g) All necessary action, including the filing of UCC-1 Financing
Statements, has or will be made to give Secured Party a first priority
security interest in the Collateral. Debtor agrees to permit Secured
Party to pre-file any UCC-1 Financing Statement pursuant to California
Commercial Code 9402.
8. Debtor's Agreements. Debtor agrees:
(a) To defend at Debtor's own cost and expense any action,
proceeding or claim affecting the Collateral.
(b) To pay reasonable attorneys fees and other expenses incurred
by Secured Party in enforcing its rights in the event of Debtor's
default under this Agreement.
(c) To pay promptly all taxes, assessments, license fees and
other public or private
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charges when levied or assessed against the Collateral or this Agreement and
this obligation shall survive the termination of this Agreement.
(d) That if a certificate of title is required or permitted by
law, Debtor shall obtain such certificate with respect to the
Collateral, showing the security interests of Secured Party thereon
and in any event do everything necessary or expedient to preserve or
perfect the security interest of Secured Party.
(e) That Debtor will not misuse, fail to keep in good repair,
secrete, or without the prior written consent of Secured Party, and
notwithstanding Secured Party's claim to proceeds, sell, rent, lend,
encumber or transfer any of the Collateral. The Collateral shall be
maintained in accordance with the manufacturer's specifications and
shall at all times be eligible for the manufacturer's maintenance
program.
(f) That Secured Party may enter upon Debtor's premises or
wherever the Collateral may be located at any reasonable time to
inspect the Collateral and Debtor's books and records pertaining to
the Collateral, and Debtor shall assist Secured Party in ;making such
inspection.
(g) That the security interest granted by Debtor to Secured Party
shall continue effective irrespective of the payment of the Secured
Obligations, so long as there are any obligations of any kind,
including obligations under guaranties or assignments, owed by Debtor
to Secured Party.
(h) To xxxx and identify the Collateral with all information and
in such manner as Secured Party may request from time to time and
replace promptly any such markings or identifications which are
removed, defaced or destroyed.
(i) To indemnify and hold Secured Party harmless from and against
all claims, losses, liabilities (including negligence, tort and strict
liability), damages, judgments, suits and all legal proceedings, and
any and all costs and expenses in connection therewith (including
attorney's fees) arising out of or in any manner connected with the
manufacture, purchase, financing, ownership, delivery, rejection,
nondelivery, possession, use, transportation, storage, operation,
maintenance, repair, return or other disposition of the Collateral or
with this Agreement, including, without limitation, claims for injury
to, or death of, persons and for damage to property, and give Secured
Party prompt notice of such claims or liability.
(j) That Debtor will not part with possession of or control of or
suffer or allow to pass out of its possession or control items of
Collateral or change the location of the Collateral or any part
thereof from the address shown in the appropriate Schedule without the
prior written consent of Secured Party.
(k) That Debtor shall not ASSIGN OR IN ANY WAY DISPOSE OF ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR SELL,
LEASE, TRANSFER, PLEDGE OR HYPOTHECATE ANY PART OF THE COLLATERAL.
DEBTOR'S INTEREST IN THIS AGREEMENT AND THE COLLATERAL IS NOT
ASSIGNABLE AND WILL NOT BE ASSIGNED OR TRANSFERRED BY OPERATION OF
LAW. CONSENT TO ANY OF THE FOREGOING PROHIBITED ACTS APPLIES ONLY IN
THE GIVEN INSTANCE AND IS NOT CONSENT TO SUBSEQUENT LIKE ACT BY DEBTOR
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OR ANOTHER ENTITY.
9. Events of Default. Any of the following events or conditions shall
constitute an Event of Default hereunder:
(a) Debtor's failure to pay any Monthly Loan Repayment or any
installment of the principal or interest due under any Schedule when
and after the same shall become due and payable, whether at the due
date thereof, or at the date fixed for prepayment or by acceleration
or otherwise;
(b) Debtor failure to observe or perform any covenant or
agreement to be observed or performed by Debtor under this Agreement,
any Schedule or any other instrument or Agreement delivered by Debtor
to Secured Party in connection with this or any other transaction;
(c) Any representation or warranty made by Debtor herein or in
any report, certificate, financial or other statement furnished in
connection with the Agreement shall prove to be false or misleading in
any material respect; or
(d) Debtor is (i) adjudicated insolvent or a bankrupt, or ceases,
becomes unable, or admits in writing its inability, to pay its debts
as they mature, or makes a general assignment for the benefit of, or
enters into any composition or arrangement with, creditors; (ii)
applies for or consents to the appointment of a receiver, trustee or
liquidator of it or of a substantial part of its property, or
authorizes such application or consent, or proceedings seeking such
appointment shall be instituted against it without such authorization,
consent or application and continues undismissed for a period of 60
calendar days; (iii) authorizes or files a voluntary petition in
bankruptcy or applies for or consents to the application of any
bankruptcy, reorganization in bankruptcy, arrangement, readjustments
or debts, insolvency, dissolution, moratorium or other similar laws of
any jurisdiction, or authorizes such application or consent, or
proceedings to such end shall be instituted against it without such
authorization, application or consent and such proceedings instituted
against it shall continue undismissed for a period of 60 calendar
days; or
(e) Secured Party, in good faith, believes the prospect of
payment or performance is impaired or in good faith believes the
Collateral is insecure;
(f) Any agreement made by a guarantor, surety or endorser for
Debtor's default in any obligation or liability to Secured Party or
any guaranty obtained in connection with this transaction is
terminated or breached.
10. Secured Party's Remedies. Debtor agrees that when an Event of
Default has occurred and is continuing, Secured Party shall have the rights,
options, duties and remedies of a Secured Party and Debtor shall have the rights
and duties of a Debtor under the Uniform Commercial Code in effect in each
jurisdiction where the Collateral or any part thereof is located and, without
limiting the foregoing, Secured Party may exercise one or more or all, and in
any order, of the remedies hereinafter set forth:
(a) By notice in writing to Debtor, declare the entire unpaid
principal balance due under any, each, and all Schedule(s) to be
immediately due and payable; and thereupon all such
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unpaid balance(s), together with all accrued and unpaid interest thereon, shall
be immediately due and payable;
(b) Personally, or by agents or attorneys, take immediate
possession of the Collateral or any portion thereof and for that
purpose pursue the same wherever it may be found and enter any of the
premises of Debtor with or without notice, demand, process of law or
legal procedure, and search for, take possession of, remove, keep and
store the same, or use, operate, or lease the same until sold and
otherwise exercise any and all of the rights and powers of Debtor in
respect thereof;
(c) Either with or without taking possession and without
instituting any legal proceedings whatsoever (having first given
notice of such sale by mail to Debtor once at least 10 calendar days
prior to the date of such sale, and any other notice of such sale
which may be required by law, if said notice is sufficient), sell and
dispose of the Collateral or any part thereof at public auction(s) to
the highest bidder, or at a private sale(s) in one lot as an entirety
or in several lots, and either for cash or for credit and on such
terms as Secured Party may determine, and at any place (whether or not
it is in the location of the Collateral or any part thereof,
designated in the notice above referred to. Any such sale or sales may
be adjourned from time to time by announcement of the time and place
appointed for such sale or sales, or for such adjourned sales or sales
without further notice, and Secured Party may bid and become the
purchaser at any such sale;
(d) Secured Party may proceed to protect and enforce this
Agreement and any Schedule(s) by suit or suits or proceedings in
equity, at law or in bankruptcy, and whether for the specific
performance of any covenant or agreement herein contained, or
execution or aid of any power herein granted, or for foreclosure
hereunder, or for the appointment of a receiver or receivers for the
Collateral, or any party thereof, or for the enforcement of any
proper, legal or equitable remedy available under applicable law.
(e) Secured Party may require Debtor to assemble the Collateral
and return it to Secured Party at a place to be designated by Secured
Party which is reasonably convenient to both parties.
(f) Debtor agrees to pay the Secured Party all expenses or
retaking, holding, preparing for sale, or selling the Collateral in
addition to attorneys' fees as set forth above.
11. Acceleration Clause. In case of any sale of the Collateral, or any
part thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Agreement, the
outstanding principal due under any Schedule, if not previously due, the
interest accrued thereon and all other sums required to be paid by Debtor
pursuant to this Agreement shall at once become and be immediately due and
payable.
12. Exercise of Rights. No delay or omission of Secured Party in the
exercise of any right or power arising from any default shall act as a waiver of
or impair any such right or power or prevent its exercise during the continuance
of such default. No waiver by Secured Party of any such default, whether such
waiver be full or partial, shall extend to or be taken to affect any subsequent
default, nor shall it impair the rights resulting therefrom except as may be
otherwise provided therein. The giving, taking or enforcement of any other or
additional security, collateral, or
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guarantee for the payment of the Secured Obligations shall not operate to
prejudice, waive, or affect the security of this Agreement or any rights,
powers, or remedies hereunder, and Secured Party shall not be required to look
first to enforce or exhaust such other additional security, collateral, or
guarantees. All rights, remedies, and options of Secured Party hereunder, or by
law shall be cumulative.
13. Assignment by Secured Party. SECURED PARTY MAY ASSIGN OR TRANSFER
THIS AGREEMENT OR SECURED PARTY'S INTEREST IN THE COLLATERAL WITHOUT NOTICE TO
DEBTOR. Any assignee of Secured Party shall have all of the rights but none of
the obligations, of Secured Party under this Agreement, and Debtor agrees that
it will not assert against any assignee of Secured Party any defense,
counterclaim or offset that Debtor may have against
Secured Party.
14. Non-Terminable Agreement; Obligations Unconditional. This Agreement
cannot be canceled or terminated except as expressly provided herein. Debtor
hereby agrees that Debtor's obligation to pay all Secured Obligations shall be
absolute and unconditional and Debtor will not be entitled to any abatement of
Monthly Loan Repayments or other payments due under this Agreement or any
reduction thereof under circumstances or for any reason whatsoever. Debtor
hereby waives any and all existing and future claims, as offsets, against any
Monthly Loan repayments and other payments due under this Agreement as and when
due regardless of any offset or claim which may be asserted by Debtor or on its
behalf. The obligations and liabilities of Debtor hereunder will survive the
termination of this Agreement.
15. Additional Documents. In connection with and in order to provide
effective evidence of the security interest in the Collateral granted Secured
Party under this Agreement, Debtor will execute and deliver to Secured Party
such financing statements and similar documents as Secured Party requests.
Debtor authorizes Secured Party where permitted by law to make filings of such
financing statements without Debtor's signature. Debtor further agrees to
furnish Secured Party:
(a) On a timely basis, Debtor's future financial statements,
including Debtor's most recent annual report, balance sheet and income
statement, prepared in accordance with generally accepted accounting
principles, which reports, Debtor warrants, shall fully and fairly
represent the true financial condition of Debtor;
(b) any other financial information normally provided by Debtor
to the public; and
(c) Such other financial data or information relative to this
Agreement and the Collateral, including, without limitation, copies of
Suppliers' proposals and purchase orders and agreements, listings of
serial numbers or other identification data and confirmations of such
information, as Secured Party may from time to time reasonably
request. Debtor will procure and/or execute, have executed, have
acknowledged, and/or deliver to Secured Party, record and file such
other documents and notices as Secured Party deems necessary or
desirable to protect its interest in and rights under this Agreement
and Collateral. Debtor will pay for all filings, searches, title
reports, legal and other fees incurred by Secured Party in connection
with any documents to be provided by Debtor pursuant to this Agreement
and any other similar documents Secured Party may procure.
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16. Miscellaneous.
(a) Successors and Assigns. Whenever any of the parties hereto is
referred to, such reference shall be deemed to include the successors
and assigns of such parties, and all the covenants, promises, and
agreements in this Agreement contained by or on behalf of Debtor or
Secured Party shall bind and inure to the benefit of the respective
successors and assigns of each party whether so expressed or not.
(b) Partial Invalidity. The enforceability or invalidity of any
provision(s) of that Agreement shall not render any other provision(s)
herein contained unenforceable or invalid.
(c) Communications. All communications provided for herein shall
be in writing and shall be deemed to have been given (unless otherwise
required by the specific provisions in respect of any matter) (i) when
addressed and delivered personally or (ii) three (3) calendar days
following deposit in the United States mail, registered or certified,
postage prepaid, and addressed to the address set forth beneath the
respective parties' signature lines below, or as to Debtor or Secured
Party at such other address as they may designate by notice duly given
in accordance with this Section to the other party.
(d) Counterpart; Governing Law. This Agreement may be executed,
acknowledged, and delivered in any number of counterparts, each of
such counterparts constituting any original but all together only one
Agreement. This Agreement and any Schedule shall be construed and
enforced in accordance with and governed by the laws of the State of
California. Debtor agrees to submit to the jurisdiction of the State
and/or Federal Courts in California.
(e) Entire Agreement. This Agreement constitutes the entire
understanding or agreement between Secured Party and Debtor and there
is no understanding or agreement, oral or written, which is not set
forth herein. This Agreement may not be amended except by a writing
signed by Secured Party and Debtor and shall be binding upon and inure
to the benefit of the parties hereto, their permitted successors and
assigns.
DATED:
DEBTOR: SECURED PARTY:
XXX.XXX., INC. MEDICAL EQUIPMENT FINANCE
COMPANY
By: /s/Xxxxxx X. Xxxxxx By: /s/ [Signature is Illegible]
--------------------------- ---------------------------------
XXXXXX X. XXXXXX [Stamped Name is Illegible]
(Print Name) (Print Name)
Its PRESIDENT Its VICE PRESIDENT
--------------------------- ---------------------------------
(Title) (Title)
Address: Address:
Xxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
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