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EXHIBIT 10.14.1
$5,000,000.00
LOAN AND SECURITY AGREEMENT
by and among
THE COMPANY DOCTOR
ANDICARE, INC.
EMERGENCY OCCUPATIONAL PHYSICIAN'S SERVICES, INC.
(the "Borrower")
and
HCFP FUNDING, INC.
(the "Lender")
April 15, 1997
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of this
15th day of April, 1997, by and between THE COMPANY DOCTOR, a Delaware
corporation, ANDICARE, INC., a Louisiana corporation, and EMERGENCY
OCCUPATIONAL PHYSICIAN'S SERVICES, INC., a Texas corporation, (collectively,
the "Borrower"), and HCFP FUNDING, INC., a Delaware corporation ("Lender").
RECITALS
A. Borrower desires to establish certain financing arrangements with
and borrow funds from Lender, and Lender is willing to establish such
arrangements for and make loans and extensions of credit to Borrower, on the
terms and conditions set forth below.
B. The parties desire to define the terms and conditions of their
relationship and to reduce their agreements to writing.
NOW, THEREFORE, in consideration of the promises and covenants
contained in this Agreement, and for other consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
SECTION 1.1. ACCOUNT. "Account" means any right to payment for
goods sold or leased or services rendered, whether or not evidenced by an
instrument or chattel paper, and whether or not earned by performance.
SECTION 1.2. ACCOUNT DEBTOR. "Account Debtor" means any Person
obligated on any Account of Borrower, including without limitation, any
self-insured employer, any Insurer and any Medicaid/Medicare Account Debtor.
SECTION 1.3. AFFILIATE. "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 and any Affiliates thereof. A Person shall be deemed to
control a corporation 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.
SECTION 1.4. AGREEMENT. "Agreement" means this Loan and Security
Agreement, as it may be amended or supplemented from time to time.
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SECTION 1.5. BASE RATE. "Base Rate" means a rate of interest
equal to two percent (2.0%) above the "Prime Rate of Interest".
SECTION 1.6. BORROWED MONEY. "Borrowed Money" means any
obligation to repay borrowed money, any indebtedness evidenced by notes, bonds,
debentures or similar obligations, any obligation under a conditional sale or
other title retention agreement and the net aggregate rentals under any lease
which under GAAP would be capitalized on the books of the Borrower.
SECTION 1.7. BORROWER. "Borrower" has the meaning set forth in the
Preamble.
SECTION 1.8. BORROWING BASE. "Borrowing Base" has the meaning set
forth in Section 2.1(d).
SECTION 1.9. BUSINESS DAY. "Business Day" means any day on which
financial institutions are open for business in the State of Maryland,
excluding Saturdays and Sundays.
SECTION 1.10. CLOSING; CLOSING DATE. "Closing" and "Closing Date"
have the meanings set forth in Section 5.3.
SECTION 1.112 COLLATERAL. "Collateral" has the meaning set forth in
Section 3.1.
SECTION 1.12. COMMITMENT FEE. "Commitment Fee" has the meaning set
forth in Section 2.4(a).
SECTION 1.13. CONCENTRATION ACCOUNT. "Concentration Account" has
the meaning set forth in Section 2.3(a).
SECTION 1.14. CONTROLLED GROUP. "Controlled Group" means a
"controlled group" within the meaning of Section 4001(b) of ERISA.
SECTION 1.15. COST REPORT SETTLEMENT ACCOUNT. "Cost Report
Settlement Account" means an "Account" owed to Borrower by a Medicaid/Medicare
Account Debtor pursuant to any cost report, either interim, filed or audited,
as the context may require.
SECTION 1.16. DEFAULT RATE. "Default Rate" means a rate per
annum equal to three percent (3%) above the then applicable Base Rate.
SECTION 1.17. ERISA. "ERISA" has the meaning set forth in Section
4.12.
SECTION 1.18. EVENT OF DEFAULT. "Event of Default" and "Events of
Default" have the meanings set forth in Section 8.1.
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SECTION 1.19. GAAP. "GAAP" means generally accepted accounting
principles applied in a matter consistent with the financial statements
referred to in Section 4.7.
SECTION 1.20. GOVERNMENTAL AUTHORITY. "Governmental Authority"
means and includes any federal, state, District of Columbia, county, municipal,
or other government and any department, commission, board, bureau, agency or
instrumentality thereof, whether domestic or foreign.
SECTION 1.21. HAZARDOUS MATERIAL. "Hazardous Material" means any
substances defined or designated as hazardous or toxic waste, hazardous or
toxic material, hazardous or toxic substance, or similar term, by any
environmental statute, rule or regulation or any Governmental Authority.
SECTION 1.22. HIGHEST LAWFUL RATE. "Highest Lawful Rate" means the
maximum lawful rate of interest referred to in Section 2.7 that may accrue
pursuant to this Agreement.
SECTION 1.23. INSURER. A Person that insures a Patient against
certain of the costs incurred in the receipt by such Patient of Medical
Services, or that has an agreement with Borrower to compensate Borrower for
providing services to a Patient.
SECTION 1.24. LENDER. "Lender" has the meaning set forth in the
Preamble.
SECTION 1.25. LOAN. "Loan" has the meaning set forth in Section
2.1(a).
SECTION 1.26. LOAN DOCUMENTS. "Loan Documents" means and includes
this Agreement, the Note, and each and every other document now or hereafter
delivered in connection therewith, as any of them may be amended, modified, or
supplemented from time to time.
SECTION 1.27. LOAN MANAGEMENT FEE. "Loan Management Fee" has the
meaning set forth in Section 2.4(c).
SECTION 1.28. LOCKBOX. "Lockbox" has the meaning set forth in
Section 2.3(a).
SECTION 1.29. LOCKBOX BANK. "Lockbox Bank" has the meaning set
forth in Section 2.3(a).
SECTION 1.30. MAXIMUM LOAN AMOUNT. "Maximum Loan Amount" has the
meaning set forth in Section 2.1(a).
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SECTION 1.31. MEDICAID/MEDICARE ACCOUNT DEBTOR. "Medicaid/
Medicare Account Debtor" means any Account Debtor which is (i) the United
States of America acting under the Medicaid/Medicare program established
pursuant to the Social Security Act, (ii) any state or the District of Columbia
acting pursuant to a health plan adopted pursuant to Title XIX of the Social
Security Act or (iii) any agent, carrier, administrator or intermediary for any
of the foregoing. SECTION 1.32. MEDICAL SERVICES. Medical and health care
services provided to a Patient, including, but not limited to, medical and
health care services provided to a Patient and performed by Borrower which are
covered by a policy of insurance issued by an Insurer, and includes physician
services, nurse and therapist services, dental services, hospital services,
skilled nursing facility services, comprehensive outpatient rehabilitation
services, home health care services, residential and out-patient behavioral
healthcare services, and medicine or health care equipment provided by Borrower
to a Patient for a necessary or specifically requested valid and proper medical
or health purpose.
SECTION 1.33. NOTE. "Note" has the meaning set forth in Section
2.1(c).
SECTION 1.34. OBLIGATIONS. "Obligations" has the meaning set forth
in Section 3.1.
SECTION 1.35 PATIENT. Any Person receiving Medical Services from
PA and all Persons legally liable to pay PA for such Medical Services other
than Insurers.
SECTION 1.36. PERMITTED LIENS. "Permitted Liens" means: (a) liens
for taxes not delinquent, or which are being contested in good faith and by
appropriate proceedings which suspend the collection thereof and in respect of
which adequate reserves, if required by GAAP, have been made (provided that
such proceedings do not, in Lender's sole discretion, involve any substantial
danger of the sale, loss or forfeiture of such property or assets or any
interest therein); (b) deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under unemployment
insurance; (c) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of business; (d) mechanic's, workmen's, materialmen's or other like
liens arising in the ordinary course of business with respect to obligations
which are not due, or which are being contested in good faith by appropriate
proceedings which suspend the collection thereof and in respect of which
adequate reserves if required by GAAP, have been made (provided that such
proceedings do not, in Lender's sole discretion, involve any substantial danger
of the sale, loss or forfeiture of such property or assets or any interest
therein); (e) liens and encumbrances in favor of Lender; (f) liens granted in
connection with the lease or purchase of clinics, operations, facilities or
other property or assets financed by borrowings permitted by Section 7.1
(provided, however, that no such borrowings permitted by Section 7.1 may be
secured by liens on any of the Collateral); and (g) liens set forth on Schedule
1.36. and liens to secure any extension, renewal or replacement thereof and (h)
customary restrictions and other encumbrances on or as to the use of property
or liens incidental to the conduct of business or the ownership of property
which are not incurred in connection with Borrowed Money or other extensions of
credit, provided that no such liens pertain to the Collateral.
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SECTION 1.37. PERSON. "Person" means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.
SECTION 1.38. PLAN. "Plan" has the meaning set forth in Section
4.12.
SECTION 1.39. PREMISES. "Premises" has the meaning set forth in
Section 4.14.
SECTION 1.40. PRIME RATE OF INTEREST. "Prime Rate of Interest"
means that rate of interest designated by Fleet National Bank of Connecticut,
N.A., or any successor thereto, as the same may from time to time fluctuate.
SECTION 1.41. PROHIBITED TRANSACTION. "Prohibited Transaction"
means a "prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Internal Revenue Code.
SECTION 1.42. QUALIFIED ACCOUNT. "Qualified Account" means an
Account of Borrower or any of its subsidiaries (and including accounts assigned
by the PA to the Borrower) generated in the ordinary course of business from
the sale of goods or rendition of Medical Services or related services which
Lender, in its reasonable credit judgment, determines to be a Qualified
Account. Without limiting the generality of the foregoing, no Account shall be
a Qualified Account if: (a) the Account or any portion thereof is payable by
an individual beneficiary, recipient or subscriber individually and not
directly to Borrower or any of its subsidiaries by a Medicaid/Medicare Account
Debtor , a self insured employer or a commercial medical insurance carrier
acceptable to Lender; (b) the Account remains unpaid more than one hundred
twenty (120) days past the claim or invoice date; (c) the Account is subject to
any defense, set-off, counterclaim, deduction, discount, credit, chargeback,
freight claim, allowance, or adjustment of any kind; (d) any part of any goods
the sale of which has given rise to the Account has been returned, rejected,
lost, or damaged; (e) if the Account arises from the sale of goods by Borrower,
such sale was not an absolute sale or on consignment or on approval or on a
sale-or-return basis or subject to any other repurchase or return agreement, or
such goods have not been shipped to the Account Debtor or its designee; (f) if
the Account arises from the performance of services, such services have not
been actually been performed or were undertaken in violation of any law; (g)
the Account is subject to a lien other than a Permitted Lien; (h) the Borrower
knows or should have known of the bankruptcy, receivership, reorganization, or
insolvency of the Account Debtor; (i) the Account is evidenced by chattel paper
or an instrument of any kind, or has been reduced to judgment; (j) the Account
is an Account of an Account Debtor having its principal place of business or
executive office outside the United States; (k) the Account Debtor is an
Affiliate or subsidiary of Borrower; (l) more than ten percent (10%) of the
aggregate balance of all
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Accounts owing from the Account Debtor obligated on the Account are outstanding
more than one hundred and fifty (150) days past their invoice date; (m) fifty
percent (50%) or more of the aggregate unpaid Accounts from any individual
Account Debtor are not deemed Qualified Accounts hereunder; (n) the total
unpaid Accounts of the Account Debtor, except for a Medicaid/Medicare Account
Debtor, exceed twenty percent (20%) of the net amount of all Qualified Accounts
(including Medicaid/Medicare Account Debtors); (o) any covenant, representation
or warranty contained in the Loan Documents with respect to such Account has
been breached; or (p) the Account fails to meet such other specifications and
requirements which may from time to time be reasonably established by Lender.
SECTION 1.43. REPORTABLE EVENT. "Reportable Event" means a
"reportable event" as defined in Section 4043(b) of ERISA.
SECTION 1.44. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has
the meaning set forth in Section 2.1(b).
SECTION 1.45. TERM. "Term" has the meaning set forth in Section
2.8.
SECTION 1.46. PA. The Physician Group, P.A., a Texas professional
association (formerly called Xxxxxx X. Angle, M.D., P.A.), or any successor
thereto, that provides Medical Services to Patients at the facilities owned and
operated by Borrower or any of its Subsidiaries, under one or more service
agreements, including without limitation, the Practice Management, Consulting
and Clinic Services Agreement, dated November 1, 1995, between the PA and
Borrower.
ARTICLE II
LOAN
SECTION 2.1. TERMS.
(a) The maximum aggregate principal amount of credit extended
by Lender to Borrower hereunder (the "Loan") that will be outstanding at any
time is Five Million and No/100 Dollars ($5,000,000.00) (the "Maximum Loan
Amount").
(b) The Loan shall be in the nature of a revolving line of
credit, and shall include sums advanced and other credit extended by Lender to
or for the benefit of the Borrower from time to time under this Article II
(each a "Revolving Credit Loan") up to the Maximum Loan Amount depending upon
the availability in the Borrowing Base and the requests of Borrower pursuant to
the terms and conditions of Section 2.2 below. The outstanding principal
balance of the Loan may fluctuate from time to time, to be reduced by
repayments made by Borrower (which may be made without penalty or premium), and
to be increased by future Revolving Credit Loans and shall be due and payable
in full upon the expiration of the Term. For purposes of this Agreement, any
determination as to whether there is ability within the Borrowing Base for
advances or extensions of credit shall be made by Lender in its reasonable
judgment and is final and binding upon Borrower absent manifest error.
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(c) At Closing, Borrower shall execute and deliver to Lender a
promissory note evidencing the Borrower's unconditional obligation to repay
Lender for Revolving Credit Loans, in the form of Exhibit A to this Agreement
(the "Note"), dated the date hereof, payable to the order of Lender in
accordance with the terms thereof. The Note shall bear interest from the date
thereof until repaid, with interest payable monthly in arrears on the first
Business Day of each month, at a rate per annum (on the basis of the actual
number of days elapsed over a year of 360 days) equal to the Base Rate,
provided that after and during the continuance of an Event of Default such rate
shall be equal to the Default Rate. Each Revolving Credit Loan shall be deemed
evidenced by the Note, which is deemed incorporated by reference herein and
made a part hereof.
(d) Subject to the terms and conditions of this Agreement,
advances under the Loan shall be made against a borrowing base equal to eighty
percent (80%) of Qualified Accounts due and owing from any Medicaid/Medicare
Account Debtor, self-insured employer, Insurer or other Account Debtor (the
"Borrowing Base").
SECTION 2.2. LOAN ADMINISTRATION. Borrowings under the Loan shall be
as follows:
(a) A request for a Revolving Credit Loan shall be made, or
shall be deemed to be made, in the following manner: (i) Borrower, may give
Lender notice of its intention to borrow, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date,
not later than 4:00 p.m. Eastern time one (1) Business Day prior to the
proposed borrowing date; provided, however, that no such request may be made at
a time when there exists an Event of Default; and (ii) the becoming due of any
amount required to be paid under this Agreement, whether as interest or for any
other Obligation, shall be deemed irrevocably to be a request for a Revolving
Credit Loan on the due date in the amount required to pay such interest or
other Obligation.
(b) Borrower hereby irrevocably authorizes Lender to disburse
the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, as follows: (i) the proceeds of each Revolving Credit Loan
requested under subsection 2.2(a)(i) shall be disbursed by Lender by wire
transfer to such bank account as may be requested by Borrower pursuant to
written direction from Borrower; and (ii) the proceeds of each Revolving Credit
Loan requested under subsection 2.2(a)(ii) shall be disbursed by Lender by way
of direct payment of the relevant interest or other Obligation.
(c) All Revolving Credit Loans shall constitute one general
Obligation of Borrower, and shall be secured by Lender's lien upon all of the
Collateral.
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(d) Lender shall enter all Revolving Credit Loans as debits to
a loan account in the name of Borrower and shall also record in said loan
account all payments made by Borrower on any Obligations and all proceeds of
Collateral which are indefeasibly paid to Lender, and may record therein, in
accordance with customary accounting practice, other debits and credits,
including interest and all charges and expenses properly chargeable to
Borrower.
(e) Lender will account to Borrower monthly with a statement
of Revolving Credit Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Lender shall be deemed final, binding
and conclusive upon Borrower, absent manifest error, unless Lender is notified
by Borrower in writing to the contrary within thirty (30) days of the date each
accounting is mailed to Borrower. Such notice shall be deemed an objection to
those items specifically objected to therein.
SECTION 2.3. COLLECTIONS, DISBURSEMENTS, BORROWING AVAILABILITY, AND
LOCKBOX ACCOUNT. Borrower shall maintain a lockbox account (the "Lockbox")
with NationsBank, N.A.(the "Lockbox Bank"), subject to the provisions of this
Agreement, and shall execute with the Lockbox Bank a Lockbox Agreement in the
form attached as Exhibit B, and such other agreements related thereto as Lender
may reasonably require. Borrower shall ensure that all collections of Accounts
are paid directly from Account Debtors into the Lockbox, and that all funds
paid into the Lockbox are immediately transferred into a depository account
maintained by Lender at Bank One Arizona, N.A. or First Bank, N.A., as
determined by Lender in its sole discretion and communicated to Borrower (the
"Concentration Account"). Lender shall apply, on a daily basis, all funds
transferred into the Concentration Account pursuant to this Section 2.3 to
reduce the outstanding indebtedness under the Loan with future Revolving Credit
Loans, to be made by Lender under the conditions set forth in this Article II.
To the extent that any collections of Accounts or proceeds of other Collateral
are not sent directly to the Lockbox but are received by Borrower, such
collections shall be held in trust for the benefit of Lender and immediately
remitted, in the form received, to the Lockbox Bank for transfer to the
Concentration Account immediately upon receipt by Borrower. Borrower
acknowledges and agrees that its compliance with the terms of this Section 2.3
is essential, and that upon its failure to comply with any such terms Lender
shall be entitled to assess a non-compliance fee which shall operate to
increase the Base Rate by two percent (2%) per annum during any period of
non-compliance. Lender shall be entitled to assess such fee whether or not an
Event of Default is declared or otherwise occurs. All funds transferred from
the Concentration Account for application to Borrower's indebtedness to Lender
shall be applied to reduce the Loan balance, but for purposes of calculating
interest shall be subject to a five (5) Business Day clearance period. If as
the result of collections of Accounts pursuant to the terms and conditions of
this Section 2.3 a credit balance exists with respect to the Concentration
Account, such credit balance shall not accrue interest in favor of Borrower,
but shall be available to Borrower at any time or times for so long as no Event
of Default exists.
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SECTION 2.4. FEES.
(a) At Closing, Borrower shall unconditionally pay to Lender a
commitment fee of Twenty Five Thousand and No/100 Dollars ($25,000.00) (the
"Commitment Fee").
(b) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly loan management fee (the "Loan
Management Fee") equal to eight and three tenths one hundredths of one percent
(0.083%) of the average amount of the outstanding principal balance of the
Revolving Credit Loans during the preceding month. The Loan Management Fee
shall be payable monthly in arrears on the first day of each successive
calendar month.
(c) Borrower shall pay to Lender all reasonable out-of-pocket
audit and appraisal fees in connection with audits and appraisals of Borrower's
books and records and such other matters as Lender shall deem appropriate,
which shall be due and payable on the first Business Day of the month following
the date of issuance by Lender of a request for payment thereof to Borrower;
provided that before an Event of Default, Borrower shall not pay for more than
one audit and one appraisal in any twelve (12) month period.
(d) Borrower shall pay to Lender, on demand, any and all fees,
costs or expenses which Lender or any participant pays to a bank or other
similar institution (including, without limitation, any fees paid by Lender to
any participant) arising out of or in connection with (i) the forwarding to
Borrower or any other Person on behalf of Borrower, by Lender, of proceeds of
Revolving Credit Loans made by Lender to Borrower pursuant to this Agreement,
and (ii) the depositing for collection, by Lender or any participant, of any
check or item of payment received or delivered to Lender or any participant on
account of Obligations.
SECTION 2.5. PAYMENTS. Principal payable on account of Revolving
Credit Loans shall be payable by Borrower to Lender immediately upon the
earliest of (i) the receipt by Borrower of any proceeds of any of the
Collateral, to the extent of such proceeds, (ii) the occurrence of an Event of
Default in consequence of which the Loan and the maturity of the payment of the
Obligations are accelerated, or (iii) the termination of this Agreement
pursuant to Section 2.8 hereof; provided, however, that if any advance made by
Lender in excess of the Borrowing Base shall exist at any time, Borrower shall,
immediately upon demand, repay such overadvance. Interest accrued on the
Revolving Credit Loans shall be due on the earliest of (i) the first Business
Day of each month (for the immediately preceding month), computed on the last
calendar day of the preceding month, (ii) the occurrence of an Event of Default
in consequence of which the Loan and the maturity of the payment of the
Obligations are accelerated, or (iii) the termination of this Agreement
pursuant to Section 2.8 hereof. Except to the extent otherwise set forth in
this Agreement, all payments of principal and of interest on the Loan, all
other charges and any other obligations of Borrower hereunder, shall be made to
Lender to the Concentration Account, in immediately available funds.
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SECTION 2.6. USE OF PROCEEDS. The proceeds of Lender's advances
under the Loan shall be used solely for working capital and general corporate
purposes and for other costs of Borrower arising in the ordinary course of
Borrower's business.
SECTION 2.7. INTEREST RATE LIMITATION. The parties intend to conform
strictly to the applicable usury laws in effect from time to time during the
term of the Loan. Accordingly, if any transaction contemplated hereby would be
usurious under such laws, then notwithstanding any other provision hereof: (a)
the aggregate of all interest that is contracted for, charged, or received
under this Agreement or under any other Loan Document shall not exceed the
maximum amount of interest allowed by applicable law (the "Highest Lawful
Rate"), and any excess shall be promptly credited to Borrower by Lender (or, to
the extent that such consideration shall have been paid, such excess shall be
promptly refunded to Borrower by Lender); (b) neither Borrower nor any other
Person now or hereafter liable hereunder shall be obligated to pay the amount
of such interest to the extent that it is in excess of the Highest Lawful Rate;
and (c) the effective rate of interest shall be reduced to the Highest Lawful
Rate. All sums paid, or agreed to be paid, to Lender for the use, forbearance,
and detention of the debt of Borrower to Lender shall, to the extent permitted
by applicable law, be allocated throughout the full term of the Note until
payment is made in full so that the actual rate of interest does not exceed the
Highest Lawful Rate in effect at any particular time during the full term
thereof. If at any time the rate of interest under the Note exceeds the
Highest Lawful Rate, the rate of interest to accrue pursuant to this Agreement
shall be limited, notwithstanding anything to the contrary herein, to the
Highest Lawful Rate, but any subsequent reductions in the Base Rate shall not
reduce the interest to accrue pursuant to this Agreement below the Highest
Lawful Rate until the total amount of interest accrued equals the amount of
interest that would have accrued if a varying rate per annum equal to the
interest rate under the Note had at all times been in effect.
SECTION 2.8. TERM.
(a) Subject to Lender's right to cease making Revolving Credit
Loans to Borrower upon or after any Event of Default, this Agreement shall be
in effect for a period of two (2) years from the Closing Date, unless
terminated as provided in this Section 2.8 (the "Term"), and this Agreement
shall be renewed for one-year periods thereafter upon the mutual written
agreement of the parties.
(b) Notwithstanding anything herein to the contrary, Lender
may terminate this Agreement without notice upon or during the continuance of
an Event of Default.
(c) Upon at least fifteen (15) days prior written notice to
Lender, Borrower may terminate this Agreement prior to the second annual
anniversary of the Closing Date, provided that, at the effective date of such
termination, Borrower shall pay to Lender (in addition to the then outstanding
principal, accrued interest and other Obligations owing under the terms of this
Agreement and any other Loan Documents) as liquidated damages for the loss of
bargain and not as a penalty, an amount equal to Twenty Thousand and No/100
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Dollars ($20,000.00) if the effective date of such termination by Borrower is
on or prior to the first annual anniversary of the Closing Date.
(d) The Obligations may be prepaid by Borrower at any time
without the payment of any fee, damages, premium or penalty, so long as the fee
described in Section 2.8b is paid upon any termination during the first year.
(e) All of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination of this
Agreement. All undertakings, agreements, covenants, warranties, and
representations, of Borrower contained in the Loan Documents shall survive any
such termination and Lender shall retain its liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds.
SECTION 2.9 JOINT AND SEVERAL LIABILITY; BINDING OBLIGATIONS.
Each entity comprising the Borrower and executing this Agreement on behalf of
the Borrower shall be jointly and severally liable for all of the Obligations.
In addition, each entity comprising the Borrower hereby acknowledges and agrees
that (i) all of the representations, warranties, covenants, obligations,
conditions, agreements and other terms contained in this Agreement shall be
applicable to and shall be binding upon each individual entity comprising the
Borrower, and shall be binding upon all such entities when taken together.
ARTICLE III
COLLATERAL
SECTION 3.1. GENERALLY. As security for the payment of all
liabilities of Borrower to Lender, under the Loan Documents, including without
limitation: (i) indebtedness evidenced under the Note, repayment of Revolving
Credit Loans, all fees and charges owing by Borrower, and all other liabilities
and obligations of every kind or nature whatsoever of Borrower to Lender, under
the Loan Documents, whether now existing or hereafter incurred, joint or
several, matured or unmatured, direct or indirect, primary or secondary, due or
to become due, including but not limited to any extensions, modifications,
substitutions, increases and renewals thereof, (ii) the payment of all amounts
advanced by Lender to preserve, protect, defend, and enforce its rights
hereunder and in the following property in accordance with the terms of this
Agreement, and (iii) the payment of all expenses incurred by Lender in
connection therewith (collectively, the "Obligations"). Borrower hereby
assigns and grants to Lender a continuing first priority lien on and security
interest in, upon, and to the following property (the "Collateral"):
(a) All of Borrower's now-owned and hereafter acquired or
arising Accounts, accounts receivable and rights to payment of every kind and
description, and any contract rights, chattel paper, documents and instruments
with respect thereto;
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(b) All of Borrower's now owned and hereafter acquired or
arising general intangibles of every kind and description pertaining to its
Accounts, accounts receivable and other rights to payment, including, but not
limited to, all existing and future customer lists, choses in action, claims,
books, records, contracts, licenses, formulae, tax and other types of refunds,
returned and unearned insurance premiums, rights and claims under insurance
policies, and computer information, software, records, and data;
(c) All of Borrower's now or hereafter acquired deposit
accounts into which Accounts are deposited, including the Concentration
Account;
(d) All of Borrower's monies and other property of every kind
and nature now or at any time or times hereafter in the possession of or under
the control of Lender or a bailee or Affiliate of Lender; and
(e) The proceeds (including, without limitation, insurance
proceeds) of all of the foregoing.
SECTION 3.2. LIEN DOCUMENTS. At Closing and thereafter as Lender
deems necessary or reasonably requests Borrower shall execute and deliver to
Lender, or have executed and delivered (all in form and substance satisfactory
to Lender in its sole discretion):
(a) UCC-1 Financing statements pursuant to the Uniform
Commercial Code in effect in the jurisdiction(s) in which Borrower operates,
which Lender may file in any jurisdiction where any Collateral is or may be
located and in any other jurisdiction that Lender deems appropriate; provided
that a carbon, photographic, or other reproduction or other copy of this
Agreement or of a financing statement is sufficient as and may be filed in lieu
of a financing statement; and
(b) Any other agreements, documents, instruments, and writings
deemed necessary by Lender or as Lender may otherwise reasonably request from
time to time in its discretion to evidence, perfect, or protect Lender's lien
and security interest in the Collateral required hereunder.
SECTION 3.3. COLLATERAL ADMINISTRATION.
(a) All Collateral (except deposit accounts) will at all times
be kept by Borrower at its principal office(s) as set forth on Exhibit C hereto
and shall not, without the prior written approval of Lender, be moved
therefrom.
(b) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit to Lender on
such periodic basis as Lender shall reasonably request a sales and collections
report for the preceding period, in form satisfactory to Lender. In addition,
if Accounts in an aggregate face amount in excess of $50,000.00 become
ineligible because they fall within one of the specified categories of
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ineligibility set forth in the definition of Qualified Accounts or otherwise,
Borrower shall notify Lender of such occurrence on the first Business Day
following its having knowledge of such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. If reasonably requested by
Lender, Borrower shall deliver to Lender copies of claims, invoices or other
information related to Accounts.
(c) Whether or not an Event of Default has occurred, any of
Lender's officers, employees or agents shall have the right, at any time or
times hereafter, in the name of Lender, any designee of Lender or Borrower, to
verify the validity, amount or any other matter relating to any Accounts by
mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude such verification
process.
(d) To expedite collection, Borrower shall endeavor in the
first instance to make collection of its Accounts for Lender. Lender retains
the right at all times after and during the occurrence of an Event of Default,
subject to applicable law regarding Medicaid/Medicare Account Debtors, to
notify Account Debtors that Accounts have been assigned to Lender and to
collect Accounts directly in its own name and to charge the collection costs
and expenses, including attorneys' fees, to Borrower.
(e) Lender will promptly release the Collateral upon payment
in full of the Obligations and, in such connection, execute and deliver, at
Borrower's expense, such instruments as Borrower may reasonably request to
evidence the release of the Collateral.
SECTION 3.4. OTHER ACTIONS. In addition to the foregoing, if
requested by Lender, Borrower (i) shall provide prompt written notice to each
private indemnity, managed care or other Insurer and each self-insured employer
who either is currently an Account Debtor or becomes an Account Debtor at any
time following the date hereof that the Lender has been granted a first
priority lien and security interest in, upon and to all Accounts applicable to
such Insurer, and hereby authorizes Lender to send any and all similar notices
to such Insurers and employers by Lender, and (ii) shall do anything further
that may be lawfully required by Lender to secure Lender and effectuate the
intentions and objects of this Agreement, including but not limited to the
execution and delivery of lockbox agreements, continuation statements,
amendments to financing statements, and any other documents required hereunder.
At Lender's request, Borrower shall also immediately deliver to Lender all
items of Collateral for which Lender must receive possession to obtain a
perfected security interest. Borrower shall, on Lender's demand, deliver to
Lender all notes, certificates, and documents of title, chattel paper,
warehouse receipts, instruments, and any other similar instruments constituting
Collateral.
SECTION 3.5. SEARCHES. Prior to Closing, and thereafter (as and when
reasonably requested by Lender in its sole discretion), Borrower shall obtain
and deliver to Lender the following searches against Borrower (the results of
which are to be consistent with Borrower's representations and warranties under
this Agreement), all at its own expense:
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(a) Uniform Commercial Code searches with the Secretary of
State and local filing offices of each jurisdiction where Borrower maintains
its executive offices, a place of business, or assets;
(b) Judgment and federal tax lien searches, in each
jurisdiction searched under clause (a) above; and
(c) Good standing certificates showing Borrower to be in good
standing in its state of formation and in each other state in which it is doing
and presently intends to do business for which qualification is required.
SECTION 3.6. POWER OF ATTORNEY. Each of the officers of Lender is
hereby irrevocably made, constituted and appointed the true and lawful attorney
for Borrower (without requiring any of them to act as such) with full power of
substitution to do the following, upon the occurrence and during the
continuation of an Event of Default: (a) endorse the name of Borrower upon any
and all checks, drafts, money orders, and other instruments for the payment of
money that are payable to Borrower and constitute collections on Borrower's
Accounts; (b) execute in the name of Borrower any financing statements,
schedules, assignments, instruments, documents, and statements that Borrower is
obligated to give Lender hereunder; and (c) do such other and further acts and
deeds in the name of Borrower that Lender may deem necessary or desirable to
enforce any Account or other Collateral or perfect Lender's security interest
or lien in any Collateral.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender, and shall be
deemed to represent and warrant on each day on which Borrower makes a request
for a Revolving Credit Loan, that:
SECTION 4.1. SUBSIDIARIES. Except as set forth in Schedule 4.1,
Borrower has no subsidiaries as of the date hereof.
SECTION 4.2. ORGANIZATION AND GOOD STANDING. Borrower is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of formation, is in good standing as a foreign corporation in
each jurisdiction in which the character of the properties owned or leased by
it therein or the nature of its business makes such qualification necessary
except where the failure to qualify would not have a material adverse effect on
the business or financial condition of Borrower and its subsidiaries, taken as
a whole, 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 except to the
extent that the failure to do so would not have a material adverse effect on
the business or financial condition of Borrower and its subsidiaries taken as a
whole.
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SECTION 4.3. AUTHORITY. Borrower has full corporate power and
authority to enter into, execute, and deliver this Agreement and to perform its
obligations hereunder, to borrow the Loan, to execute and deliver the Note, and
to incur and perform the obligations provided for in the Loan Documents, all of
which have been duly authorized by all necessary corporate action. No consent
or approval of shareholders of, or lenders to, Borrower and no consent,
approval, filing or registration with any Governmental Authority is required as
a condition to the validity of the Loan Documents or the performance by
Borrower of its obligations thereunder.
SECTION 4.4. BINDING AGREEMENT. This Agreement and all other Loan
Documents constitute, and the Note, when issued and delivered pursuant hereto
for value received, will constitute, the valid and legally binding obligations
of Borrower, enforceable against Borrower in accordance with their respective
terms, subject to bankruptcy, insolvency and other laws affecting creditors'
rights and general principles of equity.
SECTION 4.5. LITIGATION. Except as disclosed in Schedule 4.5, there
are no actions, suits, proceedings or investigations pending or threatened
against Borrower before any court or arbitrator or before or by any
Governmental Authority which, in any one case or in the aggregate, is likely to
have a material adverse effect on the business, properties, condition
(financial or otherwise) or operations, present or prospective, of Borrower and
its subsidiaries taken as a whole, or upon its ability to perform its
obligations under the Loan Documents. Borrower is not in default in any
material respect with respect to any order of any court, arbitrator, or
Governmental Authority applicable to Borrower or its properties.
SECTION 4.6. NO CONFLICTS. The execution and delivery by Borrower of
this Agreement and the other Loan Documents do not, and the performance of its
obligations thereunder will not, violate, conflict with, constitute a default
under, or result in the creation of a lien or encumbrance upon the property of
Borrower under: (a) any provision of Borrower's certificate of incorporation or
bylaws), (b) any provision of any law, rule, or regulation applicable to
Borrower, or (c) any of the following: (i) any indenture or other material
agreement or instrument to which Borrower is a party or by which Borrower or
its property is bound; or (ii) any judgment, order or decree of any court,
arbitration tribunal, or Governmental Authority having jurisdiction over
Borrower which is applicable to Borrower.
SECTION 4.7. FINANCIAL CONDITION. The annual financial statements of
the Borrower as of June 30, 1996 audited by Xxxxxxxx Xxxxx Xxxxxxx & Xxxxxxx
P.C. and the unaudited financial statements of the Borrower as of December 31,
1996, certified by the chief financial officer of the Borrower, which have been
delivered to Lender, fairly present the financial condition of the Borrower and
the results of its operations and changes in financial condition as of the
dates and for the periods referred to, and have been prepared in accordance
with GAAP. Except as disclosed on Schedule 4.7, there are no material
unrealized or anticipated
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liabilities, direct or indirect, fixed or contingent, of the Borrower as of the
dates of such financial statements which are not reflected therein or in the
notes thereto. There has been no material adverse change in the business,
properties, condition (financial or otherwise) or operations (present or
prospective) of the Borrower and its subsidiaries, taken as a whole, since
December 31, 1996. The Borrower's fiscal year ends on June 30. The federal
tax identification number of Borrower is as shown on Schedule 4.7.
SECTION 4.8. NO DEFAULT. Borrower is not in default under or with
respect to any material obligation in any respect which is likely to be
materially adverse to the business, operations, property or financial condition
of Borrower and its subsidiaries taken as a whole, or which could adversely
affect the ability of Borrower to perform its obligations under the Loan
Documents. No Event of Default or event which, with the giving of notice or
lapse of time, or both, could become an Event of Default, has occurred and is
continuing.
SECTION 4.9. TITLE TO PROPERTIES. Borrower and its subsidiaries and
the PA have good and marketable title to their respective properties and
assets, including the Collateral and the properties and assets reflected in the
financial statements described in Section 4.7, subject to no lien, mortgage,
pledge, encumbrance or charge of any kind, other than Permitted Liens.
Borrower has not agreed or consented to cause any of its properties or assets
whether owned now or hereafter acquired to be subject in the future (upon the
happening of a contingency or otherwise) to any lien, mortgage, pledge,
encumbrance or charge of any kind other than Permitted Liens.
SECTION 4.10. TAXES. Borrower has filed, or has obtained extensions
for the filing of, all federal, state and other tax returns which are required
to be filed, and has paid all taxes shown as due on those returns and all
assessments, fees and other amounts due as of the date hereof, except such
taxes the non-payment of which would not have a material adverse effect on the
business or financial condition of Borrower and its subsidiaries taken as a
whole and except as disclosed on Schedule 4.10. All tax liabilities of
Borrower were, as of December 31, 1996, and are now, adequately provided for on
Borrower's books. No tax liability has been asserted by the Internal Revenue
Service or other taxing authority against Borrower for taxes in excess of those
already paid.
SECTION 4.11. SECURITIES AND BANKING LAWS AND REGULATIONS.
(a) The use of the proceeds of the Loan and Borrower's
issuance of the Note will not directly or indirectly violate or result in a
violation of the Securities Act of 1933 or the Securities Exchange Act of 1934,
as amended, or any regulations issued pursuant thereto, including without
limitation Regulations U, T, G, or X of the Board of Governors of the Federal
Reserve System. Borrower is not engaged in the business of extending credit
for the purpose of the purchasing or carrying "margin stock" within the meaning
of those regulations. No part of the proceeds of the Loan hereunder will be
used to purchase or carry any margin stock or to extend credit to others for
such purpose.
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(b) Borrower is not an investment company within the meaning
of the Investment Company Act of 1940, as amended, nor is it, directly or
indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of that Act.
SECTION 4.12. ERISA. No employee benefit plan (a "Plan") subject to
the Employee Retirement Income Security Act of 1974 ("ERISA") and regulations
issued pursuant thereto that is maintained by Borrower or under which Borrower
could have any liability under ERISA (a) has failed to meet minimum funding
standards established in Section 302 of ERISA, (b) has failed to comply in all
material respects with all applicable requirements of ERISA and of the Internal
Revenue Code, including all applicable rulings and regulations thereunder, (c)
has engaged in or been involved in a prohibited transaction (as defined in
ERISA) under ERISA or under the Internal Revenue Code, or (d) has been
terminated. Borrower has not assumed, or received notice of a claim asserted
against Borrower for, withdrawal liability (as defined in the Multi-Employer
Pension Plan Amendments Act of 1980, as amended) with respect to any
multi-employer pension plan and is not a member of any Controlled Group (as
defined in ERISA) except the Controlled Group that includes its subsidiaries.
Borrower has timely made when due all contributions with respect to any
multi-employer pension plan in which it participates and no event has occurred
triggering a claim against Borrower for withdrawal liability with respect to
any multi-employer pension plan in which Borrower participates.
SECTION 4.13. COMPLIANCE WITH LAW. Except as described in Schedule
4.13, and except to the extent that any violation, absence or non-compliance
would not have a material adverse effect on the business or financial condition
of Borrower and its subsidiaries taken as a whole: Borrower is not in violation
of any statute, rule or regulation of any Governmental Authority (including,
without limitation, any statute, rule or regulation relating to employment
practices or to environmental, occupational and health standards and controls).
Borrower has obtained all licenses, permits, franchises, and other governmental
authorizations necessary for the ownership of its properties and the conduct of
its business. Borrower is current with all reports and documents required to
be filed with any state or federal securities commission or similar
Governmental Authority and is in full compliance with all applicable rules and
regulations of such commissions.
SECTION 4.14. ENVIRONMENTAL MATTERS. No use, exposure, release,
generation, manufacture, storage, treatment, transportation or disposal of
Hazardous Material has occurred or is occurring on or from any real property on
which the Collateral is located or which is owned, leased or otherwise occupied
by Borrower (the "Premises"), or off the Premises as a result of any action of
Borrower, except as described in Schedule 4.14 or except to the extent that the
same would not have a material adverse effect on the business or financial
condition of Borrower and its subsidiaries, taken as a whole. All Hazardous
Material used, treated, stored, transported to or from, generated or handled on
the Premises, or off the Premises by Borrower, has been disposed of on or off
the Premises by or on behalf of Borrower in a lawful manner. There are no
underground storage tanks present on or under the Premises
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owned or leased by Borrower. No other environmental, public health or safety
hazards exist with respect to the Premises, except to the extent that the same
would not have a material adverse effect on the business or financial condition
of Borrower and its subsidiaries, taken as a whole..
SECTION 4.15. PLACES OF BUSINESS. The only places of
business of Borrower, and the places where it keeps and intends to keep the
Collateral and records concerning the Collateral as of the date hereof, are at
the addresses set forth in Schedule 4.15. Schedule 4.15 also lists the owner
of record of each such property.
SECTION 4.16. INTELLECTUAL PROPERTY. Borrower exclusively owns or
possesses all the patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, franchises, licenses, and
rights with respect to the foregoing necessary for the present and planned
future conduct of its business, without any conflict with the rights of others
or except to the extent that the same would not have a material adverse effect
on the business or financial condition of Borrower and its subsidiaries, taken
as a whole. A list of all such intellectual property (indicating the nature of
Borrower's interest), as well as all outstanding franchises and licenses given
by or held by Borrower as of the date hereof, is attached as Schedule 4.16.
Borrower is not in default of any obligation or undertaking with respect to
such intellectual property or rights or except to the extent that the same
would not have a material adverse effect on the business or financial condition
of Borrower and its subsidiaries, taken as a whole.
SECTION 4.17. CAPITALIZATION. The capitalization of Borrower as of
the date hereof showing all classes of the outstanding stock of the Borrower is
as set forth on Schedule 4.17.
SECTION 4.18. MATERIAL FACTS. Neither this Agreement nor any other
Loan Document nor any other agreement, document, certificate, or statement
furnished to Lender by or on behalf of Borrower in connection with the
transactions contemplated hereby contains any untrue statement of material fact
or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There is no fact known to Borrower
that materially adversely affects or in the future may materially adversely
affect the business, operations, affairs or financial condition of Borrower and
its subsidiaries taken as a whole, or any of its properties or assets.
SECTION 4.19. INVESTMENTS, GUARANTEES, AND CERTAIN CONTRACTS.
Borrower does not own or hold any equity or long-term debt investments in, have
any outstanding advances to, have any outstanding guarantees for the
obligations of, or have any outstanding borrowings from, any Person as of the
date hereof, except as described on Schedule 4.19. Borrower is not a party to
any contract or agreement, or subject to any corporate restriction, which
materially adversely affects the business of it and its Subsidiaries taken as a
whole.
SECTION 4.20. BUSINESS INTERRUPTIONS. Within five years prior to the
date hereof, neither the business, property or assets, or operations of
Borrower has been materially
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adversely affected in any way by any casualty, strike, lockout, combination of
workers, or order of the United States of America or other Governmental
Authority, directed against Borrower. There are no pending or threatened labor
disputes, strikes, lockouts, or similar occurrences or grievances against
Borrower or its business.
SECTION 4.21. NAMES. Within five years prior to the date hereof,
Borrower has not conducted business under or used any other name (whether
corporate, partnership or assumed) other than as shown on Schedule 4.21.
Borrower is the sole owner of all names listed on that Schedule and any and all
business done and invoices issued in such names are Borrower's sales, business,
and invoices. Each trade name of Borrower represents a division or trading
style of Borrower and not a separate Person or independent Affiliate.
SECTION 4.22 JOINT VENTURES. Borrower is not engaged in any joint
venture or partnership with any other Person as of the date hereof, except as
set forth on Schedule 4.22.
SECTION 4.23 ACCOUNTS. Lender may rely, in determining which
Accounts are Qualified Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts. Unless otherwise indicated
in writing to Lender, with respect to each Account:
(a) It is genuine and in all respects what it purports to be,
and is not evidenced by a judgment;
(b) It arises out of a completed, bona fide sale and delivery
of goods or rendition of services by Borrower or its subsidiaries or by PA in
the ordinary course of business and in accordance with the terms and conditions
of all purchase orders, contracts, certification, participation, certificate of
need, or other documents relating thereto and forming a part of the contract
between Borrower, a subsidiary or PA and the Account Debtor;
(c) It is for a liquidated amount maturing as stated in a
duplicate claim or invoice covering such sale or rendition of services, a copy
of which has been furnished or is available to Lender;
(d) Such Account, and Lender's security interest therein, is
not, and will not (by voluntary act or omission by Borrower), be in the future,
subject to any offset, lien, deduction, defense, dispute, counterclaim or any
other adverse condition, and each such Account is absolutely owing to Borrower,
a subsidiary or PA and is not contingent in any respect or for any reason;
(e) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or reduces the amount
payable thereunder from the face amount of the claim or invoice and statements
delivered to Lender with respect thereto;
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(f) To the best of Borrower's knowledge, (i) the Account
Debtor thereunder had the capacity to contract at the time any contract or
other document giving rise to the Account was executed and (ii) such Account
Debtor is solvent;
(g) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account Debt
thereunder which might result in any material adverse change in such Account
Debtor's financial condition or the collectibility of such Account;
(h) It has been billed and forwarded to the Account Debtor for
payment in accordance with applicable laws and compliance and conformance with
any and requisite procedures, requirements and regulations governing payment by
such Account Debtor with respect to such Account, and such Account if due from
a Medicaid/Medicare Account Debtor is properly payable directly to Borrower, a
subsidiary or PA; and
(i) Borrower, its subsidiaries and PA, as the case may be,
obtained and currently has all certificates of need, Medicaid and Medicare
provider numbers, licenses, permits and authorizations as necessary in the
generation of such Accounts.
ARTICLE V
CLOSING AND CONDITIONS OF LENDING
SECTION 5.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of
Lender to enter into and perform this Agreement and to make Revolving Credit
Loans is subject to the following conditions precedent:
(a) Lender shall have received two (2) originals of this
Agreement and all other Loan Documents required to be executed and delivered at
or prior to Closing (other than the Note, as to which Lender shall receive only
one original), executed by Borrower and any other required Persons, as
applicable.
(b) Lender shall have received all searches and good standing
certificates required by Section 3.5.
(c) Borrower shall have complied in all material respects and
shall then be in compliance in all material respects with all the terms,
covenants and conditions of the Loan Documents.
(d) There shall have occurred no Event of Default and no event
which, with the giving of notice or the lapse of time, or both, could
constitute such an Event of Default.
(e) The representations and warranties contained in Article IV
shall be true and correct in all material respects.
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(f) Lender shall have received copies of all board of
directors resolutions of the Borrower, and other corporate action taken by
Borrower to authorize the execution, delivery and performance of the Loan
Documents and the borrowing of the Loan thereunder, as well as the names and
signatures of the officers of Borrower authorized to execute documents on its
behalf in connection herewith, all as also certified as of the date hereof by
Borrower's chief financial officer, and such other papers as Lender may
require.
(g) Lender shall have received copies, certified as true,
correct and complete by a corporate officer of Borrower, of the certificate of
incorporation of Borrower, with any amendments to any of the foregoing, and all
other documents necessary for performance of the obligations of Borrower under
this Agreement and the other Loan Documents.
(h) Lender shall have received a written opinion of counsel
for Borrower, dated the date hereof, in the form of Exhibit D.
(i) Lender shall have received such financial statements,
reports, certifications, and other operational information required to be
delivered hereunder, including without limitation an initial borrowing base
certificate calculating the Borrowing Base.
(j) Lender shall have received the Commitment Fee.
(k) The Lockbox and the Concentration Account shall have been established.
(l) Lender shall have received a certificate of Borrower's
chief financial officer, dated the Closing Date, certifying that all of the
conditions specified in this Section have been fulfilled.
SECTION 5.2. CONDITIONS PRECEDENT TO ADVANCES. Notwithstanding any
other provision of this Agreement, no proceeds from a Revolving Credit Loan,
shall be disbursed hereunder unless the following conditions have been
satisfied or waived immediately prior to such disbursement:
(a) The representations and warranties on the part of
Borrower contained in Article IV of this Agreement shall be true and correct in
all material respects at and as of the date of disbursement or advance, as
though made on and as of such date (except to the extent that such
representations and warranties expressly relate solely to an earlier date and
except that the references in Section 4.7 to financial statements shall be
deemed to be a reference to the then most recent annual and interim financial
statements of Borrower furnished to Lender pursuant to Section 6.1 hereof).
(b) No Event of Default or event which, with the giving
of notice of the lapse of time, or both, could become an Event of Default shall
have occurred and be continuing or would result from the making of the
disbursement or advance.
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(c) No material adverse change in the condition
(financial or otherwise), properties, business, or operations of Borrower and
its subsidiaries taken as a whole shall have occurred and be continuing with
respect to Borrower since the date hereof.
SECTION 5.3. CLOSING. Subject to the conditions of this Article V,
the Loan shall be made available on the date as is mutually agreed by the
parties (the "Closing Date") at such time as may by mutually agreeable to the
parties upon the execution hereof (the "Closing") at such place as may be
requested by Lender.
SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing hereunder,
or by making advances under the Loan, Lender does not waive a breach of any
representation or warranty of Borrower hereunder or under any other Loan
Document, and all of Lender's claims and rights resulting from any breach or
misrepresentation by Borrower are specifically reserved by Lender.
ARTICLE VI
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that for so long as Borrower may borrow
hereunder and until payment in full of the Note and performance of all other
obligations of Borrower under the Loan Documents:
SECTION 6.1. FINANCIAL STATEMENTS AND COLLATERAL REPORTS. Borrower
will furnish to Lender (a) a sales and collections report and accounts
receivable aging schedule on a form acceptable to Lender within fifteen (15)
days after the end of each calendar month, which shall include, but not be
limited to, a report of sales, credits issued, and collections received; (b)
payable aging schedules within fifteen (15) days after the end of each calendar
month; (c) internally prepared monthly financial statements for Borrower,
certified by the chief financial officer of Borrower, within forty-five (45)
days of the end of each calendar month, accompanied by management analysis and
actual vs. budget variance reports; (d) to the extent prepared by Borrower,
annual projections, profit and loss statements, balance sheets, and cash flow
reports (prepared on a monthly basis) for the succeeding fiscal year within
thirty (30) days before the end of each of Borrower's fiscal years; (e)
internally prepared annual financial statements for Borrower within
seventy-five (75) days after the end of each of Borrower's fiscal years; (f)
annual audited financial statements for the Borrower prepared by Xxxxxxxx Xxxxx
Xxxxxxx & Xxxxxxx P.C., or a firm of independent public accountants reasonably
satisfactory to Lender, within one hundred thirty-five (135) days after the end
of each of Borrower's fiscal year; (g) promptly upon receipt thereof, copies of
any reports submitted to Borrower by independent accountants in connection with
any interim audit of the books of Borrower and copies of each management
control letter provided to Borrower by independent accountants; (h) as soon as
available, copies of all financial statements and notices provided by Borrower
to all of its stockholders; and (i) such additional information, reports or
statements as Lender may from time to time reasonably request. Annual
financial statements
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shall set forth in comparative form figures for the corresponding periods in
the prior fiscal year. All financial statements shall include a balance sheet
and statement of earnings and shall be prepared in accordance with GAAP.
SECTION 6.2. PAYMENTS HEREUNDER. Borrower will make all payments of
principal, interest, fees, and all other payments required hereunder, under the
Loan, and under any other agreements with Lender to which Borrower is a party,
as and when due.
SECTION 6.3. EXISTENCE, GOOD STANDING, AND COMPLIANCE WITH LAWS.
Borrower will do or cause to be done all things necessary (a) to obtain and
keep in full force and effect all corporate existence, rights, licenses,
privileges, and franchises of Borrower and its subsidiaries 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 and its subsidiaries; and (b) to maintain and protect the properties
used or useful in the conduct of the operations of Borrower and its
subsidiaries, in a prudent manner, including without limitation the maintenance
at all times of such insurance upon its insurable property and operations as
required by law or by Section 6.7 hereof, (i) except in each case to the extent
that the failure to do so would not have a material adverse effect on the
business or financial condition of Borrower and its subsidiaries taken as a
whole and (ii) except that Borrower and its subsidiaries may dispose of
operations, assets or properties for reasonably equivalent value as the Board
of Directors of Borrower may determine is in the best interests of the business
of Borrower and its subsidiaries taken as a whole, which disposition shall not
exceed in any fiscal year the aggregate of $200,000.
SECTION 6.4. LEGALITY. The making of the Loan and each disbursement
or advance under the Loan shall not be subject to any penalty or special tax,
shall not be prohibited by any governmental order or regulation applicable to
Borrower, and shall not violate any rule or regulation of any Governmental
Authority, and necessary consents, approvals and authorizations of any
Governmental Authority to or of any such disbursement or advance shall have
been obtained.
SECTION 6.5. LENDER'S SATISFACTION. All instruments and legal
documents and proceedings in connection with the transactions contemplated by
this Agreement shall be reasonably satisfactory in form and substance to Lender
and its counsel, and Lender shall have received all documents, including
records of corporate proceedings and opinions of counsel, which Lender may have
reasonably requested in connection therewith.
SECTION 6.6. 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 subsidiaries, or their income or profits
or upon its properties or any part thereof, before the same shall be in default
and prior to the date on which penalties attach thereto, as well as all lawful
claims for labor, material, supplies or otherwise which, if unpaid, might
become a lien or charge upon the properties or any part thereof of Borrower,
except to
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the extent that the failure to do so would not have a material adverse effect
on the business or financial condition of Borrower and its subsidiaries taken
as a whole; provided, however, that the 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 the
Borrower shall have set aside on their book, if required by GAAP, 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
Collateral is not materially adversely affected thereby and Lender's lien and
priority on the Collateral are not materially adversely affected, altered or
impaired thereby.
SECTION 6.7. INSURANCE. Borrower will carry adequate public
liability and professional liability insurance with responsible companies
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.
SECTION 6.8. GENERAL INFORMATION. Borrower will furnish to Lender
such information as Lender may, from time to time, reasonably request with
respect to the business or financial affairs of Borrower, and permit any
officer, employee or agent of Lender to visit and inspect any of the
properties, to examine the minute books, books of account and other records,
including management letters prepared by Borrower's auditors, of Borrower, and
make copies thereof or extracts therefrom, and to discuss its and their
business affairs, finances and accounts with, and be advised as to the same by,
the accountants and officers of Borrower, all at such times and as often as
Lender may reasonably require. All confidential or proprietary information so
obtained shall be kept confidential by Lender and not used for any purpose
other than in connection with the administration of this Agreement.
SECTION 6.9. MAINTENANCE OF PROPERTY. Borrower will maintain, keep
and preserve all of its properties in good repair, working order and condition
and from time to time make all needful and proper repairs, renewals,
replacements, betterments and improvements thereto, so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times.
SECTION 6.10. NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE
DEVELOPMENTS. Borrower promptly will notify Lender upon the occurrence of: (a)
any Event of Default; (b) any event which, with the giving of notice or lapse
of time, or both, could constitute an Event of Default; (c) any event,
development or circumstance whereby the financial statements previously
furnished to Lender fail in any material respect to present fairly, in
accordance with GAAP, the financial condition and operational results of
Borrower; (d) any judicial, administrative or arbitration proceeding pending
against Borrower, and any judicial or administrative proceeding known by
Borrower to be threatened against it which, if adversely decided, could
adversely affect its condition (financial or otherwise) or operations (present
or prospective) or which may expose Borrower to uninsured liability of
$125,000.00 or more; (e) any default claimed by any other creditor for Borrowed
Money of Borrower other than
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Lender; and (f) any other development in the business or affairs of Borrower
which is likely to have a material adverse effect on the business or financial
condition of Borrower and its subsidiaries taken as a whole; in each case
describing the nature thereof and (in the case of notification under clauses
(a) and (b)) the action Borrower proposes to take with respect thereto.
SECTION 6.11. EMPLOYEE BENEFIT PLANS. Borrower will (a) comply in
all material requests with the funding requirements of ERISA with respect to
the Plans for its employees, or will promptly satisfy any accumulated funding
deficiency that arises under Section 302 of ERISA; (b) furnish Lender, promptly
after filing the same, with copies of all reports or other statements filed
with the United States Department of Labor, the Pension Benefit Guaranty
Corporation, or the Internal Revenue Service with respect to all Plans, or
which Borrower, or any member of a Controlled Group, may receive from such
Governmental Authority with respect to any such Plans, and (c) promptly advise
Lender of the occurrence of any Reportable Event or Prohibited Transaction with
respect to any such Plan and the action which Borrower proposes to take with
respect thereto. Borrower will make all contributions when due with respect to
any multi-employer pension plan in which it participates and will promptly
advise Lender: (a) upon its receipt of notice of the assertion against Borrower
of a claim for withdrawal liability; (b) upon the occurrence of any event which
could trigger the assertion of a claim for withdrawal liability against
Borrower; and (c) upon the occurrence of any event which would place Borrower
in a Controlled Group as a result of which any member (including Borrower)
thereof may be subject to a claim for withdrawal liability, whether liquidated
or contingent.
SECTION 6.12. FINANCING STATEMENTS. Borrower shall provide to Lender
evidence reasonably satisfactory to Lender as to the due recording of
termination statements, releases of collateral, and Forms UCC-3, and shall
cause to be recorded financing statements on Form UCC-1, duly executed by
Borrower and Lender, in all places necessary to release all existing security
interests and other liens in the Collateral (other than as permitted hereby)
and to perfect and protect Lender's first priority lien and security interest
in the Collateral, as Lender may reasonably request.
SECTION 6.13. FINANCIAL RECORDS. Borrower shall keep current and
accurate books of records and accounts in which full and correct entries will
be made of all of its business transactions, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP.
SECTION 6.14. COLLECTION OF ACCOUNTS. Borrower shall continue to
collect its Accounts in the ordinary course of business.
SECTION 6.15. PLACES OF BUSINESS. Borrower shall give thirty (30)
days' prior written notice to Lender of any change in the location of any of
its places of business, of the places where its records concerning its Accounts
are kept, of the places where the Collateral is kept, or of the establishment
of any new, or the discontinuance of any existing, places of business.
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SECTION 6.16. BUSINESS CONDUCTED. Borrower shall continue in the
business presently conducted by it using its best efforts to maintain its
customers and goodwill except to the extent permitted by Section 6.3 hereof.
Borrower shall not engage, directly or indirectly, in any line of business
substantially different from the business conducted by it immediately prior to
the Closing Date, or engage in business or lines of business which are not
reasonably related thereto.
SECTION 6.17. LITIGATION AND OTHER PROCEEDINGS. Borrower shall give
prompt notice to Lender of any litigation, arbitration, or other proceeding
before any Governmental Authority against or affecting Borrower if the amount
claimed is more than $125,000.00
SECTION 6.18. BANK ACCOUNTS. Borrower shall assign all of its
depository and disbursement accounts to Lender.
SECTION 6.19. SUBMISSION OF COLLATERAL DOCUMENTS. To the fullest
extent permitted by law, Borrower will, on demand of Lender, make available to
Lender copies of shipping and delivery receipts evidencing the shipment of
goods that gave rise to an Account, medical records, insurance verification
forms, assignment of benefits, in-take forms or other proof of the satisfactory
performance of services that gave rise to an Account, a copy of the claim or
invoice for each Account and copies of any written contract or order from which
the Account arose. Borrower shall promptly notify Lender if an Account becomes
evidenced or secured by an instrument or chattel paper and upon request of
Lender, will promptly deliver any such instrument or chattel paper to Lender.
SECTION 6.20. LICENSURE; MEDICAID/MEDICARE 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. Except to the extent permitted by
Section 6.3 hereof. If required, all Medicaid/Medicare costs reports will be
properly filed.
SECTION 6.21. OFFICER'S CERTIFICATES. Together with the monthly
financial statements delivered pursuant to clause (c) of Section 6.1, and
together with the audited annual financial statements delivered pursuant to
clause (f) of that Section, Borrower shall deliver to Lender a certificate of
its chief financial officer, in form and substance reasonably satisfactory to
Lender setting forth:
(a) The information (including detailed calculations) required
in order to establish whether Borrower is in compliance in all material
respects with the requirements of Articles VI and VII as of the end of the
period covered by the financial statements then being furnished; and
(b) That the signer has reviewed the relevant terms of this
Agreement, and has made (or caused to be made under his supervision) a review
of the transactions and conditions
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of Borrower from the beginning of the accounting period covered by the income
statements being delivered to the date of the certificate, and that such review
has not disclosed the existence during such period of any condition or event
which constitutes an Event of Default or which is then, or with the passage of
time or giving of notice or both, could become an Event of Default, and if any
such condition or event existed during such period or now exists, specifying
the nature and period of existence thereof and what action Borrower has taken
or proposes to take with respect thereto.
SECTION 6.22. VISITS AND INSPECTIONS. Borrower agrees to permit
representatives of Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and inspect the
properties of Borrower and its subsidiaries, and to inspect, audit and make
extracts from its books and records, and discuss with its officers, its
employees and its independent accountants, the business, assets, liabilities,
financial condition, business prospects and results of operations of Borrower
and its subsidiaries.
SECTION 6.23. NET WORTH. Borrower will not at any time allow its
consolidated net worth, as computed in accordance with GAAP, to fall below
$12.5 million.
ARTICLE VII
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as Borrower may borrow
hereunder and until payment in full of the Note and performance of all other
obligations of the Borrower under the Loan Documents:
SECTION 7.1. BORROWING. Borrower will not create, incur, assume or
suffer to exist any liability for Borrowed Money except: (a) indebtedness to
Lender; (b) indebtedness of Borrower secured by mortgages, encumbrances or
liens expressly permitted by Section 7.3 hereof; (c) accounts payable to trade
creditors and current operating expenses (other than for borrowed money) which
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 GAAP and deemed adequate by Borrower and its
independent accountants; (d) borrowings incurred in the ordinary course of its
business and not exceeding $125,000.00 in the aggregate outstanding at any one
time; (e) existing indebtedness listed on Schedule 7.1 hereto, and any
extension, modification, refunding or replacement thereof; (f) purchase money
indebtedness and leases required to be capitalized in accordance with GAAP; (g)
indebtedness representing the deferred purchase price of clinics or related
operations or facilities representing not more than 50% of the purchase price
therefor; and (h) indebtedness relating to clinics or related operations or
facilities existing at the time of the acquisition thereof. Accounts to which
Borrower acquires rights as a result of the purchase of clinics, related
operations or facilities shall not be considered "Qualified Accounts" for
purposes of this Agreement, and Lender
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shall be under no obligation to finance such accounts, unless and until Lender
has completed its credit underwriting of the accounts and has determined,
consistent with the policies employed hereunder for the initial Qualified
Accounts, to permit the accounts to be considered "Qualified Accounts."
Borrower will not make prepayments on any existing or future indebtedness for
Borrowed Money to any Person (other than Lender, to the extent permitted by
this Agreement or any subsequent agreement between Borrower and Lender), except
as contemplated by Schedule 7.1 hereto.
SECTION 7.2. JOINT VENTURES. Borrower will not invest directly or
indirectly in any joint venture other than the ventures described on Schedule
4.1 hereto for any purpose without the prior written notice to, and the express
written consent of, Lender, which consent may be not unreasonably withheld.
SECTION 7.3. 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 its Collateral, whether now owned or hereafter acquired,
except for Permitted Liens.
SECTION 7.4. 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, and will not sell, lease, or otherwise dispose
of any of its assets except in the ordinary course of its business (a) except
to the extent permitted by Section 6.3 hereof and (b) except that Borrower and
its subsidiaries may acquire clinics and related operations and facilities
without the prior written consent of Lender so long as (i) the maximum number
of such acquisitions shall not exceed five in any fiscal year and (ii) the
maximum cash consideration payable for any acquisition may not exceed $500,000.
SECTION 7.5. SALE AND LEASEBACK. Borrower will not, directly or
indirectly, enter into any arrangement whereby Borrower sells or transfers all
or any part of its assets and thereupon and within one year thereafter rents or
leases the assets so sold or transferred without the prior written notice to,
and the express written consent of, Lender, which consent may not be
unreasonably withheld.
SECTION 7.6. DISTRIBUTIONS AND MANAGEMENT FEES. Borrower will not
declare or pay any dividends or other distributions with respect to, purchase,
redeem or otherwise acquire for value any of its outstanding stock now or
hereafter outstanding, or return any capital of its stockholders, nor shall
Borrower pay or become obligated to pay management fees or fees of a similar
nature to any Person; provided, however, that so long as Lender has not
notified Borrower of the existence of an Event of Default hereunder, Borrower
may make any such dividends or other distributions or purchase, redeem or
otherwise acquire such interest, return any such capital, or pay any such
management fees subject any other terms and conditions of this Agreement.
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SECTION 7.7. LOANS. Borrower will not make loans or advances to any
Person, 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, stockholders, directors, and
employees, and (iii) loans or advances to subsidiaries, the PA and the joint
venture described on Schedule 4.1 hereto.
SECTION 7.8. CONTINGENT LIABILITIES. Borrower will not assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person, other than a subsidiary, the joint venture
described on Schedule 4.1 hereto or the PA, except by the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business.
SECTION 7.9. SUBSIDIARIES. Borrower will not form any subsidiary, or
make any investment in or any loan in the nature of an investment to, any other
Person, except as permitted by Sections 7.4, 7.7 and 7.8 hereto.
SECTION 7.10. COMPLIANCE WITH ERISA. Borrower will not permit with
respect to any Plan covered by Title IV of ERISA any Prohibited Transaction or
any Reportable Event.
SECTION 7.11. CERTIFICATES OF NEED. Borrower will not amend, alter
or suspend or terminate or make provisional in any material way, any
certificate of need or provider number without the prior written consent of
Lender, except as permitted by Section 6.3 hereto.
SECTION 7.12. TRANSACTIONS WITH AFFILIATES. 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 an Affiliate or subsidiary, and so long
as the transaction is not otherwise prohibited hereunder. For purposes of the
foregoing, Lender consents to the transactions described on Schedule 7.12.
SECTION 7.13. USE OF LENDER'S NAME. Borrower will not use Lender's
name (or the name of any of Lender's affiliates) in connection with any of its
business operations. Borrower may disclose to third parties that Borrower has
a borrowing relationship with Lender. Nothing herein contained is intended to
permit or authorize Borrower to make any contract on behalf of Lender.
SECTION 7.14. CAPITALIZATION. There shall occur no change in
Borrower's capital structure as set forth in Schedule 4.17, such that Borrower
is no longer a reporting company under the Securities Exchange Act of 1934.
SECTION 7.15. CONTRACTS AND AGREEMENTS. Borrower will not become or
be a party to any contract or agreement which would breach this Agreement.
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SECTION 7.16. MARGIN STOCK. Borrower will not carry or purchase any
"margin security" within the meaning of Regulations U, G, T or X of the Board
of Governors of the Federal Reserve System.
SECTION 7.17. 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.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. Each of the following (individually,
an "Event of Default" and collectively, the "Events of Default") shall
constitute an event of default hereunder:
(a) A default in the payment of any installment of principal
of, or interest upon, the Note when due and payable, whether at maturity or
otherwise, which default shall have continued unremedied for a period of five
(5) days after written notice thereof from Lender to Borrower;
(b) A default in the payment of any other charges, fees, or
other monetary obligations owing to Lender arising out of or incurred in
connection with this Agreement when such payment is due and payable, which
default shall have continued unremedied for a period of five (5) days after
written notice from Lender;
(c) A default in the due observance or performance by Borrower
in any material respect of any other term, covenant or agreement contained in
any of the Loan Documents, which default shall have continued unremedied for a
period of ten (10) days after written notice from Lender;
(d) If any representation or warranty made by Borrower herein
or in any of the other Loan Documents, any financial statement, or any
statement or representation made in any other certificate, report or opinion
delivered in connection herewith or therewith proves to have been incorrect or
misleading in any material respect when made, which default shall have
continued unremedied for a period of ten (10) days after written notice from
Lender;
(e) If any obligation of Borrower (other than its Obligations
hereunder) for the payment of Borrowed Money exceeding $125,000 is not paid
when due or within any applicable grace period, or such obligation becomes or
is declared to be due and payable prior to the expressed maturity thereof.
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(f) If Borrower makes an assignment for the benefit of
creditors, offers a composition or extension to creditors, or makes or sends
notice of an intended bulk sale of any business or assets now or hereafter
conducted by Borrower;
(g) If Borrower files a petition in bankruptcy, is adjudicated
insolvent or bankrupt, petitions or applies to any tribunal for any receiver of
or any trustee for itself or any substantial part of its property, commences
any proceeding relating to itself under any reorganization, arrangement,
readjustment or debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or there is commenced against
Borrower any such proceeding which remains undismissed for a period of sixty
(60) days, or any Borrower by any act indicates its consent to, approval of, or
acquiescence in, any such proceeding or the appointment of any receiver of or
any trustee for a Borrower or any substantial part of its property, or suffers
any such receivership or trusteeship to continue undischarged for a period of
sixty (60) days;
(h) If one or more final judgments against Borrower or
attachments against its property in an aggregate amount exceeding $125,000 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;
(i) A Reportable Event which might constitute grounds for
termination of any Plan covered by Title IV of ERISA or for the appointment by
the appropriate United States District Court of a trustee to administer any
such Plan or for the entry of a lien or encumbrance to secure any deficiency,
has occurred and is continuing thirty (30) days after its occurrence, or any
such Plan is terminated, or a trustee is appointed by an appropriate United
States District Court to administer any such Plan, or the Pension Benefit
Guaranty Corporation institutes proceedings to terminate any such Plan or to
appoint a trustee to administer any such Plan, or a lien or encumbrance is
entered to secure any deficiency or claim, and the financial exposure to
Borrower exceeds $125,000;
(j) Intentionally deleted.
(k) If there shall occur any uninsured damage to or loss,
theft or destruction of any portion of the Collateral exceeding $125,000.00;
(l) If Borrower breaches of violates in any material respect
the terms of, or if a default or an event which could, whether with notice or
the passage of time, or both, constitute a default in any material respect,
occurs under any other existing or future agreement (related or unrelated)
between Borrower and Lender;
(m) Upon the issuance of any execution or distraint process
against Borrower or any of its property or assets;
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(n) If Borrower ceases any material portion of its business
operations as presently conducted, except as permitted by Section 6.3 hereof;
(o) Borrower has directly or indirectly been engaged in any
type of activity which is likely to result in the forfeiture of any property
of Borrower having an aggregate value of over $125,000 to any Governmental
Authority, which default shall have continued unremedied for a period of twenty
(20) days after written notice from Lender;
(p) Borrower or any Affiliate of Borrower, shall challenge or
contest, in any action, suit or proceeding, the validity or enforceability of
this Agreement, or any of the other Loan Documents, the legality or the
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Lender;
(q) Borrower shall be criminally indicted or convicted under
any law that is likely to lead to a forfeiture of any Collateral having an
aggregate value over $125,000;
(r) There shall occur a material adverse change in the
financial condition or business prospects of Borrower and its subsidiaries,
taken as a whole, which material adverse change shall have continued unremedied
for a period of ten (10) days after written notice from Lender.
(s) An Event of Default shall have occurred under the
Secured Term Note dated as of April 15, 1997 (the "Secured Term Note") executed
by Borrower in favor of HealthCare Financial Partners--Funding II, L.P.
("Funding II").
SECTION 8.2. ACCELERATION. Upon the occurrence of any of the
foregoing Events of Default, the Note shall become and be immediately due and
payable upon declaration to that effect delivered by Lender to Borrower;
provided that, upon the happening of any event specified in Section 8.1.(g)
hereof, the Note shall be immediately due and payable without declaration or
other notice to Borrower.
SECTION 8.3. REMEDIES.
(a) In addition to all other rights, options, and remedies
granted to Lender under this Agreement, upon the occurrence of an Event of
Default and until cured by Borrower to Lender's satisfaction in its sole
discretion (with Borrower hereby acknowledging that it has no right to cure an
Event of Default unless Lender specifically grants such right in writing),
Lender may (i) terminate the Loan, whereupon all outstanding Obligations shall
be immediately due and payable, (ii) exercise all other rights granted to it
hereunder and all rights under the Uniform Commercial Code in effect in the
applicable jurisdiction(s) and under any other applicable law, and (iii)
exercise all rights and remedies under all Loan Documents now or hereafter in
effect, including the following rights and remedies (which list is given by way
of example and is not intended to be an exhaustive list of all such rights and
remedies):
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(i) The right to take possession of, send notices
regarding, and collect directly the Collateral, with or without judicial
process, and to exercise all rights and remedies available to Lender with
respect to the Collateral under the Uniform Commercial Code in effect in the
jurisdiction(s) in which such Collateral is located;
(ii) The right to (by its own means or with judicial
assistance) enter any of Borrower's premises and take possession of the
Collateral, or render it unusable, or dispose of the Collateral on such
premises in compliance with subsection (b), without any liability for rent,
storage, utilities, or other sums, and Borrower shall not resist or interfere
with such action;
(iii) The right to require Borrower at Borrower's
expense to assemble all or any part of the Collateral and make it available to
Lender at any place designated by Lender;
(iv) The right to reduce the Maximum Loan Amount or
to use the Collateral and/or funds in the Concentration Account in amounts up
to the Maximum Loan Amount to pay the Obligations in such order as it shall
determine.
(b) Borrower agrees that a notice received by it at least ten
(10) days before the time of any intended public sale, or the time after which
any private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any perishable Collateral which threatens to speedily
decline in value or which is sold on a recognized marked may be sold
immediately by Lender without prior notice to Borrower. At any sale or
disposition of Collateral, Lender may (to the extent permitted by applicable
law) purchase all or any part of the Collateral, free from any right of
redemption by Borrower, which right is hereby waived and released. Borrower
covenants and agrees not to interfere with or impose any obstacle to Lender's
exercise of its rights and remedies with respect to the Collateral, provided
Lender proceeds in a commercially reasonable manner.
SECTION 8.4. NATURE OF REMEDIES. Lender shall have the right to
proceed against all or any portion of the Collateral to satisfy, in any order,
the Obligations of Borrower to Lender upon an Event of Default under this
Agreement, and the indebtedness of Borrower to Funding II upon the occurrence
of an Event of Default under the Secured Term Note. All rights and remedies
granted Lender hereunder and under any agreement referred to herein, or
otherwise available at law or in equity, shall be deemed concurrent and
cumulative, and not alternative remedies, and Lender may proceed with any
number of remedies at the same time until the Obligations are satisfied in
full. The exercise of any one right or remedy shall not be deemed a waiver or
release of any other right or remedy, and Lender, upon the occurrence and
during the continuation of an Event of Default, may proceed against Borrower,
and/or the Collateral, at any time, under any agreement, with any available
remedy and in any order.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES AND TAXES.
(a) Borrower agrees to pay, whether or not the Closing
occurs, a reasonable documentation preparation fee, together with actual audit
and appraisal fees and all other reasonable out-of-pocket charges and expenses
incurred by Lender in connection with the negotiation, preparation and
execution of each of the Loan Documents and preparation for Closing. Borrower
also agrees to pay all reasonable out-of-pocket charges and expenses incurred
by Lender (including the reasonable fees and expenses of Lender's counsel) in
connection with the enforcement, protection or preservation of any right or
claim of Lender and the collection of any amounts due under the Loan Documents.
(b) Borrower shall pay all taxes (other than taxes based upon
or measured by Lender's income or revenues or any personal property tax), if
any, in connection with the issuance of the Note and the recording of the
security documents therefor. The obligations of Borrower under this clause (b)
shall survive the payment of Borrower's indebtedness hereunder and the
termination of this Agreement.
SECTION 9.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
other Loan Documents constitute the full and entire understanding and agreement
among the parties with regard to their subject matter and supersede all prior
written or oral agreements, understandings, representations and warranties made
with respect thereto. No amendment, supplement or modification of this
Agreement nor any waiver of any provision thereof shall be made except in
writing executed by the party against whom enforcement is sought.
SECTION 9.3. NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party
hereto of any one or more defaults by the other party in the performance of any
of the provisions of this Agreement shall operate or be construed as a waiver
of any future default or defaults, whether of a like or different nature. No
failure or delay on the part of any party in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law, in equity or
otherwise.
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SECTION 9.4. NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and personally delivered, mailed by
registered or certified mail (return receipt requested and postage prepaid),
sent by telecopier (with a confirming copy sent by regular mail), or sent by
prepaid overnight courier service, and addressed to the relevant party at its
address set forth below, or at such other address as such party may, by written
notice, designate as its address for purposes of notice hereunder:
(a) If to Lender, at:
HCFP Funding, Inc.
0 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to Borrower, at:
The Company Doctor, Inc.
0000 X. X'Xxxxxx Xxxx., Xxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxxxx, CFO
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If mailed, notice shall be deemed to be given five (5) days after being sent,
if sent by personal delivery or telecopier, notice shall be deemed to be given
when delivered, and if sent by prepaid courier, notice shall be deemed to be
given on the next Business Day following deposit with the courier.
SECTION 9.5. SEVERABILITY. If any term, covenant or condition of
this Agreement, or the application of such term, covenant or condition to any
party or circumstance shall be found by a court of competent jurisdiction to
be, to any extent, invalid or unenforceable, the remainder of this Agreement
and the application of such term, covenant, or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition shall be
valid and enforced to the fullest extent permitted by law. Upon determination
that any such term is invalid, illegal or unenforceable, the parties hereto
shall amend this Agreement so as to effect the original intent of the parties
as closely as possible in an acceptable manner.
SECTION 9.6. SUCCESSORS AND ASSIGNS. This Agreement, the Note, and
the other Loan Documents shall be binding upon and inure to the benefit of
Borrower and Lender and their respective successors and assigns.
Notwithstanding the foregoing, Borrower may not assign any of its rights or
delegate any of its obligations hereunder without the prior written consent
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of Lender, which may be withheld in its sole discretion. Lender may sell,
assign, transfer, or participate any or all of its rights or obligations
hereunder without notice to or consent of Borrower.
SECTION 9.7. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one instrument.
SECTION 9.8. INTERPRETATION. No provision of this Agreement or any
other Loan Document shall be interpreted or construed against any party because
that party or its legal representative drafted that provision. The titles of
the paragraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include singular and plural and masculine,
feminine and neuter gender as the case may be. The words "herein," "hereof,"
and "hereunder" shall be deemed to refer to this entire Agreement, except as
the context otherwise requires.
SECTION 9.9. SURVIVAL OF TERMS. All covenants, agreements,
representations and warranties made in this Agreement, any other Loan Document,
and in any certificates and other instruments delivered in connection therewith
shall be considered to have been relied upon by Lender and shall survive the
making by Lender of the Loans herein contemplated and the execution and
delivery to Lender of the Note, and shall continue in full force and effect
until all liabilities and obligations of Borrower to Lender are satisfied in
full.
SECTION 9.10. Intentionally deleted.
SECTION 9.11. TIME. Whenever Borrower is required to make any
payment or perform any act on a Saturday, Sunday, or a legal holiday under the
laws of the State of Maryland (or other jurisdiction where Borrower is required
to make the payment or perform the act), the payment may be made or the act
performed on the next Business Day. Time is of the essence in Borrower's
performance under this Agreement and all other Loan Documents.
SECTION 9.12. COMMISSIONS. The transaction contemplated by this
Agreement was brought about by Lender and Borrower acting as principals and
without any brokers, agents, or finders being the effective procuring cause.
Borrower represents that it has not committed Lender to the payment of any
brokerage fee, commission, or charge in connection with this transaction. If
any such claim is made on Lender by any broker, finder, or agent or other
person, Borrower will indemnify, defend, and hold Lender harmless from and
against the claim and will defend any action to recover on that claim, at
Borrower's cost and expense, including Lender's counsel fees. Borrower further
agrees that until any such claim or demand is adjudicated in Lender's favor,
the amount demanded will be deemed a liability of Borrower under this
Agreement, secured by the Collateral.
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SECTION 9.13. THIRD PARTIES. No rights are intended to be created
hereunder or under any other Loan Document for the benefit of any third party
donee, creditor, or incidental beneficiary of Borrower. Nothing contained in
this Agreement shall be construed as a delegation to Lender of Borrower's duty
of performance, including without limitation Borrower's duties under any
account or contract in which Lender has a security interest.
SECTION 9.14. DISCHARGE OF BORROWER'S OBLIGATIONS. Lender, in its
sole discretion, shall have the right at any time, and from time to time
without prior notice to Borrower if Borrower fails to do so after notice and
the expiration of ten (10) days thereafter (a) to obtain insurance covering any
of the Collateral as required hereunder; (b) pay for the performance of any of
Borrower's obligations hereunder; (c) discharge taxes, liens, security
interests, or other encumbrances at any time levied or placed on any of the
Collateral in violation of this Agreement unless Borrower is in good faith with
due diligence by appropriate proceedings contesting those items; and (d) pay
for the maintenance and preservation of any of the Collateral. Expenses and
advances shall be added to the Loan, until reimbursed to Lender and shall be
secured by the Collateral. Such payments and advances by Lender shall not be
construed as a waiver by Lender of an Event of Default.
SECTION 9.15. INFORMATION TO PARTICIPANTS. Subject to Section 6.8
hereof. Lender may divulge to any participant it may obtain in the Loan, or any
portion thereof, all information, and furnish to such participant copies of
reports, financial statements, certificates, and documents obtained under any
provision of this Agreement or any other Loan Document.
SECTION 9.16. INDEMNITY. Borrower hereby agrees to indemnify and
hold harmless Lender, its partners, officers, agents and employees
(collectively, "Indemnitee") from and against any liability, loss, cost,
expense, claim, damage, suit, action or proceeding ever suffered or incurred by
Lender (including reasonable attorneys' fees and expenses) arising from
Borrower's failure to observe, perform or discharge any of its covenants,
obligations, agreements or duties hereunder, or from the breach of any of the
representations or warranties contained in Article IV hereof; provided that
there shall be no indemnification for Lender's recklessness, gross negligence
or willful misconduct. In addition, Borrower shall defend Indemnitee against
and save it harmless from all claims of any Person with respect to the
Collateral. Notwithstanding any contrary provision in this Agreement, the
obligation of Borrower under this Section 9.16 shall survive the payment in
full of the Obligations and the termination of this Agreement.
SECTION 9.17. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF MARYLAND, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR THE NOTE
IS COMMENCED BY LENDER IN THE STATE OF MARYLAND OR FEDERAL COURT LOCATED IN THE
STATE OF MARYLAND, BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH
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ACTION AND TO THE LAYING OF VENUE IN THE STATE OF MARYLAND. ANY PROCESS IN ANY
SUCH ACTION SHALL BE DULY SERVED IF MAILED BY REGISTERED MAIL, POSTAGE PREPAID,
TO THE BORROWER AT ITS ADDRESS DESCRIBED IN SECTION 9.4 HEREOF.
SECTION 9.18. WAIVER OF TRIAL BY JURY. BORROWER HEREBY (A) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE 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 OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY
IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER, 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. LENDER IS HEREBY AUTHORIZED
AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER
THE SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE
EVIDENCE OF BORROWER'S WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, BORROWER
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER'S
COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL
NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
"LENDER"
HCFP FUNDING, INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxx
------------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
"BORROWER"
THE COMPANY DOCTOR
a Delaware corporation
By: /s/ Xxxxxx X. Angle, M.D.
-----------------------------------------
Name: Xxxxxx X. Angle, M.D.
Title: President
ANDICARE, INC.
a Louisiana corporation
By: /s/ Xxxxxx X. Angle, M.D.
-----------------------------------------
Name: Xxxxxx X. Angle, M.D.
Title: President
EMERGENCY OCCUPATIONAL
PHYSICIAN'S SERVICES, INC.
a Texas corporation
By: /s/ Xxxxxx X. Angle, M.D.
-----------------------------------------
Name: Xxxxxx X. Angle, M.D.
Title: President
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LIST OF EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Lockbox Agreement
Exhibit C - Locations of Collateral
Exhibit D - Form of Legal Opinion
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LIST OF SCHEDULES
Schedule 1.36 - Permitted Liens
Schedule 4.1 - Subsidiaries
Schedule 4.5 - Litigation
Schedule 4.7 - Federal Tax Identification Numbers
Schedule 4.10 - Taxes
Schedule 4.13 - Non-Compliance with Law
Schedule 4.14 - Environmental Matters
Schedule 4.15 - Places of Business
Schedule 4.16 - Licenses
Schedule 4.17 - Stock Ownership
Schedule 4.19 - Borrowings and Guarantees
Schedule 4.21 - Trade Names
Schedule 4.22 - Joint Ventures
Schedule 7.12 - Transactions with Affiliates
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