Ex 10.15
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement"), dated as of the
26th day of March, 1998 is made and entered into on the terms and conditions
hereinafter set forth, by and between HEALTHGATE DATA CORP., a Delaware
corporation ("Borrower"), and PETRA CAPITAL, LLC, a Georgia limited liability
company ("Lender").
RECITALS:
Borrower has requested that Lender make available to Borrower a loan
in the amount of Two Million and No/100 Dollars ($2,000,000.00), upon the terms
and conditions hereinafter set forth, and for the purposes hereinafter set forth
(the "Loan")
NOW, THEREFORE, in consideration of the agreement of Lender to make
the Loan, the mutual covenants and agreements hereinafter set forth, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
ARTICLE 1 - THE LOAN
1.1 Evidence of Loan Indebtedness and Repayment. Subject to the
terms and conditions set forth herein, Lender hereby agrees to make the Loan to
Borrower. The Loan shall be evidenced by a Secured Promissory Note substantially
in the form attached hereto as Exhibit A (the "Note"), executed by Borrower in
favor of Lender. The Loan shall be in the original principal amount indicated in
the Note, shall be payable in accordance with the terms of the Note, and shall
be prepayable at any time without penalty or premium. The proceeds of the Loan
shall be disbursed by Lender on the date hereof (the "Closing Date") by wire
transfer of immediately available funds in accordance with the written
instructions of Borrower.
1.2 Processing Fee. In connection with the making of the Loan,
Borrower shall pay to Lender a processing fee in the amount of $40,000 (the
"Processing Fee"), and Borrower hereby authorizes and directs Lender to deduct
and retain for its account the sum of $40,000 as payment of the Processing Fee.
1.3 Stock Purchase Warrants. In consideration for Lender's entering
into this Agreement and for making the Loan contemplated herein, Borrower shall
deliver to Lender a Stock Purchase Warrant substantially in the form attached
hereto as Exhibit B (the "Warrant"), executed by Borrower in favor of Lender.
1.4 Investment Representations. Lender represents and warrants that
it is purchasing the Warrant and any shares of common stock issuable upon
exercise of the Warrant for its own account, for investment purposes and not
with a view to the distribution thereof. The foregoing representations and
warranties shall not be construed as imposing any limitation on Lender's right
to transfer the Warrant or any of the shares of common stock issuable upon the
exercise of the Warrant that is not otherwise expressly set forth herein or in
the Warrant or required under applicable law.
1.5 Subordination. The obligations evidenced by the Note shall be
subordinate to Senior Debt (as defined herein). For purposes of this agreement,
"Senior Debt" shall mean the principal of and interest on any Debt incurred
under one or more credit or loan agreements by and between the Borrower and one
or more lenders designated by the Borrower as a "Senior Lender" by writen notice
to Lender (collectively, the "Senior Lender"), together with all replacements,
renewals, extensions, refinancings and refundings thereof; provided that the
outstanding principal amount of all Senior Debt shall not exceed the greater of
(i) 3 times EBITDA for the twelve-month period ending on the last day of the
most recently ended month prior to the date that such Debt is incurred, or (ii)
$1,000,000; provided further, that Senior Debt shall not bear interest at a rate
that exceeds the Prime Rate plus three percent (3%); and provided further, that
no Debt shall constitute Senior Debt to the extent such Debt is incurred in
violation of the terms of this Agreement. For purposes of determining whether
any Debt is incurred in violation of the terms of this Agreement, Senior Lender
may, in the absence of actual knowledge otherwise, conclusively rely upon the
certificate of the Borrower to that effect. For purposes of this Agreement,
"Debt" of any person means, without duplication, (a) all obligations of such
person for borrowed money and all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments on which interest charges are
customarily paid, (b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such person, (c) all capitalized lease
obligations of such person (to the extent required by GAAP to be included on the
balance sheet of such person) and (d) all obligations of such person (contingent
or otherwise) to guarantee, purchase or otherwise acquire, or otherwise assure a
creditor against loss in respect of, Debt of another person. For purposes of
this Agreement, "EBITDA" means, for any period, an amount equal to the net
income (or loss) for such period, determined in accordance with GAAP, but
excluding extraordinary gains or losses for such period ("Net Income") plus (to
the extent deducted in determining Net Income) interest expense, provisions for
income taxes, depreciation and amortization of intangible assets. For purposes
of this Agreement, "Prime Rate" means the rate which First Union National Bank,
or its successors, publicly announces from time to time to be its prime lending
rate, as in effect from time to time.
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ARTICLE 2 - SECURITY
2.1 Security. As security for the Secured Obligations (as defined in
Section 2.2), Borrower hereby grants to Lender a security interest in the
following described property, and any and all proceeds and products thereof
(collectively, the "Collateral"):
(a) Equipment. All machinery and equipment, all data
processing and office equipment, all computer equipment, hardware, firmware and
software, all furniture, fixtures, appliances and all other goods of every type
and description, whether now owned or hereafter acquired and wherever located,
together with all parts, accessories and attachments and all replacements
thereof and additions thereto; and
(b) Inventory. All inventory and goods, whether held for
lease, sale or furnishing under contracts of service, all agreements for lease
of same and rentals therefrom, whether now in existence or owned or hereafter
acquired and wherever located; and
(c) General Intangibles. All rights, interests, choses in
action, causes of action, claims and all other intangible property of every kind
and nature, in each instance whether now owned or hereafter acquired but not
limited to, all corporate and business records; all loans, royalties, and other
obligations receivable; all trade secrets, inventions, designs, patents, patent
applications, registered or unregistered service marks, trade names, trademarks,
copyrights and the goodwill associated therewith and incorporated therein, and
all registrations and applications for registration related thereto; all
goodwill, licenses, permits, franchises, customer lists and credit files; all
customer and supplier contracts, firm sale orders, rights under license and
franchise agreements, and other contracts and contract rights; all right, title
and interest under leases, subleases, licenses and concessions and other
agreements relating to real or personal property and any security agreements
relating thereto; all rights to indemnification; all proceeds of insurance of
which Borrower is beneficiary; all letters of credit, guarantees, liens,
security interests and other security held by or granted to Borrower; and all
other intangible property, whether or not similar to the foregoing; and
(d) Accounts. Chattel Paper. Instruments and Documents. All
accounts, accounts receivable, chattel paper, instruments and documents, whether
now in existence or owned or hereafter acquired, entered into, created or
arising, and wherever located; and
(e) Other Property. All other personal property or interests
in property now owned or hereafter acquired.
2.2 Secured Obligations. Without limiting any of the provisions
thereof, the Security Instruments (as defined in Section 2.3) shall secure the
following indebtedness and other obligations (the "Secured Obligations"):
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(a) the full and timely payment of the indebtedness evidenced
by the Note, together with interest thereon, and any extensions,
modifications, consolidations or renewals thereof, and any notes
given in payment thereof;
(b) the full and prompt performance of all of the obligations
of Borrower to Lender under the Loan Documents (as defined in
Section 2.3) to which Borrower is a party;
(c) the full and prompt payment of all court costs and other
costs and expenses of whatever kind incident to the collection of
the indebtedness evidenced by the Note, the enforcement or
protection of the security interests of the Security Instruments or
the exercise of any rights or remedies of Lender with respect to the
indebtedness evidenced by the Note, including without limitation the
reasonable attorney and paralegal fees and costs incurred by Lender,
all of which Borrower agrees to pay to Lender upon demand; and
(d) the full and prompt payment and performance of any and all
other indebtedness and other obligations of Borrower to Lender
(other than obligations arising under the Warrant), direct or
contingent, however evidenced or denominated, and however and
whenever incurred, including but not limited to indebtedness
incurred pursuant to any present or future commitment of Lender to
Borrower, together with interest thereon, and any extensions,
modifications, consolidations and/or renewals thereof and any notes
given in payment thereof.
2.3 Security Instruments. The Secured Obligations shall be further
secured by the Trademark and Patent Security Agreement in substantially the form
attached hereto as Exhibit D (the "Trademark and Patent Security Agreement").
This Agreement, the Trademark and Patent Security Agreement, and any other
instruments, documents or agreements now or hereafter securing the Secured
Obligations are herein collectively referred to as the "Security Instruments".
The Security Instruments, together with the Note and any other instruments and
documents now or hereafter evidencing, securing or in any way related to the
indebtedness evidenced by the Note are herein individually referred to as a
"Loan Document" and collectively referred to as the "Loan Documents".
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2.4 Subordination of Security Interests. Lender's security interests
in the Collateral shall be subordinate to the security interests of Senior
Lender in the Collateral granted by Borrower after the date hereof as security
for Senior Debt.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants to Lender as follows:
3.1 Corporate Status.
(a) Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
corporate power to own and operate its properties, to carry on its business as
now conducted and to enter into and to perform its obligations under this
Agreement and the other Loan Documents to which it is a party. Borrower is duly
qualified to do business and is in good standing in each state or other
jurisdiction in which a failure to be so qualified could give rise to a Material
Adverse Event, as hereinafter defined. The states or other jurisdictions in
which Borrower is so qualified are set forth on Schedule 3.1(a). For purposes of
this Agreement, "Material Adverse Event" means any event or circumstance, or set
of events or circumstances, individually or collectively, that reasonably could
be expected to result in (i,) an adverse effect upon the validity or
enforceability of any Loan Document or (ii) a material and adverse effect on the
condition (financial or otherwise), business, operations, properties or
prospects of Borrower.
(b) Borrower does not own, directly or indirectly, any capital
stock or other equity interest of any corporation, partnership, joint venture,
limited liability company or other business organization in which Borrower holds
or owns, directly or indirectly, 50% or more of the outstanding shares of
capital stock or other equity interest having ordinary voting power for the
election of directors (or others performing similar functions) or, in the case
of a partnership, joint venture, limited liability company or similar entity,
which has the power, directly or indirectly, to effect the management or
policies thereof (any such corporation, partnership, joint venture, limited
liability company or other business organization, a "Subsidiary").
(c) The authorized capital stock of Borrower is set forth in
Schedule 3.1(c). In addition, there are 5,087 shares of such common stock
reserved for issuance upon exercise of the Warrant and the Additional Warrants
(as such term is defined in the Warrant); provided that the number of shares so
reserved shall be increased in accordance with the terms of the Warrant and the
Additional Warrants. Except for the issued capital stock set forth in Schedule
3.1(c) (the "Shares"), there are no shares of capital stock or other securities
of Borrower issued or outstanding. Except for the Warrant, the Additional
Warrants and as set forth in Schedule 3.1(c), there are no outstanding options,
warrants or rights to purchase or acquire from Borrower any securities of
Borrower, and there are no contracts, commitments, agreements, understandings,
arrangements or restrictions
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relating to any shares of capital stock or other securities of Borrower, whether
or not outstanding, to which Borrower is a party or by which it is bound or, to
the best knowledge of Borrower, to which any of its shareholders is a party or
by which any such shareholder is bound. All of the Shares are validly issued,
fully paid and non-assessable and were not issued in violation of any preemptive
rights, rights of first refusal, anti-dilution rights or any similar rights held
by any party. Borrower has not violated any federal or state securities laws in
connection with the issuance of any securities.
(d) The issuance of the Warrant has been duly authorized and,
upon delivery to Lender, will be validly issued, fully paid and nonassessable,
free and clear of all liens and other encumbrances. Except as set forth in
Schedule 3.1(d), there are no statutory or contractual preemptive rights, rights
of first refusal, anti-dilution rights or any similar rights held by any party
with respect to the issuance of the Warrant or the issuance of common stock upon
exercise of the Warrant. The issuance of shares of common stock upon exercise of
the Warrant has been duly authorized and, when issued upon exercise of the
Warrant in accordance with the terms thereof, such shares of common stock will
be validly issued, fully paid and nonassessable. The offer, sale and issuance of
the Warrant do not require registration under the Securities Act of 1933, as
amended, or any applicable state securities laws.
3.2 Authorization. Borrower has full legal right, power and
authority to enter into and perform its obligations under the Loan Documents,
without the consent or approval of any other person, firm, governmental agency
or other legal entity, other than consents listed on Schedule 3.2, which
consents have previously been obtained. Borrower has all necessary right, power
and authority to grant to Lender a valid and enforceable security interest in
the Collateral. The execution and delivery of this Agreement, the borrowing
hereunder, the execution and delivery of each Loan Document to which Borrower is
a party, and the performance by Borrower of its obligations hereunder and
thereunder are within the corporate powers of Borrower and have been duly
authorized by all necessary corporate action properly taken, have received all
necessary governmental approvals, if any were required, and do not and will not
contravene or conflict with the articles of incorporation or bylaws of Borrower
or any material agreement binding upon Borrower or its properties or any
provision of law, any applicable judgment, ordinance, regulation or order of any
court or governmental agency. The officer(s) executing this Agreement, the Note
and all of the other Loan Documents to which Borrower is a party, are duly
authorized to act on behalf of Borrower.
3.3 Validity and Binding Effect This Agreement and the other Loan
Documents are the legal, valid and binding obligations of Borrower, enforceable
in accordance with their respective terms, subject to limitations imposed by
bankruptcy, insolvency, moratorium, or similar laws or provisions affecting the
rights of creditors generally and further subject to the discretion of the court
in the exercise of equitable remedies.
3.4 Priority of Liens: Title to Property. Except as disclosed on
Schedule 3.4, there are no outstanding loans, liens, pledges, security
interests, agreements or other financings which provide any third person with a
lien against any of the collateral securing the Secured Obligations, whether
such collateral is pledged pursuant to this Agreement or any other Security
Instruments.
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Borrower has good and marketable title to all of its real and personal property,
free and clear of any and all claims, liens, encumbrances, equities and
restrictions of every kind and nature whatsoever, except as disclosed on
Schedule 3.4.
3.5 Location of Collateral. The records with respect to all
intangible personal property constituting the collateral security for the
Secured Obligations are maintained at one or more of the addresses set forth on
Schedule 3.5. None of the Collateral comprised of tangible personal property is
located at any address other than at one of the addresses set forth on Schedule
3.5.
3.6 Litigation. Except as set forth on Schedule 3.6, there are no
actions, suits or proceedings pending, or, to the knowledge of Borrower,
threatened, against or affecting Borrower or involving the validity or
enforceability of any of the Loan Documents or the priority of the liens
thereof, at law or in equity, or before any governmental or administrative
agency, except actions, suits and proceedings that are fully covered by
insurance and that, if adversely determined, would not impair materially the
ability of Borrower to perform each and every one of its obligations under and
by virtue of the Loan Documents; and to Borrower's knowledge, Borrower is not in
default with respect to any order, writ, injunction, decree or demand of any
court or any governmental authority.
3.7 Financial Statements. The financial statements of Borrower for
the years ended December 31, 1996 and December 31, 1997 heretofore delivered to
Lender are true and correct in all material respects, have been prepared on the
basis of generally accepted accounting principles ("GAAP") consistently applied
(except that the unaudited financial statements do not include footnotes and are
subject to normal year-end adjustments), and fairly present the financial
condition of the subjects thereof as of the date(s) thereof. No material adverse
change has occurred in the condition (financial or otherwise), business,
operations, properties or, to the best of Borrower's knowledge, prospects of
Borrower since the date(s) thereof, and no additional indebtedness or
obligations have been incurred by Borrower since the date(s) thereof, other than
trade payables incurred in the ordinary course of business.
3.8 No Defaults. Consummation of the transactions hereby
contemplated and the performance of the obligations of Borrower under and by
virtue of the Loan Documents will not result in any breach of, or constitute a
default under, the charter documents or bylaws of Borrower or any mortgage,
security deed or agreement, deed of trust, lease, loan or credit agreement,
partnership agreement, license, franchise or any other material instrument or
agreement to which Borrower is a party or by which Borrower or its properties
may be bound or, to the knowledge of Borrower, affected.
3.9 Compliance With Law. Borrower is in compliance with all laws,
regulations, decrees and orders applicable to it (including but not limited to
laws, regulations, decrees and orders relating to environmental, occupational
and health standards and controls, antitrust, monopoly, restraint of trade or
unfair competition).
3.10 Environmental Matters. Borrower has no actual knowledge of (i)
the presence of any Hazardous Substances (as defined below) on any property
owned, leased or otherwise
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controlled by Borrower (collectively, the "Property"); (ii) any spills,
releases, discharges, or disposal of Hazardous Substances that have occurred or
are presently occurring on or onto any of the Property; (iii) the presence on
any of the Property of underground or above-ground storage tanks or pipelines
which are required to be licensed by any local, state or federal agency; (iv)
any spills or disposal of Hazardous Substances that have occurred or are
occurring off the Property as a result of any construction on or operation and
use of the Property; (v) any failure by Borrower to comply with any Applicable
Environmental Laws (as defined below); (vi) any notices related to Borrower or
any of the Property claiming a violation of any Applicable Environmental Laws,
or the commencement of any action or proceeding against Borrower or related to
any of the Property alleging a violation of Applicable Environmental Laws; (vii)
any notices related to Borrower or any of the Property requiring compliance with
Applicable Environmental Laws, or demanding payment or contribution for injury
to the environment or human health; or (viii) any outstanding notices or
citations relating to violations by any former owner or operator of any of the
Property. For the purposes of this Agreement, "Hazardous Substances" means any
substance or material defined or designated as a hazardous or toxic waste,
material or substance, or other similar term, by any federal, state, or local
environmental statute, regulation, or ordinance presently in effect, including,
without limitation, asbestos in any form, urea formaldehyde foam insulation,
petroleum products, and polychlorinated biphenyls. For the purposes of this
Agreement, "Applicable Environmental Laws" means any and all applicable local,
state, and federal environmental laws, regulations, ordinances, and
administrative and judicial orders relating to the generation, recycling, reuse,
sale, storage, handling, transport, or disposal of any Hazardous Substances.
3.11 Taxes. Borrower has filed or caused to be filed all tax returns
required to be filed (except for returns that have been appropriately extended),
and has paid all taxes shown to be due and payable on said returns and all other
taxes, impositions, assessments, fees or other charges imposed on it by any
governmental authority, agency or instrumentality, prior to any delinquency with
respect thereto (other than taxes, impositions, assessments, fees and charges
currently being contested in good faith by appropriate proceedings, for which
appropriate amounts have been reserved). No tax liens have been filed against
Borrower or any of its properties.
3.12 Certain Transactions. Except as set forth on Schedule 3.12(a),
(i) Borrower is not indebted, directly or indirectly, to any of its respective
officers or directors, or to their respective spouses or children, and (ii) none
of said officers or directors or any members of their immediate families are
indebted to Borrower or have any direct or indirect ownership interest in any
firm or corporation with which Borrower is affiliated or with which Borrower has
a business relationship, or any firm or corporation which competes with
Borrower, except that officers and directors of Borrower may own no more than 1%
of the outstanding stock of any publicly traded company which competes directly
with Borrower. Except as set forth on Schedule 3.12(b), no officer or director
or any member of their immediate families is, directly or indirectly, interested
in any material contract with Borrower and each such contract has been fully
disclosed to and approved by the Board of Directors of Borrower and is on arm's
length terms. Except as set forth on Schedule 3.12(c), Borrower is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.
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3.13 Intellectual Property. Borrower is the lawful owner of or has
the lawful right to use all of its proprietary information free and clear of any
claim, right, trademark, patent or copyright protection of any third party. As
used herein, "proprietary information" includes without limitation (i) any
computer software and related documentation, inventions, technical data and
nontechnical data related thereto, and (ii) other documentation, inventions and
data related to patterns, plans, methods, techniques, drawings, finances,
customer lists, suppliers, products, special pricing and cost information,
designs, processes, procedures, formulas, research data owned or used by
Borrower or marketing studies conducted by Borrower, all of which is
commercially important and competitively sensitive and which generally has not
been disclosed to third parties other than customers in the ordinary course of
business. Borrower has good and valid title to or has a valid and subsisting
license to use all patents, trademarks, trade names, service marks, copyrights
or other intangible property rights, and registrations or applications for
registration thereof, owned by Borrower or used or required by Borrower in the
operation of its business as presently being conducted. There is no infringement
or conflict with asserted rights of others with respect to copyrights, patents,
trademarks, service marks, trade names, trade secrets or other intangible
property rights or know-how utilized by Borrower. To the knowledge of Borrower,
no products or processes of Borrower infringe or conflict with any rights of
patent or copyright, or any discovery, invention, product or process, that is
the subject of a patent or copyright application or registration. Borrower
follows such procedures as are necessary or appropriate to provide reasonable
protection of Borrower's trade secrets and proprietary rights in intellectual
property of all kinds. To the knowledge of Borrower, no person employed by or
affiliated with Borrower has employed or proposes to employ any trade secret or
any information or documentation proprietary to any former employer and, to the
knowledge of Borrower, no person employed by or affiliated with Borrower has
violated any confidential relationship that such person may have had with any
third person, in connection with the development, manufacture, sale or lease of
any product or proposed product or the development or sale of any service or
proposed service of Borrower.
3.14 Regulatory Compliance. Borrower possesses all licenses, permits
and other authorizations from federal, state or local regulatory bodies
necessary for the conduct of its business and for the ownership, maintenance and
operation of its properties and assets. All such licenses, permits and
authorizations are in full force and effect. Borrower's business is not subject
to the regulation of any federal, state or local government regulatory body by
reason of the nature of the business being conducted.
3.15 ERISA. With respect to the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder ("ERISA"):
(a) Plans. Schedule 3.15 sets forth any and all "employee
benefit plans" maintained by or on behalf of Borrower or any ERISA
Affiliate as defined in Section 3(3) of ERISA (a "Plan"), including,
but not limited to, any defined benefit pension plan, profit sharing
plan, money purchase pension plan, savings or thrift plan, stock
bonus plan, employee stock ownership plan, Multiemployer Plan, or
any plan, fund, program, arrangement or practice providing for
medical (including post-retirement
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medical), hospitalization, accident, sickness, disability, or life
insurance benefits. For purposes of this Agreement, "ERISA
Affiliate" shall mean each trade or business (whether or not
incorporated) which, together with Borrower, is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended from time to time, and the
regulations promulgated and the rulings issued thereunder (the
"Code"); and "Multiemployer Plan" shall mean a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA. Neither Borrower nor any
ERISA Affiliate maintains or contributes to, or has maintained or
contributed to, any defined benefit pension plan or Multiemployer
Plan.
(b) Compliance. Each Plan has at all times been maintained, by
its terms and in operation, in accordance in all material respects
with all applicable laws.
(c) Liabilities. Except for liabilities and expenses which
become payable and are timely paid pursuant to the terms and usual
operations of the Plans, Borrower is not currently and, to the best
of its knowledge, will not become subject to any material liability
(including withdrawal liability), tax or penalty whatsoever to any
person whomsoever with respect to any Plan including, but not
limited to, any material tax, penalty or liability arising under
Title I or Title IV of ERISA or Chapter 43 of the Code.
(d) Funding. Borrower and each ERISA Affiliate has made full
and timely payment of all amounts (i) required to be contributed
under the terms of each Plan and applicable law and (ii) required to
be paid as expenses of each Plan. No Plan or Plans have an "amount
of unfunded benefit liabilities" (as defined in Section 400l(a)(18)
of ERISA) which, in the aggregate, exceed $100,000.
3.16 Regulations G, T, U and X. Borrower is not engaged in the
business of extending credit for the purposes of purchasing or carrying margin
stock, and no proceeds of the Loan will be used for a purpose which violates, or
would be inconsistent with, Regulations G, T, U or X of the Board of Governors
of the Federal Reserve System.
3.17 Government Regulation. Borrower is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" within the meaning of the Public Utility
Holding Company Act of 1935, as amended, or subject to regulation under the
Federal Power Act, the Interstate Commerce Act or any other federal law or state
laws limiting its ability to incur indebtedness or to execute, deliver or
perform the Loan Documents.
3.18 Statements Not False or Misleading. No representation or
warranty given as of the date hereof by Borrower contained in this Agreement or
any schedule attached hereto or any statement in any document, certificate or
other instrument furnished or to be furnished to Lender pursuant hereto, taken
as a whole, contains or will (as of the time so furnished) contain any untrue
statement of a material fact or omits or will (as of the time so furnished) omit
to state any material fact which is necessary in order to make the statements
contained therein not misleading.
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3.19 Survival. The representations and warranties of Borrower
contained in this Agreement or any schedule attached hereto or any statement in
any document, certificate or other instrument furnished or to be furnished to
Lender pursuant hereto, shall survive until this Agreement terminates in
accordance with Article 7 hereof.
ARTICLE 4 - COVENANTS AND AGREEMENTS OF BORROWER
Borrower covenants and agrees that, without Lender's prior written
consent:
4.1 Sales of and Encumbrances on Collateral. Borrower will not sell,
exchange, lease, negotiate, pledge, assign or grant any security interest in or
otherwise dispose of any Collateral, nor Borrower permit any other lien of any
kind to attach thereto, except that (i) Borrower may sell or lease inventory in
the ordinary course of business, (ii) Borrower may sell or otherwise dispose of
obsolete or retired equipment in the ordinary course of business, (iii) Borrower
may grant security interests to secure "Senior Debt" as such term is defined in
the Intercreditor Agreement, and (iv) Borrower may grant security interests to
Lender.
4.2 Use of Proceeds. Borrower shall use the proceeds of the Loan to
finance expansion of the Borrower's existing business and for other working
capital purposes.
4.3 Further Assurances. Borrower will take all actions reasonably
requested by Lender to create and maintain in Lender's favor valid liens upon
and perfected security interests in any Collateral secured pursuant to this
Agreement or the other Security Instruments and all other security for the
Secured Obligations now or hereafter held by or for Lender. Without limiting the
foregoing, Borrower agrees to execute such further instruments (including
financing statements and continuation statements) as may be required or
permitted by any law relating to notices of, or affidavits in connection with,
the perfection of Lender's liens and security interests, and to cooperate with
Lender in the filing or recording and renewal thereof.
4.4 Limitations on Debt and Obligations. Borrower shall not incur,
assume or otherwise suffer to exist any Debt except (i) Debt reflected on
Borrower's balance sheet dated as of December 31, 1997 and delivered to Lender
in connection with the making of the Loan, (ii) "Senior Debt" as such term is
defined in the Intercreditor Agreement, and (iii) Debt incurred pursuant to this
Agreement and evidenced by the Note. For purposes of this Agreement, "Debt" of
any person means, without duplication, (a) all obligations of such person for
borrowed money and all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments on which interest charges are
customarily paid, (b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such person, (c) all capitalized lease
obligations of such person (to the extent required by generally accepted
accounting principles to be included on the balance sheet of such person) and
(d) all obligations of such person (contingent or otherwise) to guarantee,
purchase or otherwise acquire, or otherwise assure a creditor against loss in
respect of, Debt of another person.
11
4.5 Financial Statements and Reports. Borrower shall furnish to
Lender the following financial information:
(i) within ninety (90) days after the end of each fiscal year
of Borrower, (A) audited consolidated financial statements of
Borrower, including a balance sheet as of the close of such fiscal
year, an income statement and statements of changes in stockholders'
equity, and of cash flows for such fiscal year, all in reasonable
detail, prepared in accordance with GAAP consistently applied, and
with the report thereon of independent public accountants acceptable
to Lender and (B) unaudited consolidating financial statements,
including a balance sheet as of the close of such fiscal year, an
income statement and statements of changes in stockholders' equity,
and of cash flows for such fiscal year;
(ii) within ninety (90) days after the end of each fiscal year
of Borrower, a certificate of the chief executive or chief financial
officer of Borrower stating that to the best knowledge of such
officer, (A) Borrower has kept, observed, performed and fulfilled
each covenant, term and condition of this Agreement and the other
Loan Documents during the preceding fiscal year and (B) no Event of
Default hereunder has occurred and is continuing (or if such officer
has knowledge that an Event of Default has occurred and is
continuing, specifying the nature of same, the period of existence
of same and the action Borrower proposes to take in connection
therewith);
(iii) within thirty (30) days after the end of each calendar
month, a consolidated balance sheet of Borrower as of the close of
such month and consolidated statements of earnings and retained
earnings of Borrower for such month and for the prior months of the
current fiscal year (on a year to date basis), each compared to the
same period in the previous fiscal year, all in reasonable detail,
and unaudited but prepared on the basis of GAAP consistently applied
(except for the absence of footnotes and subject to year-end
adjustments), together with a report of Borrower's management with
respect to such financial statements; and
(iv) with reasonable promptness, such other financial data as
Lender may reasonably request.
4.6 Maintenance of Books and Records: Inspection. Borrower shall
maintain its books, accounts and records on the basis of GAAP consistently
applied, and permit a representative of Lender to visit and inspect any of its
properties (including but not limited to the collateral security described in
Section 2.1 or the Security Instruments), corporate books and financial records,
and to discuss its accounts, affairs and finances with Borrower or the principal
officers of Borrower during reasonable business hours, all at such times as
Lender may reasonably request.
4.7 Insurance. Without limiting any of the requirements of any of
the other Loan Documents, Borrower shall maintain, in amounts customary for
entities engaged in comparable business activities, fire, liability and other
forms of insurance on its properties (including but not
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limited to the collateral now or hereafter securing payment and performance of
the Secured Obligations), against such hazards and in at least such amounts as
is customary in Borrowers business. Lender shall be named as an additional
insured with respect to liability insurance and an additional loss payee with
respect to hazard insurance (subject to the interests of any holder of "Senior
Debt" as such term is defined in the Intercreditor Agreement). Each such
insurance policy shall require the insurer to notify Lender in writing at least
thirty (30) days prior to any cancellation or material reduction or limitation
of such policy. At the request of Lender, Borrower will deliver forthwith a
certificate specifying the details of such insurance in effect.
4.8 Taxes and Assessments. Borrower shall (i) file all tax returns
and appropriate schedules thereto that are required to be filed under applicable
law, prior to the date of delinquency, (ii) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon Borrower upon its
income and profits or upon any properties belonging to it, prior to the date on
which penalties attach thereto, and (iii) pay all taxes, assessments and
governmental charges or levies that, if unpaid, might become a lien or charge
upon any of its properties; provided that Borrower shall have the right to
contest in good faith and by appropriate proceedings the applicability or
validity of any such tax, assessment, charge or levy without paying such tax,
assessment, charge or levy so long as adequate reserves with respect thereto are
maintained in accordance with generally accepted accounting principles.
4.9 Corporate Existence. Borrower shall maintain its corporate
existence in the state indicated in Section 3.1 hereof, and its qualification
and good standing as a foreign corporation in each jurisdiction in which such
qualification is required by applicable law.
4.10 Compliance with Law and Agreements. Except where failure to do
so does not and would not constitute a Material Adverse Event, Borrower shall
maintain its business operations and property owned or used in connection
therewith in compliance with (i) all applicable federal, state and local laws,
regulations and ordinances, and such laws, regulations and ordinances of foreign
jurisdictions, governing such business operations and the use and ownership of
such property, and (ii) all agreements, licenses, franchises, indentures and
mortgages to which Borrower is a party or by which Borrower or any of its
properties is bound. Without limiting the foregoing, Borrower shall pay all of
its indebtedness promptly and substantially in accordance with the terms
thereof.
4.11 Environmental Requirements. In addition to, and not in
derogation of, the requirements of Section 4.10, Borrower will comply with all
laws, governmental standards and regulations applicable to Borrower or to
properties owned or leased by Borrower, in respect of occupational health and
safety and Applicable Environmental Laws (unless such laws, standards or
regulations are being contested in good faith by appropriate proceedings and
adequate reserves therefor have been established), promptly notify Lender of its
receipt of any notice of a violation of any such law, standard or regulation,
and indemnify and hold Lender harmless from all loss, cost, damage, liability,
claim and expense incurred by or imposed upon Lender on account of Borrower's
failure to perform its obligations under this Section 4.11.
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4.12 Notice of Default. Borrower shall give written notice to Lender
of the occurrence of any default or Event of Default under this Agreement or
default or event of default under any other Loan Document promptly upon
knowledge of the occurrence thereof. Borrower shall give written notice to
Lender of the occurrence of any default under any of the documents evidencing,
governing or otherwise relating to "Senior Debt" as such term is defined in the
Intercreditor Agreement (the "Senior Debt Documents").
4.13 Notice of Litigation. Borrower shall give notice, in writing,
to Lender of (i) any actions, suits or proceedings instituted by any persons
whomsoever against Borrower or materially affecting any of the assets of
Borrower, and (ii) any dispute between Borrower on the one hand and any
governmental regulatory body on the other hand, which dispute might interfere
with the normal operations of Borrower, except where such actions, suits,
proceedings and disputes do not and would not reasonably be expected to
constitute a Material Adverse Event.
4.14 ERISA. If Borrower has in effect, or hereafter institutes, a
Plan, then the following warranty and covenants shall be applicable during such
period as any such Plan shall be in effect: (i) Borrower hereby warrants that no
fact that might constitute grounds for the involuntary termination of the Plan,
or for the appointment by the appropriate United States District Court of a
trustee to administer the Plan, exists at the time of execution of this
Agreement; (ii) Borrower hereby covenants that throughout the existence of the
Plan, Borrower's contributions under the Plan will meet the minimum funding
standards required by ERISA and Borrower will not institute a distress
termination of the Plan; and (iii) Borrower hereby covenants that it will send
to Lender a copy of any notice of a reportable event (as defined in ERISA)
required by ERISA to be filed with the Labor Department or the Pension Benefit
Guaranty Corporation, at the time that such notice is so filed.
4.15 Key Man Insurance. Borrower will maintain in full force and
effect, at all times during the term of this Agreement and at its sole cost and
expense, an insurance policy in the amount of at least the amount of the Loan
insuring the life of Xxxxxxx X. Xxxxx issued by an insurance company having an
A.M. Best Rating of "A" or better and a financial size category of not less than
VIII, the proceeds of which policy shall be assigned to Lender.
4.16 Name Change. Borrower will not change its name or conduct its
business under any name other than its legal name.
4.17 Merger. Consolidation and Sale of Assets. Borrower will not
acquire the business of or a substantial portion of the assets of, or merge or
consolidate with any other entity or sell, lease or transfer or otherwise
dispose of all or a substantial portion of its assets to any person or entity,
other than sales or leases of inventory in the ordinary course of business.
Notwithstanding the foregoing, Borrower may acquire the business of or a
substantial portion of the assets of any entity whose business is substantially
related to the Borrower's business as an on-line provider of medical and health
information for healthcare professionals, patients and insurers. Borrower shall
not acquire or create any Subsidiaries.
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4.18 Liability for Other Parties. Borrower will not become liable,
directly or indirectly, for any obligation of any other person, by guaranty,
endorsement, or otherwise, except by endorsement in the ordinary course of
business of negotiable instruments payable at sight for deposit or collection,
and except for those guarantees set forth on Schedule 3.12(c).
4.19 Dividends: Redemptions. Borrower will not (i) declare, set
aside, or pay any dividend or make any other distribution, whether in cash, in
kind, or otherwise, on account of or with respect to, or (ii) apply any of its
funds, property or. assets to the purchase, redemption or other retirement of,
any class of its capital stock or any warrants, options or other rights with
respect to any class of its capital stock.
4.20 Liquidation. Borrower will not permit the dissolution or
liquidation of Borrower.
4.21 Loans and Investments. Borrower will not (i) make any loans
other than deposits required by government agencies or public utilities, or (ii)
make any investments (which term shall include the purchase of any ownership or
similar interest in any corporation, partnership, joint venture, limited
liability company or other business organization or the purchase of any debt or
equity securities or instruments issued by any such entity) other than cash
equivalent investments.
4.22 Notice of Issuance of Stock. Upon the issuance of additional
shares of capital stock of Borrower, Borrower shall promptly disclose to Lender,
in writing, the number of shares issued, the price therefor, and such other
information as Lender may from time to time request.
4.23 Change in Business. Borrower will not engage in any line of
business other than the business conducted by Borrower as of the date of this
Agreement, provided, however, that the expansion of Borrower's business into
related fields and business shall be deemed not to be a breach of this Section.
4.24 Location of Business and Collateral. Borrower shall give
written notice to Lender (i) thirty (30) days prior to the opening of any new
business office, setting forth the address (including county) of such new
location, (ii) thirty (30) days prior to changing the location of records with
respect to intangible personal property constituting collateral security for the
Secured Obligations and (iii) whenever any Collateral comprised of tangible
personal property will be located in a county or state that is not set forth on
Schedule 3.5 hereof for a period of four months or longer. Prior to establishing
any new business office location or locating any collateral in a county or state
that is not set forth on Schedule 3.5 hereof for a period of four months or
longer, Borrower shall have (i) executed and delivered to Lender all financing
statements and financing statement amendments which Lender may reasonably
request in connection therewith in order to perfect and protect the security
interests and priority of Lender in such Collateral, (ii) paid in full all
filing fees and taxes, if any, payable in connection with such filings and (iii)
complied with any other requirement in this Agreement or any other Loan Document
relating to the location of any Collateral.
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4.25 Information; Post-Closing Review. Borrower will furnish to
Lender such financial data and other information relating to the business of
Borrower as Lender may from time to time reasonably request. In addition to the
foregoing, at Borrower's request, no later than ninety (90) days after the Loan
is advanced, Borrower shall furnish Lender a certificate executed by the
president itemizing the use of proceeds from the Loan, and, at Borrower's
request, Borrower shall cooperate with Lender in connection with a post-closing
review with respect to the use of the proceeds of the Loan and such other
matters relating to the Loan as Lender shall reasonably request.
ARTICLE 5 - CONDITIONS TO CLOSING
5.1 Deliveries. The obligation of Lender to make the Loan is subject
to the receipt by Lender of the following documents, each of which shall be
satisfactory to Lender in form and substance:
(a) Corporate Documents. A copy of the Certificate of
Incorporation of Borrower, as certified by the Secretary of State of
Delaware, and a certificate of existence or good standing from the
Secretary of State of Delaware and each other State in which
Borrower is legally required to qualify to transact business as a
foreign corporation, each as of a recent date.
(b) Security Instruments. Each of the Security Instruments,
duly executed by Borrower.
(c) Officer's Certificate. A certificate of the President of
Borrower to the effect set forth in Exhibit E.
(d) Opinion of Counsel. The favorable written opinion of Rich,
May, Xxxxxxxx & Xxxxxxxx, P.C., counsel to Borrower, in form
satisfactory to King & Spalding, counsel to Lender, and
substantially in the form of Exhibit F hereto.
(e) The Note. The Note, duly completed and executed by
Borrower.
(f) UCC-1 Financing Statements. Financing statements on Form
UCC-1, duly completed and executed by Borrower, perfecting the
security interest of Lender in the Collateral.
(g) Stock Purchase Warrant. The Warrant duly completed and
executed by Borrower.
(h) Consents and Approvals. True copies of all consents and
required governmental approvals, if any, necessary to the execution,
delivery and performance of the Loan Documents and the transactions
contemplated hereby and thereby.
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(i) Closing Certificate. A certificate of a duly authorized
officer of Borrower, substantially in the form of Exhibit G hereto,
certifying that, after giving effect to this Agreement, all
representations and warranties herein are true and correct and there
is no default or Event of Default in existence as of such date, nor
any event which, given the passage of time, would constitute an
Event of Default.
(j) Additional Deliveries. Such additional documents,
certificates and instruments as are deemed reasonably necessary or
appropriate by Lender.
5.2 Other Conditions to Lender's Obligation to make Loan. The
obligation of the Lender to make the Loan is subject to the satisfaction of each
of the additional conditions precedent set forth in this Section 5.2:
(a) Compliance with Warranties. No Default. etc. The
representations and warranties set forth in this Agreement and the
Security Instruments shall have been true and correct in all
material respects, both before and after giving effect to the making
of the Loan.
(b) No Default. No Event of Default shall have occurred and be
continuing, and no event shall have occurred that with the giving of
notice or the passage of time or both would constitute an Event of
Default.
(c) Material Adverse Event. In the reasonable judgment of
Lender, no Material Adverse Event shall have occurred.
ARTICLE 6 - DEFAULT AND REMEDIES
6.1 Events of Default. The occurrence of any of the following shall
constitute an Event of Default hereunder:
(a) default in the punctual payment of any portion of the
principal amount of the indebtedness evidenced by the Note, or
default in the payment of any interest on the indebtedness evidenced
by the Note which is not cured within five (5) days;
(b) any representation by Borrower hereunder or under any of
the other Loan Documents, or delivery by Borrower of any schedule,
statement, resolution, report, certificate, notice or writing to
Lender, is untrue in any material respect on the date as of which
made, stated or certified;
(c) a default or event of default (not covered by Section
6.1(a) or (b)) shall occur under, or there shall occur such other
failure by Borrower to perform its obligations
17
under, any of the Loan Documents and such default or event of
default shall not be cured within thirty (30) days;
(d) Borrower (i) shall admit in writing its inability to pay
its debts generally as they become due; or (ii) shall make an
assignment for the benefit of creditors or petition or apply to any
tribunal for the appointment of a custodian, receiver or trustee for
it or a substantial part of its assets; or (iii) shall commence any
proceeding under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (iv) shall
have had any such petition or application filed or any such
proceeding commenced against it in which an order for relief is
entered or an adjudication or appointment is made; or (v) shall
indicate, by any act or omission, its consent to, approval of, or
acquiescence in any such petition, application, proceeding or order
for relief or the appointment of a custodian, receiver or trustee
for it or a substantial part of its assets; or (vi) shall suffer any
such custodianship, receivership or trusteeship to continue
undischarged for a period of thirty (30) days or more;
(e) Borrower shall be liquidated, dissolved, partitioned or
terminated, or the articles or certificate of incorporation of
Borrower shall expire or be revoked;
(f) Borrower shall default in the timely payment or
performance of any obligation now or hereafter owed to Lender in
connection with any indebtedness of Borrower now or hereafter owed
to Lender, other than the Loan, subject to any applicable grace
period; or
(g) (i) Borrower shall fail to pay any principal of or premium
or interest on any Debt owed by Borrower (other than the Loan),
which is outstanding in a principal amount of at least $100,000 in
the aggregate, when the same becomes due and payable (whether by
scheduled maturity, acceleration, demand or otherwise), and such
failure shall continue after any cure period applicable thereto; or
(ii) any other event shall occur or condition shall exist under any
agreement or instrument relating to any such indebtedness and shall
continue after any applicable cure period, if the effect of such
event or condition is to accelerate or permit the acceleration of
such indebtedness; or (iii) any such indebtedness shall be
accelerated or otherwise declared to be due and payable prior to the
stated maturity thereof; or (iv) any such indebtedness shall be
required to be prepaid, redeemed, purchased or defeased, or an offer
to repay, redeem, purchase or defease such indebtedness shall be
required to be made, in each case prior to the stated maturity
thereof;
(h) the occurrence of any default or event of default under
the Senior Debt Documents;
(i) Xxxxxxx X. Xxxxx shall have sold, transferred or otherwise
disposed of record or beneficial ownership of shares of common stock
of Borrower held by such person on
18
the date hereof, provided, however, a transfer of shares to Xxxxxxx
X. Xxxxx'x spouse, children or parents or any trust in which Xxxxxxx
X. Xxxxx or any of the foregoing persons is a beneficiary shall be a
permitted transfer hereunder;
(j) Xxxxxxx X. Xxxxx shall cease to hold the office of Chief
Executive Officer of Borrower; or
(k) any shareholder shall have exercised or given notice to
the Borrower of his or her or its intention to exercise his or her
or its right to require the Borrower to purchase or redeem any stock
of the Borrower.
6.2 Acceleration of Maturity: Remedies. Upon the occurrence of any
Event of Default described in Section 6.1(d) or Section 6.1(k), the indebtedness
evidenced by the Note as well as any and all other indebtedness of Borrower to
Lender shall be immediately due and payable in full; and upon the occurrence of
any other Event of Default described in Section 6.1, Lender at any time
thereafter while such Event of Default is continuing may at its option
accelerate the maturity of the indebtedness evidenced by the Note as well as any
and all other indebtedness of Borrower to Lender, whereupon such indebtedness
shall be and become immediately due and payable; all without notice of any kind.
Upon the occurrence of any such Event of Default and the acceleration of the
maturity of the indebtedness evidenced by the Note:
(a) Lender shall be immediately entitled to exercise any and
all rights and remedies possessed by Lender pursuant to the terms of
this Agreement (including without limitation, those remedies set
forth in Sections 6.3 and 6.4), the Security Instruments and all of
the other Loan Documents;
(b) Lender shall have all of the rights and remedies of a
secured party under the under the Uniform Commercial Code as in
effect in any applicable jurisdiction (the "UCC"); and
(c) Lender shall have any and all other rights and remedies
that Lender may now or hereafter possess at law, in equity or by
statute.
6.3 Lender's Rights.
(a) Power of Attorney. Borrower hereby irrevocably constitutes and
appoints Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Borrower and in the name of
Borrower or in its own name, from time to time after the occurrence, and during
the continuation of, an Event of Default, in Lender's discretion, for the
purpose of carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, Borrower hereby gives Lender
the power and right, on behalf of Borrower, without notice to or assent by
Borrower, to do the following:
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(i) in the name of Borrower or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys
due under, or with respect to, any Collateral and to file any claim
or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Lender for the purpose of
collecting any and all such moneys due with respect to such
Collateral whenever payable;
(ii) to pay or discharge taxes and liens levied or placed on
or threatened against the Collateral, to effect any repairs or any
insurance called for by the terms of this Agreement and to pay all
or part of the premiums therefor and the costs thereof; and
(iii) to direct any party liable for any payment under any of
the Collateral to make payment of any and all monies due or to
become due thereunder directly to Lender or as Lender shall direct,
to ask or demand for, collect, receive payment of and receipt for,
any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral, to sign and
endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of
the Collateral, to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to
enforce any other right in respect of any Collateral, to defend any
suit, action or proceeding brought against Lender with respect to
any Collateral, to settle, compromise or adjust any suit, action or
proceeding described in the preceding clause and, in connection
therewith, to give such discharges or releases as Lender may deem
appropriate, to assign any trademark (along with goodwill of the
business to which such trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as
Lender shall in its sole discretion determine, and generally, to
sell, transfer, pledge and make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for all purposes, and
to do, at Lender's option and Lender's expense, at any time, or from
time to time, all acts and things which Lender deems necessary to
protect, preserve or realize upon the Collateral and the liens of
Lender thereon and to effect the intent of this Agreement, all as
fully and effectively as Borrower might do.
Lender hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) Other Powers. Borrower also authorizes Lender, at any time and
from time to time, to execute, in connection with any sale provided for in
Section 6.4, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) No Duty on the Pan of Lender. The powers conferred on Lender
hereunder are solely to protect the interests of Lender in the Collateral and
shall not impose any duty upon Lender
20
to exercise any such powers. Lender shall be accountable only for amounts that
it actually receives as a result of the exercise of such powers, and neither it
nor any of its partners, officers, directors, employees or agents shall be
responsible to Lender for any act or failure to act hereunder, except for their
own gross negligence or willful misconduct.
6.4 Remedies with respect to Collateral. If an Event of Default
shall occur and be continuing, Lender may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any other instrument
or agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the UCC. Without limiting the
generality of the foregoing, Lender without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon Borrower or any other
person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, at any office of Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or on future delivery without assumption of any credit risk. Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, at any private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in Borrower, which
right of equity is hereby waived or released. Borrower further agrees, at
Lender's request, to assemble the Collateral and make it available to Lender at
places which Lender shall reasonably select, whether at Borrower's premises or
elsewhere. Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all reasonable
costs and expenses of every kind incurred therein or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or
the rights of Lender hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Secured Obligations, in such order as Lender may elect, and only after such
application and after the payment by Lender of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the UCC,
need Lender account for the surplus, if any, to the Borrower. To the extent
permitted by applicable law, Borrower waives all claims, damages and demands it
may acquire against Lender arising out of the exercise by Lender of any rights
hereunder. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least five days before such sale or other disposition. Borrower shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations
and the reasonable fees and expenses of any attorneys employed by Lender to
collect such deficiency.
6.5 Remedies Cumulative: No Waiver. No right, power or remedy
conferred upon or reserved to Lender by this Agreement or any of the other Loan
Documents is intended to be exclusive of any other right, power or remedy, but
each and every such right, power and remedy shall be cumulative and concurrent
and shall be in addition to any other right, power and remedy given hereunder,
under any of the other Loan Documents or now or hereafter existing at law, in
21
equity or by statute. No delay or omission by Lender to exercise any right,
power or remedy accruing upon the occurrence of any Event of Default shall
exhaust or impair any such right, power or remedy or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein, and every right,
power and remedy given by this Agreement and the other Loan Documents to Lender
may be exercised from time to time and as often as may be deemed expedient by
Lender.
6.6 Proceeds of Remedies. Any or all proceeds resulting from the
exercise of any or all of the foregoing remedies shall be applied as set forth
in the Loan Document(s) providing the remedy or remedies exercised; if none is
specified, or if the remedy is provided by this Agreement, then as follows:
(a) First, to the costs and expenses, including reasonable
attorney and paralegal fees and costs, incurred by Lender in
connection with the exercise of its remedies;
(b) Second, to the expenses of curing the default that has
occurred, in the event that Lender elects, in its sole discretion,
to cure the default that has occurred;
(c) Third, to the payment of accrued and unpaid interest on
the indebtedness evidenced by the Note;
(d) Fourth, to the payment of the unpaid principal of the
Note;
(e) Fifth, to the payment of all other Secured Obligations;
and
(f) Sixth, the remainder, if any, to Borrower or to any other
person lawfully thereunto entitled.
ARTICLE 7 - TERMINATION
This Agreement shall remain in full force and effect until the
payment in full by Borrower of all amounts owed to Lender under the Loan
Documents, within a reasonable time after which Lender shall take such actions
as necessary to release its security interests in the Collateral, including the
filing of appropriate UCC-3 termination statements.
ARTICLE 8 - MISCELLANEOUS
8.1 Performance By Lender. If Borrower shall default in the payment,
performance or observance of any covenant, term or condition of this Agreement,
Lender may, at its option, after 3 days advance written notice to the Borrower,
pay, perform or observe the same, and all payments made or costs or expenses
incurred by Lender in connection therewith (including but not limited to
22
reasonable attorney and paralegal fees and costs), with interest thereon at the
highest default rate provided in the Note, shall be immediately repaid to Lender
by Borrower and shall constitute a part of the Secured Obligations and be
secured hereby until fully repaid. Lender, in its sole and complete discretion
and without any liability therefor, shall determine the necessity for any such
actions and of the amounts, if any, to be paid.
8.2 Successors and Assigns Included in Parties. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of Borrower or by or on behalf of Lender shall bind and inure to
the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
8.3 Costs and Expenses. Borrower agrees to pay up to $10,000 of the
costs and expenses incurred by Lender in connection with the making of the Loan,
including but not limited to filing fees and recording taxes, but excluding
attorney and paralegal fees and costs, promptly upon demand of Lender. Borrower
further agrees to pay up to $20,000 of the reasonable attorney and paralegal
fees and costs incurred by Lender in connection with the making of the Loan,
promptly upon demand of Lender. Borrower further agrees to pay all of the
out-of-pocket costs and expenses incurred by Lender in connection with the
maintenance of its security interest in the Collateral, protection of the
Collateral, and collection of the Loan, including but not limited to reasonable
attorney and paralegal fees and costs related thereto (including any such
incurred in connection with any appellate litigation), promptly upon demand of
Lender.
8.4 Assignment. The Note, this Agreement and the other Loan
Documents may be endorsed, assigned and transferred in whole or in part by
Lender and any such subsequent holder or assignee of the same shall succeed to
and be possessed of the rights and powers of Lender under all of the same to the
extent transferred and assigned. Lender may grant participations in the Note,
this Agreement and the other Loan Documents (or any portion thereof). Lender
shall notify Borrower in writing of any such endorsement, assignment or transfer
by Lender. Borrower shall not assign any of its rights nor delegate any of its
duties hereunder or under any of the other Loan Documents without the prior
express written consent of Lender.
8.5 Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Borrower hereunder and under all
of the other Loan Documents.
8.6 Severability. If any provisions of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby nor shall the validity and enforceability thereof be affected.
8.7 Interest and Loan Charges Not to Exceed Maximum Allowed by Law.
Anything in this Agreement, the Note, the Security Instruments or any of the
other Loan Documents
23
to the contrary notwithstanding, in no event whatsoever, whether by reason of
advancement of proceeds of the Loan, acceleration of the maturity of the unpaid
balance of the Loan or otherwise, shall the interest and other consideration
agreed to be paid to Lender for the use of the money advanced or to be advanced
hereunder exceed the maximum amounts collectible under applicable laws in effect
from time to time. It is understood and agreed by the parties that, if for any
reason whatsoever the interest or other consideration paid or contracted to be
paid by Borrower in respect of the indebtedness evidenced by the Note shall
exceed the maximum amounts collectible under applicable laws in effect from time
to time, then ipso facto, the obligation to pay such interest and other
consideration shall be reduced to the maximum amounts collectible under
applicable laws in effect from time to time, and any amounts collected by Lender
that exceed such maximum amounts shall be applied to the reduction of the
principal balance of the indebtedness evidenced by the Note or refunded to
Borrower, in Lender's sole discretion, so that at no time shall the interest and
other consideration paid or payable in respect of the indebtedness evidenced by
the Note exceed the maximum amounts permitted from time to time by applicable
law.
8.8 Article and Section Headings; Defined Terms. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
8.9 Notices. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
faxed (provided that such notice is mailed to the other party promptly
thereafter), or sent by certified mail or nationally recognized overnight
courier service (such as Federal Express) to the other party at the address set
forth below, or at such other address as may be supplied in writing and of which
receipt has been acknowledged in writing. The date of personal delivery, the
date of successful fax transmission, the third day after the date of mailing, or
the business day after the date of delivery to such courier service, as the case
may be, shall be the date of such notice, election or demand. For the purposes
of this Agreement, notices, elections or demands made pursuant hereto shall be
made to the following addresses:
If to Lender: Petra Capital, LLC
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxx
with a copy to: King & Spalding
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Attention: Xxxxxx X. Xxxxxxx, Xx.
24
If to Borrower: HealthGate Data Corp.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxxx
with a copy to: Rich, May, Xxxxxxxx & Xxxxxxxx, P.C.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxxxx X. Xxxx
8.10 Entire Agreement. This Agreement and the other written
agreements between Borrower and Lender executed contemporaneously herewith
represent the entire agreement between the parties concerning the subject matter
hereof, and all oral discussions and prior agreements are merged herein.
8.11 Counterparts. This Agreement may be executed in multiple
originals or counterparts, each of which shall be deemed an original and all or
which when taken together shall constitute but one and the same instrument.
8.12 Governing Law. This Agreement shall be construed and enforced
under the internal laws of the State of Georgia, without reference to the
conflict of laws principles thereof.
8.13 Amendments: Incorporation. No amendment or modification hereof
shall be effective except in a writing executed by each of the parties hereto.
All schedules, exhibits, riders, and other documents and instruments referenced
herein shall be deemed to be incorporated herein and made a part hereof.
8.14 Waiver of Jury Trial. LENDER AND BORROWER EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY
APPLICABLE LAW) ANY RIGHT TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER,
RELATING TO, OR CONNECTED WITH THIS AGREEMENT, THE COLLATERAL OR ANY OTHER
AGREEMENT, INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY OR DELIVERED IN CONNECTION
HEREWITH AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING
WITHOUT A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER
INTO THIS AGREEMENT.
25
IN WITNESS WHEREOF, the parties hereto have executed this Loan and
Security Agreement, or have caused this Agreement to be executed by their duly
authorized officers, as of the day and year first above written.
BORROWER:
HEALTHGATE DATA CORP.
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & Chief Executive Officer
Attest: /s/ Xxxxxxx X. Xxxx
--------------------------------------
Name: Xxxxxxx X. Xxxx
--------------------------------
Title: Asst. Sec.
-------------------------------
LENDER:
PETRA CAPITAL, LLC
By: Petra Capital Management, LLC,
Manager
By:
---------------------------------------
Xxxxxx X. Xxxxxx
Member
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Loan and
Security Agreement, or have caused this Agreement to be executed by their duly
authorized officers, as of the day and year first above written.
BORROWER:
HEALTHGATE DATA CORP.
By:
-------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President & Chief Executive Officer
Attest:
---------------------------------------
Name:
----------------------------------
Title:
---------------------------------
LENDER:
PETRA CAPITAL, LLC
By: Petra Capital Management, LLC,
Manager
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx
Member
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
