1
EXHIBIT 10.1
$1,500,000.00
LOAN AND SECURITY AGREEMENT
between
CELERIS CORPORATION
X.X. XXXXXXXX & ASSOCIATES, INC.
("Borrower")
and
XXXXXX HEALTHCARE FINANCE, INC.
("Lender")
June 1, 2001
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of June
1, 2001, between CELERIS CORPORATION, a Minnesota corporation ("Celeris"), and
X.X. XXXXXXXX &ASSOCIATES, INC., a Maryland corporation ("CL"; together with
Celeris, "Borrower") and XXXXXX HEALTHCARE FINANCE, 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, unless otherwise specified, all references
to "Sections" shall be deemed to refer to Sections of this Agreement, and the
following terms shall have the meanings set forth below:
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,
invoice, claim or chattel paper, and whether or not earned by performance,
including, without limitation, the right to payment of management fees.
SECTION 1.2. ACCOUNT DEBTOR. "Account Debtor" means any Person
obligated on any Account of Borrower, including without limitation, any
pharmaceutical, medical device and biotechnology company, and any Client.
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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.
SECTION 1.5. BASE RATE. "Base Rate" means a rate of interest equal to
two percent (2%) above the "Prime Rate of Interest".
SECTION 1.6. BORROWED MONEY. "Borrowed Money" means any obligation to
repay 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 Borrower or which is the substantial equivalent
of the financing of the property so leased.
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 1.9A. CLIENT. "Client" means any Person receiving Services from
Borrower and all Persons legally liable to pay Borrower for such Services.
SECTION 1.10. CLOSING; CLOSING DATE. "Closing" and "Closing Date" have
the meanings set forth in Section 5.3.
SECTION 1.11. 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).
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SECTION 1.13. CONCENTRATION ACCOUNT. "Concentration Account" has the
meaning set forth in Section 2.3.
SECTION 1.14. CONTROLLED GROUP. "Controlled Group" means all businesses
that would be treated as a single employer under 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 four percent (4%) 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.
SECTION 1.19. GAAP. "GAAP" means generally accepted accounting
principles applied in a consistent manner.
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 applicable to Borrower
or its business, operations or assets.
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. INTENTIONALLY DELETED.
SECTION 1.24. LENDER. "Lender" means Xxxxxx Healthcare Finance, Inc., a
Delaware corporation.
SECTION 1.25. LOAN. "Loan" has the meaning set forth in Section 2.1(a).
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SECTION 1.26. LOAN DOCUMENTS. "Loan Documents" means and includes this
Agreement, the Note, the Certificate of Validity, and each and every other
document now or hereafter delivered in connection with this Agreement, 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.
SECTION 1.28 A. LOCKBOX ACCOUNT. "Lockbox Account" means an account
maintained by Borrower at the Lockbox Bank into which all collections of
Accounts are paid directly.
SECTION 1.29. LOCKBOX BANK. "Lockbox Bank" has the meaning set forth in
Section 2.3.
SECTION 1.30. MAXIMUM LOAN AMOUNT. "Maximum Loan Amount" has the
meaning set forth in Section 2.1(a).
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. INTENTIONALLY DELETED.
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. PERMITTED ACCOUNT DEBTOR. "Permitted Account Debtor"
means Roche Molecular Biosystems, Regeneron and any other Account Debtor
approved by Lender, in Lender's sole discretion.
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SECTION 1.36. PERMITTED LIENS. "Permitted Liens" means: (i) deposits or
pledges to secure obligations under workmen's compensation, social security or
similar laws, or under unemployment insurance; (ii) 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; (iii) 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 have been made (provided that
such proceedings do not, in Lender's sole discretion, involve any substantial
risk of the sale, loss or forfeiture of such property or assets or any interest
therein); (iv) liens for taxes or assessments or other government charges or
levies 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 have been made (provided that such proceedings do not,
in Lender's sole discretion, involve any substantial risk of the sale, loss or
forfeiture of such property or assets or any interest therein), (v) judgment and
other similar liens arising in connection with court proceedings encumbering
assets of Borrower other than the Collateral provided the execution or other
enforcement of such liens is effectively stayed and the claims secured thereby
liens are being actively contested in good faith and by appropriate proceedings
and in respect of which adequate reserves have been made (provided that such
proceedings do not, in Lender's sole discretion, involve any substantial risk of
the sale, loss or forfeiture of such property or assets or any interest
therein), (vi) easements, rights-of-way, restrictions and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use and enjoyment by the Borrower of the property or assets
encumbered thereby in the normal course of its business or materially impair the
value of the property subject thereto, (vii) purchase money liens on any
property hereafter acquired or the assumption of any lien on property existing
at the time of such acquisition (and not created in contemplation of such
acquisition), or a lien incurred in connection with any conditional sale or
other title retention agreement or a capital lease, not to exceed $100,000 in
the aggregate, (viii) liens and encumbrances in favor of Lender; and (ix) liens
set forth on Schedule 1.36, not to exceed $250,000 in the aggregate.
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 as such by Citibank, N.A., or any successor
thereto, as the same may from time to time fluctuate.
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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 that is not exempt under Section 407 or
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Internal Revenue Code
or under a class exemption granted by the U.S. Department of Labor.
SECTION 1.42. QUALIFIED ACCOUNT. "Qualified Account" means an Account
of Borrower generated in the ordinary course of Borrower's business from the
sale of goods or rendition of Services which Lender, in its sole credit
judgment, consistent with Lender's business practices, deems to be a Qualified
Account. Without limiting the generality of the foregoing, no Account shall be a
Qualified Account if: (a) Intentionally Deleted; (b) the Account remains unpaid
more than ninety (90) days past the claim or invoice date (but in no event more
than one hundred and eighty (180) days after the applicable Services have been
rendered); (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, the sale was not an absolute sale, or the
sale was made on consignment or on approval or on a sale-or-return basis, or the
sale was made subject to any other repurchase or return agreement, or the goods
have not been shipped to the Account Debtor or its designee; (f) if the Account
arises from the performance of Services, the Services have not been actually
been performed or the Services were undertaken in violation of any law; (g) the
Account is subject to a lien other than a Permitted Lien; (h) 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 twenty percent (20%) of the aggregate
balance of all 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
single Account Debtor are not deemed Qualified Accounts under this Agreement;
(n) the total unpaid Accounts of the Account Debtor, exceed twenty percent (20%)
of the net amount of all Qualified Accounts; (o) any covenant, representation or
warranty contained in the Loan Documents with respect to such Account has been
breached; (p) the Account is for Services which have been rendered but for which
an invoice, claim or written request for payment has not been sent to the Client
for whom such Services were rendered, or (q) the Account fails to meet such
other specifications and requirements which may from time to time be established
by Lender, consistent with Lender's business practices.
SECTION 1.43. REPORTABLE EVENT. "Reportable Event" means a "reportable
event" as defined in Section 4043(c) of ERISA for which the notice requirements
of Section 4043(a) of ERISA are not waived.
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SECTION 1.44. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has the
meaning set forth in Section 2.1(b).
SECTION 1.44A. SERVICES. "Services" means all services offered and/or
provided to a Client, including, without limitation, specialty clinical research
and consulting services, regulatory consulting services, clinical monitoring,
and data management services provided to pharmaceutical, medical device and
biotechnology manufacturers.
SECTION 1.45. TERM. "Term" has the meaning set forth in Section 2.8.
SECTION 1.46 TERMINATION FEE. "Termination Fee" shall mean a fee
payable upon termination of the Agreement, as yield maintenance for the loss of
bargain and not as a penalty, equal to three percent (3%) of the Maximum Loan
Amount.
ARTICLE II
LOAN
SECTION 2.1. TERMS.
(a) The maximum aggregate principal amount of credit extended
by Lender to Borrower under this Agreement (the "Loan") that will be outstanding
at any time is One Million Five Hundred Thousand and No/100 Dollars
($1,500,000.00) (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 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, the requests of Borrower pursuant to the
terms and conditions of Section 2.2, and on such other basis as Lender may
reasonably determine. 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, advances and other extensions of credit to or for the benefit of
Borrower, 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
availability within the Borrowing Base for advances or extensions of credit
shall be made by Lender in its sole discretion, consistent with Lender's
business practices, and is final and binding upon Borrower.
(c) At Closing, Borrower shall execute and deliver to Lender a
promissory note evidencing Borrower's unconditional obligation to repay Lender
for Revolving Credit Loans, advances, and other extensions of credit made under
the Loan, in the form of Exhibit A to this Agreement (as amended, modified,
restated or replaced from time to time, the "Note"), dated the date of this
Agreement, payable to the order of Lender in accordance with the terms thereof.
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The Note shall bear interest on the outstanding principal balance of the Note
from the date of the Note 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 the occurrence and during the continuance of an Event
of Default such rate shall be equal to the Default Rate. Upon Borrower's failure
to comply with the terms of this Agreement, Lender will be entitled, in addition
to exercising any other rights and remedies available to it, 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. In no event however, shall Borrower be charged both a non compliance fee
and the Default Rate for the same time period. Each Revolving Credit Loan,
advance and other extension of credit shall be deemed evidenced by the Note,
which is deemed incorporated into and made a part of this Agreement by this
reference.
(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 Account Debtor (the
"Borrowing Base"); provided, however, that except as permitted by Lender, in
Lender's sole discretion, no advances under the Loan shall be made for (i) any
Accounts owing from a Permitted Account Debtor which, together with all other
Accounts owing from such Permitted Account Debtor, exceed thirty percent (30%)
of all Accounts owing to Borrower (i.e. Lender will only make advances on
Qualified Accounts from a Permitted Account Debtor which represent up to thirty
percent (30%) of Borrower's Accounts), and (ii) with respect to any Accounts
owing from an Account Debtor other than a Permitted Account Debtor, any Accounts
owing from an Account Debtor which, together with all other Accounts owing by
such Account Debtor, exceed fifteen percent (15%) of all Accounts owing to
Borrower (i.e. Lender will only make advances on Qualified Accounts from an
Account Debtor which represent up to fifteen percent (15%) of Borrower's
Accounts. Lender, in its sole credit judgment, consistent with Lender's business
practices, may further adjust the Borrowing Base by applying percentages (known
as "liquidity factors") to Qualified Accounts by payor class based upon
Borrower's actual recent collection history for each such payor class (i.e.,
Medicare, Medicaid, commercial insurance, etc.) in a manner consistent with
Lender's underwriting practices and procedures. Such liquidity factors may be
adjusted by Lender throughout the Term as warranted by Lender's underwriting
practices and procedures in its sole credit judgment.
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 2:00 p.m. Eastern time two (2) Business Days before 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
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irrevocably to be a request for a Revolving Credit Loan on the day following the
due date in the amount required to pay such interest or other Obligation if such
was not paid by Borrower on the due date.
(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 agreed upon by Borrower and Lender from time to time or
elsewhere if pursuant to written direction from Borrower; and (ii) the proceeds
of each Revolving Credit Loan deemed to be 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, advances and other extensions
of credit to or for the benefit of Borrower shall constitute one general
Obligation of Borrower, and shall be secured by Lender's lien upon all of the
Collateral.
(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.
All collections into the Concentration Account pursuant to Section 2.3 shall be
applied first to fees, costs and expenses due and owing under the Loan
Documents, then to interest due and owing under the Loan Documents, and then to
principal outstanding with respect to Revolving Credit Loans.
(e) Lender will account to Borrower monthly with a statement
of Revolving Credit Loans, charges and payments made pursuant to this Agreement,
and such accounting 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 in the notice.
SECTION 2.3. COLLECTIONS, DISBURSEMENTS, BORROWING AVAILABILITY, AND
LOCKBOX ACCOUNT. (a) Prior to Lender's making any Revolving Credit Loans
hereunder, Lender shall have established and will maintain a lockbox and a
lockbox account (the "Lockbox" and the "Lockbox Account", respectively) with a
bank mutually agreeable to the parties (the "Lockbox Bank"), and Borrower shall
execute with Lender and the Lockbox Bank a Provider Account Agreement in
substantially the form attached hereto as Exhibit B (the "Lockbox Agreement"),
together with any other agreements or documents necessary to effectuate the
intent of the parties as set forth in this Section 2.3 or in the Lockbox
Agreement as Lender may require. Borrower shall ensure that all collections of
Accounts are paid directly from Account Debtors to the Lockbox. Borrower hereby
irrevocably makes, constitutes and appoints Lockbox Bank (and all
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persons designated by Lockbox Bank for such purpose) as Borrower's true and
lawful attorney and agent-in-fact to endorse Borrower's name on all checks,
items of payment or other cash items that are acceptable for collection through
the Federal Reserve System (collectively, "Checks") payable to Celeris
Corporation or X.X. XxXxxxxx & Associates, Inc. (or any reasonable variation of
such names) with the endorsement "Credit to the account of Xxxxxx Healthcare
Finance, Inc."). Borrower agrees not to change the foregoing irrevocable
instructions to the Lockbox Bank without the prior written consent of Lender.
Notwithstanding anything in the Lockbox Agreement to the contrary, Borrower
agrees that it shall be liable for any fees and charges in effect from time to
time and charged by the Lockbox Bank in connection with the Lockbox and the
Lockbox Account, and that Lender shall have no liability therefor. Borrower
further acknowledges and agrees that, to the extent such fees and charges are
not paid by Borrower directly but are satisfied using collections in the Lockbox
Account, if applicable, such fees and charges shall be deemed to be Revolving
Credit Loans made by Lender hereunder and, to the extent that the payment of
such fees or charges by Borrower as provided herein results in any overadvance
under this Agreement, Borrower agrees to immediately (upon notice) repay to
Lender the amount of such overadvance. It is understood that Lender's actions
pursuant to this Section 2.3 are provided as a convenience to Borrower and, in
consideration thereof, Borrower agrees to indemnify and hold Lender harmless
from any and all liabilities, claims, losses and demands whatsoever, including
reasonable attorney's fees and expenses, arising from or relating to Lender's or
the Lockbox Bank's actions pursuant to this Section 2.3.
(b) Borrower agrees that all collections paid to the Lockbox and
deposited by Lender into the Lockbox Account under the Lockbox Agreement will be
immediately transferred by Lender into a depository account maintained by Lender
at Bank One, N.A., or such other financial institution as determined by Lender
in its sole discretion, by written notice to Borrowers and the Lockbox Bank (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 (in accordance with Section
2.2(d)), and all future Revolving Credit Loans, advances and other extensions of
credit 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.
(c) Borrower acknowledges and agrees that its compliance with the terms
of this Section 2.3 is essential, and that Lender will suffer immediate and
irreparable injury and have no adequate remedy at law, if Borrower, through its
acts or omissions, causes or permits Account Debtors to send payments other than
to the Lockbox, or if Borrower fails to immediately deposit collections of
Accounts or proceeds of other Collateral in the Lockbox Account as herein
required. Upon Borrower's failure to comply with the terms of this Section 2.3,
Lender will be entitled, in addition to exercising any other rights and remedies
available to it, to assess a non-compliance fee which shall operate to increase
the Base Rate by two percent (2%) per annum
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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 seven (7) 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, and no event or circumstance which, with notice
or the passage of time (or both), would constitute an Event of Default, exists.
SECTION 2.4. FEES.
(a) By executing this Agreement, Borrower agrees
unconditionally to pay to Lender a commitment fee equal to one percent (1%) of
the Maximum Loan Amount (the "Commitment Fee").
(b) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly usage fee (the "Usage Fee") equal
to (0.0425%) of the average amount by which the Maximum Loan Amount exceeds the
average amount of the outstanding principal balance of the Revolving Credit
Loans during the preceding month. The Usage Fee shall be payable monthly in
arrears on the first Business Day of each successive calendar month.
(c) 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 one-twelfth 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.
(d) 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, however, so long as no Event of Default has occurred, Borrower shall
not be required to pay for more than four (4) audits per calendar year and the
aggregate cost of such audits (excluding travel expenses) shall not exceed
$20,000 per calendar year.
(e) 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
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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 or Lender of any payments on or proceeds from any of
the Collateral, to the extent of such proceeds, (ii) the occurrence of an Event
of Default if 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
of this Agreement; 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
if 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. 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
under this Agreement, shall be made to Lender to the Concentration Account, in
immediately available funds.
SECTION 2.6. USE OF PROCEEDS. The proceeds of Lender's advances under
the Loan shall be used solely for working capital 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 by this Agreement
would be usurious under such laws, then notwithstanding any other provision of
this Agreement: (i) 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); (ii) neither Borrower
nor any other Person now or hereafter liable under this Agreement shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the Highest Lawful Rate; and (iii) 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 in
this Agreement, to the Highest Lawful Rate, but any subsequent reductions in the
Base Rate shall not reduce the interest to accrue pursuant to this
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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. If the total amount of interest paid or accrued pursuant to this
Agreement under the foregoing provisions is less than the total amount of
interest that would have accrued if a varying rate per annum equal to the
interest rate under the Note had been in effect, then Borrower agrees to pay to
Lender an amount equal to the difference between (x) the lesser of (A) the
amount of interest that would have accrued if the Highest Lawful Rate had at all
times been in effect, or (B) 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, and (y) the amount of interest accrued in accordance with
the other provisions of this Agreement.
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 in this Agreement to the
contrary, Lender may terminate this Agreement without notice upon or after the
occurrence of an Event of Default.
(c) Upon at least thirty (30) days prior written notice to
Lender (the "Termination Notice Period"), Borrower may terminate this Agreement
after the first annual anniversary of the Closing Date, provided however, at the
effective date of any 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 yield
maintenance for the loss of bargain and not as a penalty, an amount equal to the
Termination Fee. Consistent with the foregoing, Borrower has no right to
terminate this Agreement until after the first anniversary of the Closing Date.
(d) All of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination of this
Agreement (the "Termination Date"); provided that, notwithstanding anything in
Section 2.8(c) to the contrary, the Termination Date shall be effective no
earlier than the first Business Day of the month following the expiration of the
Termination Notice Period. 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.
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(e) Notwithstanding any provision of this Agreement which
makes reference to the continuance of an Event of Default, nothing in this
Agreement shall be construed to permit Borrower to cure an Event of Default
following the lapse of the applicable cure period, and Borrower shall have no
such right in any instance unless specifically granted in writing by Lender.
ARTICLE III
COLLATERAL
SECTION 3.1. GENERALLY. As security for the payment of all liabilities
of Borrower to Lender, including without limitation: (i) indebtedness evidenced
under the Note, repayment of Revolving Credit Loans, advances and other
extensions of credit, all fees and charges owing by Borrower, (including without
limitation the Termination Fee) and all other liabilities and obligations of
every kind or nature whatsoever of Borrower to Lender, whether now existing or
hereafter incurred, joint or several, matured or unmatured, direct or indirect,
primary or secondary, related or unrelated, 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 under this Agreement and in
the following property in accordance with the terms of this Agreement, (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 all of Borrower's contract rights, chattel paper, documents and
instruments with respect thereto, and all of Borrower's rights, remedies,
security and liens, in, to and in respect of the Accounts, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any Account Debtor, and credit
and other insurance;
(b) All Borrower's money, securities and other property and
the proceeds thereof, including but not limited to any money, securities or
other property from or for Borrower that are now or hereafter held or received
by, in transit to, in possession of, or under the control of Lender or a bailee
or Affiliate of Lender, whether for safekeeping, pledge, custody, transmission,
collection or otherwise, and all of Borrower's deposits (general or special),
balances, sums and credits, whether or not with Lender in each case, at any time
existing;
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(c) All of Borrower's right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in, Accounts,
including, without limitation, all goods described in invoices or other
documents or instruments with respect to, or otherwise representing or
evidencing, any Account, and all returned, reclaimed or repossessed goods;
(d) All of Borrower's now owned or hereafter acquired deposit
accounts into which Accounts are deposited, including the Lockbox Account;
(e) All of Borrower's now owned and hereafter acquired or
arising general intangibles and other property of every kind and description
with respect to, evidencing or relating 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, ledger cards,
contracts, licenses, formulae, tax and other types of refunds, returned and
unearned insurance premiums, rights and claims under insurance policies, and
computer programs, information, software, records, and data, as the same relates
to the Accounts;
(f) All of Borrower's other general intangibles (including,
without limitation, any proceeds from insurance policies after payment of prior
interests), patents, unpatented inventions, trade secrets, copyrights, contract
rights, goodwill, literary rights, rights to performance, rights under licenses,
choses-in-action, claims, information contained in computer media (such as data
bases, source and object codes, and information therein), things in action,
trademarks and trademarks applied for (together with the goodwill associated
therewith) and derivatives thereof, trade names, including the right to make,
use, and vend goods utilizing any of the foregoing, and permits, licenses,
certifications, authorizations and approvals, and the rights of Borrower
thereunder, issued by any governmental, regulatory, or private authority,
agency, or entity whether now owned or hereafter acquired, together with all
cash and non-cash proceeds and products thereof;
(g) All of Borrower's now owned or hereafter acquired
inventory of every description which is held by Borrower for sale or lease or is
furnished by Borrower under any contract of service or is held by Borrower as
raw materials, work in process or materials used or consumed in a business,
wherever located, and as the same may now and hereafter from time to time be
constituted, together with all cash and non-cash proceeds and products thereof;
(h) All of Borrower's now owned or hereafter acquired
machinery, equipment, computer equipment, tools, tooling, furniture, fixtures,
goods, supplies, materials, work in process, whether now owned or hereafter
acquired, together with all additions, parts, fittings, accessories, special
tools, attachments, and accessions now and hereafter affixed thereto and/or used
in connection therewith, all replacements thereof and substitutions therefor,
and all cash and non-cash proceeds and products thereof, provided however that
property leased by Borrower is specifically excluded from this section; and
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(i) 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 in its sole discretion, 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 request from time to time
in its sole discretion to evidence, perfect, or protect Lender's lien and
security interest in the Collateral required under this Agreement.
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 Schedule 4.15 and
shall not be moved from such locations without the prior written consent of
Lender, which consent shall not be unreasonably withheld.
(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 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 ineligibility set forth in
the definition of Qualified Accounts or otherwise, Borrower shall notify Lender
of such occurrence as soon as possible but no later than the third Business Day
following Borrower's knowledge of such occurrence and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence. If requested by Lender,
following the occurrence of an Event of Default, Borrower shall execute and
deliver to Lender formal written assignments of all of its Accounts weekly or
daily, which shall include all Accounts that have been created since the date of
the last assignment, together with copies of claims, invoices or other
information related thereto.
(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 or any designee of Lender or Borrower, to
verify the validity, amount or any other matter relating to
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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 the occurrence and during the continuance 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.
SECTION 3.4. OTHER ACTIONS. In addition to the foregoing, Borrower (i)
shall provide prompt written notice to each Person who either is currently an
Account Debtor or becomes an Account Debtor at any time following the date of
this Agreement directing each Account Debtor to make payments into the Lockbox,
and hereby authorizes Lender, upon Borrower's failure to send such notices
within ten (10) days after the date of this Agreement (or ten (10) days after
the Person becomes an Account Debtor), to send any and all similar notices to
such Persons, 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 under this Agreement. At Lender's request, Borrower
shall also immediately deliver to Lender all items 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. Before Closing, and thereafter (as and when
determined by Lender in its sole discretion), Lender will perform the searches
described in clauses (a) and (b) below against Borrower (the results of which
are to be consistent with Borrower's representations and warranties under this
Agreement), all at Borrower's expense:
(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, federal tax lien and corporate and partnership
tax lien searches, in each jurisdiction searched under clause (a) above; and
In addition, prior to Closing, at Borrower's expense, Borrower shall
obtain and deliver to Lender 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 currently intends to do business for which qualification is
required.
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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: (i) 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;
(ii) execute in the name of Borrower any financing statements, schedules,
assignments, instruments, documents, and statements that Borrower is obligated
to give Lender under this Agreement; and (iii) 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. This foregoing power of attorney may be exercised by
Lender only under the following circumstances: (i) if Borrower has failed to do
such act or deliver requested items within ten (10) days following Lender's
written request, (ii) following the occurrence of an Event of Default, or (iii)
if there is a substantial risk to Lender's security interest in the Collateral.
In addition, if Borrower breaches its obligation to direct payments of the
proceeds of the Collateral to the Lockbox Account, Lender, as the irrevocably
made, constituted and appointed true and lawful attorney for Borrower pursuant
to this paragraph, may, by the signature or other act of any of Lender's
officers (without requiring any of them to do so), direct any federal, state or
private payor or fiscal intermediary to pay proceeds of the Collateral to
Borrower by directing payment to the Lockbox Account.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each entity constituting Borrower represents and warrants to Lender,
and shall be deemed to represent and warrant on each day on which any
Obligations shall be outstanding under this Agreement, that:
SECTION 4.1. SUBSIDIARIES. Except as set forth in Schedule 4.1,
Borrower has no subsidiaries.
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, 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.
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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 under this Agreement, 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 under the Loan Documents.
SECTION 4.4. BINDING AGREEMENT. This Agreement and all other Loan
Documents constitute, and the Note, when issued and delivered pursuant to this
Agreement for value received, will constitute, the valid and legally binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms.
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, if determined adversely to
the interests of Borrower, could have a material adverse effect on the business,
properties, condition (financial or otherwise) or operations, current or
prospective, of Borrower, or upon its ability to perform its obligations under
the Loan Documents. Borrower is not in default 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 under the Loan Documents will not, violate, conflict with,
constitute a default under, or result in the creation of a lien or encumbrance
upon the property of Borrower (other than for the benefit of Lender) under: (i)
any provision of Borrower's articles of incorporation or bylaws, (ii) any
provision of any law, rule, or regulation applicable to Borrower, or (iii) any
of the following: (A) any indenture or other agreement or instrument to which
Borrower is a party or by which Borrower or its property is bound; or (B) 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
Borrower as of and for the period ending December 31, 2000 audited by Xxxxxx
Xxxxxxxx LLP and the unaudited financial statements of Borrower as of and for
the period ending March 31, 2001, certified by the chief financial officer of
Borrower, which have been delivered to Lender, fairly present the financial
condition of 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. There are no material unrealized or
anticipated liabilities, direct or indirect, fixed or contingent, of Borrower as
of the dates of such financial statements which are not reflected in such
financial statements or in the notes to such financial statements. There has
been no adverse change in the business, properties, condition (financial or
otherwise) or
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operations (current or prospective) of Borrower since December 31, 2000.
Borrower's fiscal year ends on December 31. The federal tax identification
number of Borrower is_________________.
SECTION 4.8. NO DEFAULT. Borrower is not in default under or with
respect to any obligation in any respect which could be adverse to its business,
operations, property or financial condition, 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 has good and marketable
title to its owned 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 of this Agreement. All tax liabilities
of Borrower were, as of December 31, 2000 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 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 under this Agreement will
be used to purchase or carry any margin stock or to extend credit to others for
such purpose.
(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 to ERISA that is maintained by Borrower or under which Borrower could
have any material liability under
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ERISA (i) has failed to meet minimum funding standards established in Section
302 of ERISA, (ii) has failed to substantially comply with all applicable
requirements of ERISA and of the Internal Revenue Code, including all applicable
rulings and regulations thereunder, or (iii) has engaged in or been involved in
a prohibited transaction (as defined in ERISA) under ERISA or under the Internal
Revenue Code. Neither Borrower nor any member of a Controlled Group that
includes Borrower has assumed, or received notice of a claim asserted against
Borrower or another member of the Controlled Group 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. 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 material 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, 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) which non compliance would have a material
adverse effect on Borrower. Borrower has obtained all material 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. 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 owned or leased by Borrower. No other
environmental, public health or safety hazards exist with respect to the
Premises.
SECTION 4.15. PLACES OF BUSINESS. As of the Closing Date, the only
places of business of Borrower, and the places where it keeps and intends to
keep the Collateral and records concerning the Collateral, 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 current
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and planned future conduct of its business, without any conflict with the rights
of others. 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, is attached as Schedule 4.16. Borrower is not in default
of any obligation or undertaking with respect to such intellectual property or
rights. Borrower is not infringing on any patents, patent applications,
trademarks, trademark applications, service marks, trade names, copyrights,
franchises, licenses, any rights with respect to the foregoing, or any other
intellectual property rights of others and the Borrower is not aware of any
infringement by others of any such rights owned by Borrower.
SECTION 4.17. STOCK OWNERSHIP. Celeris is a publicly traded company. CL
is a wholly owned subsidiary of Celeris.
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 by this Agreement contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements contained in
this Agreement or other Loan Document not misleading. There is no fact known to
Borrower that adversely affects or in the future may adversely affect the
business, operations, affairs or financial condition of Borrower, 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, except as described on
Schedule 4.19. Borrower is not a party to any contract or agreement, or subject
to any corporate restriction, which adversely affects its business.
SECTION 4.20. BUSINESS INTERRUPTIONS. Within five years before the date
of this Agreement, neither the business, property or assets, or operations of
Borrower has been 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 before the date of this
Agreement, 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, except as set forth on Schedule
4.22.
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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 Qualified Account, Borrower represents that:
(a) The Account is genuine and in all respects what it
purports to be, and is not evidenced by a judgment;
(b) The Account arises out of a completed, bona fide sale and
delivery of goods or rendition of Services by Borrower in the ordinary course of
its 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
and the Account Debtor;
(c) The Account 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) The Account, and Lender's security interest in such
Account, 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 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 tend to reduce the
amount payable thereunder from the face amount of the claim or invoice and
statements delivered to Lender with respect thereto;
(f) To the best of Borrower's knowledge, (i) the Account
Debtor under the Account 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
Debtor under the Account which might result in any material adverse change in
such Account Debtor's financial condition or the collectibility of such Account;
(h) The Account 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; and
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(i) Borrower has obtained and currently has all certificates
of need, Medicaid and Medicare provider numbers, licenses, permits and
authorizations that are necessary in the generation of such Accounts.
SECTION 4.24. SOLVENCY. Both before and after giving effect to the
transactions contemplated by the terms and provisions of this Agreement,
Borrower (taken as a whole) (i) owns property whose fair saleable value is
greater than the amount required to pay all of Borrower's Indebtedness
(including contingent debts), (ii) was and is able to pay all of its
Indebtedness as such Indebtedness matures, and (iii) had and has capital
sufficient to carry on its business and transactions and all business and
transactions in which it about to engage. For purposes of this Agreement, the
term "Indebtedness" means, without duplication (x) all items which in accordance
with GAAP would be included in determining total liabilities as shown on the
liability side of a balance sheet of such Borrower as of the date on which
Indebtedness is to be determined, (y) all obligations of any other person or
entity which such Borrower has guaranteed, and (z) the Obligations.
SECTION 4.25. YEAR 2000 COMPLIANCE.
(a) All devices, systems, machinery, information technology,
computer software and hardware, and other date sensitive technology
(collectively, the "Systems") necessary for Borrower to carry on its business as
currently conducted and as expected to be conducted in the future are Year 2000
Compliant or will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of Borrower's business operations. For
purposes of these provisions, "Year 2000 Compliant" means that such Systems are
designed to be used before, during and after the Gregorian calendar year 2000
A.D. and will operate during each such time period without error related to date
data, specifically including any error relating to, or the product of, date data
that represents or refers to different centuries or more than one century.
(b) Borrower has: (i) undertaken a detailed inventory, review,
and assessment of all areas within its business and operations that could be
adversely affected by the failure of Borrower to be Year 2000 Compliant on a
timely basis; (ii) developed a detailed plan and time line for becoming Year
2000 Compliant on a timely basis; and (iii) to date, implemented that plan in
accordance with the timetable in all material respects.
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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, the Certificate of Validity and all other Loan Documents required to
be executed and delivered at or before 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 and shall then be in
compliance with all the terms, covenants and conditions of the Loan Documents.
(d) There shall have occurred and be continuing 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.
(f) Lender shall have received copies of all board of
directors resolutions of Borrower and other action taken by Borrower to
authorize the execution, delivery and performance of the Loan Documents and the
borrowing of the Loan under the Loan Documents, as well as the names and
signatures of the officers of Borrower authorized to execute documents on its
behalf in connection with the Loan, all as also certified as of the date of this
Agreement by Borrower's chief financial officer, or equivalent, 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 each Borrower, of the certificate
of incorporation of each 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 of this Agreement, substantially in the
form of Exhibit C.
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(i) Lender shall have received such financial statements,
reports, certifications, and other operational information required to be
delivered under this Agreement, including without limitation an initial
borrowing base certificate calculating the Borrowing Base.
(j) Lender shall have received the Commitment Fee.
(k) The Lockbox, Lockbox Account 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 Loan proceeds, Revolving Credit Loans,
advances or other extensions of credit under the Loan shall be disbursed under
this Agreement unless the following conditions have been satisfied or waived
immediately before 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 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).
(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.
(c) No adverse change in the condition (financial or
otherwise), properties, business, or operations of Borrower shall have occurred
and be continuing with respect to Borrower since the date of this Agreement.
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 be mutually agreeable to the parties
upon the execution of this Agreement (the "Closing") at such place as may be
requested by Lender.
SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing under this
Agreement, or by making advances under the Loan, Lender does not waive a breach
of any representation or warranty of Borrower under this Agreement or under any
other Loan Document, and all of
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Lender's claims and rights resulting from any breach or misrepresentation by
Borrower are specifically reserved by Lender.
ARTICLE VI
AFFIRMATIVE COVENANTS
Each entity constituting Borrower covenants and agrees that for so long
as Borrower may borrow under this Agreement 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 (i) 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; (ii) payables aging
schedules within fifteen (15) days after the end of each calendar month; (iii)
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; (iv) 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; (v) internally prepared annual financial
statements for Borrower within sixty (60) days after the end of each of
Borrower's fiscal years; (vi) annual audited financial statements for Borrower
prepared by Xxxxxx Xxxxxxxx LLP, or another firm of independent public
accountants satisfactory to Lender, within one hundred thirty-five (135) days
after the end of each of Borrower's fiscal years; (vii) promptly upon receipt
thereof, copies of any reports submitted to Borrower by the 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; (viii) as soon as available, copies of all financial statements and
notices provided by Borrower to all of its stockholders; (ix) on the last
business day of every month, evidence satisfactory to Lender that all federal
and state taxes, including, without limitation payroll taxes, that are due have
been paid in full; and (x)such additional information, reports or statements as
Lender may from time to time request. Annual financial statements 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 UNDER THIS AGREEMENT. Borrower will make all
payments of principal, interest, fees, and all other payments required under
this Agreement and under the
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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 (i) to obtain and keep
in full force and effect all corporate existence, rights, licenses, privileges,
and franchises of Borrower necessary to the ownership of its property or the
conduct of its business, and comply with all applicable current and future laws,
ordinances, rules, regulations, orders and decrees of any Governmental Authority
having or claiming jurisdiction over Borrower; and (ii) to maintain and protect
the properties used or useful in the conduct of the operations of Borrower, 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.
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 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 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 income or profits or upon its properties or
any part thereof, before the same shall be in default and before the date on
which penalties attach thereto, as well as all lawful claims for labor,
material, supplies or otherwise which, if unpaid, might become a lien or charge
upon the properties or any part thereof of Borrower; provided, however, that
Borrower shall not be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith and by appropriate
proceedings by Borrower, and Borrower shall have set aside on their books
adequate reserve therefor; and provided further, that such deferment of payment
is permissible only so long as Borrower's title to, and its right to use, the
Collateral is not adversely affected thereby and Lender's lien and priority on
the Collateral are not adversely affected, altered or impaired thereby.
SECTION 6.7. INSURANCE. Borrower will carry adequate public liability
and professional liability insurance with responsible companies reasonably
satisfactory to Lender in such amounts
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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, 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 during business hours and as often as Lender may reasonably
require.
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 necessary repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.10. NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE
DEVELOPMENTS. Borrower promptly will notify Lender upon the occurrence of: (i)
any Event of Default; (ii) any event which, with the giving of notice or lapse
of time, or both, could constitute an Event of Default; (iii) 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; (iv) 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 (current
or prospective) or which may expose Borrower to uninsured liability of
$25,000.00 or more; (v) any default claimed by any other creditor for Borrowed
Money of Borrower other than Lender; (vi) the occurrence of a breach or
termination of any contract which accounts for fifteen percent (15%) or more of
Borrower's average revenues, and (vii) any other development in the business or
affairs of Borrower which may be adverse; in each case describing the nature of
the event or development. In the case of notification under clauses (i) and
(ii)), Borrower should set forth the action Borrower proposes to take with
respect to such event.
SECTION 6.11. EMPLOYEE BENEFIT PLANS. Borrower will (i) comply 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; (ii) 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 (iii) 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
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will make all contributions when due with respect to any multi-employer pension
plan in which it participates and will promptly advise Lender: (x) upon its
receipt of notice of the assertion against Borrower of a claim for withdrawal
liability; (y) upon the occurrence of any event which could trigger the
assertion of a claim for withdrawal liability against Borrower; and (z) 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 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 by this Agreement) and to
perfect and protect Lender's first priority lien and security interest in the
Collateral, as Lender may 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.
SECTION 6.16. BUSINESS CONDUCTED. Borrower shall continue in the
business currently conducted by it using its best efforts to maintain its
customers and goodwill. Borrower shall not engage, directly or indirectly, in
any line of business substantially different from the business conducted by it
immediately before 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 $100,000.00.
SECTION 6.18. BANK ACCOUNTS. Borrower shall assign to Lender all of its
depository and disbursement accounts into which collections of Accounts are
deposited.
SECTION 6.19. SUBMISSION OF COLLATERAL DOCUMENTS. Borrower will, on
demand of Lender, make available to Lender copies of shipping and delivery
receipts evidencing the
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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 currently conducted, and take any steps required to
comply with any such new or additional requirements that may be imposed on
providers of medical products and Services. If required, all Medicaid/Medicare
cost reports will be properly filed.
SECTION 6.21. OFFICER'S CERTIFICATES. Together with the monthly
financial statements delivered pursuant to clause (iii) of Section 6.1, and
together with the audited annual financial statements delivered pursuant to
clause (vi) of that Section, Borrower shall deliver to Lender a certificate of
its chief financial officer, in form and substance satisfactory to Lender:
(a) Setting forth the information (including detailed
calculations) required to establish whether Borrower is in compliance 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) Stating 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 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 to inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Borrower's business, assets, liabilities, financial condition,
business prospects and results of operations.
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ARTICLE VII
NEGATIVE COVENANTS
Each entity constituting Borrower covenants and agrees that so long as
Borrower may borrow under this Agreement and until payment in full of the Note
and performance of all other obligations of 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: (i) indebtedness to
Lender; (ii) indebtedness of Borrower secured by mortgages, encumbrances or
liens expressly permitted by Section 7.3; and (iii) accounts payable to trade
creditors and current operating expenses (other than for borrowed money) which
are not aged more than one hundred twenty (120) days from the billing date or
more than thirty (30) days from the due 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. 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).
SECTION 7.2. JOINT VENTURES. Borrower will not invest directly or
indirectly in any joint venture for any purpose without the prior written notice
to, and the prior written consent of, Lender, which consent shall not be
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. RESTRICTION ON FUNDAMENTAL CHANGES. Borrower will not: (i)
enter into any transaction of merger or consolidation; (ii) liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution); (iii) convey,
sell, lease, sublease, transfer or otherwise dispose of, in one transaction or a
series of transactions, any of its assets, or the capital stock of any
subsidiary of Borrower, whether now owned or hereafter acquired; or (iv) acquire
by purchase or otherwise all or any substantial part of the business or assets
of, or stock or other evidence of beneficial ownership of, any Person. Borrower
agrees that compliance with this Section 7.4 is a material inducement to
Lender's advancing credit under this Agreement and Borrower further agrees that
in addition to all other remedies available to Lender, if Lender determines that
non-compliance of this Section 7.4 is reasonably likely to result in either (x)
a material impairment of the Collateral, or (y) Borrower's inability to satisfy
the Obligations, then Lender shall be entitled to specific enforcement of the
covenants in this Section 7.4, including injunctive relief.
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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 prior written notice to and the
prior written consent of Lender, which consent shall not be unreasonably
withheld.
SECTION 7.6. DIVIDENDS, DISTRIBUTIONS AND MANAGEMENT FEES. Upon notice
from Lender to Borrower of the existence of an Event of Default under this
Agreement and until such Event of Default is cured, 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
management fees or fees of a similar nature to any Person.
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, and (ii) advances for business travel and similar temporary advances
made in the ordinary course of business to officers, stockholders, directors,
and employees.
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, 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.
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, which
consent shall not be unreasonably withheld.
SECTION 7.12. TRANSACTIONS WITH AFFILIATES. Borrower will not enter
into any transaction with any Affiliate or subsidiary, 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 under
this Agreement. For purposes of the foregoing, Lender consents to the
transactions described on Schedule 7.12.
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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 contained in this Agreement is
intended to permit or authorize Borrower to make any contract on behalf of
Lender.
SECTION 7.14. CHANGE IN CONTROL. There shall occur no change in the
ownership of CL's capital stock. Additionally, with respect to Celeris, none of
the changes described in Schedule 7.14 shall occur.
SECTION 7.15. CONTRACTS AND AGREEMENTS. Borrower will not become or be
a party to any contract or agreement which would breach this Agreement, or
breach any other instrument, agreement, or document to which Borrower is a party
or by which it is or may be bound.
SECTION 7.16. MARGIN STOCK. Borrower will not carry or purchase any
"margin security" within the meaning of Regulations U, 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.
SECTION 7.18. DISCLOSURE OF AGREEMENT. Borrower will not disclose the
contents of this Loan Agreement and the other Loan Documents to any third party
(including, without limitation, any financial institution or intermediary)
without Lender's prior written consent.
SECTION 7.19. NET WORTH. Borrower will not at any time allow its net
worth, as computed in accordance with GAAP, to fall below $3,000,000.
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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 under this Agreement:
(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, or any breach of Section 2.3, which default or breach, as
applicable, shall have continued unremedied for a period of five (5) days after
written notice of the default or breach 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 ten (10) days after
written notice of the default from Lender to Borrower;
(c) A default in the due observance or performance by
Borrower or any guarantor of the Obligations 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 of the
default from Lender to Borrower, provided, however, that no such Event of
Default shall occur if such default is not capable of being cured within ten
(10) days and Borrower diligently, continuously and in good faith pursues such
cure and the default is remedied within twenty (20) days after the original
notice of default;
(d) Any representation or warranty made by Borrower in
this Agreement 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 with this Agreement or the other Loan Documents
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 of the default from Lender to Borrower;
(e) Any obligation of Borrower (other than its
Obligations under this Agreement) for the payment of Borrowed Money in excess of
$100,000 in the aggregate is not paid when due or within any applicable grace
period, or such obligation becomes or is declared to be due and payable before
the expressed maturity of the obligation, or there shall have occurred an event
which, with the giving of notice or lapse of time, or both, would cause any such
obligation to become, or allow any such obligation to be declared to be, due and
payable;
(f) 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;
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(g) (i) Borrower files a petition in bankruptcy, (ii)
Borrower 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, (iii) Borrower 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, (iv) any such proceeding is commenced against Borrower and such
proceeding remains undismissed for a period of sixty (60) days, (v) 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) One or more (i) final judgments in excess of $100,000
in the aggregate against Borrower or attachments against its property shall be
rendered by a court, arbitrator, arbitration panel, mediator or any
individual(s) or entity with the authority to issue binding judgments against
Borrower or (ii) final settlements in excess of $100,000 in the aggregate by or
on behalf of Borrower of any pending litigation, arbitration or other claim or
otherwise disputed matter, in any event not fully and unconditionally covered by
insurance, shall remain unpaid, unstayed on appeal, undischarged, unbonded and
undismissed for a period of ten (10) 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;
(j) A breach of Section 7.14;
(k) There shall occur any uninsured damage to or loss,
theft or destruction of any portion of the Collateral that exceeds $100,000 in
the aggregate;
(l) Borrower breaches or violates the terms of, or a
default or an event which could, whether with notice or the passage of time, or
both, constitute a default, 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 for a claim in excess
of $100,000;
(n) Borrower ceases any material portion of its business
operations as currently conducted;
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(o) Any indication or evidence is received by Lender that
Borrower may have directly or indirectly been engaged in any type of activity
which, in Lender's discretion, may result in the forfeiture of any property of
Borrower to any Governmental Authority, which default shall have continued
unremedied for a period of ten (10) 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 could lead to a forfeiture of any Collateral;
(r) There shall occur a material adverse change in the
financial condition or business prospects of Borrower, which default shall have
continued unremedied for a period of ten (10) days after written notice from
Lender; or
(s) A default or event of default occurs under any other
note, instrument, deed of trust, mortgage, loan agreement, security agreement,
letter agreement or other document executed and delivered by any Borrower or
Guarantor, or any Affiliate of Borrower or Guarantor, in connection with any
financing provided by Lender or Lender's Affiliate to any such parties;
SECTION 8.2. ACCELERATION. Upon the occurrence of any of the foregoing
Events of Default, the Obligations under 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), all Obligations including, without limitation the Termination Fee, shall
be immediately due and payable without declaration or other notice to Borrower.
SECTION 8.3. REMEDIES.
(a) Upon the occurrence of and during the continuance of
an Event of Default under this Agreement or the other Loan Documents, Lender, in
addition to all other rights, options, and remedies granted to Lender under this
Agreement or at law or in equity, may take any of the following steps (which
list is given by way of example and is not intended to be an exhaustive list of
all such rights and remedies):
(i) Terminate the Loan, whereupon all
outstanding Obligations (including without limitation the Termination Fee) shall
be immediately due and payable;
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(ii) Exercise all other rights granted to it
under this Agreement and all rights under the UCC 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 but not limited to:
(A) The right to take possession of,
send notices regarding, and collect directly the Collateral, with or without
judicial process;
(B) 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 (C) below, without any liability for
rent, storage, utilities, or other sums, and Borrower shall not resist or
interfere with such action;
(C) 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; and
(D) 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 for any reason.
(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 market 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.
SECTION 8.4. NATURE OF REMEDIES. Lender shall have the right to proceed
against all or any portion of the Collateral to satisfy the liabilities and
Obligations of Borrower to Lender in any order. All rights and remedies granted
Lender under this Agreement and under any agreement referred to in this
Agreement, 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 Loans, and all other
existing and future liabilities and obligations of Borrower to Lender, are
satisfied in full. The exercise of any one
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right or remedy shall not be deemed a waiver or release of any other right or
remedy, and Lender, upon the occurrence 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.
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 (such document preparation, audit and appraisal fees not to
exceed $20,000) and all other out-of-pocket charges and expenses incurred by
Lender in connection with the negotiation, preparation, legal review and
execution of each of the Loan Documents, including but not limited to UCC and
judgment lien searches and UCC filings and fees for post-Closing UCC and
judgment lien searches. In addition, Borrower shall pay all such fees associated
with any amendments to the Loan Documents following Closing.
(b) Borrower also agrees to pay all out-of-pocket charges
and expenses incurred by Lender (including the fees and expenses of Lender's
counsel) in connection with the enforcement, protection or preservation of any
right or claim of Lender, the termination of this Agreement, the termination of
any liens of Lender on the Collateral, or the collection of any amounts due
under the Loan Documents. If Lender uses in-house counsel for any of these
purposes (i.e., for any task in connection with the enforcement, protection or
preservation of any right or claim of Lender and the collection of any amounts
due under its Loan Documents), Borrower further agrees that its Obligations
under the Loan Documents include reasonable charges for such work commensurate
with the fees that would otherwise be charged by outside legal counsel selected
by Lender for the work performed.
(c) 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 (c)
shall survive the payment of Borrower's indebtedness under this Agreement 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.
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SECTION 9.3. NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party to
this Agreement 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 under this Agreement shall operate as a waiver of such right, power or
remedy nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise of such right, power or remedy or
the exercise of any other right, power or remedy. The remedies provided for in
this Agreement are cumulative and are not exclusive of any remedies that may be
available to any party to this Agreement at law, in equity or otherwise.
SECTION 9.4. NOTICES. Any notice or other communication required or
permitted under this Agreement 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 under this
Agreement:
(a) If to Lender, at:
Xxxxxx Healthcare Finance, Inc.
0 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx, Esq., Chief Counsel
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to Borrower, at:
Celeris Corporation
0000 Xxxx Xxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx, VP and Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If mailed, notice shall be deemed to be given five (5) days after being sent,
and if sent by personal delivery, telecopier or prepaid courier, notice shall be
deemed to be given when delivered.
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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, Lender may, but is not obligated
to, advance funds to Borrower under this Agreement until the parties to this
Agreement amend this Agreement so as to effect the original intent of the
parties as closely as possible in a valid and enforceable 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 under this Agreement without the prior written consent 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 under this Agreement
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 with this
Agreement shall be considered to have been relied upon by Lender and shall
survive the making by Lender of the Loans contemplated by this Agreement 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. RELEASE OF LENDER. For and in consideration of the Loan,
Borrower, voluntarily, knowingly, unconditionally, and irrevocably, with
specific and express intent, for and on behalf of itself and its agents,
attorneys, heirs, successors, and assigns (collectively the "Releasing Parties")
does hereby fully and completely release, acquit and forever discharge Lender,
and its successors, assigns, heirs, affiliates, subsidiaries, parent companies,
principals,
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directors, officers, employees, shareholders and agents (hereinafter called the
"Lender Parties"); and any other person, firm, business, corporation, insurer,
or association which may be responsible or liable for the acts or omissions of
the Lender Parties, or who may be liable for the injury or damage resulting
therefrom (collectively the {"Released Parties"), of and from any and all
actions, causes of action, suits, debts, disputes, damages, claims, obligations,
liabilities, costs, expenses and demands of any kind whatsoever, at law or in
equity, whether matured or unmatured, liquidated or unliquidated, vested or
contingent, xxxxxx or inchoate, known or unknown that the Releasing Parties (or
any of them) may now have (whether directly or indirectly) against the Released
Parties or any of them. The foregoing release shall not apply to a claim by
Borrower for actual damages to the extent Lender or the Released Parties are
determined to have acted with willful misconduct or in a reckless or grossly
negligent manner. The Borrower acknowledges that the foregoing release is a
material inducement to Lender's decision to extend to Borrower the financial
accommodations hereunder and has been relied upon by Lender in agreeing to make
the Loan.
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.
SECTION 9.13. THIRD PARTIES. No rights are intended to be created under
this Agreement 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, to: (i) obtain insurance
covering any of the Collateral as required under this Agreement; (ii) pay for
the performance of any of Borrower's obligations under this Agreement; (iii)
discharge taxes, liens, security interests, or other encumbrances at any time
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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 (iv) 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. Any 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. Lender may divulge to any
participant it may obtain in the Loan, or any portion of the Loan, 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 under this Agreement, or from the breach of any of the
representations or warranties contained in Article IV of this Agreement. 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. LENDER APPROVALS. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Lender with respect
to any matter that is the subject of this Agreement, the other Loan Documents
may be granted or withheld by Lender in its sole and absolute discretion.
SECTION 9.18. 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 COURTS OF THE STATE OF MARYLAND OR IN THE U.S.
DISTRICT COURT FOR THE DISTRICT OF MARYLAND, BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH 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 BORROWER AT ITS ADDRESS DESCRIBED
IN SECTION 9.4. OR IF SERVED BY ANY OTHER MEANS PERMITTED BY APPLICABLE LAW.
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SECTION 9.19. COOPERATION IN DISCOVERY AND LITIGATION. IN ANY
LITIGATION, TRIAL, ARBITRATION OR OTHER DISPUTE RESOLUTION PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ALL DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF BORROWER OR OF ITS AFFILIATES SHALL BE DEEMED TO BE
EMPLOYEES OR MANAGING AGENTS OF BORROWER FOR PURPOSES OF ALL APPLICABLE LAW OR
COURT RULES REGARDING THE PRODUCTION OF WITNESSES BY NOTICE FOR TESTIMONY
(WHETHER IN A DEPOSITION, AT TRIAL OR OTHERWISE). BORROWER IN ANY EVENT WILL USE
ALL COMMERCIALLY REASONABLE EFFORTS TO PRODUCE IN ANY SUCH DISPUTE RESOLUTION
PROCEEDING, AT THE TIME AND IN THE MANNER REQUESTED BY LENDER, ALL PERSONS,
DOCUMENTS (WHETHER IN TANGIBLE, ELECTRONIC OR OTHER FORM) OR OTHER THINGS UNDER
ITS CONTROL AND RELATING TO THE DISPUTE IN ANY JURISDICTION THAT RECOGNIZES THAT
(OR ANY SIMILAR) DISTINCTION.
SECTION 9.20. 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 TO THIS AGREEMENT, 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.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, intending to be legally bound, and
intending that this Agreement constitutes an instrument executed under seal, the
parties have caused this Agreement to be executed under seal as of the date
first written above.
LENDER:
XXXXXX HEALTHCARE FINANCE, INC.
a Delaware corporation
By: /s/ Xxxxxxxx Xxxxxx (SEAL)
-------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
BORROWER:
CELERIS CORPORATION
a Minnesota corporation
By: /s/ Xxxxxxx X. Xxxxxx (SEAL)
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
X.X. XXXXXXXX & ASSOCIATES, INC.
a Maryland corporation
By: /s/ Xxxxxxx X. Xxxxxx (SEAL)
-------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
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LIST OF EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Lockbox Agreement
Exhibit C - 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 - Tax Identification Numbers
Schedule 4.13 - Non-Compliance with Law
Schedule 4.14 - Environmental Matters
Schedule 4.15 - Places of Business
Schedule 4.16 - Licenses
Schedule 4.19 - Borrowings and Guarantees
Schedule 4.21 - Trade Names
Schedule 4.22 - Joint Ventures
Schedule 7.12 - Transactions with Affiliates
Schedule 7.14 - Change in Control
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