$4,000,000.00
LOAN AND SECURITY AGREEMENT
by and among
ALLION HEALTHCARE, INC.
THE CARE GROUP OF TEXAS, INC.
CARE LINE OF HOUSTON, INC.
MAIL ORDER MEDS, INC.
CARE LINE OF NEW YORK, INC.
COMMONWEALTH CERTIFIED HOME CARE, INC.
("Borrower")
and
HCFP FUNDING, INC.
("Lender")
April 21, 1999
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of this
21st day of April, 1999, by and among ALLION HEALTHCARE, INC., a Delaware
corporation f/k/a The Care Group, Inc. ("Allion"), THE CARE GROUP OF TEXAS,
INC., a Texas corporation, CARE LINE OF HOUSTON, INC., a Texas corporation, MAIL
ORDER MEDS, INC., a Texas corporation, CARE LINE OF NEW YORK, INC., a New York
corporation, and COMMONWEALTH CERTIFIED HOME CARE, INC., a New York corporation
(collectively with Allion, "Borrower"), and HCFP FUNDING, INC., a Delaware
corporation ("Lender").
RECITALS
A. Borrower and certain other entities previously established a
financing relationship pursuant to that certain Loan and Security Agreement
dated as of July 24, 1997 (the "Initial Loan Agreement"), which was modified by
that certain Amended and Restated Loan and Security Agreement for Debtor in
Possession Financing dated as of September 15, 1998 (the "DIP Loan Agreement").
B. Borrower and Lender now desire to continue the financing
relationship with those changes in the relationship that are set forth below,
pursuant to which Lender shall make loans and extensions of credit to Borrower
on the terms and conditions set forth below.
C. As of the date of this Agreement, the balance outstanding under the
DIP Loan Agreement is Four Million Three Thousand Nine Hundred Two and 1/100
Dollars ($4,003,902.01), of which amount Four Million and No/100 Dollars
($4,000,000.00) shall be treated as the amount of revolving credit extended to
Borrower at the inception of this Agreement.
D. 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
or chattel paper, and whether or not earned by performance.
SECTION 1.2. ACCOUNT DEBTOR. "Account Debtor" means any Person
obligated on any Account of Borrower, including without limitation, any Insurer
and any Medicaid/Medicare Account Debtor.
SECTION 1.3. AFFILIATE. "Affiliate" means, with respect to a specified
Person, any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person, including without limitation their
stockholders and any Affiliates thereof. A Person shall be deemed to control a
corporation or other entity if the Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and business of the
corporation or other entity, whether through the ownership of voting securities,
by contract, or otherwise.
SECTION 1.4. AGREEMENT. "Agreement" means this Loan and Security
Agreement, as it may be amended or supplemented from time to time.
SECTION 1.5. BASE RATE. "Base Rate" means a rate of interest equal to
two percent (2.0%) above the "Prime Rate of Interest".
SECTION 1.6. BORROWED MONEY. "Borrowed Money" means any obligation to
repay 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 1.10. CLOSING; CLOSING DATE. "Closing" and "Closing Date" have
the meanings set forth in Section 5.3.
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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).
SECTION 1.13. CONCENTRATION ACCOUNT. "Concentration Account" has the
meaning set forth in Section 2.3.
SECTION 1.14. CONTROLLED GROUP. "Controlled Group" means a "controlled
group" within the meaning of Section 4001(b) of ERISA.
SECTION 1.15. COST REPORT SETTLEMENT ACCOUNT. "Cost Report Settlement
Account" means an "Account" owed to Borrower by a Medicaid/Medicare Account
Debtor pursuant to any cost report, either interim, filed or audited, as the
context may require.
SECTION 1.16. DEFAULT RATE. "Default Rate" means a rate per annum
equal to five percent (5.0%) 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.
SECTION 1.22. HIGHEST LAWFUL RATE. "Highest Lawful Rate" means the
maximum lawful rate of interest referred to in Section 2.7 that may accrue
pursuant to this Agreement.
SECTION 1.23. INSURER. "Insurer" means a Person that insures a Patient
against certain of the costs incurred in the receipt by such Patient of Medical
Services, or that has an agreement with Borrower to compensate Borrower for
providing services to a Patient.
SECTION 1.24. LENDER. "Lender" means HCFP Funding, 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, and each and every other document now or hereafter
delivered in connection therewith, as any of them may be amended, modified, or
supplemented from time to time.
SECTION 1.27. LOAN MANAGEMENT FEE. "Loan Management Fee" has the
meaning set forth in Section 2.4(c).
SECTION 1.28. LOCKBOX. "Lockbox" has the meaning set forth in Section
2.3.
SECTION 1.28A. 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. MEDICAL SERVICES. Medical and health care services
provided to a Patient, including, but not limited to, medical and health care
services provided to a Patient and performed by Borrower which are covered by a
policy of insurance issued by an Insurer, and includes physician services, nurse
and therapist services, dental services, hospital services, skilled nursing
facility services, comprehensive outpatient rehabilitation services, home health
care services, residential and out-patient behavioral healthcare services, and
medicine or health care equipment provided by Borrower to a Patient for a
necessary or specifically requested valid and proper medical or health purpose.
SECTION 1.33. NOTE. "Note" has the meaning set forth in Section 2.1(c).
SECTION 1.34. OBLIGATIONS. "Obligations" has the meaning set forth in
Section 3.1.
SECTION 1.35. PATIENT. "Patient" means any Person receiving Medical
Services from Borrower and all Persons legally liable to pay Borrower for such
Medical Services other than Insurers.
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SECTION 1.36. PERMITTED LIENS. "Permitted Liens" means: (a) liens for
taxes not delinquent, or which are being contested in good faith and by
appropriate proceedings which suspend the collection thereof and in respect of
which adequate reserves have been made; (b) deposits or pledges to secure
obligations under workmen's compensation, social security or similar laws, or
under unemployment insurance; (c) deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, easements,
minor survey exceptions, zoning restrictions, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the ordinary course
of business; (d) purchase money mortgages or security interests, conditional
sale arrangements and other similar security interests, on motor vehicles and
equipment acquired by any Borrower (hereinafter referred to individually as a
"Purchase Money Security Interest") with the proceeds of the Indebtedness
referred to in Section 7.1, PROVIDED, HOWEVER, that (i) the transaction in which
any Purchase Money Security Interest is proposed to be created is not then
prohibited by this Agreement; (ii) any Purchase Money Security Interest shall
attach only to the property or asset acquired in such transaction and shall not
extend to or cover any other assets or properties of the Borrower or any
Subsidiary; (iii) the Indebtedness secured or covered by any Purchase Money
Security Interest shall not exceed the lesser of the cost or fair market value
of the property or asset acquired and shall not be renewed, extended or prepaid
from the proceeds of any borrowing; and (iv) the aggregate amount of all
Indebtedness secured by Purchase Money Security Interests on a consolidated
basis for the Borrower shall not at any time exceed $500,000; (e) 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; (f) liens and
encumbrances in favor of Lender; (g) liens granted in connection with the lease
or purchase of property or assets financed by borrowings permitted by Section
7.1 (provided, however, that no such borrowings permitted by Section 7.1 may be
secured by liens on any of the Collateral); (h) judgment liens not affecting the
Collateral and not resulting in an Event of Default under Section 8.2(h); and
(i) liens set forth on SCHEDULE 1.36.
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 Fleet National Bank of Connecticut,
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.
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 medical services which Lender, in its reasonable
credit judgment, determines satisfies the requirements contained in this
definition. Without limiting the generality of the foregoing, no Account shall
be a Qualified Account if: (a) the Account or any portion thereof is payable by
an individual beneficiary, recipient or subscriber individually and not directly
to Borrower by a Medicaid/Medicare Account Debtor or commercial medical
insurance carrier acceptable to Lender in its sole discretion; (b) the Account
remains unpaid more than one hundred fifty (150) days past the claim or invoice
date; (c) the Account is subject to any defense, set-off, counterclaim,
deduction, or other claim, of any kind denying liability thereunder; (d) more
than twenty-five percent (25%) 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
on consignment or was made on approval or on a sale-or-return basis or was made
subject to any other repurchase or return agreement, or such goods have not been
shipped to the Account Debtor or its designee; (f) if the Account arises from
the performance of services, the services have not actually been performed or
the services were undertaken in violation in any material respect of any law;
(g) the Account is subject to a lien other than a Permitted Lien; (h) the
Account Debtor is subject to a bankruptcy, receivership, reorganization, or
insolvency proceeding; (i) if the Account is evidenced by chattel paper or an
instrument of any kind, the same has not been delivered to Lender; (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 two hundred eighty (280) days past their
invoice date; (m) fifty percent (50%) or more of the aggregate unpaid Accounts
from any individual Account Debtor (other than Medicaid/Medicare Account
Debtors) are not deemed Qualified Accounts under this Agreement; (n) the total
unpaid Accounts of the Account Debtor, except for a Medicaid/Medicare Account
Debtor, exceed twenty percent (20%) of the net amount of all Qualified Accounts
(including Medicaid/Medicare Account Debtors); (o) any covenant, representation
or warranty contained in the Loan Documents with respect to such Account has
been breached; or (p) the Account fails to meet such other reasonable
specifications and requirements which may from time to time be established by
Lender.
SECTION 1.43. REPORTABLE EVENT. "Reportable Event" means a "reportable
event" as defined in Section 4043(b) of ERISA.
SECTION 1.44. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has the
meaning set forth in Section 2.1(b).
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SECTION 1.45. SECURED LOAN. "Secured Loan" means the loan made by
Lender to Borrower in the maximum aggregate principal amount of One Million Five
Hundred Thousand and No/100 Dollars ($1,500,000.00), evidenced by the Secured
Note.
SECTION 1.46. SECURED LOAN DOCUMENTS. "Secured Loan Documents" means
the Secured Note and each and every other document now or hereafter delivered in
connection with the Secured Note or the Secured Loan, as any of them may be
amended, modified, or supplemented from time to time.
SECTION 1.47. SECURED NOTE. "Secured Note" means that certain Secured
Term Note made by Borrower in favor of Lender in the maximum aggregate principal
amount of the Secured Loan and dated of even date with this Agreement.
SECTION 1.48. TERM. "Term" has the meaning set forth in Section 2.8.
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 Four Million and No/100 Dollars ($4,000,000.00) (the "Maximum
Loan Amount"), provided that at no time shall the aggregate principal amount of
all Revolving Credit Loans outstanding under this Agreement exceed eighty-five
percent (85%) of the Qualified Accounts of Borrower unless modified by Lender in
writing at Lender's sole discretion..
(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, and the requests of Borrower pursuant to the
terms and conditions of Section 2.2 below. The outstanding principal balance of
the Loan may fluctuate from time to time, to be reduced by repayments made by
Borrower (which may be made without penalty or premium), and to be increased by
future Revolving Credit Loans, 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 submitted by Borrower for advances or
extensions of credit shall be made by Lender in its sole discretion and is final
and binding upon Borrower.
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(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.
The Note shall bear interest from the date thereof until repaid, with interest
payable monthly in arrears on the first Business Day of each month, at a rate
per annum (on the basis of the actual number of days elapsed over a year of 360
days) equal to the Base Rate, provided that after an Event of Default such rate
shall be equal to the Default Rate. 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 Medicaid/Medicare,
Insurer or other Account Debtor (the "Borrowing Base").
SECTION 2.2. LOAN ADMINISTRATION. Borrowings under the Loan shall be as
follows:
(a) A request for a Revolving Credit Loan shall be made, or
shall be deemed to be made, in the following manner: (i) Borrower may give
Lender notice of its intention to borrow, in which notice Borrower shall specify
the amount of the proposed borrowing and the proposed borrowing date, not later
than 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 irrevocably to be a request for a Revolving Credit Loan on the
due date in the amount required to pay such interest or other Obligation.
(b) Borrower hereby irrevocably authorizes Lender to disburse
the proceeds of each Revolving Credit Loan requested, or deemed to be requested,
as follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 2.2(a)(i) shall be disbursed by Lender by wire transfer to such bank
account as may be agreed upon by Borrower or Lender from time to time or
elsewhere if pursuant to written direction from Borrower; and (ii) the proceeds
of each Revolving Credit Loan requested under subsection 2.2(a)(ii) shall be
disbursed by Lender by way of direct payment of the relevant interest or other
Obligation.
(c) All Revolving Credit Loans, 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 maintained 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
under the Loan Document.
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(e) Lender will account to Borrower monthly with a statement of
Revolving Credit Loans, charges and payments made pursuant to this Agreement,
and such account rendered by Lender shall be deemed final, binding and
conclusive upon Borrower absent manifest error. In any event, Borrower agrees
that any account rendered by Lender shall be final and binding on Borrower
unless Borrower notifies Lender in writing to the contrary within thirty (30)
days of the date that each accounting is mailed to Borrower. Any such notice
shall be deemed an objection only to those items to which specific objection is
made in such notice.
SECTION 2.3. COLLECTIONS, DISBURSEMENTS, BORROWING AVAILABILITY, AND
LOCKBOX ACCOUNT. Borrower shall maintain a lockbox account (the "Lockbox") with
Bank One, Texas, N.A. ("Lockbox Bank"), subject to the provisions of this
Agreement, and shall maintain with the Lockbox Bank the Provider Account
Agreement (Three Party), dated December 22, 1998, a copy of which is attached as
EXHIBIT B, and such other agreements related thereto as Lender may reasonably
require. Borrower shall ensure that all collections of Accounts are paid
directly from Account Debtors into the Lockbox, and that all funds paid into the
Lockbox are immediately transferred into a depository account maintained by
Lender at Bank One Arizona, N.A. or U.S. Bank N.A., as determined by Lender in
its sole discretion and communicated to Borrower (the "Concentration Account").
Lender shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to this Section 2.3 to reduce the outstanding
indebtedness under the Loan (in accordance with Section 2.2(d)) with 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. Borrower acknowledges and agrees that its compliance with
the terms of this Section 2.3 is essential, and that upon its failure to comply
with any such terms Lender shall be entitled to assess a non-compliance fee
which shall operate to increase the Base Rate by two percent (2%) per annum
during any period of non-compliance. Lender shall be entitled to assess such fee
whether or not an Event of Default is declared or otherwise occurs. All funds
transferred from the Concentration Account for application to Borrower's
indebtedness to Lender shall be applied to reduce the Loan balance, but for
purposes of calculating interest shall be subject to a nine (9) 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 be available for transfer
by Lender to Borrower at any time or times for so long as no Event of Default
exists.
SECTION 2.4. FEES.
(a) 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-fifth of one percent (0.20%) 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.
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(b) Borrower shall pay to Lender all reasonable audit fees and
expenses in connection with audits and appraisals of Borrower's books and
records and such other matters as Lender shall deem in good faith to be
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, that absent an Event of Default such fees shall
not exceed Fifteen Thousand and No/100 Dollars ($15,000.00) in any calendar
year.
(c) Borrower shall pay to Lender, on demand, any and all
reasonable fees, costs or expenses which Lender or any participant pays to a
bank or other similar institution (including, without limitation, any fees paid
by Lender to any participant) arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by Lender, of
proceeds of Revolving Credit Loans made by Lender to Borrower pursuant to this
Agreement, and (ii) the depositing for collection, by Lender or any participant,
of any check or item of payment received or delivered to Lender or any
participant on account of Obligations.
SECTION 2.5. PAYMENTS. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Borrower of any proceeds of any of the Collateral, to the
extent of such proceeds, (ii) the occurrence of an Event of Default in
consequence of which the Loan and the maturity of the payment of the Obligations
are accelerated, or (iii) the termination of this Agreement pursuant to Section
2.8 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
in consequence of which the Loan and the maturity of the payment of the
Obligations are accelerated, or (iii) the termination of this Agreement pursuant
to Section 2.8. 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.
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SECTION 2.7. INTEREST RATE LIMITATION. The parties intend to conform
strictly to the applicable usury laws in effect from time to time during the
term of the Loan. Accordingly, if any transaction contemplated hereby would be
usurious under such laws, then notwithstanding any other provision 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 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 upon notice to the Borrower upon
or after the occurrence of an Event of Default.
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(c) Upon at least fifteen (15) days prior written notice to
Lender (the "Termination Notice Period"), Borrower may terminate this Agreement
before the second annual anniversary of the Closing Date, provided that, at the
effective date of such termination, Borrower shall pay to Lender (in addition to
the then outstanding principal, accrued interest and other Obligations owing
under the terms of this Agreement and any other Loan Documents) as liquidated
damages for the loss of bargain and not as a penalty, an amount equal to (i) two
percent (2%) of the Maximum Loan Amount if the effective date of such
termination by Borrower is on or before the first anniversary of the Closing
Date, and (ii) one percent (1%) of the Maximum Loan Amount if the effective date
of such termination by Borrower is after the first anniversary of the Closing
Date and before the second anniversary of the Closing Date. Notwithstanding the
foregoing, no termination fee shall be due under this Agreement if the
termination by Borrower is due to the transfer, sale or other disposition for
fair value of substantially all of Borrower's assets to an unaffiliated
third-party.
(d) All of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination of this
Agreement. All undertakings, agreements, covenants, warranties, and
representations of Borrower contained in the Loan Documents shall survive any
such termination and Lender shall retain its liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds.
SECTION 2.9. JOINT AND SEVERAL LIABILITY; BINDING OBLIGATIONS. Each
entity comprising Borrower and executing this Agreement on behalf of Borrower
shall be jointly and severally liable for all of the Obligations. In addition,
each entity comprising Borrower hereby acknowledges and agrees that all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in this Agreement shall be applicable to and shall be
binding upon each individual entity comprising Borrower, and shall be binding
upon all such entities when taken together.
ARTICLE III
COLLATERAL
SECTION 3.1. GENERALLY. As security for the payment of all liabilities
of Borrower to Lender, 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, 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
12
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, and (iii) the payment of all expenses incurred by Lender in
connection therewith (collectively, the "Obligations"), and as additional
security for the payment of all liabilities and obligations of Borrower to
Lender under the Secured Note and the other Secured Loan Documents, Borrower
hereby reaffirms, assigns, and grants to Lender a continuing first priority lien
on and security interest in, upon, and to the following property (the
"Collateral"):
(a) All of Borrower's now-owned and hereafter acquired or
arising Accounts, accounts receivable and rights to payment of every kind and
description, and any contract rights, chattel paper, documents and instruments
with respect thereto;
(b) All of Borrower's now owned and hereafter acquired or
arising general intangibles relating to its Accounts and general intangibles
of every kind and description, including, but not limited to, accounts
receivable and other rights to payment, all existing and future customer
lists, choses in action, claims, books, records, contracts, licenses,
formulae, tax and other types of refunds (including, specifically, federal
income tax refunds), returned and unearned insurance premiums, rights and
claims under insurance policies, and computer information, software, records,
and data;
(c) All of Borrower's now or hereafter acquired deposit
accounts into which Accounts are deposited, including the Lockbox Account and
the Concentration Account;
(d) All of Borrower's monies and other property of every kind
and nature now or at any time or times hereafter in the possession of or under
the control of Lender or a bailee or Affiliate of Lender;
(e) All of Borrower's furniture, equipment and fixtures,
whether now owned or hereafter acquired, together with (1) all additions,
parts, fittings, accessories, special tools, attachments, and accessions now
and hereafter affixed thereto and/or used in connection therewith, (2) all
replacements thereof and substitutes therefor, and (3) cash and non-cash
proceeds and products thereof;
(f) All of Borrower's 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 the Borrower as raw materials, work in
process or materials used or consumed in a business, whether now owned or
hereafter acquired, 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 thereafter; and
(g) The proceeds (including, without limitation, insurance
proceeds) of all of the foregoing.
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SECTION 3.2. LIEN DOCUMENTS. At Closing and thereafter as Lender deems
reasonably necessary, Borrower shall execute and deliver to Lender, or have
executed and delivered (all in form and substance satisfactory to Lender in its
reasonable discretion):
(a) UCC-1 Financing Statements pursuant to the Uniform
Commercial Code in effect in the jurisdiction(s) in which Borrower has any
property or assets, which Lender may file in any jurisdiction where any
Collateral is or may be located; 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) Subject to Section 6.15 all Collateral (except deposit
accounts) will at all times be kept by Borrower at its principal office(s) as
set forth on EXHIBIT C of this Agreement and shall not, without the prior
written approval of Lender, be moved therefrom.
(b) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit to Lender on
such periodic basis as Lender shall request account receivable aging summaries
for the preceding period, in the form previously delivered 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 on the first Business Day
following such occurrence and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence.
(c) Whether or not an Event of Default has occurred, any of
Lender's officers, employees or agents shall have the right, at any time or
times hereafter, in the name of Lender, any designee of Lender or Borrower, to
verify the validity, amount or any other matter relating to any Accounts by
mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude such verification
process.
(d) To expedite collection, Borrower shall endeavor in the
first instance to make collection of its Accounts for Lender. Lender retains the
right at all times after 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.
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SECTION 3.4. OTHER ACTIONS. In addition to the foregoing, Borrower (i)
shall provide prompt written notice to each private indemnity, managed care or
other Insurer who either is currently an Account Debtor or becomes an Account
Debtor at any time following the date of this Agreement that Lender has been
granted a first priority lien and security interest in, upon and to all Accounts
applicable to such Insurer and directs each Account Debtor to make payments into
the Lockbox, and hereby authorizes Lender to send any and all similar notices to
such Insurers by Lender, and (ii) shall do anything further that may be
reasonably 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 promptly 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 reasonable 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; and
(b) Judgment, federal tax lien and corporate and partnership
tax lien searches, in each jurisdiction searched under clause (a) above.
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 or licensure is
required, PROVIDED THAT good standing certificates for the entities and
jurisdictions specified on SCHEDULE 3.5. need not be delivered prior to Closing
but shall be delivered on or before May __, 1999.
SECTION 3.6. POWER OF ATTORNEY. After the occurrence and during the
continuation of an Event of Default, 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
15
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,
in the exercise of Lender's good faith reasonable judgment, to enforce any
Account or other Collateral or perfect Lender's security interest or lien in any
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 comprising 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. Except as set forth on
SCHEDULE 3.5, Borrower is a corporation, duly organized, validly existing, and
in good standing under the laws of its state of formation, is in good standing
as a foreign corporation in each jurisdiction in which the character of the
properties owned or leased by it therein or the nature of its business makes
such qualification necessary, except where the failure to so qualify would not
have a material adverse effect on Borrower or its assets or operations taken as
a whole, has the corporate power and authority to own its assets and transact
the business in which it is engaged, and, except as set forth on SCHEDULE 4.2,
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. Other than consents and approvals that have already been obtained, 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 hereto
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 reasonably be expected to have a material
adverse effect on the business, properties, condition (financial or otherwise)
or operations of Borrower, taken as a whole, 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 thereunder will not, violate, conflict with, constitute a default
under, or result in the creation of a lien or encumbrance upon the property of
Borrower under: (i) any provision of Borrower's certificate of incorporation or
bylaws, (ii) any material provision of any law, rule, or regulation applicable
to Borrower, or (iii) any of the following: (A) any material provision of 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. INTENTIONALLY OMITTED.
SECTION 4.8. NO DEFAULT. Borrower is not in default under or with
respect to any obligation in any respect which could be materially adverse to
its business, operations, property or financial condition, or which could
materially 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.
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SECTION 4.9. TITLE TO PROPERTIES. Borrower has good and marketable
title to its properties and assets, including the Collateral, 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. Except as set forth on SCHEDULE 4.10, 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 the
Closing Date 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.
No employee benefit plan (a "Plan") subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") and regulations issued pursuant
thereto that is maintained by Borrower or under which Borrower could have any
liability under ERISA (a) has failed to meet minimum funding standards
established in Section 302 of ERISA, (b) has failed to comply with all material
applicable requirements of ERISA and of the Internal Revenue Code, including all
applicable rulings and regulations thereunder, (c) has engaged in or been
involved in a prohibited transaction (as defined in ERISA) under ERISA or under
the Internal Revenue Code which can reasonably be expected to result in a
liability exceeding $100,000, or (d) has been terminated. Borrower has not
assumed, or received notice of a claim asserted against Borrower for, withdrawal
liability (as defined in the Multi-Employer Pension Plan Amendments Act of 1980,
as amended) with respect to any multi-employer pension plan and is not a member
of any Controlled Group (as defined in ERISA). Borrower has timely made when due
all contributions with respect to any multi-employer pension plan in which it
participates and no event has occurred triggering a claim against Borrower for
withdrawal liability with respect to any multi-employer pension plan in which
Borrower participates.
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SECTION 4.13. COMPLIANCE WITH LAW. Borrower is not in violation of any
material 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).
Except as described in SCHEDULE 4.13, Borrower has obtained all licenses,
permits, franchises, and other governmental authorizations necessary for the
ownership of its properties and the conduct of its business, except where the
failure to so obtain would not have a material adverse effect on any entity
comprising Borrower or any of their respective assets or operations. Except as
disclosed on SCHEDULE 4.13, 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. With respect to any matters disclosed by
Borrower on SCHEDULE 4.13, Borrower will bring obtain all required licenses and
file all required reports and documents on or before May ___, 1999.
SECTION 4.14 ENVIRONMENTAL MATTERS. No use, exposure, release,
generation, manufacture, storage, treatment, transportation or disposal of
Hazardous Material (collectively, a "Discharge") has occurred or is occurring at
levels in excess of permissible levels on or from any real property on which the
Collateral is located or which is owned, leased or otherwise occupied by
Borrower (the "Premises"), or off the Premises as a result of any action of
Borrower, except as described in SCHEDULE 4.14 or where the Discharge does not
have a material adverse effect on any entity comprising Borrower or any of their
respective assets or operations. 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. The only places of business of
Borrower, and the places where it keeps and intends to keep the Collateral and
records concerning the Collateral as of the Closing Date, are at the addresses
set forth in SCHEDULE 4.15. SCHEDULE 4.15 also lists the owner of record as of
the Closing Date 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 and planned
future conduct of its business, without any conflict in any material respect
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.
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SECTION 4.17. STOCK OWNERSHIP. The identity of the stockholders of
record of all classes of the outstanding stock of Borrower, together with the
respective ownership percentages held by such stockholders as of the Closing
Date, are as set forth on SCHEDULE 4.17.
SECTION 4.18. MATERIAL FACTS. Neither this Agreement nor any other Loan
Document nor any other agreement, document, certificate, or statement furnished
to Lender by or on behalf of Borrower in connection with the transactions
contemplated hereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained in this
Agreement or other Loan Document not misleading.
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.
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.
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.
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 concerning its status as a Qualified
Account. Unless otherwise indicated in writing to Lender, with respect to each
Account:
(a) It is genuine and in all respects what it purports to be,
and is not evidenced by a judgment;
(b) It arises out of a completed, BONA FIDE sale and delivery
of goods or rendition of services by Borrower in the ordinary course of its
business and in accordance in all material respects 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;
20
(c) It is for a liquidated amount maturing as stated in a
duplicate claim or invoice covering such sale or rendition of services;
(d) Such Account, and Lender's security interest therein, is
not, and will not (by voluntary act or omission by Borrower), be in the future,
subject to any offset, lien, deduction, defense, dispute or counterclaim;
(e) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts;
(f) 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
(g) 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. OTHER ASSETS. There are no assets or items of value in
any of the entities which dissolved pursuant to the confirmed Plan of
Reorganization under Chapter 11 of the Bankruptcy Code for The Care Group, Inc.
and its Affiliated Debtors approved by the United States Bankruptcy Court for
the Western District of Texas, Austin Division, Case No. 98-13247FM (the "Plan
of Reorganization"). Any such asset has been transferred to Borrower and is
subject to the security interest granted to Lender as set forth in Section 2.1.
ARTICLE V
CLOSING AND CONDITIONS OF LENDING
SECTION 5.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of
Lender to enter into and perform this Agreement and to make Revolving Credit
Loans is subject to the following conditions precedent:
(a) Lender shall have received two (2) originals of this
Agreement and all other Loan Documents required to be executed and delivered at
or 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.
21
(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 no Event of Default and no event
which, with the giving of notice or the lapse of time, or both, could constitute
such an Event of Default.
(e) The representations and warranties contained in Article IV
shall be true and correct in all material respects.
(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 D.
(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 evidence that the Pappajohn
Group has made a $1 million capital contribution to Allion in exchange for a 50%
interest in the equity of Allion;
(k) Borrower shall be in material compliance with the terms
and conditions of the Plan of Reorganization;
(l) The Lockbox Account shall have been established;
(m) 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.
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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 taken as a whole
shall have occurred and be continuing with respect to Borrower since the date of
this Agreement.
(d) Borrower shall be in material compliance with the terms
and conditions of the Plan of Reorganization.
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 Lender's claims and rights resulting from any
breach or misrepresentation by Borrower are specifically reserved by Lender.
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ARTICLE VI
AFFIRMATIVE COVENANTS
Each entity comprising 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 thirty (30)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 thirty (30) days after the end of each calendar month; (iii)
internally prepared monthly financial statements for Borrower, certified by the
chief executive officer or 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 ninety (90) 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 a 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; and (ix) 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 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.
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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. INTENTIONALLY DELETED.
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 in such amounts
and against such risks as is customarily maintained by similar businesses and by
owners of similar property in the same general area.
SECTION 6.8. GENERAL INFORMATION. For purposes of determining whether
Borrower is in compliance with the terms of this Agreement, Borrower will
furnish to Lender such information as Lender may, from time to time, reasonably
request with respect to the business or financial affairs of Borrower, and
permit any officer, employee or agent of Lender to visit and inspect any of the
properties, to examine the minute books, books of account and other records,
including management letters prepared by Borrower's auditors, of Borrower, and
make copies thereof or extracts therefrom, and to discuss, subject to applicable
laws regarding patient confidentiality, its and their business affairs, finances
and accounts with, and be advised as to the same by, the accountants and
officers of Borrower, during normal business hours and at such times 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,
ordinary wear and tear excepted, and from time to time make all needful and
proper repairs, renewals, replacements, betterments and improvements thereto, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
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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, would be
likely to materially adversely affect its condition (financial or otherwise) or
operations (present or prospective) or which may expose Borrower to uninsured
liability of $100,000.00 or more; (v) any default claimed by any other creditor
for Borrowed Money of Borrower in excess of $100,000 other than Lender; and (vi)
any other development in the business or affairs of Borrower which is reasonably
likely to be materially adverse; in each case describing the nature thereof and
(in the case of notification under clauses (i) and (ii)) the action Borrower
proposes to take with respect thereto.
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 will make
all contributions when due with respect to any multi-employer pension plan in
which it participates and will promptly advise Lender: (i) upon its receipt of
notice of the assertion against Borrower of a claim for withdrawal liability;
(ii) upon the occurrence of any event which could trigger the assertion of a
claim for withdrawal liability against Borrower; and (iii) 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 (as applicable), and shall
cause to be recorded financing statements on Form UCC-1 and/or UCC-3, duly
executed by Borrower and Lender, in all places necessary to release all existing
security interests and other liens in the Collateral (other than as permitted
hereby) and to perfect and protect Lender's first priority lien and security
interest in the Collateral, as Lender may 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.
26
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 and all businesses reasonably related to such
business, 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 proceeds of Accounts are
deposited.
SECTION 6.19. SUBMISSION OF COLLATERAL DOCUMENTS. Borrower will,
promptly following a request therefor by Lender, make available to Lender copies
of all records reasonably necessary to ensure Borrower's compliance with this
Agreement and/or Lender's security interest in the Collateral. 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 and timely 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,
certifying that:
27
(a) No default or Event of Default has occurred under this
Agreement or any of the other Loan Documents; and
(b) 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. INTENTIONALLY DELETED.
SECTION 6.23. NET WORTH. Borrower will not at any time allow its
consolidated net worth, as computed in accordance with GAAP, to decline by more
than One Hundred Thousand and No/100 Dollars ($100,000.00) from Borrower's
consolidated net worth at the Closing Date.
In addition, Borrower covenants and agrees that Borrower's consolidated net
worth at the end of each fiscal year shall have increased over the prior year's
consolidated net worth by an amount equal to at least fifty percent (50%) of
Borrower's net profits for such fiscal year. Lender shall verify Borrower's
compliance with this section by review of Borrower's annual audited financial
statements, which are required to be delivered to Lender pursuant to Section
6.1.
ARTICLE VII
NEGATIVE COVENANTS
Each entity comprising 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 not to exceed $250,000.00 of new debt in
any calendar year secured by mortgages, encumbrances or liens expressly
permitted by Section 7.3 or by the definition of Permitted Liens; (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; (iv) except as set forth on SCHEDULE 7.1, borrowings
incurred in the ordinary course of its business and not exceeding $50,000.00 in
the aggregate outstanding at any one time; (v) the indebtedness disclosed on
SCHEDULE 7.1, and any renewals, extensions or refinancings of such indebtedness;
(vi) indebtedness approved by Lender in its reasonable discretion that is
expressly subordinated to the Obligations and is incurred in connection with a
transaction permitted pursuant to Section 7.4; and (vii) indebtedness owed by
one entity comprising Borrower to another entity comprising Borrower.. 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).
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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 express written consent of, Lender, which consent may be withheld in
Lender's sole discretion.
SECTION 7.3. LIENS AND ENCUMBRANCES. Borrower will not create, incur,
assume or suffer to exist any mortgage, pledge, lien or other encumbrance of any
kind (including the charge upon property purchased under a conditional sale or
other title retention agreement) upon, or any security interest in, any of its
Collateral, whether now owned or hereafter acquired, except for Permitted Liens.
SECTION 7.4. MERGER, ACQUISITION OR SALE OF ASSETS. Except as may be
described on SCHEDULE 7.4 with respect to Commonwealth Certified Home Care,
Inc., Borrower will not sell, lease, or otherwise dispose of any of its assets
in excess of $100,000 in any calendar year except in the ordinary course of its
business. Borrower will not merge or consolidate with any Person (whether or not
any entity comprising the Borrower or any subsidiary is the surviving entity),
or acquire all or substantially all of the assets or any of the capital stock of
any Person, except (i) any subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more
wholly-owned subsidiaries of the Borrower (provided that the wholly-owned
subsidiary or subsidiaries shall be the continuing or surviving corporation) and
after giving effect to any of such transactions, no default or Event of Default
shall exist, and (ii) the Borrower may acquire all or substantially all of the
assets or capital stock of any Person if and only if: (A) after giving effect to
such acquisition, no default or Event of Default shall have occurred or would
exist as a result of such purchase; (B) each such acquisition shall be of
operating assets utilized by the transferor in rendering health care services or
of 51% of the stock or other equity interests in a corporation or other entity
substantially all of whose properties consist of such operating assets; (C) the
aggregate consideration payable (inclusive of cash payable, notes payable and
indebtedness assumed) in respect of all such acquisitions shall not exceed
$1,000,000 for any single acquisition or $10,000,000 on a cumulative basis over
the term of this Agreement; (D) the Borrower shall have given the Lender not
less than thirty (30) days prior written notice of its intention to make an
acquisition pursuant to this Section 7.4, such notice to include the proposed
amount, date and form of the proposed transaction, a reasonable description of
the assets or stock or other equity interest to be acquired, a description of
the liabilities to be assumed (if any) and the location of all assets to be
acquired; and (E) concurrently with the consummation of any such acquisition
29
pursuant to this Section 7.4, the Borrower shall, as additional collateral
security for the Obligations: (1) grant to the Lender a first lien on all of its
right, title and interest in and to the acquired assets or capital stock or
other equity interest, by the execution and delivery to the Lender of such
agreements, instruments and documents as shall be satisfactory in form and
substance to the Lender; and (2) with respect to the acquisition by the Borrower
of any entity that will become a Borrower hereunder, the Borrower shall cause
each such entity to execute and deliver to the Lender an amendment to this
Agreement in the form submitted by Lender, together with a security agreement
and any other similar documents and instruments executed and delivered to the
Lender by each Borrower.
SECTION 7.5. SALE AND LEASEBACK. Borrower will not, directly or
indirectly, enter into any arrangement whereby Borrower sells or transfers all
or any part of its assets and thereupon and within one year thereafter rents or
leases the assets so sold or transferred without the prior written notice to,
and the express written consent of, Lender, which consent may be withheld in
Lender's sole discretion.
SECTION 7.6. DIVIDENDS, DISTRIBUTIONS AND MANAGEMENT FEES. Borrower
will not declare or pay any dividends or other distributions with respect to,
purchase, redeem or otherwise acquire for value any of its outstanding stock now
or hereafter outstanding, or return any capital of its stockholders, nor shall
Borrower pay or become obligated to pay management fees or fees of a similar
nature to any Person; PROVIDED, HOWEVER, that so long as Lender has not notified
Borrower of the existence of an Event of Default under this Agreement, Borrower
may make or pay any such dividends or other distributions or purchase, redeem or
otherwise acquire such interest, return any such capital, or pay any such
management fees, all subject to any other terms and conditions of this
Agreement..
SECTION 7.7. LOANS. Borrower will not make loans or advances to any
Person, other than (i) trade credit extended in the ordinary course of its
business, (ii) advances for business travel and similar temporary advances in
the ordinary course of business to officers, stockholders, directors, and
employees, and (iii) loans to other entities comprising Borrower.
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, and except for indebtedness expressly permitted by Section
7.1.
SECTION 7.9. INTENTIONALLY DELETED.
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.
30
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.
SECTION 7.12. TRANSACTIONS WITH AFFILIATES. Borrower will not enter
into any transaction, including without limitation the purchase, sale, or
exchange of property, or the loaning or giving of funds to any Affiliate or
subsidiary, except in the ordinary course of business and pursuant to the
reasonable requirements of Borrower's business and upon terms substantially the
same and no less favorable to Borrower as it would obtain in a comparable arm's
length transaction with any Person not an Affiliate or subsidiary, and so long
as the transaction is not otherwise prohibited under this Agreement. For
purposes of the foregoing, Lender consents to the transactions described on
SCHEDULE 7.12.
SECTION 7.13. USE OF LENDER'S NAME. Borrower will not use Lender's name
(or the name of any of Lender's affiliates) in connection with any of its
business operations. Borrower may disclose to third parties that Borrower has a
borrowing relationship with Lender. Nothing contained in this Agreement is
intended to permit or authorize Borrower to make any contract on behalf of
Lender.
SECTION 7.14. INTENTIONALLY DELETED.
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.
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:
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(a) A default in the payment of any installment of principal
of, or interest upon, the Note when due and payable, whether at maturity or
otherwise, which default shall have continued unremedied for a period of five
(5) days after written notice of the default from Lender to Borrower;
(b) A default in the payment of any other charges, fees, or
other monetary obligations owing to Lender arising out of or incurred in
connection with this Agreement when such payment is due and payable, which
default shall have continued unremedied for a period of five (5) days after
written notice of the default from Lender to Borrower;
(c) A default in the due observance or performance by Borrower
of any other term, covenant or agreement contained in any of the Loan Documents,
which default shall have continued unremedied for a period of twenty (20) days
after written notice of the default from Lender to Borrower;
(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 $100,000.00
is not paid 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;
(g) Except as set forth on SCHEDULE 8.1, (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;
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(h) One or more final judgments against Borrower or
attachments against its property in excess of $250,000.00 not fully and
unconditionally covered by insurance shall be rendered by a court of record and
shall remain unpaid, unstayed on appeal, undischarged, unbonded and undismissed
for a period of thirty (30) 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 in
excess of $250,000.00, 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) Over fifty percent (50%) of the outstanding stock of any
entity comprising Borrower is sold or otherwise transferred by the Person owning
such stock on the Closing Date;
(k) There shall occur any uninsured damage to or loss, theft
or destruction of any portion of the Collateral;
(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) Borrower ceases any material portion of its business
operations as currently conducted;
(n) Lender receives any indication or evidence that Borrower
may have directly or indirectly been engaged in any type of activity which is
reasonably expected to result in the forfeiture of a material portion 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;
(o) 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;
(p) Borrower shall be convicted under any law that results in
a forfeiture of any Collateral;
(q) There shall occur a material adverse change in the
financial condition or business prospects of Borrower, taken as a whole, or
Lender in good xxxxx xxxxx itself insecure as a result of acts or events bearing
upon the financial condition of Borrower or the repayment of the Note, and such
adverse change or condition shall have continued unremedied for a period of
thirty (30) days after written notice from Lender; or
33
(r) An Event of Default shall have occurred under the Secured
Note or the other Secured Loan Documents.
SECTION 8.2. ACCELERATION. Upon the occurrence of any of the foregoing
Events of Default, the Note shall become and be immediately due and payable upon
declaration to that effect delivered by Lender to Borrower; provided that, upon
the happening of any event specified in Section 8.1(g), the Note shall be
immediately due and payable without declaration or other notice to Borrower.
SECTION 8.3. REMEDIES.
(a) Upon the occurrence of an Event of Default under this
Agreement or the other Loan Documents, in addition to all other rights, options,
and remedies granted to Lender under this Agreement or at law or in equity,
Lender 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 shall be immediately
due and payable;
(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) After notice to Borrower and the
expiration of a five (5) day cure period, 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
34
(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 marked may be sold immediately by
Lender without prior notice to Borrower. At any sale or disposition of
Collateral, Lender may (to the extent permitted by applicable law) purchase all
or any part of the Collateral, free from any right of redemption by Borrower,
which right is hereby waived and released. Borrower covenants and agrees not to
interfere with or impose any obstacle to Lender's exercise of its rights and
remedies with respect to the Collateral.
SECTION 8.4. NATURE OF REMEDIES. Lender shall have the right to proceed
against all or any portion of the Collateral to satisfy in any order (i) the
liabilities and Obligations of Borrower to Lender under this Agreement or the
other Loan Documents, or (ii) upon the occurrence of an Event of Default under
the Secured Note or the other Secured Loan Documents, the liabilities and
obligations of Borrower under the Secured Note or the other Secured Loan
Documents. 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 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.
35
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES AND TAXES.
(a) Borrower agrees to pay, whether or not the Closing occurs,
a reasonable documentation preparation fee, together with actual audit and
appraisal fees and all other 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 and 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.
SECTION 9.3. NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party
hereto of any one or more defaults by the other party in the performance of any
of the provisions of this Agreement shall operate or be construed as a waiver of
any future default or defaults, whether of a like or different nature. No
failure or delay on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for in this Agreement are cumulative and are not exclusive
of any remedies that may be available to any party hereto at law, in equity or
otherwise.
36
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:
HCFP Funding, Inc.
0 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxx, Esq.
Xxxxxxx, Xxxxx & Xxxxxxxx
000 Xxxxx, 00xx xxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(b) If to Borrower, at:
Allion Healthcare, Inc.
00 Xxxx Xxxxxxx Xxxx, Xxxxx 000X
Xxxxxxxxxx Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxx & Xxxxxxx
----------------------
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
37
If mailed, notice shall be deemed to be given five (5) days after being sent, if
sent by personal delivery or telecopier, notice shall be deemed to be given when
delivered, and if sent by prepaid courier, notice shall be deemed to be given on
the next Business Day following deposit with the courier.
SECTION 9.5. SEVERABILITY. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term is invalid, illegal or unenforceable, Lender may, but is not obligated
to, advance funds to Borrower under this Agreement until the parties hereto
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 to no more than five (5) persons in the aggregate, 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.
38
SECTION 9.9. SURVIVAL OF TERMS. All covenants, agreements,
representations and warranties made in this Agreement, any other Loan Document,
and in any certificates and other instruments delivered in connection therewith
shall be considered to have been relied upon by Lender and shall survive the
making by Lender of the Loans 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. Borrower releases Lender, its
officers, employees, and agents, of and from any claims for loss or damage
resulting from acts or conduct of any or all of them, unless caused by Lender's
recklessness, gross negligence, or willful misconduct.
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 following the occurrence of an
Event of Default, to the extent deemed necessary by Lender in its sole
discretion, upon prior notice to Borrower if Borrower fails to do so within five
(5) days after receiving such notice, 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 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.
39
SECTION 9.15. INFORMATION TO PARTICIPANTS. Lender may divulge to any
participant it may obtain in the Loan, or any portion thereof, all information,
and furnish to such participant copies of reports, financial statements,
certificates, and documents obtained under any provision of this Agreement or
any other Loan Document.
SECTION 9.16. INDEMNITY AND RELEASE.
(a) Except for matters caused by Lender's gross negligence or
willful misconduct, 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 obligations of Borrower under this
Section 9.16(a) shall survive the payment in full of the Obligations and the
termination of this Agreement.
(b) Borrower hereby irrevocably and unconditionally remises,
releases and forever discharges, and does for his heirs, executors,
administrators, agents, and assigns, irrevocably and unconditionally remises,
releases and forever discharges, Lender, its subsidiaries and affiliates, and
each of their employees, officers, directors, shareholders, members, partners,
agents, affiliates, and assigns of and from any and all claims, demands, rights,
causes of actions, or suits, whether in law, equity or otherwise, whether in
contract, tort, or otherwise, of any kind or nature whatever, known or unknown.
SECTION 9.17. REAFFIRMATION. The liens placed on Borrower's assets to
secure the Revolving Loans made pursuant to the Initial Loan Agreement and to
the DIP Loan Agreement are hereby ratified and affirmed by Borrower, and
Borrower hereby represents, warrants and covenants to Lender that no liens have
been placed on Borrower's assets that adversely affect Lender's liens or the
priority of Lender's liens.
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.
40
SECTION 9.19. WAIVER OF TRIAL BY JURY. BORROWER HEREBY (A) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY,
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER, AND THIS WAIVER IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED AND
REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF
BORROWER'S WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, BORROWER HEREBY CERTIFIES
THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER'S COUNSEL) HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL NOT SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
LENDER:
HCFP FUNDING, INC.
a Delaware corporation
By:
------------------------------
Name:
Title:
41
BORROWER:
ALLION HEALTHCARE, INC.
a Delaware corporation
By: /S/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
THE CARE GROUP OF TEXAS, INC.
a Texas corporation
By: /s/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
CARE LINE OF HOUSTON, INC.
a Texas corporation
By: /S/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
[SIGNATURES CONTINUED]
42
MAIL ORDER MEDS, INC.
a Texas corporation
By: /S/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
CARE LINE OF NEW YORK, INC.
a New York corporation
By: /S/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
COMMONWEALTH CERTIFIED HOME CARE, INC.
a New York corporation
By: /S/ XXXXXXX X. XXXXX
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and CEO
LIST OF EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Lockbox Agreement
Exhibit C - List of Locations of Collateral
Exhibit D - Form of Legal Opinion
LIST OF SCHEDULES
Schedule 1.36 - Permitted Liens
Schedule 3.5 - Good Standing
Schedule 4.1 - Subsidiaries
Schedule 4.2 - Licensing
Schedule 4.5 - Litigation
Schedule 4.7 - Tax Identification Numbers
Schedule 4.10 - Taxes
Schedule 4.13 - Non-Compliance with Law
Schedule 4.14 - Environmental Matters
Schedule 4.15 - Places of Business
Schedule 4.16 - Licenses
Schedule 4.17 - Stock Ownership
Schedule 4.19 - Borrowings and Guarantees
Schedule 4.21 - Trade Names
Schedule 4.22 - Joint Ventures
Schedule 7.1 - Borrowings
Schedule 7.4 - Description of Transaction
Schedule 7.12 - Transactions with Affiliates
Schedule 8.1 - Description of Bankruptcy Proceedings
