EXHIBIT 4.1
AMENDED AND RESTATED
LOAN AGREEMENT
BETWEEN
COMERICA BANK-TEXAS
AND
XXXXXX HEALTHCARE, INC.
DATED
JUNE 30, 1997
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS......................................................1
1.1. DEFINED TERMS............................................1
1.2. ACCOUNTING TERMS........................................16
1.3. SINGULAR AND PLURAL.....................................16
SECTION 2. LOANS, INTEREST AND FEES........................................16
2.1. LOANS...........................................................16
2.1.1. REVOLVING LOANS.........................................16
2.2. BORROWING PROCEDURES............................................16
2.2.1. NOTICE..................................................16
2.2.2. BANK OBLIGATIONS........................................16
2.3. NOTES...........................................................17
2.3.1. REVOLVING NOTE..........................................17
2.3.2. TERM NOTE A.............................................17
2.3.3. TERM NOTE B.............................................17
2.4. INTEREST; PAYMENTS..............................................17
2.4.1. REVOLVING NOTE..........................................17
2.4.2. TERM NOTE A.............................................18
2.4.3. TERM NOTE B.............................................18
2.4.4. TERM NOTE B ANNUAL CALL PROVISIONS......................18
2.5. MAXIMUM RATE....................................................18
2.6. FEES............................................................20
2.7. BASIS OF COMPUTATION............................................20
2.8. MANDATORY PREPAYMENTS...........................................21
2.9. BASIS OF PAYMENTS; APPLICATION..................................21
SECTION 3. SECURITY.......................................................21
SECTION 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK.....................21
4.1. CONDITIONS TO FIRST DISBURSEMENT................................21
4.1.1. DOCUMENTS EXECUTED AND FILED............................21
4.1.2. BORROWING AUTHORIZATIONS................................22
4.1.3. CERTIFIED ARTICLES AND BYLAWS...........................22
4.1.4. CERTIFICATES OF EXISTENCE, GOOD STANDING AND
QUALIFICATION...........................................22
4.1.5. UCC, PATENT AND TRADEMARK LIEN SEARCHES.................22
4.1.6. HAZARD INSURANCE........................................22
4.1.7. PURCHASE AGREEMENT AND SUBORDINATED DEBT DOCUMENTS......23
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4.1.8. APPROVAL OF BANK COUNSEL................................23
4.1.9. FINANCIAL STATEMENTS....................................23
4.1.10. OTHER INFORMATION AND DOCUMENTATION.....................23
4.2. CONDITIONS TO ALL DISBURSEMENTS AND ISSUANCES...................23
4.2.1. CERTIFICATE.............................................23
4.2.2. LETTERS OF CREDIT.......................................23
4.2.3. BANK SATISFACTION.......................................24
SECTION 5. WARRANTIES AND REPRESENTATIONS..................................24
5.1. CORPORATE EXISTENCE AND POWER...................................24
5.2. AUTHORIZATION AND APPROVALS.....................................24
5.3. VALID AND BINDING AGREEMENT.....................................25
5.4. ACTIONS, SUITS OR PROCEEDINGS...................................25
5.5. SUBSIDIARIES....................................................25
5.6. NO LIENS, PLEDGES, MORTGAGES OR SECURITY INTERESTS..............25
5.7. ACCOUNTING PRINCIPLES...........................................25
5.8. NO ADVERSE CHANGES..............................................25
5.9. CONDITIONS PRECEDENT............................................25
5.10. TAXES...........................................................25
5.11. COMPLIANCE WITH LAWS............................................26
5.12. INDEBTEDNESS....................................................26
5.13. MATERIAL AGREEMENTS.............................................26
5.14. MARGIN STOCK....................................................26
5.15. PENSION FUNDING.................................................26
5.16. MISREPRESENTATION...............................................27
5.17. BORROWING BASE COMPONENTS.......................................27
5.18. ASSUMED NAMES; OTHER NAMES......................................29
SECTION 6. AFFIRMATIVE COVENANTS...........................................29
6.1. FINANCIAL AND OTHER INFORMATION.................................29
6.1.1. ANNUAL FINANCIAL REPORTS................................29
6.1.2. MONTHLY FINANCIAL STATEMENTS............................30
6.1.3. NO DEFAULT CERTIFICATE..................................30
6.1.4. AGING AND BORROWING BASE CERTIFICATE....................30
6.1.5. SEC REPORTS.............................................31
6.1.6. INVENTORY NOT IN WAREHOUSE..............................31
6.1.7. ADVERSE EVENTS..........................................31
6.1.8. MANAGEMENT LETTERS......................................31
6.1.9. AUDITS..................................................31
6.1.10. TAX RETURNS.............................................31
6.1.11. OTHER INFORMATION AS REQUESTED..........................31
6.2. INSURANCE.......................................................32
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6.3. TAXES...........................................................32
6.4. MAINTAIN CORPORATION AND BUSINESS...............................32
6.5. MAINTAIN EFFECTIVE TANGIBLE NET WORTH...........................33
6.6. MAINTAIN LEVERAGE RATIO.........................................33
6.7. FIXED CHARGE COVERAGE RATIO.....................................33
6.8. CURRENT RATIO...................................................33
6.9. ERISA...........................................................33
6.10. USE OF LOAN PROCEEDS............................................33
6.11. KEY AGREEMENTS..................................................33
6.12. LOCKBOX DEPOSITS................................................33
6.13. NOTICE OF EVENTS................................................33
6.14. TITLE INSURANCE POLICY..........................................34
6.15. CERTIFICATE OF TITLE............................................34
6.16. CERTIFICATES OF GOOD STANDING AND QUALIFICATION.................34
6.17. EQUIPMENT AUDITS................................................34
6.18. REAL ESTATE AUDITS..............................................34
6.19. ADDITIONAL GUARANTIES AND SECURITY..............................35
SECTION 7. NEGATIVE COVENANTS..............................................36
7.1. CAPITAL EXPENDITURES; FDA EXPENDITURES..........................36
7.2. STOCK ACQUISITION...............................................36
7.3. LIENS AND ENCUMBRANCES..........................................36
7.4. INDEBTEDNESS....................................................36
7.5. EXTENSION OF CREDIT.............................................36
7.6. GUARANTEE OBLIGATIONS...........................................37
7.7. SUBORDINATE INDEBTEDNESS........................................37
7.8. PROPERTY TRANSFER, MERGER AND FORMATION OF SUBSIDIARIES.........37
7.9. ................................................................37
ACQUIRE SECURITIES....................................................37
7.10. PENSION PLANS...................................................37
7.11. MISREPRESENTATION...............................................38
7.12. MARGIN STOCK....................................................38
7.13. COMPLIANCE WITH ENVIRONMENTAL LAWS..............................38
7.14. DIVIDENDS.......................................................38
7.15. PURCHASE AGREEMENT; SUBORDINATED DEBT DOCUMENTS.................38
SECTION 8. EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF PROCEEDS.......38
8.1. EVENTS OF DEFAULT...............................................38
8.1.1. FAILURE TO PAY MONIES DUE...............................38
8.1.2. MISREPRESENTATION.......................................39
8.1.3. NONCOMPLIANCE WITH BANK AGREEMENTS......................39
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8.1.4. OTHER DEFAULTS..........................................39
8.1.5. JUDGMENTS...............................................39
8.1.6. BUSINESS SUSPENSION, BANKRUPTCY, ETC....................39
8.1.7. CHANGE OF CONTROL OR MANAGEMENT.........................39
8.1.8. INADEQUATE FUNDING OR TERMINATION OF EMPLOYEE/BENEFIT
PLAN(S).................................................40
8.1.9. OCCURRENCE OF CERTAIN REPORTABLE EVENTS.................40
8.1.10. LOSS OR DAMAGE.........................................40
8.1.11. ADVERSE CHANGE.........................................40
8.1.12. PBGC...................................................40
8.2. REMEDIES........................................................40
8.3. APPLICATION OF PROCEEDS.........................................41
8.4. CUMULATIVE REMEDIES.............................................41
SECTION 9. MISCELLANEOUS...................................................41
9.1. INDEPENDENT RIGHTS......................................41
9.2. COVENANT INDEPENDENCE...................................41
9.3. WAIVERS AND AMENDMENTS..................................41
9.4. GOVERNING LAW...........................................42
9.5. SURVIVAL OF WARRANTIES, ETC.............................42
9.6. ATTORNEYS' FEES.........................................42
9.7. PAYMENTS ON SATURDAYS, ETC..............................42
9.8. BINDING EFFECT..........................................42
9.9. MAINTENANCE OF RECORDS..................................42
9.10. NOTICES.................................................42
9.11. COUNTERPARTS............................................43
9.12. HEADINGS................................................43
9.13. CAPITAL ADEQUACY........................................43
9.14. COSTS AND ATTORNEYS' FEES...............................43
9.15. GENDER..................................................44
9.16. JOINT AND SEVERAL OBLIGATIONS...........................44
9.17. SEVERABILITY OF PROVISIONS..............................44
9.18. ASSIGNMENT..............................................45
9.19. WAIVER OF JURY TRIAL....................................45
9.20. AMENDED AND RESTATED LOAN AGREEMENT; WAIVER OF DEFAULTS.45
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AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made and delivered this 30th
day of June, 1997, by and between XXXXXX HEALTHCARE, INC., a Texas corporation,
and COMERICA BANK-TEXAS, a Texas banking corporation.
WITNESSETH:
WHEREAS, the Borrower desires to (a) borrow from the Bank from time to
time an amount not to exceed in the aggregate $5,000,000 for the working capital
needs of the Borrower and establish a sublimit under such facility for the
issuance of letters of credit, (b) ratify and confirm a $893,000 term loan to
the Borrower and (c) ratify and confirm another $1,616,000 term loan to the
Borrower; and
WHEREAS, the Bank is willing to supply such financing subject to the terms
and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, the Borrower and the Bank agree as follows:
SECTION 1. DEFINITIONS
1.1. DEFINED TERMS. As used herein, the following terms shall have the
following respective meanings:
"ACCOUNTS," "CHATTEL PAPER," "DOCUMENTS," "EQUIPMENT," "FIXTURES,"
"GENERAL INTANGIBLES," "GOODS," "INSTRUMENTS" and "INVENTORY" shall have the
meanings assigned to them in the UCC on the date of this Agreement.
"ADDITIONAL SECURITY DOCUMENTS" shall mean, with respect to any Guarantor,
(a) a security agreement substantially in the form of EXHIBIT A hereof and
otherwise in Proper Form, in favor of the Bank covering the Accounts, Inventory,
patents and trademarks and other General Intangibles, Documents, Equipment,
Fixtures, Goods, Instruments and Inventory, wherever located and whether now
owned or hereafter acquired of such Guarantor, as security for such Guarantor's
obligations under a Guaranty, and (b) a deed of trust, mortgage or similar
instrument in favor of or for the benefit of the Bank covering any real property
and related improvements located thereon, to be acquired from an Approved Seller
or owned by an Approved Subsidiary (together with a mortgagee's policy of title
insurance covering such real property in an amount acceptable to the Bank
insuring title to said real property is vested in such Guarantor subject only to
the Permitted Liens); together with all related Financing Statements as the Bank
may reasonably require.
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"AGREEMENT" shall mean this Amended and Restated Loan Agreement, as the
same may be amended, restated and modified from time to time.
"APPLICATIONS" shall have the meaning ascribed to such term in the Letter
of Credit Agreement.
"APPROVED SELLER" shall mean any Person a party to an asset purchase
agreement or similar agreement, as seller, transferor, assignor or conveyor (as
the case may be) with an Obligor, as buyer, whereby the applicable Obligor
acquires all or substantially all the properties or assets of such seller, with
respect to which the Bank has received the following:
(a) as soon as practicable and in any event within seven days prior to
the completion of any acquisition, a copy of the form of asset
purchase agreement or similar agreement with all applicable annexes,
schedules and other attachments, substantially in the form to be
executed by such seller and such Obligor;
(b) a Uniform Commercial Code search covering such seller in each
jurisdiction where such seller conducts its business together with
copies of all filings of record in such jurisdictions and together
with all releases of liens and termination statements duly executed
by the secured party under any such filings except for Permitted
Liens and those otherwise approved in writing by the Bank in
advance;
(c) if real property is to be acquired in connection with any such
acquisition, a title commitment in favor of the Bank, issued by a
title insurance company acceptable to the Bank in its sole and
absolute discretion, pursuant to which said title company will agree
to insure the title to said real property subject to no liens other
than Permitted Liens and other liens and security interests approved
by the Bank in writing in advance immediately upon the consummation
of the acquisition (and the Bank subsequently receives a mortgagee's
policy of title insurance covering such real property subject only
to the above described liens and security interests);
(d) a survey of said real property meeting the Bank's standard survey
requirements;
(e) if real property is to be acquired in connection with any such
acquisition, an environmental assessment report prepared by an
independent engineering firm or environmental consultant
(appropriately licensed and insured) acceptable to the Bank stating
that after due investigation (including test borings as appropriate)
of said real property, there is no evidence that there is any
hazardous waste, toxic substance, pollutant or other contaminant
contained in, on, above or under said real property;
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(f) an appraisal by an appraiser selected and engaged by the Bank in
form and substance satisfactory to the Bank;
(g) such financial information with respect to Person to be required or
any Obligor as the Bank may reasonably request confirming that
neither immediately prior to the proposed acquisition nor
immediately following the completion of such proposed acquisition,
no Default or Event of Default shall have occurred; and
(h) the Bank shall have given its prior written consent to the
applicable Obligor to the acquisition.
"APPROVED SUBSIDIARY" shall mean a Person all of the stock of which is to
be acquired by an Obligor, with respect to which the Bank has received the
following:
(a) as soon as practicable and in any event within seven days prior to
the completion of any acquisition, a copy of the stock purchase
agreement or similar agreement with all applicable annexes,
schedules and other attachments, substantially in the form to be
executed by the seller of said stock, such Person to be acquired (if
applicable) and such Obligor, together with the Organizational
Documents to the Person to be acquired and of any Subsidiary of an
Obligor formed to acquire the stock of the Person to be acquired;
(b) a Uniform Commercial Code search covering the Person to be acquired
and the seller of said stock in each jurisdiction where the Person
to be acquired and the seller of said stock conduct their businesses
together with copies of all filings of record in such jurisdictions
and together with all releases of liens and termination statements
duly executed by the secured party under any such filings except for
Permitted Liens and those otherwise approved in writing by the Bank
in advance;
(c) if the Person to be acquired owns any real property, a title
commitment in favor of the Bank, issued by a title insurance company
acceptable to the Bank in its sole and absolute discretion, pursuant
to which said title company will agree to insure the title to said
real property subject to no liens other than Permitted Liens and
other liens and security interests approved by the Bank in writing
in advance immediately upon the consummation of the acquisition (and
the Bank subsequently receives a mortgagee's policy of title
insurance covering such real property subject only to the above
described liens and security interests);
(d) a survey of said real property meeting the Bank's standard survey
requirements;
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(e) if the Person to be acquired owns any real property, an
environmental assessment report prepared by an independent
engineering firm or environmental consultant (appropriately licensed
and insured) acceptable to the Bank stating that after due
investigation (including test borings as appropriate) of said real
property, there is no evidence that there is any hazardous waste,
toxic substance, pollutant or other contaminant contained in, on,
above or under said real property;
(f) an appraisal by an appraiser selected and engaged by the Bank in
form and substance satisfactory to the Bank;
(g) such financial information with respect to Person to be required or
any Obligor as the Bank may reasonably request confirming that
neither immediately prior to the proposed acquisition nor
immediately following the completion of such proposed acquisition,
no Default or Event of Default shall have occurred;
(h) such other financial information regarding the Person to be acquired
as the Bank in its sole reasonable discretion shall request from the
Borrower; and
(i) the Bank shall have given its prior written consent to the
applicable Obligor to the acquisition.
"BANK" shall mean Comerica Bank-Texas, a Texas banking corporation.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended, or any successor act or code.
"BORROWER" shall mean Xxxxxx Healthcare, Inc., a Texas corporation.
"BORROWING AUTHORIZATION" shall mean (i) with respect to a corporation, a
certificate of the Secretary or an Assistant Secretary of a corporation as to
the resolutions of the Board of Directors of such corporation authorizing the
execution, delivery and performance of the documents to be executed by such
corporation; the incumbency and signature of the officer of such corporation
executing such documents on behalf of such corporation, and the Organizational
Documents of such corporation and (ii) with respect to a partnership, joint
venture or other non-individual Person, such written instruments as shall be
required by the Bank authorizing the execution, delivery and performance of the
documents to be executed by such Person; the incumbency and signature of the
representative of such Person executing such documents on behalf of such Person,
and the Organizational Documents of such Person.
"BORROWING BASE" shall mean, on any day the sum of:
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(a) eighty percent (80%) of the aggregate outstanding principal balance of
the Obligors' Eligible Accounts (other than Home Care Receivables) PLUS
(b) sixty percent (60%) of the aggregate outstanding principal balance of
the Obligors' Home Care Receivables; PROVIDED, that in no event may the
Medicare Receivables component of Home Care Receivables exceed $500,000,
PLUS
(c) thirty-five percent (35%) of the book value of the Obligors' Eligible
Inventory (exclusive of Tens Units) PLUS
(d) the lesser of (i) twenty-five percent (25%) of the Tens Units which
qualify as Eligible Inventory, and (ii) $500,000.
Notwithstanding the foregoing, in no event may the aggregate of the
Obligors' Eligible Inventory component of the Borrowing Base exceed at any
time fifty percent (50%) of the Borrowing Base.
"BORROWING BASE CERTIFICATE" shall mean a certificate in the form of
EXHIBIT A to this Agreement, completed in all appropriate respects and executed
by the chief executive officer, chief financial officer, or treasurer of
Borrower or by any other officer of Borrower designated in writing by any of the
chief executive officer, chief financial officer or treasurer, such designation
to be acceptable to Lender in its sole discretion, and setting forth Borrower's
computation of the Borrowing Base as of the date of such certificate.
"BUSINESS DAY" shall mean a day on which the Bank is open to carry on its
normal commercial lending business.
"CAPITAL EXPENDITURES" shall mean, as to any Person and as of the date of
determination, expenditures for fixed or capital assets, all determined in
accordance with GAAP.
"CASH FLOW" shall mean (without duplication), as to any Person and for any
period, the sum of (a) Net Income AND (b) the sum of (1) depreciation,
amortization, depletion, obsolescence of property, (2) interest expense, and (3)
non-cash addbacks of compensatory stock issued by the Borrower and stock issued
by the Borrower in lieu of interest, all determined in accordance with GAAP."
"COLLATERAL" shall mean any property of any Obligor in the possession of
the Bank, any amount in any deposit account of any Obligor with the Bank and all
of Obligors' Accounts, Chattel Paper, Documents, Equipment, Fixtures, General
Intangibles, Goods, Instruments and Inventory,
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wherever located and whether now owned or hereafter acquired, together with all
replacements thereof, substitutions therefor and all proceeds and products
thereof.
"COMMITMENT AMOUNT" shall mean $5,000,000.
"CONTRACT RATE" shall mean, as of any date of determination, the annual
rate of interest which, pursuant to SECTION 2.4 of this Agreement would be
applicable to the Notes if the annual rate of interest were determined without
the Maximum Legal Rate limitation.
"CONTRIBUTION AGREEMENT" shall mean that certain Contribution Agreement of
even date herewith, by and among the Borrower and the Current Guarantors, as the
same may be amended, modified, supplemented, restated and joined in pursuant to
a Joinder Agreement, from time to time.
"COVER" shall have the meaning ascribed to such term in the Letter of
Credit Agreement.
"CURRENT ASSETS" shall mean, as of any applicable date of determination,
all cash, nonaffiliated customer receivables, United States government
securities and inventories of a Person that should be classified as current in
accordance with GAAP.
"CURRENT GUARANTORS" shall mean Health Career Learning Systems, Inc., a
Michigan corporation, Med-Quip, Inc., a Georgia corporation, and any and all of
their respective successors and assigns.
"CURRENT LIABILITIES" shall mean, as of any applicable date of
determination, all liabilities of a Person that should be classified as current
in accordance with GAAP.
"CURRENT MATURITIES OF CAPITAL LEASES" shall mean, as of any date of
determination, all current maturities of capital leases of a Person as
determined in accordance with GAAP.
"CURRENT MATURITIES OF LONG TERM DEBT" shall mean, as of any date of
determination, all current maturities of long term debt of a Person as
determined in accordance with GAAP.
"DEBT" shall mean, as of any applicable date of determination, all items
of indebtedness, obligation or liability of a Person, whether matured or
unmatured, liquidated or unliquidated, direct or indirect, absolute or
contingent, joint or several, that should be classified as liabilities in
accordance with GAAP.
"DEFAULT" shall mean a condition or event which, with the giving of notice
or the passage of time, or both, would become an Event of Default.
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"DISBURSEMENT DATE" shall mean each date upon which the Bank makes a loan
to the Borrower under SECTION 2.1 of this Agreement.
"EFFECTIVE TANGIBLE NET WORTH" shall mean as of any day the consolidated
Tangible Net Worth of the Obligors as of such day PLUS the Debt evidenced by the
Subordinated Debt Documents as of such day."
"ELIGIBLE ACCOUNTS" shall mean those Accounts of the Obligors for which
each of the warranties set forth in SECTION 5.17.1 of this Agreement shall be
true (as of any applicable date of determination) and which has been represented
by the Borrower to be an "ELIGIBLE ACCOUNT" on the Borrowing Base Certificate.
"ELIGIBLE INVENTORY" shall mean that Inventory of the Obligors for which
each of the warranties set forth in SECTION 5.17.2 of this Agreement shall be
true (as of any applicable date of determination) and which has been represented
by the Borrower to be an item of "ELIGIBLE INVENTORY" on a Borrowing Base
Certificate.
"ENVIRONMENTAL LAWS" shall mean all requirements imposed by any law
(including The Resource Conservation and Recovery Act and The Comprehensive
Environmental Response, Compensation, and Liability Act), rule, regulation or
order of any governmental authority in effect at the applicable time which
relate to (i) noise; (ii) pollution, protection or clean-up of the air, surface
water, ground water or land; (iii) solid, gaseous or liquid waste generation,
recycling, reclamation, treatment, storage, disposal or transportation; (iv)
exposure to Hazardous Substances; (v) the safety or health of employees or (vi)
regulation of the manufacture, processing, distribution in commerce, use,
discharge, release, threatened release, emission or storage of Hazardous
Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any successor act or code.
"EVENT OF DEFAULT" shall mean any of those conditions or events listed in
SECTION 8.1 of this Agreement.
"FDA EXPENDITURES" shall mean any and all costs and expenses (including,
without limitation, expenses for travel, outside consultants and engineers,
expert witnesses, attorneys and other outside professionals) associated with
seeking approval of laser-related products from the United States Food and Drug
Administration.
"FINANCIAL STATEMENTS" shall mean all those balance sheets, earnings
statements and other financial data (whether of any Obligor) which have been
furnished to the Bank for the purpose of, or in connection with, this Agreement
and the transactions contemplated hereby.
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"FINANCING STATEMENTS" shall mean, as to any Obligor, UCC financing
statements describing the Bank as secured party and the applicable Obligor as
debtor covering the Collateral owned by such Obligor and otherwise in such form,
for filing in such jurisdictions and with such filing offices as the Bank shall
reasonably deem necessary or advisable.
"FIXED CHARGE COVERAGE RATIO" shall mean, as of any day and for any
Person, (a) if such day is prior to July 31, 1997, the RATIO OF (i) Cash Flow
for the period beginning on July 1, 1996 through and including the most recently
ended calendar month as of such day TO (ii) an amount equal to the sum of (1)
Current Maturities of Long Term Debt as of the end of such period, (2) interest
actually paid during such period, and (3) non-financed Capital Expenditures for
such period, and (b) if such day is on or after July 31, 1997, the RATIO OF (x)
an amount equal to Cash Flow for the most recently ended 12 month period as of
such day TO (y) an amount equal to the sum of (1) Current Maturities of Long
Term Debt as of the end of such period, (2) interest actually paid during for
such period, and (3) non-financed Capital Expenditures for such period."
"GAAP" shall mean those principles and practices (a) which are recognized
as such by the Financial Accounting Standards Board, (b) which are applied for
all periods after the date hereof in a manner consistent with the manner in
which such principles and practices were applied to the most recent audited
financial statements of the relevant Person furnished to the Bank, and (c) which
are consistently applied for all periods after the date hereof so as to reflect
properly the financial condition, and results of operations and changes in
financial position, of such Person. If any change in any accounting principle or
practice is required by the Financial Accounting Standards Board in order for
such principle or practice to continue as a GAAP or practice, all reports and
financial statements required hereunder may be prepared in accordance with such
change only after written notice of such change is given to the Bank.
"GUARANTIES" shall mean that certain Master Guaranty of even date herewith
in favor of the Bank, by and among the Current Guarantors, as amended,
supplemented, modified, joined in pursuant to a Joinder Agreement and restated
from time to time, and each and every other guaranty executed from time to time
in respect of this Agreement.
"GUARANTORS" shall mean each and every Person executing a guaranty from
time to time guaranteeing the Indebtedness of the Borrower owing from time to
time to the Bank pursuant to this Agreement or the Notes, including the Current
Guarantors.
"HAZARDOUS SUBSTANCE" shall mean any substance, product, waste, pollutant,
material, chemical, contaminant, constituent, or other material which is or
becomes listed, regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinated biphenyls.
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"HOME CARE RECEIVABLES" shall mean those Eligible Accounts arising in
connection with the sale, lease or other form of rental of Inventory of the
Borrower to or for use by home facility patients and users, including, without
limitation, the Medicare Receivables.
"INDEBTEDNESS" shall mean all loans, advances and indebtedness of the
Borrower to the Bank under this Agreement, all Letters of Credit Liabilities,
and all other indebtedness, obligations and liabilities whatsoever of the
Borrower to the Bank, whether matured or unmatured, liquidated or unliquidated,
direct or indirect, absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising pursuant to the Loan Documents.
"KEY AGREEMENTS" shall mean any contracts or agreements between the
Borrower and customers of the Borrower under which or pursuant to which the
Borrower is reasonably expected to derive five percent (5%) or more of its gross
revenues during any 12-month period, and any and all renewals, extensions and
modifications thereof.
"LETTER OF CREDIT" shall have the meaning ascribed to such term in the
Letter of Credit Agreement.
"LETTER OF CREDIT AGREEMENT" shall mean the Amended and Restated Letter of
Credit Agreement dated concurrently herewith executed by and between the
Borrower and the Bank, as it may from time to time be amended, modified,
restated or supplemented.
"LETTER OF CREDIT DOCUMENTS" shall mean the Letter of Credit Agreement,
the Letters of Credit and the Applications.
"LETTER OF CREDIT LIABILITIES" shall have the meaning ascribed to such
term in the Letter of Credit Agreement.
"LIEN" means any mortgage, pledge, charge, encumbrance, security interest,
collateral assignment or other lien or restriction of any kind, whether based on
common law, constitutional provision, statute or contract, and shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions.
"LOAN DOCUMENTS" shall mean any and all papers now or hereafter governing,
evidencing, guaranteeing or securing or otherwise relating to all or any part of
the Indebtedness, including, without limitation, the Notes, this Agreement, the
Letter of Credit Documents, the Security Documents, all instruments,
certificates and agreements now or hereafter executed or delivered to the Bank
pursuant to any of the foregoing or in connection with the Loans or the Letters
of Credit or any commitment regarding the Loans or the Letters of Credit and all
amendments, modifications, renewals, extensions, increases and rearrangements
of, and substitutions for, any of the foregoing.
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"LOANS" shall mean the Revolving Loans, Term Loan A and Term Loan B.
"LOCKBOX" shall mean, collectively, post office box number 4890 and 4160,
each established by one or more Obligors with the Bank to which all payments by
the Obligors' Account debtors are to made.
"LOCKBOX AGREEMENT" shall mean collectively, any and all agreements
between the Borrower and the Bank establishing the Lockbox, as the same may be
amended, restated, replaced, substituted for or supplemented from time to time.
"MAXIMUM AVAILABLE AMOUNT" shall mean the lesser of (1) the Commitment
Amount and (2) the Borrowing Base.
"MAXIMUM LEGAL RATE" shall have the meaning set forth in SECTION 2.5 of
this Agreement.
"MAXXIM" shall mean Maxxim Medical, Inc., a Delaware corporation.
"MEDICARE RECEIVABLES" shall mean those Eligible Accounts of which the
Account debtor is a governmental authority or any agency thereof and which are
governed by the United States Social Security Act, as amended, and/or the Texas
Human Resources Act, as amended, and which such Eligible Accounts are not
subject to the Federal Assignment of Claims Act or of a type which applicable
federal or Texas law prohibits the taking of a security interest therein.
"MORTGAGE" shall mean the Deed of Trust and Security Agreement dated as of
April 30, 1996, executed by the Borrower in favor of Xxxx X. Xxx, Trustee for
the benefit of the Bank, as the same may from time to time be amended, modified,
restated or supplemented, including as supplemented pursuant to that certain
Supplemental Deed of Trust and Security Agreement of even date herewith.
"MQI-FLORIDA" shall mean MQI-Florida, Inc., a Florida corporation.
"NET INCOME" shall mean, for any Person and as of any date of
determination, gross revenues and other proper income credits, less all proper
income charges, including taxes on income, all determined in accordance with
GAAP.
"NOTES" shall mean the Revolving Note and Term Note A and Term Note B.
"OBLIGORS" shall mean the Borrower and all of its Guarantors, and
"OBLIGOR" shall mean any one of them.
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"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture, and with respect to a trust,
the instrument establishing such trust; in each case including any and all
modifications thereof as of the date of the Loan Document referring to such
Organizational Document and any and all future modifications thereof which are
consented to by the Bank.
"PAST DUE RATE" shall mean on any day the lesser of (a) Prime Rate for
such day plus five percent (5%) per annum and (b) the Maximum Legal Rate on such
day.
"PATENT SECURITY AGREEMENT" shall mean, collectively, that certain Patent
Security Agreement dated as of April 30, 1996, executed by the Borrower and the
Bank, and all additional Patent security agreements executed by the Borrower or
any other Obligor as security for the Indebtedness and all related recordation
form cover sheets and any and all amendments, modifications, renewals,
extensions and supplements thereof or thereto from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any person
succeeding to the present powers and functions of the Pension Benefit Guaranty
Corporation.
"PERMITTED INVESTMENTS" shall mean:
(a) expense accounts for and other advances to directors, officers
and employees in the ordinary course of business up to an aggregate amount
of $25,000 outstanding at any time;
(b) marketable obligations issued or unconditionally guaranteed by
the United States Government or issued by any of its agencies and backed
by the full faith and credit of the United States of America, in each case
maturing within one year from the date of acquisition (and investments in
mutual funds investing primarily in those obligations);
(c) short-term investment grade domestic and eurodollar certificates
of deposit or time deposits that are fully insured by the Federal Deposit
Insurance Corporation or are issued by commercial banks whether domestic
or foreign having combined capital, surplus, and undivided profits of not
less than $100,000,000 (as shown on its most recently published statement
of condition;
(d) commercial paper and similar obligations rated "P-1" or better
by Xxxxx'x Investors Service, Inc., or "A-1" or better by Standard & Poors
Corporation;
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(e) readily marketable tax-free municipal bonds of a domestic issuer
rated "AAA" or better by Xxxxx'x Investors Service, Inc., or "AAA" or
better by Standard & Poors Corporation, and maturing within one year from
the date of issuance (and investments in mutual funds investing primarily
in those bonds);
(f) readily marketable shares of any money market fund having total
assets in excess of $250,000,000, unless the Bank has disapproved such
fund in writing;
(g) demand deposit accounts maintained in the ordinary course of
business;
(h) extensions of credit in connection with trade receivables and
overpayments of trade payables, in each case resulting from transactions
in the ordinary course of business; and
(i) stock of Approved Subsidiaries.
"PERMITTED LIENS" shall mean:
(a) Liens and encumbrances in favor of the Bank;
(b) Liens for taxes, assessments or other governmental charges
incurred in the ordinary course of business and not yet past due or being
contested in good faith by appropriate proceedings and, if requested by
the Bank, bonded in a manner satisfactory to the Bank;
(c) Liens not delinquent created by statute in connection with
worker's compensation, unemployment insurance, social security and similar
statutory obligations;
(d) Liens of mechanics, materialmen, carriers, warehousemen or other
like statutory or common law liens securing obligations incurred in good
faith in the ordinary course of business that are not yet due and payable;
(e) Encumbrances consisting of zoning restrictions, rights-of-way,
easements or other restrictions on the use of real property, none of which
materially impairs the use of such property by any Obligor in the
operation of the business for which it is used and none of which is
violated in any material respect by any existing or proposed structure or
land use;
(f) the Subordinated Liens;
(g) purchase money Debt to acquire Equipment not exceeding, in the
aggregate, $500,000 outstanding at any one time; and
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(h) Existing liens described in SCHEDULE 5.6 attached hereto.
"PERMITTED SUBSIDIARY INVESTMENTS" shall mean, with respect to the
Borrower, loans, advances or extensions of credit to one or more Subsidiaries so
long as the aggregate amount thereof outstanding as of any date of determination
of the Tangible Net Worth of the Borrower and its Subsidiaries does not exceed
five percent (5%) of the aggregate Tangible Net Worth of the Borrower and the
Subsidiaries on a consolidated basis.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, association, trust, unincorporated association, joint stock company,
government, municipality, political subdivision or agency or other entity.
"PRIME RATE" shall mean that annual rate of interest designated and
announced by the Bank as its prime rate and which is changed by the Bank from
time to time. The Prime Rate may not necessarily be the lowest rate charged by
the Bank.
"PURCHASE AGREEMENT" shall mean that certain Agreement of Purchase and
Sale of Assets dated as of April 30, 1996, executed by and between the Borrower
and Maxxim.
"REVOLVING LOAN" shall mean an advance made by the Bank to the Borrower
under SECTION 2.1 of this Agreement on a Disbursement Date.
"REVOLVING NOTE" shall mean a promissory note conforming to SECTION 2.3.1
of this Agreement and in the form of EXHIBIT B to this Agreement, and any and
all renewals, extensions, modifications, rearrangements and/or replacements
thereof.
"REVOLVING NOTE MATURITY DATE" shall mean May 1, 1999, or such earlier
date as may be designated by the Bank pursuant to SECTION 8.2 hereof.
"SECURITIES OFFERING" shall mean any offering or issuance of a "security"
(as that term is defined in the Securities Act of 1933), whether or not subject
or required to be registered with the Securities and Exchange Commission or any
other governmental authority or agency thereof.
"SECURITY DOCUMENTS" shall mean (a) one or more security agreements
executed by the Obligors in favor of the Bank pursuant to which each Obligor
grants to the Bank a security interest in the Accounts, Chattel Paper,
Documents, Equipment, Fixtures, General Intangibles, Goods, Instruments and
Inventory, wherever located and whether now owned or hereafter acquired, of such
Obligor, and securing such Obligor's obligations for the indebtedness arising
either as a maker (in the case of the Borrower) or as a Guarantor (in the case
of a Guarantor), together with all replacements thereof, substitutions therefor
and all proceeds and products thereof, (b) the Financing
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Statements, (c) the Mortgage, (d) the Title Insurance Policy, (e) the Lockbox
Agreement and any and all other documentation reasonably required by Bank to
establish a Lockbox with Bank any and all other security agreements,
assignments, collateral assignments, pledges, mortgages, deeds of trust and
guaranties from time to time securing the Indebtedness or any thereof, (f) the
Trademark Security Agreements, (g) the Patent Security Agreements, (h) the
Subordination Agreement, (i) the Additional Security Agreements, (j) the
Guaranties, (k) the Joinder Agreements, and (l) any and all renewals,
extensions, amendments, modifications, replacements, supplements, substitutions
and rearrangements thereof, thereto or therefor.
"SUBORDINATED DEBT DOCUMENTS" shall mean the Subordinated Note, the
Subordinated Security Agreement, the Subordinated Financing Statement and any
and all other documents, instruments, and any and all other papers now or
hereafter governing, evidencing, guaranteeing or securing or otherwise relating
to all or any part of the indebtedness evidenced by the Subordinated Note, and
all amendments, modifications, renewals, extensions, increases and
rearrangements of, and substitutions for, any of the foregoing permitted herein
or in the Subordination Agreement.
"SUBORDINATED FINANCING STATEMENT" shall mean UCC financing statements
describing Maxxim as secured party and the Borrower as debtor covering the
property described in the Subordinated Security Agreement and otherwise.
"SUBORDINATED LIENS" shall mean the Liens arising pursuant to the
Subordinated Security Agreement and expressly made subordinate to the Liens of
the Bank in and to the Collateral pursuant to the Subordination Agreement.
"SUBORDINATED NOTE" shall mean, collectively, that certain Subordinated
Convertible Promissory Note in the original principal sum of $7,000,000 dated as
of April 30, 1996, executed by the Borrower, payable to the order of Maxxim,
with a final stated maturity of March 1, 2003, together with the "Substitute
Note" (as that term is defined in the Purchase Agreement).
"SUBORDINATED SECURITY AGREEMENT" shall mean that certain Commercial
Security Agreement dated as of April 30, 1996, executed by the Borrower, as
debtor, and Maxxim, as secured party, covering all or a portion of the
Collateral.
"SUBORDINATION AGREEMENT" shall mean that certain Subordination Agreement
substantially in the form of EXHIBIT F attached hereto and incorporated herein
by reference for all purposes, dated as of April 30, 1996, by and among the
Borrower, the Bank and Maxxim, as the same may be amended, restated and modified
from time to time.
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"SUBSIDIARIES" shall mean any corporation of which more than fifty percent
(50%) of the outstanding voting securities shall, as of any applicable date of
determination, be owned directly, or indirectly through one or more
intermediaries, by the Borrower.
"TANGIBLE NET WORTH" shall mean, for any Person and as of any applicable
date of determination, tangible net worth of a Person as determined in
accordance with GAAP.
"TANGIBLE NET WORTH STEP-UP" shall mean, on any date it is determined, an
amount equal to seventy-five percent of the aggregate amount of Net Income of
the Companies earned during each calendar month which has ended as of such date
of determination, beginning with the calendar month ending September 30, 1996.
"TENS UNITS" shall mean transcutaneous electrical nerve stimulation
devices manufactured by the Borrower.
"TERM LOAN A" shall mean the loan described in SECTION 2.1.2 hereof.
"TERM NOTE A" shall mean a promissory note, in the original principal sum
of $893,000, dated as of April 30, 1996, and otherwise in the form of EXHIBIT C
to this Agreement, and any and all renewals, extensions, modifications,
rearrangements and/or replacements thereof.
"TERM NOTE A MATURITY DATE" shall mean April 30, 2001, or such earlier
date as may be designated by the Bank pursuant to SECTION 8.2 hereof.
"TERM LOAN B" shall mean the loan described in SECTION 2.1.3 hereof.
"TERM NOTE B" shall mean a promissory note, in the original principal sum
of $1,616,000, dated as of April 30, 1996, and otherwise in the form of EXHIBIT
D to this Agreement, and any and all renewals, extensions, modifications,
rearrangements and/or replacements thereof.
"TERM NOTE B MATURITY DATE" shall mean April 30, 2011, or such earlier
date as may be designated by the Bank pursuant to SECTION 8.2 hereof or SECTION
2.4.4 hereof.
"TEXAS T.E.N.S." shall mean Texas T.E.N.S., Inc., a Texas corporation.
"TITLE INSURANCE POLICY" shall mean the policy of title insurance in a
face amounts reasonably satisfactory to the Bank, issued in favor of the Bank by
a title insurance Obligor satisfactory to the Bank and insuring that title to
the property covered by the Mortgage is vested in the Borrower free and clear of
any lien, security interest or any other objection, exception or requirement
other than those permitted hereunder, and that the Mortgage creates a valid
first and
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prior lien on all such property, subject only to such exceptions as may be
approved in writing by the Bank. The Title Insurance Policy shall contain a
complete and accurate description of the Mortgage, shall specify the recording
and filing information applicable to it and shall describe the property covered
by the Mortgage identically to the description thereof in the Mortgage.
"TRADEMARK SECURITY AGREEMENT" shall mean, collectively, that certain
Trademark Security Agreement dated as of April 30, 1996, executed by the
Borrower and the Bank, and all additional Trademark security agreements executed
by Borrower or any other Obligor as security for the Indebtedness and all
related recordation form cover sheets and any and all amendments, modifications,
renewals, extensions and supplements thereof or thereto from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
Texas and as amended from time to time.
1.2. ACCOUNTING TERMS. All accounting terms not specifically defined in
this Agreement shall be construed in accordance with GAAP.
1.3. SINGULAR AND PLURAL. Where the context herein requires, the singular
number shall be deemed to include the plural, and vice versa.
SECTION 2. LOANS, INTEREST AND FEES.
2.1. LOANS.
2.1.1. REVOLVING LOANS. Subject to the terms and conditions of this
Agreement and the other Loan Documents, the Bank agrees to make loans to
the Borrower on a revolving basis of such amount as the Borrower shall
request pursuant to SECTION 2.2 of this Agreement at any time from the
date of this Agreement until (but not including) the Revolving Note
Maturity Date, up to an aggregate principal amount outstanding at any time
not to exceed the difference of the Maximum Available Amount then in
effect MINUS the Letter of Credit Liabilities as of such time, provided
that each Disbursement Date for the Revolving Loans under this Agreement
must be a Business Day.
2.1.2. TERM LOAN A. Subject to the terms and conditions of this
Agreement and the other Loan Documents, the Bank has made a loan to the
Borrower on April 30, 1996, in an amount equal to $893,000.
2.1.3. TERM LOAN B. Subject to the terms and conditions of this
Agreement and the other Loan Documents, the Bank has made a loan to the
Borrower on April 30, 1996, in an amount equal to $1,616,000.
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2.2. BORROWING PROCEDURES.
2.2.1. NOTICE. The Borrower shall give the Bank notice of the
Borrower's desire for a Revolving Loan by 2:00 p.m. (Houston, Texas time) on the
day of the requested Revolving Loan. Such notice shall be by telephone
communication from an officer of the Borrower who has been given access by the
Borrower to a security code given to the Borrower by the Bank in accordance with
a security letter from the Borrower to the Bank, in form and substance
acceptable to the Bank. Such notice shall specify the proposed Disbursement Date
and the principal amount of the proposed Revolving Loan.
2.2.2. BANK OBLIGATIONS. The Bank agrees to make the Revolving Loan
on the Disbursement Date as set forth in a notice to the Bank from the Borrower
conforming to the requirements of SECTION 2.2.1 by crediting the Borrower's
general deposit account with the Bank in the amount of such Revolving Loan,
provided, however, that the Bank shall not be so obligated if:
(a) Any of the conditions precedent set forth in SECTION 4
of this Agreement shall not have been satisfied or waived by the
Bank in accordance with SECTION 9.3 of this Agreement; or
(b) Such proposed Revolving Loan would cause the aggregate
unpaid principal amount of the Revolving Loans outstanding under
this Agreement to exceed the lesser of the Commitment Amount or the
Borrowing Base, on the Disbursement Date.
2.3. NOTES.
2.3.1. REVOLVING NOTE. The Revolving Loans shall be evidenced by the
Revolving Note, executed by the Borrower, dated the date of this
Agreement, payable to the Bank on the Revolving Note Maturity Date (unless
sooner accelerated pursuant to the terms of this Agreement), and in the
principal amount of the original Commitment Amount. The date and amount of
each Revolving Loan made by the Bank and of each repayment of principal
thereon received by the Bank shall be recorded by the Bank in its records
or, at the option of the Bank, on a schedule attached to the Revolving
Note. The aggregate unpaid principal amount so recorded by the Bank shall
constitute the best evidence of the principal amount owing and unpaid on
the Revolving Note, PROVIDED, HOWEVER, that the failure by the Bank so to
record any such amount or any error in so recording any such amount
(whether on the schedule attached to the Revolving Note or otherwise)
shall not limit or otherwise affect the obligations of the Borrower under
this Agreement or the Revolving Note to repay the principal amount of all
the Revolving Loans together with all interest accrued or accruing
thereon.
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2.3.2. TERM NOTE A. Term Loan A shall continue to be evidenced by
Term Note A.
2.3.3. TERM NOTE B. Term Loan B shall continue to be evidenced by
Term Note B.
2.4. INTEREST; PAYMENTS.
2.4.1. REVOLVING NOTE. Subject to the provisions of SECTION 2.5
below, prior to and on the Revolving Loan Maturity Date, the Revolving Note
shall bear interest on the outstanding principal balance from time to time
outstanding at a rate equal to the lesser of (a) the Maximum Legal Rate, and (b)
the Prime Rate in effect from time to time PLUS one-half of one percent (1/2%)
per annum until the Revolving Note Maturity Date, and after the Revolving Loan
Maturity Date, at the Past Due Rate. Interest shall be payable to the extent
then accrued on the first (1st) day of each calendar month, beginning August 1,
1997, until the Revolving Loan Maturity Date and from and after such maturity,
on demand. Without notice to the Borrower or any other Person, the rate of
interest applicable to the Revolving Note shall change as and when the Bank's
Prime Rate changes.
2.4.2. TERM NOTE A. Subject to the provisions of SECTION 2.5 below,
Term Note A shall bear interest on the outstanding principal balance from time
to time outstanding under Term Note A at a rate equal to the lesser of (a) the
Prime Rate plus one-half of one percent (1/2%) per annum until the Term Note A
Maturity Date, and after the Term Note A Maturity Date, at the Past Due Rate,
and (b) the Maximum Legal Rate. Term Note A shall continue to be payable in
monthly principal installments of $14,883.34 each, one each due and payable on
the first day of each succeeding calendar month after its date until Term Note A
(including all accrued interest thereon) has been fully paid and satisfied;
PROVIDED, that on the Term Note A Maturity Date, all principal of Term Note A
and all accrued and unpaid interest thereon shall be finally due and payable.
Accrued interest on Term Note A shall be due and payable concurrently with and
in addition to the principal installments provided for hereinabove. Without
notice to the Borrower or any other person, the rate of interest applicable to
Term Note A shall change as and when the Bank's Prime Rate changes.
2.4.3. TERM NOTE B. Subject to the provisions of SECTION 2.5 below,
Term Note B shall bear interest on the outstanding principal balance from time
to time outstanding under Term Note B at a rate equal to the lesser of (a) the
Prime Rate plus one-half of one percent (1/2%) per annum until the Term Note B
Maturity Date, and after the Term Note B Maturity Date, at the Past Due Rate,
and (b) the Maximum Legal Rate. Term Note B shall continue to be payable in
monthly principal installments of $8,977.78 each, one each due and payable on
the first day of each succeeding calendar month after its date until Term Note B
(including all accrued interest thereon) has been fully paid and satisfied;
PROVIDED, that on the Term Note B Maturity Date, all principal of Term Note B
and all accrued and unpaid interest thereon shall be finally due and payable.
Accrued
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interest on Term Note B shall be due and payable concurrently with and in
addition to the principal installments provided for hereinabove. Without notice
to any Borrower or any other person, the rate of interest applicable to Term
Note B shall change as and when the Bank's Prime Rate changes.
2.4.4. TERM NOTE B ANNUAL CALL PROVISIONS. Notwithstanding anything
contained in this Agreement, Term Note B or any of the Loan Documents (and
without limiting any other provision contained in any of them for the
acceleration of the maturity of Term Note B), beginning with April 30, 2001, and
with respect to each April 30 occurring thereafter, the Bank, in its sole and
absolute discretion, with or without cause, may elect to accelerate the final
stated maturity of Term Note B to any such April 30 date by giving written
notice to the Borrower of such election no later than 30 days prior to the
applicable anniversary date.
2.5. MAXIMUM RATE. The following provisions shall control this Agreement
and the Note:
(a) No agreements, conditions, provision or stipulations contained
in this Agreement, any Note, any of the other Loan Documents or in any
other agreement between the Borrower and the Bank, or the occurrence of an
Event of Default, or the exercise by the Bank of the right to accelerate
the payment of the maturity of principal and interest, or to exercise any
option whatsoever contained in this Agreement or any other agreement
between the Borrower and the Bank, or the arising of any contingency
whatsoever, shall entitle the Bank to collect, in any event, interest
exceeding the maximum rate of nonusurious interest allowed from time to
time by applicable state or federal laws as now or as may hereinafter be
in effect (the "MAXIMUM LEGAL RATE") and in no event shall the Borrower be
obligated to pay interest exceeding such Maximum Legal Rate, and all
agreements, conditions or stipulations, if any, which may in any event or
contingency whatsoever operate to bind, obligate or compel any Obligor to
pay a rate of interest exceeding the Maximum Legal Rate shall be without
binding force or effect, at law or in equity, to the extent only of the
excess of interest over such Maximum Legal Rate. In the event any interest
is charged in excess of the Maximum Legal Rate (the "EXCESS"), the
Borrower acknowledges and stipulates that any such charge shall be the
result of an accidental and bona fide error, and such Excess shall be,
first, applied to reduce the principal of any obligations due, and,
second, returned to the Borrower, it being the intention of the parties
hereto not to enter at any time into an usurious or otherwise illegal
relationship. The parties hereto recognize that with fluctuations in the
Prime Rate from time to time announced by the Bank such an unintentional
result could inadvertently occur. By the execution of this Agreement, the
Borrower covenants that the credit or return of any Excess shall
constitute the acceptance by the Borrower of such Excess, and the Borrower
shall not seek or pursue any other remedy, legal or equitable, against the
Bank based, in whole or in part, upon the charging or receiving of any
interest in excess of the Maximum Legal Rate. For the purpose of
determining whether or not any Excess has been contracted for, charged or
received by the Bank, all interest at any time contracted for,
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charged or received by the Bank in connection with the Borrower's
obligations shall be amortized, prorated, allocated and spread in equal
parts during the entire term of this Agreement. If at any time the rate of
interest payable hereunder with respect to any Note shall be computed for
such Note on the basis of the Maximum Legal Rate, any subsequent reduction
in the Contract Rate shall not reduce such interest thereafter payable
hereunder with respect to such Note below the amount computed on the basis
of the Maximum Legal Rate until the aggregate amount of such interest
accrued and payable under this Agreement equals the total amount of
interest which would have accrued if such interest had been at all times
computed solely on the basis of the Contract Rate for such Note.
(b) Unless preempted by federal law, the rate of interest from time
to time in effect hereunder shall not exceed the "INDICATED RATE CEILING"
from time to time in effect under Chapter 1 of the Texas Credit Code
(Vernon's Texas Civil Statutes), Section (a)(1), Article 5069-1.04, as
amended.
(c) The provisions of this Section shall be deemed to be
incorporated into every document or communication relating to the
Indebtedness which sets forth or prescribes any account, right or claims
or alleged account, right or claim of the Bank with respect to the
Borrower (or any other Obligor in respect of the Indebtedness), whether or
not any provisions of this Section is referred to therein. All such
documents and communications and all figures set forth therein shall, for
the sole purpose of computing the extent of the obligations asserted by
the Bank thereunder, be automatically recomputed by the Borrower or any
other Obligor, and by any court considering the same, to give effect to
the adjustments or credits required by this Section.
(d) If the applicable state or federal law is amended in the future
to allow a greater rate of interest to be charged under this Agreement
than is presently allowed by applicable state or federal law, then the
limitation of interest hereunder shall be increased to the maximum rate of
interest allowed by applicable state or federal law, as amended, which
increase shall be effective hereunder on the effective date of such
amendment, and all interest charges owing to the Bank by reason thereof
shall be payable upon demand.
(e) The provisions of Chapter 15 of the Texas Credit Code (Vernon's
Texas Civil Statutes), Article 5069-15, as amended, are specifically
declared by the parties hereto not to be applicable to this Agreement or
any of the other agreements executed in connection herewith or therewith
or to the transactions contemplated hereby or thereby.
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2.6. FEES.
2.6.1. PREPARATION FEES. Simultaneously with the execution of this
Agreement, the Borrower shall pay to the Bank the amount of the expenses
(including attorney's fees and disbursements) incurred by the Bank in
connection with the preparation of this Agreement and the other Loan
Documents.
2.6.2. COMMITMENT FEE. The Borrower agrees (subject to SECTION 2.5
hereof) to pay to the Bank in arrears a commitment fee for the period from
and including the date of this Agreement to the Revolving Note Maturity
Date equal to one-fourth of one percent (0.250%) per annum on the average
daily difference between the Commitment Amount and the aggregate unpaid
principal balance of the Revolving Loans. Such commitment fee shall be
payable on the last Business Day of June, September, December and March,
beginning June, 1996, and on the Revolving Note Maturity Date, for the
periods ending on such dates.
2.6.3. FACILITY FEES. Simultaneously with the execution of this
Agreement, the Borrower shall pay to the Bank its facility fee in the
amount of $15,000.
2.7. BASIS OF COMPUTATION. The amount of all accrued interest and fees
hereunder and under the Notes shall be computed for the actual number of days
elapsed in a year consisting of 360 days, unless the Ceiling Rate would thereby
be exceeded, in which event, to the extent necessary to avoid exceeding the
Ceiling Rate, interest shall be computed on the basis of the actual number of
days elapsed in the applicable calendar year in which accrued.
2.8. MANDATORY PREPAYMENTS. The Borrower shall pay to the Bank the amount,
if any, by which the aggregate unpaid principal amount of all Revolving Loans
from time to time exceeds the Borrowing Base, together with all interest accrued
and unpaid on the amount of such excess, but without other premium or penalty.
Such prepayment shall be immediately due and owing upon the occurrence of any
such excess.
2.9. BASIS OF PAYMENTS; APPLICATION. All sums payable by the Borrower to
the Bank under this agreement shall be paid directly to the Bank at its
principal office in immediately available funds, without setoff, deduction or
counterclaim. All payments and prepayments shall be applied first to interest,
the balance to principal.
SECTION 3. SECURITY. To secure full and timely performance of the Borrower's
covenants set out in this Agreement and to secure the repayment of the Notes and
all other Indebtedness whatsoever of the Borrower to the Bank, the Borrower
agrees to (and agrees to cause each other Obligor to) grant and assign a lien
upon and security interest in the Collateral pursuant to the Security Documents
and other instruments and agreements satisfactory to the Bank.
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SECTION 4. CONDITIONS PRECEDENT TO OBLIGATIONS OF BANK.
4.1. CONDITIONS TO FIRST DISBURSEMENT. The obligations of the Bank under
this Agreement are subject to the occurrence, prior to or on the Disbursement
Date first occurring, of each of the following conditions, any or all of which
may be waived in whole or in part by the Bank in writing:
4.1.1. DOCUMENTS EXECUTED AND FILED. The Borrower and the Current
Guarantors (as applicable) shall have executed (or caused to be executed)
and delivered to the Bank, the following, all in form satisfactory to the
Bank:
(a) The Notes;
(b) The Mortgage;
(c) The Patent Security Agreement;
(d) The Copyright Security Agreement;
(e) The Trademark Security Agreement;
(f) The Subordination Agreement;
(g) The Financing Statements;
(h) An initial Borrowing Base Certificate;
(i) A landlord's consent in form and substance satisfactory
to the Bank, executed by the landlord of the Borrower's Ohio
location;
(j) A legal opinion of Xxxxxx & Xxxxxx, L.L.P., counsel for
the Obligors, in Proper Form;
(k) The Letter of Credit Documents; and
(l) The other Security Documents (exclusive of the Title
Insurance Policy).
4.1.2. BORROWING AUTHORIZATIONS. The Borrower shall have furnished
to the Bank a copy of resolutions of the Borrowing Authorization for the
Board of Directors of the Borrower authorizing the execution, delivery and
performance of this Agreement, the
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borrowing hereunder, the Notes and the other Loan Documents, which shall
have been certified by the Secretary or Assistant Secretary of each
Obligor as of the Disbursement Date first occurring.
4.1.3. CERTIFIED ARTICLES AND BYLAWS. The Borrower shall have
furnished to the Bank a copy of the Organizational Documents of each of
the Obligors.
4.1.4. CERTIFICATES OF EXISTENCE, GOOD STANDING AND QUALIFICATION.
The Borrower shall have furnished to the Bank a certificate of existence
and good standing with respect to the Borrower, which shall have been
certified by the state agencies issuing the same as of a date reasonably
near the Disbursement Date first occurring.
4.1.5. UCC, PATENT AND TRADEMARK LIEN SEARCHES. The Bank shall have
received (a) UCC, record and copy search, disclosing no notice of any
liens or encumbrances filed against any of the Collateral in any relevant
jurisdiction other than as relate to Permitted Liens (but exclusive of the
Subordinated Liens). In addition, the Bank shall receive searches of the
records of the United States Patent & Trademark Office reflecting title to
the patents and trademarks covered by the Patent Security Agreement and
the Trademark Security Agreement is in the Borrower (or, where an express
assignment of such patents and trademarks pursuant to the Asset Purchase
Agreement, in Maxxim) and disclosing no notice of any liens or
encumbrances filed against any of such Collateral in any relevant
jurisdiction other than the Patent Security Agreement, the Trademark
Security Agreement and other than as relate to Permitted Liens.
4.1.6. HAZARD INSURANCE. The Borrower shall have furnished to the
Bank, in form and amounts and with companies satisfactory to the Bank,
evidence of hazard insurance policies naming the Bank as "loss/payee", and
relating to the assets and properties (including, but not limited to, the
Collateral) of the Borrower.
4.1.7. PURCHASE AGREEMENT AND SUBORDINATED DEBT DOCUMENTS. The Bank
shall have received a fully executed copy of the Purchase Agreement and
the Subordinated Debt Documents, together with all schedules, annexes and
other attachments contemplated therein, and shall have received evidence
satisfactory to the Bank that the transactions contemplated therein have
been consummated.
4.1.8. APPROVAL OF BANK COUNSEL. All actions, proceedings,
instruments and documents required to carry out the transactions
contemplated by this Agreement or incidental thereto and all other related
legal matters shall have been satisfactory to and approved by Liddell,
Sapp, Zivley, Hill & XxXxxx, L.L.P., legal counsel for the Bank.
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4.1.9. FINANCIAL STATEMENTS. The Borrower shall have furnished to
the Bank consolidated (if applicable) annual audited financial statements
for the Borrower and for Maxxim for their respective most recently ended
fiscal year.
4.1.10. OTHER INFORMATION AND DOCUMENTATION. The Bank shall have
received such other information, certificates and executed documents as
they shall have reasonably requested.
4.2. CONDITIONS TO ALL DISBURSEMENTS AND ISSUANCES. The obligation of the
Bank to make any Revolving Loan on any Disbursement Date or to issue any Letter
of Credit, including, but not limited to, the Disbursement Date or of the date
of the issuance of a Letter of Credit, whichever occurs first, are subject to
the occurrence, prior to or on the Disbursement Date related to such Revolving
Loan or the issuance date of such Letter of Credit, whichever occurs first, of
each of the following conditions, any or all of which may be waived in whole or
in part by the Bank in writing:
4.2.1. CERTIFICATE. If such Loan is to made after the date hereof
and is not being made pursuant to an automated advance and repayment
mechanism provided to the Borrower by the Bank, the Bank shall have
received a certificate substantially in the form of EXHIBIT E attached
hereto and incorporated herein by reference for all purposes, executed by
the chief executive or chief financial officer of the Borrower, certified
as of such Disbursement Date, and confirming that, as of such Disbursement
Date:
(a) No Default or Event of Default has occurred and is
continuing; and
(b) The warranties and representations set forth in SECTION 5
of this Agreement are true and correct on and as of such
Disbursement Date.
4.2.2. LETTERS OF CREDIT. If a Letter of Credit is being requested,
the Borrower shall have satisfied any and all requirements of the Letter
of Credit Agreement within the times set forth therein.
4.2.3. BANK SATISFACTION. The Bank does not have actual knowledge
that, as of such Disbursement Date:
(a) Any Default or Event of Default has occurred and is
continuing;
(b) Any provision of law, any order of any court or other
agency of government or any regulation, rule or interpretation
thereof has had a material adverse effect on the validity or
enforceability of any Loan Document.
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SECTION 5. WARRANTIES AND REPRESENTATIONS.
The Borrower represents and warrants to the Bank that:
5.1. CORPORATE EXISTENCE AND POWER. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, each of the Subsidiaries is a corporation duly organized, validly
existing and in good standing under the law of the state of its incorporation.
The Borrower and each of the Subsidiaries have the corporate power and authority
to own their respective properties and assets and to carry out their respective
business as now being conducted and are, or will within 30 days from the date
hereof be, qualified to do business and in good standing in every jurisdiction
(including, without limitation, Ohio, Michigan, Georgia and Florida) wherein the
failure to be so qualified could have a material adverse effect on the Borrower
or any Subsidiary. The Borrower has the corporate power and authority to execute
and perform this Agreement, to borrow money in accordance with its terms, to
execute and deliver the Notes and other Loan Documents, to grant to the Bank
liens and security interest in the Collateral as hereby contemplated and to do
any and all other things required of it hereunder.
5.2. AUTHORIZATION AND APPROVALS. The execution, delivery and performance
of this Agreement, the borrowings hereunder and the execution and delivery of
the Notes, the Letter of Credit Documents and other Loan Documents to which any
Obligor is a party have been duly authorized by all requisite corporate action,
do not require registration with or consent or approval of, or other action by,
any federal, state or other governmental authority or regulatory body, or, if
such registration, consent or approval is required, the same has been obtained
and disclosed in writing to the Bank or will be completed or obtained
concurrently with the execution and delivery of this Agreement, will not violate
any provision of law, any order of any court or other agency of government, the
Organizational Documents of any Obligor, any provision of any indenture,
agreement or other instrument to which any Obligor is a party, or by which it or
any of its properties or assets are bound, will not be in conflict with, result
in a breach of or constitute (with or without notice or passage of time) a
default under any such indenture, agreement or other instrument, and will not
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the properties or assets of any Obligor other than
in favor of the Bank and as contemplated hereby.
5.3. VALID AND BINDING AGREEMENT. This Agreement is, and the Notes, the
Security Documents, the Letter of Credit Documents and all other Loan Documents
to which any of the Obligors is a party will be, when delivered, valid and
binding obligations of such Obligor, enforceable in accordance with their
respective terms except for laws and equitable principles affecting the
enforcement of creditors' rights generally.
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5.4. ACTIONS, SUITS OR PROCEEDINGS. Except as disclosed on SCHEDULE 5.4,
there are no actions, suits or proceedings, at law or in equity, and no
proceedings before any arbitrator or by or before any governmental commission,
board, bureau or other administrative agency, pending, or, to the best knowledge
of the Borrower, threatened against or affecting any Obligor, or any properties
or rights of any Obligor which, if adversely determined, could reasonably be
expected to materially impair the right of any Obligor to carry on business
substantially as now conducted or could reasonably be expected to have a
material adverse effect upon the financial condition of any Obligor.
5.5. SUBSIDIARIES. The Borrower has no Subsidiaries as of the date hereof
other than the Current Guarantors, Texas T.E.N.S. and MQI-Florida.
5.6. NO LIENS, PLEDGES, MORTGAGES OR SECURITY INTERESTS. Except for
Permitted Liens and the liens and security interests securing indebtedness to be
satisfied in full with proceeds from the initial loan hereunder (and which such
liens and security interests are to be released simultaneously with such
satisfaction), no Obligor's assets and properties, including, without
limitation, the Collateral, is subject to any mortgage, pledge, lien, security
interest or other encumbrance of any kind or character.
5.7. ACCOUNTING PRINCIPLES. The Financial Statements have been prepared in
accordance with GAAP and fully and fairly present in all material respects the
financial condition of each Obligor as of the dates, and the results of their
operations for the periods, for which the same are furnished to the Bank. To the
best of any Obligor's knowledge and belief, no Obligor has any material
contingent obligations, liabilities for taxes, long-term leases or unusual
forward or long-term commitments not disclosed by, or reserved against in, the
Financial Statements.
5.8. NO ADVERSE CHANGES. There has been no material adverse change in the
business, properties or condition (financial or otherwise) of any of the
Obligors since the date of the latest of the Financial Statements.
5.9. CONDITIONS PRECEDENT. As of each Disbursement Date, all appropriate
conditions precedent referred to in SECTION 4 hereof shall have been satisfied
(or waived in writing by the Bank).
5.10. TAXES. Each Obligor has filed by the due date therefor all federal,
state and local tax returns and other reports they are required by law to file
and which are material to the conduct of their respective businesses, have paid
or caused to be paid all taxes, assessments and other governmental charges that
are shown to be due and payable under such returns, and have made adequate
provision for the payment of such taxes, assessments or other governmental
charges which have accrued but are not yet payable. No Obligor has any knowledge
of any deficiency or assessment in a material amount in connection with any
taxes, assessments or other governmental charges not adequately disclosed in the
Financial Statements.
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5.11. COMPLIANCE WITH LAWS. Except as disclosed on SCHEDULE 5.11, each
Obligor has complied with all applicable laws, to the extent that failure to
comply would materially interfere with the conduct of the business of any of the
Obligors.
5.12. INDEBTEDNESS. Except as permitted by SECTIONS 7.5, 7.6 and 7.7 of
this Agreement, and as otherwise disclosed on SCHEDULE 5.12, neither the
Borrower nor any of the Subsidiaries has any indebtedness for money borrowed or
any agreements of guarantee or surety except for the endorsement of negotiable
instruments by the Borrower and the Subsidiaries in the ordinary course of
business for deposit or collection.
5.13. MATERIAL AGREEMENTS. Except as disclosed on SCHEDULE 5.13, neither
the Borrower nor any of the Subsidiaries has any material leases, contracts or
commitments of any kind (including, without limitation, employment agreements,
collective bargaining agreements, powers of attorney, distribution contracts,
patent or trademark licenses, contracts for future purchase or delivery of goods
or rendering of services, bonus, pension and retirement plans, or accrued
vacation pay, insurance and welfare agreements); to the best knowledge of the
Borrower, other than with respect to consents to the assignment of such material
leases, contracts or commitments required by the terms thereof disclosed on
SCHEDULE 5.13, all parties to such agreements (including, without limitation,
the Borrower and the Subsidiaries) have complied with the provisions of such
leases, contracts or commitments; and to the best knowledge of the Borrower, no
party to such agreements (including, without limitation, the Borrower and the
Subsidiaries) is in default thereunder, nor has there occurred any event which
with notice or the passage of time, or both, would constitute such a default.
The Borrower have no Key Agreements as of the date hereof.
5.14. MARGIN STOCK. No Obligor is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any "MARGIN STOCK" within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System, and no part of the
proceeds of any Revolving Loan will be used, directly or indirectly, to purchase
or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock or for any other purpose which might
violate the provisions of Regulation G, T, U or X of the said Board of
Governors. The Borrower does not own any margin stock.
5.15. PENSION FUNDING. No Obligor has incurred any material accumulated
funding deficiency within the meaning of ERISA and has not incurred any material
liability to the PBGC in connection with any employee benefit plan established
or maintained by the Borrower or any of the Subsidiaries and no reportable event
or prohibited transaction, as defined in ERISA, has occurred with respect to
such plans.
5.16. MISREPRESENTATION. No warranty or representation by any Obligor
contained herein or in any certificate or other document furnished by any
Obligor pursuant hereto contains any untrue
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statement of material fact or omits to state a material fact necessary to make
such warranty or representation not misleading in light of the circumstances
under which it was made.
5.17. BORROWING BASE COMPONENTS.
5.17.1. ELIGIBLE ACCOUNTS. As to each Account represented by the
Borrower to be an "ELIGIBLE ACCOUNT" on a Borrowing Base Certificate, as
of the date of each such Borrowing Base Certificate:
(a) Such Account arose in the ordinary course of the
business of an Obligor out of either a bona fide sale of Inventory by such
Obligor, and in such case such Inventory has in fact been shipped to, and
accepted and retained by, the appropriate account debtor or the sale has
otherwise been consummated in accordance with such order, or services
performed by such Obligor under an enforceable contract (other than those
relating to training), and in such case such services have in fact been
performed for the appropriate account debtor in accordance with such
contract.
(b) Such Account represents a legally valid and enforceable
claim which is due and owing to an Obligor by such account debtor and for
such amount as is represented by such Obligor to the Bank on such
Borrowing Base Certificate, such Account is due and payable not more than
30 days from the delivery of the related Inventory, or the performance of
the related services, giving rise to such Account and such Account has not
been due for more than 90 days from the date of invoice.
(c) The unpaid balance of such Account as represented by an
Obligor to the Bank on such Borrowing Base Certificate is not subject to
any defense, counterclaim, setoff, credit, allowance or adjustment by the
account debtor because of returned, inferior or damaged Inventory or
services, or for any other reason, except for customary discounts allowed
by such Obligor in the ordinary course of business for prompt payment, and
there is no agreement between such Obligor, the related account debtor and
any other person for any rebate, discount, concession or release of
liability, in whole or in part.
(d) The transactions leading to the creation of such Account
comply with all applicable state and federal laws and regulations.
(e) An Obligor has granted to the Bank a perfected security
interest in such Account (as an item of the Collateral) prior in right to
all other persons (other than Permitted Liens), and such Account has not
been sold, transferred or otherwise assigned by such Obligor to any
person, other than the Bank.
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(f) Such Account is not represented by any note, trade
acceptance, draft or other negotiable instrument or by any chattel paper,
except any such as have been endorsed and delivered by an Obligor to the
Bank on or prior to such Account's inclusion on such Borrowing Base
Certificate.
(g) An Obligor has not received, with respect to such
Account, any notice of the death of the related account debtor or any
partner thereof, nor of the dissolution, liquidation, termination of
existence, insolvency, business failure, appointment of a receiver for any
part of the property of, assignment for the benefit of creditors by, or
the filing of a petition in bankruptcy or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against, such
account debtor.
(h) The account debtor on such Account is not:
(i) an affiliate of an Obligor,
(ii) the United States of America or any department,
agency or instrumentality thereof, in any case
other than in the case of a Medicare Receivable,
(iii) a citizen or resident of any jurisdiction other
than one of the United States or Canada, unless
such Obligor has received a letter of credit in an
amount equal to or greater than such Account
issued by a financial institution acceptable to
the Bank and otherwise in form and substance
satisfactory to the Bank,
(iv) one which has more than twenty-five percent (25%)
of the aggregate Accounts owed by it which are
more than 90 days past the date of invoice (or, in
the case of Home Care Receivables, are not more
than 120 days past the date of invoice), or
(v) an account debtor whom the Bank has, in the
exercise of such Bank's sole discretion,
determined to be (based on such factors as the
Bank deems appropriate) an ineligible account
debtor and as to which the Bank has notified the
Borrower, PROVIDED, HOWEVER, that any such notice
shall not apply as to any Account of such account
debtor which has been included on a Borrowing Base
Certificate by the Borrower prior to the
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giving of such notice by the Bank and which meets
each and every other requirement under this
Agreement for the denomination of such Account as
an "ELIGIBLE ACCOUNT."
5.17.2. ELIGIBLE INVENTORY. As to each item of Inventory represented
by the Borrower to be "ELIGIBLE INVENTORY" on a Borrowing Base
Certificate, as of the date of each such Borrowing Base Certificate:
(a) Such item of Inventory is of good and merchantable
quality and is usable or salable by an Obligor in the ordinary course of
such Obligor's business, and is not obsolete.
(b) An Obligor has granted to the Bank a perfected security
interest in such item of Inventory (as an item of the Collateral) prior in
right to all other persons (other than Permitted Liens), and such item of
Inventory has not been sold, transferred or otherwise assigned by such
Obligor to any person, other than the Bank and other than sales in the
ordinary course of business occurring after the date of such Borrowing
Base Certificate.
(c) Such item of Inventory is located within the United
States of America and is in the possession and control of an Obligor at
one of the locations described on SCHEDULE 5.17.2 attached hereto.
5.18. ASSUMED NAMES; OTHER NAMES. Neither the Borrower nor any parties to
the Purchase Agreement has changed its name during the last five (5) years
except as described on SCHEDULE I attached hereto and incorporated herein by
reference for purposes. The only assumed names used by Maxxim in connection with
its Xxxxxx Healthcare division in the last five (5) years are "Xxxxxx Operating
Company, Xxxxxx International and Xxxxxx Healthcare." The only assumed names
used by any other party to an acquisition of a Subsidiary in the last five (5)
years are described in SCHEDULE I attached hereto.
SECTION 6. AFFIRMATIVE COVENANTS.
From the date hereof until the principal of and interest on each Note and
other Indebtedness is paid in full, all Letter of Credit Liabilities have been
terminated, paid in full or otherwise satisfied and the ability, if any, of the
Borrower to obtain Revolving Loans or Letters of Credit under the Letter of
Credit Agreement has irrevocably terminated, the Borrower covenants and agrees
that it will (or will cause each other Obligor to):
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6.1. FINANCIAL AND OTHER INFORMATION.
6.1.1. ANNUAL FINANCIAL REPORTS. Furnish to the Bank in form
satisfactory to the Bank not later than 90 days after the close of each
fiscal year of the Borrower beginning with its 1996 fiscal year, on a
consolidated and consolidating basis, a balance sheet as at the close of
each such fiscal year, statements of income and statements of cash flows
for each such fiscal year, and such other comments and financial details
as are usually included in similar reports. Such reports shall be prepared
in accordance with GAAP by independent certified public accountants of
recognized standing selected by the Borrower and acceptable to the Bank
and shall contain unqualified opinions that the financial statements
present fairly the Obligors' financial position and results of operations
in all material respects.
6.1.2. MONTHLY FINANCIAL STATEMENTS. Furnish to the Bank not later
than 20 days after the close of each month of each fiscal year of the
Obligors, beginning with February 1996, financial statements containing
the balance sheet of the Obligors as of the end of each such period,
statements of income and statements of cash flows of the Obligors up to
the end of such period, all on a consolidated basis. These statements
shall be prepared on substantially the same accounting basis as the
statements required in SECTION 6.1.1 of this Agreement and shall be in
such detail as the Bank may reasonably require, and the accuracy of the
statements shall be certified by the chief executive or financial officer
of the Obligors.
6.1.3. NO DEFAULT CERTIFICATE. Together with each delivery of the
financial statements required by SECTIONS 6.1.1 and 6.1.2 of this
Agreement, furnish to the Bank a compliance certificate substantially in
the form of EXHIBIT G attached hereto and incorporated herein by reference
for all purposes, duly executed by its chief executive or financial
officer stating, among other things, that no Event of Default or Default
has occurred, or if any such Event of Default or Default exists, stating
the nature thereof, the period of existence thereof and what action the
Borrower propose to take with respect thereto accompanied by such
supporting calculations contained in such certificate as the Lender may
request.
6.1.4. AGING AND BORROWING BASE CERTIFICATE. Furnish to the Bank
monthly by the 10th of each month a Borrowing Base Certificate confirming
that the sum of (1) the aggregate unpaid principal balance of all the
Revolving Loans PLUS (2) the aggregate Letter of Credit Liabilities, does
not exceed the Maximum Available Amount as then in effect (or if such is
not the case, accompanied by a prepayment of the Revolving Note or Cover
for Letters of Credit or a cancelled Letter of Credit, or combination
thereof, in accordance with SECTION 2.8 of this Agreement), an aging as of
the end of the preceding month of the Obligors' Accounts in a form
satisfactory to the Bank, a summary of the Obligors' Inventory as of the
end of such calendar month, prepared in reasonable detail and containing
such other information as the Bank may request, and an aging as of the end
of the preceding month of
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the Obligors' accounts payable in a form satisfactory to the Bank in its
sole and absolute discretion. In addition, furnish the Bank by the 10th of
the month, a Borrowing Base Certificate confirming that the sum of (1) the
aggregate unpaid principal balance of all the Revolving Loans PLUS (2) the
aggregate Letter of Credit Liabilities, does not exceed the Maximum
Available Amount as then in effect (or if such is not the case,
accompanied by a prepayment of the Revolving Note or Cover for Letters of
Credit or a cancelled Letter of Credit, or a combination thereof, in
accordance with SECTION 2.8 of this Agreement).
6.1.5. SEC REPORTS. Furnish to the Bank within five days after the
filing with the Securities and Exchange Commission by any Obligor, true,
correct and complete copies of all such filings, of any financial
statements, registration statements, reports and proxy statements.
6.1.6. INVENTORY NOT IN WAREHOUSE. Furnish to the Bank not later
than 20 days after the close of each fiscal quarter of the Obligors,
beginning with March 31, 1996, a listing of all Inventory of the Obligors
held by third parties on a consignment basis or otherwise not in the
possession of the Obligors at one of the locations described on SCHEDULE
5.17.2 hereof (as said Schedule may be updated in writing from time to
time with 30 days advance written notice to the Bank), including, without
limitation, a description of its value and the location and the name,
address and telephone number of each such third party and otherwise
containing such other information as the Bank may request.
6.1.7. ADVERSE EVENTS. Promptly inform the Bank of the occurrence of
any Event of Default or Default, or of any occurrence which has or could
reasonably be expected to have a materially adverse effect upon any
Obligor's business, properties, financial condition or ability to comply
with its obligations hereunder.
6.1.8. MANAGEMENT LETTERS. Furnish to the Bank, promptly upon
receipt thereof, copies of all management letters and other reports of
substance submitted to the Borrower by independent certified public
accountants in connection with any annual or interim audit of the books of
the Obligors.
6.1.9. AUDITS. From time to time, at any time upon the request of
the Bank, a report of an independent collateral field examiner (which may
be, or be affiliated with, the Bank) with respect to the Accounts
component included in the Borrowing Base. From time to time, at any time
upon the request of the Bank, a report of an independent collateral field
examiner (which may be, or be affiliated with, the Bank) with respect to
the Inventory component included in the Borrowing Base (PROVIDED, HOWEVER,
that so long as no Event of Default has occurred which is then continuing,
the Bank shall not require such a report more than twice per calendar
year). So long as no Event of Default has occurred which is then
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continuing, the Obligors will not be responsible for the cost of any such
audit. Upon the occurrence of an Event of Default, the Borrower shall
promptly pay to the Bank upon demand, the costs of all such audits
occurring after such occurrence of an Event of Default.
6.1.10. TAX RETURNS. As soon as it has been filed with the United
States Internal Revenue Service, each Obligor's federal tax return.
6.1.11. OTHER INFORMATION AS REQUESTED. Promptly furnish (or cause
to be furnished) to the Bank such other information regarding the
operations, business affairs and financial condition of the Obligors as
the Bank may reasonably request from time to time and permit the Bank, its
employees, attorneys and agents, to inspect all of the books, records and
properties of the Obligors at any reasonable time.
6.2. INSURANCE. Keep its (and cause the other Obligors to keep their
respective) insurable properties (including, but not limited to, the Collateral)
adequately insured and maintain insurance against fire and other risks
customarily insured against by companies engaged in the same or a similar
business to that of the Borrower or the other Obligors, whichever is applicable,
necessary worker's compensation insurance, public liability and product
liability insurance, and such other insurance as may be required by law or as
may be reasonably required in writing by the Bank, all of which insurance shall
be in such amounts, containing such terms, in such form, for such purposes and
written by such Obligor as may be satisfactory to the Bank. All such policies
shall contain a provision whereby they may not be canceled except upon 30 days'
prior written notice to the Bank. The Obligors will deliver to the Bank, at the
Bank's request, evidence satisfactory to the Bank that such insurance has been
so procured and, with respect to casualty insurance, names the Bank as
"loss/payee" and as its interest may appear. If any Obligor fails to maintain
satisfactory insurance as herein provided, the Bank shall have the option to do
so, and such Obligor agrees to repay the Bank, with interest at the Past Due
Rate, all amounts so expended by the Bank. Each Obligor hereby appoints the Bank
as such Obligor's attorney-in-fact, which appointment is coupled with an
interest and irrevocable, to endorse any check or draft payable to such Obligor
in connection with returned or unearned premiums on said insurance or the
proceeds of said insurance, and any amount so collected may be applied toward
satisfaction of the Indebtedness, PROVIDED, HOWEVER, that the Bank shall not be
required hereunder so to act. The provisions of this Section are in addition to
and cumulative of the insurance provisions set forth in the Mortgage.
6.3. TAXES. Pay promptly and within the time that they can be paid without
interest or penalty all taxes, assessments and similar imposts and charges of
every kind and nature lawfully levied, assessed or imposed upon the Obligors and
their respective property, except to the extent being contested in good faith
and, if requested by the Bank, bonded in a manner satisfactory to the Bank. If
any Obligor shall fail to pay such taxes and assessments by their due date, the
Bank shall
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have the option to do so, and the Borrower agrees to repay the Bank, with
interest at the Past Due Rate, all amounts so expended by the Bank.
6.4. MAINTAIN CORPORATION AND BUSINESS. Do or cause to be done all things
necessary to preserve and keep in full force and effect each Obligor's corporate
existence, rights and franchises, if any, and comply with all applicable laws
unless the failure to do so could not reasonably be expected to have a material
adverse effect on such Obligor or any of its property or business; continue to
conduct and operate their respective businesses substantially as conducted and
operated during the present and preceding calendar year; at all times maintain,
preserve and protect all franchises and trade names and preserve all the
remainder of their respective property used or useful in the conduct of their
respective business and keep the same in good repair, working order and
condition; and from time to time make, or cause to be made, all needed 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.
6.5. MAINTAIN EFFECTIVE TANGIBLE NET WORTH. Maintain on a consolidated
statement basis, an Effective Tangible Net Worth of not less than THE SUM OF (a)
$6,950,000 at all times PLUS (b) (beginning with the calendar month ending
April, 1997) the Tangible Net Worth Step-Up.
6.6. MAINTAIN LEVERAGE RATIO. Have on a consolidated statement basis, the
ratio of (a) Debt less the Debt evidenced by the Subordinated Debt Documents to
(b) Effective Tangible Net Worth of not more than 1.25 to 1.00 at all times.
6.7. FIXED CHARGE COVERAGE RATIO. Maintain on a consolidated statement
basis, a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00 and at all
times.
6.8. CURRENT RATIO. Maintain at all times on a consolidated statement
basis the ratio of (a) Current Assets to (b) Current Liabilities (inclusive of
outstanding Revolving Loans), of not less than 1.50 to 1.00 at all times.
6.9. ERISA. At all times meet and cause each of the Obligors to meet the
minimum funding requirements of ERISA with respect to the Obligors' employee
benefit plans subject to ERISA; promptly after any Obligor knows or has reason
to know of the occurrence of any event, which would constitute a reportable
event or prohibited transaction under ERISA, or that the PBGC or any Obligor has
instituted or will institute proceedings to terminate an employee pension plan,
deliver to the Bank a certificate of the chief financial officer of such Obligor
setting forth details as to such event or proceedings and the action which such
Obligor proposes to take with respect thereto, together with a copy of any
notice of such event which may be required to be filed with the PBGC; and
furnish to the Bank (or cause the plan administrator to furnish the Bank) a copy
of the annual
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return (including all schedules and attachments) for each plan covered by ERISA,
and filed with the Internal Revenue Service by such Obligor, not later than ten
days after such report has been so filed.
6.10. USE OF LOAN PROCEEDS. Use the proceeds of any Revolving Loan for the
purpose set forth in the recitals to this Agreement.
6.11. KEY AGREEMENTS. Promptly upon entering into any Key Agreement,
provide true, correct and complete copies thereof to the Bank.
6.12. LOCKBOX DEPOSITS. Direct all Account debtors to make remittance to
the Lockbox.
6.13. NOTICE OF EVENTS. Notify the Bank immediately upon acquiring
knowledge of the occurrence of, or if any Obligor causes or intends to cause, as
the case may be: (1) the institution of any lawsuit or administrative proceeding
affecting any Obligor involving monetary claims in excess of $250,000 or the
institution of any lawsuit or administrative proceeding affecting any Obligor,
the adverse determination under which could have a material adverse effect on
the business, condition (financial or otherwise), operations, property or
prospects of any Obligor or on its ability to perform any of its obligations
under any Loan Document to which it is a party; (2) any material adverse change,
either in any case or in the aggregate, in the assets, liabilities, business,
condition (financial or otherwise), operations, property or prospects of the
Obligors on a consolidated basis; (3) any Event of Default or any Default,
together with a detailed statement by an appropriate officer or other
responsible party acceptable to the Bank on behalf of the Obligor of the steps
being taken to cure the effect of such Event of Default or Default; (4) the
occurrence of a default or event of default by any Obligor under any agreement
or series of related agreements to which it is a party where such default could
result in monetary damages in excess of $250,000, and (5) any change in the
accuracy of the representations and warranties of any Obligor in this Agreement
or any other Loan Document. Each Obligor will notify the Bank in writing within
30 days prior to the date that any Obligor changes its name or the location of
its chief executive office or principal place of business or the place where it
keeps its books and records. Any notice of a name change delivered to the Bank
shall be accompanied by such certificates of governmental authorities as the
Bank may require substantiating such name change.
6.14. TITLE INSURANCE POLICY. Deliver to the Bank the Title Insurance
Policy within ten days from the date hereof.
6.15. CERTIFICATE OF TITLE. Have any assets subject to certificate of
title laws which is greater than in the aggregate at any time $100,000 unless
the certificates of title thereto have been delivered to the Bank.
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6.16. CERTIFICATES OF GOOD STANDING AND QUALIFICATION. Furnish to the Bank
within 30 days from the date hereof a certificate from the appropriate public
official of each jurisdiction (including, without limitation, Ohio, Michigan,
Georgia and Florida) as to the due qualification to do business and good
standing of each Obligor where such qualification is necessary to conduct such
Obligor's business in such jurisdiction.
6.17. EQUIPMENT AUDITS. From time to time, at any time upon the request of
the Bank, a report of an independent collateral field examiner (which may be, or
be affiliated with, the Bank) with respect to the Obligors' Equipment. So long
as no Event of Default has occurred which is then continuing, no Obligor will be
responsible for the cost of any such audit. Upon the occurrence of an Event of
Default, the Borrower shall promptly pay to the Bank upon demand, the costs of
all such audits occurring after such occurrence of an Event of Default.
6.18. REAL ESTATE AUDITS. From time to time, at any time upon the request
of the Bank, a report of an independent collateral field examiner (which may be,
or be affiliated with, the Bank) with respect to the Collateral covered by the
Mortgage. So long as no Event of Default has occurred which is then continuing,
no Obligor will be responsible for the cost of any such audit. Upon the
occurrence of an Event of Default, the Borrower shall promptly pay to the Bank
upon demand, the costs of all such audits occurring after such occurrence of an
Event of Default.
6.19. ADDITIONAL GUARANTIES AND SECURITY. Promptly, but in any event no
later than 30 days from the date of completion of an acquisition, cause each
Person which becomes an Approved Subsidiary after the date hereof to execute and
deliver to the Bank a Guaranty or a Joinder Agreement and the Additional
Security Documents (as applicable) (each enforceable under the laws of such
jurisdiction and in the jurisdictions in which the assets of such Subsidiary are
located and otherwise in Proper Form), together with:
(a) a certificate of the Secretary or any Assistant Secretary of
Approved Subsidiary (or other officer or director of Approved
Subsidiary which is authorized in Approved Subsidiary's
Organizational Documents to keep the minute book or similar record
of Approved Subsidiary), in Proper Form, dated as of the date
hereof, as to (i) the resolutions of the Board of Directors (or
similar governing body) of Approved Subsidiary authorizing the
execution, delivery and performance of a Joinder Agreement and the
Additional Security Documents and of all instruments contemplated
herein to be executed and delivered by Approved Subsidiary in
connection herewith (a copy of such resolutions to be incorporated
into such certificate), such certificate to state that said copy is
a true and correct copy of such resolutions and that such
resolutions were duly adopted and have not been amended, superseded,
revoked or modified in any respect and remain in full force and
effect as of the date of such certificate; (ii) the election,
incumbency and signatures of the
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officer or officers (or other official) of Approved Subsidiary
executing and delivering such Joinder Agreement, the Additional
Security Documents and each other instrument or document furnished
in connection herewith; (iii) Approved Subsidiary's Organizational
Documents (a copy of such charter to be attached to the
certificate), and (iv) such other documents and information as Bank
shall reasonably request;
(b) a legal opinion from the legal counsel for Approved Subsidiary
reasonably acceptable to Bank, in Proper Form;
(c) a Uniform Commercial Code search prepared by the appropriate
governmental authority for each jurisdiction (both county and
central offices) where Approved Subsidiary has any assets reflecting
no liens or security interests in favor of any party other than Bank
which have not been approved by Bank in writing;
(d) a copy of the executed stock purchase agreement, if applicable,
together with any and all exhibits, schedules and attachments
thereto, pursuant to which Approved Subsidiary is to become a
Subsidiary of Borrower, and such other financial information
regarding Approved Subsidiary and the acquisition of Approved
Subsidiary by Borrower or other Obligor as Bank in its sole
reasonable discretion shall request delivered;
(e) such related certificates, opinions and documents as the Bank may
reasonably require.
SECTION 7. NEGATIVE COVENANTS.
From the date hereof until the principal of and interest on each Note and
other Indebtedness is paid in full, the Borrower covenants and agrees that it
will not and will not permit any other Obligor to:
7.1. CAPITAL EXPENDITURES; FDA EXPENDITURES. Make (a) Capital Expenditures
on a consolidated basis during any fiscal year of the Obligors in excess of
$500,000, or (b) FDA Expenditures on a consolidated basis during any fiscal year
of the Obligors in excess of $200,000.
7.2. STOCK ACQUISITION. Purchase, redeem, retire or otherwise acquire any
of the shares of its capital stock, or make any commitment to do so.
7.3. LIENS AND ENCUMBRANCES. Create, incur, assume or suffer to exist any
mortgage, pledge, encumbrance, security interest, lien or charge of any kind
(including any charge upon
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property purchased or acquired under a conditional sales or other
title-retaining agreement or lease required to be capitalized under GAAP) upon
any of its property or assets, whether now owned or hereafter acquired, other
than Permitted Liens.
7.4. INDEBTEDNESS. Incur, create, assume or permit to exist any
indebtedness or liability on account of deposits or advances or any indebtedness
or liability for borrowed money, or any other indebtedness or liability
evidenced by notes, bonds, debentures or similar obligations, or any other
indebtedness whatsoever, except for (1) the Indebtedness, (2) the Subordinated
Debt, (3) other indebtedness subordinated to the prior payment in full of the
Indebtedness upon terms and conditions approved in writing by the Bank, (4)
existing indebtedness to the extent set forth on SCHEDULE 5.12, (5) other Debt
not to exceed in the aggregate $500,000 at any time, and (6) renewals and
extensions thereof (but not increases therein), trade indebtedness incurred and
paid in the ordinary course of business, contingent indebtedness to the extent
permitted by SECTION 7.7 of this Agreement, indebtedness secured by Permitted
Liens, and obligations to the extent permitted by SECTION 7.11 of this
Agreement.
7.5. EXTENSION OF CREDIT. Make loans, advances or extensions of credit to
any Person, except for (a) normal and reasonable advances in the ordinary course
of business to officers and employees of the Borrower not to exceed in the
aggregate at any time outstanding $150,000, (b) sales on open account and
otherwise in the ordinary course of business, and (c) Permitted Subsidiary
Investments.
7.6. GUARANTEE OBLIGATIONS. Guarantee or otherwise, directly or
indirectly, in any way be or become responsible for obligations of any other
Person, whether by agreement to purchase the indebtedness of any other Person,
agreement for the furnishing of funds to any other person through the furnishing
of goods, supplies or services, by way of stock purchase, capital contribution,
advance or loan, for the purpose of paying or discharging (or causing the
payment or discharge of) the indebtedness of any other person, or otherwise,
except for the endorsement of negotiable instruments by an Obligor in the
ordinary course of business for deposit or collection.
7.7. SUBORDINATE INDEBTEDNESS. Subordinate any indebtedness due to it from
a Person to indebtedness of other creditors of such Person.
7.8. PROPERTY TRANSFER, MERGER AND FORMATION OF SUBSIDIARIES. Sell, lease,
transfer or otherwise dispose of all or, except as to the sale of Inventory in
the ordinary course of business, any material part (and in any event more than
five percent [5%] during the term of this Agreement) of its properties and
assets (whether in one transaction or in a series of transactions), change its
name, consolidate with or merge into any other corporation, permit another
corporation to merge into it, acquire all or substantially all the properties or
assets of any other Person which is not an Approved Seller, enter into any
reorganization or recapitalization or reclassify its capital stock, enter into
any
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sale-leaseback transaction, or form, acquire or permit to exist any Subsidiary
which is not an Approved Subsidiary (other than Texas T.E.N.S., so long as it is
merged into the Borrower by no later than July 31, 1997, and MQI-Florida, so
long as it is merged into an Obligor or dissolved by no later than July 31,
1997) without the express written consent of the Bank given in its sole and
absolute discretion. Nothing contained in this Agreement or any of the other
Loan Documents (including, without limitation, the references to Subsidiaries or
consolidated and consolidating financial statements) shall be deemed or
construed as a consent to the Borrower's creation or acquisition of any
Subsidiary which is not a Guarantor. Any Guarantor wholly owned by the Borrower
may be merged into, or consolidated with, the Borrower or another Obligor wholly
owned by the Borrower, and such Obligor may sell, lease or transfer all or a
substantial part of its assets to the Borrower or another Obligor wholly owned
by the Borrower, and the Borrower or such Obligor may acquire all or
substantially all of the properties and assets of the Subsidiary so to be merged
into, or consolidated with, it or so to be sold, leased or transferred to it, so
long as prior written notice of such action has been given to the Bank and the
applicable Obligor has executed and delivered to the Bank such Financing
Statements and Additional Security Agreement.
7.9. ACQUIRE SECURITIES. Purchase or hold beneficially any stock or other
securities of, or make any investment or acquire any interest whatsoever in, any
other Person except for Permitted Investments.
7.10. PENSION PLANS. Allow any fact, condition or event to occur or exist
with respect to an employee pension or profit sharing plan which might
constitute grounds for termination of any such plan or for the appointment by a
United States District Court of a trustee to administer any such plan, or permit
any such plan to be the subject of termination proceedings (whether voluntary or
involuntary) from which termination proceedings there may result a liability of
the Borrower or any of the Obligors to the PBGC which in the opinion of the
Bank, will have a materially adverse effect upon the operations, business,
property, assets, financial condition or credit of the Borrower.
7.11. MISREPRESENTATION. Furnish (or permit any other Obligor to furnish)
the Bank with any certificate or other document that contains any untrue
statement of a material fact or omits to state a material fact necessary to make
such certificate or document not misleading in light of the circumstances under
which it was furnished.
7.12. MARGIN STOCK. Apply any of the proceeds of any Note to the purchase
of carrying of any "MARGIN STOCK" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System, or any regulations,
interpretations or rulings thereunder.
7.13. COMPLIANCE WITH ENVIRONMENTAL LAWS. Use (or permit any tenant to
use) any of its respective properties or assets for the handling, processing,
storage, transportation, or disposal of any Hazardous Substance except in all
respects in compliance with Environmental Laws, generate
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any Hazardous Substance except in all respects in compliance with Environmental
Laws, conduct any activity which is likely to cause a release of any Hazardous
Substance, or otherwise conduct any activity or use any of its respective
properties or assets in any manner that is likely to violate any Environmental
Law.
7.14. DIVIDENDS. Declare or pay any dividend (other than dividends payable
solely in shares of its capital stock) (or permit any other Obligor to do so)
on, or make any other distribution with respect to (whether by reduction of
capital or otherwise), any shares of its capital stock except dividends from a
Subsidiary to the Borrower.
7.15. PURCHASE AGREEMENT; SUBORDINATED DEBT DOCUMENTS. Terminate or agree
to the termination of the Purchase Agreement or any of the Subordinated Debt
Documents or amend, modify or obtain or grant a waiver of any provision of the
Purchase Agreement or any of the Subordinated Debt Documents, unless the same
shall be consented to in writing by the Bank.
SECTION 8. EVENTS OF DEFAULT - ENFORCEMENT - APPLICATION OF PROCEEDS.
8.1. EVENTS OF DEFAULT. The occurrence of any of the following events
shall constitute an Event of Default (herein so called) hereunder:
8.1.1. FAILURE TO PAY MONIES DUE. If any principal of any Note
shall not be paid when due, whether by acceleration or otherwise, or, if
any accrued interest, any fees under SECTION 2.6 of this Agreement or any
other Indebtedness (exclusive of principal of any Note) shall not be paid
when due, whether by acceleration or otherwise, unless the Bank declares
the default fully cured to the Bank's satisfaction within 3 calendar days
after such due date.
8.1.2. MISREPRESENTATION. If any warranty or representation of any
of the Obligors in connection with or contained in this Agreement, or if
any financial data or other information now or hereafter furnished to the
Bank by or on behalf of any Obligor shall prove to be false or misleading
in any material respect.
8.1.3. NONCOMPLIANCE WITH BANK AGREEMENTS. If any Obligor shall
fail to perform any of its Debt and covenants under, or shall fail to
comply with any of the provisions of, this Agreement or any other
agreement with the Bank to which it may be a party, which does not involve
the failure to make a payment when due (be it principal, interest, taxes,
insurance or otherwise) and which is not cured by the Obligors within 15
days after the earlier of the date of notice to the Borrower by the Bank
of such Default or the date the Bank is notified, or should have been
notified pursuant to the Borrower's obligation under SECTION 6.13 hereof,
of such Default.
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8.1.4. OTHER DEFAULTS. If any Obligor shall default in the due
payment of any of its Debt (other than the Indebtedness) involving
obligations in excess of $100,000 or in the observance or performance of
any term, covenant or condition in any agreement or instrument evidencing,
securing or relating to such indebtedness and such default results in the
acceleration of such Debt, irrespective of whether any such default shall
be forgiven or waived by the holder thereof, unless such payment is being
contested in good faith and adequate reserves for the payment thereof have
been established.
8.1.5. JUDGMENTS. If there shall be rendered against any Obligor
one or more judgments or decrees involving an aggregate liability of
$100,000 or more, which has or have become nonappealable and shall remain
undischarged, unsatisfied by insurance and unstayed for more than 30 days,
whether or not consecutive; or of a writ of attachment or garnishment
against the property of any Obligor shall be issued and levied in an
action claiming $100,000 or more and not released or appealed and bonded
in a manner satisfactory to the Bank within 30 days thereafter.
8.1.6. BUSINESS SUSPENSION, BANKRUPTCY, ETC. If any Obligor shall
voluntarily suspend transaction of its business; or if any Obligor shall
not pay its debts, generally, as they mature or shall make a general
assignment for the benefit of creditors; or proceedings in bankruptcy, or
for reorganization or liquidation of any Obligor under the Bankruptcy Code
or under any other state or federal law for the relief of debtors shall be
commenced by any Obligor or shall be commenced against any Obligor and
shall not be discharged within 60 days of commencement; or a receiver,
trustee or custodian shall be appointed for any Obligor or for any
substantial portion of its respective properties or assets.
8.1.7. CHANGE OF CONTROL OR MANAGEMENT. If Xxxxxxx X. Xxxxxxx or
Xxxxxx Xxxxxxx shall cease to serve as officers of the Borrower in
substantially the same capacity as they currently serve or if Xxxxxxx X.
Xxxxxxx or Xxxxxx Xxxxxxx shall cease to serve as a member of the
Borrower's board of directors.
8.1.8. INADEQUATE FUNDING OR TERMINATION OF EMPLOYEE/BENEFIT
PLAN(S). If any Obligor shall fail to meet its minimum funding
requirements under ERISA with respect to any employee benefit plan
established or maintained by such Obligor, or if any such plan shall be
the subject of termination proceedings (whether voluntary or involuntary)
and there shall result from such termination proceedings a liability of
any Obligor to the PBGC which in the opinion of the Bank will have a
materially adverse effect upon the operations, business, property, assets,
financial condition or credit of any Obligor.
8.1.9. OCCURRENCE OF CERTAIN REPORTABLE EVENTS. If there shall
occur, with respect to any pension plan maintained by any Obligor, any
reportable event (within the meaning of
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section 4043(b) of ERISA) which the Bank shall determine in good faith
constitutes a ground for the termination of any such plan, and if such
event continues for 30 days after the Bank gives written notice to the
Obligors, provided that termination of such plan or appointment of such
trustee would, in the opinion of the Bank, have a materially adverse
effect upon the operations, business, property, assets, financial
condition or credit of any Obligor.
8.1.10. LOSS OR DAMAGE. If any loss, theft, substantial damage or
destruction to or of any material portion of the Collateral occurs which
is not fully covered by insurance after the payment of industry standard
deductibles by the Obligors under applicable insurance policies.
8.1.11. ADVERSE CHANGE. If any material and adverse change in the
business operations and condition, financial or otherwise, of any Obligor
occurs.
8.1.12. PBGC. Except as expressly permitted herein, if a notice of
lien, levy or assessment is filed of record with respect to all or any of
the assets of any Obligor by the United States of America, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including, without limitation, the
PBGC, or if any taxes or debts owing at any time or times hereafter to any
one of them becomes a lien or encumbrance upon the Collateral or any other
assets of any Obligor.
8.2. REMEDIES. Upon the occurrence of any Event of Default, and at any
time thereafter, the obligation, if any, to make a Revolving Loan or to issue
Letters of Credit shall cease and terminate, and the Bank shall have the right,
at its option, to declare the unpaid balance of the Indebtedness to be
immediately due and payable without further notice (including notice of intent
to accelerate and notice of acceleration), protest or demand or presentment for
payment, all of which are hereby expressly waived by the Borrower, to require
Borrower to pay to the Bank, in immediately available funds, an amount equal to
the then aggregate amount available for drawings under all Letters of Credit
(which funds shall be held by the Bank as Cover) and to enforce or avail itself
of any and all powers, rights and remedies available at law or provided in this
Agreement, the Notes, the Letter of Credit Documents, the Joinder Agreements,
the Security Documents, the other Loan Documents or any other document executed
pursuant hereto or in connection herewith. Notwithstanding any provision in this
Section to the contrary, upon the occurrence of any Event of Default, the Bank
shall have the right, immediately and without notice, to take possession of and
exercise possessory rights with regard to any Collateral. Every power, right or
remedy of the Bank set forth in this Agreement, the Notes, the Letter of Credit
Documents, the Joinder Agreements, the Security Documents, the other Loan
Documents or any other document executed pursuant hereto or in connection
herewith, or afforded by law may be exercised from time to time, and as often as
may be deemed expedient by the Bank.
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8.3. APPLICATION OF PROCEEDS. The proceeds of any sale or other
disposition of the Collateral authorized by this Agreement shall be applied by
the Bank, first upon all expenses authorized by the Uniform Commercial Code and
all reasonable attorneys' fees and legal expenses incurred by the Bank; the
balance of the proceeds of such sale or other disposition shall be applied to
the payment of the Indebtedness, first to interest, then to principal; and the
surplus, if any, shall be paid over to the Borrower or to such other person or
persons as may be entitled thereto under applicable law. The Borrower shall
remain jointly and severally liable for any deficiency, which shall pay to the
Bank immediately upon demand.
8.4. CUMULATIVE REMEDIES. The remedies provided for herein are cumulative
to the remedies for collection of the Indebtedness as provided by law or by any
mortgage, security agreement or other document contemplated hereby. Nothing
herein contained is intended, nor should it be construed, to preclude the Bank
from pursuing any other remedy for the recovery of any other sum to which the
Bank may be or become entitled for the breach of this Agreement by the Borrower.
SECTION 9. MISCELLANEOUS.
9.1. INDEPENDENT RIGHTS. No single or partial exercise of any right, power
or privilege hereunder, or any delay in the exercise thereof, shall preclude
other or further exercise of the rights of the parties to this Agreement.
9.2. COVENANT INDEPENDENCE. Each covenant in this Agreement shall be
deemed to be independent of any other covenant, and an exception in one covenant
shall not create an exception in another covenant.
9.3. WAIVERS AND AMENDMENTS. No forbearance on the part of the Bank in
enforcing any of its rights under this Agreement, nor any renewal, extension or
rearrangement of any payment or covenant to be made or performed by the Borrower
hereunder or by any other Obligor under any of the other Loan Documents, shall
constitute a waiver of any of the terms of this Agreement or of any such right.
No Default or Event of Default shall be waived by the Bank except in writing
signed and delivered by an officer of the Bank, and no waiver of any Default or
Event of Default shall operate as a waiver of any other Default or Event of
Default or of the same Default or Event of Default on a future occasion. No
other amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or any Note or other documents contemplated hereby
shall be effective unless the same shall be in writing and signed and delivered
by an officer of the Bank.
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9.4. GOVERNING LAW. THIS AGREEMENT, AND EACH AND EVERY TERM AND PROVISION
HEREOF, SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF THE STATE OF
TEXAS.
9.5. SURVIVAL OF WARRANTIES, ETC. All of the covenants, agreements,
representations and warranties made by any Obligor in connection with this
Agreement and any document contemplated hereby shall survive the borrowing and
the delivery of the Notes hereunder and shall be deemed to have been relied upon
by the Bank, notwithstanding any investigation heretofore or hereafter made by
the Bank. All statements contained in any certificate or other document
delivered to the Bank at any time by or on behalf of any Obligor pursuant hereto
or in connection with the transactions contemplated hereby shall constitute
representations and warranties by the Borrower in connection with this
Agreement.
9.6. ATTORNEYS' FEES. The Borrower agrees that it will pay all reasonable
costs and expenses of the Bank in connection with the enforcement of the Bank's
rights and remedies under this Agreement and in connection with the preparation
or making of any amendments, modifications, waivers or consents with respect to
this Agreement.
9.7. PAYMENTS ON SATURDAYS, ETC. Whenever any payment to be made hereunder
or under any Note shall be stated to be due on a Saturday, Sunday or any other
day which is not a Business Day, such payment may be made on the next succeeding
Business Day, and such extension, if any, shall be included in computing
interest in connection with such payment.
9.8. BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
assigns; PROVIDED, HOWEVER, Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of the Bank.
9.9. MAINTENANCE OF RECORDS. The Borrower will keep all of its and the
other Obligors' records concerning the Collateral at its principal place of
business. The Borrower will give the Bank prompt written notice of any change in
its principal place of business, or in the location of said records.
9.10. NOTICES. Except as expressly provided herein, all notices and
communications provided for herein or in any other Loan Document contemplated
hereby or required by law to be given shall be effective when received or, in
the case of notices sent by mail from the Bank to the Borrower, upon sending by
first class mail, postage prepaid, addressed as follows: if to the Borrower, to:
000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx Xxxx, Xxxxx 00000, Attn: Chief Executive
Officer, and if to the Bank, to: Xxxx X. Xxx, 0000 Xxx Xxxxxx, Xxxxxx, Xxxxx
00000, with a copy to X.X. Xxx 0000,
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Xxxxxxx, Xxxxx 00000-0000, Attn: Xxxxxxxx Xxxxxxx, or to such other address as a
party shall have designated to the other in writing.
9.11. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures were upon the same
instrument.
9.12. HEADINGS. Article and section headings in this Agreement are
included for the convenience of reference only and shall not constitute a part
of this Agreement for any purpose.
9.13. CAPITAL ADEQUACY. If as a result of any regulatory change directly
or indirectly affecting the Bank or any of the Bank's affiliates there shall be
imposed, modified or deemed applicable any tax, reserve, special deposit,
minimum capital, capital ratio, or similar requirement against or with respect
to or measured by reference to loans made or to be made hereunder or
participations therein, and the result shall be to increase the cost to the Bank
or any of the Bank's affiliates of making or maintaining any loan hereunder or
to any other party maintaining any participation therein, or reduce any amount
receivable in respect of any such loan (which increase in cost, or reduction in
amount receivable, shall be the result of the Bank's or the Bank's affiliated
Obligor's reasonable allocation among all affected customers of the aggregate of
such increases or reductions resulting from such event), then, within ten days
after receipt by the Borrower of a certificate from the Bank containing the
information described in this Section below which shall be delivered to the
Borrower, the Borrower agrees from time to time to pay the Bank such additional
amounts as shall be sufficient to compensate the Bank or any of the Bank's
affiliates (for as long as such increased costs or reductions in amount
receivable exist) for such increased costs or reductions in amount receivable
which the Bank determines in the Bank's sole discretion are material. The
certificate requesting compensation under this Section shall identify the
regulatory change which has occurred, the requirements which have been imposed,
modified or deemed applicable, the amount of such additional cost or reduction
in amount receivable and the way in which such amount has been calculated.
9.14. COSTS AND ATTORNEYS' FEES. If the Bank retains an attorney in
connection with any default or to collect, enforce or defend this Agreement, any
of the Notes or any of the Loan Documents in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if the Borrower sues the Bank
in connection with this Agreement, any of the Notes or any of the Loan Documents
and does not prevail, then the Borrower agree to pay to the Bank, in addition to
principal and interest, all reasonable costs and expenses incurred by the Bank
in trying to collect this note or in any such suit or proceeding, including
reasonable attorneys' fees. To the extent not prohibited by applicable law, the
Borrower will pay all costs and expenses and reimburse the Bank for any and all
expenditures of every character incurred or expended from time to time,
regardless of whether or not a default has occurred, in connection with (a) the
preparation, negotiation, documentation, closing, renewal, revision,
modification, increase, review or restructuring of this Agreement or any of the
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other Loan Documents including, without limitation, legal, accounting, auditing,
architectural engineering and inspection services and disbursements, or in
connection with collecting or attempting to enforce or collect this Agreement,
any of the Notes or any of the other Loan Documents, (b) the Bank's evaluating,
monitoring, administrating and protecting any Collateral now or hereafter
securing payment of any part of the Indebtedness and (c) the Bank's creating,
perfecting and realizing upon Payee's security interests in and liens on any
Collateral, and all costs and expenses relating to the Bank's exercising any of
its rights and remedies hereunder or under any other Loan Document or at law,
including, without limitation, all appraisal fees, consulting fees, filing fees,
taxes, brokerage fees and commissions, title review and abstract fees, UCC
search fees, other fees and expenses incident to title searches, reports and
security interests, escrow fees, attorneys' fees, legal expenses, court costs,
other fees and expenses incurred in connection with any complete or partial
liquidation of any Collateral and all fees and expenses for any professional
services relating to the Collateral or any operations conducted in connection
with it; PROVIDED, that no right or option granted by the Borrower to the Bank
or otherwise arising pursuant to any provision of this or any other instrument
shall be deemed to impose or admit a duty on the Bank to supervise, monitor or
control any aspect of the character or condition of the Collateral or any
operations conducted in connection with it for the benefit of the Borrower or
any other Person other than the Bank. The Borrower agrees to indemnify, defend
and hold the Bank, its shareholders, directors, officers, agents and employees
(collectively "INDEMNIFIED PARTIES") harmless from and against any and all loss,
liability, obligation, damage, penalty, judgment, claim, deficiency, expense,
action, suit, cost and disbursement of any kind or nature whatsoever (including
interest, penalties, attorneys' fees and amounts paid in settlement), REGARDLESS
OF WHETHER CAUSED IN WHOLE OR IN PART BY THE NEGLIGENCE OF ANY OF THE
INDEMNIFIED PARTIES, imposed on, incurred by or asserted against the Indemnified
Parties growing out of or resulting from this note, any Loan Document or any
transaction or event contemplated herein or therein (except that such indemnity
shall not be paid to any Indemnified Party to the extent that such loss, etc.
results from the gross negligence or willful misconduct of that Indemnified
Party). Any amount to be paid under this Section by the Borrower to Payee shall
be a demand obligation owing by such the Borrower to Payee and shall bear
interest from the date of expenditure until paid at the Past Due Rate.
9.15. GENDER. Throughout this Agreement, the masculine shall include the
feminine and vice versa and the singular shall include the plural and vice
versa, unless the context of this Agreement indicates otherwise.
9.16. JOINT AND SEVERAL OBLIGATIONS. The Borrower shall be jointly and
severally liable for the payment and performance of the Indebtedness without
regard to which the Borrower receives the proceeds hereof. The Borrower hereby
acknowledges that it expects to derive economic advantage from each Loan.
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9.17. SEVERABILITY OF PROVISIONS. Any provision of this Agreement, any
Note or any other Loan Documents that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement, such Note or such other documents or affecting the
validity or enforceability of such provision in any other jurisdiction.
9.18. ASSIGNMENT. The Bank shall have the absolute and unrestricted right
to sell, assign, transfer, or grant participation in, all or any portion of the
loans and any collateral, guaranties or other security relating thereto without
the consent of the Borrower; provided, however, no such action on the part of
the Bank shall have the effect of changing any of the Borrower's obligations
hereunder without the written consent of the Borrower. The Bank shall give the
Borrower written notice of any absolute assignment of any of the loans if the
result thereof will be to cause the Borrower to deal directly with another
financial institution which is not the successor in interest by merger to the
Bank.
9.19. WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY IRREVOCABLY
WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR
PROCEEDINGS AT ANY TIME IN WHICH THE BORROWER AND BANK ARE PARTIES ARISING OUT
OF THIS AGREEMENT.
9.20. AMENDED AND RESTATED LOAN AGREEMENT; WAIVER OF DEFAULTS. This
Agreement amends and restates that certain Loan Agreement dated as of April 30,
1996, between the Bank and the Borrower, as the same has heretofore been amended
(the "ORIGINAL LOAN AGREEMENT"), in its entirety. All liens securing the
Original Loan Agreement are hereby ratified and confirmed as security for the
Loans. Unless the provisions would otherwise require, any reference to "Loan
Agreement" contained in any Loan Document shall be deemed to refer to this
Agreement, as it may be amended, restated, modified and supplemented from time
to time. The Bank hereby waives the occurrence of any Default or Event of
Default (as those terms are defined in the Original Loan Agreement) which may or
may not have occurred under the provisions of Section 6.7 of the Original Loan
Agreement (the "Fixed Charge Coverage Ratio") prior to the date of this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Borrower and the Bank have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
written above.
XXXXXX HEALTHCARE, INC., a Texas corporation
By:/s/ XXXXXXX X. XXXXXXX
XXXXXXX X. XXXXXXX, PRESIDENT
COMERICA BANK-TEXAS, a Texas banking
corporation
By: /s/ XXXXX X. XXXXXX
XXXXX X. XxXXXX, VICE PRESIDENT
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EXHIBITS:
EXHIBIT A - Form of Security Agreement
EXHIBIT B - Revolving Note
EXHIBIT C - Term Note A
EXHIBIT D - Term Note B
EXHIBIT E - Officer's Certificate
EXHIBIT F - Subordination Agreement
EXHIBIT G - Compliance Certificate
SCHEDULES:
SCHEDULE I - Assumed Names SCHEDULE 5.4 - Actions, Suits or Proceedings SCHEDULE
5.6 - Existing Liens SCHEDULE 5.11 - Compliance With Laws SCHEDULE 5.12 -
Indebtedness SCHEDULE 5.13 - Material Agreements SCHEDULE 5.17.2 - Location of
Inventory
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