99(i) Loan and Security Agreement between the Company and MainStreet XXX.xxx
Inc. dated July 12, 2000.
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated July 12, 2000, is between
MAINSTREET XXX.XXX INC., a Delaware corporation, whose mailing address is
000 Xxxxxx Xxxx, Xxxxx Xxxxxxxxx, XX 00000, and DIALYSIS CORPORATION OF
AMERICA, a Florida corporation, whose mailing address is 00 Xxxxxx Xxxxxx,
Xxxxxxx, XX 00000.
1. Definitions. As used herein, the following terms, when initial
-----------
capital letters are used, shall have the respective meanings set forth
below. In addition, all terms defined in the Uniform Commercial Code as
adopted in Florida shall have the meanings given therein unless otherwise
defined herein.
1.1 Affiliate shall mean any person, company or business entity
---------
controlling, controlled by or under common control with, Borrower, whether
such common control is direct or indirect, including all of the partners,
officers, directors and principal shareholders of Borrower. Any family
member (immediate and beyond) of an Affiliate or any Person with whom the
Affiliate has an association, directly or indirectly, exclusive of the
Lender or Xxxx & Company, Inc., are included in the definition of Affiliate.
1.2 Agreement shall include all amendments, modifications and
---------
supplements hereto and shall refer to this Agreement and all its exhibits and
schedules as the same may be in effect at the time such reference becomes
operative.
1.3 Borrower shall mean MainStreet XXX.xxx Inc., a Delaware corporation,
--------
and its successors and assigns.
1.4 Closing Date. That date at which the closing of the transactions
------------
contemplated in this Agreement shall be completed as referred to in Section
2.1.
1.5 Collateral shall mean (a) all of the Borrower's right, title and
----------
interest in and to all 300,000 shares of common stock, $.001 par value, of
Linux Global Partners, Inc. which Borrower currently has and any other
securities of Linux Global Partners, Inc. Borrower may hereinafter obtain;
(b) all instruments, documents, securities, and the proceeds of any of the
foregoing, owned by the Borrower or in which it has or may hereafter acquire
an interest; (c) all ledger sheets, files, records, documents, and
instruments evidencing an interest in or relating to the foregoing; and (d)
all proceeds and products of the Collateral, including, without limitation,
all claims against third parties for loss of any of the foregoing, including
accounts, contract rights, chattel paper and general intangibles arising out
of any sale, lease or other disposition of the Collateral.
1.6 Creditor. Any person, entity, association of any type to whom the
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Borrower is indebted for money, services, property, or anything whatsoever
in an amount of $10,000 or more in dollars or equivalent fair value.
1.7 Escrow Agreement shall mean that agreement referred to in the Note
----------------
and this Agreement pursuant to which the Collateral is pledged and held as
otherwise described in Section 3.3.
1.8 Event of Default shall mean any event described in Section 9.
----------------
1.9 GAAP shall mean generally accepted accounting principles
----
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of the relevant Person.
1.10 Indebtedness shall mean all liabilities, obligations and
------------
indebtedness of or advances by the Borrower of any and every kind and nature,
including, without limitation, the Obligations and all obligations and/or
liabilities to Affiliates and to Creditors, whether heretofore, now or
hereafter owing, arising, due or payable from the Borrower to any Person,
and howsoever evidenced, created, incurred, acquired or owing, whether
primary, secondary, direct, contingent, fixed, secured, or otherwise.
1.11 Lender shall mean Dialysis Corporation of America, a Florida
------
corporation, and its successors and assigns.
1.12 Lien shall mean any mortgage or deed of trust, pledge, hypothe-
----
cation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any title retention agreement,
and the filing of, or agreement to give, any financing statement under the
UCC or comparable law of any jurisdiction).
1.13 Loan shall have the meaning set forth in Section 2.1.
----
1.14 Loan Documents shall mean this Agreement, the Note, the Escrow
--------------
Agreement, the Subordination Agreement, and all other documents executed in
connection with the Loan.
1.15 Merger means the proposed merger of Lender and Borrower or its
------
Affiliate as provided in the Agreement and Plan of Merger between and among
the Lender, the Borrower and its Affiliates dated October 20, 1999 ("Merger
Agreement").
1.16 Note shall mean the Secured Convertible Promissory Note dated
----
July 12, 2000 evidencing the Loan under this Agreement.
1.17 Obligations shall mean, without limitation, the Loan (as defined
-----------
in Section 2) and all other debts, obligations, or liabilities of every kind
and description of Borrower to Lender, now due or to become due, direct or
indirect, absolute or contingent, presently existing or hereafter arising,
joint or several, secured or unsecured, including, without limitation, any
Loan by renewal or extension, all payments of principal, interest and other
amounts due under the Note, all Indebtedness of Borrower to Lender, all
undertakings to take or refrain from taking any action and all Indebtedness
owing from Borrower to others which Lender may obtain by
2
purchase, negotiation, discount, assignment or otherwise, all costs incurred
by Lender to obtain, preserve and/or enforce the security interests granted
by this Agreement, to collect the Obligations, and to maintain and preserve
the Collateral, with such costs including, but not limited to, expenditures
made by the Lender for taxes, assessments, insurance premiums, reasonable
attorneys' fees and other legal expenses, and expenses of sale, together
with interest on the above amounts at the highest rate being paid by Borrower
on any of its Obligations, all of which Borrower agrees to pay to Lender.
Obligations shall also include all interest and other charges chargeable to
the Borrower or due from the Borrower to the Lender from time to time and
all costs and expenses referred to in Section 11.
1.18 Person shall mean an individual, a corporation, an association, a
------
partnership, a joint venture, a joint stock company, a trust, an organization,
a business, or a government or political subdivision thereof, or any govern-
ment agency, or any other form of entity.
1.19 Subordination Agreement shall mean that agreement dated July 12,
-----------------------
2000 subordinating the Subordinated Debt.
1.20 Subordinated Debt shall mean Indebtedness of the Borrower to any
-----------------
Affiliate of the Borrower that is subordinated to the Obligations pursuant to
the Subordination Agreement included as part of the Loan Documents.
2. Loan and Interest.
-----------------
2.1 Loan. Subject to the terms and conditions of the Loan Documents
----
and Section 2.6 of this Agreement, the Lender shall lend to the Borrower
$140,000 to be evidenced by a Note of the Borrower in substantially the
form as attached hereto as Exhibit A, in the principal amount of $140,000.
This borrowing shall be made simultaneously with the execution of the Loan
Documents at the offices of Xxxxx, Xxxxxxxx & Xxxx, LLC, 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000 (the "Closing Date"). The Note shall
mature at the earlier of (i) failure of approval by Lender's shareholders of
the Merger on or before but not later than November 1, 2000, or (ii) one
year from the date hereof, subject to acceleration, conversion, and prepay-
ment as provided herein and in the Note.
2.2 Interest. The Note shall bear interest from the date hereof to
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maturity on the unpaid principal balance thereof at the rate of 1/2 of 1%
per annum in excess of the prime rate as the Lender's bank describes as
its "prime" or "best" rate (the "Prime Rate"), when and as the Prime Rate
shall change, but in no event less than 9.5% per annum, and after maturity
(whether by acceleration or otherwise) at a rate of 5% per annum in excess
of the Prime Rate. Interest on the Note shall accrue from the date hereof
until the Note and all Obligations are fully satisfied and shall, on the
maturity date of the Note, be payable to the Lender, and thereafter upon
demand. Interest shall be calculated on the basis of a 360-day year.
2.3 Loan Payments. All payments of the Obligations shall be made by
-------------
the Borrower to the Lender in immediately available funds at its principal
office in Lemoyne, Pennsylvania, or
3
at such other place as the Lender may designate in writing, at such times
as shall be set forth herein or in the Note.
2.4 Loan Purpose. Borrower agrees to use the proceeds of the Loan
------------
solely for working capital, and for no other purpose except upon prior written
approval of the Lender.
2.5 Prepayment. The Borrower shall have the right from time to time
----------
to prepay the Note in part in amounts of $10,000 or a multiple thereof, or
at any time in whole, together with accrued interest to such prepayment
date. No prepayment pursuant to this Section 2.5 of less than the entire
unpaid principal amount of the Note shall relieve the Borrower from its
Obligations under this Agreement.
2.6 Loan Reduction for Fee Payment. At the Closing, as provided in
------------------------------
Section 2.1, the $140,000 amount of the Loan shall be reduced by $12,420, a
fee due from Borrower to Xxxx & Company, Inc. ("Xxxx"), which Lender, with
the acknowledgement and agreement of Borrower, shall pay to Xxxx, or to the
order of any designee of Xxxx, as per the enclosed xxxx attached as Schedule
2.6. Thereby, the Borrower will be receiving from the Lender net Loan
proceeds at the Closing of $127,580; provided, notwithstanding anything
herein to the contrary, the principal of the Loan remains at $140,000, which
is due hereunder, together with accrued interest on that principal sum, at
the maturity date of the Note.
3. Security.
--------
3.1 Grant of Security Interest. To secure the payment and performance
--------------------------
of all of the Obligations, the Borrower hereby grants, assigns, pledges and
transfers to the Lender a continuing security interest in and assigns to
the Lender all of the Collateral. The security interest granted hereby
shall constitute a first and best lien on the Collateral.
3.2 Financing Statements. Borrower shall execute such financing
--------------------
statements and other documentation as shall reasonably be required by the
Lender in order to perfect the security interests granted to the Lender
and to carry out the terms of this Agreement. The security interest may
be evidenced by certain UCC-1 Financing Statements or a copy of this
Agreement to be recorded by Lender with the applicable filing offices.
3.3 Pledge of Collateral and Escrow. Borrower agrees to assign,
transfer, pledge and deliver the Collateral to Xxxxxxxx X. Xxxxx, Esq.,
attorney-at-law, Secretary and counsel to the Lender, to hold in escrow
to secure the Note in accordance with the Escrow Agreement attached to the
Note and made a part of this Agreement and the Loan Documents. Transfer of
and voting rights relating to the Collateral shall be governed by the terms
of the Note and the Escrow Agreement.
3.4 Filing and Recording. The Borrower shall cause all instruments,
--------------------
documents, and financing statements relating to the Collateral given as
security pursuant to this Agreement to be duly recorded and/or filed in
all places necessary, in the opinion of the Lender, to perfect and protect
the first priority lien and security interest of the Lender in the
Collateral, all at the
4
Borrower's cost and expense. The Borrower authorizes the Lender to file any
such document, instrument and/or financing statement, although the same may
have been executed only by the Lender, or at the option of the Lender, to
sign such financing statement, document or instrument on behalf of the
Borrower, and file the same, and the Borrower hereby irrevocably designates
the Lender, its agents, representatives, and designees, as agents and
attorneys-in-fact for the Borrower for this purpose. In the event that any
re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is require to protect
and preserve the Lender's lien and security interest in the Collateral, the
Borrower shall, at its cost and expense, cause the same to be recorded
and/or refiled at the time and in the manner requested by the Lender.
4. Conditions of Closing.
---------------------
4.1 Conditions of Loan. Without limiting in any manner any other
------------------
provisions of this Agreement, the obligation of the Lender to make the Loan
is subject to: (i) the accuracy and correctness of the representations
and warranties of the Borrower contained herein and in the other Loan
Documents and in any schedule and certificate delivered pursuant to this
Agreement or the other Loan Documents; (ii) the performance by the Borrower
of its agreements contained herein and in the other Loan Documents; and
(iii) the satisfaction of all of the following conditions:
(a) Note. The Note, in form and substance satisfactory to the Lender
----
and its counsel, shall have been duly authorized, executed and delivered by
the Borrower, shall be in full force and effect and no default shall exist
thereunder.
(b) Articles of Incorporation. The Lender shall have received copies
-------------------------
of the Articles of Incorporation of the Borrower, and all amendments
thereto, certified by the Secretary of State of Delaware.
(c) Certificates of Good Standing. The Lender shall have received
-----------------------------
certificates for the Borrower, of the corporation's good standing under the
laws of each state where the Borrower is authorized to transact business.
(d) Loan Documents. All Loan Documents required by Lender to be
--------------
executed at Closing shall have been executed and delivered to Lender.
(e) Opinion of Counsel to the Borrower. The Lender shall have
----------------------------------
received the opinion of counsel for the Borrower dated the Closing Date, as
to the transactions contemplated by this Agreement, in form and substance
satisfactory to the Lender and its counsel.
(f) Taxes. All taxes, fees and other charges in connection with the
-----
execution, delivery, recording, filing and registration of any of the Loan
Documents shall have been paid.
5
(g) Governmental Approvals. All necessary approvals, authorizations
----------------------
and consents, if any are required, of all governmental bodies (including
courts) having jurisdiction with respect to the Collateral and the transac-
tions contemplated by this Agreement shall have been obtained.
(h) No Injunction, Etc. No action, proceeding, investigation, regula-
------------------
tion or legislation shall have been instituted, threatened or proposed before
any court, governmental agency or legislative body to enjoin, restrain, or
prohibit, or to obtain substantial damages in respect of, or which is related
to or arises out of this Agreement or the consummation of the transactions
contemplated hereby, or which, in the Lender's sole discretion, would make
it inadvisable to consummate the transactions contemplated by this Agreement,
except as described in Schedule 4.1(h).
(i) No Material Adverse Change. There shall not have occurred (a) any
--------------------------
material adverse change in the business, financial condition or results of
operations of the Borrower since June 30, 2000, or (b) any event, condition
or state of facts which would materially affect the business, financial
condition or results of operations of the Borrower.
(j) Proceedings and Documents. All opinions, certificates and other
-------------------------
instruments and all proceedings in connection with the transactions contem-
plated by this Agreement shall be satisfactory in form and substance to the
Lender and its counsel. The Lender shall have received copies of all other
instruments and other evidence as the Lender may reasonably request, in form
and substance satisfactory to the Lender and its counsel, with respect to
the transactions contemplated by this Agreement and the taking of all actions
in connection therewith, including without limitation corporate proceedings
certified by appropriate corporate authorities.
(k) Subordinated Debt. Affiliates shall have executed and delivered to
-----------------
the Lender an agreement (in form and substance satisfactory to Lender)
pursuant to which the Affiliates shall have subordinated $1,300,000 in
principal indebtedness due from the Borrower to the Affiliates.
(l) Event of Default. No Event of Default, nor any event or condition
----------------
which, with notice, lapse of time or the making of the Loan would constitute
an Event of Default, shall have occurred and be continuing.
4.2 Waiver of Conditions Precedent. If the Lender shall close and fund
------------------------------
the Loan prior to the fulfillment of any of the conditions precedent set forth
in Section 4.1 hereof, the making of the Loan shall constitute only an
extension of time for the fulfillment of such condition(s) and not a waiver
thereof, and the Borrower shall thereafter use its best efforts to fulfill
each such condition promptly.
5. Representations and Warranties of the Borrower. In order to induce
----------------------------------------------
the Lender to enter into this Agreement and each of the other Loan Documents
and to make the Loan, the Borrower makes the following CONTINUING warranties
and representations to the Lender:
5.1 Organization and Authority. (a) The Borrower is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the State
of its incorporation and has the
6
corporate power and authority to conduct its business as now conducted and
as proposed to be conducted while this Agreement is in effect; (b) the execu-
tion and delivery of this Agreement and the Note and other Loan Documents
and the performance of the transactions contemplated hereby and thereby are
within the corporate authority of the Borrower and have been duly authorized
by all proper and necessary corporate action; (c) the execution and delivery
of this Agreement, the Note, and other Loan Documents and the performance of
the transactions contemplated hereby and thereby will not violate or contra-
vene any provisions of law or the articles of incorporation or bylaws of the
Borrower, or result in a breach or default in respect of the terms of any
other agreement to which the Borrower is a party or by which it is bound,
which breach or default would result in the creation, imposition or enforce-
ment of any lien against any of the Collateral, or would have a material
adverse affect on the conduct of the Borrower's business as it is now being
conducted and proposed to be conducted while this Agreement is in effect,
or would otherwise impair the value of the security interest granted to the
Lender hereunder; and (d) the Borrower is duly qualified as a foreign
corporation and is in good standing and duly authorized to do business in
every jurisdiction where the nature of its properties or the conduct of its
business requires such qualification and authorization.
5.2 Binding Effect of Documents. The Loan Documents are legal and
---------------------------
binding obligations of the Borrower enforceable in accordance with their
terms.
5.3 Government Consent. The execution and delivery of this Agreement
------------------
and the Note, and other Loan Documents and the performance of the transac-
tions contemplated hereby and thereby do not require any approval or
consent of any governmental agency or authority, or of any other party.
5.4 Financial Statements. The Financial Statements to be furnished
--------------------
to Lender pursuant to Section 7.3 of this Agreement shall be true and correct,
present fairly and completely the financial condition of the Borrower and its
subsidiaries in all material respects for the periods covered in such
Financial Statements, shall have been prepared in accordance with GAAP, and
shall be in accordance with the respective books of accounts and records of
the Borrower. The Financial Statements shall not be materially different
from the audited financial statements of the Borrower included in the
Borrower's registration statement on Form S-4 dated February 9, 2000 filed
with the Securities and Exchange Commission with respect to the Merger for
the period April 12, 1999 (inception) through October 31, 1999, except for
Indebtedness to Xxxxxx X. Xxxxxxx, an Affiliate of the Borrower.
There shall not be any Indebtedness which shall not be shown or provided
for in full on the Financial Statements.
5.5 Affiliate Indebtedness. The only Indebtedness to an Affiliate is
----------------------
$1,300,000 owing to Xxxxxx X. Xxxxxxx, which shall be subordinated to the
Loan in accordance with Section 6 of this Agreement.
5.6 No Change in Financial Condition. Since the ending date of the
--------------------------------
Financial Statements described in Section 7.3, there shall not be any change
in the assets, liabilities, financial condition or operations of the Borrower,
other than changes in the ordinary course of
7
business, nor shall the Borrower have incurred any obligation or Indebtedness
which would adversely affect its financial condition, operations or the
Collateral, except as the Borrower's business may be modified to satisfy the
requirements of the Securities and Exchange Commission and/or the NASD.
5.7 No Other Liabilities. Except to the extent to be reflected in
--------------------
the Financial Statements described in Section 7.3, the Borrower does not know
or have reasonable grounds to know of any basis for the assertion against it
of any liabilities, Indebtedness or obligations of any nature, direct or
indirect, accrued, absolute or contingent , which if material shall be deemed
an Event of Default.
5.8 Taxes. The Borrower has filed all federal, state, local and other
-----
tax returns and reports required to be filed by it, and such returns and
reports are true and correct. The Borrower has paid all taxes, assessments
and other governmental charges lawfully levied or imposed on or against it
or its properties, other than those presently payable without penalty or
interest.
5.9 No Litigation. Except as listed on Schedule 5.9 and Schedule 4.1(h)
-------------
of this Agreement, there is no litigation or proceeding or governmental
investigation pending or, to the knowledge of the Borrower, threatened
against or relating to the Borrower, its properties or business, or relating
to the Collateral.
5.10 Compliance with Laws. Except as listed on Schedule 5.10 of this
--------------------
Agreement, the Borrower is not in violation of or default under any statute,
regulation, license, permit, order, writ, injunction or decree of any
government, governmental department, commission, board, bureau, agency,
instrumentality or court, which violation or default would have a material
adverse effect on the business, properties or condition, financial or other-
wise, of the Borrower.
5.11 No Default. The Borrower is not in default under a material
----------
order, writ, judgment, injunction, decree, indenture, agreement, lease or
other instrument or contract, which default would have a material adverse
effect on the business, properties or condition, financial or otherwise, of
the Borrower, or in the performance of any covenants or conditions
respecting any of its Indebtedness, or upon the Collateral, and no Creditor
or any other holder of any Indebtedness of the Borrower has given notice of
any asserted default thereunder, and no liquidation or dissolution of the
Borrower and no receivership, insolvency, bankruptcy, reorganization or
other similar proceedings relative to the Borrower or its properties is
pending or, to the knowledge of the Borrower, is threatened against Borrower.
5.12 Title to Collateral. Except for the security interests granted
-------------------
herein, the Borrower is and at all times during the term of this Agreement
will be the sole owner of and have good and marketable title to the
Collateral, free from all Liens in favor of any person other than the
Lender, and has full right and power to grant the Lender a security
interest therein, and the security interest granted in the Collateral is a
valid first security interest and will inure to the benefit of the Lender
without further action. All information furnished to Lender concerning
the Collateral is and will be complete, accurate and correct in all
material respects when furnished.
8
5.13 Name Rights, Licenses, Franchises, etc. Borrower possesses and,
--------------------------------------
so long as any Obligations hereunder remain unpaid, the Borrower will
continue to possess all permits, trade memberships, franchises, contracts
and licenses required and all trade xxxx rights, trade names, trade name
rights, patents, patent rights, and fictitious name rights, domain names and
web pages, all necessary to enable it to conduct the business in which it is
now engaged or is about to engage without conflict with the rights of others.
Nothing in this Section 5.13, however, shall prevent the Borrower from
failing to renew or from entering into additional permits, trade memberships,
franchises, contracts and licenses or trademark rights, trade names, trade
name rights, patents, patent rights and fictitious name rights if in the
judgment of the Borrower reasonably exercised such action is advisable for
business purposes and will not materially and adversely affect the business
in which it is then engaged.
5.14 Event of Default. No event has occurred and is continuing which
----------------
constitutes an Event of Default or would constitute such an Event of Default
after notice or lapse of time or both.
5.15 Margin Securities. None of the transactions contemplated by this
-----------------
Agreement (including, without limitation thereof, the use of the proceeds of
the Loan) will violate or result in a violation of the Securities Exchange
Act of 1934, as amended, or any regulations issued pursuant thereto. The
Borrower does not own or intend to carry or purchase, directly or
indirectly, any "margin securities" as that term is defined in Regulations G
and U of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and the proceeds of the Loan will be used only for the
purposes contemplated hereunder. None of the proceeds of the Loan will be
used, directly or indirectly, for the purpose of purchasing or carrying any
margin security, for the purpose of reducing or retiring any indebtedness
which was originally incurred to purchase or carry any margin security or
for any other purpose which might cause the Loan to be considered a "purpose
credit" within the meaning of Regulations G, T, U or X of the Federal Reserve
Board. The Borrower will neither take nor permit any agent acting on its
behalf to take any action which might cause this Agreement or any document
or instrument delivered pursuant hereto to violate any regulation of the
Federal Reserve Board.
5.16 Full Disclosure. None of the Loan Documents, nor any statements
---------------
furnished by or on behalf of the Borrower to the Lender in connection with
the Loan Documents, contains any untrue statement of a material fact or
omits a material fact necessary to make the statements contained therein
or herein not misleading. To the Borrower's knowledge, there is no fact
which the Borrower has not disclosed to Lender in writing which materially
and adversely affects or, to the Borrower's knowledge, will materially and
adversely affect the Borrower, the Collateral, the Lender's Liens in the
Collateral or the priority thereof, the other assets, business, profits or
conditions (financial or otherwise) of the Borrower, or the ability of the
Borrower to perform the Obligations.
6. Subordination. The principal amount of any Indebtedness to any
-------------
Affiliate who is identified on Schedule 6 to this Agreement owed or hereafter
incurred by or on behalf of the Borrower shall, at all times during this
Agreement and as long as the Obligations are outstanding and due and owing
to the Lender, be subject and subordinate to the Loan, the Note, and all the
9
Loan Documents, notwithstanding when such Indebtedness was or will be
incurred by the Borrower. Such Indebtedness shall be subordinated in
accordance with the Subordination Agreement.
7. Affirmative Covenants. The Borrower covenants and agrees that
---------------------
until all of the Obligations have been paid in full and Borrower shall have
no further Obligations under this Agreement, unless the Lender shall
otherwise consent in writing:
7.1 Repayment of Obligations. The Borrower shall repay the Obliga-
------------------------
tions according to the terms of this Agreement, the Note and the other Loan
Documents.
7.2 Performance Under Loan Documents. The Borrower shall perform all
--------------------------------
obligations required to be performed by it under the terms of this Agreement,
the Note, the Escrow Agreement, and the other Loan Documents and any other
agreements now or hereafter existing or entered into between the Borrower
and the Lender.
7.3 Financial Statements. The Borrower shall deliver within six weeks
--------------------
from the date hereof to the Lender copies of its balance sheet and statement
of operations as of June 30, 2000, prepared by Xxxxx, Xxxxxxxxxx & Co., LLP,
independent accountants ("Financial Statements"). All of the Financial
Statements shall be true and correct, present fairly and completely the
financial condition of Borrower and its subsidiaries in all material respects
for the periods covered therein, shall have been prepared in accordance with
GAAP, and shall be in accordance with the respective books of account and
records of the business of the Borrower, and shall present no liabilities
or transactions which are not reflected in the Financial Statements described
in this Section 7.3.
7.4 Other Information. The Borrower shall furnish to the Lender:
-----------------
(a) Promptly upon receipt thereof, copies of all financial reports, if
any, submitted to the Borrower or any of its subsidiaries by its auditors, in
connection with each annual or interim audit of their respective books by such
auditors;
(b) Promptly upon the issuance thereof, copies of all reports to or from
the Securities and Exchange Commission or any other governmental agency or any
securities exchange, and all reports, notices, or statements sent to its
stockholders;
(c) Promptly upon the commencement thereof, written notice of any
litigation, including arbitrations, and of any proceedings before any
governmental agency which would, if successful, materially affect the
Borrower or any subsidiary, or where the amount involved exceeds $10,000; and
(d) With reasonable promptness, such other information respecting the
business, operations and financial condition of the Borrower or any sub-
sidiary as the Lender may from time to time request. The Lender is hereby
authorized to deliver a copy of any financial statements or any other
information relating to the business, operations, or financial condition of
10
the Borrower or any subsidiary which may be furnished to it or come to its
attention pursuant to this Agreement or otherwise, to any regulatory body or
agency having jurisdiction of the Lender or to any person which shall, or
shall have any right or obligation to, succeed to all or any part of the
Lender's interest in the Note, this Agreement and any security herein
provided for or otherwise securing the Note.
7.5 Taxes and Claims. The Borrower shall duly pay and discharge, and
----------------
shall cause each of its subsidiaries to pay and discharge, (a) all taxes,
assessments, and governmental charges upon or against the Borrower or its
subsidiaries or their respective properties or assets prior to the date on
which penalties attach thereto, unless and to the extent that such taxes
are being diligently contested in good faith and by appropriate proceedings
and appropriate reserves therefor have been established, and (b) all lawful
claims, whether for tort damages, labor, materials, supplies, services,
repairs, wages or otherwise, which might or could, if unpaid, become a Lien
upon the properties or assets of the Borrower or its subsidiaries, unless
and to the extent only that the same are being diligently contested in good
faith and by appropriate proceedings and appropriate reserves therefor have
been established.
7.6 Books and Reserves. The Borrower shall and shall cause each of its
------------------
subsidiaries to:
(a) Maintain, at all times, true and complete books, records, and
accounts in which true and correct entries shall be made of its transactions
in accordance with GAAP consistently applied and consistent with those
applied in the preparation of the Financial Statements referred to in
Section 7.3, and
(b) By means of appropriate quarterly entries, reflect in its accounts
and in all financial statements proper liabilities and reserves for all taxes
and proper reserves for depreciation, renewals and replacements, obsolescence
and amortization of its properties and bad debts, all in accordance with GAAP
consistently applied, as above described.
7.7 Other Information. Furnish to the Lender such other financial and
-----------------
business information and reports in form and substance satisfactory to the
Lender as and when the Lender may from time to time request.
7.8 Maintenance of Existence and Licenses. While this Agreement
-------------------------------------
remains in effect and until the Obligations have been paid in full, (a)
maintain its corporate existence in good standing; (b) make no change in
the nature or character of its existing or proposed business or engage in
any business in which it was not or was not to be engaged on the date of
this Agreement as disclosed in Schedule 7.8, except as the business may be
modified to satisfy the requirements of the Securities and Exchange
Commission and/or the NASD; (c) maintain and keep in full force and effect
all licenses and permits necessary to the proper conduct of its business;
(d) at the request of Lender, qualify as a foreign corporation and obtain
all requisite licenses and permits in each state (other than the state of
its incorporation) where the Borrower does business; and (e) file or cause
to be filed in a timely manner all reports, applications, estimates and
licenses which shall be required by any governmental authority and which,
if not
11
timely filed, would have a material adverse effect on the Borrower, the
Collateral, the Lender's Liens in the Collateral or the priority of such
Liens.
7.9 Notice of Certain Events. The Borrower shall, immediately upon
------------------------
obtaining knowledge thereof, give written notice to the Lender of: (a) any
material litigation or proceeding brought against the Borrower, whether or
not the claim is considered by the Borrower to be covered by insurance;
(b) any written notice of a violation received by the Borrower from any
governmental regulatory body or law enforcement authority which, if such
violation were established, might have a material adverse effect on the
business of the Borrower, the value of the Collateral, the Lender's Liens
in the Collateral or the priority of such Liens; (c) any labor controversy
which has resulted in a strike or other work action materially affecting the
Borrower; (d) any attachment, judgment, Lien, levy or order which may be
placed on or assessed against or threatened against the Borrower if the
amount thereof exceeds $10,000 or against the Collateral in any amount;
(e) any Event of Default or any event which, after notice or lapse of time
or both, would become an Event of Default; and (f) any other matter which
has resulted in a material adverse change in the financial condition, cash
flows or operations of the Borrower.
7.10 Payment of Indebtedness: Performance of Other Obligations. The
---------------------------------------------------------
Borrower shall comply with all acts, rules, regulations and orders of any
legislative, administrative or judicial body or official applicable to the
operation of the Borrower's business; provided, however, that the Borrower
may in good faith by appropriate proceedings and with due diligence contest
any such taxes, assessments, governmental charges, acts, rules, regulations,
orders and directions. The Borrower shall also observe and remain in
compliance with all laws, ordinances, governmental rules and regulations to
which it is subject, and all covenants and conditions of all agreements and
instruments to which the Borrower is a party, which failure to comply or
failure to obtain would materially and adversely affect the business,
prospects, profits, properties or condition (financial or otherwise) of the
Borrower.
7.11 Defense of Collateral. Defend the Collateral and all proceeds
---------------------
therefrom against all claims and demands of all Persons at any time claiming
the same or any interest therein and preserve the Collateral free from any
subsequent Liens, and Borrower shall pay all costs and expenses (including
attorneys' fees) incurred in connection with such defense and preservation.
8. Negative Covenants. The Borrower covenants and agrees that so long
------------------
as this Agreement shall remain in effect and until the Obligations have been
paid in full, and Borrower shall have no further obligations under this
Agreement, unless the Lender shall consent in advance in writing, it shall
not:
8.1 Sale of Assets or Merger. Discontinue its business or proposed
------------------------
business or liquidate, sell, transfer, directly or indirectly, assign or
otherwise dispose of a material part of its assets or of the Collateral,
by sale, merger, consolidation or otherwise.
8.2 Liens and Encumbrances. Sell, assign, pledge, grant or suffer
----------------------
to exist any Lien on any of the Collateral to any Person other than the
Lender, or permit any Lien to attach to any of the Collateral, except in
favor of the Lender.
12
8.3 Distributions and Dividends. Declare or pay any dividends or make
---------------------------
any other payments on its capital stock, redeem, repurchase or retire any of
its capital stock, or make any other distribution to its stockholders.
8.4 Change in Management or Business. Engage in any business other than
--------------------------------
the business in which the Borrower is currently engaged or proposed to be
engaged as per Schedule 7.8, change its management or make any material
change in any of its business objectives, purposes and operations which might
in any way adversely affect the repayment of the Loan.
8.5 Repayment of Affiliates. Directly or indirectly, make or repay any
-----------------------
Indebtedness to, or purchase, assume or guarantee any obligation of, any of
the Borrower's Affiliates, except that the Borrower may make travel or other
reasonable expense advances to employees in the ordinary course of its
business.
8.6 Guaranties. Guarantee or otherwise, in any way, become liable with
----------
respect to the Indebtedness of any Person other than the Obligations to Lender.
8.7 Payments on Subordinated Debt. Make any payments, whether directly
-----------------------------
or indirectly, on any Subordinated Debt or purchase any Subordinated Debt,
provided, however, that reductions in Subordinated Debt shall be permitted on
a dollar for dollar basis from additional equity that is injected into
Borrower subsequent to the date of this Agreement or from the use of
retained earnings, on a quarterly basis, arising subsequent to June 30,
2000, but in no case more than 50% of such Subordinated Debt, so long as
both before and immediately after the contemplated reduction, (a) no Event
of Default shall exist under this Agreement, and (b) no facts or circum-
stances exist which, with notice and/or lapse of time, could constitute an
Event of Default under this Agreement.
9. Events of Default.
-----------------
9.1 Event of Default. The occurrence of any one or more of the following
----------------
events shall constitute an "Event of Default":
(a) The Borrower fails to pay any portion of the Obligations when due and
payable or declared due and payable;
(b) The Borrower fails or neglects to observe, perform or comply with any
other term, provision, condition, covenant, warranty or representation
contained in this Agreement or the other Loan Documents or in any other
agreement now existing or hereafter executed evidencing, securing or relating
in any way to the Obligations, which is required to be observed, performed or
complied with by the Borrower; provided, however, that the breach by the
Borrower of any non-financial covenant that is reasonably susceptible to cure
by the Borrower within 30 days shall not constitute an Event of Default if such
breach is fully cured within 30 days after written notice from Lender;
13
(c) If any representation or warranty made orally or in writing by or on
behalf of the Borrower in this Agreement, or in the other Loan Documents or in
any other agreement now existing or hereafter executed between the Borrower
and the Lender, or in connection with the transactions contemplated hereby or
thereby, shall prove to have been false or incorrect in any material respect
at the time at which such representation or warranty was made;
(d) Other than the Lender's Lien, there shall occur any Lien on any of
the Collateral, or any levy, seizure or attachment thereof;
(e) The Borrower is enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from conducting
all or any material part of its business;
(f) The filing by the Borrower of any voluntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any
other relief under the Bankruptcy Code or under any other act or law pertaining
to insolvency or debtor relief, whether state, federal or foreign, now or
hereafter existing;
(g) The filing against the Borrower of any involuntary petition seeking
liquidation, reorganization, arrangement, readjustment of debts or for any
other relief under the Bankruptcy Code or under any other act or law per-
taining to insolvency or debtor relief, whether state, federal or foreign,
now or hereafter existing, and such petition is not dismissed within forty-
five (45) days of the filing thereof or within such forty-five (45) day
period an order for relief under the Bankruptcy Code or any other applicable
act or law shall be entered;
(h) The Borrower ceases to be solvent, or the Borrower ceases to conduct
its business as now conducted or as proposed to be conducted;
(i) A notice of lien, levy or assessment in an amount in excess of
$10,000 is filed of record to all or any portion of the Borrower's assets by
the United States, or any department, agency or instrumentality thereof, or
by any state, county, municipal or other governmental agency, or if any taxes
or debts owing at any time or times hereafter to any one of them becomes a
Lien upon the Collateral or any other asset of the Borrower and the same is
not dismissed, released, discharged or transferred to bond within thirty
(30) days after the same becomes a Lien or, in the case of ad valorem taxes,
prior to the last day when payment may be made without penalty or such
earlier date upon which payment is required pursuant to the terms of the
other Loan Documents;
(j) Any of the Loan Documents for any reason ceases to be in full force
and effect unless the document is re-established or reinstated within 10 days
of Lender's written notice to the Borrower, or any of the Loan Documents for
any reason is declared to be null and void, or the Borrower denies that it
has any further liability under any Loan Document to which it is a party, or
gives notice to such effect;
14
(k) Any strike, lockout, labor dispute, embargo, condemnation, act of
God or public enemy, or other casualty which causes the cessation or
substantial curtailment of the Borrower's revenue producing activities for 30
days or more;
(l) The loss, suspension or revocation of, or failure to renew, any
material license or permit now held or hereafter acquired by the Borrower or
required for Borrower's business unless the Borrower fully remedies such loss,
suspension, revocation or failure to renew within 30 days;
(m) The Lender does not have or ceases to have a valid and perfected
first priority Lien in the Collateral, in each case, for any reason other
than the failure of the Lender to take any action within its control;
(n) The entry of a judgment or the issuance of a warrant of attachment,
execution or similar process against the Borrower or any of their respective
assets in excess of $10,000, which shall not be dismissed, discharged or
bonded within thirty (30) days;
(o) If a custodian, trustee, receiver or assignee for the benefit of
Creditors is appointed or takes possession of the Collateral, or any of the
Borrower's other assets;
(p) There shall occur any change in the business of the Borrower or its
operations, conduct or prospects thereof as per Schedule 7.8, which,
individually or in the aggregate, would have a material adverse effect on
the Borrower's ability to repay the Obligations; or
(q) There shall occur any material adverse change in the financial
condition of the Borrower.
9.2 Acceleration of the Obligations. Upon and after an Event of Default
-------------------------------
(other than an Event of Default specified in Section 9.1(f) or (g) hereof),
all of the Obligations may, at the option of the Lender, and without demand,
notice (except for any notice and cure period expressly allowed under Section
9.1(b)) or legal process of any kind, be declared, and immediately shall
become, due and payable, and upon the occurrence of an Event of Default
specified in Section 9.1(f) or (g) or hereof, all of the Obligations shall
automatically become due and payable, without demand, notice or legal process
of any kind, anything in the Note or other contract evidencing any such
obligation or in the Loan Documents or in any other agreement to the
contrary notwithstanding.
9.3 Default Rate of Interest. Upon the occurrence and during the
------------------------
continuance of an Event of Default, all of the Obligations shall bear interest
at the Post-Default Rate set forth in the Note until either (i) such Event of
Default is cured to the Lender's satisfaction or otherwise waived in writing
by the Lender, (ii) the Lender takes the Collateral in satisfaction of the
Note and the Obligations; (iii) the Obligations are paid in full; or (iv) the
Note is converted in full by the Lender and this Agreement is terminated.
15
10. Rights and Remedies After Event of Default.
------------------------------------------
10.1 Rights and Remedies. Upon and after the occurrence of any Event
-------------------
of Default, the Lender shall have, in addition to all other rights and
remedies which the Lender may have under this Agreement, the other Loan
Documents, and applicable law, the following rights and remedies, all of
which may be exercised with or without further notice to the Borrower: (a)
all of the rights and remedies of a secured party under the UCC of the State
of Florida, or any other state where such rights and remedies are asserted;
and (b) the right to the fullest extent allowed under the Note and the
Escrow Agreement, and to which Borrower agrees and shall make no objection
to in any action, whether in court, administrative agency, arbitration or
otherwise, for the Lender to take the Collateral in Lender's name, through
self-help and without the need for judicial process, without the need for
obtaining a final judgment or giving the Borrower notice and opportunity for
a hearing on the validity of the Lender's claim, without posting bond or
other security which might otherwise be required by law or a court prior to
exercise of this remedy, with the Collateral all going to the name and
possession of the Lender without any requirement of valuation, sale or
liquidation of the Collateral, and with no right of redemption by any
Person, whether for itself or on behalf of the Borrower, notwithstanding
the Collateral is in excess of the Obligations under this Agreement and
the Note. The Borrower agrees that the Lender has no obligation to preserve
rights to the Collateral against any Person or to marshal any Collateral for
the benefit of any Person.
10.2 Rights and Remedies Cumulative; Non-Waiver; Etc. The enumeration
-----------------------------------------------
of the Lender's rights and remedies set forth in this Agreement is not
intended to be exhaustive and the exercise by the Lender of any right or
remedy shall not preclude the exercise of any other rights or remedies, all
of which shall be cumulative, and shall be in addition to any other right
or remedy given hereunder, under the Loan Documents or under any other
agreement between the Borrower and the Lender or which may now or hereafter
exist in law or in equity or by suit or otherwise; provided, if the Lender
exercises its rights and remedies under subparagraph (b) of Section 10.1,
it will take and obtain all rights, title and interest to the entire
Collateral in full satisfaction of Borrower's Obligations, and will seek
no further remedies as to the Borrower's Obligations. No delay or failure
to take action on the part of the Lender in exercising any right, power or
privilege shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or privilege preclude other or
further exercise thereof or the exercise of any other right, power or
privilege, except as limited by the proviso in the first sentence of this
Section 10.2 relating to taking the Collateral in full satisfaction of the
Borrower's Obligations, or shall be construed to be a waiver of any Event of
Default. No course of dealing between the Borrower and the Lender or the
Lender's employees shall be effective to change, modify or discharge any
provision of this Agreement or to constitute a waiver of any Event of
Default. The Lender shall not, under any circumstances or in any event
whatsoever, have any liability for any error, omission or delay of any kind
occurring in the liquidation of the Collateral or for any damages resulting
therefrom except damages directly attributable to the Lender's gross
negligence or willful misconduct.
16
11. Miscellaneous.
-------------
11.1 Survival of Agreements. All agreements, covenants, representa-
----------------------
tions and warranties contained herein or made in writing by or on behalf of
the Borrower in connection with the transactions contemplated hereby shall
survive the execution and delivery of this Agreement and the other Loan
Documents until the Obligations are fully paid and performed and Borrower
shall have no further obligations under this Agreement. No termination or
cancellation (regardless of cause or procedure) of this Agreement shall in
any way affect or impair the powers, obligations, duties, rights and
liabilities of the parties hereto in any way with respect to any transaction
or event occurring prior to such termination or cancellation. The Borrower
further agrees that to the extent that the Borrower makes a payment or
payments to the Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy, insolvency or similar state or federal law, common law
or equitable cause, then, to the extent of such payment or repayment, the
Obligations or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been received
by the Lender.
11.2 Governing Law; Waiver of Jury Trial. THIS AGREEMENT SHALL BE
-----------------------------------
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED,
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF FLORIDA. THE BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF
FLORIDA, AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR
CERTIFIED MAIL DIRECTED TO THE BORROWER AT THE ADDRESS STATED IN SECTION 11.3
HEREOF AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES
MAILS, PROPER POSTAGE PREPAID. THE BORROWER WAIVES ANY OBJECTION WHICH THE
BORROWER MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON
CONVENIENS TO ANY SUIT OR PROCEEDING INSTITUTED BY THE LENDER UNDER THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS IN ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE STATE OF FLORIDA. NOTHING IN THIS SECTION 11.2 SHALL AFFECT THE
RIGHT OF THE LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR AFFECT THE RIGHT OF THE LENDER TO BRING ANY ACTION OR PROCEEDING
AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION
WHICH HAS JURISDICTION OVER THE BORROWER OR ITS PROPERTY. EACH OF THE
BORROWER AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY SUIT OR PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PERSON IN CONNECTION WITH THE LOAN OR THE LOAN DOCUMENTS. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER
17
TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND TO MAKE THE LOAN.
11.3 Notice. All notices and other communications hereunder shall be
------
in writing and shall be deemed to have been validly served, given or
delivered three (3) days after deposit in the United States malls, with
postage prepaid, and addressed to the party to be notified as follows:
If to Lender: Dialysis Corporation of America
00 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
With a copy to: Xxxxxxxx X. Xxxxx, Esq.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx Xxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
If to the Borrower at: MainStreet XXX.xxx Inc.
000 Xxxxxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile Number: (000) 000-0000
With a copy to: XxXxxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile Number: (000) 000-0000
or to such other address as each party may designate for itself by like
notice, or on the date of delivery to such party at such address, if notice
is given or delivered by hand, telex, telegram, facsimile transmittal, or
overnight courier.
11.4 Indemnification of the Lender and its Affiliates. From and at
------------------------------------------------
all times after the date of this Agreement, and in addition to all of the
Lender's other rights and remedies against the Borrower, the Borrower agrees
to hold the Lender, its Affiliates and their respective officers, directors
and employees, harmless from, and to indemnify the Lender, its Affiliates
and their respective officers, directors and employees against, all losses,
damages, costs and expenses (including, but not limited to, attorneys' and
paralegals' fees, costs and expenses) incurred by the Lender, its Affiliates
and their respective officers, directors and employees from and after the
18
date hereof, whether direct, indirect or consequential, as a result of or
arising from or relating to any suit, action or proceeding by any Person,
whether threatened or initiated, asserting a claim for any legal or equitable
remedy under any statute or regulation, including, but not limited to, any
federal or state securities laws, or under any common law or equitable cause
or otherwise, arising from or in connection with the negotiation, preparation,
execution or performance of, or the financing transactions contemplated by,
this Agreement and the other Loan Documents, the Lender's furnishing of funds
to the Borrower pursuant to this Agreement; provided, however, that the
foregoing indemnification shall not protect a Lender or its Affiliates from
loss, damage, cost or expense directly attributable to such Lender's or any
Affiliate's willful misconduct or gross negligence or arising from any claim
by a shareholder of the Lender other than the Borrower or its Affiliates,
provided the shareholder has continuously held $2,000 in market value or 1%
of the Lender's securities for at least one year prior to the assertion of
any such claim. All of the foregoing losses, damages, costs and expenses of
the Lender, its Affiliates and their respective officers, directors and
employees shall be payable by the Borrower upon demand by the Lender and
shall be additional Obligations hereunder secured by the Collateral.
11.5 Waivers by the Borrower. The Borrower waives (a) presentment,
-----------------------
demand and protest and notice of presentment, protest, non-payment, maturity
and all other notices; (b) notice prior to taking possession or control of
the Collateral or any bond or security which might be required by any court
prior to allowing the Lender to exercise any of the its remedies; and (c) the
benefit of all valuation, appraisement and exemption laws.
11.6 Lawful Charges. It is the intent of the parties that the rate of
--------------
interest and all other charges due from the Borrower be lawful. Notwith-
standing anything to the contrary contained in this Agreement or the Note,
if at any time until payment in full of the Obligations, the rate of interest
payable with respect to the Loan (the "Stated Rate") exceeds the highest
lawful rate permissible under any law which a court of competent jurisdiction
shall, in a final determination, deem applicable hereto (the "Maximum Lawful
Rate"), then in such event and so long as the Maximum Lawful Rate would be so
exceeded, the Stated Rate shall be equal to the Maximum Lawful Rate; provided,
however, that if at any time thereafter the Stated Rate is less than the
Maximum Lawful Rate, the Borrower shall continue to pay interest hereunder at
the Maximum Lawful Rate until such time as the total interest received by the
Lender from the making of Loan hereunder is equal to the total interest which
the Lender would have received had the Stated Rate been (but for the operation
of this paragraph) the interest rate payable since the Closing Date.
Thereafter, the interest rate payable hereunder shall be the Stated Rate
unless and until the Stated Rate again exceeds the Maximum Lawful Rate, in
which event this paragraph shall again apply. In no event shall the total
interest received by the Lender pursuant to the terms hereof exceed the
amount which the Lender could lawfully have received had the interest due
hereunder been calculated for the full Term at the Maximum Lawful Rate. If
for any reason payment of a portion of interest or charges as required by
this Agreement would exceed the limit established by applicable law, then
the obligation to pay interest or charges shall automatically be reduced to
such limit and if any amounts in excess of such limit shall have been paid,
then such amounts shall be applied to the unpaid principal amount of the
Obligations or refunded so that under no circumstances shall interest or
charges required hereunder exceed the Maximum Lawful Rate.
19
11.7 Assignment. The Borrower may not sell, assign or transfer this
----------
Agreement, or the other Loan Documents or any portion thereof, including
without limitation, the Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. The Borrower hereby consents
to the Lender's participation, sale, assignment, transfer or other dis-
position at any time or times hereafter of this Agreement or the other
Loan Documents, or of any portion hereof or thereof, including without
limitation, the Lender's rights, title, interests, remedies, powers and
duties hereunder or thereunder.
11.8 Binding Effect. All of the terms of this Agreement and the other
--------------
Loan Documents, as the same may from time to time be amended, shall be
binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of the Borrower and the Lender. This provision,
however, shall not be deemed to modify Section 11.7.
11.9 Injunctive Relief. The Borrower recognizes that in the event
-----------------
the Borrower fails to perform, observe or discharge any of its obligations
or liabilities under this Agreement, any remedy of law may prove to be
inadequate relief to the Lender. The Borrower therefore agrees that the
Lender, if the Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of
proving actual damages.
11.10 Collection Costs. All costs and expenses incurred by the
----------------
Lender to obtain, enforce or preserve the security interests granted by
this Agreement and to collect the Obligations, including, without
limitation, stationery and postage, telephone and telegraph, secretarial
and clerical expenses, the fees or salaries of any collection agents
utilized, all costs to maintain and preserve the Collateral and all
attorneys' fees and legal expenses incurred in obtaining or enforcing payment
of any of the Obligations or foreclosing or satisfying the Lender's security
interest in the Collateral, whether through the Escrow Agreement, judicial
proceedings or otherwise, or in enforcing or protecting its rights and
interests under this Agreement or under any of the other Loan Documents
delivered pursuant hereto, or in protecting the rights of any holder or
holders with respect thereto, or in defending or prosecuting any actions or
proceedings arising out of or relating to the Lender's transactions with the
Borrower, shall be paid by the Borrower to the Lender, upon demand, or, at
the Lender's election, added to the Obligations, and the Lender may take
judgment against the Borrower for all such costs, expense and fees in
addition to all other amounts due from the Borrower hereunder.
11.11 No Waiver of Merger. Notwithstanding anything in this Agreement
-------------------
or any of the Loan Documents to the contrary, no provisions or terms of the
Merger or the Merger Agreement are waived or modified by virtue of the Loan,
this Agreement or the Loan Documents.
11.12 Severability. Any provision of this Agreement which is
------------
prohibited and unenforceable in any jurisdiction shall, as to such juris-
diction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
11.13 Entire Agreement, Modification, Benefit. This Agreement and
----------------
the Loan Documents shall constitute the entire agreement of the parties and
no provision of this
20
Agreement or the Loan Documents, including the provisions of this Section,
may be modified, deleted or amended in any manner except by agreement in
writing executed by the parties.
11.14 Construction. All references in this Agreement to the single
------------
number and neuter gender shall be deemed to mean and include the plural
number and all genders, and vice versa, unless the context shall otherwise
require.
11.15 Headings. The underlined headings contained herein are for
--------
convenience only and shall not affect the interpretation of this Agreement.
11.16 Counterparts. This Agreement may be executed in more than one
------------
counterpart, each of which shall be deemed an original.
11.17 Nonliability of Lender. The Lender shall not have any fiduciary
----------------------
responsibilities to the Borrower. The Lender undertakes no responsibility
to the Borrower to review or inform the Borrower of any matter in connection
with any phase of the Borrower's business or operations.
11.18 Limitation of Liability. No claim may be made by the Borrower
-----------------------
against the Lender, or its Affiliates for any special consequential or
punitive damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contem-
plated by this Agreement, or any act, omission or event occurring in
connection therewith; and the Borrower hereby waives, releases and agrees not
to xxx upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
11.19 Warrant of Attorney. Except to the extent Lender exercises its
-------------------
remedy under Section 10.1(c) to which this Section 11.19 shall have no
application, the Borrower authorizes any attorney at law, including an attorney
engaged by the Lender, to appear in any court of record in the State of New
York or any other State or Territory of the United States, after the occurrence
of an Event of Default hereunder and waive the issuance and service of process
and confess judgment against the Borrower in favor of the Lender, for the
amount of the Obligations then appearing due, together with costs of suit, and
thereupon to release all errors and waive all rights of appeal and stay of
execution. The Borrower hereby expressly waives any conflict of interest that
the Lender's attorney may have in confessing such judgment against Borrower and
expressly consents to the confessing attorney receiving a legal fee from the
holder for confessing such judgment against Borrower. The foregoing warrant
of attorney shall survive any judgment; and if any judgment be vacated for any
reason, the Lender nevertheless may thereafter use the foregoing warrant of
attorney to obtain an additional judgment or judgments against the Borrower.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
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TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY
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21
BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT
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CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST
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THE LENDER, INCLUDING FAILURE ON ITS PART TO COMPLY WITH THE AGREEMENT OR ANY
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OTHER CAUSE.
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MAINSTREET XXX.XXX INC. DIALYSIS CORPORATION OF AMERICA,
a Delaware corporation a Florida corporation
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxxx
By---------------------------------- By-------------------------------
XXXXXX X. XXXXXXX XXXXXX X. XXXXXXXX
Title: Chairman of the Board, Chief Title: Chairman of the Board and
Executive Officer and President Chief Executive Officer
