1
Exhibit 10.9
BUSINESS LOAN AGREEMENT
PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
$1,500,000.00 08-15-1996 04000062812 A100 36 936
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
BORROWER: Coast Dental Services, Inc. LENDER: ▇▇▇▇▇▇▇ BANK, N.A.
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇, ▇▇▇▇▇ ▇▇▇ P.O. BOX 40329
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
====================================================================================================================================
THIS BUSINESS LOAN AGREEMENT between Coast Dental Services, Inc. ("Borrower")
and ▇▇▇▇▇▇▇ BANK, N.A. ("Lender") is made and executed on the following terms
and conditions. Borrower has received prior commercial loans from lender or
has applied to Lender for a commercial loan or loans or other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations
from Lender to Borrower, are referred to in this Agreement individually as the
"Loan" and collectively as the "Loans." Borrower understands and agrees that:
(a) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by Lender at
all times shall be subject to Lender's sole judgment and discretion; and (c)
all such Loans shall be and shall remain subject to the following terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of August 15, 1996, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms in the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
AGREEMENT. The word "Agreement" means this Business Loan Agreement,
as this Business Loan Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Business Loan Agreement from time to time.
BORROWER. The word "Borrower" means Coast Dental Services, Inc.
CERCLA. The word "CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended.
COLLATERAL. The word "Collateral" means and includes without
limitation all property and assets granted as collateral security for
a Loan, whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted
in the form of a security interest, mortgage, deed of trust,
assignment, pledge, chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien, charge, lien
or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time and the regulations and
published interpretations thereof.
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EVENT OF DEFAULT. The words "Event of Default" mean and include
without limitation any of the Events of Default set forth below in the
section titled "EVENTS OF DEFAULT."
GAAP. The word "GAAP" means generally accepted accounting principles
consistently applied.
GRANTOR. The word "Grantor" means and includes without limitation
each and all of the persons or entities granting a Security Interest
in any Collateral for the Indebtedness, including without limitation
all Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation
each and all of the guarantors, sureties, and accommodation parties in
connection with any indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well
as all claims by Lender against Borrower, or any one or more of them;
whether now existing, contemporaneously with or hereafter incurred or
created and any renewals, modifications, extensions, substitutions or
consolidations thereof, voluntary or involuntary incurred, secured
or unsecured, absolute or contingent, liquidated or unliquidated;
determined or undetermined, whether Borrower may be liable
individually or jointly with others, or primarily or secondarily, or
as guarantor, surety, or otherwise; whether recovery upon the
Indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such Indebtedness may be or hereafter may
become otherwise unenforceable.
LENDER. The word "Lender" means ▇▇▇▇▇▇▇ BANK, N.A., its successors
and assigns.
LOAN. The word "Loan" or "Loans" means and includes any and all
loans, advances, interest, costs, fees, documentary stamp tax and/or
intangible taxes, debts, overdraft indebtedness, leases, drafts,
letters of credit, credit cards, and business services from Lender to
Borrower, whether now existing, contemporaneously with, or hereafter
incurred or created and any renewals, modification, extensions,
substitutions or consolidations thereof, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to
this Agreement from time to time.
NOTE. The word "Note" means Borrower's promissory note or notes, if
any, evidencing Borrower's Loan obligations in favor of Lender, as
well as any renewal, extension, modification, consolidation,
substitute, replacement or refinancing note or notes therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and
security interests securing indebtedness owed by Borrower to Lender;
(b) liens for taxes, assessments, or similar charges either not yet
due or being contested in good faith; (c) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in
the ordinary course of business and securing obligations which are not
yet delinquent; (d) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (e) liens and
security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those
liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to the net
value of Borrower's assets.
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RELATED DOCUMENTS. The words "Related Documents" mean and include
without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection
with the Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract,
or otherwise, evidencing, governing, representing, or creating a
Security Interest.
SECURITY INTEREST. The words "Security Interest" mean and include
without limitation any type of collateral security, whether in the
form of a lien, charge, mortgage, deed of trust, assignment, pledge,
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract,
lease or consignment intended as a security device, or any other
security or lien interest whatsoever, whether created by law,
contract, or otherwise.
▇▇▇▇. The word "▇▇▇▇" means the Superfund Amendments and
Reauthorization Act of 1986 as now or hereafter amended.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions
set forth in this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory
to Lender the following documents for the Loan: (a) the Note, (b)
Security Agreements granting to Lender security interests in the
Collateral, (c) Financing Statements perfecting Lender's Security
Interests; (d) evidence of insurance as required below; and (e) any
other documents required under this Agreement or by Lender or its
counsel, including without limitation any guaranties described below.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and
the Related Documents, and such other authorizations and other
documents and instruments as Lender or its counsel, in their sole
discretion, may require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties
set forth in this Agreement, in the Related Documents, and in any
document or certificate delivered to Lender under this Agreement are
true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any advance
a condition which would constitute an Event of Default under this
Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
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ORGANIZATION. Borrower is a corporation which is duly organized,
validly existing, and in good standing under the laws of the state of
Borrower's incorporation and is validly existing and in good standing
in all states in which Borrower is doing business. Borrower has the
full power and authority to own its properties and to transact the
businesses in which it is presently engaged or presently proposes to
engage. Borrower also is duly qualified as a foreign corporation and
is in good standing in all states in which the failure to so qualify
would have a material adverse effect on its businesses or financial
condition.
AUTHORIZATION. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly
authorized by all necessary action by Borrower; do not require the
consent or approval of any other person, regulatory authority or
governmental body; and do not conflict with, result in a violation of,
or constitute a default under (a) any provision of its articles of
incorporation or organization, or bylaws, or any agreement or other
instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower and each
information, exhibit or report supplied to Lender by Borrower, its
agents or accountants truly and completely disclosed Borrower's
financial condition as of the date of the statement in accordance with
GAAP, and there has been no material adverse change in Borrower's
financial or business condition or operations subsequent to the date
of the most recent financial statement supplied to Lender and none are
imminent or threatened. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Borrower acknowledges and agrees that Lender is relying on all such
financial information in entering into, continuing, renewing or
extending any Loan.
LEGAL EFFECT. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by Borrower when delivered
will constitute, legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective
terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes
not presently due and payable, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and
has not executed any security documents or financing statements
relating to such properties. All of Borrower's properties are titled
in Borrower's legal name, and Borrower has not used, or filed a
financing statement under, any other name for at least the last five
(5) years. Additionally, Borrower and Borrower's real and personal
properties comply fully with all laws, ordinances, statutes, codes and
requirements of the Americans with Disabilities Act of 1990.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous
substances," "disposal," "release," and "threatened release," as used
in this Agreement, shall have the same meanings as set forth in the
"CERCLA," "▇▇▇▇," the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery
Act, 49 U.S.C. Section 6901, et seq., or other applicable state or
Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. Except as disclosed to and acknowledged by Lender in
writing, Borrower represents and warrants that: (a) During the
period of Borrower's ownership, lease or use of any real or personal
properties and the Collateral, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance by any person on, under, or
about any of the properties. (b) Borrower has no knowledge of, or
reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release, or threatened
release of any hazardous waste or substance by any prior owners or
occupants of any of the properties or the Collateral, or (ii) any
actual or threatened litigation or claims of any kind by any person
relating to such matters. (c) Neither Borrower nor any tenant,
contractor, agent or other
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authorized user of any of the properties or the Collateral shall use,
generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, or about any of the properties
or the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation those laws,
regulations and ordinances described above. Borrower authorizes Lender
and its agents to enter upon the properties to make such inspections
and tests as Lender may deem appropriate to determine compliance of
the properties with this section of the Agreement. Any inspections or
tests made by Lender shall be at Borrower's expense and for Lender's
purposes only and shall not be construed to create any responsibility
or liability on the part of Lender to Borrower or to any other person.
The representations and warranties contained herein are based on
Borrower's due diligence in investigating the Collateral and the
properties for hazardous wastes and substances. Borrower hereby (a)
releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any such laws, and (b) agrees to fully and promptly pay,
perform, discharge and defend, indemnify and hold harmless Lender
against any and all claims, orders, demands, causes of action,
proceedings, judgments, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer
resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal,
release or threatened release occurring prior to Borrower's ownership
or interest in the properties or the Collateral, whether or not the
same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the indebtedness and the termination or
expiration of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claims, investigation,
administrative proceeding or similar action (including those for
unpaid taxes) against Borrower is pending or threatened, and no other
event has occurred which may materially adversely affect Borrower's
financial condition or properties, other than litigation, claims, or
other events, if any, that have been disclosed to and acknowledged by
Lender in writing.
TAXES. To the best of Borrower's knowledge, all tax returns and
reports of Borrower that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental charges have
been paid in full, except those presently being or to be contested by
Borrower in good faith in the ordinary course of business and for
which adequate reserves have been provided.
LIEN PRIORITY. Unless otherwise previously disclosed to Lender in
writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interests on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior or
that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
BINDING EFFECT. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note
are binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance
with their respective terms.
PERMITS. Borrower possesses and will continue to possess all permits,
licenses, copyrights, trademarks, trade names, patents and rights
thereto to conduct its business and its business does not conflict or
violate any valid rights of others with respect to the foregoing.
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COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely
for business or commercial related purposes and will not purchase or
carry margin stock (within the meaning of Regulations G, T and U of
the Board of Governors of the Federal Reserve System).
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which
Borrower may have any liability complies in all material respects with
all applicable requirements of law and regulations, and (i) no
Reportable Event nor Prohibited Transaction (as defined in ERISA) has
occurred with respect to any such plan, (ii) Borrower has not
withdrawn from any such plan or initiated steps to do so, and (iii) no
steps have been taken to terminate any such plan.
LOCATION OF BORROWER'S OFFICES AND RECORDS. The chief place of
business of Borrower and the office or offices where Borrower keeps
its records concerning the Collateral is located at ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
▇▇ ▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purpose of or in connection
with this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender
will be, true and accurate in every material respect on the date as of
which such information is dated or certified; and none of such
information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and
agrees that Lender, without independent investigation, is relying upon
the above representations and warranties in extending Loan Advances to
Borrower. Borrower further agrees that the foregoing representations
and warranties shall be continuing in nature and shall remain in full
force and effect until such time as Borrower's indebtedness shall be
paid in full, or until this Agreement shall be terminated in the
manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
DEPOSIT ACCOUNTS. Maintain its primary banking accounts with Lender.
LITIGATION. Promptly inform Lender in writing of (a) all material
adverse changes in Borrower's financial condition, and (b) all
litigation and claims and all threatened litigation and claims
affecting Borrower or any Guarantor which could materially affect the
financial condition of Borrower or the financial condition of any
Guarantor.
UPDATES. Promptly inform Lender in writing of details of all
litigation, legal or administrative proceedings, investigation or
other action of similar nature, pending or threatened against
Borrower, at any time during the term of this Agreement, which in part
or in whole may or will render any of the above representations and
warranties no longer true, accurate and correct in each and every
respect. Borrower will bring such details to Lender's attention, in
writing, within thirty (30) days from the date Borrower acquires
knowledge of same.
FINANCIAL RECORDS. Maintain its books and records in accordance with
GAAP and permit Lender to examine and audit Borrower's books and
records at all reasonable times.
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FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but
in no event later than one hundred twenty (120) days after the end of
each fiscal year, Borrower's balance sheet and income statement,
statement of cash flow and notes to statements for the year ended,
audited by a certified public accountant satisfactory to Lender, and,
as soon as available, but in no event later than thirty (30) days
after the end of each month, Borrower's balance sheet and profit and
loss statement for the period ended, prepared and certified as correct
to the best knowledge and belief by Borrower's chief financial officer
or other officer or person acceptable to Lender. All financial
reports required to be provided under this Agreement shall be prepared
in accordance with GAAP and certified by Borrower as being true and
correct. Provide to Lender annually for each individual Borrower or
Guarantor, if any, signed and dated personal financial statements on
Lender's forms and, immediately after filing, the personal income tax
return filed for the past calendar year. Simultaneously with the
financial information required herein of Borrower, the same
information of all corporate or partnership guarantors, if any,
prepared in accordance with GAAP.
Promptly after the furnishing thereof, provide Lender with copies of
any statement or report furnished to any other party pursuant to the
terms of any indenture, loan, credit, or similar agreement and not
otherwise required to be furnished to Lender pursuant to any other
section of this Agreement.
Promptly after the sending or filing thereof, provide Lender with
copies of all proxy statements, financial statements and reports which
Borrower sends to its stockholders, and copies of all regular,
periodic, special reports, and all registration statements which
Borrower files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or with any
national securities exchange.
ADDITIONAL INFORMATION. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and
other reports with respect to Borrower's financial condition and
business operations as Lender may request from time to time.
FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants
and ratios:
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of
not less than:
PERIOD AMOUNT
------ ------
AS OF 12/31/96 $550,000.00
CASH FLOW REQUIREMENTS. Maintain Cash Flow at not less than
the following level:
PERIOD REQUIREMENT
------ -----------
EACH FISCAL YEAR END. 1.25 TO 1.00
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FIXED CHARGE RATIO. Maintain a ratio of Adjusted Net Income
to Fixed Charges of not less than:
PERIOD RATIO
------ -----
EACH FISCAL YEAR END. 1.15 TO 1.00
For purposes of this Agreement and to the extent the following terms
are utilized in this Agreement, the term "Tangible Net Worth" shall
mean Borrower's total assets excluding all intangible assets
determined in accordance with GAAP (i.e., goodwill, trademarks,
patents, copyrights, organizational expenses, and similar intangible
items, but including leaseholds and leasehold improvements at book
value) of Borrower less total Debt. The term "Debt" shall be
determined in accordance with GAAP. The term "Subordinated Debt"
shall mean indebtedness and liabilities of Borrower which have been
subordinated by written agreement to indebtedness owed by Borrower to
Lender in form and substance acceptable to Lender. The term "Working
Capital" shall mean Borrower's current assets at lower of cost or
current market value less amounts due from any officer, director,
shareholder or any entity related by common control or ownership,
excluding prepaid expenses, less Borrower's current liabilities. The
term "Liquid Assets" shall mean Borrower's cash on hand, marketable
securities, bank deposits and Borrower's receivables. The term
"Adjusted Net Income" means net income after taxes plus depreciation,
amortization, lease expense, and interest expense. The term "Fixed
Charges" mean interest expense plus lease expense, current maturities
of long-term debt and current maturities of capital leases. The term
"Cash Flow" shall mean net income after taxes, and exclusive of
extraordinary gains and income, plus depreciation and amortization.
The term "Senior Debt" shall mean Debt less Subordinated Debt. The
term "Capital Funds" shall mean Tangible Net Worth plus Subordinated
Debt. Except as provided above, all computations made to determine
compliance with the requirements contained in this paragraph shall be
made in accordance with GAAP and certified by Borrower as being true
and correct.
INSURANCE. Maintain fire and other risk insurance, business
interruption, theft, public liability insurance, and such other
insurance in such amounts and covering such risks as are usually
covered by businesses engaged in the same or a similar business and
similarly situated with respect to Borrower's properties and
operations, in form, coverages and with insurance companies reasonably
acceptable to Lender. Borrower, upon request of Lender, will deliver
to lender from time to time the policies or certificates of insurance
in form satisfactory to Lender, including stipulations that coverages
will not be cancelled or diminished without at least thirty (30) days'
prior written notice to Lender. In connection with all policies
covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such loss
payable or other endorsements as Lender may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports
on each existing insurance policy showing such information as Lender
may reasonably request, including without limitation the following: (a)
the name of the insurer; (b) the risks insured; (c) the amount of the
policy; (d) the properties insured; (e) the then current property
values on the basis of which insurance has been obtained, and the
manner of determining those values; and (f) the expiration date of the
policy. In addition, upon request of Lender (however not more often
than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value
or replacement cost of any Collateral. The cost of such appraisal
shall be paid by Borrower.
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GUARANTIES. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans in favor of Lender, on Lender's form,
and in the amounts and by the guarantors named below:
GUARANTORS AMOUNTS
---------- -------
▇▇▇▇ ▇▇▇▇▇▇ UNLIMITED
▇▇▇ ▇▇▇▇▇▇ UNLIMITED
▇▇▇▇ ▇▇▇▇▇▇, P.A. UNLIMITED
▇▇▇▇▇ ▇▇▇▇▇▇ UNLIMITED
OTHER AGREEMENTS. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and
any other party and notify Lender immediately in writing of any
default in connection with any other such agreements.
LOAN PROCEEDS. Use all loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind an nature, imposed upon Borrower or its properties, income, or
profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any
of Borrower's properties, income or profits. Provided, however,
Borrower will not be required to pay and discharge any such
assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim so long as (a) the
legality of the same shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on its books
adequate reserves with respect to such contested assessment, tax,
charge, ▇▇▇▇, ▇▇▇▇ or claim in accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish
to Lender evidence of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the appropriate
governmental official to deliver to Lender at any time a written
statement of any assessments, taxes, charges, levies, liens and claims
against Borrower's properties, income or profits.
PERFORMANCE. Perform and comply with all terms, conditions, and
provisions set forth in this Agreement and in the Related Documents in
a timely manner, and promptly notify Lender if Borrower learns of the
occurrence of any event which constitutes an Event of Default under
this Agreement or under any of the Related Documents.
OPERATIONS. Substantially maintain its present executive and
management personnel; conduct its business affairs in a reasonable and
prudent manner and in compliance with all applicable federal, state and
municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including without
limitation, compliance with the Americans With Disabilities Act and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefits plans, and
continue to engage in an efficient and economical manner in a business
of the same general type as now conducted by it, provided, however,
that nothing contained in this Agreement shall prevent Borrower from
discontinuing any part of Borrower's business, if in Borrower's
opinion, this discontinuance is in the best interests of Borrower and
not disadvantageous to Lender.
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08-15-1996 BUSINESS LOAN AGREEMENT PAGE 10
LOAN NO 04000062812 (CONTINUED)
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MAINTENANCE. Maintain, keep and preserve Borrower's buildings and
properties and every part thereof in good repair, working order, and
condition and from time to time make all needful and proper repairs,
renewals, replacements, additions, betterments and improvements
thereto, so that at all times the efficiency thereof shall be fully
preserved and maintained, ordinary wear and tear excepted.
INSPECTION. Permit employees or agents of Lender at any reasonable
time to inspect any and all collateral for the Loan or Loans and
Borrower's other properties and to examine or audit Borrower's books,
accounts and records and to make copies and memoranda of Borrower's
books, accounts and records. If Borrower now or at any time hereafter
maintains any records (including without limitation computer generated
records and computer software programs for the generation of such
records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of
any records it may request, all at Borrower's expense, and discuss the
affairs, finances and accounts of Borrower with Lender.
COMPLIANCE CERTIFICATE. Unless waived in writing by Lender, provide
Lender upon Lender's request a compliance certificate executed by
borrower's chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of
the certificate, no default or Event of Default has occurred, or has
occurred and is continuing under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all
respects with all environmental protection federal, state and local
laws, statutes, regulations and ordinances; not cause or permit to
exist, as a result of an intentional or unintentional action or
omission on its part or on the part of any third party, on property
owned and/or occupied by Borrower, any environmental activity where
damage may result to the environment, unless such environmental
activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within
thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with
any environmental activity whether or not there is damage to the
environment and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements,
financing statements, instruments, documents and other agreements as
Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent
of Lender:
INDEBTEDNESS AND LIENS. (a) except for trade debt incurred in the
normal course of business, purchase money security interests (for
which the maximum aggregate amount which may be incurred annually is
$200,000.00); operating leases (for which the maximum aggregate amount
which may be paid annually is $10,000,000.00), and indebtedness to
Lender contemplated by this Agreement, create, incur or assume
additional indebtedness for borrowed money, including capital leases,
in excess of U.S. $200,000.00, (b) sell, transfer, mortgage, assign,
pledge, lease, grant a security interest in or encumber any of
Borrower's assets, or (c) sell with recourse any of Borrower's
accounts, except to Lender and except for Borrower's accounts as
allowed as a permitted lien.
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08-15-1996 BUSINESS LOAN AGREEMENT PAGE 11
LOAN NO 04000062812 (CONTINUED)
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CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently
engaged, (b) cease operations, wind up, liquidate, merge, reorganize,
transfer, acquire or consolidate with any other entity, change
ownership, dissolve, transfer or sell or acquire Collateral or assets
out of the ordinary course of business, or (c) pay, declare, set
aside, or allocate any dividends in cash or other property, on
Borrower's stock (however, if Borrower is a Subchapter S corporation,
Borrower may make distributions to each shareholder which is necessary
to pay for any personal income tax liability incurred by that
shareholder as a direct result of profits generated by the Subchapter
S corporation) or purchase or retire any of Borrower's outstanding
shares or alter or amend Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance
money or assets (except to shareholders or officers of Borrower and in
which the aggregate amount outstanding at any time may not exceed
$200,000.00), (b) purchase, create or acquire any interest in any
other enterprise or entity, or (c) assume, endorse, be liable for or
incur any agreement or obligation as surety or guarantor.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if
(a) Borrower or any Guarantor is in default under the terms of this Agreement
or any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or
any other loan with Lender; or (e) Lender in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure
even though no Event of Default shall have occurred.
DIVIDEND LIMITATIONS. Notwithstanding anything to the contrary contained in
the Negative Covenants Section, Subsection "Continuity of Operations", clause
(c) above, Lender will permit a maximum aggregate annual amount of 50.00% of
annual net income to be paid in dividends.
ADDITIONAL FINANCIAL RATIO. Notwithstanding anything contrary contained in
this document, Tangible Net Worth shall be a minimum of $550,000.00 as of
12/31/96 and must increase by a minimum of 50.00% of annual net income
thereafter.
RIGHT OF SETOFF. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge, withdraw or setoff all sums owing on this Agreement
against any and all the accounts set forth below in the Accounts section
without prior demand or notice to Borrower.
ACCOUNTS. Borrower grants to Lender a contractual possessory security interest
in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
of Borrower's right, title and interest in and to, Borrower's deposits, accounts
(whether checking, savings, or some other account), or securities now or
hereafter in the possession of or on deposit with Lender or with any ▇▇▇▇▇▇▇
▇▇▇▇▇, Inc. affiliate or subsidiary including without limitation all accounts
held jointly with someone else and all accounts Borrower may open in the future,
excluding however all ▇▇▇, ▇▇▇▇▇, and trust accounts.
EVENTS OF DEFAULT. If any of the following events shall occur each shall
constitute an Event of Default under this Agreement:
DEFAULT ON INDEBTEDNESS. An event of default as defined in any Loan
or Note or demand for full payment of any Loan or Note.
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08-15-1996 BUSINESS LOAN AGREEMENT PAGE 12
LOAN NO 04000062812 (CONTINUED)
================================================================================
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or
to perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or
failure of Borrower to comply with or to perform any other term,
obligation, covenant or condition contained in any other agreement
between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor
default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any
other creditor or person that may materially affect any of Borrower's
property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of
the Related Documents.
FALSE STATEMENTS. Any warranty, representation, or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under
this Agreement or the Related Documents is false or misleading in any
material respect, either now or at the time made or furnished.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any Security Agreement to create a valid and perfected Security
Interest) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as
a going business, insolvency, appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors,
any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR PROCEEDINGS. Commencement of foreclosure proceedings, whether
by judicial proceeding, self-help, repossession or any other method, by
any creditor of Borrower, any creditor of any grantor of collateral for
the Loan. This includes a garnishment, attachment, or levy on or of any
of Borrower's deposit accounts with Lender.
FORFEITURE. The filing of formal charges under any federal or state
law against any Borrower which forfeiture is the penalty. However,
this Event of Default shall not apply if there is a good faith dispute
by Borrower as to the validity or reasonableness of the claim which is
the basis of the proceeding, and if Borrower gives Lender written
notice of the proceeding and furnishes reserves or a surety bond for
the proceeding satisfactory to Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor
dies or becomes incompetent.
INSECURITY. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except
where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate (including any
obligation to make Loan Advances or disbursements), and, at Lender's option,
all Indebtedness immediately will become due and payable, all without notice of
any kind to Borrower, except that in the case of an Event of Default of the
type described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's
rights and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and
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08-15-1996 BUSINESS LOAN AGREEMENT PAGE 13
LOAN NO 04000062812 (CONTINUED)
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an election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's right to declare a default
and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement and supersedes all prior
understandings and correspondence, oral or written, with respect to
the subject matter hereof. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
CAPTION HEADINGS. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or
define the provisions of this Agreement.
CONTINUING AGREEMENT. This Agreement is a continuing agreement and
shall continue in effect notwithstanding that from time to time, no
Indebtedness may exist.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to
Lender's sale or transfer, whether now or later, of one or more
participation interests in the Loans to one or more purchasers, whether
related or unrelated to Lender. Lender may provide, without any
limitation whatsoever, to any one or more purchasers, or potential
purchasers any information or knowledge Lender may have about Borrower
or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy it may have with respect to such matters.
Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of
such participation interests. Borrower also agrees that the purchasers
of any such participation interests will be considered as the absolute
owners of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing the
sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interest may
enforce its interests irrespective of any personal claims or defenses
that Borrower may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of
Lender's out-of-pocket expenses, including reasonable attorneys' fees,
incurred in connection with the preparation, execution, enforcement
and collection of this Agreement or in connection with the Loans made
pursuant to this Agreement. Lender may pay someone else to help
collect the Loans and to enforce this Agreement, and Borrower will pay
that amount. This includes, subject to any limits under applicable
law, Lender's reasonable attorneys' fees and Lender's legal expenses,
whether or not there is a lawsuit, including reasonable attorneys'
fees for bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction), appeals and any anticipated
post-judgment collection services. Borrower also will pay any court
costs, in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall
be given in writing and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier or
deposited in the United States registered or certified mail, first
class, postage prepaid, return receipt requested, addressed to the
party to whom the notice is to be given at the address shown above;
notification by facsimile is specifically not allowed. Any party may
change its address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of
the notice
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08-15-1996 BUSINESS LOAN AGREEMENT PAGE 14
LOAN NO 04000062812 (CONTINUED)
================================================================================
is to change the party's address. To the extent permitted by
applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice
purposes, Borrower agrees to keep Lender informed at all times of
Borrower's current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any
provision of this Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision
invalid or unenforceable as to any other persons or circumstances. If
feasible, any such offending provision shall be deemed to be modified
to be within the limits of enforceability or validity; however, if the
offending provision cannot be so modified, it shall be stricken and
all other provisions of this Agreement in all other respects shall
remain valid and enforceable.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or
on behalf of Borrower shall bind its successors and assigns and shall
inure to the benefit of Lender, its successors and assigns. Borrower
shall not, however, have the right to assign its rights under this
Agreement or any interest therein, without the prior written consent
of Lender.
SURVIVAL. All warranties, representations, and covenants made by
Borrower in this Agreement or in any certificate or other instrument
delivered by Borrower to Lender under this Agreement shall be
considered to have been relied upon by Lender and will survive the
making of the Loan and delivery to Lender of the Related Documents,
regardless of any investigation made by Lender or on Lender's behalf.
TIME. Time is of the essence in the performance of this Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any
right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice
or constitute a waiver of Lender's right otherwise to demand strict
compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing
between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's right or of any obligations of
Borrower or of any Grantor as to any future transactions. Whenever
the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is
required, and in all cases such consent may be granted or withheld in
the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
AUGUST 15, 1996.
BORROWER
Coast Dental Services, Inc.
By: ____________________________________
▇▇▇▇▇ ▇▇▇▇▇▇, President
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08-15-1996 BUSINESS LOAN AGREEMENT PAGE 15
LOAN NO 04000062812 (CONTINUED)
================================================================================
LENDER:
▇▇▇▇▇▇▇ BANK, N.A.
By: ____________________________________
Authorized Officer
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