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EXHIBIT 10.1
LOAN AGREEMENT
March 6, 2000
Park Pharmacy Corporation
Attention: Xx. Xxxxxx X. Xxxxx, President
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Xxxxxxxxx'x Pharmacy, Inc.
Attention: Xx. Xxxxxx X. Xxxxx, President
00000 Xxxxxxx Xxxx Xxxxx 000
Xxxxxx, Xxxxx 00000
XX-Xxx.Xxx, Inc.
Attention: Xx. Xxxxxx X. Xxxxx, President
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Gentlemen:
This Loan Agreement (the "Loan Agreement"), when countersigned by an
authorized officer of each corporation, Park Pharmacy Corporation ("Park"), a
Colorado corporation, Xxxxxxxxx'x Pharmacy, Inc. ("Xxxxxxxxx"), a Texas
corporation, and XX-Xxx.Xxx, Inc. ("RX"), a Texas corporation (hereinafter for
convenience sometimes collectively, jointly or singly referred to as
"Borrower"), will set forth the terms of a multiple obligation credit facility
by and between Borrower and BANK OF TEXAS, N.A.("Bank"):
1. CREDIT FACILITY. Subject to the terms and conditions set forth in this Loan
Agreement and the other agreements, instruments and documents evidencing,
governing, and/or pertaining to the Loan, as hereinafter defined (collectively,
together with the Loan Agreement, referred to hereinafter as the "Loan
Documents"), which includes but is not limited to execution of all required
documentation, payment of all fees and expenses of Bank, and tender of all
enumerated documentation relating to each Borrower, Bank hereby agrees to
provide to Borrower the credit facility hereinbelow described (the "Credit
Facility") and more particularly set forth in the Loan Documents:
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a. $3,000,000.00 Revolving Line of Credit. Subject to the terms
and conditions set forth herein and satisfaction of all of
Borrower's obligations under the Loan Documents, Bank agrees
to lend to Borrower on a revolving basis from time to time
during the period commencing on the date hereof and continuing
through February 28, 2002, the maturity date of one of the two
promissory notes evidencing this Credit Facility from time to
time, such amounts as Borrower may request hereunder;
provided, however, (i) the total principal amount outstanding
at any time shall not exceed $3,000,000.00 (the "Revolving
Line of Credit" or the "Maximum LOC Commitment Amount"), and
(ii) notwithstanding anything to the contrary herein, amounts
outstanding on the Revolving Line of Credit shall not exceed
the lesser of the Borrowing Base or the Maximum LOC Commitment
Amount. Borrower's right to borrow further funds under the
Revolving Line of Credit shall be limited to the Borrowing
Base as established by the terms thereof. Subject to the terms
and conditions of the Revolving Line of Credit, Borrower may
borrow, repay and reborrow amounts thereunder. The sums
advanced under the Revolving Line of Credit shall be used by
the Borrower to provide (i) working capital support for
Borrower, (ii) acquisition financing of other pharmacies
and/or pharmaceutical/medical supply concerns, and (iii)
refinancing of existing debt owed by any one or more of the
three corporations comprising Borrower.
b. $336,000.00 Term Note. Subject to the terms and conditions set
forth herein and satisfaction of all obligations of the
Borrower in the Loan Documents, Bank agrees to lend Borrower
on a term basis beginning on the date hereof and continuing
for a term of five (5) years, in a single advance the lesser
of (i) $336,000.00 or (ii) the Term Loan Borrowing Base. This
Note (the "Term Equipment Loan") will amortize fully on the
basis of a five (5) year mortgage amortization and mature on
February 28, 2005. Funding will be limited to the lesser of
the face amount of the Term Equipment Loan or 80% of the
depreciated book value at cost of all machinery and equipment
(the percentage result referred to as the "Term Loan Borrowing
Base"and the personalty referred to as the "equipment") as
shown on the consolidated financial statements of the Borrower
dated December 31, 1999. The equipment must be owned by
Borrower. No leased or third party owned equipment shall be
included in the listing of equipment pledged, but shall
include all equipment currently owned by the Borrower. The
monies advanced on the Term Equipment Loan will be used by
Borrower to provide (i) working capital support for Borrower,
(ii) acquisition financing of other pharmacies and/or
pharmaceutical/medical supply concerns, and (iii) refinancing
of existing debt owed by any one or more of the three
corporations comprising Borrower.
c. The two (2) notes (a "Note" or the "Notes") will provide that
the Notes are cross- collateralized and cross-defaulted. Park
shall have the option to add Additional Collateral (defined
below) to the Borrowing Base upon acquisition of a future
subsidiary subject to provision in form and substance to the
satisfaction of Bank of (i)
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a written Guaranty of the Revolving Line of Credit( in form
substantially similar to the attached Exhibit "B"), (ii) a
written pledge and security agreement (substantially in the
form of the attached Exhibit "C"), (iii) a written opinion of
counsel containing opinions of the type delivered by
Borrower's current counsel at closing and an opinion to the
effect that the act of pledging assets to secure the debt of
Borrower is not subject to a fraudulent conveyance claim, (iv)
execution and delivery of all necessary financing statements
or other documentation or agreements required by Bank to
perfect a first and prior security interest in the Additional
Collateral, (v) evidence of the authorization and binding
effect of that future subsidiary's proffered performance under
those new agreements and/or documents, and (vi) payment of all
Bank's costs, including without limitation reasonable
attorney's fees,
All advances under the Notes and the amounts from time to time outstanding shall
be collectively called the "Loan". Bank reserves the right to require Borrower
to give Bank not less than three (3) Business Days' prior written notice of each
requested advance under Revolving Line of Credit Note not advanced at closing,
specifying (i) the aggregate amount of such requested advance and providing
evidence of or the particulars establishing Borrower's eligibility under the
Borrowing Base, all as more particularly set forth in the Revolving Line of
Credit Note (as hereinafter defined), and (ii) the requested date of such
advance, with such advances to be requested in a written form satisfactory to
Bank.
2. PROMISSORY NOTES. The Loan shall be evidenced by two (2) promissory notes
(together with any renewals, extensions, modifications, and/or increases
thereof, if any [and none is committed by Bank], the "Revolving Line of Credit
Note" and the "Term Equipment Note" respectively, with each Note providing for
joint and several liability, duly executed by an authorized officer of Park,
Xxxxxxxxx and RX, and payable to the order of Bank), in the stated aggregate
principal amount of up to $3,336,000.00 (the "Commitment Amount"), and otherwise
in form and substance acceptable to Bank. Interest on the Notes shall accrue at
the various rates set forth below. The principal of and interest on the two (2)
Notes comprising the Loan shall be due and payable in accordance with the terms
and conditions set forth in each of the Notes and in this Loan Agreement.
3. COLLATERAL. As collateral and security for the indebtedness evidenced by the
Notes and any and all other indebtedness or obligations related to or arising
under the Notes (collectively the "Indebtedness"), Borrower has pledged and
assigned to Bank, its successors and assigns, a first and prior lien and
security interest in the following property or property interests of Borrower as
follows:
a. Revolving Line of Credit Note: (i) all stock owned by Park of
Xxxxxxxxx and RX together with all tangible personal property
of Park now existing or hereafter acquired and (ii) all
accounts receivable, inventory, cash and all other tangible
personal property of Xxxxxxxxx and RX, including without
limitation, insurance policies thereto and all proceeds
therefrom (the "LOC Collateral"), more particularly described
in those three (3) certain Pledge Agreement or Pledge and
Security Agreements dated of even date herewith, executed as
appropriate, by Park,
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Xxxxxxxxx and RX to or for the benefit of Bank (each hereafter
referred to as a "Pledge Agreement"). Park, Xxxxxxxxx and RX
agree to execute such other agreements and documents as Bank
shall deem appropriate and otherwise require from time to time
to more fully create and perfect Bank's first and prior liens
and security interests in the LOC Collateral. Borrower
confirms that each entity comprising Borrower owns the LOC
Collateral free and clear of all security interests and liens
of any type after closing and the payoff of any loan balance
of Borrower then outstanding, as applicable.
b. Term Equipment Note: the equipment of Xxxxxxxxx and RX, and
all insurance policies, warranties, and service contracts
associated therewith (the "Term Note Collateral"). Borrower
will provide Bank all necessary documentation to evidence this
Note and all security for the repayment thereof.
c. Guaranty Agreements: If Park elects to add eligible assets of
any future subsidiary to the Borrowing Base, as part of the
requirements discussed above Borrower further agrees to
provide to Bank as additional security for repayment of the
Credit Facility separate written guaranty agreements (each
hereafter referred to as a "Guaranty") substantially in form
of the attached Exhibit "B" or as otherwise required by Bank
in its sole discretion by each future subsidiary of Park. Each
Guaranty will remain in effect until both Notes and all costs
and expenses due therein are fully paid. Each Guaranty shall
expressly provide that the Bank will be entitled to proceed to
enforce its rights in the LOC Collateral against one or more
Guarantor without proceeding against any one or all of the
three entities comprising the Borrower, any other Guarantor,
or in any combination thereof, or in respect of any collateral
which secures the Credit Facility in such manner, time and
sequence as the Bank shall determine in its sole and absolute
discretion.
d. Cross-collateralization and cross-default: The Notes shall
provide that all collateral for that Note is also collateral
for the other Note, and also state that a default in the
payment of one Note or in the performance of Borrower's or any
other party's obligations under the Loan Documents associated
thereto shall also be a default under the provisions of the
other Note.
e. Definitions: The following definitions shall apply to the Loan
Documents and the terms and provisions thereof.
(i) "Accounts Receivable" Any present or future right
to receive payment as shown on the books and records
of Borrower, including without limitation accounts
receivable established in the ordinary course of
business, contract rights evidencing a debt or
obligation of a third party not an affiliate, a tax
refund due to Borrower based on a filed tax return,
or any other
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account, chattel paper or document which evidences a
right of Borrower to receive payment from a third
party, not an affiliate of Borrower.
(ii) "Affiliate" Any partnership, joint venture,
company, association or other entity related to
Borrower by common ownership.
(iii) "Borrowing Base" The sum of (a) Eligible
Inventory plus (b) 80% of Eligible Accounts
Receivable.
(iv) "Contra Accounts" Any account receivable where
Borrower has a corresponding account payable. Stated
differently, any situation where there are mutual
accounts receivable and accounts payable existing
between Park, Xxxxxxxxx or RX or any future
subsidiary of any one or more of Borrower in respect
of inter-company obligations as well as any
obligations with a third party.
(v) "Government Accounts" Any account receivable from
any governmental agency which is not a "pre-approved
Medicare/Medicaid account." Included within this
definition would be any Medicare account based upon
assignments for durable goods, "walk-in" accounts or
other accounts subject to governmental audit.
(vi) "Guarantor" Any future subsidiary of Borrower
which executes and delivers to Bank a written
guaranty of the Credit Facility and a Pledge
Agreement granting a first and prior security
interest in certain of its personal property which is
eligible LOC Collateral.
(vii) "Five Percent Past Due Rule" Any relationship
with a customer where more than five percent (5%) of
the account balance is more than ninety (90) days
outstanding shall result in the entirety of the
account receivable to that customer being excluded
from eligible accounts receivable.
(viii) "Ten Percent Concentration Rule" Any accounts
receivable representing more than ten percent (10%)
of Borrower's receivable relationship owed by any one
third party.
(ix) "Ineligible Accounts Receivable" Any account
receivable more than ninety (90) days outstanding and
any account receivable required to be subtracted from
total accounts receivable in accordance with the
requirements of Schedule 1 to Exhibit "A" attached to
this Agreement.
(x) "Eligible Accounts Receivable" Any account
receivable which is not an ineligible account
receivable as defined above.
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(xi) "Eligible Inventory" Those items held for sale
to third parties not otherwise held for or as
consigned goods as reflected on the books and records
of Borrower at fifty percent (50%) of FIFO, cost
basis accounting method applying generally accepted
accounting principles ("GAAP").
(xii) "Eligible Equipment" All equipment actually
owned by Borrower valued as carried on the books and
records of that owning entity at eighty percent (80%)
of the depreciated book value at cost of all such
eligible items.
(xiii) "Additional Collateral" Collateral which is
satisfactory to the Bank and of the same type,
character and quality originally pledged to secure
the Credit Facility, but excluding any Collateral
pledged for the Term Equipment Note, originally
pledged for the Revolving Line of Credit, any
asserted value for any Guaranty or any Collateral
which Borrower and/or Borrower's future subsidiaries
do not own and cannot provide a first and prior
perfected security interest to Bank.
4. REDUCTION OF REVOLVING LINE OF CREDIT NOTE.
a. Mandatory Reduction. At any time the amount advanced and
outstanding on the Revolving Line of Credit Note is in excess
of eighty per cent (80%) of the eligible accounts receivable
and the eligible inventory pledged to Bank, Borrower shall
immediately make a payment on the Loan within five (5)
business days in amount sufficient to reduce the outstanding
balance of the Revolving Line of Credit Note to an amount
equal to or less than the Borrowing Base, or Borrower shall
cause to be pledged to the Bank Additional Collateral in form
reasonably satisfactory to the Bank. Upon either party
obtaining knowledge that Borrower is not in compliance with
the Borrowing Base, Borrower shall not be entitled to any
further advances on the Revolving Line of Credit Note until
such time as Borrower has made the payment provided above or
pledged Additional Collateral to increase the Borrowing Base
to a level of compliance. Payment of the required amount to
bring the outstanding balance of the Revolving Line of Credit
Note into compliance with the provisions of this Agreement
shall be made on or before five (5) business days after the
date Borrower shall have filed a report with Bank hereunder
reflecting that set of facts. Any action by Borrower to pledge
Additional Collateral may allow the Maximum LOC Commitment
Amount to be increased as supported by the Borrowing Base, but
never to an amount in excess of $3,000,000.00.
b. Advancement on Term Equipment Note. Borrower shall be entitled
to one (1) advance on the Term Equipment Note in the amount
and based upon the provisions of paragraph 1(b), above. The
amount of advancement to the Term Equipment Note shall be the
lesser of $336,000.00 or the value of equipment on the books
and records
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of the Borrower which is represented by Borrower to be the
depreciated book value at cost of each such item of equipment.
5. REPRESENTATIONS AND WARRANTIES. Park, Xxxxxxxxx and RX hereby jointly and
severally represent and warrant, and upon each request for an advance under the
Credit Facility further so represent and warrant, to Bank as follows:
a. Binding Obligations. The execution, delivery, and performance
of this Loan Agreement and all of the other Loan Documents by
Borrower, and where applicable by each Guarantor, constitute
legal, valid and binding obligations of Borrower and where
applicable of each Guarantor, enforceable in accordance with
the respective terms, except as limited by bankruptcy,
insolvency or similar laws of general application relating to
the enforcement of creditors' rights and except to the extent
specific remedies may generally be limited by equitable
principles.
b. No Consent. The execution, delivery and performance of this
Loan Agreement and the other Loan Documents, and the
consummation of the transactions contemplated hereby and
thereby, do not (i) conflict with, result in a violation of,
or constitute a default under any law, governmental
regulation, court decree or order applicable to Borrower, or
(ii) require the consent, approval or authorization by any
third party, other than the action to be taken by each
Guarantor in executing and delivering a Guaranty and a Pledge
Agreement as provided above.
c. Financial Condition. Each financial statement of Borrower and
of any future subsidiary of Park supplied to the Bank fairly
discloses and presents Borrower's and/or each of Park's
Subsidiary's respective financial condition as of the date of
each such statement. There has been no material adverse change
in such financial condition or results of operations of
Borrower and of each of Guarantor subsequent to the date of
the most recent financial statements supplied to the Bank.
d. Litigation. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against
or affecting Borrower, or the property of Borrower and/or of a
Guarantor, if applicable, before any court or governmental
department, commission or board, which, if determined
adversely to Borrower and/or any Guarantor, if applicable,
would have a material adverse effect on the financial
condition, properties, or operations of Borrower and/or any
Guarantor.
e. Taxes; Governmental Charges. Borrower and, if applicable, each
Guarantor have filed all federal, state and local tax reports
and returns required by any law or regulation to be filed by
Borrower (and if applicable by a Guarantor) and each filing
party has either duly paid all taxes, duties and charges
indicated due on the basis of such returns and reports, or
made adequate provision for the payment thereof, and the
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assessment of any material amount of additional taxes in
excess of those paid and reported is not reasonably expected.
6. CONDITIONS PRECEDENT TO ADVANCES. Bank's obligation to make any advance under
this Loan Agreement relating to any one of the two (2) Notes and the other Loan
Documents shall be subject to the conditions precedent that, as of the date of
such advance and after giving effect thereto (i) all representations and
warranties made to Bank in this Loan Agreement and the other Loan Documents
shall be true and correct, as of and as if made on such date, (ii) no material
adverse change in the respective or consolidated financial condition of Borrower
(and a Guarantor, if applicable) since the effective date of the most recent
financial statements furnished to Bank by Borrower shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result from
the requested advance, which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined), (iv) Bank has received
all Loan Documents appropriately executed by Borrower and all other proper
parties and Borrower has paid any and all fees and expenses due Bank hereunder,
and (vi) Borrower has submitted all required certificates and other
documentation to request an initial or subsequent (where, when and to the extent
permitted) advance on the Credit Facility.
7. AFFIRMATIVE COVENANTS. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Bank has no further commitment to
lend hereunder, Borrower agrees and covenants that Borrower will, unless Bank
shall otherwise consent in writing:
(a) Monthly Financial Statements. As soon as available, and in any
event within thirty (30) days after the end of each of the
months of each fiscal year of Borrower, Borrower will provide
Bank a separate financial report for the month ending for
Park, Dougherty, and RX. Each report will contain a copy of an
unaudited financial report of those three entities as of the
end of such month and for the portion of the fiscal year then
ended, containing balance sheets, statements of income,
statements of retained earnings, statements of changes in
financial position and cash flow statements, in each case
setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in
reasonable detail certified by the respective chief financial
officer of Borrower to have been prepared in accordance with
generally accepted accounting principles and to fairly and
accurately present (subject to year-end audit adjustments) the
financial condition and results of operations of Park,
Xxxxxxxxx and RX at the date and for the periods indicated
therein;
(b) Quarterly Consolidated Financial Statements. Within forty-five
(45) days of the end of each fiscal quarter, Borrower shall
provide a quarterly consolidated financial statement for
Borrower and any future subsidiary of Park. Each such
quarterly report shall summarize the prior quarterly end
balances and contain such all detail as is provided in the
monthly financial statements summarized for the quarter and
reflected
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on a consolidated basis for Borrower and any future subsidiary
of Park, all in reasonable detail and certified by the
respective chief financial officer of Borrower. Each such
summary shall be prepared in accordance with generally
accepted accounting principles and fairly and accurately
present the financial condition and results of operations of
the Borrower on a consolidated basis for that quarter ending;
(c) Annual Financial Statements. As soon as available and in any
event within ninety (90) days after the end of each fiscal
year of the Borrower beginning with the fiscal year ended June
30, 2000, Borrower will provide Bank a copy of the annual
audited consolidated financial statements for Park, Xxxxxxxxx
and RX and any Guarantor for such fiscal year containing
balance sheets, income statements, statements of retained
earnings, statements of changes in financial position and cash
flow statements, as at the end of each such fiscal year and
for the twelve (12) month period then ended, in each case
setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited
and certified by independent certified public accountants of
recognized standing acceptable to the Bank, to the effect that
such report has been prepared in accordance with generally
accepted accounting principles;
(d) Borrowing Base Certificate. Furnish to the Bank, within thirty
(30) days of the end of each month, a Borrowing Base
Certificate (in the form of Exhibit "A" to this Agreement) for
the previous month end, together with a monthly listing and
aging of accounts receivable which includes a complete and
correct list of the account debtors, their addresses and the
amount owing to Borrower and/or each Guarantor, if applicable,
by each such account debtor;
(e) Inventory Schedule. Furnish to the Bank, at its request, but
no less frequently than annually, beginning July 31, 2000, on
or before thirty (30) days from the end of the fiscal year end
period, a schedule of all inventory in a form satisfactory to
the Bank;
(f) Listing of Accounts Payable. Furnish to the Bank, at its
request, a listing and aging of accounts payable of the
Borrower and, if applicable, each Guarantor;
(g) Certificate of No Default. Furnish to the Bank, within thirty
(30) days of the end of each month, a separate Certificate of
No Default signed by an officer of Park, Xxxxxxxxx and RX in
the form of Exhibit "D" attached hereto and incorporated by
reference to the effect that to the best of his knowledge and
after reasonable investigation no Event of Default (as
hereinafter defined) has occurred hereunder or under any other
agreement to which the Borrower is a party or by which it is
bound or by which any of its properties or assets may be
affected and the default thereunder is material to Borrower's
financial condition, and no event which, with the giving of
notice or the lapse of time or both, would constitute an Event
of Default has occurred and is continuing;
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(h) Notice of Default. Give notice to the Bank immediately in
writing of the occurrence of any Event of Default and each
event which, with the giving of notice or lapse of time or
both, would constitute an Event of Default, any change in the
name or address of the Borrower, any change in name, identity
or Borrower structure, and any uninsured or partially
uninsured loss through fire, theft, liability or property
damage, except deductible amounts;
(i) Notice of Litigation. Promptly give notice to the Bank of all
litigation and all proceedings before governmental or
regulatory agencies affecting the Borrower or any future
subsidiary of Park, excepting only litigation or proceedings
not materially affecting the operations or financial condition
of the Borrower and/or of each Guarantor;
(j) Notice of Material Adverse Effect. As soon as possible and in
any event within five (5) days after the occurrence thereof,
provide written notice of any matter that could have a
material adverse effect on the business, condition (financial
or otherwise), operations, prospects, or properties of the
Borrower or, if applicable, a Guarantor;
(k) Guarantor Financial Statements. Furnish to the Bank, within
ninety days of the end of the fiscal year on June 30,
corporate financial statements and trial balances and cash
flow statements of each Guarantor;
(l) Further Assurances. From time to time, upon request by the
Bank, execute and deliver to the Bank any instrument,
document, assignment or other writing which may be necessary
or advisable in the Bank's opinion to carry out the terms of
the Agreement and to perfect the Bank's security interest in
and facilitate the collection of any Collateral securing the
Credit Facility;
(m) Insurance. Maintain insurance with financially sound and
reputable insurance companies at least in such amounts and
against such risks as are usually insured against by persons
engaged in similar businesses. Each policy covering Collateral
shall name the Bank as loss payee or additional insured, as
appropriate, and provide that such policy will not be canceled
without thirty (30) days prior written notice to the Bank;
(n) Existence. Maintain its existence as a corporation duly
incorporated and in good standing under the law of the
jurisdiction under which it is incorporated and continue to be
duly licensed or qualified as a foreign corporation in all
jurisdictions wherein the character of the property owned or
leased by it or the nature of the business transacted by it
makes licensing or qualification necessary by a foreign
corporation;
(o) Inspection. Make available to the Bank's officers or
representatives, at any reasonable time, the books and records
of the Borrower, including, but not limited to, the
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accounts receivable files, inventory records, general ledger,
and correspondence files. The Bank has the right to examine
its Collateral at any reasonable time without prior notice;
(p) Compliance with Laws. Comply in all material respects with all
applicable laws, rules, regulations and orders of any court,
governmental authority or arbitrator;
(q) Taxes. Pay and discharge all taxes, assessments and
governmental charges ("taxes") imposed upon the Borrower or
its property or property used by Borrower in the conduct of
its business prior to maturity or before the taxes become
delinquent;
(r) Current Ratio. Maintain at all times on a consolidated basis,
a ratio of current assets less any type of prepaid assets to
current liabilities of not less than 1.5 to 1.0 as determined
in accordance with generally accepted accounting principles,
consistently applied;
(s) Tangible Net Worth. To have at the making of the Notes a
consolidated tangible net worth of at least $1,750,000.00.
Borrower's Tangible Net Worth shall increase annually
beginning December 31, 2000 by an amount equal to at least
fifty percent (50%) of Borrower's pre-tax income. Tangible Net
Worth, as used in this Agreement, is defined to be (i) total
assets of the Borrower (limited as provided below) plus (ii)
any indebtedness of Borrower (Subordinated Debt) that is fully
and unconditionally subordinated to all indebtedness and
obligations owed by the Borrower to Bank less (iii) the total
liabilities of the Borrower, contingent or otherwise. The sum
of the following shall be excluded from the calculation of
total assets of the Borrower: (w) goodwill, including any
amounts (however designated on the Borrower's balance sheet)
representing the cost of acquisition of assets or stock in
excess of underlying tangible assets, (x) patents, trademarks,
copyrights, deferred charges (including but not limited to,
unamortized discount and expenses, but excluding therefrom any
prepaid expenses), intangible and other similar assets, (y)
advances to stockholders, officers, employees or other related
parties of the Borrower and (z) all other assets properly
classified as intangible assets.
(t) Opinion of Counsel. Borrower shall provide Bank an opinion of
counsel in the form satisfactory to Bank's counsel providing
opinions by Borrower's counsel as to the existence of Park,
Xxxxxxxxx and RX , where and when applicable, that the value
received by each Guarantor and the binding effect of each
Guaranty and each Pledge Agreement by a Guarantor , an opinion
on usury, organization and good standing of the Borrower and
each Guarantor as well as the authorization of Borrower and
each Guarantor to conduct business in the State of Texas, and
evidence that all requisite corporate action, authority of the
executing officer and no third-party consents are required,
together with such other opinions as might be appropriate
under the circumstances to accomplish the Loan and evidence
Borrower's and, when applicable,
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each Guarantor's ability to enter into, execute and perform
under the terms of the Loan Documents.
8. NEGATIVE COVENANTS. Until (i) the Revolving Line of Credit Note and the Term
Equipment Note and all other obligations and liabilities of Borrower under this
Loan Agreement and the other Loan Documents are fully paid and satisfied, and
(ii) the Bank has no further commitment to lend hereunder, Borrower will not,
without the prior written consent of Bank:
(a) Debt. Directly or contingently create, incur, assume or suffer
to exist any debt for borrowed money, whether by way of loan,
guaranty or the issuance or sale of bonds, debentures, notes
or securities, including deferred debt for the purchase price,
except (i) the Loan described herein, (ii) current accounts
payable and other current obligations (other than for borrowed
money) arising out of transactions in the ordinary course of
business and (iii) loans by any one of the three corporations
comprising the Borrower to any one or more of the other
corporations comprising the Borrower;
(b) Mergers; Dispositions. Form any new Subsidiary or merge or
invest in or consolidate with any corporation or other entity,
or sell, lease, assign, transfer, or otherwise dispose of
(whether in one transaction or as a series of related
transactions) all or substantially all of its assets, whether
now owned or hereafter acquired, or acquire by purchase or
otherwise, all or substantially all of the assets of any
corporation or other entity. Provided, however, that Bank does
approve any action by Borrower to spin- off XX-Xxx.Xxx, Inc.
and commits to release Park's common stock in RX, RX's
accounts receivable and equipment, all of which are part as
LOC Collateral if the proceeds of that transaction received by
Borrower are applied to the then outstanding balance of the
Credit Facility to the extent necessary to bring Borrower into
compliance with the terms and provisions of this Loan
Agreement. If Borrower is otherwise in compliance with the
terms of the Loan Agreement and not in default under any Loan
Document, in a "spin-off" transaction of XX-Xxx.Xxx, Inc.,
Borrower shall be entitled to a termination of the RX Pledge
Agreement at no cost or expense to Bank. Park may hereafter
acquire or form a new Subsidiary if, immediately after either
such acquisition or formation, Park (x) pledges the capital
stock of such new Subsidiary to the Bank as security for
Park's obligations under the Credit Facility and (y) should
Park elect to use certain assets of a new Subsidiary as part
of the Borrowing Base, causes each such new Subsidiary to
execute a Guaranty and a separate Pledge Agreement all as
discussed above. However, notwithstanding the increase in the
Borrowing Base, the Maximum LOC Commitment Amount shall never
exceed $3,000,000.00.
(c) Change in Form of Business. Other than in respect of a
spin-off of RX from Park as discussed above, Borrower shall
not, directly or indirectly, engage in any business
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significantly and materially different from those in which it
currently engages in or contemplates engaging in, or
substantially altering its method of business;
(d) Restricted Payments. During any single fiscal year, pay any
cash dividend or make any other payment or distribution (in
cash, property, or obligations) other than a stock dividend on
account of its respective capital stock, or redeem, purchase
or retire, or otherwise acquire any of its capital stock, or
set apart any money for a sinking or other analogous fund for
any dividend or other distribution on its capital stock or for
any redemption, purchase, retirement, or other acquisition of
any of its capital stock, or grant or issue any capital stock,
except that RX and Xxxxxxxxx shall be permitted to pay cash
dividends to Park; or
(e) Liens. Create, incur, assume or suffer to exist any mortgage,
deed of trust, pledge, encumbrance, lien or security interest
of any kind, upon any of its property now owned or hereafter
acquired, except (i) liens, mortgages, encumbrances or
security interests to secure payment of the borrowings
authorized hereunder; (ii) pledges or deposits to secure
obligations under workmen's compensation laws or of similar
laws; (iii) deposits to secure public or statutory
obligations; (iv) statutory mechanics', carriers', workmen's,
repairmen's liens or other like items in the ordinary course
of business with respect to obligations which are not overdue
or are being contested in good faith; and (v) existing liens
not contemplated under this Agreement as reflected by the
financial statements submitted to the Bank dated as of
December 31, 1999;
(f) Affiliated Transactions. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange
of property or the rendering of any service, with any
affiliate of the Borrower or a division or future subsidiary
of Park, except in the ordinary course of and pursuant to the
reasonable requirements of the Borrower's (or such division's
or future Parks subsidiary's) business and upon fair and
reasonable terms no less favorable to the Borrower (or such
division or future subsidiary of Park) than would be obtained
in a comparable arms-length transaction with a person not an
affiliate of the Borrower (or such division or subsidiary of
Park);
(g) Disposition of Assets. Sell, lease, assign, transfer, or
otherwise dispose of any of its assets except any shares of
capital stock of XX-Xxx.Xxx, Inc. transferred in accordance
with the provisions of paragraph 8.(b), above; and
(h) Capital Expenditures. Permit its aggregate capital
expenditures to exceed $500,000 during any fiscal year.
(i) Change in Management. Permit a change in the senior management
of Borrower's business operations whereby at the end of that
change Xxxxxx X. Xxxxx and/or Xxx X. Park are not the senior
executive officers of Borrower. Borrower confirms that the
death or legal incapacity of Xxxxxx X. Xxxxx or Xxx X. Park
shall
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not constitute a permitted change of management of the
Borrower under this section.
9. EVENTS OF DEFAULT. In confirmation and/or in addition to the express terms of
the Loan Documents, each of the following shall constitute an "Event of Default"
under this Loan Agreement:
(a) The failure of Borrower to pay when due interest on any one or
both of the Notes or any other indebtedness or obligations
owing to Bank by Borrower from time to time, and the
continuation of such failure for a period of ten (10) days
after written notice thereof by Bank to Borrower.
(b) The failure of Borrower or any Obligated Party (as defined
below) to timely and properly observe, keep or perform any
covenant, agreement, warranty or condition required herein or
in any of the other Loan Documents (other than covenants in
respect to the delivery of additional collateral, as and when
required by any one of the Pledge Agreements, which covenants
shall be governed by the terms of that Pledge Agreement), and
the continuation of such failure for a period of thirty (30)
days after written notice thereof by Bank to Borrower and, if
applicable, an Obligated Party.
(c) The occurrence of an event of default under any of the other
Loan Documents or under any other agreement now existing or
hereafter arising between Bank and Borrower and or any other
Obligated Party and such default shall continue for a period
of ten (10) days after written notice thereof from Bank to
Borrower.
(d) Any representation contained herein or in any of the other
Loan Documents made by Borrower or any Obligated Party is
false or misleading in any material respect as of the date
made.
(e) If Borrower or any Obligated Party: (i) becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment
for the benefit of creditors, or admits in writing its
inability to pay its debts as they become due; (ii) generally
is not paying its debts as such debts become due; (iii) has a
receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of the assets of such
party, either in a proceeding brought by such party or in a
proceeding brought against such party and such appointment is
not discharged or such possession is not terminated within
sixty (60) days after the effective date thereof or such party
consents to or acquiesces in such appointment or possession;
(iv) files a petition for relief under the United States
Bankruptcy Code or any other present or future federal or
state insolvency, bankruptcy or similar laws (all of the
foregoing hereinafter collectively called "Applicable
Bankruptcy Law") or an involuntary petition for relief is
filed against such party under any Applicable Bankruptcy Law
and such involuntary petition is not dismissed within sixty
(60) days after the filing thereof, or an order for relief
naming such party is entered under any Applicable Bankruptcy
Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter
Page 14
15
existing is requested or consented to by such party; (v) fails
to have discharged within a period of thirty (30) days any
attachment, sequestration or similar writ levied upon any
property of such party; or (vi) fails to pay within thirty
(30) days any final money judgment against such party.
(f) The death or legal incapacitation of Xxxxxx X. Xxxxx and/or
Xxx X. Park or any person obligated to pay any part of the
Indebtedness; provided, however, that no such event of default
shall occur if a successor executive officer nominated,
appointed and/or elected is disclosed by Borrower to and
approved by Bank within thirty (30) days of the date of death
or legal incapacity of Xxxxxx X. Xxxxx and/or Xxx X. Park, or
absent the disclosure of a successor executive officer within
that period of time, until the earliest to occur of (1) the
date which is sixty (60) days after the death or date of
determination of legal incapacity of Messrs. Xxxxx and/or
Park, or (2) the date which is no less than thirty (30)
Business Days before the expiration of the period for filing a
claim on behalf of Bank (as the holder of a matured,
liquidated claim) with the appropriate probate or other court
having jurisdiction over the estate and/or person of Messrs.
Xxxxx and/or Park, which date shall be determined by Bank in
its sole and absolute discretion after consultation with legal
counsel selected by Bank, or (3) the date which is twenty (20)
Business Days after the date that the executor, administrator,
or guardian of Messrs. Xxxxx and/or Park's estate or person is
duly appointed or approved by the appropriate probate or other
court with jurisdiction without Borrower providing evidence
that a personal representative of Xxxxxx X. Xxxxx and/or Xxx
X. Park has been appointed, qualified and is serving in
office. It is the intent of Borrower and Bank that Borrower is
always possessed of qualified senior executive management and
that Borrower can evidence that its management will not be
disrupted by the absence of either Xxxxxx X. Xxxxx and/or Xxx
X. Park. The Bank's determination of the continuity of
management of the Borrower shall be in the Bank's sole and
absolute discretion.
(g) If Borrower defaults in any covenant or obligation in the
Pledge Agreement to deliver to Bank additional collateral for
the Loan and such failure continues for a period of ten (10)
days after notice thereof from Bank to Borrower.
(h) The default by or of Borrower under any one of the two Notes
or any of the Loan Documents related thereto shall also
constitute an event of default under the other Note not
otherwise then in default.
Nothing contained in this Loan Agreement shall be construed to limit
the events of default enumerated in any of the other Loan Documents and all such
events of default shall be cumulative. The term "Obligated Party", as used
herein, shall mean any party other than Borrower who secures, guarantees, in
whole or in part, and/or is otherwise obligated to pay all or any portion of the
indebtedness evidenced by any one or both of the two Notes.
Page 15
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10. REMEDIES. Upon the occurrence of any one or more of the foregoing Events of
Default,
(a) the entire unpaid balance of principal of each of the two
Notes, together with all accrued but unpaid interest thereon,
and all other indebtedness owing to Bank by Borrower at such
time shall, at the option of Bank, become immediately due and
payable without further notice, demand, presentation, notice
of dishonor, notice of intent to accelerate, notice of
acceleration, protest or notice of protest of any kind, all of
which are expressly waived by Borrower, and (b) Bank may, at
its option, make further advances under the Revolving Line of
Credit Note; provided, however concurrently and automatically
with the occurrence of an Event of Default under subparagraph
(e) in the immediately preceding paragraph (i) further
advances requested by Borrower under the Revolving Line of
Credit Note shall cease, and (ii) the Revolving Line of Credit
Note, the Term Equipment Note and all other indebtedness owing
to Bank by Borrower at such time shall, without any action by
Bank, become due and payable, without further notice, demand,
presentation, notice of dishonor, notice of acceleration,
notice of intent to accelerate, protest or notice of protest
of any kind, all of which are expressly waived by Borrower.
All rights and remedies of Bank set forth in this Loan
Agreement and in any of the other Loan Documents may also be
exercised by Bank, at its option to be exercised in its sole
discretion, upon the occurrence of an Event of Default.
11. RIGHTS CUMULATIVE. All rights of Bank under the terms of this Loan Agreement
shall be cumulative of, and in addition to, the rights of Bank under any and all
other agreements between Borrower and Bank (including, but not limited to, the
other Loan Documents), and not in substitution or diminution of any rights now
or hereafter held by Bank under the terms of any other agreement.
12. WAIVER AND AGREEMENT. Neither the failure nor any delay on the part of Bank
to exercise any right, power or privilege herein or under any of the other Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower therefrom shall be effective unless the
same shall be in writing and signed by Bank, and then shall be effective only in
the specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Loan Agreement
or to any of the other Loan Documents shall be valid or effective unless the
same is signed by the party against whom it is sought to be enforced.
13. BENEFITS. This Loan Agreement shall be binding upon and inure to the benefit
of Bank, Borrower, and any Obligated Party, and their respective successors and
assigns, provided, however, that Borrower and any Obligated Party may not,
without the prior written consent of Bank, assign any rights, powers, duties or
obligations under this Loan Agreement or any of the other Loan Documents.
Page 16
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14. NOTICES. All notices, requests, demands or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and given
by (i) personal delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid, registered or certified
mail, return receipt requested, sent to the intended addressee at the address
set forth on the signature page hereof and shall be deemed to have been received
either, in the case of personal delivery, as of the time of personal delivery,
in the case of expedited delivery service, as of the date of first attempted
delivery at the address and in the manner provided herein, or in the case of
mail, upon deposit in a depository receptacle under the care and custody of the
United States Postal Service. Either party shall have the right to change its
address for notice hereunder to any other location within the continental United
States by notice to the other party of such new address at least thirty (30)
days prior to the effective date of such new address.
15. CONSTRUCTION. This Loan Agreement and the other Loan Documents have been
executed and delivered in the State of Texas, shall be governed by and construed
in accordance with the laws of the State of Texas, and shall be performable by
the parties hereto in Dallas County, Texas.
16. INVALID PROVISIONS. If any provision of this Loan Agreement or any of the
other Loan Documents is held to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
17. EXPENSES. Borrower shall pay all costs and expenses (including, without
limitation, reasonable attorneys' fees) in connection with (i) any action
required in the course of administration of the indebtedness and obligations
evidenced by the Loan Documents, and (ii) any action in the enforcement of
Bank's rights upon the occurrence of Event of Default.
18. PARTICIPATION OF THE LOAN. Borrower agrees that Bank may, at its option,
sell interests in the Loans and its rights under this Loan Agreement to a
financial institution or institutions and, in connection with each such sale,
Bank may disclose any financial and other information available to Bank
concerning Borrower to each prospective purchaser.
19. ENTIRE AGREEMENT. This Loan Agreement (together with the other Loan
Documents) contains the entire agreement among the parties regarding the subject
matter hereof and supersedes all prior written and oral agreements and
understandings among the parties hereto regarding same.
20. CONFLICTS. In the event any term or provision hereof is inconsistent with or
conflicts with any provision of the other Loan Documents, the terms and
provisions contained in this Loan Agreement shall be controlling.
21. COUNTERPARTS. This Loan Agreement may be separately executed in any number
of counterparts, each of which shall be an original, but all of which, taken
together, shall be deemed to constitute one and the same instrument.
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22. JURY TRIAL WAIVER. Each of the two Notes and each of the Loan Documents, and
any amendment, modification or extension agreement thereto, shall contain
provisions in a form then promulgated by the Bank waiving Borrower's and any
other Obligated Party's right to a trial by jury.
23. ORIGINATION AND COMMITMENT FEES. Borrower agrees to pay Bank in cash at
closing a loan origination fee equal to one per cent (1.0%) of the Commitment
Amount for the Credit Facility. Borrower also agrees to pay to the Bank on a
monthly basis a commitment fee on the average daily unused portion of the
Maximum LOC Commitment Amount, from and including March 6, 2000 to and including
the Maturity Date (as defined in the LOC Note) at the rate of one quarter of one
percent (.25%) per annum based on a 365 day year and the actual number of days
elapsed, payable on the 30th day of each month, commencing March 6, 2000, and
ending on the Maturity Date.
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
BANK OF TEXAS, N.A.
By: /s/ Xxxxx X. Xxxxxxxxx, Xx.
----------------------------------
Xxxxx X. Xxxxxxxxx, Xx.
Senior Vice President
READ, AGREED AND APPROVED:
PARK PHARMACY CORPORATION, XX-XXX.XXX, INC.,
A COLORADO CORPORATION A TEXAS CORPORATION
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxx
-------------------------------- ----------------------------------
Xxxxxx X. Xxxxx, President Xxxxxx X. Xxxxx, President
Date: March 6, 2000 Date: March 6, 2000
-------------------------------- ----------------------------------
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XXXXXXXXX'X PHARMACY, INC,
A TEXAS CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx, President
Date: March 6, 2000
Page 19
