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EXHIBIT 10.7
LOAN AND SECURITY AGREEMENT
among
AMERICAN SHARED-CURACARE
and
CURACARE, INC.
Borrower,
AMERICAN SHARED HOSPITAL SERVICES
Guarantor,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Individual Guarantor
and
DVI FINANCIAL SERVICES INC.
Lender
Dated as of May 17, 1995
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TABLE OF CONTENTS
Page
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SECTION 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. SPECIFIC DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND UNIFORM COMMERCIAL CODE . . . . . . . . . . . . . . . . . . 6
SECTION 1.3. CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2
LOAN . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.1. THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.2. TERM AND REPAYMENT OF LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.3. PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 2.4. CONDITIONS TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 3
SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.1. GRANT OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4
SPECIFIC REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.1. NAME OF GUARANTOR; BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.2. MERGERS AND CONSOLIDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.3. PURCHASE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.4. CHANGE OF NAME OR IDENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.5. CORPORATE STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5
PROVISIONS CONCERNING COLLATERAL . . . . . . . . . . . . . . . . . . 11
SECTION 5.1. TITLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2. NO WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.3. FURTHER ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.4. ADDITIONAL COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.5. LENDER'S DUTY OF CARE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.6. BORROWER'S CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.7. REINSTATEMENT OF LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.8. LENDER EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.9. INSPECTION OF COLLATERAL AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.10. WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 14
SECTION 6.1. CORPORATE STATUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.2. AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6.3. NO BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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SECTION 6.4. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.5. DEFERRED COMPENSATION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.6. LITIGATION AND PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.7. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.8. LAWS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.9. FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.10. ENVIRONMENTAL LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.11. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.12. OWNERSHIP OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.13. HEALTH CARE LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.14. CUMULATIVE REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.1. ENCUMBRANCE OF COLLATERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.2. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.3. CONDITION AND REPAIR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.4. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.5. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.6. ACCOUNTING SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 7.7. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.8. FURTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.9. ERISA COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.10. ENVIRONMENTAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.11. RESTRICTIONS ON MERGER, CONSOLIDATION, SALE OF ASSETS, ISSUANCE OF STOCK, ETC . . . . . . . . . . . . . . 20
SECTION 7.12. HEALTH CARE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.13. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.14. SUBORDINATED OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.15. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.16. CAPITAL EXPENDITURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.17. EQUIPMENT LEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.18. LENDER CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 8
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 22
SECTION 9
REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.1. SPECIFIC REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 9.2. POWER OF ATTORNEY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 9.3. EXPENSES SECURED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.4. EQUITABLE RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 9.5. REMEDIES ARE CUMULATIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 10
INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 10.1. GENERAL INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 10.2. SPECIFIC ENVIRONMENTAL INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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SECTION 11
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.1. DELAY AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.2. COMPLETE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.3. SEVERABILITY; HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.4. BINDING EFFECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.5. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 11.6. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.7. JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 11.8. WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SCHEDULES
1.1. LIENS
3.1. GRANT OF SECURITY INTEREST
4.2. MERGERS AND CONSOLIDATIONS
4.3. PURCHASE OF ASSETS OUTSIDE ORDINARY COURSE OF BUSINESS
6.6. LITIGATION AND PROCEEDINGS
6.11. INSURANCE
6.12. OWNERSHIP OF PROPERTY
7.13. PERMITTED DISTRIBUTIONS
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is entered into
as of May 17, 1995 by and between DVI Financial Services Inc., a Delaware
corporation ("Lender"), American Shared-CuraCare, a California general
partnership ("AS-CuraCare") and CuraCare, Inc., a Delaware corporation
("CuraCare") (AS-CuraCare and CuraCare, collectively and individually referred
to as "Borrower"), American Shared Hospital Services, a California corporation
("Guarantor") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. ("Individual Guarantor").
SECTION 1
DEFINITIONS
SECTION 1.1. SPECIFIC DEFINITIONS. The following definitions
shall apply:
(a) "Account Debtors" shall mean Borrower's and its
Affiliates' customers and all other persons who are obligated or indebted to
Borrower or any Affiliate in any manner, whether directly or indirectly,
primarily or secondarily, contingently or otherwise, with respect to Accounts.
(b) "Accounts" shall mean all accounts, contract rights,
instruments, documents, chattel paper and obligations in any form owing to
Borrower or any Affiliate arising out of the sale or lease of goods or the
rendition of services by Borrower or any Affiliate whether or not earned by
performance; all credit insurance, guaranties, letters of credit, advises of
credit and other security for any of the above; all merchandise returned to or
reclaimed by Borrower or any Affiliate; and Borrower's Books relating to any of
the foregoing.
(c) "Advance" shall mean an advance of loan proceeds
constituting all or a part of the Loan.
(d) "Affiliate" shall mean with respect to any Person any
other Person which directly or indirectly Controls, is Controlled by or is
under common Control with that Person.
(e) "Borrower's Books" shall mean all of Borrower's and
its Affiliates' books and records including but not limited to: minute books,
ledgers; records indicating, summarizing or evidencing Borrower's and its
Affiliates' assets, liabilities and the Accounts; all information relating to
Borrower's and its Affiliates business operations or financial condition; and
all computer programs, disk or tape files, printouts, runs and other
computer-prepared information and the equipment containing such information;
provided, however, that confidential patient records shall not be included
therein, except to the extent otherwise provided by law.
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(f) "Closing Date" shall mean the date of the first
Advance of the Loan.
(g) "Collateral" shall have the meaning specified in
Section 3.1 hereof.
(h) "Control" shall mean (i) the ownership of a majority
of the voting power of all classes of voting stock of a corporation, or (ii)
the ownership of a majority of the beneficial interest in income and capital of
a person other than a corporation.
(i) "Deed of Trust" shall mean a deed of trust among
CuraCare, Lender and Chicago Title and Trust Company with respect to CuraCare's
Modesto property.
(j) "Distribution" shall mean, with respect to any shares
of capital stock or any warrant or right to acquire shares of capital stock or
any other equity security, (i) the retirement, redemption, purchase or other
acquisition, directly or indirectly, for value by the issuer of any such
security, except to the extent that the consideration therefor consists of
shares of stock, (ii) the declaration or (without duplication) payment of any
dividend in cash, directly or indirectly, on or with respect to any such
security, (iii) any investment in the holder of five percent (5%) or more of
any such security if a purpose of such investment is to avoid characterization
of the transaction as a Distribution, and (iv) any other cash payment
constituting a distribution under applicable laws with respect to such
security.
(k) "Environmental Laws" shall mean all federal, state,
local and foreign laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal transport or handling of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes, and any and all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices, or
demand letters issued, entered, promulgated, or approved thereunder.
(l) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and all references to sections thereof shall include
such sections and any predecessor provisions thereto, including any rules or
regulations issued in connection therewith.
(m) "ERISA Affiliate" shall mean each trade or business
(whether or not incorporated) that together with Borrower would be deemed a
"contributing sponsor" to a single employee plan within the meaning of Section
4001 of ERISA.
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(n) "Event of Default" shall have the meaning specified
in Section 8 hereof.
(o) "Governmental Authority" shall mean any governmental
or political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality thereof, or any court, tribunal,
grand jury or arbitrator, in any case whether foreign or domestic.
(p) "Guaranty" shall mean the Unconditional Continuing
Guaranty executed by Guarantor unconditionally guaranteeing Borrower's
Obligations under this Agreement.
(q) "Health Care Laws" shall mean all federal, state and
local laws relating to health care providers and health care services,
including, but not limited to, Section 1877(a) of the Social Security Act as
amended by the Omnibus Budget Reconciliation Act of 1993, 42 USC Section
1395nn.
(r) "Indebtedness" of a Person shall mean (i) all items
(except items of capital stock, capital or paid-in surplus or of retained
earnings) which, in accordance with generally accepted accounting principles,
would be included in determining total liabilities as shown on the liability
side of the balance sheet of such Person as at the date as of which
Indebtedness is to be determined, including any lease which, in accordance with
generally accepted accounting principles would constitute indebtedness; (ii)
all indebtedness secured by any mortgage, pledge, security, lien or conditional
sale or other title retention agreement to which any property or asset owned or
held by such Person is subject, whether or not the indebtedness secured thereby
shall have been assumed; and (iii) all indebtedness of others which such Person
has directly or indirectly guaranteed, endorsed (otherwise then for the
collection or deposit in the ordinary course of business), discounted or sold
with recourse or agreed (contingently or otherwise) to purchase or repurchase
or otherwise acquire, or in respect of which such Person has agreed to supply
or advance funds (whether by way of loan, stock or equity purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly
liable.
(s) "Individual Guaranty" shall mean the Unconditional
Continuing Guaranty executed by Individual Guarantor unconditionally
guaranteeing Borrower's Obligations under this Agreement.
(t) "Intercreditor Agreement" shall mean that certain
Intercreditor Agreement dated on or about the date hereof among Guarantor,
AS-CuraCare, CuraCare, Lender, DVI Business Credit ("DVIBC") and General
Electric Company, a New York corporation acting through GE Medical Systems
("GE").
(u) "Lender Expenses" shall mean (i) all costs or
expenses (including, without limitation, taxes and insurance
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premiums) required to be paid by Borrower or its Affiliates under this
Agreement or under any of the other Loan Documents that are paid or advanced by
Lender; (ii) filing, recording, publication and search fees paid or incurred by
Lender in connection with Lender's transactions with Borrower; (iii) costs and
expenses incurred by Lender to correct any Event of Default or enforce any
provision of the Loan Documents or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, and preparing for sale or
advertising to sell the Collateral, whether or not a sale is consummated, after
the occurrence of an Event of Default; (iv) costs and expenses of suit incurred
by Lender in enforcing or defending the Loan Documents or any portion thereof;
(v) all costs or expenses incurred by Lender to convert any data submitted to
Lender by Borrower or Guarantor to an acceptable form; and (vi) Lender's
reasonable attorney fees and expenses incurred (before or after execution of
this Agreement) in advising Lender with respect to, or in structuring,
drafting, reviewing, negotiating, amending, terminating, enforcing, defending
or otherwise concerning, the Security Documents or any portion thereof,
irrespective of whether suit is brought.
(v) "Lien" shall mean any security interest, mortgage,
pledge, assignment, lien or other encumbrance of any kind, including any
interest of a vendor under a conditional sale contract or consignment and any
interest of a lessor under a capital lease.
(w) "Loan" shall mean each loan or any other loan or
loans made by Lender to Borrower pursuant to this Agreement.
(x) "Loan Documents" shall mean (i) this Agreement; (ii)
the Note; (iii) the Security Documents; (iv) any other agreements or documents
hereafter delivered to secure repayment of the Loan; (v) the Lock Box Agreement
and (vi) any other certificates, documents or instruments delivered by Borrower
to Lender pursuant to the terms of this Agreement.
(y) "Lock Box Agreement" shall mean the letter of
direction with respect to those certain Lock Box Agreements between Borrower
and First Interstate Bank of California and between Borrower and Bank of
America NT&SA.
(z) "Note" shall mean the Secured Promissory Note
executed by Borrower pursuant to the terms of this Agreement.
(aa) "Obligations" shall mean (i) the due and punctual
payment of all amounts due or become due under the Note; (ii) the performance
of all obligations of Borrower under this Agreement, the Note and all other
Loan Documents; (iii) all extensions, renewals, modifications, amendments and
refinancings of any of the foregoing; (iv) all Lender Expenses; (v) all loans,
advances, indebtedness and other obligations owed by Borrower to Lender of
every description whether now existing or hereafter arising (including those
owed by Borrower to others and acquired by Lender
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by purchase, assignment, or otherwise) and whether direct or indirect, primary
or as guarantor or surety, absolute or contingent, liquidated or unliquidated,
matured or unmatured, whether or not secured by additional collateral; and (vi)
all loans, advances, indebtedness and other obligations owed by Borrower to
Lender under the Other Loan Document of every description whether now existing
or hereafter arising (including those owed by Borrower to others and acquired
by Lender by purchase, assignment or otherwise) and whether direct or indirect,
primary or as guarantor or surety, absolute or contingent, liquidated or
unliquidated, matured or unmatured, whether or not secured by additional
collateral.
(bb) "Other Loan Document" shall mean that certain Loan
and Security Agreement among Borrower, Guarantor, Individual Guarantor and
DVIBC dated on or about the date hereof.
(cc) "Permitted Liens" shall mean (i) Liens for property
taxes and assessments or governmental charges or levies and Liens securing
claims or demands of mechanics and materialmen, provided that payment thereof
is not yet due or is being contested as permitted in this Agreement; (ii) Liens
of or resulting from any judgment or award, the time for the appeal or petition
for rehearing of which has not expired, or in respect of which Borrower is in
good faith prosecuting an appeal or proceeding for a review and in respect of
which a stay of execution pending such appeal or proceeding for review has been
secured; (iii) Liens and priority claims incidental to the conduct of business
or the ownership of properties and assets (including warehouse's and attorney's
Liens and statutory landlord's Liens); deposits, pledges or Liens to secure the
performance of bids, tenders, or trade contracts, or to secure statutory
obligations; and surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money; provided that in each case the obligation secured is not
overdue or, if overdue, is being contested in good faith by appropriate actions
or proceedings; and further provided that any such warehouse's or statutory
landlord's Liens have been subordinated to the Liens of Lender in a manner
satisfactory to Lender; and (iv) Liens existing on the date of this Agreement
that secure indebtedness outstanding on such date and that are disclosed on
Schedule 1.1 hereto;
(dd) "Person" shall mean an individual, corporation,
partnership, limited liability company, trust, unincorporated association,
joint venture, joint-stock company, government (including political
subdivisions), Governmental Authority or any other entity.
(ee) "Proceeds" shall mean all proceeds and products of
Collateral and all additions and accessions to, replacements of, insurance or
condemnation proceeds of, and documents covering Collateral; all property
received wholly or partly in trade or exchange for Collateral; all claims
against third parties arising
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out of damage, destruction, or decrease in value of the Collateral; all leases
of Collateral; and all rents, revenues, issues, profits and proceeds arising
from the sale, lease, license, encumbrance, collection or any other temporary
or permanent disposition of the Collateral or any interest therein.
(ff) "Security Documents" shall mean the Guaranty, the
Individual Guaranty, the Deed of Trust and any agreement or instrument entered
into between Borrower and Lender or executed by Borrower, Guarantor or
Individual Guarantor and delivered to Lender in connection with this Agreement.
(gg) "Senior-Subordinated Notes" shall mean Borrower's 16
1/2% Senior Subordinated Exchangeable Notes Due 1996 and Borrower's 14 3/4%
Senior Subordinated Notes Due 1996.
(hh) "Unmatured Default" shall mean any event or condition
that, with notice, passage of time, or a determination by Lender or any
combination of the foregoing would constitute an Event of Default.
SECTION 1.2. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND
UNIFORM COMMERCIAL CODE. All financial terms used in this Agreement other than
those defined in this Section, have the meanings accorded to them under
generally accepted accounting principles. All other terms used in this
Agreement, other than those defined in this Section, have the meanings accorded
to them in the Uniform Commercial Code as is enacted in any applicable
jurisdiction.
SECTION 1.3. CONSTRUCTION.
(a) Unless the context of this Agreement clearly requires
otherwise, the plural includes the singular, the singular includes the plural,
the part includes the whole, "including" is not limiting, and "or" has the
inclusive meaning of the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and other similar terms in this Agreement refer to this
Agreement as a whole and not exclusively to any particular provision of this
Agreement.
(b) Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Lender or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each of the parties and its counsel and shall be
construed and interpreted according to the ordinary meaning of the words used
so as to accomplish the purposes and intentions of all parties hereto fairly.
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SECTION 2
LOAN
SECTION 2.1. THE LOAN. Subject to the terms and conditions
and relying on the representations and warranties set forth herein, Lender
agrees to advance to Borrower, individually or collectively, and Borrower
agrees to borrow from Lender, a senior secured term loan in the amount of Two
Million Five Hundred Thousand Dollars ($2,500,000) which shall be evidenced by
a Note. The proceeds of the Loan shall be used by Borrower to repay a portion
of the Senior-Subordinated Notes and as a part of its working capital.
SECTION 2.2. TERM AND REPAYMENT OF LOAN. The "Term" of the
Loan shall be forty-eight (48) months and shall be payable in forty-eight (48)
consecutive monthly installments of Seventy Thousand Five Dollars and 77/100
($70,005.77) on the same day of each calendar month commencing on the
Commencement Date set forth in the Note. All payments of principal and
interest shall be paid in full without setoff, deduction or counterclaim.
Lender shall be entitled to debit the lock box maintained pursuant to the Lock
Box Agreement on the due date of each monthly installment for all amounts due
and payable pursuant to this Agreement.
SECTION 2.3. PREPAYMENT. The Loan shall not be subject to
prepayment or redemption in whole or in part prior to the expiration of the
Term.
SECTION 2.4. CONDITIONS TO THE CLOSING. The obligation of
Lender to make an Advance on the Closing Date is subject to Lender's
determination that Borrower has satisfied the following conditions on the
Closing Date:
(a) The representations and warranties set forth in this
Agreement and in the Other Loan Document shall be true and correct on and as of
the date hereof and shall be true and correct in all material respects as of
the Closing Date and Borrower shall have performed all obligations which were
to have been performed by it hereunder prior to Closing Date.
(b) Borrower shall have executed and delivered to Lender
(or shall cause to be executed and delivered to Lender by the appropriate
Persons) the following:
(i) this Agreement;
(ii) the Note;
(iii) UCC-1 Financing Statements;
(iv) the Guaranty;
(v) the Individual Guaranty;
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(vi) the Deed of Trust;
(vii) the Intercreditor Agreement;
(viii) the Lock Box Agreement;
(ix) an updated Appraisal with respect to
CuraCare's Modesto, California property, satisfactory to Lender verifying a
fair market value of $830,000 or more;
(x) evidence satisfactory to Lender that each of
CuraCare, Guarantor and the general partners of AS- CuraCare is a corporation
duly formed, validly existing and in good standing in the state in which it was
formed and in each state in which it is authorized to do business;
(xi) certificates of insurance that evidence the
insurance coverage and policy provisions required by this Agreement and in the
Loan Documents;
(xii) a mortgagee's title insurance policy with
respect to the Modesto property acceptable to Lender;
(xiii) pay-off letters, UCC Termination Statements,
and Mortgage and Lien Releases as required to grant Lender a first priority
security interest other than Permitted Liens in Collateral pledged as security
for repayment of the Loan;
(xiv) repayment of the Senior-Subordinated Notes on
terms and conditions satisfactory to Lender;
(xv) certified copies of resolutions of the Board
of Directors of CuraCare, Guarantor and the general partners of AS-CuraCare
authorizing the execution and delivery of Loan Documents to be executed by
Borrower and Guarantor;
(xvi) copies of the Articles of Incorporation of
each of CuraCare, Guarantor and the general partners of AS-Curacare, certified
by the Secretary of State;
(xvii) copies of the Bylaws of each of CuraCare,
Guarantor and the general partners of AS-CuraCare certified by an officer
thereof;
(xviii) a copy of the Partnership Agreement of
CuraCare certified by a general partner;
(xix) the written opinion of counsel to Borrower
issued on the Closing Date and satisfactory to Lender in scope and substance;
and
(xx) a certificate from an officer of Borrower
indicating that the representations and warranties contained herein are true
and correct as of the Closing Date.
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(c) Borrower shall have paid closing fees to Lender
including Lender's legal fees incurred by Lender for the negotiation and
preparation of the Loan Documents.
(d) Neither an Event of Default nor an Unmatured Default
shall have occurred and be continuing.
(e) None of Borrower, Guarantor nor Individual Guaranty
shall not have suffered a material or adverse change in its business,
operations or financial condition from that reflected in the Financial
Statements of Borrower and Guarantor delivered to Lender or otherwise.
(f) Lender shall have received such additional supporting
documents, certificates and assurances as Lender shall reasonably request which
shall be satisfactory to Lender in form and substance.
SECTION 3
SECURITY INTEREST
SECTION 3.1. GRANT OF SECURITY INTEREST. In order to secure
prompt payment and performance of all Obligations, Borrower hereby grants to
Lender a continuing first-priority pledge and security interest in the
following property of Borrower, subject to the terms of the Intercreditor
Agreement (the "Collateral"), whether now owned or existing or hereafter
acquired or arising and regardless of where located subject only to Permitted
Liens. This security interest in the Collateral shall attach to all Collateral
without further action on the part of Lender or Borrower. Regardless of the
manner of affixation, the Collateral shall remain the personal property and not
become part of the real estate. Borrower agrees to keep the Collateral at the
location(s) set forth in Schedule 3.1, and will notify Lender promptly, in
writing, of any change in the location of the Collateral within such state, but
will not remove the Collateral from such state without the prior written
consent of Lender.
The Collateral shall consist of the following, subject in each
case only to Permitted Liens and the terms and conditions of the Intercreditor
Agreement, together with such third-party consents, lien waivers and estoppel
certificates as Lender shall reasonably require:
(a) the real estate owned by CuraCare at its Modesto,
California facility and the fixtures thereon, all as more completely described
in the Deed of Trust;
(b) all of Borrower's equipment and machinery listed on
Schedule 3.1 and all machine tools, motors, tools, parts, attachments,
accessories, accessions, replacements, upgrades, substitutions, additions and
improvements related thereto, wherever
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located, and the Proceeds of any of the foregoing, including cash and non-cash
Proceeds;
(c) all of Borrower's presently existing and hereafter
arising Accounts, contract rights, instruments, notes, drafts, documents,
chattel paper and all other forms of obligations owing to Borrower arising out
of the sale or lease of goods or the rendition of services, whether or not
earned by performance, and any and all credit insurance, guarantees and other
security therefor, as well as all merchandise returned to or reclaimed by
Borrower and all of Borrower's Books relating to any of the foregoing, and the
Proceeds of any of the foregoing, including the pledge to it of the Accounts,
cash and non-cash Proceeds;
(d) all of Borrower's presently existing and hereafter
acquired general intangibles (including, without limitation, any and all choses
or things in action, goodwill, patents, trade names, trademarks, blueprints,
drawings, purchase orders, computer programs, computer discs, computer tapes,
literature, reports, catalogues, deposit accounts and tax refunds) other than
goods and accounts, as well as all of Borrower's Books relating to any of the
foregoing, and the Proceeds of any of the foregoing, including cash and
non-cash Proceeds;
(e) all of Borrower's presently existing and hereafter
acquired inventory including, without limitation, goods held for sale or lease
or to be furnished under a contract of service, wherever located, and any
documents of title representing any of the above, and the Proceeds of any of
the foregoing, including cash and non-cash Proceeds;
provided, however, anything in the foregoing notwithstanding the Collateral
does not include, and Lender takes no security interest in, equipment leased by
GE or any other equipment lessor to Borrower or Borrower's leasehold interest
in such equipment.
SECTION 4
SPECIFIC REPRESENTATIONS
SECTION 4.1. NAME OF GUARANTOR; BORROWER. The exact
corporate name of Guarantor is American Shared Hospital Services. Guarantor
was incorporated under the laws of the State of California. The following are
all previous legal names of Borrower: None. Borrower uses the following trade
names: None. The following are all other trade names used by Borrower in the
past: None.
(b) The exact corporate name of CuraCare is CuraCare,
Inc. CuraCare was incorporated under the laws of the State of Delaware. The
following are all previous legal names of CuraCare: None. CuraCare uses the
following trade names: None. The following are all other trade names used by
CuraCare in the past: None.
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(c) The exact name of AS-CuraCare is American Shared-
CuraCare. AS-CuraCare was formed under the laws of the State of California.
The following are all previous legal names of AS-CuraCare: None. AS-CuraCare
uses the following trade names: None. The following are all other trade names
used by AS-CuraCare in the past: None.
SECTION 4.2. MERGERS AND CONSOLIDATIONS. Except as disclosed
on Schedule 4.2, no entity has merged into any of Borrower or its Affiliates or
been consolidated with Borrower or any Affiliate.
SECTION 4.3. PURCHASE OF ASSETS. Except as disclosed on
Schedule 4.3 no entity has sold substantially all of its assets to Borrower or
any Affiliate or sold assets to Borrower or any Affiliate outside the ordinary
course of such seller's business at any time in the past.
SECTION 4.4. CHANGE OF NAME OR IDENTITY. Borrower shall not
change its or its Affiliates' name, business structure, or identity or use or
permit any Affiliate to use any new trade name with prior notifications of
Lender or merge or permit any Affiliate to merge into or consolidate with any
other entity.
SECTION 4.5. CORPORATE STRUCTURE. Guarantor is the direct or
indirect holder of one hundred percent (100%) of the ownership interests,
whether stock or partnership interests, of CuraCare and AS-CuraCare.
Individual Guarantor is the holder of twenty-five percent (25%) or more of the
common stock of Guarantor. Such common stock is the sole authorized class of
stock in Guarantor.
SECTION 5
PROVISIONS CONCERNING COLLATERAL
SECTION 5.1. TITLE. Borrower has good and marketable title
to the Collateral, and the Liens granted to Lender pursuant to this Agreement
are fully perfected first-priority Liens, subject only the terms of the
Intercreditor Agreement and the proper filing of any financing statement or
notice necessary to provide notice to third parties of the existence of such
Liens, in and to the Collateral with priority over the rights of every person
in the Collateral is free, clear, and unencumbered by any Liens in favor of any
person other than Lender except for Permitted Liens.
SECTION 5.2. NO WARRANTIES. This Agreement is solely a
financing agreement. Borrower acknowledges that with respect to the
appropriate Collateral: the Collateral has or will have been selected and
acquired solely by Borrower for Borrower's purposes; Lender is not the
manufacturer, dealer, vendor or supplier of the Collateral; the Collateral is
of a size, design, capacity, description and manufacturer selected by Borrower;
Borrower is
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satisfied that the Collateral is suitable and fit for its purposes; and LENDER
HAS NOT MADE AND DOES NOT MAKE ANY WARRANTY OR REPRESENTATION WHATSOEVER,
EITHER EXPRESS OR IMPLIED, AS TO THE FITNESS, CONDITION, MERCHANTABILITY,
DESIGN OR OPERATION OF THE COLLATERAL, ITS FITNESS FOR ANY PARTICULAR PURPOSE,
THE VALUE OF THE COLLATERAL, THE QUALITY OR CAPACITY OF THE MATERIALS IN THE
COLLATERAL OR WORKMANSHIP IN THE COLLATERAL, NOR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER.
SECTION 5.3. FURTHER ASSURANCES. Borrower and its Affiliates
shall execute and deliver to Lender, concurrent with Borrower's execution of
this Agreement and at any time or times hereafter at the request of Lender, all
financing statements, continuation financing statements, security agreements,
chattel mortgages, assignments, endorsements of certificates of title,
applications for titles, affidavits, reports, notices, schedules of accounts,
letters of authority and all other documents Lender may reasonably request, in
form satisfactory to Lender, to perfect and maintain perfected Lender's Liens
in the Collateral and in order to consummate fully all of the transactions
contemplated under the Loan Documents. Borrower and Guarantor hereby
irrevocably make, constitute, and appoint Lender (and any of Lender's officers,
employees, or agents designated by Lender) as Borrower's and its Affiliates'
true and lawful attorney with power to sign the name of Borrower and its
Affiliates on any of the above-described documents or on any other similar
documents that need to be executed, recorded, or filed in order to perfect or
continue perfected Lender's Liens in the Collateral. The appointment of Lender
as Borrower's and its Affiliates' attorney is irrevocable as long as any
Obligations are outstanding. Any person dealing with Lender shall be entitled
to rely conclusively on any written or oral statement of Lender that this power
of attorney is in effect.
SECTION 5.4. ADDITIONAL COLLATERAL. If there is a material
impairment of the value of the Collateral, Borrower shall grant a security
interest to Lender in additional assets satisfactory to Lender having a value
at least equal to the decline in value of the existing Collateral.
SECTION 5.5. LENDER'S DUTY OF CARE. Lender shall have no
duty of care with respect to the Collateral except that Lender shall exercise
reasonable care with respect to the Collateral in Lender's custody. Lender
shall be deemed to have exercised reasonable care if such property is accorded
treatment substantially equal to that which Lender accords its own property or
if Lender takes such action with respect to the Collateral as the Borrower
shall request or agree to in writing provided that no failure to comply with
any such request nor any omission to do any such act requested by the Borrower
shall be deemed a failure to exercise reasonable care. Lender's failure to
take steps to preserve rights against any parties or property shall not be
deemed to be failure to exercise reasonable care with respect to the Collateral
in Lender's custody. All risk, loss, damage or destruction of the Collateral
shall be borne by Borrower.
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SECTION 5.6. BORROWER'S CONTRACTS. Borrower and its
Affiliates shall remain liable to perform its Obligations under any contracts
and agreements included in the Collateral to the same extent as though this
Agreement had not been entered into and Lender shall not have any Obligation or
liability under such contracts and agreements by reason of this Agreement or
otherwise.
SECTION 5.7. REINSTATEMENT OF LIENS. If, at any time after
payment in full by Borrower of all Obligations and termination of Lender's
Liens, any payments on Obligations previously made by Borrower or any other
Person must be disgorged by Lender for any reason whatsoever (including,
without limitation, the insolvency, bankruptcy, or reorganization of Borrower
or such other Person), this Agreement and Lender's Liens granted hereunder
shall be reinstated as to all disgorged payments as though such payments had
not been made, and Borrower shall sign and deliver to Lender all documents and
things necessary to perfect all terminated Liens.
SECTION 5.8. LENDER EXPENSES. If Borrower or an Affiliate
fails to pay any moneys (whether taxes, assessments, insurance premiums or
otherwise) due to third persons or entities, fails to make any deposits or
furnish any required proof of payment or deposit or fails to discharge any Lien
not permitted hereby, all as required under the terms of this Agreement, then
Lender may, to the extent that it determines that such failure by Borrower or
its Affiliates could have a material adverse effect on Lender's interests in
the Collateral, in its discretion and without prior notice to Borrower, make
payment of the same or any part thereof. Any amounts paid or deposited by
Lender shall constitute Lender Expenses, shall become part of the Obligations,
shall bear interest at the rate of eighteen percent (18%) per annum, and shall
be secured by the Collateral. Any payments made by Lender shall not constitute
(a) an agreement by Lender to make similar payments in the future or (b) a
waiver by Lender of any Event of Default under this Agreement. Lender need not
inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or Lien, and the receipt of the usual official notice for
the payment of moneys to a governmental entity shall be conclusive evidence
that the same was validly due and owing.
Borrower shall immediately and without demand reimburse Lender
for all sums expended by Lender that constitute Lender Expenses, and Borrower
hereby authorizes and approves all advances and payments by Lender for items
constituting Lender Expenses.
SECTION 5.9. INSPECTION OF COLLATERAL AND RECORDS. During
usual business hours, Lender may inspect and examine the Collateral and check
and test the same as to quality, quantity, value and condition and Borrower
agrees to reimburse Lender for its costs and expenses in so doing. Lender
shall also have the right at any time or times hereafter, during usual business
hours to inspect and verify Borrower's Books in order to verify the amount
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or condition of, or any other matter relating to, the Collateral and
Guarantor's and Borrower's financial condition and to copy and make extracts
therefrom. Guarantor and Borrower waive the right to assert a confidential
relationship, if any, it may have with any accounting firm or service bureau in
connection with any information requested by Lender pursuant to this Agreement
and agrees that Lender may directly contact any such accounting firm or service
bureau in order to obtain such information.
SECTION 5.10. WAIVERS. Except as specifically provided for
herein, Borrower waives demand, protest, notice of protest, notice of default
or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension or renewal
of any or all commercial paper, accounts, documents, instruments, chattel
paper, and guaranties at any time held by Lender on which Borrower may in any
way be liable.
SECTION 6
REPRESENTATIONS AND WARRANTIES
As of the date hereof Guarantor and Borrower each hereby
warrants and represents to Lender the following:
SECTION 6.1. CORPORATE STATUS. Each of CuraCare, Guarantor
and AS-CuraCare's general partners is a corporation validly existing and in
good standing under the laws of the state of its incorporation; AS-CuraCare is
a general partnership validly existing under the laws of the State of
California; and each of such entities is qualified and licensed to do business
and is in good standing in any state in which the conduct of its business or
its ownership of property requires that it be so qualified or licensed, and has
the power and authority (corporate and otherwise) to execute and carry out the
terms of the Loan Documents to which it is a party, to own its assets and to
carry on its business as currently conducted.
SECTION 6.2. AUTHORIZATION. The execution, delivery, and
performance by Borrower and Guarantor of this Agreement and each Loan Document
have been duly authorized by all necessary corporate or partnership action.
Borrower, Guarantor and ndividual Guarantor have duly executed and delivered
this Agreement and each Loan Document to which they are a party, and each of
them constitutes a valid and binding obligation of Borrower, Guarantor and
Individual Guarantor, as applicable, enforceable according to its terms except
as limited by equitable principles and by bankruptcy, insolvency or similar
laws affecting the rights of creditors generally.
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SECTION 6.3. NO BREACH. The execution, delivery and
performance by Borrower, Guarantor and Individual Guarantor of this Agreement
and each Loan Document to which they or an Affiliate is a party (a) will not
contravene any law or any governmental rule or order binding on Collateral; (b)
will not violate any provision of the articles of incorporation, bylaws or
partnership agreement, as applicable, of Borrower or its Affiliates; (c) will
not violate any agreement or instrument by which Borrower, its Affiliates or
Individual Guarantor, as applicable, is bound; (d) do not require any notice to
consent by any governmental body; and (e) will not result in the creation of a
Lien on any assets of Borrower or its Affiliates except the Lien to Lender
granted herein.
SECTION 6.4. TAXES. All assessments and taxes, whether real,
personal or otherwise, due or payable by or imposed, levied or assessed against
Borrower, its Affiliates or any of their property have been paid in full before
delinquency or before the expiration of any extension period; and Borrower and
its Affiliates have made due and timely payment or deposit of all federal,
state, and local taxes, assessments, or contributions required of it by law,
except only for items that Borrower or its Affiliates are currently contesting
diligently and in good faith and that have been fully disclosed in writing to
Lender.
SECTION 6.5. DEFERRED COMPENSATION PLANS. Borrower and each
ERISA Affiliate have made all required contributions to all deferred
compensation plans to which such person is required to contribute, and neither
Borrower nor any ERISA Affiliate has any liability for any unfunded benefits of
any single-employer or multi-employer plans. Neither Borrower nor any ERISA
Affiliate is or at any time has been a sponsor of, provided, or maintained for
any employees any defined benefit plan.
SECTION 6.6. LITIGATION AND PROCEEDINGS. Except as set forth
on Schedule 6.6 attached hereto, there are no outstanding judgments against
Borrower, its Affiliates or any of their assets and there are no actions or
proceedings pending by or against Borrower or its Affiliates before any court
or administrative agency. Borrower has no knowledge or belief of any pending,
threatened, or imminent litigation, governmental investigations, or claims,
complaints, actions, or prosecutions involving Borrower or its Affiliates,
except for ongoing collection matters in which Borrower or its Affiliates are
the plaintiff and except as set forth in Schedule 6.6 hereto.
SECTION 6.7. BUSINESS. Borrower and its Affiliates have all
franchises, authorizations, patents, trademarks, copyrights and other rights
necessary to advantageously conduct their business. They are all in full force
and effect and are not in known conflict with the rights of others. Neither
Borrower nor any of its Affiliates is a party to or subject to any agreement or
restriction that is so unusual or burdensome that it might have a material
adverse effect on Borrower's or its Affiliates' business, properties or
prospects.
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SECTION 6.8. LAWS AND AGREEMENTS. Borrower and its
Affiliates are in compliance with all material agreements applicable to it,
including obligations to contribute to any employee benefit plan or pension
plan regulated by ERISA. Borrower and its Affiliates are in material
compliance with all laws applicable to it. For purposes of this Section 6.8
compliance with the GE Affected Debt (as defined in the Intercreditor
Agreement) shall mean that an "Event of Default", as such term is defined with
respect to the GE Affected Debt, has not occurred and is not continuing with
respect thereto.
SECTION 6.9. FINANCIAL CONDITION. All financial statements
and information relating to Borrower and its Affiliates that have been or may
hereafter be delivered by Borrower to Lender are accurate and complete and have
been prepared in accordance with generally accepted accounting principles
consistently applied. Borrower and its Affiliates have no material obligations
or liabilities of any kind not disclosed in that financial information, and
there has been no material adverse change in the financial condition of
Borrower or its Affiliates since the date of the most recent financial
statements submitted to Lender.
SECTION 6.10. ENVIRONMENTAL LAWS.
(a) Borrower and its Affiliates have obtained all
permits, licenses, and other authorizations that are required under
Environmental Laws and Borrower and its Affiliates are in compliance in all
material respects with all terms and conditions of the required permits,
licenses and authorizations, and are also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws.
(b) Borrower is not aware of, and has not received notice
of, any past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans that may interfere with or prevent
compliance or continued compliance in any material respect with Environmental
Laws, or may give rise to any material common-law or legal liability, or
otherwise form the basis of any material claim, action, demand, suit,
proceeding, hearing, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling or the emission, discharge, release or threatened release
into the environment, of any pollutant, contaminant, chemical, or industrial,
toxic or hazardous substance or waste.
(c) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice or demand letter, notice of violation,
investigation, or proceeding pending or threatened against Borrower or any of
its Affiliates, relating in any way to Environmental Laws.
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SECTION 6.11. INSURANCE. Schedule 6.11 sets forth a complete
and accurate list of all policies of fire, liability, product liability,
workers' compensation, health, business interruption and other forms of
insurance currently in effect with respect to Borrower's business, true copies
of which have heretofore been delivered to Lender. All such policies are
valid, outstanding and enforceable policies and, to the best knowledge of
Borrower, each will remain in full force and effect at least through the
respective dates set forth on Schedule 6.11.
SECTION 6.12. OWNERSHIP OF PROPERTY. Except as set forth
Schedule 6.12 hereto, Borrower has good and marketable title to all of its
properties and assets, free and clear of all liens, security interests and
encumbrances, except liens to secure repayment of the Loan. Borrower has the
exclusive right to use all such assets.
SECTION 6.13. HEALTH CARE LAWS.
(a) Borrower and its Affiliates have obtained all
permits, licenses and other authorizations that are required under Health Care
Laws applicable to Borrower and such Affiliates are in compliance in all
material respects with all terms and conditions of the required permits,
licenses and authorizations, and are also in compliance in all material
respects with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such Health Care Laws.
(b) Borrower is not aware of, and has not received notice
of, any past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans that may interfere with or prevent
compliance or continued compliance in any material respect with Health Care
Laws.
(c) There is no civil, criminal or administrative action,
suit, demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or threatened against Borrower or its
Affiliates, relating in any way to Health Care Laws.
SECTION 6.14. CUMULATIVE REPRESENTATIONS. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements that
Borrower shall give, or cause to be given, to Lender, either now or hereafter.
SECTION 7
COVENANTS
SECTION 7.1. ENCUMBRANCE OF COLLATERAL. Borrower shall not
create, incur, assume or permit to exist any Lien on any
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Collateral now owned or hereafter acquired by Borrower or its Affiliates, except
for Liens to Lender and Permitted Liens.
SECTION 7.2. BUSINESS. Borrower and its Affiliates shall engage
primarily in business of the same general character as that now conducted by
Borrower and its Affiliates.
SECTION 7.3. CONDITION AND REPAIR. Borrower and its Affiliates
shall maintain in good repair and working order all material properties used in
their business and from time to time shall make all appropriate repairs and
replacements thereof.
SECTION 7.4. TAXES. Borrower and its Affiliates shall pay all
taxes, assessments and other governmental charges imposed upon it or any of its
assets or in respect of any of its franchises, business, income or profits
before any penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or might become a Lien or
charge upon any of its assets, provided that (unless any material item or
property would be lost, forfeited or materially impaired as a result thereof) no
such charge or claim need be paid if it is being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted, if Lender
is notified in advance of such contest, and if Borrower or an Affiliate
establishes any reserve or other appropriate provision required by generally
accepted accounting principles and deposits with Lender cash or an acceptable
bond in an amount equal to twice the amount of such charge or claim. Borrower
and its Affiliates shall make timely payment or deposit of all FICA payments and
withholding taxes required of it by applicable laws and will, upon request,
furnish Lender with proof satisfactory to Lender indicating that Borrower or an
Affiliate has made such payments or deposits.
SECTION 7.5. INSURANCE. Borrower and its Affiliates shall
maintain, with financially sound and reputable insurers, insurance with respect
to its properties and business against loss or damage of the kinds and in the
amounts customarily insured against by corporations of established reputation
engaged in the same or similar businesses. Each such policy shall name Lender as
an additional insured and, where applicable, as loss payee under a lender loss
payable endorsement satisfactory to Lender and shall provide for thirty (30)
days' written notice to Lender before such policy is altered or canceled.
SECTION 7.6. ACCOUNTING SYSTEM. Borrower and its Affiliates at
all times hereafter shall maintain a standard and modern system of accounting in
accordance with generally accepted accounting principles consistently applied,
with ledger and account cards or computer tapes, disks, printouts, and records
that contain information pertaining to the Collateral that may from time to time
be requested by Lender. Borrower shall not modify or change its method of
accounting or enter into any agreement hereafter with any
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third-party accounting firm or service bureau for the preparation or storage of
Borrower's accounting records without said accounting firm's or service bureau's
agreeing to provide to Lender information regarding the Collateral and
Borrower's financial condition.
SECTION 7.7. FINANCIAL STATEMENTS. Guarantor shall submit
monthly financial statements, showing a comparison of actual expenditures to
budgeted amounts, with respect to Guarantor, on a consolidated basis, to Lender
as soon as available, and in any event within twenty (20) days of the end of
each month. Guarantor shall provide Lender with copies of all reports filed by
it with the Securities and Exchange Commission. Additionally, Guarantor will
submit audited financial statements with respect to Guarantor on a consolidated
basis to Lender as soon as available, and in any event within ninety (90) days
of the end of each fiscal year. With all financial statements, Guarantor will
also deliver a certificate of its chief financial officer attesting that no
Event of Default or Unmatured Default under the Agreement has occurred and is
continuing.
SECTION 7.8. FURTHER INFORMATION. Borrower shall promptly
supply Lender with such other information concerning its affairs as Lender may
reasonably request from time to time hereafter and shall promptly notify Lender
of any material adverse change in Borrower's financial condition and any
condition or event that constitutes a breach of or event that constitutes an
Event of Default under this Agreement. In addition, Borrower and Guarantor
authorize Lender to contact credit reporting agencies concerning Guarantor's,
Borrower's and its Affiliates' credit standing.
SECTION 7.9. ERISA COVENANTS. Borrower shall, and shall cause
each ERISA Affiliate to, comply with all applicable provisions of ERISA and all
other laws applicable to any deferred compensation plans with which Borrower or
any ERISA Affiliate is associated, and shall promptly notify Lender of the
occurrence of any event that could result in any material liability of Borrower
to any person to any person whatsoever with respect to any such plan.
SECTION 7.10. ENVIRONMENTAL COVENANTS.
(a) Borrower and its Affiliates shall comply in all material
respects with, and will obtain all permits required by, all Environmental Laws.
(b) Borrower shall promptly furnish to Lender a copy of any
communication from the U.S. Environmental Protection Agency or any other
governmental authority concerning any possible violation of, or the filing of a
lien pursuant to, any Environmental Laws or any occurrence of which Borrower or
an Affiliate would be required to notify any governmental authority with
jurisdiction over Environmental Laws.
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SECTION 7.11. RESTRICTIONS ON MERGER, CONSOLIDATION, SALE OF
ASSETS, ISSUANCE OF STOCK, ETC. Unless authorized by Lender, Guarantor and
Borrower shall not, nor shall they permit any Affiliate to:
(a) merge or consolidate with any Person;
(b) sell, lease or otherwise dispose of its assets in any
transaction or series of related transactions (other than sales in the ordinary
course of business);
(c) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(d) acquire interests in excess of Two Hundred Forty Thousand
Dollars ($240,000) in the aggregate in any calendar year in any business
(whether by purchase of assets, purchase of stock, merger or otherwise);
(e) become subject to any agreement or instrument which by its
terms would restrict Guarantor's right or ability to perform any of its
obligations to Lender pursuant to the terms of the Loan Documents (Lender
acknowledges that compliance with the terms of the Intercreditor Agreement shall
not constitute a breach of this clause 7.11(e)); or
(f) authorize or issue any additional stock or equity interest
other than the issuance by Guarantor of its common stock.
SECTION 7.12. HEALTH CARE COVENANTS.
(a) Borrower and its Affiliates shall comply in all material
respects with, and will obtain all permits required by, all Health Care Laws
applicable to Borrower and such Affiliates.
(b) Borrower shall promptly furnish to Lender a copy of any
communication from any governmental authority concerning any possible violation
of any Health Care Laws or any occurrence of which Borrower or an Affiliate
would be required to notify any governmental authority with jurisdiction over
Health Care Laws.
SECTION 7.13. DISTRIBUTIONS. Except as set forth on Schedule
7.13 hereto, Guarantor shall not make any Distributions and shall prohibit its
Affiliates that are not directly or indirectly wholly-owned by Guarantor from
making any Distributions.
SECTION 7.14. SUBORDINATED OBLIGATIONS. Neither Guarantor nor
any Affiliate shall voluntarily prepay any principal (including the making of
any sinking fund payment), interest or any other amount in respect of any
Obligations that are subordinate to Borrower's obligations to Lender, including
without limitation, its Obligations to GE pursuant to the Deferral Note issued
pursuant to that certain Agreement dated November 1, 1994 among GE and Guarantor
and its Affiliates ("Subordinate Obligations").
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Notwithstanding the foregoing, Guarantor shall be permitted to prepay or
repurchase any Senior-Subordinated Notes upon receipt by Lender of prior notice
of such repayment or repurchase and certification by Guarantor that such
prepayment or repurchase will not impair Borrower's ability to perform its
obligations under this Agreement.
SECTION 7.15. AMENDMENTS. Neither Borrower nor its Affiliates
shall amend any provision of any Subordinate Obligation if such amendment would
(i) affect any of the subordination provisions thereof, (ii) advance the date of
any required payment or prepayment thereunder, (iii) make covenants therein more
burdensome, when considered in their entirety, to Borrower or its Affiliates, or
(iv) reduce any default or grace period therein provided, or (v) otherwise have
a material adverse effect on the interests of Lender.
SECTION 7.16. CAPITAL EXPENDITURES. Neither Borrower nor its
Affiliates shall make capital expenditures (excluding for purposes of this
Section 7.16 expenditures permitted pursuant to Section 7.17) in excess of Two
Hundred Forty Thousand Dollars ($240,000) in any transaction (or group of
related transactions) or One Million Dollars ($1,000,000) in the aggregate in
any calendar year.
SECTION 7.17. EQUIPMENT LEASES. Neither Borrower nor its
Affiliates shall become the lessee under any operating or capital lease (or
series of operating or capital leases with respect to assets that are related to
the operation of a unit of equipment (including, without limitation, the unit,
associated van or modular building, and related component parts)), if the
aggregate payments thereunder during any one calendar year exceed Two Hundred
Forty Thousand Dollars ($240,000) with respect to such unit of equipment and
assets that are related to the operation of such unit of equipment; provided,
however, that Borrower and its Affiliates are expressly permitted to remain
lessee under, and make all payments required by, any leases with GE, entered
into on or about or prior to the date of this Agreement, subject in each case to
the terms of the Intercreditor Agreement if applicable; provided, further,
Borrower notifies Lender of the existence of such leases on or prior to the
Closing Date.
SECTION 7.18. LENDER CONSENTS. Borrower or Guarantor may
request that Lender consent to any action prohibited by Sections 7.11 and 7.13
through 7.17 by delivering a written request which specifies in reasonable
detail the nature of the proposed action. Lender agrees to consider such request
in a timely fashion and will provide Borrower or Guarantor with a written
response to such request. Nothing in this Section 7.18 shall be construed to
require Lender to approve any such request.
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SECTION 8
EVENTS OF DEFAULT
An Event of Default shall be deemed to exist if any of the
following events shall have occurred and be continuing:
(a) Borrower fails to make any payment of principal or interest
or any other payment on the Note or any other Obligation when due and payable,
by acceleration or otherwise, and such failure shall continue for five (5) days
after the payment is due;
(b) Borrower fails to observe or perform any covenant,
condition or agreement to be observed or performed pursuant to the terms hereof
or any Loan Document to which it is a party and such failure is not cured as
soon as reasonably practicable and in any event within thirty (30) days after
written notice thereof by Lender; provided, however, that if such failure can
not be cured within such thirty (30) day period, Borrower shall not be in
default if the cure is commenced within such thirty (30) day period and
thereafter such cure is diligently pursued to completion;
(c) Borrower fails to keep its and its Affiliates' assets
insured as required herein, or material uninsured damage to or loss, theft or
destruction of the Collateral occurs;
(d) A court enters a decree or order for relief in respect of
Borrower or an Affiliate in an involuntary case under any applicable bankruptcy,
insolvency, or other similar law then in effect, or appoints a receiver,
liquidator, assignee, custodian, trustee, or sequestrator (or other similar
official) of Borrower or an Affiliate or for any substantial part of their
property, or orders the windup or liquidation of Borrower's or an Affiliate's
affairs; or a petition initiating an involuntary case under any such bankruptcy,
insolvency, or similar law is filed against Borrower or an Affiliate and is
pending for sixty (60) days without dismissal;
(e) Borrower or an Affiliate commences a voluntary case under
any applicable bankruptcy, insolvency or other similar law then in effect, makes
any general assignment for the benefit of creditors, fails generally to pay its
debts as such debts become due, or takes corporate action in furtherance of any
of the foregoing;
(f) Final judgment for the payment of money on any claim in
excess of $100,000 is rendered against Borrower or an Affiliate and remains
undischarged for twenty (20) days during which execution is not effectively
stayed;
(g) Guarantor revokes or attempts to revoke its guaranty of any
of the Obligations, or becomes the subject of an insolvency proceeding of the
type described in clauses (d) or (e) above with respect to Borrower or fails to
observe or perform any covenant,
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condition or agreement to be performed under any Loan Document to which it is a
party;
(h) Borrower or an Affiliate makes any payment on account of
any Subordinate Obligations, other than payments specifically permitted by the
terms of such subordination or this Agreement;
(i) Any person holding any Subordinate Obligations becomes the
subject of any proceeding resulting in the termination of the subordination
arrangement, terminates the subordination arrangement or asserts that it is
terminated.
(j) Any Collateral or any part thereof is sold, agreed to be
sold, conveyed or allocated by operation of law or otherwise;
(k) Borrower or an Affiliate defaults under the terms of any
Indebtedness or lease involving total payment obligations of Borrower or an
Affiliate in excess of $100,000 and such default is not cured within the time
period permitted pursuant to the terms and conditions of such Indebtedness or
lease, or an event occurs that gives any creditor or lessor the right to
accelerate the maturity of any such indebtedness or lease payments; provided,
however, with respect to any default under the GE Affected Debt (as defined in
the Intercreditor Agreement) an Event of Default shall not be deemed to exist
under this Agreement until such default constitutes an "Event of Default", as
such term is defined with respect to the GE Affected Debt;
(l) Demand is made for payment of any Indebtedness in excess of
$100,000 that was not originally payable upon demand when incurred but the terms
of which were later changed to provide for payment upon demand;
(m) Borrower or an Affiliate is enjoined, restrained or in any
way prevented by court order from continuing to conduct all or any material part
of its business affairs;
(n) A judgment or other claim in excess of $100,000 becomes a
Lien upon any or all of Borrower's or its Affiliates' assets, other than a
Permitted Lien;
(o) A notice of Lien, levy or assessment in excess of $100,000
is filed of record with respect to any or all of Borrower's or its Affiliates'
assets by the United States Government, or any department, agency, or
instrumentality thereof, or by any state, county, municipal or other Government
Agency; or any tax or debt owing at any time hereafter to any one or more of
such entities becomes a Lien upon any or all of Borrower's or its Affiliates'
assets and the same is not paid on the payment date thereof, except to the
extent such tax or debt is being contested by Borrower or an Affiliate as
permitted in Section 6.4;
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(p) There is a material impairment of the value of the
Collateral or priority of Lender's Liens on the Collateral;
(q) Any of Borrower's or its Affiliates' assets in excess of
$100,000 or any Collateral are seized, subjected to a distress warrant, levied
upon or come into the possession of any judicial officer;
(r) Any representation or warranty made in writing to Lender by
any officer of Borrower in connection with the transaction contemplated in this
Agreement is materially incorrect when made;
(s) Guarantor shall be in default with respect to any of its
Obligations to Lender or an Event of Default or an Unmatured Default occurs
under the Other Loan Document; or
(t) If the aggregate dollar value of all judgments, defaults,
demands, claims and notices of Liens under clauses (f), (k), (l), (n) and (o)
hereof exceeds $250,000.
SECTION 9
REMEDIES
SECTION 9.1. SPECIFIC REMEDIES. Upon the occurrence of any
Event of Default, subject in each case to the terms of the Intercreditor
Agreement:
(a) Lender may declare all Obligations to be due and payable
immediately, whereupon they shall immediately become due and payable without
presentment, demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrower.
(b) Lender may set off against the Obligations all Collateral,
balances, credits, deposits, accounts, or moneys of Borrower then or thereafter
held with Lender, including amounts represented by certificates of deposit.
(c) Lender may enter any premises of Borrower or its
Affiliates, with or without judicial process, and take possession of the
Collateral; provided however, that Lender may only exercise such remedy if it
may do so without a breach of the peace. Lender may remove the Collateral and
may remove or copy all records pertaining thereto, or Lender may remain on such
premises and use the premises for the purpose of collecting, preparing and
disposing of the Collateral, without any liability for rent or occupancy
charges. Borrower shall, upon request of Lender, assemble the Collateral and any
records pertaining thereto and make them available at a place designated by
Lender that is reasonably convenient to both parties.
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(d) Lender may dispose of the Collateral in its then-existing
condition or, at its election, may take such measures as it deems necessary or
advisable to improve, process, finish, operation, demonstrate and prepare for
sale the Collateral, and may store, ship, reclaim, recover, protect, advertise
for sale or lease, and insure the Collateral. Lender may use and operate
equipment of Borrower or its Affiliates in order to process or finish inventory
included in the Collateral. If any Collateral consists of documents, Lender may
proceed either as to the documents or as to the goods represented thereby.
(e) Lender may pay, purchase, contest, or compromise any
encumbrance, charge or Lien that, in the opinion of Lender, appears to be prior
or superior to its Lien and pay all reasonable expenses incurred in connection
therewith.
(f) Lender may (i) endorse Borrower's or its Affiliates' name
on all checks, notes, drafts, money orders or other forms of payment of or
security for Accounts or other Collateral; (ii) sign Borrower's or its
Affiliates' name on drafts drawn on Account Debtors or issuers of letters of
credit; and (iii) notify the postal authorities in Borrower's or its Affiliates'
name to change the address for delivery of Borrower's or its Affiliates' mail to
an address designated by Lender, receive and open all mail addressed to Borrower
or an Affiliate, copy all mail, return all mail relating to Collateral, and hold
all other mail available for pickup by Borrower or an Affiliate.
(g) Lender may sell the Collateral at public or private sale
and is not required to repossess Collateral before selling it. Any requirement
of reasonable notice of any disposition of the Collateral shall be satisfied if
such notice is sent to Borrower, ten (10) days prior to such disposition by any
of the methods provided in Section 11.5 hereof. Borrower shall be credited with
the net proceeds of such sale only when they are actually received by Lender,
and Borrower shall continue to be liable for any deficiency remaining after the
Collateral is sold or collected.
(h) If the sale is to be a public sale, Lender shall also give
notice of the time and place by publishing a notice one time at least five (5)
days before the date of the sale in a newspaper of general circulation in the
county in which the sale is to be held.
(i) To the maximum extent permitted by applicable law, Lender
may be the purchaser of any or all of the Collateral at any public sale and
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Collateral sold at any
public sale, to use and apply all or any part of the Obligations as a credit on
account of the purchase price of any Collateral payable by Lender at such sale.
SECTION 9.2. POWER OF ATTORNEY. Guarantor and Borrower hereby
appoint Lender (and any of Lender's officers, employees, or
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agents designated by Lender) as Guarantor's and Borrower's attorney, with power
whether before or after the occurrence of an Event of Default: (a) to endorse
Borrower's or its Affiliates' name on any checks, notes, acceptances, money
orders, drafts or other forms of payment or security that may come into Lender's
possession; (b) to sign Borrower's or its Affiliates' name on drafts against
Account Debtors, on schedules and assignments of Accounts, on verifications of
Accounts, and on notices to Account Debtors; (c) to notify the post office
authorities to change the address for delivery of Borrower's or its Affiliates'
mail to an address designated by Lender, to receive and open all mail addressed
to Borrower or an Affiliate and to retain all mail relating to the Collateral
and forward all other mail to Borrower or an Affiliate; (d) to send requests for
verification of Accounts; (e) to execute UCC Financing Statements; and (f) to do
all things necessary to carry out this Agreement. The appointment of Lender as
Borrower's attorney and each and every one of Lender's rights and powers, being
coupled with an interest, are irrevocable as long as any Obligations are
outstanding. Lender agrees not to exercise the power granted in clauses 9.2(a)
through 9.2(c) prior to the occurrence of an Event of Default and agrees not to
exercise the power granted in clause 9.2(d) prior to notification of Borrower of
its intent to do so, but such limitations do not limit the effectiveness of such
power of attorney at any time. Any person dealing with Lender shall be entitled
to rely conclusively on any written or oral statement of Lender that this power
of attorney is in effect. Lender may also use Borrower's stationery in
connection with exercising its rights and remedies and performing the
Obligations of Borrower.
SECTION 9.3. EXPENSES SECURED. All expenses, including attorney
fees, incurred by Lender in the exercise of its rights and remedies provided in
this Agreement, in the Other Loan Document or by law shall be payable by
Borrower to Lender, shall be part of the Obligations, and shall be secured by
the Collateral.
SECTION 9.4. EQUITABLE RELIEF. Borrower recognizes that in the
event Borrower fails to perform, observe, or discharge any of its Obligations or
liabilities under this Agreement, no remedy of law will provide adequate relief
to Lender, and Borrower agrees that Lender shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
SECTION 9.5. REMEDIES ARE CUMULATIVE. No remedy set forth
herein is exclusive of any other available remedy or remedies, but each is
cumulative and in addition to every other right or remedy given under this
Agreement or under any other agreement between Lender and Borrower or Guarantor
or now or hereafter existing at law or in equity or by statute. Lender may
pursue its rights and remedies concurrently or in any sequence, and no exercise
of one right or remedy shall be deemed to be an election. No delay by Lender
shall constitute a waiver, election, or acquiescence by it. Borrower on its
behalf waives any rights to
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require Lender to (i) proceed against Guarantor or any other party; or (ii)
proceed against or exhaust any security held from Guarantor. Lender may at any
time and from time to time, without notice to, or consent of, Borrower, and
without affecting or impairing the obligation of Borrower hereunder do any of
the following: (i) renew or extend any Obligations of Guarantor, or of any other
party at any time directly or contingently liable for payment of any of the
Obligations of Guarantor; (ii) accept partial payments of the Obligations of
Guarantor; (iii) settle, release (by operation of law or otherwise), compound,
compromise, collect or liquidate any of the Obligations of Guarantor and the
security therefor in any manner; (iv) consent to the transfer or sale of any
security or bid and purchase at any sale of any security of Guarantor. Borrower
expressly agrees that the validity of this Agreement and the Obligations of
Borrower shall not be terminated, affected or impaired by reason of the waiving,
delaying, exercising or non-exercising, of any of Lender's rights against
Guarantor or as a result of the substitution, release, repossession, sale,
disposition or destruction of any Collateral securing any Obligations of
Guarantor. Lender shall not be released or discharged, either in whole or in
part, by Lender's failure or delay to perfect or continue the perfection of any
security interest in any Collateral which secures the Obligations of Guarantor
or to protect the property covered by such security interest.
SECTION 10
INDEMNITY
SECTION 10.1. GENERAL INDEMNITY. Borrower shall protect,
indemnify and defend and save harmless Lender and its directors, officers,
agents and employees from and against any and all loss, cost, liability
including negligence, tort and strict liability), expense, damage, suits or
demands (including fees and disbursements of counsel) on account of any suit or
proceeding before any Governmental Authority which arises from the transactions
contemplated in this Agreement or otherwise arising in connection with or
relating to the Loan and any security therefor, unless such suit, claim or
damages are caused by the negligence or intentional malfeasance of Lender or its
directors, officer, agents or employees. Upon receiving knowledge of any suit,
claim or demand asserted by a third-party that Lender believes is covered by
this indemnity, Lender shall give Borrower timely notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel acceptable to Lender. Lender may, at its option, also require Borrower
to so defend the matter. This obligation on the part of Borrower shall survive
the termination of this Agreement and the repayment of the Note.
SECTION 10.2. SPECIFIC ENVIRONMENTAL INDEMNITY. Borrower hereby
agrees unconditionally to indemnify, defend and
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hold harmless Lender, its directors, officers, employees and agents against any
loss, liability, damage or expense or claim arising under any Environmental
Laws having jurisdiction over the property or assets of Borrower or its
Affiliates or any portion thereof or its use.
SECTION 11
MISCELLANEOUS
SECTION 11.1. DELAY AND WAIVER. No delay or omission to
exercise any right shall impair any such right or be a waiver thereof, but any
such right may be exercised from time to time and as often as may be deemed
expedient. A waiver on one occasion shall be limited to that particular
occasion.
SECTION 11.2. COMPLETE AGREEMENT. This Agreement and the
Schedules are the complete agreement of the parties hereto and supersede all
previous understandings relating to the subject matter hereof. This Agreement
may be amended only by an instrument in writing that explicitly states that it
amends this Agreement and is signed by the party against whom enforcement of
the amendment is sought. This Agreement may be executed in counterparts, each
of which will be an original and all of which will constitute a single
agreement.
SECTION 11.3. SEVERABILITY; HEADINGS. If any part of this
Agreement or the application thereof to any person or circumstance is held
invalid, the remainder of this Agreement shall not be affected thereby. The
section headings herein are included for convenience only and shall not be
deemed to be a part of this Agreement.
SECTION 11.4. BINDING EFFECT. This Agreement shall be
binding upon and inure to the benefit of the respective legal representatives,
successors and assigns of the parties hereto; however, Borrower may not assign
any of its rights or delegate any of its Obligations hereunder. Lender (and
any subsequent assignee) may transfer and assign this Agreement and deliver the
Collateral to the assignee, who shall thereupon have all of the rights of
Lender; and Lender (or such subsequent assignee who in turn assigns as
aforesaid) shall then be relieved and discharged of any responsibility or
liability with respect to this Agreement and said Collateral.
SECTION 11.5. NOTICES. Any notices under or pursuant to this
Agreement shall be deemed duly sent when delivered in hand or when mailed by
registered or certified mail, return receipt requested, or when delivered by
courier or when transmitted by telex, telecopy, or similar electronic medium to
the following addresses:
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To Borrower: American Shared Hospital Services
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
To Lender: DVI Business Credit
▇/▇ ▇▇▇ Financial Services Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Copies to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇, White & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change such address by sending notice of the
change to the other party; such change of address shall be effective only upon
actual receipt of the notice by the other party.
SECTION 11.6. GOVERNING LAW. ALL ACTS AND TRANSACTIONS
HEREUNDER AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE
GOVERNED, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF CALIFORNIA.
SECTION 11.7. JURISDICTION. Borrower agrees that the state
and federal courts in Orange County, California or any other court in which
Lender initiates proceedings have jurisdiction over all matters arising out of
this Agreement and that service of process in any such proceeding shall be
effective if mailed to Borrower at its address described in the Notices section
of this Agreement. Borrower waives any right it may have to assert the defense
of forum non conveniens or to object to such venue and hereby consents to any
court-ordered relief.
SECTION 11.8. WAIVER OF TRIAL BY JURY. LENDER, GUARANTOR
AND BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT
OF THIS AGREEMENT OR ANY OF THE SECURITY DOCUMENTS OR THE CONDUCT OF THE
RELATIONSHIP BETWEEN LENDER, GUARANTOR AND BORROWER.
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IN WITNESS WHEREOF, Borrower, Guarantor, Individual Guarantor
and the Lender have executed this Agreement by their duly authorized officers
as of the date first above written.
BORROWER: LENDER:
CURACARE, INC. DVI FINANCIAL SERVICES INC.
By: By:
------------------------------ --------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President President
AMERICAN SHARED-CURACARE
By: American Shared Hospital
Services, general partner
By:
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
President
By: MMRI, Inc., general partner
By:
-------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
President
GUARANTOR:
AMERICAN SHARED HOSPITAL SERVICES
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
INDIVIDUAL GUARANTOR:
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
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