Exhibit 10.20
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REVOLVING CREDIT AND SECURITY AGREEMENT
between
AMERICASDOCTOR, INC.
AMERICASDOCTOR INTERNET OPERATIONS, INC.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ COORDINATOR SERVICES, INC.
as Borrower
and
CAPITALSOURCE FINANCE LLC,
as Lender
Dated as of
March 15, 2002
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REVOLVING CREDIT AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
I. DEFINITIONS.........................................................................................1
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1.1 General Terms................................................................................1
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II. ADVANCES, PAYMENT AND INTEREST......................................................................1
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2.1 The Revolving Facility.......................................................................1
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2.2 The Note; Maturity...........................................................................2
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2.3 Interest.....................................................................................2
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2.4 Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate...............2
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2.5 Revolving Facility Collections; Repayment; Borrowing Availability and Lockbox................3
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2.6 Manner of Payment............................................................................4
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2.7 Repayment of Excess Advances.................................................................4
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2.8 Payments by Lender...........................................................................4
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2.9 Grant of Security Interest; Collateral.......................................................4
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2.10 Collateral Administration....................................................................5
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2.11 Power of Attorney............................................................................6
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III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE................................................7
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3.1 Commitment Fee...............................................................................7
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3.2 Unused Line Fee..............................................................................7
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3.3 Collateral Management Fee....................................................................7
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3.4 Early Termination Fees.......................................................................7
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3.5 Computation of Fees; Lawful Limits...........................................................8
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3.6 Default Rate of Interest.....................................................................8
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IV. CONDITIONS PRECEDENT................................................................................8
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4.1 Conditions to Initial Advance and Closing....................................................8
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4.2 Conditions to Each Advance..................................................................10
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V. REPRESENTATIONS AND WARRANTIES.....................................................................10
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5.1 Organization and Authority..................................................................10
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5.2 Loan Documents..............................................................................11
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5.3 Subsidiaries, Capitalization and Ownership Interests........................................11
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5.4 Properties..................................................................................11
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5.5 Other Agreements............................................................................12
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5.6 Litigation..................................................................................12
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5.7 Hazardous Materials.........................................................................12
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5.8 Tax Returns; Governmental Reports...........................................................12
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5.9 Financial Statements and Reports............................................................13
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5.10 Compliance with Law.........................................................................13
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5.11 Intellectual Property.......................................................................13
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5.12 Licenses and Permits; Labor.................................................................13
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5.13 No Default..................................................................................14
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5.14 Disclosure..................................................................................14
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5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts........................14
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5.16 Agreements Concerning Officers, Directors, Competitors......................................14
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5.17 Insurance...................................................................................15
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5.18 Names; Location of Offices, Records and Collateral..........................................15
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5.19 Non-Subordination...........................................................................15
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5.20 Accounts....................................................................................15
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5.21 Healthcare..................................................................................16
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5.22 Survival....................................................................................16
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VI. AFFIRMATIVE COVENANTS..............................................................................16
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6.1 Financial Statements, Reports and Other Information.........................................16
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6.2 Payment of Obligations......................................................................17
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6.3 Conduct of Business and Maintenance of Existence and Assets.................................18
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6.4 Compliance with Legal and Other Obligations.................................................18
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6.5 Insurance...................................................................................18
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6.6 True Books..................................................................................18
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6.7 Inspection; Periodic Audits.................................................................19
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6.8 Further Assurances; Post Closing............................................................19
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6.9 Payment of Indebtedness.....................................................................19
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6.10 Lien Searches...............................................................................20
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6.11 Use of Proceeds.............................................................................20
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6.12 Collateral Documents; Security Interest in Collateral.......................................20
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6.13 Revisions to Schedule.......................................................................20
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6.14 Taxes and Other Charges.....................................................................20
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VII. NEGATIVE COVENANTS.................................................................................21
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7.1 Financial Covenants.........................................................................21
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7.2 Permitted Indebtedness......................................................................22
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7.3 Permitted Liens.............................................................................22
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7.4 Investments; New Facilities or Collateral; Subsidiaries.....................................22
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7.5 Dividends; Redemptions......................................................................23
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7.6 Transactions with Affiliates................................................................23
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7.7 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds................................24
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7.8 Truth of Statements.........................................................................24
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VIII. DEFAULT ...........................................................................................24
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8.1 Events of Default...........................................................................24
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8.2 Actions of Lender After Default; Certain Cure Rights........................................26
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IX. RIGHTS AND REMEDIES AFTER DEFAULT..................................................................26
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9.1 Rights and Remedies.........................................................................26
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9.2 Application of Proceeds.....................................................................27
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9.3 Rights of Lender to Appoint Receiver........................................................28
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9.4 Rights and Remedies not Exclusive...........................................................28
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X. WAIVERS AND JUDICIAL PROCEEDINGS...................................................................28
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10.1 Waivers.....................................................................................28
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10.2 Delay; No Waiver of Defaults................................................................28
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10.3 Jury Waiver.................................................................................29
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10.4 [Intentionally Omitted].....................................................................29
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XI. EFFECTIVE DATE AND TERMINATION.....................................................................29
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11.1 Effectiveness and Termination...............................................................29
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11.2 Survival....................................................................................29
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XII. MISCELLANEOUS......................................................................................30
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12.1 Governing Law; Jurisdiction; Service of Process; Venue......................................30
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12.2 Successors and Assigns; Participations; New Lenders.........................................30
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12.3 Application of Payments.....................................................................31
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12.4 Indemnity...................................................................................31
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12.5 Notice......................................................................................32
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12.6 Severability; Captions; Counterparts; Facsimile Signatures..................................32
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12.7 Expenses....................................................................................32
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12.8 Entire Agreement............................................................................33
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12.9 Lender Approvals............................................................................33
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12.10 Confidentiality and Publicity...............................................................33
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1) Minimum Liquidity............................................................................A
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EXECUTION COPY
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS REVOLVING CREDIT AND SECURITY AGREEMENT (the "Agreement") dated
as of March 15, 2002, is entered into among AMERICASDOCTOR, INC., a Delaware
corporation, AMERICADOCTORS INTERNET OPERATIONS, INC., a Delaware corporation
and ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ COORDINATOR SERVICES, INC., a Delaware corporation
(collectively the "Borrower"), and CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company ("Lender").
WHEREAS, Borrower has requested that Lender make available to Borrower
a revolving credit facility (the "Revolving Facility") in a maximum principal
amount at any time outstanding of up to Four Million Dollars ($4,000,000) (the
"Facility Cap"), the proceeds of which shall be used by Borrower for refinancing
Borrower's existing obligations and indebtedness and working capital needs; and
WHEREAS, Lender is willing to make the Revolving Facility available to
Borrower upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrower and Lender hereby agree as follows:
I. DEFINITIONS
1.1 General Terms
For purposes of this Agreement, in addition to the definitions above
and elsewhere in this Agreement, the terms listed in Appendix A hereto shall
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have the meanings given such terms in Appendix A, which is incorporated herein
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and made a part hereof. All capitalized terms used which are not specifically
defined shall have meanings provided in Article 9 of the UCC in effect on the
date hereof to the extent the same are used or defined therein. Unless otherwise
specified herein or in Appendix A, any agreement or contract referred to herein
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or in Appendix A shall mean such agreement as modified, amended or supplemented
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from time to time. Unless otherwise specified, as used in the Loan Documents or
in any certificate, report, instrument or other document made or delivered
pursuant to any of the Loan Documents, all accounting terms not defined in
Appendix A elsewhere in this Agreement shall have the meanings given to such
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terms in and shall be interpreted in accordance with GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1 The Revolving Facility
(a) Subject to the provisions of this Agreement, Lender shall make
Advances to Borrower under the Revolving Facility from time to time during the
Term; provided that, notwithstanding any other provision of this Agreement, the
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aggregate amount of all Advances at any one time outstanding under the Revolving
Facility shall not exceed either of (a) the Facility Cap and (b) the
Availability as defined below. The Revolving Facility is a revolving credit
facility, which may be drawn, repaid and redrawn, from time to time as permitted
under this Agreement. Unless otherwise permitted by Lender, each Advance shall
be in an amount of at least $1,000. Subject to the provisions of this Agreement,
Borrower may request Advances under the Revolving Facility up to and including
the value, in dollars, of fifty percent (50%) of the Borrowing Base minus, if
applicable, amounts reserved pursuant
to this Agreement (such calculated amount being referred to herein as the
"Availability"). Advances under the Revolving Facility automatically shall be
made for the payment of interest on the Note and other Obligations on the date
when due to the extent available and as provided for herein.
(b) Lender has established the above-referenced advance rate for
Availability and, in its sole credit judgment, may further adjust the
Availability and such advance rate by applying percentages (known as "liquidity
factors") to Eligible Receivables based upon Borrower's actual recent collection
history in a manner consistent with Lender's generally applicable underwriting
practices and procedures, including without limitation Lender's review and
analysis of, among other things, Borrower's historical returns, rebates,
discounts, credits and allowances (collectively, the "Dilution Items"). Such
liquidity factors and the advance rate for Availability may be adjusted by
Lender throughout the Term as warranted in Lender's sole credit judgment,
consistent with Lender's generally applicable underwriting practices and
procedures. Also, Lender shall have the right to establish from time to time, in
its sole credit judgment, consistent with its generally applicable lending
practices, reserves against the Borrowing Base, which reserves shall have the
effect of reducing the amounts otherwise eligible to be disbursed to Borrower
under the Revolving Facility pursuant to this Agreement.
2.2 The Note; Maturity
(a) All Advances under the Revolving Facility shall be evidenced by
the Note, evidencing the aggregate indebtedness of Borrower to Lender resulting
from Advances under the Revolving Facility, from time to time. Lender hereby is
authorized, but is not obligated, to enter the amount of each Advance under the
Revolving Facility and the amount of each payment or prepayment of principal or
interest thereon in the appropriate spaces on the reverse of or on an attachment
to the Note. Lender will account to Borrower monthly with a statement of
Advances under the Revolving Facility and charges and payments made pursuant to
this Agreement, and in the absence of manifest error, such accounting rendered
by Lender shall be deemed final, binding and conclusive unless Lender is
notified by Borrower in writing to the contrary within thirty (30) calendar days
of Receipt of each accounting, which notice shall be deemed an objection only to
items specifically objected to therein.
(b) All amounts outstanding under the Note and other Obligations shall
be due and payable in full, if not earlier in accordance with this Agreement, on
the earlier of (i) the occurrence of an Event of Default if required pursuant
hereto or Lender's demand upon an Event of Default, and (ii) the last day of the
Term (such earlier date being the "Maturity Date").
2.3 Interest
Interest on outstanding Advances under the Note shall be payable
monthly in arrears on the first Business Day of each calendar month at an annual
rate of Prime Rate plus 2.0%, provided, however, that, notwithstanding any
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provision of any Loan Document, the interest on outstanding Advances under the
Note shall be not less than 7.5%, in each case calculated on the basis of a
360-day year and for the actual number of calendar days elapsed in each interest
calculation period. Interest accrued on each Advance under the Note shall be due
and payable on the first day of each calendar month, in accordance with the
procedures provided for herein, commencing the month immediately following the
first Advance, and continuing until the later of the expiration of the Term and
the full performance and irrevocable payment in full in cash of the Obligations
and termination of this Agreement.
2.4 Revolving Facility Disbursements; Requirement to Deliver Borrowing
Certificate
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So long as no Default or Event of Default shall have occurred and be
continuing, Borrower may give Lender irrevocable written notice requesting an
Advance under the Revolving Facility by delivering to Lender not later than
11:00 a.m. (New York City time) at least two but not more than four Business
Days before the proposed borrowing date of such requested Advance (the
"Borrowing Date"), a completed Borrowing Certificate and relevant supporting
documentation reasonably satisfactory to Lender, which shall (i) specify the
proposed Borrowing Date of such Advance which shall be a Business Day, (ii)
specify the principal amount of such requested Advance, and (iii) certify the
matters contained in Section 4.2. Each time a request for an Advance is made,
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and, in any event and regardless of whether an Advance is being requested, on
the last Business Day of each month during the Term (and more frequently if
Lender shall so request) until the Obligations are indefeasibly paid in cash in
full and this Agreement is terminated, Borrower shall deliver to Lender a
Borrowing Certificate as of the immediately preceeding month end accompanied by
a separate detailed aging and categorizing of Borrower's accounts receivable and
accounts payable and such other supporting documentation with respect to the
figures and information in the Borrowing Certificate as Lender shall reasonably
request from a credit or security perspective or otherwise. On each Borrowing
Date, Borrower irrevocably authorizes Lender to disburse the proceeds of the
requested Advance to Borrower's account(s) as set forth on Schedule 2.4, in all
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cases for credit to Borrower (or to such other account as to which Borrower
shall instruct Lender) via Federal funds wire transfer no later than 4:00 p.m.
(New York City time).
2.5 Revolving Facility Collections; Repayment; Borrowing Availability and
Lockbox
Each Borrower shall maintain one or more lockbox accounts
(individually and collectively, the "Lockbox Account") with one or more banks
reasonably acceptable to Lender (each, a "Lockbox Bank"), and shall execute with
each Lockbox Bank one or more agreements reasonably acceptable to Lender
(individually and collectively, the "Lockbox Agreement"), and such other
agreements related thereto as Lender may reasonably require to perfect a
security interest therein. Borrower shall ensure that all collections of its
Accounts and all other cash payments received by Borrower are paid and delivered
directly from Account Debtors and other Persons into the appropriate Lockbox
Account. The Lockbox Agreements shall provide that the Lockbox Banks immediately
will transfer all funds paid into the Lockbox Accounts into a depository account
or accounts maintained by Lender or an Affiliate of Lender at such bank as
Lender may communicate to Borrower from time to time (the "Concentration
Account") or such other account as directed by Borrower in accordance with the
terms and conditions of the Lockbox Agreement. Notwithstanding and without
limiting any other provision of any Loan Document, Lender shall apply, on a
daily basis, all funds transferred into the Concentration Account pursuant to
the Lockbox Agreement and this Section 2.5 in such order and manner as
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determined by Lender. To the extent that any Accounts collections of Borrower or
any other cash payments received by Borrower are not sent directly to the
appropriate Lockbox Account but are received by Borrower or any of their
Affiliates, such collections and proceeds shall be held in trust for the benefit
of Lender and immediately remitted (and in any event within two (2) Business
Days), in the form received, to the appropriate Lockbox Account for immediate
transfer to the Concentration Account. Borrower acknowledges and agrees that
compliance with the terms of this Section 2.5 is an essential term of this
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Agreement. All funds transferred to the Concentration Account for application to
the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility, but, for purposes of calculating
interest hereunder, shall be subject to a seven Business Day clearance period.
If as the result of collections of Accounts and/or any other cash payments
received by Borrower pursuant to this Section 2.5 a credit balance exists with
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respect to the Concentration Account, such credit balance shall be immediately,
and in any event within two (2) Business Days, transferred to an account
designated by Borrower from time to time; provided that each such transfer will
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not occur unless and until the credit balance is at least $5,000. If applicable,
at any time prior to the execution of
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all or any of the Lockbox Agreements and operation of all or any of the Lockbox
Accounts, Borrower and their Affiliates shall direct all collections or proceeds
it receives on Accounts or from other Collateral to the accounts(s) and in the
manner specified by Lender in its reasonable discretion.
2.6 Manner of Payment
Any payments made by Borrower (other than payments automatically paid
through Advances under the Revolving Facility as provided herein), shall be made
only by wire transfer on the date when due, without offset or counterclaim, in
Dollars, in immediately available funds to such account as may be indicated in
writing by Lender to Borrower from time to time. Any such payment received after
2:00 p.m. (New York City time) on the date when due shall be deemed received on
the following Business Day. Whenever any payment hereunder shall be stated to be
due or shall become due and payable on a day other than a Business Day, the due
date thereof shall be extended to, and such payment shall be made on, the next
succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate
then in effect during such extension) and/or fees, as the case may be.
2.7 Repayment of Excess Advances
Any balance of Advances under the Revolving Facility outstanding at
any time in excess of the lesser of the Facility Cap or the Availability shall
be immediately due and payable by Borrower without the necessity of any demand,
at the Payment Office, whether or not a Default or Event of Default has occurred
or is continuing and shall be paid in the manner specified in Section 2.8.
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2.8 Payments by Lender
Should any amount required to be paid under any Loan Document be
unpaid for more than three (3) Business Days after the due date, such amount may
be paid by Lender, which payment shall be deemed a request for an Advance under
the Revolving Facility as of the date such payment is due, and Borrower
irrevocably authorizes disbursement of any such funds to Lender by way of direct
payment of the relevant amount, interest or Obligations. No payment or
prepayment of any amount by Lender or any other Person shall entitle any Person
to be subrogated to the rights of Lender under any Loan Document unless and
until the Obligations have been fully performed and paid irrevocably in cash and
this Agreement has been terminated. Any sums reasonably expended by Lender as a
result of Borrower's failure to pay, perform or comply with any Loan Document or
any of the Obligations may be charged to Borrower's account as an Advance under
the Revolving Facility and added to the Obligations.
2.9 Grant of Security Interest; Collateral
(a) To secure the payment and performance of the Obligations, Borrower
hereby grants to Lender a continuing first priority security interest (subject
to Permitted Liens, which in no case shall include or permit liens on Accounts
or proceeds thereof) in and Lien upon, and pledges to Lender, all of its right,
title and interest in and to the following (collectively and each individually,
the "Collateral"); provided, however, that the Collateral shall not include any
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of the following to the extent the following relates to, and is utilized solely
in connection with, the contractual arrangements between Borrower and Sepracor,
Inc.:
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(i) all of such Borrower's tangible personal property now owned
or hereafter acquired, other than Inventory and Equipment;
(ii) all of such Borrower's intangible personal property,
including without limitation all present and future Accounts, securities,
contract rights, Permits, General Intangibles, Chattel Paper, Documents,
Instruments and Deposit Accounts, rights to the payment of money or other forms
of consideration of any kind, tax refunds, insurance proceeds, now owned or
hereafter acquired, and all intangible and tangible personal property relating
to or arising out of any of the foregoing; and
(iii) any and all additions to any of the foregoing, and any and
all replacements, products and proceeds (including insurance proceeds) of any of
the foregoing.
(b) Notwithstanding the foregoing provisions of this Section 2.9, such
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grant of a security interest shall not extend to, and the term "Collateral"
shall not include, any General Intangibles of Borrower to the extent that (i)
such General Intangibles are not assignable or capable of being encumbered as a
matter of law or under the terms of any license or other agreement applicable
thereto (but solely to the extent that any such restriction shall be enforceable
under applicable law) without the consent of the licensor thereof or other
applicable party thereto, and (ii) such consent has not been obtained; provided,
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however, that the foregoing grant of a security interest shall extend to, and
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the term "Collateral" shall include, each of the following: (a) any General
Intangible which is in the nature of an Account or a right to the payment of
money or a proceed of, or otherwise related to the enforcement or collection of,
any Account or right to the payment of money, or goods which are the subject of
any Account or right to the payment of money, (b) any and all proceeds of any
General Intangible that is otherwise excluded to the extent that the assignment,
pledge or encumbrance of such proceeds is not so restricted, and (c) upon
obtaining the consent of any such licensor or other applicable party with
respect to any such otherwise excluded General Intangible, such General
Intangible as well as any and all proceeds thereof that might theretofore have
been excluded from such grant of a security interest and from the term
"Collateral."
(c) Upon the execution and delivery of this Agreement, and upon the
proper filing of the necessary financing statements, without any further action,
Lender will have a good, valid first priority (subject to Permitted Liens, which
in no case shall include or permit liens on Accounts or the proceeds thereof)
Lien and security interest in the Collateral, subject to no transfer or other
restrictions or Liens of any kind in favor of any other Person except for
Permitted Liens. No financing statement relating to any of the Collateral is on
file in any public office except those (i) on behalf of Lender, and/or (ii) in
connection with Permitted Liens.
2.10 Collateral Administration
(a) All Collateral (except Deposit Accounts) will at all times be kept
by Borrower at the locations set forth on Schedule 5.18B hereto and shall not,
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without thirty (30) calendar days prior written notice to Lender, be moved
therefrom, and in any case shall not be moved outside the United States.
(b) Borrower shall keep commercially reasonable accurate and complete
records of its Accounts and all payments and collections thereon and shall
submit such records to Lender on such periodic bases as may reasonably request
(but unless an Event of Default has occurred and is continuing, not more
frequently than monthly). In addition, if (i) Accounts of Borrower in an
aggregate face amount in excess of $40,000 become ineligible because they fall
within one of the specified categories of ineligibility set forth in the
definition of Eligible Receivables and (ii) Borrower has borrowed fifty percent
(50%) or more of its Availability and such amount is currently outstanding, then
Borrower shall
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notify Lender of such occurrence on the first Business Day following Borrower's
knowledge thereof and the Borrowing Base shall thereupon be adjusted to reflect
such occurrence. If requested by Lender after the occurrence and during the
continuance of an Event of Default, Borrower shall execute and deliver to Lender
formal written assignments of all of its Accounts weekly or daily as Lender may
request, including all Accounts created since the date of the last assignment,
together with copies of claims, invoices and/or other information related
thereto. To the extent that collections from such assigned accounts exceed the
amount of the Obligations, such excess amount shall not accrue interest in favor
of Borrower, but shall be available to Borrower upon Borrower's written request.
(c) Whether or not an Event of Default has occurred, any of Lender's
officers, employees, representatives or agents shall have the right, at any time
during normal business hours, in the name of Lender, any designee of Lender or
Borrower, to verify the validity, amount or any other matter relating to any
Accounts of Borrower which, prior to the occurrence or continuation of a Default
or Event of Default shall not include the right to contact Borrower's customers
or account debtors. Borrower shall cooperate fully with Lender in an effort to
facilitate and promptly conclude such verification process.
(d) Lender shall have the right at all times after the occurrence and
during the continuance of an Event of Default to notify Account Debtors owing
Accounts to Borrower that their Accounts have been assigned to Lender and to
collect such Accounts directly in its own name and to charge collection costs
and expenses, including reasonable attorney's fees, to Borrower.
(e) As and when determined by Lender in its sole discretion, Lender
will perform the searches described in clauses (i) and (ii) below against
Borrower (the results of which are to be consistent with Borrower's
representations and warranties under this Agreement) once per calendar quarter
prior to the occurrence and continuation of any Default or Event of Default at
Borrower's expense, and following the occurrence and continuation of a Default
or Event of Default, as often as Lender reasonably shall deem appropriate, all
at Borrower's expense: (i) UCC searches in the state of Borrower's formation;
and (ii) judgment, federal tax lien and corporate and partnership tax lien
searches, in each jurisdiction searched under clause (i) above.
(f) Borrower (i) shall provide prompt written notice to its current
bank to transfer all items, collections and remittances to the Concentration
Account, (ii) shall provide prompt written notice to each Account Debtor to make
payments to the appropriate Lockbox Account, and Borrower hereby authorizes
Lender, upon any failure to send such notices and directions within ten (10)
calendar days after the date of this Agreement (or ten (10) calendar days after
the Person becomes an Account Debtor) after the occurrence and during the
continuance of an Event of Default, to send any and all similar notices and
directions to such Account Debtors, and (iii) shall do anything further that may
be lawfully required by Lender to secure Lender and effectuate the intentions of
the Loan Documents.
2.11 Power of Attorney
Lender is hereby irrevocably made, constituted and appointed the true and
lawful attorney for Borrower (without requiring any of them to act as such) with
full power of substitution to do the following upon the occurrence and during
the continuance of an Event of Default: (i) endorse the name of Borrower upon
any and all checks, drafts, money orders, and other instruments for the payment
of money that are payable to Borrower and constitute collections on its
Accounts; (ii) execute in the name of Borrower any financing statements,
schedules, assignments, instruments, documents, and statements that it is or
they or are obligated to give Lender under any of the Loan Documents; and (iii)
do such other and further acts and deeds in the name of Borrower that Lender may
deem necessary or desirable to enforce any Account or other Collateral or to
perfect Lender's security interest or lien in any Collateral.
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In addition, if Borrower breaches its obligation hereunder to direct payments of
Accounts or the proceeds of any other Collateral to the appropriate Lockbox
Account, Lender, as the irrevocably made, constituted and appointed true and
lawful attorney for Borrower pursuant to this paragraph, may, upon the
occurrence and continuation of an Event of Default by the signature or other act
of any of Lender's officers or authorized signatories (without requiring any of
them to do so), direct any federal, state or private payor or fiscal
intermediary to pay proceeds of Accounts or any other Collateral to the
appropriate Lockbox Account.
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE
3.1 Commitment Fee
On or before the Closing Date, Borrower shall pay to Lender 1.0% of
the Facility Cap as a nonrefundable commitment fee.
3.2 Unused Line Fee
Borrower shall pay to Lender an unused line fee (the "Unused Line
Fee") in an amount equal to 0.042% (per month, prorated for partial months where
this Agreement is only effective for a portion of any such month) of the
difference derived by subtracting (i) the daily average amount of the balances
under the Revolving Facility outstanding during the preceding month, from (ii)
the Facility Cap. The Unused Line Fee shall be payable monthly in arrears on the
first Business Day of each successive calendar month (starting with the month in
which the Closing Date occurs).
3.3 Collateral Management Fee
Borrower shall pay Lender as additional interest a monthly collateral
management fee (the "Collateral Management Fee") equal to 0.10% of the daily
average amount of the balances under the Revolving Facility outstanding during
the preceding month. The Collateral Management Fee shall be payable monthly in
arrears on the first Business Day of each successive calendar month (starting
with the month in which the Closing Date occurs).
3.4 Early Termination Fees
If (i) Borrower terminates the Revolving Facility under Section 11.1
------------
hereof, (ii) Lender demands or Borrower is otherwise required to make payment in
full of the Revolving Facility and/or Obligations relating to the Revolving
Facility upon the occurrence of an Event of Default, (iii) a voluntary or
involuntary Change of Control occurs, (iv) any prepayment of the Revolving
Facility and/or Obligations occurs (other than reductions to zero of the
outstanding balance of the Revolving Facility resulting from the ordinary course
operation of the provisions of Section 2.5), whether by virtue of Lender's
-----------
exercising its right of set-off or otherwise, or (v) any acceleration of the
Obligations or cessation of lending and termination of the commitment to lend
occurs as a result of or during a bankruptcy, reorganization or other proceeding
or liquidation or pursuant to any Debtor Relief Law (a "termination"), then, at
the effective date of any such termination, Borrower shall pay Lender (in
addition to the then outstanding principal, accrued interest and other
Obligations relating to the Revolving Facility pursuant to the terms of this
Agreement and any other Loan Document), as yield
7
maintenance for the loss of bargain and not as a penalty, an amount equal to the
applicable Minimum Termination Fee.
3.5 Computation of Fees; Lawful Limits
All fees hereunder shall be computed on the basis of a year of 360
days and for the actual number of days elapsed in each calculation period, as
applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Lender for the use, forbearance or detention of money hereunder
exceed the maximum rate permissible under applicable law which a court of
competent jurisdiction shall, in a final determination, deem applicable hereto.
If, due to any circumstance whatsoever, fulfillment of any provision hereof, at
the time performance of such provision shall be due, shall exceed any such
limit, then, the obligation to be so fulfilled shall be reduced to such lawful
limit, and, if Lender shall have received interest or any other charges of any
kind which might be deemed to be interest under applicable law in excess of the
maximum lawful rate, then such excess shall be applied first to any unpaid fees
and charges hereunder, then to unpaid principal balance owed by Borrower
hereunder, and if the then remaining excess interest is greater than the
previously unpaid principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 3.5 shall
-----------
control to the extent any other provision of any Loan Document is inconsistent
herewith.
3.6 Default Rate of Interest
Upon the occurrence and during the continuation of an Event of
Default, the Applicable Rate of interest in effect at such time with respect to
the Obligations shall be increased by 3.0% per annum (the "Default Rate").
IV. CONDITIONS PRECEDENT
4.1 Conditions to Initial Advance and Closing
The obligations of Lender to consummate the transactions contemplated
herein and to make the initial Advance under the Revolving Facility (the
"Initial Advance") are subject to the satisfaction of the following:
(a) Borrower shall have delivered to Lender (A) the Loan Documents to
which it is a party, each duly executed by an authorized officer of Borrower and
in case of the Lockbox Agreement, executed by ▇▇▇▇▇▇ Trust and Savings Bank, and
(B) a Borrowing Certificate for the Initial Advance under the Revolving Facility
executed by an authorized officer of Borrower;
(b) all in form and substance satisfactory to Lender in its sole
discretion, Lender shall have received (i) a report of Uniform Commercial Code
financing statement, tax and judgment lien searches performed with respect to
Borrower in each jurisdiction determined by Lender in its sole discretion, and
such report shall show no Liens on the Collateral (other than Permitted Liens),
(ii) each document (including, without limitation, any UCC financing statement)
required by any Loan Document or under law or reasonably requested by Lender to
be filed, registered or recorded to create in favor of Lender, a perfected first
priority security interest (subject to Permitted Liens, which in no case shall
include or permit liens on Accounts or proceeds thereof) upon the Collateral,
and (iii) evidence of each
8
such filing, registration or recordation and of the payment by Borrower (or by
Lender on Borrower's behalf) of any necessary fee, tax or expense relating
thereto;
(c) Lender shall have received (i) the Charter and Good Standing
Documents, all in form and substance acceptable to Lender provided, however,
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that such certificates from Delaware shall be delivered to Lender within 30 days
of Closing and such certificates from Illinois shall be delivered to Lender
within 60 days from Closing, (ii) a certificate of the corporate secretary or
assistant secretary of Borrower dated the Closing Date, as to the incumbency and
signature of the Persons executing the Loan Documents, in form and substance
acceptable to Lender, (iii) the written legal opinion of counsel for Borrower,
in form and substance satisfactory to Lender and its counsel; and (iv) a
certificate executed by an authorized officer of Borrower, which shall
constitute a representation and warranty by such Borrower as of the Closing Date
and the applicable Borrowing Date that the conditions contained in this
Agreement have been satisfied;
(d) Lender shall have received a certificate of the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of Borrower, in form and substance satisfactory to Lender (each, a
"Solvency Certificate"), certifying (i) the solvency of Borrower after giving
effect to the transactions and the Indebtedness contemplated by the Loan
Documents, and (ii) as to Borrower's financial resources and ability to meet its
obligations and liabilities as they become due, to the effect that as of the
Closing Date and the Borrowing Date for the Initial Advance and after giving
effect to such transactions and Indebtedness: (A) the assets of Borrower, at a
Fair Valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of Borrower, and (B) no
unreasonably small capital base with which to engage in its anticipated business
exists with respect to Borrower;
(e) Lender shall have completed examinations, the results of which
shall be satisfactory in form and substance to Lender, of the Collateral, the
financial statements and the books, records, business, obligations, financial
condition and operational state of Borrower, and Borrower shall have
demonstrated to Lender's satisfaction that (i) its operations comply, in all
respects deemed material by Lender, in its sole judgment, with all applicable
federal, state, foreign and local laws, statutes and regulations, (ii) its
operations are not the subject of any governmental investigation, evaluation or
any remedial action which could result in any expenditure or liability deemed
material by Lender, in its sole judgment, and (iii) it has no liability (whether
contingent or otherwise) that is deemed material by Lender, in its sole
judgment;
(f) Lender shall have received all fees, charges and expenses payable
to Lender on or prior to the Closing Date pursuant to the Loan Documents;
(g) all in form and substance satisfactory to Lender in its sole
discretion, Lender shall have received such consents, approvals and agreements,
including, without limitation, any applicable Landlord Waivers and Consents with
respect to any and all leases at locations where Borrower maintains its
financial and corporate books and records, as specified on Schedule 5.4, which
------------
may be delivered post-closing, as set forth on Schedule 6.8 hereto, from such
------------
third parties as Lender and its counsel shall determine are necessary or
desirable with respect to (i) the Loan Documents and/or the transactions
contemplated thereby, and/or (ii) claims against Borrower or the Collateral;
(h) Borrower shall be in compliance with Section 6.5, and Lender shall
-----------
have received (i) certified copies of all such insurance policies, and (ii)
original certificates of such insurance
9
policies confirming that they are in effect and that the premiums due and owing
with respect thereto have been paid in full;
(i) all corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents (including, but not limited to, those relating to corporate and
capital structures of Borrower) shall be satisfactory to Lender; and
(j) Lender shall have received a signed IRS Form 8821 for each
Borrower and such other documents, certificates, information or legal opinions
as Lender may reasonably request, all in form and substance reasonably
satisfactory to Lender, which shall be delivered post-closing, as set forth on
Schedule 6.8 hereto within the time therein provided.
------------
4.2 Conditions to Each Advance
The obligations of Lender to make any Advance (including, without
limitation, the Initial Advance) are subject to the satisfaction of the
following additional conditions precedent:
(a) Borrower shall have delivered to Lender a Borrowing Certificate
for the Advance executed by an authorized officer of Borrower, which shall
constitute a representation and warranty by Borrower as of the Borrowing Date of
such Advance that the conditions contained in this Section 4.2 have been
-----------
satisfied;
(b) each of the representation and warranties made by Borrower in or
pursuant to this Agreement shall be accurate, before and after giving effect to
such Advance, as if made on the date of such Advance notwithstanding any
provision in Section V hereof limiting representations or warranties to the
---------
Closing Date or the date hereof, and no Default or Event of Default shall have
occurred or be continuing or would exist after giving effect to the Advance
under the Revolving Facility on such date;
(c) immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of Advances under the Revolving Facility
shall not exceed the lesser of the Availability and the Facility Cap;
(d) except as disclosed in the historical financial statements, there
shall be no liabilities or obligations with respect to Borrower of any nature
whatsoever which, either individually or in the aggregate, would reasonably be
likely to have a Material Adverse Effect; and
(e) Lender shall have received all fees, charges and expenses due and
payable to Lender on or prior to such date pursuant to the Loan Documents.
V. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as of the date hereof, and each
Borrowing Date as follows:
5.1 Organization and Authority
Borrower is a corporation duly organized, validly existing and in good
standing, except as set forth on Schedule 5.1, under the laws of its state of
------------
formation. Borrower (i) has all requisite corporate
10
power and authority to own its properties and assets and to carry on its
business as now being conducted and as contemplated in the Loan Documents, (ii)
is duly qualified to do business in every jurisdiction in which failure so to
qualify could reasonably be expected to have a Material Adverse Effect, and
(iii) has all requisite power and authority (A) to execute, deliver and perform
the Loan Documents to which it is a party, (B) to borrow hereunder, (C) to
consummate the transactions contemplated under the Loan Documents, and (D) to
grant the Liens with regard to the Collateral pursuant to the Security Documents
to which it is a party. Borrower is not an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
or controlled by such an "investment company."
5.2 Loan Documents
The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (i) have been duly authorized by all requisite action of
Borrower and have been duly executed and delivered by or on behalf of Borrower;
(ii) do not violate any provisions of (A) applicable law, statute, rule,
regulation, ordinance or tariff, (B) any order of any Governmental Authority
binding on Borrower or any of its properties, or (C) the certificate of
incorporation or bylaws (or any other equivalent governing agreement or
document) of Borrower, or any agreement between Borrower and its respective
stockholders; (iii) are not in conflict with, and do not result in a breach or
default of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute or
result in a conflict, breach, default or event of default under, any indenture,
agreement or other instrument to which Borrower is a party, or by which the
properties or assets of Borrower are bound, the effect of which could reasonably
be expected to have a Material Adverse Effect; (iv) except as set forth therein,
will not result in the creation or imposition of any Lien of any nature upon any
of the properties or assets of Borrower, and (v) except as set forth on Schedule
--------
5.2, do not require the consent, approval or authorization of, or filing,
---
registration or qualification with, any Governmental Authority or any other
Person. When executed and delivered, each of the Loan Documents to which
Borrower is a party will constitute the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
5.3 Subsidiaries, Capitalization and Ownership Interests
Borrower has no Subsidiaries other than as set forth on Schedule 5.3.
------------
Schedule 5.3 states, as of the date hereof, the authorized and issued
------------
capitalization of Borrower, the number and class of equity securities issued and
outstanding of Borrower and the record owners of two percent (2%) or more in the
aggregate of all such equity interests of Borrower (including options, warrants
and other rights to acquire any of the foregoing). The outstanding equity
securities of Borrower have been duly authorized and validly issued and are
fully paid and nonassessable. Schedule 5.3 also lists, as of the date hereof,
------------
the directors and officers of Borrower. Except as listed on Schedule 5.3,
------------
Borrower does not own an interest or participate or engage in any joint venture,
partnership or similar arrangements with any Person.
5.4 Properties
Borrower (i) is the sole owner and has good, valid and marketable
title to, or a valid leasehold interest in, all of its properties and assets,
including the Collateral, whether personal or real,
11
subject to no transfer restrictions or Liens of any kind except for Permitted
Liens, and (ii) is in compliance in all material respects with each lease to
which it is a party or otherwise bound. Schedule 5.4 lists all real properties
------------
(and their locations) owned or leased by or to Borrower and all leases covering
or with respect to such properties as of the date hereof. Borrower enjoys
peaceful and undisturbed possession under all such leases and such leases are
all the leases necessary for the operation of such properties and assets, are
valid and subsisting and are in full force and effect.
5.5 Other Agreements
Except as set forth on Schedule 5.5, Borrower is not (i) a party to
------------
any judgment, order or decree or any agreement, document or instrument, or
subject to any restriction, which would materially adversely affect its ability
to execute and deliver, or perform under, any Loan Document or to pay the
Obligations and (ii) in default in the performance, observance or fulfillment of
any obligation, covenant or condition contained in any agreement, document or
instrument to which it is a party or to which any of its properties or assets
are subject, which default, if not remedied within any applicable grace or cure
period could reasonably be expected to have a Material Adverse Effect, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a Material
Adverse Effect.
5.6 Litigation
Except as set forth on Schedule 5.6, there is no action, suit,
------------
proceeding or investigation pending or, to its knowledge, threatened against
Borrower that (i) questions or could reasonably be expected to prevent the
validity of any of the Loan Documents or the right of Borrower to enter into any
Loan Document or to consummate the transactions contemplated thereby, (ii) could
reasonably be expected to be or have, either individually or in the aggregate,
any Material Adverse Change or Material Adverse Effect, or (iii) could
reasonably be expected to result in any Change of Control. Borrower is not a
party or subject to any order, writ, injunction, judgment or decree of any
Governmental Authority that could reasonably be expected to have a Material
Adverse Effect. As of the Closing Date, there is no action, suit, proceeding or
investigation initiated by Borrower pending. As of the Closing Date, Borrower
does not have any existing accrued and/or unpaid Indebtedness to any
Governmental Authority.
5.7 Hazardous Materials
Borrower is in compliance in all material respects with all applicable
Environmental Laws. Borrower has not been notified of any action, suit,
proceeding or investigation (i) relating in any way to failure to comply by or
liability of Borrower under any Environmental Laws, or (ii) which seeks to
suspend, revoke or terminate any license, permit or approval of Borrower
necessary for the generation, handling, storage, treatment or disposal of any
Hazardous Substance.
5.8 Tax Returns; Governmental Reports
Borrower (i) has filed all federal, state, foreign (if applicable) and
local tax returns and other reports which are required by law to be filed by
Borrower, and (ii) has paid all taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
12
taxes, in each case that are due and payable, except only for items that
Borrower is currently contesting in good faith and that are described on
Schedule 5.8 to the extent existing as of the date hereof.
5.9 Financial Statements and Reports
All financial statements and financial information relating to
Borrower that have been or may hereafter be delivered to Lender by Borrower are
accurate and complete and have been prepared in accordance with GAAP
consistently applied with prior periods. Borrower has no material obligations or
liabilities of any kind not disclosed in such financial information or
statements that are required to be so disclosed by GAAP consistently applied,
and since the date of the most recent financial statements submitted to Lender,
there has not occurred any Material Adverse Change or Material Adverse Effect
or, to Borrower's knowledge, any other event or condition that could reasonably
be expected to have a Material Adverse Effect.
5.10 Compliance with Law
Borrower (i) is in compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental Authority applicable to
Borrower and/or Borrower's business, assets or operations, including, without
limitation, ERISA, and (ii) is not in violation of any order of any Governmental
Authority or other board or tribunal, except in each case where noncompliance or
violation could not reasonably be expected to have a Material Adverse Effect.
There is no event, fact, condition or circumstance which, with notice or passage
of time, or both, would constitute or result in any noncompliance with, or any
violation of, any of the foregoing, in each case except where noncompliance or
violation could not reasonably be expected to have a Material Adverse Effect.
Borrower has not received any notice that Borrower is not in compliance in any
respect with any of the requirements of any of the foregoing. Borrower has (a)
not engaged in any Prohibited Transactions as defined in Section 406 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder, (b) not failed to meet any applicable
minimum funding requirements under Section 302 of ERISA in respect of its plans
and no funding requirements have been postponed or delayed, (c) no knowledge of
any event or occurrence which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Title IV of ERISA to terminate any of
the employee benefit plans, (d) no fiduciary responsibility under ERISA for
investments with respect to any plan existing for the benefit of Persons other
than its employees or former employees, or (e) not withdrawn, completely or
partially, from any multi-employer pension plans so as to incur liability under
the MultiEmployer Pension Plan Amendments of 1980. With respect to Borrower,
there exists no event described in Section 4043 of ERISA, excluding Subsections
4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day notice period
contained in 12 C.F.R. Section. 2615.3 has not been waived.
5.11 Intellectual Property
Except as set forth on Schedule 5.11 as of the date hereof, Borrower
-------------
does not own, license or utilize, and is not a party to, any patents, patent
applications, trademarks, trademark applications, service marks, registered
copyrights, copyright applications, copyrights, trade names, trade secrets,
software or licenses (collectively, the "Intellectual Property").
5.12 Licenses and Permits; Labor
Borrower is in compliance with and has all Permits and Intellectual
Property necessary or required by applicable law or Governmental Authority for
the operation of its businesses. All of the
13
foregoing are in full force and effect and not in known conflict with the rights
of others. Borrower is not (i) in breach of or default under the provisions of
any of the foregoing, nor is there any event, fact, condition or circumstance
which, with notice or passage of time or both, would constitute or result in a
conflict, breach, default or event of default under, any of the foregoing which,
if not remedied within any applicable grace or cure period could reasonably be
expected to have a Material Adverse Effect, (ii) a party to or subject to any
agreement, instrument or restriction that is so unusual or burdensome that it
could reasonably be expected to have a Material Adverse Effect, and/or (ii) and
has not been, involved in any labor dispute, strike, walkout or union
organization which could reasonably be expected to have a Material Adverse
Effect
5.13 No Default
There does not exist any Default or Event of Default or any event,
fact, condition or circumstance which, with the giving of notice or passage of
time or both, would constitute or result in a Default or Event of Default.
5.14 Disclosure
No Loan Document nor any other agreement, document, certificate, or
statement furnished to Lender by or on behalf of Borrower in connection with the
transactions contemplated by the Loan Documents, nor any representation or
warranty made by Borrower in any Loan Document, contains any untrue statement of
material fact or omits to state any fact necessary to make the statements
therein not materially misleading. There is no fact known to Borrower which has
not been disclosed to Lender which Borrower reasonably believes is likely to
have a Material Adverse Effect.
5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts
Except for Permitted Indebtedness, as contemplated by the Loan
Document or as otherwise set forth on Schedule 5.15, Borrower (i) has no
-------------
outstanding Indebtedness, (ii) is not subject or party to any mortgage, note,
indenture, indemnity or guarantee of, with respect to or evidencing any
Indebtedness of any other Person, and (iii) does not own or hold any equity or
long-term debt investments in, and does not have any outstanding advances to or
any outstanding guarantees for the obligations of, or any outstanding borrowings
from, any Person. Borrower has performed all material obligations required to be
performed by Borrower pursuant to or connection with any items listed on
Schedule 5.15 and there has occurred no breach, default or event of default
-------------
under any document evidencing any such items with respect to Indebtedness in
excess of $100,000 or any fact, circumstance, condition or event which, with the
giving of notice or passage of time or both, would constitute or result in a
breach, default or event of default thereunder.
5.16 Agreements Concerning Officers, Directors, Competitors
Except as set forth on Schedule 5.16, (i) there are no existing or
-------------
proposed agreements, arrangements, understandings or transactions between
Borrower and any of Borrower's officers, directors (solely as of the date hereof
with respect to directors who also perform clinical research), in their capacity
as such, or Affiliates or any members of their respective immediate families,
and (ii) no such officers are directly or indirectly, indebted to or have any
direct or indirect ownership, partnership or voting interest in, to Borrower's
knowledge, any Person with which Borrower has a business relationship or which
competes with Borrower (except that any such officers may own stock in (but not
14
exceeding two (2%) percent of the outstanding capital stock of) any publicly
traded company that may compete with Borrower).
5.17 Insurance
Borrower has in full force and effect such insurance policies as are
customary and appropriate in the judgment of management of the Company for its
business and as may be required pursuant to Section 6.5 hereof. All such
-----------
insurance policies as of the date hereof are listed and described on Schedule
--------
5.17.
----
5.18 Names; Location of Offices, Records and Collateral
During the preceding two years, Borrower has not conducted business
under or used any name (whether corporate, partnership or assumed) other than as
shown on Schedule 5.18A. To the best knowledge of Borrower, Borrower is the sole
--------------
owner of all of its names listed on Schedule 5.18A, and any and all business
--------------
done and invoices issued in such names are Borrower's sales, business and
invoices. Each trade name of Borrower represents a division or trading style of
Borrower. Borrower maintains its principal places of business and chief
executive office only at the locations set forth on Schedule 5.18B, as of the
--------------
date hereof, and all Accounts of Borrower arise, originate and are located, and
all of the Collateral other than Deposit Accounts and all books and records in
connection therewith or in any way relating thereto or evidence the Collateral
other than Deposit Accounts are located and unless Borrower provides at least 30
days advance notice shall be only, in and at such locations. All of the
Collateral other than Deposit Accounts is located only in the United States.
5.19 Non-Subordination
The Obligations are not contractually subordinated in any way to any
other obligations of Borrower or to the rights of any other Person.
5.20 Accounts
In determining which Accounts are Eligible Receivables, Lender may
rely on all statements and representations made by Borrower with respect to any
Account. Unless otherwise indicated in writing to Lender, each Account of
Borrower (i) is genuine and in all respects what is purports to be and is not
evidenced by a judgment, (ii) arises out of a completed, bona fide sale and
delivery of goods or rendering of Services by Borrower in the ordinary course of
business and in accordance with the terms and conditions of all purchase orders,
contracts, certifications, participations, certificates of need and other
documents relating thereto or forming a part of the contract between Borrower
and the Account Debtor, (iii) is for a liquidated amount maturing as stated in a
claim or invoice covering such sale of goods or rendering of Services, a copy of
which has been furnished or is available to Lender, (iv) together with Lender's
security interest therein, is not and will not be in the future (by voluntary
act or omission by Borrower), subject to any material offset, lien, deduction,
defense, dispute, counterclaim or other adverse condition (other than in the
ordinary course of business), is absolutely owing to Borrower and is not
contingent in any respect or for any reason, (v) there are no facts, events or
occurrences which in any material way impair the validity or enforceability
thereof or tend to reduce the amount payable thereunder from the face amount of
the claim or invoice and statements delivered to Lender with respect thereto,
(vi) to the best of Borrower's knowledge, (A) the Account Debtor thereunder had
the capacity to contract at the time any contract or other document giving rise
thereto was executed and (B) such Account Debtor is solvent, (vii) has been
billed and forwarded to the Account
15
Debtor for payment in accordance with applicable laws and is in compliance and
conformance with any requisite procedures, requirements and regulations
governing payment by such Account Debtor with respect to such Account.
5.21 Healthcare
Without limiting or being limited by any other provision of any Loan
Document, Borrower has timely filed or caused to be filed all material reports
of every kind required by law, agreement or otherwise necessary for the
continued operation of its business. There are no claims, actions or appeals
pending (and Borrower has not filed any claims or reports which could reasonably
result in any such claims, actions or appeals) before any commission, board or
agency or other Governmental Authority except such as could not reasonably be
expected to result in a Material Adverse Effect.
5.22 Survival
Borrower makes the representations and warranties contained herein
with the knowledge and intention that Lender is relying and will rely thereon.
All such representations and warranties will survive the execution and delivery
of this Agreement, and the making of the Advances under the Revolving Facility.
VI. AFFIRMATIVE COVENANTS
Borrower, covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
6.1 Financial Statements, Reports and Other Information
(a) Financial Reports. Borrower shall furnish to Lender (i) as soon as
-----------------
available and in any event within ninety (90) calendar days after the end of
each fiscal year of Borrower, audited annual consolidated financial statements
of Borrower, including the notes thereto, consisting of a consolidated balance
sheet at the end of such completed fiscal year and the related consolidated
statements of income, retained earnings, cash flows and owners' equity for such
completed fiscal year, which financial statements shall be prepared and
certified without qualification, except for Borrower's fiscal year 2001 audit,
which may be qualified, by an independent certified public accounting firm
satisfactory to Lender and accompanied by related management letters, if
available, and (ii) as soon as available and in any event within thirty (30)
calendar days after the end of each calendar month, unaudited consolidated and
consolidating financial statements of Borrower consisting of a balance sheet and
statements of income, retained earnings, cash flows and owners' equity as of the
end of the immediately preceding calendar month. All such financial statements
shall be prepared in accordance with GAAP consistently applied with prior
periods. With each such financial statement, Borrower shall also deliver a
certificate of its chief financial officer stating that (A) such person has
reviewed the relevant terms of the Loan Documents and the condition of Borrower,
(B) no Default or Event of Default has occurred or is continuing, or, if any of
the foregoing has occurred or is continuing, specifying the nature and status
and period of existence thereof and the steps taken or proposed to be taken with
respect thereto, and (C) Borrower is in compliance with all financial covenants
attached as Annex I hereto. Such certificate shall be accompanied by the
calculations necessary to show compliance with the financial covenants in a form
satisfactory to Lender.
16
(b) Other Materials. Borrower shall furnish to Lender as soon as
---------------
available, and in any event within ten (10) calendar days after the preparation
or issuance thereof or at such other time as set forth below: (i) copies of such
financial statements (other than those required to be delivered pursuant to
Section 6.1(a)) prepared by, for or on behalf of Borrower and any other notes,
--------------
reports and other materials related thereto, including, without limitation, any
pro forma financial statements, (ii) any reports, returns, information, notices
and other materials that relate to the material operations of the Borrower's
business that Borrower sends to its stockholders, (iii) within thirty (30)
calendar days after the end of each calendar month for such month, (A) a sales
and collection report and accounts receivable and accounts payable aging
schedule, including a report of sales, credits issued and collections received,
all such reports showing a reconciliation to the amounts reported in the monthly
financial statements, and (C) a report listing ongoing clinical studies, (iv)
promptly upon receipt thereof, copies of any reports submitted to Borrower by
its independent accountants in connection with any interim audit of the books of
Borrower and copies of each management control letter provided by such
independent accountants, and (v) such additional information, documents,
statements, reports and other materials as Lender may reasonably request from a
credit or security perspective or otherwise from time to time.
(c) Notices. Borrower shall promptly, and in any event within three
-------
(3) Business Days after Borrower or any authorized officer of Borrower obtains
knowledge thereof, notify Lender in writing of (i) any pending or threatened
litigation, suit, investigation, arbitration, dispute resolution proceeding or
administrative proceeding brought or initiated by Borrower or otherwise
affecting or involving or relating to Borrower or any of its property or assets
to the extent (A) the amount in controversy exceeds $100,000, or (B) to the
extent any of the foregoing seeks injunctive relief, (ii) any Default or Event
of Default, which notice shall specify the nature and status thereof, the period
of existence thereof and what action is proposed to be taken with respect
thereto, (iii) any other development, event, fact, circumstance or condition
that could reasonably be expected to have a Material Adverse Effect, in each
case describing the nature and status thereof and the action proposed to be
taken with respect thereto, (iv) any notice given by Borrower to any other
lender of Borrower and shall furnish to Lender a copy of such notice, (v)
receipt of any notice or request from any Governmental Authority or governmental
payor regarding any liability or claim of liability in excess of $100,000, (vi)
the termination of any Key Officer, and/or (vii) if any Account becomes
evidenced or secured by an instrument or chattel paper.
(d) Consents. Borrower shall obtain and deliver from time to time all
--------
required consents, approvals and agreements from such third parties as Lender
shall determine are necessary or desirable in its sole discretion and that are
satisfactory to Lender with respect to (i) the Loan Documents and the
transactions contemplated thereby, and (ii) claims against Borrower or the
Collateral, (iii) Landlords Waivers and Consents with respect to Leases for
locations identified by Borrower as those where corporate financial books and
records are kept, and in each case to the extent identified by Lender prior to
Closing Date.
(e) Operating Budget. Borrower shall furnish to Lender on or prior to
----------------
the Closing Date and for each fiscal year of Borrower prior to the commencement
of such fiscal year, consolidated and consolidating month by month projected
operating budgets, annual projections, profit and loss statements, balance
sheets and cash flow reports of and for Borrower for such upcoming fiscal year
(including an income statement for each month and a balance sheet as at the end
of the last month in each fiscal quarter), in each case prepared in accordance
with GAAP consistently applied with prior periods.
6.2 Payment of Obligations
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Borrower shall make full and timely indefeasible payment in cash of
the principal of and interest on the Loans, Advances and all other Obligations.
6.3 Conduct of Business and Maintenance of Existence and Assets
Borrower shall (i) conduct its business in accordance with good
business practices customary to the industry, (ii) engage principally in the
same or similar lines of business substantially as heretofore conducted, (iii)
collect its Accounts in the ordinary course of business, (iv) maintain all of
its material properties, assets and equipment used or useful in its business in
good repair, working order and condition (normal wear and tear excepted and
except as may be disposed of in the ordinary course of business and in
accordance with the terms of the Loan Documents), (v) from time to time to make
all necessary or desirable repairs, renewals and replacements thereof, (vi)
maintain and keep in full force and effect its existence and all material
Permits and qualifications to do business and good standing in each jurisdiction
in which the ownership or lease of property or the nature of its business makes
such Permits or qualification necessary and in which failure to maintain such
Permits or qualification could reasonably be likely to have a Material Adverse
Effect; and (vii) remain in good standing in Delaware and Illinois (to the
extent Borrower currently conducts business in Illinois) and in all other
jurisdictions in which currently located unless the failure to do so is not
likely to have a Material Adverse Effect.
6.4 Compliance with Legal and Other Obligations
Borrower shall (i) comply with all material laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (ii) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in
good faith and against which adequate reserves have been established, (iii)
perform in accordance with its terms each contract, agreement or other
arrangement to which it is a party or by which it or any of the Collateral is
bound, except where the failure to comply, pay or perform could not reasonably
be expected to have a Material Adverse Effect, and (iv) maintain and comply with
all Permits necessary to conduct its business and comply with any new or
additional requirements that may be imposed on it or its business.
6.5 Insurance
Borrower shall (i) keep all of its insurable properties and assets
adequately insured in all material respects against losses, damages and hazards
as are customarily insured against by businesses engaging in similar activities
or owning similar assets or properties and at least the minimum amount required
by applicable law, including, without limitation, medical malpractice and
professional liability insurance, as applicable; and shall maintain general
public liability insurance at all times against liability on account of damage
to persons and property having such limits, deductibles, exclusions and
co-insurance and other provisions as are customary for a business engaged in
activities similar to those of Borrower; and (ii) maintain insurance under all
applicable workers' compensation laws; all of the foregoing insurance policies
to be reasonably satisfactory in form and substance to Lender. Borrower shall
give notice to Lender within two (2) Business Days of (i) receipt of any notice
of cancellation of any of its current insurance policies or (ii) material
change, for any reason, in the amounts of insurance coverage.
6.6 True Books
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Borrower shall (i) keep true, complete and accurate books of record
and account in accordance with commercially reasonable business practices in
which true and correct entries are made of all of its and their dealings and
transactions in all material respects; and (ii) set up and maintain on its books
such reserves as may be required by GAAP with respect to doubtful accounts and
all taxes, assessments, charges, levies and claims and with respect to its
business, and include such reserves in its quarterly as well as year end
financial statements.
6.7 Inspection; Periodic Audits
Borrower shall permit the representatives of Lender, at the expense of
Borrower but no more frequently then once per fiscal quarter at Borrower's
expense unless a Default or Event of Default has occurred and is continuing,
from time to time during normal business hours upon reasonable notice, to (i)
visit and inspect any of its offices or properties or any other place where
Collateral is located to inspect the Collateral and/or to examine or audit all
of its books of account, records, reports and other papers, (ii) make copies and
extracts therefrom, and (iii) discuss its business, operations, prospects,
properties, assets, liabilities, condition and/or Accounts with its officers and
independent public accountants (and by this provision such officers and
accountants are authorized to discuss the foregoing).
6.8 Further Assurances; Post Closing
At Borrower's cost and expense, Borrower shall (i) within five (5)
Business Days after Lender's demand, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instructions or documents as Lender may reasonably request with
respect to the purposes, terms and conditions of the Loan Documents and the
consummation of the transactions contemplated thereby, whether before, at or
after the performance and/or consummation of the transactions contemplated
hereby or the occurrence of a Default or Event of Default; (ii) without limiting
and notwithstanding any other provision of any Loan Document, execute and
deliver, or cause to be executed and delivered, such agreements and documents,
and take or cause to be taken such actions, and otherwise perform, observe and
comply with such obligations, as are set forth on Schedule 6.8; and (iii) upon
------------
the exercise by Lender or any of its Affiliates of any power, right, privilege
or remedy pursuant to any Loan Document or under applicable law or at equity
which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority, execute and deliver, or cause the
execution and delivery of, all applications, certificates, instruments and other
documents that may be so required for such consent, approval, registration,
qualification or authorization. Without limiting the foregoing, upon the
exercise by Lender or any of its Affiliates of any right or remedy under any
Loan Document which requires any consent, approval or registration with,
consent, qualification or authorization by, any Person, Borrower shall execute
and deliver, or cause the execution and delivery of, all applications,
certificates, instruments and other documents that Lender or its Affiliate may
be required to obtain for such consent, approval, registration, qualification or
authorization.
6.9 Payment of Indebtedness
Except as otherwise prescribed in the Loan Documents, Borrower shall
pay, discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and, in the case of trade payables, to ordinary course payment
practices) all of its material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Lender may deem proper and necessary in its
sole discretion shall have been made.
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6.10 Lien Searches
If Liens other than Permitted Liens exist, Borrower immediately shall
take, execute and deliver all actions, documents and instruments necessary to
release and terminate such Liens.
6.11 Use of Proceeds
Borrower shall use the proceeds from the Revolving Facility only for
the purposes set forth in the first "WHEREAS" clause of this Agreement.
6.12 Collateral Documents; Security Interest in Collateral
Borrower shall (i) execute, obtain, deliver, file, register and/or
record any and all financing statements, continuation statements, stock powers,
instruments and other documents, or cause the execution, filing, registration,
recording or delivery of any and all of the foregoing, that are necessary or
required under law or otherwise or reasonably requested by Lender to be
executed, filed, registered, obtained, delivered or recorded to create,
maintain, perfect, preserve, validate or otherwise protect the pledge of the
Collateral to Lender and Lender's perfected first priority Lien on the
Collateral (and Borrower irrevocably grants Lender the right, at Lender's
option, to file any or all of the foregoing), (ii) immediately upon learning
thereof, report to Lender any reclamation, return or repossession of goods in
excess of $50,000 (individually or in the aggregate), and (iii) defend the
Collateral and Lender's perfected first priority Lien thereon against all claims
and demands of all Persons at any time claiming the same or any interest therein
adverse to Lender, and pay all reasonable costs and expenses (including, without
limitation, in-house documentation and diligence fees and legal expenses and
reasonable attorneys' fees and expenses) in connection with such defense, which
may at Lender's discretion be added to the Obligations.
6.13 Revisions to Schedule
At any time after Closing, if the matters set forth on any Schedule annexed
hereto are or become materially different from that which existed at the Closing
Date, Borrower shall provide Lender with such revised Schedules as reflect such
material differences.
6.14 Taxes and Other Charges
All payments and reimbursements to Lender made under any Loan Document
shall be free and clear of and without deduction for all taxes, levies, imposts,
deductions, assessments, charges or withholdings, and all liabilities with
respect thereto of any nature whatsoever, excluding taxes to the extent imposed
on Lender's net income and franchise taxes imposed in lieu of taxes on net
income. If Borrower shall be required by law to deduct any such amounts from or
in respect of any sum payable under any Loan Document to Lender, then the sum
payable to Lender shall be increased as may be necessary so that, after making
all required deductions, Lender receives an amount equal to the sum it would
have received had no such deductions been made. Notwithstanding any other
provision of any Loan Document, if at any time after the Closing (i) any change
in any existing law, regulation, treaty or directive or in the interpretation or
application thereof, (ii) any new law, regulation, treaty or directive enacted
or any interpretation or application thereof, or (iii) compliance by Lender with
any request or directive (whether or not having the force of law) from any
Governmental Authority: (A) subjects Lender to any tax, levy, impost, deduction,
assessment, charge or withholding of any kind whatsoever with respect to any
Loan Document, or changes the basis of taxation of payments to Lender of any
20
amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of Lender), or (B) imposes on Lender any other condition or increased cost in
connection with the transactions contemplated thereby or participations therein;
and the result of any of the foregoing is to increase the cost to Lender of
making or continuing any Loan hereunder or to reduce any amount receivable
hereunder, then, in any such case, Borrower shall promptly pay to Lender any
additional amounts necessary to compensate Lender, on an after-tax basis, for
such additional cost or reduced amount as determined by Lender. If Lender
becomes entitled to claim any additional amounts pursuant to this Section 6.14
------------
it shall promptly notify Borrower of the event by reason of which Lender has
become so entitled, and each such notice of additional amounts payable pursuant
to this Section 6.14 submitted by Lender to Borrower shall, absent manifest
------------
error, be final, conclusive and binding for all purposes. Without limiting or
being limited by any other provision of any Loan Document, Borrower at all times
shall retain and use a Person acceptable to Lender to process, manage and pay
its payroll taxes and shall cause to be delivered to Lender, within ten (10)
calendar days after such Person provides Borrower with a report and evidence of
payment of such payroll taxes (which Borrower shall require such Person to
deliver no less often than once per quarter), a copy of such report and related
evidence.
VII. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
7.1 Financial Covenants
Borrower shall not violate the financial covenants set forth on Annex
-----
I to this Agreement, which is incorporated herein and made a part hereof.
-
21
7.2 Permitted Indebtedness
Borrower shall not create, incur, assume or suffer to exist any
Indebtedness, except the following (collectively, "Permitted Indebtedness"): (i)
Indebtedness under the Loan Documents, (ii) any Indebtedness set forth on
Schedule 7.2, (iii) Capitalized Lease Obligations incurred after the Closing
------------
Date and Indebtedness incurred pursuant to purchase money Liens permitted by
Section 7.3(v), provided that the aggregate amount thereof outstanding at any
--------------
time shall not exceed $500,000, (iv) Indebtedness in connection with advances
made by a stockholder in order to cure any default of the financial covenants
set forth on Annex I; provided, however, that such Indebtedness shall be on an
------- -------- -------
unsecured basis, subordinated in right of repayment and remedies to all of the
Obligations and to all of Lender's rights and in form and substance satisfactory
to Lender; (v) accounts payable to trade creditors and current operating
expenses (other than for borrowed money) which are not aged more than 120
calendar days from the billing date or more than 30 days from the due date
(excluding accrued investigator fees), in each case incurred in the ordinary
course of business and paid within such time period, unless the same are being
contested in good faith and by appropriate and lawful proceedings and such
reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by Borrower's independent accountants shall have been reserved; and
(vi) Indebtedness incurred in the ordinary course of business and not exceeding
$50,000 individually or in the aggregate outstanding at any one time; provided,
--------
however, that such Indebtedness shall be on an unsecured basis.
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7.3 Permitted Liens
Borrower shall not create, incur, assume or suffer to exist any Lien
upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "Permitted Liens"): (i) Liens under the Loan
Documents or otherwise arising in favor of Lender, (ii) Liens imposed by law for
taxes, assessments or charges of any Governmental Authority for claims not yet
due or which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions are
being maintained by Borrower in accordance with GAAP, (iii) (A) statutory Liens
of landlords (provided that any landlord at a location where books and records
are kept has executed a Landlord Waiver and Consent in form and substance
satisfactory to Lender) and of carriers, warehousemen, mechanics, materialmen,
and (B) other Liens imposed by law or that arise by operation of law in the
ordinary course of business from the date of creation thereof, in each case only
for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by Borrower in accordance with GAAP,
(iv) Liens (A) incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers' compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations, or (B) arising as a result of progress payments
under government contracts, (v) purchase money Liens (A) securing Indebtedness
permitted under Section 7.2(iii), or (B) in connection with the purchase by
---------------
Borrower of equipment in the normal course of business, provided that such
--------
payables shall not exceed any limits on Indebtedness provided for herein and
shall otherwise be Permitted Indebtedness hereunder, (vi) Liens necessary and
desirable for the operation of such Person's business, provided Lender has
--------
consented to such Liens in writing before their creation and existence; and
(vii) Liens disclosed on Schedule 7.3.
-------------
7.4 Investments; New Facilities or Collateral; Subsidiaries
22
Borrower, directly or indirectly, shall not (a) purchase, own, hold,
invest in or otherwise acquire obligations or stock or securities of, or any
other interest in, or all or substantially all of the assets of, any Person or
any joint venture, or (b) make or permit to exist any loans, advances or
guarantees to or for the benefit of any Person or assume, guarantee, endorse,
contingently agree to purchase or otherwise become liable for or upon or incur
any obligation of any Person, other than: (i) those created by the Loan
Documents; (ii) Permitted Indebtedness; (iii) other investments which in the
aggregate do not exceed $200,000 in any fiscal year of Borrower; and (iv) (A)
trade credit extended in the ordinary course of business, (B) advances for
business travel and similar temporary advances made in the ordinary course of
business to officers, directors and employees, and (C) the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business. Borrower, directly or indirectly, shall not
purchase, own, operate, hold, invest in or otherwise acquire any facility,
property or assets or any Collateral that is not located at the locations set
forth on Schedule 5.18B or change its jurisdiction of formation unless Borrower
--------------
shall provide to Lender at least thirty (30) Business Days prior written notice.
Except as set forth on Schedule 5.3, Borrower has no Subsidiaries.
------------
7.5 Dividends; Redemptions
Borrower shall not (i) declare, pay or make any dividend or
distribution on any shares of capital stock or other securities or interests
(other than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock), (ii) apply any of its funds, property or assets
to the acquisition, redemption or other retirement of any capital stock or other
securities or interests or of any options to purchase or acquire any of the
foregoing (provided, however, that Borrower may redeem its capital stock from
terminated employees pursuant to, but only to the extent required under, the
terms of the related employment agreements as long as no Default or Event of
Default has occurred and is continuing or would be caused by or result
therefrom), (iii) otherwise make any payments or Distributions to any
stockholder, member, partner or other equity owner in such Person's capacity as
such, (iv) make any payment of any management or service fee to any Person
(excluding payments for clinical trial services that are provided under contract
to physicians or entities affiliated with investigative sites, which physicians
or entities are also stockholders), other than payments made to Physician
Partners from Excess Cash Flow which in the aggregate do not exceed 2.0% of
Borrower's revenues in any given fiscal year.
7.6 Transactions with Affiliates
Borrower shall not enter into or consummate any transaction of any
kind with any of its Affiliates other than: (i) salary, bonus, employee stock
option and other compensation and employment arrangements with directors or
officers in the ordinary course of business, provided, that no payment of any
--------
bonus shall be permitted if a Default or Event of Default has occurred and
remains in effect or would be caused by or result from such payment, (ii)
Distributions and dividends permitted pursuant to Section 7.5, (iii)
-----------
transactions on overall terms at least as favorable to Borrower as would be the
case in an arm's-length transaction between unrelated parties of equal
bargaining power, (iv) transactions with Lender or any Affiliate of Lender, (v)
payments permitted under and pursuant to written agreements entered into by and
between Borrower and one or more of its Affiliates that both (A) reflect and
constitute transactions on overall terms at least as favorable to Borrower as
would be the case in an arm's-length transaction between unrelated parties of
equal bargaining power, and (B) are subject to such terms and conditions as
determined by Lender in its sole discretion; provided, that notwithstanding the
--------
foregoing Borrower shall not (Y) enter into or consummate any transaction or
agreement pursuant to which it becomes a party to any mortgage, note, indenture
or guarantee evidencing any Indebtedness of any of its Affiliates or otherwise
to become responsible or liable, as a guarantor, surety or otherwise, pursuant
to agreement for any Indebtedness of any such Affiliate except for loans to
employees in connection with the exercise of
23
stock options or as set forth on Schedule 7.6, or (Z) make any cash payment
------------
(other than reimbursement of out of pocket expenses) to any of its Affiliates
(other than payments made in connection with the performance of clinical
research related services) in excess of $100,000 in any given fiscal year
without the prior written consent of Lender.
7.7 Charter Documents; Fiscal Year; Dissolution; Use of Proceeds
Borrower shall not (i) amend, modify, restate or change its
certificate of incorporation or bylaws in a manner that would be adverse to
Lender, (ii) change its fiscal year unless Borrower demonstrates to Lender's
satisfaction compliance with the covenants contained herein for both the fiscal
year in effect prior to any change and the new fiscal year period by delivery to
Lender of appropriate interim and annual pro forma, historical and current
compliance certificates for such periods and such other information as Lender
may reasonably request, (iii) amend, alter or suspend or terminate or make
provisional in any material way, any material Permit without the prior written
consent of Lender, which consent shall not be unreasonably withheld, (iv) wind
up, liquidate or dissolve (voluntarily or involuntarily) or commence or suffer
any proceedings seeking or that would result in any of the foregoing, or (v) use
any proceeds of any Advance for "purchasing" or "carrying" "margin stock" as
defined in Regulations U, T or X of the Board of Governors of the Federal
Reserve System.
7.8 Truth of Statements
Borrower shall not furnish to Lender any certificate or other document
that contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.
VIII. DEFAULT
8.1 Events of Default
The occurrence of any one or more of the following shall constitute an
"Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason of acceleration, by notice of intention to prepay, by
required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed made by
Borrower in any Loan Document or in any other certificate, document, report or
opinion delivered in conjunction with any Loan Document to which it is a party,
shall not be true and correct in all material respects or shall have been false
or misleading in any material respect on the date when made or deemed to have
been made (except to the extent already qualified by materiality, in which case
it shall be true and correct in all respects and shall not be false or
misleading in any respect);
(c) Borrower shall be in violation, breach or default of, or shall
fail to perform, observe or comply with any covenant, obligation or agreement
set forth in, any Loan Document and such violation, breach, default or failure
shall not be cured within the applicable period set forth in the applicable Loan
Document; provided that, with respect to the affirmative covenants set forth in
--------
Article VI (other than Sections 6.2, 6.3 and 6.11 for which there shall be no
---------- ------------ --- ----
cure period), there shall be a thirty
24
(30) calendar day cure period commencing from the earlier of (i) Receipt by
Borrower of written notice of such breach, default, violation or failure, and
(ii) the time at which Borrower or any authorized officer thereof knew or became
aware, or should have known or been aware, of such failure, violation, breach or
default;
(d) through action or inaction of Borrower (i) any of the Loan
Documents ceases to be in full force and effect, or (ii) any Lien created
thereunder ceases to constitute a valid perfected first priority (except with
respect to Permitted Liens, which in no case shall include or permit liens on
Accounts or proceeds thereof) Lien on the Collateral in accordance with the
terms thereof, or Lender ceases to have a valid perfected first priority (except
with respect to Permitted Liens, which in no case shall include or permit liens
on Accounts or proceeds thereof) security interest in any of the Collateral or
any securities pledged to Lender pursuant to the Security Documents;
(e) one or more judgments or decrees is rendered against Borrower in
an amount in excess of $50,000 individually or $100,000 in the aggregate, in
excess of any applicable insurance coverage which is/are not satisfied, stayed,
vacated or discharged of record within thirty (30) calendar days of being
rendered;
(f) (i) any default occurs, which is not cured or waived, (x) in the
payment of any amount with respect to any Indebtedness (other than the
Obligations) of Borrower in excess of $100,000, (y) in the performance,
observance or fulfillment of any provision contained in any agreement, contract,
document or instrument to which Borrower is a party or to which any of their
properties or assets are subject or bound under or pursuant to which any
Indebtedness in excess of $100,000 was issued, created, assumed, guaranteed or
secured in either case and such default continues for more than any applicable
grace period and is declared to be due and payable or is required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof;
(g) Borrower (i) shall be unable to pay its debts generally as they
become due, (ii) shall make a general assignment for the benefit of its
creditors, (iii) shall commence a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any substantial
part of its property, or (iv) shall file a petition seeking reorganization or
liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute;
(h) (i) a court of competent jurisdiction (A) shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of Borrower or the whole or any substantial part of any Borrower's
properties, which shall continue unstayed and in effect for a period of sixty
(60) calendar days, (B) shall approve a petition filed against Borrower seeking
reorganization, liquidation or similar relief under the any Debtor Relief Law or
any other applicable law or statute, which is not dismissed within sixty (60)
calendar days or, (C) under the provisions of any Debtor Relief Law or other
applicable law or statute, assumes custody or control of Borrower or of the
whole or any substantial part of any Borrower's properties, which is not
irrevocably relinquished within sixty (60) calendar days, or (ii) there is
commenced against Borrower any proceeding or petition seeking reorganization,
liquidation or similar relief under any Debtor Relief Law or any other
applicable law or statute, which (A) is not dismissed within sixty (60) calendar
days after the date of commencement, or (B) is with respect to which Borrower
takes any formal action to indicate its approval of or consent to;
(i) (i) any Change of Control occurs or any agreement or commitment to
cause or that may result in any such Change of Control is entered into, (ii) any
Material Adverse Effect, Material Adverse Change occurs, or (iii) Borrower
ceases the conduct of a majority of its business operations as currently
conducted or reasonably related thereto;
25
(j) Lender receives any evidence that Borrower may have directly or
indirectly been engaged in any type of activity which, in Lender's reasonable
judgment, could reasonably be expected to result in forfeiture of any property
with a fair market value in excess of $100,000 to any Governmental Authority
which shall have continued unremedied for a period of ten (10) calendar days
after written notice from Lender;
(k) an Event of Default occurs and is continuing beyond any cure
period under any other Loan Document;
(l) uninsured damage to, or loss, theft or destruction of, any portion
of the Collateral occurs that exceeds $100,000 in the aggregate in any single
occurrence;
(m) Borrower or any of their respective directors or senior officers
is criminally indicted or convicted under any law that could reasonably be
expected to lead to a forfeiture of any Collateral in excess of $100,000;
(n) the issuance of any process for levy, attachment or garnishment by
any Government Authority not discharged or released within ten days and not in
respect of taxes or Liens that related to taxes not yet due and payable or any
other Permitted Lien or execution upon or prior to any judgment against Borrower
or any of its property or assets with a fair market value in excess of $100,000;
or
(o) Borrower does, or enters into or becomes a party to any agreement
or commitment to do, or cause to be done, any of the things described in this
Article VIII or otherwise prohibited by any Loan Document (subject to any cure
------------
periods set forth therein);
8.2 Actions of Lender After Default; Certain Cure Rights
In the event of any such Default or Event of Default, notwithstanding
any other provision of any Loan Document, Lender may, by notice to Borrower (i)
terminate its obligations to make Advances hereunder, whereupon the same shall
immediately terminate, (ii) declare the Note, all interest thereon and all other
Obligations to be due and payable immediately (except in the case of an Event of
Default under Section 8(d), (g), (h) or (i)(iii), in which event all of the
------------ --- --- --------
foregoing shall automatically and without further act by Lender be due and
payable, provided that, with respect to non-material breaches or violations that
constitute Events of Default under clause (ii) of Section 8(d), there shall be a
------------
three (3) Business Day cure period commencing from the earlier of (A) Receipt by
Borrower of written notice of such breach or violation or of any event, fact or
circumstance constituting or resulting in any of the foregoing, and (B) the time
at which Borrower or any authorized officer thereof knew or became aware, or
should have known or been aware, of such breach or violation and resulting Event
of Default or of any event, fact or circumstance constituting or resulting in
any of the foregoing)), in each case without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower, and (iii) prohibit any action permitted to be taken under Article VII
-----------
hereof.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 Rights and Remedies
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(a) In addition to the acceleration provisions set forth in Article
-------
VIII above, upon the occurrence and continuation of an Event of Default, Lender
----
shall have the right to exercise any and all rights, options and remedies
provided for in any Loan Document, under the UCC or at law or in equity,
including, without limitation, the right to (i) apply any property of Borrower
held by Lender to reduce the Obligations, (ii) foreclose the Liens created under
the Security Documents, (iii) realize upon, take possession of and/or sell any
Collateral or securities pledged with or without judicial process, (iv) exercise
all rights and powers with respect to the Collateral as Borrower, as applicable,
might exercise, (v) collect and send notices regarding the Collateral, with or
without judicial process, (vi) by its own means or with judicial assistance,
enter any premises at which Collateral and/or pledged securities are located, or
render any of the foregoing unusable or dispose of the Collateral and/or pledged
securities on such premises without any liability for rent, storage, utilities,
or other sums, and no Borrower shall resist or interfere with such action, (vii)
at Borrower's expense, require that all or any part of the Collateral be
assembled and made available to Lender at any place designated by Lender, (viii)
reduce or otherwise change the Facility Cap, and/or (ix) relinquish or abandon
any Collateral or securities pledged or any Lien thereon. Notwithstanding any
provision of any Loan Document, Lender, in its sole discretion, shall have the
right, at any time that Borrower fails to do so, and from time to time, without
prior notice, to the extent Borrower is required to do so or act hereunder, to:
(i) obtain insurance covering any of the Collateral; (ii) pay for the
performance of any of Obligations; (iii) discharge taxes or Liens on any of the
Collateral that are in violation of any Loan document unless Borrower is in good
faith with due diligence by appropriate proceedings contesting those items; and
(iv) pay for the maintenance and preservation of the Collateral. Such expenses
and advances shall be added to the Obligations until reimbursed to Lender and
shall be secured by the Collateral, and such payments by Lender shall not be
construed as a waiver by Lender of any Event of Default or any other rights or
remedies of Lender.
(b) Borrower agrees that notice received by it at least ten (10)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower. At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrower which right is hereby waived and released.
Debtor covenants and agrees not to interfere with or impose any obstacle to
Secured Party's exercise of its rights and remedies under the UCC with respect
to the Collateral. Lender, in dealing with or disposing of the Collateral or any
part thereof, shall not be required to give priority or preference to any item
of Collateral or otherwise to marshal assets or to take possession or sell any
Collateral with judicial process.
9.2 Application of Proceeds
In addition to any other rights, options and remedies Lender has under
the Loan Documents, the UCC, at law or in equity, all dividends, interest,
rents, issues, profits, fees, revenues, income and other proceeds collected or
received from collecting, holding, managing, renting, selling, or otherwise
disposing of all or any part of the Collateral or any proceeds thereof upon
exercise of its remedies hereunder shall be applied in the following order of
priority: (i) first, to the payment of all costs and expenses of such
-----
collection, storage, lease, holding, operation, management, sale, disposition or
delivery and of conducting Borrower's business and of maintenance, repairs,
replacements, alterations, additions and improvements of or to the Collateral,
and to the payment of all sums which Lender may be required or may elect to pay,
if any, for taxes, assessments, insurance and other charges upon the Collateral
or any part thereof, and all other payments that Lender may be required or
authorized to make under any provision of this Agreement (including, without
limitation, in each such case, in-house documentation and diligence fees and
reasonable legal expenses, search, audit, recording,
27
professional and filing fees and expenses and reasonable attorneys' fees and all
expenses, liabilities and advances made or incurred in connection therewith);
(ii) second, to the payment of all Obligations as provided herein; (iii) third,
------ -----
to the satisfaction of Indebtedness secured by any subordinate security interest
of record in the Collateral if written notification of demand therefor is
received before distribution of the proceeds is completed, provided, that, if
--------
requested by Lender, the holder of a subordinate security interest shall furnish
reasonable proof of its interest, and unless it does so, Lender need not address
its claims; and (iv) fourth, to the payment of any surplus then remaining to
------
Borrower, unless otherwise provided by law or directed by a court of competent
jurisdiction, provided that Borrower shall be liable for any deficiency if such
--------
proceeds are insufficient to satisfy the Obligations or any of the other items
referred to in this section.
9.3 Rights of Lender to Appoint Receiver
Without limiting and in addition to any other rights, options and
remedies Lender has under the Loan Documents, the UCC, at law or in equity, upon
the occurrence and continuation of an Event of Default, Lender shall have the
right to apply for and have a receiver appointed by a court of competent
jurisdiction in any action taken by Lender to enforce its rights and remedies in
order to manage, protect and preserve the Collateral and continue the operation
of the business of Borrower and to collect all revenues and profits thereof and
apply the same to the payment of all expenses and other charges of such
receivership including the compensation of the receiver and to the payments as
aforesaid until a sale or other disposition of such Collateral shall be finally
made and consummated.
9.4 Rights and Remedies not Exclusive
Lender shall have the right in its sole discretion to determine which
rights, Liens and/or remedies Lender may at any time pursue, relinquish,
subordinate or modify, and such determination will not in any way modify or
affect any of Lender's rights, Liens or remedies under any Loan Document,
applicable law or equity. The enumeration of any rights and remedies in any Loan
Document is not intended to be exhaustive, and all rights and remedies of Lender
described in any Loan Document are cumulative and are not alternative to or
exclusive of any other rights or remedies which Lender otherwise may have. The
partial or complete exercise of any right or remedy shall not preclude any other
further exercise of such or any other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 Waivers
Except as expressly provided for herein, Borrower hereby waives
demand, presentment, protest and all defenses with respect to any and all
instruments and all notices and demands of any description. Borrower hereby
waives any and all defenses and counterclaims it may have or could interpose in
any action or procedure brought by Lender to obtain an order of court
recognizing the Lien of Lender in and to, any Collateral.
10.2 Delay; No Waiver of Defaults
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Lender's part in enforcing any such
provision shall affect the liability of Borrower or operate as a waiver of such
provision or affect the liability of Borrower or preclude any other or further
exercise of such
28
provision. No waiver by any party to any Loan Document of any one or more
defaults by any other party in the performance of any of the provisions of any
Loan Document shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver. Notwithstanding any
other provision of any Loan Document, by completing the Closing under this
Agreement and/or by making Advances, Lender does not waive any breach of any
representation or warranty of under any Loan Document, and all of Lender's
claims and rights resulting from any such breach or misrepresentation are
specifically reserved.
10.3 Jury Waiver
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS
OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH
RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF
THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 [Intentionally Omitted]
XI. EFFECTIVE DATE AND TERMINATION
11.1 Effectiveness and Termination
Subject to Lender's right to terminate and cease making Advances upon
or after any Event of Default, this Agreement shall continue in full force and
effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this Section 11.1. Borrower
------------
may terminate this Agreement at any time upon not less than thirty (30) calendar
days' prior written notice to Lender and upon full performance and indefeasible
payment in full in cash of all Obligations on or prior to such 30th calendar day
after Receipt by Lender of such written notice. All of the Obligations shall be
immediately due and payable upon any such termination on the termination date
stated in any notice of termination (the "Termination Date"); provided that,
-------------
notwithstanding any other provision of any Loan Document, the Termination Date
shall be effective no earlier than the first Business Day of the month following
the expiration of the thirty (30) calendar days' prior written notice period.
Notwithstanding any other provision of any Loan Document, no termination of this
Agreement shall affect Lender's rights or any of the Obligations existing as of
the effective date of such termination, and the provisions of the Loan Documents
shall continue to be fully operative until the Obligations have been fully
performed and indefeasibly paid in cash in full. The Liens granted to Lender
under the Security Documents and the financing statements filed pursuant thereto
and the rights and powers of Lender shall continue in full force and effect
notwithstanding the fact that Borrower's borrowings hereunder may from time to
time be in a zero or credit position until all of the Obligations have been
fully performed and indefeasibly paid in full in cash.
11.2 Survival
29
All obligations, covenants, agreements, representations, warranties,
waivers and indemnities made by Borrower in any Loan Document shall survive the
execution and delivery of the Loan Documents, the Closing, the making of the
Advances and any termination of this Agreement until all Obligations are fully
performed and indefeasibly paid in full in cash. The obligations and provisions
of Sections 3.5, 3.6, 10.1, 10.3, 11.1, 11.2, 12.1, 12.4, 12.5, 12.7 and 12.9
--------------------------------------------------------------------------
shall survive termination of the Loan Documents and any payment, in full or in
part, of the Obligations.
XII. MISCELLANEOUS
12.1 Governing Law; Jurisdiction; Service of Process; Venue
The Loan Documents shall be governed by and construed in accordance
with the internal laws of the State of Maryland without giving effect to its
choice of law provisions. Any judicial proceeding against Borrower with respect
to the Obligations, any Loan Document or any related agreement may be brought in
any federal or state court of competent jurisdiction located in the State of
Maryland. By execution and delivery of each Loan Document to which it is a
party, Borrower (i) accepts the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waives personal service of process, (iii) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to Section 12.5 hereof, and (iv) waives any objection to jurisdiction and venue
------------
of any action instituted hereunder and agrees not to assert any defense based on
lack of jurisdiction, venue or convenience. Nothing shall affect the right of
Lender to serve process in any manner permitted by law or shall limit the right
of Lender to bring proceedings against Borrower in the courts of any other
jurisdiction having jurisdiction. Any judicial proceedings against Lender
involving, directly or indirectly, the Obligations, any Loan Document or any
related agreement shall be brought only in a federal or state court located in
the State of Maryland or the State of Delaware. All parties acknowledge that
they participated in the negotiation and drafting of this Agreement and that,
accordingly, no party shall move or petition a court construing this Agreement
to construe it more stringently against one party than against any other.
12.2 Successors and Assigns; Participations; New Lenders
The Loan Documents shall inure to the benefit of Lender, Transferees
and all future holders of any Note, the Obligations and/or any of the
Collateral, and each of their respective successors and assigns. Each Loan
Document shall be binding upon the Persons' other than Lender that are parties
thereto and their respective successors and assigns, and no such Person may
assign, delegate or transfer any Loan Document or any of its rights or
obligations thereunder without the prior written consent of Lender. No rights
are intended to be created under any Loan Document for the benefit of any third
party donee, creditor or incidental beneficiary of Borrower. Nothing contained
in any Loan Document shall be construed as a delegation to Lender of any other
Person's duty of performance. BORROWER ACKNOWLEDGES AND AGREES THAT LENDER AT
ANY TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND RESTATE ANY NOTE, AND/OR (II)
sell, assign or GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF
ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THE OBLIGATIONS AND/OR
THE COLLATERAL TO OTHER PERSONS (EACH SUCH TRANSFEREE, ASSIGNEE OR PURCHASER, A
"TRANSFEREE"), provided that all such assignments or transfers shall be in
-------- ----
minimum amount of $500,000 or, if less, Lender's entire interest under the Loan
Documents and, provided further, that any such transfer by Lender shall not be
-------- -------
to a Person known by Lender to be a competitor of Borrower. Each Transferee
shall have all of the rights and benefits with respect to the Obligations,
Notes, Collateral and/or Loan Documents held by it as fully as if the original
holder thereof, and either Lender or any Transferee may be designated as the
sole agent to manage the transactions and obligations contemplated
30
therein; provided that, notwithstanding anything to the contrary in any Loan
-------- ----
Document, Borrower shall not be obligated to pay under this Agreement to any
Transferee any sum in excess of the sum which Borrower would have been obligated
to pay to Lender had such participation not been effected. Notwithstanding any
other provision of any Loan Document, Lender may disclose to any Transferee all
information, reports, financial statements, certificates and documents obtained
under any provision of any Loan Document.
12.3 Application of Payments
To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Lender. Any payments with respect to the
Obligations received shall be credited and applied in such manner and order as
Lender shall decide in its sole discretion.
12.4 Indemnity
Borrower shall indemnify Lender, its Affiliates and its and their
respective managers, members, officers, employees, Affiliates, agents,
representatives, successors, assigns, accountants and attorneys (collectively,
the "Indemnified Persons") from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel and in-house
documentation and diligence fees and legal expenses) which may be imposed on,
incurred by or asserted against any Indemnified Person other than Borrower with
respect to or arising out of, or in any litigation, proceeding or investigation
instituted or conducted by any Person with respect to any aspect of, or any
transaction contemplated by or referred to in, or any matter related to, any
Loan Document or any agreement, document or transaction contemplated thereby,
whether or not such Indemnified Person is a party thereto, except to the extent
that any of the foregoing arises out of the gross negligence or willful
misconduct of such Indemnified Person or a claim of Borrower finally determined
by a court of competent jurisdiction in favor of Borrower. If any Indemnified
Person uses in-house counsel for any purpose for which Borrower is responsible
to pay or indemnify, Borrower expressly agrees that its indemnification
obligations include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by such
Indemnified Person in its reasonable discretion for the work performed. Lender
agrees to give Borrower reasonable notice of any event of which Lender becomes
aware for which indemnification may be required under this Section 12.4, and
------------
Lender may elect (but is not obligated) to direct the defense thereof, provided
that the selection of counsel shall be subject to Borrower's consent, which
consent shall not be unreasonably withheld or delayed. Any Indemnified Person
may, in its reasonable discretion, take such actions as it deems necessary and
appropriate to investigate, defend or, with Borrower's written consent, which
still not be unreasonably withheld, settle any event or take other remedial or
corrective actions with respect thereto as may be necessary for the protection
of such Indemnified Person or the Collateral. Notwithstanding the foregoing, if
any insurer agrees to undertake the defense of an event (an "Insured Event"),
Lender agrees not to exercise its right to select counsel to defend the event if
that would cause Borrower's insurer to deny coverage; provided, however, that
-------- -------
Lender reserves the right to retain counsel to represent any Indemnified Person
with respect to an Insured Event at its sole cost and expense. To the extent
that Lender obtains recovery from a third party other than an Indemnified Person
of any of the amounts that
31
Borrower has paid to Lender pursuant to the indemnity set forth in this Section
-------
12.4, then Lender shall promptly pay to such Borrower the amount of such
----
recovery.
12.5 Notice
Any notice or request under any Loan Document shall be given to any
party to this Agreement at such party's address set forth beneath its signature
on the signature page to this Agreement, or at such other address as such party
may hereafter specify in a notice given in the manner required under this
Section 12.5. Any notice or request hereunder shall be given only by, and shall
------------
be deemed to have been received upon (each, a "Receipt"): (i) registered or
certified mail, return receipt requested, on the date on which such received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile or electronic transmission, in each case upon telephone or
further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.
12.6 Severability; Captions; Counterparts; Facsimile Signatures
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents. The Loan Documents may be executed in one or more counterparts (which
taken together, as applicable, shall constitute one and the same instrument) and
by facsimile transmission, which facsimile signatures shall be considered
original executed counterparts. Each party to this Agreement agrees that it will
be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
12.7 Expenses
Borrower shall pay, whether or not the Closing occurs, all costs and
expenses incurred by Lender and/or its Affiliates, including, without
limitation, documentation and diligence fees and expenses, all search, audit,
appraisal, recording, professional and filing fees and expenses and all other
out-of-pocket charges and expenses (including, without limitation, UCC and
judgment and tax lien searches and UCC filings and fees for post-Closing UCC and
judgment and tax lien searches and wire transfer fees and audit expenses), and
reasonable attorneys' fees and expenses, (i) in any effort to enforce, protect
or collect payment of any Obligation or to enforce any Loan Document or any
related agreement, document or instrument, (ii) in connection with entering
into, negotiating, preparing, reviewing and executing the Loan Documents and/or
any related agreements, documents or instruments (which shall not exceed $50,000
without Lender's prior notice to Borrower, (iii) arising in any way out of
administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Lender's Liens in any
of the Collateral or securities pledged under the Loan Documents, whether
through judicial proceedings or otherwise, (v) in defending or prosecuting any
actions, claims or proceedings arising out of or relating to Lender's
transactions with Borrower, (vi) in seeking, obtaining or receiving any advice
with respect to its rights and obligations under any Loan Document and any
related agreement, document or instrument, and/or (vii) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or instrument. To the
extent incurred hereunder and not reimbursed promptly, all of the foregoing
shall be charged to Borrower's account and shall be part of the Obligations. If
Lender or any of its Affiliates uses in-house counsel for any purpose under any
Loan Document for which Borrower is responsible to pay or indemnify, Borrower
expressly agrees that its
32
Obligations include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by Lender or
such Affiliate in its sole discretion for the work performed. Without limiting
the foregoing, Borrower shall pay all taxes (other than taxes based upon or
measured by Lender's income, franchise taxes in lieu thereof, or revenues or any
personal property tax), if any, in connection with the issuance of any Note and
the filing and/or recording of any documents and/or financing statements.
12.8 Entire Agreement
This Agreement and the other Loan Documents to which Borrower is a
party constitute the entire agreement between Borrower and Lender with respect
to the subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof. Any
promises, representations, warranties or guarantees not herein contained and
hereinafter made shall have no force and effect unless in writing signed by
Borrower and Lender. No provision of this Agreement may be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by an
agreement in writing signed by Lender and Borrower. Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
12.9 Lender Approvals
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Lender with respect to any matter that is
subject of any Loan Document may be granted or withheld by Lender in its sole
and absolute discretion.
12.10 Confidentiality and Publicity
(a) Borrower agrees, and agrees to cause each of its Affiliates, (i)
not to transmit or disclose any provision of any Loan Document to any Person
(other than to Borrower's advisors and officers on a need-to-know basis) without
Lender's prior written consent, (ii) to inform all Persons of the confidential
nature of the Loan Documents and to direct them not to disclose the same to any
other Person and to require each of them to be bound by these provisions. Lender
reserves the right to review and approve all materials that Borrower or any of
its Affiliates prepares that contain Lender's name or describe or refer to any
Loan Document, any of the terms thereof or any of the transactions contemplated
thereby. Borrower shall not, and shall not permit any of its Affiliates to, use
Lender's name (or the name of any of Lender's Affiliates) in connection with any
of its business operations. Nothing in this paragraph shall condition or limit
Borrower's ability to disclose the Loan Documents in any filing with a
governmental agency or in connection with its financial statements. Nothing
contained in any Loan Document is intended to permit or authorize Borrower or
any of its Affiliates to contract on behalf of Lender.
(b) Lender agrees to keep confidential during the Term any material or
information about Borrower that was delivered, disclosed, furnished or provided
by Borrower or any agent, attorney or accountant of Borrower to Lender and that
was identified by Borrower or such other Person in writing as confidential (the
"Confidential Information"). Confidential Information excludes material or
information that is or becomes generally available to the public or to any third
party (other than Lender and its Representatives) than as a result of a breach
by Lender hereof, or that was within the knowledge or possession of Lender or
its Representatives (defined below) prior to being furnished by Borrower or any
agent, attorney or accountant of Borrower to Lender, or was or becomes available
to Lender or its
33
Representatives from a third party, or that was independently developed by
Lender or its Representatives without reference to the Confidential Information.
Notwithstanding the foregoing or any other provision of this Agreement, Lender
may disclose, provide and/or furnish Confidential Information: (a) to its
officers, directors, partners, members, managers, stockholders, controlling
persons, affiliates, agents, advisors, representatives and employees, and any
potential Transferee of the Loans (each, a "Representative"); and (b) otherwise
pursuant to any of the following: (i) to any other person subject to an
obligation to maintain the confidentiality of such Confidential Information on
substantially similar terms as those in this subsection, or (ii) if required by
any governmental entity, law, regulation, governmental proceeding, court order
or similar process or otherwise, (iii) in connection with enforcing any
agreement or rights between Borrower and Lender or defending any action or
relating to the relationship between Lender and Borrower, and/or (iv) with
respect to public or non-confidential portions of such Confidential Information.
Lender further agrees not to use Borrower's name or logo in any written
publication without Borrower's prior consent, which shall not be unreasonably
withheld or delayed.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
34
IN WITNESS WHEREOF, each of the parties has duly executed this
Revolving Credit Agreement as of the date first written above.
AMERICASDOCTOR, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
Address for Borrower:
▇▇▇▇ ▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
35
CAPITALSOURCE FINANCE LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Its: Deputy General Counsel
CapitalSource Finance LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Healthcare Finance Group, Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
-------------------------
36
EXHIBITS
--------
Exhibit A - Borrowing Certificate
SCHEDULES
---------
Schedule 2.4 -- Deposit Accounts
------------
Schedule 5.1 -- Organization and Authority
------------
Schedule 5.2 -- Consents
------------
Schedule 5.3 -- Subsidiaries, Capitalization, and Ownership Interests
------------
Schedule 5.4 -- Real Properties
------------
Schedule 5.5 -- Other Agreements
------------
Schedule 5.6 -- Litigation
------------
Schedule 5.8 -- Tax Returns; Governmental Reports
------------
Schedule 5.11 -- Intellectual Property
------------
Schedule 5.15 -- Existing Indebtedness
------------
Schedule 5.16 -- Other Agreements
-------------
Schedule 5.17 -- Insurance
-------------
Schedule 5.18A -- Names
--------------
Schedule 5.18B -- Location of Offices, Records and Collateral
--------------
Schedule 6.8 -- Further Assurances; Post Closing
------------
Schedule 7.2 -- Permitted Indebtedness
------------
Schedule 7.3 -- Permitted Liens
------------
Schedule 7.6 -- Transactions with Affiliates
------------
1
ANNEX I
-------
FINANCIAL COVENANTS
-------------------
1) Minimum Liquidity
At Closing and at all other times, Borrower shall not have less than
the greater of (a) $2,000,000 of Available Cash or (b) Available Cash in an
amount equal to Borrower's previous six (6) months of negative cash flow from
operations.
2) Net Worth
Until full performance and indefeasible payment in full in cash of all
Obligations, Borrower, on a consolidated basis, will maintain a Tangible Net
Worth at all times of (a) $1,500,000 during the first twelve (12) calendar
months after the Closing Date, and (b) $2,000,000 thereafter.
For purposes of the covenants set forth in this Annex I, the terms listed
below shall have the following meanings:
"Available Cash" shall mean, for and on any date, the sum, without
--------------
duplication, of the following for Borrower: (a) unrestricted cash on hand on
such date, (b) Cash Equivalents held on such date, and (c) the unborrowed
Availability on and as of such date.
"Cash Equivalents" shall mean (a) securities issued, or directly and
----------------
fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers' acceptances of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$100,000,000, or (ii) any bank (or the parent company of such bank) whose
short-term commercial paper rating from Standard & Poor's Ratings Services
("S&P") is at least A-2 or the equivalent thereof or from ▇▇▇▇▇'▇ Investors
Service, Inc. ("▇▇▇▇▇'▇") is at least P-2 or the equivalent thereof in each case
with maturities of not more than six months from the date of acquisition (any
bank meeting the qualifications specified in clauses (b)(i) or (ii), an
"Approved Bank"), (c) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (a), above,
entered into with any Approved Bank, (d) commercial paper issued by any Approved
Bank or by the parent company of any Approved Bank and commercial paper issued
by, or guaranteed by, any industrial or financial company with a short-term
commercial paper rating of at least A-2 or the equivalent thereof by S&P or at
least P-2 or the equivalent thereof by Moody's, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in each
case maturing within six months after the date of acquisition and (e)
investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (a) through (d) above.
"Intangible Assets" means all intangible assets (determined in
-----------------
conformity with GAAP) including, without limitation, goodwill, intellectual
property, licenses, organizational costs, deferred amounts, covenants not to
compete, unearned income, restricted funds, investments in Subsidiaries,
intercompany receivables and accumulated depreciation.
A
"Tangible Net Worth" means assets (excluding Intangible Assets) less
------------------
liabilities (excluding any liabilities related to the Borrower's Preferred
Stock) (determined in conformity with GAAP).
B
APPENDIX A
DEFINITIONS
"Accounts" shall mean all "accounts" (as defined in the UCC) of
--------
Borrower (or, if referring to another Person, of such other Person), including
without limitation, accounts, accounts receivables, monies due or to become due
and obligations in any form (whether arising in connection with contracts,
contract rights, instruments, general intangibles or chattel paper), in each
case whether arising out of goods sold or services rendered or from any other
transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Account Debtor" shall mean any Person who is obligated under an
--------------
Account.
"Advance" shall mean a borrowing under the Revolving Facility. Any
-------
amounts paid by Lender on behalf of Borrower at Borrower's request, or
otherwise, under any Loan Document shall be an Advance for purposes of the
Agreement.
"Affiliate" shall mean, as to any Person, any other Person (a) that,
---------
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, (b) who is a
director or officer (i) of such Person, (ii) of any Subsidiary of such Person,
or (iii) of any Person described in clause (a) above with respect to such
Person, or (c) which, directly or indirectly through one or more intermediaries,
is the beneficial or record owner (as defined in Rule 13d-3 of the Securities
Exchange Act of 1934, as amended, as the same is in effect on the date hereof)
of ten percent (10%) or more of any class of the outstanding voting stock,
securities or other equity or ownership interests of such Person. For purposes
of this definition, the term "control" (and the correlative terms, "controlled
by" and "under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies, whether through ownership of securities or other interests, by
contract or otherwise.
"Applicable Rate" shall mean the interest rates applicable from time
---------------
to time to Advances under the Agreement.
"Borrowing Base" shall mean, as of any date of determination, the net
--------------
collectible dollar value of Eligible Receivables, as determined with reference
to the most recent Borrowing Certificate and otherwise in accordance with the
Agreement; provided, however, that if as of such date the most recent Borrowing
-------- -------
Certificate is of a date more than five (5) Business Days before or after such
date, the Borrowing Base shall be determined by Lender in its sole discretion.
"Borrowing Certificate" shall mean a Borrowing Certificate
---------------------
substantially in the form of Exhibit A.
----------
"Business Day" shall mean any day other than a Saturday, Sunday or
------------
other day on which the Federal Reserve or Lender is closed.
"Capital Expenditures" shall mean the sum (without duplication) of all
--------------------
expenditures (whether paid in cash or accrued as liabilities) that are or should
be treated as capital expenditures under GAAP, but excluding such expenditures
financed by Permitted Indebtedness or other external sources of funds (such as
insurance proceeds for lost or damaged property).
A-1
"Capital Lease" shall mean, as to any Person, a lease of any interest
-------------
in any kind of property or asset by that Person as lessee that is, should be or
should have been recorded as a "capital lease" in accordance with GAAP.
"Capitalized Lease Obligations" shall mean all obligations of any
-----------------------------
Person under Capital Leases, in each case, taken at the amount thereof accounted
for as a liability in accordance with GAAP.
"Change of Control" shall mean, with respect to Borrower, the
-----------------
occurrence of any of the following: (i) a merger, consolidation, reorganization,
recapitalization or share or interest exchange, sale or transfer or any other
transaction or series of transactions in which its stockholders, managers,
partners or interest holders immediately prior to such transaction or series of
transactions receive, in exchange for the stock or interests owned by them,
cash, property or securities of the resulting or surviving entity or any
Affiliate thereof, and, as a result thereof, Persons who, individually or in the
aggregate, were holders of 50% or more of its voting stock, securities or
equity, partnership or ownership interests immediately prior to such transaction
or series of transactions hold less than 50% of the voting stock, securities or
other equity, partnership or ownership interests of the resulting or surviving
entity or such Affiliate thereof, calculated on a fully diluted basis, (ii) a
direct or indirect sale, transfer or other conveyance or disposition, in any
single transaction or series of related transactions, of all or substantially
all of its assets.
"Charter and Good Standing Documents" shall mean, for Borrower (i) a
-----------------------------------
copy of the certificate of incorporation certified as of a date acceptable to
Lender by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of such Borrower, (ii) a copy of the bylaws of
Borrower certified as of a date acceptable to Lender by the corporate secretary
or assistant secretary of such Borrower, (iii) an original certificate of good
standing as of a date acceptable to Lender issued by the applicable Governmental
Authority of the jurisdiction of incorporation or organization of such Borrower
and of every other jurisdiction in which such Borrower is otherwise required to
be in good standing, and (iv) copies of the resolutions of the Board of
Directors and, if required, stockholders, authorizing the execution, delivery
and performance of the Loan Documents to which such Borrower is a party,
certified by an authorized officer of such Person as of the Closing Date.
"Closing" shall mean the satisfaction, or written waiver by Lender, of
-------
all of the conditions precedent set forth in the Agreement required to be
satisfied prior to the consummation of the transactions contemplated hereby.
"Closing Date" shall mean the date the Closing occurs.
------------
"Collateral" has the meaning ascribed to it in Section 2.9(a).
----------
"Debtor Relief Law" shall mean, collectively, the Bankruptcy Code of
-----------------
the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
"Default" shall mean any event, fact, circumstance or condition that,
-------
with the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
"Deposit Account" shall mean, collectively, the Lockbox Account and
---------------
all bank or other depository accounts of Borrower.
A-2
"Distribution" shall mean any fee, payment, bonus or other
------------
remuneration of any kind, and any repayment of or debt service on loans or other
indebtedness.
"Eligible Receivables" shall mean each Account arising in the ordinary
--------------------
course of Borrower's business from the rendering of Services unless:
(a) it is not subject to a valid perfected first priority security
interest in favor of Lender, subject to no other Lien (other than Permitted
Liens, which in no case shall include or permit liens on Accounts or proceeds
thereof;
(b) it arises out of services rendered or a sale made to, or out of
any other transaction between with, one or more Affiliates (other than services
related to clinical research business) of Borrower;
(c) it remains unpaid for longer than 180 calendar days after the
applicable invoice date or Services were rendered;
(d) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, 50% or more of all such Accounts are not deemed Eligible
Receivables for any reason hereunder (which percentage may, in Lender's sole
discretion, be increased or decreased);
(e) with respect to all Accounts owed by any particular Account Debtor
and/or its Affiliates, if such Accounts exceed 20% of the Borrowing Base
provided, however, that Lender will consider lending against Accounts that
-------- -------
exceed such 20% threshold on a case by case basis;
(f) any covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been breached and remains
uncured;
(g) the Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made a general assignment for the benefit of
creditors, or a decree or order for relief has been entered by a court having
jurisdiction in respect of such Account Debtor in an involuntary case under any
Debtor Relief Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor, or such Account
Debtor has failed, suspended business, ceased to be solvent, or has consented to
or suffered a receiver, trustee, liquidator or custodian to be appointed for it
or for all or a significant portion of its assets or affairs;
(h) it arises from the sale of property or services rendered to one or
more Account Debtors outside the United States;
(i) it represents the sale of goods or rendering of services to an
Account Debtor on a ▇▇▇▇-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
chattel paper or an instrument of any kind or has been reduced to judgment;
(j) it is subject to any material offset, credit (including any
resource or other income credit or offset) deduction, defense, discount,
chargeback, freight claim, allowance, adjustment, dispute or counterclaim, or is
contingent in any respect or for any reason;
(k) there is any agreement with an Account Debtor for any material
deduction from such Account, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each
A-3
invoice related thereto, such that only the discounted amount of such Account
after giving effect to such discounts and allowances shall be considered an
Eligible Receivable;
(l) any return, rejection or repossession of goods or services related
to it has occurred;
(m) it is not payable to Borrower;
(n) Borrower has agreed to accept or has accepted any non-cash payment
for such Account;
(o) with respect to any Account arising from the performance of
Services, the Services have not been actually performed or the Services were
undertaken in violation of any law; or
(p) it fails to meet such other specifications and requirements which
may from time to time be established by Lender or is not otherwise satisfactory
to Lender, each as determined in Lender's discretion in accordance with its
customary business practices.
"Environmental Laws" shall mean, collectively and each individually
------------------
,the Comprehensive Environmental Response, Compensation and Liability Act of
1980, the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, any other "Superfund" or "Superlien" law and all other
federal, state and local and foreign environmental, land use, zoning, health,
chemical use, safety and sanitation laws, statutes, ordinances and codes
relating to the protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances, in each case, as amended, and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and
directives of Governmental Authorities with respect thereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended, and the regulations thereunder.
"Event of Default" shall mean the occurrence of any event set forth in
----------------
Article VIII.
------------
"Excess Cash Flow" shall mean, for any fiscal year, without
----------------
duplication, an amount equal to the sum of (i) consolidated net income or loss
of Borrower for such period, plus (ii) an amount equal to the amount of
----
depreciation expenses, amortization expense (including the amortization of
goodwill), accrued non cash interest expense and all other non cash charges
deducted in arriving at such consolidated net income or loss, plus (iii) an
----
amount equal to the aggregate net cash proceeds of the sale, lease, transfer or
other disposition of assets by Borrower during such period to the extent not
required to be applied to mandatory prepayments or payments on the Loans, plus,
----
(iv) an amount equal to the net loss on the sale, lease, transfer or other
disposition of assets by Borrower during such period to the extent deducted in
arriving at such consolidated net income or loss, plus (v) without duplication
----
with other items included in this definition other amount of any tax refunds or
credits received by Borrower during such period, less (vi) an amount equal to
----
the permitted and used Capital Expenditures of Borrower for such period, less
----
(vii) an amount equal to the sum of all regularly scheduled payments and
optional and mandatory prepayments of principal or Indebtedness for borrowed
money of Borrower (other than on the Loans) actually made during such period to
the extent permitted hereunder, less (viii) an amount equal to
----
A-4
the net gain on the sale, lease, transfer or other disposition of assets by
Borrower during such period to the extent included in arriving at such
consolidated net income or loss.
"Fair Valuation" shall mean the determination of the value of the
--------------
consolidated assets of a Person on the basis of the amount which may be realized
by a willing seller within a reasonable time through collection or sale of such
assets at market value on a going concern basis to an interested buyer who is
willing to purchase under ordinary selling conditions in an arm's length
transaction.
"GAAP" shall mean generally accepted accounting principles in the
----
United States of America in effect from time to time as applied by nationally
recognized accounting firms.
"Governmental Authority" shall mean any federal, state, municipal,
----------------------
national, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
"Hazardous Substances" shall mean, without limitation, any flammable
--------------------
explosives, radon, radioactive materials, asbestos, urea formaldehyde foam
insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Indebtedness" of any Person shall mean, without duplication, (a) all
------------
items which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet of such Person
as of the date as of which Indebtedness is to be determined, including any lease
which, in accordance with GAAP would constitute Indebtedness, (b) 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, (c) all indebtedness of others which such Person has directly
or indirectly guaranteed (sold with recourse or agreed) 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, equity or other
ownership interest purchase, capital contribution or otherwise) or otherwise to
become directly or indirectly liable.
"Key Officers" shall mean the chief executive officer, chief
------------
information officer, chief financial officers, vice president of sales, and vice
president of operations of Borrower.
"Landlord Waiver and Consent" shall mean a waiver/consent in form and
---------------------------
substance satisfactory to Lender from the owner/lessor of any premises not owned
by Borrower at which any of its financial or corporate books and records are now
or hereafter located for the purpose of providing Lender access to such
Collateral, in each case, as such may be modified, amended or supplemented from
time to time.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
A-5
"Loan" or "Loans" shall mean, individually and collectively, all
---- -----
Advances under the Revolving Facility.
"Loan Documents" shall mean, collectively and each individually, the
--------------
Agreement, the Note, the Security Documents, the Lockbox Agreements, the UCC
financing statements, the Landlord Waiver and Consents, the Borrowing
Certificates, and all other agreements, documents, instruments and certificates
heretofore or hereafter executed or delivered to Lender in connection with any
of the foregoing or the Loans, as the same may be amended, modified or
supplemented from time to time.
"Lockbox Accounts" shall mean the accounts maintained by Borrower at
----------------
the Lockbox Banks into which all collections or payments on their Accounts and
other Collateral are paid.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
----------------------- -----------------------
event, condition or circumstance or set of events, conditions or circumstances
or any change(s) which (i) has, had or could reasonably be expected to have any
material adverse effect upon or change in the validity or enforceability of any
Loan Document, (ii) has been or could reasonably be expected to be material and
adverse to the value of the Collateral as a whole or to the business,
operations, properties, assets, liabilities or financial condition of Borrower,
either individually or taken as a whole, or (iii) has materially impaired or
could reasonably be expected to materially impair the ability of Borrower to
perform the Obligations or to consummate the transactions under the Loan
Documents executed by it.
"Minimum Termination Fee" shall mean (for the time period indicated)
-----------------------
the amount equal to (i) 2% of the Facility Cap, if the date of notice of such
termination by Borrower is after the Closing Date but before the first
anniversary of the Closing Date; and (ii) 1% of the Facility Cap, if the date of
notice of such termination by Borrower is on or after the first anniversary of
the Closing Date.
"Note" shall mean, the promissory note payable to the order of Lender
----
executed by Borrower evidencing the Revolving Facility, as the same may be
modified, amended or supplemented from time to time.
"Obligations" shall mean all present and future obligations,
-----------
Indebtedness and liabilities of Borrower to Lender at any time and from time to
time of every kind, nature and description, direct or indirect, secured or
unsecured, joint and several, absolute or contingent, due or to become due,
matured or unmatured, now existing or hereafter arising, contractual or
tortious, liquidated or unliquidated, under any of the Loan Documents or
otherwise relating to the Note and/or Loans, including, without limitation, all
applicable fees, charges and expenses and/or all amounts paid or advanced by
Lender on behalf of or for the benefit of Borrower for any reason at any time,
including in each case obligations of performance as well as obligations of
payment and interest that accrue after the commencement of any proceeding under
any Debtor Relief Law by or against any such Person.
"Payment Office" shall mean initially the address set forth beneath
--------------
Lender's name on the signature page of the Agreement, and thereafter, such other
office of Lender, if any, which it may designate by notice to Borrower to be the
Payment Office.
"Permit" shall mean collectively all licenses, leases, powers,
------
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights.
"Person" shall mean an individual, a partnership, a corporation, a
------
limited liability company, a business trust, a joint stock company, a trust, an
unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
A-6
"Physician Partners" shall mean the physicians, and any entities
------------------
affiliated therewith, that are parties to a contractual arrangement with
Borrower relating to the provision of clinical trial services.
"Prime Rate" shall mean a fluctuating interest rate per annum equal at
----------
all times to the rate of interest announced publicly from time to time by
Citibank, N.A. as its base rate; provided, that such rate is not necessarily the
best rate offered to its customers, and, should Lender be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Lender; provided, that each change in the fluctuating
interest rate shall take effect simultaneously with the corresponding change in
the Prime Rate.
"Security Documents" shall mean the Note, this Agreement, the Lockbox
------------------
Agreements, UCC financing statements and all other documents or instruments
necessary to create or perfect the Liens in the Collateral, as such may be
modified, amended or supplemented from time to time.
"Services" shall mean the clinical research and data management
--------
services provided by Borrower to pharmaceutical companies pursuant to clinical
research study agreements.
"Subsidiary" shall mean, (i) as to Borrower, any Person in which more
----------
than 50% of all equity, membership, partnership or other ownership interests is
owned directly or indirectly by Borrower or one or more of its Subsidiaries, and
(ii) as to any other Person, any Person in which more than 50% of all equity,
membership, partnership or other ownership interests is owned directly or
indirectly by such Person or by one or more of such Person's Subsidiaries.
"Term" shall mean the period commencing on the date set forth on the
----
first page of this Agreement and ending on the date that is three (3) years
after such date (i.e., the third year anniversary of the date hereof).
"UCC" shall mean the Uniform Commercial Code as in effect in the State
---
of Maryland from time to time.
A-7