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EXHIBIT 10.117.1
LOAN AND SECURITY AGREEMENT
DATED AS OF APRIL 21, 1997
BY AND AMONG
UNISON HEALTHCARE CORPORATION,
AS BORROWER,
AND
ELK ▇▇▇▇▇▇▇ INVESTMENTS, L.L.C.,
AND
BRITWILL INVESTMENTS COMPANY, LTD.,
COLLECTIVELY, AS LENDER
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................. 1
1.1 Certain Defined Terms.................................... 1
1.2 Other Terms.............................................. 9
1.3 Interpretation........................................... 9
1.4 Rounding................................................. 9
ARTICLE II LOAN TERMS............................................... 9
2.1 Single Advance........................................... 9
2.2 Note..................................................... 9
2.3 Analysis of Collateral Value; Mandatory Loan Reductions.. 9
2.4 Loan Records............................................. 9
2.5 Interest................................................. 10
2.6 Fees..................................................... 10
2.7 Collections on Receivables............................... 10
ARTICLE III [Reserved]............................................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES......................... 11
4.1 Representations and Warranties of the Borrower........... 11
ARTICLE V GENERAL COVENANTS OF THE BORROWER........................ 11
5.1 Affirmative Covenants of the Borrower.................... 11
5.2 Reporting Requirements of the Borrower................... 12
5.3 Negative Covenants of the Borrower....................... 13
ARTICLE VI [Reserved]............................................. 14
ARTICLE VII [Reserved]............................................. 14
ARTICLE VIII GRANT OF SECURITY INTERESTS............................ 14
8.1 Borrower's Grant of Security Interest.................... 14
8.2 Additional Collateral.................................... 15
8.3 Delivery of Collateral................................... 15
8.4 Borrower Remains Liable.................................. 15
8.5 Covenants of the Borrower Regarding the Collateral....... 15
8.6 All Obligations Secured.................................. 17
ARTICLE IX EVENTS OF DEFAULT...................................... 18
9.1 Events of Default........................................ 18
ARTICLE X REMEDIES............................................... 19
10.1 Actions Upon Event of Default............................ 19
10.2 Receipt of Payments in Trust............................. 20
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10.3 Application of Proceeds.................................. 20
10.4 Exercise of Remedies..................................... 20
10.5 Severability of Remedies................................. 21
10.6 Waiver of Appraisement................................... 21
10.7 Power of Attorney........................................ 21
10.8 Additional Rights Regarding Pledged Stock................ 21
ARTICLE XI [Reserved]............................................. 22
ARTICLE XII INDEMNIFICATION........................................ 22
12.1 Indemnities by the Borrower.............................. 22
ARTICLE XIII MISCELLANEOUS.......................................... 23
13.1 Notices, Etc............................................. 23
13.2 Binding Effect; Assignability; Limits on Assignability... 23
13.3 Costs, Expenses and Taxes................................ 23
13.4 [Reserved]............................................... 24
13.5 Amendments; Waivers; Consents............................ 24
13.6 GOVERNING LAW; CONSENT TO JURISDICTION: WAIVER OF
JURY TRIAL............................................... 24
13.7 Execution in Counterparts; Facsimile Signatures;
Severability............................................. 25
13.8 Descriptive Headings..................................... 25
EXHIBITS
A. Collateral Value Certificate
SCHEDULES
1. Representations and Warranties
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This LOAN AND SECURITY AGREEMENT, dated as of April 21, 1997 (this
"Agreement"), is by and among UNISON HEALTHCARE CORPORATION, a Delaware
corporation (the "Borrower"), and ELK ▇▇▇▇▇▇▇ INVESTMENTS, L.L.C. and BRITWILL
INVESTMENTS COMPANY, LTD. (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower desires to obtain a loan from the Lender secured by
certain accounts receivable owned by it and purchased pursuant to the
Receivables Assignment Agreement;
WHEREAS, in order to secure the advances made to the Borrower by the
Lender, the Borrower intends to grant to the Lender and its assigns a security
interest in such receivables and other collateral owned by the Borrower.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. In addition to the items defined in the first
paragraph above, as used herein, the following terms shall have the following
meanings:
"Adverse Claim" means any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other
type of preferential arrangement having the effect or purpose of creating
a lien or security interest, other than the security interest created
under this Agreement;
"Affiliate" means as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person within the meaning of control under Section 15
of the Securities Act of 1933, as amended.
"Authorized Officer" means, with respect to any corporation, the
Chairman of the Board, the President, the Chief Financial Officer, the
Chief Operating Officer, the Secretary, the Treasurer, any Assistant
Secretary, any Assistant Treasurer and each other officer of such
corporation specifically authorized in resolutions of the Board of
Directors of such corporation to sign agreements, instruments or other
documents in connection with this Agreement.
"Billed Amount" means, with respect to any Receivable, the net
amount billed on the Billing Date to the related Obligor with respect
thereto.
"Billing Date" means the date on which the invoice or claim with
respect to a
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Receivable was generated by the related Facility Owner, which date,
subject to approval by the Lender, at the Lender's sole discretion, shall
be within a reasonable time after the date of the related service.
"Borrower Assigned Agreements" has the meaning specified in Section
8.1(b).
"Business Day" means any day of the year other than a Saturday,
Sunday or any day on which banks generally are required, or authorized to
close in Phoenix, Arizona.
"CHAMPUS" means the Civilian Health and Medical Program of the
Uniformed Service, a program of medical benefits covering retirees and
dependents of a member or a former member of a uniformed service,
provided, financed and supervised by the United States Department of
Defense established by 10 USC Sections 1071 et seq.
"Change in Control" means, with respect to a Person, the time when
(i) any Person or "group" has acquired "beneficial ownership" (as such
terms are defined under Section 13d-3 of and Regulation 13D under the
Securities Exchange Act of 1934, as amended), either directly or
indirectly, of outstanding shares of Stock of another Person having more
than fifty percent (50%) of the voting power for the election of directors
of such Person under ordinary circumstances or (ii) more than fifty
percent (50%) of the members of such Person's board of directors shall
have been replaced by new directors not nominated for membership on the
board by a majority of directors who were directors on the Closing Date.
"Closing Date" means April 21, 1997.
"Closing Fee" means a non-refundable fee equal to $29,500 (1% of the
Maximum Loan Amount as of the Closing Date).
"Collateral" means all of the collateral pledged by the Borrower in
Sections 8.1 and 8.2.
"Collateral Value" means, as of the date of its computation, an
amount equal to the aggregate Outstanding Balance of Transferred
Receivables that are Eligible Receivables.
"Collateral Value Certificate" means an Officer's Certificate in the
form of Exhibit A, computing for any Business Day the Collateral Value and
the maximum outstanding principal balance of the Loan.
"Collections" means, with respect to any Receivable, all cash
collections and other cash proceeds of such Receivable.
"Contract" means an agreement (or agreements, including an invoice
or invoices,
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or claim or claims) pursuant to, or under which, an Obligor shall be
obligated to pay for provision of services (and any services or sales
ancillary thereto) rendered to clients of the Facilities, from time to
time.
"Daily Interest" means for any day the product of (a) the Interest
Rate times (b) the outstanding principal balance of the Loan at the end of
such day.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money, (b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) obligations of such
Person to pay the deferred purchase price of property or services, (d)
obligations of such Person as lessee under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, (e)
obligations secured by any lien or other charge upon property or assets
owned by such Person, even though such Person has not assumed or become
liable for the payment of such obligations, (f) obligations of such Person
under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise
to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (e)
above, and (g) liabilities in respect of unfunded vested benefits under
plans covered by ERISA. For the purposes hereof, the term "guarantee"
shall include any agreement, whether such agreement is on a contingency or
otherwise, to purchase, repurchase or otherwise acquire Debt of any other
Person, or to purchase, sell or lease, as lessee or lessor, property or
services, in any such case primarily for the purpose of enabling another
person to make payment of Debt, or to make any payment (whether as an
advance, capital contribution, purchase of an equity interest or
otherwise) to assure a minimum equity, asset base, working capital or
other balance sheet or financial condition, in connection with the Debt of
another Person, or to supply funds to or in any manner invest in another
Person in connection with Debt of such Person.
"Default Rate" means a per annum rate equal to 2.5% plus the
otherwise applicable Interest Rate.
"Eligible Receivable" means, at any time, unless otherwise agreed to
by the Lender, a Receivable:
(a) which is a liability of (i) a commercial insurance company
acceptable to the Lender, organized under the laws of any
jurisdiction in the United States, having its principal office in
the United States, (ii) Medicare, Medicaid, or CHAMPUS, or (iii) a
HMO or PPO or any other type of Obligor not included in the
categories of Obligors listed in the foregoing clauses (i) and (ii),
organized under the laws of any jurisdiction in the United States,
having its principal office in the United States, and (iv) any other
receivables from time to time deemed acceptable by the Lender;
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(b) the Obligor of which is not an Affiliate of any of the
parties hereto;
(c) as to which the representations and warranties of Sections
4.1 are true in all respects at the time of presentation of any
Collateral Value Certificate;
(d) which is not a Receivable aged more than 120 days from the
date of the related service; and
(e) which complies with such other criteria and requirements
(other than those relating to the collectibility of such
Receivables) as the Lender may from time to time specify to the
Borrower following five Business Days' notice.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time, and the regulations promulgated
thereunder.
"Event of Default" has the meaning specified in Section 9.1.
"Facilities" means the business facilities managed and operated by
the following Affiliates of the Borrower: Quest Pharmacies, Inc., ▇▇▇▇▇▇▇
Card, Inc., RehabWest, Inc., Cornerstone Care, Inc., Arkansas, Inc.,
▇▇▇▇▇▇▇ ▇▇▇▇▇, Inc., Memphis Clinical Laboratory, Inc., Decatur Sports Fit
& Wellness Center, Inc., Therapy Health Systems, Inc., ▇▇▇▇▇▇▇▇▇ &
Associates Rehabilitation, Inc., Sunbelt Therapy Management Services,
Inc., Ampro Medical Services, Inc., and Gamma Laboratories, Inc.
"Facility Owner" means each of the Affiliates managing and operating
any Facilities, and its respective successors and assigns.
"Fees" means all fees and expenses incurred by, and not yet paid to,
the Lender in connection with the transactions contemplated by this
Agreement, including, without limitation, the Closing Fee, all legal fees
and expenses, accounting and auditing fees, any servicing fees paid to a
successor servicer hereunder, professional consulting fees, fees and
expenses associated with government filings, consents, licenses or
approvals, and all other fees and expenses payable by the Borrower
pursuant to the terms of Section 13.3 hereof.
"GAAP" means generally accepted accounting principles as in effect
in the United States, consistently applied, as of the date of such
application.
"Governmental Authority" means the United States of America, any
state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"Government Receivables" means Transferred Receivables payable by
Medicare, Medicaid or CHAMPUS.
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"HMO" means a health maintenance organization, organized under the
laws of any state, that provides or arranges for the provision of basic
and supplemental health services to its enrollees in the manner prescribed
by, and which otherwise meets the requirements of the Public Health
Service Act, 42 U.S.C. Section 300-e (including the regulations under 42
C.F.R. Part 417).
"Incipient Event" means an event which, upon the giving of notice or
the passage of time, or both, would become an Event of Default.
"Indemnified Amounts" has the meaning specified in Section 12.1.
"Indemnified Party" has the meaning specified in Section 12.1.
"Index Rate" means a percentage equal to the Prime Rate of Interest,
as published in the "Money Rates" column of the Wall Street Journal, as
the same may fluctuate from time to time.
"Interest," for any period, means the sum of the Daily Interest
amounts for each day in such period.
"Interest Rate" means the Index Rate, plus 2%, as calculated based
upon a 365-day year.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Loan" means the indebtedness issued by the Lender pursuant to this
Agreement.
"Loan To Value Ratio" means, as of any date, the ratio derived by
dividing the outstanding loan amount by the Collateral Value as of such
date.
"Material Adverse Effect" means, with respect to a Person, (a) a
material adverse effect on (a) the business, assets, operations,
prospects, or financial or other condition of such Person, the industry
within which such Person operates, or any of its Subsidiaries, (b) such
Person's ability to pay any Obligations or perform its duties or
obligations under this Agreement or any Related Document, in accordance
with the terms thereof, (c) the Lender's liens or security interest in the
Borrower's Collateral or the priority of any such liens or security
interests, or (d) the rights and remedies of Lender under this Agreement
and the Related Documents.
"Maturity Date" means the earliest of (a) August 1, 1997, (b) 30
days after written demand from the Lender to the Borrower, or (c) the date
of declaration or automatic occurrence of the Maturity Date pursuant to
Section 9.1.
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"Maximum Balance" has the meaning specified in Section 2.3.
"Maximum Loan Amount" means $2,950,000.
"Medicaid" means the medical assistance program established by Title
XIX of the Social Security Act (42 USC Sections 1396 et seq.) and
any statutes succeeding thereto or amendments thereof.
"Medicare" means the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act (42 USC
Sections 1395 et seq.) and any statutes succeeding thereto or
amendments thereof.
"Note" means the $2,950,000 Promissory Note of even date herewith
from the Borrower to the Lender.
"Obligations" means all amounts and performances owed by the
Borrower under this Agreement, including repayment of principal, Interest,
Fees and indemnities, and all other amounts and performances owing from
the Borrower and any Affiliates of the Borrower to the Lender or any
Affiliates of the Lender, including without limitation the following:
(a) Repayment of eight promissory notes maturing on October 31, 1997
(four each currently held in two separate escrow accounts) payable by
Borrower to ▇▇▇▇▇ ▇▇▇▇▇▇▇ or certain of his relatives, with the aggregate
principal amount of all eight notes totalling approximately $1,145,967.
(b) Repayment of Borrower's equity adjustment obligations owing with
respect to its acquisition of certain facilities. The obligations total
approximately $1,028,188 to ▇▇. ▇▇▇▇▇▇▇ and $131,626 each to four of ▇▇.
▇▇▇▇▇▇▇'▇ family members. ▇▇. ▇▇▇▇▇▇▇ and Borrower anticipate that the
obligations soon will be evidenced by promissory notes from Borrower to
▇▇. ▇▇▇▇▇▇▇ and certain of his relatives, respectively, for the amounts
listed in the preceding sentence.
(c) Repayment of the obligations owing to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as Agent
for the former shareholders of BritWill HealthCare Company, pursuant to a
Contingent Payment Agreement, dated as of April 16, 1996, with an
effective date of August 10, 1995, and all documents related thereto.
(d) Repayment of any sums paid by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇ ▇▇▇▇▇▇▇
based pursuant to their respective guarantees of certain obligations of
the Borrower and/or its Affiliates at any time prior to repayment in full
ot items (a) through (c) above.
"Obligor" means, with respect to any Receivable, the Person
primarily obligated to make payments in respect thereto.
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"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the
Board, the President, the Chief Financial Officer, the Treasurer, the
Secretary or any other duly authorized officer of such Person acceptable
to the Lender.
"Other Costs" has the meaning specified in Section 13.3(a).
"Outstanding Balance" of any Receivable at any time means an amount
(not less than zero) equal to (a) its Billed Amount, minus (b) all
Collections received from the Obligor with respect thereto; provided, that
if the Lender makes a determination that all Collections from the Obligor
with respect to such Receivable have been made, its Outstanding Balance
shall be zero.
"Payment Date" means the first Business Day of a month until the
Maturity Date, and on and thereafter every Business Day.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, association, joint venture,
Governmental Authority or any other entity of whatever nature.
"PPO" means a preferred provider organization, consisting of
physicians and/or hospitals or other health care facilities that contract
with insurance companies, unions, or businesses to provide their health
care services at less than the usual or customary fee.
"Proceeds" means, with respect to any Collateral, whatever is
receivable or received when such Collateral is sold, collected, exchanged
or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes all rights to payment, including returned
premiums, with respect to any insurance relating to such Collateral.
"Receivable" means the net amount of (a) an account receivable
billed to, or otherwise due from an Obligor arising from the provision of
services in the ordinary course of business (services or sales ancillary
thereto) by facilities managed and operated by one of the Facility Owners
including the right to payment of any interest or finance charges and
other obligations of such Obligor with respect thereto;
(b) all security interests or liens and property subject thereto
from time to time purporting to secure payment by the Obligor;
(c) all contracts, contract rights, general intangibles, guarantees,
indemnities and warranties and proceeds thereof, proceeds of insurance
policies, financing statements and other agreements or arrangements of
whatever character from time to time supporting or securing payment of
such receivable;
(d) all Collections with respect to any of the foregoing;
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(e) all Records with respect to any of the foregoing;
(f) all Proceeds of any of the foregoing; and
(g) all rights, remedies, powers and/or privileges of any Facility
Owner with respect to any of the foregoing.
Provided that Receivables from Quest Pharmacies, Inc. shall include all of
the above to the extent they constitute "accounts" as defined in the UCC,
but shall exclude all items listed above to the extent, and only to the
extent, that they are both (i) not "accounts" as defined in the UCC, and
(ii) pledged as collateral to ▇▇▇▇▇▇ ▇▇▇▇ pursuant to a Security Agreement
between him and Quest Pharmacies, Inc.
"Receivables Assignment Agreement" means each of the Receivables
Assignment Agreements dated as of the date hereof between the Borrower and
a Facility Owner.
"Records" means all Contracts and other documents, books, records
and other information (including, without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property
and rights) prepared and maintained by the Borrower with respect to
Receivables and the related Obligors.
"Related Documents" means the Note, each Receivables Assignment
Agreement and all agreements, instruments, certificates, financing
statements or other documents required to be delivered hereunder or
thereunder.
"Required Information" means, with respect to a Receivable, (a) the
Obligor, (b) the Obligor's address, (c) the Billed Amount, (d) any
discounts, and (e) the Billing Date.
"Self-Pay Receivable" means a Receivable on which the patient who
has received the related medical treatment is the Obligor.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests or other equivalents (regardless of how designated)
of or in a corporation, partnership or equivalent entity whether voting or
nonvoting, including common stock, preferred stock or any other "equity
security" (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, as amended).
"Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the Board of Directors or other
Persons performing similar functions are at the time directly or
indirectly owned by such Person.
"Transferred Receivable" means any receivable which has been
purchased by the
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Borrower under the Receivables Assignment Agreement.
"UCC" means, for any jurisdiction, the Uniform Commercial Code as
from time to time in effect in such jurisdiction.
1.2 Other Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. All terms used in Article 9 of the
UCC of the State of Arizona, and not specifically defined herein, are used
herein as defined in such Article 9. All hourly references herein shall refer to
Arizona time.
1.3 Interpretation. Except as otherwise indicated, all agreements defined
in this Agreement refer to the same as from time to time amended or supplemented
or as the terms of such agreements are waived or modified in accordance with
their terms.
1.4 Rounding. For purposes of any calculations referred to in this
Agreement (unless otherwise specified), (a) all percentages resulting from such
calculations will be rounded up, if necessary, to the nearest one ten-thousandth
of a percentage point (e.g., 9.87654% (or .0987654) being rounded up to 9.8766%
(or .098766)) and (b) all Dollar amounts used in or resulting from such
calculations will be rounded up to the nearest dollar (e.g., $1,057.37 being
rounded up to $1,058).
ARTICLE II
LOAN TERMS
2.1 Single Advance. The Lender hereby agrees, on the terms and subject to
the conditions of this Agreement, to make a single advance to the Borrower at
the Closing up to, but not exceeding, $2,950,000; provided that under no
circumstances shall the amount of the advance result in a Loan to Value Ratio of
greater than 60%.
2.2 Note. The advance made by the Lender hereunder shall be evidenced by
the Note.
2.3 Analysis of Collateral Value; Mandatory Loan Reductions. On the tenth
Business Day of each month and as otherwise requested by the Lender, the
Borrower shall file a Collateral Value Certificate with the Lender. The maximum
balance outstanding on the Loan at any time shall not exceed 60% of the
Collateral Value (the "Maximum Balance"). If the actual principal balance at any
time exceeds the Maximum Balance, the Borrower must repay the excess amount
within 5 Business Days after the submission of the Collateral Value Certificate
evidencing the overage.
2.4 Loan Records. The Lender shall maintain an account on its books to
record: (i) all payments relating to the Loan, (ii) all payments of Interest and
Fees made by Borrower, and (iii) all other appropriate debits and credits as
provided in this Agreement with respect to the
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obligations of the Borrower. All entries in the account shall be made in
accordance with Lender's customary accounting practices as in effect from time
to time. Borrower shall pay all of its obligations as such amounts become due or
are declared due -- pursuant to the terms of this Agreement.
2.5 Interest. (a) Borrower shall pay interest to the Lender, (i) in
arrears for the preceding calendar month, on each Payment Date commencing on
June 1, 1997, (ii) as accrued on the Maturity Date, and (iii) if any interest
accrues or remains payable after the Maturity Date, upon demand. If any interest
or other payment under this Agreement becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
(b) Borrower shall be obligated to pay interest to Lender on the
outstanding principal balance of the Loan at a floating rate equal to the
Interest Rate. All computations of interest shall be made by Lender and on the
basis of a 365-day year. Each determination by Lender of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error or bad faith.
(c) Following the occurrence of any Event of Default, at the option
of the Lender, the interest rate applicable to the Obligations shall, from the
date of the occurrence of such Event of Default and so long as such Event of
Default continues, be the Default Rate.
(d) The Lender is authorized to charge against the Loan an amount
equal to the amount of any Obligations from time to time due and payable to
Lender. Lender is authorized to, and at its option may, make or cause to be made
advances on behalf of Borrower for payment of all Fees, expenses, costs,
principal, interest, or other Obligations due and payable by Borrower under this
Agreement or any of the Related Documents, even if the making of any such
advance causes the Loan to exceed the maximum Loan to Value Ratio. Borrower
agrees that the making of any such advance in excess of the Loan to Value Ratio
shall constitute an automatic Event of Default, entitling Lender to exercise all
rights and remedies available to Lender under this Agreement, the Related
Documents or applicable law.
2.6 Fees. On the Closing Date, the Borrower shall have paid to the Lender
the Closing Fee and all other Fees due as of the Closing Date. The Lender may
elect to pay the Closing Fee and all other Fees due as of the Closing Date from
the proceeds of the initial Advance. On each Payment Date, the Borrower shall
have paid to the Lender all Fees due on or before such date.
2.7 Collections on Receivables. The Borrower, the Parent and the Facility
Owners shall have the right to service and collect Receivables in accordance
with their normal business practices, and shall arrange to have any Transferred
Receivables collected promptly applied to reduce the balance of Loan, as
necessary, to ensure that the Loan balance does not exceed the Maximum Balance.
Notwithstanding the previous sentence, Lender, at any time in its sole
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discretion, regardless of whether an Incipient Event or Event of Default exists,
shall have the right to demand that a lockbox mechanism be instituted for the
collection and application to the Loan of Transferred Receivables. Such
mechanism may, at the Lender's election, be structured in substantially the same
manner as the lockbox arrangement previously instituted by General Electric
Capital Corporation in its financing arrangement with the Borrower, or the
lockbox arrangement instituted by HealthPartners Funding, L.P., in its financing
arrangement with the Parent. The provisions of this Section 2.7 shall supplement
the provisions of Section 8.5(b) regarding the Lenders' rights with respect to
the collection of Transferred Receivables. To the extent that Collections are
applied to reduce the outstanding balance of the Obligations in the manner
contemplated therein, the Lender shall apply such amounts as follows: (a) first,
to all accrued and unpaid Fees; (b) second, to all accrued and unpaid Interest
on the Loan to such Business Day; (c) third, to all Indemnified Amounts incurred
and payable to any Indemnified Party; (d) fourth, to the principal balance of
the Loan; and (e) finally, to any other Obligations owed to the Lender
hereunder.
ARTICLE III
[Reserved]
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Borrower. The Borrower hereby
makes each of the representations and warranties attached on Schedule 1 to the
Lender as of the Closing Date.
ARTICLE V
GENERAL COVENANTS OF THE BORROWER
5.1 Affirmative Covenants of the Borrower. The Borrower shall, unless the
Lender shall otherwise consent in writing:
(a) comply in all material respects with all applicable laws, rules,
regulations and orders with respect to it, its business and properties and all
Transferred Receivables, related Contracts, Collections and Proceeds with
respect thereto;
(b) preserve and maintain its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation;
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(c) cooperate fully with all requests of the Lender regarding the
information and documents necessary or desirable to allow the Lender to carry
out its responsibilities hereunder;
(d) permit the Lender to make or cause to be made (at the Borrower's
expense) inspections and audits of any books, records and papers of the Borrower
and to make extracts therefrom and copies thereof, or to make inspections and
examinations of any properties and facilities of the Borrower, on reasonable
notice, at all such reasonable times and as often as required in order to assure
that the Borrower is and will be in compliance with its obligations under this
Agreement and the Related Documents or to evaluate the Lender's investment in
the then outstanding Note;
(e) pay, perform and discharge all of its obligations and
liabilities, including, without limitation, all taxes, assessments and
governmental charges upon its income and properties when due, unless and to the
extent only that such obligations, liabilities, taxes, assessments and
governmental charges shall be contested in good faith and by appropriate
proceedings and that, to the extent required by GAAP, proper and adequate book
reserves relating thereto are established by the Borrower and then only to the
extent that a bond is filed in cases where the filing of a bond is necessary to
avoid the creation of an Adverse Claim against any of its properties; and
(f) promptly notify the Lender in writing of any litigation, legal
proceeding or dispute, whether or not in the ordinary course of business, to
which the Borrower is a party or which would have a Material Adverse Effect on
the Borrower or its operations, whether or not fully covered by insurance, and
regardless of the subject matter thereof.
5.2 Reporting Requirements of the Borrower. The Borrower shall furnish, or
cause to be furnished, to the Lender:
(a) (i) no less frequently than on the tenth Business Day of each
month, commencing with the Closing Date, a Collateral Value Certificate; and
(ii) upon request of the Lender, a monthly trial balance showing Receivables
outstanding aged from their respective Billing Dates as follows: (A) O to 30
days, (B) 31 to 60 days, (C) 61 to 90 days, and (D) 91 days or more, in each
case in both summary format by Obligor and in detail, and in each case
accompanied by such supporting detail and documentation as shall be requested by
the Lender in its sole discretion;
(b) as soon as available, a copy of the annual report for such year
for the Borrower and its consolidated Subsidiaries containing audited financial
statements for such fiscal year;
(c) beginning with the second quarter of 1997, as soon as available
and in any event within 45 days after the end of each of the quarters of each
fiscal year of the Borrower, a consolidated and consolidating balance sheet of
the Borrower and its consolidated Subsidiaries
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as of the end of such quarter, and consolidated and consolidating statements of
income and retained earnings, and cash flow, of the Borrower and its
consolidated Subsidiaries for such quarter and for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter,
together with a certificate of the chief financial officer or chief accounting
officer of the Borrower identifying such documents as being the documents
described in this paragraph (c) and stating that the information set forth
therein fairly presents the financial condition of the Borrower and its
consolidated Subsidiaries as of and for the period then ended in accordance with
GAAP, consistently applied, subject to year-end adjustments consisting only of
normal, recurring accruals.
(d) as soon as possible and in any event within five days after the
occurrence of an Event of Default, the statement of the chief executive officer
of the Borrower setting forth complete details of such Event of Default and the
action which the Borrower has taken, is taking and proposes to take with respect
thereto;
(e) within 15 Business Days of receipt, a copy of the letter of the
independent public accountants to Borrower's management with respect to their
annual audit of the Borrower and management's response thereto;
(f) promptly, and in any event within 30 days after the end of each
fiscal month, a summary financial report of the financial condition and
operating results on a monthly and year-to-date basis of the Borrower and its
consolidated Subsidiaries in the form of a balance sheet, statements of income
and retained earnings, and statements of cash flow; and
(g) promptly, from time to time, such other information, documents,
records or reports respecting the Transferred Receivables, the Contracts, the
Collateral or the condition or operations, financial or otherwise, of the
Borrower or any of its Subsidiaries as the Lender may, from time to time,
reasonably request.
5.3 Negative Covenants of the Borrower. The Borrower shall not, and shall
cause its Subsidiaries not to, without the written consent of the Lender:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon or with respect
to, or assign any right to receive income in respect of, any of the Collateral;
(b) extend, amend, forgive, discharge, compromise, cancel or
otherwise modify the terms of the Receivables Assignment Agreement, any Related
Document or of any Transferred Receivable, or amend, modify or waive any term or
condition of any Contract related thereto;
(c) amend its certificate of incorporation, its by-laws or any
Related Document; or
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(d) merge with or into, consolidate with or into, convey, transfer,
lease or otherwise dispose of all or substantially all of its assets (whether
now owned or hereafter acquired) to any Person (whether in one transaction or in
a series of transactions).
ARTICLE VI
[Reserved]
ARTICLE VII
[Reserved]
ARTICLE VIII
GRANT OF SECURITY INTERESTS
8.1 Borrower's Grant of Security Interest. As security for the prompt
payment or performance in full when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations, the Borrower hereby assigns and
pledges to the Lender, and grants to the Lender a security interest in and lien
upon, all of the Borrower's right, title and interest in and to the following,
in each case whether now or hereafter existing or in which Borrower now has or
hereafter acquires an interest and wherever the same may be located
(collectively, the "Collateral"):
(a) all Transferred Receivables, Contracts and Collections and
Proceeds;
(b) the Related Documents now or hereafter in effect relating to the
purchase, servicing or processing of Transferred Receivables (the "Borrower
Assigned Agreements"), including (i) all rights of the Borrower to receive
moneys due and to become due under or pursuant to the Borrower Assigned
Agreements, (ii) all rights of the Borrower to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Borrower Assigned
Agreements, (iii) claims of the Borrower for damages arising out of or for
breach of or default under the Borrower Assigned Agreements, and (iv) the right
of the Borrower to amend, waive or terminate the Borrower Assigned Agreements,
to perform under the Borrower Assigned Agreements and to compel performance and
otherwise exercise all remedies under the Borrower Assigned Agreements;
(c) all additional property that may from time to time hereafter be
granted and pledged to the Lender by the Borrower or by anyone on its behalf,
including the deposit with the Lender of additional moneys by the Borrower; and
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(d) all Proceeds, accessions, substitutions, rents and profits of
any and all of the foregoing Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not the Lender or any
assignee or agent on behalf of the Lender is the loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.
8.2 Additional Collateral. The Collateral shall also include the pledge by
the Borrower of its stock ownership interests in various Affiliates that are, or
control, the Facility Owners. The pledge shall be evidenced by a Stock Pledge
Agreement of even date herewith.
8.3 Delivery of Collateral. All certificates or instruments representing
or evidencing Collateral shall be delivered to and held by or on behalf of the
Lender pursuant to this Agreement, and shall be in suitable form for transfer by
delivery or shall be accompanied by duly executed instruments of transfer or
assignment in blank, and in form and substance satisfactory to the Lender, and
to the extent not constituting an assignment shall be irrevocable powers of
attorney coupled with an interest. The Lender shall have the right, at any time
in its discretion and without notice to the Borrower, to transfer to or to
register in the name of the Lender or any of its nominees any or all of the
Collateral. In addition, the Lender shall have the right at any time to exchange
certificates or instruments representing or evidencing Collateral for
certificates or instruments of smaller or larger denominations.
8.4 Borrower Remains Liable. Notwithstanding anything in this Agreement,
(i) the Borrower shall remain liable under the Transferred Receivables,
Contracts, Borrower Assigned Agreements and other agreements included in the
Collateral to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (ii) the exercise by the
Lender of any of its rights under this Agreement shall not release the Borrower
or any other party thereto from any of their respective duties or obligations
under the Transferred Receivables, Contracts, Borrower Assigned Agreements or
other agreements included in the Collateral, (iii) the Lender shall not have any
obligation or liability under the Transferred Receivables, Contracts, Borrower
Assigned Agreements or other agreements included in the Collateral by reason of
this Agreement, and (iv) the Lender shall not be obligated to perform any of the
obligations or duties of the Borrower under the Transferred Receivables,
Contracts, Borrower Assigned Agreements or other agreements included in the
Collateral or to take any action to collect or enforce any claim for payment
assigned under this Agreement.
8.5 Covenants of the Borrower Regarding the Collateral.
(a) Offices and Records. The Borrower shall keep its principal place
of business and chief executive offices and the office where it keeps its
Records at the location specified underneath the line on which its signature
appears in this Agreement or, upon 30 days' prior written notice to the Lender,
at such other location in a jurisdiction where all action required by Section
8.5(f) shall have been taken with respect to the Collateral. The Borrower will,
upon two Business Days notice, permit representatives of the Lender at any time
and from time to time during normal business hours, and at such times outside of
normal business hours
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as the Lender shall reasonably request, (i) to inspect and make copies of and
abstracts from such records, and (ii) to visit the properties of the Borrower
utilized in connection with the collection, processing or servicing of the
Transferred Receivables for the purpose of examining such Records, and to
discuss matters relating to the Receivables or the Borrower's performance under
this Agreement with any officer or employee of the Borrower having knowledge of
such matters. In connection therewith, the Lender may institute procedures to
permit it to confirm the Obligor balances in respect of any Transferred
Receivables. The Borrower agrees to render to the Lender such clerical and other
assistance as may be reasonably requested with regard to the foregoing.
(b) Collection of Transferred Receivables. Except as otherwise
provided in this Section 8.5(b), the Borrower shall continue to collect or cause
to be collected, at its own expense, all amounts due or to become due to the
Borrower under the Transferred Receivables, the Borrower Assigned Agreements and
any other Collateral. In connection with such collections, the Borrower may take
(and at the Lender's direction after an Event of Default has occurred and is
continuing, shall take) such action as the Borrower or the Lender may deem
necessary or advisable to enforce collection of the Transferred Receivables and
the Borrower Assigned Agreements; provided, however, that the Lender may, at any
time that an Event of Default has occurred and is continuing, notify any Obligor
with respect to any Transferred Receivables or obligors under the Borrower
Assigned Agreements of the assignment of such Transferred Receivables or
Borrower Assigned Agreements, as the case may be, to the Lender and direct that,
except with respect to payments on Government Receivables, payments of all
amounts due or to become due to the Borrower thereunder be made directly to, the
Lender or any servicer, collection agent or lockbox or other account designated
by the Lender and, upon such notification and at the expense of the Borrower,
the Lender may enforce collection of any such Transferred Receivables or the
Borrower Assigned Agreements and adjust, settle or compromise the amount or
payment thereof.
(c) Maintain Records of Transferred Receivables. The Borrower shall,
at its own cost and expense, maintain (or cause to be maintained) satisfactory
and complete records of the Collateral, including a record of all payments
received and all credits granted with respect to the Collateral and all other
dealings with the Collateral. Upon the occurrence and during the continuation of
an Event of Default, the Borrower shall (i) deliver and turn over (or cause to
be delivered and turned over) to the Lender or to its representatives, or at the
option of the Lender shall provide the Lender or its representatives with access
to, at any time on demand of the Lender, all of the Borrower's facilities,
personnel, books and records pertaining to the Collateral, including all
Records, and (ii) allow the Lender to occupy the premises of the Borrower where
such books, records and Records are maintained, and utilize such premises, the
equipment thereon and any authorized personnel of the Borrower that the Lender
may wish to employ for such reasonable period of time as is necessary to
administer, service and collect the Transferred Receivables.
(d) Performance of Borrower Assigned Agreements. The Borrower shall
(i) perform and observe all the terms and provisions of the Borrower Assigned
Agreements to be
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performed or observed by it, maintain the Borrower Assigned Agreements in full
force and effect, enforce the Borrower Assigned Agreements in accordance with
their terms and take all such action to such end as may be from time to time
requested by the Lender, and (ii) upon request of the Lender, make to any other
party to the Borrower Assigned Agreements such demands and requests for
information and reports or for action as the Borrower is entitled to make under
the Borrower Assigned Agreements.
(e) Notice of Adverse Claim. The Borrower shall advise the Lender
promptly, in reasonable detail, (i) of any Adverse Claim known to it made or
asserted against any of the Collateral, and (ii) of the occurrence of any event
which would have a material adverse effect on the aggregate value of the
Collateral or on the assignments and security interests granted by the Borrower
in this Agreement.
(f) Further Assurances; Financing Statements.
(i) The Borrower agrees that at any time and from time to
time, at its expense, it shall promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or desirable or that the Lender may request to perfect and
protect the assignments and security interests granted or purported to be
granted by this Article VIII or to enable the Lender to exercise and
enforce its rights and remedies under this Agreement with respect to any
Collateral. Without limiting the generality of the foregoing, the Borrower
shall execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices as may be
necessary or desirable or that the Lender may request to protect and
preserve the assignments and security interests granted by this Agreement.
(ii) The Borrower hereby authorizes the Lender to file one or
more financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the signature of the
Borrower where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law. The Lender will promptly send to the
Borrower any financing or continuation statements thereto which it files
without the signature of the Borrower except, in the case of filings of
copies of this Agreement as financing statements, the Lender will promptly
send the Borrower the filing or recordation information with respect
thereto.
8.6 All Obligations Secured. Even if the Note is paid in full, the
security interests granted herein and in the Pledge Agreement shall continue to
secure repayment of any other Obligations, and shall remain in effect until all
Obligations have been satisfied.
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ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Default. If any of the following events (each, an "Event of
Default") shall occur and be continuing, without any notice or opportunity to
cure except as set forth in a particular provision below, and with any such
notice or opportunity to cure only applying to such provision:
(a) (i) the Borrower shall default in the payment of any amount owed
by it hereunder and such failure shall remain unremedied for two Business Days,
or (ii) the Borrower shall fail to perform or observe any other term, covenant
or agreement contained in this Agreement and such failure shall remain
unremedied for a period ending five Business Days after written notice thereof
shall have been given by the Lender to the Borrower; or
(b) a default shall have occurred (and any applicable grace period
shall have elapsed) and be continuing under any instrument or agreement
evidencing, securing or providing for the Obligations or the issuance of Debt of
the Borrower and such default shall not have been waived or be the subject of
forbearance by the non-defaulting party; or
(c) the Borrower shall generally not pay any of its respective Debts
as such Debts become due, or shall admit in writing its inability to pay its
Debts generally, or shall make a general assignment for the benefit of
creditors, or any proceeding shall be instituted by or against the Borrower
seeking to adjudicate it as bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or any of its Debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property, or any of
the actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur, or the Borrower shall take any corporate action to
authorize any of the actions set forth in this subsection; or
(d) judgments or orders for the payment of money (other than such
judgments or orders in respect of which adequate insurance is maintained for the
payment thereof) in excess of $250,000 in the aggregate against the Borrower or
any of its Affiliates including any of the Facility Owners, shall remain unpaid,
unstayed on appeal, undischarged, unbounded or undismissed for a period of 30
days or more; or
(e) a judgment or order for the payment of money is rendered against
the Borrower in excess of $100,000 and shall remain unpaid, unstayed on appeal,
undischarged, unbounded or undismissed for a period of 30 days or more; or
(f) there is, in the judgment of the Lender, a material breach of
any of the
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representations and warranties of the Borrower set forth in Section 4.1;
provided, however, that if such breach is capable of being cured within 30
Business Days of its occurrence, such breach shall not cause an Event of Default
to occur until such breach has continued and remained uncured for such 30
Business Day period; or
(g) any Governmental Authority shall file notice of a lien with
regard to any assets of the Borrower; or
(h) the Lender ceases to hold a first priority, perfected security
interest in the Collateral; provided that this shall not be a default so long as
the outstanding balance of the Loan does not exceed 60% of the value of the
Collateral in which the Lender does hold a first priority, perfected security
interest;
then and in any such event, at the election of the Lender, the Maturity Date
shall automatically occur, without demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Borrower.
ARTICLE X
REMEDIES
10.1 Actions Upon Event of Default. If any Event of Default shall have
occurred and be continuing and the Lender shall have declared the Maturity Date
to have occurred or the Maturity Date shall have been deemed to have occurred
pursuant to Section 9.1, then the Lender may exercise in respect of the
Collateral, in addition to any and all other rights and remedies otherwise
available to it, all of the rights and remedies of a secured party upon default
under the UCC (such right and remedies to be cumulative and nonexclusive) and,
in addition, may take the following remedial actions:
(a) The Lender may solicit and accept bids for and sell the
Collateral or any part of the Collateral in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Lender's offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Lender may deem commercially reasonable. The Lender agrees to give
at least ten Business Days' notice to the Borrower of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Lender shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Lender may adjourn any public or private sale from time to time by announcement
at the time and place fixed for such sale, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. Every such
sale shall operate to divest all right, title, interest, claim and demand
whatsoever of the Borrower in and to the Collateral so sold, and shall be a
perpetual bar, both at law and in equity, against the Borrower, any Person
claiming the Collateral sold through the Borrower, and their respective
successors or assigns.
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(b) Upon the completion of any sale under Section 10.1(a), the
Borrower will deliver or cause to be delivered all of the Collateral sold to the
purchaser or purchasers at such sale on the date of sale, or within a reasonable
time thereafter if it shall be impractical to make immediate delivery, but in
any event full title and right of possession to such property shall pass to such
purchaser or purchasers forthwith upon the completion of such sale.
Nevertheless, if so requested by the Lender or by any purchaser, the Borrower
shall confirm any such sale or transfer by executing and delivering to such
purchaser all proper instruments of conveyance and transfer and releases as may
be designated in any such request.
(c) At any public sale under Section 10.1(a), the Lender may bid for
and purchase the property offered for sale and, upon compliance with the terms
of sale, may hold, retain and dispose of such property without further
accountability therefor. Any purchaser at any sale under Section 10.1(a) shall
be entitled, for the purpose of making payment for the property purchased, to
use the Note in order that there may be credited thereon the sums payable out of
the net proceeds of such sale to any such holder, and thereupon such purchaser
shall be credited on account of such purchase price with the portion of such net
proceeds that shall be applicable to the payment of, and shall have been
credited upon, the Note so used.
(d) The Lender may exercise at the Borrower's expense any and all
rights and remedies of the Borrower under or in connection with the Borrower
Assigned Agreements or the other Collateral, including any and all rights of the
Borrower to demand or otherwise require payment of any amount under, or
performance of any provisions of, any Borrower Assigned Agreement.
10.2 Receipt of Payments in Trust. In the event of an Event of Default all
payments received by the Borrower in connection with the Collateral shall be
received in trust for the benefit of the Lender, shall be segregated from other
funds of such party and shall be forthwith paid over to the Lender in the same
form as so received (with any necessary endorsement).
10.3 Application of Proceeds. Any cash held by or on behalf of the Lender,
whether from Transferred Receivables or otherwise, and any cash proceeds
received by the Lender in respect of any sale of, collection from or other
realization upon all or any part of the Collateral, shall be applied as set
forth in Section 2.7.
10.4 Exercise of Remedies. No failure or delay on the part of the Lender
to exercise any right, power or privilege under this Agreement and no course of
dealing between the Borrower, on the one hand, and the Lender, on the other
hand, shall operate as a waiver of such right, power or privilege, nor shall any
single or partial exercise of any right, power or privilege under this Agreement
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. The rights and remedies
expressly provided in this Agreement are cumulative and not exclusive of any
rights or remedies which the Lender would otherwise have pursuant to law or
equity. No notice to or demand on any party in any case shall entitle such party
to any other or further notice or demand in similar or other circumstances, or
constitute a waiver of the right of the other party to any other or further
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action in any circumstances without notice or demand.
10.5 Severability of Remedies. The invalidity of any remedy in any
jurisdiction shall not invalidate such remedy in any other jurisdiction. The
invalidity or unenforceability of the remedies herein provided in any
jurisdiction shall not in any way affect the right of the enforcement in such
jurisdiction or elsewhere of any of the other remedies herein provided.
10.6 Waiver of Appraisement. The Borrower agrees, to the full extent that
it may lawfully so agree, that neither it nor anyone claiming through or under
it will set up, claim or seek to take advantage of any appraisement, valuation,
stay, extension or redemption law now or hereafter in force in any locality
where any Collateral may be situated in order to prevent, hinder or delay the
enforcement or foreclosure of this Agreement, or the absolute sale of any of the
Collateral or any part thereof, or the final and absolute putting into
possession thereof, immediately after such sale, of the purchasers thereof, and
the Borrower, for itself and all who may at any time claim through or under it,
hereby waives, to the full extent that it may be lawful so to do, the benefit of
all such laws to the extent they may prevent, hinder or delay the enforcement or
foreclosure of the Agreement, and any and all right to have any of the
properties or assets comprising the Collateral marshalled upon any such sale,
and agrees that the Lender or any court having jurisdiction to foreclose the
security interest granted in this Agreement may sell the Collateral as an
entirety or in such parcels as the Lender or such court may determine.
10.7 Power of Attorney. The Borrower hereby irrevocably appoints the
Lender its true and lawful attorney (with full power of substitution) in its
name, place and stead and at its expense, in connection with the enforcement of
the rights and remedies provided for in this Article X, including with the
following powers; (a) to give any necessary receipt or acquittance for amount
collected or received hereunder, (b) to make an necessary transfers of the
Collateral in connection with any sale or other disposition made pursuant
hereto, (c) to execute and deliver for value an necessary or appropriate bills
of sale, assignments and other instrumental in connection with any such sale or
other disposition, the Borrower hereby ratifying and confirming all that such
attorney (or any substitute) shall lawfully to hereunder and pursuant hereto,
and (d) to sign any agreements, orders or other documents in connection with or
pursuant to this Agreement and any Related Document. Nevertheless, if so
requested by the Lender or a purchaser of Collateral, the Borrower shall ratify
and confirm any such sale or other disposition by executing and delivering to
the Lender or such purchaser all proper bills of sale, assignments, releases and
other instruments as may be designated in any such request.
10.8 Additional Rights Regarding Pledged Stock. In addition to the
foregoing provisions, the Lender also shall be entitled to rely upon the terms
of the separate Stock Pledge Agreement described in Section 8.2, and to exercise
any rights or remedies set forth therein.
ARTICLE XI
[Reserved]
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ARTICLE XII
INDEMNIFICATION
12.1 Indemnities by the Borrower. (a) Without limiting any other rights
that the Lender or any director, officer, employee or agent of such party (each
an "Indemnified Party") may have hereunder or under applicable law, the Borrower
hereby agrees to indemnify each Indemnified Party from and against any and all
claims, losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, and related costs and expenses of any nature whatsoever,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts"), which may be imposed
on, or incurred by an Indemnified Party in any way arising out of or relating to
(i) any breach of the Borrower's obligations under this Agreement, (ii) the
financing or the pledge of the Transferred Receivables, or (iii) any Receivable
or any Contract, excluding, however, Indemnified Amounts to the extent resulting
from gross negligence or wilful misconduct on the part of such Indemnified
Party. Without limiting or being limited by the foregoing, the Borrower shall
pay on demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all Indemnified
Amounts relating to or resulting from:
(A) reliance on any representation or warranty made or deemed made
by the Borrower (or any of its officers) under or in connection with this
Agreement, any Related Document or any report or other information
delivered by the Borrower pursuant hereto which shall have been incorrect
in any material respect when made or deemed made or delivered;
(B) the failure by the Borrower to comply with any term, provision
or covenant contained in this Agreement, any Related Document or any
agreement executed by it in connection with this Agreement or with any
applicable law, rule or regulation with respect to any Transferred
Receivable or its related Contract, or the nonconformity of any
Transferred Receivable or its related Contract with any such applicable
law, rule or regulation; or
(C) the failure to vest and maintain vested in the Borrower legal
and equitable title to and ownership of the Receivables which are, or are
purported to be, Transferred Receivables, together with an Collections and
Proceeds in respect thereof free and clear of any Adverse Claim (except as
permitted hereunder) whether exiting at the time of the purchase of such
Receivable or at any time thereafter, and to maintain or transfer to the
Lender a first priority, perfected security interest therein.
(b) Any Indemnified Amounts subject to the indemnification
provisions of this Section 12.1 not paid in accordance with Article VI, to the
extent that funds are available therefor in accordance with the provisions of
Article VI, shall be paid to the Indemnified Party
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within five Business Days following final settlement or adjudication thereof.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices, Etc. All notices and other communications provided for
hereunder, unless otherwise stated herein, shall be in writing and mailed or
telecommunicated, or delivered as to each party hereto, at its address set forth
beneath its signature line herein or at such other address as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be deemed effective as against the party
to whom such notice or communication is addressed on the third Business Day
following deposit of such notice in the U.S. mails, or on the next Business Day
following delivery by the sender of such notice to an overnight delivery
service.
13.2 Binding Effect; Assignability; Limits on Assignability. This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lender, and their respective permitted successors and assigns. The Borrower may
not assign any of its rights and obligations hereunder or any interest herein
without the prior written consent of the Lender. Lender may assign any of its
rights and obligations under this Agreement without the consent of any other
party hereto; provided, however, that any assignment by Lender that conflicts
with, requires consent or approval of the Trustee under, or requires affirmative
conduct of the Borrower under the terms of the Borrower's $100,000,000 Indenture
shall require the prior written consent of Borrower. This Agreement shall create
and constitute the continuing obligations of the parties hereto in accordance
with its terms, and shall remain in full force and effect until its termination;
provided that the rights and remedies with respect to any breach of any
representation and warranty made by the Borrower or the Servicer pursuant to
Article IV and the indemnification and payment provisions of Article XII shall
be continuing and shall survive any termination of this Agreement.
13.3 Costs, Expenses and Taxes. (a) In addition to the rights of
indemnification under Article XII hereof, the Borrower agrees to pay upon demand
all reasonable costs and expenses and taxes (excluding income and similar taxes)
incurred by the Lender ("Other Costs") in connection with the administration
(including periodic auditing, modification and amendment) of this Agreement, the
Related Documents and the other documents to be delivered hereunder, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Lender, with respect thereto and with respect to advising the Lender as
to its rights and remedies under this Agreement, the Related Document and the
other agreements executed pursuant hereto. The Borrower further agrees to pay
within five Business Days after demand all reasonable costs, counsel fees and
expenses in connection with the enforcement (whether through negotiation, legal
proceedings or otherwise) of this Agreement, the Related Documents and the other
agreements and documents to be delivered hereunder, including, without
limitation, reasonable counsel fees and expenses in connection with the
enforcement of rights under this Section 13.3.
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(b) In addition, the Borrower shall pay on demand any and all stamp,
sales, excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing or recording of this Agreement,
the Related Documents or the other agreements and documents to be delivered
hereunder, and agrees to indemnify and save each Indemnified Party from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
(c) If the Borrower fails to perform any agreement or obligation
contained herein, the Lender may (but shall not be required to) itself perform,
or cause performance of, such agreement or obligation, and the expenses of such
party incurred in connection therewith shall be payable by the party which has
failed to so perform upon such party's demand therefor.
13.4 [Reserved]
13.5 Amendments; Waivers; Consents. No modification, amendment or waiver
of or with respect to any provision of this Agreement, the Related Documents or
any other agreements, instruments and documents delivered pursuant hereto, nor
consent to any departure by the Borrower from any of the terms or conditions
thereof shall be effective unless it shall be in writing and signed by each of
the parties hereto. Any waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No consent to or demand
on the Borrower in any case shall, in itself, entitle it to any other consent or
further notice or demand in similar or other circumstances. This Agreement, the
Related Documents and the documents referred to therein embody the entire
agreement among the Borrower and supersede all prior agreements and
understandings relating to the subject hereof.
13.6 GOVERNING LAW; CONSENT TO JURISDICTION: WAIVER OF JURY TRIAL. (a)
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
ARIZONA.
(b) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR IN CONNECTION
WITH THIS AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY.
13.7 Execution in Counterparts; Facsimile Signatures; Severability. This
Agreement may be executed by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall consist as one and the same agreement. Delivery by any
party of a facsimile signature shall constitute effective delivery of an
original, binding signature hereto. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
libations, or of such provision or obligation
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shall not in any way be affected or impaired thereby in such jurisdiction and
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation shall not be impaired thereby in
any other jurisdiction.
13.8 Descriptive Headings. The descriptive headings of the various
sections of this Agreement are inserted for convenience of reference only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
UNISON HEALTHCARE BRITWILL INVESTMENTS COMPANY,
CORPORATION, as Borrower LTD., as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By:__________________________________
----------------------------------- Its:___________________________
Its:EVP/COO Address:
Address: _______________________________
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ _______________________________
▇▇▇▇▇ ▇▇▇ _______________________________
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ELK ▇▇▇▇▇▇▇ INVESTMENTS,
L.L.C., as Lender
By:__________________________________
Its:___________________________
Address:
_______________________________
_______________________________
_______________________________
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Schedule 1
Representations and Warranties
Part I:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation and is duly
qualified to do business, and is in good standing, in each jurisdiction in which
the nature of its business requires it to be so qualified (except where such
failure to be so qualified would not have a material adverse effect).
(b) The Borrower has the power and authority, subject to applicable
restrictions in its certificate of incorporation, to own and convey all of its
properties and to execute and deliver this Agreement and the Related Documents
and to perform the transactions contemplated hereby and thereby.
(c) The execution, delivery and performance by the Borrower of this
Agreement, the Related Documents and the transactions contemplated hereby and
thereby (i) have been duly authorized by all necessary corporate or other action
on the part of the Borrower, (ii) do not contravene or cause the Borrower to be
in default under (A) the Borrower's certificate of incorporation or by-laws, (B)
any contractual restriction contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other agreement
or instrument binding on or affecting the Borrower or its property or the Parent
or its property, or (C) any law, rule, regulation, order, license requirement,
writ, judgment, award, injunction, or decree applicable to, binding on or
affecting the Borrower or its property or the Parent or its property, and (iii)
do not result in or require the creation of any Adverse Claim upon or with
respect to any of the property of the Borrower or the Parent (other than in
favor of the Lender as contemplated hereunder).
(d) This Agreement and the Related Documents have each been duly executed
and delivered by the Borrower.
(e) No consent of, notice to, filing with or permits, qualifications or
other action by any Governmental Authority or any other party is required (i)
for the due execution, delivery and performance by the Borrower of this
Agreement or any of the Related Documents, (ii) for the perfection of or the
exercise by the Lender of any of its rights or remedies hereunder or thereunder,
except as may be required by federal law for certain Government Receivables,
(iii) for the grant by the Borrower of the security interests granted under this
Agreement, except as may be required by federal law for certain Government
Receivables, (iv) for the perfection of or the exercise by the Lender of its
rights and remedies provided for in this Agreement, except as may be required by
federal law for certain Government Receivables, or (v) to ensure the legality,
validity, enforceability or admissibility into evidence of this Agreement in any
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jurisdiction in which any of the Collateral is located, in each case other than
consents, notices, filings and other actions which have been obtained or made
and complete copies of which have been provided to the Lender.
(f) No transaction contemplated by this Agreement requires compliance with
any bulk sales an or similar law.
(g) This Agreement and each Related Document is the legal, valid and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its respective terms. Each of the Borrower Assigned Agreements
to which the Borrower is a party constitutes its the legal, valid and binding
obligation, enforceable against the Borrower in accordance with its terms.
(h) The principal place of business and chief executive office of the
Borrower, and the office where the Borrower keeps its Records and the original
copies of the Borrower Assigned Agreements are located at the address of the
Borrower for notices as set forth under the line containing its signature
herein, except for its previous offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, Arizona, and there are currently no, and during the past four
months (or such shorter time as the Borrower has been in existence) there have
not been, any other locations where the Borrower is located (as that term is
used in the UCC of the jurisdiction where such principal place of business is
located) or keeps Records.
(i) The Borrower has complied in all respects with all applicable laws,
rules regulations, and orders with respect to it, its business and properties
and all Collateral.
(j) The Borrower has filed on a timely basis all tax returns (federal,
state and local) required to be filed, is not liable for taxes payable by any
other Person and has paid or made adequate provisions for the payment of all
taxes, assessments and other governmental charges due from the Borrower.
(k) Each Collateral Value Certificate is accurate in all material
respects.
(l) Each Transferred Receivable is owned by the Borrower free and clear of
any Adverse Claim and the Borrower has the right to pledge the same and
interests therein, and the interest acquired the Lender therein will be a
perfected, first priority and valid security interest in such Transferred
Receivable, free and clear of any Adverse Claim. No effective financing
statement or other instrument similar in effect covering all or any part of the
Collateral is on file in any recording official except such as may have been
filed in favor of the Lender as secured party.
(m) All information heretofore or hereafter furnished by or on behalf of
the Borrower to the Lender in connection with this Agreement or any transaction
contemplated hereby is and will be true and complete in all material respects
and does not and did not omit to state a material fact necessary to make the
statements contained therein not misleading.
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EXHIBIT A
[Form of Collateral Value Certificate]
Unison HealthCare Corporation
Accounts Receivable Collateral Value Certificate
Certificate For the Period to:__________________________________________________
(in dollars)
RECONCILIATION TOTAL
Accounts Receivable Per Aging Summary $
---------
Less Ineligibles:
Accounts Receivable over 120 days from billing date $
---------
Credits over 120 days old
Finance Charges
Other (Describe if significant)
Total Ineligibles $
---------
Total Eligible Receivables $
---------
Maximum Loan to Value Ratio 60%
Maximum Outstanding Principal Balance $
=========
33
The undersigned, the authorized signer of Unison HealthCare Corporation (the
"Borrower"), is delivering this Collateral Value Certificate pursuant to the
Loan and Security Agreement dated as of April 21, 1997 (as amended, modified,
supplemented or restated and in effect from time to time, the "Agreement"). The
undersigned hereby certifies to the Lender that the information set forth above
in this Collateral Value Certificate is true and correct as of the date set
forth above.
By:___________________________________________
Title:________________________________________
Attach executed Assignment hereto.