EXHIBIT 10.2
LOAN AND SECURITY AGREEMENT
dated as of August 31, 1995
by and between
MEDICAL DIAGNOSTICS, INC.
and
CHEMICAL BANK
TABLE OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS AND ACCOUNTING TERMS
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Section 1.01. Defined Terms............................
Section 1.02. Use of Defined Terms.....................
Section 1.03. Accounting Terms.........................
ARTICLE II AMOUNTS AND TERMS OF THE LOANS
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Section 2.01. Revolving Loans..........................
Section 2.02. Request for Floating Rate Revolving
Loans....................................
Section 2.03. Repayment of Principal of Revolving
Loans....................................
Section 2.04. Interest Payments on Revolving
Loans....................................
Section 2.05. Term Loan................................
Section 2.06. Repayment of Principal of Term Loan......
Section 2.07. Interest Payment on Term Loan............
Section 2.08. LIBOR Loans..............................
Section 2.09. Commitment Fees..........................
Section 2.10. Rate Determination Protection............
Section 2.11. Prepayment of LIBOR Loans................
Section 2.12. Increased Costs; Capital Adequacy........
Section 2.13. Illegality or Impossibility..............
Section 2.14. Rate Adjustment..........................
Section 2.15. Letters of Credit........................
ARTICLE III LOAN PROCEEDS AND PAYMENTS
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Section 3.01. Availability.............................
Section 3.02. Payment Notices..........................
Section 3.03. Use of Loan Proceeds.....................
Section 3.04. Payments.................................
Section 3.05. Payments on Non-Business Days............
Section 3.06. Net Payments.............................
ARTICLE IV CONDITIONS OF LENDING
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Section 4.01. Conditions Precedent to Initial Loan.....
Section 4.02. Conditions Precedent to All Loans........
ARTICLE V SECURITY
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Section 5.01. Grant of Security Interest...............
Section 5.02. Pledges; Further Grants
of Security..............................
ARTICLE VI REPRESENTATIONS AND WARRANTIES
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Section 6.01. Representations and Warranties...........
ARTICLE VII COVENANTS OF THE BORROWER
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Section 7.01. Affirmative Covenants Other
Than Reporting Requirements..............
Section 7.02. Negative Covenants.......................
Section 7.03. Reporting Requirements...................
ARTICLE VIII DEFAULT AND REMEDIES
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Section 8.01. Events of Default........................
Section 8.02. Rights and Remedies Upon Default.........
Section 8.03. Set-Off..................................
Section 8.04. Right to Cure............................
Section 8.05. Letters of Credit........................
ARTICLE IX FURTHER PROVISIONS AS TO RECEIVABLES
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Section 9.01. Furnishing Information...................
Section 9.02. Disputes.................................
Section 9.03. Collections..............................
ARTICLE X FURTHER RIGHTS OF THE BANK
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Section 10.01. Further Assurances......................
ARTICLE XI MISCELLANEOUS
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Section 11.01. No Waiver; Cumulative Remedies..........
Section 11.02. Amendment, Waivers and Consents.........
Section 11.03. Addresses for Notices, etc..............
Section 11.04. Costs, Expenses and Taxes...............
Section 11 05. Reduction and Termination...............
Section 11.06. Representations and Warranties..........
Section 11.07. Binding Effect; Assignment..............
Section 11.08. Reproduction of Agreement...............
Section 11.09. Consent to Jurisdiction.................
Section 11.10. Governing Law...........................
Section 11.11. Severability............................
Section 11.12. Headings................................
Section 11.13. Waiver of Trial by Jury.................
LOAN AND SECURITY AGREEMENT dated as of August 31, 1995 between
Medical Diagnostics, Inc., a Delaware corporation (the "Borrower") and
Chemical Bank (the "Bank").
The Borrower and the Bank, each party in consideration that the other
joins herein, hereby act and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Defined Terms. As used in this Agreement or in any
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certificate or opinion delivered in connection with this Agreement, the
following terms shall have the meanings set out respectively after each:
"Acquisition" - Any purchase or other acquisition made by any Person
of all or substantially all of the capital stock or other equity interests
of any other Person or of all or substantially all of the assets of any
other Person or of any line of business of another Person.
"Adjusted LIBOR Rate" - For any Interest Period, an interest rate per
annum, expressed as a percentage, determined by the Bank pursuant to the
following formula:
* ALR = LIBOR + LRI
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[1.00 - RR]
Where ALR = Adjusted LIBOR Rate
LIBOR = See definition of LIBOR
RR = Reserve Rate
LRI = the applicable LIBOR Rate Increment
* ALR and each component thereof to be rounded upwards
to the next higher 1/100 of 1%.
"Advanced NMR" Advanced NMR Systems, Inc., a Delaware corporation.
"Affiliate" - See Subsection 7.02(n).
"Affiliate Guaranties" - Collectively, (i) that certain Guaranty and
Security Agreement of even date herewith being given to the Bank by
Advanced NMR and (ii) that certain Guaranty and Security Agreement of even
date herewith being given to the Bank by the Guaranteeing Subsidiaries.
"Affiliate Guarantor Collateral" - All collateral as to which the Bank
has received, or is intended to receive, a security interest pursuant to
any Affiliate Guaranty or any pledge agreement delivered pursuant to any
Affiliate Guaranty.
"Aggregate Revolving Loans" - The aggregate principal amount of all
Revolving Loans outstanding at any one time.
"Agreement" (as in "this Agreement") - This Loan and Security
Agreement, as the same may be amended from time to time.
"AMS" Advanced Mammography Systems Inc., a Delaware corporation.
"Bank Certificate" - A certificate signed by an officer of the Bank
setting forth any additional amount required to be paid by the Borrower to
the Bank pursuant to Section 2.08, Section 2.11 or Section 2.12 of this
Agreement, which certificate shall be submitted by the Bank to the Borrower
in connection with each demand made at any time by the Bank upon the
Borrower with respect to such additional amounts, and each such certificate
shall, save for manifest error, constitute conclusive evidence of the
additional amount required to be paid by the Borrower to the Bank upon each
demand. A claim by the Bank for all or any part of any additional amount
required to be paid by the Borrower may be made before and/or after the end
of the Interest Period to which such claim relates or during which such
claim has arisen and before and/or after any payment hereunder to which
such claim relates. Each Bank Certificate shall set forth in reasonable
detail the basis for and calculation of the claim to which it relates.
"Base Rate" For any date, a rate per annum (rounded upward, if
necessary, to the next higher 1/16 of 1%) equal to the greater of (a) the
Prime Rate in effect on such date or (b) the sum of one-half of one (0.5%)
percent per annum plus the Federal Funds Effective Rate in effect on such
date. If for any reason the Bank shall have determined (which
determination shall be conclusive absent manifest error) that it is unable
to ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Bank to obtain sufficient quotations in
accordance with the terms of the definition of "Federal Funds Effective
Rate" below, the Base Rate shall be determined without regard to clause (b)
of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist.
"Borrower Collateral" - All of the property, rights and interests of
the Borrower described in Subsections 5.01(a)-(g) or in any pledge
agreement delivered pursuant to this Agreement.
"Business Day - Any day which is not a Saturday, nor a Sunday, nor a
public holiday under the laws of the United States of America or the State
of New York applicable to a New York banking corporation or other day on
which banks in New York, New York are authorized or directed to close; and,
if the applicable provision relates to a LIBOR Loan, the term "Business
Day" shall also not include any day on which dealings are not carried on in
the London interbank market or on which banks are not open for business in
London.
"Capital Base" At any time, the sum of (i) the consolidated Tangible
Net Worth of the Borrower and its Subsidiaries then existing, plus (ii) the
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principal amount of Subordinated Debt of the Borrower then outstanding
(nothing contained in this definition being deemed to authorize the
incurrence of any additional Subordinated Debt).
"Capital Expenditures" - All acquisitions of machinery, equipment,
land, leaseholds, buildings, leasehold improvements and all other
expenditures for purposes which are considered to be fixed assets under
generally accepted accounting principles consistently applied. When a
fixed asset is acquired by a lease which is required to be capitalized
pursuant to generally accepted accounting principles, the amount required
to be so capitalized shall be considered to be an expenditure in the year
such asset is first leased.
"Charter" - The Certificate of Incorporation or other organizational
document of a corporation referred to, in each case as amended to date.
"Collateral" - Collectively, the Affiliate Guarantor Collateral and
the Borrower Collateral.
"Commitment" - The agreement of the Bank to make Loans to the Borrower
pursuant to this Agreement.
"Covenanted Subsidiaries" All Subsidiaries of the Borrower, now
existing or hereafter acquired or created, other than Mass. Mobile Imaging
Venture, Greater Springfield MRI Limited Partnership, MVA Rehabilitation
Associates, Mobile MRI of Western Massachusetts Associates, Merrimack
Scanning Associates and Western Massachusetts Magnetic Resonance Services,
Inc..
"Current Assets" As to any Person, all assets of such Person which are
properly shown as current assets on a balance sheet of such Person prepared
in accordance with generally accepted accounting principles consistently
applied; excluding, however, any and all amounts due from affiliated
entities.
"Current Liabilities" As to any Person, all liabilities of such Person
which are properly shown as current liabilities on a balance sheet of such
Person prepared in accordance with generally accepted accounting principles
consistently applied, including, without limitation, all capitalized lease
payments and fixed prepayments of, and sinking fund payments with respect
to, Indebtedness required to be made within one year from the date of
determination. "Current Liabilities" shall also and in any event be deemed
to include the Revolving Loans.
"Current Maturities" As at any date as of which same is to be
determined, the total principal amount of Indebtedness of the Borrower then
due or coming due or required to be paid within the next following 12
months, including, without limitation, any Indebtedness payable on demand,
all current maturities of long-term debt and any sinking fund installments
in respect thereof and that current portion of any capitalized lease
payment which is attributable to principal.
"Debt Service Coverage Ratio" See Subsection 7.01(k).
"Default" - Any event or circumstance which, with the passage of time
or giving of notice or both, could become an Event of Default.
"Determination Date" See Subsection 7.01(k).
"EBIT" As determined for any period, the sum of: (1) the consolidated
Net Income (or consolidated Net Loss, expressed as a negative number) of
the Borrower and its consolidated Subsidiaries (determined in accordance
with generally accepted accounting principles) for such period, plus (2)
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all federal and state income taxes (but not taxes in the nature of an ad
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valorem property tax or a sales or excise tax) paid or accrued by the
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Borrower with respect to such period and actually deducted on the
consolidated books of the Borrower for the purposes of computation of
consolidated Net Income (or consolidated Net Loss, as the case may be) of
the Borrower and its Subsidiaries for such period, plus (3) all interest on
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any Indebtedness paid by the Borrower or any Subsidiary of the Borrower
during such period or accrued by the Borrower or any such Subsidiary for
such period and in each case actually deducted on the consolidated books of
the Borrower for the purposes of computation of consolidated Net Income (or
consolidated Net Loss, as the case may be) of the Borrower and its
Subsidiaries for the period involved.
"EBITDA Available for Debt Service" - As determined for any period,
the result of: (1) the consolidated Net Income (or consolidated Net Loss,
expressed as a negative number) of the Borrower and its Subsidiaries for
such period (excluding from each item of revenue and expense derived from
any Subsidiary which is not wholly-owned a pro rata share thereof
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representing minority interests), plus (2) all federal and state income
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taxes (but not taxes in the nature of an ad valorem property tax or a sales
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or excise tax) paid or accrued by the Borrower with respect to such period
and actually deducted on the consolidated books of the Borrower for the
purposes of computation of consolidated Net Income (or consolidated Net
Loss, as the case may be) of the Borrower and its Subsidiaries for such
period, plus (3) all interest on any Indebtedness paid by the Borrower or
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any Subsidiary of the Borrower during such period or accrued by the
Borrower or any such Subsidiary for such period and in each case actually
deducted on the consolidated books of the Borrower for the purposes of
computation of consolidated Net Income (or consolidated Net Loss, as the
case may be) of the Borrower and its Subsidiaries for the period involved
(excluding, with respect to any interest paid by any of Mass. Mobile
Imaging Venture, Greater Springfield MRI Limited Partnership and MVA
Rehabilitation Associates, a pro rata share thereof representing minority
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interests), plus (4) the amount of the provision for depreciation and/or
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amortization actually deducted on the consolidated books of the Borrower
for the purposes of computation of consolidated Net Income (or consolidated
Net Loss, as the case may be) of the Borrower and its Subsidiaries for such
period (excluding, with respect to any such depreciation and/or
amortization recorded by any of Mass. Mobile Imaging Venture, Greater
Springfield MRI Limited Partnership and MVA Rehabilitation Associates, a
pro rata share thereof representing minority interests), minus (5) the
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amount of all Capital Expenditures made by the Borrower and/or any of its
Subsidiaries during the period involved and not financed as permitted under
Subsection 7.02(a) below (excluding, with respect to any such non-financed
Capital Expenditures which are made by any of Mass. Mobile Imaging Venture,
Greater Springfield MRI Limited Partnership and MVA Rehabilitation
Associates, a pro rata share thereof representing minority interests).
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"ERISA" - See Subsection 6.01(l).
"Eurocurrency Liabilities" - Has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System (or
any successor), as in effect from time to time, or in any successor
regulation relating to the liabilities described in said Regulation D.
"Event of Default" - Any of the events specified in Section 8.01
hereof.
"Federal Funds Effective Rate" As determined for any day, the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day for such
transactions received by the Bank from three Federal funds brokers of
recognized standing selected by the Bank in its discretion.
"Floating Rate Loan" - Any Loan which bears interest at a rate
calculated with reference to the Base Rate.
"Floating Rate Revolving Loan" - Any Revolving Loan which is a
Floating Rate Loan.
"Guaranteeing Subsidiaries" The Subsidiaries listed on Exhibit A
hereto, as well as any other Subsidiaries of the Borrower hereafter created
or acquired.
"Guarantors" Collectively, Advanced NMR and each of the Guaranteeing
Subsidiaries.
"Impositions" - All present and future taxes, levies, duties,
impositions, deductions, charges and withholdings applicable to the Bank
with respect to any LIBOR Loan, excluding, however, any taxes imposed
directly on the Bank's income and any franchise taxes imposed on it by the
jurisdiction under the laws of which the Bank is organized or any political
subdivision thereof.
"Indebtedness" - The total of all obligations of a Person, whether
current or long-term, senior or subordinated, which in accordance with
generally accepted accounting principles would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to
be determined, and shall also include such Person's liability in respect of
guaranties, endorsements (other than for collection in the ordinary course
of business) or other arrangements whereby responsibility is assumed for
the obligations of others, whether by agreement to purchase or otherwise
acquire the obligations of others, including any agreement, contingent or
otherwise, to furnish funds through the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"Interest Payment Date" - As to any LIBOR Loan, the last day of the
Interest Period for such LIBOR Loan; provided, however, that if the
Interest Period for a LIBOR Loan is longer than three months, then there
will be two Interest Payment Dates for such LIBOR Loan, the first being at
the expiration of three months from the date of the making of such LIBOR
Loan and the second being the last day of such Interest Period.
"Interest Period" - As to each LIBOR Loan, the period commencing with
the date of the making of such LIBOR Loan and ending one, two, three or six
months thereafter, as the Borrower may select pursuant to Section 2.08
below; provided that (A) any such Interest Period which would otherwise end
on a day which is not a Business Day shall be extended to the next
succeeding Business Day unless such Business Day occurs in a new calendar
month, in which case such Interest Period shall end on the immediately
preceding Business Day; (B) any such Interest Period which begins on a day
for which there is no numerically corresponding day in the calendar month
during which such Interest Period is to end shall end on the last Business
Day of such calendar month; (C) no Interest Period as to any Revolving Loan
may be selected which would end after the Revolving Expiration Date; and
(D) no Interest Period may be selected as to any portion of the Term Loan
which would end after the date when such portion of the Term Loan becomes
due and payable in accordance with the provisions of the Term Note.
"Inventory" All goods now owned or hereafter acquired by the Borrower
and intended for sale or lease, all raw materials, parts, work-in-process
and finished goods, and all materials and supplies which are used or which
may be used in manufacturing, selling, packing, shipping, advertising or
furnishing of goods, whether now owned or hereafter acquired or created and
wherever located, as well as all proceeds (including, without limitation,
insurance proceeds) and products of any of the foregoing.
"LIBOR" - With respect to each Interest Period, that rate per annum
(rounded upward, if necessary, to the nearest 1/16th of 1%) at which
deposits in United States Dollars are offered to the Bank in the London
interbank market by prime banks (as reasonably determined by the Bank), for
a period coterminous with the term of such Interest Period and in an amount
approximately equal to the principal amount of the LIBOR Loan to which such
Interest Period is to apply, as determined by the Bank on that date which
is two Business Days prior to the first day of the applicable Interest
Period.
"LIBOR Loan" - Any Loan which bears interest at an Adjusted LIBOR
Rate.
"LIBOR Rate Increment" Subject to Section 2.14 below, as to Revolving
Loans 2.5; and (subject to Section 2.14 below) as to all or any portion of
the Term Loan which becomes a LIBOR Loan 3.0.
"LIBOR Rate Revolving Loan" Any Revolving Loan which is a LIBOR Loan.
"Loan" - Any obligation (matured or unmatured) of the Borrower to the
Bank now or hereafter arising under or in respect of this Agreement
(including, without limitation, any Revolving Loan and the Term Loan).
"London" - The City of London in England.
"Material Adverse Effect" Any act, omission or circumstance which
could reasonably be expected to have a material adverse effect on (i) the
business, prospects, affairs, operations or condition of the Borrower and
the Guaranteeing Subsidiaries taken as a whole, or (ii) the ability of the
Borrower to carry out its obligations under this Agreement, the Notes
and/or any of the other documents delivered by the Borrower hereunder or
(iii) the validity or enforceability of this Agreement, the Notes and/or
any of such other documents.
"Measurement Period" See Subsection 7.01(k).
"Merger" The merger of Old MDI with and into ANMR Acquisition Corp.,
the resulting corporation being a wholly-owned Subsidiary of Advanced NMR
which is changing its name to "Medical Diagnostics, Inc.".
"Net Income" (or "Net Loss") - The book net income (or book net loss,
as the case may be) of a Person for any period, after all taxes actually
paid or accrued and all expenses and other charges determined in accordance
with generally accepted accounting principles consistently applied.
"Net Working Capital" The amount by which Current Assets exceed
Current Liabilities.
"Notes" - Collectively, the Revolving Note and the Term Note.
"Obligations" See Section 5.01.
"Officer's Certificate" - A certificate delivered in compliance with
Subsection 4.02(e).
"Old MDI" The former Medical Diagnostics, Inc., a Delaware
corporation, which has been merged into the Borrower pursuant to the
Merger.
"PBGC" - See Subsection 6.01(l).
"Person" - An individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Premises" - All locations now or hereafter owned, leased or operated
by the Borrower or by any Subsidiary of the Borrower.
"Prime Rate" - That rate of interest per annum announced by the Bank,
from time to time, at its Principal Office, as being its prime rate, it
being understood that such rate is merely a reference rate, not necessarily
the lowest, which serves as the basis upon which effective rates of
interest are calculated for obligations making reference thereto.
"Principal Office" - The principal place of business of the Bank, now
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇.
"Receivables" - All of the Borrower's present and future accounts,
accounts receivable and notes, drafts, acceptances and other instruments
representing or evidencing a right to payment for goods sold or for
services rendered.
"Reserve Rate" - The aggregate rate, expressed as a decimal, at which
the Bank would be required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor or
similar regulation relating to such reserve requirements) against
Eurocurrency Liabilities, as well as any other reserve required of the Bank
with respect to the LIBOR Loans. The Adjusted LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Rate.
"Revolving Commitment Amount" - Subject to reduction as provided in
Section 11.05, as determined at any date, that amount by which (x)
$6,000,000 exceeds (y) the sum of (i) all then undrawn amounts of
outstanding letters of credit issued by the Bank for the account of the
Borrower or any Guaranteeing Subsidiary plus (ii) all amounts then drawn on
any such letter of credit which at said date shall not have been reimbursed
to the Bank by the Borrower or such Guaranteeing Subsidiary.
"Revolving Expiration Date" August 31, 1998.
"Revolving Loans" - Loans made by the Bank to the Borrower pursuant to
Section 2.01. Subject to the terms of this Agreement, Revolving Loans may
be Floating Rate Loans or LIBOR Loans.
"Revolving Note" - The $6,000,000 face amount promissory note of the
Borrower in the form of Exhibit B attached hereto.
"Subordinated Debt" - All Indebtedness hereafter incurred by the
Borrower which is fully subordinated to the Loans pursuant to a
subordination agreement in form and substance satisfactory to the Bank.
"Subsidiary" - As to any Person, any corporation or other entity as to
which such Person and/or any of its Subsidiaries, directly or indirectly,
owns, or has the right to control or direct the voting of, fifty (50%)
percent or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances), and
also any other corporation or other entity whose financial results may be
consolidated with those of said Person under generally accepted accounting
principles. The term "Subsidiary" will in any event be deemed to include
the Covenanted Subsidiaries.
"Tangible Net Worth" - An amount equal to the total assets of any
Person (excluding the total intangible assets of such Person) minus the
total liabilities of such Person. Total intangible assets shall be deemed
to include, but shall not be limited to, the excess of cost over book value
of acquired businesses accounted for by the purchase method, formulae,
trademarks, trade names, patents, patent rights and deferred expenses
(including, but not limited to, unamortized debt discount and expense,
organizational expense and experimental and development expenses).
Further, Tangible Net Worth shall expressly exclude (1) any write-up in the
book value of any asset resulting from a revaluation thereof after the date
of this Agreement, (2) earnings or losses attributable to equity interests
in Persons that are not Subsidiaries, unless actually received, (3) the
effect of any changes in the method of accounting and (4) minority
interests in any Subsidiaries which are not wholly-owned.
"Term Loan" The Loan made by the Bank to the Borrower pursuant to
Section 2.05.
"Term Note" The $9,000,000 original principal amount promissory note
of the Borrower in the form of Exhibit C attached hereto.
Section 1.02. Use of Defined Terms. Any defined term used in the
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plural preceded by the definite article shall be taken to encompass all
members of the relevant class. Any defined term used in the singular
preceded by "any" shall be taken to indicate any number of the members of
the relevant class.
Section 1.03. Accounting Terms. All accounting terms not
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specifically defined herein shall be construed in accordance with United
States generally accepted accounting principles consistently applied on the
basis used by the concerned entity (or its corporate predecessor) in prior
years.
ARTICLE II
AMOUNTS AND TERMS OF THE LOANS
Section 2.01. Revolving Loans. Subject to the terms and conditions
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hereinafter set forth, the Bank will make loans under this Section 2.01
("Revolving Loans") to the Borrower at the Principal Office of the Bank on
any Business Day prior to the first to occur of (i) the Expiration Date or
(ii) the earlier termination of the Commitment pursuant to Section 8.02 or
the earlier termination of this Agreement under Section 11.05, in such
amounts as the Borrower may request; provided, however, that the Aggregate
Revolving Loans shall at no time exceed the then-effective Revolving
Commitment Amount. Within such Revolving Commitment Amount, and subject to
the terms and conditions hereof, the Borrower may obtain Revolving Loans,
repay Revolving Loans and obtain Revolving Loans again on one or more
occasions. Each request for a Revolving Loan shall be in a principal
amount of $500,000 or an integral multiple of $100,000 in excess of
$500,000. The Revolving Loans shall be evidenced by the Revolving Note of
the Borrower, dated as of the date hereof, payable to the order of the
Bank. The Borrower hereby irrevocably authorizes the Bank to make or cause
to be made, on a schedule attached to the Revolving Note or on the books of
the Bank, at or following the time of making each Revolving Loan and of
receiving any payment of principal, an appropriate notation reflecting such
transaction and the then aggregate unpaid principal balance of the
Revolving Loans. The unpaid principal amount, as so noted, will constitute
presumptive evidence as to the amount owed by the Borrower with respect to
principal of the Revolving Loans. Failure of the Bank to make any such
notation shall not, however, affect any obligation of the Borrower or right
of the Bank hereunder or under the Revolving Note.
Section 2.02. Request for Floating Rate Revolving Loans. Except as
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otherwise provided below with respect to LIBOR Loans, the Borrower will
give the Bank, prior to 12:00 Noon on the Business Day on which a Revolving
Loan is to be made, written notice specifying the amount and date of each
Revolving Loan requested.
Section 2.03. Repayment of Principal of Revolving Loans. The
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Borrower will repay in full all Revolving Loans and all interest accrued
thereon to the date of payment upon the first to occur of: (i) the
Revolving Expiration Date or (ii) an acceleration under Subsection 8.02(a)
following an Event of Default. Except as provided below with respect to
LIBOR Loans, the Borrower may prepay at any time, without premium or
penalty, the whole or any portion of any Revolving Loan. Each such
prepayment, if less than the Aggregate Revolving Loans then outstanding,
shall be in a principal amount of at least $100,000.
Section 2.04. Interest Payments on Revolving Loans. The Borrower
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will pay interest on the principal amount of the Aggregate Revolving Loans
outstanding from time to time, from the date of the initial Revolving Loan
until payment of all Revolving Loans and the Revolving Note in full.
Interest on Floating Rate Revolving Loans will be payable monthly in
arrears on the first day of each month (commencing with the first such date
after the making of any Revolving Loan). Interest on any LIBOR Rate
Revolving Loan will be payable on the Interest Payment Date or Dates
applicable thereto. In any event, interest shall also be paid on the date
of payment of the Revolving Loans in full. Subject to Section 2.14 below,
interest on Floating Rate Revolving Loans shall be paid at a fluctuating
rate per annum which shall at all times be equal to the sum of (i) one-
quarter of one (0.25%) percent per annum plus (ii) the Base Rate as in
effect from time to time (but in no event in excess of the maximum rate
permitted by then applicable law), with a change in such rate of interest
to become effective on the same day on which any change in the Base Rate is
effective. The rate of interest payable on each LIBOR Rate Revolving Loan
shall be the Adjusted LIBOR Rate applicable thereto. Notwithstanding the
foregoing, after the occurrence and during the continuance of any Event of
Default, interest on all outstanding principal of the Revolving Loans (and,
to the extent permitted by law, on any overdue interest on the Revolving
Loans) shall be payable at a fluctuating rate per annum which at all times
shall be equal to the sum of (i) two (2%) percent per annum plus (ii) the
Base Rate as in effect from time to time (but in no event in excess of the
maximum rate from time to time permitted by then applicable law),
compounded monthly and payable on demand.
Section 2.05. Term Loan. Pursuant to this Agreement, the Bank is
---------
this day making a term loan (the "Term Loan") to the Borrower in the
original principal amount of $9,000,000. The Term Loan is evidenced by the
Term Note. The Borrower hereby irrevocably authorizes the Bank to make or
cause to be made, on a schedule attached to the Term Note or on the books
of the Bank, at or following the time of receiving each payment or
prepayment of principal of the Term Note, an appropriate notation
reflecting such transaction and the then aggregate unpaid principal balance
of the Term Loan. Failure of the Bank to make any such notation shall not,
however, affect any obligation of the Borrower hereunder or under the Term
Note. The aggregate unpaid principal amount of the Term Loan, as recorded
by the Bank from time to time on such schedule or on such books, shall
constitute presumptive evidence of such amount.
Section 2.06. Repayment of Principal of the Term Loan. The Borrower
---------------------------------------
will repay the principal amount of the Term Loan in eighteen consecutive
quarterly installments, each in the amount of $500,000, payable on the last
day of each calendar quarter commencing March 31, 1996 and continuing on
the last day of each calendar quarter thereafter through and including June
30, 2000 when there shall be due and payable an amount equal to all then
unpaid principal of the Term Loan and all accrued interest thereon. Except
as otherwise provided below with respect to so much of the Term Loan as is
then represented by a LIBOR Loan, the Borrower may at its option prepay at
any time, without premium or penalty, the whole or any portion of the Term
Loan; provided that (i) each such optional prepayment, if less than the
entire principal amount of the Term Loan then outstanding, shall be in an
amount of $500,000 or an integral multiple thereof and (ii) each such
prepayment shall be accompanied by payment of all interest on the Term Loan
accrued to the date of such prepayment. Any partial prepayment of
principal of the Term Loan shall be applied to installments of principal of
the Term Loan thereafter coming due in inverse order of normal maturity.
The Borrower shall give not less than 10 Business Days' prior written
notice of any prepayment of the Term Loan.
Section 2.07. Interest Payments on Term Loan. The Borrower will pay
------------------------------
interest on the principal amount of the Term Loan outstanding from time to
time, from the date hereof until payment of the Term Loan and the Term Note
in full. Except as provided below with respect to all or any portion of
the Term Loan which constitutes a LIBOR Loan, such interest will be payable
monthly in arrears on the first day of each month (commencing with
October 1, 1995) and on the date of payment in full of the Term Loan.
Interest on all or any portion of the Term Loan which constitutes a LIBOR
Loan will be payable on the Interest Payment Date or Dates applicable
thereto. Except as provided below with respect to all or any portion of
the Term Loan which constitutes a LIBOR Loan, the rate of interest on the
Term Loan shall, subject to Section 2.14 below, be a fluctuating rate per
annum which shall at all times be equal to the sum of (i) one-half of one
(0.5%) percent per annum plus (ii) the Base Rate as in effect from time to
time (but in no event in excess of the maximum rate permitted by then
applicable law), with a change in such rate of interest to become effective
on the same day on which any change in the Base Rate is effective. The
rate of interest payable on all or any portion of the Term Loan which
constitutes a LIBOR Loan will be the Adjusted LIBOR Rate applicable
thereto. Notwithstanding the foregoing, after the occurrence and during
the continuance of any Event of Default, interest on all outstanding
principal of the Term Loan (and, to the extent permitted by law, on any
overdue interest on the Term Loan) shall be payable at a fluctuating rate
per annum which at all times shall be equal to the sum of (i) two (2%)
percent per annum plus (ii) the Base Rate as in effect from time to time
(but in no event in excess of the maximum rate permitted by then applicable
law), compounded monthly and payable on demand.
Section 2.08. LIBOR Loans. (a) Any Revolving Loan made under this
-----------
Article II will, except as provided in this Section 2.08, be a Floating
Rate Loan. Subject to the conditions set forth in this Agreement, the
Borrower may elect that any Revolving Loan to be made under Section 2.01
will be made as a LIBOR Loan. Such election shall be made by the Borrower
giving to the Bank a written or facsimile notice (a "Fixed Rate Borrowing
Notice") containing the information described below, which Fixed Rate
Borrowing Notice must be received by the Bank not later than 12:00 noon
(New York time) three Business Days prior to the date of the proposed
borrowing. Each Fixed Rate Borrowing Notice must state that a LIBOR Loan
is being requested, specify the amount of the proposed LIBOR Loan requested
and specify the duration of the Interest Period selected for such Revolving
Loan. Any Fixed Rate Borrowing Notice shall, upon receipt by the Bank,
become irrevocable and binding on the Borrower. If the Borrower shall
submit a Fixed Rate Borrowing Notice and shall then fail for any reason to
borrow the LIBOR Loan described therein, the Borrower shall, upon
submission by the Bank of a Bank Certificate with respect thereto,
forthwith indemnify the Bank against any loss or expense incurred by the
Bank as a result of any such failure by the Borrower, including, without
limitation, any loss or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by the Bank to fund or
maintain the requested LIBOR Rate Revolving Loan. Each such LIBOR Rate
Revolving Loan will mature and be due and payable in full on the last day
of the Interest Period applicable thereto. The principal amount of any
such LIBOR Rate Revolving Loan so repaid may be reborrowed as a new LIBOR
Rate Revolving Loan to the extent and on the terms and conditions contained
in this Agreement by delivery to the Bank of a new Fixed Rate Borrowing
Notice conforming to the requirements set forth above in this Section 2.08
or, to the extent and on the terms and conditions contained in this
Agreement, may be reborrowed as a Floating Rate Revolving Loan (and any
LIBOR Rate Revolving Loan not so repaid and not so reborrowed as a new
LIBOR Rate Revolving Loan will be deemed to have been so reborrowed as a
Floating Rate Revolving Loan).
(b) In addition to the foregoing, the Borrower may elect that all or
any portion of the Term Loan (provided that such portion is in the
principal amount of $500,000 or an integral multiple of $100,000 in excess
of $500,000) be converted to a LIBOR Loan. Such election shall be made by
the Borrower giving to the Bank a written or facsimile notice (a "Fixed
Rate Conversion Notice") containing the information described below, which
Fixed Rate Conversion Notice must be received by the Bank not later than
12:00 noon (New York Time) three (3) Business Days prior to the date of the
proposed conversion. Each Fixed Rate Conversion Notice must state that a
conversion to a LIBOR Loan is requested, specify the amount of the relevant
LIBOR Loan and specify the duration of the Interest Period selected. At
the end of any Interest Period applicable to all or any portion of the Term
Loan, the Term Loan (or such portion) shall become a Floating Rate Loan,
subject to the Borrower's right to again convert same to a LIBOR Loan
pursuant to the provisions of this Subsection 2.08(b).
(c) Any request for a LIBOR Rate Revolving Loan and any election to
convert all or any portion of the Term Loan to a LIBOR Loan may be made on
behalf of the Borrower only by a duly authorized officer; provided,
however, that the Bank may conclusively rely upon any written or facsimile
communication received from any individual whom the Bank believes in good
faith to be such a duly authorized officer.
Section 2.09. Commitment Fees. The Borrower will pay to the Bank on
---------------
the last day of each calendar quarter, commencing on September 30, 1995,
and on the Revolving Expiration Date or the date of any earlier termination
of the Commitment, commitment fees ("Commitment Fees") computed in arrears
on the daily average unused portion of the Revolving Commitment Amount
during the calendar quarter then ending. Such Commitment Fees will be
payable, based on such daily average unused portion of the Revolving
Commitment Amount, at the rate of 0.375% per annum, appropriately prorated
for any period of less than a calendar quarter. As used herein, the
"unused portion" of the Revolving Commitment Amount shall mean such unused
portion of such Revolving Commitment Amount as results from the fact either
that the Bank has not for any reason made Revolving Loans up to the
Revolving Commitment Amount or from the fact that the Borrower has repaid
Revolving Loans so as to increase the amount of such unused portion. The
Bank will endeavor to invoice the Borrower for the estimated quarterly
Commitment Fees not less than 15 days prior to each due date.
The closing fee provided for in the Affiliate Guaranty from Advanced
NMR and the Commitment Fees provided for in this Section 2.09 are in
addition to any fees, balances or charges which may be applicable to other
services now or hereafter provided to the Borrower by the Bank or any of
its affiliates.
Section 2.10. Rate Determination Protection. In the event that:
-----------------------------
(i) the Bank shall determine that, by reason of circumstances
affecting the London interbank market or otherwise, adequate and
reasonable methods do not exist for ascertaining LIBOR for any
Interest Period, or
(ii) the Bank shall determine that:
(A) the making or continuation of any LIBOR Loan has been
made impracticable or unlawful by (1) the occurrence of a
contingency that materially and adversely effects the London
interbank market or (2) compliance by the Bank in good faith with
any applicable law or governmental regulation, guideline or order
or interpretation or change thereof by any governmental authority
charged with the interpretation or administration thereof or with
any request or directive of any such governmental authority
(whether or not having the force of law); or
(B) LIBOR will not adequately and fairly reflect the cost
to the Bank of funding its LIBOR Loans for such Interest Period
then the Bank shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower) to the Borrower. In such
event the Borrower shall forthwith repay all outstanding LIBOR Loans and
the obligation of the Bank to make LIBOR Loans shall be suspended until the
Bank determines that the circumstances giving rise to such suspension no
longer exist, whereupon the Bank shall notify the Borrower.
Section 2.11. Prepayment of LIBOR Loans. The following provisions
-------------------------
shall be effective as to any LIBOR Loan: If, due to acceleration of the
maturity of the Notes or due to optional prepayment or for any other
reason, the Bank receives payment of any installment of principal of any
LIBOR Loan on any date prior to the last day of the then-current Interest
Period applicable thereto, the Borrower shall, upon demand and receipt of a
Bank Certificate from the Bank with respect thereto, pay forthwith to the
Bank any amounts required to compensate the Bank for any losses, costs or
expenses which it may have incurred and may reasonably incur as a result of
such payment, including, without limitation, any loss or expense incurred
by reason of the liquidation or redeployment of funds acquired by the Bank
to fund or maintain such LIBOR Loan.
Section 2.12. Increased Costs; Capital Adequacy.
---------------------------------
(a) If the adoption or effectiveness, after the date hereof, of any
applicable law, rule or regulation, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:
(i) shall subject the Bank to any Imposition or other charge with
respect to any LIBOR Loan or its obligation to make LIBOR Loans, or
shall change the basis of taxation of payments to the Bank of the
principal of or interest on any LIBOR Loan or any other amounts due
under this Agreement in respect of any LIBOR Loan or the Bank's
obligation to make LIBOR Loans (except for changes in the rate of
taxation on the overall net income of the Bank imposed by the
jurisdiction in which the Bank's Principal Office is located); or
(ii) shall impose, modify or deem applicable any reserve, special
deposit, deposit insurance or similar requirement (including, without
limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System, but excluding any such requirement already
included in the applicable Reserve Rate) against assets of, deposits
with or for the account of, or credit extended by, the Bank or shall
impose on the Bank or on the London interbank market any other
condition affecting any LIBOR Loan or the Bank's obligation to make
LIBOR Loans
and the result of any of the foregoing is to increase the cost to the Bank
of making or maintaining any LIBOR Loan, or to reduce the amount of any sum
received or receivable by the Bank under this Agreement or under any Note
with respect thereto, by an amount deemed by the Bank to be material, then,
upon demand by the Bank and receipt of a Bank Certificate from the Bank
with respect thereto, the Borrower shall pay forthwith to the Bank such
additional amount or amounts as will compensate the Bank for such increased
cost or reduction in receipts.
(b) If the Bank shall have determined that the adoption,
effectiveness or phase-in after the date hereof of any applicable law, rule
or regulation regarding capital requirements for banks or bank holding
companies, or any change therein after the date hereof, or any change after
the date hereof in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with
any request or directive of such entity regarding capital adequacy (whether
or not having the force of law) has or would have the effect of reducing
the return on the Bank's capital with respect to its Commitment or any
Loans (whether in respect of Floating Rate Loans or LIBOR Loans) to a level
below that which the Bank could have achieved (taking into consideration
the Bank's policies with respect to capital adequacy immediately before
such adoption, effectiveness, phase-in, change or compliance and assuming
that the Bank's capital was then fully utilized) by any amount deemed by
the Bank to be material: (i) the Bank shall promptly after its
determination of such occurrence give notice thereof to the Borrower; and
(ii) the Borrower shall pay to the Bank as an additional fee from time to
time on demand such amount as the Bank certifies to be the amount that will
compensate it for such reduction. A certificate of the Bank claiming
compensation under this Section shall be conclusive in the absence of
manifest error. Such certificate shall set forth the nature of the
occurrence giving rise to such compensation, the additional amount or
amounts to be paid to it hereunder and the method by which such amounts
were determined. In determining such amount, the Bank may use any
reasonable averaging and attribution methods.
(c) No failure on the part of the Bank to demand compensation on any
one occasion shall constitute a waiver of its right to demand such
compensation on any other occasion and no failure on the part of the Bank
to deliver any Bank Certificate in a timely manner shall in any way reduce
any obligation of the Borrower to the Bank under this Section 2.12.
Section 2.13. Illegality or Impossibility. Notwithstanding any other
---------------------------
provision of this Agreement, if the introduction of or any change in or in
the interpretation or administration of any law or regulation applicable to
the Bank or the Bank's activities in the London interbank market shall make
it unlawful, or any central bank or other governmental authority having
jurisdiction over the Bank or the Bank's activities in the London interbank
market shall assert that it is unlawful, or otherwise make it impossible,
for the Bank to perform its obligations hereunder to make LIBOR Loans or to
continue to fund or maintain LIBOR Loans, then on notice thereof and demand
therefor by the Bank to the Borrower, (i) the obligation of the Bank to
fund LIBOR Loans shall terminate and (ii) the Borrower shall within five
(5) Business Days after the Bank gives such notice prepay in full all
affected LIBOR Loans.
Section 2.14. Rate Adjustment. If for any Measurement Period (as
---------------
defined in Subsection 7.01(k) below) ending December 31, 1995, March 31,
1996, June 30, 1996, September 30, 1996, December 31, 1996 or March 31,
1997, the Borrower fails to achieve a Debt Service Coverage Ratio of at
least 1.2 to 1 (the "Target Coverage Ratio"), the Borrower will pay to the
Bank, as additional interest, an amount equal to the difference between (x)
the interest which would have been payable on the Loans outstanding for
such fiscal quarter at the Increased Rate (hereinafter defined) and (y) the
interest actually paid on such outstanding Loans for such fiscal quarter.
Such additional interest will be paid within 45 days after the end of the
fiscal quarter to which it relates (or, in the case of the fiscal quarter
ending September 30, 1996, within 90 days after the end of such fiscal
quarter or, in the case of all fiscal quarters, within such longer period
as may be permitted by Subsections 7.03(b) and (c) with respect to the
furnishing of financial statements). If the Borrower fails to submit to
the Bank timely quarterly financial statements complying with the
provisions of Subsection 7.03(a) for any of the aforesaid fiscal quarters
(or, in the case of the fiscal quarter ending September 30, 1996, timely
consolidating financial statements complying with the provisions of
Subsection 7.03(c) for the fiscal year then ending, containing separate
information for said fiscal quarter ending September 30, 1996 in such
detail as is reasonably satisfactory to the Bank), the Borrower will be
deemed to have failed to achieve the Target Coverage Ratio for such fiscal
quarter. As used herein, (1) the Increased Rate for any Floating Rate
Revolving Loan will be deemed to be a fluctuating rate per annum equal to
the sum of (i) 0.65% per annum plus (ii) the Base Rate as in effect from
time to time; (2) the Increased Rate for all or any portion of the Term
Loan which constitutes a Floating Rate Loan will be deemed to be a
fluctuating rate per annum equal to the sum of (i) 0.90% per annum plus
(ii) the Base Rate in effect from time to time; and (3) the Increased Rate
for any LIBOR Loan will be determined by applying the formula for "Adjusted
LIBOR Rate" set forth in Section 1.01 above, except that for this purpose
the LIBOR Rate Increment for the purposes of Revolving Loans will be deemed
to be 2.9 and the LIBOR Rate Increment the purposes of the Term Loan will
be deemed to be 3.4.
Section 2.15. Letters of Credit. At the Borrower's request, the Bank
-----------------
may, from time to time, in its sole discretion issue one or more letters of
credit for the account of the Borrower or any Guaranteeing Subsidiary;
provided that at the time of each such issuance and after giving effect
thereto (x) the sum of (i) the Aggregate Revolving Loans, plus (ii) the
stated amount of such letter of credit to be so issued, plus (iii) the
undrawn amounts of all other letters of credit then outstanding issued by
the Bank for the account of the Borrower or any Guaranteeing Subsidiary,
plus (iv) all amounts then drawn on any such letter of credit which at that
date shall not have been reimbursed to the Bank by the Borrower will in no
event exceed (y) $6,000,000 (as such number may be reduced pursuant to
Section 11.05). Any such letter of credit will be issued for such fee and
upon such terms and conditions as may be agreed to by the Bank and the
Borrower at the time of issuance. If any such letter of credit is issued
for the account of a Guaranteeing Subsidiary, the Borrower will deliver to
the Bank a guaranty of such Subsidiary's liability to the Bank, such
Guaranty to be satisfactory in form and substance to the Bank. The
Borrower hereby authorizes the Bank, without further request from the
Borrower, to cause the Borrower's liability to the Bank for reimbursement
of funds drawn under any such letter of credit or in respect of any such
guaranty to be repaid from the proceeds of a Revolving Loan to be made
hereunder. The Borrower hereby irrevocably requests that such Revolving
Loans be made.
ARTICLE III
LOAN PROCEEDS AND PAYMENTS
Section 3.01. Availability. The proceeds of all Revolving Loans and
------------
the Term Loan shall be credited by the Bank to a general deposit account
maintained by the Borrower with the Bank or otherwise as the Borrower may
direct in writing.
Section 3.02. Payment Notices. Without limitation of the Bank's
---------------
rights under Section 8.03 in case of an Event of Default, the Bank will
endeavor to provide the Borrower with an appropriate invoice (which may be
estimated) not less than 15 days prior to the due date of any payment of
interest, principal and/or Commitment Fees under this Agreement and/or any
Note. The failure of the Bank to provide any such invoice shall not affect
the obligation of the Borrower to pay when due interest, principal and all
other sums as provided in this Agreement and/or in any Note.
Section 3.03. Use of Loan Proceeds. The proceeds of the Revolving
--------------------
Loans will be used solely for repayment of existing debt owed to Fleet Bank
of Massachusetts, N.A., for amounts due and expenses incurred in
conjunction with the Merger and for working capital purposes of the
Borrower and its Affiliates. The proceeds of the Term Loan will be used
for the corporate purposes of the Borrower and its Affiliates.
Section 3.04. Payments. Except as otherwise provided in Sections
--------
3.02 and 8.03, all payments of interest, principal and any other sum
payable hereunder and/or under any Note shall be made to the Bank at its
Principal Office in immediately available funds. All payments received by
the Bank after 2:00 p.m. on any day shall be deemed received as of the next
succeeding Business Day. All monies received by the Bank hereunder shall
be applied first to fees, charges, costs and expenses payable to the Bank
under this Agreement, next to interest then accrued on account of the Loans
and only thereafter to principal of the Loans (except that if no Event of
Default has occurred and is continuing, the Borrower may designate that
monies be applied in a different order; provided that in any event any
partial prepayments of principal of the Term Loan will be applied to
principal payments thereafter coming due in inverse order of normal
maturity). All interest and fees payable under this Agreement and/or any
Note shall be computed on the basis of a year of 360 days for the number of
days actually elapsed.
Section 3.05. Payment on Non-Business Days. Whenever any payment to
----------------------------
be made hereunder or under any of the Notes shall be stated to be due on a
day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and interest payable on each such date shall
include the amount thereof which shall accrue during the period of such
extension of time.
Section 3.06. Net Payments. All payments by the Borrower hereunder
------------
and/or in respect of any Note shall be made without deduction, set-off or
counterclaim, notwithstanding any claim which the Borrower may now or at
any time hereafter have against the Bank.
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. Conditions Precedent to Initial Loan. Prior to the
------------------------------------
initial Loan hereunder, the Borrower shall deliver to the Bank duly
executed copies of this Agreement and the Notes, and shall also deliver to
the Bank the documents enumerated below in this Section 4.01, all of which,
as well as all legal matters incident to the transactions contemplated
hereby, shall be reasonably satisfactory in form and substance to the Bank
and its counsel:
(a) Certified copies of the resolutions of the Board of Directors
(and, if necessary, the stockholders) of the Borrower evidencing approval
of this Agreement, the Notes and the other matters contemplated hereby and
thereby and certified copies of all documents evidencing other necessary
corporate action or approvals, if any, with respect to this Agreement, the
Notes and such other matters, including, without limitation, any required
approvals of governmental authorities and other Persons.
(b) A certificate, signed by the Secretary of the Borrower, setting
forth the names and titles of the officers of the Borrower authorized to
sign this Agreement, the Notes and any and all other agreements,
certificates, notices and reports referred to herein; such certificate
shall contain the true signatures of such officers and shall state that the
Bank may conclusively rely on the statements made therein until the Bank
shall receive a further certificate of such Secretary cancelling or
amending the prior certificate and submitting signatures of the officers
named in such further certificate.
(c) A copy of the Charter of the Borrower and all amendments thereto
certified by the Secretary of State of Delaware; a copy of the by-laws of
the Borrower, as amended to date, as certified by its Secretary; a
certificate of legal existence and good standing (including franchise tax
good standing) for the Borrower in Delaware; and certificates of the
appropriate state officials and agencies in Massachusetts and in all other
jurisdictions in which the Borrower owns, leases or operates any real or
personal property and in each other jurisdiction in which the Borrower is
required to qualify to do business, in each case attesting as to the
Borrower's qualification and good standing (including tax good standing) in
each such jurisdiction.
(d) A favorable written opinion of counsel to the Borrower and each
Guarantor, in form and substance satisfactory to the Bank.
(e) An Affiliate Guaranty, executed by each Guarantor.
(f) Certified copies of the resolutions of the respective Board of
Directors (and, if necessary, the stockholders) of each Guarantor
evidencing approval of its respective Affiliate Guaranty and the other
matters contemplated hereby and thereby and certified copies of all
documents evidencing other necessary corporate action or approvals, if any,
with respect to such Affiliate Guaranty and such other matters, including,
without limitation, any required approvals of governmental authorities and
other Persons.
(g) A certificate, signed by the Clerk or Secretary of each
Guarantor, setting forth the names and titles of the officers of such
Guarantor authorized to sign its respective Affiliate Guaranty and any
certificates, notices and reports referred to herein or therein; such
certificate shall contain the true signatures of such officers and shall
state that the Bank may conclusively rely on the statements made therein
until the Bank shall receive a further certificate of such Clerk or
Secretary cancelling or amending the prior certificate and submitting
signatures of the officers named in such further certificate.
(h) A copy of the Charter of each Guarantor and all amendments
thereto, certified by the secretary of state of such Guarantor's
jurisdiction of incorporation; a copy of the by-laws of each Guarantor, as
amended to date, as certified by its Clerk or Secretary; certificates of
legal existence and good standing (including tax good standing) for each
Guarantor in its jurisdiction of incorporation, and certificates of
qualification and good standing for each Guarantor from the appropriate
state officials and agencies in all other jurisdictions where such
Guarantor owns, leases or operates any real or personal property and in
each other jurisdiction in which such Guarantor is required to qualify to
do business, in each case attesting as to such Guarantor's qualification
and good standing (including tax good standing) in each such jurisdiction.
(i) A pledge by Advanced NMR of the stock of AMS owned by Advanced
NMR (other than shares of AMS held in escrow; provided, however, that
shares of AMS released from escrow shall become subject to the pledge);
pledges by the Borrower of the stock of each of the Covenanted Subsidiaries
other than Western Massachusetts Magnetic Resonance Services, Inc., Mobile
MRI of Western Massachusetts, Inc. and Greater Springfield MRI, Inc.; and
pledges by the Borrower and/or the relevant Subsidiaries of the partnership
interests owned by the Borrower and/or any such Subsidiary in each of
Greater Boston MRI Limited Partnership and MVA Rehabilitation Associates.
Stock pledges will be accompanied by the relevant stock certificates and
appropriate stock powers endorsed in blank. The Borrower and or any
relevant Subsidiaries shall execute a pledge of the partnership interests
owned by the Borrower or any such Subsidiaries in Merrimack Scanning
Associates if Merrimack Scanning Associates does not wind up its businesses
prior to March 31, 1996.
(j) Uniform Commercial Code Financing Statements and all such other
documents as shall be necessary or desirable to vest in the Bank a first
priority interest in and to all of the Collateral, and evidence of all
filings, recordations (including, without limitation, recordations with the
United States Patent and Trademark Office, the United States Copyright
Office and the Massachusetts Department of Motor Vehicles, if necessary)
and other actions necessary or desirable to perfect fully the Bank's
security interests.
(k) Such documents which, in the opinion of the Bank, are required to
be obtained in connection with the Loans by reason of the provisions of any
law or regulation applicable to the Bank, and the statements made in such
documents shall be such as, in the opinion of the Bank, will permit such
Loans from the Bank in accordance with such laws and regulations.
(l) Financial statements of Advanced NMR as at December 31, 1994 and
for the fiscal year then ended, certified by the independent certified
public accountants of Advanced NMR, together with financial statements of
Old MDI as at September 30, 1994 and for the fiscal year then ended,
certified by the independent certified public accountants of Old MDI.
(m) Interim financial statements for each of Old MDI and Advanced NMR
as at June 30, 1995, together with the opening balance sheets of the
Borrower giving effect to the Merger, all of same to be satisfactory to the
Bank in presentation and as to the financial results presented.
(n) Certificates of the insurance (including, without limitation,
professional liability insurance) required by this Agreement and/or the
Affiliate Guaranties.
(o) An Officer's Certificate dated the date of such initial Loan,
affirming compliance with the conditions of Subsections 4.02(a)-(d).
(p) A certificate executed by the chief financial officer of the
Borrower, dated the date of such initial Loan, demonstrating compliance
with each of Subsections 7.01(m), 7.01(n), 7.01(p), 7.01(q) and 7.01(r).
(q) All such releases and terminations which may be necessary so that
the Bank receives a first priority lien on all of the Collateral.
(r) Evidence reasonably satisfactory to the Bank that the Borrower,
Advanced NMR and the other Guarantors are in compliance with all material
federal, state and local laws, rules and regulations (including, without
limitation, ERISA).
(s) Evidence of consummation of the Merger.
(t) Copies of all capitalized leases to which the Borrower, any
Subsidiary of the Borrower or Advanced NMR is a party.
(u) Copies of all partnership agreements to which the Borrower or any
of its Subsidiaries is a party.
(v) Copies of all employment and compensation agreements with
executive officers to which the Borrower is a party.
(w) Evidence satisfactory to the Bank that the Borrower has obtained
the rate protection required by Subsection 7.01(t).
(x) Such other documents, instruments, records, assignments,
consents, certificates, opinions, assurances and authorizations as the Bank
may shall reasonably require.
Section 4.02. Conditions Precedent to All Loans. The obligation of
---------------------------------
the Bank to make any Loan (including the initial Loan) or to issue any
letter of credit hereunder is subject to the further conditions precedent
that on the date on which such Loan is made or such letter of credit is
issued (and after giving effect thereto):
(a) The statements, representations and warranties of the Borrower
made in this Agreement and the statements, representations and warranties
of each Guarantor made in its respective Affiliate Guaranty shall continue
to be correct in all material respects as of the date of such Loan or such
letter of credit issuance, as the case may be.
(b) The covenants and agreements of the Borrower contained herein and
the covenants and agreements of each Guarantor contained in its respective
Affiliate Guaranty shall have been complied with in all material respects
on and as of the date of such Loan or such letter of credit issuance, as
the case may be.
(c) No Default or Event of Default shall have occurred and be
continuing.
(d) No material adverse change shall have occurred in the financial
condition of the Borrower or any Guarantor from that disclosed in the
financial statements for such entity most recently furnished to the Bank.
Each request for a Loan or for the issuance of any letter of credit
and each acceptance by the Borrower of the proceeds of any Loan shall be
deemed to constitute the representation of the Borrower that all of the
foregoing conditions of this Section 4.02 are true and correct as of the
date of such Loan or such letter of credit issuance, as the case may be.
ARTICLE V
SECURITY
Section 5.01. Grant of Security Interest. As security for the
--------------------------
repayment of the principal amount of the Loans and the interest thereon,
and also for the prompt and full payment and performance of any and every
other liability and obligation of the Borrower to the Bank, whether arising
out of this Agreement or otherwise (including, without limitation, all
reimbursement obligations with respect to any letters of credit issued
hereunder), whether otherwise secured or unsecured, direct or indirect,
absolute or contingent, primary or secondary, due or to become due, and all
whether now or hereafter existing or arising (all of the foregoing being
collectively referred to as the "Obligations"), the Borrower does hereby
pledge, grant, assign and transfer to the Bank, and grant to the Bank a
security interest in and to, all of the following property of the Borrower,
all whether now owned or existing or hereafter acquired or arising:
(a) all equipment, fixtures, furnishings, furniture, motor vehicles
and machinery of the Borrower (but excepting (i) any personal automobiles,
(ii) all items of computer equipment leased at the date hereof from Fleet
Bank of Massachusetts, N.A. and listed on Exhibit D hereto and (iii) those
items of equipment which are described on Exhibit D hereto), wherever
located, whether now owned or hereafter acquired, whether affixed or
moveable, and all replacements of, substitutions for and accessions to any
of same and all products and proceeds (including, without limitation,
insurance proceeds) of any of the foregoing;
(b) all Receivables of the Borrower;
(c) all contract rights of the Borrower, including, without
limitation, licenses, employment agreements, any non-competition agreements
for the benefit of the Borrower, and all leases and occupancy agreements;
all obligations owing to the Borrower of every kind and nature; and all tax
refunds of every kind and nature, including, without limitation, loss
carryback refunds; and all of the foregoing whether now existing or
hereafter acquired or arising;
(d) all of the Borrower's Inventory;
(e) all of the Borrower's general intangibles, choses in action,
chattel paper, insurance policies, deposits, deposit accounts, money, cash,
documents and instruments (whether negotiable or non-negotiable and
regardless of attachment to chattel paper), whether arising out of,
relating to or evidencing all or any of the foregoing Collateral or
otherwise, and all whether now existing or hereafter acquired or arising;
(f) all goodwill, trade secrets, formulae, customer lists, trade
names, trademarks, copyrights, patents and licenses (including, without
limitation, the trademarks, copyrights, patents and licenses listed on
Exhibit E hereto) and all files, records (including, without limitation,
computer programs, tapes and related electronic data processing software)
and writings, whether now owned or hereafter acquired; and
(g) all liens, guaranties, securities, rights, remedies and
privileges pertaining to, and all products and proceeds (including, without
limitation, insurance proceeds) of, and all accessions to, any of the
foregoing.
Section 5.02. Pledges; Further Grants of Security. The pledges
-----------------------------------
described in Subsection 4.01(i) are being delivered this date to the Bank
by the Borrower and the Guaranteeing Subsidiaries as further security for
the Obligations. The Borrower represents that at the date hereof, due to
various contractual relationships with unrelated third parties, (i) the
Borrower is not able to pledge to the Bank the stock of Western
Massachusetts Magnetic Resonance Services, Inc. ("WMMRSI"), (ii) WMMRSI is
not able to pledge to the Bank its partnership interests in Greater
Springfield MRI Limited Partnership ("GSMRI"), (iii) the Borrower is not
able to pledge to the Bank its partnership interests in Mass. Mobile
Imaging Venture ("MMIV"), (iv) the Borrower is not able to cause MMIV to
grant a security interest in its assets to the Bank, (v) the Borrower is
not able to cause GSMRI to grant a security interest in its assets to the
Bank, (vi) the Borrower is not able to cause MVA Rehabilitation Associates
to grant a security interest in its assets to the Bank, (vii) the Borrower
is not able to cause Merrimack Scanning Associates to grant a security
interest in its assets to the Bank, [(viii) Greater Springfield MRI, Inc.
is not able to grant a security interest in its assets (including, without
limitation, its partnership interest in Mobile MRI of Western Massachusetts
Associates) to the Bank, (ix) Mobile MRI of Western Mass., Inc. is not able
to grant a security interest in its assets (including, without limitation,
its partnership interest in Mobile MRI of Western Massachusetts Associates)
to the Bank and (x) the Borrower is not able to cause Mobile MRI of Western
Massachusetts Associates to grant a security interest in its assets to the
Bank]. The Borrower contemplates that in the future some or all of the
foregoing restrictions may lapse. Promptly (and in any event within 30
days) after any such restriction lapses, the Borrower will execute and
deliver pledges to the Bank (or cause each relevant Subsidiary entity to
pledge and/or grant a security to the Bank) so that to the maximum extent
legally permissible at any time the Bank will hold a fully perfected pledge
of and security interest in all assets of the Borrower and each such
Subsidiary entity.
The Borrower is presently not able to grant to the Bank a security
interest in those items of equipment which are listed on Exhibit D hereto,
due to prohibitions on junior liens contained in the financing arrangements
for said units in effect at the date hereof. If the presently existing
financing for any such items of equipment is paid or prepaid and the
Borrower retains any such items of equipment, the Borrower will grant to
the Bank (and will deliver to Bank all documentation necessary to provide)
a fully perfected first priority security interest in each such item.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01. Representations and Warranties. As an inducement to
------------------------------
the Bank to execute this Agreement and to make Loans hereunder to the
Borrower and/or issue letters of credit for the account of the Borrower,
the Borrower hereby represents and warrants to the Bank as follows:
(a) The Borrower is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has the corporate power
and authority to enter into and perform this Agreement, to execute and
deliver the Notes, to grant the security interests described in Article V,
to enter into and perform all obligations required of the Borrower by all
other instruments and other documents referred to herein to which it is a
party, to fulfill its obligations set forth herein and therein and to carry
out the transactions contemplated hereby and thereby. The Borrower has all
requisite corporate power to own and operate its properties and to carry on
its business as now conducted and as proposed to be conducted and is duly
qualified to do business and in good standing in Massachusetts and in each
other jurisdiction where the Borrower owns, leases or operates any real or
personal property and in each other jurisdiction where the failure so to be
qualified could (singly or in the aggregate with all such other failures to
be qualified) have a Material Adverse Effect. At the date of this
Agreement, except as set forth on Exhibit F hereto, the Borrower has no
Subsidiaries and is not a member of any partnership or joint venture. The
names and respective jurisdictions of incorporation of all of the
Borrower's Subsidiaries and the respective stock ownership (or ownership of
partnership interests, as the case may be) in each of them is set forth on
Exhibit F hereto, together with a description of each such partnership and
joint venture.
(b) All of the issued and outstanding shares of capital stock of the
Borrower are being acquired at this date, of record and beneficially, by
Advanced NMR. There are no outstanding rights, options, warrants,
conversion rights or agreements or commitments of any kind relating to the
aforesaid shares or to the authorized and unissued or treasury stock of the
Borrower.
(c) The execution, delivery and performance of this Agreement, the
Notes and the other documents required to be executed by the Borrower
pursuant hereto have been duly authorized by all necessary corporate
action, will not require the consent of any third party, and will not
conflict with, violate the provisions of, or cause a default or constitute
an event which, with the passage of time or the giving of notice or both,
could constitute a default on the part of the Borrower under any contract,
agreement, law, rule, order, ordinance, franchise, instrument or other
document or under any provision of the Charter or by-laws of the Borrower,
or result in the imposition of any lien or encumbrance on any property or
assets of the Borrower, other than in favor of the Bank. This Agreement
and the other documents delivered to the Bank by the Borrower pursuant
hereto (including, without limitation, the Notes) are the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, in each case except as such enforceability may be limited
by: (i) the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the rights and remedies of creditors generally
or (ii) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law.
(d) Except as disclosed on Exhibit G hereto, there are no actions,
suits, proceedings or investigations pending or, to the knowledge of the
Borrower, threatened (nor, to the knowledge of the Borrower, is there any
basis therefor) against or affecting the Borrower or any of its
Subsidiaries by or before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, which could
prevent or hinder the consummation of the transactions contemplated hereby
or call into question the validity of this Agreement, any Note or any other
instrument provided for or contemplated by this Agreement or any action
taken or to be taken in connection with the transactions contemplated
hereby or thereby, nor are there any such actions, suits, proceedings or
investigations pending or, to the knowledge of the Borrower, threatened,
anticipated or contemplated which, if determined adversely to the Borrower
or any of its Subsidiaries, in any single case or in the aggregate, could
have a Material Adverse Effect.
(e) Except as otherwise disclosed on Exhibit H hereto, neither the
Borrower nor any of its Subsidiaries is in violation of any term of its
Charter or by-laws, as now in effect, nor in violation of any term of any
mortgage, indenture, judgment, decree or order, any other instrument,
contract or agreement or of any term of any administrative determination,
failure to comply with which, singly or in the aggregate with all such
other failures, could have a Material Adverse Effect.
(f) The Borrower and each of its Subsidiaries has filed proper and
accurate federal, foreign, state and local tax returns, reports and
estimates for all years and periods for which any such returns, reports or
estimates were required to be filed and has paid all taxes, assessments,
impositions, fees and other governmental charges required to be paid in
respect of the periods covered by any such returns, reports or estimates,
other than any such taxes, assessments, impositions, fees and charges which
the Borrower is contesting in good faith by appropriate proceedings which
serve as a matter of law to stay the enforcement of any remedy of the
relevant taxing authority and as to which adequate reserves have been
established. Neither the Borrower nor any of its Subsidiaries is
delinquent in the payment of any tax, assessment or governmental charge,
and no deficiencies for any tax, assessment or governmental charge have
been asserted or assessed, and the Borrower knows of no material
governmental liability or basis therefor for which adequate reserves have
not been established.
(g) The Borrower and each of its Subsidiaries is in compliance with
all requirements of law, federal, state and local, and all requirements of
all governmental bodies or agencies having jurisdiction over any such
Person, the conduct of its business, the use of its properties and assets
and all Premises occupied by it, failure to comply with which could, singly
or in the aggregate with all other such failures, have a Material Adverse
Effect. Without limiting the foregoing, the Borrower and each of its
Subsidiaries has all the required franchises, licenses, permits,
certificates and authorizations needed for the conduct of its business and
the use of its properties and all premises occupied by it, as now
conducted, owned and used or as proposed to be conducted, owned and used,
including, without limitation, all of the determinations of need and
"physician notices of intent" needed for the operation of the MRI units
currently operated by the Borrower or any such Subsidiary (all such
Determinations of Need and physician notices of intent being listed on
Exhibit I hereto); provided that no representation is made herein as to any
such franchise, license, permit, certificate or authorization if the
failure to have same could not, singly or in the aggregate with all other
such failures, have a Material Adverse Effect. Neither the Borrower nor
any such Subsidiary has received any notice not heretofore complied with
from any federal, state or local authority or any insurance or inspection
body that any of its properties, facilities, equipment or business
procedures or practices fails to comply in any material respect with any
applicable law, ordinance, regulation, building or zoning law or any other
requirement of any such authority or body. No authorization, consent,
approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to the valid
execution or delivery of, or for the performance by the Borrower of any of
its obligations under, this Agreement, any Note or any other instrument
provided for or contemplated by this Agreement.
(h) Neither the Borrower nor any of its Subsidiaries is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of the Board of Governors
of the Federal Reserve System), and no part of the proceeds of any Loan
will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin stock or in any
other manner which would involve a violation of any of the regulations of
the Board of Governors of the Federal Reserve System. The Borrower and
each of its Subsidiaries is primarily engaged in the business of the
management, ownership, operation, lease and sale of medical equipment and
mobile medical equipment; the provision of management services within the
healthcare industry including, but not limited to, business advisory
services, billing and collection services, scheduling, transcription,
legal, finance, personal consulting, personnel consulting and placement
services; and the ownership and operation of medical service businesses.
The Borrower is not an "investment company" nor the "affiliate" of an
"investment company", as such terms are defined in the Investment Company
Act of 1940.
(i) The Borrower and each Subsidiary of the Borrower has good and
marketable title to all assets now carried on its books, including those
reflected in its financial statements referred to in Subsection 6.01(j) or
acquired since the date of such statements, free of any mortgages, pledges,
charges, liens, security interests or other encumbrances, except as
permitted under Subsection 7.02(b). The Borrower and each Subsidiary of
the Borrower enjoys peaceful and undisturbed possession under all material
leases under which it is operating, and all of such leases are valid and
subsisting and in full force and effect.
(j) The financial statements of Old MDI for its fiscal year ended
September 30, 1994 and for the fiscal quarters ended December 31, 1994,
March 31, 1995 and June 30, 1995, each heretofore delivered to the Bank,
fairly present the consolidated financial condition of Old MDI as at the
dates thereof and for the periods covered thereby, subject, as to interim
statements, to normal year-end audit adjustment (which is not expected to
be material) and to the absence of footnotes. Said financial statements
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the relevant periods, subject,
as to interim statements, to normal year-end audit adjustment (which is not
expected to be material) and to the absence of footnotes. The pro forma
--- -----
opening balance sheet giving effect to the Merger, heretofore delivered to
the Bank, fairly presents the pro forma financial condition of the Borrower
--- -----
at the date hereof. Neither the Borrower nor any of its Subsidiaries has
any liability, contingent or otherwise, not disclosed in the aforesaid
financial statements or in any notes thereto that could materially
adversely affect the financial condition of the Borrower. The following
representations are true at the date hereof and shall be true at the date
of each Loan, in each case since the date of the most recently delivered
financial statements: (i) except as otherwise previously disclosed to the
Bank in writing, there has been no material adverse change in the business,
assets or condition, financial or otherwise, of the Borrower or of any of
its Subsidiaries or of any Guarantor; (ii) except as otherwise previously
disclosed to the Bank in writing, neither the business, condition or
operations of the Borrower or of any of its Subsidiaries or of any
Guarantor nor any of their respective properties or assets have been
materially adversely affected as the result of any legislative or
regulatory change, any revocation or change in any franchise, license or
right to do business, or any other event or occurrence, whether or not
insured against; (iii) except as otherwise previously disclosed in writing
to the Bank, neither the Borrower nor any of its Subsidiaries nor any
Guarantor has experienced any material controversy or problem with its
employees or with any labor organization; and (iv) except as otherwise
previously disclosed in writing to the Bank (including disclosure as to the
Merger), neither the Borrower nor any of its Subsidiaries nor any Guarantor
has entered into any material transaction other than in the ordinary course
of its business.
(k) The Borrower and each of its Subsidiaries owns or has a valid
right to use all of the patents, licenses, copyrights, trademarks, service
marks, trade names and franchises ("Intellectual Property") now being used
or necessary to conduct its business, all of which are described on
Exhibit D hereto (including, in each case, the owner of such Intellectual
Property). None of the Intellectual Property owned by the Borrower or any
Subsidiary of the Borrower is represented by a registered patent,
copyright, trademark or other federal or state registration, except as set
forth on Exhibit E hereto. The conduct of the respective businesses of the
Borrower and its Subsidiaries, as now operated, does not conflict with
valid patents, licenses, copyrights, trademarks, service marks, trade names
or franchises of others in any manner that could have a Material Adverse
Effect.
(l) No employee pension benefit plan maintained by the Borrower or
any Subsidiary of the Borrower or in which employees of the Borrower or any
Subsidiary of the Borrower participate has any accumulated funding
deficiency within the meaning of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), nor does the Borrower or any Subsidiary
of the Borrower have any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under ERISA (or any successor thereto) in
connection with any employee pension benefit plan (or other class of
benefit which the PBGC has elected to insure), and there have been no
"reportable events" or "prohibited transactions" with respect to any such
plan, as those terms are defined in Section 4043 of ERISA and Section 4975
of the Internal Revenue Code of 1986, as amended, respectively. Except as
listed on Exhibit J hereto, neither the Borrower nor any Subsidiary of the
Borrower maintains any profit-sharing, retirement, deferred compensation,
ESOT, stock bonus, stock option or similar benefit plan for any officers or
employees. Said Exhibit J also sets forth all employment agreements,
management contracts and other written agreements with any managers and/or
executive officers to which the Borrower or any Subsidiary of the Borrower
is a party.
(m) The chief executive offices and principal place of business of
the Borrower are located at ▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇. The Borrower conducts business under no trade name other than its
corporate name and "MDI."
(n) All offices, warehouses, sales offices and other business
locations maintained at the date hereof by the Borrower or any of its
Subsidiaries are listed on Exhibit K hereto. The Borrower and its
Subsidiaries maintain books and records relating to Receivables and other
intangible Collateral only at the Borrower's chief executive offices
described in Subsection 6.01(m) above. At the date hereof, the Borrower
and each Subsidiary of the Borrower maintains Inventory, machinery and/or
equipment only at the locations shown on Exhibit K hereto. As to any items
of the Collateral which are or are to become fixtures, the premises
described on Exhibit K constitute the real estate concerned. Said
Exhibit K discloses the record owners of each such premises. Said Exhibit
K also describes all titled motor vehicles owned by the Borrower and/or any
Guaranteeing Subsidiary and the jurisdiction in which each such vehicle is
titled and principally located, as well as the principal locations of all
other mobile goods.
(o) To the best knowledge of the Borrower, none of the executive
officers of the Borrower or of any Subsidiary of the Borrower is subject to
any agreement in favor of anyone other than the Borrower or such Subsidiary
which limits or restricts that person's right to engage in the type of
business activity conducted or proposed to be conducted by the Borrower or
such Subsidiary or to use therein any property or confidential information
or which grants to anyone other than the Borrower or such Subsidiary any
rights in any inventions or other ideas susceptible to legal protection
developed or conceived by any such officer.
(p) Neither the Borrower nor any Subsidiary of the Borrower is now a
party to any contract or agreement, the terms of which now have or, as far
as can be reasonably foreseen, may have a Material Adverse Effect.
(q) Neither this Agreement, nor the financial statements referred to
herein, nor any Officer's Certificate delivered pursuant to this Agreement,
nor any other agreement, document, certificate or written statement
furnished to the Bank by or on behalf of the Borrower or any Guarantor in
connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. There is no fact within the special knowledge of any of the
executive officers of the Borrower which has not been disclosed herein or
in writing by them to the Bank and which materially adversely affects, or
in the future in their opinion may, insofar as they can now foresee,
materially adversely affect the business, properties, assets or condition,
financial or other, of the Borrower or any Guarantor.
(r) The Merger has been duly consummated in accordance with the
Merger Agreement dated May 2, 1995 (a copy of which has heretofore been
provided by the Borrower to the Bank) and in compliance with all applicable
laws.
(s) After giving effect to the Merger and the transactions
contemplated thereby and to the extension of financial accommodations
contemplated by this Agreement, the Borrower (A) is and will be able to pay
its debts as they become due, (B) has and will have funds and capital
sufficient to carry on its business as now conducted or as contemplated to
be conducted, (C) owns property having a value both at fair valuation and
at present fair saleable value greater than the amount required to pay its
debts as they become due, and (D) is not insolvent and will not be rendered
insolvent as determined by applicable law.
ARTICLE VII
COVENANTS OF THE BORROWER
Section 7.01. Affirmative Covenants Other Than Reporting
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Requirements. Without limiting any other covenants and provisions hereof,
------------
the Borrower covenants and agrees that so long as the Commitment is in
effect or any Loan is outstanding or any letter of credit issued hereunder
is outstanding or any other Obligation of the Borrower to the Bank remains
unpaid:
(a) The Borrower will pay the principal of and interest on the Notes
at the times and place and in the manner provided for in the Notes and
herein, and will promptly pay when due any and all other amounts owing to
the Bank, in respect of fees or otherwise.
(b) The Borrower will pay and discharge (and will cause each of the
Covenanted Subsidiaries to pay and discharge) all taxes, assessments and
governmental charges or levies imposed upon it or them, or upon its or
their income or profits, or upon any properties belonging to it or them,
prior to the date on which penalties or interest would attach thereto, and
all lawful claims which, if unpaid, might become a lien or charge upon any
properties of the Borrower or any of the Covenanted Subsidiaries; provided
that neither the Borrower nor any such Covenanted Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim which is
being contested in good faith and by proper proceedings which serve as a
matter of law to stay the enforcement of any remedy of the taxing authority
or claimant and as to which the Borrower or the Covenanted Subsidiary
concerned, as the case may be, shall have set aside on its books adequate
reserves (or, if such enforcement is not so stayed as a matter of law, a
surety bond, satisfactory to the Bank as to amount, terms and the identity
of the surety, shall have been delivered to the Bank). The Borrower will
pay (and will cause each of the Covenanted Subsidiaries to pay) in a timely
manner, all material lease obligations, trade debt and purchase money
obligations, other than any such lease obligations, trade debt and purchase
money obligations which the Borrower or the relevant Covenanted Subsidiary
(as the case may be) is contesting in good faith, with adequate reserves
having been established, under circumstances in which no material asset or
interest of the Borrower or such Covenanted Subsidiary would be
jeopardized. The Borrower will fully, faithfully and punctually perform
and fulfill (and will cause each of the Covenanted Subsidiaries fully,
faithfully and punctually to perform and fulfill) all material covenants
and agreements under any leases of real estate, agreements relating to
purchase money debt, equipment leases and other material contracts, other
than any such covenants and agreements which the Borrower or the relevant
Covenanted Subsidiary (as the case may be) is contesting in good faith,
with adequate reserves having been established, under circumstances in
which no material asset or interest of the Borrower or such Covenanted
Subsidiary would be jeopardized.
(c) The Borrower will maintain (and will cause each of the Covenanted
Subsidiaries to maintain), with responsible and reputable insurance
companies or associations reasonably satisfactory to the Bank, insurance in
such amounts and covering such risks as are typically insured by similar
businesses (and any such other insurance as the Bank may reasonably request
from time to time), but in any event in amounts sufficient to prevent the
Borrower or any such Covenanted Subsidiary from becoming a coinsurer.
Without limiting the foregoing, the Borrower will keep the Collateral fully
insured against fire, lightning and extended coverage perils and against
such other risks as the Bank may from time to time reasonably require, in
an amount at least equal to the full insurable value of the Collateral and
in any event not less than the amount necessary to avoid co-insurance.
Insurance at any one location may be "blanket" with insurance at other
locations and insurance of the Borrower and the Covenanted Subsidiaries may
be "blanket" with insurance of other Affiliates of the Borrower. In
addition, the Borrower shall procure and maintain general liability
insurance with minimum limits of not less than $5,000,000. The Borrower
shall also procure and maintain workmen's compensation insurance, employer
liability and other insurance as required by law. The Borrower will also
maintain comprehensive automobile liability insurance covering all motor
vehicles owned or leased by it, with combined limits of not less than
$1,000,000 for bodily injury and $500,000 for property damage. The
Borrower will also maintain (and will cause each of the Covenanted
Subsidiaries to maintain) (i) business interruption insurance in amounts
satisfactory to the Bank covering all material business operations of the
Borrower and each such Covenanted Subsidiary and (ii) professional
malpractice insurance covering all employees of the Borrower or any such
Covenanted Subsidiary engaged in patient care. All insurance herein
provided for shall be in such form and written by such companies as may
from time to time be reasonably approved by the Bank. The Borrower will
assign and deliver to the Bank duplicate original copies or certificates
for all policies of casualty insurance, as collateral and further security
for the obligations of the Borrower herein contained, with the Bank named
as first loss payee with respect to all property in which it holds a
security interest (except that the Bank may be named as second loss payee
with respect to any property as to which the Bank holds a security interest
subject to another Person's prior security interest which is permitted
under this Agreement). All policies of insurance shall contain a provision
forbidding cancellation of such insurance either by the carrier or by the
insured until at least 30 days after written notice of the proposed
cancellation is given to the Bank; and whenever any insurance is to expire
for any reason, the Borrower will deliver to the Bank, at least 30 days
prior to such expiration, a renewal or replacement policy, complying with
all of the conditions of this Subsection. In addition, the Borrower will
obtain an endorsement with respect to all such policies indicating that,
solely as to the Bank, the insurance shall not be impaired or invalidated
by reason of any act or neglect of the named insured or any subsequent
owner of any of the property insured. Any insurance proceeds received by
the Bank may, at the option of the Bank, either (i) be applied to the
payment or prepayment of any obligations of the Borrower to the Bank or
(ii) be transmitted in whole or in part to the owner of the property
damaged or destroyed for the purpose of repairing or replacing the same;
provided that insurance proceeds so received as proceeds of business
interruption insurance or with respect to damage to or destruction of any
equipment will (provided that no Event of Default has then occurred and is
then continuing) be released to the Borrower. Any insurance proceeds
received by the Bank with respect to damage to or destruction of any
equipment on which it holds a security interest that are released to the
Borrower shall be used by the Borrower to repay any outstanding capital
financing of such damaged or destroyed equipment and to repair or replace
the damaged or destroyed equipment, with the Bank to receive its same
priority security interest in the repaired and/or replacement equipment.
(d) The Borrower will preserve and maintain (and, subject to the last
sentence of this Subsection, will cause each of the Covenanted Subsidiaries
to preserve and maintain) its corporate existence, rights, franchises and
privileges and remain in good standing in the jurisdiction of its
incorporation. The Borrower will remain qualified and in good standing in
Massachusetts and will qualify and remain qualified (and will cause each of
the Covenanted Subsidiaries to qualify and remain qualified and in good
standing) in each other jurisdiction in which it maintains a plant,
warehouse or office and in each other jurisdiction in which the failure so
to qualify could have a Material Adverse Effect. Notwithstanding the
foregoing, the Borrower may wind up the business of any Covenanted
Subsidiary in the ordinary course of the Borrower's business and, in
connection with such winding up, may merge such Covenanted Subsidiary into
the Borrower or may dissolve any such Covenanted Subsidiary and transfer
the assets of such Covenanted Subsidiary pro rata to its stockholders (or
--- ----
its partners, in the case of any Covenanted Subsidiary which is a
partnership).
(e) The Borrower will comply (and will cause each of the Covenanted
Subsidiaries to comply) with the requirements of all applicable laws
(including, without limitation, laws relating to environmental protection),
rules, regulations and the orders of any court or other tribunal or
governmental or administrative authority or agency applicable to it or to
its business, property or assets, all to the extent that failure to comply
with any such laws, rules, regulations or orders could, singly or in the
aggregate with all other such failures, have a Material Adverse Effect.
The Borrower will obtain and maintain (and will cause each of its
Subsidiaries to obtain and maintain) all licenses, permits and permissions
relating to its properties or business, failure to obtain or maintain which
could, singly or in the aggregate with all other such failures, have a
Material Adverse Effect. Without limitation of the foregoing, the Borrower
will maintain in effect (and will cause to be maintained in effect) all
determinations of need and "physician notices of intent" necessary or
desirable in connection with MRI units owned and/or operated by the
Borrower or by any Covenanted Subsidiary.
(f) At any reasonable time and from time to time (and at any time and
as frequently as the Bank requests following the occurrence and during the
continuance of an Event of Default), the Borrower will permit (and will
cause each of the Covenanted Subsidiaries to permit) the Bank, and any
agents or representatives thereof, to inspect and examine Collateral,
wherever located, and to examine and make copies of and take abstracts from
the records and books of account of, and visit the properties of the
Borrower and each of the Covenanted Subsidiaries, and to discuss the
affairs, finances and accounts of the Borrower and any such Covenanted
Subsidiary with any of their respective managers, officers or directors and
independent accountants, all of whom are hereby authorized and directed to
cooperate with the Bank in carrying out the intent of this Subsection
7.01(f). The Borrower will, upon request, arrange for the Bank to have
access to (and facilities for obtaining copies of) all electronically
stored data and all papers and files of any kind relating to Receivables of
the Borrower or any Covenanted Subsidiary.
(g) The Borrower will keep proper and complete records and books of
account in which complete entries will be made in accordance with generally
accepted accounting principles consistently applied reflecting all
financial transactions of the Borrower and its Subsidiaries. All financial
statements submitted to the Bank under this Agreement will be prepared in
accordance with generally accepted accounting principles consistently
applied, except that interim statements will be subject to normal year-end
audit adjustment (not to be material) and to the absence of footnotes.
(h) The Borrower will maintain and preserve (and will cause each of
the Covenanted Subsidiaries to maintain and preserve) all of their
respective properties necessary or useful in the proper conduct of their
respective businesses in good working order and condition (subject to
ordinary wear and tear), making all necessary repairs thereto and
replacements thereof; provided that neither the Borrower nor any Covenanted
Subsidiary will be deemed to be in default under this Subsection 7.01(h) by
reason of any damage by fire or other casualty so long as the Borrower (or
such Covenanted Subsidiary, as the case may be) repairs and/or replaces the
damaged property as promptly as reasonably practicable.
(i) The Borrower will maintain experienced and competent professional
senior management with respect to its business and properties and with
respect to the Covenanted Subsidiaries. Without limitation of the
foregoing, if any of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇▇▇▇▇ shall for
any reason cease to serve as an executive officer of the Borrower actively
involved in the Borrower's management, he shall be replaced, as promptly as
reasonably practicable, as such executive officer by another individual of
comparable experience and ability reasonably acceptable to the Bank; and
this covenant shall become applicable to each such replacement officer.
(j) Subject to the provisions of the next following sentence, the
Borrower will continue to conduct (and will cause each of the Covenanted
Subsidiaries to continue to conduct) in the ordinary course, the business
in which each of them is presently engaged. Notwithstanding the
immediately preceding sentence, the Borrower may wind up the business of
any Covenanted Subsidiary in the ordinary course of the Borrower's
business; provided that, upon such winding up, the assets of such
Covenanted Subsidiary are transferred pro rata to the stockholders (or the
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partners, in the case of any Covenanted Subsidiary which is a partnership)
of the relevant Covenanted Subsidiary. Neither the Borrower nor any of
such Covenanted Subsidiaries will, without the prior written consent of the
Bank, directly or indirectly enter into any lines of business, businesses
or ventures outside of the lines of business conducted by Old MDI
immediately prior to the date hereof.
(k) As used herein, the term "Determination Date" means the last day
of each fiscal quarter of the Borrower, commencing with September 30, 1995.
The Borrower will maintain a Debt Service Coverage Ratio, determined as at
each Determination Date for the Measurement Period then ended, of not less
than the following: not less than 1.0 to 1 as at September 30, 1995; not
less than 1.1 to 1 as at each of December 31, 1995, March 31, 1996,
June 30, 1996, September 30, 1996, December 31, 1996 and March 31, 1997;
and not less than 1.2 to 1 as at June 30, 1997 and as at each Determination
Date thereafter. As used herein, the "Debt Service Coverage Ratio" as
determined as at any Determination Date means the ratio of (x) EBITDA
Available for Debt Service for the Measurement Period then ended to (y) the
result of: (i) all interest on any Indebtedness, which interest was paid
or payable or accrued by the Borrower or any Subsidiary of the Borrower
during such Measurement Period, plus (ii) the aggregate amount of Current
----
Maturities of the Borrower and Subsidiaries outstanding at such
Determination Date (or 25% of such aggregate amount of Current Maturities
if the relevant Measurement Period is three months, 50% of such aggregate
amount of Current Maturities if the relevant Measurement Period is six
months or 75% of such aggregate amount of Current Maturities if the
relevant Measurement Period is nine months); but excluding from the
interest expense and Current Maturities (if any) relating to Mass. Mobile
Imaging Venture, MVA Rehabilitation Associates and Greater Springfield MRI
Limited Partnership a pro rata share of same reflecting the minority
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interests in each such entity which interests are not owned, directly or
indirectly, by the Borrower. As used herein, the term "Measurement Period"
means the following: the Measurement Period ending September 30, 1995 is
the six-month period ending on that date, the Measurement Period ending
December 31, 1995 is the nine-month period ending on that date; the
Measurement Period ending March 31, 1996 and on each subsequent
Determination Date is the rolling 12-month period ending on each such date.
(l) The Borrower will maintain an Interest Coverage Ratio, determined
as at each Determination Date for the Measurement Period then ended, of not
less than the following: not less than 2.0 to 1 as at each of September 30,
1995, December 31, 1995, March 31, 1996, June 30, 1996, September 30, 1996
and December 31, 1996; and not less than 3.0 to 1 as at March 31, 1997 and
as at each Determination Date thereafter. As used herein, the "Interest
Coverage Ratio" determined as at any Determination Date means the ratio of
(x) the consolidated EBIT of the Borrower and Subsidiaries for the
Measurement Period then ended to (y) the total amount of all interest on
Indebtedness, which interest was paid or payable or accrued by the Borrower
or any Subsidiary of the Borrower during such Measurement Period.
(m) The Borrower will maintain at all times a Capital Base of not
less than the then-applicable Minimum Capital Base Requirement. The
Minimum Capital Base Requirement will be deemed to be negative $5,250,000
as at the date hereof and will be deemed to remain at that level through
and including December 30, 1995. The Minimum Capital Base Requirement will
be deemed increased by $600,000 on each of December 31, 1995, March 31,
1996, June 30, 1996 and September 30, 1996 and will be deemed further
increased so that it will be equal to positive $1,750,000 on September 30,
1997 (each such increase to remain in effect until the next increase is
effective). On September 30, 1998 and at all times thereafter, the Minimum
Capital Base Requirement will be deemed to be positive $6,000,000.
(n) The Borrower will maintain at all times a Net Working Capital of
not less than the following: not less than $1,100,000 on September 30,
1995 and at all times thereafter to (but not including) September 30, 1996;
not less than $1,500,000 on September 30, 1996 and at all times thereafter
to (but not including) September 30, 1997; not less than $3,500,000 on
September 30, 1997 and at all times thereafter to (but not including)
September 30, 1998; and not less than $5,800,000 on September 30, 1998 and
at all times thereafter.
(o) For each fiscal year, the Borrower and its Subsidiaries will
achieve an annual consolidated Adjusted Net Income of at least $1.00. In
addition, and without limitation of the foregoing, the Borrower and its
Subsidiaries will not fail to achieve a quarterly consolidated Adjusted Net
Income of at least $1.00 for any two consecutive fiscal quarters. Further,
and without limitation of the foregoing, the Borrower shall have sufficient
Adjusted Net Income for each fiscal year so that the consolidated Adjusted
Net Income of Advanced NMR and Subsidiaries (including the Borrower) will
not be less than $1.00 for each fiscal year. As used herein, "Adjusted Net
Income" of the relevant Person for any period means the sum of: (1) the Net
Income (or Net Loss, expressed as a negative number) of such Person for
such period, plus (2) the amount, if any, representing amortization of
----
goodwill arising from the Merger which was actually deducted on the books
of the Borrower in computing the Borrower's Net Income (or Net Loss, as the
case may be) for such period, plus (3) as to the computation of Adjusted
----
Net Income for fiscal 1995 only, that amount which represents legal,
accounting, printing and other actual expenses of the Merger (not to exceed
$1,500,000 in the aggregate) which were incurred by the Borrower and
actually deducted on the books of the Borrower in computing the Borrower's
Net Income (or Net Loss, as the case may be) for the relevant period.
(p) The Borrower will maintain at all times sufficient Tangible Net
Worth so that the consolidated Tangible Net Worth of Advanced NMR and
Subsidiaries (including the Borrower) will never be less than the
following: on September 30, 1995 and at all times thereafter through and
including September 29, 1996 not less than $4,000,000; on September 30,
1996 and at all times thereafter through and including September 29, 1997
not less than $6,000,000; on September 30, 1997 and at all times thereafter
through and including September 29, 1998 not less than $8,000,000; and on
September 30, 1998 and at all times thereafter not less than $10,000,000.
(q) The Borrower will maintain at all times sufficient Current Assets
so that the ratio of (x) consolidated Current Assets of Advanced NMR and
Subsidiaries (including the Borrower) to (y) consolidated Current
Liabilities of Advanced NMR and Subsidiaries (including the Borrower) will
never be less than 1.2 to 1.
(r) At all times from the date hereof to March 1, 1996, the Borrower
and Advanced NMR will maintain aggregate cash and cash-equivalents held in
the name and under the control of the Borrower or Advanced NMR totalling
not less than $6,000,000.
(s) If the Borrower forms or acquires any Subsidiary after the date
hereof, the Borrower will cause such Subsidiary to execute and deliver an
Affiliate Guaranty (and, to the extent relevant, appropriate pledge
agreements), to grant to the Bank a fully perfected first security interest
in all of its assets (except for those assets encumbered by purchase money
Indebtedness and capital lease financing within the limitations set forth
in Section 7.02(a)(iv) hereof) and to observe and perform all of the
agreements and obligations contained herein and therein.
(t) The Borrower will maintain at all times after the date of this
Agreement through the first anniversary of such date an interest cap or
rate swap or other interest rate protection satisfactory to the Bank
relating to not less than 40% of the outstanding principal amount of the
Term Loan; and the Borrower will maintain at all times after the first
anniversary of the date of this Agreement through the second such
anniversary an interest cap or rate swap or other interest rate protection
satisfactory to the Bank relating to not less than 25% of the outstanding
principal amount of the Term Loan.
(u) Within 60 days after the date hereof, the Borrower will establish
with the Bank, and will thereafter maintain with the Bank, the principal
operating and deposit accounts of the Borrower and the Covenanted
Subsidiaries.
Section 7.02. Negative Covenants. Without limiting any other
------------------
covenants and provisions hereof, the Borrower covenants and agrees that, so
long as the Commitment is in effect or any Loan is outstanding or any
letter of credit issued hereunder is outstanding or any other Obligation of
the Borrower to the Bank has not been fully performed:
(a) The Borrower will not create, incur, assume or suffer to exist
(nor permit any of the Covenanted Subsidiaries to create, incur, assume or
suffer to exist) any Indebtedness, except for:
(i) Indebtedness owed to the Bank, including, without limitation,
the Indebtedness represented by the Notes;
(ii) Indebtedness of the Borrower or any such Covenanted
Subsidiary for taxes, assessments and governmental charges or levies,
to the extent payment thereof shall not at the time be required under
Subsection 7.01(b) above;
(iii) unsecured current liabilities of the Borrower or any such
Covenanted Subsidiary (other than for money borrowed or for the
deferred purchase price of property) incurred upon customary terms in
the ordinary course of business and unsecured advances or progress
payments under contracts incurred on customary terms in the ordinary
course of business;
(iv) purchase money Indebtedness and capital lease financing owed
to vendors or lessors of equipment used in the business of the
Borrower or any of the Covenanted Subsidiaries, such purchase money
Indebtedness and capital lease financing not to exceed the CapEx Limit
(as defined in Subsection 7.02(t) hereof) in aggregate principal
amount incurred per fiscal year of the Borrower;
(v) Subordinated Debt (including, without limitation, seller
financing of any future Acquisition) hereafter incurred by the
Borrower; but only if the Bank has given its prior written consent to
the financial terms and the subordination provisions of such
Subordinated Debt;
(vi) up to $3,000,000 now or hereafter owed by MVA Rehabilitation
Associates for working capital financing provided by the Borrower for
said MVA Rehabilitation Associates;
(vii) other Indebtedness existing at the date hereof, but only to
the extent set forth on Exhibit L hereto; and
(viii) and guaranties expressly permitted pursuant to Subsection
7.02(c) below.
In the event the Borrower creates, incurs, assumes or suffers to exist
any Indebtedness pursuant to Subsection 7.02(a)(iv) above, the Bank agrees
upon request of the Borrower to execute a partial release of its security
interest to the extent necessary to permit such indebtedness.
(b) The Borrower will not create, incur, assume or suffer to exist
(nor permit any of the Covenanted Subsidiaries to create, incur, assume or
suffer to exist) any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or retained
security title of a conditional vendor) of any nature (collectively,
"liens"), upon or with respect to any of its property or assets, now owned
or hereafter acquired, except that the foregoing restrictions shall not
apply to:
(i) liens for taxes, assessments or governmental charges
or levies on property of the Borrower or any of the Covenanted
Subsidiaries if the same shall not at the time be delinquent or
thereafter can be paid without interest or penalty or are being
contested in good faith and by appropriate proceedings which serve as
a matter of law to stay the enforcement of any remedies of the taxing
authorities and as to which adequate reserves have been made (or, if
such enforcement is not stayed as a matter of law, a surety bond
satisfactory to the Bank as to amount, terms and the identity of the
surety has been delivered to the Bank);
(ii) liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary
course of business for sums not yet due or which are being contested
in good faith and by appropriate proceedings which serve as a matter
of law to stay the enforcement thereof and as to which adequate
reserves have been made (or, if such enforcement is not stayed as a
matter of law, a surety bond satisfactory to the Bank as to amount,
terms and the identity of the surety has been delivered to the Bank);
(iii) pledges or deposits under workmen's compensation laws,
unemployment insurance, social security, retirement benefits or
similar legislation;
(iv) liens existing on the date hereof to the extent listed on
Exhibit L hereto;
(v) liens securing the performance of bids, tenders, contracts
(other than for the repayment of borrowed money), statutory
obligations and surety bonds arising in the ordinary course of
business;
(vi) zoning restrictions, easements and rights or restrictions of
record on the use of real property which do not materially detract
from its value or impair its use;
(vii) capital leases and liens securing the purchase price of
property (to the extent such capital leases and purchases are
permitted by clause (iv) of Subsection 7.02(a) above), provided that
--------
each such lien is given solely to secure the purchase price of such
property, does not extend to any other property and is given at the
time of the acquisition of such property; and
(viii) liens in favor of the Bank.
(c) The Borrower will not assume, guarantee, endorse or otherwise
become directly or contingently liable (nor permit any of its Covenanted
Subsidiaries to assume, guarantee, endorse or otherwise become directly or
contingently liable), including, without limitation, liable by way of
agreement, contingent or otherwise, to purchase, to provide funds for
payment, to supply funds to or otherwise invest in any debtor or otherwise
to assure any creditor against loss, in connection with any Indebtedness of
any other Person, except (i) guaranties by endorsement for deposit or
collection in the ordinary course of business, (ii) any guaranty in favor
of the Bank, (iii) existing guaranties described on Exhibit M hereto,
including existing liability incurred by the Borrower or any Covenanted
Subsidiary by virtue of being the general partner of any partnership, (iv)
any guaranty given by the Borrower with respect to any purchase money
Indebtedness or capital lease financing hereafter incurred by any
Covenanted Subsidiary, so long as the incurrence of such purchase money
Indebtedness or capital lease financing is expressly permitted pursuant to
clause (iv) of Subsection 7.02(a), and (v) any further liabilities arising
after the date hereof for which the Borrower or any such Covenanted
Subsidiary becomes liable by virtue of being the general partner of any
partnership, so long as the incurrence of each such liability would have
been permitted under any of clauses (i), (ii), (iii), (iv) or (v) of
Subsection 7.02(a) if the Borrower or the Covenanted Subsidiary in question
had incurred such liability directly (rather than merely becoming liable in
its capacity as a general partner of the partnership which has incurred
such liability).
(d) Except as otherwise provided in the second sentence of this
Subsection, the Borrower will not liquidate or dissolve, or merge or
consolidate with any other Person, or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) any
item or items material to its business (whether now owned or hereafter
acquired) included in the assets of the Borrower (nor will the Borrower
permit any of the Covenanted Subsidiaries to do any of the foregoing),
except that the Borrower and the Covenanted Subsidiaries may sell or
dispose of property through (i) sales of Inventory in the ordinary course
of business, (ii) disposal of worn out or obsolete equipment in the
ordinary course of business, (iii) sale or disposal in any one fiscal year
of items aggregating not more than five (5%) percent of the consolidated
Tangible Net Worth of the Borrower measured as at the beginning of such
year, and (iv) the winding up of the business of any Covenanted Subsidiary
in the ordinary course of the Borrower's business under the circumstances
provided for in Subsection 7.01(j) above. Notwithstanding the foregoing,
(i) any Subsidiary of the Borrower may be merged into the Borrower provided
that no Event of Default has occurred and is then continuing and (ii) any
such Subsidiary may be merged into any other Subsidiary of the Borrower.
Neither the Borrower nor any of the Covenanted Subsidiaries will make any
Acquisition without the prior written consent of the Bank.
(e) The Borrower will not sell, assign, factor or dispose in any way
of any of its Receivables or other rights to payment, with or without
recourse, except for assignment for collection in the ordinary course of
business, nor will the Borrower permit any of the Covenanted Subsidiaries
to do any of the foregoing.
(f) The Borrower will not make or maintain, nor permit any of the
Covenanted Subsidiaries to make or maintain, any loan or advance to any
Person, or purchase or otherwise acquire, or permit any of its Subsidiaries
to purchase or otherwise acquire, the capital stock, assets comprising the
business of, or obligations of, or any interest in, any Person, except the
following investments by the Borrower or any such Covenanted Subsidiary:
(i) loans and/or capital contributions aggregating up to
$3,000,000 made or to be made by the Borrower to MVA Rehabilitation
Associates for working capital purposes (including, without
limitation, for the purpose of funding start-up costs for new centers
to be opened by MVA Rehabilitation Associates); provided that at the
date of each such loan or capital contribution (each, an "Investment
Date") MVA Rehabilitation Associates' then open and operational
centers will have achieved positive net income for the Relevant Fiscal
Period ended most recently prior to the Investment Date;
(ii) investments consistent with the Borrower's Investment Policy
Guidelines attached hereto as Exhibit N (except that the minimum
capital base for acceptable commercial banks will be deemed increased
for this purpose from $750,000,000 to $1,000,000,000);
(iii) travel advances and similar advances to employees in the
ordinary course of the Borrower's business;
(iv) existing investments by the Borrower and/or any Covenanted
Subsidiary in, and loans and advances by the Borrower to, any
Subsidiary or joint venture to the extent disclosed on Exhibit O
hereto; and
(v) future investments by the Borrower and/or any Covenanted
Subsidiary in any entity which satisfies all of the following
criteria: (1) such entity is or becomes a Covenanted Subsidiary, (2)
such entity is or becomes party to the Affiliate Guaranty of even date
herewith from the Guaranteeing Subsidiaries to the Bank, and (3) such
entity grants (or has granted and thereupon confirms) to the Bank a
fully perfected first priority security interest in all of its assets
(except for those assets encumbered by purchase money Indebtedness and
capital lease financing within the limitations set forth in Section
7.02(a)(iv) hereof).
Nothing contained in this Subsection 7.02(f) shall permit the Borrower
to use, directly or indirectly, proceeds of any Loan for the purpose,
whether immediate, incidental or ultimate, of purchasing or carrying any
"margin stock" within the meaning of Regulation U. As used herein,
"Relevant Fiscal Period" means (i) the six-month period ending
September 30, 1995, (ii) the nine-month period ending December 31, 1995,
(iii) the twelve-month period ending March 31, 1996, and (iv) the twelve-
month period ending at each fiscal quarter-end thereafter.
(g) The Borrower will not establish (nor permit any of its
Subsidiaries to establish) any new pension or defined benefit plan or
modify any such existing plan for employees subject to ERISA, which plan
provides any benefits based on past service, without the advance consent of
the Bank to the amount of the aggregate past service liability thereby
created.
(h) The Borrower will not waive (nor permit any of the Covenanted
Subsidiaries to waive) any debt or claim, except in the ordinary course of
its business.
(i) The Borrower will not make, directly or indirectly, any optional
or voluntary prepayment or purchase of Subordinated Debt, nor make any
payment of any Subordinated Debt except to the extent expressly permitted
in the Subordination Agreement relating thereto. The Borrower will not at
any time make any payment on account of principal of and/or interest on any
Subordinated Debt unless at the time of such payment (and after giving
effect to any such payment of principal and/or interest) no Default nor any
Event of Default shall have occurred and be continuing.
(j) The Borrower will not remove (nor permit to be removed) from the
Premises listed on Exhibit K any books or records relating to Receivables
or other intangible Collateral of the Borrower nor remove therefrom any
tangible Collateral (other than Inventory sold to customers in the ordinary
course of the Borrower's business and other than mobile goods, which may
travel to other locations on a temporary basis but will not be removed from
the state described in Exhibit K as the principal location thereof without
prior written notice to the Bank), until after receipt of a certificate
from the Bank, signed by an officer thereof, stating that the Bank has, to
its satisfaction, obtained all documentation that it deems necessary or
desirable to obtain, maintain, perfect and confirm the first priority
security interests granted or intended to be granted herein.
(k) The Borrower will not move its chief executive offices or
principal place of business from the address described in
Subsection 6.01(m) nor change its name or identity nor use any trade name
or trade style other than its corporate name nor make or suffer to be made
any change in its corporate structure until, in each case, after receipt of
a certificate from the Bank, signed by an officer thereof, stating that the
Bank has, to its satisfaction, obtained all documentation that it deems
necessary or desirable to obtain, maintain, perfect and confirm the first
priority security interests granted or intended to be granted herein.
(l) The Borrower will not, without the prior written consent of the
Bank, declare or pay any dividends, purchase, redeem, retire, or otherwise
acquire for value any of its capital stock (or rights, options or warrants
to purchase such shares) now or hereafter outstanding, return any capital
to its stockholders or make any distribution of assets to its stockholders;
provided that (i) at the date hereof, in connection with the Merger, the
Borrower may dividend to Advanced NMR an amount not in excess of
$12,000,000 and (ii) the Borrower may pay a dividend to Advanced NMR in an
aggregate amount not to exceed $100,000 per fiscal year of the Borrower so
long as at the time of any such dividend payment and after giving effect
thereto no Default or Event of Default shall have occurred and be
continuing and (iii) the Borrower may make payments to Advanced NMR in
accordance with the terms of that certain Tax Sharing Agreement dated
August 31, 1995 by and between Advanced NMR and the Borrower.
(m) Neither the Borrower nor any of the Covenanted Subsidiaries will
become a member of any partnership or joint venture in which another entity
has the ability to incur any Indebtedness on behalf of the Borrower or such
Covenanted Subsidiary or to commit any assets of the Borrower or such
Covenanted Subsidiary without the consent of the Borrower or such
Covenanted Subsidiary, as the case may be.
(n) The Borrower will not enter into (nor permit any of the
Covenanted Subsidiaries to enter into) any transaction, including, without
limitation, the purchase, sale or exchange of any property or the rendering
of any service, with any present or former Affiliate, except in the
ordinary course of business and pursuant to the reasonable requirements of
its business and upon fair and reasonable terms no less favorable to the
Borrower or such Covenanted Subsidiary, as the case may be, than would be
obtained in a comparable arms'-length transaction with any Person not an
Affiliate. As used herein, "Affiliate" of any entity means any officer or
director of such entity or any Person which, directly or indirectly,
through one or more intermediaries, controls or is controlled by or is
under common control with such entity, or any Person which beneficially
owns or holds five (5%) percent or more of any class of equity securities
of such entity. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of any Person, whether through the ownership of voting
securities, by contract or otherwise. Without limitation of the foregoing,
the "Affiliates" of the Borrower include Advanced NMR and each Subsidiary
of Advanced NMR.
(o) The Borrower will not dispose of (nor permit any of its
Subsidiaries to dispose of) any hazardous material or oil on any Premises
of the Borrower or any such Subsidiary; nor shall the Borrower store or
suffer or permit to exist on any Premises of the Borrower or any such
Subsidiary any hazardous material or oil, nor transport or arrange the
transport of (nor permit any such Subsidiary to transport or arrangement
the transport of) any hazardous material or oil, except under valid permits
and licenses and otherwise in compliance with all applicable laws and
regulations. The Borrower shall provide the Bank with prompt written
notice of (i) any release or threat of release of any hazardous material or
oil at or from any site or vessel owned, occupied or operated by the
Borrower or any such Subsidiary and (ii) any incurrence of any expense or
loss by any governmental authority in connection with the assessment,
containment or removal of any hazardous material or oil for which expense
or loss the Borrower or any such Subsidiary may be liable. As used herein,
the terms "hazardous material" and "oil" have the respective meanings
ascribed to such terms in Mass. Gen. Laws, Ch. 21E and shall also be deemed
to include any similar terms in any comparable statute in any other
relevant jurisdiction.
(p) The Borrower will not suffer or permit to exist any circumstance
in which the Borrower is not a wholly-owned Subsidiary of Advanced NMR or
in which the percentage equity ownership of the Borrower in any entity
which is a Subsidiary of the Borrower at the date hereof decreases from
that shown on Exhibit F hereto.
(q) Neither the Borrower nor any of the Covenanted Subsidiaries will
make any material change in the nature of its business as carried on the
date hereof. The Borrower will not change its fiscal year or accounting
principles or methods of applying same (it being contemplated that Advanced
NMR will change its fiscal year to a year ending September 30). If any
accounting treatment or classification is for any reason changed as to the
accounts of the Borrower and/or any of its Subsidiaries, the Borrower will
forthwith notify the Bank of same in writing and will execute and deliver
any amendment to this Agreement which the Bank may reasonably deem
necessary or desirable in order to preserve unimpaired the rights of the
Bank and the obligations of the Borrower under this Agreement.
(r) The Borrower will not write up (by creating an appraisal surplus
or otherwise), nor permit any of its Subsidiaries to write up, the value of
any assets of the Borrower or such Subsidiary above their cost to the
Borrower or such Subsidiary, as the case may be, less the depreciation
regularly allowable thereon.
(s) The Borrower will not enter into (nor permit any Subsidiary of
the Borrower to enter into) any new or replacement operating leases, except
that Borrower may enter into (i) replacement leases for the items of
equipment listed on Exhibit D hereto and (ii) three new operating leases,
provided that each time the Borrower is able to demonstrate to the Bank
that the equipment leased under a new operating lease pursuant to this
Subsection 7.02(s)(ii) is profitable based upon reports compiled by the
Borrower (profitability to be calculated consistently with historical
reports of such information), the Borrower shall be permitted to enter into
one additional new operating lease.
(t) The Borrower will not incur aggregate Capital Expenditures in any
fiscal year in excess of the CapEx Limit. As used herein, subject to the
last sentence of this Subsection 7.02(t), "CapEx Limit" means: $1,500,000
for the fiscal year ending September 30, 1995; $1,100,000 for the fiscal
year ending September 30, 1996; and $1,800,000 for the fiscal year ending
September 30, 1997. If the Borrower incurs in any fiscal year aggregate
Capital Expenditures in an amount which is less than the full amount of the
CapEx Limit for such fiscal year, then the amount by which such CapEx Limit
for such fiscal year exceeds said aggregate Capital Expenditures for such
fiscal year may be carried forward and added by the Borrower to the CapEx
Limit for any subsequent fiscal year or years; provided that, in any event,
at the time of the making of such Capital Expenditures in such subsequent
fiscal year or years and after giving effect thereto there is no Event of
Default under this Agreement nor would such additional Capital Expenditures
lead to an Event of Default under this Agreement.
Section 7.03. Reporting Requirements. So long as any Loan shall
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be outstanding or any letter of credit issued hereunder is outstanding or
any other Obligation of the Borrower to the Bank shall remain unpaid or the
Commitment is in effect, the Borrower shall furnish to the Bank:
(a) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters in each fiscal year of the
Borrower, consolidated and consolidating balance sheets of the Borrower and
Subsidiaries as at the end of such fiscal quarter and consolidated and
consolidating statements of income and cash flow for the Borrower and
Subsidiaries for such fiscal quarter and for the period commencing at the
end of the previous fiscal year and ending with the end of such fiscal
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified by the chief financial officer of the
Borrower as having been prepared in accordance with generally accepted
accounting principles consistently applied, subject to normal year-end
audit adjustment and the absence of footnotes.
(b) As soon as available and in any event within 45 days after the
end of each of the first three fiscal quarters in each fiscal year of
Advanced NMR (or within such longer period, not to exceed in any event 50
days after the end of the relevant fiscal quarter, as the Securities and
Exchange Commission may allow for filing of Advanced NMR's Quarterly Report
on Form 10-Q for the fiscal quarter in question), consolidated and
consolidating balance sheets of Advanced NMR and Subsidiaries (including
the Borrower) as at the end of such fiscal quarter and consolidated and
consolidating statements of income and cash flow for Advanced NMR and
Subsidiaries (including the Borrower) for such fiscal quarter and for the
period commencing at the end of the previous fiscal year and ending with
the end of such fiscal quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the
preceding fiscal year, all in reasonable detail and duly certified by the
chief financial officer of Advanced NMR as having been prepared in
accordance with generally accepted accounting principles consistently
applied, subject to normal year-end audit adjustment and the absence of
footnotes.
(c) As soon as available and in any event within 90 days after the
end of each fiscal year of Advanced NMR (or within such longer period, not
to exceed in any event 120 days after the end of the relevant fiscal year,
as the Securities and Exchange Commission may allow for the filing of
Advanced NMR's Annual Report on Form 10-K for the fiscal year in question),
a copy of Advanced NMR's annual audit report for such fiscal year,
including therein consolidated and consolidating balance sheets of Advanced
NMR and Subsidiaries (including the Borrower) as at the end of such fiscal
year and consolidated and consolidating statements of income and retained
earnings and consolidated and consolidating statements of cash flow for
Advanced NMR and Subsidiaries (including the Borrower) for such fiscal year
(and including statements showing the results of Advanced NMR and the
Borrower for the fourth quarter of such fiscal year of Advanced NMR). The
annual consolidated statements shall be certified by independent certified
public accountants selected by Advanced NMR and reasonably acceptable to
the Bank in such form as is generally recognized as "unqualified". Each of
the annual financial statements submitted under this Subsection shall be
accompanied by a statement of the independent certified public accountants
stating whether in the course of their examination (which shall include a
review of this Agreement) they became aware of the existence as at the end
of the fiscal year covered by such financial statements of any event,
transaction, occurrence or state of affairs which would contravene or
violate any of the covenants or agreements contained in this Agreement and,
if their examination has disclosed any such event, transaction, occurrence
or state of affairs, specifying the nature and period of the existence
thereof. Said accountants shall also state that they have examined the
certificate of the chief financial officer submitted with the annual
statements of the Borrower and referred to in Subsection 7.03(d) and that
their examination has not disclosed the existence of anything contrary to
the matters set forth in such certificate. Such accountants' statement
shall also include a schedule setting forth the computations necessary to
determine compliance, as at the relevant fiscal year-end, with each of
Subsections 7.01(k), 7.01(l), 7.01(m), 7.01(n), 7.01(o), 7.01(p), 7.01(q),
7.01(r), 7.02(s) and 7.02(t).
(d) At the time of delivery of each annual statement of the Borrower
and/or Advanced NMR and at the time of delivery of the quarterly statement
for the first, second and third fiscal quarters of each fiscal year for the
Borrower and/or Advanced NMR, a certificate executed by the chief financial
officer of the Borrower stating that he has reviewed this Agreement and has
no knowledge of any default by the Borrower or any of the Guarantors in the
performance or observance of any of the provisions of this Agreement or, if
he has such knowledge, specifying each such default and the nature thereof,
which certificate shall be accompanied by a statement of such chief
financial officer setting forth in detail the computations necessary to
determine compliance with the covenants contained in Subsections 7.01(k),
(l), (m), (n), (o), (p), (q) and (r). In addition, the certificate
delivered in connection with the annual statements will also set forth in
detail the computations necessary to determine compliance with each of
Subsection 7.02(s) and Subsection 7.02(t).
(e) Together with the quarterly financial statements described in
Subsections 7.03(a) and 7.03(b) above, schedules of Inventory and
Receivables (including agings) of the Borrower and Advanced NMR in such
detail as shall be reasonably satisfactory to the Bank, such schedules to
be certified as accurate by the chief financial officer of the Borrower or
Advanced NMR, as the case may be.
(f) Prior to the end of each fiscal year of the Borrower and/or
Advanced NMR, a forecast for the next following fiscal year for each of the
Borrower and Advanced NMR, setting forth on a quarterly basis projections
as to balance sheets, income statements and cash flow statements, all in
such detail as will be reasonably satisfactory to the Bank.
(g) As soon as possible and in any event within five (5) Business
Days after the occurrence of each Default or Event of Default, the
statement of the Borrower setting forth details of such Default or Event of
Default and the action which the Borrower proposes to take with respect
thereto.
(h) As soon as possible and in any event within five (5) Business
Days after the commencement thereof, notice of all actions, suits,
proceedings and investigations by or before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, affecting the Borrower or any of its Subsidiaries or any
Guarantor, excluding, however, any such action, suit, proceeding or
investigation in which an adverse determination could not have a material
adverse effect on the business, prospects or financial condition of the
Borrower, any of its Subsidiaries or any Guarantor.
(i) Promptly after receipt, a copy of all audits or reports submitted
to the Borrower by independent public accountants in connection with any
annual, special or interim audits of the books of the Borrower and any
letter of comments directed by such accountants to the management of the
Borrower.
(j) As soon as possible and in any event within 30 days after the
Borrower knows or has reason to know that any event has occurred which
would constitute a reportable event under Section 4043(b) of Title IV of
ERISA with respect to any employee pension or other benefit plan in which
employees of the Borrower or of any Subsidiary of the Borrower participate,
or that the PBGC or the Borrower or any Subsidiary of the Borrower has
instituted or will institute proceedings under such Title to terminate such
plan, a certificate of the chief financial officer of the Borrower setting
forth details as to such termination or other reportable event and the
action which the Borrower proposes to take with respect thereto, together
with a copy of any notice of such reportable event which may be required to
be filed with the PBGC, or any notice delivered by the PBGC evidencing its
intent to institute such proceedings, or any notice to the PBGC that the
plan is to be terminated, as the case may be.
(k) A copy of each registration statement and each periodic or
current report filed by Advanced NMR with the Securities and Exchange
Commission (the "SEC") or any successor agency (other than routine updating
filings relating to employee benefit plans) and each annual report, proxy
statement and other communication sent to shareholders or other
securityholders generally, such copy to be provided to the Bank promptly
upon such filing with the SEC or such communication with shareholders or
securityholders, as the case may be.
(l) Promptly upon applying for, or being granted, a federal or state
registration for any copyright, trademark or patent or purchasing any
registered copyright, trademark or patent, written notice to the Bank
describing same, together with all such documents as the Bank may prepare
and reasonably request the Borrower to execute in order to give the Bank a
fully perfected first priority security interest in each such copyright,
trademark or patent.
(m) Promptly after the Borrower has knowledge thereof, written notice
of:
(i) termination or potential termination of any consent,
license, permit or franchise material to the conduct of the business
of the Borrower or of any of its Subsidiaries or of any Guarantor or
the ownership of its or their property and assets;
(ii) any material loss, damage or destruction to or of any
property or assets of the Borrower or of any of its Subsidiaries or of
any Guarantor (regardless of whether the same is covered by
insurance);
(iii) any material controversy with employees of the Borrower or
of any of its Subsidiaries or of any Guarantor or with any labor
organization; and
(iv) any other material development adversely affecting the
Borrower, any of its Subsidiaries or any Guarantor or their respective
businesses, properties, assets or conditions, financial or otherwise.
(n) Promptly upon the occurrence of any change in any of the present
executive officers or directors of the Borrower or of any of its
Subsidiaries or of any Guarantor, all of whom are listed on Exhibit P
hereto, a notice of such change.
(o) Such other information respecting the financial condition,
operations, Inventory and Receivables of the Borrower and/or any of its
Subsidiaries and/or any of the Guarantors as the Bank may from time to time
reasonably request.
ARTICLE VIII
DEFAULT AND REMEDIES
Section 8.01. Events of Default. The occurrence of any of the
-----------------
following events shall constitute an Event of Default under this Agreement:
(a) The Borrower shall fail to make any payment of principal of any
Note or any Loan on the date when due; or
(b) The Borrower shall fail to make any payment of interest on any
Note or any Loan or in respect of any Commitment Fee on the date when due
and such failure shall continue uncured for five (5) days after the date
when due; or
(c) Any representation or warranty of the Borrower contained herein
shall at any time prove to have been incorrect in any material respect when
made; or any representation or warranty made by the Borrower or any
Guarantor in connection with the execution and delivery of this Agreement
or in connection with any Loan shall at any time prove to have been
incorrect in any material respect when made; or
(d) The Borrower shall default in the performance or observance of
any agreement or obligation under any of Subsections 7.01(b)(first sentence
only), (c), (d)(as applies to corporate existence only), (e), (k), (l),
(m), (n), (o), (p), (q) or (r) or Section 7.02 or Section 7.03; or
(e) The Borrower shall default in the performance of any other term,
covenant or agreement contained in this Agreement and such default shall
continue unremedied for 30 days after notice thereof shall have been given
to the Borrower; or
(f) Any default on the part of the Borrower or any of its
Subsidiaries or any Guarantor shall exist, and shall remain unwaived or
uncured beyond the expiration of any applicable notice and/or grace period,
under any contract, agreement or undertaking now existing or hereafter
entered into with or for the benefit of the Bank; or
(g) Any default shall exist and shall remain unwaived or uncured
beyond the expiration of any applicable notice and/or grace period with
respect to any Indebtedness of the Borrower or any of its Subsidiaries or
any Guarantor in a principal amount equal to or greater than $100,000, or
any such Indebtedness of $100,000 or more shall not have been paid when
due, whether by acceleration or otherwise, and shall remain unpaid beyond
the expiration of any applicable notice and/or grace period or shall have
been declared to be due and payable prior to its stated maturity; or
(h) The Borrower or any Guarantor shall be dissolved; or the Borrower
or any of its Subsidiaries or any Guarantor shall become bankrupt or shall
cease paying its debts as they mature or shall make an assignment for the
benefit of creditors, or a trustee, receiver or liquidator shall be
appointed for the Borrower or any of its Subsidiaries or any Guarantor or
for a substantial part of the property of any of the foregoing, or
bankruptcy, reorganization, arrangement, insolvency or similar proceedings
shall be instituted by or against the Borrower or any of its Subsidiaries
or any Guarantor under the laws of any jurisdiction (other than any
involuntary proceedings which are commenced against the Borrower, any of
its Subsidiaries or any Guarantor without the consent or acquiescence of
the Borrower, any such Subsidiary or such Guarantor and are dismissed
within 60 days after the commencement thereof); or
(i) Any final judgment (i.e., a judgment which has become final by
---
the expiration of any applicable appeal period without appeal having been
taken or, if such appeal has been taken, such judgment has been upheld on
appeal) in an amount of $500,000 or more shall be issued or levied against
the Borrower or any Subsidiary of the Borrower or any Guarantor and such
judgment shall not be paid, vacated or fully bonded within 60 days after
its issue or levy; or
(j) The Borrower or any Subsidiary of the Borrower or any Guarantor
shall fail to meet its minimum funding requirements under ERISA with
respect to any employee benefit plan (or other class of benefit which the
PBGC has elected to insure) or any such plan shall be the subject of
termination proceedings (whether voluntary or involuntary) and there shall
result from such termination proceedings a liability of the Borrower or any
such Subsidiary or any Guarantor to the PBGC which, in the reasonable
opinion of the Bank, may have a material adverse effect upon the business,
operations or financial condition of the Borrower or any such Subsidiary or
any Guarantor; or
(k) The security interest and lien of the Bank in and on any of the
Collateral shall not be in full force and effect as a fully perfected first
priority lien for any reason (except due to any failure by the Bank to make
or maintain appropriate Uniform Commercial Code filings or other required
filings) and said circumstance shall continue uncured for 15 days after the
Borrower has knowledge or notice thereof; or
(l) For any reason any Affiliate Guaranty shall not be in full force
and effect as to each Guarantor or any failure or default of any Guarantor
shall exist thereunder; or
(m) There shall occur any other material adverse change in the
condition (financial or otherwise), operations, properties, assets,
liabilities or earnings of the Borrower or any Guarantor.
Section 8.02. Rights and Remedies Upon Default. Upon the occurrence
--------------------------------
of any Event of Default and at any time thereafter during the continuance
thereof, in addition to any other rights and remedies available to the Bank
hereunder or otherwise, the Bank may exercise any one or more of the
following rights and remedies (all of which shall be cumulative):
(a) Declare the entire unpaid principal amount of the Notes and Loans
then outstanding, all interest accrued and unpaid with respect to any and
all of the foregoing, and all other amounts payable under or with respect
to this Agreement to be forthwith due and payable, whereupon the same shall
become forthwith due and payable, without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of any Event of
Default under Subsection 8.01(h), the Notes, all Loans and all other
amounts payable under this Agreement will automatically become due and
payable without any such notice or any such declaration.
(b) Declare the Commitment to be terminated, whereupon the same and
all obligations of the Bank to make Loans shall be terminated forthwith and
without further notice; provided, however that upon the occurrence of any
Event of Default under Subsection 8.01(h), the Commitment will
automatically terminate without any notice and without any such
declaration.
(c) Exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code. The Bank may enter upon the Premises or any
of same and may take physical possession of the Collateral or render the
Collateral unusable by process of law or peaceably without process of law.
The Bank may, with only such demand, advertising or notice as may be
required by law, sell and deliver any and all Collateral held by it for its
account at any time or times in one or more private or public sales, for
cash or credit or otherwise, at such price and upon such terms as the Bank
deems advisable in its sole discretion; provided that such terms are
commercially reasonable. Notice of any public sale shall be sufficient if
it describes the Collateral to be sold in general terms, stating the
amounts thereof and the location and nature of the properties covered by
the security interests and the prior liens thereon, and is published, at
least once, not less than seven (7) days prior to the sale in any newspaper
which the Bank may select which newspaper has a general circulation in the
municipality where the Collateral is located or deemed located. All
requirements of reasonable notice shall be met if such notice is sent to
the Borrower, in the manner provided in Section 11.03 below, at least seven
(7) days before the time of such sale or disposition. The Bank may be the
purchaser at any such sale, if it is public, free from any right of
redemption. The proceeds of sale shall be applied first to the costs of
retaking, refurbishing, storing and selling any Collateral hereunder and to
other costs of collection and other costs incurred by the Bank, and then to
the payment of obligations of the Borrower to the Bank.
(d) Enforce the provisions of this Agreement by legal proceedings for
the specific performance of any covenant or agreement contained herein or
for the enforcement of any other appropriate legal or equitable remedy, and
the Bank may recover damages caused by any breach by the Borrower of the
provisions of this Agreement, including court costs, reasonable attorneys'
fees and other costs and expenses incurred in the enforcement of the
obligations of the Borrower hereunder.
(e) Exercise all rights and remedies hereunder, under the Notes, the
Affiliate Guaranties and under any other agreement with the Bank, and
exercise all other rights and remedies which the Bank may have under
applicable law.
Section 8.03. Set-off. In addition to any rights now or hereafter
-------
granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default and during the
continuance thereof, the Bank is hereby authorized at any time or from time
to time, without presentment, demand, protest or other notice of any kind
to the Borrower or to any other Person, all of which are hereby expressly
waived, to set off and to appropriate and apply any and all deposits (other
than designated payroll accounts) and any other Indebtedness at any time
held or owing by the Bank or any affiliate of the Bank to or for the credit
or the account of the Borrower against and on account of the obligations
and liabilities of the Borrower to the Bank under this Agreement or
otherwise, irrespective of whether or not the Bank shall have made any
demand for payment and although said obligations, liabilities or claims, or
any of them, may then be contingent or unmatured and without regard for the
availability or adequacy of other collateral. The Borrower also grants to
the Bank a security interest with respect to all its deposits and all
securities or other property in the possession of the Bank or any affiliate
of the Bank from time to time in order to secure the Loans, the Notes and
all other amounts now or hereafter due under this Agreement, and, upon the
occurrence of any Event of Default, the Bank may exercise all rights and
remedies of a secured party under the Uniform Commercial Code.
Section 8.04. Right to Cure. In the event that the Borrower shall
-------------
fail to pay any tax, assessment, governmental charge or levy, except as the
same may be otherwise permitted hereunder, or in the event that any lien,
encumbrance or security interest prohibited hereby shall not be paid in
full or discharged, or in the event that the Borrower shall fail to pay or
comply with any other obligation hereunder, the Bank may, but shall not be
required to, pay, satisfy, perform, discharge or bond the same for the
account of the Borrower, and all moneys so paid by the Bank shall be
reimbursed by the Borrower to the Bank on demand and shall bear interest
from the date of demand until paid at the lesser of (i) a fluctuating rate
per annum which shall at all times be equal to the sum of two and one-half
(2-1/2%) percent per annum plus the Base Rate as in effect from time to
time, or (ii) the maximum rate permitted by then applicable law. The Bank
will give the Borrower not less than 30 days' prior notice before acting
under this Section, except that the Bank may act with less notice (or
without any notice) in the case of emergency, as reasonably determined by
the Bank.
Section 8.05. Letters of Credit. Without limitation of any other
-----------------
right or remedy of the Bank, (i) if an Event of Default shall have occurred
and the Bank shall have accelerated the Revolving Loans or (ii) if this
Agreement and/or the revolving financing arrangements described herein
shall have expired or shall have been earlier terminated by either the Bank
or the Borrower for any reason, the Borrower will forthwith deposit with
the Bank in cash a sum equal to the total of all then undrawn amounts of
all outstanding letters of credit issued by the Bank for the account of the
Borrower or any Guaranteeing Subsidiary.
ARTICLE IX
FURTHER PROVISIONS AS TO RECEIVABLES
Section 9.01. Furnishing Information. The Borrower will, at the
----------------------
Bank's request, deliver confirmatory written assignments of Receivables,
but the failure to execute or deliver any such assignment shall not affect
or limit the security interest of the Bank in any Receivable. Together
with each such assignment, if the Bank so requests, the Borrower will
furnish to the Bank copies of invoices to customers or the equivalent and
original shipping or delivery receipts for merchandise sold. The Borrower
shall promptly make, stamp or record such entries or legends on the
Borrower's books and records or on any of the Collateral as the Bank shall
reasonably request from time to time to indicate that the Bank has a
security interest in such Collateral.
Section 9.02. Returns; Disputes. Upon the occurrence and during the
-----------------
continuance of any Event of Default, the Bank may settle or adjust disputes
or claims directly with customers or account debtors for amounts and upon
terms which it considers advisable. In all cases, the Borrower's account
will be credited only with amounts actually received by the Bank. Whenever
the Borrower has received collateral of any kind or nature by reason of
transactions between itself and its customers or account debtors, it will
hold the same on the Bank's behalf, subject to the Bank's instructions, and
as property forming part of the Receivables.
Section 9.03. Collections. After the occurrence and during the
-----------
continuance of any Event of Default, the Bank or its designee may at any
time notify customers or account debtors of the Bank's security interest in
Receivables, collect the same directly, and charge the reasonable
collection costs and expenses to the Borrower's account. Whenever the Bank
deems it desirable that any legal or other action be instituted in order to
effectuate collection of any Receivable, the Bank may at its option
reassign any such Receivable to the Borrower (and any such reassignment
shall be deemed to be without recourse to the Bank in any event) and
require the Borrower to proceed with such legal or other action at the
Borrower's sole liability, cost and expense, in which event all amounts
collected by the Borrower on such Receivable shall nevertheless be subject
to this Agreement.
ARTICLE X
FURTHER RIGHTS OF THE BANK
Section 10.01. Further Assurances. The Borrower shall do all things
------------------
and deliver all instruments reasonably requested by the Bank to protect or
perfect any security interest granted or intended to be granted hereunder.
If the Borrower fails promptly to comply with any such request, or if any
Event of Default shall have occurred and be continuing hereunder, the
Borrower authorizes the Bank to execute, in the name or on behalf of the
Borrower, any financing statement or other document or instrument that the
Bank may require to perfect, protect or establish any security interest or
lien interest to which the Bank may be then entitled hereunder and further
authorizes the Bank to sign the Borrower's name on the same. The Borrower
appoints (but only for the purposes of protecting the Bank's interests)
such Person or Persons as the Bank may designate as the attorney-in-fact of
the Borrower with the power (after the occurrence and during the
continuance of any Event of Default) to endorse the name of the Borrower on
any checks, notes, drafts or other forms of payment or security relating to
any Collateral that may come into the possession of the Bank; to sign the
name of the Borrower on invoices or bills of lading, drafts against
customers, notices of assignment, verifications and schedules; to demand,
collect, receive payment of, receipt for, settle, compromise or adjust and
give discharges and releases in respect of the Receivables or any of them;
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Receivables or
any of them and to enforce any other rights in respect thereof or in
respect of the goods which have given rise thereto; to defend any suit,
action or proceeding brought against the Borrower in respect of any
Receivables or the goods which have given rise thereto; to settle,
compromise or adjust any suit, action or proceeding hereinbefore described
and, in connection therewith, to give such discharges or releases as the
Bank may deem appropriate; to notify the U.S. Postal Service authorities to
change the address for delivery of mail to an address designated by the
Bank and to open and dispose of mail addressed to the Borrower and,
generally, to do all things necessary to carry out the intent of this
Agreement. This power, being coupled with an interest, is irrevocable, and
the Borrower approves all acts of such attorney-in-fact. The powers
conferred on the Bank by this Section are solely to protect the interests
of the Bank and shall not impose any duty upon the Bank to exercise any
such power, and neither the Bank nor any such attorney-in-fact shall be
liable for any act or omission, error in judgment or mistake of law, except
for its actual wilful misconduct or bad faith. The Bank shall have no duty
as to the collection or protection of any Collateral and shall have no duty
as to the preservation of rights pertaining thereto, except as provided by
applicable law.
ARTICLE XI
MISCELLANEOUS
Section 11.01. No Waiver; Cumulative Remedies. No failure or delay on
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the part of any party in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy hereunder. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or otherwise available to the Bank. Such remedies may be
exercised without resort or regard to any other source of satisfaction of
any liabilities of the Borrower to the Bank. The provisions of this
Agreement are not limited by nor in limitation of any additional or
inconsistent provisions contained in any Affiliate Guaranty or elsewhere.
Section 11.02. Amendments, Waivers and Consents. Neither this
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Agreement nor any provision hereof may be amended, waived, discharged or
terminated orally, but only by a writing signed by the party against whom
enforcement of the amendment, waiver, discharge or termination is sought.
Any waiver or consent may be given subject to satisfaction of conditions
stated therein and any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 11.03. Addresses for Notices, etc. Except as otherwise
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expressly provided in this Agreement, all notices, requests, demands and
other communications provided for hereunder shall be in writing and shall
be mailed or delivered to the applicable party at the address indicated
below:
If to the Borrower:
Medical Diagnostics, Inc.
▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
with a copy to:
Advanced NMR Systems, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chairman
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Posternak, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and
▇▇▇▇▇ ▇▇▇▇, Esquire
▇▇▇▇ & Priest LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
If to the Bank:
Chemical Bank
c/o Chemical Connecticut Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
or, as to each of the foregoing, at such other address as shall be
designated by such Person in a written notice to the other party complying
as to delivery with the terms of this Section. Except as otherwise
provided herein, all such notices, requests, demands and other
communications shall be deemed delivered on the earlier of (i) the date
received or (ii) the date of delivery, refusal or non-delivery indicated on
the return receipt if deposited in the United States mails, sent postage
prepaid, registered or certified mail, return receipt requested, postage
and registration or certification charges prepaid, addressed as aforesaid.
Section 11.04. Costs, Expenses and Taxes. The Borrower agrees to pay
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on demand all costs and expenses (including, without limitation, reasonable
legal fees) of the Bank in connection with the preparation, execution and
delivery of this Agreement, the Notes and all other instruments and
documents to be delivered hereunder and any amendments or modifications of
any of the foregoing, or in connection with the examination, review or
administration of any of the foregoing, as well as the costs and expenses
(including, without limitation, the reasonable fees and out-of-pocket
expenses of legal counsel) incurred by the Bank in connection with
preserving, enforcing or exercising any rights or remedies under this
Agreement, the Notes and all other instruments and documents to be
delivered hereunder, all whether or not legal action is instituted. In
addition, the Borrower shall be obligated to pay any and all stamp and
other taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Notes and all other
instruments and documents to be delivered hereunder, and agrees to save the
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes. Any
fees, expenses or other charges which the Bank is entitled to receive from
the Borrower hereunder shall bear interest from the date of demand for
payment until paid at the lesser of (i) a fluctuating rate per annum which
shall at all times be equal to the sum of two and one-half (2-1/2%) percent
per annum plus the Base Rate as in effect from time to time or (ii) the
maximum rate permitted by then applicable law. In addition, the Borrower
shall indemnify and hold harmless the Bank from and against any claim for
brokerage commissions or other fees arising from the Loans contemplated by
this Agreement.
Section 11.05. Reduction and Termination. This Agreement may be
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terminated by the Borrower at any time upon written notice of such
termination to the Bank; provided, however, that, unless and until all
Loans made by the Bank hereunder and all other Indebtedness hereunder of
the Borrower to the Bank existing (whether or not due) as of the time of
the receipt of such notice by the Bank shall have been paid in full, such
termination shall in no way affect the rights and powers granted to the
Bank in connection with this Agreement, and until such payment in full all
rights and powers hereby granted to the Bank hereunder shall be and remain
in full force and effect.
The Borrower may at any time, by written notice to the Bank, reduce
the Revolving Commitment Amount; provided that said notice to the Bank
shall be accompanied by such prepayment of principal as shall be necessary
to ensure that the Aggregate Revolving Loans do not exceed the Revolving
Commitment Amount, as same may be so reduced. Any such reduction notice
will be irrevocable and any such reduction will be permanent. Any such
reduction in the Revolving Commitment Amount will be deemed to cause a like
reduction in the $6,000,000 amount appearing in Section 2.15.
Section 11.06. Representations and Warranties. All covenants,
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agreements, representations and warranties made herein or in any other
document delivered by or on behalf of the Borrower or any Guarantor
pursuant to or in connection with this Agreement are material and shall be
deemed to have been relied upon by the Bank, notwithstanding any
investigation heretofore or hereafter made by the Bank and shall survive
the making of the Loans as herein contemplated, and shall continue in full
force and effect so long as the Loans or other amount due under this
Agreement remains outstanding and unpaid. All statements contained in any
certificate or other paper delivered to the Bank at any time by or on
behalf of the Borrower or any Guarantor pursuant hereto shall constitute
representations and warranties by the Borrower hereunder.
Section 11.07. Binding Effect; Assignment. This Agreement shall be
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binding upon the Borrower and its successors and assigns and shall inure to
the benefit of the Borrower and the Bank and their respective permitted
successors and assigns. The Borrower may not assign this Agreement or any
rights hereunder without the express written consent of the Bank. The Bank
may, in accordance with applicable law, assign and/or grant participations
in this Agreement, any of the Loans and/or the Notes. The Bank will notify
the Borrower promptly following any such assignment.
Section 11.08. Reproduction of Agreement. This Agreement and all
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other instruments, documents and papers which relate thereto which have
been or may be hereafter furnished to the Bank may be reproduced by the
Bank by any photographic, photostatic, micro-card, miniature photographic,
xerographic or similar process, and the Bank may destroy the original from
which any document was so reproduced. Any such reproduction shall be
admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made in the regular course of
business).
Section 11.09. Consent to Jurisdiction. The Borrower irrevocably
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submits to the non-exclusive jurisdiction of any New York court or any
federal court sitting within the Southern District of New York over any
suit, action or proceeding arising out of or relating to this Agreement.
The Borrower irrevocably waives, to the fullest extent permitted by law,
any objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding brought in such a court and any claim
that any such suit, action or proceeding has been brought in an
inconvenient forum. The Borrower agrees that final judgment in any such
suit, action or proceeding brought in such a court shall be enforced in any
court of proper jurisdiction by a suit upon such judgment, provided that
service of process in such action, suit or proceeding shall have been
effected upon the Borrower in one of the manners specified in the following
paragraph of this Section 11.09 or as otherwise permitted by law.
The Borrower hereby consents to process being served in any suit,
action or proceeding of the nature referred to in the preceding paragraph
of this Section 11.09 either (i) by mailing a copy thereof by registered or
certified mail, postage prepaid, return receipt requested, to it at its
address set forth in Section 11.03 or (ii) by serving a copy thereof upon
it at its address set forth in Section 11.03. The Borrower irrevocably
waives, to the fullest extent permitted by law, all claims of error by
reason of any service as contemplated herein and agrees that such service
shall (x) be deemed in every respect effective service upon the Borrower in
any such suit, action or proceeding and (y) to the fullest extent permitted
by law, be taken and held to be valid personal service upon and personal
delivery to the Borrower.
Section 11.10. Governing Law. This Agreement and the Notes shall be
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governed by, and construed in accordance with, the laws of the State of New
York.
Section 11.11. Severability. In the event that any provision of this
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Agreement or the application thereof to any Person, property or
circumstances shall be held to any extent to be invalid or unenforceable,
the remainder of this Agreement and the application of such provision to
Persons, properties or circumstances other than those as to which it has
been held invalid or unenforceable shall not be affected thereby, and each
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
Section 11.12. Headings. Article and Section headings in this
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Agreement and any table of contents are included herein for convenience of
reference only and shall not constitute a part of this Agreement for any
other purpose.
Section 11.13. WAIVER OF TRIAL BY JURY. THE BORROWER HEREBY
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EXPRESSLY KNOWINGLY AND VOLUNTARILY WAIVES ALL BENEFIT AND ADVANTAGE OF ANY
RIGHT TO TRIAL BY JURY, AND AGREES THAT IT WILL NOT AT ANY TIME INSIST
UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR
ADVANTAGE OF, A TRIAL BY JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS
AGREEMENT, ANY OF THE NOTES OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed under seal by their respective officers thereunto duly
authorized as of the date first above written.
MEDICAL DIAGNOSTICS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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Its President
CHEMICAL BANK
By: ▇▇▇▇▇▇ ▇▇▇▇▇
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Its Vice President
EXHIBITS
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Exhibit A - List of Guaranteeing Subsidiaries
Exhibit B - Form of Revolving Note
Exhibit C - Form of Term Note
Exhibit D - Equipment subject to Fleet Lease; other equipment excepted
from Collateral
Exhibit E - Intellectual Property
Exhibit F - Subsidiaries, joint ventures
Exhibit G - Litigation schedule
Exhibit H - Violations of contracts, etc.
Exhibit I - Determinations of Need; physician notices of intent
Exhibit J Employee benefit plans
Exhibit K - Premises; Collateral locations; Record owners; titled
vehicles
Exhibit L - Existing Indebtedness and existing liens
Exhibit M - Existing Guaranties
Exhibit N - Investment Policy Guidelines
Exhibit O - Existing investments in and loans to Subsidiaries, joint
ventures
Exhibit P - Officers and Directors