EXHIBIT 10.43
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SECOND AMENDED AND RESTATED LOAN AGREEMENT
among
INFOCURE CORPORATION, POLCI ACQUISITION, INC.,
ORTHODONTIC PRACTICE MANAGEMENT SYSTEM, INC.,
PACE FINANCIAL CORPORATION, MD ACQUISITION, INC.,
ROVAK, INC., KCOMP MANAGEMENT SYSTEMS, INC.,
SOFTEASY SOFTWARE, INC., CCI ACQUISITION, INC.,
HEALTH CARE DIVISION, INC., DR SOFTWARE, INC.,
▇▇▇▇▇▇▇-▇▇▇▇▇, INC., INTERNATIONAL COMPUTER SOLUTIONS, INC.
and
FINOVA CAPITAL CORPORATION
Dated as of February 24, 1998
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TABLE OF CONTENTS
ARTICLE I.................................................................. 1
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DEFINITIONS AND DETERMINATIONS............................................. 1
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1.1 DEFINITIONS....................................................... 1
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1.2 TIME PERIODS...................................................... 20
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1.3 ACCOUNTING TERMS AND DETERMINATIONS............................... 21
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1.4 REFERENCES........................................................ 21
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1.5 FINOVA'S DISCRETION............................................... 21
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1.6 BORROWER'S KNOWLEDGE.............................................. 21
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ARTICLE II................................................................. 22
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LOANS; TERMS OF PAYMENT; AND CONTINGENT OBLIGATION PAYMENT................. 22
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2.1 LOANS............................................................. 22
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2.1.1 TERM LOAN.................................................. 22
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2.1.2 ADVANCES OF THE ACQUISITION LOAN........................... 22
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2.2 USE OF PROCEEDS, NOTES AND REBORROWING............................ 23
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2.2.1 USE OF PROCEEDS............................................ 23
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2.2.2 NOTES...................................................... 23
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2.2.3 REBORROWING................................................ 23
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2.3 INTEREST.......................................................... 24
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2.3.1 INTEREST RATES AND PAYMENT................................. 24
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2.3.2 DEFAULT RATE............................................... 24
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2.3.3 INTEREST COMPUTATION....................................... 24
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2.3.4 MAXIMUM INTEREST........................................... 24
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2.4 PRINCIPAL PAYMENTS................................................ 25
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2.4.1 TERM LOAN.................................................. 25
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2.4.2 ACQUISITION LOAN........................................... 25
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2.4.3 FINAL PAYMENT.............................................. 26
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2.5 LATE CHARGES...................................................... 26
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2.6 PREPAYMENTS....................................................... 26
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2.6.1 VOLUNTARY PREPAYMENTS...................................... 26
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2.6.2 MANDATORY PREPAYMENT...................................... 28
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2.7 LOAN AMENDMENT FEE................................................ 28
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2.8 INTENTIONALLY OMITTED............................................. 28
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2.9 UNUSED COMMITMENT FEE............................................. 28
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2.10 PAYMENTS AFTER EVENT OF DEFAULT.................................. 29
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2.11 CONTINGENT OBLIGATION PAYMENT.................................... 29
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2.12 METHOD OF PAYMENT; GOOD FUNDS.................................... 29
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ARTICLE III................................................................ 29
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SECURITY................................................................... 29
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ARTICLE IV................................................................. 30
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CONDITIONS OF CLOSING; ACQUISITIONS........................................ 30
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4.1 CLOSING........................................................... 30
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4.1.1 REPRESENTATIONS AND WARRANTIES............................. 30
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4.1.2 MICRO-SOFTWARE ACQUISITION................................. 30
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4.1.3 DELIVERY OF DOCUMENTS...................................... 30
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4.1.4 PERFORMANCE; NO DEFAULT.................................... 31
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4.1.5 OPINIONS OF COUNSEL; DIRECTION FOR DELIVERY................ 31
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4.1.6 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS............. 32
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4.1.7 SECURITY INTERESTS......................................... 32
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4.1.8 INTENTIONALLY OMITTED...................................... 32
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4.1.9 LICENSES................................................... 32
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4.1.10 FINANCIAL STATEMENTS, REPORTS AND
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PROJECTIONS; INSPECTION................................... 32
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4.1.11 MATERIAL ADVERSE EFFECT................................... 32
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4.1.12 USE OF ASSETS............................................. 32
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4.1.13 BROKER FEES............................................... 32
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4.1.14 INSURANCE; SURVEY......................................... 33
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4.1.15 MINIMUM OPERATING CASH FLOW............................... 33
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4.1.16 PAYMENT OF FEES AND EXPENSES.............................. 34
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4.2 ACQUISITIONS...................................................... 34
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4.2.1 CONSUMMATION OF ACQUISITIONS............................... 34
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4.2.2 CONSENT OF FINOVA.......................................... 34
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4.2.3 DELIVERY OF DOCUMENTS...................................... 34
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4.2.4 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS.............. 36
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4.2.5 OPINIONS OF COUNSEL........................................ 36
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4.2.6 LICENSES................................................... 36
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4.2.7 MATERIAL ADVERSE EFFECT.................................... 36
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4.2.8 SECURITY INTEREST.......................................... 36
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4.2.9 ENVIRONMENTAL AUDIT........................................ 36
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4.2.10 INSURANCE; SURVEY........................................ 36
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4.2.11 PAYMENT OF FEES.......................................... 36
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4.2.12 REPRESENTATIONS AND WARRANTIES........................... 36
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4.2.13 PERFORMANCE; NO DEFAULT.................................. 37
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ARTICLE V.................................................................. 37
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REPRESENTATIONS AND WARRANTIES............................................. 37
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5.1 EXISTENCE AND POWER............................................... 37
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5.2 AUTHORITY......................................................... 37
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5.3 CAPITAL STOCK AND RELATED MATTERS................................. 37
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5.3.1 CAPITAL STOCK.............................................. 37
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5.3.2 RESTRICTIONS............................................... 37
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5.4 BINDING AGREEMENTS................................................ 38
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5.5 BUSINESS AND PROPERTY OF BORROWER................................. 38
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5.5.1 BUSINESS AND PROPERTY..................................... 38
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5.5.2 LICENSES.................................................. 38
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5.5.3 OPERATING AGREEMENTS...................................... 38
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5.5.4 FACILITY SITES............................................ 38
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5.5.5 LEASES.................................................... 38
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5.5.6 REAL ESTATE............................................... 39
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5.5.7 OPERATION AND MAINTENANCE OF EQUIPMENT.................... 39
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5.5.8 LICENSE AGREEMENTS........................................ 39
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5.6 TITLE TO PROPERTY; LIENS.......................................... 39
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5.7 PROJECTIONS AND FINANCIAL STATEMENTS.............................. 39
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5.7.1 FINANCIAL STATEMENTS...................................... 39
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5.7.2 PROJECTIONS............................................... 40
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5.8 LITIGATION........................................................ 40
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5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS.... 40
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5.10 TAXES............................................................ 40
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5.11 COMPLIANCE WITH APPLICABLE LAWS.................................. 41
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5.12 PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS...................... 41
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5.13 REGULATORY MATTERS............................................... 41
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5.14 ENVIRONMENTAL MATTERS............................................ 41
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5.15 APPLICATION OF CERTAIN LAWS AND REGULATIONS...................... 41
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5.15.1 INVESTMENT BORROWER ACT.................................. 41
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ii
5.15.2 HOLDING BORROWER ACT..................................... 41
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5.15.3 FOREIGN OR ENEMY STATUS.................................. 42
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5.15.4 REGULATIONS AS TO BORROWING.............................. 42
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5.16 MARGIN REGULATIONS............................................... 42
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5.17 OTHER INDEBTEDNESS............................................... 42
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5.18 NO MISREPRESENTATION............................................. 42
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5.19 EMPLOYEE BENEFIT PLANS........................................... 43
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5.19.1 NO OTHER PLANS........................................... 43
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5.19.2 ERISA AND CODE COMPLIANCE AND LIABILITY.................. 43
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5.19.3 FUNDING.................................................. 43
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5.19.4 PROHIBITED TRANSACTIONS AND PAYMENTS..................... 43
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5.19.5 NO TERMINATION EVENT..................................... 43
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5.19.6 ERISA LITIGATION......................................... 44
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5.20 EMPLOYEE MATTERS................................................. 44
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5.20.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES............. 44
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5.20.2 CLAIMS RELATING TO EMPLOYMENT............................ 44
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5.21 BURDENSOME OBLIGATIONS........................................... 44
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5.22 SUBSIDIARIES..................................................... 44
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5.23 REPRESENTATIONS AS TO THE POLCI ACQUISITION INSTRUMENTS,
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THE SOFTEASY ACQUISITION INSTRUMENTS, THE COMMERCIAL
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ACQUISITION INSTRUMENTS, THE PACE ACQUISITION INSTRUMENTS,
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THE OPMS ACQUISITION INSTRUMENTS AND THE MICRO-SOFTWARE
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ACQUISITION INSTRUMENTS.......................................... 45
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ARTICLE VI................................................................. 45
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AFFIRMATIVE COVENANTS...................................................... 45
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6.1 LEGAL EXISTENCE; GOOD STANDING.................................... 45
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6.2 INSPECTION........................................................ 45
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6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION........................ 45
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6.3.1 MONTHLY STATEMENTS........................................ 45
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6.3.2 QUARTERLY STATEMENTS; COMPLIANCE CERTIFICATE.............. 46
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6.3.3 ANNUAL STATEMENTS......................................... 46
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6.3.4 ACCOUNTANTS' CERTIFICATE.................................. 47
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6.3.5 AUDIT REPORTS............................................. 47
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6.3.6 NOTICE OF DEFAULTS; LOSS.................................. 47
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6.3.7 NOTICE OF SUITS, ADVERSE EVENTS........................... 47
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6.3.8 REPORTS TO SHAREHOLDERS, CREDITORS AND
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GOVERNMENTAL BODIES....................................... 48
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6.3.9 ERISA NOTICES AND REQUESTS................................ 48
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6.3.10 OTHER INFORMATION........................................ 49
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6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS.................. 49
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6.5 MAINTENANCE OF LICENSES, FRANCHISES AND OTHER AGREEMENTS.......... 50
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6.6 INSURANCE......................................................... 50
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6.6.1 MAINTENANCE OF INSURANCE................................... 50
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6.6.2 PROCEEDS................................................... 50
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6.7 FUTURE LEASES..................................................... 50
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6.8 FUTURE ACQUISITIONS OF REAL ESTATE................................ 51
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6.9 ENVIRONMENTAL MATTERS............................................. 51
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6.9.1 COMPLIANCE................................................ 51
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6.10 COMPLIANCE WITH LAWS............................................. 51
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6.11 TAXES AND CLAIMS................................................. 51
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6.12 MAINTENANCE OF PROPERTIES........................................ 52
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6.13 GOVERNMENTAL APPROVALS........................................... 52
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6.14 REAFFIRMATIONS OF SUBORDINATION AGREEMENT........................ 52
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iii
ARTICLE VII................................................................ 52
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NEGATIVE COVENANTS......................................................... 52
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7.1 BORROWING......................................................... 52
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7.2 LIENS............................................................. 52
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7.3 MERGER AND ACQUISITION............................................ 52
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7.4 CONTINGENT LIABILITIES............................................ 53
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7.5 DISTRIBUTIONS..................................................... 53
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7.6 CAPITAL EXPENDITURES.............................................. 53
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7.7 PAYMENTS OF INDEBTEDNESS FOR BORROWED MONEY....................... 53
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7.8 INVESTMENTS, LOANS................................................ 54
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7.9 FUNDAMENTAL BUSINESS CHANGES...................................... 54
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7.10 FACILITY SITES................................................... 54
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7.11 SALE OR TRANSFER OF ASSETS....................................... 54
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7.12 AMENDMENT OF DOCUMENTS........................................... 55
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7.13 ACQUISITION OF ADDITIONAL PROPERTIES............................. 55
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7.14 ISSUANCE OF CAPITAL STOCK OR OTHER SIMILAR INTERESTS............. 55
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7.15 TRANSACTIONS WITH AFFILIATES..................................... 55
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7.16 COMPLIANCE WITH ERISA............................................ 55
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7.17 CURRENT RATIO.................................................... 56
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7.18 SENIOR DEBT SERVICE COVERAGE RATIO............................... 56
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7.19 SUBSIDIARIES..................................................... 56
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ARTICLE VIII............................................................... 57
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DEFAULT AND REMEDIES....................................................... 57
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8.1 EVENTS OF DEFAULT................................................. 57
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8.1.1 DEFAULT IN PAYMENT........................................ 57
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8.1.2 BREACH OF COVENANTS....................................... 57
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8.1.3 BREACH OF WARRANTY........................................ 57
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8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY....... 57
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8.1.5 BANKRUPTCY................................................ 58
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8.1.6 JUDGMENTS................................................. 58
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8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS.................. 58
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8.1.8 COLLATERAL................................................ 58
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8.1.9 PLANS..................................................... 59
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8.1.10 CHANGE IN CONTROL........................................ 59
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8.2 ACCELERATION OF BORROWER'S OBLIGATIONS............................ 59
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8.3 REMEDIES ON DEFAULT............................................... 60
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8.3.1 ENFORCEMENT OF SECURITY INTERESTS......................... 60
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8.3.2 OTHER REMEDIES............................................ 60
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8.4 APPLICATION OF FUNDS.............................................. 60
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8.4.1 EXPENSES................................................... 60
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8.4.2 BORROWERS' OBLIGATIONS..................................... 60
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8.4.3 SURPLUS.................................................... 60
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8.5 PERFORMANCE OF BORROWER'S OBLIGATIONS............................. 60
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ARTICLE IX................................................................. 61
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CLOSING.................................................................... 61
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ARTICLE X.................................................................. 61
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EXPENSES AND INDEMNITY..................................................... 61
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10.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES..................... 61
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10.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN INSTRUMENTS.... 61
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10.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR
DEFENSE OF LOAN INSTRUMENTS.............................. 61
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iv
10.2 INDEMNITY....................................................... 62
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10.2.1 BROKERAGE FEES........................................... 62
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10.2.2 GENERAL.................................................. 62
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10.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS................. 62
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10.2.4 ENVIRONMENTAL INDEMNITY.................................. 62
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ARTICLE XI................................................................. 63
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MISCELLANEOUS.............................................................. 63
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11.1 NOTICES......................................................... 63
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11.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES......................... 64
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11.3 FURTHER ASSURANCE............................................... 64
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11.4 TAXES AND FEES.................................................. 64
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11.5 SEVERABILITY.................................................... 65
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11.6 WAIVER.......................................................... 65
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11.7 MODIFICATION OF LOAN INSTRUMENTS................................ 65
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11.8 CAPTIONS........................................................ 65
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11.9 SUCCESSORS AND ASSIGNS.......................................... 65
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11.10 REMEDIES CUMULATIVE............................................ 65
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11.11 ENTIRE AGREEMENT; CONFLICT..................................... 65
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11.12 APPLICABLE LAW................................................. 66
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11.13 JURISDICTION AND VENUE......................................... 66
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11.14 WAIVER OF RIGHT TO JURY TRIAL.................................. 66
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11.15 TIME OF ESSENCE................................................ 66
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11.16 ESTOPPEL CERTIFICATE........................................... 66
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11.17 CONSEQUENTIAL DAMAGES.......................................... 67
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11.18 COUNTERPARTS................................................... 67
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11.19 NO FIDUCIARY RELATIONSHIP...................................... 67
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11.20 NOTICE OF BREACH BY FINOVA..................................... 67
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11.21 JOINT AND SEVERAL OBLIGATIONS................................... 67
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11.22 CONTINUED EFFECTIVE; NO NOVATION................................ 67
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v
LIST OF EXHIBITS TO LOAN AGREEMENT
Exhibit 1.1(A) - Existing Loan Instruments
Exhibit 2.1.1 - Notice of Borrowing
Exhibit 5.3.1 - Subsidiaries Capital Stock
Exhibit 5.5.1 - Business and Property
Exhibit 5.5.2 - Licenses
Exhibit 5.5.3 - Operating Agreements
Exhibit 5.5.4 - Facility Sites
Exhibit 5.5.5 - Leases
Exhibit 5.5.6 - Real Estate
Exhibit 5.5.8 - License Agreements
Exhibit 5.7.1 - Financial Statements
Exhibit 5.7.2 - Projections
Exhibit 5.8 - Litigation
Exhibit 5.12 - Intellectual Property
Exhibit 5.19.1 - Employee Benefit Plans
Exhibit 5.20.1 - Collective Bargaining
SECOND AMENDED AND RESTATED LOAN AGREEMENT
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This SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as of February 24,
1998, is among INFOCURE CORPORATION, a Delaware corporation ("InfoCure"), POLCI
ACQUISITION, INC., a Michigan corporation ("Polci"), ORTHODONTIC PRACTICE
MANAGEMENT SYSTEM, INC., a Georgia corporation ("OPMS"), PACE FINANCIAL
CORPORATION, an Ohio corporation ("Pace"), MD ACQUISITION, INC., a Connecticut
corporation ("MD Acquisition, Inc."), ROVAK, INC., a Minnesota corporation
("Rovak"), KCOMP MANAGEMENT SYSTEMS, INC., a California corporation ("KComp"),
SOFTEASY SOFTWARE, INC., a Pennsylvania corporation ("SoftEasy"), CCI
ACQUISITION, INC., a Florida corporation ("CCI Acquisition, Inc."), and HEALTH
CARE DIVISION, INC., a Georgia corporation ("HCD"), DR SOFTWARE, INC., a Georgia
corporation ("DR Software"), ▇▇▇▇▇▇▇-▇▇▇▇▇, INC., a Georgia corporation
("▇▇▇▇▇▇▇-▇▇▇▇▇"), INTERNATIONAL COMPUTER SOLUTIONS, INC., a Georgia corporation
("ICS"), and FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA").
PRELIMINARY STATEMENT:
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A. The Original Borrowers (as hereinafter defined), as original signatories
thereto or by joinder, and FINOVA entered into that certain Amended and Restated
Loan Agreement dated as of November 26, 1997 (as the same may have been amended
through the date hereof, the "Existing Amended and Restated Loan Agreement"),
which amended and restated the Loan Agreement dated as of October 29, 1997 among
certain of the Original Borrowers and FINOVA, as amended, pursuant to which the
Original Borrowers requested, and FINOVA made available to the Original
Borrowers, certain loan facilities, upon and subject to the terms and conditions
therein set forth.
B. The Original Borrowers, MD Acquisition, Inc. and FINOVA have agreed to
amend and restate in its entirety the Existing Amended and Restated Loan
Agreement without constituting a novation.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the Existing Amended and Restated Loan Agreement is
amended and restated in its entirety as follows:
ARTICLE I
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DEFINITIONS AND DETERMINATIONS
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1.1 DEFINITIONS. As used in this Loan Agreement and in the other
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Loan Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the
1
following meanings (such meanings to be applicable equally to both the singular
and plural forms of the terms defined):
Accountants: BDO ▇▇▇▇▇▇▇, L.L.P. or any other independent certified public
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accounting firm selected by Borrowers and reasonably satisfactory to FINOVA.
Accounting Changes: as defined in Section 1.3.
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Accounts Decrease: for any period, the excess of the Eligible Accounts at the
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beginning of such period over the Eligible Accounts at the end of such period.
Accounts Increase: for any period, the excess of the Eligible Accounts at the
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end of such period over the Eligible Accounts at the beginning of such period.
Acquisition: an Asset Acquisition or an Equity Acquisition.
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Acquisition Closing. the consummation of a Permitted Acquisition.
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Acquisition Closing Date: the date of an Acquisition Closing.
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Acquisition Instruments: the purchase agreement and all other documents and
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instruments executed in connection with a Permitted Acquisition.
Acquisition Loan: the loans in the aggregate maximum amount of $20,000,000,
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the proceeds of which are to be used solely for Permitted Acquisitions and
to pay related transaction costs.
Acquisition Loan Instruments: collectively, the following documents
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to be executed and delivered in connection with a Permitted Acquisition:
(i) any amendments to the Loan Instruments and any Joinder to Loan
Agreement, Note, Mortgage, Security Agreement, Pledge Agreement,
Assignment of Leases, Environmental Certificate, Contribution
Agreement, Reaffirmation of Subordination Agreement, Master
Reaffirmation Agreement, UCC Financing Statements and other
agreements, documents and instruments required by FINOVA to (A)
reflect the effect of such Permitted Acquisition and (B) grant to
FINOVA a perfected first Lien, subject only to Permitted Prior Liens,
upon all Property of the applicable Target or acquired by InfoCure or
the applicable Acquisition Subsidiary upon the consummation of such
Permitted Acquisition;
(ii) an Assignment of Acquisition Instruments;
2
(iii) a Seller's Consent with respect to such Permitted Acquisition if such
consent is required to the applicable Assignment of Acquisition
Instruments;
(iv) a Landlord's Consent executed by each Landlord under each Lease of
the applicable Target or assumed or executed by the applicable
Acquisition Subsidiary in connection with such Permitted Acquisition;
and
(v) such other instruments, agreements, documents, certificates, consents,
waivers and opinions as FINOVA may reasonably require in connection
with such Permitted Acquisition.
Acquisition Loan Note: a promissory note in the principal amount of
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$20,000,000 executed and delivered by Borrowers to FINOVA to evidence the
Acquisition Loan, and any notes issued in substitution thereof pursuant to this
Loan Agreement, in each case in form and substance satisfactory to FINOVA.
Acquisition Subsidiary: a wholly-owned subsidiary of InfoCure formed
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and organized after the Restatement Effective Date to consummate a Permitted
Acquisition which constitutes an Asset Acquisition in accordance with the terms
of this Loan Agreement, provided that such Subsidiary shall have executed and
delivered to FINOVA such Acquisition Loan Instruments and other documents and
instruments as FINOVA shall require to cause such Person to become a "Borrower"
under the Loan Instruments.
ADA: the Americans with Disabilities Act of 1990, as amended, any successor
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statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Additional Closing: the disbursement of an Advance of the Acquisition Loan.
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Additional Closing Date: the date of an Additional Closing.
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Adjusted Debt Service: when determining whether an Advance of the Acquisition
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Loan shall be made to Borrowers to consummate an Acquisition (a "Requested
Advance"), for any period, the sum of the following, without duplication: (i)
Debt Service of Borrowers for such period, plus (ii) to the extent any Advance
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of the Acquisition Loan was actually made after the first day of such period,
the interest and principal which would have been payable during such period with
respect to such Advance if such Advance had been made on the first day of such
period, plus (iii) the interest and principal which would have been payable
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during such period with respect to the Requested Advance which shall be
requested by Borrowers to consummate such Acquisition if such Requested Advance
had been made on the first day of such period.
3
Adjusted Operating Cash Flow: for any twelve-month period, the Operating Cash
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Flow of Borrowers for such period, plus, without duplication, the sum of the
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following:
(i) if an Acquisition Closing shall have occurred during such period, the
Operating Cash Flow of the Target which has been acquired by InfoCure
or the applicable Acquisition Subsidiary pursuant to the Permitted
Acquisition in respect of such Acquisition Closing, from the beginning
of such period until the date such Permitted Acquisition was
consummated, the calculation of which shall be reasonably satisfactory
to FINOVA;
(ii) when determining whether a proposed Acquisition will be a Permitted
Acquisition, the Operating Cash Flow for such period of the Target to
be acquired, as determined to the satisfaction of the FINOVA based on
financial and other information submitted to FINOVA by Borrowers, the
calculation of which shall be reasonably satisfactory to FINOVA;
(iii) for any portion of such period prior to the Original Closing Date, the
Operating Cash Flow of SoftEasy Seller and the Operating Cash Flow
attributable to the Property acquired by CCI Acquisition, Inc.
pursuant to the Commercial Acquisition Instruments from the beginning
of such period until the Original Closing Date, in each case the
calculation of which shall be reasonably satisfactory to FINOVA; and
(iv) such adjustments to the Operating Cash Flow of Borrowers and such
Target for such period as FINOVA reasonably deems appropriate, based
on information furnished to FINOVA by Borrowers, to take into account
reductions or increases in expenses for said period which would have
been effected if such Acquisition had been consummated at the
beginning of such period.
Advance: any advance of the Acquisition Loan.
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Affiliate: any Person that directly or indirectly, through one or more
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intermediaries, controls or is controlled by or is under common control with
another Person. The term "control" means possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or equity interests,
by contract or otherwise. For the purposes hereof any Person which owns or
controls, directly or indirectly, 10% or more of the securities or equity
interests, as applicable, whether voting or non-voting, of any other Person
shall be deemed to "control" such Person. Notwithstanding anything contained
herein to the contrary, FINOVA shall not be deemed to be an Affiliate of any
Borrower.
Applicable Margin: as defined in subsection 2.3.1.
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4
Asset Acquisition: an acquisition of the Property of a Target.
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Assignment of Acquisition Instruments: an assignment of acquisition
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instruments executed and delivered by InfoCure and/or the applicable Acquisition
Subsidiary in connection with a Permitted Acquisition, in form and substance
satisfactory to FINOVA.
Assignment of Leases: an assignment of leases executed by any of the
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Borrowers, in form and substance satisfactory to FINOVA.
Bankruptcy Code: the United States Bankruptcy Code, any successor
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statute thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
Base Rate: the per annum rate of interest announced or published publicly
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from time to time by Citibank, N.A. in New York, New York as its corporate base
(or equivalent) rate of interest, which rate shall change automatically without
notice and simultaneously with each change in such corporate base rate. The Base
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer by Citibank, N.A. in New York, New York.
Basic Financial Statements: as defined in subsection 6.3.3.
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Borrower: any of the Borrowers.
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Borrowers: collectively, InfoCure, Rovak, CCI Acquisition, Inc., Polci, HCD,
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KComp, SoftEasy, DR Software, ▇▇▇▇▇▇▇-▇▇▇▇▇, ICS, OPMS, Pace, MD Acquisition,
Inc., each Acquisition Subsidiary and any Target acquired by InfoCure pursuant
to an Equity Acquisition.
Borrowers' Obligations: (i) any and all Indebtedness due or to become due,
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now existing or hereafter arising, of Borrowers to FINOVA pursuant to the terms
of this Loan Agreement, any other Loan Instrument or otherwise, including,
without limitation, the Contingent Obligation Payment required to be made by
Borrowers pursuant to Section 2.11, and (ii) the performance of the covenants of
Borrowers contained in the Loan Instruments.
Business Day: any day other than a Saturday, Sunday or other day on which
------------
banks in Phoenix, Arizona or New York, New York are required to close.
Capital Expenditures: payments that are made or liabilities that are incurred
--------------------
by any Borrower for the lease, purchase, improvement, construction or use of any
Property, the value or cost of which under GAAP is required to be capitalized
and appears on such Borrower's balance sheet in the category of property, plant
or equipment, without regard
5
to the manner in which such payments or the instruments pursuant to which they
are made are characterized by such Borrower or any other Person.
Capitalized Lease: any lease of Property, the obligations for the rental of
-----------------
which are required to be capitalized in accordance with GAAP.
CCI Acquisition, Inc.: as defined in the Preamble of this Loan Agreement.
---------------------
Chief Financial Officer: the chief financial officer of each Borrower.
-----------------------
Closing Certificate: a Closing Certificate executed by Borrowers in form and
-------------------
substance satisfactory to FINOVA.
Code: the Internal Revenue Code of 1986, any successor statute thereto, and
----
the rules, regulations and legally binding policies promulgated thereunder, as
amended and in effect from time to time.
Collateral: (i) all existing and after-acquired Property of Borrowers,
----------
including, without limitation, all existing and after-acquired accounts,
equipment, inventory, investment property and general intangibles, (ii) the
Subsidiaries Capital Stock and (iii) all proceeds of the foregoing.
Commercial Acquisition: the acquisition by CCI Acquisition, Inc. of
----------------------
substantially all of the Property of Commercial Seller.
Commercial Acquisition Instruments: all agreements, documents and instruments
----------------------------------
executed and delivered by InfoCure, CCI Acquisition, Inc. and Commercial Seller
in connection with the Commercial Acquisition.
Commercial Seller: Commercial Computers, Inc., a Florida corporation.
-----------------
Commercial Subordinated Note: that certain Non-Negotiable Convertible
----------------------------
Promissory Note dated as of October 1, 1997 in the original principal amount of
$600,000 made by InfoCure and CCI Acquisition, Inc. payable to the order of
Commercial Seller.
Commercial Subordination Agreement: that certain Subordination Agreement
----------------------------------
dated as of November 14, 1997 among InfoCure, CCI Acquisition, Inc., Commercial
Seller and FINOVA.
Compliance Certificate: a Compliance Certificate executed by the Chief
----------------------
Financial Officer, in form and substance satisfactory to FINOVA.
Contingent Obligation Payment: as defined in Section 2.11.
-----------------------------
6
Contribution Agreement: a contribution agreement among the Borrowers, in form
----------------------
and substance satisfactory to FINOVA.
COP Base Amount: as of any date, an amount equal to the difference of (i) the
---------------
Operating Cash Flow of Borrowers for the Fiscal Year of Borrowers ending January
31, 1998, less (ii) the Operating Cash Flow attributable to any Subsidiary,
profit-center or other material group of assets which, during the period from
the Original Closing Date to and including the COP Calculation Date, shall have
been sold or otherwise subject to a disposition in accordance with the terms of
this Loan Agreement, the calculation of which shall be reasonably satisfactory
to FINOVA.
COP Calculation Date: (i) the date on which the Contingent Obligation
--------------------
Payment is required to be made pursuant to Section 2.11 or (ii) if the
Contingent Obligation Payment is due as a result of the occurrence of any Market
Event or Market Refinancing Event, then, at FINOVA's option, the date on which
FINOVA shall have received notice of such Market Event or Market Refinancing
Event, as applicable, which Borrowers covenant and agree to provide no less than
thirty (30) days prior to the date on which such Market Event or Market
Refinancing Event, as applicable, occurs.
COP Default Event: shall mean (i) the occurrence of any Event of Default
-----------------
described in subsection 8.1.10 or (ii) the acceleration of Borrowers'
Obligations pursuant to Section 8.2.
COP Market Value: shall mean (i) if the Contingent Obligation Payment is
----------------
required to be paid on the COP Maturity Payment Date, the Operating Cash Flow of
Borrowers for the Fiscal Year of Borrowers ending on January 31, 2001, the
calculation of which shall be based upon financial statements delivered to
FINOVA by Borrowers pursuant to subsection 6.3.3 or (ii) if the Contingent
Obligation payment is required to be made on any other date, the greater of (A)
the Adjusted Operating Cash Flow of Borrowers for the twelve-month period ending
on the last day of the most recent month for which Borrowers shall have
delivered to FINOVA financial statements pursuant to subsection 6.3.1 or (B) the
annualized Adjusted Operating Cash Flow of Borrowers for the then current Fiscal
Year determined as of the last day of the most recent month for which Borrowers
shall have delivered to FINOVA financial statements pursuant to subsection
6.3.1, the calculation of which shall be based upon such financial statements
which cover the period from the beginning of the then current Fiscal Year of
Borrowers to the end of such most recent month.
COP Maturity Payment Date: the 30th day after the date on which Borrowers are
-------------------------
required to deliver audited financial statements for the Fiscal Year of
Borrowers ending on January 31, 2001 pursuant to subsection 6.3.3.
Debt Service: during any period, all payments of principal, interest,
------------
premium, loan fees and other charges with respect to Indebtedness for Borrowed
Money, which
7
payments are required or permitted to be made pursuant to this Loan Agreement
and are due and payable during such period, excluding any payments made in
connection with unsecured inter-company loans by any Borrower to any other
Borrower permitted to be made pursuant to this Loan Agreement.
Default Rate: (i) with respect to the Term Loan, a rate equal to 14.5% per
------------
annum, (ii) with respect to the Acquisition Loan, a rate equal to the Base Rate,
plus the Applicable Margin then in effect, plus 5.0% per annum and (iii) with
---- ----
respect to any other amounts which may be owing by Borrowers to FINOVA pursuant
to this Loan Agreement, the other Loan Instruments or otherwise, a rate equal to
the greater of (i) and (ii) of this definition.
Default Rate Period: a period of time commencing on the date an Event of
-------------------
Default has occurred and ending on the date that such Event of Default is cured
or waived.
Discount Value: as defined in subsection 2.6.1(e)(ii).
--------------
Eligible Accounts: at any given time, the aggregate of the face amount of the
-----------------
accounts receivable of Borrowers, exclusive of any accounts receivable over 60
days past due.
Employee Benefit Plan: any employee benefit plan within the meaning of
---------------------
Section 3(3) of ERISA which (i) is maintained for employees of any Borrower or
any of its ERISA Affiliates or (ii) has at any time within the preceding six
years been maintained for the employees of such Borrower or any of its current
or former ERISA Affiliates.
Environmental Certificate: an environmental certificate executed by
-------------------------
Borrowers, in form and substance satisfactory to FINOVA.
Environmental Laws: any and all federal, state and local laws that relate to
------------------
or impose liability or standards of conduct concerning public or occupational
health and safety or protection of the environment, as now or hereafter in
effect and as have been or hereafter may be amended or reauthorized, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 ▇.▇.▇ '▇▇▇▇ et seq.), the Hazardous Materials Transportation
------
Act (42 U.S.C. '1802 et seq.), the Resource Conservation and Recovery Act (42
------
U.S.C. '6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. '1251
------
et seq.), the Toxic Substances Control Act (15 U.S.C. '2601 et seq.), the Clean
------ ------
Air Act (42 U.S.C. '7901 et seq.), the National Environmental Policy Act (42
------
U.S.C. '4231, et seq.), the Refuse Act (33 U.S.C. '407, et seq.), the Safe
------ ------
Drinking Water Act (42 U.S.C. '300(f) et seq.), the Occupational Safety and
------
Health Act (29 U.S.C. '651 et seq.), and all rules, regulations, codes,
------
ordinances and guidance documents promulgated or published thereunder, and the
8
provisions of any licenses, permits, orders and decrees issued pursuant to any
of the foregoing.
Equity Acquisition: an acquisition by InfoCure directly or through a wholly-
------------------
owned subsidiary of 100% of the capital stock or other equity interests of a
Target.
ERISA: the Employee Retirement Income Security Act of 1974, and any successor
-----
statute thereto, and the rules, regulations and legally binding policies
promulgated thereunder, as amended and in effect from time to time.
ERISA Affiliate: any Person who is a member of a group which is under common
---------------
control with any Borrower, who together with such Borrower is treated as a
single employer within the meaning of Section 414(b), (c) and (m) of the Code.
Event of Default: any of the Events of Default set forth in Section 8.1.
----------------
Excess Cash Flow: for any period, (i) the Operating Cash Flow of Borrowers
----------------
for such period, (ii) plus Accounts Decrease, if any, for such period, and (iii)
----
minus, the aggregate of the following for such period: (A) Debt Service, (B)
-----
amounts actually paid by Borrowers with respect to Capital Expenditures
permitted to be incurred pursuant to this Loan Agreement, whether or not under
the definition "Capital Expenditures" such Capital Expenditures were deemed to
be made during such period, but excluding any such amounts paid from the
proceeds of Permitted Senior Indebtedness, and (C) Accounts Increase, if any.
Excess Interest: as defined in subsection 2.3.4.
---------------
Existing Acquisition Instruments: collectively, (i) the SoftEasy Acquisition
--------------------------------
Instruments, (ii) the Commercial Acquisition Instruments, (iii) the OPMS
Acquisition Instruments, (iv) the Pace Acquisition Instruments and (v) the Polci
Acquisition Instruments.
Existing Amended and Restated Loan Agreement: as defined in the Preliminary
--------------------------------------------
Statement of this Loan Agreement.
Existing Loan Instruments: collectively, the agreements, documents and
-------------------------
instruments set forth on EXHIBIT 1.1(A).
FINOVA: as defined in the Preamble to this Loan Agreement.
------
Fiscal Year: shall mean the fiscal year of Borrowers for financial accounting
-----------
purposes, which fiscal year ends on January 31.
Funding Date: the date of disbursement of any Advance of the Acquisition
------------
Loan.
9
GAAP: generally accepted accounting principles as in effect from time to
----
time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
Good Funds: United States Dollars available in Federal funds to FINOVA at or
----------
before 2:00 p.m., Phoenix time, on a Business Day.
Governmental Body: any foreign, federal, state, municipal or other
-----------------
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Hazardous Materials: any hazardous, toxic, dangerous or other waste,
-------------------
substance or material defined as such in, regulated by or for purposes of any
Environmental Law.
HCD: as defined in the Preamble of this Loan Agreement.
---
ICS: as defined in the Preamble of this Loan Agreement.
---
Incipient Default: any event of condition which, with the giving of notice or
-----------------
the lapse of time, or both, would become an Event of Default.
Indebtedness: all liabilities, obligations and reserves, contingent or
------------
otherwise, which, in accordance with GAAP, would be reflected as a liability on
a balance sheet or would be required to be disclosed in a financial statement,
including, without duplication: (i) Indebtedness for Borrowed Money, (ii)
obligations secured by any Lien upon Property, (iii) guaranties, letters of
credit and other contingent obligations and (iv) liabilities in respect of
unfunded vested benefits under any Pension Plan or in respect of withdrawal
liabilities incurred under ERISA by any Borrower or any of its ERISA Affiliates
to any Multiemployer Plan.
Indebtedness for Borrowed Money: without duplication, all Indebtedness (i) in
-------------------------------
respect of money borrowed, (ii) evidenced by a note, debenture or other like
written obligation to pay money (including, without limitation, all of
Borrowers' Obligations and Permitted Senior Indebtedness), (iii) in respect of
rent or hire of Property under Capitalized Leases or for the deferred purchase
price of Property, (iv) in respect of obligations under conditional sales or
other title retention agreements and (v) all guaranties of any or all of the
foregoing.
InfoCure: as defined in the Preamble of this Loan Agreement.
--------
Initial Loan Instruments: collectively,
------------------------
(i) this Loan Agreement;
10
(ii) the Notes;
(iii) a Contribution Agreement;
(iv) a Master Reaffirmation Agreement among the Borrowers as of the
Restatement Effective Date and FINOVA;
(v) a Reaffirmation of Subordination Agreement with respect to (a) each of
KComp Subordination Agreements, (b) the Commercial Subordination
Agreement and (c) the Polci Subordination Agreement;
(vi) a Security Agreement executed by MD Acquisition, Inc.;
(vii) a Pledge Agreement with respect to the capital stock of MD Acquisition,
Inc.;
(viii) a power of attorney executed by MD Acquisition, Inc.;
(ix) an Assignment of Leases executed by MD Acquisition, Inc.;
(x) an Environmental Certificate executed by MD Acquisition, Inc.;
(xi) Mortgages, if any;
(xii) an Assignment of Acquisition Instruments in connection with the Micro-
Software Acquisition;
(xiii) a Closing Certificate;
(xiv) a Solvency Certificate;
(xv) an initial notice of borrowing;
(xvi) such Uniform Commercial Code financing statements as FINOVA may require
in order to perfect the Security Interests; and
(xvii) such other instruments and documents as FINOVA reasonably may require
in connection with the transactions contemplated by this Loan
Agreement.
Instruments: collectively, (i) the Loan Instruments, (ii) the Acquisition
-----------
Instruments, (iii) the Existing Acquisition Instruments, (iv) the KComp Notes,
(v) the Commercial Subordinated Note, (vi) the Polci Subordinated Note, (vii)
the Micro-Software Acquisition Instruments and (viii) each subordination
agreement executed and delivered in connection with the transactions
contemplated by the Loan Instruments.
11
Joinder to Loan Agreement: a joinder to this Loan Agreement pursuant to which
-------------------------
any Person shall become a "Borrower" hereunder.
KComp: as defined in the Preamble of this Loan Agreement.
-----
KComp Notes: shall mean, collectively, (i) that certain Promissory Note dated
-----------
July 9, 1997 in the original principal amount of $46,645.25 made by KComp
payable to the order of ▇▇▇▇ ▇▇▇▇▇▇, (ii) that certain Promissory Note dated
July 9, 1997 in the original principal amount of $60,141.92 made by KComp
payable to the order of ▇▇▇▇ ▇▇▇▇▇, (iii) that certain Promissory Note dated
July 9, 1997 in the original principal amount of $24,092.14 made by KComp
payable to the order of ▇▇▇▇ ▇▇▇▇▇▇▇ and (iv) that certain Promissory Note dated
July 9, 1997 in the original principal amount of $119,120.69 made by KComp
payable to the order of ▇▇▇▇▇ ▇▇▇▇▇▇.
KComp Subordination Agreements: collectively, the subordination agreements
------------------------------
among KComp, FINOVA and each holder of the KComp Notes.
Landlord: a lessor under a Lease.
--------
Landlord Consent: a consent from a Landlord in form and substance
----------------
satisfactory to FINOVA.
Lease: any lease of real estate under which any Borrower is the lessee or
-----
sublessee.
Leasehold Property: any real estate which is the subject of a Lease.
------------------
License Agreements: all license agreements pursuant to which any Borrower is
------------------
licensed to use the computer software or similar Property of any other Person in
connection with the business of such Borrower.
Licenses: all licenses, permits, consents, approvals and authority issued by
--------
any Governmental Body in connection with the operation of the business of any
Borrower.
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance or security
----
interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease or other title retention
agreement.
Loan Agreement: this Second Amended and Restated Loan Agreement and any
--------------
amendments or supplements hereto.
Loan Amendment Fee: as defined in Section 2.7.
------------------
12
Loan Instruments: collectively, (i) the Initial Loan Instruments, (ii) the
----------------
Existing Loan Instruments and (iii) the Acquisition Loan Instruments, including,
without limitation, the Acquisition Loan Instruments executed and delivered in
connection with the Micro-Software Acquisition.
Loan Year: a period of time from the Original Closing Date or any anniversary
---------
of the Original Closing Date to the immediately succeeding anniversary of the
Original Closing Date.
Loans: collectively, the Term Loan and the Acquisition Loan.
-----
Make Whole Premium: as defined in subsection 2.6.1(e)(i).
------------------
Master Reaffirmation Agreement: a master reaffirmation agreement among
------------------------------
Borrowers and FINOVA executed and delivered in connection with a Permitted
Acquisition or otherwise, in each case in form and substance satisfactory to
FINOVA.
Material Adverse Effect: (i) a material adverse effect upon the business,
-----------------------
operations, Property, profits or condition (financial or otherwise) of the
Borrowers as a whole or upon the validity, enforceability or priority of the
Security Interests or (ii) a material impairment of the ability of the Borrowers
as a whole to perform their obligations under any Loan Instrument or of FINOVA
to enforce or collect any of Borrowers' Obligations.
Market Event: shall mean a sale or disposition of a Subsidiary or all or
------------
substantially all of the Property of any Borrower, in each case subject to the
applicable provisions of this Loan Agreement.
Market Refinancing Event: the prepayment, performance and satisfaction in
------------------------
full of all of Borrowers' Obligations (other than the making of the Contingent
Obligation Payment) pursuant to the applicable terms of this Loan Agreement.
Maximum Rate: as defined in subsection 2.3.4.
------------
MD Acquisition, Inc.: as defined in the Preamble of this Loan Agreement.
--------------------
Micro-Software Acquisition: the acquisition by MD Acquisition, Inc. of
--------------------------
substantially all of the Property of Micro-Software Seller pursuant to the
Micro-Software Acquisition Instruments.
Micro-Software Acquisition Instruments: that certain Asset Purchase Agreement
--------------------------------------
dated as of February 19, 1998 among Micro-Software Seller, MD Acquisition, Inc.
and InfoCure, and all other agreements, documents and instruments executed and
delivered pursuant thereto.
13
Micro-Software Seller: collectively, Micro-Software Designs, Inc., a New York
---------------------
corporation, ▇▇▇▇▇▇ ▇▇▇▇▇, an individual, and ▇▇▇▇▇ ▇▇▇▇▇, an individual.
▇▇▇▇▇▇▇-▇▇▇▇▇: as defined in the Preamble of this Loan Agreement.
-------------
Mortgage: a mortgage on a parcel of Real Estate in favor of FINOVA, in form
--------
and substance satisfactory to FINOVA.
Multiemployer Plan: any multiemployer plan as defined pursuant to Section
------------------
3(37) of ERISA to which any Borrower or any of its ERISA Affiliates makes, or
accrues an obligation to make contributions, or has made, or been obligated to
make, contributions within the preceding six years.
Multiplier: shall be equal to (i) seven (7) if the COP Calculation Date
----------
occurs during the period commencing on the Original Closing Date and ending on
the last day of Borrowers' Fiscal Year ending January 31, 1999, (ii) six (6) if
the COP Calculation Date occurs during the period commencing on February 1, 1999
and ending on the day immediately preceding the COP Maturity Payment Date and
(iii) five (5) if the COP Calculation Date occurs on the COP Maturity Payment
Date.
Notes: collectively, the Term Note and the Acquisition Loan Note.
-----
Operating Agreements: all right-of-entry agreements, access agreements,
--------------------
advertising contracts, equipment leases, agreements pursuant to which any Person
provides electronic data service to any Borrower, service contracts and similar
agreements relating to the operation of the business of any Borrower, excluding
the Leases.
Operating Cash Flow: for any period, the net income of each Borrower for such
-------------------
period:
(i) plus the sum of the following (without duplication), to the extent
----
deducted in determining such net income of such Borrower for such
period:
(A) losses from sales, exchanges and other dispositions of Property
not in the ordinary course of business;
(B) interest, fees and other charges paid or accrued on Indebtedness,
including, without limitation, interest on Capitalized Leases
that is imputed in accordance with GAAP;
(C) depreciation and amortization;
14
(D) extraordinary and non-recurring losses not in the ordinary course
of business;
(E) casualty losses to the extent covered by casualty insurance;
(F) taxes accrued but not paid during such period; and
(G) any other non-cash item deducted in determining such net income;
(ii) minus the sum of the following (without duplication), to the extent
-----
included in determining such net income for such period:
(A) gains from sales, exchanges and other dispositions of Property
not in the ordinary course of business; and
(B) proceeds of any insurance other than business interruption
insurance.
Operating Lease: any lease which, under GAAP, is not required to be
---------------
capitalized.
OPMS: as defined in the Preamble of this Loan Agreement.
----
OPMS Acquisition: the acquisition by InfoCure of 100% of the issued and
----------------
outstanding capital stock of OPMS.
OPMS Acquisition Instruments: all agreements, documents and instruments
----------------------------
executed and delivered by InfoCure, OPMS and the seller thereunder in connection
with the OPMS Acquisition.
Original Borrowers: shall mean all of the Borrowers as of the Restatement
------------------
Effective Date other than MD Acquisition, Inc.
Original Closing Date: October 29, 1997.
---------------------
Pace: as defined in the Preamble of this Loan Agreement.
----
Pace Acquisition: the acquisition by InfoCure of 100% of the issued and
----------------
outstanding capital stock of Pace.
Pace Acquisition Instruments: all agreements, documents and instruments
----------------------------
executed and delivered by InfoCure, Pace and the seller thereunder in connection
with the Pace Acquisition.
15
PBGC: the Pension Benefit Guaranty Corporation or any Governmental Body
----
succeeding to the functions thereof.
Pension Plan: any Employee Benefit Plan, other than a Multiemployer Plan,
------------
which is subject to the provisions of Part 3 of Title I of ERISA, Title IV of
ERISA, or Section 412 of the Code and which (i) is maintained for employees of
any Borrower or any of its ERISA Affiliates, or (ii) has at any time within the
preceding six years been maintained for the employees of any Borrower or any of
its current or former ERISA Affiliates.
Permitted Acquisitions: an Acquisition funded in whole or in part with the
----------------------
proceeds of an Advance of the Acquisition Loan.
Permitted Liens: any of the following Liens:
---------------
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments and similar charges, which either are
(A) not delinquent or (B) being contested diligently and in good faith
by appropriate proceedings, and as to which the applicable Borrower
has set aside reserves on its books which are satisfactory to FINOVA;
(iv) statutory Liens, such as mechanic's, materialman's, warehouseman's,
carrier's or other like Liens, incurred in good faith in the ordinary
course of business, provided that the underlying obligations relating
to such Liens are paid in the ordinary course of business, or are
being contested diligently and in good faith by appropriate
proceedings and as to which the applicable Borrower has set aside
reserves on its books satisfactory to FINOVA, or the payment of which
obligations are otherwise secured in a manner satisfactory to FINOVA;
(v) zoning ordinances, easements, licenses, reservations, provisions,
covenants, conditions, waivers or restrictions on the use of Property
and other title exceptions, in each case, that are acceptable to
FINOVA;
(vi) Liens in respect of judgments or awards with respect to which no Event
of Default would exist pursuant to subsection 8.1.6; and
(vii) Liens to secure payment of insurance premiums (A) to be paid in
accordance with applicable laws in the ordinary course of business
relating to payment of worker's compensation, or (B) that are required
for the participation in any fund in connection with worker's
compensation,
16
unemployment insurance, old-age pensions or other social security
programs.
Permitted Prior Liens: any of the following Liens:
---------------------
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii) and (iv) of the
definition of Permitted Liens that are accorded priority to the
Security Interests by law; and
(iii) the Permitted Liens described in clauses (v) and (vii) of the
definition of Permitted Liens, subject to the limitations set
forth therein.
Permitted Senior Indebtedness: Indebtedness, other than Borrowers'
-----------------------------
Obligations, incurred to purchase tangible personal property or Indebtedness
incurred to lease tangible personal property pursuant to Capitalized Leases,
provided that (i) such aggregate Indebtedness of the Borrowers existing as of
the Original Closing Date shall not in the aggregate exceed $150,000, (ii)
during any Loan Year after the Original Closing Date the aggregate amount of
such Indebtedness of the Borrowers at any one time outstanding during such Loan
Year shall not exceed $2,500,000 and payments made with respect to such
Indebtedness during such Loan Year shall not exceed $750,000 in the aggregate,
and (iii) no Event of Default exists at the time or will be caused as a result
of the incurrence of any Indebtedness described in clause (ii).
Permitted Senior Indebtedness Liens: Liens that secure Permitted Senior
-----------------------------------
Indebtedness, provided that each such Lien attaches only to the Property
purchased or leased with the proceeds of the Permitted Senior Indebtedness
incurred with respect to such Property.
Person: any individual, firm, corporation, business enterprise, trust,
------
association, joint venture, partnership, limited liability company or
partnership, Governmental Body or other entity, whether acting in an individual,
fiduciary or other capacity.
Pledge Agreement: a pledge agreement executed by InfoCure pursuant to which
----------------
FINOVA is granted a Lien upon any of the Subsidiaries Capital Stock, in form and
substance satisfactory to FINOVA.
Polci: as defined in the Preamble of this Loan Agreement.
-----
Polci Acquisition: the acquisition by Polci of substantially all of the
-----------------
Property of Polci Seller pursuant to the Polci Acquisition Instruments.
17
Polci Acquisition Instruments: that certain Asset Purchase Agreement dated as
-----------------------------
of November 18, 1997 but effective as of October 1, 1997 among Polci Seller,
Polci, InfoCure, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust ▇/▇/▇ ▇▇▇▇ ▇▇, ▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust U/A/D June 15, 1990, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
as Personal Representative of the Estate of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
and all other documents and instruments executed and delivered pursuant thereto.
Polci Seller: Professional On-Line Computer, Inc., a Michigan corporation.
------------
Polci Subordination Agreement: that certain Subordination Agreement of even
-----------------------------
date herewith among Polci, InfoCure, the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust
U/A/D June 15, 1990, and FINOVA.
Polci Subordinated Note: that certain Promissory Note dated as of October 1,
-----------------------
1997 in the original principal amount of $89,733 made by Polci and InfoCure
payable to the order of the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust U/A/D June
15, 1990.
Prepayment Premium: as defined in subsection 2.6.1(b).
------------------
Principal Balance: the unpaid principal balance of the Loans or any specified
-----------------
portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and all types of
--------
tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve System having a
--------------------
combined capital and surplus of at least $100,000,000.
Reaffirmation of Subordination Agreement: a reaffirmation of subordination
----------------------------------------
agreement executed by the applicable Borrowers and such other Persons as
required by FINOVA, in form and substance satisfactory to FINOVA.
Real Estate: any real estate which is owned, beneficially or otherwise, by
-----------
any Borrower.
Reinvestment Yield: as defined in subsection 2.6.1(e)(iv).
------------------
Remaining Scheduled Payment Amount: as defined in subsection 2.6.1(e)(iii).
----------------------------------
Restatement Effective Date: the date on which the Restatement Closing shall
--------------------------
have occurred.
Restatement Closing: this Loan Agreement being deemed to becoming effective
-------------------
pursuant to Section 4.1.
18
Rovak: as defined in the Preamble of this Loan Agreement.
-----
Securities Act: the Securities Act of 1933, the Securities Exchange Act of
--------------
1934, any successor statute thereto, and the rules, regulations and legally
binding policies of the Securities Exchange Commission promulgated thereunder,
as amended and in effect from time to time.
Security Interests: the Liens in the Collateral granted to FINOVA pursuant to
------------------
the Loan Instruments and any other document or instrument now or hereafter
executed by any Borrower or any other Person which purports to ▇▇▇▇▇ ▇ ▇▇▇▇ on
the Property of such Borrower or such other Person in favor of FINOVA.
Seller's Consent: a consent to an Assignment of Acquisition Instruments, in
----------------
form and substance reasonably satisfactory to FINOVA, to be executed by the
seller of the Property which is the subject of a Permitted Acquisition.
Senior Debt Service: during any period, all payments of principal, interest,
-------------------
premium, loan fees and other charges with respect to Borrowers' Obligations,
which payments are required or permitted to be made pursuant to this Loan
Agreement and are due and payable during such period.
Senior Debt Service Coverage Ratio: the ratio of (i) consolidated Adjusted
----------------------------------
Operating Cash Flow for the twelve-month period ending on the last day of any
quarter less any payments made during such twelve-month period with respect to
Capital Expenditures to (ii) Senior Debt Service of Borrowers for such twelve-
month period.
SoftEasy: as defined in the Preamble of this Loan Agreement.
--------
SoftEasy Seller: collectively, ▇▇▇ ▇. ▇▇▇▇▇, an individual, and ▇▇▇▇ ▇ ▇▇▇▇▇,
---------------
an individual.
SoftEasy Acquisition: the acquisition by InfoCure of all of the equity
--------------------
interests of SoftEasy.
SoftEasy Acquisition Instruments: all agreements and other documents executed
--------------------------------
and delivered in connection with the SoftEasy Acquisition.
Solvency Certificate: a solvency certificate executed by Borrowers, in form
--------------------
and substance satisfactory to FINOVA.
Stated Rate: as defined in subsection 2.3.4.
-----------
Subsidiaries: all of the Borrowers except InfoCure.
------------
19
Subsidiaries Capital Stock: all of the issued and outstanding capital stock
--------------------------
of the Subsidiaries and all warrants, options and other rights to purchase
capital stock of the Subsidiaries.
Subsidiary: any of the Subsidiaries.
----------
Target: (i) any other Person engaged in business activities primarily
------
related to the business activities of the then existing Borrowers or (ii) a
business unit or asset group of any other Person which is used in business
activities primarily related to the business activities of the then existing
Borrowers, in each case acquired or proposed to be acquired in an Acquisition.
Termination Event: (i) a "Reportable Event" described in Section 4043 of
-----------------
ERISA and the regulations issued thereunder; or (ii) the withdrawal of any
Borrower or any of its ERISA Affiliates from a Pension Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2); or
(iii) the termination of a Pension Plan, the filing of a notice of intent to
terminate a Pension Plan or the treatment of a Pension Plan amendment as a
termination under Section 4041 of ERISA; or (iv) the institution of proceedings
to terminate, or the appointment of a trustee with respect to, any Pension Plan
by the PBGC; or (v) any other event or condition which would constitute grounds
under Section 4042(a) of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan; or (vi) the partial or complete
withdrawal of any Borrower or any of its ERISA Affiliates from a Multiemployer
Plan; or (vii) the imposition of a lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA; or (ix) any event or condition which results in the termination of a
Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
Term Loan: the term loan in the aggregate amount of $10,000,000 to be made by
---------
FINOVA to Borrowers pursuant to this Loan Agreement.
Term Note: a promissory note in the principal amount of $10,000,000 executed
---------
and delivered by Borrowers to FINOVA to evidence the Term Loan, and any notes
issued in substitution thereof pursuant to the terms of this Loan Agreement, in
each case in form and substance satisfactory to FINOVA.
Unused Commitment Fee: as defined in Section 2.9.
---------------------
Weighted Average Life to Maturity: as defined in subsection 2.6.1(e)(v).
---------------------------------
1.2 TIME PERIODS. In this Loan Agreement and the other Loan Instruments, in
------------
the computation of periods of time from a specified date to a later specified
date, (i) the word
20
"from" means "from and including," (ii) the words "to" and "until" each mean
"to, but excluding" and (iii) the words "through," "end of" and "expiration"
each mean "through and including." Unless otherwise specified, all references
in this Loan Agreement and the other Loan Instruments to (i) a "month" shall be
deemed to refer to a calendar month, (ii) a "quarter" shall be deemed to refer
to a calendar quarter and (iii) a "year" shall be deemed to refer to a calendar
year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms not
-----------------------------------
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In
the event that any Accounting Changes (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrowers and FINOVA
agree to enter into negotiations to amend such provisions of this Loan Agreement
so as to reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of Borrower shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
For purposes hereof, "Accounting Changes" shall mean (i) changes in generally
accepted accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or any successor
thereto) or other appropriate authoritative body and (ii) changes in accounting
principles as approved by the Accountants.
1.4 REFERENCES. All references in this Loan Agreement to "Article,"
----------
"Section," "subsection," "subparagraph," "clause" or "Exhibit," unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.5 FINOVA'S DISCRETION. Whenever the terms "satisfactory to FINOVA,"
-------------------
"determined by FINOVA," "acceptable to FINOVA," "FINOVA shall elect," "FINOVA
shall request," "at the option or election of FINOVA," or similar terms are used
in the Loan Instruments, except as otherwise specifically provided therein, such
terms shall mean satisfactory to, at the election or option of, determined by,
acceptable to or requested by FINOVA, in its sole and unlimited discretion.
1.6 BORROWER'S KNOWLEDGE. Any statements, representations or warranties in
--------------------
the Loan Instruments that are based upon the knowledge or best knowledge of a
Borrower or an officer thereof shall be deemed to have been made after due
inquiry by the officer making such statements, representations or warranties on
behalf of such Borrower or himself or herself, as applicable, with respect to
the matter in question, and no Borrower shall be imputed with knowledge of any
fact or circumstance unless an executive officer of such Borrower shall have or
should have had actual knowledge of such fact or circumstance.
21
ARTICLE II
----------
LOANS; TERMS OF PAYMENT; AND CONTINGENT OBLIGATION PAYMENT
----------------------------------------------------------
2.1 LOANS.
-----
2.1.1 TERM LOAN. The Term Loan shall consist of a term loan from FINOVA
---------
to Borrowers in the aggregate amount of $10,000,000. Borrowers agree and
acknowledge that on the Restatement Effective Date, the Term Loan shall be
deemed to have been fully disbursed and, on such date, the Principal Balance
of the Term Loan shall be equal to $9,972,500.00, such amount constituting (i)
all of the loans outstanding under the Existing Loan Agreement as of the
Restatement Effective Date, plus (ii) a portion of the Term Loan to be
----
disbursed on the Restatement Effective Date in an amount equal to
$2,141,881.14, less (iii) $27,500, the amount of principal repaid by Borrowers
----
under the Existing Loan Agreement.
2.1.2 ADVANCES OF THE ACQUISITION LOAN.
--------------------------------
(a) FINOVA shall from time to time, on or before February 24,
1999, make Advances of the Acquisition Loan to Borrowers provided (i)
at no time shall the aggregate amount of such Advances of the
Acquisition Loan exceed $20,000,000 and (ii) the terms and conditions
set forth in paragraph (b) of this subsection 2.1.2 shall have been
satisfied with respect to each Advance of the Acquisition Loan made
after the Restatement Effective Date. FINOVA shall have no obligation
to make Advances of the Acquisition Loan subsequent to February 24,
1999.
(b) CONDITIONS TO ADVANCES OF THE ACQUISITION LOAN. The obligation
----------------------------------------------
of FINOVA to make any Advances of the Acquisition Loan shall be
subject to the satisfaction of each of the following conditions:
(i) no Event of Default shall exist or be created by the
disbursement of such Advance of the Acquisition Loan;
(ii) each Advance of the Acquisition Loan shall be in a
minimum amount of $500,000 and integral multiples of $100,000
in excess of that amount;
(iii) FINOVA shall have received not less than thirty (30)
days prior to the proposed Funding Date, a description of the
operations history and relevant market information with
respect to the applicable Target, a discussion of competition
and information regarding key personnel with respect to such
Target, and such other financial statements, reports,
22
projections and information with respect to the operations of
such Target as FINOVA shall require;
(iv) FINOVA shall have received a Notice of
Borrowing/Disbursement Request from Borrowers in the form of
EXHIBIT 2.1.2 with respect to each requested Advance no later
than 12:00 p.m., Chicago time, at least two (2) Business Days
in advance of the proposed Funding Date with respect to such
Advance, which Funding Date shall be on a Business Day;
(v) all of the terms and conditions of Section 4.2 shall
have been satisfied with respect to the subject Acquisition;
(vi) the ratio of (A) the Adjusted Operating Cash Flow of
Borrowers for the twelve-month period ending on the last day
of the most recent month preceding the applicable Funding Date
for which Borrowers have delivered to FINOVA the financial
statements and other information reasonably necessary to
enable FINOVA to make such calculation less any payments made
----
during such twelve-month period with respect to Capital
Expenditures to (B) Adjusted Debt Service of Borrowers for
such twelve-month period, shall be greater than 1.50;
(vii) on the applicable Funding Date the representations and
warranties of Borrowers set forth in the Loan Instruments
shall be true and correct when made and at and as of the time
of such Funding Date, except to the extent that such
representations and warranties expressly relate to an earlier
date; and
(viii) FINOVA shall have received a certificate executed by
the Chief Financial Officer that the Borrowers are not
prohibited by the Subordinated Loan Instruments from incurring
the Indebtedness in connection with such Advance of the
Acquisition Loan or from consummating such Acquisition.
2.2 USE OF PROCEEDS, NOTES AND REBORROWING.
-------------------------
2.2.1 USE OF PROCEEDS. The proceeds of the Loans shall be used solely
---------------
for Permitted Acquisitions and to pay related transaction costs.
2.2.2 NOTES. The Term Loan and the Acquisition Loan shall be evidenced
-----
by the Term Note and the Acquisition Loan Note, respectively.
2.2.3 REBORROWING. Borrowers may not reborrow all or any portion of the
-----------
Term Loan or the Acquisition Loan which is repaid or prepaid.
23
2.3 INTEREST.
--------
2.3.1 INTEREST RATES AND PAYMENT. Except as provided in subsection
--------------------------
2.3.2, (i) the Principal Balance of the Term Loan shall bear interest at a
rate equal to nine and one half percent (9.5%) per annum and (ii) the
Principal Balance of the Acquisition Loan shall bear interest (A) until March
31, 1999, at the Base Rate then in effect from time to time plus 1.0% and (B)
----
thereafter, at the Base Rate then in effect from time to time plus the
----
Applicable Margin. As used in this Loan Agreement, the "Applicable Margin"
shall be determined on the first day of each quarter (the "Determination
Date") commencing with March 1, 1999 and shall mean the percentage set forth
opposite the applicable Senior Debt Service Coverage Ratio as calculated as of
the last day of the second quarter preceding such quarter:
Senior Debt
Service Coverage Ratio Applicable Margin
---------------------- -----------------
greater than or equal to 3.25 0.50%
greater than or equal to 2.75, 0.75%
but less than 3.25
greater than or equal to 2.25, 0.90%
but less than 2.75
less than 2.25 1.00%
Interest shall be payable monthly in arrears on the first Business Day of
each month commencing with the first month following the Original Closing
Date.
2.3.2 DEFAULT RATE. During a Default Rate Period, Borrowers'
------------
Obligations shall bear interest at the Default Rate.
2.3.3 INTEREST COMPUTATION. Interest shall be computed on the basis of
--------------------
a year consisting of 360 days and charged for the actual number of days during
the period for which interest is being charged. In computing interest, the
date of funding shall be included and the date of payment shall be excluded.
2.3.4 MAXIMUM INTEREST. Notwithstanding any provision to the contrary
----------------
contained herein or in any other Loan Instrument, FINOVA shall not collect a
rate of interest on any obligation or liability due and owing by Borrowers to
FINOVA in excess of the maximum contract rate of interest permitted by
applicable law ("Excess Interest"). FINOVA and Borrowers agree that the
interest laws of the State of Arizona shall govern
24
the relationship among them and understand and believe that the transactions
contemplated by the Loan Instruments comply with the usury laws of the
State of Arizona, but in the event of a final adjudication to the contrary,
Borrowers shall be obligated to pay, nunc pro tunc, to FINOVA only such
-------------
interest as then shall be permitted by the laws of the state found to
govern the contract relationship among FINOVA and Borrowers. If any Excess
Interest is provided for or determined by a court of competent jurisdiction
to have been provided for in this Loan Agreement or any other Loan
Instrument, then in such event (i) no Borrower shall be obligated to pay
such Excess Interest, (ii) any Excess Interest collected by FINOVA shall
be, at FINOVA's option, (A) applied to the Principal Balance of the Loans
in such manner as FINOVA may elect or to accrued and unpaid interest not in
excess of the maximum rate permitted by applicable law (the "Maximum Rate")
or (B) refunded to the payor thereof, (iii) the interest rates provided for
herein (the "Stated Rate") shall be automatically reduced to the Maximum
Rate and the Loan Instruments shall be deemed to have been, and shall be,
modified to reflect such reduction and (iv) no Borrower shall have any
action against FINOVA for any damages arising out of the payment or
collection of such Excess Interest; provided, however, that if at any time
-------- -------
thereafter the Stated Rate is less than the Maximum Rate, Borrowers shall,
to the extent permitted by law, continue to pay interest at the Maximum
Rate until such time as the total interest received by FINOVA is equal to
the total interest which FINOVA would have received had the Stated Rate
been (but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable shall be the Stated Rate unless and
until the Stated Rate again exceeds the Maximum Rate, in which event the
provisions contained in this subsection 2.3.4 shall again apply.
2.4 PRINCIPAL PAYMENTS.
------------------
2.4.1 TERM LOAN. The Principal Balance of the Term Loan shall be
---------
payable by Borrowers, jointly and severally, in fifty-five (55) consecutive
monthly installments on the first Business Day of each month commencing on
the first Business Day of April, 1998. Each of the first fifty-four (54)
installments shall be in the amount of $181,318.18, and the last
installment shall be in the amount of the then remaining Principal Balance
of the Term Loan.
2.4.2 ACQUISITION LOAN. The Principal Balance of the Acquisition Loan
----------------
shall be payable by Borrowers, jointly and severally, in fifty-five (55)
consecutive monthly installments on the first Business Day of each month
commencing on the first Business Day of April, 1998 (the "First Payment
Date"). Each of the first fifty-four (54) installments shall be in an
amount equal to (i) the Principal Balance of the Acquisition Loan as of the
last day of the month immediately preceding the month in which such
installment is payable divided by (ii) the difference of (a) 60 less (b)
---------- ----
the number of full months which shall have passed since the First Payment
Date (not including the month in which such installment is to be made), and
the last installment shall be in the amount of the then remaining Principal
Balance of the Acquisition Loan.
25
2.4.3 FINAL PAYMENT. The then remaining Principal Balance of the Term
-------------
Loan and the Acquisition Loan, if any, and any other sums which then are
due and payable pursuant to the terms of the Loan Instruments, shall be due
and payable on October 28, 2002.
2.5 LATE CHARGES. If a payment of principal or interest to be made
------------
pursuant to this Loan Agreement or the payment of the Contingent Obligation
Payment becomes past due for a period in excess of five (5) days, Borrowers
shall pay on demand to FINOVA a late charge of 5.0% of the amount of such
overdue payment.
2.6 PREPAYMENTS.
-----------
2.6.1 VOLUNTARY PREPAYMENTS. Borrowers may at any time and from time to
---------------------
time voluntarily prepay all or any portion of the Principal Balance, subject
to the following terms and conditions:
(a) NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF PREPAYMENTS. Not less
------------------------------------------------------
than 20 days prior to the date upon which Borrowers desire to make any
such voluntary prepayment, Borrowers shall deliver to FINOVA notice of
their intention to prepay, which notice shall state the prepayment date
and the amount of the Principal Balance to be prepaid. No partial
prepayment of the Principal Balance shall be in an amount less than
$100,000 or integral multiples of $100,000 in excess thereof. A
prepayment of the Principal Balance shall not be made more frequently
than once each month. If Borrowers deliver to FINOVA a notice of
prepayment and fail to make such prepayment, Borrowers shall reimburse
FINOVA on demand for any loss, cost and/or expense incurred by FINOVA as
a result of FINOVA's reliance on such notice.
(b) PREPAYMENT PREMIUM. Any prepayment of the Principal Balance
------------------
(other than a prepayment made pursuant to subsection 2.6.2(a)) shall be
accompanied by a payment (a "Prepayment Premium") of (i) 3% of the amount
prepaid during the first Loan Year; (ii) 2% of the amount prepaid during
the second Loan Year; and (iii) 1% of the amount prepaid during the
third, fourth or fifth Loan Years.
(c) ADDITIONAL PAYMENTS. Concurrently with any prepayment pursuant
-------------------
to this subsection 2.6.1, Borrowers shall pay to FINOVA accrued and
unpaid interest on the Principal Balance which is being prepaid to the
date on which FINOVA is in receipt of Good Funds, and any other sums
which are due and payable pursuant to the terms of any of the Loan
Instruments.
(d) APPLICATION OF VOLUNTARY PREPAYMENTS. Prepayments of the
------------------------------------
Principal Balance pursuant to this subsection 2.6.1 shall be applied to
the payment
26
of the Loans in such manner as FINOVA shall determine in its sole and
absolute discretion.
(e) MAKE WHOLE PREMIUM. In addition to the premiums calculated
------------------
pursuant to (b) above, any prepayment of the Term Loan (including,
without limitation, any prepayment made pursuant to subsection 2.6.2(a))
shall be accompanied by a payment equal to the Make Whole Premium. The
following definitions shall apply in calculating the Make Whole Premium:
(i) "Make Whole Premium" means the positive difference, if any,
------------------
between (A) the Discounted Value immediately prior to any
prepayment of that portion of the Principal Balance of the Term
Loan which is being prepaid and (B) the Principal Balance of the
Term Loan, or portion thereof, being prepaid as of the date of
any such prepayment.
(ii) "Discounted Value" means the amount determined by
----------------
discounting the Remaining Scheduled Payment Amounts from their
respective due dates to the date of the prepayment of the Term
Loan, at a discount factor equal to the Reinvestment Yield.
(iii) "Remaining Scheduled Payment Amount" means the amount of
----------------------------------
each scheduled payment of the Principal Balance of and interest
on the Term Loan that would be due on or after the date of a
prepayment of the Term Loan if no prepayment of the Term Loan
were made prior to its scheduled due date.
(iv) "Reinvestment Yield" means the sum of (A) the rates shown
------------------
under the column heading "Ask YLD" for "Govt. Bonds & Notes" in
the "Treasury Bonds, Notes & Bills" section of The Wall Street
Journal, Western Edition, published on the Business Day prior to
the date of any proposed prepayment of the Term Loan for the
government bond or note with a maturity date having the closest
matching maturity to the Weighted Average Life to Maturity, or,
if there is more than one government bond or note with a maturity
date having the closest matching maturity to the Weighted Average
Life to Maturity, the highest of the rates shown in the "Ask YLD"
column for any such bond or note, plus (B) two percent (2%).
----
(v) "Weighted Average Life to Maturity" means the number of
---------------------------------
years (calculated to the nearest one-twelfth year) obtained by
dividing (A) the sum of the products obtained by multiplying each
remaining scheduled payment of principal under the Term Loan by
the number of years (calculated to the nearest one-twelfth) which
will elapse between the date of a prepayment of the Term Loan and
the scheduled due date of such
27
remaining scheduled principal payments, by (B) the outstanding
Principal Balance of the Term Loan on such prepayment date.
2.6.2 MANDATORY PREPAYMENT.
--------------------
(a) EXCESS CASH FLOW PAYMENTS. Until Borrowers' Obligations are paid
-------------------------
and performed in full, for each Fiscal Year of Borrowers commencing with
the Fiscal Year of Borrowers ending January 31, 1999, Borrowers shall pay
to FINOVA an amount equal to 25% of the Excess Cash Flow for such Fiscal
Year provided that the Operating Cash Flow of Borrowers for such Fiscal
Year shall have been less than or equal to the Operating Cash Flow of
Borrowers for the immediately preceding Fiscal Year of Borrowers. Each
such payment shall be made within thirty (30) days after the date that
Borrowers are required to deliver to FINOVA the financial statements for
such Fiscal Year pursuant to subsection 6.3.3. Each Borrower agrees that
it will not take any actions primarily intended to decrease the amount
payable under this subsection 2.6.2(a) in anticipation of the calculation
referred to herein.
(b) Concurrently with any payment of the Principal Balance received by
FINOVA resulting from the exercise by FINOVA of any remedy available to
FINOVA subsequent to the occurrence of an Event of Default and the
acceleration of Borrowers' Obligations, Borrowers jointly and severally
shall pay to FINOVA a prepayment premium in an amount equal to the
prepayment premium which would be payable if such payment was made
pursuant to subsection 2.6.1.
(c) Prepayments received by FINOVA pursuant to this subsection 2.6.2
shall be applied in the following order of priority to the payment of:
(i) any and all sums which are due and payable pursuant to the terms of
the Loan Instruments, except the Principal Balance and accrued and unpaid
interest thereon, (ii) accrued and unpaid interest on the portion of the
Principal Balance being prepaid, (iii) any other accrued and unpaid
interest which is unpaid and (iv) the installments of the Principal
Balance in accordance with subsection 2.6.1(d).
2.7 LOAN AMENDMENT FEE. Borrowers shall pay to FINOVA on the Restatement
------------------
Effective Date a loan amendment fee of $200,000 (the "Loan Amendment Fee"),
which shall be deemed fully earned on the Restatement Effective Date, and shall
be in addition to any loan or similar fee paid to FINOVA by Borrowers pursuant
to the Existing Amended and Restated Loan Agreement or otherwise.
2.8 INTENTIONALLY OMITTED.
---------------------
2.9 UNUSED COMMITMENT FEE. Borrowers shall pay to FINOVA a fee (the
---------------------
"Unused Commitment Fee") on the first Business Day of each month, commencing
with the month of
28
January, 1998 through and including December, 1998, in an amount equal to the
product of (i) the amount by which (a) for the months of January and February of
1998, $10,000,000, and (b) thereafter, $20,000,000, exceeds the daily average
outstanding Principal Balance of the Acquisition Loan during the immediately
preceding month, multiplied by (ii) one-half of one percent (0.5%) per annum.
---------- --
2.10 PAYMENTS AFTER EVENT OF DEFAULT. All payments received by FINOVA
-------------------------------
during the existence of an Event of Default shall be applied in accordance with
Section 8.4.
2.11 CONTINGENT OBLIGATION PAYMENT. Borrowers hereby jointly and
-----------------------------
severally agree to pay to FINOVA, at the time specified herein, a payment (the
"Contingent Obligation Payment") computed in the manner set forth in this
Section 2.11. The Contingent Obligation Payment shall be paid in one
installment and shall be equal to 2.0% of the product of (i) the Multiplier then
in effect multiplied by (ii) the amount by which (A) the COP Market Value
---------- --
calculated as of the COP Calculation Date exceeds (B) the COP Base Amount
calculated as of the COP Calculation Date. Subject to the proviso contained at
the end of this sentence, Borrowers shall make the Contingent Obligation Payment
to FINOVA in Good Funds on the earlier of (a) the date on which a Market
Refinancing Event shall have occurred and (b) the COP Maturity Payment Date;
provided, however, Borrowers shall make the Contingent Obligation Payment to
-------- -------
FINOVA in Good Funds, if FINOVA so elects, on (x) the date of, and
simultaneously with, the occurrence of a Market Event or (y) on or before the
fifth (5th) day after the occurrence of any COP Default Event.
2.12 METHOD OF PAYMENT; GOOD FUNDS. All payments to be made pursuant to
-----------------------------
the Loan Instruments by Borrowers shall be made by wire transfer of Good Funds
to the account of FINOVA at Citibank, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇▇, Credit: FINOVA Capital Corporation, Credit Account No. ▇▇▇▇▇▇▇▇,
Reference: InfoCure Loan, Attn: ▇▇▇▇ ▇▇▇ ▇▇▇▇, or to such other account as
FINOVA shall notify Borrowers.
ARTICLE III
-----------
SECURITY
--------
Borrowers' Obligations shall be secured by a Lien upon all of the Collateral,
which at all times shall be superior and prior to all other Liens, except
Permitted Prior Liens.
29
ARTICLE IV
----------
CONDITIONS OF CLOSING; ACQUISITIONS
-----------------------------------
4.1 CLOSING. This Loan Agreement shall not be deemed to be effective,
-------
and FINOVA shall not be obligated to disburse the unused portion of the Term
Loan or make the initial Advance of the Acquisition Loan, until all of the
following conditions precedent shall have been satisfied in a manner
satisfactory to FINOVA:
4.1.1 REPRESENTATIONS AND WARRANTIES. On the Restatement Effective
------------------------------
Date the representations and warranties of each Borrower set forth in the
Instruments to which such Borrower is a party shall be true and correct.
4.1.2 MICRO-SOFTWARE ACQUISITION. (i) FINOVA shall have received
--------------------------
evidence that immediately prior to or contemporaneously with the disbursement
of the Loans requested by Borrowers on the Restatement Effective Date, the
Micro-Software Acquisition shall have been consummated in accordance with the
terms of the Micro-Software Acquisition Instruments and as a result thereof
(A) MD Acquisition, Inc. shall have acquired good and marketable title to all
of the Property to be acquired by MD Acquisition, Inc. pursuant to the terms
of the Micro-Software Acquisition Instruments, free and clear of all Liens and
(B) any Indebtedness to be assumed by MD Acquisition, Inc. pursuant to the
terms of the Micro-Software Acquisition Instruments shall be in an amount and
otherwise satisfactory to FINOVA and (ii) none of the parties to the Micro-
Software Acquisition Instruments shall have failed to perform any material
obligation or covenant required by any of the Micro-Software Acquisition
Instruments to be performed or complied with by it on or before the
Restatement Effective Date.
4.1.3 DELIVERY OF DOCUMENTS. The following shall have been delivered to
---------------------
FINOVA, each duly authorized and executed, where applicable, and in form and
substance satisfactory to FINOVA:
(a) the Loan Instruments;
(b) good standing certificates for each Borrower from each of the
states in which such Borrower is organized and qualified to do business,
each dated a recent date prior to the Original Closing Date;
(c) copies of (i) the articles of incorporation of each Borrower,
together with all current and proposed amendments thereto, certified by
the Secretary of State of the state in which each such Person is
organized as of a recent date prior to the Original Closing Date; (ii)
the by-laws of each Borrower, together with all current and proposed
amendments thereto, certified by the corporate secretary of each
Borrower, (iii) copies of resolutions adopted by the board of directors
of each Borrower, each authorizing the execution and delivery by each
such Borrower of the Instruments to which such Borrower
30
is a party and the consummation of the transactions contemplated thereby,
certified as of the Original Closing Date by the corporate secretary of
such Borrower;
(d) signature and incumbency certificates of the officers of each
Borrower;
(e) certified copies or executed originals of each of the following:
(1) the Polci Acquisition Instruments, the Commercial Acquisition
Instruments, the SoftEasy Acquisition Instruments, the OPMS
Acquisition Instruments, the Pace Acquisition Instruments and the
Micro-Software Acquisition Instruments;
(2) the Leases;
(3) the Licenses;
(4) the material License Agreements;
(5) the material Operating Agreements; and
(6) all instruments and documents evidencing Permitted Senior
Indebtedness existing as of the Restatement Effective Date;
(f) a Landlord Consent from each Landlord under each Lease;
(g) such other agreements, instruments, documents, certificates,
consents, waivers and opinions as FINOVA reasonably may request; and
(h) certificates representing 100% of the issued and outstanding
capital stock of the Subsidiaries and executed stock powers in form and
substance reasonably acceptable to FINOVA.
4.1.4 PERFORMANCE; NO DEFAULT. Each Borrower shall have performed
-----------------------
and complied with all agreements and conditions contained in the Instruments
to be performed by or complied with by such Person prior to or at the Closing,
and no Event of Default or Incipient Default shall then exist or result from
the making of any Advance on the Restatement Effective Date.
4.1.5 OPINIONS OF COUNSEL; DIRECTION FOR DELIVERY. FINOVA shall
-------------------------------------------
have received (i) an opinion dated the Restatement Effective Date from (A)
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Borrowers, and (B) from ▇'▇▇▇▇▇▇▇
Flahtery & Attmore, LLP, counsel to the Micro-Software Seller, in each case
addressed to FINOVA, in such form and covering such matters as FINOVA may
require, and (ii) a copy of a letter in form and substance satisfactory to
FINOVA from the Borrowers addressed to the counsel set
31
forth in (A) directing such counsel to deliver to FINOVA the foregoing opinion
described on (A).
4.1.6 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. FINOVA shall
----------------------------------------------
have received evidence that the approval or consent shall have been obtained
from all Governmental Bodies and all other Persons whose approval or consent
is required to enable Borrowers to (i) enter into and perform their respective
obligations under the Instruments to which each such Person is a party and
(ii) grant the Security Interests to FINOVA.
4.1.7 SECURITY INTERESTS. All filings of Uniform Commercial Code
------------------
financing statements, all recordings of Mortgages and all other filings and
actions necessary to perfect and maintain the Security Interests as first,
valid and perfected Liens in the Property covered thereby, subject only to
Permitted Prior Liens, shall have been filed or taken and FINOVA shall have
received such UCC, state and federal tax Lien, pending suit, judgment and
other Lien searches as it deems necessary to confirm the foregoing.
4.1.8 INTENTIONALLY OMITTED.
---------------------
4.1.9 LICENSES. FINOVA shall have received evidence that (i) each
--------
Borrower is the licensee of all Licenses necessary for the operation of its
business and (ii) such Licenses are in full force and effect as of the
Restatement Effective Date and no event has occurred which could result in the
termination, revocation or non-renewal of any such License.
4.1.10 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS; INSPECTION.
---------------------------------------------------------
FINOVA shall have received the financial statements described in EXHIBIT
5.7.1 and the projections described in EXHIBIT 5.7.2. Each Borrower shall
have arranged for representatives of FINOVA to visit and inspect its
offices and properties.
4.1.11 MATERIAL ADVERSE EFFECT. No event shall have occurred since
-----------------------
July 31, 1997 which has had or could have a Material Adverse Effect. No
litigation or governmental proceedings or investigation shall be pending,
which in the opinion of FINOVA could, if adversely determined, have a
Material Adverse Affect.
4.1.12 USE OF ASSETS. FINOVA shall be satisfied that each Borrower at
-------------
all times shall be entitled to the use and quiet enjoyment of all Property
necessary for the continued ownership and operation of the business conducted
by such Borrower, including, without limitation, the use of equipment,
fixtures, Licenses, offices and means of ingress and egress thereto, necessary
for the operation of such business.
4.1.13 BROKER FEES. If the services of a broker or other agent have
-----------
been used in connection with the Loans, all fees owed to such broker or agent
shall have been paid by Borrowers and FINOVA shall have received evidence of
such payment.
32
4.1.14 INSURANCE; SURVEY.
-----------------
(a) BUSINESS AND FLOOD INSURANCE. At least three (3) Business
----------------------------
Days prior to the Restatement Effective Date Borrowers shall have
delivered to FINOVA evidence satisfactory to FINOVA (i) of flood
insurance with respect to each parcel of Real Estate other than a
parcel as to which Borrowers have supplied FINOVA evidence that such
parcel is not in a flood hazard area and (ii) that all insurance
coverage required pursuant to Section 6.6 is in full force and effect
and all premiums then due thereon have been paid in full.
(b) REAL ESTATE; LEASEHOLD PROPERTY. FINOVA shall have received
-------------------------------
an ALTA mortgagee's policy of title insurance (ALTA Revised 1987 Form)
in favor of FINOVA with respect to each parcel of Real Estate, issued
by a title company and in an amount showing that the applicable
Borrower has good and marketable title to each such parcel of Real
Estate and insuring that the Mortgage covering such parcel constitutes
a valid Lien on such Borrower's interest in such parcel, subject only
to Permitted Prior Liens. Each policy shall insure over all survey
and other general exceptions contained therein and shall include such
affirmative endorsements as may be required by FINOVA, including,
without limitation, comprehensive endorsement no. 1, contiguity (if
applicable), usury, doing business, variable rate, tie-in,
restrictions (where applicable), encroachment (where applicable), 3.1
zoning (including parking), last dollar, tax parcel, survey, location,
access and future advances. FINOVA shall have received copies of and
found satisfactory the provisions of each document referred to in each
such policy.
(c) PREMIUMS. FINOVA shall have received evidence that all
--------
premiums with respect to such title insurance have been paid by
Borrowers.
(d) SURVEY. FINOVA shall have received an "as-built" survey of
------
each parcel of Real Estate dated not earlier than 45 days prior to the
Restatement Effective Date, certified to FINOVA and the title company
as being drawn in compliance with the American Land Title Association
and American Congress on Surveying and Mapping Standards (as adopted
in 1962), containing a flood plain certification and showing no
matters or exceptions which are not Permitted Liens and otherwise in
sufficient detail as to permit the elimination of any survey
exceptions to the title policies described above.
4.1.15 MINIMUM OPERATING CASH FLOW. FINOVA shall have received
---------------------------
satisfactory evidence that the consolidated Operating Cash Flow of Borrowers
for the twelve month period ending January 31, 1998 was not less than
$4,000,000.
33
4.1.16 PAYMENT OF FEES AND EXPENSES. Borrowers shall have paid the
----------------------------
Loan Fee and all fees and expenses described in subsection 10.1.1 incurred
in connection with the Loans.
4.2 ACQUISITIONS. The right of InfoCure or any Acquisition Subsidiary
------------
to make an Acquisition (other than the Micro-Software Acquisition), and the
obligation of FINOVA to make any Advance of the Acquisition Loan (other than any
Advance thereof on the Restatement Effective Date), shall be subject to the
satisfaction of all of the following conditions in a manner, form and substance
satisfactory to FINOVA:
4.2.1 CONSUMMATION OF ACQUISITIONS. Prior to or concurrently with
----------------------------
each Acquisition Closing, FINOVA shall have received evidence that (i) such
Acquisition is in accordance with the terms of the applicable Acquisition
Instruments, (ii) if such Acquisition is an Asset Acquisition, (a) the
applicable Acquisition Subsidiary will acquire concurrently with the
Acquisition Closing good and marketable title to all of the Property which is
being purchased pursuant to such Acquisition Instruments, free and clear of
all Liens except Permitted Liens and (b) any Indebtedness to be assumed by
such Acquisition Subsidiary pursuant to the terms of such Acquisition
Instruments shall be in an amount and on terms satisfactory to FINOVA, (iii)
if such Acquisition is an Equity Acquisition, (a) the Property owned by the
applicable Target and the capital stock or other equity interests which are
the subject of such Acquisition shall be free and clear of all Liens except
Permitted Liens, (b) any Indebtedness to be assumed by Infocure or the
applicable Acquisition Subsidiary pursuant to the terms of such Acquisition
Instruments shall be in an amount and on terms satisfactory to FINOVA and (c)
FINOVA shall be satisfied that adequate provision has been made to protect
InfoCure or the applicable Acquisition Subsidiary against the assumption of
material undisclosed liabilities and (iv) any consent, authorization or
approval which is required from any Governmental Body or other Person as a
condition to the consummation of such Acquisition, the failure to obtain which
would prevent InfoCure or the applicable Acquisition Subsidiary from operating
the business which is the subject of such Acquisition, shall have been
obtained.
4.2.2 CONSENT OF FINOVA. FINOVA shall have approved and consented
-----------------
to such Acquisition, it being understood that FINOVA's decision to consent
to such Acquisition shall be based upon, inter alia, FINOVA's (i)
----- ----
evaluation and approval of the business and financial condition of the
applicable Target and (ii) review and approval of the Acquisition Instruments
in connection with the proposed Acquisition.
4.2.3 DELIVERY OF DOCUMENTS. The following shall have been
---------------------
delivered to FINOVA, each duly authorized and executed, where applicable,
and in form and substance satisfactory to FINOVA:
(a) the applicable Acquisition Loan Instruments;
34
(b) such certificates of incumbency and good-standing as FINOVA
may reasonably require in connection with such Acquisition and copies
of resolutions adopted by the board of directors of the Target,
InfoCure or the applicable Acquisition Subsidiary, as applicable,
authorizing the execution and delivery by such Person of the
Acquisition Instruments and Acquisition Loan Instruments to which such
Person is a party and the consummation of the transactions
contemplated thereby, certified as of the Funding Date by the
corporate secretary of such Person;
(c) certified or executed original copies of each of the
following, the terms and conditions of all of which shall be
reasonably satisfactory to FINOVA:
(i) the applicable Acquisition Instruments;
(ii) the Leases of the Target or those assumed or entered
into by the applicable Acquisition Subsidiary in connection
with such Acquisition and related Landlord's Consents;
(iii) the Licenses of the Target or those assumed or
entered into the applicable Acquisition Subsidiary in
connection with such Acquisition;
(iv) the material License Agreements of the Target or
those assumed or entered into by the applicable Acquisition
Subsidiary in connection with such Acquisition; and
(v) the material Operating Agreement of the Target or
those assumed or entered into the applicable Acquisition
Subsidiary in connection with such Acquisition;
(d) a Landlord Consent from each Landlord under each Lease
referenced in paragraph (c) above; and
(e) Pay-off letters from the holders of Indebtedness to be paid
on the applicable Funding Date;
(f) such other instruments, documents, certificates, consents,
waivers and opinions as FINOVA reasonably may request; and
(g) certificates representing 100% of the issued and outstanding
capital stock of the Target or the applicable Acquisition Subsidiary,
as applicable, and executed stock powers in form acceptable to FINOVA.
35
4.2.4 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS. FINOVA shall
---------------------------------------------
have received such financial statements, reports and projections with
respect to the operation of the business which is the subject of the
Acquisition as FINOVA reasonably may require.
4.2.5 OPINIONS OF COUNSEL. FINOVA shall have received such
-------------------
opinions of counsel as FINOVA reasonably may require in connection with
such Acquisition and the Liens to be granted to FINOVA upon the Property
acquired in connection therewith.
4.2.6 LICENSES. FINOVA shall have received evidence that (i) the
--------
Target or the applicable Acquisition Subsidiary is the licensee of all
Licenses assumed or entered into by such Person in connection with such
Acquisition and (ii) such Licenses are in full force and effect as of the
applicable Funding Date and no event has occurred which could result in the
termination, revocation or non-renewal of any such License.
4.2.7 MATERIAL ADVERSE EFFECT. No event shall have occurred since
-----------------------
the Original Closing Date which has had or could have a Material Adverse
Effect. No litigation or governmental proceedings or investigation shall
be pending, which in the opinion of FINOVA could, if adversely determined,
have a Material Adverse Affect.
4.2.8 SECURITY INTEREST. FINOVA shall have received evidence
-----------------
that it has or will acquire upon the Acquisition Closing Date a perfected
first Lien on all of the Property which is the subject of such Acquisition,
subject only to Permitted Prior Liens.
4.2.9 ENVIRONMENTAL AUDIT. FINOVA shall have received an
-------------------
Environmental Audit with respect to any real estate of the Target or which
is being acquired by the applicable Acquisition Subsidiary pursuant to such
Acquisition and, at the request of FINOVA, any real estate which is the
subject of a Lease of the Target or which is being assumed or entered into
by the applicable Acquisition Subsidiary in connection with such
Acquisition.
4.2.10 INSURANCE; SURVEY. Borrowers shall deliver to FINOVA (i) such
-----------------
title and other insurance with respect to each parcel of real estate being
acquired in connection with such Acquisition as is required pursuant to
subsection 4.1.14 and (ii) a recent survey of each such parcel in
sufficient detail to permit the elimination of survey exceptions to each
title policy.
4.2.11 PAYMENT OF FEES. Borrowers shall have paid all fees and
---------------
expenses described in subsection 10.1.1 incurred in connection with such
Acquisition and the Advance made in connection therewith.
4.2.12 REPRESENTATIONS AND WARRANTIES. On each Acquisition Closing
------------------------------
Date the representations and warranties of each Borrower set forth in the
Instruments to which such Person is a party shall be true and correct when
made and at and as of the time of
36
the Acquisition Closing, except to the extent that such representations and
warranties expressly relate to an earlier date.
4.2.13 PERFORMANCE; NO DEFAULT. Each Borrower shall have performed
-----------------------
and complied with all agreements and conditions contained in the
Instruments to be performed by or complied with by such Person prior to or
at the applicable Acquisition Closing, and no Event of Default or Incipient
Default shall exist after giving effect to such Acquisition.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrowers represent and warrant to FINOVA as follows:
5.1 EXISTENCE AND POWER. Each Borrower is a corporation duly formed,
-------------------
validly existing and in good standing under the laws of the state of its
incorporation, and each Borrower has all requisite power and authority to own
its Property and to carry on its business as now conducted and as proposed to be
conducted following the Original Closing Date, and is in good standing and
authorized to do business in each jurisdiction in which the failure so to
qualify would be a Material Adverse Effect.
5.2 AUTHORITY. Each Borrower has full power and authority to enter into,
---------
execute, deliver and carry out the terms of the Instruments to which it is a
party and to incur the obligations provided for therein, all of which have been
duly authorized by all proper and necessary action and are not prohibited by the
organizational instruments of such Borrower.
5.3 CAPITAL STOCK AND RELATED MATTERS.
---------------------------------
5.3.1 CAPITAL STOCK. There is set forth in EXHIBIT 5.3.1 a complete
-------------
description of the Subsidiaries Capital Stock, all of which are validly
issued, fully paid and non-assessable, and have been issued and sold in
compliance with all applicable federal and state laws, rules and regulations,
including, without limitation, all so-called "Blue-Sky" laws. The Subsidiaries
Capital Stock is owned beneficially and of record by InfoCure, free and clear
of all Liens except the Security Interests.
5.3.2 RESTRICTIONS. No Borrower (i) is a party to and has no knowledge
------------
of any agreements restricting the transfer of Subsidiaries Capital Stock,
except the Loan Instruments, (ii) has issued any rights which can be
convertible into or exchangeable or exercisable for any of Subsidiaries
Capital Stock, or any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance (contingent
or otherwise) of, or any calls, commitments or claims of any character
relating to, any of Subsidiaries Capital Stock or any securities convertible
into
37
or exchangeable or exercisable for any of Subsidiaries Capital Stock and (iii)
is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of Subsidiaries Capital Stock or any
convertible rights or options with respect thereto. No Borrower is required to
file, and no Borrower has filed, pursuant to the Securities Act, a
registration statement relating to any class of debt or equity securities,
other than the registration statement filed by InfoCure as Registration Number
333-1892, effective as of July 10, 1997.
5.4 BINDING AGREEMENTS. This Loan Agreement and the other Instruments,
------------------
when executed and delivered, will constitute the valid and legally binding
obligations of each Borrower to the extent such Borrower is a party thereto,
enforceable against such Borrower in accordance with their respective terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting the enforcement of creditors' rights generally and (ii)
equitable principles (whether or not any action to enforce such document is
brought at law or in equity).
5.5 BUSINESS AND PROPERTY OF BORROWER.
---------------------------------
5.5.1 BUSINESS AND PROPERTY. Each Borrower is the owner of all Property
---------------------
and the holder of all Leases, Licenses and Operating Agreements necessary to
conduct its business as now conducted. No Borrower engages or proposes to
engage in any business or activity other than as set forth in EXHIBIT 5.5.1.
5.5.2 LICENSES. There is set forth in EXHIBIT 5.5.2 a description of
--------
all Licenses which have been issued or assigned to the Borrowers. All of such
Licenses are in full force and effect and have been duly issued in the name
of, or validly assigned to, the applicable Borrower, no default or breach
exists thereunder and each Borrower has full power and authority thereunder to
conduct its business.
5.5.3 OPERATING AGREEMENTS. There is set forth in EXHIBIT 5.5.3 a
--------------------
description of all material Operating Agreements with respect to the
businesses of the Borrowers. All of such Operating Agreements are in full
force and effect and no event has occurred which could result in the
cancellation or termination of any such Operating Agreement or the imposition
thereunder of any liability upon any Borrower which could have a Material
Adverse Effect.
5.5.4 FACILITY SITES. There is set forth in EXHIBIT 5.5.4 the location
--------------
of the chief executive office of each Borrower and all other locations of such
Borrower's Property.
5.5.5 LEASES. There is set forth in EXHIBIT 5.5.5 a list of all Leases,
------
together with a complete and accurate address of each parcel of Leasehold
Property. Each Lease is in full force and effect, there has been no material
default in the performance of any of its terms or conditions by any party
thereto, and no claims of default have been asserted with respect thereto.
38
5.5.6 REAL ESTATE. There is set forth in EXHIBIT 5.5.6 a complete and
-----------
accurate address and legal description of each parcel of Real Estate. The
present and contemplated use of the Leasehold Property and the Real Estate is
in compliance with all applicable zoning ordinances and regulations and other
laws and regulations, the violation of which could have a Material Adverse
Effect.
5.5.7 OPERATION AND MAINTENANCE OF EQUIPMENT. No Borrower owning or
--------------------------------------
operating any equipment necessary for the operation of its business has used,
operated or maintained the same in a manner which now or hereafter could
result in the cancellation or termination of the right of such Borrower to use
or make use of the same or which could result in any material liability of
such Borrower for damages in connection therewith. All of the equipment and
other tangible personal property owned by each Borrower is, in all material
respects, in good operating condition and repair (subject to normal wear and
tear) and has been used, operated and maintained in substantial compliance
with all applicable laws, rules and regulations.
5.5.8 LICENSE AGREEMENTS. There is set forth in EXHIBIT 5.5.8 a
------------------
description of all material License Agreements with respect to the businesses
of the Borrowers. All of such License Agreements are in full force and effect
and no event has occurred which could result in the cancellation or
termination of any such License Agreement or the imposition thereunder of any
liability upon any Borrower which could have a Material Adverse Effect.
5.6 TITLE TO PROPERTY; LIENS. Each Borrower has (i) good and marketable
------------------------
title to all of its Property, except (A) any License which cannot be transferred
without the consent of a Governmental Body and (B) the portion thereof
consisting of a leasehold estate and (ii) a valid leasehold estate in each
portion of its Property which consists of a leasehold estate. All of such
Property is free and clear of all Liens, except Permitted Liens. Upon the
proper filing with the appropriate Governmental Bodies of the Mortgages and
appropriate Uniform Commercial Code financing statements, the applicable Loan
Instruments will create valid and perfected Liens in the Property described
therein, subject only to Permitted Prior Liens.
5.7 PROJECTIONS AND FINANCIAL STATEMENTS.
------------------------------------
5.7.1 FINANCIAL STATEMENTS. Borrowers have delivered to FINOVA the
--------------------
financial statements described in EXHIBIT 5.7.1 pertaining to the operations
of the Borrowers. Such financial statements present fairly in all material
respects the results of operations of the business of each Borrower for the
periods covered thereby and the financial condition of such Borrower as of the
dates indicated therein. All of such financial statements have been prepared
in conformity with GAAP, subject to normal year-end adjustments and the
absence of footnotes. Since July 31, 1997, there has been no change which has
had or could have a Material Adverse Effect. Borrowers also have delivered to
FINOVA a pro-forma balance sheet of each Borrower as of the Restatement
Effective Date. Such pro-forma balance sheets, which assume the consummation
of the
39
transactions contemplated by the Instruments, present fairly in all material
respects the anticipated financial condition of each Borrower as of the
Restatement Effective Date.
5.7.2 PROJECTIONS. Borrowers have delivered to FINOVA the projections
-----------
described in EXHIBIT 5.7.2 of the future operations of each Borrower. Such
projections represent the best estimates of the Borrowers as of the
Restatement Effective Date of the Borrowers' future financial performance.
5.8 LITIGATION. There is set forth in EXHIBIT 5.8 a description of all
----------
actions and suits, arbitration proceedings and claims pending or, to the best
knowledge of Borrowers, threatened against any Borrower or maintained by any
Borrower at law or in equity or before any Governmental Body. None of the
matters set forth in such EXHIBIT 5.8, if adversely determined, could have a
Material Adverse Effect.
5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS. Except
--------------------------------------------------------------
as otherwise disclosed herein, no Borrower is in default under any agreement to
which such Person is a party or by which such Person or any of the Property of
such Person is bound, the effect of which default could have a Material Adverse
Effect. No authorization, consent, approval or other action by, and no notice
to or filing with, any Governmental Body or any other Person which has not
already been obtained, taken or filed, as applicable, is required (i) for the
due execution, delivery or performance by any Borrower of any of the Instruments
to which such Borrower is a party or (ii) as a condition to the validity or
enforceability of any of the Instruments to which any Borrower is a party or any
of the transactions contemplated thereby or the priority of the Security
Interests, except for certain filings to establish and perfect the Security
Interests. No provision of any mortgage, indenture, contract, agreement,
statute, rule, regulation, judgment, decree or order binding on any Borrower or
affecting the Property of any Borrower conflicts with, or requires any consent
which has not already been obtained under, or would in any way prevent the
execution, delivery or performance of the terms of any of the Instruments or
affect the validity or priority of the Security Interests. The execution,
delivery or performance of the terms of the Instruments will not constitute a
default under, or result in the creation or imposition of, or obligation to
create, any Lien upon the Property of any Borrower pursuant to the terms of any
such mortgage, indenture, contract or agreement, other than the Loan
Instruments.
5.10 TAXES. Each Borrower has filed all tax returns required to be filed,
-----
and has paid, or made adequate provision for the payment of, all taxes shown to
be due and payable on such returns or in any assessments made against any such
Person, and no tax Liens have been filed and no claims are being asserted in
respect of such taxes which are required by GAAP to be reflected in the
financial statements of any Borrower and are not so reflected therein. The
charges, accruals and reserves on the books of each Borrower with respect to all
federal, state, local and other taxes are considered by the management of each
such Person to be adequate, and there is no unpaid assessment which is or might
be due and payable by any such Person or create a Lien against any such Person's
Property, except such assessments as are being contested in good faith and by
appropriate proceedings diligently conducted, and for which adequate
40
reserves have been set aside in accordance with GAAP. None of the tax returns
of any Borrower are under audit.
5.11 COMPLIANCE WITH APPLICABLE LAWS. No Borrower is in default in respect
-------------------------------
of any judgment, order, writ, injunction, decree or decision of any Governmental
Body, which default could have a Material Adverse Effect. Except as otherwise
provided herein, each Borrower is in compliance in all material respects with
all applicable statutes and regulations, including, without limitation, all
Environmental Laws, ERISA, ADA and all laws and regulations relating to unfair
labor practices, equal employment opportunity and employee safety, of all
Governmental Bodies, a violation of which could have a Material Adverse Effect.
No condemnation, eminent domain or expropriation has been commenced or, to the
best knowledge of Borrowers, threatened against the Property of any Borrower.
5.12 PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS. There is set forth on
-------------------------------------------
EXHIBIT 5.12 a description of all patents, patent applications, trademarks,
trademark applications, copyrights and copyright applications owned or used by
any Borrower. Each Borrower owns, possesses or has the right to use all
patents, trademarks, service marks, tradenames, copyrights, franchises and
rights with respect thereto, necessary for the conduct of its business, without
any known conflict with the rights of others and, in each case, free of any
Liens.
5.13 REGULATORY MATTERS. Each Borrower (i) has duly and timely filed all
------------------
reports, statements of account and other filings which are required to be filed
by such Borrower under any applicable law, rule or regulation of any
Governmental Body, the non-filing of which could have a Material Adverse Effect,
and (ii) is in compliance with all such laws, rules and regulations, the
noncompliance with which could have a Material Adverse Effect.
5.14 ENVIRONMENTAL MATTERS. To the best of Borrowers' knowledge, each
---------------------
Borrower is in compliance with all applicable Environmental Laws and no portion
of the Real Estate or Leasehold Property has been used as a land fill. To the
best of Borrowers' knowledge there currently are not any known Hazardous
Materials generated, manufactured, released, stored, buried or deposited over,
beneath, in or on (or used in the construction and/or renovation of) the Real
Estate or Leasehold Property in violation of applicable Environmental Laws.
5.15 APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower or any
-------------------------------------------
Affiliate of such Borrower is:
5.15.1 INVESTMENT BORROWER ACT. An "investment company," or a company
-----------------------
"controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.15.2 HOLDING BORROWER ACT. A "holding company," or a "subsidiary
--------------------
company" of a "holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended.
41
5.15.3 FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally of an enemy"
-----------------------
within the meaning of Section 2 of the Trading with the Enemy Act, (ii) a
"national" of a foreign country designated in Executive Order No. 8389, as
amended, or of any "designated enemy country" as defined in Executive Order
No. 9095, as amended, of the President of the United States of America, in
each case within the meaning of such Executive Orders, as amended, or of any
regulation issued thereunder, (iii) a "national of any designated foreign
country" within the meaning of the Foreign Assets Control Regulations or of
the Cuban Assets Control Regulations of the United States of America (Code of
Federal Regulations, Title 31, Chapter V, Part 515, Subpart B, as amended), or
(iv) an alien or a representative of any alien or foreign government within
the meaning of Section 310 of Title 47 of the United States Code.
5.15.4 REGULATIONS AS TO BORROWING. Subject to any statute or
---------------------------
regulation which regulates the incurrence of any Indebtedness for Borrowed
Money, including, without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.
5.16 MARGIN REGULATIONS. None of the transactions contemplated by this
------------------
Loan Agreement or any of the other Instruments, including the use of the
proceeds of the Loan, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X, and Borrower
does not own or intend to carry or purchase any "margin security" within the
meaning of such Regulation U or G.
5.17 OTHER INDEBTEDNESS. After giving effect to the Restatement Closing,
------------------
on the Restatement Effective Date no Borrower shall have any Indebtedness for
Borrowed Money, except (i) Borrowers' Obligations, (ii) Permitted Senior
Indebtedness, (iii) unsecured inter-company loans by any Borrower to any other
Borrower to the extent permitted under Section 7.1, (iv) Indebtedness for
Borrowed Money evidenced by the KComp Notes, (v) Indebtedness for Borrowed Money
evidenced by the Commercial Subordinated Note and (vi) Indebtedness for Borrowed
Money evidenced by the Polci Subordinated Note.
5.18 NO MISREPRESENTATION. To the best of Borrowers' knowledge neither
--------------------
this Loan Agreement nor any other Loan Instrument, certificate, information or
report furnished or to be furnished by or on behalf of any Borrower to FINOVA in
connection with any of the transactions contemplated hereby or thereby, contains
or will contain a misstatement of material fact, or omits or will omit to state
a material fact required to be stated in order to make the statements contained
herein or therein, taken as a whole, not misleading in the light of the
circumstances under which such statements were made. There is no fact, other
than information known to the public generally, known to or reasonably foreseen
by Borrowers after diligent inquiry, that could have a Material Adverse Effect
that has not expressly been disclosed to FINOVA in writing.
42
5.19 EMPLOYEE BENEFIT PLANS.
----------------------
5.19.1 NO OTHER PLANS. No Borrower or any of its ERISA Affiliates
--------------
maintains or contributes to, or has any obligation under, any Employee Benefit
Plan other than those identified on EXHIBIT 5.19.1. Borrowers have provided
FINOVA accurate and complete copies of all material contracts, agreements and
documents described on EXHIBIT 5.19.1.
5.19.2 ERISA AND CODE COMPLIANCE AND LIABILITY. Each Borrower and each
---------------------------------------
of its ERISA Affiliates is in compliance with all applicable provisions of
ERISA and the regulations and published interpretations thereunder with
respect to all Employee Benefit Plans except where failure to comply would not
result in a material liability to such Borrower and except for any required
amendments for which the remedial amendment period as defined in Section
401(b) of the Code has not yet expired. Each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified, and each trust related to
such plan has been determined to be exempt under Section 401(a) of the Code.
No material liability has been incurred by any Borrower or any of its ERISA
Affiliates which remains unsatisfied for any taxes or penalties with respect
to any Employee Benefit Plan or any Multiemployer Plan.
5.19.3 FUNDING. No Pension Plan has been terminated, nor has any
-------
accumulated funding deficiency (as defined in Section 412 of the Code) been
insured (without regard to any waiver granted under Section 412 of the Code),
nor has any funding waiver from the Internal Revenue Service been received or
requested with respect to any Pension Plan, nor has any Borrower or any of its
ERISA Affiliates failed to make any contributions or to pay any amounts due
and owing as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C), 4063(a) or 4068 of ERISA
with respect to any Pension Plan.
5.19.4 PROHIBITED TRANSACTIONS AND PAYMENTS. No Borrower or any of its
------------------------------------
ERISA Affiliates has: (i) engaged in a nonexempt "prohibited transaction" as
such term is defined in Section 406 of ERISA or Section 4975 of the Code; (ii)
incurred any liability to the PBGC which remains outstanding other than the
payment of premiums and there are no premium payments which are due and
unpaid; (iii) failed to make a required contribution or payment to a
Multiemployer Plan; or (iv) failed to make a required installment or other
required payment under Section 412 of the Code.
5.19.5 NO TERMINATION EVENT. No Termination Event has occurred or is
--------------------
reasonably expected to occur.
43
5.19.6 ERISA LITIGATION. No material proceeding, claim, lawsuit and/or
----------------
investigation is existing or, to the best knowledge of Borrowers, threatened
concerning or involving any (i) employee welfare benefit plan (as defined in
Section 3(1) of ERISA) currently maintained or contributed to by any Borrower
or any of its ERISA Affiliates, (ii) Pension Plan or (iii) Multiemployer Plan.
5.20 EMPLOYEE MATTERS.
----------------
5.20.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. (i) None of the
--------------------------------------------
employees of any Borrower is subject to any collective bargaining agreement,
(ii) except as described in EXHIBIT 5.20.1, no petition for certification or
union election is pending with respect to the employees of any Borrower and no
union or collective bargaining unit has sought such certification or
recognition with respect to the employees of any Borrower and (iii) there are
no strikes, slowdowns, work stoppages, unfair labor practice complaints,
grievances, arbitration proceedings or controversies pending or, to the best
knowledge of Borrowers, threatened against any Borrower by any of such
Borrower's employees, other than employee grievances or controversies arising
in the ordinary course of business that could not in the aggregate have a
Material Adverse Effect.
5.20.2 CLAIMS RELATING TO EMPLOYMENT. No Borrower nor, to Borrowers'
-----------------------------
best knowledge, any shareholder or employee of any Borrower, is subject to any
employment agreement or non-competition agreement with any former employer or
any other Person which agreement could have a Material Adverse Effect due to
(i) any information which any Borrower would be prohibited from using under
the terms of such agreement or (ii) any legal considerations relating to
unfair competition, trade secrets or proprietary information.
5.21 BURDENSOME OBLIGATIONS. After giving effect to the transactions
----------------------
contemplated by the Instruments (i) no Borrower (A) will be a party to or be
bound by any franchise, agreement, deed, lease or other instrument, or be
subject to any restriction, which is so unusual or burdensome so as to cause, in
the foreseeable future, a Material Adverse Effect and (B) intends to incur, or
believes that it will incur, debts beyond its ability to pay such debts as they
become due, and (ii) each Borrower (A) owns and will own Property, the fair
saleable value of which is (I) greater than the total amount of its liabilities
(including contingent liabilities) and (II) greater than the amount that will be
required to pay the probable liabilities of its then existing debts as they
become absolute and matured, and (B) has and will have capital that is not
unreasonably small in relation to its business as presently conducted and as
proposed to be conducted. Borrowers do not presently anticipate that future
expenditures needed to meet the provisions of federal or state statutes, orders,
rules or regulations will be so burdensome so as to have a Material Adverse
Effect.
5.22 SUBSIDIARIES. As of the Restatement Effective Date, (i) InfoCure has
------------
no subsidiaries other than Rovak, CCI Acquisition, Inc., Polci, HCD, KComp,
SoftEasy, DR
44
Software, ▇▇▇▇▇▇▇-▇▇▇▇▇, ICS, OPMS, Pace and MD Acquisition, Inc. and (ii) no
Borrower (other than InfoCure) has any subsidiaries.
5.23 REPRESENTATIONS AS TO THE POLCI ACQUISITION INSTRUMENTS, THE SOFTEASY
---------------------------------------------------------------------
ACQUISITION INSTRUMENTS, THE COMMERCIAL ACQUISITION INSTRUMENTS, THE PACE
-------------------------------------------------------------------------
ACQUISITION INSTRUMENTS, THE OPMS ACQUISITION INSTRUMENTS AND THE MICRO-SOFTWARE
--------------------------------------------------------------------------------
ACQUISITION INSTRUMENTS. To the best knowledge of Borrowers, the
-----------------------
representations and warranties made by the Polci Seller, the SoftEasy Seller,
the Commercial Seller, the Micro-Software Seller and the sellers under the Pace
Acquisition Instruments and the OPMS Acquisition Instruments pursuant to the
Polci Acquisition Instruments, the SoftEasy Acquisition Instruments, the
Commercial Acquisition Instruments, the Micro-Software Acquisition Instruments,
the Pace Acquisition Instruments and the OPMS Acquisition Instruments,
respectively, are true and correct as of the Restatement Effective Date and no
default exist thereunder.
ARTICLE VI
----------
AFFIRMATIVE COVENANTS
---------------------
Until all of Borrowers' Obligations are paid and performed in full each
Borrower agrees that it will:
6.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and its good
------------------------------
standing in the jurisdiction of its formation and its qualification in each
jurisdiction in which the failure so to qualify could have a Material Adverse
Effect.
6.2 INSPECTION. Permit representatives of FINOVA at any time to (i) visit
----------
its offices, (ii) examine its books and records and Accountants' reports
relating thereto, (iii) make copies or extracts therefrom, (iv) discuss its
affairs with its employees, (v) examine and inspect its Property and (vi) meet
and discuss its affairs with the Accountants, and such Accountants, as a
condition to their retention by the applicable Borrower, are hereby irrevocably
authorized by such Borrower to fully discuss and disclose all such affairs with
FINOVA.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a standard system
------------------------------------------
of accounting in accordance with GAAP and furnish to FINOVA:
6.3.1 MONTHLY STATEMENTS. As soon as available and in any event within
------------------
30 days after the close of each month:
(a) a consolidated balance sheet of Borrowers and the consolidating
balance sheet of each Borrower as of the end of such month, and
(b) the consolidated statements of operations and Operating Cash Flow
of Borrowers and the consolidating statements of operations and
Operating Cash
45
Flow of each Borrower for such month and for the period from the
beginning of the then current year to the end of such month, setting
forth in each case in comparative form the corresponding figures for
the corresponding period in the preceding year,
all in reasonable detail, containing such information as FINOVA reasonably may
require, and certified by the Chief Financial Officer as complete and correct,
subject to normal year-end adjustments.
6.3.2 QUARTERLY STATEMENTS; COMPLIANCE CERTIFICATE. As soon as
--------------------------------------------
available and in any event within 45 days after the close of each quarter of
each year:
(a) the consolidated balance sheet of Borrowers and the consolidating
balance sheet of each Borrower as of the end of such quarter, and
(b) the consolidated statements of operations of Borrowers, the
consolidated statements of Operating Cash Flow of Borrowers and the
consolidating statements of operations and Operating Cash Flow for
each Borrower for such quarter and for the period from the beginning
of the then current year to the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the
corresponding period in the preceding year, and showing a comparison
with the budget for such period,
all in reasonable detail, containing such information as FINOVA reasonably may
require, and certified by the Chief Financial Officer as complete and
correct, subject to normal year-end adjustments. Each such financial
statement shall be accompanied by a Compliance Certificate.
6.3.3 ANNUAL STATEMENTS. As soon as available and in any event within
-----------------
90 days after the close of each Fiscal Year:
(a) the audited consolidated balance sheet of Borrowers as of the end
of such Fiscal Year, the audited consolidated statements of
operations, cash flows and stockholders' equity of Borrowers
(collectively, the "Basic Financial Statements"), the audited
consolidating balance sheet of each Borrower as of the end of such
Fiscal Year, the audited consolidating statements of operations, cash
flows and stockholders' equity for each Borrower for such Fiscal Year,
the audited statements of the consolidated and consolidating Operating
Cash Flow for Borrowers for such Fiscal Year, setting forth in each
case in comparative form the corresponding figures for the preceding
Fiscal Year,
(b) an opinion of the Accountants which shall accompany the Basic
Financial Statements, which opinion shall be unqualified as to going
concern and scope of audit, stating that (i) the examination by the
Accountants in connection
46
with such Basic Financial Statements has been made in accordance with
generally accepted auditing standards, (ii) such Basic Financial
Statements have been prepared in conformity with GAAP and in a manner
consistent with prior periods, and (iii) such Basic Financial
Statements fairly present in all material respects the financial
position and results of operations of the Borrowers, and
(c) a letter from the Accountants stating that the statements of
Operating Cash Flow were computed in accordance with the requirements
of this Loan Agreement.
6.3.4 ACCOUNTANTS' CERTIFICATE. Simultaneously with the delivery of the
------------------------
certified Basic Financial Statements required by subsection 6.3.3, copies of a
certificate of the Accountants stating that (i) they have checked the
computations delivered in compliance with subsection 6.3.3, and (ii) in making
the examination necessary for their audit of the Basic Financial Statements
for such Fiscal Year, nothing came to their attention of a financial or
accounting nature that caused them to believe that (A) applicable Borrower was
not in compliance with the terms, covenants, provisions or conditions of any
of the Loan Instruments, or (B) there shall have occurred any condition or
event which would constitute an Event of Default, or, if so, specifying in
such certificate all such instances of non-compliance and the nature and
status thereof.
6.3.5 AUDIT REPORTS. Promptly upon receipt thereof, a copy of each
-------------
report, other than the reports referred to in subsection 6.3.3, including any
so-called "Management Letter" or similar report, submitted to any Borrower by
the Accountants in connection with any annual, interim or special audit made
by the Accountants of the books of such Borrower.
6.3.6 NOTICE OF DEFAULTS; LOSS. Prompt written notice if: (i) any
------------------------
Indebtedness of such Borrower is declared or shall become due and payable
prior to its declared or stated maturity, or called and not paid when due,
(ii) an event has occurred that enables the holder of any note, or other
evidence of such Indebtedness, certificate or security evidencing any such
Indebtedness to declare such Indebtedness due and payable prior to its stated
maturity, (iii) there shall occur and be continuing an Incipient Default or
Event of Default, accompanied by a statement setting forth what action the
Borrower proposes to take in respect thereof, or (iv) any event shall occur
which has or could have a Material Adverse Effect, including the amount or the
estimated amount of any loss or depreciation or adverse effect.
6.3.7 NOTICE OF SUITS, ADVERSE EVENTS. Prompt written notice of: (i)
-------------------------------
any citation, summons, subpoena, order to show cause or other order naming any
Borrower a party to any proceeding before any Governmental Body which could
have a Material Adverse Effect and include with such notice a copy of such
citation, summons, subpoena, order to show cause or other order, (ii) any
lapse or other termination of any license, permit, franchise, agreement or
other authorization issued to any Borrower by any
47
Governmental Body or any other Person that is material to the operation of the
Business of such Borrower, (iii) any refusal by any Governmental Body or any
other Person to renew or extend any such license, permit, franchise, agreement
or other authorization and (iv) any dispute between any Borrower and any
Governmental Body or any other Person, which lapse, termination, refusal or
dispute referred to in clauses (ii) and (iii) above or in this clause (iv)
could have a Material Adverse Effect.
6.3.8 REPORTS TO SHAREHOLDERS, CREDITORS AND GOVERNMENTAL BODIES.
----------------------------------------------------------
(a) Promptly upon becoming available, copies of all financial
statements, reports, notices and other statements sent or made
available generally by any Borrower to its shareholders or members, of
all regular and periodic reports and all registration statements and
prospectuses filed by such Borrower with any securities exchange or
with the Securities and Exchange Commission or any Governmental Body
succeeding to any of its functions, and of all statements generally
made available by such Borrower or others concerning material
developments in the business of such Borrower.
(b) Promptly upon becoming available, copies of any periodic or
special reports filed by such Borrower with any Governmental Body or
Person, if such reports indicate any material change in the business,
operations, affairs or condition of such Borrower, or if copies
thereof are requested by FINOVA, and copies of any material notices
and other communications from any Governmental Body or Person which
specifically relate to such Borrower.
6.3.9 ERISA NOTICES AND REQUESTS.
--------------------------
(a) With reasonable promptness, and in any event within 30 days after
occurrence of any of the following such Borrower will give notice of
and/or deliver to FINOVA copies of: (i) the establishment of any new
Employee Benefit Plan, Pension Plan or Multiemployer Plan; (ii) the
commencement of contributions to any Employee Benefit Plan, Pension
Plan or Multiemployer Plan to which any Borrower or any of its ERISA
Affiliates was not previously contributing or any increase in the
benefits of any existing Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (iii) each funding waiver request filed with
respect to any Employee Benefit Plan and all communications received
or sent by any Borrower or any of its ERISA Affiliates with respect to
such request; and (iv) the failure of any Borrower or any of its ERISA
Affiliates to make a required installment or payment under Section 302
of ERISA or Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 days of becoming aware of the
occurrence of or forthcoming occurrence of any (i) Termination Event
or (ii) "prohibited transaction", as such term is defined in Section
406 of ERISA or
48
Section 4975 of the Code, in connection with any Pension Plan or any
trust created thereunder such Borrower will deliver to FINOVA a notice
specifying the nature thereof, what action the applicable Borrower or
its ERISA Affiliate has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto.
(c) With reasonable promptness but in any event within 10 days after
the occurrence of any of the following, such Borrower will deliver to
FINOVA copies of: (i) any favorable or unfavorable determination
letter from the Internal Revenue Service regarding the qualification
of an Employee Benefit Plan under Section 401(a) of the Code; (ii) all
notices received by any Borrower or any of its ERISA Affiliates of the
PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; (iii) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed
by such Borrower or any of its ERISA Affiliates with the Internal
Revenue Service with respect to each Pension Plan; and (iv) all
notices received by such Borrower or any of its ERISA Affiliates from
a Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. Such Borrower
promptly will notify FINOVA in writing in the event any Borrower or
any of its ERISA Affiliates files or intends to file a notice of
intent to terminate any Pension Plan under a distress termination
within the meaning of Section 4041(c) of ERISA.
6.3.10 OTHER INFORMATION.
-----------------
(a) Prompt notice of any change in the location of any Property of
any Borrower which is material to or necessary for the continued
operation of such Borrower's business, any change in the name of any
Borrower, any sale or purchase of Property outside the regular course
of business of any Borrower, and any change in the business or
financial affairs of any Borrower, which change could have a Material
Adverse Effect.
(b) Promptly upon request therefor, such other information and reports
relating to the past, present or future financial condition,
operations, plans and projections of Borrowers as FINOVA reasonably
may request from time to time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file all
------------------------------------------------
material reports, applications, documents, instruments and information required
to be filed pursuant to all rules, regulations or requests of any Governmental
Body or other Person having jurisdiction over the operation of the business of
such Borrower, including, but not limited to, such of the Loan Instruments as
are required to be filed with any such Governmental Body or other Person
pursuant to applicable rules and regulations promulgated by such Governmental
Body or other Person.
49
6.5 MAINTENANCE OF LICENSES, FRANCHISES AND OTHER AGREEMENTS. Maintain in
--------------------------------------------------------
full force and effect at all times, and apply in a timely manner for renewal of,
all Licenses, trademarks, tradenames, License Agreements and Operating
Agreements necessary for the operation of its business, the loss of any of which
could have a Material Adverse Effect.
6.6 INSURANCE.
---------
6.6.1 MAINTENANCE OF INSURANCE. Maintain in full force and effect at
------------------------
all times such property, casualty, business interruption and other insurance
required by FINOVA, all of which shall be written by insurers, contain terms
and be in amounts and forms satisfactory to FINOVA, including public liability
insurance, flood insurance required pursuant to this Loan Agreement, workmen's
compensation, builders' risk, fire and extended coverage and flood insurance,
with a standard mortgagee clause endorsed thereon in favor of FINOVA which
shall provide, among other things, that the policies may not be cancelled
without 30 days' prior notice to the FINOVA. Deliver to FINOVA, from time to
time as FINOVA may reasonably request, evidence of compliance with this
subsection 6.6.1.
6.6.2 PROCEEDS. Each Borrower hereby directs all insurers under all
--------
policies of insurance to pay all proceeds payable thereunder directly to
FINOVA and each Borrower hereby authorizes FINOVA to collect all such proceeds
subject to such Borrower's rights as described below in this subsection 6.6.2
to receive certain proceeds. Each Borrower irrevocably appoints FINOVA (and
all officers, employees or agents designated by FINOVA) as such Borrower's
true and lawful attorney and agent in fact for the purpose of and with power
to make, settle and adjust claims under such policies of insurance, endorse
the name of such Borrower on any check, draft, instrument or other item of
payment for the proceeds of such policies of insurance, and to make all
determinations and decisions with respect to such policies of insurance. Each
Borrower acknowledges that such appointment as attorney and agent in fact is a
power, coupled with an interest, and therefore is irrevocable. Borrowers shall
notify FINOVA promptly of any loss, damage, destruction or other casualty to
the Collateral in excess of $20,000. If the proceeds of a casualty do not
exceed $50,000 and no Event of Default exists such proceeds shall be paid to
the applicable Borrower and applied to repair or replace the Property which is
the subject of such casualty. If the proceeds of a casualty exceed $50,000 or
an Event of Default exists, at the option of the FINOVA, such proceeds shall
be applied to the (i) payment of Borrowers' Obligations in accordance with
Section 8.4 or (ii) repair or replacement of the Collateral. In the event the
proceeds are to be applied to the repair or replacement of Collateral, the
Collateral shall be repaired or replaced so as to be of at least equal value
and substantially the same character as prior to such loss, damage,
destruction or other casualty.
6.7 FUTURE LEASES. Deliver to FINOVA, concurrently with the execution by
-------------
any Borrower, as lessee, of any Lease, an executed copy thereof and a Landlord's
Consent to the assignment of such Lease pursuant to an Assignment of Leases.
50
6.8 FUTURE ACQUISITIONS OF REAL ESTATE. Deliver to FINOVA concurrently
----------------------------------
with the (i) execution by any Borrower of any contract relating to the purchase
by such Borrower of real estate, an executed copy of such contract and (ii)
closing of the purchase of such real estate (A) a first mortgage or deed of
trust in favor of FINOVA on such real estate, in form and substance satisfactory
to FINOVA, (B) a lender's policy of title insurance, in such form and amount and
containing such endorsements as shall be satisfactory to FINOVA, (C) an
ALTA/ACSM survey of such real estate and (D) such other documents and assurances
with respect to such real estate as FINOVA may require.
6.9 ENVIRONMENTAL MATTERS.
---------------------
6.9.1 COMPLIANCE. At all times comply with, and be responsible for, its
----------
obligations under all Environmental Laws applicable to the Real Estate, the
Leasehold Property and any other Property owned by any Borrower or used by
such Borrower in the operation of its business. Borrowers shall at their sole
cost and expense (i) comply in all respects with (A) any notice of any
violation or administrative or judicial complaint or order having been filed
against any such Person, any portion of any Leasehold Property or any other
Property owned by such Person or used by such Person in the operation of its
business alleging violations of any law, ordinance and/or regulation requiring
such Person to take any action in connection with the release, transportation
and/or clean-up of any Hazardous Materials, and (B) any notice from any
Governmental Body or any other Person alleging that such Person is or may be
liable for costs associated with a response or clean-up of any Hazardous
Materials or any damages resulting from such release or transportation, or
(ii) diligently contest in good faith by appropriate proceedings any demands
set forth in such notices, provided (A) reserves in an amount satisfactory to
FINOVA to pay the costs associated with complying with any such notice are
established by such Person and (B) no Lien would or will attach to the
Property which is the subject of any such notice as a result of any compliance
by such Person which is delayed during any such contest. Promptly upon receipt
of any notice described in the foregoing clause (i), Borrowers shall deliver a
copy thereof to FINOVA.
6.10 COMPLIANCE WITH LAWS. Comply with all federal, state and local laws,
--------------------
ordinances, requirements and regulations and all judgments, orders, injunctions
and decrees applicable to any Borrower and its operations, the failure to comply
with which could have a Material Adverse Effect.
6.11 TAXES AND CLAIMS. Pay and discharge all taxes, assessments and
----------------
governmental charges or levies imposed upon it or upon its income or profits, or
upon any Property belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien (other than
a Permitted Lien) upon the Property of any Borrower, provided that so long as no
Lien has attached to the Property of any Borrower as a result of any of the
foregoing, no Borrower shall be required by this Section 6.11 to pay any such
amount if the same is being contested diligently and in good faith by
appropriate proceedings and as to which the applicable Borrower has set aside
reserves on its books satisfactory to FINOVA.
51
6.12 MAINTENANCE OF PROPERTIES. Maintain all of its Properties necessary
-------------------------
in the operation of its business in good working order and condition.
6.13 GOVERNMENTAL APPROVALS. Upon the exercise by FINOVA of any power,
----------------------
right or privilege pursuant to the provisions of any of the Loan Instruments
requiring any consent, approval or authorization of any Governmental Body
(including, without limitation, transfers of Licenses), promptly execute and
cause the execution of all applications, certificates, instruments and other
documents that FINOVA may be required to obtain for such consent, approval or
authorization.
6.14 REAFFIRMATIONS OF SUBORDINATION AGREEMENT. Borrowers shall use their
-----------------------------------------
best efforts to obtain and deliver to FINOVA, on or before the thirtieth (30th)
day after the Restatement Effective Date, a reaffirmation of subordination with
respect to each subordination agreement executed and delivered in connection
with the Existing Loan Agreement, in each case in form and substance reasonably
satisfactory to FINOVA.
ARTICLE VII
-----------
NEGATIVE COVENANTS
------------------
Until all of Borrowers' Obligations are paid and performed in full, no
Borrower shall:
7.1 BORROWING. Create, incur, assume or suffer to exist any liability for
---------
Indebtedness for Borrowed Money except (i) Borrowers' Obligations, (ii)
Permitted Senior Indebtedness, (iii) Indebtedness for Borrowed Money evidenced
by the KComp Notes, (iv) Indebtedness for Borrowed Money evidenced by the
Commercial Subordinated Note, (v) Indebtedness for Borrowed Money evidenced by
the Polci Subordinated Note and (vi) unsecured inter-company loans by any
Borrower to any other Borrower, provided that the obligations of each obligor of
such Indebtedness shall: (A) be evidenced by promissory notes which shall have
been pledged to FINOVA as security for Borrowers' Obligations, (B) if required
by FINOVA, be subordinated in right of payment to Borrowers' Obligations on
terms and conditions acceptable to FINOVA and (C) have such other terms and
provisions as FINOVA may reasonably require.
7.2 LIENS. Create, incur, assume or suffer to exist any Lien upon any of
-----
its Property, whether now owned or hereafter acquired, except Permitted Liens.
7.3 MERGER AND ACQUISITION. Consolidate with or merge with or into any
----------------------
Person, or acquire directly or indirectly all or substantially all of the
capital stock, equity interests or Property of any Person, except (i) Permitted
Acquisitions and (ii) any Subsidiary may merge with or into any other
Subsidiary, provided that (A) no Event of Default or Incipient Default would
exist after giving effect to any such merger, (B) FINOVA shall have received 45
days' prior written notice of any such merger, (C) Borrowers shall have executed
and delivered to
52
FINOVA such instruments and documents as FINOVA shall require to preserve the
validity and priority of the Security Interests in the Property transferred to
the surviving Subsidiary in connection with any such merger and (D) FINOVA shall
have received such other instruments and documents in connection with any such
merger as FINOVA shall require, including, without limitation, certified copies
of the related plan of merger and certificates of merger.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently agree
----------------------
to purchase, become liable in respect of any letter of credit, or otherwise
become liable upon the obligation of any Person, except liabilities arising from
the endorsement of negotiable instruments for deposit or collection, the posting
of bonds to secure performance to the extent necessary in connection with its
business and similar transactions in the ordinary course of business.
7.5 DISTRIBUTIONS. Make any dividends, distributions or other shareholder
-------------
expenditures with respect to its capital stock or other equity interests or
apply any of its Property to the purchase, redemption or other retirement of, or
set apart any sum for the payment of, or make any other distribution by
reduction of capital or otherwise in respect of, any of such capital stock or
equity interests, except (i) if no Event of Default exists or would be created
thereby, any Subsidiary may make dividends or other distributions to InfoCure,
(ii) InfoCure may be required to redeem a portion its capital stock pursuant to
mandatory redemption rights or obligations which are exerciseable or enforceable
only after the indefeasible payment and performance in full of Borrowers'
Obligations, (iii) during the period from the Original Closing Date to the first
anniversary of the Original Closing Date, InfoCure may redeem capital stock of
InfoCure issued to MDP Corporation provided that (A) the price of such
redemption shall (1) not exceed $150,000 in the aggregate and (2) be offset
against amounts otherwise owing by MDP Corporation to InfoCure and (B) no
Incipient Default or Event of Default exists or would be created by the
consummation of any such redemption, and (iv) InfoCure may pay dividends on
capital stock issued to the provider of electronic data services to InfoCure,
provided that (A) no Incipient Default or Event of Default exists or would be
created by the payment of such dividends, (B) such dividends shall not exceed
$200,000 in the aggregate during any year and (C) after giving effect to any
such payment of dividends the ratio of (1) the consolidated Operating Cash Flow
of Borrowers for the twelve month period ending on the last day of the most
recent quarter for which FINOVA shall have received financial statements, less
----
any payments made during such twelve month period with respect to Capital
Expenditures, to (2) the sum of, for such twelve month period, Debt Service of
Borrowers, plus the amount of any dividends paid by InfoCure during such period,
----
shall not be less than 1.10.
7.6 CAPITAL EXPENDITURES. Make or incur any Capital Expenditures (other
--------------------
than Permitted Acquisitions and payments made by any Borrower in connection with
the development of computer software in connection with the business of such
Borrower) in any year if the aggregate amount of Capital Expenditures of
Borrowers for such year would exceed $1,250,000.
7.7 PAYMENTS OF INDEBTEDNESS FOR BORROWED MONEY. Make any voluntary or
-------------------------------------------
optional payment or prepayment of any Indebtedness for Borrowed Money other than
(i)
53
Borrowers' Obligations, (ii) KComp may make regularly scheduled payments of
interest and principal of the Indebtedness for Borrowed Money evidenced by the
KComp Notes, provided that no Event of Default or Incipient Default exists or
would be created by the making of any such payment, (iii) without duplication,
InfoCure and CCI Acquisition, Inc. may make regularly scheduled payments of
interest and principal of the Indebtedness for Borrowed Money evidenced by the
Commercial Subordinated Note, provided that no Event of Default or Incipient
Default exists or would be created by the making of any such payment and (iv)
without duplication, InfoCure and Polci may make regularly scheduled payments of
interest and principal of the Indebtedness for Borrowed Money evidenced by Polci
Subordinated Note, provided that no Event of Default or Incipient Default exists
or would be created by the making of any such payment.
7.8 INVESTMENTS, LOANS. At any time purchase or otherwise acquire, hold or
------------------
invest in the capital stock of, or any other interest in, any Person, or make
any loan or advance to, or enter into any arrangement for the purpose of
providing funds or credit to, or make any other investment, whether by way of
capital contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by a Qualified Depository, (ii) investments in
commercial or finance paper which, at the time of investment, is rated "A" or
better by ▇▇▇▇▇'▇ Investors Service, Inc., or Standard & Poor's Ratings Group, a
Division of ▇▇▇▇▇▇-▇▇▇▇, Inc., respectively, or at the equivalent rate by any of
their respective successors, (iii) any interests in any money market account
maintained, at the time of investment, with a Qualified Depository, the
investments of which, at the time of investment, are restricted to the types
specified in clause (i) above, and (iv) InfoCure may make investments in
Acquisition Subsidiaries. All investments permitted pursuant to clauses (i),
(ii) and (iii) of this Section 7.8 shall have a maturity not exceeding one year.
7.9 FUNDAMENTAL BUSINESS CHANGES. Materially change the nature of its
----------------------------
business.
7.10 FACILITY SITES. Change the locations of its chief executive office or
--------------
other Property used in the operation of its business unless (i) FINOVA shall
have received at least thirty (30) days' prior written notice thereof, (ii) the
applicable Borrower shall have complied with all applicable laws, rules and
regulations and shall have received all required consents and approvals from any
Governmental Body, (iii) FINOVA shall have received satisfactory evidence that
such change could not reasonably be expected to affect adversely the operations
or business prospects of the applicable Borrower and (iv) the applicable
Borrower shall have executed and delivered to FINOVA any documents FINOVA may
reasonably require in order to maintain the validity and priority of the
Security Interests, including, without limitation, UCC financing statements and
amendments.
7.11 SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer or
--------------------------
otherwise dispose of any Property (other than in the ordinary course of
business) except for the sale or disposition of (i) Property which is not
material to or necessary for the continued operation of its business
54
and (ii) obsolete or unusable items of equipment which promptly are replaced
with new items of equipment of like function and comparable value to the
obsolete or unusable items of equipment when the same were new or not obsolete
or unusable, provided such replacement items of equipment shall become subject
to the Security Interests.
7.12 AMENDMENT OF DOCUMENTS. Amend or modify (i) its articles of
----------------------
incorporation except (A) if required by law or (B) InfoCure may amend its
articles of incorporation in connection with the issuance of additional capital
stock permitted under Section 7.14, (ii) any of the KComp Notes, (iii) the
Commercial Subordinated Note, (iv) the Polci Note, (v) any of the Existing
Acquisition Instruments, (vi) any of the Micro-Software Acquisition Instruments
or (vii) any Acquisition Instruments.
7.13 ACQUISITION OF ADDITIONAL PROPERTIES. (i) Enter into an agreement
------------------------------------
with respect to a proposed Acquisition unless such agreement provides that the
only remedy against the Borrower entering into such agreement in the event of
default by such Borrower thereunder is liquidated damages in an amount not to
exceed 5% of the purchase price or (ii) acquire any additional Property except
(A) such Property as is necessary to or useful in the operation of its business,
provided such acquisitions shall be subject to the conditions and limitations
set forth in this Loan Agreement, and (B) acquisitions of Property as are
permitted pursuant to Section 7.3.
7.14 ISSUANCE OF CAPITAL STOCK OR OTHER SIMILAR INTERESTS. Issue or sell,
----------------------------------------------------
permit to be issued or sold, or otherwise consent to the transfer of, any
additional capital stock or equity interests or any interests convertible into
or exercisable for any such capital stock or additional equity interests, except
(i) the issuance of capital stock of InfoCure, provided that InfoCure shall not
be required to pay dividends, redeem such capital stock or make other
distributions with respect thereto except as permitted under Section 7.5 and
(ii) the convertible rights granted pursuant to the Commercial Long-Term
Subordinated Note.
7.15 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer or
----------------------------
otherwise dispose of any Property to any Affiliate of any Borrower, lease
Property, render or receive services or purchase assets from any such Affiliate,
or otherwise enter into any contractual relationship with any such Affiliate,
except for transactions among the Borrowers which shall have been fully
disclosed to FINOVA in writing.
7.16 COMPLIANCE WITH ERISA.
---------------------
(i) Permit the occurrence of any Termination Event which would
result in a liability to any Borrower or any of its ERISA Affiliates in
excess of $50,000;
(ii) Permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities by more than $50,000;
55
(iii) Permit any accumulated funding deficiency in excess of
$50,000 (as defined in Section 302 of ERISA and Section 412 of the Code)
with respect to any Pension Plan, whether or not waived;
(iv) Fail to make any contribution or payment to any Multiemployer
Plan which any Borrower or any of its ERISA Affiliates may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto which results in or is likely to result in a liability
in excess of $50,000;
(v) Engage, or permit any Borrower or any of its ERISA Affiliates
to engage, in any "prohibited transaction" as such term is defined in
Section 406 of ERISA or Section 4975 of the Code for which a civil penalty
pursuant to Section 502(i) of ERISA or a tax pursuant to Section 4975 of
the Code in excess of $50,000 is imposed;
(vi) Permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit
Plan which establishment or amendment could result in liability to any
Borrower or any of its ERISA Affiliates or increase the obligation of any
Borrower or any of its ERISA Affiliates to a Multiemployer Plan which
liability or increase, individually or together with all similar liabilities
and increases, is material to any Borrower or any of its ERISA Affiliates; or
(vii) Fail, or permit any of its ERISA Affiliates to fail, to establish,
maintain and operate each Employee Benefit Plan in compliance in all material
respects with ERISA, the Code and all other applicable laws and regulations
and interpretations thereof.
7.17 CURRENT RATIO. Permit the consolidated current assets of Borrowers
-------------
as of the last day of any quarter to be less than the consolidated current
liabilities of Borrowers as of such day less the amount of deferred revenues of
----
Borrowers as of such day as accurately reflected on the financial statements of
Borrowers in accordance with GAAP.
7.18 SENIOR DEBT SERVICE COVERAGE RATIO. Permit the Senior Debt Service
----------------------------------
Coverage Ratio as of the last day of any quarter to be less than 1.50.
7.19 SUBSIDIARIES. Create or permit to exist any subsidiary, other than
------------
(i) the Subsidiaries of InfoCure as of the Restatement Effective Date and (ii)
Acquisition Subsidiaries, provided that each such Acquisition Subsidiary shall
have executed and delivered all agreements, documents and instruments required
by FINOVA to (A) cause such Acquisition Subsidiary to be a "Borrower" under this
Loan Agreement and the other Loan Instruments and (B) grant a first Lien in
favor of FINOVA on all of the Property of such Acquisition Subsidiary.
56
ARTICLE VIII
------------
DEFAULT AND REMEDIES
--------------------
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
-----------------
constitute an Event of Default under the Loan Instruments:
8.1.1 DEFAULT IN PAYMENT. If Borrowers shall fail to pay all or any
------------------
portion of Borrowers' Obligations when the same become due and payable,
including, without limitation, the failure of Borrowers to make the payment
of the Contingent Obligation Payment required pursuant to Section 2.11.
8.1.2 BREACH OF COVENANTS.
-------------------
(a) If any Borrower shall fail to observe or perform any covenant
or agreement made by or on behalf of any Borrower contained in Section
6.1, 6.2, 6.5, 6.6, 6.9 and 6.11 or in Article VII;
(b) If any Borrower shall fail to observe or perform any covenant or
agreement (other than those referred to in subparagraph (a) above or
specifically addressed elsewhere in this Section 8.1) made by such Person
in any of the Loan Instruments to which such Person is a party, and such
failure shall continue for a period of 30 days after written notice of
such failure is given by FINOVA.
8.1.3 BREACH OF WARRANTY. If any representation or warranty made by
------------------
or on behalf of any Borrower in or pursuant to any of the Loan Instruments
or in any instrument or document furnished in compliance with the Loan
Instruments shall prove to be false or misleading in any material respect
on the date as of which made.
8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY. If (i)
---------------------------------------------------
any Borrower at any time shall be in default (as principal or guarantor or
other surety) in the payment of any principal of or premium or interest on any
Indebtedness for Borrowed Money (other than Borrowers' Obligations) beyond the
grace period, if any, applicable thereto and the aggregate amount of such
payments then in default beyond such grace period shall exceed $100,000 or
(ii) any default shall occur in respect of any issue of Indebtedness for
Borrowed Money of any Borrower (other than Borrowers' Obligations) outstanding
in a principal amount of at least $100,000, or in respect of any agreement or
instrument relating to any such issue of Indebtedness for Borrowed Money, and
such default shall continue beyond the grace period, if any, applicable
thereto or (iii) any Borrower at any time shall be in default under the KComp
Notes, the Commercial Subordinated Note or the Polci Note.
57
8.1.5 BANKRUPTCY.
----------
(a) If any Borrower shall (i) generally not be paying its debts
as they become due, (ii) file, or consent, by answer or otherwise, to the
filing against it of a petition for relief or reorganization or
arrangement or any other petition in bankruptcy or insolvency under the
laws of any jurisdiction, (iii) make an assignment for the benefit of
creditors, (iv) consent to the appointment of a custodian, receiver,
trustee or other officer with similar powers for such Borrower, or for
any substantial part of the Property of such Borrower or (v) be
adjudicated insolvent.
(b) If any Governmental Body of competent jurisdiction shall enter an
order appointing, without consent of such Borrower, a custodian,
receiver, trustee or other officer with similar powers with respect to
such Borrower, or with respect to any substantial part of the Property
belonging to any such Person, or if an order for relief shall be entered
in any case or proceeding for liquidation or reorganization or otherwise
to take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or liquidation of
any Borrower or if any petition for any such relief shall be filed
against any Borrower and such petition shall not be dismissed or stayed
within 60 days.
8.1.6 JUDGMENTS. If the aggregate amount of all judgments or awards
---------
against the Borrowers exceeds $50,000 at any one time outstanding, excluding
judgments or awards (i) for which there is full insurance and with respect to
which the insurer has assumed responsibility in writing, (ii) for which there
is full indemnification (upon terms and by credit worthy indemnitors which are
satisfactory to FINOVA) or (iii) which have not been discharged in full or
stayed pending appeal.
8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
----------------------------------------
Governmental Body shall (A) revoke, terminate, suspend or adversely modify any
License of any Borrower, the non-continuation of which could have a Material
Adverse Effect, or (B) enter a final order or decision to suspend, revoke,
terminate or adversely modify any such License or (ii) there shall exist any
violation or default in the performance of, or a material failure to comply
with any agreement, or condition or term of any License or License Agreement,
which violation, default or failure could have a Material Adverse Effect, or
any such License or License Agreement shall cease to be in full force and
effect, or (iii) any Operating Agreement or License Agreement shall expire or
be revoked or terminated and not replaced by a substitute acceptable to FINOVA
within 30 days after the date of such expiration, revocation or termination,
and such expiration, revocation or termination and non-replacement could have
a Material Adverse Effect.
8.1.8 COLLATERAL. If any material portion of the Collateral shall be
----------
seized or taken by a Governmental Body or Person, or Borrowers shall fail
to maintain or cause to be maintained the Security Interests and priority
of the Loan Instruments as against
58
any Person, or the title and rights of any Borrower to any material portion of
the Collateral shall have become the subject matter of litigation which
could reasonably be expected to result in impairment or loss of the
security provided by the Loan Instruments.
8.1.9 PLANS. If an event or condition specified in subsection 6.3.11
-----
hereof shall occur or exist with respect to any Plan or Multiemployer Plan
and, as a result of such event or condition, together with all other such
events or conditions, any Borrower or any of its ERISA Affiliates shall incur,
or in the opinion of FINOVA be reasonably likely to incur, a liability to a
Plan or Multiemployer Plan or the PBGC (or any of them) which, in the
reasonable judgment of FINOVA, could have a Material Adverse Effect.
8.1.10 CHANGE IN CONTROL. If at any time (i) InfoCure ceases to own
-----------------
and control all of the issued and outstanding capital stock and options,
warrants and other rights to acquire capital stock of each other Borrower or
(ii) any Person or any Persons acting together which would constitute a
"group" (a "Group") for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any successor provision
thereto, other than a Group whose nominees constitute a majority of the board
of directors of InfoCure as of the Original Closing Date, together with any
Affiliates or "Related Persons" (as defined in Rule 13d-3 od the Securities
and Exchange Commission under the Exchange Act or any successor provision
thereto) thereof, shall beneficially own 50% or more of the aggregate voting
power of all classes of capital stock of InfoCure entitled to vote generally
in the election of directors of InfoCure or (iii) any Person or Group, other
than any Person or Group whose nominees constituted a majority of the board of
directors of InfoCure as of the Original Closing Date, together with any
Affiliates or Related Persons thereof, shall succeed in having sufficient of
its or their nominees elected to the board of directors of InfoCure, such that
such nominees, when added to any existing director remaining on the board of
directors of InfoCure after such election who is an Affiliate or a Related
Person of such Group, shall constitute a majority of the board of directors of
InfoCure.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
--------------------------------------
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrowers' Obligations at
that time outstanding automatically shall mature and become due, and
(b) any other Event of Default, FINOVA, at any time (unless such Event
of Default shall have been waived in writing or remedied), at its option,
without further notice or demand may declare all of Borrowers' Obligations
due and payable, whereupon Borrowers' Obligations immediately shall mature
and become due and payable,
all without presentment, demand, protest or notice (other than the declaration
referred to in clause (b) above), all of which hereby are waived.
59
8.3 REMEDIES ON DEFAULT. If Borrowers' Obligations have been
-------------------
accelerated pursuant to Section 8.2, FINOVA, at its option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce or cause to be
---------------------------------
enforced any of the rights or remedies accorded to FINOVA under the Loan
Instruments.
8.3.2 OTHER REMEDIES. Enforce or cause to be enforced any of the
--------------
rights or remedies accorded to FINOVA at equity or law, by virtue of
statute or otherwise.
8.4 APPLICATION OF FUNDS. Any funds received by FINOVA pursuant to the
--------------------
exercise of any rights accorded to FINOVA pursuant to, or by the operation of
any of the terms of, any of the Loan Instruments, including, without limitation,
insurance proceeds, condemnation proceeds or proceeds from the sale of
Collateral, shall be applied to Borrowers' Obligations in the following order of
priority:
8.4.1 EXPENSES. First, to the payment of (i) all fees and expenses
--------
actually incurred, including, without limitation, court costs, fees of
appraisers, title charges, costs of maintaining and preserving the Collateral,
costs of sale, and all other costs incurred by FINOVA, in exercising any
rights accorded to FINOVA pursuant to the Loan Instruments or by applicable
law, including, without limitation, reasonable attorney's fees, and (ii) all
Liens superior to the Liens of FINOVA except such superior Liens subject to
which any sale of the Collateral may have been made.
8.4.2 BORROWERS' OBLIGATIONS. Next, to the payment of Borrowers'
----------------------
Obligations in such manner as FINOVA shall determine.
8.4.3 SURPLUS. Any surplus, to the Person or Persons entitled
-------
thereto.
8.5 PERFORMANCE OF BORROWER'S OBLIGATIONS. If any Borrower fails to (i)
-------------------------------------
maintain in force and pay for any insurance policy or bond which any Borrower is
required to provide pursuant to any of the Loan Instruments, (ii) keep the
Collateral free from all Liens except for Permitted Liens, (iii) pay when due
all taxes, levies and assessments on or in respect of the Collateral, except as
otherwise permitted pursuant to the terms hereof, (iv) make all payments and
perform all acts on the part of such Borrower to be paid or performed in the
manner required by the terms hereof and by the terms of the other Loan
Instruments with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring, handling
and maintaining the Collateral, (v) keep fully and perform promptly any other of
the obligations of such Borrower hereunder or under any of the other Loan
Instruments, and (vi) keep fully and perform promptly the obligations of such
Borrower with respect to any issue of Indebtedness for Borrowed Money secured by
a Permitted Prior Lien, then FINOVA may (but shall not be required to) procure
and pay for such insurance policy or bond, place such Collateral in good repair
and operating condition, pay, contest or settle such Liens or taxes or any
judgments based thereon or otherwise make good any other aforesaid failure of
such Borrower. Borrowers shall reimburse FINOVA immediately upon demand for all
reasonable
60
sums paid or advanced on behalf of any Borrower for any such purpose, together
with reasonable and/or necessary costs and expenses (including reasonable
attorneys' fees) paid or incurred by FINOVA in connection therewith and interest
on all sums advanced from the date of advancement until repaid to FINOVA at the
Default Rate. All such sums advanced by FINOVA, with interest thereon,
immediately upon advancement thereof, shall be deemed to be part of Borrowers'
Obligations.
ARTICLE IX
----------
CLOSING
-------
The Restatement Effective Date shall be such date as the parties shall
determine, and the Closing shall take place on such date, provided all
conditions for the Closing as set forth in this Loan Agreement have been
satisfied or otherwise waived by FINOVA. The Closing shall take place at the
office of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇ or such other place as the parties hereto shall
agree. Unless the Closing occurs on or before March 31, 1998, this Loan
Agreement shall terminate and be of no further force or effect and, except for
any obligations of Borrowers to FINOVA pursuant to Article X, none of the
parties hereto shall have any further obligation to any other party.
ARTICLE X
---------
EXPENSES AND INDEMNITY
----------------------
10.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any of the
-------------------------------------------
transactions contemplated by this Loan Agreement shall be consummated, subject
to the limitations set forth in subsection 10.1.1, Borrowers agree to pay to
FINOVA on demand all expenses incurred by FINOVA in connection with the
transactions contemplated hereby and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
10.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN INSTRUMENTS. All
-----------------------------------------------------
expenses, disbursements (including, without limitation, charges for required
mortgagee's title insurance, lien searches, reproduction of documents, long
distance telephone calls and overnight express carriers) and reasonable
attorneys' fees, actually incurred by FINOVA in connection with the (i)
preparation and negotiation of the Loan Instruments or any amendments,
modifications or waivers thereto or any documents delivered pursuant thereto
and (ii) administration of the Loan.
10.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
-------------------------------------------------------------
INSTRUMENTS. Any expenses or other costs, including reasonable attorneys'
-----------
fees and expert witness fees, actually incurred by FINOVA in connection
with the enforcement
61
or collection against any Borrower of any provision of any of the Loan
Instruments, and in connection with or arising out of any litigation,
investigation or proceeding instituted by any Governmental Body or any other
Person with respect to any of the Loan Instruments, whether or not suit is
instituted, including, but not limited to, such costs or expenses arising from
the enforcement or collection against any Borrower of any provision of any of
the Loan Instruments in workout or restructuring any state or federal
bankruptcy or reorganization proceeding.
10.2 INDEMNITY. Borrowers agree to indemnify and save FINOVA harmless of and
---------
from the following:
10.2.1 BROKERAGE FEES. The fees, if any, of brokers and finders engaged
--------------
by Borrower.
10.2.2 GENERAL. Any loss, cost, liability, damage or expense (including
-------
reasonable attorneys' fees and expenses) incurred by FINOVA in investigating,
preparing for, defending against, providing evidence, producing documents or
taking other action in respect of any commenced or threatened litigation,
administrative proceeding, suit instituted by any Person or investigation
under any law, including any federal securities law, the Bankruptcy Code, any
relevant state corporate statute or any other securities law, bankruptcy law
or law affecting creditors generally of any jurisdiction, or any regulation
pertaining to any of the foregoing, or at common law or otherwise, relating,
directly or indirectly, to the transactions contemplated by or referred to in,
or any other matter related to, the Loan Instruments.
10.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
----------------------------------------
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or maintenance
of the Collateral, the construction of FINOVA and any Borrower as having the
relationship of joint venturers or partners or the determination that FINOVA
has acted as agent for any Borrower.
10.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims, losses, damages,
-----------------------
response costs, clean-up costs and expenses suffered and/or incurred at any
time by FINOVA arising out of or in any way relating to the existence at any
time of any Hazardous Materials in, on, under, at, transported to or from, or
used in the construction and/or renovation of, any of the Real Estate or
Leasehold Property, or otherwise with respect to any Environmental Law, and/or
the failure of any Borrower to perform its obligations and covenants hereunder
with respect to environmental matters, including, but not limited to: (i)
claims of any Persons for damages, penalties, response costs, clean-up costs,
injunctive or other relief, (ii) costs of removal and restoration, including
fees of attorneys and experts, and costs of reporting the existence of
Hazardous Materials to any Governmental Body, and (iii) any expenses or
obligations, including attorneys' fees and expert witness fees, incurred at,
before and after any trial or other proceeding before any Governmental Body or
appeal therefrom whether or not taxable as costs,
62
including, without limitation, witness fees, deposition costs, copying and
telephone charges and other expenses, all of which shall be paid by Borrowers
to FINOVA.
ARTICLE XI
----------
MISCELLANEOUS
-------------
11.1 NOTICES. All notices and communications under this Loan Agreement shall
-------
be in writing and shall be (i) delivered in person, (ii) sent by telecopy, or
(iii) mailed, postage prepaid, either by registered or certified mail, return
receipt requested, or by overnight express carrier, addressed in each case as
follows:
To Borrowers: c/o InfoCure Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
1600 Atlanta Financial Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To FINOVA: FINOVA Capital Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: FINOVA Capital Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Law
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to any other address or telecopy number, as to any of the parties hereto, as
such party shall designate in a written notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 11.1 shall be deemed received
(i) if personally delivered, then on the Business Day of delivery, (ii) if sent
by telecopy before 2:00 p.m. Phoenix time, on the day sent if a Business Day or
if such day is not a Business Day or if sent after 2:00 p.m. Phoenix time, then
on the next Business Day, (iii) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent, or (iv) if sent by
registered or certified mail, on the earlier of the fifth Business Day following
the day sent or when actually received. Any notice by telecopy shall be
followed by delivery on the next Business Day by overnight, express carrier or
by hand.
11.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants, agreements,
---------------------------------------
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the making by FINOVA of the
Loans and the execution and delivery to FINOVA of the Notes and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrowers' Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments, the
cancellation of the Notes and the release and/or cancellation of any and all of
the Loan Instruments or the foreclosure of any Liens on the Collateral, the
obligations of Borrowers to indemnify FINOVA with respect to the expenses,
damages, losses, costs and liabilities described in Section 10.2 shall survive
until all applicable statute of limitations periods with respect to actions
which may be brought against FINOVA have run.
11.3 FURTHER ASSURANCE. From time to time, Borrowers shall execute and
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deliver to FINOVA such additional documents as FINOVA reasonably may require to
carry out the purposes of the Loan Instruments and to protect rights of FINOVA
thereunder, including, without limitation, using its best efforts in the event
any Collateral is to be sold to secure the approval by any Governmental Body of
any application required by such Governmental Body in connection with such sale,
and not take any action inconsistent with such sale or the purposes of the Loan
Instruments.
11.4 TAXES AND FEES. Should any tax (other than taxes based upon the net
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income of any FINOVA), recording or filing fees become payable in respect of any
of the Loan Instruments, or any amendment, modification or supplement thereof,
Borrowers agree to pay the same on demand, together with any interest or
penalties thereon attributable to any delay by Borrowers in meeting any FINOVA
demand, and agrees to hold FINOVA harmless with respect thereto.
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11.5 SEVERABILITY. In the event that any provision of this Loan Agreement is
------------
deemed to be invalid by reason of the operation of any law, or by reason of the
interpretation placed thereon by any court or Governmental Body, as applicable,
this Loan Agreement shall be construed as not containing such provision and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
11.6 WAIVER. No delay on the part of FINOVA in exercising any right, power
------
or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
11.7 MODIFICATION OF LOAN INSTRUMENTS. No modification or waiver of any
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provision of any of the Loan Instruments shall be effective unless the same
shall be in writing and signed by Borrowers and FINOVA, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Borrower in any case shall entitle
such Borrower to any other or further notice or demand in the same, similar or
other circumstances.
11.8 CAPTIONS. The headings in this Loan Agreement are for purposes of
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reference only and shall not limit or otherwise affect the meaning hereof.
11.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon and
----------------------
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
11.10 REMEDIES CUMULATIVE. All rights and remedies of the parties hereto,
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any other Loan Instruments or otherwise, shall be cumulative and non-exclusive,
and may be exercised singularly or concurrently. FINOVA shall not be required
to prosecute collection, enforcement or other remedies against any Borrower
before proceeding against any other Borrower or to enforce or resort to any
security, liens, collateral or other rights of FINOVA. One or more successive
actions may be brought against Borrower and/or any other Borrower, either in the
same action or in separate actions, as often as FINOVA deems advisable, until
all of Borrowers' Obligations are paid and performed in full.
11.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other Loan
--------------------------
Instruments executed prior or pursuant hereto constitute the entire agreement
among the parties hereto with respect to the transactions contemplated hereby or
thereby and supersede any prior agreements, whether written or oral, relating to
the subject matter hereof. In the event of a conflict between the terms and
conditions set forth herein and the terms and conditions set forth in any other
Loan Instrument, the terms and conditions set forth herein shall govern.
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11.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN ACCORDANCE
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WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ARIZONA.
11.13 JURISDICTION AND VENUE. BORROWERS HEREBY AGREE THAT ALL ACTIONS OR
----------------------
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE
LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF MARICOPA COUNTY, OR
THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA OR, IF FINOVA
INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS, ANY COURT IN WHICH
FINOVA SHALL INITIATE SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION.
EACH BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY FINOVA IN ANY OF SUCH
COURTS IN THE STATE OF ARIZONA. EACH BORROWER WAIVES ANY CLAIM THAT MARICOPA
COUNTY, ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR AN
IMPROPER FORUM BASED ON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM FOR
BORROWER SET FORTH IN THIS SECTION 11.13 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT BY OR FINOVA OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM TO THE
EXTENT SUCH FORUM HAS JURISDICTION OR THE TAKING BY FINOVA OF ANY ACTION TO
ENFORCE THE SAME IN ANY OTHER JURISDICTION PERMITTED BY LAW, AND EACH BORROWER
HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
11.14 WAIVER OF RIGHT TO JURY TRIAL. FINOVA AND BORROWERS ACKNOWLEDGE AND
-----------------------------
AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN INSTRUMENTS OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT
ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
11.15 TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE BY
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BORROWERS OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND THE OTHER LOAN
INSTRUMENTS.
11.16 ESTOPPEL CERTIFICATE. Within fifteen (15) days after FINOVA requests
--------------------
Borrowers to do so, Borrowers will execute and deliver to FINOVA a statement
certifying (i) that this Loan Agreement is in full force and effect and has not
been modified except as described in such statement, (ii) the date to which
interest and principal on the Note has been paid, (iii) the Principal Balance,
(iv) whether or not to its knowledge an Incipient Default or Event of Default
has occurred and is continuing, and, if so, specifying in reasonable detail each
such Incipient Default or Event of Default of which it has knowledge, (v)
whether to its knowledge it has any
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defense, setoff or counterclaim to the payment of the Note in accordance with
their terms, and, if so, specifying each defense, setoff or counterclaim of
which it has knowledge in reasonable detail (including where applicable the
amount thereof), and (vi) as to any other matter reasonably requested by FINOVA.
11.17 CONSEQUENTIAL DAMAGES. Neither FINOVA nor any agent or attorney of
---------------------
FINOVA shall be liable to Borrowers for consequential damages arising from any
breach of contract, tort or other wrong relating to the establishment,
administration or collection of the Borrowers' Obligations.
11.18 COUNTERPARTS. This Loan Agreement may be executed by the parties
------------
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same agreement.
11.19 NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement or in
-------------------------
any other Loan Instrument, and no course of dealing among the parties hereto,
shall be deemed to create any fiduciary duty by FINOVA to Borrowers.
11.20 NOTICE OF BREACH BY FINOVA. Borrowers agree to give FINOVA written
--------------------------
notice of (i) any action or inaction by FINOVA or any agent or attorney of
FINOVA in connection with the Loan Instruments that may be actionable against
FINOVA or any agent or attorney of FINOVA or (ii) any defense to the payment of
Borrowers' Obligations for any reason, including, but not limited to, commission
of a tort or violation of any contractual duty implied by law.
11.21 JOINT AND SEVERAL OBLIGATIONS. The obligations of the Borrowers are
-----------------------------
joint and several obligations.
11.22 CONTINUED EFFECTIVE; NO NOVATION. Notwithstanding anything contained
--------------------------------
herein, the terms of this Loan Agreement are not intended to and do not serve to
effect a novation of Borrowers' Obligations. Instead, it is the express
intention of the parties hereto to reaffirm the indebtedness created under the
Existing Amended and Restated Loan Agreement which is evidenced by the notes
provided for therein and secured by the Collateral. Each Borrower acknowledges
and confirms that the liens and security interests granted pursuant to the Loan
Instruments secure the indebtedness, liabilities and obligations of such
Borrower to FINOVA under the Existing Amended and Restated Loan Agreement, as
amended and restated hereby, and that the term "Borrowers' Obligations" as used
in the Loan Instruments (or any other term used therein to described or refer to
the indebtedness, liabilities and obligations of Borrowers to FINOVA) includes,
without limitation, the indebtedness, liabilities and obligations of such
Borrower under the Notes to be delivered hereunder, and under the Existing
Amended and Restated Loan Agreement, as amended and restated hereby, as the same
may be further amended, modified, supplemented or restated from time to time.
The Loan Instruments and all agreements, instruments and documents executed or
delivered in connection with any of the foregoing shall each be deemed to be
amended to the extent necessary to give effect to the provisions of this Loan
Agreement. Cross-references in the Loan Instruments to particular
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section numbers in the Existing Amended and Restated Loan Agreement shall be
deemed to be cross-references to the corresponding sections, as applicable, of
this Loan Agreement.
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IN WITNESS WHEREOF, this Loan Agreement has been executed and delivered by
each of the parties hereto by a duly authorized officer of each such party on
the date first set forth above.
INFOCURE CORPORATION, POLCI ACQUISITION, INC,
ORTHODONTIC PRACTICE MANAGEMENT SYSTEM, INC., PACE
FINANCIAL CORPORATION, MD ACQUISITION, INC., ROVAK,
INC., ▇▇▇▇▇▇▇-▇▇▇▇▇, INC., KCOMP MANAGEMENT SYSTEMS,
INC., HEALTH CARE DIVISION, INC., DR SOFTWARE, INC.,
CCI ACQUISITION, INC., SOFTEASY SOFTWARE, INC., and
INTERNATIONAL COMPUTER SOLUTIONS, INC.
By: /s/ ▇▇▇▇▇▇▇▇▇ L Fine
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Name:
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A duly authorized officer of each Borrower
FINOVA CAPITAL CORPORATION, a Delaware corporation
By: /s/▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇
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Title: Vice President
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