SECOND ADDENDUM
TO
CREDIT AGREEMENT
THIS SECOND ADDENDUM to Credit Agreement ("Second Addendum") is made as of the
9th day of August, 2005 by ▇▇▇▇▇ Fargo Bank, National Association (the "Bank")
and American CareSource Holdings, Inc. (the "Borrower").
Recitals:
A. The Bank and the Borrower entered into a Credit Agreement, with an
Effective Date of December 1, 2004 ("Credit Agreement"), as amended by a
First Addendum to Credit Agreement dated February 2, 2005, pursuant to
which the Bank made available to the Borrower a $3,000,000.00 revolving
line of credit for general business purposes. Borrowings under the Line
are currently evidenced by a $3,000,000.00 promissory note, dated February
2, 2005 ("Existing Revolving Note").
B. As of August 8, 2005 there is owed on the Existing Revolving Note the
principal amount of $2,480,000 and accrued, unpaid interest in the amount
of $3,366.32.
C. The Borrower has requested that the Bank increase the Line to Four Million
Dollars ($4,000,000.00).
D. The Bank and the Borrower wish to amend the Credit Agreement pursuant to
the terms of this Second Addendum.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein it is agreed:
1. All terms not otherwise defined in this Second Addendum shall have the
meaning given to such term in the Credit Agreement. The recital paragraphs
are hereby incorporated as though fully set forth in this Second Addendum.
2. Notwithstanding the execution of the Credit Agreement or any addendum
thereto, or the delivery of all documents in furtherance thereof, the
obligation of the Bank to make any advance on the Line and this Second
Addendum becoming effective shall be subject to the timely satisfaction of
the following conditions precedent:
a) No event of default or event which will mature into an event of
default, shall have occurred and be continuing.
b) The representations and warranties of the Borrower contained in the
Documents shall be true and correct as of the date of any advance on
the Line.
c) The Borrower shall have delivered to the Bank copies, duly certified
as of the date of this Second Addendum by the Borrowers secretary of
(i) the resolutions
1
of Borrower's board of directors authorizing the execution and
delivery of this Second Addendum and the Documents required by this
Second Addendum, (ii) all documents evidencing other necessary
Borrower action, and (iii) all approvals or consents required, if
any, with respect to the Documents.
d) The Borrower shall have delivered to the Bank a certificate of its
secretary certifying the name(s) of the person(s) authorized to sign
this Second Addendum and the Documents, and all other documents and
certificates of the Borrower to be delivered hereunder, together
with the true signatures of such person(s).
e) The Borrower shall have delivered the Documents and the agreements
listed below, each of which shall be in a form and content
satisfactory to the Bank, executed by the parties specified therein,
and all other documents, certificates, opinions and statements
requested by the Bank:
i) This Second Addendum.
ii) The revolving note attached hereto as Exhibit "A" ("New
Revolving Note") which shall evidence the Borrower's
obligation to repay advances made under the Line (as defined
below). Upon this Second Addendum becoming effective, the New
Revolving Note will replace, but not be deemed to satisfy, the
Existing Revolving Note.
f) The Bank shall have received the standby letters of credit
(collectively, the "Letters of Credit") described below, in a form
satisfactory to the Bank, with an expiration dateofAugust3l, 2006:
i) Issued by Manufacturers and Traders Trust Company on account
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in the amount of $975,000.00; and
ii) Issued by West Bank on account of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ in the
amount of $100,000.00.
g) The Bank shall have received from ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ the (i) Consent to
Second Addendum of Credit Agreement, Ratification of Guaranty and
Waiver of Claims attached hereto as Exhibit "B" ("Pappajohn
Consent") and (ii) the guaranty attached to the Pappajohn Consent as
Exhibit "A" ("Pappajohn_Guaranty").
h) The Bank shall have received a letter, in the form attached as
Exhibit "C" (the "Guarantors' Letter"), from all of the Facility
Guarantors (as that term is defined in such letter).
i) The Bank shall have received from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ the (i) Consent
to Second Addendum of Credit Agreement, Ratification of Guaranty and
Waiver of Claims attached hereto as Exhibit "D" ("▇▇▇▇▇▇▇▇ Consent")
and (ii) the guaranty attached to the ▇▇▇▇▇▇▇▇ Consent as Exhibit
"A" ("▇▇▇▇▇▇▇▇ Guaranty").
j) The Bank shall have received from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ the (i)
Acknowledgment, Consent to Second Addendum of Credit Agreement, and
Waiver of Claims attached hereto as Exhibit "E" ("▇▇▇▇▇▇ Consent")
and (ii) the guaranty attached to the ▇▇▇▇▇▇ Consent as Exhibit "A"
("▇▇▇▇▇▇ Guaranty").
k) The Borrower shall have reimbursed the Bank for all expenses
incurred by it in connection with this Second Addendum, including
but not limited to, attorney's fees.
3. The Letters of Credit, Pappajohn Consent, Pappajohn Guaranty, Guarantors'
Letter, ▇▇▇▇▇▇▇▇ Consent, ▇▇▇▇▇▇▇ Guaranty, ▇▇▇▇▇▇ Consent and ▇▇▇▇▇▇
Guaranty are hereinafter deemed to be included in and a part of the
"Security Documents" described in Exhibit A to the Credit Agreement.
2
4. Section 1.1 (Line Credit Amount) of the Credit Agreement is hereby deleted
and the following new Section 1.1 is substituted in lieu thereof:
1.1 Line of Credit Amount. During the Line Availability Period
defined below, the Bank agrees to provide a revolving line of credit
(the "Line") to the Borrower. Outstanding amounts under the Line
will not, at any one time, exceed FOUR MILLION DOLLARS AND 00/100
DOLLARS ($4,000,000.00).
5. Section 1.3 (Advances) of the Credit Agreement is hereby deleted and the
following new Section 3.1 is substituted in lieu thereof:
1.3 Advances. The Borrower's obligation to repay advances made under
the Line will be evidenced by a single promissory note (the
"Revolving Note") dated as of August 9, 2005. Reference is made to
the Revolving Note for interest rate and repayment terms.
6. Section 3.1 (Requests for Advances) of the Credit Agreement is hereby
deleted and the following new Section 3.1 is substituted in lieu thereof:
3.1 Requests for Advances. Advances hereunder, to the total amount
of the principal sum stated above, may be made by the Bank at the
oral or written request of (i) ______________ or ______________, any
one acting alone, who are authorized to request advances and direct
the disposition of any advances until written notice of the
revocation of such authority is received by the holder at the office
designated above, or (ii) any person, with respect to advances
deposited to the credit of any deposit account of the Borrower,
which advances, when so deposited, shall be conclusively presumed to
have been made to or for the benefit of the Borrower regardless of
the fact that persons other than those authorized to request
advances may have authority to draw against such account. The Bank
shall have no obligation to determine whether any person requesting
an advance is or has been authorized by the Borrower.
7. Section 3.2 (Payments) of the Credit Agreement is hereby deleted and the
following new Section 3.2 is substituted in lieu thereof:
3.2 Payments. All principal, interest and fees due under the
Documents shall be paid in immediately available funds as contracted
in this Agreement and no later than the payment due date set forth
in the statement mailed to the Borrower by the Bank. Should a
payment come due on a Saturday, Sunday or any other day on which
commercial banks in Iowa are authorized or required by law to close
day, then the payment shall be made no later than the next Business
Day. A Business Day means any day except a Saturday, Sunday or any
other day on which commercial banks in Iowa are authorized or
required by law to close. For amounts bearing interest at the LIBOR
Rate (if any) a Business Day is a day on which the Bank is open for
substantially all of its business and on which dealings in U.S.
dollar deposits are carried on in the London interbank market.
8. The Borrower does hereby release and forever discharge ▇▇▇▇▇ Fargo Bank,
National Association, ▇▇▇▇▇ Fargo & Company, and their respective
affiliates and their officers, directors, attorneys, agents, employees,
successors and assigns from all causes of action, suits, claims and
demands of every kind and character, liquidated or unliquidated, fixed,
contingent, direct or indirect without limit, including any action in law
or equity, which the Borrower now has or may ever have had against them,
if the circumstances giving rise to
3
such causes of action, suits, claims and demands arose prior to the date
of this Second Addendum.
9. Except as modified by this Second Addendum, all the terms and conditions
of the Credit Agreement, as amended, shall remain in full force and
effect.
10. The Credit Agreement, as amended, embodies the entire agreement and
understanding between the Borrower and the Bank with respect to the
subject matter thereof and supersedes all prior agreements and
understandings among such parties with respect to the subject mailers
thereof.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ
CAREFULLY BECAUSE ONLY THOSE TERMS IN WRITING ARE ENFORCEABLE. NO OTHER TERMS OR
ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED.
YOU MAY CHANGE THE TERMS OF THIS AGREEMENT ONLY BY ANOTHER WRITTEN AGREEMENT.
THIS NOTICE ALSO APPLIES TO ANY OTHER CREDIT AGREEMENTS (EXCEPT CONSUMER LOANS
OR OTHER EXEMPT TRANSACTIONS) NOW IN EFFECT BETWEEN YOU AND THIS LENDER.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT HE
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS, WHETHER VERBAL OR WRITTEN, OR ACTIONS OF EITHER
PARTY.
IN WITNESS WHEREOF, the parties have executed this Second Addendum as of the day
and year first above written.
AMERICAN CARESOURCE HOLDINGS, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Its CFO, Secretary & Treasurer
--------------------------
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice President
4
EXHIBIT A
▇▇▇▇▇ ▇▇▇▇▇ Fargo Bank,
Fargo National Association Revolving Note
================================================================================
$4,000,000.00 August 9, 2005
FOR VALUE RECEIVED. American CareSource Holdings, Inc. (the "Borrower") promises
to pay to the order of ▇▇▇▇▇ Fargo Bank, National Association (the "Bank"), at
its principal office or such other address as the Bank or holder may designate
from time to time, the principal sum of FOUR MILLION AND 00/100 DOLLARS
($4,000,000.00), or the amount shown on the Bank's records to be outstanding,
plus interest (calculated on the basis of actual days elapsed in a 360-day year)
accruing on the unpaid balance at the annual interest rate defined below. Absent
manifest error the Bank's records will be conclusive evidence of the principal
and accrued interest owing hereunder.
This Revolving Note is issued pursuant to a Second Addendum to credit Agreement
of even date herewith between the Bank and the Borrower (the "Agreement"). The
Agreement, and any amendments or substitutions thereto, contain additional terms
and conditions including default and acceleration provisions. The terms of the
Agreement are incorporated into this Revolving Note by reference. Capitalized
terms not expressly defined herein shall have the meanings given them in the
Agreement.
INTEREST RATE
Base Rate. The principal balance outstanding under this Revolving Note will bear
interest at an annual rate equal to the Base Rate, floating (the "Base Rate
Option"). The Base Rate is the "base" or "prime" rate of interest established by
the Bank from time to time at its principal office in Des Moines, Iowa.
REPAYMENT TERMS
Interest. Interest will be payable on the last day of each month, beginning
August31, 2005.
Principal. Principal, and any unpaid interest, will be payable in a single
payment due on July 31, 2006.
ADDITIONAL TERMS AND CONDITIONS. The Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees and legal expenses incurred by
the Bank in the event this Revolving Note is not duly paid. Demand, presentment,
protest and notice of nonpayment and dishonor of this Revolving Note are
expressly waived. This Revolving Note will be governed by the substantive laws
of the State of Iowa.
AMERICAN CARESOURCE HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Its: CFO, Secretary & Treasurer
--------------------------
1
EXHIBIT B
▇▇▇▇▇ ▇▇▇▇▇ Fargo Bank,
Fargo National Association Personal Guaranty
================================================================================
▇▇▇▇▇ Fargo Bank, National Association American CareSource Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, PO Box 837 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(the "Bank") (the "Borrower")
Dated: August 9, 2005
FOR VALUABLE CONSIDERATION, and to induce the Bank in its sole discretion
to make loans or extend other accommodations to or for the account of the
Borrower, the undersigned gives this Personal Guaranty (the "Guaranty"), and
absolutely and unconditionally guarantees to the Bank the full and prompt
payment of each and every debt, liability or obligation of the Borrower to the
Bank relating to or arising out of the Credit Agreement effective December 1,
2004, together with any deposit account related overdrafts of the Borrower. (All
such obligations, including but not limited to every promissory note,
instrument, or other agreement given by the Borrower evidencing any such
obligations, and any extensions, renewals, replacements or refinancings of same,
to collectively be referred to as the "Indebtedness".)
This Guaranty is an absolute, unconditional and continuing guaranty of
payment of the Indebtedness and shall continue to be binding upon the
undersigned, whether or not all Indebtedness is paid in full, until this
Guaranty is revoked prospectively in writing as to future transactions. Such
revocation shall not be effective until actually received in writing by the Bank
and then shall not be effective as to Indebtedness existing or committed to at
the time of revocation, and shall not be effective as to renewals, extensions,
or refinancings of existing Indebtedness, whether such Indebtedness is renewed
before or after receipt of such notice of revocation. The death or incompetence
of the undersigned shall not revoke this Guaranty until written notice of such
death or incompetence is actually received by the Bank, and then only
prospectively as to future transactions as set forth above.
Notwithstanding the preceding paragraphs, the liability of the undersigned
under this Guaranty shall be limited to a principal amount of $2,925,000, plus
accrued interest on the full amount of the Indebtedness and all attorneys' fees,
collection costs and enforcement expenses incurred by the Bank in collecting on
and enforcing its rights under the Indebtedness and incurred in connection with
the protection, defense or enforcement of this Guaranty in any litigation or
bankruptcy proceedings. The Indebtedness may be created and continued in any
amount, whether or not in excess of such principal amount, without reducing or
impairing the liability of the undersigned under this Guaranty. Any payment made
by the undersigned under this Guaranty shall be effective to reduce or discharge
the undersigned's liability only if accompanied by a written transmittal
document, received by the Bank and advising it that such payment is made under
this Guaranty for such purpose.
The undersigned further acknowledges and agrees with Bank that:
1. No act or event need occur to establish the liability of the undersigned
under this Guaranty, and no act or event, except full payment and discharge of
all Indebtedness, shall exonerate and discharge the liability of the undersigned
under this Guaranty.
2. If the undersigned dies or becomes insolvent (however defined) then the Bank
may declare immediately due and payable the obligations of the undersigned under
this Guaranty, and the undersigned shall immediately pay to the Bank the full
amount of all Indebtedness, whether due and payable or unmatured. If the
1
undersigned voluntarily commences or there is commenced involuntarily against
the undersigned a case under the United States Bankruptcy Code, the obligations
of the undersigned under this Guaranty shall immediately be due and payable
without the necessity of demand or notice.
3. The undersigned will not exercise or enforce any right of contribution,
reimbursement, recourse or subrogation available to the undersigned against the
Borrower or any person liable for payment of the Indebtedness, or as to any
collateral securing the Indebtedness, unless and until all of the Indebtedness
shall have first been fully paid and discharged.
4. The Bank may in its discretion enter into transactions resulting in the
creation or continuance of Indebtedness, without notice to or the consent or
approval of the undersigned, regardless of whether or not any existing
relationship between the Borrower and the undersigned has been revoked and
regardless of whether this Guaranty has been revoked.
5. The liability of the undersigned shall not be reduced or impaired by any of
the following acts or events (which the Bank, after advance notification to the
Undersigned, is expressly authorized to do, omit or suffer from time to time,
both before and after revocation of this Guaranty, without the consent or
approval of the undersigned): (a) any acceptance of collateral security,
guarantors, accommodation parties or sureties for any or all of the
Indebtedness; (b) any one or more extensions or renewals of Indebtedness
(whether or not for a period longer than the original period) or any
modification of the interest rate, maturity or other contractual terms
applicable to all or part of the Indebtedness; (c) any waiver or indulgence
granted to Borrower, any delay or lack of diligence in the enforcement of the
Indebtedness, or any failure to institute proceedings, file a claim, give any
required notices or otherwise protect any of the Indebtedness; (d) any full or
partial release of, settlement with, or agreement not to ▇▇▇, Borrower or any
other guarantor or other person liable with respect to any of the Indebtedness;
(e) any discharge of any evidence of Indebtedness or the acceptance of any
instrument renewing or refinancing the Indebtedness; (f) any failure to obtain
collateral security (including rights of setoff) for the Indebtedness, or to
assure its proper or sufficient creation, perfection, or priority, or to
protect, insure, or enforce any collateral security; or any modification,
substitution, discharge, impairment, or loss of such collateral security; (g)
any foreclosure or enforcement of any collateral security by the Bank or any
other creditor of the Borrower with a security interest in the collateral
security; (h) any assignment or transfer of any Indebtedness or documentation
evidencing the Indebtedness; (i) any order of application of any payments or
credits upon the Indebtedness from the Borrower, the undersigned, or any other
person; and (j) any election by the Bank under ss.1111(b)(2) of the United
States Bankruptcy Code.
6. The undersigned waives any and all defenses, claims and discharges of
Borrower, or any other obligor, pertaining to the Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
preceding sentence, the undersigned will not assert, plead or enforce against
the Bank any defense of waiver, release, discharge in bankruptcy, statute of
limitations, res judicata, statute of frauds, anti-deficiency statute,
misrepresentation or fraud, incapacity, minority, usury, illegality or
unenforceability which may be available to Borrower or any other party liable
for payment of any of the Indebtedness, or any setoff available against the Bank
to Borrower or any such other person, whether or not on account of a related
transaction. The undersigned shall be liable for any deficiency remaining after
foreclosure of any mortgage, deed of trust or security interest securing the
Indebtedness, whether or not the liability of the Borrower or any other obligor
for such deficiency is discharged pursuant to statute or judicial decision.
7. The Bank may in its sole discretion demand that the undersigned discharge its
obligations under this Guaranty at any time, whether at the time of the
scheduled or accelerated maturity of the Indebtedness or at any earlier or later
time, and regardless of whether there has been a default with respect to the
Indebtedness. The Bank shall not be required to first resort for payment of the
Indebtedness to the Borrower or to any other person or their properties, or to
2
first enforce, realize upon, or exhaust any collateral security given to secure
the Indebtedness before enforcing this Guaranty. The undersigned waives
presentment, demand for payment, notice of dishonor or nonpayment, and protest
of any instrument evidencing part or all of the Indebtedness.
8. If any payment applied by the Bank to the Indebtedness is later set aside,
recovered, rescinded or required to be returned for any reason (including,
without limitation, the bankruptcy, insolvency or reorganization of the Borrower
or any other obligor), the Indebtedness to which such payment was applied shall
for the purposes of this Guaranty be deemed to have continued in existence,
notwithstanding such application, and this Guaranty shall be enforceable as to
such Indebtedness as fully as if such application had never been made.
9. The liability of the undersigned under this Guaranty is in addition to and
cumulative with all other liabilities of the undersigned to the Bank as a
guarantor or otherwise, without limitation as to amount, unless the instrument
or agreement evidencing or creating such other liability specifically provides
to the contrary.
10. This Guaranty shall be enforceable regardless of the failure of other
persons to sign other guaranties of the Indebtedness. This Guaranty shall be
effective upon delivery to the Bank, without further act, condition or
acceptance by the Bank, shall be binding upon the undersigned and the heirs,
representatives, successors and assigns of the undersigned for the benefit of
the Bank and its participants, successors and assigns. Any invalidity or
unenforceability of any provision or application shall not affect other lawful
provisions and applications of this Guaranty, which is severable. This Guaranty
may not be waived, modified, amended, terminated, released or otherwise changed
except by a writing signed by both the undersigned and the Bank. This Guaranty
is issued in and shall be governed by the laws of the State of Iowa.
--------------------------------------------------------------------------------
WAIVER OF RIGHT TO TRIAL BY JURY
The undersigned hereby waives the right to a trial by jury in any action
relating to this Guaranty
--------------------------------------------------------------------------------
IN WITNESS WHEREOF, this Guaranty has been duly executed on the above date
by the undersigned. Undersigned acknowledges receipt of a copy of this
agreement.
---------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address:
2116 Financial Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3