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EXHIBIT 10.1.1
$20,000,000.00
AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
ODYSSEY HEALTHCARE, INC.
ODYSSEY HEALTHCARE OF CENTRAL INDIANA, INC.
ODYSSEY HEALTHCARE OF PENNSYLVANIA, INC.
ODYSSEY HEALTHCARE OF NEW JERSEY, INC.
ODYSSEY HEALTHCARE OF NORTH TEXAS, INC.
ODYSSEY HEALTHCARE OF PHOENIX, INC.
ODYSSEY HEALTHCARE OF LAS VEGAS, INC.
ODYSSEY HEALTHCARE OF HOUSTON, INC.
ODYSSEY HEALTHCARE OF NEW ORLEANS, INC.
ODYSSEY HEALTHCARE OF GEORGIA, INC.
ODYSSEY HEALTHCARE OF DETROIT, INC.
ODYSSEY HEALTHCARE OF BIRMINGHAM, INC.
(collectively, "Borrower")
and
▇▇▇▇▇▇ HEALTHCARE FINANCE, INC.
(f/k/a HCFP FUNDING, INC.
("Lender")
October 2, 2000
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (the "Agreement")
is made as of October 2, 2000, by and among ODYSSEY HEALTHCARE, INC., a Delaware
corporation, ODYSSEY HEALTHCARE OF CENTRAL INDIANA, INC., a Delaware
corporation, ODYSSEY HEALTHCARE OF PENNSYLVANIA, INC., a Delaware corporation,
ODYSSEY HEALTHCARE OF NEW JERSEY, INC., a Delaware corporation, ODYSSEY
HEALTHCARE OF NORTH TEXAS, INC., a Delaware corporation, ODYSSEY HEALTHCARE OF
PHOENIX, INC., a Delaware corporation, ODYSSEY HEALTHCARE OF LAS VEGAS, INC., a
Delaware corporation, ODYSSEY HEALTHCARE OF HOUSTON, INC., a Delaware
corporation, ODYSSEY HEALTHCARE OF NEW ORLEANS, INC, a Delaware corporation,
ODYSSEY HEALTHCARE OF GEORGIA, INC., a Delaware corporation, ODYSSEY HEALTHCARE
OF DETROIT, INC., a Delaware corporation, and ODYSSEY HEALTHCARE OF BIRMINGHAM,
INC., a Delaware corporation, ("collectively, "Borrower"), and ▇▇▇▇▇▇ HEALTHCARE
FINANCE, INC. (f/k/a HCFP Funding, Inc.), a Delaware corporation ("Lender").
RECITALS
A. Borrower and Lender established a working capital financing
relationship pursuant to that certain Loan and Security Agreement dated March 5,
1998, as amended by Amendment No. 1 dated February 22, 1999, and Amended No. 2
dated, [_______________], 1999 (collectively, the "Original Agreement").
B. The parties desire to continue their financing relationship in
accordance with the terms and conditions set forth in this Agreement.
C. This Agreement amends and restates the Original Agreement in its
entirety; provided, however, any liens included therein will be continued
hereunder.
NOW, THEREFORE, in consideration of the promises and covenants
contained in this Agreement, and for other consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
SECTION 1.1. ACCOUNT. "Account" means any right to payment for goods
sold or leased or services rendered, whether or not evidenced by an instrument
or chattel paper, and whether or
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not earned by performance, including, without limitation, the right to payment
of management fees.
SECTION 1.2. ACCOUNT DEBTOR. "Account Debtor" means any Person
obligated on any Account of Borrower, including without limitation, any Insurer
and any Medicaid/Medicare Account Debtor.
SECTION 1.3. AFFILIATE. "Affiliate" means, with respect to a specified
Person, any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person, including without limitation their
stockholders and any Affiliates thereof. A Person shall be deemed to control a
corporation or other entity if the Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and business of the
corporation or other entity, whether through the ownership of voting securities,
by contract, or otherwise.
SECTION 1.4. AGREEMENT. "Agreement" means this Loan and Security
Agreement, as it may be amended or supplemented from time to time.
SECTION 1.4a. A/R STANDARD BORROWING BASE. "A/R Standard Borrowing
Base" has the meaning set forth in Section 2.1(d).
SECTION 1.4b. A/R TERM BORROWING BASE. "A/R Term Borrowing Base" has
the meaning set forth in Section 2.1(d).
SECTION 1.5. BASE RATE. "Base Rate" means a rate of interest equal to
one percent (1%) above the "Prime Rate of Interest"; provided however, that in
no event shall the Base Rate fall below ten percent (10%) so long as this
Agreement remains in effect.
SECTION 1.6. BORROWED MONEY. "Borrowed Money" means any obligation to
repay money, any indebtedness evidenced by notes, bonds, debentures or similar
obligations, any obligation udder a conditional sale or other title retention
agreement and the net aggregate rentals under any lease which under GAAP would
be capitalized on the books of Borrower or which is the substantial equivalent
of the financing of the property so leased.
SECTION 1.7. BORROWER. "Borrower" has the meaning set forth in the
Preamble.
SECTION 1.8. BORROWING BASE. "Borrowing Base" has the meaning set forth
in Section 2.1(d).
SECTION 1.9. BUSINESS DAY. "Business Day" means any day on which
financial institutions are open for business in the State of Maryland, excluding
Saturdays and Sundays.
SECTION 1.9a. CASH FLOW. "Cash Flow" has the meaning set forth in
Section 7.7.
SECTION 1.9b. CHANGE OF CONTROL. "Change of Control" means (i) that
during any period of three (3) consecutive years, individuals who at the
beginning of the period constituted the board of directors of Borrower (together
with any new directors whose election by that board
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of directors or whose nomination for election by the stockholders of Borrower
was approved by two-thirds of the directors of Borrower then still in office who
were either directors at the beginning of the period or whose election or
nomination for election was previously approved) cease for any reason to
constitute a majority of the board of directors of Borrower then in office, or
(ii) a transfer of capital stock of Borrower occurs such that, immediately after
giving effect to the transfer, entities who held capital stock of Borrower
immediately prior to the transfer do not continue to hold at least 50% of the
capital stock of Borrower.
SECTION 1.10. CLOSING; CLOSING DATE. "Closing" and "Closing Date" have
the meanings set forth in Section 5.3.
SECTION 1.11. COLLATERAL. "Collateral" has the meaning set forth in
Section 3.1.
SECTION 1.12. COMMITMENT FEE. "Commitment Fee" has the meaning set
forth in Section 2.4(a).
SECTION 1.13. CONCENTRATION ACCOUNT. "Concentration Account" has the
meaning set forth in Section 2.3.
SECTION 1.14. CONTROLLED GROUP. "Controlled Group" means all businesses
that would be treated as a single employer under Section 4001(b) of ERISA.
SECTION 1.15. DEBT SERVICE. "Debt Service" has the meaning set forth in
Section 7.7.
SECTION 1.15a. DEBT SERVICE COVERAGE RATIO. "Debt Service Coverage
Ratio" has the meaning set forth in Section 7.7.
SECTION 1.16. DEFAULT RATE. "Default Rate" means a rate per annum equal
to five percent (5%) above the then applicable Base Rate.
SECTION 1.16a EBITDA. "EBITDA" means Borrower's earnings before
interest expenses, taxes, depreciation and amortization, all determined in
accordance with GAAP.
SECTION 1.17. ERISA. "ERISA" has the meaning set forth in Section 4.12.
SECTION 1.18. EVENT OF DEFAULT. "Event of Default" and "Events of
Default" have the meanings set forth in Section 8.1.
SECTION 1.19. GAAP. "GAAP" means generally accepted accounting
principles applied in a matter consistent with the financial statements referred
to in Section 4.7.
SECTION 1.20. GOVERNMENTAL AUTHORITY. "Governmental Authority" means
and includes any federal, state, District of Columbia, county, municipal, or
other government and any department, commission, board, bureau, agency or
instrumentality thereof, whether domestic or foreign.
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SECTION 1.21. HAZARDOUS MATERIAL. "Hazardous Material" means any
substances defined or designated as hazardous or toxic waste, hazardous or toxic
material, hazardous or toxic substance, or similar term, by any environmental
statute, rule or regulation or any Governmental Authority applicable to Borrower
or its business, operations or assets.
SECTION 1.22. HIGHEST LAWFUL RATE. "Highest Lawful Rate" means the
maximum lawful rate of interest referred to in Section 2.7 that may accrue
pursuant to this Agreement.
SECTION 1.23. INSURER. "Insurer" means a Person that insures a Patient
against certain of the costs incurred in the receipt by such Patient of Medical
Services, or that has an agreement with Borrower to compensate Borrower for
providing services to a Patient.
SECTION 1.24. LENDER. "Lender" means ▇▇▇▇▇▇ Healthcare Finance, Inc., a
Delaware corporation.
SECTION 1.25. LOAN. "Loan" has the meaning set forth in Section 2.1(a).
SECTION 1.26. LOAN DOCUMENTS. "Loan Documents" means and includes this
Agreement, the Note, and each and every other document now or hereafter
delivered in connection with this Agreement, as any of them may be amended,
modified, or supplemented from time to time.
SECTION 1.27. LOAN MANAGEMENT FEE. "Loan Management Fee" has the
meaning set forth in Section 2.4(c).
SECTION 1.28. LOCKBOX. "Lockbox" G the meaning set forth in Section
2.3.
SECTION 1.28a. LOCKBOX ACCOUNT. "Lockbox Account" means an account
maintained by Borrower at the Lockbox Bank into which all collections of
Accounts are paid directly.
SECTION 1.29. LOCKBOX BANK. "Lockbox Bank" has the meaning set forth in
Section 2.3.
SECTION 1.30. MAXIMUM LOAN AMOUNT. "Maximum Loan Amount" has the
meaning set forth in Section 2.1(a).
SECTION 1.31. MEDICAID/MEDICARE ACCOUNT DEBTOR. "Medicaid/ Medicare
Account Debtor" means any Account Debtor which is (i) the United States of
America acting under the Medicaid/Medicare program established pursuant to the
Social Security Act, (ii) any state or the District of Columbia acting pursuant
to a health plan adopted pursuant to Title XIX of the Social Security Act or
(iii) any agent, carrier, administrator or intermediary for any of the
foregoing.
SECTION 1.32. MEDICAL SERVICES. Medical and health care services
provided to a Patient, including, but not limited to, medical and health care
services provided to a Patient and performed by Borrower which are covered by a
policy of insurance issued by an Insurer, and includes physician services, nurse
and therapist services, dental services, hospital services,
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skilled nursing facility services, comprehensive outpatient rehabilitation
services, home health care services, residential and out-patient behavioral
healthcare services, and medicine or health care equipment provided by Borrower
to a Patient for a necessary or specifically requested valid and proper medical
or health purpose.
SECTION 1.33. NOTE. "Note" has the meaning set forth in Section 2.1(c).
SECTION 1.34. OBLIGATIONS. "Obligations" has the meaning set forth in
Section 3.1.
SECTION 1.35. PATIENT. "Patient" means any Person receiving Medical
Services from Borrower and all Persons legally liable to pay Borrower for such
Medical Services other than Insurers.
SECTION 1.36. PERMITTED LIENS. "Permitted Liens" means: (a) hens for
taxes not delinquent, or which are being contested in good faith and by
appropriate proceedings which suspend the collection thereof and in respect of
which adequate reserves have been made (provided that such proceedings do not,
in Lender's sole discretion, involve any substantial danger of the sale, loss or
forfeiture of such property or assets or any interest therein); (b) deposits or
pledges to secure obligations under workmen's compensation, social security or
similar laws, or under unemployment insurance; (c) deposits or pledges to secure
bids, tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the ordinary course of business; (d) mechanic's,
workmen's, materialmen's or other like liens arising in the ordinary course of
business with respect to obligations which are not due, or which are being
contested in good faith by appropriate proceedings which suspend the collection
thereof and in respect of which adequate reserves have been made (provided that
such proceedings do not, in Lender's sole discretion, involve any substantial
risk of the sale, loss or forfeiture of such property or assets or any interest
therein); (e) liens and encumbrances in favor of Lender; (f) liens granted in
connection with the lease or purchase of property or assets financed by
borrowings permitted by Section 7.1 (provided, however, that no such borrowings
permitted by Section 7.1 may be secured by liens on any of the Collateral); and
(g) liens set forth on Schedule 1.36.
SECTION 1.37. PERSON. "Person" means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.
SECTION 1.38. PLAN. "Plan" has the meaning set forth in Section 4.12.
SECTION 1.39. PREMISES. "Premises" has the meaning set forth in Section
4.15.
SECTION 1.40. PRIME RATE OF INTEREST. "Prime Rate of Interest" means
that rate of interest designated as such by Citibank, or any successor thereto,
as the same may from time to time fluctuate.
SECTION 1.41. PROHIBITED TRANSACTION. "Prohibited Transaction" means a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Internal
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Revenue Code that is not exempt under Section 407 or Section 408 of ERISA or
Section 4975(c)(2) or (d) of the Internal Revenue Code or under a class
exemption granted by the U.S. Department of Labor.
SECTION 1.42. QUALIFIED ACCOUNT. "Qualified Account" means an Account
of Borrower generated in the ordinary course of Borrower's business from the
sale of goods or rendition of medical services which Lender, in its sole credit
judgment, deems to be a Qualified Account. Without limiting the generality of
the foregoing, no Account shall be a Qualified Account if: (a) the Account or
any portion thereof is payable by an individual beneficiary, recipient or
subscriber individually and not directly to Borrower by a Medicaid/Medicare
Account Debtor or commercial medical insurance carrier acceptable to Lender in
its sole discretion; (b) the Account remains unpaid more than one hundred twenty
(120) days past the claim or invoice date if payable by a Medicaid Account
Debtor, or one hundred twenty (120) days past the claim or invoice date if
payable by a Medicare Account Debtor or commercial medical insurance carrier
acceptable to Lender in its sole discretion; (c) the Account is subject to any
defense, set-off, counterclaim, deduction, discount, credit, chargeback, freight
claim, allowance, or adjustment of any kind; (d) any part of any goods the sale
of which has given rise to the Account has been returned, rejected, lost, or
damaged; (e) if the Account arises from the sale of goods by Borrower, the sale
was not an absolute sale or the sale was made on consignment or on approval or
on a sale-or-return basis, or the sale was made subject to any other repurchase
or return agreement, or the goods have not been shipped to the Account Debtor or
its designee; (f) if the Account arises from the performance of Medical
Services, the Medical Services have not actually been performed or the Medical
Services were undertaken in violation of any law; (g) the Account is subject to
a lien other than a Permitted Lien; (h) Borrower knows or should have known of
the bankruptcy, receivership, reorganization, or insolvency of the Account
Debtor; (i) the Account is evidenced by chattel paper or an instrument of any
kind, or has been reduced to judgment; (j) the Account is an Account of an
Account Debtor having its principal place of business or executive office
outside the United States; (k) the Account Debtor is an Affiliate or Subsidiary
of Borrower; (1) more than ten percent (10%) of the aggregate balance of all
Accounts owing from the Account Debtor obligated on the Account are outstanding
more than one hundred twenty (120) days past their invoice date; (m) fifty
percent (50%) or more of the aggregate unpaid Accounts from any individual
Account Debtor are not deemed Qualified Accounts under this Agreement; (n) the
total unpaid Accounts of the Account Debtor, except for a Medicaid/Medicare
Account Debtor, exceed twenty percent (20%) of the net amount of all Qualified
Accounts (including Medicaid/Medicare Account Debtors); (o) any covenant,
representation or warranty contained in the Loan Documents with respect to such
Account has been breached; or (p) the Account fails to meet such other
specifications and requirements which may from time to time be reasonably
established by Lender and communicated to Borrower.
SECTION 1.43. REPORTABLE EVENT. "Reportable Event" means a "reportable
event" as defined in Section 4043(b) of ERISA for which the notice requirements
of Section 4043(a) of ERISA are not waived.
SECTION 1.44. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has the
meaning set forth in Section 2.1(b).
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SECTION 1.45. TERM. "Term" has the meaning set forth in Section 2.8.
SECTION 1.46 TERMINATION FEE. "Termination Fee" shall mean a fee
payable upon termination of the Agreement, as yield maintenance for the loss of
bargain and not as a penalty, equal to (i) two percent (2%) of the Maximum Loan
Amount if the date of notice of a termination is on or before the first
anniversary of the Closing Date (ii) one percent (1%) of the Maximum Loan Amount
if the date of a notice of termination is after the first anniversary of the
Closing Date and on or before the third anniversary of the Closing Date;
provided, however, the Termination Fee may be reduced as set forth in Section
2.8(c).
SECTION 1.47 VC'S. "VC's" has the meaning set forth in Section 6.24.
SECTION 1.48 VC DOCUMENTS. "VC Documents" has the meaning set forth in
Section 6.24.
SECTION 1.48 VC LETTER AGREEMENT. "VC Letter Agreement" has the meaning
set forth in Section 6.24.
ARTICLE II
LOAN
SECTION 2.1. TERMS.
(a) The maximum aggregate principal amount of credit extended
by Lender to Borrower hereunder (the "Loan") that will be outstanding at any
time is Twenty Million and No/100 Dollars ($20,000,000.00) (the "Maximum Loan
Amount").
(b) The Loan shall be in the nature of a revolving line of
credit, and shall include sums advanced and other credit extended by Lender to
or for the benefit of Borrower from time to time under this Article II (each a
"Revolving Credit Loan") up to the Maximum Loan Amount depending upon the
availability in the Borrowing Base, the requests of Borrower pursuant to the
terms and conditions of Section 2.2 below, and on such other basis as Lender may
reasonably determine. The outstanding principal balance of the Loan may
fluctuate from time to time, to be reduced by repayments made by Borrower (which
may be made without penalty or premium), and to be increased by future Revolving
Credit Loans, advances and other extension of credit to or for the benefit of
Borrower, and shall be due and payable in full upon the expiration of the Term.
For purposes of this Agreement, any determination as to whether there is
availability within the Borrowing Base for advances or extensions of credit
shall be made by Lender in its sole reasonable discretion and is final and
binding upon Borrower.
(c) At Closing, Borrower shall execute and deliver to Lender a
promissory note evidencing Borrower's unconditional obligation to repay Lender
for Revolving Credit Loans, advances, and other extensions of credit made under
the Loan, in the form of Exhibit A to this Agreement (the "Note"), payable to
the order of Lender in accordance with the terms thereof.
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The Note shall bear interest from the date thereof until repaid, with interest
payable monthly in arrears on the first Business Day of each month, at a rate
per annum (on the basis of the actual number of days elapsed over a year of 360
days) equal to the Base Rate, provided that after the occurrence and during the
continuance of an Event of Default such rate shall be equal to the Default Rate.
Each Revolving Credit Loan, advance and other extension of credit shall be
deemed evidenced by the Note, which is deemed incorporated by reference herein
and made a part hereof.
(d) Subject to the terms and conditions of this Agreement,
advances under the Loan shall be made against the sum of (i) a borrowing base
(the "A/R Standard Borrowing Base") equal to eighty-five percent (85%) of
Qualified Accounts due and owing from any Medicaid/Medicare, Insurer or other
Account Debtor plus (ii) a borrowing base (the "A/R Term Borrowing Base" and
collectively with the A/R Standard Borrowing Base, the "Borrowing Base") equal
to the lesser of (A) fifty percent (50%) of the A/R Standard Borrowing Base, or
(B) the difference of (x) the product of three (3) times the sum of (aa)
Borrower's most recent six months' trailing EBITDA plus (bb) Borrower's
pro-forma six months trailing EBITDA contribution from acquisitions(1) minus (y)
the A/R Standard Borrowing Base. For purposes of this section, EBITDA
calculations shall be confirmed by Lender's audit.
SECTION 2.2. LOAN ADMINISTRATION. Borrowings under the Loan shall be as
follows:
(a) A request for a Revolving Credit Loan shall be made, or
shall be deemed to be made, in the following manner: (i) Borrower may give
Lender notice of its intention to borrow, in which notice Borrower shall specify
the amount of the proposed borrowing and the proposed borrowing date, not later
than 2:00 p.m. Eastern time two (2) Business Days prior to the proposed
borrowing date; provided, however, that no such request may be made at a time
when there exists an Event of Default; and (ii) the becoming due of any amount
required to be paid under this Agreement, whether as interest or for any other
Obligation, shall be deemed irrevocably to be a request for a Revolving Credit
Loan on the day following the due date in the amount required to pay such
interest or other Obligation if such was not paid by borrower on the due date.
(b) Borrower hereby irrevocably authorizes Lender to disburse
the proceeds of each Revolving Credit Loan requested, or deemed to be requested,
as follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 2.2(a)(i) shall be disbursed by Lender by wire transfer to such bank
account as may be agreed upon by Borrower or Lender from time to time or
elsewhere if pursuant to written direction from Borrower, and (ii) the proceeds
of each Revolving Credit Loan requested under subsection 2.2(a)(ii) shall be
disbursed by Lender by way of direct payment of the relevant interest or other
Obligation.
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(1) An acquisition's contribution, set forth in (B) above, shall be calculated
after the first month of operations following the closing of any such
acquisition as follows: the sum of (x) actual EBITDA for the first month after
the applicable acquisition and (y) the actual EBITDA results for the prior five
months under the previous owner. After the second month of operations, actual
EBITDA for the two months shall be added to the last four months of actual
EBITDA results under the prior owner. This calculation shall continue until
Borrower has six months of actual results.
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(c) All Revolving Credit Loans, advances and other extensions
of credit to or for the benefit of Borrower shall constitute one general
Obligation of Borrower, and shall be secured by Lender's lien upon all of the
Collateral.
(d) Lender shall enter all Revolving Credit Loans as debits to
a loan account in the name of Borrower and shall also record in said loan
account all payments made by Borrower on any Obligations and all proceeds of
Collateral which are indefeasibly paid to Lender, and may record therein, in
accordance with customary accounting practice, other debits and credits,
including interest and all charges and expenses properly chargeable to Borrower.
All collections into the Concentration Account pursuant to Section 2.3 shall be
applied first to fees, costs and expenses due and owing under the Loan
Documents, then to interest due and owing under the Loan Documents, and then to
principal outstanding with respect to Revolving Credit Loans.
(e) Lender will account to Borrower monthly with a statement
of Revolving Credit Loans, charges and payments made pursuant to this Agreement,
and such accounting rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender is notified by Borrower in writing to the
contrary within thirty (30) days of the date each accounting is mailed to
Borrower. Such notice shall be deemed an objection to those items specifically
objected to therein.
SECTION 2.3. COLLECTIONS, DISBURSEMENTS, BORROWING, AVAILABILITY, AND
LOCKBOX ACCOUNT.
Borrower shall maintain a lockbox account (the "Lockbox") with Bank of
America, N.A. (or its successor) (the "Lockbox Bank"), subject to the provisions
of this Agreement, and shall execute with the Lockbox Bank a Lockbox Agreement
in the form attached as Exhibit B, and such other agreements related thereto as
Lender may require. Borrower shall ensure that all collections of Accounts are
paid directly from Account Debtors into the Lockbox, and that all funds paid
into the Lockbox are immediately transferred into a depository account
maintained by Lender at Bank One Arizona, N.A. or U.S. Bank N.A., as determined
by Lender in its sole discretion and communicated to Borrower (the
"Concentration Account"). Lender shall apply, on a daily basis, all funds
transferred into the Concentration Account pursuant to this Section 2.3 to
reduce the outstanding indebtedness under the Loan (in accordance with Section
2.2(d)) with future Revolving Credit Loans, advances and other extensions of
credit to be made by Lender under the conditions set forth in this Article II.
To the extent that any collections of Accounts or proceeds of other Collateral
are not sent directly to the Lockbox but are received by Borrower, such
collections shall be held in trust for the benefit of Lender and immediately
remitted, in the form received, to the Lockbox Bank for transfer to the
Concentration Account immediately upon receipt by Borrower. Borrower
acknowledges and agrees that its compliance with the terms of this Section 2.3
is essential, and that Lender will suffer immediate and irreparable injury and
have no adequate remedy at law, if Borrower, through its acts or omissions,
causes or permits Account Debtors to pay other than to the Lockbox Account, or
if Borrower fails to immediately deposit collections of Accounts or proceeds of
other Collateral in the Lockbox Account as herein required. Upon Borrower's
failure to comply with the terms of this Section 2.3, Lender will be entitled,
in addition to exercising any other rights and remedies available to it, to
assess a non-compliance fee which shall operate to increase the Base Rate by two
percent (2%) per
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annum during any period of non-compliance. Lender shall be entitled to assess
such fee whether or not an Event of Default is declared or otherwise occurs. All
funds transferred from the Concentration Account for application to Borrower's
indebtedness to Lender shall be applied to reduce the Loan balance, but for
purposes of calculating interest shall be subject to a two (2) Business Day
clearance period. If as the result of collections of Accounts pursuant to the
terms and conditions of this Section 2.3 a credit balance exists with respect to
the Concentration Account, such credit balance shall not accrue interest in
favor of Borrower, but shall be available, upon written request by Borrower to
Lender, to Borrower at any time or times for so long as no Event of Default
exists.
SECTION 2.4. FEES.
(a) Borrower shall unconditionally pay to Lender a commitment
fee equal to one hundred thousand dollars ($100,000.00), which commitment fee
shall be payable in full at Closing.
(b) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly usage fee (the "Usage Fee") equal
to four one hundredths of one percent (.04%) of the average amount by which the
Maximum Loan Amount exceeds the average amount of the outstanding principal
balance of the Revolving Credit Loans during the preceding month. The Usage Fee
shall be payable monthly in arrears on the first Business Day of each successive
calendar month.
(c) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly loan management fee (the "Loan
Management Fee") equal to three one hundredths of one percent (0.03%) of the
average amount of the outstanding principal balance of the Revolving Credit
Loans during the preceding month. The Loan Management Fee shall be payable
monthly in arrears on the first day of each successive calendar month.
(d) Borrower shall pay to Lender all out-of-pocket audit and
appraisal fees in connection with audits and appraisals of Borrower's books and
records and such other matters as Lender shall deem appropriate, which shall be
due and payable on the first Business Day of the month following the date of
issuance by Lender of a request for payment thereof to Borrower; provided,
however, that (i) absent the occurrence of an Event of Default and (ii)
exclusive of audit and appraisal fees and expenses related to acquisitions, the
other audit and appraisal fees shall be capped at $20,000.00 in any calendar
year.
(e) Borrower shall pay to Lender, on demand, any and all
fees, costs or expenses which Lender or any participant pays to a bank or other
similar institution (including, without limitation, any fees paid by Lender to
any participant) arising out of or in connection with (i) the forwarding to
Borrower or any other Person on behalf of Borrower, by Lender, of proceeds of
Revolving Credit Loans made by Lender to Borrower pursuant to this Agreement,
and (ii) the depositing for collection, by Lender or any participant, of any
check or item of payment received or delivered to Lender or any participant on
account of Obligations.
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SECTION 2.5. PAYMENTS. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) the receipt by Borrower or Lender of any payments on or proceeds from any of
the Collateral, to the extent of such proceeds, (ii) the occurrence of an Event
of Default if the Loan and the maturity of the payment of the Obligations are
accelerated, or (iii) the termination of this Agreement pursuant to Section 2.8
hereof of this Agreement; provided, however, that if any advance made by Lender
in excess of the Borrowing Base shall exist at any time, Borrower shall,
immediately upon demand, repay such overadvance. Interest accrued on the
Revolving Credit Loans shall be due on the earliest of (i) the first Business
Day of each month (for the immediately preceding month), computed on the last
calendar day of the preceding month, (ii) the occurrence of an Event of Default
if the Loan and the maturity of the Obligations are accelerated, or (iii) the
termination of this Agreement pursuant to Section 2.8. Except to the extent
otherwise set forth in this Agreement, all payments of principal and of interest
on the Loan, all other charges and any other obligations of Borrower under this
Agreement, shall be made to Lender to the Concentration Account, in immediately
available funds.
SECTION 2.6. USE OF PROCEEDS. The proceeds of Lender's advances under
the Loan shall be used solely for working capital, acquisitions (as permitted by
this Agreement) and general corporate purposes and to pay off the existing term
loan from Lender.
SECTION 2.7. INTEREST RATE LIMITATION. The parties intend to conform
strictly to the applicable usury laws in effect from time to time during the
term of the Loan. Accordingly, if any transaction contemplated by this Agreement
would be usurious under such laws, then notwithstanding any other provision of
this Agreement: (i) the aggregate of all interest that is contracted for,
charged, or received under this Agreement or under any other Loan Document shall
not exceed the maximum amount of interest allowed by applicable law (the
"Highest Lawful Rate"), and any excess shall be promptly credited to Borrower by
Lender (or, to the extent that such consideration shall have been paid, such
excess shall be promptly refunded to Borrower by Lender); (ii) neither Borrower
nor any other Person now or hereafter liable under this Agreement shall be
obligated to pay the amount of such interest to the extent that it is in excess
of the Highest Lawful Rate; and (iii) the effective rate of interest shall be
reduced to the Highest Lawful Rate. All sums paid, or agreed to be paid, to
Lender for the use, forbearance, and detention of the debt of Borrower to Lender
shall, to the extent permitted by applicable law, be allocated throughout the
full term of the Note until payment is made in full so that the actual rate of
interest does not exceed the Highest Lawful Rate in effect at any particular
time during the full term thereof. If at any time the rate of interest under the
Note exceeds the Highest Lawful Rate, the rate of interest to accrue pursuant to
this Agreement shall be limited, notwithstanding anything to the contrary in
this Agreement, to the Highest Lawful Rate, but any subsequent reductions in the
Base Rate shall not reduce the interest to accrue pursuant to this Agreement
below the Highest Lawful Rate until the total amount of interest accrued equals
the amount of interest that would have accrued if a varying rate per annum equal
to the interest rate under the Note had at all times been in effect. If the
total amount of interest paid or accrued pursuant to this Agreement under the
foregoing provisions is less than the total amount of interest that would have
accrued if a varying rate per annum equal to the interest rate under the Note
had been in effect, then Borrower agrees to pay to Lender an amount equal to the
difference between (i) the lesser of (x) the amount of interest that would have
accrued if the Highest Lawful Rate had at all times been in effect, or (y) the
amount of interest that would have accrued if a varying rate per
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annum equal to the interest rate under the Note had at all times been in effect,
and (ii) the amount of interest accrued in accordance with the other provisions
of this Agreement.
SECTION 2.8. TERM.
(a) Subject to Lender's right to cease making Revolving Credit
Loans to Borrower upon or after any Event of Default, this Agreement shall be in
effect for a period of three (3) years from the Closing Date, unless terminated
as provided in this Section 2.8 (the "Term"), and this Agreement shall be
renewed for one-year periods thereafter upon the mutual written agreement of the
parties.
(b) Notwithstanding anything herein to the contrary, Lender
may terminate this Agreement upon fifteen (15) days written notice or after the
occurrence of an Event of Default and the expiration of any applicable cure
period.
(c) Upon at least thirty (30) days prior written notice to
Lender, Borrower may terminate this Agreement prior to the third annual
anniversary of the Closing Date, provided that, at the effective date of such
termination, Borrower shall pay the Termination Fee to Lender (in addition to
the then outstanding principal, accrued interest and other Obligations owing
under the terms of this Agreement and any other Loan Documents) as yield
maintenance for the loss of bargain and not as a penalty; provided, however, if
and only if Borrower terminates this Agreement and indefeasibly satisfies all
Obligations to Lender as a result of the initial public offering of Borrower
providing for net proceeds to the Borrower of no less than $20,000,000.00, the
Termination Fee shall be equal to the following: (i) the Termination Fee if the
date of notice of a termination is on or before the first anniversary of the
Closing Date shall be equal to one percent (1%) of the Maximum Loan Amount and
(ii) the Termination Fee if the date of notice of a termination is after the
first anniversary of the Closing Date and on or before the third anniversary of
the Closing Date shall be equal to one half of one percent (0.5%) of the Maximum
Loan Amount.
(d) All of the Obligations shall be immediately due and
payable upon the termination date stated in any notice of termination of this
Agreement. All undertakings, agreements, covenants, warranties, and
representations of Borrower contained in the Loan Documents shall survive any
such termination and Lender shall retain its liens in the Collateral and all of
its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds.
(e) Notwithstanding any provision of this Agreement which
makes reference to the continuance of an Event of Default, nothing in this
Agreement shall be construed to permit Borrower to cure an Event of Default
following the lapse of the applicable cure period, and Borrower shall have no
such right in any instance unless specifically granted in writing by Lender.
SECTION 2.9. JOINT AND SEVERAL LIABILITY; BINDING OBLIGATIONS. Each
entity comprising Borrower and executing this Agreement on behalf of Borrower
shall be jointly and severally liable for all of the Obligations. In addition,
each entity comprising Borrower hereby
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acknowledges and agrees that all of the representations, warranties, covenants,
obligations, conditions, agreements and other terms contained in this Agreement
shall be applicable to and shall be binding upon each individual entity
comprising Borrower, and shall be binding upon all such entities when taken
together.
ARTICLE III
COLLATERAL
SECTION 3.1. GENERALLY. As security for the payment of all liabilities
of Borrower to Lender, including without limitation: (i) indebtedness evidenced
under the Note, repayment of Revolving Credit Loans, advances and other
extensions of credit, all fees and charges owing by Borrower, and all other
liabilities and obligations of every kind or nature whatsoever of Borrower to
Lender, whether now existing or hereafter incurred, joint or several, matured or
unmatured, direct or indirect, primary or secondary, related or unrelated, due
or to become due, including but not limited to any extensions, modifications,
substitutions, increases and renewals thereof, (ii) the payment of all amounts
reasonably advanced by Lender to preserve, protect, defend, and enforce its
rights under this agreement and in the following property in accordance with the
terms of this Agreement, and (iii) the payment of all reasonable expenses
incurred by Lender in connection therewith (collectively, the "Obligations").
Borrower hereby assigns and grants to Lender a continuing first priority lien on
and security interest in, upon, and to the following property (the
"Collateral"):
(a) All of Borrower's now-owned and hereafter acquired or
arising Accounts, accounts receivable and rights to payment of every kind and
description, and all of Borrower's contract rights, chattel paper, documents and
instruments with respect thereto, and all of Borrower's rights, remedies,
security and liens, in, to and in respect of the Accounts, including, without
limitation, rights of stoppage in transit, replevin, repossession and
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party, guaranties or other contracts of suretyship with respect to the Accounts,
deposits or other security for the obligation of any Account Debtor, and credit
and other insurance;
(b) All moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, in transit to, in possession of,
or under the control of Lender or a bailee or Affiliate of Lender, from or for
Borrower, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all of Borrower's deposits (general or special), balances, sums
and credits with Lender at any time existing;
(c) All of Borrower's right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in, Accounts,
including, without limitation, all goods described in invoices or other
documents or instruments with respect to, or otherwise representing or
evidencing, any Account, and all returned, reclaimed or repossessed goods;
(d) All of Borrower's now owned or hereafter acquired deposit
accounts into which Accounts are deposited, including the Lockbox Account;
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(e) All of Borrower's now owned and hereafter acquired or
arising general intangibles and other property of every kind and description
with respect to, evidencing or relating to its Accounts, accounts receivable and
other rights to payment, including, but not limited to, all existing and future
customer lists, choses in action, claims, books, records, ledger cards,
contracts, licenses, formulae, tax and other types of refunds, returned and
unearned insurance premiums, rights and claims under insurance policies, and
computer programs, information, software, records, and data, as the same relates
to the Accounts;
(f) All of Borrower's other general intangibles (including,
without limitation, any proceeds from insurance policies after payment of prior
interests), patents, unpatented inventions, trade secrets, copyrights, contract
rights, goodwill, literary rights, rights to performance, rights under licenses,
choses-in-action, claims, information contained in computer media (such as data
bases, source and object codes, and information therein), things in action,
trademarks and trademarks applied for (together with the goodwill associated
therewith) and derivatives thereof, trade names, including the right to make,
use, and vend goods utilizing any of the foregoing, and permits, licenses,
certifications, authorizations and approvals, and the rights of Borrower
thereunder, issued by any governmental, regulatory, or private authority,
agency, or entity whether now owned or hereafter acquired, together with all
cash and non-cash proceeds and products thereof;
(g) All of Borrower's now owned or hereafter acquired
inventory of every description which is held by Borrower for sale or lease or is
furnished by Borrower under any contract of service or is held by Borrower as
raw materials, work in process or materials used or consumed in a business,
wherever located, and as the same may now and hereafter from time to time be
constituted, together with all cash and non-cash proceeds and products thereof;
(h) All of Borrower's now owned or hereafter acquired
machinery, equipment, computer equipment, tools, tooling, furniture, fixtures,
goods, supplies, materials, work in process, whether now owned or hereafter
acquired, together with all additions, parts, fittings, accessories, special
tools, attachments, and accessions now and hereafter affixed thereto and/or used
in connection therewith, all replacements thereof and substitutions therefore,
and all cash and non-cash proceeds and products thereof; and
(i) The proceeds (including, without limitation, insurance
proceeds) of all of the foregoing.
SECTION 3.2. LIEN DOCUMENTS. At Closing and thereafter as Lender deems
necessary in its sole discretion, Borrower shall execute and deliver to Lender,
or have executed and delivered (all in form and substance satisfactory to Lender
in its sole discretion):
(a) UCC-1 Financing Statements pursuant to the Uniform
Commercial Code in effect in the jurisdiction(s) in which Borrower operates,
which Lender may file in any jurisdiction where any Collateral is or may be
located and in any other jurisdiction that Lender deems appropriate; provided
that a carbon, photographic, or other reproduction or other copy of this
Agreement or of a financing statement is sufficient as and may be filed in lieu
of a financing statement; and
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(b) Any other agreements, documents, instruments, and writings
deemed necessary by Lender or as Lender may otherwise request from time to time
in its sole discretion to evidence, perfect, or protect Lender's lien and
security interest in the Collateral required under this Agreement.
SECTION 3.3. COLLATERAL ADMINISTRATION.
(a) All Collateral (except deposit accounts) will at all times
be kept by Borrower at its principal offices) as set forth on Schedule 4.15
hereto and shall not, without the prior written approval of Lender, be moved
therefrom.
(b) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit to Lender on
such periodic basis as Lender shall request a sales and collections report for
the preceding period, in form satisfactory to Lender. In addition, if Accounts
in an aggregate face amount in excess of $150,000.00 become ineligible because
they fall within one of the specified categories of ineligibility set forth in
the definition of Qualified Accounts or otherwise, Borrower shall notify Lender
of such occurrence on the first Business Day following such occurrence and the
Borrowing Base shall thereupon be adjusted to reflect such occurrence. If
reasonably requested by Lender, Borrower shall execute and deliver to Lender
formal written assignments of all of its Accounts weekly or daily, which shall
include all Accounts that have been created since the date of the last
assignment, together with copies of claims, invoices or other information
related thereto.
(c) If an Event of Default has occurred and is continuing, any
of Lender's officers, employees or agents shall have the right, at any time or
times hereafter, in the name of Lender, any designee of Lender or Borrower, to
verify the validity, amount or any other matter relating to any Accounts by
mail, telephone, telegraph or otherwise. Borrower shall cooperate fully with
Lender in an effort to facilitate and promptly conclude such verification
process.
(d) To expedite collection, Borrower shall endeavor in the
first instance to make collection of its Accounts for Lender. Lender retains the
right at all times after the occurrence of an Event of Default, subject to
applicable law regarding Medicaid/Medicare Account Debtors, to notify Account
Debtors that Accounts have been assigned to Lender and to collect Accounts
directly in its own name and to charge the collection costs and expenses,
including attorneys' fees, to Borrower.
SECTION 3.4. OTHER ACTIONS. In addition to the foregoing, Borrower (i)
shall provide prompt written notice to each private indemnity, managed care or
other Insurer who either is currently an Account Debtor or becomes an Account
Debtor at any time following the date of this Agreement that Lender has been
granted a first priority lien and security interest in, upon and to all Accounts
applicable to such Insurer, and directs each Account Debtor to make payments
into the Lockbox, upon Borrower's failure to send such notices within ten (10)
days after the date of this Agreement (or ten (10) days after the Insurer
becomes an Account Debtor), and (ii) shall do anything further that may be
lawfully required by Lender to secure Lender and effectuate the intentions and
objects of this Agreement, including but not limited to the execution
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and delivery of lockbox agreements, continuation statements, amendments to
financing statements, and any other documents required hereunder. At Lender's
request, Borrower shall also immediately deliver to Lender all items for which
Lender must receive possession to obtain a perfected security interest. Borrower
shall, on Lender's demand, deliver to Lender all notes, certificates, and
documents of title, chattel paper, warehouse receipts, instruments, and any
other similar instruments constituting Collateral.
SECTION 3.5. SEARCHES. Before Closing, and thereafter (as and when
determined by Lender in its sole discretion), Lender will perform the searches
described in clauses (a) and (b) below against Borrower (the results of which
are to be consistent with Borrower's representations and warranties under this
Agreement), all at its own expense:
(a) Uniform Commercial Code searches with the Secretary of
State and local filing offices of each jurisdiction where Borrower maintains its
executive offices, a place of business, or assets;
(b) Judgment, federal tax lien and corporate and partnership
tax lien searches, in each jurisdiction searched under clause (a) above; and
(c) In addition, prior to Closing, at Borrower's expense,
Borrower shall obtain and deliver to Lender good standing certificates showing
Borrower to be in good standing in its state of formation and in each other
state in which it is doing and currently intends to do business for which
qualification is required.
SECTION 3.6. POWER OF ATTORNEY. Each of the officers of Lender is
hereby irrevocably made, constituted and appointed the true and lawful attorney
for Borrower (without requiring any of them to act as such) with full power of
substitution to do the following: (i) endorse the name of Borrower upon any and
all checks, drafts, money orders, and other instruments for the payment of money
that are payable to Borrower and constitute collections on Borrower's Accounts;
(ii) execute in the name of Borrower any financing statements, schedules,
assignments, instruments, documents, and statements that Borrower is obligated
to give Lender hereunder, and (iii) upon and during .the continuance of an Event
of Default do such other and further acts and deeds in the name of Borrower that
Lender may deem necessary or desirable to enforce any Account or other
Collateral or perfect Lender's security interest or lien in any Collateral. In
addition, if Borrower breaches its obligation to direct payments of the proceeds
of the Collateral to the Lockbox Account, Lender, as the irrevocably made,
constituted and appointed true and lawful attorney for Borrower pursuant to this
paragraph, may, by the signature or other act of any of Lender's officers
(without requiring any of them to do so), direct any federal, state or private
payor or fiscal intermediary to pay proceeds of the Collateral to Borrower by
directing payment to the Lockbox Account.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each entity comprising Borrower represents and warrants to Lender, and
shall be deemed to represent and warrant on each day on which any Obligations
shall be outstanding hereunder, that:
SECTION 4.1. SUBSIDIARIES. Except as set forth in Schedule 4.1.
Borrower has no subsidiaries.
SECTION 4.2. ORGANIZATION AND GOOD STANDING. Except as set forth in
Schedule 4.2, Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of its state of formation, is in good standing as a
foreign corporation in each jurisdiction in which the character of the
properties owned or leased by it therein or the nature of its business makes
such qualification necessary, has the corporate power and authority to own its
assets and transact the business in which it is engaged, and has obtained all
certificates, licenses and qualifications required under all laws, regulations,
ordinances, or orders of public authorities necessary for the ownership and
operation of all of its properties and transaction of all of its business.
SECTION 4.3. AUTHORITY. Borrower has full corporate power and authority
to enter into, execute, and deliver this Agreement and to perform its
obligations hereunder, to borrow the Loan, to execute and deliver the Note, and
to incur and perform the obligations provided for in the Loan Documents, all of
which have been duly authorized by all necessary corporate action. No consent or
approval of shareholders of, or lenders to, Borrower and no consent, approval,
filing or registration with any Governmental Authority is required as a
condition to the validity of the Loan Documents or the performance by Borrower
of its obligations under the Loan Documents.
SECTION 4.4. BINDING AGREEMENT. This Agreement and all other Loan
Documents constitute, and the Note, when issued and delivered pursuant to this
Agreement for value received, will constitute, the valid and legally binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms.
SECTION 4.5. LITIGATION. Except as disclosed in Schedule 4.5, there are
no actions, suits, proceedings or investigations pending or threatened against
Borrower before any court or arbitrator or before or by any Governmental
Authority which, in any one case or in the aggregate, if determined adversely to
the interests of Borrower, could have a material adverse effect on the business,
properties, condition (financial or otherwise) or operations, present or
prospective, of Borrower, or upon its ability to perform its obligations under
the Loan Documents. Borrower is not in default with respect to any order of any
court, arbitrator, or Governmental Authority applicable to Borrower or its
properties.
SECTION 4.6. NO CONFLICTS. The execution and delivery by Borrower of
this Agreement and the other Loan Documents do not, and the performance of its
obligations under the Loan Documents will not, violate, conflict with,
constitute a default under, or result in the creation of a
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lien or encumbrance upon the property of Borrower (other than for the benefit of
Lender) under: (i) any provision of Borrower's articles of incorporation or
bylaws, (ii) any provision of any law, rule, or regulation applicable to
Borrower, or (iii) any of the following: (A) any indenture or other agreement or
instrument to which Borrower is a party or by which Borrower or its property is
bound; or (B) any judgment, order or decree of any court, arbitration tribunal,
or Governmental Authority having jurisdiction over Borrower which is applicable
to Borrower.
SECTION 4.7. FINANCIAL CONDITION. The annual financial statements of
Borrower as of December 31, 1999 audited by Ernst & Young and the unaudited
financial statements of Borrower as of March 31, 2000, certified by the chief
financial officer of Borrower, which have been delivered to Lender, fairly
present the financial condition of Borrower and the results of its operations
and changes in financial condition as of the dates and for the periods referred
to, and the audited financial statements have been prepared in accordance with
GAAP. There are no material unrealized or anticipated liabilities, direct or
indirect, fixed or contingent, of Borrower as of the dates of such financial
statements which are not reflected in such financial statements or in the notes
to such financial statements. There has been no adverse change in the business,
properties, condition (financial or otherwise) or operations (current or
prospective) of Borrower since March 31, 2000 Borrower's fiscal year ends on
December 31. The federal tax identification number of each entity comprising
Borrower is as described on Schedule 4.15.
SECTION 4.8. NO DEFAULT. Borrower is not in default under or with
respect to any obligation in any respect which could be adverse to its business,
operations, property or financial condition, or which could adversely affect the
ability of Borrower to perform its obligations under the Loan Documents. No
Event of Default or event which, with the giving of notice or lapse of time, or
both, could become an Event of Default, has occurred and is continuing.
SECTION 4.9. TITLE TO PROPERTIES. Borrower has good and marketable
title to its properties and assets, including the Collateral and the properties
and assets reflected in the financial statements described in Section 4.7,
subject to no lien, mortgage, pledge, encumbrance or charge of any kind, other
than Permitted Liens. Borrower has not agreed or consented to cause any of its
properties or assets whether owned now or hereafter acquired to be subject in
the future (upon the happening of a contingency or otherwise) to any lien,
mortgage, pledge, encumbrance or charge of any kind other than Permitted Liens.
SECTION 4.10. TAXES. Borrower has filed, or has obtained extensions for
the filing of, all federal, state and other tax returns which are required to be
filed, and has paid all taxes shown as due on those returns and all assessments,
fees and other amounts due as of the date of this Agreement. All tax liabilities
of Borrower were, as of March 31, 2000 and are now, adequately provided for on
Borrower's books. No tax liability has been asserted by the Internal Revenue
Service or other taxing authority against Borrower for taxes in excess of those
already paid.
SECTION 4.11. SECURITIES AND BANKING LAWS AND REGULATIONS.
(a) The use of the proceeds of the Loan and Borrower's
issuance of the Note will not directly or indirectly violate or result in a
violation of the Securities Act of 1933 or the
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Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including without limitation Regulations U, T, G, or X of the Board of
Governors of the Federal Reserve System. Borrower is not engaged in the business
of extending credit for the purpose of the purchasing or carrying "margin stock"
within the meaning of those regulations. No part of the proceeds of the Loan
under this Agreement will be used to purchase or carry any margin stock or to
extend credit to others for such purpose.
(b) Borrower is not an investment company within the meaning
of the Investment Company Act of 1940, as amended, nor is it, directly or
indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of that Act.
SECTION 4.12. ERISA. No employee benefit plan (a "Plan") subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") and regulations issued
pursuant thereto that is maintained by Borrower or under which Borrower could
have any liability under ERISA (a) has failed to meet minimum funding standards
established in Section 302 of ERISA, (b) has failed to comply with all
applicable requirements of ERISA and of the Internal Revenue Code, including all
applicable rulings and regulations thereunder, (c) neither Borrower nor any
member of a Controlled Group that includes Borrower has engaged in or been
involved in a prohibited transaction (as defined in ERISA) under ERISA or under
the Internal Revenue Code, or (d) has been terminated. Borrower has not assumed,
or received notice of a claim asserted against Borrower or another member of the
Controlled Group for, withdrawal liability (as defined in the Multi-Employer
Pension Plan Amendments Act of 1980, as amended) with respect to any
multi-employer pension plan. Borrower has timely made when due all contributions
with respect to any multi-employer pension plan in which it participates and no
event has occurred triggering a claim against Borrower for withdrawal liability
with respect to any multi-employer pension plan in which Borrower participates.
SECTION 4.13. COMPLIANCE WITH LAW. Except as described in Schedule
4.13, Borrower is not in violation of any statute, rule or regulation of any
Governmental Authority (including, without limitation, any statute, rule or
regulation relating to employment practices or to environmental, occupational
and health standards and controls). Borrower has obtained all licenses, permits,
franchises, and other governmental authorizations necessary for the ownership of
its properties and the conduct of its business. Borrower is current with all
reports and documents required to be filed with any state or federal securities
commission or similar Governmental Authority and is in full compliance with all
applicable rules and regulations of such commissions.
SECTION 4.14. ENVIRONMENTAL MATTERS. No use, exposure, release,
generation, manufacture, storage, treatment, transportation or disposal of
Hazardous Material has occurred or is occurring on or from any real property on
which the Collateral is located or which is owned, leased or otherwise occupied
by Borrower (the "Premises"), or off the Premises as a result of any action of
Borrower, except as described in Schedule 4.14. All Hazardous Material used,
treated, stored, transported to or from, generated or handled on the Premises,
or off the Premises by Borrower, has been disposed of on or off the Premises by
or on behalf of Borrower in a lawful manner. There are no underground storage
tanks present on or under the Premises owned or
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leased by Borrower. No other environmental, public health or safety hazards
exist with respect to the Premises.
SECTION 4.15. PLACES OF BUSINESS. The only places of business of
Borrower, and the places where it keeps and intends to keep the Collateral and
records concerning the Collateral, are at-the addresses set forth in Schedule
4.15.
SECTION 4.16. INTELLECTUAL PROPERTY. Borrower exclusively owns or
possesses all the patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, franchises, licenses, and
rights with respect to the foregoing necessary for the current and planned
future conduct of its business, without any conflict with the rights of others.
A list of all such intellectual property (indicating the nature of Borrower's
interest), as well as all outstanding franchises and licenses given by or held
by Borrower, is attached as Schedule 4.16. Borrower is not in default of any
obligation or undertaking with respect to such intellectual property or rights.
Borrower is not infringing on any patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, franchises,
licenses, any rights with respect to the foregoing, or any other intellectual
property rights of others and the Borrower is not aware of any infringement by
others of any such rights owned by Borrower.
SECTION 4.17. STOCK OWNERSHIP. The identity of the stockholders of
record of all classes of the outstanding stock of Borrower, together with the
respective ownership percentages held by such stockholders, are as set forth on
Schedule 4.17.
SECTION 4.18. MATERIAL FACTS. Neither this Agreement nor any other Loan
Document nor any other agreement, document, certificate, or statement furnished
to Lender by or on behalf of Borrower in connection with the transactions
contemplated by this Agreement contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the statements
contained in this Agreement or other Loan Documents or therein not misleading.
There is no fact known to Borrower that adversely affects or in the future may
adversely affect the business, operations, affairs or financial condition of
Borrower, or any of its properties or assets.
SECTION 4.19. INVESTMENTS, GUARANTEES, AND CERTAIN CONTRACTS. Borrower
does not own or hold any equity or long-term debt investments in, have any
outstanding advances to, have any outstanding guarantees for the obligations of,
or have any outstanding borrowings from, any Person, except as described on
Schedule 4.19. Borrower is not a party to any contract or agreement, or subject
to any corporate restriction, which adversely affects its business.
SECTION 4.20. BUSINESS INTERRUPTIONS. Within five years before the date
of this Agreement, neither the business, property or assets, or operations of
Borrower has been adversely affected in any way by any casualty, strike,
lockout, combination of workers, or order of the United States of America or
other Governmental Authority, directed against Borrower. There are no pending or
threatened labor disputes, strikes, lockouts, or similar occurrences or
grievances against Borrower or its business.
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SECTION 4.21. NAMES. Within five years before the date of this
Agreement, Borrower has not conducted business under or used any other name
(whether corporate, partnership or assumed) other than as shown on Schedule
4.21. Borrower is the sole owner of all names listed on that Schedule and any
and all business done and invoices issued in such names are Borrower's sales,
business, and invoices. Each trade name of Borrower represents a division or
trading style of Borrower and not a separate Person or independent Affiliate.
SECTION 4.22 JOINT VENTURES. Borrower is not engaged in any joint
venture or partnership with any other Person, except as set forth on Schedule
4.22.
SECTION 4.23 ACCOUNTS. Lender may rely, in determining which Accounts
are Qualified Accounts, on all statements and representations made by Borrower
with respect to any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Qualified Account, Borrower represents that:
(a) The Account is genuine and in all respects what it
purports to be, and is not evidenced by a judgment;
(b) The Account arises out of a completed, bona fide sale and
delivery of goods or rendition of Medical Services by Borrower in the ordinary
course of its business and in accordance with the terms and conditions of all
purchase orders, contracts, certification, participation, certificate of need,
or other documents relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
(c) The Account is for a liquidated amount maturing as stated
in a duplicate claim or invoice covering such sale or rendition of Medical
Services, a copy of which has been furnished or is available to Lender;
(d) The Account, and Lender's security interest in such
Account, is not, and will not (by voluntary act or omission by Borrower), be in
the future, subject to any offset, lien, deduction, defense, dispute,
counterclaim or any other adverse condition, and each such Account is absolutely
owing to Borrower and is not contingent in any respect or for any reason;
(e) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the claim or invoice and
statements delivered to Lender with respect thereto;
(f) To the best of Borrower's knowledge, (i) the Account
Debtor under the Account had the capacity to contract at the time any contract
or other document giving rise to the Account was executed and (ii) such Account
Debtor is solvent;
(g) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor under the Account which might result in any material adverse change in
such Account Debtor's financial condition or the collectibility of such Account;
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(h) It has been billed and forwarded to the Account Debtor for
payment in accordance with applicable laws and compliance and conformance with
any and requisite procedures, requirements and regulations governing payment by
such Account Debtor with respect to such Account, and such Account if due from a
Medicaid/Medicare Account Debtor is properly payable directly to Borrower; and
(i) Borrower has obtained and currently has all certificates
of need, Medicaid and Medicare provider numbers, licenses, permits and
authorizations that are necessary in the generation of such Accounts.
SECTION 4.24. SOLVENCY. Both before and after giving effect to the
transactions contemplated by the terms and provisions of this Agreement, (i)
Borrower (taken as a whole) owns property whose fair saleable value is greater
than the amount required to pay all of Borrower's Indebtedness (including
contingent debts), (ii) Borrower (taken as a whole) was and is able to pay all
of its Indebtedness as such Indebtedness matures, and (iii) Borrower (taken as a
whole) had and has capital sufficient to carry on its business and transactions
and all business and transactions in which it about to engage. For purposes
hereof, the term "Indebtedness" means, without duplication (x) all items which
in accordance with GAAP would be included in determining total liabilities as
shown on the liability side of a balance sheet of such Borrower as of the date
on which Indebtedness is to be determined, (y) all obligations of any other
person or entity which such Borrower has guaranteed, and (z) the Obligations.
SECTION 4.25. YEAR 2000 COMPLIANCE. All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology (collectively, the "Systems") necessary for Borrower to carry on its
business as currently conducted and as expected to be conducted in the future
are Year 2000 Compliant or will be Year 2000 Compliant within a period of time
calculated to result in no material disruption of any of Borrower's business
operations. For purposes of these provisions, "Year 2000 Compliant" means that
such Systems are designed to be used before, during and after the Gregorian
calendar year 2000 A.D. and will operate during each such time period without
error related to date data, specifically including any error relating to, or the
product of, date data that represents or refers to different centuries or more
than one century.
ARTICLE V
CLOSING AND CONDITIONS OF LENDING
SECTION 5.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of
Lender to enter into and perform this Agreement and to make Revolving Credit
Loans is subject to the following conditions precedent:
(a) Lender shall have received two (2) originals of this
Agreement, one (1) original of the Amended and Restated Note and all other Loan
Documents required to be executed and delivered at or before Closing (other than
the Note, as to which Lender shall receive only one original), executed by
Borrower and any other required Persons, as applicable.
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(b) INTENTIONALLY DELETED
(c) Lender shall have received all searches and good standing
certificates required by Section 3.5.
(d) Borrower shall have complied and shall then be in
compliance with all the terns, covenants and conditions of the Loan Documents.
(e) There shall have occurred no Event of Default and no event
which, with the giving of notice or the lapse of time, or both, could constitute
such an Event of Default.
(f) The representations and warranties contained in Article IV
shall be true and correct.
(g) Lender shall have received copies of all board of
directors resolutions of Borrower, and other corporate action taken by each
entity comprising Borrower to authorize the execution, delivery and performance
of the Loan Documents and the borrowing of the Loan under the Loan Documents, as
well as the names and signatures of the officers of Borrower authorized to
execute documents on its behalf in connection with the Loan, all as also
certified as of the date of this Agreement by Borrower's chief financial
officer, and such other papers as Lender may require.
(h) Lender shall have received copies, certified as true,
correct and complete by a corporate officer of each entity comprising Borrower,
of the articles of incorporation of each entity comprising Borrower, with any
amendments to any of the foregoing, and all other documents necessary for
performance of the obligations of Borrower under this Agreement and the other
Loan Documents.
(i) Lender shall have received a written opinion of counsel
for Borrower, dated the date hereof, substantially in the form of Exhibit C.
(j) Lender shall have received such financial statements,
reports, certifications, and other operational information required to be
delivered under this Agreement, including without limitation an initial
borrowing base certificate calculating the Borrowing Base.
(k) Lender shall have received the Commitment Fee, to the
extent payable.
(l) The Lockbox and the Concentration Account shall have been
established.
(m) Lender shall have received an estoppel certificate
substantially in the form of Exhibit D from Borrower's landlord or sublandlord,
as the case may be, with respect to each of the facilities identified on
Schedule 4.15.
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(n) Lender shall have received evidence that Highland Partners
and any additional VC's (as defined in Section 6.24) which are not otherwise a
party thereto shall have been added as a venture capital party to the VC Letter
Agreement (as defined in Section 6.24).
SECTION 5.2. CONDITIONS PRECEDENT TO ADVANCES. Notwithstanding any
other provision of this Agreement, no Loan proceeds, Revolving Credit Loans,
advances or other extensions of credit under the Loan shall be disbursed under
this Agreement unless the following conditions have been satisfied or waived
immediately prior to such disbursement:
(a) The representations and warranties on the part of Borrower
contained in Article IV of this Agreement shall be true and correct in all
respects at and as of the date of disbursement or advance, as though made on and
as of such date (except to the extent that such representations and warranties
expressly relate solely to an earlier date and except that the references in
Section 4.7 to financial statements shall be deemed to be a reference to the
then most recent annual and interim financial statements of Borrower furnished
to Lender pursuant to Section 6.1 hereof).
(b) No Event of Default or event which, with the giving of
notice of the lapse of time, or both, could become an Event of Default shall
have occurred and be continuing or would result from the making of the
disbursement or advance.
(c) No adverse change in the condition (financial or
otherwise), properties, business, or operations of Borrower shall have occurred
and be continuing with respect to Borrower since the date of this Agreement.
SECTION 5.3. CLOSING. Subject to the conditions of this Article V, the
Loan shall be made available on the date as is mutually agreed by the parties
(the "Closing Date") at such time as may be mutually agreeable to the parties
upon the execution of this Agreement (the "Closing") at such place as may be
requested by Lender.
SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing under this
Agreement, or by making advances under the Loan, Lender does not waive a breach
of any representation or warranty of Borrower under this Agreement or under any
other Loan Document, and all of Lender's claims and rights resulting from any
breach or misrepresentation by Borrower are specifically reserved by Lender.
ARTICLE VI
AFFIRMATIVE COVENANTS
Each entity constituting Borrower covenants and agrees that for so long
as Borrower may borrow under this Agreement and until payment in full of the
Note and performance of all other obligations of Borrower under the Loan
Documents:
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SECTION 6.1. FINANCIAL STATEMENTS AND COLLATERAL REPORTS. Borrower will
furnish to Lender (i) a sales and collections report and accounts receivable
aging schedule on a form acceptable to Lender within fifteen (15) days after the
end of each calendar month, which shall include, but not be limited to, a report
of sales, credits issued, and collections received; (ii) payable aging schedules
within fifteen (15) days after the end of each calendar month; (iii) internally
prepared monthly financial statements for Borrower, certified by the chief
financial officer of Borrower, within fifteen (15) days of the end of each
calendar month, accompanied by management analysis and actual vs. budget
variance reports; (iv) a certificate of Borrowing Base (including without
limitation A/R Standard Borrowing Base and A/R Term Borrowing Base) setting
forth the maximum loan availability for that month within fifteen (15) days of
the end of each calendar month(2), (v) a statement of net worth, certified by
the chief financial officer of Borrower, within fifteen (15) days of the end of
each calendar month, (vi) to the extent prepared by Borrower, annual
projections, profit and loss statements, balance sheets, and cash flow reports
(prepared on a monthly basis) for the succeeding fiscal year within thirty (30)
days after the end of each of Borrower's fiscal years; (vii) internally prepared
annual financial statements for Borrower within sixty (60) days after the end of
each of Borrower's fiscal years; (viii) annual audited financial statements for
Borrower prepared by Ernst & Young, or a firm of independent public accountants
satisfactory to Lender, within one hundred thirty-five (135) days after the end
of each of Borrower's fiscal years; (ix) promptly upon receipt thereof, copies
of any reports submitted to Borrower by the independent accountants in
connection with any interim audit of the books of Borrower and copies of each
management control letter provided to Borrower by independent accountants; (x)
as soon as available, copies of all financial statements and notices provided by
Borrower to all of its stockholders; and (xi) such additional information,
reports or statements as Lender may from time to time reasonably request. Annual
financial statements shall set forth in comparative form figures for the
corresponding periods in the prior fiscal year. All financial statements shall
include a balance sheet and statement of earnings and shall be prepared in
accordance with GAAP, except that interim financial statements will not contain
footnotes and other disclosures necessary for GAAP.
SECTION 6.2. PAYMENTS HEREUNDER. Borrower will make all payments of
principal, interest, fees, and all other payments required hereunder, under the
Loan, and under any other agreements with Lender to which Borrower is a party,
as and when due.
SECTION 6.3. EXISTENCE, GOOD STANDING, AND COMPLIANCE WITH LAWS.
Borrower will do or cause to be done all things necessary (a) to obtain and keep
in full force and effect all corporate existence, rights, licenses, privileges,
and franchises of Borrower necessary to the ownership of its property or the
conduct of its business, and comply with all applicable current and future laws,
ordinances, rules, regulations, orders and decrees of any Governmental Authority
having or claiming jurisdiction over Borrower; and (b) to maintain and protect
the properties used or useful in the conduct of the operations of Borrower, in a
prudent manner, including without limitation the maintenance at all times of
such insurance upon its insurable property and operations as required by law or
by Section 6.7 hereof.
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(2) Notwithstanding Section 6.1(iv) above, in the event that (A) an Event of
Default has occurred that has not been cured, or (B) Borrower's Borrowing Base
is determined using the "50% of A/R Standard Borrowing Base" factor (as set
forth in Section 2.1(d)(ii))A)) rather than the three times EBITDA factor (set
forth in Section 2.1(d)(ii)(B)), then Borrower shall be required to submit a
certificate of Borrowing Base with each request for a Revolving Credit Loan.
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SECTION 6.4. LEGALITY. The making of the Loan and each disbursement or
advance under the Loan shall not be subject to any penalty or special tax, shall
not be prohibited by any governmental order or regulation applicable to
Borrower, and shall not violate any rule or regulation of any Governmental
Authority, and necessary consents, approvals and authorizations of any
Governmental Authority to or of any such disbursement or advance shall have been
obtained.
SECTION 6.5. LENDER'S SATISFACTION. All instruments and legal documents
and proceedings in connection with the transactions contemplated by this
Agreement shall be satisfactory in form and substance to Lender and its counsel,
and Lender shall have received all documents, including records of corporate
proceedings and opinions of counsel, which Lender may have requested in
connection therewith.
SECTION 6.6. TAXES AND CHARGES. Borrower will timely file all tax
reports and pay and discharge all taxes, assessments and governmental charges or
levies imposed upon Borrower, or its income or profits or upon its properties or
any part thereof, before the same shall be in default and before the date on
which penalties attach thereto, as well as all lawful claims for labor,
material, supplies or otherwise which, if unpaid, might become a lien or charge
upon the properties or any part thereof of Borrower, provided, however, that
Borrower shall not be required to pay and discharge or cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith and by appropriate
proceedings by Borrower, and Borrower shall have set aside on their books
adequate reserve therefor; and provided further, that such deferment of payment
is permissible only so long as Borrower's title to, and its right to use, the
Collateral is not adversely affected thereby and Lender's lien and priority on
the Collateral are not adversely affected, altered or impaired thereby.
SECTION 6.7. INSURANCE. Borrower will carry adequate public liability
and professional liability insurance with responsible companies reasonably to
Lender in such amounts and against such risks as is customarily maintained by
similar businesses and by owners of similar property in the same general area.
SECTION 6.8. GENERAL INFORMATION. Borrower will furnish to Lender such
information as Lender may, from time to time, request with respect to the
business or financial affairs of Borrower, and permit any officer, employee or
agent of Lender to visit and inspect any of the properties, to examine the
minute books, books of account and other records, including management letters
prepared by Borrower's auditors, of Borrower, and make copies thereof or
extracts therefrom, and to discuss its and their business affairs, finances and
accounts with, and be advised as to the same by, the internal accountants
employed by and officers of Borrower, and with Ernst & Young, or such other
independent public accountant retained by Borrower, upon prior written notice to
Borrower, all at such times and as often as Lender may require.
SECTION 6.9. MAINTENANCE OF PROPERTY. Borrower will maintain, keep and
preserve all of its properties in good repair, working order and condition and
from time to time make all necessary and proper repairs, renewals, replacements,
betterments and improvements thereto, so
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that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 6.10. NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE
DEVELOPMENTS. Borrower promptly will notify Lender upon the occurrence of: (i)
any Event of Default; (ii) any event which, with the giving of notice or lapse
of time, or both, could constitute an Event of Default; (iii) any event,
development or circumstance whereby the financial statements previously
furnished to Lender fail in any material respect to present fairly, in
accordance with GAAP, the financial condition and operational results of
Borrower, (iv) any judicial, administrative or arbitration proceeding pending
against Borrower, and any judicial or administrative proceeding known by
Borrower to be threatened against it which, if adversely decided, could
adversely affect its condition (financial or otherwise) or operations (present
or prospective) or which may expose Borrower to uninsured liability of
$100,000.00 or more; (v) any default claimed by any other creditor for Borrowed
Money of Borrower other than Lender; and (vi) any other development in the
business or affairs of Borrower which may be adverse; in each case describing
the nature of the event or development. In the case of notification under
clauses (i) and (ii) the action Borrower proposes to take with respect thereto.
SECTION 6.11. EMPLOYEE BENEFIT PLANS. Borrower will (i) comply with the
funding requirements of ERISA with respect to the Plans for its employees, or
will promptly satisfy any accumulated funding deficiency that arises under
Section 302 of ERISA; (ii) furnish Lender, promptly after filing the same, with
copies of all reports or other statements filed with the United States
Department of Labor, the Pension Benefit Guaranty Corporation, or the Internal
Revenue Service with respect to all Plans, or which Borrower, or any member of a
Controlled Group, may receive from such Governmental Authority with respect to
any such Plans, and (iii) promptly advise Lender of the occurrence of any
Reportable Event or Prohibited Transaction with respect to any such Plan and the
action which Borrower proposes to take with respect thereto. Borrower will make
all contributions when due with respect to any multi-employer pension plan in
which it participates and will promptly advise Lender: (i) upon its receipt of
notice of the assertion against Borrower of a claim for withdrawal liability;
(ii) upon the occurrence of any event which could trigger the assertion of a
claim for withdrawal liability against Borrower; and (iii) upon the occurrence
of any event which would place Borrower in a Controlled Group as a result of
which any member (including Borrower) thereof may be subject to a claim for
withdrawal liability, whether liquidated or contingent.
SECTION 6.12. FINANCING STATEMENTS. Borrower shall provide to Lender
evidence satisfactory to Lender as to the due recording of termination
statements, releases of collateral, and Forms UCC-3, and shall cause to be
recorded financing statements on Form UCC-1, duly executed by Borrower and
Lender, in all places necessary to release all existing security interests and
other liens in the Collateral (other than as permitted hereby) and to perfect
and protect Lender's first priority lien and security interest in the
Collateral, as Lender may request.
SECTION 6.13. FINANCIAL RECORDS. Borrower shall keep current and
accurate books of records and accounts in which full and correct entries will be
made of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP.
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SECTION 6.14. COLLECTION OF ACCOUNTS. Borrower shall continue to
collect its Accounts in the ordinary course of business.
SECTION 6.15. PLACES OF BUSINESS. Borrower shall give written notice to
Lender within fifteen (15) days after any change in the location of any of its
places of business, of the places where its records concerning its Accounts are
kept, of the places where the Collateral is kept, or of the establishment of any
new, or the discontinuance of any existing, places of business.
SECTION 6.16. BUSINESS CONDUCTED. Borrower shall continue in the
business presently conducted by it using its best efforts to maintain its
customers and goodwill. Borrower shall not engage, directly or indirectly, in
any line of business substantially different from the business conducted by it
immediately prior to the Closing Date, or engage in business or lines of
business which are not reasonably related thereto.
SECTION 6.17. LITIGATION AND OTHER PROCEEDINGS. Borrower shall give
prompt notice to Lender of any litigation, arbitration, or other proceeding
before any Governmental Authority against or affecting Borrower if the amount
claimed is more than $100,000.00.
SECTION 6.18. BANK ACCOUNTS. Borrower shall assign all of its
depository and disbursement accounts to Lender.
SECTION 6.19. SUBMISSION OF COLLATERAL DOCUMENTS. Borrower will, on
demand of Lender and to the extent permitted by applicable law, make available
to Lender copies of shipping and delivery receipts evidencing the shipment of
goods that gave rise to an Account, medical records, insurance verification
forms, assignment of benefits, in-take forms or other proof of the satisfactory
performance of services that gave rise to an Account, a copy of the claim or
invoice for each Account and copies of any written contract or order from which
the Account arose. Borrower shall promptly notify Lender if an Account becomes
evidenced or secured by an instrument or chattel paper and upon request of
Lender, will promptly deliver any such instrument or chattel paper to Lender.
SECTION 6.20. LICENSURE; MEDICAID/MEDICARE COST REPORTS. Borrower will
maintain all certificates of need, provider numbers and licenses necessary to
conduct its business as currently conducted, and take any steps required to
comply with any such new or additional requirements that may be imposed on
providers of medical products and Medical Services. If required, all
Medicaid/Medicare cost reports will be properly filed.
SECTION 6.21. OFFICER'S CERTIFICATES. Together with the monthly
financial statements delivered pursuant to clause (iii) of Section 6.1, and
together with the audited annual financial statements delivered pursuant to
clause (vi) of that Section, Borrower shall deliver to Lender a certificate of
its chief financial officer, in form and substance satisfactory to Lender:
(a) Setting forth the information (including detailed
calculations) required to establish whether Borrower is in compliance with the
requirements of Articles VI and VII as of the end of the period covered by the
financial statements then being furnished; and
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(b) Stating that the signer has reviewed the relevant terms of
this Agreement, and has made (or caused to be made under his supervision) a
review of the transactions and conditions of Borrower from the beginning of the
accounting period covered by the income statements being delivered to the date
of the certificate, and that such review has not disclosed the existence during
such period of any condition or event which constitutes an Event of Default or
which is then, or with the passage of time or giving of notice or both, could
become an Event of Default, and if any such condition or event existed during
such period or now exists, specifying the nature and period of existence thereof
and what action Borrower has taken or proposes to take with respect thereto.
SECTION 6.22. VISITS AND INSPECTIONS. Borrower agrees to permit
representatives of Lender, from time to time, as often as may be reasonably
requested, but only during normal business hours, to visit and inspect the
properties of Borrower, and to inspect, audit and make extracts from its books
and records, and discuss with its officers, its employees and its independent
accountants, Borrower's business, assets, liabilities, financial condition,
business prospects and results of operations.
SECTION 6.23. NET WORTH. As of August 31, 2000, Borrower had a net
worth, as computed in accordance with GAAP, of approximately ($11,185,260). Each
quarter during the terms of this Agreement, Borrower's net worth (calculated
quarterly in accordance with GAAP) must increase by at least $210,000.
SECTION 6.24. TERMINATION/DEFAULT OF EQUITY LETTER. Borrower will
notify Lender of all venture capital investors of Borrower (the "VC'S") and
ensure that such VC's agree to be and are added as a venture capital party to
that certain letter agreement dated as of March 5, 1998 and attached hereto as
Exhibit E (the "VC LETTER AGREEMENT") by and among Lender and each of Borrower's
current venture capital investors, including without limitation Oak Investment
Partners, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇, Three Arch Partners and Highland Partners, and
Borrower will notify lender of any modification or termination of any document
(the "VC DOCUMENTS") among Borrower and either any of the VC's or any
combination of VC's on the earlier of (i) one (1) Business Day prior to the
subsequent borrowing under this Loan Agreement or (ii) four (4) Business Days
after any notice of termination or modification thereunder. Borrower will notify
Lender within two (2) Business Days (but at least two (2) Business Days prior to
any subsequent borrowing) upon receiving any such modification or receiving any
written notice of default that would give rise to a termination. Notwithstanding
anything in this Section 6.24 to the contrary, no provision in this Section 6.24
will modify, reduce or otherwise affect Lender's rights hereunder or under any
other Loan Document.
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ARTICLE VII
NEGATIVE COVENANTS
Each entity comprising Borrower covenants and agrees that so long as
Borrower may borrow under this Agreement and until payment in full of the Note
and performance of all other obligations of Borrower under the Loan Documents:
SECTION 7.1. BORROWING. Borrower will not create, incur, assume or
suffer to exist any liability for Borrowed Money except: (i) indebtedness to
Lender; (ii) indebtedness of Borrower secured by mortgages, encumbrances or
liens expressly permitted by Section 7.3 hereof; (iii) accounts payable to trade
creditors and current operating expenses (other than for borrowed money) which
are not aged more than one hundred twenty (120) days from the billing date or
more than thirty (30) days from the due date, in each case incurred in the
ordinary course of business and paid within such time period, unless the same
are being contested in good faith and by appropriate and lawful proceedings, and
Borrower shall have set aside such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower and its independent
accountants; (iv) borrowings incurred in the ordinary course of its business and
not exceeding $10,000.00 in the aggregate outstanding at any one time; (v)
equipment leases in the ordinary course of business, and (vi) borrowings in the
amount of $12,000,000 relating to that certain Senior Subordinated Note and
Preferred Stock Purchase Agreement dated as of July 1, 1998 by and between
Borrower, Capital Resource Lender III, L.P. and CRP Investment Partners III, LLC
(the "CR Debt"). Borrower will not make prepayments on any existing or future
indebtedness for Borrowed Money to any Person (other than Lender, to the extent
permitted by this Agreement or any subsequent agreement between Borrower and
Lender).
SECTION 7.2. JOINT VENTURES. Borrower will not invest directly or
indirectly in any joint venture for any purpose without the prior written notice
to and the prior written consent of Lender, which consent shall not be
unreasonably withheld.
SECTION 7.3. LIENS AND ENCUMBRANCES. Borrower will not create, incur,
assume or suffer to exist any mortgage, pledge, lien or other encumbrance of any
kind (including the charge upon property purchased under a conditional sale or
other title retention agreement) upon, or any security interest in, any of its
Collateral, whether now owned or hereafter acquired, except for Permitted Liens.
SECTION 7.4. MERGER, ACQUISITION, OR SALE OF ASSETS. Borrower will not
enter into any merger or consolidation with or acquire all or substantially all
of the assets of any Person, and will not sell, lease, or otherwise dispose of
any of its assets except in the ordinary course of its business, without the
prior written consent of Lender, which consent shall not be unreasonably
withheld. Borrower agrees that compliance with this Section 7.4 is a material
inducement to Lender's advancing credit under this Agreement and Borrower
further agrees that any breach of the terms of this Section 7.4 shall constitute
fraud.
SECTION 7.5. SALE AND LEASEBACK. Borrower will not, directly or
indirectly, enter into any arrangement whereby Borrower sells or transfers all
or any part of its assets and thereupon
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and within one year thereafter rents or leases the assets so sold or transferred
without the prior written notice to, and the express written consent of, Lender,
which consent may be withheld in Lender's sole discretion.
SECTION 7.6. DIVIDENDS, DISTRIBUTIONS AND MANAGEMENT FEES. Upon notice
from Lender to Borrower of the existence of an Event of Default hereunder,
Borrower will not declare or pay any dividends or other distributions with
respect to, purchase, redeem or otherwise acquire for value any of its
outstanding stock now or hereafter outstanding, or return any capital of its
stockholders, nor shall Borrower pay management fees or fees of a similar nature
to any Person.
SECTION 7.7. LOANS; LONG TERM DEBT AND DEBT SERVICE COVERAGE RATIO.
Borrower will not make loans or advances to any Person, other than (i) trade
credit extended in the ordinary course of its business, (ii) intra company loans
or advances within the entities composing Borrower; and (iii) advances for
business travel and similar temporary advances in the ordinary course of
business to officers, stockholders, directors, and employees. Borrower's
aggregate long term debt, calculated in accordance with GAAP, shall not exceed
(i) $30,000,000 (inclusive of all acquisitions) without the prior written
approval of Lender or (ii) the product of (A) five (5) times (B) Borrower's most
recent six months' trailing EBITDA (measured monthly). At the end of each
calendar month throughout the term of this Agreement, Borrower shall have
maintained a Debt Service Coverage Ratio of at least 1.2:1.0. For purposes of
this covenant, "Debt Service Coverage Ratio" shall mean the ratio of (i) Cash
Flow (defined below) of Borrower for Borrower's most recent six (6) month period
to (ii) Debt Service (defined below) of Borrower for Borrower's most recent six
(6) month period. The Debt Service Coverage Ratio shall be measured on a monthly
basis beginning with the month ending September 30. For purposes of this
covenant, "Cash Flow" shall mean, for any given accounting period, net income
(as determined in accordance with generally accepted accounting principles
applied on a basis consistent with prior periods) plus amortization,
depreciation, interest (excluding interest to Affiliates), and accrued taxes,
less capital expenditures, the cost of which are not financed. For purposes of
this covenant, "Debt Service" shall mean, for any given period, all regularly
scheduled principal and interest payments due under all loans to Lender, all
regularly scheduled principal payments due and owing under the CR Debt ($750,000
per quarter commencing in June, 2001), plus all payments on operating and
capital leases, and any other debt (whether or not permitted pursuant to the
terms of the Loan Documents).
SECTION 7.8. CONTINENT LIABILITIES. Borrower will not assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
SECTION 7.9. SUBSIDIARIES. Borrower will not form any subsidiary, or
make any investment in or any loan in the nature of an investment to, any other
Person in an aggregate amount over $100,000, without the prior written consent
of Lender, which consent shall not be unreasonably withheld.
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SECTION 7.10. COMPLIANCE WITH ERISA. Borrower will not permit with
respect to any Plan covered by Title IV of ERISA any Prohibited Transaction or
any Reportable Event.
SECTION 7.11. CERTIFICATES OF NEED. Borrower will not amend, alter or
suspend or terminate or make provisional in any material way, any certificate of
need or provider number without the prior written consent of Lender, which
consent shall not be unreasonably withheld.
SECTION 7.12. TRANSACTIONS WITH AFFILIATES. Borrower will not enter
into any transaction, including without limitation the purchase, sale, or
exchange of property, or the loaning or giving of funds to any Affiliate or
subsidiary, except in the ordinary course of business and pursuant to the
reasonable requirements of Borrower's business and upon terms substantially the
same and no less favorable to Borrower as it would obtain in a comparable arm's
length transaction with any Person not an Affiliate or subsidiary, and so long
as the transaction is not otherwise prohibited under this Agreement. For
purposes of the foregoing, Lender consents to the transactions described on
Schedule 7.12.
SECTION 7.13. USE OF LENDER'S NAME. Borrower will not use Lender's name
(or the name of any of Lender's affiliates) in connection with any of its
business operations. Borrower may disclose to third parties that Borrower has a
borrowing relationship with Lender. Nothing herein contained in this Agreement
is intended to permit or authorize Borrower to make any contract on behalf of
Lender.
SECTION 7.14. CHANGE IN CAPITAL STRUCTURE. Borrower's capital structure
is set forth in Schedule 4.17. No change in such capital structure shall occur
that would cause a Change in Control without the prior written consent of
Lender.
SECTION 7.15. CONTRACTS AND AGREEMENTS. Borrower will not become or be
a party to any contract or agreement which would breach this Agreement, or
breach any other instrument, agreement, or document to which Borrower is a party
or by which it is or may be bound.
SECTION 7.16. MARGIN STOCK. Borrower will not carry or purchase any
"margin security" within the meaning of Regulations U, G, T or X of the Board of
Governors of the Federal Reserve System.
SECTION 7.17. TRUTH OF STATEMENTS AND CERTIFICATES. Borrower will not
furnish to Lender any certificate or other document that contains any untrue
statement of a material fact or that omits to state a material fact necessary to
make it not misleading in light of the circumstances under which it was
furnished.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. Each of the following (individually, an
"Event of Default" and collectively, the "Events of Default") shall constitute
an event of default hereunder:
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(a) A default in the payment of any installment of principal
of, or interest upon, the Note when due and payable, whether at maturity or
otherwise, or any breach of Section 2.3 of this Agreement, which default or
breach, as applicable, shall have continued unremedied for a period of five (5)
days after written notice thereof from Lender to Borrower;
(b) A default in the payment of any other charges, fees, or
other monetary obligations owing to Lender arising out of or incurred in
connection with this Agreement when such payment is due and payable, which
default shall have continued unremedied for a period of five (5) business days
after written notice from Lender;
(c) A default in the due observance or performance by Borrower
of any other term, covenant or agreement contained in any of the Loan Documents,
which default shall have continued unremedied for a period of ten (10) business
days after written notice of the default from Lender to Borrower;
(d) If any representation or warranty made by Borrower in this
Agreement or in any of the other Loan Documents, any financial statement, or any
statement or representation made in any other certificate, report or opinion
delivered in connection with this Agreement or the other Loan Documents proves
to have been incorrect or misleading in any material respect when made, which
default shall have continued unremedied for a period of ten (10) business days
after written notice from Lender to Borrower;
(e) If any obligation of Borrower (other than its Obligations
under this Agreement) for the payment of Borrowed Money is not paid when due or
within any applicable grace period, or such obligation becomes or is declared to
be due and payable before the expressed maturity of the obligations, or there
shall have occurred an event which, with the giving of notice or lapse of time,
or both, would cause any such obligation to become, or allow any such obligation
to be declared to be, due and payable;
(f) If Borrower makes an assignment for the benefit of
creditors, offers a composition or extension to creditors, or makes or sends
notice of an intended bulk sale of any business or assets now or hereafter
conducted by Borrower;
(g) (i) Borrower files a petition in bankruptcy, (ii) Borrower
is adjudicated insolvent or bankrupt, petitions or applies to any tribunal for
any receiver of or any trustee for itself or any substantial part of its
property, (iii) Borrower commences any proceeding relating to itself under any
reorganization, arrangement, readjustment or debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, (iv) any
such proceeding is commenced against Borrower any such proceeding which remains
undismissed for a period of sixty (60) days, (v) Borrower by any act indicates
its consent to, approval of, or acquiescence in, any such proceeding or the
appointment of any receiver of or any trustee for a Borrower or any substantial
part of its property, or suffers any such receivership or trusteeship to
continue undischarged for a period of sixty (60) days;
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(h) If one or more final judgments against Borrower or
attachments against its property not fully and unconditionally covered by
insurance shall be rendered by a court of record and shall remain unpaid,
unstayed on appeal, undischarged, unbonded and undismissed for a period of ten
(10) days;
(i) A Reportable Event which might constitute grounds for
termination of any Plan covered by Title IV of ERISA or for the appointment by
the appropriate United States District Court of a trustee to administer any such
Plan or for the entry of alien or encumbrance to secure any deficiency, has
occurred and is continuing thirty (30) days after its occurrence, or any such
Plan is terminated, or a trustee is appointed by an appropriate United States
District Court to administer any such Plan, or the Pension Benefit Guaranty
Corporation institutes proceedings to terminate any such Plan or to appoint a
trustee to administer any such Plan, or a lien or encumbrance is entered to
secure any deficiency or claim;
(j) If any outstanding stock of Borrower is sold or otherwise
transferred by the Person owning such stock on the date hereof, such that a
Change in Control of Borrower shall occur, unless there has been compliance with
Section 7.14 of this Agreement;
(k) If there shall occur any uninsured damage to or loss,
theft or destruction of any material portion of the Collateral;
(l) If Borrower ceases any material portion of its business
operations as presently conducted;
(m) If any evidence is received by Lender that Borrower may
have directly or indirectly been engaged in an activity which, in Lender's
reasonable discretion, has a substantial likelihood of resulting in the
forfeiture of any material portion of property of Borrower to any Governmental
Authority, which activity shall have continued unremedied for a period of ten
(10) days after written notice from Lender;
(n) Borrower shall be criminally indicted or convicted under
any law that could lead to a forfeiture of any material portion of Collateral;
(o) There shall occur a material adverse change in the
financial condition or business prospects of Borrower, which change shall have
continued unremedied for a period of ten (10) days after written notice from
Lender; and
(p) If there is a breach of the VC Letter Agreement or any of
the VC Documents of (with respect to the VC Documents, after all applicable cure
periods).
SECTION 8.2. ACCELERATION. Upon the occurrence of any of the foregoing
Events of Default, the Note shall become and be immediately due and payable upon
declaration to that effect delivered by Lender to Borrower; provided that, upon
the happening of any event specified in Section 8.1 (g) hereof, the Note shall
be immediately due and payable without declaration or other notice to Borrower.
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SECTION 8.3. REMEDIES.
(a) Upon the occurrence of and during the continuance of an
Event of Default under this Agreement or the Loan Documents, Lender, in addition
to all other rights, options, and remedies granted to Lender under this
Agreement or at law or in equity, may take any of the following steps (which
list is given by way of example and is not intended to be an exhaustive list of
all such rights and remedies):
(i) Terminate the Loan, whereupon all outstanding Obligations
shall be immediately due and payable,
(ii) Exercise all other rights granted to it under this
Agreement and all rights under the UCC in effect in the applicable
jurisdiction(s) and under any other applicable law; and
(iii) Exercise all rights and remedies under all Loan
Documents now or hereafter in effect, including but not limited to:
(A) The right to take possession of, send notices
regarding, and collect directly the Collateral, with or without judicial
process, and to exercise all rights and remedies available to Lender with
respect to the Collateral under the Uniform Commercial Code in effect in the
jurisdiction(s) in which such Collateral is located;
(B) The right to (by its own means or with judicial
assistance) enter any of Borrower's premises and take possession of the
Collateral, or render it unusable, or dispose of the Collateral on such premises
in compliance with subsection (C) below, without any liability for rent,
storage, utilities, or other sums, and Borrower shall not resist or interfere
with such action;
(C) The right to require Borrower at Borrower's
expense to assemble all or any part of the Collateral and make it available to
Lender at any place designated by Lender; and
(D) The right to reduce the Maximum Loan Amount or to
use the Collateral and/or funds in the Concentration Account in amounts up to
the Maximum Loan Amount for any reason.
(iv) The right to relinquish or abandon any Collateral or any
security interest therein.
(b) Borrower agrees that a notice received by it at least
thirty (30) days before the time of any intended public sale, or the time after
which any private sale or other disposition of the Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower. At any sale or
disposition of Collateral, Lender may (to the extent permitted by applicable
law) purchase all or any part of the Collateral, free from any right
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of redemption by Borrower, which right is hereby waived and released. Borrower
covenants and agrees not to interfere with or impose any obstacle to Lender's
exercise of its rights and remedies with respect to the Collateral.
SECTION 8.4. NATURE OF REMEDIES. Lender shall have the right to proceed
against all or any portion of the Collateral to satisfy the liabilities and
Obligations of Borrower to Lender in any order. All rights and remedies granted
Lender under this Agreement and under any agreement referred to in this
Agreement, or otherwise available at law or in equity, shall be deemed
concurrent and cumulative, and not alternative remedies, and Lender may proceed
with any number of remedies at the same time until the Loans, and all other
existing and future liabilities and obligations of Borrower to Lender, are
satisfied in full. The exercise of any one right or remedy shall not be deemed a
waiver or release of any other right or remedy, and Lender, upon the occurrence
of an Event of Default, may proceed against Borrower, and/or the Collateral, at
any time, under any agreement, with any available remedy and in any order.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES AND TAXES.
(a) Borrower agrees to pay, whether or not the Closing occurs,
a reasonable documentation preparation fee, together with actual audit and
appraisal fees and all other out-of-pocket charges and expenses incurred by
Lender in connection with the negotiation, preparation, legal review and
execution of each of the Loan Documents, including but not limited to UCC and
judgment lien searches and UCC filings and fees for post Closing UCC and
judgment lien searches and other preparation for Closing, provided that such
fees shall not exceed $18,000.00 in the aggregate. In addition, Borrower shall
pay all fees associated with any amendments to the Loan Documents following
Closing. Borrower also agrees to pay all out-of-pocket charges and expenses
incurred by Lender (including the fees and expenses of Lender's counsel) in
connection with the enforcement, protection or preservation of any right or
claim of Lender, the termination of this Agreement, the termination of any liens
of Lender on the Collateral, and the collection of any amounts due under the
Loan Documents. If Lender uses in-house counsel for any of these purposes (i.e,
for any task in connection with the enforcement, protection or preservation of
any right or claim of Lender and the collection of any amounts due under this
Loan Documents), Borrower further agrees that its Obligations under the Loan
Documents include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by Lender for
the work performed.
(b) Borrower shall pay all taxes (other than taxes based upon
or measured by Lender's income or revenues or any personal property tax), if
any, in connection with the issuance of the Note and the recording of the
security documents therefor. The obligations of Borrower under this clause (b)
shall survive the payment of Borrower's indebtedness under this Agreement and
the termination of this Agreement.
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SECTION 9.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Loan Documents constitute the full and entire understanding and agreement among
the parties with regard to their subject matter and supersede all prior written
or oral agreements, understandings, representations and warranties made with
respect thereto. No amendment, supplement or modification of this Agreement nor
any waiver of any provision thereof shall be made except in writing executed by
the party against whom enforcement is sought.
SECTION 9.3. NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party to
this Agreement of any one or more defaults by the other party in the performance
of any of the provisions of this Agreement shall operate or be construed as a
waiver of any future default or defaults, whether of a like or different nature.
No failure or delay on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver of such right, power or
remedy, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise of such right, power or remedy.
The remedies provided for in this Agreement are cumulative and are not exclusive
of any remedies that may be available to any party to this Agreement at law, in
equity or otherwise.
SECTION 9.4. NOTICES. Any notice or other communication required or
permitted under this Agreement shall be in writing and personally delivered,
mailed by registered or certified mail (return receipt requested and postage
prepaid), sent by telecopier (with a confirming copy sent by regular mail), or
sent by prepaid overnight courier service, and addressed to the relevant party
at its address set forth below, or at such other address as such party may, by
written notice, designate as its address for purposes of notice under this
Agreement:
(a) If to Lender, at:
▇▇▇▇▇▇ Healthcare Finance, Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Borrower, at:
Odyssey HealthCare, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, President/CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If mailed, notice shall be deemed to be given five (5) days after being sent, if
sent by personal delivery or telecopier, notice shall be deemed to be given when
delivered, and if sent by prepaid courier, notice shall be deemed to be given on
the next Business Day following deposit with the courier.
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SECTION 9.5. SEVERABILITY. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term is invalid, illegal or unenforceable, Lender may, but is not obligated
to, advance funds to Borrower under this Agreement until the parties to this
Agreement shall amend this Agreement so as to effect the original intent of the
parties as closely as possible in a valid and enforceable manner.
SECTION 9.6. SUCCESSORS AND ASSIGN. This Agreement, the Note, and the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and Lender and their respective successors and assigns. Notwithstanding the
foregoing, Borrower may not assign any of its rights or delegate any of its
obligations under this Agreement without the prior written consent of Lender,
which may be withheld in its sole discretion. Lender may sell, assign, transfer,
or participate any or all of its rights or obligations under this Agreement
without notice to or consent of Borrower.
SECTION 9.7. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.
SECTION 9.8. INTERPRETATION. No provision of this Agreement or any
other Loan Document shall be interpreted or construed against any party because
that party or its legal representative drafted that provision. The titles of the
paragraphs of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and neuter gender as the case may be. The words "herein," "hereof," and
"hereunder" shall be deemed to refer to this entire Agreement, except as the
context otherwise requires.
SECTION 9.9. SURVIVAL OF TERMS. All covenants, agreements,
representations and warranties made in this Agreement, any other Loan Document,
and in any certificates and other instruments delivered in connection with this
Agreement shall be considered to have been relied upon by Lender and shall
survive the making by Lender of the Loans contemplated by this Agreement and the
execution and delivery to Lender of the Note, and shall continue in full force
and effect until all liabilities and obligations of Borrower to Lender are
satisfied in full.
SECTION 9.10. RELEASE OF LENDER. For and in consideration of the Loan,
Borrower, voluntarily, knowingly, unconditionally, and irrevocably, with
specific and express intent, for and on behalf of itself and its agents,
attorneys, heirs, successors, and assigns (collectively the "Releasing Parties")
does hereby fully and completely release, acquit and forever discharge Lender,
and its successors, assigns, heirs, affiliates, subsidiaries, parent companies,
principals, directors, officers, employees, shareholders and agents (hereinafter
called the "Lender Parties"); and any other person, firm, business, corporation,
insurer, or association which may be
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responsible or liable for the acts or omissions of the Lender Parties, or who
may be liable for the injury or damage resulting therefrom (collectively the
"Released Parties"), of and from any and all actions, causes of action, suits,
debts, disputes, damages, claims, obligations, liabilities, costs, expenses and
demands of any kind whatsoever, at law or in equity, whether matured or
unmatured, liquidated or unliquidated, vested or contingent, ▇▇▇▇▇▇ or inchoate,
known or unknown that the Releasing Parties (or any of them) now have (whether
directly or indirectly) against the Released Parties or any of them. The
Borrower acknowledges that the foregoing release is a material inducement to
Lender's decision to extend to Borrower the financial accommodations hereunder
and has been relied upon by Lender in agreeing to make the Loan.
SECTION 9.11. TIME. Whenever Borrower is required to make any payment
or perform any act on a Saturday, Sunday, or a legal holiday under the laws of
the State of Maryland (or other jurisdiction where Borrower is required to make
the payment or perform the act), the payment may be made or the act performed on
the next Business Day. Time is of the essence in Borrower's performance under
this Agreement and all other Loan Documents.
SECTION 9.12. COMMISSIONS. The transaction contemplated by this
Agreement was brought about by Lender and Borrower acting as principals and
without any brokers, agents, or finders being the effective procuring cause.
Borrower represents that it has not committed Lender to the payment of any
brokerage fee, commission, or charge in connection with this transaction. If any
such claim is made on Lender by any broker, finder, or agent or other person,
Borrower will indemnify, defend, and hold Lender harmless from and against the
claim and will defend any action to recover on that claim, at Borrower's cost
and expense, including Lender's counsel fees. Borrower further agrees that until
any such claim or demand is adjudicated in Lender's favor, the amount demanded
will be deemed a liability of Borrower under this Agreement, secured by the
Collateral.
SECTION 9.13. THIRD PARTIES. No rights are intended to be created under
this Agreement or under any other Loan Document for the benefit of any third
party donee, creditor, or incidental beneficiary of Borrower. Nothing contained
in this Agreement shall be construed as a delegation to Lender of Borrower's
duty of performance, including without limitation Borrower's duties under any
account or contract in which Lender has a security interest.
SECTION 9.14. DISCHARGE OF BORROWER'S OBLIGATIONS. Lender, in its sole
discretion, shall have the right at any time, and from time to time, without
prior notice to Borrower if Borrower fails to do so, to: (i) after notice to
Borrower and Borrower's refusal to perform, pay for the performance of any of
Borrower's material obligations under this Agreement; (ii) discharge taxes,
liens, security interests, or other encumbrances at any time levied or placed on
any of the Collateral in violation of this Agreement unless Borrower is in good
faith with due diligence by appropriate proceedings contesting those items; and
(iii) pay for the maintenance and preservation of any of the Collateral.
Expenses and advances shall be added to the Loan, until reimbursed to Lender and
shall be secured by the Collateral. Any such payments and advances by Lender
shall not be construed as a waiver by Lender of an Event of Default.
SECTION 9.15. INFORMATION TO PARTICIPANTS. Lender may divulge to any
participant it may obtain in the Loan, or any portion of the Loan, all
information, and furnish to such
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participant copies of reports, financial statements, certificates, and documents
obtained under any provision of this Agreement or any other Loan Document.
SECTION 9.16. INDEMNITY. Borrower hereby agrees to indemnify and hold
harmless Lender, its partners, officers, agents and employees (collectively,
"Indemnitee") from and against any liability, loss, cost, expense, claim,
damage, suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys' fees and expenses) arising from Borrower's
failure to observe, perform or discharge any of its covenants, obligations,
agreements or duties under this Agreement, or from the breach of any of the
representations or warranties contained in Article IV of this Agreement. In
addition, Borrower shall defend Indemnitee against and save it harmless from all
claims of any Person with respect to the Collateral. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 9.16 shall survive the payment in full of the Obligations and the
termination of this Agreement.
SECTION 9.17. LENDER APPROVALS. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Lender with respect
to any matter that is the subject of this Agreement or the other Loan Documents
may be granted or withheld by Lender in its sole and absolute discretion.
SECTION 9.18. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF MARYLAND, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR THE NOTE IS
COMMENCED BY LENDER IN THE STATE COURTS OF THE STATE OF MARYLAND OR IN THE U.S.
DISTRICT COURT FOR THE DISTRICT OF MARYLAND, BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN
THE STATE OF MARYLAND. ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF
MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS DESCRIBED
IN SECTION 9.4 HEREOF.
SECTION 9.19. WAIVER OF TRIAL BY JURY. BORROWER HEREBY (A) COVENANTS
AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY A JURY,
AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS
SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY BORROWER, AND THIS WAIVER IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. LENDER IS HEREBY AUTHORIZED AND
REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER AND THE PARTIES TO THIS AGREEMENT, SO AS TO SERVE AS CONCLUSIVE
EVIDENCE OF BORROWER'S WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, BORROWER
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER'S
COUNSEL)
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HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL NOT SEEK
TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
SECTION 9.20. CONFESSION OF JUDGMENT. BORROWER AUTHORIZES ANY ATTORNEY
ADMITTED TO PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES OR THE
CLERK OF SUCH COURT TO APPEAR ON BEHALF OF BORROWER IN ANY COURT IN ONE OR MORE
PROCEEDINGS, OR BEFORE ANY CLERK THEREOF OF PROTHONOTARY OR OTHER COURT
OFFICIAL, AND TO CONFESS JUDGMENT AGAINST BORROWER IN FAVOR OF LENDER IN THE
FULL AMOUNT DUE ON THIS AGREEMENT (INCLUDING PRINCIPAL, ACCRUED INTEREST AND ANY
AND ALL CHARGES, FEES AND COSTS) PLUS REASONABLE ATTORNEYS' FEES ALL AS
ENUMERATED UNDER THIS AGREEMENT, PLUS COURT COSTS, ALL WITHOUT PRIOR NOTICE OR
OPPORTUNITY OF BORROWER FOR PRIOR HEARING. BORROWER AGREES AND CONSENTS THAT
VENUE AND JURISDICTION SHALL BE PROPER IN THE CIRCUIT COURT OF ANY COUNTY OF THE
STATE OF MARYLAND OR OF BALTIMORE CITY, MARYLAND, OR IN THE UNITED STATES
DISTRICT COURT FOR THE DISTRICT OF MARYLAND. BORROWER WAIVES THE BENEFIT OF ANY
AND EVERY STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY WAIVED
CONFERRING UPON BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD RIGHTS,
STAY OF EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM THE
ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON A
JUDGMENT. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST
BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, OR BY ANY
IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT
ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS
OFTEN AS LENDER SHALL DEEM NECESSARY, CONVENIENT, OR PROPER.
SECTION 9.21. PRIORITY; OBLIGATIONS COMBINED. Borrower and Lender agree
that the first priority status of Lender's lien on and security interest in the
Collateral shall continue and date back to the date on which the Borrower's
original grant of such lien and security interest was made (i.e., March 5,
1998). The Obligations under the Original Agreement and this Agreement are
hereby combined and shall constitute joint and several obligations of each and
every Borrower.
42
43
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first written above.
LENDER:
▇▇▇▇▇▇ HEALTHCARE FINANCE, INC.
a Delaware corporation
By: [SEAL]
-------------------------------
Name:
Title:
BORROWER:
ODYSSEY HEALTHCARE, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF CENTRAL
INDIANA, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF PENNSYLVANIA, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
44
ODYSSEY HEALTHCARE OF
NEW JERSEY, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF
NORTH TEXAS
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF
PHOENIX, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF
LAS VEGAS, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
45
ODYSSEY HEALTHCARE OF
HOUSTON, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF
NEW ORLEANS, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF
GEORGIA, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
ODYSSEY HEALTHCARE OF
DETROIT, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO
46
ODYSSEY HEALTHCARE OF
BIRMINGHAM, INC.
a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ [SEAL]
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President and CFO