EXHIBIT 10.11
$2,500,000.00
LOAN AND SECURITY AGREEMENT
by and among
MEDICAL ASSET MANAGEMENT, INC.
HEALTHCARE PROFESSIONAL MANAGEMENT, INC.
("Borrower")
and
HCFP FUNDING, INC.
("Lender")
November 12, 1997
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of this 12th
day of November, 1997, by and among MEDICAL ASSET MANAGEMENT, INC., a Delaware
corporation, and HEALTHCARE PROFESSIONAL MANAGEMENT, INC., a Pennsylvania
corporation (collectively, "Borrower"), and HCFP FUNDING, INC., a Delaware
corporation ("Lender").
RECITALS
A. Borrower desires to establish certain financing arrangements with and
borrow funds from Lender, and Lender is willing to establish such arrangements
for and make loans and extensions of credit to Borrower, on the terms and
conditions set forth below.
B. The parties desire to define the terms and conditions of their
relationship and to reduce their agreements to writing.
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 not earned by performance.
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 1.5. BASE RATE. "Base Rate" means a rate of interest equal to two
percent (2%) above the "Prime Rate of Interest".
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 under 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 1.10. 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 a "controlled
group" within the meaning of Section 4001(b) of ERISA.
SECTION 1.15. COST REPORT SETTLEMENT ACCOUNT. "Cost Report Settlement
Account" means an "Account" owed to Borrower by a Medicaid/Medicare Account
Debtor pursuant to any cost report, either interim, filed or audited, as the
context may require.
SECTION 1.16. DEFAULT RATE. "Default Rate" means a rate per annum equal to
five percent (5%) above the then applicable Base Rate.
SECTION 1.17. ERISA. "ERISA" has the meaning set forth in Section 4.12.
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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.
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.
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" has the meaning set forth in the Preamble.
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 therewith, 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" has the meaning set forth in Section 2.3.
SECTION 1.28 A. 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.
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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, 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) liens 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
danger 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
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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 Fleet National Bank of Connecticut, N.A.,
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 Revenue Code.
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; (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, such sale
was not an absolute sale or on consignment or on approval or on a sale-or-return
basis or subject to any other repurchase or return agreement, or such goods have
not been shipped to the Account Debtor or its designee; (f) if the Account
arises from the performance of services, such services have not been actually
been performed or 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; (l) 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 fifty (150) days past their invoice date; (m) fifty
percent (50%) or more of the aggregate unpaid Accounts from any
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individual Account Debtor are not deemed Qualified Accounts hereunder; (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 established by
Lender.
SECTION 1.43. REPORTABLE EVENT. "Reportable Event" means a "reportable
event" as defined in Section 4043(b) of ERISA.
SECTION 1.44. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has the
meaning set forth in Section 2.1(b).
SECTION 1.45. TERM. "Term" has the meaning set forth in Section 2.8.
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 Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00) (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 extensions 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 ability
within the Borrowing Base for advances or extensions of credit shall be made by
Lender in its sole 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
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this Agreement (the "Note"), dated the date hereof, payable to the order of
Lender in accordance with the terms thereof. 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 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 a borrowing base equal to eighty percent
(80%) of Qualified Accounts due and owing from any Medicaid/Medicare, Insurer or
other Account Debtor (the "Borrowing Base").
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 Day 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 due date
in the amount required to pay such interest or other Obligation.
(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.
(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,
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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 account 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 One Arizona, N.A.(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 after it receives payment, it deposits
all collections of Accounts 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. Borrower acknowledges
and agrees that its compliance with the terms of this Section 2.3 is essential,
and that upon its failure to comply with any such terms Lender shall be entitled
to assess a non-compliance fee which shall operate to increase the Base Rate by
two percent (2%) per 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
nine (9) 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 to
Borrower at any time or times for so long as no Event of Default exists.
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SECTION 2.4. FEES.
(a) At Closing, Borrower shall unconditionally pay to Lender a
commitment fee equal to one percent (1%) of the Maximum Loan Amount (the
"Commitment Fee").
(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 one twelfth (1/12th) of one percent (1.0%) 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 fifteen one hundredths of one percent (0.15%) 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.
(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.
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 of any proceeds of any of the Collateral, to the
extent of such proceeds, (ii) the occurrence of an Event of Default in
consequence of which 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; 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 in consequence of
which the Loan and the maturity of the payment of the Obligations are
accelerated, or (iii) the
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termination of this Agreement pursuant to Section 2.8 hereof. 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
hereunder, 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 and for other costs of Borrower
arising in the ordinary course of Borrower's business.
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 hereby would be
usurious under such laws, then notwithstanding any other provision hereof: (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 hereunder 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 herein, 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 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
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two (2) 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 without notice upon or after the occurrence of an Event
of Default.
(c) Upon at least thirty (30) days prior written notice to Lender,
Borrower may terminate this Agreement prior to the second annual anniversary of
the Closing Date, provided that, at the effective date of such termination,
Borrower shall pay 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 liquidated damages for the loss of bargain and
not as a penalty, an amount equal to (i) three percent (3%) of the Maximum Loan
Amount if the effective date of such termination by Borrower is on or prior to
the first annual anniversary of the Closing Date, and (ii) two percent (2%) of
the Maximum Loan Amount if the effective date of such termination by Borrower is
after the first annual anniversary of the Closing Date and prior to the second
annual anniversary of the Closing Date.
(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 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 taken together.
ARTICLE III
COLLATERAL
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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
advanced by Lender to preserve, protect, defend, and enforce its rights
hereunder and in the following property in accordance with the terms of this
Agreement, and (iii) the payment of all 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 any contract rights, chattel paper, documents and instruments
with respect thereto;
(b) All of Borrower's now owned and hereafter acquired or arising
general intangibles of every kind and description pertaining 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, contracts, licenses, formulae, tax and other types of refunds, returned
and unearned insurance premiums, rights and claims under insurance policies, and
computer information, software, records, and data;
(c) All of Borrower's now or hereafter acquired deposit accounts
into which Accounts are deposited, including the Lockbox Account;
(d) All of Borrower's monies and other property of every kind and
nature now or at any time or times hereafter in the possession of or under the
control of Lender or a bailee or Affiliate of Lender; and
(e) 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
12
this Agreement or of a financing statement is sufficient as and may be filed in
lieu of a financing statement; and
(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 hereunder.
SECTION 3.3. COLLATERAL ADMINISTRATION.
(a) All Collateral (except deposit accounts) will at all times be
kept by Borrower at its principal office(s) 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 $50,000.00 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
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) Whether or not an Event of Default has occurred, 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 hereof that Lender has been granted a
first priority lien and security interest in, upon and to all
13
Accounts applicable to such Insurer, and hereby authorizes Lender to send any
and all similar notices to such Insurers by Lender, 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 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. Prior to Closing, and thereafter (as and when
requested by Lender in its sole discretion), Borrower shall obtain and deliver
to Lender the following searches 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) 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 presently 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) 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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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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. 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
thereunder.
SECTION 4.4. BINDING AGREEMENT. This Agreement and all other Loan Documents
constitute, and the Note, when issued and delivered pursuant hereto 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 thereunder will not, violate, conflict with, constitute a default
under, or result in the creation of a lien or encumbrance upon the property of
Borrower 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
15
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, 1996 audited by Ernst & Young, LLP and the unaudited
financial statements of Borrower as of June 30, 1997, 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 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
therein or in the notes thereto. There has been no adverse change in the
business, properties, condition (financial or otherwise) or operations (present
or prospective) of Borrower since June 30, 1997. Borrower's fiscal year ends on
December 31. The federal tax identification number of each entity comprising
Borrower is as described on Schedule 4.7.
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.
Consistent with the foregoing and pursuant to the terms of all management
services agreements and asset purchase agreements with medical practices
applicable to the Accounts being financed pursuant to this Agreement, Borrower
has all right, title and interest to all such presently owned and hereafter
arising Accounts.
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 hereof. All tax liabilities of
Borrower were, as of December 31, 1996 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.
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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 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 hereunder 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) 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 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 and is not a member
of any Controlled Group (as defined in ERISA). 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,
17
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 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.
Schedule 4.15 also lists the owner of record of each such property.
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 present 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.
SECTION 4.17. STOCK OWNERSHIP. The identity of the known significant
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 hereby contains any untrue statement of material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading. There is no fact 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 prior to the date
hereof, 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
18
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.
SECTION 4.21. NAMES. Within five years prior to the date hereof, 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 Account:
(a) It is genuine and in all respects what it purports to be, and is
not evidenced by a judgment;
(b) It arises out of a completed, bona fide sale and delivery of
goods or rendition of 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) It is for a liquidated amount maturing as stated in a duplicate
claim or invoice covering such sale or rendition of services, a copy of which
has been furnished or is available to Lender;
(d) Such Account, and Lender's security interest therein, 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
thereunder 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;
19
(g) To the best of Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor thereunder
which might result in any material adverse change in such Account Debtor's
financial condition or the collectibility of such Account;
(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 as necessary in the generation of such Accounts.
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
and all other Loan Documents required to be executed and delivered at or prior
to Closing (other than the Note, as to which Lender shall receive only one
original), executed by Borrower and any other required Persons, as applicable.
(b) Lender shall have received all searches and good standing
certificates required by Section 3.5.
(c) Borrower shall have complied and shall then be in compliance
with all the terms, covenants and conditions of the Loan Documents.
(d) 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.
(e) The representations and warranties contained in Article IV shall
be true and correct.
(f) Lender shall have received copies of all board of directors
resolutions of Borrower, and other corporate action taken by Borrower to
authorize the execution, delivery and performance of the Loan Documents and the
borrowing of the Loan thereunder, as well as the
20
names and signatures of the officers of Borrower authorized to execute documents
on its behalf in connection herewith, all as also certified as of the date
hereof by Borrower's chief financial officer, and such other papers as Lender
may require.
(g) Lender shall have received copies, certified as true, correct
and complete by a corporate officer of each Borrower, of the articles of
incorporation of each 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.
(h) Lender shall have received a written opinion of counsel for
Borrower, dated the date hereof, in the form of Exhibit C.
(i) Lender shall have received such financial statements, reports,
certifications, and other operational information required to be delivered
hereunder, including without limitation an initial borrowing base certificate
calculating the Borrowing Base.
(j) Lender shall have received the Commitment Fee.
(k) The Lockbox and the Concentration Account shall have been
established.
(l) Lender shall have received a certificate of Borrower's chief
financial officer, dated the Closing Date, certifying that all of the conditions
specified in this Section have been fulfilled.
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 hereunder 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.
21
(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 hereof.
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 hereof (the "Closing") at such place as may be requested by
Lender.
SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing hereunder, or by
making advances under the Loan, Lender does not waive a breach of any
representation or warranty of Borrower hereunder 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
Borrower covenants and agrees that for so long as Borrower may borrow
hereunder and until payment in full of the Note and performance of all other
obligations of Borrower under the Loan Documents:
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 forty-five (45) days of the end of each
calendar month, accompanied by management analysis and actual vs. budget
variance reports; (iv) 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 before the
end of each of Borrower's fiscal years; (v) internally prepared annual financial
statements for Borrower within sixty (60) days after the end of each of
Borrower's fiscal years; (vi) annual audited financial statements for Borrower
prepared by Ernst & Young, LLP, 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; (vii) 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;
(viii) as soon as available, copies of all financial statements and notices
provided by Borrower to all of its stockholders; and (ix) such additional
information, reports or statements as Lender may from time to time request.
Annual financial
22
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.
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 present 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.
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 prior to 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
23
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 satisfactory 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 accountants and officers of
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 needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so 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 $25,000.00 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 thereof and (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
24
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
all of its business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with GAAP.
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 thirty (30) days'
prior written notice to Lender of 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 $25,000.00.
25
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, 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 presently 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 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
(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.
26
SECTION 6.23. NET WORTH. Borrower will not at any time allow its net worth,
as computed in accordance with GAAP, to fall below $ . -----------------
ARTICLE VII
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as Borrower may borrow hereunder
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; and (iv) borrowings incurred in the ordinary course of its business
and not exceeding $10,000.00 in the aggregate outstanding at any one time.
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 express written consent of, Lender, which consent may be withheld in
Lender's sole discretion.
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.
27
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 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. Borrower will not make loans or advances to any Person,
other than (i) trade credit extended in the ordinary course of its business, and
(ii) advances for business travel and similar temporary advances in the ordinary
course of business to officers, stockholders, directors, and employees.
SECTION 7.8. CONTINGENT 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.
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.
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 hereunder. 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
28
may disclose to third parties that Borrower has a borrowing relationship with
Lender. Nothing herein contained is intended to permit or authorize Borrower to
make any contract on behalf of Lender.
SECTION 7.14. CHANGE IN CAPITAL STRUCTURE. There shall occur no
change in Borrower's capital structure as set forth in Schedule 4.17.
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:
(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) 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) days
after written notice from Lender;
29
(d) If any representation or warranty made by Borrower herein 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 herewith or therewith 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) days after written notice from Lender;
(e) If any obligation of Borrower (other than its Obligations
hereunder) 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 prior to the expressed maturity thereof, 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) If Borrower files a petition in bankruptcy, 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, 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, or there is commenced against
Borrower any such proceeding which remains undismissed for a period of sixty
(60) days, or any 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;
(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 a lien 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;
30
(j) If a majority of the outstanding stock of Borrower is sold or
otherwise transferred by the Person owning such stock on the date hereof;
(k) If there shall occur any uninsured damage to or loss, theft or
destruction of any portion of the Collateral;
(l) If Borrower breaches or violates the terms of, or if a default
or an event which could, whether with notice or the passage of time, or both,
constitute a default, occurs under any other existing or future agreement
(related or unrelated) between Borrower and Lender;
(m) Upon the issuance of any execution or distraint process against
Borrower or any of its property or assets;
(n) If Borrower ceases any material portion of its business
operations as presently conducted;
(o) If any indication or evidence is received by Lender that
Borrower may have directly or indirectly been engaged in any type of activity
which, in Lender's discretion, might result in the forfeiture of any property of
Borrower to any Governmental Authority, which default shall have continued
unremedied for a period of ten (10) days after written notice from Lender;
(p) Borrower or any Affiliate of Borrower, shall challenge or
contest, in any action, suit or proceeding, the validity or enforceability of
this Agreement, or any of the other Loan Documents, the legality or the
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Lender;
(q) Borrower shall be criminally indicted or convicted under any law
that could lead to a forfeiture of any Collateral.
(r) There shall occur a material adverse change in the financial
condition or business prospects of Borrower, or if Lender in good ▇▇▇▇▇ ▇▇▇▇▇
itself insecure as a result of acts or events bearing upon the financial
condition of Borrower or the repayment of the Note, which default shall have
continued unremedied for a period of ten (10) days after written notice from
Lender.
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.
31
SECTION 8.3. REMEDIES.
(a) In addition to all other rights, options, and remedies granted
to Lender under this Agreement, upon the occurrence of an Event of Default
Lender may (i) terminate the Loan, whereupon all outstanding Obligations shall
be immediately due and payable, (ii) exercise all other rights granted to it
hereunder and all rights under the Uniform Commercial Code 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 the following rights and remedies (which list is given by way
of example and is not intended to be an exhaustive list of all such rights and
remedies):
(i) 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;
(ii) 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 (b), without any liability for rent, storage,
utilities, or other sums, and Borrower shall not resist or interfere with such
action;
(iii) 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;
(iv) 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; and
(v) The right to relinquish or abandon any Collateral or any
security interest therein.
(b) Borrower agrees that a notice received by it at least five (5)
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 marked 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 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.
41
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 hereunder and under any agreement referred to herein, 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 and execution of each of
the Loan Documents, any amendments to the Loan Documents following Closing, and
preparation for 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 and the collection of any amounts due under the Loan
Documents.
(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 hereunder and the termination of
this Agreement.
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 hereto 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
33
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to any party hereto at law, in equity or
otherwise.
SECTION 9.4. NOTICES. Any notice or other communication required or
permitted hereunder 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 hereunder:
(a) If to Lender, at:
HCFP Funding, Inc.
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Borrower, at:
Medical Asset Management, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Chief Financial Officer
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.
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
34
unenforceable, the parties hereto shall amend this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner.
SECTION 9.6. SUCCESSORS AND ASSIGNS. 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 hereunder 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 hereunder 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 therewith shall be
considered to have been relied upon by Lender and shall survive the making by
Lender of the Loans herein contemplated 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. Borrower releases Lender, its officers,
employees, and agents, of and from any claims for loss or damage resulting from
acts or conduct of any or all of them, unless caused by Lender's recklessness,
gross negligence, or willful misconduct.
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
35
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 hereunder
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) obtain insurance
covering any of the Collateral as required hereunder; (ii) pay for the
performance of any of Borrower's obligations hereunder; (iii) 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
(iv) 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 thereof, all information,
and furnish to such 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 hereunder, or from the breach of any of the representations
or warranties contained in Article IV hereof. 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. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT AND
THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
36
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 9.18. 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 HERETO, 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) HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL NOT SEEK TO
ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
SECTION 9.19. 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 ATTORNEYS' FEES EQUAL TO FIFTEEN PERCENT
(15%) OF THE AMOUNT DUE, 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,
37
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.
38
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
LENDER:
ATTEST: HCFP FUNDING, INC.
a Delaware corporation
By: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ [SEAL]
---------------------------- ---------------------------
Name: Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Title: Vice President
BORROWER:
ATTEST: MEDICAL ASSET MANAGEMENT, INC.
a Delaware corporation
By: /s/ D. ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ [SEAL]
---------------------------- ---------------------------
Name: D. ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: V.P. Title: Chief Financial Officer
ATTEST: HEALTHCARE PROFESSIONAL
MANAGEMENT, INC.
a Pennsylvania corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, M.D. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ [SEAL]
---------------------------- ---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Title: CEO
39
LIST OF EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Lockbox Agreement
Exhibit C - Form of Legal Opinion
40
LIST OF SCHEDULES
Schedule 1.36 - Permitted Liens
Schedule 4.1 - Subsidiaries
Schedule 4.5 - Litigation
Schedule 4.7 - Tax Identification Numbers
Schedule 4.13 - Non-Compliance with Law
Schedule 4.14 - Environmental Matters
Schedule 4.15 - Places of Business
Schedule 4.16 - Licenses
Schedule 4.17 - Stock Ownership
Schedule 4.19 - Borrowings and Guarantees
Schedule 4.21 - Trade Names
Schedule 4.22 - Joint Ventures
Schedule 7.12 - Transactions with Affiliates
41
SCHEDULE 1.36
Permitted Liens
C. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D., P.C. (Colorado)
Gynecology Ltd., P.C. (Colorado)
▇. ▇. ▇▇▇▇▇▇, M.D., P.C. (Colorado)
SCHEDULE 4.1
Subsidiaries
None
SCHEDULE 4.5
Litigation
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ KLUTZ ("KLUTZ") V. HEALTH PROFESSIONAL MANAGEMENT CORP.("HPM")
On or about August 30, 1995, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Klutz filed a civil action
against HPM, Inc. in Allegheny County, Pennsylvania, Court of Common Pleas.
Klutz alleges breach of contract and negligence arising in connection with HPM's
alleged obligation to seek out prospective buyer for the sale of plaintiff's
medical practice. Klutz seeks damages in excess of $25,000.
▇▇▇▇▇▇▇ ▇▇▇▇, M.D., P.C. AND ▇▇▇▇▇▇▇ ▇▇▇▇, M.D. ("▇▇▇▇▇▇▇") V. MEDICAL ASSET
MANAGEMENT, INC. ("MAM"); HEALTHCARE PROFESSIONAL MANAGEMENT ("HPM"); AND ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
On or about September 20, 1996, ▇▇▇▇▇▇▇ ▇▇▇▇, M.D., filed a civil action
against HPM, Inc., MAM, Inc., and ▇▇▇▇▇ ▇▇▇▇▇▇▇ filed in Allegheny County,
Pennsylvania, Court of Common Pleas. ▇▇▇▇▇▇▇ alleges breach of contract,
negligence, and misrepresentation arising in connection with HPM and MAM's
alleged obligation to perform their duty under the contract to detect and/or
report embezzlement of the plaintiffs' funds. ▇▇▇▇▇▇▇ seeks damages in excess of
$25,000, together with interest, costs and attorney fees.
CENTURY CITY PLAZA RADIOLOGY MEDICAL GROUP; ▇▇▇▇ ▇. ▇▇▇▇, M.D.; ▇▇▇▇ ▇. ▇▇▇▇,
M.D., INC.; ▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D.; ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (COLLECTIVELY "CENTURY CITY")
V. MEDICAL ASSET MANAGEMENT, INC. ("MAM")
On or about June 26, 1997, Century City filed this demand for an
arbitration proceeding with the Los Angeles, California office of the American
Arbitration Association based upon an Asset Purchase and Clinic Management
Agreement dated February 1, 1993, between Century City and MAM. In its
arbitration demand against MAM, Century City alleged breach of contract, breach
of fiduciary duty, request for indemnification, and constructive fraud. Century
City has requested compensatory damages in the amount of $516,545, loss of
profits in the amount of $400,000, unspecified attorneys fees, and punitive
damages. One August 1, 1997 MAM filed a response and counterclaim against
Century City denying liability and asserting claims for material
misrepresentation and other causes of action. MAM has requested damages to
indemnify it for physician compensation, operating expenses, and management
fees. In addition, MAM has requested punitive damages, interest, attorneys fees
and costs. The parties are currently engaged in discovery, and based upon
matters discovered therein as well as managements knowledge and understanding of
the relevant facts and circumstances, MAM believes that Century City's claims
are without merit and has made no reserves for such.
MEDICAL ASSET MANAGEMENT, INC. ("MAM") V. ARBOR FAMILY MEDICINE, P.C.; MEDICAL
ACQUISITION CORPORATION; ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇, M.D.; AND ▇▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, M.D., (COLLECTIVELY "ARBOR")
On or about August 15, 1977, MAM filed a demand for arbitration with the
Denver, Colorado office of the American Arbitration Association against Arbor
based upon the March 31, 1996, Asset Purchase Agreement and Management Services
Agreement between MAM and Arbor, in its demand, MAM requests the return of its
monies represented by accounts receivable in the approximate amount of $250,000;
that Arbor repurchase its furniture, fixtures, equipment and supplies in the
approximate amount of $130,000; that Arbor return 90,000 shares of MAM common
stock, that Arbor assume certain liabilities which it is obligated to assume,
and that Arbor repurchase real property in the amount of $360,000, plus interest
and costs. On or about September 1, 1997, Arbor filed an answer and counterclaim
alleging breach of contract and requesting approximately $140,000 in
reimbursement and the return of $80,000 in management fees paid MAM, as well as
interest and costs. MAM believes that Arbor's counterclaims are without merit
and has made no reserves for such.
RENTON FAMILY PRACTICE CENTER ("RENTON") V. MEDICAL ASSET MANAGEMENT, INC.
("MAM")
On or about August 1, 1997, Renton filed an unlawful detainer action in
King County, Washington Superior Court against MAM seeking approximately $13,000
in rent, attorneys fees, interest and costs. MAM, subsequently, consolidated
this action with numerous counterclaims against Renton, and claims against
entities owned or controlled by Renton's general partner, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, M.D.
The matter has been consolidated and calendared for trial in December 1998. MAM
believes it will prevail in its claim and has made no reserves for any
counterclaims of Renton.
MEDICAL ASSET MANAGEMENT, INC. ("MAM") V. ONE CAPITAL CORPORATION; ▇▇▇▇▇▇ ▇. MAM
In these related matters, MAM has filed a civil action against One Capital
Corporation in Maricopa County, Arizona Superior Court and, by way of
counterclaim, in Colorado for, among other things, breach of fiduciary duty,
breach of oral agreement, and misappropriation of trade secrets. (Plaintiff,
Marcus, has filed the action against MAM in Denver County, Colorado Superior
Court, alleging breach of contract. MAM believes Plaintiff's allegations are
without merit. MAM's maximum exposure in the Colorado action is under $40,000
plus plaintiff's attorneys' fees.) In or about 1995, MAM and One Capital
Corporation entered into corporate advisory agreements wherein One Capital
Corporation represented that it would perform certain services for MAM in return
for certain fees, including stock options of MAM. One Capital Corporation has
brought various counterclaims against MAM in response to MAM's complaint. MAM
believes One Capital Corporation's counterclaims are without merit. MAM has
established no contingent reserve for these counterclaims. One Capital
Corporation has asked for specific performance and, in the alternative, damages.
In the event One Capital Corporation prevails in its counterclaims, the
agreement between MAM and One Capital Corporation provides for the sale of a
maximum of 375,000 shares of MAM common
stock to One Capital Corporation at a 40 to 50 percent discount from fair market
value. Counterclaimants have also requested attorneys' fees.
▇▇▇▇▇▇ ▇▇▇▇▇, M.D. ("▇▇▇▇▇") V. MEDICAL ASSET MANAGEMENT, INC. ("MAM")
▇▇▇▇▇ and MAM entered into a settlement agreement, based upon certain
claims by ▇▇▇▇▇, on July 17, 1997. Thereafter, on October 1, 1997, ▇▇▇▇▇ entered
a judgment against MAM in the amount of $181,250. MAM has reserved $182,000 for
the judgment.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("SCHEYER") V. MEDICAL ASSET MANAGEMENT, INC. ("MAM")
In June 1997, Scheyer filed a claim for 10,000 shares of stock, and $80,575
for unpaid compensation with a King County, Washington arbitration association.
Scheyer also alleged unspecified damages for breach of alleged oral agreement,
together with a claim for interest and attorneys' fees. MAM plans to vigorously
defend these claims. MAM has asserted a counterclaim for payment of its
management fee and damages for breach of contract and violation of the
Washington Securities Act. The claims are expected to be submitted to
arbitration. MAM believes Scheyer's claims are without merit and has made no
reserves for such.
▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") V. MEDICAL ASSET MANAGEMENT, INC. ("MAM")
The ▇▇▇▇▇▇▇▇ action was settled on May 23, 1997, based on an action filed
in King County, Washington Superior Court. The material features of the
settlement include payment by MAM of $112,500 upon execution of the agreement
and $75,000 over 24 months, the issuance of 40,461 shares of MAM stock to
various shareholders of Lifestyle Academy, and the assumption of certain
obligations of Lifestyle Academy. The parties executed mutual releases. MAM may
assert a malpractice cause of action against its former counsel to recover some
of its losses in this case.
PICO COMMERCIAL CENTER PROPERTIES, A CALIFORNIA GENERAL PARTNERSHIP ("PICO")
V. MEDICAL ASSET MANAGEMENT, INC. ("MAM")
In this action filed in Los Angeles County, California Superior Court,
Pico alleges breach of contract and damages arising in connection with MAM's
alleged obligation to deliver 112,000 shares of its common stock in exchange for
Pico's conveyance to MAM of its interest in a certain long term hospital lease.
MAM, by way of defense, asserts that Pico did not fulfill certain conditions
precedent to MAM's obligations. Subsequently, the parties agreed upon the basic
terms of a settlement, under which MAM officers, ▇▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇▇
individually, and not MAM, would convey to Pico 40,000 shares of MAM common
stock, restricted in accordance with SEC Rule 144. MAM would use its best
efforts to obtain "piggyback registration rights" for said shares and would pay,
by way of cash or additional stock, any shortfall between the ultimate
liquidated proceeds of the stock and the amount of $6.25 per share. The parties
are
currently engaged in the process of negotiating details of the settlement. MAM
has not established a reserve for this matter.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") V. MEDICAL ASSET MANAGEMENT, INC. ("MAM")
In or about July 1997, the California State Worker's Compensation Appeals
Board issued an Amended Findings and Award in favor of former MAM employee
▇▇▇▇▇▇▇▇ in the approximate amount of $45,000 for indemnity awards and
penalties.
SCHEDULE 4.7
Tax Identification Numbers
Medical Asset Management, Inc. (33-03599760)
Healthcare Professional Management (▇▇-▇▇▇▇▇▇▇)
SCHEDULE 4.13
Non-Compliance with Law
Other than filing with the SEC which MAM is currently in the process of
updating, MAM believes it is not in violation of any statute, rules or
regulation.
SCHEDULE 4.14
Environmental Matters
None
SCHEDULE 4.15
Places of Business
MEDICAL ASSET MANAGEMENT, INC.
▇▇▇▇▇ ▇▇▇▇, Controller
Rocky Mountain Region
CORPORATE ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
---------------- ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Office: (▇▇▇) ▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
CALIFORNIA REGIONAL OFFICE
M&A and CFO
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
OPERATIONS HEADQUARTERS Office: (▇▇▇) ▇▇▇-▇▇▇▇
(888) MAM-T555
Healthcare Professional Management
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MERGERS & ACQUISITIONS
▇▇▇ ▇▇▇▇▇▇
Vice President of Mergers & Acquisitions
Pines Office Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ALASKA CLINICS
FAMILY MEDICAL CLINIC OF SOLDOTNA
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, MD (IM)
FAMILY MEDICAL CLINIC OF SEWARD ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AND
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Manager: ▇▇▇▇ ▇▇▇▇▇▇▇
ARIZONA CLINICS Business: (▇▇▇) ▇▇▇-▇▇▇▇
Back Office: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇)▇▇▇-▇▇▇▇ FAX: (▇▇▇) ▇▇▇-▇▇▇▇
BIRTH & WOMEN'S HEALTH CENTER
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ CARDIOVASCULAR GROUP
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, MD (HEM/ONC)
▇▇▇▇▇ ▇▇▇▇▇▇, MD 9360 No Name Uno, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇▇▇ Gilroy, CA 95020
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PEDIATRIC UROLOGY & MALE INFERTILITY
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THE OB/GYN ASSOCIATES, PC
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
POTOMAC ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
COLORADO CLINICS
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ AND
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AND
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ROCKY MOUNTAIN WOMEN'S HEALTHCARE FLORIDA CLINICS
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ LAUREL OAK MEDICAL ASSOCIATES
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ IDAHO CLINICS
Fairview Medical Clinic, PA
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MISSISSIPPI CLINICS
DESOTO FAMILY PRACTICE
WOODRIDGE WOMEN'S CLINIC, PC (RETIRED) ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
C/O ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
GYN, LTD.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
OHIO CLINICS
PEDIATRIC ALLIANCE
PRIMARY CARE ASSOCIATES, PC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PENNSYLVANIA CLINICS
MANOR OAK
MOUNTAIN SPRINGS MEDICAL ASSOCIATES ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇ ▇▇▇▇▇▇▇'▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ PEDIATRICS
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
COMMUNITY CARE PLUS ▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NORTH HILLS PEDIATRICS
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AND
▇▇▇ ▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NORTHLAND PEDIATRICS CONTEMPORARY WOMEN'S HEALTH CARE
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇ N ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PEDIATRICS SOUTH
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AURORA FOOT & ANKLE
SOUTHWESTERN PEDIATRICS ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ST. CLAIR PEDIATRICS WOODENVILLE DERMATOLOGY CLINIC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WASHINGTON CLINICS
Northwest Foot & Ankle
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 4.16
Licenses
Medical Asset Management, Inc.
Business permits and qualified to do business in the following states:
Alaska, Arizona, California, Colorado, Mississippi, Tennessee, and Washington
Healthcare Professional Management Business permits and
qualified to do business in the following state:
Pennsylvania
SCHEDULE 4.17
Stock Ownership
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 8
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:05
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
--------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ###-##-#### C 2,000
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ -------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ MA 1035 R 108,333
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 108,333
▇▇▇▇▇ A & ▇▇▇▇▇ ▇ ▇▇▇▇ JT TEN MA0937 R 2,000
-------
TOTAL 2,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 0753 C 1,429
▇▇▇▇ ▇▇▇▇▇ ▇▇ -------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇▇▇ J & ▇▇▇▇▇▇▇▇ A MA1004 ###-##-#### C 100
▇▇▇▇▇▇▇▇▇▇ JTTEN -------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ TOTAL 100
JASPER IN 47546
▇▇▇▇▇ ▇▇▇ ▇▇▇▇ MA1076 ###-##-#### C 200
▇▇▇▇ ▇ ▇▇▇ ▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 300
▇▇▇▇ ▇ ▇▇▇ ▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 100
1015 NEVILLE -------
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 200
1827 ALLENBY GREEN -------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 200
JDN PARTNERS LP MA1048 R 50,000
-------
TOTAL 50,000
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 0754 C 1,429
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ JTTEN MA0955 ###-##-#### C 3,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 3,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 11
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:52
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ MA0961 R 25,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇, MA, RPT, --------
INC, PS TOTAL 25,000
▇▇▇▇ ▇▇▇▇▇ MA1085 R 14,286
---------
TOTAL 14,286
▇▇▇▇▇ ▇ ▇▇▇▇ 0761 C 1,429
▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇ ---------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇▇ S & ▇▇▇▇▇▇ ▇ ▇▇▇▇ JTTEN MA0965 R 11,300
---------
TOTAL 11,300
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇ MA0951 ▇▇-▇▇▇▇▇▇▇ C 200
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ C 2,000
▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,000
▇▇▇▇▇ ▇▇▇▇▇▇ MA1084 R 14,286
---------
TOTAL 14,286
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 200
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇ ---------
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 200
▇▇▇▇▇▇ ▇▇▇▇▇▇ 0764 C 1,429
▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇ ---------
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇▇ NEIUWENDORP 0810 ###-##-#### C 100
▇▇▇ ▇ ▇▇▇ ▇▇▇ ---------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ R 64,200
---------
TOTAL 64,200
OB-GYN ASSOCIATES PC MA1015 ▇▇-▇▇▇▇▇▇▇ R 146,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 146,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 12
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:53
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
ODESSA MANAGEMENT 0767 C 215,026
2ND FLOOR CITY BANK BUILD ---------
FREEPORT BAHAMAS TOTAL 215,026
PACIFIC INTER SECURITIES INC 0769 C 38,606
▇▇▇▇-▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇ ---------
PO BOX 10015 TOTAL 38,606
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
GEORGIA PACIFIC SEC. 0814 C 2,858
STE 1600 TWO BENTALL CENTRE ---------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ TOTAL 2,858
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
MR & ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ MA0941 R 2,000
---------
TOTAL 2,000
▇▇▇▇▇▇ A & ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ JTTEN MA0970 R 2,000
---------
TOTAL 2,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ TRUSTEE MA1062 R 5,000
UA DTD 5-12-88 FBO ▇▇▇▇▇▇ S ---------
▇▇▇▇▇▇▇
TOTAL 5,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ TRUSTEE MA1070 R 15,000
UA DTD 6-14-78 FBO ▇▇▇▇▇▇▇ W ---------
▇▇▇▇▇▇▇
TOTAL 15,000
▇▇▇▇▇ ▇▇▇▇▇ 0803 R 5,000
---------
TOTAL 5,000
PHILADELPHIA DEP 0771 C 396,754
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 396,754
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ D MA1088 ###-##-#### C 155
PODOBNIK JTTEN
▇▇▇ ▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 130
▇▇▇ ▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 130
▇▇▇▇▇ ▇▇▇▇▇ 0792 R 2,000
---------
2,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 13
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:54
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
PONTE VEDRE PARTNERS LTD MA1058 R 150,000
---------
TOTAL 150,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇▇▇▇▇▇▇ C 200
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 200
PRISM PARTNERS I MA1045 R 50,000
---------
TOTAL 50,000
PYRAMID PARTNERS LP MA1069 R 75,000
---------
TOTAL 75,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ MA0912 ###-##-#### C 150
BOX 593 ---------
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇▇▇ R 5,146,094
JTTEN
---------
TOTAL 5,146,094
▇▇▇▇▇▇▇ ▇ & ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 15,800
COM PROP
---------
15,800
REGENT CAPITAL PARTNERS MA1053 R 200,000
---------
TOTAL 200,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ 0773 C 2,002
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ---------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,002
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0774 C 11,559
---------
TOTAL 11,559
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇ R 6,250
---------
TOTAL 6,250
▇▇▇▇▇ ▇ ▇▇▇▇ MA1068 R 6,250
---------
TOTAL 6,250
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 14
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:55
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇ & ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 4,000
JTTEN
BOX 828 ---------
JASPER IN 47546 TOTAL 4,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 0775 C 2,858
▇▇▇▇ ▇ ▇▇▇▇▇ ▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
▇▇▇▇▇▇▇ ▇ & ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 200
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ---------
JASPER IN 47546 TOTAL ▇▇▇
▇▇▇▇▇▇▇ ▇ & ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 5,000
CO TRUST UTA 5/24/93 ---------
TOTAL 5,000
▇▇▇▇▇▇ W & ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ JTTEN MA1014 C 1,000
▇▇▇ ▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ F MA0968 C 1,000
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ---------
JASPER IN 47546 TOTAL 1,000
▇▇▇▇▇ ▇▇▇▇ 0777 R 2,312
---------
TOTAL 2,312
THERON & ▇▇▇▇▇ ▇▇▇▇▇▇▇ JTTEN MA0930 ###-##-#### C 700
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ---------
JASPER IN 47546 TOTAL 700
▇▇▇▇▇▇▇ T & ▇▇▇▇▇ ▇ ▇▇▇▇▇ MA0933 ###-##-#### C 16,500
▇▇▇▇ ▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 16,500
▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇ MA1001 C 3,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ---------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 3,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ MA0940 R 8,000
---------
TOTAL 8,000
SHELL PENSIONS TRUST LTD MA1054 R 150,000
---------
TOTAL 150,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 15
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:56
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇ H SKILMAN CUST ▇▇▇▇▇▇ J MA0949 ###-##-#### C 475
SKILMAN
▇▇▇▇ ▇ ▇▇▇ ▇▇▇ --------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇ ▇ & ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ###-##-#### C 100
▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ---------
JASPER IN 47546 TOTAL 100
DENIS E & ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ JT TEN MA0922 ###-##-#### R 558
1609 2ND ST ---------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ C 1,000
▇▇ ▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 108,333
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 108,333
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ MA0980 R 48,800
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ---------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ TOTAL 48,800
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ MD MA1083 R 14,304
---------
TOTAL 14,304
SPRING POINT PARTNERS LP MA1046 R 50,000
---------
TOTAL 50,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 500
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ---------
JASPER IN 47546 TOTAL ▇▇▇
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 3,000
BOX 8006 ---------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 3,000
▇▇▇▇▇▇▇ R & ROYAL ▇▇▇▇▇▇▇▇ ▇▇ TEN MA0907 C 1,400
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ #A-104 ---------
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,400
▇▇▇▇▇▇ PARTNERS LP MA1059 R 250,000
---------
TOTAL 250,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 16
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:58
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇ B & ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ JTTEN MA1081 R 10,625
---------
TOTAL 10,625
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### R 558
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇▇ ▇ & ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 300
JTTEN
▇▇▇ ▇ ▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ R 7,500
---------
TOTAL 7,500
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ MA1056 R 5,600
---------
TOTAL 5,600
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ R 1,000
---------
TOTAL 1,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇ 0779 R 2,312
---------
TOTAL 2,312
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ MA0985 R 4,000
---------
TOTAL 4,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ C 150,000
INC PROFIT SHARING TR ---------
TOTAL 150,000
THE TRAVELERS INDEMNITY COMPANY MA1057 R 650,000
---------
TOTAL 650,000
▇▇▇▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇▇▇▇, MD MA1091 R 22,500
---------
TOTAL ▇▇,▇▇▇
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### R 558
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 558
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 17
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:59
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇▇-VISION INC MA1052 R 15,625
--------
TOTAL 15,625
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0800 R 224,035
--------
TOTAL 224,035
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ MA1011 ###-##-#### C 700
6730 ▇▇▇▇▇ FAIRY --------
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 700
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ 0783 C 1,429
▇▇▇▇ ▇ ▇▇▇▇ ▇ --------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇ ▇▇▇▇▇▇ MA0972 ▇▇-▇▇▇▇▇▇▇ C 1,000
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ --------
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇▇▇▇ E & ▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 0815 ###-##-#### C 100
BOX 631 --------
JASPER IN 47546 TOTAL 100
▇▇▇▇▇▇ ▇▇▇▇ 0801 R 11,659
--------
TOTAL 11,659
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 0784 C 1,429
▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇ --------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇ ▇▇▇▇ 0796 R 2,000
--------
TOTAL 2,000
▇▇▇▇▇▇ ▇▇▇▇▇▇ MA1016 ###-##-#### R 15,125
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇#▇▇▇ --------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 15,125
▇▇▇▇▇▇ ▇ ▇▇▇▇ CUST ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 1,050
▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇ --------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,050
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 18
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:48:10
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 1,050
▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,050
▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 25
▇▇▇▇ ▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇
▇▇▇▇▇ ▇ & ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ C 4,000
JTTEN
▇▇▇▇ ▇ ▇▇▇ ▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 4,000
▇▇▇▇▇ ▇ ▇▇▇▇ MA1071 R 6,250
-------
TOTAL 6,250
▇▇▇▇ ▇ ▇▇▇▇▇▇▇ MA1072 R 6,250
-------
TOTAL 6,250
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ MA1002 C 1,000
▇▇ ▇▇▇ ▇▇▇ -------
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ & ▇▇▇▇ ▇ ▇▇▇▇▇ MA0925 R 2,000
TRUSTEES LIVING TRUST DATED -------
2/8/95
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ TOTAL 2,000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ MA0944 R 2,000
-------
TOTAL 2,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 3,500
-------
TOTAL 3,500
▇▇▇▇▇▇ E & ▇▇▇▇▇▇▇▇ ▇▇▇▇ 0798 R 2,000
-------
TOTAL 2,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 19
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:48:10
REPORT SELECTION CRITERIA
--------------------------
CLASS : Both
SERIES : All
MIN. SHARES : 1
STATE : All
ENTITY : All
COMMON SERIES C SHARES SHAREHOLDERS
--------------- ---------------------------------------
This Criteria 3,132,670 113
All Other 0 0
---------------------------------------
3,132,670 113
COMMON SERIES R SHARES SHAREHOLDERS
--------------- ---------------------------------------
This Criteria 9,941,932 101
All Other 0 0
---------------------------------------
TOTALS 9,941,932 101
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 1
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:39:58
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-----------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ MA0997 C 100
▇▇▇▇ ▇▇▇▇▇ ▇▇ ------
▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 100
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 0789 R 2,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ 0727 C 2,858
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 0728 C 2,858
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. ------
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
▇▇▇ ▇▇▇▇▇▇ 0729 C 2,858
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ------
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
ASSOCIATED CAPITAL LP MA1047 R 237,500
------
237,500
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ MA1033 R 108,333
-------
108,333
MR & ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ MA0945 R 2,000
-------
2,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ 0790 R 2,000
-------
TOTAL 2,000
▇▇▇▇ ▇▇▇▇▇ MA0979 R 2,100
-------
TOTAL 2,100
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 0730 C 1,429
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ -------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
BBR CAPITAL LIMITED MA0973 C 175,000
-------
TOTAL 175,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 3
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:00
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ IRREVOCABLE TRUST MA0991 R 50,000
---------
TOTAL 50,000
J ▇▇▇▇▇▇▇ BROTHERS MA0992 R 1,000
---------
TOTAL 1,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ MA1029 R 55,483
▇▇▇▇ ▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 55,483
▇▇▇▇ CALLICCHIO 0734 C 500
▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 500
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 0736 R 1,131,096
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,131,096
▇▇▇▇ ▇▇▇▇▇▇▇ 0805 R 2,000
---------
TOTAL 2,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 0737 R 2,312
---------
TOTAL 2,312
ALEX E & ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ JTTEN MA1009 ###-##-#### C 500
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ---------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 500
CEDE & CO 0780 C 1,996,034
▇▇ ▇▇▇ ▇▇▇ -----------
NY TOTAL 1,996,034
▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 0740 C 2,858
▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇ -----------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
▇▇▇▇▇▇ ▇▇▇▇▇▇ 0741 C 2,858
▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ -----------
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 0742 C 2,858
▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ -----------
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 4
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:01
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
-------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 0743 C 2,858
▇▇▇▇ ▇ ▇▇▇ ▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,858
▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇, MD MA1090 R 22,500
-------
TOTAL 22,500
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ TRUST UTA MA1038 R 4,000
12/25/94
-------
TOTAL 4,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ 0744 C 1,429
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇ -------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇▇▇ ▇ ▇▇▇▇ TTEE ▇▇▇▇▇▇▇ ▇▇▇▇ MA1017 ▇▇-▇▇▇▇▇▇▇ C 500
& ASS
▇▇▇▇▇▇ SHARING TRUST -------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 0745 C 1,429
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ -------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ MA1003 C 200
JTTEN
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ -------
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 10
▇▇▇▇ ▇ ▇▇▇▇▇▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 41,000
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ -------
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 41,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ MD PC MA0969 R 3,000
-------
TOTAL 3,000
▇▇▇▇▇ CAPITAL LP MA0983 R 65,000
-------
TOTAL 65,000
▇▇▇▇▇▇ J DEER JR 0791 R 4,000
-------
TOTAL 4,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 5
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:02
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 1,000
5685 US 40 -------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇▇▇▇ R DXLEY II MA0996 C 200
GENERAL DELIVERY -------
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 200
▇▇▇▇▇ LIMITED PARTNERSHIP MA1066 R 15,000
-------
TOTAL 15,000
H ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MA0981 R 29,000
-------
TOTAL 29,000
▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ 0746 R 800
▇▇ ▇▇▇ ▇▇▇ -------
FERDINAND IN 47532 TOTAL ▇▇▇
▇▇▇▇▇▇ ▇ & ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 10,015
JTTEN
-------
TOTAL 10,015
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0825 R 2,000
-------
TOTAL 2,000
▇▇▇▇ T & ▇▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ JT MA0927 ###-##-#### C 200
TEN -------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ A & ▇▇▇▇▇ ▇ ▇▇▇▇ JTTEN MA0978 C 8,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ -------
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 8,000
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇ UTA FEB 21 0794 R 2,000
1994 -------
TOTAL 2,000
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ R 100,000
TRUSTEES
UTA DATED 3/4/96 -------
TOTAL 100,000
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ 0747 C 1,429
▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 6
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:03
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 2,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ -------
▇▇ ▇▇ ▇▇▇▇▇ TOTAL 2,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 20,000
-------
TOTAL 20,000
▇▇▇▇▇ ▇▇▇▇▇▇ MA1094 R 10,000
-------
TOTAL 10,000
▇▇▇▇ ▇▇▇▇▇▇▇ MA1063 R 6,250
-------
TOTAL 6,250
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇ & ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 2,000
JTTEN
-------
TOTAL 2,000
▇▇▇▇▇▇ L &HELEN M ▇▇▇▇▇▇▇ JTTEN MA1043 ###-##-#### C 150
▇▇ ▇▇▇ ▇▇ -------
IRELAND IN 47545 TOTAL 150
▇▇▇▇▇ ▇▇▇▇▇▇▇ 0806 C 4,624
-------
TOTAL 4,624
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 0795 R 2,000
-------
TOTAL 2,000
GLOBAL SECURITIES CORP 0748 C 8,000
▇▇ ▇▇▇ ▇▇▇▇▇ ROYAL TOWER -------
▇▇▇▇ - ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ST TOTAL 8,000
VAN ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 200
-------
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ TOTAL ▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
BARNEY & ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 1,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ -------
▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇ ▇ ▇▇▇▇▇ MA1082 ###-##-#### C 200
625 PAXINOSA AVE -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 200
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 7
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:04
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ MA1032 R 108,333
-------
TOTAL 108,333
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ MA0932 ###-##-#### C 200
▇▇▇ ▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇ ▇ & ▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇ C 1,000
RFD 1 BOX 247 -------
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,000
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ C 1,429
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 5,779
-------
TOTAL 5,779
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 0804 R 16,000
-------
TOTAL 16,000
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 0812 C 1,500
▇▇▇ ▇ ▇▇▇▇ ▇▇ -------
▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,500
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇▇ MA1024 ###-##-#### C 300
BOX 421 -------
JASPER IN 47546 TOTAL 300
THE HEART LAB ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ R 23,559
VALLEY INC -------
PROFIT SHARING PLAN FBO
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ TOTAL 23,559
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ MA0935 ###-##-#### C 100
▇▇▇ ▇▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 100
▇▇▇▇▇ ▇▇▇▇▇▇ 0751 C 1,429
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇ ▇▇▇▇▇▇▇ MA0943 R 7,400
▇▇▇▇▇▇ ▇▇▇▇▇▇ & CO -------
TOTAL 7,400
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 9
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:40:07
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
------------------------------------------------------------------------------------------------
BANK OF NEWPORT AS CUST MA0936 R 4,000
FBO: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ -------
TOTAL 4,000
ORANGE NAT BK CUST FBO: MA0971 R 2,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ BPS:55931888a11 -------
TOTAL 2,000
▇▇▇▇▇▇ CAPITAL PARTNERS LP MA1060 R 2,525
-------
TOTAL 2,525
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MA1050 R 1,750
-------
TOTAL 1,750
▇▇▇▇▇ ▇▇▇▇▇ 0757 R 2,312
-------
TOTAL 2,312
▇▇▇▇ & ▇▇▇▇▇▇▇ ▇▇▇▇▇ 0758 C 500
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 314932-3925 C 400
▇▇▇▇ ▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ C 300
BOX 193 -------
DUBOIS IN 47527 TOTAL 300
▇▇▇▇▇ j & ▇▇▇▇▇ ▇ ▇▇▇▇▇ JTTEN MA1079 ###-##-#### C 500
4261 S170 E -------
HUNTINGBURG IN 47542 TOTAL 500
▇▇▇▇▇▇▇ R & ▇▇▇▇▇▇ ▇ ▇▇▇▇▇ JTTEN MA0903 C 1,000
▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇ -------
HUNTINGBURG IN 47542 TOTAL 1,000
HOPE & ▇▇▇▇ ▇▇▇▇▇ MA0999 C 190
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ -------
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL ▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ R 10,000
-------
TOTAL 10,000
MEDICAL ASSET MANAGEMENT INC SHAREHOLDER LIST PAGE 10
AS OF 06/30/96 FORM: 10A
DATE: 07/10/97
TIME: 12:44:51
REGISTRATION ACCOUNT NO. TAXPAYER ID SERIES SHARES
--------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ AND
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ MA1061 R 6,250
-------
TOTAL 6,250
▇▇▇ ▇▇▇▇▇▇▇ MA1064 R 6,250
-------
TOTAL 6,250
▇▇▇▇▇ ▇▇▇▇▇▇▇ MA1065 R 6,250
-------
TOTAL 6,250
▇▇▇▇ ▇ ▇▇▇▇▇ MA1008 ###-##-#### C 200
1321 BRIARCLIFF -------
JASPER IN 47546 TOTAL ▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 1,130
▇▇▇▇▇▇ ▇ ▇▇▇▇▇ -------
1321 BRIARCLIFF TOTAL 1,130
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇ 0821 ###-##-#### C 4,000
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 4,000
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇ A MA0906 ###-##-#### C 600
HUPER JTTEN
1393 ▇▇▇▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 600
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇ 0760 C 1,429
▇▇▇▇ ▇ ▇▇▇▇▇ ▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 1,429
▇▇▇▇▇▇ ▇▇▇ & ▇▇▇▇ ▇ ▇▇▇ ▇▇▇▇▇▇ R 3,500
-------
TOTAL 3,500
▇▇▇▇▇▇▇ W & ▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ###-##-#### C 200
JTTEN
BOX 121 -------
IRELAND IN 47545 TOTAL ▇▇▇
▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ###-##-#### C 500
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ -------
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ TOTAL 500
SCHEDULE 4.19
Borrowings & Guarantees
Medical Asset Management, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
4. ACQUISITIONS (CONTINUED)
The unaudited pro forma information presented below is for illustrative
information only and is not necessarily indicative of results which would have
been achieved or results which may be achieved in the future:
1996 1995
(Unaudited) (Uaudited)
----------- ---------
Revenue $12,608,758 $14,833,235
Net loss (5,516,496) (1,030,025)
Net loss per share (.42) (.10)
5. PROFIT SHARING PLAN
During 1996, the Company implemented a 401(k) profit sharing plan (the Plan).
Substantially all employees are eligible to participate in the Plan once they
have reached the age of 21 and completed one year of service with the Company,
as defined. Participants may contribute a percentage of their compensation to
the Plan, but not in excess of the maximum allowed by law. The Plan also
provides for matching and other additional contributions by the Company at its
discretion. No discretionary contributions were made by the Company in 1996.
6. DEBT
RELATED PARTY DEBT
Related party debt in the amount of $9,830 and $213,361 at December 31, 1996 and
1995, respectively, consists of demand notes payable including interest at 8% to
certain officers of the Company.
LINE OF CREDIT AND NOTES PAYABLE
At December 31, 1996, the Company has $2.5 million available under a line of
credit with a bank. The amount outstanding under the line was $1,264,351 at
December 31, 1996 at 4.9%. Upon maturity on May 30, 1997, this note was extended
to May 29, 1998 at 6.72%. Amounts are available under this line only to the
extent the Company has certificates of deposit to secure the balance (see Note
2). At December 31, 1996, $1,235,649 remained available for use under the line.
On September 3, 1997, all amounts outstanding under the line were repaid.
18
Medical Asset Management, Inc. and Subsidiary
Notes to Consolidated Financial Statements (continued)
6. DEBT (CONTINUED)
LINE OF CREDIT AND NOTES PAYABLE (CONTINUED)
At December 31, 1996, the Company had four notes payable totaling $301,498 due
upon demand including interest at 10%. On July 21, 1997, the total amount due
under these notes on that date of $317,636 was forgiven. This forgiveness will
be recognized in the Company's financial statements in the quarter ended
September 30, 1997. The Company also has $141,020 of demand notes payable at
interest rates ranging from 8% to 10% due in 1997.
At December 31, 1995, the Company had $936,766 of demand notes at interest rates
ranging from 8% to 10%. In August 1996, $263,193 of the 1995 balance plus
$12,260 of additional interest accrued in 1996 was converted into 47,565 shares
of common stock. Additionally, $515,875 of the 1995 balance was forgiven in
conjunction with the termination of certain management agreements in 1996 (see
Note 3).
LONG-TERM DEBT
Long-term debt consists of the following:
DECEMBER 31
1996 1995
--------------------------
Notes payable to various individuals in $1,511,190 $391,606
conjunction with asset acquisitions,
interest at 10%, maturing on various
dates in 1996 and 1997, with all unpaid
principal and accrued interest due at
maturity date.
Mortgage payable to a bank, 300,513 -
collateralized by a building, with a net
book value of $510,000 interest at 10%
with monthly payments of $3,270 to 2011
Unsecured note payable to a finance 500,000 -
company with interest at 7.9%, and
monthly payments of $15,550 to 1999
Note payable to a computer software 737,500 -
vendor, interest at 10%, $600,000 due in
1998, remainder in 1999, collateralized
by software licenses with a net book
value of $1,237,604
Capital lease obligations, varying 534,734 175,241
interest rates not exceeding 26.5%, with
various due dates through 2001 and
collateraliized by equipment
Other 110,350 37,898
------- ------
3,694,287 604,745
1,393,399 21,898
Less current portion --------- ------
$2,300,888 $582,847
========== ========
19
6. DEBT (CONTINUED)
LONG-TERM DEBT (CONTINUED)
Maturities of long-term debt, including capital lease obligations, as of
December 31, 1996 are as follows:
1997 $1,393,399
1998 1,526,000
1999 426,500
2000 96,000
2001 41,000
Thereafter 211,388
-------
$3,694,287
==========
CONVERTIBLE SUBORDINATED DEBT
During 1995, the Company issued $762,000 in Series B Convertible Redeemable
Secured Subordinated Debentures (convertible debentures) which are convertible
into common stock at $5 per share. Principal and accrued interest at December
31, 1995 was $808,095. During 1996, the holders of $718,000 of the convertible
debentures converted the convertible debentures into 143,600 shares of common
stock. The remaining $44,000 of convertible debentures were redeemed in cash.
In 1995, in conjunction with an acquisition, the Company entered into an
agreement to issue to a physician 8% convertible debentures not to exceed
$450,000, which will mature and be due for payment to the physician in 1999.
These debentures are convertible into common stock upon maturity at a rate of
80% of the then current market price at the time of maturity but not less than
$5 per share. At December 31, 1996 and 1995, $125,438 and $54,810, respectively
of debentures (including interest) were outstanding.
7. EQUITY
PREFERRED STOCK
In 1994, the Company issued 3,000,000 shares of Class A preferred stock which
are convertible into shares of common stock. In July 1996, 750,000 shares of
common stock were issued to the original holder of the Class A preferred
stock pursuant to the agreed conversion terms, leaving a balance of 2,250,000
shares of Class A preferred stock. In order to conform the Company's
SCHEDULE 4.21
Trade Names
None
SCHEDULE 4.22
Joint Ventures
None
SCHEDULE 7.12
Transactions with Affiliates
None