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LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of October 16, 1998, by and
among ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Trustee, or her successor in Trust of the ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ Revocable Trust dated August 15, 1995, (the "Lender") and the
Borrower described below.
In consideration of the Loan or Loans described below and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the Lender and the Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with respect
thereto:
A. Borrower: Medical Technology Systems, Inc.
B. Borrower's Address:
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C. Hazardous Materials. Hazardous Materials include all materials
defined as hazardous materials or substances under any local, state or
federal environmental laws, rules or regulations, and petroleum, petroleum
products, oil and asbestos.
D. Loan. Any loan described in Section 2 hereof and any subsequent
loan which states that it is subject to this Loan Agreement.
E. Loan Documents. Loan Documents means this Loan Agreement and any
and all promissory notes executed by the Borrower in favor of Lender and
all other documents, instruments (including, without limitation, warrants),
guarantees, certificates and agreements executed and/or delivered by the
Borrower in connection with the Loan.
F. Accounting Terms. All accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from
time to time, consistently applied, with respect to the financial
statements referenced in Section 3.H. hereof.
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2. LOANS.
A. Loan. The Lender hereby agrees to make a term loan to the Borrower
in the principal amount of $200,000.00. The obligation to repay the loan is
evidenced by a promissory note of even date herewith (the promissory note
together with any and all renewals, extensions or rearrangements thereof
being hereafter collectively referred to as the "Note") having a maturity
date, repayment terms and interest rate as set forth in the Note.
B. Use of Proceeds. The Borrower agrees that the proceeds of the Loan
shall be used solely for working capital purposes and shall not be used to
satisfy any obligations of any Borrower other than obligations incurred in
the normal course of business of the Borrower.
C. Extension of Loan. The maturity of the Note shall be automatically
extended from June 1, 1999 until September 1, 1999 provided that: (a) no
defaults exist under this Agreement; and (b) that the Loan is not subject
to any setoff, defense or counterclaim by the Borrower.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER. The Borrower hereby
represents and warrants to the Lender as follows:
A. Good Standing. The Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the state of its
respective incorporation and has the power and authority to own its
property and to carry on its business in each jurisdiction in which the
Borrower does business.
B. Authority and Compliance. The Borrower has full power and authority
to execute and deliver the Loan Documents and to incur and perform the
obligations provided for therein, all of which have been duly authorized by
all proper and necessary action of the appropriate governing body of the
Borrower. No consent or approval of any public authority or other third
party is required as a condition to the validity of any Loan Document, and
the Borrower is in compliance with all laws and regulatory requirements to
which it is subject.
C. Binding Agreement. This Agreement and the other Loan Documents
executed by the Borrower constitute valid and legally binding obligations
of the Borrower, enforceable in accordance with their terms.
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D. Litigation. There is no proceeding involving the Borrower pending
or, to the knowledge of the Borrower, threatened before any court or
governmental authority, agency or arbitration authority, except as
disclosed to the Lender in writing and acknowledged by the Lender prior to
the date of this Agreement.
E. No Conflicting Agreements. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization, power or authority of the Borrower and no provision of any
existing agreement, mortgage, indenture or contract binding on the Borrower
or affecting its respective properties, which would conflict with or in any
way prevent the execution, delivery or carrying out of the terms of this
Agreement and the other Loan Documents.
F. Taxes. All taxes and assessments due and payable by the Borrower
have been paid or are being contested in good faith by appropriate
proceedings and the Borrower has filed all tax returns which it is required
to file.
G. Financial Statements. The financial statements of the Borrower
heretofore delivered to the Lender have been prepared in accordance with
GAAP, applied on a consistent basis throughout the period involved, and
fairly present the Borrower's financial condition as of the date or dates
thereof. All factual information furnished by the Borrower to the Lender in
connection with this Agreement and the other Loan Documents is and will be
accurate and complete on the date when such information is delivered to the
Lender and is not and will not be incomplete by the omission of any
material fact necessary to make such information not misleading.
H. Place of Business. The Borrower's primary executive office is
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
I. Environmental. The conduct of the Borrower's business operations
and the condition of the Borrower's property does not and will not violate
any federal laws, rules or ordinances for environmental protection,
regulations of the Environmental Protection Agency, any applicable local or
state law, rule, regulation or rule of common law or any judicial
interpretation thereof relating primarily to the environment or Hazardous
Materials.
J. Continuation of Representations and Warranties. All representations
and warranties made under this Agreement shall be deemed to be made at and
as of the date hereof and at and as of the date of any advance under any
Loan.
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4. REPRESENTATIONS AND WARRANTIES OF LENDER. The Lender hereby represents
and warrants to the Borrower that the Lender: (a) is an "accredited investor,"
as that term is defined in Exhibit "A" to this Agreement, (b) has such knowledge
and experience in financial and business matters rendering the Lender capable of
evaluating the merits and risks of an investment in securities of the Company (a
"sophisticated investor"), or (c) is not an accredited or sophisticated
investor, but has appointed a "purchaser representative," as that term is
defined in Exhibit "A," in connection with evaluating the merits and risks of an
investment in securities of the Company.
5. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of the Borrower under the Note, the Borrower will, unless the Lender
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
A. Financial Statements and Other Information. Maintain a system of
accounting satisfactory to the Lender and in accordance with GAAP applied
on a consistent basis throughout the period involved, permit the Lender's
officers or authorized representatives to visit and inspect the Borrower's
books of account and other records at such reasonable times and as often as
the Lender may desire, and pay the reasonable fees and disbursements of any
accountants or other agents of the Lender selected by the Lender for the
foregoing purposes. Unless written notice of another location is given to
the Lender, the Borrower's books and records will be located at the
Borrower's primary executive office set forth above. All financial
statements called for below shall be prepared in form and content
acceptable to the Lender.
In addition, the Borrower will:
(i) Furnish to the Lender audited financial statements of the
Borrower for each fiscal year of the Borrower, within ninety
(90) days after the close of each such fiscal year.
(ii) Furnish to the Lender financial statements of the Borrower
for each quarter of each fiscal year of the Borrower, within
forty-five (45) days after the close of each such period.
(iii)Furnish to the Lender promptly such additional financial
information and reports with respect to the business
operations and financial condition of the Borrower as the
Lender may reasonably request.
B. Insurance. Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same
vicinity, specifically to include fire and extended coverage insurance
covering all assets, business interruption insurance, workers compensation
insurance and liability insurance, all to be with such companies and in
such amounts as are satisfactory to the Lender and providing for at least
30 days prior notice to the Lender of any cancellation thereof.
Satisfactory evidence of such insurance will be supplied to the Lender
prior to funding under the Loan and 30 days prior to each policy renewal.
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C. Existence and Compliance. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
D. Adverse Conditions or Events. Promptly advise the Lender in writing
of (i) any condition, event or act which comes to its attention that would
or might materially adversely affect the Borrower's financial condition or
operations or the Lender's rights under the Loan Documents, (ii) any
litigation filed by or against the Borrower, (iii) any event that has
occurred that would constitute an event of default under any Loan Documents
and (iv) any uninsured or partially uninsured loss through fire, theft,
liability or property damage in excess of an aggregate of $50,000.00.
E. Taxes and Other Obligations. Pay all of its taxes, assessments and
other obligations, including, but not limited to taxes, costs or other
expenses arising out of this transaction, as the same become due and
payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner.
F. Maintenance. Maintain all of its tangible property in good
condition and repair and make all necessary replacements thereof, and
preserve and maintain all licenses, trademarks, privileges, permits,
franchises, certificates and the like necessary for the operation of its
business.
G. Environmental. Immediately advise the Lender in writing of (i) any
and all enforcement, cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed or threatened pursuant to any
applicable federal, state, or local laws, ordinances or regulations
relating to any Hazardous Materials affecting the Borrower's business
operations; and (ii) all claims made or threatened by any third party
against the Borrower relating to damages, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials. The
Borrower shall immediately notify the Lender of any remedial action taken
by the Borrower with respect to the Borrower's business operations. The
Borrower will not use or permit any other party to use any Hazardous
Materials at any of the Borrower's places of business or at any other
property owned by the Borrower except such materials as are incidental to
the Borrower's normal course of business, maintenance and repairs and which
are handled in compliance with all applicable environmental laws. The
Borrower agrees to permit the Lender, its agents, contractors and employees
to enter and inspect any of the Borrower's places of business or any other
property of the Borrower at any reasonable times upon three (3) days prior
notice for the purposes of conducting an environmental investigation and
audit (including taking physical samples) to insure that the Borrower is
complying with this covenant and the Borrower shall reimburse the Lender on
demand for the costs of any such environmental investigation and audit. The
Borrower shall provide the Lender, its agents, contractors, employees and
representatives with access to and copies of any and all data and documents
relating to or dealing with any Hazardous Materials used, generated,
manufactured, stored or disposed of by the Borrower's business operations
within five (5) days of the request therefore.
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6. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of the Borrower under the Note, the Borrower will, without the prior
written consent of Lender (and without limiting any requirement of any other
Loan Documents):
A. Transfer of Assets or Control. Sell, lease, assign or otherwise
dispose of or transfer any assets, except in the normal course of its
business, or enter into any merger or consolidation, or transfer control or
ownership of the Borrower.
B. Character of Business. Change the general character of business as
conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.
C. Dividends and Distributions. Make any distribution or pay any
dividends (other than dividends payable in common stock of the Borrower) on
any shares of any class of its capital stock, or apply any of its property
or assets to the purchase, redemption or the retirement of any shares of
any class of its capital stock.
D. Management Change. Make any change in the president of the Borrower
or the chief executive officer of the Borrower, if applicable.
7. EVENTS OF DEFAULT. The Borrower shall be in default under this Agreement
and under each of the other Loan Documents if it shall default in the payment of
any amounts due and owing under the Loan or should it fail to timely and
properly observe, keep or perform any term, covenant, agreement or condition in
any Loan Document or in any other loan agreement, promissory note, security
agreement, deed of trust, deed to secure debt, mortgage, assignment or other
contract securing or evidencing payment of any indebtedness of the Borrower to
the Lender. The Borrower shall also be in default under this Agreement if (a)
the Borrower defaults under the Second Amended and Restated Loan and Security
Agreement dated as of September 5, 1996, as amended, by and among SouthTrust,
the Borrower, Medical Technology Systems, Inc. ("MTS"), and certain other
parties, and SouthTrust commences any enforcement or collection action
(including without limitation any self help remedy) as a result thereof; (b) if
the Borrower or MTS defaults under or refuses to issue any shares of stock
pursuant to any stock warrant that is issued to the Lender in connection with
the loan transaction contemplated by this Loan Agreement, or (c) the Lender's
attorney does not receive the original stock certificate or certificates that
are subject to the Pledge Agreement within ten (10) days from the date of this
Agreement.
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8. REMEDIES UPON DEFAULT. If an event of default shall occur, the Lender
shall have all rights, powers and remedies available under the Note and each of
the Loan Documents as well as all rights and remedies available at law or in
equity.
9. NOTICES. All notices, requests or demands which any party is required or
may desire to give to any other party under any provision of this Agreement must
be in writing delivered to the other party at the following address:
Borrower: Medical Technology Systems, Inc.
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Fax. No. (▇▇▇) ▇▇▇-▇▇▇▇
Lender: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Trustee, or
her successor in Trust of the ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ Revocable Trust dated
August 15, 1995
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Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by mail, upon the earlier of the date of receipt or five
(5) days after deposit in the U.S. Mail, first class postage prepaid;
B. If sent by any other means, upon delivery.
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10. COSTS, EXPENSES AND ATTORNEYS' FEES. The Borrower shall pay to the
Lender immediately upon demand the full amount of all costs and expenses,
including reasonable attorneys' fees incurred by the Lender in connection with
(a) negotiation and preparation of this Agreement and each of the Loan
Documents, and (b) all other costs and attorneys' fees incurred by the Lender
for which the Borrower is obligated to reimburse the Lender in accordance with
the terms of the Loan Documents.
11. MISCELLANEOUS. The Borrower and the Lender further covenant and agree
as follows, without limiting any requirement of any other Loan Document:
A. Cumulative Rights and No Waiver. Each and every right granted to
the Lender under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and all
other rights of the Lender, and no delay in exercising any right shall
operate as a waiver thereof, nor shall any single or partial exercise by
the Lender of any right preclude any other or future exercise thereof or
the exercise of any other right. The Borrower expressly waives any
presentment, demand, protest or other notice of any kind, including but not
limited to notice of intent to accelerate and notice of acceleration. No
notice to or demand on the Borrower in any case shall, of itself, entitle
the Borrower to any other or future notice or demand in similar or other
circumstances.
B. Applicable Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance
with the laws of Florida and applicable United States federal law.
C. Amendment. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by the
Borrower therefrom, shall be effective unless the same shall be in writing
and signed by the Lender, and then shall be effective only in the specified
instance and for the purpose for which given. This Loan Agreement is
binding upon the Borrower, its respective successors and assigns, and
inures to the benefit of the Lender, its successors and assigns; however,
no assignment or other transfer of the Borrower's rights or obligations
hereunder shall be made or be effective without the Lender's prior written
consent, nor shall it relieve the Borrower of any obligations hereunder.
There is no third party beneficiary of this Loan Agreement.
D. Documents. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to the Lender
shall be in form and content satisfactory to the Lender and its counsel.
E. Partial Invalidity. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or
validity of any other provision herein and the invalidity or
unenforceability of any provision of any Loan Document to any person or
circumstance shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
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F. Indemnification. Notwithstanding anything to the contrary contained
in Section 11(G), the Borrower shall indemnify, defend and hold the Lender
and its successors and assigns harmless from and against any and all
claims, demands, suits, losses, damages, assessments, fines, penalties,
costs or other expenses (including reasonable attorneys' fees and court
costs) arising from or in any way related to any of the transactions
contemplated hereby, including but not limited to actual or threatened
damage to the environment, agency costs of investigation, personal injury
or death, or property damage, due to a release or alleged release of
Hazardous Materials, arising from the Borrower's business operations, any
other property owned by the Borrower or in the surface or ground water
arising from any of the Borrower's business operations, or gaseous
emissions arising from any of the Borrower's business operations or any
other condition existing or arising from the Borrower's business operations
resulting from the use or existence of Hazardous Materials, whether such
claim proves to be true or false. The Borrower further agrees that its
indemnity obligations shall include, but are not limited to, liability for
damages resulting from the personal injury or death of an employee of the
Borrower, regardless of whether the Borrower has paid the employee under
the workmen's compensation laws of any state or other similar federal or
state legislation for the protection of employees. The term "property
damage" as used in this paragraph includes, but is not limited to, damage
to any real or personal property of the Borrower, the Lender, and of any
third parties. The Borrower's obligations under this paragraph shall
survive the repayment of the Loan.
G. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the
making of the Loan and shall continue in full force and effect so long as
the Loan is outstanding or the obligation of the Lender to make any
advances under the Loan shall not have expired.
H. Counterparts. This Agreement may be executed in two or more
counterparts any by facsimile transmission of signed counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12. WAIVER OF JURY TRIAL. AFTER CONSULTING WITH COUNSEL AND CAREFUL
CONSIDERATION, THE BORROWER AND THE LENDER KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY LITIGATION ARISING OUT OF THIS AGREEMENT, THE NOTE, OR ANY OTHER
LOAN DOCUMENTS, OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(ORAL OR WRITTEN), OR ACTIONS OF THE BORROWER OR LENDER. THIS WAIVER IS A
MATERIAL INDUCEMENT TO LENDER'S AGREEMENT TO MAKE THE LOAN TO THE BORROWER.
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13. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
14. JOINT VENTURE. Neither this Loan Agreement nor any other Loan Document
creates or evidences a partnership or joint venture between the Borrower and the
Lender. The relationship between the Borrower and the Lender is solely that of a
debtor and creditor. IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed under seal by their duly authorized
representatives as of the date first above written.
LENDER:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, as Trustee, or her
successor in Trust of the ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ Revocable Trust dated
August 15, 1995
BORROWER:
MEDICAL TECHNOLOGY SYSTEMS, INC.
By: _____________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
President
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EXHIBIT "A"
With respect to individuals, an "accredited investor" is defined by Rule
501(a) of Regulation D, promulgated under the Securities Act of 1933, as amended
("Reg D"), as (i) "any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds
$1,000,000," (ii) "any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year," or (iii)
"any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer or general
partner of a general partner of that issuer."
"Purchaser representative" is defined by Reg D as a person that is "not
an affiliate, director, officer or other employee of the issuer, or beneficial
owner of 10 percent or more of any class of the equity securities or 10 percent
or more of the equity interest in the issuer," unless the purchaser is (a) a
relative of the purchaser representative by blood, marriage, or adoption, and is
not more remote than a first cousin; (b) a trust or estate in which the
purchaser representative and any persons related to him as described in sections
(a) or (c) of this paragraph collectively have more than 50% of the beneficial
interest (excluding contingent interest) or of which the purchaser
representative serves as trustee, executor, or in any similar capacity; (c) a
corporation or other organization of which the purchaser representative and any
persons related to him as described in sections (a) or (b) of this paragraph
collectively are the beneficial owners of more than 50% of the equity securities
(excluding directors' qualifying shares) or equity interests. A "purchaser
representative" must have such knowledge and experience in financial and
business matters that he is capable of evaluating (together with the purchaser
or other purchaser representatives of the purchaser) the merits and risks of the
prospective investment. A "purchaser representative" must also meet certain
acknowledgement and disclosure requirements described in Reg D.