[LETTERHEAD]
LOAN AGREEMENT
November 20, 1997
Horizon Pharmacies. Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This Loan Agreement (the "LOAN AGREEMENT") will serve to set forth the
terms of the financing transactions by and between HORIZON PHARMACIES, INC.
("BORROWER"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION ("BANK"):
1. CREDIT FACILITY. Subject to the terms and conditions set forth in
this Agreement and the other agreements, and documents evidencing, securing,
governing, guaranteeing and/or pertaining to the loan, as hereinafter
defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "LOAN AGREEMENT"), Bank hereby agrees to provide to
Borrower the credit facility or facilities hereinbelow (whether one or more,
the "CREDIT FACILITY"):
BORROWING BASE LINE OF CREDIT. Subject to the terms and conditions
set forth herein, Bank agrees to lend to Borrower (the "BORROWING BASE LINE
OF CREDIT"), on a revolving basis from time to time during the period
commencing on the date hereof and continuing through the maturity date of
the promissory note evidencing this Credit Facility from time to time, such
amounts as Borrower may request hereunder: PROVIDED, HOWEVER, the total
principal amount outstanding at any time shall not exceed the lesser of
(a)(i) an amount equal to the Borrowing Base Amount (as such term is
defined hereinbelow), or (ii) $2,000,000.00 LESS (b) the amount of the
outstanding Letter of Credit Liabilities (as hereinafter defined). If at
any time the sum of the aggregate principal amount outstanding under the
Borrowing Line of Credit PLUS the amount of the outstanding Letter of
Credit Liabilities exceeds and amount equal to the Borrowing Base Amount,
Borrower agrees to immediately repay to Bank such excess amount, PLUS all
accrued but unpaid
Horizon Pharmacies, Inc.
November 20, 1997
Page 2
interest thereon. Subject to the terms and conditions hereof Borrower may
borrow, repay and reborrow hereunder. Borrower agrees that for a period
of not less than 30 consecutive days during each calendar year, Borrower
shall have repaid the entire outstanding principal amount of the Borrowing
Base Line of Credit, together with all accrued but unpaid interest thereon.
The sums advanced under the Borrowing Base Line of Credit shall be used for
working capital.
As used in this Loan Agreement, the term "BORROWING BASE AMOUNT" shall have
the meaning set forth hereinbelow:
An amount equal to 50% of the Borrower's Eligible Inventory.
As used herein, the term "ELIGIBLE INVENTORY" shall mean as of any date,
the aggregate value of all inventory of raw materials and finished goods
(excluding work in progress and packaging materials, supplies and any
advertising costs capitalized into inventory) then owned by Borrower and
held for sale, lease or other disposition in the ordinary course of its
business, in which Bank has a first priority lien, excluding (i) inventory
which is damaged, defective, obsolete or otherwise unsalable in the
ordinary course of Borrower's business, (ii) inventory which has been
returned or rejected, and (iii) inventory subject to any consignment
arrangement between Borrower and any other person or entity. For purposes
of this definition, EligibLe Inventory shall be valued at the lower of cost
(excluding the cost of labor) or market value.
All advances under the Credit facility shall be collectively called the
"LOAN". Bank reserves the right to require Borrower to give Bank not less
than one (1) business day prior notice of each requested advance under the
Credit Facility, specifying (i) the aggregate count of such requested
advance, (ii) the requested date of such advance, and (iii) the purpose for
such advance, with such advances to be requested in a form satisfactory to
Bank.
2. PROMISSORY NOTE. The Loan shall be evidenced by one or more
promissory notes (whether one or more, together with any renewals, extensions
and increases thereof, the "NOTE") duly executed by Borrower and payable to
the order of Bank, in form and substance acceptable to Bank. Interest on the
Note shall accrue at the rate set forth therein. The principal of and
interest on the Note shall be due and payable in accordance with the terms
and conditions set forth in the Note and in this Loan Agreement.
3. LETTERS OF CREDIT.
(a) ISSUANCE OF LETTERS OF CREDIT. Subject to the terms and
conditions of this Loan Agreement, Bank agrees to issue one or more letters
of credit (collectively, the "LETTERS OF CREDIT") for the account of
Borrower from time to time from the date hereof to and including the
maturity date of the Note, PROVIDED, however, that the Bank's outstanding
commitments under all outstanding Letters of Credit (the "LETTER OF CREDIT
LIABILITIES") shall not at any time exceed (i) the lesser of (1) an amount
equal to the
Horizon Pharmacies, Inc.
November 20, 1997
Page 3
Committed Sum, or (2) an amount equal to the Borrowing Base Amount, LESS
(ii) the aggregate principal amount outstanding under the Borrowing Base
Line of Credit. All Letters of Credit shall have an expiration date of on
or prior to the maturity date of the Note, must support a transaction that
is entered into in the ordinary course of business, must otherwise be
satisfactory in form and substance to Bank, and shall be issued pursuant to
such documents and instruments, including, without limitation, Bank's
standard application and agreement for issuance of letters of credit, as
then in effect ("LETTER OF CREDIT APPLICATION") as Bank may require. No
Letter of Credit shall require any payment by Bank to the beneficiary
thereunder pursuant to a drawing prior to the third business day following
presentment of a draft and any related documents to Bank. Each Letter of
Credit shall be issued on at least one (1) business days prior notice from
Borrower to Bank.
(b) REPAYMENT. Each payment by Bank pursuant to a drawing under a
Letter of Credit must be repaid to Bank immediately by Borrower in
accordance with the terms of the subject Letter of Credit Application.
(c) FEE. Borrower shall pay to Bank a letter of credit fee payable on
the date each Letter of Credit is issued in an amount equal to one and
one-half (1.50%) per annum of the stated amount of such Letter of Credit,
for the stated term of such Letter of Credit, based on a 360 day year and
the actual number of days elapsed.
4. COLLATERAL. As collateral and security for the indebtedness
evidenced by the Note and any and all other indebtedness or obligations from
time to time owing by Borrower to Bank, Borrower shall grant, and hereby
grants, to Bank, its successors and assigns, a first and prior lien and
security interest in and to the property described hereinbelow, together with
any and all PRODUCTS AND PROCEEDS thereof (the "COLLATERAL"):
(a) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any right
to payment for goods sold or services rendered arising out of the sale or
delivery of personal property or work done or labor performed by Borrower),
now or hereafter owned, held, or acquired by Borrower, together with any
and all books of account, customer lists and other records relating in any
way to the foregoing.
(b) All present and hereafter acquired inventory (including without
limitation, all raw materials, work in process and finished goods) held,
possessed, owned, held on consignment, or held for sale, lease, return or
to be furnished under contracts of service, in whole or in part, by
Borrower wherever located.
The term "Collateral" shall also include all records and data relating to any
of the foregoing (including, without limitation, any computer software on
which such records and data may be located). Borrower agrees to execute such
security agreements, assignments, deeds of trust and
Horizon Pharmacies, Inc.
November 20, 1997
Page 4
other agreements and documents as Bank shall deem appropriate and otherwise
require from time to time to more fully create and perfect Bank's lien and
security interests in the Collateral.
5. GUARANTORS. As a condition precedent to the Bank's obligation to
make the Loan to Borrower, Borrower agrees to cause HORIZON HOME CARE, INC.,
a Texas corporation (whether one or more, the "GUARANTORS") to each execute
and deliver to Bank contemporaneously herewith a guaranty agreement, in form
and substance satisfactory to Bank.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants, and upon each request for an advance under the Borrowing Base Line
of Credit and each request for the issuance of a Letter of Credit further
represents and warrants, to Bank as follows:
(a) EXISTENCE. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas and all
other states where it is doing business, and has all requisite power and
authority to execute and deliver the Loan Documents.
(b) BINDING OBLIGATIONS. The execution, delivery, and performance of
this Loan Agreement and all of the other Loan Documents by Borrower have
been duly authorized by all necessary action by Borrower, and constitute
legal, valid and binding obligations of Borrower, enforceable in accordance
with their respective terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the enforcement of
creditors' rights and except to the extent specific remedies may generally
be limited by equitable principles.
(c) NO CONSENT. The execution, delivery and performance of this Loan
Agreement and the other Loan Documents, and the consummation of the
transactions contemplated hereby and thereby, do not (i) conflict with,
result in a violation of, or constitute a default under (A) any provision
of its articles of certificate of incorporation or bylaws, if Borrower is a
corporation, or its partnership agreement, if Borrower is a partnership, or
any agreement or other instrument binding upon Borrower, or (B) any law,
governmental regulation, court decree or order applicable to Borrower, or
(ii) require the consent, approval or authorization of any third party.
(d) FINANCIAL CONDITION. Each financial statement of Borrower
supplied to the Bank truly discloses and fairly presents Borrower's
financial condition as of the date of each such statement. There has been
no material adverse change in such financial condition or results of
operations of Borrower subsequent to the date of the most recent financial
statement supplied to the Bank.
(e) LITIGATION. There are no actions, suits or proceedings, pending
or, to the knowledge of Borrower, threatened against or affecting Borrower
or the properties of Borrower, before any court or governmental department,
commission or board, which, if
Horizon Pharmacies, Inc.
November 20, 1997
Page 5
determined adversely to Borrower, would have a material adverse effect on
the financial condition, properties, or operations of Borrower.
(f) TAXES; GOVERNMENTAL CHARGES. Borrower has filed all federal,
state and local tax reports and returns required by any law or regulation
to be filed by it and has either duly paid all taxes, duties and charges
indicated due on the basis of such returns and reports, or made adequate
provision for the payment thereof, and the assessment of any material
amount of additional taxes in excess of those paid and reported is not
reasonably expected.
7. CONDITIONS PRECEDENT TO ADVANCES. Bank's obligation to make any
advance under the Borrowing Base Line of Credit or issue any Letters of
Credit under this Loan Agreement and the other Loan Documents shall be subject
to the conditions precedent that, as of the date of such advance and after
giving effect thereto (i) all representations and warranties made to Bank in
this Loan Agreement and the other Loan Documents shall be true and correct,
as of and as if made on such date, (ii) no material adverse change in the
financial condition of Borrower since the effective date of the most recent
financial statements furnished to Bank by Borrower shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result
from the requested advance, which with notice or lapse of time, or both,
would constitute an Event of Default (as hereinafter defined), (iv) Bank's
receipt of all Loan Documents appropriately executed by Borrower and all
other proper parties, (v) Bank's receipt of landlord waivers, in form and
substance satisfactory to Bank, from the landlord of each Property (as
hereinafter defined) within thirty (30) days of the date hereof, (vi) Bank's
receipt of UCC-3 financing statements terminating all security interests
other than those securing the Seller Financing (as hereinafter defined) or as
otherwise permitted by Bank, within thirty (30) days of the date hereof, and
(vii) Bank's receipt of all additional documentation necessary for Bank to
obtain a perfected security interest in the Collateral and exercise its
remedies with respect to such Collateral upon the occurrence of an Event of
Default.
8. AFFIRMATIVE COVENANTS. Until (i) the Note, the outstanding Letter
of Credit Liabilities and all other obligations and liabilities of Borrower
under this Loan Agreement and the other loan Documents are fully paid and
satisfied, and (ii) the Bank has no further commitment to lend hereunder,
Borrower agrees and covenants that it will, unless Bank shall otherwise
consent in writing:
(a) ACCOUNTS AND RECORDS. Maintain its books and records in
accordance with generally accepted accounting principles.
(b) RIGHT OF INSPECTION. Permit Bank to visit its properties and
installations and to examine, audit and make and take away copies or
reproductions of Borrower's books and records, at all reasonable times.
(c) RIGHT TO ADDITIONAL INFORMATION. Furnish Bank with such
additional information and statements, lists of assets and liabilities, tax
returns, and other reports
Horizon Pharmacies, Inc.
November 20, 1997
Page 6
with respect to Borrower's financial condition and business operations as
Bank may request from time to time.
(d) COMPLIANCE WITH LAWS. Conduct its business in an orderly and
efficient manner consistent with good business practices, and perform and
comply with all statutes, rules, regulations and/or ordinances imposed by
any governmental unit upon Borrower its businesses, operations and
properties (including without limitation, all applicable environmental
statutes, rules, regulations and ordinances).
(e) TAXES. Pay and discharge when due all of its indebtedness
and obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits, provided, however, Borrower will not be required to
pay and discharge any such assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim
so long as (i) the legality of the same shall be contested in good faith
by appropriate judicial, administrative or other legal proceedings, and
(ii) Borrower shall have established on its books adequate reserves with
respect to such contested assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim
in accordance with generally accepted accounting principles,
consistently applied.
(f) INSURANCE. Maintain insurance, including but not limited
to, fire insurance, comprehensive property damage, public liability,
worker's compensation, business interruption and other insurance deemed
necessary or otherwise required by Bank.
(g) NOTICE OF INDEBTEDNESS. Promptly inform Bank of the creation,
incurrence or assumption by Borrower of any actual or contingent
liabilities not permitted under this Loan Agreement.
(h) NOTICE OF LITIGATION. Promptly after the commencement thereof,
notify Bank of all actions, suits and proceedings before any court or
any governmental department, commission or board affecting Borrower or
any of its properties.
(i) NOTICE OF MATERIAL ADVERSE CHANGE. Promptly inform Bank of
(i) any and all material adverse changes in Borrower's financial
condition, and (ii) all claims made against Borrower which could
materially affect the financial condition of Borrower.
(J) ADDITIONAL DOCUMENTATION. Execute and deliver, or cause to
be executed and delivered, any and all other agreements, instruments or
documents which Bank may reasonably request in order to give effect to
the transactions contemplated under this Loan Agreement and the other
Loan Documents.
(k) LICENSE. At least two of the three licensed pharmacists on
the Board of Directors of Borrower shall maintain their pharmaceutical
licenses issued by the applicable
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November 20, 1997
Page 7
state Board of Pharmacy. Upon the occurrence of an Event of Default,
such licensed pharmacist agrees to assist Bank dispose of the
pharmaceuticals comprising the Eligible Inventory in compliance with
applicable state and federal law in the manner Bank determines appropriate
in its sole discretion.
9. NATIVE COVENANTS. Until (i) the Note, the outstanding Letter of
Credit Liabilities and all other obligations and liabilities of Borrower
under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Bank has no further commitment to lend hereunder,
Borrower will not, without the prior written consent of Bank:
(a) NATURE OF BUSINESS. Make any material change in the nature of its
business as carried on as of the date hereof.
(b) LIQUIDATIONS, MERGERS, CONSOLIDATIONS. Liquidate, merge or
consolidate with or into any other entity unless after such merger or
consolidation Borrower is the surviving entity.
(c) SALE OF ASSETS. Sell, transfer or otherwise dispose of any of
its assets or properties, other than in the ordinary course of business.
(d) LIENS. Create or incur any lien or encumbrance on any of its
assets, other than (i) Liens and security interest securing indebtedness
owing to Bank, (ii) liens for taxes, assessments or similar charges with
(1) not yet due or (2) being contested in good faith by appropriate
proceedings and for which Borrower has established adequate reserves, and
(iii) liens and security interest existing as of the date hereof which have
been disclosed to and approved by the Bank in writing and (iv) liens and
security interests granted by Borrower on inventory located at a retail
pharmacy ("PROPERTY") being acquired by Borrower in connection with the
Seller financing of the acquisition of such Property ("SELLER FINANCING").
(e) INDEBTEDNESS. Create, incur or assume any indebtedness for
borrowed money or issue or assume any other note, debenture, bond or other
evidences of indebtedness, or guarantee any such indebtedness or such
evidences of indebtedness of others, other than (i) borrowings from Bank,
and (ii) borrowings outstanding on the date hereof and disclosed in writing
to Bank and (iii) borrowings which do not exceed in the aggregate in any
fiscal year (A) $2,000,000.00 in additional Seller Financing and (B)
$500,000.00 for purchase money indebtedness.
(f) CHANGE IN MANAGEMENT. Permit a change in the senior management
of Borrower.
(g) LOAN. Make any loans to any person or entity.
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November 20, 1997
Page 8
(h) TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property
or the rendering of any service, with any Affiliate (as hereinafter
defined) of Borrower, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms no less favorable to Borrower than would be obtained in a comparable
arm's-length transaction with a person or entity not an Affiliate of
Borrower. As used herein, the term "AFFILIATE" means any individual or
entity directly or indirectly controlling, controlled by, or under common
control with, another individual or entity.
10. FINANCIAL COVENANTS. Until (i) the Note, the outstanding Letter of
Credit Liabilities and all other obligations and liabilities of Borrower
under this Loan Agreement and the other Loan Documents are fully paid and
satisfied, and (ii) the Bank has no further commitment to lend hereunder,
Borrower will maintain the following financial covenants:
(a) CURRENT RATIO. Borrower will maintain, at all times, a ratio of
(i) current assets (excluding prepaid expenses) to (ii) current liabilities
of not less than 1.25 to 1.0.
(b) TANGIBLE NET WORTH. Borrower will maintain, at all times, its
Tangible Net Worth at not less than $8,500,000.00.
(c) LIABILITIES/TANGIBLE NET WORTH. Borrower will maintain, at all
times, a ratio of (i) total liabilities (excluding any Subordinated Debt),
to (ii) Tangible Net Worth of not greater than 1.50 to 1.0.
(d) DEBT SERVICE. Borrower will maintain, as of the last day of each
fiscal quarter, a ratio of (i) EBIDA defined as net income after taxes PLUS
depreciation, amortization and other non-cash expenses for the 12-month
period ending with such fiscal quarter (including actual, historical
rolling four-quarter EBIDA for any Properties acquired during the previous
12 months) LESS any Distributions and non-financed capital expenditures
during such 12-month period, to (ii) current maturities of long-term debt
(including any current maturities of long term debt associated with the
acquisition of any Properties) PLUS interest expense for such 12-month
period, of not less than 1.30 to 1.0.
As used herein, the term "TANGIBLE NET WORTH" means, as of any date,
Borrower's total assets excluding all intangible assets, LESS total
liabilities excluding any Subordinated Debt. As used herein, the term
"SUBORDINATED DEBT" means any indebtedness owing by Borrower which has been
subordinated by written agreement to all indebtedness now or hereafter owing
by Borrower to Lender, such agreement to be in form and substance acceptable
to Lender. As used herein, "DISTRIBUTIONS" shall mean all dividends and
other distributions made by Borrower to its shareholders or partners, as the
case may be, other than salary, bonuses and other compensation for services.
Unless otherwise specified, all accounting and financial terms and covenants
set forth above are to be determined according to generally accepted
accounting principles, consistently applied.
Horizon Pharmacies, Inc.
November 20, 1997
Page 9
10. REPORTING REQUIREMENTS. Until (i) the Note, the outstanding Letter
of Credit Liabilities and all other obligations and liabilities of Borrower
under this Loan Agreement and the other Loan Document are fully paid and
satisfied, and (ii) the Bank has no further commitment to lend hereunder,
Borrower will, unless Bank shall otherwise consent in writing, furnish to
Bank:
(a) INTERIM FINANCIAL STATEMENTS. As soon as available, and in any
event within forty-five (45) days after the end of each quarter of each
fiscal year of Borrower, a balance sheet and income statement of Borrower
as of the end of such fiscal quarter, all in form and substance and in
reasonable detail satisfactory to Bank and duly certified (subject to
year-end review adjustments) by the President and/or Chief Financial
Officer of Borrower (i) as being true and correct in all material aspects
to the best of his or her knowledge and (ii) as having been prepared in
accordance with generally accepted accounting principles, consistently
applied.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within ninety (90) days after the end of each fiscal year of
Borrower, a balance sheet and income statement of Borrower as of the end of
such fiscal year, in each case audited by independent public accountants of
recognized standing acceptable to Bank.
(c) COMPLIANCE CERTIFICATE. A certificate signed by the President
and/or Chief Financial Officer within forty-five (45) days after the end of
each quarter of each fiscal year, stating that Borrower is in full
compliance with all of its obligations under this Loan Agreement and all
other Loan Documents and is not in default of any term or provisions hereof
or thereof, and demonstrating compliance with all financial ratios and
covenants set forth in this Loan Agreement.
(d) BORROWING BASE REPORT. A borrowing base report signed by the
President and/or Chief Financial Officer within thirty (30) days after the
end of each month of each fiscal year, in form and detail satisfactory to
Bank.
(e) (INVENTORY LISTING. A list of Borrower's inventory by location
and type (to include the following: raw materials, work in process and
finished goods) within thirty (30) days after the end of each month of each
fiscal year, in form and detail satisfactory to Bank.
(f) INVENTORY REPORT. A report of Borrower's physical inventory
prepared by an independent third party acceptable to Bank within sixty (60)
days after the end of each semi-annual period of each fiscal year, in form
and detail satisfactory to Bank.
Horizon Pharmacies, Inc.
November 20, 1997
Page 10
11. EVENTS OF DEFAULT. Each of the following shall constitute an "Event
of Default" under this Loan Agreement:
(a) The failure, refusal or neglect of Borrower to pay when due any
part of the principal of, or interest on, the Note, the Letter of Credit
Liabilities or any other indebtedness or obligations owing to Bank by
Borrower from time to time.
(b) The failure of Borrower or any Obligated Party (as defined below)
to timely and properly observe, keep or perform any covenant, agreement,
warranty or condition required herein or in any of the other Loan Documents
and such failure continues for a period of ten (10) days after receipt of
written notice thereof from Bank to Borrower.
(c) The occurrence of an event of default under any of the other Loan
Documents or under any other agreement now existing or hereafter arising
between Bank and Borrower.
(d) Any representation contained herein or in any of the other Loan
Documents made by Borrower or any Obligated Party is false or misleading in
any material respect.
(e) The occurrence of any event which permits the acceleration of the
maturity of any indebtedness owing by Borrower to any third party under any
agreement or understanding.
(f) If Borrower or any Obligated Party: (i) becomes insolvent, or
makes a transfer in fraud of creditors, or makes an assignment for the
benefit of creditors, or admits in writing its inability to pay its debts
as they become due; (ii) generally is not paying its debts as such debts
become due, (iii) has a receiver, trustee or custodian appointed for, or
take possession of, all or substantially all of the assets of such party,
either in a proceeding brought by such party or in a proceeding brought
against such party and such appointment is not discharged or such
possession is not terminated within sixty (60) days after the effective
date thereof or such party consents to or acquiesces in such appointment or
possession; (iv) files a petition for relief under the United States
Bankruptcy Code or any other present or future federal or state insolvency,
bankruptcy or similar laws (all of the foregoing hereinafter collectively
called "APPLICABLE BANKRUPTCY LAW") or an involuntary petition for relief
is filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is entered under
any Applicable Bankruptcy Law, or any composition, rearrangement,
extension, reorganization or other relief of debtors now or hereafter
existing is requested or consented to by such party; (v) fails to have
discharged within a period of thirty (30) days any attachment,
sequestration or similar writ levied upon any property of such party; or
(vi) fails to pay within thirty (30) days any final money judgment against
such party.
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November 20, 1997
Page 11
(g) If Borrower or any Obligated Party is an entity, the liquidation,
dissolution, merger or consolidation of any such entity or, if Borrower or
any Obligated Party is an individual, the death or legal incapacity of any
such individual.
(h) The entry of any judgment against Borrower or the issuance or
entry of any attachment or other lien against any of the property of
Borrower for an amount in excess of $25,000.00, if undischarged, unbonded
or undismissed within thirty (30) days after such entry.
Nothing contained in this Loan Agreement shall be construed to limit the
events of default enumerated in any of the other Loan Documents and all such
events of default shall be cumulative. The term "OBLIGATED PARTY", as used
herein, shall mean any party other than Borrower who secures, guarantees
and/or is otherwise obligated to pay all or any portion of the indebtedness
evidenced by the Note.
12. REMEDIES. Upon the occurrence of any one or more of the foregoing
Events of Default, (a) the entire unpaid balance of principal of the Note,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Bank by Borrower at such time shall, at the option of
Bank, become immediately due and payable without further notice, demand,
presentation, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Borrower, and (b) Bank may, at its option, cease further
advances under any of the Note; PROVIDED, HOWEVER, concurrently and
automatically with the occurrence of an Event of Default under SUBPARAGRAPH
(f) in the immediately preceding paragraph (i) further advances under the
Note shall cease, and (ii) the Note and all other indebtedness owing to Bank
by Borrower at such time shall, without any action by Bank, become due and
payable, without further notice, demand, presentation, notice of dishonor,
notice of acceleration, notice of intent to accelerate, protest or notice of
protest of any kind, all of which are expressly waived by Borrower. All
rights and remedies of Bank set forth in this Loan Agreement and in any of
the other Loan Documents may also be exercised by Bank, at its option to be
exercised in its sole discretion upon the occurrence of an Event of Default.
13. RIGHTS CUMULATIVE. All rights of Bank under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Bank
under any and all other agreements between Borrower and Bank (including, but
not limited to, the other Loan Documents), and not in substitution or
diminution of any rights now or hereafter held by Bank under the terms of any
other agreement.
4. WAIVER AND AGREEMENT. Neither the failure nor any delay on the
part of Bank to exercise any right, power or privilege herein or under any of
the other Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of such right, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege. No waiver of any provision in this Loan Agreement or in any of
the other Loan Documents and no departure by Borrower therefrom shall be
effective unless the same shall be in writing and signed by Bank, and then
shall be effective only in the specific instance and for
Horizon Pharmacies, Inc.
November 20, 1997
Page 12
the purpose for which given and to the extent specified in such writing. No
modification or amendment to this Loan Agreement or to any of the other Loan
Documents shall be valid or effective unless the same is signed by the party
against whom it is sought to be enforced.
15. BENEFITS. This Loan Agreement shall be binding upon and inure to
the benefit of Bank and Borrower, and their respective successors and
assigns, provided, however, that Borrower may not, without the prior written
consent of Bank, assign any rights, powers, duties or obligations under this
Loan Agreement or any of the other Loan Documents.
16. NOTICE. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in
writing and given by (i) personal delivery, (ii) expedited delivery service
with proof of delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent to the intended
addressee at the address set forth on the signature page hereof and shall be
deemed to have been received either, in the case of personal delivery, as of
the time of personal delivery, in the case of expedited delivery service, as
of the date of first attempted delivery at the address and in the manner
provided herein, or in the case of mail, upon deposit in a depository
receptacle under the care and custody of the United States Postal Service.
Either party shall have the right to change its address for notice hereunder
to any other location within the continental United States by notice to the
other party of such new address at least thirty (30) days prior to the
effective date of such new address.
17. CONSTRUCTION. This Loan Agreement and the other Loan Documents have
been executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Bank's
address set forth on the signature page hereof is located.
18. INVALID PROVISIONS. If any provision of this Loan Agreement or any
of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan
Documents shall remain in full force and effect and shall not be affected by
the illegal, invalid or unenforceable provision or by its severance.
19. EXPENSES. Borrower shall pay all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees) in connection
with (i) any action required in the course of administration of the
indebtedness and obligations evidenced by the Loan Documents, and (ii) any
action in the enforcement of Bank's rights upon the occurrence of Event of
Default.
20. PARTICIPATION OF THE LOAN. Borrower agrees that Bank may, at its
option, sell interests in the Loan and its rights under this Loan Agreement
to a financial institution or institutions and, in connection with each such
sale, Bank may disclose any financial and other information available to Bank
concerning Borrower to each perspective purchaser.
Horizon Pharmacies, Inc.
November 20, 1997
Page 13
21. ENTIRE AGREEMENT. This Loan Agreement (together with the other
Loan Documents) contains the entire agreement among the parties regarding the
subject matter hereof and supersedes all prior written and oral agreements
and understandings among the parties hereto regarding same.
22. CONFLICTS. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions contained in this Loan Agreement shall be
controlling.
23. COUNTERPARTS. This Loan Agreement may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
24. FEES. In consideration of the financial accommodations granted by
Bank to Borrower under the Borrowing Base Line of Credit, Borrower agrees to
pay to Bank a fee (the "UNUSED FEE") per annum (based on a year of 360 days)
equal to one-quarter percent (1/4%) of the average daily unborrowed amount
under the Borrowing Base Line of Credit. The Unused Fee shall be payable
quarterly in arrears on the first day of each January, April, July and
October during the term of the Borrowing Base Line of Credit. Borrower
acknowledges that the Unused Fee is required to be paid and is in
consideration of Bank taking appropriate action to ensure that all funds that
Bank may advance under the Borrowing Base Line of Credit are available to
Borrower when Borrower requests same.
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
Very truly yours,
BANK ONE, TEXAS, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
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Title: Banking Officer
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Bank's Address:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Horizon Pharmacies, Inc.
November 20, 1997
Page 14
ACCEPTED as of the date first written above.
BORROWER: Borrower's Address:
HORIZON PHARMACIES, INC., ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
a Texas corporation ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title: C.F.O.
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