EXHIBIT 10.1
BANK OF AMERICA
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|_| BUSINESS LINE |X| BUSINESS LOAN
AGREEMENT
To: Bank of America National Trust and Savings Association
Business Lending Services #1738
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CUSTOMER NAME
MEDICAL SCIENCE SYSTEMS, INC.
LINE OF CREDIT/LOAN NO. CREDIT LIMIT/LOAN AMOUNT BRANCH NO. DEPOSIT ACCOUNT NO. ("ACCOUNT")
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0740829-9003 $570,000.00 0694 06940-18831
INTRODUCTION. This Agreement dated as of June 05, 1998 is entered into
between Medical Science Systems, Inc. (the "Borrower") and Bank of America
National Trust and Savings Association (the "Bank") concerning the Borrower's
Business Loan credit facility with the Bank. In consideration of, and to induce
the Bank to make available to the Borrower the credit facility described herein,
the Borrower agrees and warrants as follows:
|_| I.THE LINE OF CREDIT
A. NATURE OF THE LINE. If the box above is checked, the Bank has made
available to the Borrower a revolving line of credit ("Line") in the
principal amount shown above as "Credit Limit" subject to the terms and
conditions of this Agreement. This means that the Borrower, or any person
provided for in Section I.C. below, may request an advance of all or a part
of the Line at any time while the Line is available. Any amount repaid by
the Borrower becomes available for the Borrower to reborrow after the
expiration of a hold period for payments by personal checks of up to eleven
business days. If the Bank delays the availability of funds, it will mail
to the Borrower a notice within one business day.
B. ADVANCES. Advances under the Line may be in any amount not to exceed the
Credit Limit remaining available. Advances may be made by writing a credit
line check or by telephone authorization, deposited into the Borrower's
account listed above, if any, or such other of the Borrower's eligible
accounts with the Bank as designated by the Borrower in writing (the
"Account").
C. TELEPHONE AUTHORIZATION. The Bank may honor telephone instructions for
advances or repayments given by any one of the individuals who signed the
application for this Line on the Borrower's behalf, or any other individual
designated by any one of such authorized individuals. Repayments authorized
by telephone shall be withdrawn from the Borrower's Account. The Borrower
indemnifies and excuses the Bank (including its officers, employees, and
agents) from all liability, loss, and costs in connection with any act
resulting from telephone instructions it reasonably believes are made by
any individual authorized by the Borrower to give such instructions. This
indemnity and excuse will survive this Agreement's termination.
D. CREDIT LINE CHECKS.
1. WRITING CHECKS. The Bank will issue checks to the Borrower at no cost.
The Borrower may borrow money under the Line (up to the Credit Limit
remaining available) by writing checks. The Borrower agrees not to write
checks in an amount less than $300, and not to write more than five checks
in any one billing cycle. The Bank may charge a fee for any checks written
for a lesser amount, or if more than the permitted number of checks are
written. Each paid check will be charged to the Line. Checks may be signed
by any one individual who signed the application for credit. Only one
signature shall be required on any check.
2. STOP PAYMENTS. The Borrower may stop payment on a check as long as the
request is received by the Bank prior to the time the check is posted to
the Line. The request must include the information which the Bank requires.
The Borrower may be charged a fee to place or renew a stop payment order. A
stop payment shall be effective for 180 days. The Borrower must renew the
stop payment if it wishes the stop payment to be effective for a longer
period. In some cases, the Bank may pay a check even if a stop payment is
in effect. For example, if a branch of the Bank or another person or entity
becomes a "holder in due course" of a check, the Bank may still pay the
check and post the amount to the Line.
3. CHECK CERTIFICATION. The Bank will not certify checks.
4. LOST OR STOLEN CHECKS. The Borrower must notify the Bank immediately at
the Bank of America Address shown at the top of the Agreement if any checks
are lost or stolen.
5. CANCELED CHECKS. The Bank will not return the canceled checks to the
Borrower, but will retain photocopies for eight (8) years. The Borrower
agrees to examine the monthly billing statement on the Account promptly in
order to identify improper or unauthorized transactions. If the Borrower
requests a copy of a check, the Borrower must write a letter to the Bank,
including the Account number, the check number and amount, and the date
that the check posted to the billing statement. The Bank may charge a fee
for providing a copy of checks.
6. AUTHORIZED USE. The checks issued to the Borrower must be used only by
the Borrower. If the Borrower permits anyone else to use its checks without
the Bank's consent, the Borrower will be obligated to pay for any advances
obtained by that person plus any interest and other charges attributable to
such advances.
7. RETURN OF CHECKS. At the Bank's request, the Borrower will return to the
Bank any unused checks if the Account is terminated. If any such event
occurs, the Bank may return any checks presented against the Account.
E. OVERDRAFT PROTECTION.
|_| If the box to the left is checked, the following paragraph applies: The
Line has been linked for overdraft protection to the following business
checking account with the Bank: N/A. If the business checking account is
overdrawn, the Bank will transfer funds from the Line to cover the
overdraft in multiples of $50 as long as there is sufficient available
credit on the Line. Overdraft protection is not accessible by in-branch
transaction, ATM withdrawal or transfer through your home or office
computer.
F. DEFAULTS. The Bank may, in its sole discretion, refuse to make advances
hereunder if an Event of Default has occurred (as defined in Section IX,
below).
G. AVAILABILITY OF THE LINE. Advances under the Line will be available until
the earlier of the following (the "Termination Date"): (1) N/A ; or (2) the
date the Bank terminates the Line because of an Event of Default pursuant
to Section IX.; or (3) the date the Line is canceled by the Borrower
pursuant to Section X.N. On the Termination Date, no further advances will
be available to the Borrower. The entire outstanding principal balance of
the Line, together with all accrued and unpaid interest thereon, and fees
and charges owing in connection therewith, shall be due and payable in full
on the Termination Date.
H. CREDIT LIMIT. A credit limit has been set on the Line and is shown above as
"Credit Limit." The Borrower agrees not to allow the principal amount which
the Borrower owes at any one time under this Agreement to exceed the Credit
Limit. The Bank does not have to honor any request for an advance which,
when added to the unpaid balance, would exceed the Credit Limit.
|X| II. THE LOAN
A. AMOUNT. If the box above is checked, the Bank has made available to the
Borrower a term loan ("Loan") in the principal amount shown above as "Loan
Amount" subject to the terms and conditions of this Agreement.
III. PAYMENTS AND INTEREST RATE
A. PAYMENTS
1. AMOUNT. The Borrower promises to pay to the Bank principal and/or
interest payments as indicated by the box checked below:
|_| A. INTEREST ONLY. The minimum payment due each month shall be the
amount of accrued interest.
|_| B. PRINCIPAL AND INTEREST. Principal and interest in monthly
installments of Dollars ($__________________).
|X| C. PRINCIPAL PLUS INTEREST. Principal in 84 monthly installments of
SIX THOUSAND SEVEN HUNDRED EIGHTY-SIX AND 00/100 DOLLARS ($6,786.00)
plus interest.
In addition, the Borrower must pay any amounts past due, any amount that
exceeds the Credit Limit, if applicable, and any other charges assessed as
described in this Agreement.
2. PAYMENT DATE. The payments shall be due and payable in full on the 1st
day of each month, beginning JULY 1, 1998 and continuing until JUNE 1,
2005, on which date all unpaid principal and interest shall be paid in
full. If the payment date falls on a Saturday or Sunday, or on a holiday on
which the Bank is closed, the payment shall be due on the next business
day. If this is a Loan, the principal and interest may also at the Bank's
option be due and payable in full upon an Event of Default in accordance
with Section IX. herein.
3. PAYMENT ALLOCATION. All sums received from the Borrower for application
to the Line or Loan shall be applied to the Borrower's obligation under the
Line or Loan in such order as determined by the Bank.
4. PREPAYMENT. The Borrower can pay the balance of the credit outstanding
under this Agreement in full or part at any time without premium or
penalty. The Bank may accept partial payments, whether or not marked "paid
in full" without losing the Bank's rights under this Agreement.
5. PAYMENT ADDRESS. Payments should be made to: Bank of America National
Trust and Savings Association
Business Lending Services #1738
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6. CREDITING THE PAYMENT. If the Bank receives the payment at the above
address by 9:00 a.m. on any business day, except Saturday or Sunday, the
Bank will credit the payment to the amount outstanding under this Agreement
as of that day. Payments may also be made at any of the Bank's California
branches. Payments received at a branch after 4 p.m. (7 p.m. on Fridays) or
on a Saturday, Sunday or holiday will be posted the following business day.
7. AUTOMATIC REPAYMENT.
|X| If the box to the left is checked, the following paragraphs apply: A.
AUTOMATIC PAYMENT SERVICE. The Borrower hereby chooses to have its
principal and interest payments made pursuant to the Bank's Automatic
Payment Service, and authorizes the Bank to collect all sums due hereunder
by charging the full amount thereof to the Borrower's Account. Should there
be insufficient funds in the Account to pay when due all or any portion of
the amount due, the full amount of such deficiency shall be immediately due
and payable by the Borrower.
B. TERMINATION. If, for any reason during the term of this Agreement, this
Automatic Payment Service is terminated by the Borrower or the Bank, the
interest rate under this Agreement will increase by one (1) percentage
point and the amount of each payment will be increased accordingly.
B. INTEREST RATE
1. INTEREST RATE OPTIONS. The principal balance outstanding under this
Agreement shall bear interest per annum equal to:
|X| A. VARIABLE RATE. The Bank's Reference Rate plus 0.00 percentage
points, as said Reference Rate may change from time to time. The Reference
Rate is the rate of interest publicly announced from time to time by the
Bank in San Francisco, California as its Reference Rate. The Reference Rate
is set by the Bank based on various factors, including the Bank's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans. The Bank may price loans to
its customers at, above, or below the Reference Rate. Any change in the
Reference Rate shall take effect at the opening of business on the day
specified in the public announcement of a change in the Bank's Reference
Rate.
|_| B. FIXED RATE. A fixed rate of N/A percentage points.
2. COMPUTATION OF INTEREST AND FEES. All computations of interest and fees
made or called for hereunder shall be calculated on the basis of:
|X| A. 360-DAY YEAR. A 360-day year and the actual number of days elapsed.
This results in more interest or a higher fee than if a 365-day year is
used.
|_| B. 365-DAY YEAR. An actual 365/366-day year and the actual number of
days elapsed.
3. DEFAULT RATE. Upon the occurrence and during the continuation of any
default under this Agreement, amounts outstanding under this Agreement will
at the option of the Bank bear interest at a rate per annum which is N/A
(____) percentage points higher than the rate of interest otherwise
provided under this Agreement. This will not constitute a waiver of any
default.
IV. FEES
A. PROMISE TO PAY FEES AND COSTS. The Borrower promises to pay according to
the terms of this Agreement, all amounts outstanding and fees and costs
which may be assessed under this Agreement including reasonable attorneys'
fees (which may include the allocated costs of in-house counsel), court
costs, and collection costs.
B. LOAN FEE. Upon the date of this Agreement, the Borrower will pay a
non-refundable loan fee of $250.00. If this is a Line, this fee may be paid
by check, charged to the Account, or treated as an advance. The advance
will be subject to all the terms of this Agreement.
C. OVERDRAFT TRANSFER FEE. Each overdraft advance shall be subject to an
overdraft transfer fee equal to 2 percent (2%) of the amount of the
advance, subject to a minimum of $3 and a maximum of $15.
D. LATE FEES. A late charge of 6% of the unpaid portion of the payment amount,
with a minimum fee of $5.00 and a maximum fee of $15.00, may be assessed if
payment is not received within fifteen days after the date the payment is
due. This fee may be changed by the Bank at its option.
E. OVERLIMIT FEES. An overlimit fee of $15 may be assessed each time the
Borrower exceeds the Credit Limit, regardless of whether the Bank permits
the Borrower to exceed the Credit Limit.
F. RETURNED ITEM FEE. The Borrower may be charged a returned item fee of $10
each time a payment is returned or if there are insufficient funds in the
Account when a payment is attempted through Automatic Payment Service.
G. STATEMENT COPY FEE. A fee may be charged for each statement copy requested,
plus an hourly charge for any necessary research time.
V. SECURITY
A. SECURITY. As security for payment of this Line or Loan and all obligations
provided for herein, the Borrower grants to the Bank a security interest in
the property described below. The Borrower also grants to the Bank a
security interest in all renewals of this property, other property
substituted for it, and proceeds.
SAVINGS/CD - 0694501340 , GD BAG
B. STOCKS/BONDS.
1. MARGIN CALL. If at any time the Credit Limit, if a Line, or the
outstanding balance, if a Loan, to collateral value ratio exceeds 60% for a
Line or Loan secured partially or completely by stock, or 65% for a Line or
Loan secured only by bonds, the Bank may send the Borrower notice
requesting additional collateral. The Bank may determine collateral value
using any reasonable method. If the additional collateral is not received
within the time given in the notice, the Borrower will be in default and
the Bank may terminate the Line or Loan as provided in Section IX.
2. RESTRICTION ON USE OF FUNDS. The Borrower agrees not to use the Line or
Loan to finance the purchase of margin stock (as defined by Regulation U)
or to pay obligations incurred in the purchase of such securities.
C. INSURANCE. The Borrower agrees to maintain all risk property damage
insurance policies covering the tangible property comprising the security.
Each insurance policy must be in an amount acceptable to the Bank. The
insurance must be issued by an insurance company acceptable to the Bank and
must include a lender's loss payable endorsement in favor of the Bank in a
form acceptable to the Bank. If the Borrower fails to maintain insurance on
the security described in Paragraph A. above, the Bank may, in its sole
discretion, obtain such insurance and the cost of the premiums shall be
payable on demand with interest at the interest rate herein.
VI. CONDITIONS
The Bank must receive the following items in form and content acceptable to
the Bank before it is required to extend any credit to the Borrower under
this Agreement.
A. AUTHORIZATION. Evidence that the execution, delivery and performance by the
Borrower of this Agreement and any instrument or agreement required under
this Agreement have been duly authorized.
B. GUARANTIES. Guaranties signed by those persons and in the amounts as
required.
C. SECURITY AGREEMENT. Signed original security agreement, financing
statements and fixture filings (together with collateral in which the Bank
requires a possessory security interest, which the Bank requires.
D. EVIDENCE OF PRIORITY. Evidence that security interests and liens in favor
of the Bank are valid, enforceable, and prior to all others' rights and
interests, except those the Bank consents to in writing.
VII. FINANCIAL STATEMENTS
The Borrower represents and warrants that:
A. Statements and data submitted in writing by the Borrower to the Bank in
connection with this request for credit are true and correct, and said
statements truly present the financial condition of the Borrower as of the
date thereof and the results of the operations of the Borrower for the
period covered thereby, and have been prepared on a consistently-maintained
basis, in accordance with generally accepted accounting principles or
another basis acceptable to the Bank. Since such date there have been no
material adverse changes in the ordinary course of business. The Borrower
has no knowledge of any liabilities, contingent or otherwise, at such date
not reflected in said statements, and the Borrower has not entered into any
special commitments or substantial contracts which are not reflected in
said statements, other than in the ordinary and normal course of its
business, which may have a materially adverse effect upon its financial
condition, operations or business as now conducted.
B. The representation and warranty contained in Section VII.A. above shall
apply to each financial statement submitted pursuant to Section VIII.B.
herein and shall be continuous and shall be automatically restated for each
such financial statement as of the date of such statement.
VIII. COVENANTS
The Borrower agrees that so long as credit is available under this
Agreement and until the Bank is repaid in full, it will, unless the Bank
shall otherwise consent in writing:
A. INSURANCE. Maintain public liability, property damage and worker's
compensation insurance and insurance on all its insurable property against
fire and other hazards with responsible insurance carriers to the extent
usually maintained by similar businesses.
B. RECORDS AND REPORTS. Maintain a standard and modern system of accounting in
accordance with generally accepted accounting principles or another basis
acceptable to the Bank on a basis consistently maintained; permit Bank's
representatives to have access to and to examine its properties, books and
records at all reasonable times; and furnish the Bank: (1) Promptly, a
notice in writing of the occurrence of any event of default hereunder or of
any event which would become an event of default hereunder upon giving of
notice, lapse of time, or both; and (2) The following financial information
and statements by one year from the date of this Agreement and annually
thereafter, and such other information relating to the affairs of the
Borrower as the Bank may request from time to time: a. Borrower's Financial
Statement. The Borrower's annual financial statements compiled by a
Certified Public Accountant ("CPA") acceptable to the Bank; b. Borrower's
Tax Return. The Borrower's federal income tax return (with all K-1 forms
attached), together with a statement of any contributions made by the
Borrower to any subchapter S corporation or trust, and copies of any
extensions of the filing date; c. Guarantor's Financial Statement. Each
guarantor's annual financial statement in form satisfactory to the Bank;
and
d. Guarantor's Tax Return. Copies of each guarantor's federal income tax
return (with all K-1 forms attached), together with a statement of any
contributions made by the guarantor to any subchapter S corporation or
trust, and copies of any extensions of the filing date.
C. TYPE OF BUSINESS. Not make any substantial change in the character of its
business.
D. PURPOSE. Use the proceeds of this loan solely for business purposes.
E. OUTSIDE INDEBTEDNESS. Not create, incur, assume or permit to exist any
indebtedness for borrowed money other than loans from the Bank except
obligations now existing as shown on the credit application or the personal
financial statement or data submitted with such application pursuant to
Section VII.A. herein; or sell or transfer, either with or without
recourse, any accounts or notes receivable or any money due or to become
due.
F. LIENS AND ENCUMBRANCES. Not create, incur, assume or permit to exist any
mortgage, deed of trust, security interest (whether possessory or
non-possessory) or other encumbrance of any kind (including without
limitation, the charge upon property purchased under conditional sale or
other title retention agreement) upon or on any of its property or assets,
or sell, assign, pledge or otherwise transfer for security any of its
accounts, contract rights, general intangibles, or chattel paper with or
without recourse, whether now owned or hereafter acquired (hereinafter
collectively called "Liens"), other than (1) Liens for taxes not delinquent
or being contested in good faith in appropriate proceedings; (2) Liens in
connection with worker's compensation, unemployment insurance or social
security obligations; (3) Mechanics', workmen's, materialmen's, landlords',
carriers', or other like liens arising in the ordinary and normal course of
business with respect to obligations which are not due or which are being
contested in good faith; (4) Liens on margin stock as defined within
Regulation U of the Board of Governors of the Federal Reserve System, as
amended from time to time; and (5) Liens in favor of the Bank.
G. LOANS, SECONDARY LIABILITIES. Not make any loans or advances to any person
or other entity other than in the ordinary and normal course of its
business as now conducted; or guarantee or otherwise become liable upon the
obligation of any person or other entity, except by endorsement of
negotiable instruments for deposit or collection in the ordinary and normal
course of its business.
H. ACQUISITION OR SALE OF BUSINESS; MERGER OR CONSOLIDATION. Not purchase or
otherwise acquire the assets or business of any person or other entity, or
liquidate, dissolve, merge or consolidate, or commence any proceedings
therefor; or sell any assets except in the ordinary and normal course of
its business as now conducted, or sell, lease, assign, or transfer any
substantial part of its business or fixed assets, or any property or other
assets necessary for the continuance of its business as now conducted,
including without limitation the selling of any property or other asset
accompanied by the leasing back of the same.
I. COMPLIANCE WITH LAWS. Comply with the laws, regulations and orders of any
government body with authority over the Borrower's business.
J. TRUSTS. Not transfer any of the Borrower's assets to a trust.
IX. EVENTS OF DEFAULT
The occurrence of any of the following events of default shall, at the
Bank's option, terminate the Bank's obligation to extend credit under this
Agreement, and make all sums of principal and interest immediately due and
payable, all without demand, presentment or notice, all of which are hereby
expressly waived and the Bank may exercise all its rights against the
Borrower, any guarantor and any collateral as provided by law.
A. FAILURE TO PAY INDEBTEDNESS. Failure to pay when due any obligation of the
Borrower to the Bank.
B. OTHER DEFAULTS. The occurrence of any event of default whether or not
waived by the obligee under any other indebtedness extended by any
institution or individual to the Borrower.
C. BREACH OF COVENANT. Failure of the Borrower to perform any other term or
condition of this Agreement binding upon the Borrower.
D. BREACH OF WARRANTY. Any of the Borrower's representations or warranties
made herein or any statement or certificate at any time given pursuant
hereto or in connection herewith shall be false or misleading in any
material respect.
E. INSOLVENCY; RECEIVER OR TRUSTEE. The Borrower, any guarantor of the
Indebtedness of the Borrower to the Bank or general partner of the Borrower
shall become insolvent; or admit its inability to pay its debts as they
mature, or make an assignment for the benefit of creditors; or apply for or
consent to the appointment of a receiver or trustee for it or for a
substantial part of its property or business.
F. JUDGMENTS; ATTACHMENTS. Any money judgment, writ, or warrant of attachment,
or similar process shall be entered or filed against the Borrower or any
guarantor of any of the Borrower's obligations to the Bank or any of its
assets and shall remain unvacated, unbonded or unstayed for a period of 10
days or in any event later than 5 days prior to the date of any proposed
sale thereunder.
G. BANKRUPTCY. Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against the
Borrower, any
guarantor of the indebtedness of the Borrower to the Bank or general
partner of the Borrower.
H. MATERIAL ADVERSE CHANGE. A material adverse change occurs in the Borrower's
financial condition or the financial condition of any guarantor of the
Borrower's obligations to the Bank, which, in the opinion of the Bank,
would affect the ability of the Borrower to repay any advances made by the
Bank hereunder or any other of the Borrower's obligations hereunder, or of
such guarantor to perform under its guaranty.
I. GUARANTY. Any guaranty of the indebtedness of the Borrower to the Bank, at
any time after the execution and delivery of such guaranty and for any
reason other than satisfaction in full of all indebtedness incurred
hereunder, ceases to be in full force and effect or is declared to be null
and void; or the validity or enforceability thereof is contested in a
judicial proceeding; or any guarantor denies that it has any further
liability under such guaranty; or any guarantor defaults in any provision
of any guaranty; or any financial information provided by any guarantor is
false or misleading in any material respect.
J. DEATH. The Borrower or any guarantor dies; if the Borrower is a sole
proprietorship, any owner dies; if the Borrower is a trust, a trustor dies;
if the Borrower is a partnership, any general partner dies; or if the
Borrower is a corporation, any principal officer or majority stockholder
dies.
K. GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's or any guarantor's
financial condition or ability to repay.
L. DEFAULT IN SECURITY DOCUMENTS. A default shall occur in any document or
instrument provided by the Borrower to the Bank in connection with the
security provided the Bank pursuant to Section V.A. herein.
M. COLLATERAL VALUE. The Credit Limit, if a Line, or the principal balance, if
a Loan, equals or exceeds the collateral value.
▇. ▇▇▇▇ PRIORITY. The Bank fails to have an enforceable first lien (except for
any prior liens to which the Bank has consented in writing) on or security
interest in any property given as security for this Line or Loan.
O. BANK REMEDIES. If the Borrower is in default the Bank may also without
prior notice, do any one or more of the following: (a) exercise any
remedies available to a secured party under the Uniform Commercial Code or
any other applicable law; (b) proceed in the foreclosure of its security
interest in the property described in the paragraph entitled "Security;"
(c) sell or otherwise dispose of the property at public or private sale,
upon terms and in such manner as it may determine and it may purchase same
at such sale; (d) refrain from disposing of the property and continue to
maintain possession of the property for such time as it deems appropriate
and the Borrower takes the risk of any depreciation in the value of the
property pending disposition; or (e) transfer any of the property into the
name of the Bank or the Bank's nominee.
X. MISCELLANEOUS PROVISIONS
A. FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the
Bank, in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
B. OTHER AGREEMENTS. Nothing herein shall in any way limit the effect of the
conditions set forth in any security or other agreement executed by the
Borrower, but each and every condition hereof shall be in addition thereto.
C. GOVERNING LAW AND WAIVER. The Borrower understands and agrees that (1) this
Agreement will be governed by and interpreted in accordance with the laws
of the State of California; and (2) the Borrower waives its right, under
Section 1808.21 of the California Vehicle Code, to the confidentiality of
its residence address in the records of the Department of Motor Vehicles,
and the Borrower authorizes the Bank to request its residence address from
the Department of Motor Vehicles if required by the Bank in enforcing this
Agreement.
D. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable, such determination shall not affect the validity of the
remaining provisions of this Agreement.
E. SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's and the
Bank's successors and assigns. The Borrower agrees that it may not assign
this Agreement without the Bank's prior consent.
F. HAZARDOUS WASTE INDEMNIFICATION. The Borrower will indemnify and hold
harmless the Bank from any loss or liability directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a hazardous
substance. This indemnity will apply whether the hazardous substance is on,
under or about the Borrower's property or operations or property leased to
the Borrower. The indemnity includes but is not limited to attorneys' fees
(including the reasonable estimate of the allocated cost of in-house
counsel and staff). The indemnity extends to the Bank, its parent,
subsidiaries and all of their directors, officers, employees, agents,
successors, attorneys and assigns. For these purposes, the term "hazardous
substances" means any substance which is or becomes designated as
"hazardous" or "toxic" under any federal, state or local law. This
indemnity will survive repayment of the Borrower's obligations to the Bank.
G. MULTIPLE BORROWERS. If there are two or more Borrowers under this
Agreement, each will be individually obligated to repay the Bank in full,
and all will be obligated together. The Bank may terminate the availability
of credit under this Agreement if the Bank receives conflicting
instructions from the Borrowers.
H. ONE AGREEMENT. This Agreement and any related security or other agreements
required by this Agreement collectively: (1) represent the sum of the
understandings and agreements between the Bank and the Borrower concerning
this credit; and (2) replace any prior oral or written agreements between
the Bank and the Borrower concerning this credit; and (3) are intended by
the Bank and the Borrower as the final, complete and exclusive statement of
the terms agreed to by them. In the event of any conflict between this
Agreement and any other agreements required by this Agreement, this
Agreement will prevail.
I. CHANGE OF TERMS. The bank may change any term or condition of this
Agreement, to the extent permitted by law, by providing written notice to
the Borrower. Any such change shall apply to any unpaid balance outstanding
under this Agreement as well as any future transactions under this
Agreement.
J. NOTICE. As required herein, notice to the Bank shall be sent to the address
shown on the Borrower's latest billing statement, to be effective when
received. Any written notice to the Borrower shall be sent to the
Borrower's address in the Bank's records, to be effective when deposited in
the U.S. mail, postage prepaid, unless otherwise stated in the notice. The
Borrower agrees to notify the Bank promptly in writing of a change in the
Borrower's mailing address.
K. COSTS. If the Bank incurs any expense in connection with administering or
enforcing this Agreement, or if the Bank takes collection action under this
Agreement, it is entitled to costs and reasonable attorneys' fees,
including any allocated costs of in-house counsel. At the Bank's option,
the Bank may add these costs to the principal amount outstanding under this
Agreement.
L. ATTORNEYS' FEES. In the event of a lawsuit or arbitration procedure, the
prevailing party is entitled to recover costs and reasonable attorneys'
fees (including any allocated costs of in-house counsel) incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator.
M. TELEPHONE MONITORING. To the extent not prohibited by law, the Bank's
personnel may listen to telephone calls between the Borrower and the Bank's
employees for the purpose of monitoring the quality of service the Borrower
receives.
N. CANCELLATION BY THE BORROWER. The Borrower may cancel this Agreement by
written notice to the Bank. The Borrower's request will take effect at the
time it is received by the Bank. If there is more than one Borrower, the
Bank may treat a request by one of them under this paragraph as a request
by all of them. At the time of cancellation, the outstanding balance will
be immediately due and payable.
O. ARBITRATION. 1. This paragraph concerns the resolution of any controversies
or claims between the Borrower and the Bank, including but not limited to
those that arise from: (a) This Agreement (including any renewals,
extensions or modifications of this Agreement); (b) Any document, agreement
or procedure related to or delivered in connection with this Agreement; (c)
Any violation of this Agreement; or (d) Any claims for damages resulting
from any business conducted between the Borrower and the Bank, including
claims for injury to persons, property or business interests (torts).
2. At the request of the Borrower or the Bank, any such controversies or
claims will be settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply despite the
provisions of paragraph C., "Governing Law and Waiver," above.
3. Arbitration proceedings will be administered by the American Arbitration
Association and will be subject to its commercial rules of arbitration.
4. For purposes of the application of the statute of limitations, the
filing of an arbitration pursuant to this paragraph is the equivalent of
the filing of a lawsuit, and any claim or controversy which may be
arbitrated under this paragraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide whether any
such claim or controversy is barred by the statute of limitations and, if
so, to dismiss the arbitration on that basis.
5. If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
6. The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
7. This provision does not limit the right of the Borrower or the Bank to:
(a) exercise self-help remedies such as setoff; (b) foreclose against or
sell any real or personal property collateral; or (c) act in a court of
law, before, during or after the arbitration proceeding to obtain (i) an
interim remedy; and/or (ii) additional or supplementary remedies.
8. The pursuit of or a successful action for interim, additional or
supplementary remedies, or the filing of a court action, does not
constitute a waiver of the right of the Borrower or the Bank, including the
suing party, to submit the controversy or claim to arbitration if the other
party contests the lawsuit.
This Agreement is effective as of the date stated at the top of the first
page.
MEDICAL SCIENCE SYSTEMS, INC.
By: By:
U. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
By: By:
▇▇▇▇ ▇. ▇▇▇▇▇, President
By: By:
Classification: Confidential
BANK OF AMERICA
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SECURITY AGREEMENT
(DEPOSIT ACCOUNTS)
1. GRANT OF SECURITY INTEREST.
As security for any and all Indebtedness (as defined below) of MEDICAL
SCIENCE SYSTEMS, INC. ("Debtors"), the undersigned MEDICAL SCIENCE SYSTEMS,
INC. ("Pledgors") hereby irrevocably and unconditionally grant a security
interest in and assign and transfer the Deposit Accounts (as defined below)
to Bank of America National Trust and Savings Association ("Secured
Party").
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2. INDEBTEDNESS.
"Indebtedness" means all debts, obligations or liabilities now or hereafter
existing, absolute or contingent, of Debtors or any one or more of them to
Secured Party, whether voluntary or involuntary, whether due or not due, or
whether incurred directly or indirectly or acquired by Secured Party by
assignment or otherwise. Unless otherwise agreed in writing, "Indebtedness"
shall not include such debts, obligations or liabilities which are or may
hereafter be "consumer credit" subject to the disclosure requirements of
the Federal Truth-in-Lending law or any regulation promulgated thereunder.
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3. DEPOSIT ACCOUNTS.
For purposes of this Agreement, "Deposit Accounts" means the following
deposit account(s) opened by Pledgors with Secured Party, any renewals or
rollovers thereof, and any proceeds thereof:
DEPOSIT ACCOUNT NUMBER OPEN OR ISSUE DATE CURRENT PRINCIPAL AMOUNT MATURITY DATE
---------------------- ------------------ ------------------------ -------------
06945-01340
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4. NO OTHER SECURITY INTERESTS.
Pledgors hereby represent and warrant to Secured Party that they own each
of the Deposit Accounts free and clear of any and all liens, encumbrances,
or interest of any third parties other than the security interest of
Secured Party.
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5. WITHDRAWALS; RENEWALS; ROLLOVERS.
Pledgors shall not withdraw funds from the Deposit Accounts without Secured
Party's prior written consent. Pledgors agree that, upon maturity of any
Deposit Account with a maturity date, such Deposit Account shall be renewed
at Secured Party's then prevailing rate of interest for successive ninety
(90) day periods (or such other time period as may be agreed by Secured
Party and Pledgors).
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6. CERTIFICATES. Upon Secured Party's request, Pledgors shall deliver any
certificate evidencing any of the Deposit Accounts to Secured Party, duly
endorsed over to Secured Party, as necessary.
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7. INTEREST PAYMENTS.
Notwithstanding Secured Party's security interest in the proceeds of the
Deposit Accounts, Secured Party will continue to pay to Pledgors interest
accruing thereunder until the occurrence of an Event of Default under this
Agreement.
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8. COSTS.
All advances, charges, costs and expenses, including reasonable attorneys'
fees, incurred or paid by Secured Party in exercising any right, power or
remedy conferred by this Agreement or in the enforcement thereof, shall
become a part of the Indebtedness
secured hereunder and shall be paid to Secured Party by Debtors immediately
and without demand, with interest thereon at an annual rate equal to the
highest rate of interest of any Indebtedness secured by this Agreement.
Such costs and attorneys' fees shall include, without limitation, the
allocated cost of in-house counsel.
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9. EVENTS OF DEFAULT.
At the option of Secured Party and without necessity of demand or notice,
all or any part of the Indebtedness of Debtors shall immediately become due
and payable irrespective of any agreed maturity upon the happening of any
of the following events ("Events of Default"); provided, however, that all
Indebtedness of Debtors automatically shall become immediately due and
payable if a bankruptcy petition is filed with respect to any Debtor: (a)
failure to keep or perform any of the terms or provisions of this
Agreement; (b) default in the payment of principal or interest or any other
default with respect to any Indebtedness of Debtors; (c) the levy of any
attachment, execution or other process against any of the collateral; (d)
the death, insolvency, failure in business, commission of an act of
bankruptcy, general assignment for the benefit of creditors, filing of any
petition in bankruptcy or for relief under the provisions of the Bankruptcy
Code, of, by, or against any Debtor or Pledgor or any comaker,
accommodation maker, surety or guarantor of the Indebtedness or any
endorser of any note or other document evidencing the Indebtedness. Upon
the happening of any of the foregoing specified events, any agreement for
further financial accommodation by Secured Party shall terminate at its
option.
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10. REMEDIES.
Upon the happening of any Event of Default, Secured Party may then exercise
as to such collateral all the rights, powers and remedies of an owner and
all rights, powers and remedies of a secured party under the California
Uniform Commercial Code and other laws. Secured party may exercise any
rights of setoff, without notice, against any funds in any Deposit Account.
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11. WAIVERS.
Pledgors waive any right to require Secured Party to (a) proceed against
any person, (b) proceed against or exhaust any collateral, or (c) pursue
any other remedy in Secured Party's power; and waive any defense arising by
reason of any disability or other defense of any Debtor or any other
person, or by reason of the cessation from any cause whatsoever of the
liability of Debtors or any other person. Pledgors waive any right of
subrogation, reimbursement, indemnification, and contribution (contractual,
statutory or otherwise), including without limitation, any claim or right
of subrogation under the Bankruptcy Code (Title 11 of the U.S. Code) or any
successor statute, arising from the existence or performance of this
Agreement, and Pledgors waive any right to enforce any remedy which Bank
now has or may hereafter have against Debtors or against any other person,
and waive any benefit of, and any right to participate in, any security now
or hereafter held by Secured Party. If any Pledgor is not also a Debtor
with respect to a specified Indebtedness, such Pledgor authorizes Secured
Party without notice or demand and without affecting Pledgor's liability
hereunder from time to time to: (a) renew, extend, accelerate or otherwise
change the time for payment of, or otherwise change the terms of, such
Indebtedness or any part thereof, including increase or decrease of the
rate of interest thereon; (b) take and hold security, other than the
collateral herein described, for the payment of such Indebtedness or any
part thereof, and exchange, enforce, waive and release the collateral
herein described or any part thereof or any such other security; and (c)
release or substitute Debtors, or any of the endorsers or guarantors of
such Indebtedness or any part thereof, or any other parties thereto.
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12. TRANSFER OF COLLATERAL.
Upon the transfer of all or any part of the Indebtedness, Secured Party may
transfer all or any part of the collateral and shall be fully discharged
thereafter from all liability and responsibility with respect to such
collateral so transferred, and the transferee shall be vested with all the
rights and powers of Secured Party hereunder with respect to such
collateral so transferred; but with respect to any collateral not so
transferred Secured Party shall retain all rights and powers hereby given.
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13. CONTINUING AGREEMENT.
This is a continuing Agreement and all the rights, powers and remedies
hereunder shall apply to all past, present and future Indebtedness of
Debtors, including that arising under successive transactions which shall
either continue the Indebtedness, increase or decrease it, or from time to
time create new Indebtedness after all or any prior Indebtedness has been
satisfied, and notwithstanding the death, incapacity, or bankruptcy of any
Debtor, or any other event or proceeding affecting any Debtor.
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14. CONTINUING POWERS.
Until all Indebtedness shall have been paid in full all rights, powers and
remedies granted to Secured Party hereunder shall continue to exist and may
be exercised by Secured Party at the time specified hereunder irrespective
of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of any Debtor may have ceased.
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15. OTHER RIGHTS.
The rights, powers and remedies given to Secured Party by this Agreement
shall be in addition to all rights, powers and remedies given to Secured
Party by virtue of any statute or rule of law. Any forbearance or failure
or delay by Secured Party in exercising any right, power or remedy
hereunder shall not be deemed to be a waiver of such right, power or
remedy, and any single or partial exercise of any right, power or remedy
hereunder shall not preclude the further exercise thereof; and every right,
power and remedy of Secured Party shall continue in full force and effect
until such right, power or remedy is specifically waived by an instrument
in writing executed by Secured party.
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16. PLEDGORS' RESIDENCE.
Each Pledgor represents and warrants that Pledgor resides in, or, if
Pledgor is not an individual, has its executive office in the state
specified on the signature page hereof. Each Pledgor agrees to give Secured
Party at least thirty (30) days' notice before changing its state of
residence or chief executive office.
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17. SINGULAR AND PLURAL.
All words used herein in the plural shall be deemed to have been used in
the singular where the context and construction so require, and the
obligations and undertakings hereunder are joint and several.
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18. TERMINATION.
This Security Agreement shall remain in full force and effect until
terminated by Secured Party.
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19. CALIFORNIA LAW.
This Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, Secured Party and Pledgors have executed this Agreement
as of June 05, 1998 .
MEDICAL SCIENCE SYSTEMS, INC.
By: Pledgor(s) Address:
U. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Chief Financial Officer
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., #▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
By:
▇▇▇▇ ▇. ▇▇▇▇▇, President
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
By: Bank Address:
Bank of America NT & SA
Business Lending Services #1738
P. O. ▇▇▇ ▇▇▇▇
By: ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
TAXPAYER INFORMATION (OWNER'S CERTIFICATION)
My Taxpayer Identification Number (TIN) to be used for tax reporting purposes
is: _______________________. Under penalties of perjury, I certify that the
taxpayer information provided is true, correct and complete.
x
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Owner's Signature (Holder of TIN to be used for tax reporting purposes)
▇▇▇▇ ▇. ▇▇▇▇▇, President
(Check if Applicable)
|_| EXEMPT FOREIGN PERSONS, INDIVIDUALS. I am neither a citizen nor a resident
of, nor am I doing business in the United States, and I have not, and do
not plan to be, present in the United States for 183 or more days during
the calendar year.*
|_| EXEMPT FOREIGN PERSONS, NON-INDIVIDUALS. The Owner is not a U.S.
corporation, partnership, estate or trust and the collateral is not
effectively connected (related) to any U.S. trade or business the Owner is
currently engaged in or plans to engage in during the year.*
|_| I am subject to backup withholding under the provisions of Internal Revenue
Section Code 3406(a)(1)(C) as notified by the Internal Revenue Service.
* Exempt Foreign Person status is valid for three years. Prior to the third
year you will be required to recertify your status as an Exempt Foreign
Person.