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LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of May 13, 1998, by and
among ▇▇▇▇ ▇▇▇▇▇ ("Lender") the Borrowers described below and the Guarantor
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, Lender and Borrowers 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(s): Lifeserv Technologies, Inc., Performance Pharmacy
Systems, Inc., Medication Management Systems, Inc., Cart-▇▇▇▇,
Inc., and Systems Professionals, Inc.
B. Borrowers' Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇
C. Guarantor: ▇▇▇▇ ▇. ▇▇▇▇▇▇
D. 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.
E. Loan. Any loan described in Section 2 hereof and any subsequent
loan which states that it is subject to this Loan Agreement.
F. Loan Documents. Loan Documents means this Loan Agreement and any
and all promissory notes executed by any Borrower in favor of
Lender and all other documents, instruments (including, without
limitation, warrants), guarantees, certificates and agreements
executed and/or delivered by any Borrower in connection with the
Loan.
G. 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. Lender hereby agrees to make a term loan to Borrowers in the
principal amount of $500,000.00. 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. Borrowers agree 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 any Borrower and those obligations listed
on the current listing of accounts payable of Borrowers that is attached
hereto as Exhibit "A."
C. Extension of Loan. The maturity of the Note shall be automatically
extended from July 31, 1998 until October 31, 1998 if Lifeserv
Technologies, Inc. ("Lifeserv") has not raised at least $3,500,000.00
pursuant to a private placement or other debt offering before July 31, 1998
provided that: (a) no events of default have occurred under the loan
agreement between the Borrowers and Southtrust Bank; (b) the pending
Chapter 11 case of Medical Management Technologies, Inc. has not been
converted to a Chapter 7 case; (c) no events of default have occurred under
the loan agreement and/or royalty agreement with the Long Family Trust; (d)
Jesup & ▇▇▇▇▇▇ has not withdrawn from its engagement with the Borrowers;
(e) no defaults exist under this Agreement; and (f) the Borrowers have
delivered to Lender a certificate of their respective Chief Executive
Officer that all of the foregoing items (a) through (e) above have been
satisfied and that the Loan is not subject to any setoff, defense or
counterclaim by any Borrower.
3. REPRESENTATIONS AND WARRANTIES OF BORROWERS. Borrowers hereby represent
and warrant to Lender as follows:
A. Good Standing. Each 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
Borrower does business.
B. Authority and Compliance. Each 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 such 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 each 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 each Borrower constitute valid and legally binding obligations
of each such Borrower, enforceable in accordance with their terms.
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D. Litigation. There is no proceeding involving any Borrower pending
or, to the knowledge of any Borrower, threatened before any court or
governmental authority, agency or arbitration authority, except as
disclosed to Lender in writing and acknowledged by 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 any Borrower and no provision of any
existing agreement, mortgage, indenture or contract binding on any 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. Ownership of Assets. Each Borrower has good title to its assets,
and its assets are free and clear of liens, except those granted to Lender
and as disclosed to Lender prior to the date of this Agreement.
G. Taxes. All taxes and assessments due and payable by each Borrower
have been paid or are being contested in good faith by appropriate
proceedings and each Borrower has filed all tax returns which it is
required to file.
H. Financial Statements. The financial statements of Borrowers
heretofore delivered to Lender have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved and fairly
present Borrowers' financial condition as of the date or dates thereof, and
there has been no material adverse change in any Borrower's financial
condition or operations since December 31, 1997. All factual information
furnished by Borrowers to Lender in connection with this Agreement and the
other Loan Documents is and will be accurate and complete on the date as of
which such information is delivered to Lender and is not and will not be
incomplete by the omission of any material fact necessary to make such
information not misleading.
I. Place of Business. Each Borrower's chief executive office is
located at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇.
J. Environmental The conduct of each Borrower's business operations
and the condition of each 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.
K. Solvency. The value of the assets of each Borrower exceeds the
amount of the liabilities of each such Borrower as of the date hereof.
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L. 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.
4. REPRESENTATIONS AND WARRANTIES OF GUARANTOR. Guarantor hereby represents
and warrants to Borrowers that: (a) the stock certificate or certificates that
will be delivered to Lender pursuant to the Pledge Agreement of even date
herewith between Guarantor and Lender (the "Pledge Agreement") have been sent to
the transfer agent for reissuance in the name of Guarantor without any
restrictive legend printed on such reissued certificate or certificates, (b)
that a copy of the transmittal letter from the Guarantor to the transfer agent
has been delivered to Lender, and (c) a copy of an opinion of counsel has been
delivered to Lender requesting removal of any restrictive legends and directing
the transfer agent to deliver new certificates representing such securities to
▇▇▇▇ ▇▇▇▇▇▇▇, as attorney for Lender, on or before ten (10) days from the date
hereof.
5. REPRESENTATIONS AND WARRANTIES OF LENDER. Lender hereby represents and
warrants to Borrowers that Lender: (a) is an "accredited investor," as that term
is defined in Exhibit "B" 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 "B," in connection with evaluating the merits and risks of an
investment in securities of the Company.
6. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of Borrowers under the Note, each Borrower will, unless 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 Lender and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Lender's officers
or authorized representatives to visit and inspect such Borrower's books of
account and other records at such reasonable times and as often as Lender
may desire, and pay the reasonable fees and disbursements of any
accountants or other agents of Lender selected by Lender for the foregoing
purposes. Unless written notice of another location is given to Lender,
each Borrower's books and records will be located at such Borrower's chief
executive office set forth above. All financial statements called for below
shall be prepared in form and content acceptable to Lender.
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In addition, each Borrower will:
i. Furnish to Lender audited financial statements of such
Borrower for each fiscal year of such Borrower, within
ninety (90) days after the close of each such fiscal year.
ii. Furnish to Lender Borrower-prepared financial statements of
such Borrower for each quarter of each fiscal year of such
Borrower, within forty-five (45) days after the close of
each such period.
iii. Furnish to Lender promptly such additional financial
information and reports with respect to the business
operations and financial condition of each Borrower as
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 Lender and providing for at least 30
days prior notice to Lender of any cancellation thereof. Satisfactory
evidence of such insurance will be supplied to Lender prior to funding
under the Loan(s) and 30 days prior to each policy renewal.
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 Lender in writing of
(i) any condition, event or act which comes to its attention that would or
might materially adversely affect such Borrower's financial condition or
operations or Lender's rights under the Loan Documents, (ii) any litigation
filed by or against such 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.
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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 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 such Borrower's business
operations; and (ii) all claims made or threatened by any third party
against such Borrower relating to damages, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials. Each
Borrower shall immediately notify Lender of any remedial action taken by
Borrower with respect to such Borrower's business operations. Borrower will
not use or permit any other party to use any Hazardous Materials at any of
such Borrower's places of business or at any other property owned by such
Borrower except such materials as are incidental to such Borrower's normal
course of business, maintenance and repairs and which are handled in
compliance with all applicable environmental laws. Each Borrower agrees to
permit Lender, its agents, contractors and employees to enter and inspect
any of such Borrower's places of business or any other property of such
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 such Borrower is complying with
this covenant and Borrower shall reimburse Lender on demand for the costs
of any such environmental investigation and audit. Each Borrower shall
provide 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 such Borrower's business operations within five (5) days
of the request therefore.
7. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of Borrowers under the Note, no 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 any Borrower.
B. Liens. Grant, suffer or permit any contractual or noncontractual
lien on or security interest in its assets, except in favor of Lender and
those previously disclosed to Lender and which are described in Exhibit "C"
attached hereto, or fail to promptly pay when due all lawful claims,
whether for labor, materials or otherwise.
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C. 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.
D. Extensions and Credit. Make or permit any subsidiary to make any
loan or advance to any person or entity, or purchase or otherwise acquire,
or permit any subsidiary to purchase or otherwise acquire, any capital
stock, assets, obligations or other securities of, make any capital
contribution to, or otherwise invest or acquire any interest in any entity,
or participate as a partner or joint venturer with any person or any
entity, except for the purchase or direct obligations in the United States
or for any agency thereof with maturities of less than one year.
E. Borrowings. Create, incur, assume or become liable in any manner
for any indebtedness (for borrowed money, deferred payment for the purchase
of assets, lease payments, as surety or guarantor for the debt of another,
or otherwise) other than to Lender except for (i) existing obligations of
Borrowers that are described in Exhibit "D" attached hereto, and (ii)
normal trade debts incurred in the ordinary course of each Borrower's
business.
F. Dividends and Distributions. Make any distribution or pay any
dividends (other than dividends payable in common stock of any 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.
G. Management Change. Make any change in the president of any Borrower
or the chief executive officer of any Borrower, if applicable.
H. Payments to SouthTrust Bank. Make any payments to SouthTrust Bank,
National Association ("SouthTrust") pursuant to any existing indebtedness
of any Borrower to SouthTrust.
I. Preferred Stock. Authorize or issue additional shares of preferred
stock, except for the issuance of up to 35,000 shares of Series A Preferred
Stock through Jesup & ▇▇▇▇▇▇ Securities Corporation pursuant to a private
placement memorandum issued by LifeServ Technologies, Inc.
J. Consideration for Issuance of Stock. Issue or sell shares of its
capital stock or rights, options, warrants, or convertible or exchangeable
securities containing the right to subscribe for or purchase its capital
stock (other than pursuant to an employee benefit plan) for a consideration
consisting, in whole or in part, of property other than cash.
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8. DEFAULT. Borrowers shall be in default under this Agreement and under
each of the other Loan Documents if they shall default in the payment of any
amounts due and owing under the Loan or should any of them 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 any Borrower to
Lender. Borrower shall also be in default under this Agreement if (a) any
Borrower defaults under the Second Amended and Restated Loan and Security
Agreement dated as of September 5, 1996, as amended, by and among SouthTrust,
certain of the Borrowers, Medical Technology Systems, Inc. ("MTS"), and certain
other parties, (b) if any Borrower or MTS defaults under or refuses to issue any
shares of stock pursuant to any stock warrant that is issued to 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.
9. REMEDIES UPON DEFAULT. If an event of default shall occur, Lender shall
have all rights, powers and remedies available under each of the Loan Documents
as well as all rights and remedies available at law or in equity.
10 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:
Borrowers and Guarantor:
LifeServ Technologies, Inc.,
Performance Pharmacy Systems, Inc.,
Medication Management Systems, Inc.,
Cart-▇▇▇▇, Inc., and
▇▇▇▇ ▇. ▇▇▇▇▇▇
Systems Professionals, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax. No.(▇▇▇) ▇▇▇-▇▇▇▇
Lender:
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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:
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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.
11. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrowers shall pay to Lender
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees incurred by 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 Lender for which Borrowers are
obligated to reimburse Lender in accordance with the terms of the Loan
Documents.
12. MISCELLANEOUS. Borrowers and 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
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 Lender, and no delay in exercising any right shall operate
as a waiver thereof, nor shall any single or partial exercise by Lender of
any right preclude any other or future exercise thereof or the exercise of
any other right. Borrowers expressly waive 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
Borrowers in any case shall, of itself, entitle Borrowers 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 Borrowers
therefrom, shall be effective unless the same shall be in writing and
signed by an officer of Lender, and then shall be effective only in the
specified instance and for the purpose for which given. This Loan Agreement
is binding upon Borrowers, their respective successors and assigns, and
inures to the benefit of Lender, its successors and assigns; however, no
assignment or other transfer of any Borrower's rights or obligations
hereunder shall be made or be effective without Lender's prior written
consent, nor shall it relieve any such 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 Lender shall
be in form and content satisfactory to Lender and its counsel.
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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.
F. Indemnification. Notwithstanding anything to the contrary contained
in Section 12(G), each Borrower shall indemnify, defend and hold 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 any Borrower's business operations, any other
property owned by any such Borrower or in the surface or ground water
arising from any such Borrower's business operations, or gaseous emissions
arising from any such Borrower's business operations or any other condition
existing or arising from any such Borrower's business operations resulting
from the use or existence of Hazardous Materials, whether such claim proves
to be true or false. Each 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 such
Borrower, regardless of whether such 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. Each 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 Line shall not have expired.
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H. Bankruptcy. In the event any Borrower files a petition for relief
under any chapter of the United States Bankruptcy Code, each Borrower
agrees that Lender shall be entitled to, and each such Borrower hereby
consents to, immediate relief from the automatic stay imposed by the
Bankruptcy Code to take any and all actions necessary to enforce any rights
Lender may have under this Agreement or the Loan Documents without further
notice to, or order of any bankruptcy court, including, but not limited to,
enforcing the security interest of the Lender in the assets of each of the
Borrowers, or otherwise compel the specific performance of any obligation
of any Borrower under this Agreement or the other Loan Documents. Each
Borrower further agrees that the filing of any partition for relief under
the Bankruptcy Code shall be deemed to have filed in bad faith and subject
to dismissal.
I. 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.
13. WAIVER OF JURY TRIAL. AFTER CONSULTING WITH COUNSEL AND CAREFUL
CONSIDERATION, EACH BORROWER, GUARANTOR AND LENDER KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES 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 ANY BORROWER OR LENDER. THIS WAIVER IS A
MATERIAL INDUCEMENT TO LENDER'S AGREEMENT TO MAKE THE LOAN TO BORROWERS.
14. 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.
15. JOINT VENTURE. Neither this Loan Agreement nor any other Loan Document
creates or evidences a partnership or joint venture between the Borrowers and
the Lender. The relationship between Borrowers and 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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BORROWERS:
LIFESERV TECHNOLOGIES, INC.
By: , as its
------------------------
-----------------------------------
PERFORMANCE PHARMACY SYSTEMS, INC.
By: , as its
------------------------
-----------------------------------
MEDICATION MANAGEMENT SYSTEMS, INC.
By: , as its
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-----------------------------------
CART-▇▇▇▇, INC.
By: , as its
------------------------
-----------------------------------
SYSTEMS PROFESSIONALS, INC.
By: , as its
------------------------
-----------------------------------
GUARANTOR:
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT "A"
ACCOUNTS PAYABLE
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EXHIBIT "B"
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.
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EXHIBIT "C"
1. The prior rights and interests of Linc Capital, Inc., in a certain
rental agreement with the Connecticut Valley Hospital dated October 27,
1997.
2. The rights and interests of SouthTrust Bank, N.A. in the assets of
Debtor, which rights and interests have been subordinated to the lien
and security interests in favor of Lender.
3. The prior rights and interests of Colonial Pacific Leasing Corporation
in certain equipment of the Debtor as described in Financing Statement
No. 94000259677 filed with the Florida Secretary of State.
4. The rights and interests of Linc Capital, Inc., in certain equipment of
Debtor as disclosed by Financing Statement No. 980000055896 and
Financing Statement No. 980000074289 both filed with the Florida
Secretary of State.
16
EXHIBIT "D"
EXISTING OBLIGATIONS
1. The obligations of Borrowers to the lenders or the secured parties that
are listed in Exhibit "C" attached hereto.
1
Promissory Note
Date May 13, 1998
Amount $500,000.00 Maturity Date July 31, 1998
================================================================================
Lender: Borrowers:
▇▇▇▇ ▇▇▇▇▇ Lifeserv Technologies, Inc., Performance Pharmacy
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Systems, Inc., Medication Management Systems, Inc.,
Suite 306 Cart-▇▇▇▇, Inc., and Systems Professionals, Inc.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
================================================================================
FOR VALUE RECEIVED, the undersigned Borrower unconditionally (and jointly and
severally, if more than one) promises to pay to the order of Lender, its
successors and assigns, without setoff, at its offices indicated at the
beginning of this Note, or at such other place as may be designated by Lender,
the principal amount of Five Hundred Thousand and No/100 Dollars ($500,000.00),
or so much thereof as may be advanced from time to time in immediately available
funds, together with interest computed daily on the outstanding principal
balance hereunder, at an annual interest rate, and in accordance with the
payment schedule, indicated below.
1. Rate.
Fixed Rate. The Rate shall be fixed at ten percent (10.0%) per annum.
Notwithstanding any provision of this Note, Lender does not intend to charge and
Borrower shall not be required to pay any amount of interest or other charges in
excess of the maximum permitted by the applicable law of the State of Florida;
if any higher rate ceiling is lawful, then that higher rate ceiling shall apply.
Any payment in excess of such maximum shall be refunded to Borrower or credited
against principal, at the option of Lender.
2. Accrual Method. Unless otherwise indicated, interest at the Rate set forth
above will be calculated by the 365/360 day method (a daily amount of interest
is computed for a hypothetical year of 360 days; that amount is multiplied by
the actual number of days for which any principal is outstanding hereunder).
3. Payment Schedule. All payments received hereunder shall be applied first to
the payment of any expense or charges payable hereunder or under any other loan
documents executed in connection with this Note, then to interest due and
payable, with the balance applied to principal, or in such other order as Lender
shall determine at its option.
Single Payment. Principal and interest shall be paid in full in a single
payment on July 31, 1998. The maturity date of this Note shall be automatically
extended from July 31, 1998, to October 31, 1998, if the Borrower satisfies all
of the terms and conditions of a Loan Agreement of even date herewith between
Borrower and Lender.
4. Waivers, Consents and Covenants. Borrower, any indorser or guarantor hereof,
or any other party hereto (individually an "Obligor" and collectively
"Obligors") and each of them jointly and severally: (a) waive presentment,
demand, protest, notice of demand, notice of intent to accelerate, notice of
acceleration of maturity, notice of protest, notice of nonpayment, notice of
dishonor, and any other notice required to be given under the law to any Obligor
in connection with the delivery, acceptance, performance, default or enforcement
of this Note, any indorsement or guaranty of this Note, or any other documents
executed in connection with this Note or any other note or other loan documents
now or hereafter executed in connection with any obligation of Borrower to
Lender (the "Loan Documents"); (b) consent to all delays, extensions, renewals
or other modifications of this Note or the Loan Documents, or waivers of any
term hereof or of the Loan Documents, or release or discharge by Lender of any
of Obligors, or release, substitution or exchange of any security for the
payment hereof, or the failure to act on the part of Lender, or any indulgence
shown by Lender (without notice to or further assent from any of Obligors), and
agree that no such action, failure to act or failure to exercise any right or
remedy by Lender shall in any way affect or impair the obligations of any
Obligors or be construed as a waiver by Lender of, or otherwise affect, any of
Lender's rights under this Note, under any indorsement or guaranty of this Note
or under any of the Loan Documents; and (c) agree to pay, on demand, all costs
and expenses of collection or defense of this Note or of any indorsement or
guaranty hereof and/or the enforcement or defense of Lender's rights with
respect to, or the administration, supervision, preservation, or protection of,
or realization upon, any property securing payment hereof, including, without
limitation, reasonable attorney's and paralegal=s fees, including fees related
to any suit, mediation or arbitration proceeding, out of court payment
agreement, trial, appeal, bankruptcy proceedings or other proceeding, in such
amount as may be determined reasonable by any arbitrator or court, whichever is
applicable.
5. Indemnification. Obligors agree to promptly pay, indemnify and hold Lender
harmless from all State and Federal taxes of any kind and other liabilities with
respect to or resulting from the execution and/or delivery of this Note or any
advances made pursuant to this Note. If this Note has a revolving feature and is
secured by a mortgage, Obligors expressly consent to the deduction of any
applicable taxes from each taxable advance extended by Lender.
6. Prepayments. Prepayments may be made in whole or in part at any time without
premium or penalty. All prepayments of principal shall be applied in the inverse
order of maturity, or in such other order as Lender shall determine in its sole
discretion.
7. Delinquency Charge. To the extent permitted by law, a delinquency charge may
be imposed in an amount not to exceed four percent (4%) of any payment that is
more than fifteen days late.
8. Events of Default. The following are events of default hereunder: (a) the
failure to pay any obligation, liability or indebtedness of any Obligor to
Lender, whether under this Note or any Loan Documents, as and when due (whether
at maturity or by acceleration); (b) the failure to perform any other
obligation, liability or indebtedness of any Obligor to Lender, which failure is
not cured within fifteen (15) days from the date on which Lender provides
Borrower written notice of such failure to the extent that any such default can
be cured by Borrower; (c) the commencement of a proceeding against any Obligor
for dissolution or liquidation, the voluntary or involuntary termination or
dissolution of any Obligor or the merger or consolidation of any Obligor with or
into another entity; (d) the insolvency of, the business failure of, the
appointment of a custodian, trustee, liquidator or receiver for or for any of
the property of, the assignment for the benefit of creditors by, or the filing
2
of a petition under bankruptcy, insolvency or debtor's relief law or the filing
of a petition for any adjustment of indebtedness, composition or extension by or
against any Obligor; (e) the determination by Lender that any representation or
warranty made to Lender by any Obligor in any Loan Documents or otherwise or in
any financial statement or financial information submitted to Lender by any
Borrower is or was, when it was made, untrue or materially misleading; (f) the
entry of a judgment against any Obligor in excess of $50,000.00, which judgment
is not satisfied or bonded off within thirty (30) days from the date of entry of
the judgment; (g) the seizure or forfeiture of, or the issuance of any writ of
possession, garnishment or attachment which writ relates to any damage in excess
of $50,000.00 and which writ is not dismissed within thirty (30) days from the
date of issuance of any such writ; or (h) the failure of any Borrower's business
to comply in any material respect with any law or regulation controlling its
operation.
9. Remedies upon Default. Whenever there is a default under this Note (a) the
entire balance outstanding hereunder and all other obligations of any Obligor to
Lender (however acquired or evidenced) shall, at the option of Lender, become
immediately due and payable and any obligation of Lender to permit further
borrowing under this Note shall immediately cease and terminate, and/or (b) to
the extent permitted by law, the Rate of interest on the unpaid principal shall
be increased at Lender's discretion up to the maximum rate allowed by law, or if
none, 18% per annum (the "Default Rate"). The provisions herein for a Default
Rate shall not be deemed to extend the time for any payment hereunder or to
constitute a "grace period" giving Obligors a right to cure any default. At
Lender's option, any accrued and unpaid interest, fees or charges may, for
purposes of computing and accruing interest on a daily basis after the due date
of the Note or any installment thereof, be deemed to be a part of the principal
balance, and interest shall accrue on a daily compounded basis after such date
at the Default Rate provided in this Note until the entire outstanding balance
of principal and interest is paid in full. Upon a default under this Note,
Lender is hereby authorized at any time, at its option and without notice or
demand, to set off and charge against any deposit accounts of any Obligor (as
well as any money, instruments, securities, documents, chattel paper, credits,
claims, demands, income and any other property, rights and interests of any
Obligor), which at any time shall come into the possession or custody or under
the control of Lender or any of its agents, affiliates or correspondents, any
and all obligations due hereunder. Additionally, Lender shall have all rights
and remedies available under each of the Loan Documents, as well as all rights
and remedies available at law or in equity. Any judgment rendered on this Note
shall bear interest at the highest rate of interest permitted pursuant to
Chapter 687, Florida Statutes.
10. Non-waiver. The failure at any time of Lender to exercise any of its options
or any other rights hereunder shall not constitute a waiver thereof, nor shall
it be a bar to the exercise of any of its options or rights at a later date. All
rights and remedies of Lender shall be cumulative and may be pursued singly,
successively or together, at the option of Lender. The acceptance by Lender of
any partial payment shall not constitute a waiver of any default or of any of
Lender's rights under this Note. No waiver of any of its rights hereunder, and
no modification or amendment of this Note, shall be deemed to be made by Lender
unless the same shall be in writing, duly signed on behalf of Lender; each such
waiver shall apply only with respect to the specific instance involved, and
shall in no way impair the rights of Lender or the obligations of Obligors to
Lender in any other respect at any other time.
11. Applicable Law, Venue and Jurisdiction. This Note and the rights and
obligations of Borrower and Lender shall be governed by and interpreted in
accordance with the law of the State of Florida. In any litigation in connection
with or to enforce this Note or any indorsement or guaranty of this Note or any
Loan Documents, Obligors, and each of them, irrevocably consent to and confer
personal jurisdiction on the courts of the State of Florida or the United States
located within the State of Florida and expressly waive any objections as to
venue in any such courts. Nothing contained herein shall, however, prevent
Lender from bringing any action or exercising any rights within any other state
or jurisdiction or from obtaining personal jurisdiction by any other means
available under applicable law. The interest rate charged on this Note is
authorized by Chapter 655, Florida Statutes and Section 687.12, Florida
Statutes.
12. Partial Invalidity. The unenforceability or invalidity of any provision of
this Note shall not affect the enforceability or validity of any other provision
herein and the invalidity or unenforceability of any provision of this Note or
of the Loan Documents to any person or circumstance shall not affect the
enforceability or validity of such provision as it may apply to other persons or
circumstances.
13. Binding Effect. This Note shall be binding upon and inure to the benefit of
Borrower, Obligors and Lender and their respective successors, assigns, heirs
and personal representatives, provided, however, that no obligations of Borrower
or Obligors hereunder can be assigned without prior written consent of Lender.
14. Controlling Document. To the extent that this Note conflicts with or is in
any way incompatible with any other document related specifically to the loan
evidenced by this Note, this Note shall control over any other such document,
and if this Note does not address an issue, then each other such document shall
control to the extent that it deals most specifically with an issue.
15. WAIVER OF JURY TRIAL. AFTER CONSULTING WITH COUNSEL AND CAREFUL
CONSIDERATION, BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) 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 NOTE OR THE LOAN
DOCUMENTS, OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (ORAL
OR WRITTEN), OR ACTIONS OF BORROWER OR LENDER. THIS WAIVER IS A MATERIAL
INDUCEMENT TO LENDER'S ACCEPTANCE OF THIS NOTE. Borrower represents to Lender
that the proceeds of this loan are to be used primarily for business. Borrower
acknowledges having read and understood, and agrees to be bound by, all terms
and conditions of this Note and hereby executes this Note under seal as of the
date here above written.
NOTICE OF FINAL AGREEMENT. THIS WRITTEN PROMISSORY NOTE REPRESENTS THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
If this Note is secured by a mortgage on real property, documentary stamp taxes
have been paid and affixed to the mortgage.
EXECUTION DATE: May 13, 1998
BORROWERS:
LIFESERV TECHNOLOGIES, INC.
By: , as its
------------------------
-----------------------------------
PERFORMANCE PHARMACY SYSTEMS, INC.
By: , as its
------------------------
-----------------------------------
MEDICATION MANAGEMENT SYSTEMS, INC.
By: , as its
------------------------
-----------------------------------
CART-▇▇▇▇, INC.
By: , as its
------------------------
-----------------------------------
SYSTEMS PROFESSIONALS, INC.
By: , as its
------------------------
-----------------------------------
1
Security Agreement
Date: May 13, 1998
================================================================================
Lender/Secured Party: Debtor(s)/Pledgor(s):
▇▇▇▇ ▇▇▇▇▇ Lifeserv Technologies, Inc., Performance Pharmacy
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ Systems, Inc., Medication Management Systems, Inc.,
Suite 306 Cart-▇▇▇▇, Inc., and Systems Professionals, Inc.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
================================================================================
Debtor/Pledgor is: [ ] Individual [X] Corporation [ ] Partnership [ ]
Other_________________________________ Address is Debtor=s/Pledgor's: [ ]
Residence [ ] Place of Business [X] Chief Executive Office if more than one
place of business Collateral (hereinafter defined) is located at: [X]
Debtor's/Pledgor=s address shown above and the following address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
================================================================================
1. Security Interest. For good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Debtor/Pledgor (hereinafter referred
to as "Debtor") assigns and grants to Lender (also known as "Secured Party"), a
security interest and lien in the Collateral (hereinafter defined) to secure the
payment and the performance of the Obligation (hereinafter defined).
2. Collateral. A security interest is granted in the following collateral
described in this Item 2 (the ACollateral"):
A. Types of Collateral
Accounts: Any and all accounts and other rights of Debtor to the payment
for goods sold or leased or for services rendered whether or not earned by
performance, including, without limitation, contract rights, book debts, checks,
notes, drafts, instruments, chattel paper, acceptances, and any and all amounts
due to Debtor from a factor or other forms of obligations and receivables, now
existing or hereafter arising;
Inventory:
Blanket Lien: Any and all of Debtor's goods held as inventory, now existing
or hereafter arising;
Equipment:
Blanket Lien: Any and all of Debtor's property held as equipment, now
existing or hereafter arising;
Fixtures:
Blanket Lien: Any and all of Debtor's goods held as fixtures, now existing
or hereafter arising;
Instruments and/or Investment Documents:
Blanket Lien: Any and all of Debtor's instruments, documents, and other
writings of any type, now existing or hereafter arising (other than any shares
of stock of any Debtor owned by Lifeserv Technologies, Inc.); and
General Intangibles:
Blanket Lien: Any and all of Debtor's general intangible property, now
existing or hereafter arising, including, but not limited to, all copyrights,
patents, trademarks, and licenses of Debtor, including Patent No. 4,695,954 that
is owned by Lifeserv Technologies, Inc., and the trademarks that are listed on
Exhibit "A" attached hereto.
B. Substitutions, Proceeds and Related Items. Any and all substitutes and
replacements for, accessions, attachments and other additions to, tools, parts
and equipment now or hereafter added to or used in connection with, and all cash
or non-cash proceeds and products of, the Collateral (including, without
limitation, all income, benefits and property receivable, received or
distributed which results from any of the Collateral, such as dividends payable
or distributable in cash, property or stock; insurance distributions of any kind
related to the Collateral, including, without limitation, returned premiums,
interest, premium and principal payments; redemption proceeds and subscription
rights; and shares or other proceeds of conversions or splits of any securities
in the Collateral); any and all choses in action and causes of action of Debtor,
whether now existing or hereafter arising, relating directly or indirectly to
the Collateral (whether arising in contract, tort or otherwise and whether or
not currently in litigation); all certificates of title, manufacturer's
statements of origin, other documents, accounts and chattel paper, whether now
existing or hereafter arising directly or indirectly from or related to the
Collateral; all warranties, wrapping, packaging, advertising and shipping
materials used or to be used in connection with or related to the Collateral;
all of Debtor's books, records, data, plans, manuals, computer software,
computer tapes, computer systems, computer disks, computer programs, source
codes and object codes containing any information, pertaining directly or
indirectly to the Collateral and all rights of Debtor to retrieve data and other
information pertaining directly or indirectly to the Collateral from third
parties, whether now existing or hereafter arising; and all returned, refused,
stopped in transit, or repossessed Collateral, any of which, if received by
Debtor, upon request shall be delivered immediately to Lender.
C. Balances and Other Property. The balance of every deposit account of
Debtor maintained with Lender and any other claim of Debtor against Lender, now
or hereafter existing, liquidated or unliquidated, and all money, instruments,
securities, documents, chattel paper, credits, claims, demands, income, and any
other property, rights and interests of Debtor which at any time shall come into
the possession or custody or under the control of Lender or any of its agents or
affiliates for any purpose, and the proceeds of any thereof. Lender shall be
deemed to have possession of any of the Collateral in transit to or set apart
for it or any of its agents or affiliates.
3. Description of Obligation(s). The following obligations ("Obligation" or
AObligations@) are secured by this Agreement: (a) All debts, obligations,
liabilities and agreements of Debtor to Lender with respect to the $500,000.00
loan from Lender to Debtor or that is evidenced by a promissory note of even
date herewith from Debtor in favor of Lender (the "Note"); (b) All costs
incurred by Lender to obtain, preserve, perfect and enforce this Agreement and
maintain, preserve, collect and realize upon the Collateral; (c) All other costs
and attorney's fees incurred by Lender, for which Debtor is obligated to
reimburse Lender in accordance with the terms of the Loan Documents (hereinafter
defined), together with interest at the maximum rate allowed by law, or if none,
18% per annum; and (d) All amounts which may be owed to Lender pursuant to all
other Loan Documents executed between Lender and any other Debtor. If Debtor is
not the obligor of the Obligation, and in the event any amount paid to Lender on
any Obligation is subsequently recovered from Lender in or as a result of any
bankruptcy, insolvency or fraudulent conveyance proceeding, Debtor shall be
liable to Lender for the amounts so recovered up to the fair market value of the
Collateral whether or not the Collateral has been released or the security
interest terminated. In the event the Collateral has been released or the
security interest terminated, the fair market value of the Collateral shall be
determined, at Lender's option, as of the date the Collateral was released, the
security interest terminated, or said amounts were recovered.
2
4. Debtor's Warranties. Debtor hereby represents and warrants to Lender as
follows:
A. Financing Statements. Except as may be noted by schedule attached hereto
and incorporated herein by reference, no financing statement covering the
Collateral is or will be on file in any public office, except the financing
statements relating to this security interest, and no security interest, other
than the one herein created, has attached or been perfected in the Collateral or
any part thereof.
B. Ownership. Debtor owns, or will use the proceeds of any loans by Lender
to become the owner of, the Collateral free from any setoff, claim, restriction,
lien, security interest or encumbrance except liens for taxes not yet due and
the security interest hereunder.
C. Fixtures and Accessions. None of the Collateral is affixed to real
estate or is an accession to any goods, or will become a fixture or accession,
except as expressly set out herein.
D. Claims of Debtors on the Collateral. To the best of Debtor's knowledge,
all account debtors and other obligors whose debts or obligations are part of
the Collateral have no right to setoffs, counterclaims or adjustments, and no
defenses in connection therewith.
E. Environmental Compliance. The conduct of Debtor's business operations
and the condition of Debtor's property does not and will not violate any federal
laws, rules or ordinances for environmental protection, regulations of the
Environmental Protection Agency and any applicable local or state law, rule,
regulation or rule of common law and any judicial interpretation thereof
relating primarily to the environment or any 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
("Hazardous Materials").
F. Power and Authority. Debtor has full power and authority to make this
Agreement, and all necessary consents and approvals of any persons, entities,
governmental or regulatory authorities and securities exchanges have been
obtained to effectuate the validity of this Agreement.
5. Debtor's Covenants. Until full payment and performance of all of the
Obligation and termination or expiration of any obligation or commitment of
Lender to make advances or loans to Debtor, unless Lender otherwise consents in
writing:
A. Obligation and This Agreement. Debtor shall perform all of its
agreements herein and in any other agreements between it and Lender.
B. Ownership and Maintenance of the Collateral. Debtor shall keep all
tangible Collateral in good condition. Debtor shall defend the Collateral
against all claims and demands of all persons at any time claiming any interest
therein adverse to Lender. Debtor shall keep the Collateral free from all liens
and security interests except those for taxes not yet due, those liens and
security interests that are described in Exhibit "B" attached hereto, and the
security interest hereby created.
C. Insurance. Debtor shall insure the Collateral with companies acceptable
to Lender. Such insurance shall be in an amount not less than the fair market
value of the Collateral and shall be against such casualties, with such
deductible amounts as Lender shall reasonably approve. All insurance policies
shall be written for the benefit of Debtor and Lender as their interests may
appear, payable to Lender as loss payee, or in other form satisfactory to
Lender, and such policies or certificates evidencing the same shall be furnished
to Lender. All policies of insurance shall provide for written notice to Lender
at least thirty (30) days prior to cancellation. Risk of loss or damage is
Debtor's to the extent of any deficiency in any effective insurance coverage.
D. Lender's Costs. Debtor shall pay all reasonable costs necessary to
obtain, preserve, perfect, defend and enforce the security interest created by
this Agreement, collect the Obligation, and preserve, defend, enforce and
collect the Collateral, including but not limited to taxes, assessments,
insurance premiums, repairs, rent, storage costs and expenses of sales, legal
expenses, reasonable attorney's fees and other fees or expenses for which Debtor
is obligated to reimburse Lender in accordance with the terms of the Loan
Documents. Whether the Collateral is or is not in Lender's possession, and
without any obligation to do so and without waiving Debtor's default for failure
to make any such payment, Lender at its option may pay any such costs and
expenses, discharge encumbrances on the Collateral, and pay for insurance of the
Collateral, and such payments shall be a part of the Obligation and bear
interest at the rate set out in the Obligation. Debtor agrees to reimburse
Lender on demand for any costs so incurred.
E. Information and Inspection. Debtor shall (i) promptly furnish Lender any
information with respect to the Collateral requested by Lender; (ii) allow
Lender or its representatives to inspect the Collateral, at any time and
wherever located, and to inspect and copy, or furnish Lender or its
representatives with copies of, all records relating to the Collateral and the
Obligation; (iii) promptly furnish Lender or its representatives such
information as Lender may request to identify the Collateral, at the time and in
the form requested by Lender; and (iv) deliver upon request to Lender shipping
and delivery receipts evidencing the shipment of goods and invoices evidencing
the receipt of, and the payment for, the Collateral.
F. Additional Documents. Debtor shall sign and deliver any papers deemed
necessary or desirable in the judgment of Lender to obtain, maintain, and
perfect the security interest hereunder and to enable Lender to comply with any
federal or state law in order to obtain or perfect Lender's interest in the
Collateral or to obtain proceeds of the Collateral.
G. Parties Liable on the Collateral. Debtor shall preserve the liability of
all obligors on any Collateral, shall preserve the priority of all security
therefor, and shall deliver to Lender the original certificates of title on all
motor vehicles or other titled vehicles constituting the Collateral. Lender
shall have no duty to preserve such liability or security, but may do so at the
expense of Debtor, without waiving Debtor's default.
H. Records of the Collateral. Debtor at all times shall maintain accurate
books and records covering the Collateral. Debtor immediately will ▇▇▇▇ all
books and records with an entry showing the absolute assignment of all
Collateral to Lender, and Lender is hereby given the right to audit the books
and records of Debtor relating to the Collateral at any time and from time to
time. The amounts shown as owed to Debtor on Debtor's books and on any
assignment schedule will be the undisputed amounts owing and unpaid.
I. Disposition of the Collateral. If disposition of any Collateral gives
rise to an account, chattel paper or instrument, Debtor immediately shall notify
Lender, and upon request of Lender shall assign or indorse the same to Lender.
No Collateral may be sold, leased, manufactured, processed or otherwise disposed
of by Debtor in any manner without the prior written consent of Lender, except
the Collateral sold, leased, manufactured, processed or consumed in the ordinary
course of business.
J. Accounts. Each account held as Collateral will represent the valid and
legally enforceable obligation of third parties and shall not be evidenced by
any instrument or chattel paper.
K. Notice/Location of the Collateral. Debtor shall give Lender written
notice of each office of Debtor in which records of Debtor pertaining to
accounts held as Collateral are kept, and each location at which the Collateral
is or will be kept, and of any change of any such location. If no such notice is
given, all records of Debtor pertaining to the Collateral and all Collateral of
Debtor are and shall be kept at the address marked by Debtor above.
3
L. Change of Name/Status and Notice of Changes. Without the written consent
of Lender, Debtor shall not change its name, change its corporate status, use
any trade name or engage in any business not reasonably related to its business
as presently conducted. Debtor shall notify Lender immediately of (i) any
material change in the Collateral, (ii) a change in Debtor's residence or
location, (iii) a change in any matter warranted or represented by Debtor in
this Agreement, or in any of the Loan Documents or furnished to Lender pursuant
to this Agreement, and (iv) the occurrence of an Event of Default (hereinafter
defined).
M. Use and Removal of the Collateral. Debtor shall not use the Collateral
illegally. Debtor shall not, unless previously indicated as a fixture, permit
the Collateral to be affixed to real or personal property without the prior
written consent of Lender. Debtor shall not permit any of the Collateral to be
removed from the locations specified herein without the prior written consent of
Lender, except for the sale of inventory in the ordinary course of business.
N. Possession of the Collateral. Debtor shall deliver all investment
securities and other instruments, documents and chattel paper which are part of
the Collateral and in Debtor's possession to Lender immediately, or if hereafter
acquired, immediately following acquisition, appropriately indorsed to Lender's
order, or with appropriate, duly executed powers. Debtor waives presentment,
notice of acceleration, demand, notice of dishonor, protest, and all other
notices with respect thereto.
O. Power of Attorney. Debtor appoints Lender and any officer thereof as
Debtor's attorney-in-fact with full power in Debtor's name and behalf to do
every act which Debtor is obligated to do or may be required to do hereunder;
however, nothing in this paragraph shall be construed to obligate Lender to take
any action hereunder nor shall Lender be liable to Debtor for failure to take
any action hereunder. This appointment shall be deemed a power coupled with an
interest and shall not be terminable as long as the Obligation is outstanding
and shall not terminate on the disability or incompetence of Debtor.
P. Waivers by Debtor. Debtor waives notice of the creation, advance,
increase, existence, extension or renewal of, and of any indulgence with respect
to, the Obligation; waives presentment, demand, notice of dishonor, and protest;
waives notice of the amount of the Obligation outstanding at any time, notice of
any change in financial condition of any person liable for the Obligation or any
part thereof, notice of any Event of Default, and all other notices respecting
the Obligation; and agrees that maturity of the Obligation and any part thereof
may be accelerated, extended or renewed one or more times by Lender in its
discretion, without notice to Debtor. Debtor waives any right to require that
any action be brought against any other person or to require that resort be had
to any other security or to any balance of any deposit account. Debtor further
waives any right of subrogation or to enforce any right of action against any
other Debtor until the Obligation is paid in full.
Q. Other Parties and Other Collateral. No renewal or extension of or any
other indulgence with respect to the Obligation or any part thereof, no release
of any security, no release of any person (including any maker, indorser,
guarantor or surety) liable on the Obligation, no delay in enforcement of
payment, and no delay or omission or lack of diligence or care in exercising any
right or power with respect to the Obligation or any security therefor or
guaranty thereof or under this Agreement shall in any manner impair or affect
the rights of Lender under the law, hereunder, or under any other agreement
pertaining to the Collateral. Lender need not file suit or assert a claim for
personal judgment against any person for any part of the Obligation or seek to
realize upon any other security for the Obligation, before foreclosing or
otherwise realizing upon the Collateral. Debtor waives any right to the benefit
of or to require or control application of any other security or proceeds
thereof, and agrees that Lender shall have no duty or obligation to Debtor to
apply to the Obligation any such other security or proceeds thereof.
R. Collection and Segregation of Accounts and Right to Notify. Lender
hereby authorizes Debtor to collect the Collateral, subject to the direction and
control of Lender, but Lender may, without cause or notice, curtail or terminate
said authority at any time after the occurrence of an Event of Default. After
the occurrence of an Event of Default and upon written notice by Lender to
Debtor, Debtor shall forthwith upon receipt of all checks, drafts, cash, and
other remittances in payment of or on account of the Collateral, deposit the
same in one or more special accounts maintained with Lender over which Lender
alone shall have the power of withdrawal. The remittance of the proceeds of such
Collateral shall not, however, constitute payment or liquidation of such
Collateral until Lender shall receive good funds for such proceeds. Funds placed
in such special accounts shall be held by Lender as security for all Obligations
secured hereunder. These proceeds shall be deposited in precisely the form
received, except for the indorsement of Debtor where necessary to permit
collection of items, which indorsement Debtor agrees to make, and which
indorsement Lender is also hereby authorized, as attorney-in-fact, to make on
behalf of Debtor. In the event Lender has notified Debtor to make deposits to a
special account, pending such deposit, Debtor agrees that it will not commingle
any such checks, drafts, cash or other remittances with any funds or other
property of Debtor, but will hold them separate and apart therefrom, and upon an
express trust for Lender until deposit thereof is made in the special account.
Lender will, from time to time, apply the whole or any part of the Collateral
funds on deposit in this special account against such Obligations as are secured
hereby as Lender may in its sole discretion elect. At the sole election of
Lender, any portion of said funds on deposit in the special account which Lender
shall elect not to apply to the Obligations, may be paid over by Lender to
Debtor. At any time, whether Debtor is or is not in default hereunder, Lender
may notify persons obligated on any Collateral to make payments directly to
Lender and Lender may take control of all proceeds of any Collateral. Until
Lender elects to exercise such rights, Debtor, as agent of Lender, shall collect
and enforce all payments owed on the Collateral.
S. Compliance with State and Federal Laws. Debtor will 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 any of its property,
business operations and transactions.
T. Environmental Covenants. Debtor shall immediately advise 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 Debtor's business operations; and
(ii) all claims made or threatened by any third party against Debtor relating to
damages, contribution, cost recovery, compensation, loss or injury resulting
from any Hazardous Materials. Debtor shall immediately notify Lender of any
remedial action taken by Debtor with respect to Debtor's business operations.
Debtor will not use or permit any other party to use any Hazardous Materials at
any of Debtor's places of business or at any other property owned by Debtor
except such materials as are incidental to Debtor's normal course of business,
maintenance and repairs and which are handled in compliance with all applicable
environmental laws. Debtor agrees to permit Lender, its agents, contractors and
employees to enter and inspect any of Debtor's places of business or any other
property of Debtor 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 Debtor is complying with this covenant
and Debtor shall reimburse Lender on demand for the costs of any such
environmental investigation and audit. Debtor shall provide 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 Debtor's business operations
within five (5) days of the request therefor.
6. Rights and Powers of Lender.
A. General. Lender, after the occurrence of an Event of Default, without
liability to Debtor may: obtain from any person information regarding Debtor or
Debtor's business, which information any such person also may furnish without
liability to Debtor; require Debtor to give possession or control of any
Collateral to Lender; indorse as Debtor's agent any instruments, documents or
chattel paper in the Collateral or representing proceeds of the Collateral;
contact account debtors directly to verify information furnished by Debtor; take
control of proceeds, including stock received as dividends or by reason of stock
splits; release the Collateral in its possession to any Debtor, temporarily or
otherwise; require additional Collateral; reject as unsatisfactory any property
hereafter offered by Debtor as Collateral; set standards from time to time to
govern what may be used as after acquired Collateral; designate, from time to
time, a certain percent of the Collateral as the loan value and require Debtor
to maintain the Obligation at or below such figure; take control of funds
generated by the Collateral, such as cash dividends, interest and proceeds or
refunds from insurance, and use same to reduce any part of the Obligation and
exercise all other rights which an owner of such Collateral may exercise, except
the right to vote or dispose of the Collateral before an Event of Default; at
any time transfer any of the Collateral or evidence thereof into its own name or
that of its nominee; and demand, collect, convert, redeem, receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclose or realize upon the Collateral, in its
own name or in the name of Debtor, as Lender may determine. Lender shall not be
liable for failure to collect any account or instruments, or for any act or
omission on the part of Lender, its officers, agents or employees, except for
its or their own willful misconduct or gross negligence. The foregoing rights
and powers of Lender will be in addition to, and not a limitation upon, any
rights and powers of Lender given by law, elsewhere in this Agreement, or
otherwise. If Debtor fails to maintain any required insurance, to the extent
permitted by applicable law Lender may (but is not obligated to) purchase single
interest insurance coverage for the Collateral which insurance may at Lender's
option (i) protect only Lender and not provide any remuneration or protection
for Debtor directly and (ii) provide coverage only after the Obligation has been
declared due as herein provided. The premiums for any such insurance purchased
by Lender shall be a part of the Obligation and shall bear interest as provided
in 3(d) hereof.
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B. Convertible Collateral. Lender may present for conversion any Collateral
which is convertible into any other instrument or investment security or a
combination thereof with cash, but Lender shall not have any duty to present for
conversion any Collateral unless it shall have received from Debtor detailed
written instructions to that effect at a time reasonably far in advance of the
final conversion date to make such conversion possible.
7. Default.
A. Event of Default. An event of default ("Event of Default") shall
occur if: (i) there is a loss, theft, damage or destruction of any material
portion of the Collateral for which there is no insurance coverage or for which,
in the opinion of Lender, there is insufficient insurance coverage; (ii) Debtor
or any other obligor on all or part of the Obligation shall fail to timely and
properly pay or observe, keep or perform any term, covenant, agreement or
condition in this Agreement or in any other agreement between Debtor and Lender
including, but not limited to, any other note or instrument, loan agreement,
security agreement, deed of trust, mortgage, promissory note, guaranty,
certificate, assignment, instrument, document or other agreement concerning or
related to the Obligation (collectively, the "Loan Documents"), and such failure
is not cured within any applicable cure period established by the Note, if any;
or (iii) Debtor or such other obligor abandons any leased premises at which any
Collateral is located or stored and the Collateral is either moved without the
prior written consent of Lender or the Collateral remains at the abandoned
premises.
B. Rights and Remedies. If any Event of Default shall occur, then, in each
and every such case, Lender may, without presentment, demand, or protest; notice
of default, dishonor, demand, non-payment, or protest; notice of intent to
accelerate all or any part of the Obligation; notice of acceleration of all or
any part of the Obligation; or notice of any other kind, all of which Debtor
hereby expressly waives, (except for any notice required under this Agreement,
any other Loan Document or applicable law); at any time thereafter exercise
and/or enforce any of the following rights and remedies at Lender's option:
i. Acceleration. The Obligation shall, at Lender's option, become
immediately due and payable, and the obligation, if any, of Lender to permit
further borrowings under the Obligation shall at Lender's option immediately
cease and terminate.
ii. Possession and Collection of the Collateral. At its option: (a) take
possession or control of, store, lease, operate, manage, sell, or instruct any
Agent or Broker to sell or otherwise dispose of, all or any part of the
Collateral; (b) notify all parties under any account or contract right forming
all or any part of the Collateral to make any payments otherwise due to Debtor
directly to Lender; (c) in Lender's own name, or in the name of Debtor, demand,
collect, receive, ▇▇▇ for, and give receipts and releases for, any and all
amounts due under such accounts and contract rights; (d) indorse as the agent of
Debtor any check, note, chattel paper, documents, or instruments forming all or
any part of the Collateral; (e) make formal application for transfer to Lender
(or to any assignee of Lender or to any purchaser of any of the Collateral) of
all of Debtor's permits, licenses, approvals, agreements, and the like relating
to the Collateral or to Debtor's business; (f) take any other action which
Lender deems necessary or desirable to protect and realize upon its security
interest in the Collateral; and (g) in addition to the foregoing, and not in
substitution therefor, exercise any one or more of the rights and remedies
exercisable by Lender under any other provision of this Agreement, under any of
the other Loan Documents, or as provided by applicable law (including, without
limitation, the Uniform Commercial Code as in effect in Florida (hereinafter
referred to as the "UCC")). In taking possession of the Collateral Lender may
enter Debtor's premises and otherwise proceed without legal process, if this can
be done without breach of the peace. Debtor shall, upon Lender's demand,
promptly make the Collateral or other security available to Lender at a place
designated by Lender, which place shall be reasonably convenient to both
parties.
Lender shall not be liable for, nor be prejudiced by, any loss, depreciation or
other damages to the Collateral, unless caused by Lender's willful and malicious
act. Lender shall have no duty to take any action to preserve or collect the
Collateral.
iii. Receiver. Obtain the appointment of a receiver for all or any of the
Collateral, Debtor hereby consenting to the appointment of such a receiver and
agreeing not to oppose any such appointment.
iv. Right of Set Off. Without notice or demand to Debtor, set off and apply
against any and all of the Obligation any and all deposits (general or special,
time or demand, provisional or final) and any other indebtedness, at any time
held or owing by Lender or any of Lender's agents or affiliates to or for the
credit of the account of Debtor or any guarantor or indorser of Debtor's
Obligation.
Lender shall be entitled to immediate possession of all books and records
evidencing any Collateral or pertaining to chattel paper covered by this
Agreement and it or its representatives shall have the authority to enter upon
any premises upon which any of the same, or any Collateral, may be situated and
remove the same therefrom without liability. Lender may surrender any insurance
policies in the Collateral and receive the unearned premium thereon. Debtor
shall be entitled to any surplus and shall be liable to Lender for any
deficiency. The proceeds of any disposition after default available to satisfy
the Obligation shall be applied to the Obligation in such order and in such
manner as Lender in its discretion shall decide.
Debtor specifically understands and agrees that any sale by Lender of all
or part of the Collateral pursuant to the terms of this Agreement may be
effected by Lender at times and in manners which could result in the proceeds of
such sale as being significantly and materially less than might have been
received if such sale had occurred at different times or in different manners,
and Debtor hereby releases Lender and its officers and representatives from and
against any and all obligations and liabilities arising out of or related to the
timing or manner of any such sale.
If, in the opinion of Lender, there is any question that a public sale or
distribution of any Collateral will violate any state or federal securities law,
Lender may offer and sell such Collateral in a transaction exempt from
registration under federal securities law, and any such sale made in good faith
by Lender shall be deemed "commercially reasonable".
8. General.
A. Parties Bound. Lender's rights hereunder shall inure to the benefit of
its successors and assigns. In the event of any assignment or transfer by Lender
of any of the Obligation or the Collateral, Lender thereafter shall be fully
discharged from any responsibility with respect to the Collateral so assigned or
transferred, but Lender shall retain all rights and powers hereby given with
respect to any of the Obligation or the Collateral not so assigned or
transferred. All representations, warranties and agreements of Debtor if more
than one are joint and several and all shall be binding upon the personal
representatives, heirs, successors and assigns of Debtor.
B. Waiver. No delay of Lender in exercising any power or right shall
operate as a waiver thereof; nor shall any single or partial exercise of any
power or right preclude other or further exercise thereof or the exercise of any
other power or right. No waiver by Lender of any right hereunder or of any
default by Debtor shall be binding upon Lender unless in writing, and no failure
by Lender to exercise any power or right hereunder or waiver of any default by
Debtor shall operate as a waiver of any other or further exercise of such right
or power or of any further default. Each right, power and remedy of Lender as
provided for herein or in any of the Loan Documents, or which shall now or
hereafter exist at law or in equity or by statute or otherwise, shall be
cumulative and concurrent and shall be in addition to every other such right,
power or remedy. The exercise or beginning of the exercise by Lender of any one
or more of such rights, powers or remedies shall not preclude the simultaneous
or later exercise by Lender of any or all other such rights, powers or remedies.
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C. Agreement Continuing. This Agreement shall constitute a continuing
agreement, applying to all future as well as existing transactions, whether or
not of the character contemplated at the date of this Agreement, and if all
transactions between Lender and Debtor shall be closed at any time, shall be
equally applicable to any new transactions thereafter. Provisions of this
Agreement, unless by their terms exclusive, shall be in addition to other
agreements between the parties. Time is of the essence of this Agreement.
D. Definitions. Unless the context indicates otherwise, definitions in the
UCC apply to words and phrases in this Agreement; if UCC definitions conflict,
Article 9 definitions apply.
E. Notices. Notice shall be deemed reasonable if mailed postage prepaid at
least five (5) days before the related action (or if the UCC elsewhere specifies
a longer period, such longer period) to the address of Debtor given above, or to
such other address as any party may designate by written notice to the other
party. Each notice, request and demand shall be deemed given or made, 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, or if sent by any other means, upon
delivery.
F. Modifications. No provision hereof shall be modified or limited except
by a written agreement expressly referring hereto and to the provisions so
modified or limited and signed by Debtor and Lender. The provisions of this
Agreement shall not be modified or limited by course of conduct or usage of
trade.
G. Applicable Law and Partial Invalidity. This Agreement has been
delivered in the State of Florida and shall be construed in accordance with the
laws of that State. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Agreement. 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.
H. Financing Statement. To the extent permitted by applicable law, a
carbon, photographic or other reproduction of this Agreement or any financing
statement covering the Collateral shall be sufficient as a financing statement.
I. Controlling Document. To the extent that this Security Agreement
conflicts with or is in any way incompatible with any other Loan Document
concerning the Obligation, any promissory note shall control over any other
document, and if such note does not address an issue, then each other document
shall control to the extent that it deals most specifically with an issue.
J. NOTICE OF FINAL AGREEMENT. THIS WRITTEN SECURITY 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. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
K. WAIVER OF JURY TRIAL. AFTER CONSULTING WITH COUNSEL AND CAREFUL
CONSIDERATION, DEBTOR AND 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 OR THE NOTE, OR OUT OF ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (ORAL OR WRITTEN), OR ACTIONS OF DEBTOR OR LENDER.
THIS WAIVER IS A MATERIAL INDUCEMENT TO LENDER'S AGREEMENT TO ENTER INTO THIS
AGREEMENT.
L. Counterparts. This Security 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.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
Lender/Secured Party: Debtor(s)/Pledgor(s):
LIFESERV TECHNOLOGIES, INC.
__________________________ By: , as its
▇▇▇▇ ▇▇▇▇▇ ------------------------
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PERFORMANCE PHARMACY SYSTEMS, INC.
By: , as its
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MEDICATION MANAGEMENT SYSTEMS, INC.
By: , as its
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CART-▇▇▇▇, INC.
By: , as its
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SYSTEMS PROFESSIONALS, INC.
By: , as its
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