Exhibit 10.11
$15,000,000.00
LOAN AND SECURITY AGREEMENT
by and between
PHYMATRIX CORP.
CLINICAL STUDIES, LTD.
CLINICAL MARKETING, LTD.
("Borrower")
and
HCFP FUNDING, INC.
("Lender")
March 12, 1999
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (the "Agreement") is made as of March
12, 1999 by and between PHYMATRIX CORP., a Delaware corporation ("PhyMatrix"),
CLINICAL STUDIES, LTD, a Delaware corporation, and CLINICAL MARKETING, LTD., a
Delaware corporation (collectively with the preceding entities, "Borrower"), and
HCFP FUNDING, INC., a Delaware corporation ("Lender").
RECITALS
A. Borrower desires to establish certain financing arrangements with
and borrow funds from Lender, and Lender is willing to establish such
arrangements for and make loans and extensions of credit to Borrower, on the
terms and conditions set forth below.
B. The parties desire to define the terms and conditions of their
relationship and to reduce their agreements to writing.
NOW, THEREFORE, in consideration of the promises and covenants
contained in this Agreement, and for other consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, unless otherwise specified, all references
to "Sections" shall be deemed to refer to Sections of this Agreement, and the
following terms shall have the meanings set forth below:
SECTION 1.1. ACCOUNT. "Account" means any right to payment for
Services, whether or not evidenced by an Instrument or Chattel Paper, and
whether or not earned by performance.
SECTION 1.2. ACCOUNT DEBTOR. "Account Debtor" means any Person
obligated on any Account of Borrower.
SECTION 1.3. AFFILIATE. "Affiliate" means, with respect to a specified
Person, any Person directly or indirectly controlling, controlled by, or under
common control with the specified Person including without limitation their
stockholders and any Affiliates of such stockholders. A Person shall be deemed
to control a corporation or other entity if the Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
business of the corporation or other entity, whether through the ownership of
voting securities, by contract, or otherwise.
SECTION 1.4. AFFILIATED BORROWERS. "Affiliated Borrowers" means,
collectively, the Affiliated PPM Borrowers and the Affiliated Services
Borrowers.
SECTION 1.5. AFFILIATED LOAN AGREEMENTS. "Affiliated Loan Agreements"
means, collectively, the Affiliated PPM Loan Agreement and the Affiliated
Services Loan Agreement.
SECTION 1.6. AFFILIATED LOAN DOCUMENTS. "Affiliated Loan Documents"
means, collectively, the Affiliated PPM Loan Documents and the Affiliated
Services Loan Documents.
SECTION 1.7 AFFILIATED PPM BORROWERS. "Affiliated PPM Borrowers" means
the entities listed on SCHEDULE 1.7.
SECTION 1.8. AFFILIATED PPM LOAN AGREEMENT. "Affiliated PPM Loan
Agreement" means that certain Loan and Security Agreement dated as of even date
with this Agreement and made by and among Lender and PhyMatrix and the
Affiliated PPM Borrowers, as it may be amended, modified or supplemented from
time to time.
SECTION 1.9. AFFILIATED PPM LOAN DOCUMENTS. "Affiliated PPM Loan
Documents" means the Affiliated PPM Loan Agreement, and each and every other
document now or hereafter delivered in connection with the Affiliated PPM Loan
Agreement, as any of them may be amended, modified, or supplemented from time to
time.
SECTION 1.10. AFFILIATED SERVICES BORROWERS. "Affiliated Services
Borrower" means the entities listed on SCHEDULE 1.10.
SECTION 1.11. AFFILIATED SERVICES LOAN AGREEMENT. "Affiliated Services
Loan Agreement" means that certain Loan and Security Agreement dated as of even
date with this Agreement and made by and among Lender and PhyMatrix and the
Affiliated Services Borrowers, as it may be amended, modified or supplemented
from time to time.
SECTION 1.12. AFFILIATED SERVICES LOAN DOCUMENTS. "Affiliated Services
Loan Documents" means the Affiliated Services Loan Agreement, and each and every
other document now or hereafter delivered in connection with the Affiliated
Services Loan Agreement, as any of them may be amended, modified, or
supplemented from time to time.
SECTION 1.13. AGREEMENT. "Agreement" means this Loan and Security
Agreement, as it may be amended or supplemented from time to time.
SECTION 1.14. BASE RATE. "Base Rate" means a rate of interest equal to
one percent (1%) above the "Prime Rate of Interest."
SECTION 1.15. BORROWED MONEY. "Borrowed Money" means any obligation to
repay money, any indebtedness evidenced by notes, bonds, debentures or similar
obligations, any obligation under a conditional sale or other title retention
agreement and the net aggregate rentals under any lease which under GAAP would
be capitalized on the books of Borrower.
SECTION 1.16. BORROWER. "Borrower" has the meaning set forth in the
Preamble.
SECTION 1.17. BORROWING BASE. "Borrowing Base" has the meaning set
forth in Section 2.1(d).
SECTION 1.18. BORROWING BASE CERTIFICATE. "Borrowing Base Certificate"
means a certificate substantially in the form of EXHIBIT D.
SECTION 1.19. BUSINESS DAY. "Business Day" means any day on which
financial institutions are open for business in the State of Maryland, excluding
Saturdays and Sundays.
SECTION 1.20. BUSINESS PLAN. "Business Plan" means the business plan of
PMC as delivered and reviewed by Lender prior to the date of this Agreement.
SECTION 1.21. CHANGE OF CONTROL. "Change of Control" means that, during
any period, individuals who at the beginning of the period constituted the board
of directors of PhyMatrix (together with any new directors whose election by
that board of directors or whose nomination for election by the stockholders of
PhyMatrix was approved by two-thirds of the directors of PhyMatrix then still in
office who were either directors at the beginning of the period or whose
election or nomination for election was previously approved) cease for any
reason to constitute a majority of the board of directors of PhyMatrix then in
office.
SECTION 1.22. CHATTEL PAPER. "Chattel Paper" has the meaning set forth
in the Uniform Commercial Code.
SECTION 1.23. CLOSING; CLOSING DATE. "Closing" and "Closing Date" have
the meanings set forth in Section 5.3.
SECTION 1.24. COLLATERAL. "Collateral" has the meaning set forth in
Section 3.1.
SECTION 1.25. COMMITMENT FEE. "Commitment Fee" has the meaning set
forth in Section 2.4(a).
SECTION 1.26. CONCENTRATION ACCOUNT. "Concentration Account" has the
meaning set forth in Section 2.3.
SECTION 1.27. CONTROLLED GROUP. "Controlled Group" means a "controlled
group" within the meaning of Section 4001(b) of ERISA.
SECTION 1.28. DEFAULT RATE. "Default Rate" means a rate per annum equal
to four percent (4%) above the then applicable Base Rate.
SECTION 1.29. ERISA. "ERISA" has the meaning set forth in Section 4.12.
SECTION 1.30. EVENT OF DEFAULT. "Event of Default" and "Events of
Default" have the meanings set forth in Section 8.1.
SECTION 1.31. GAAP. "GAAP" means generally accepted accounting
principles applied in a consistent manner.
SECTION 1.32. GENERAL INTANGIBLES. "General Intangibles" has the
meaning set forth in the Uniform Commercial Code.
SECTION 1.33. GOODS. "Goods" has the meaning set forth in the Uniform
Commercial Code.
SECTION 1.34. GOVERNMENTAL AUTHORITY. "Governmental Authority" means
and includes any federal, state, District of Columbia, county, municipal, or
other government and any department, commission, board, bureau, agency or
instrumentality thereof, whether domestic or foreign.
SECTION 1.35. GUARANTY. "Guaranty" means that certain Unconditional
Guaranty of Payment and Performance made by Borrower, the Affiliated PPM
Borrowers and the Affiliated Services Borrowers with respect to this Agreement
and the Affiliated Loan Agreements in favor of Lender and dated as of even date
with this Agreement.
SECTION 1.36. HAZARDOUS MATERIAL. "Hazardous Material" means any
substances defined or designated as hazardous or toxic waste, hazardous or toxic
material, hazardous or toxic substance, or similar term, by any environmental
statute, rule or regulation or any Governmental Authority.
SECTION 1.37. HIGHEST LAWFUL RATE. "Highest Lawful Rate" has the
meaning set forth in Section 2.7.
SECTION 1.38. INSTRUMENTS. "Instruments" has the meaning set forth in
the Uniform Commercial Code.
SECTION 1.39. LENDER. "Lender" means HCFP Funding, Inc., a Delaware
corporation.
SECTION 1.40. LOCKBOX ACCOUNT. "Lockbox Account" means an account
maintained by Borrower at the Lockbox Bank into which all collections of
Accounts are paid directly.
SECTION 1.41. LOAN. "Loan" has the meaning set forth in Section 2.1(a).
SECTION 1.42. LOAN DOCUMENTS. "Loan Documents" means and includes this
Agreement, the Note, the Lockbox Agreement, the Guaranty and each and every
other document now or hereafter delivered in connection therewith, as any of
them may be amended, modified, or supplemented from time to time.
SECTION 1.43. LOAN MANAGEMENT FEE. "Loan Management Fee" has the
meaning set forth in Section 2.4(c).
SECTION 1.44. LOCKBOX. "Lockbox" has the meaning set forth in Section
2.3.
SECTION 1.45. LOCKBOX AGREEMENT. "Lockbox Agreement" has the meaning
set forth in Section 2.3.
SECTION 1.46. LOCKBOX BANK. "Lockbox Bank" has the meaning set forth in
Section 2.3.
SECTION 1.47. MATERIAL ADVERSE EFFECT. "Material Adverse Effect" means
(i) a material adverse change in, or a material adverse effect upon, the
financial condition, operations, assets,
business or properties of PMC, (ii) a material impairment of the ability of
Borrower and the Affiliated Borrowers as a whole to perform any of their
material obligations under the Loan Documents and the Affiliated Loan Documents,
taken as a whole, or (iii) a material adverse effect upon any material portion
of the Collateral under this Agreement or the Affiliated Loan Agreements, or
upon the legality, validity, binding effect or enforceability of any Loan
Document against any Borrower or any other Person (other than Lender) obligated
on any Loan Document.
SECTION 1.48. MAXIMUM LOAN AMOUNT. "Maximum Loan Amount" has the
meaning set forth in Section 2.1(a).
SECTION 1.49. NOTE. "Note" has the meaning set forth in Section 2.1(c).
SECTION 1.50. OBLIGATIONS. "Obligations" has the meaning set forth in
Section 3.1.
SECTION 1.51. PERMITTED LIENS. "Permitted Liens" means: (a) liens for
taxes not delinquent, or which are being contested in good faith and by
appropriate proceedings which suspend the collection of such liens, and in
respect of which adequate reserves have been made, if required by GAAP (provided
that such proceedings do not, in Lender's reasonable discretion, involve any
substantial danger of the sale, loss or forfeiture of such property or assets or
any interest therein); (b) deposits or pledges to secure obligations under
workmen's compensation, social security or similar laws, or under unemployment
insurance; (c) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of business; (d) mechanic's, workmen's, materialmen's or other like liens
arising in the ordinary course of business with respect to obligations which are
not due, or which are being contested in good faith by appropriate proceedings
which suspend the collection of such liens and in respect of which adequate
reserves have been made, if required by GAAP (provided that such proceedings do
not, in Lender's reasonable discretion, involve any substantial danger of the
sale, loss or forfeiture of such property or assets or any interest therein);
(e) liens and encumbrances in favor of Lender; and (f) liens set forth on
SCHEDULE 1.51.
SECTION 1.52. PERSON. "Person" means an individual, partnership,
corporation, trust, joint venture, joint stock company, limited liability
company, association, unincorporated organization, Governmental Authority, or
any other entity.
SECTION 1.53. PLAN. "Plan" has the meaning set forth in Section 4.12.
SECTION 1.54. PMC. "PMC" means PhyMatrix Corp. and its direct and
indirect subsidiaries, on a consolidated basis.
SECTION 1.55. PREMISES. "Premises" has the meaning set forth in Section
4.14.
SECTION 1.56. PRIME RATE OF INTEREST. "Prime Rate of Interest" means
that rate of interest designated as such by Fleet National Bank of Connecticut,
N.A., or any successor thereto, as the same may from time to time fluctuate.
SECTION 1.57. PROHIBITED TRANSACTION. "Prohibited Transaction" means a
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Internal Revenue Code.
SECTION 1.58. QUALIFIED ACCOUNT. "Qualified Account" means an Account
of Borrower generated in the ordinary course of Borrower's business from
rendition of Services by Borrower to pharmaceutical companies and contract
research organizations which Lender, in its reasonable credit judgment, deems to
be a Qualified Account. A "Qualified Account" is an Account of Borrower that
satisfies the criteria set forth on the Borrowing Base Certificate and does not
become unqualified for any of the reasons set forth below. Without limiting the
generality of the foregoing, no Account shall be a Qualified Account if: (a) the
Account remains unpaid more than 365 days past the date on which the applicable
Services were rendered; (b) the Account is subject to any defense, set-off,
counterclaim, deduction, discount, credit, chargeback, freight claim, allowance,
or adjustment of any kind; (c) the Services giving rise to the Account have not
actually been performed or were undertaken in violation of any law; (d) the
Account is subject to a lien other than a Permitted Lien; (e) Borrower knows of
the bankruptcy, receivership, reorganization, or insolvency of the Account
Debtor; (f) the Account is evidenced by Chattel Paper or an Instrument of any
kind, or has been reduced to judgment; (g) the Account is an Account of an
Account Debtor having its principal place of business or executive office
outside the United States; (h) the Account Debtor is an Affiliate or Subsidiary
of Borrower; (i) the total unpaid Accounts of any individual Account Debtor
obligated on the Account exceed twenty percent (20%) of the net amount of all
Qualified Accounts; (j) any covenant, representation or warranty contained in
the Loan Documents with respect to such Account has been breached in any
material respect; or (k) the Account fails to meet such other specifications and
requirements which may from time to time be established by Lender in its
reasonable credit judgment in accordance with its customary lending practices
and notice of which shall have been given to Borrower at least five (5) days
prior to the effective date.
SECTION 1.59. RECEIVABLES-RELATED COLLATERAL. "Receivables-Related
Collateral" means those items of Collateral described in Section 3.1 (a) through
(d) and in Section 3.1(h) as related to or proceeding from such items of
Collateral.
SECTION 1.60. REPORTABLE EVENT. "Reportable Event" means a "reportable
event" as defined in Section 4043(b) of ERISA.
SECTION 1.61. REVOLVING CREDIT LOAN. "Revolving Credit Loan" has the
meaning set forth in Section 2.1(b).
SECTION 1.62. SERVICES. "Services" means the site management services
provided by Borrower to pharmaceutical companies and clinical research
organizations.
SECTION 1.63. TANGIBLE COLLATERAL. "Tangible Collateral" means those
items of Collateral described in Section 3.1(e) and (f) and in Section 3.1(h) as
related to or proceeding from such items of Collateral.
SECTION 1.64. TERM. "Term" has the meaning set forth in Section 2.8.
SECTION 1.65. UNIFORM COMMERCIAL CODE. "Uniform Commercial Code" means
the Uniform Commercial Code, as amended and in effect in the State of Maryland.
SECTION 1.66. USAGE FEE. "Usage Fee" has the meaning set forth in
Section 2.4 (b).
ARTICLE II
LOAN
SECTION 2.1. TERMS.
(a) The maximum aggregate principal amount of credit extended
by Lender to Borrower under this Agreement (the "Loan") that will be outstanding
at any time is Fifteen Million and No/100 Dollars ($15,000,000.00) (the "Maximum
Loan Amount"). Notwithstanding the foregoing, the maximum aggregate principal
amount of Revolving Credit Loans made by Lender to Borrower under this Agreement
and to the Affiliated Borrowers under the Affiliated Loan Agreements shall not
at any time exceed Thirty Million and No/100 Dollars ($30,000,000.00) (the
"Overall Maximum Loan Amount").
(b) The Loan shall be in the nature of a revolving line of
credit, and shall include sums advanced and other credit extended by Lender to
or for the benefit of Borrower from time to time under this Article II (each a
"Revolving Credit Loan") up to the lesser of (i) the Maximum Loan Amount and
(ii) the Borrowing Base submitted in connection with such request. The
outstanding principal balance of the Loan may fluctuate from time to time, will
be reduced by repayments made by Borrower (which may be made without penalty or
premium), and will be increased by future Revolving Credit Loans, advances and
other extensions of credit to or for the benefit of Borrower, and shall be due
and payable in full upon the expiration of the Term. For purposes of this
Agreement, any determination as to whether there is ability within the Borrowing
Base for advances or extensions of credit shall be made by Lender in the
exercise of its reasonable lender's discretion and shall be final and binding
upon Borrower.
(c) At Closing, Borrower shall execute and deliver to Lender a
promissory note evidencing Borrower's unconditional obligation to repay Lender
for Revolving Credit Loans, advances, and other extensions of credit made under
the Loan, in the form of EXHIBIT A to this Agreement (the "Note"), dated the
date of this Agreement, payable to the order of Lender in accordance with the
terms of such Note. The Note shall bear interest from the date of such Note
until repaid, with interest payable monthly in arrears on the first Business Day
of each month, at a rate per annum (on the basis of the actual number of days
elapsed over a year of 360 days) equal to the Base Rate, provided that after an
Event of Default has occurred and is continuing, such rate shall be equal to the
Default Rate. Each Revolving Credit Loan, advance and other extension of credit
shall be deemed evidenced by the Note, which is deemed incorporated into and
made a part of this Agreement by this reference.
(d) Subject to the terms and conditions of this Agreement,
advances under the Loan shall be made against a borrowing base equal to eighty
percent (80%) of Qualified Accounts due and owing to Borrower from any Account
Debtor (the "Borrowing Base").
SECTION 2.2. LOAN ADMINISTRATION. Borrowings under the Loan shall be as
follows:
(a) A request for a Revolving Credit Loan shall be made, or
shall be deemed to be made, in the following manner: (i) Borrower may give
Lender notice of its intention to borrow, in which notice Borrower shall specify
the amount of the proposed borrowing and the proposed borrowing date, not later
than 2:00 p.m. Eastern time one (1) Business Day prior to the proposed borrowing
date; PROVIDED, HOWEVER, that no such request may be made at a time when there
exists an Event of Default; and (ii) the becoming due of any amount required to
be paid under this Agreement, whether as interest or for any other Obligation,
shall be deemed irrevocably to be a request for a Revolving Credit Loan on the
due date in the amount required to pay such interest or other Obligation.
(b) Borrower hereby irrevocably authorizes Lender to disburse
the proceeds of each Revolving Credit Loan requested, or deemed to be requested,
as follows: (i) the proceeds of each Revolving Credit Loan requested under
subsection 2.2(a)(i) shall be disbursed by Lender by wire transfer to such bank
account as may be agreed upon by Borrower and Lender from time to time or
elsewhere if pursuant to written direction from Borrower; and (ii) the proceeds
of each Revolving Credit Loan requested under subsection 2.2(a)(ii) shall be
disbursed by Lender by way of direct payment of the relevant interest or other
Obligation.
(c) All Revolving Credit Loans, advances and other extensions
of credit to or for the benefit of Borrower shall constitute one general
Obligation of Borrower, and shall be secured by Lender's lien upon all of the
Collateral.
(d) Lender shall enter all Revolving Credit Loans as debits to
a loan account in the name of Borrower and shall also record in said loan
account all payments made by Borrower on any Obligations and all proceeds of
Collateral which are indefeasibly paid to Lender, and may record therein, in
accordance with customary accounting practice, other debits and credits,
including interest and all charges and expenses properly chargeable to Borrower
under or in connection with this Agreement. All collections into the
Concentration Account pursuant to Section 2.3 shall be applied first to fees,
costs and expenses due and owing under the Loan Documents, then to interest due
and owing under the Loan Documents, and then to principal outstanding with
respect to Revolving Credit Loans.
(e) Lender will account to Borrower monthly with a statement
of Revolving Credit Loans, charges and payments made pursuant to this Agreement,
and such accounting rendered by Lender shall be deemed final, binding and
conclusive upon Borrower unless Lender
is notified by Borrower in writing to the contrary within thirty (30) days of
the date each accounting is received by Borrower. Such notice shall be deemed an
objection to those items specifically objected to in such accounting.
(f) So long as no Event of Default has occurred and is
continuing (including, without limitation, the bottom line availability under
the Borrowing Base being lower than the outstanding principal balance under the
Agreement) proceeds of collections received by Lender on Accounts shall be made
immediately available to Borrower as additional extensions of credit under this
Agreement without any need for Borrower to request such extension of credit.
Borrower's ability to receive such automatic extensions of credit is expressly
conditioned on Borrower's submitting to Lender a Borrowing Base Certificate at
least weekly during the Term.
SECTION 2.3. COLLECTIONS, DISBURSEMENTS, BORROWING AVAILABILITY, AND
LOCKBOX. Borrower shall maintain a lockbox account (the "Lockbox") with
NationsBank, N.A. (South) or another financial institution mutually acceptable
to Borrower and Lender (the "Lockbox Bank"), subject to the provisions of this
Agreement, and shall execute with the Lockbox Bank a Lockbox Agreement
substantially in the form attached as EXHIBIT B (the "Lockbox Agreement"), and
such other agreements related thereto as Lender may reasonably require. Borrower
shall ensure that all collections of Accounts from entities that become Account
Debtors after the date of this Agreement are paid directly from such Account
Debtors into the Lockbox, and that, so long as any Obligations are outstanding,
all funds paid into the Lockbox are immediately transferred into a depository
account maintained by Lender at Bank One Arizona, N.A. or U.S. Bank N.A., as
determined by Lender in its sole discretion and communicated to Borrower (the
"Concentration Account"). Lender shall apply, on a daily basis, all funds
transferred into the Concentration Account pursuant to this Section 2.3 to
reduce the outstanding indebtedness under the Loan (in accordance with Section
2.2(d)). Future Revolving Credit Loans, advances and other extensions of credit
shall be made by Lender under the conditions set forth in this Article II. To
the extent that any collections of Accounts or proceeds of other Collateral are
not sent directly to the Lockbox but are received by Borrower, such collections
shall be held in trust for the benefit of Lender and remitted within one (1)
Business Day, in the form received, to the Lockbox Bank for transfer to the
Concentration Account immediately upon receipt by Borrower. Collections from
entities that are Account Debtors on or before the date of this Agreement may
continue to be received directly by Borrower but shall be remitted to the
Concentration Account within one (1) Business Day after such receipt. Borrower
acknowledges and agrees that its compliance with the terms of this Section 2.3
is essential, and that if Lender reasonably determines that Borrower has failed
to comply with any such terms, Lender shall give Borrower five (5) days written
notice of such noncompliance. If the noncompliance is not cured within such
five-day period, Lender shall be entitled to assess a noncompliance fee, which
shall operate to increase the Base Rate by up to two percent (2%) per annum
during any period of noncompliance. Lender shall be entitled to assess such fee
whether or not an Event of Default is declared or otherwise occurs.
Notwithstanding the foregoing, the failure by Borrower to transmit or cause to
be transmitted to the Lockbox an aggregate of up to $100,000.00 in any calendar
quarter shall not be deemed to be noncompliance with this Section. All funds
transferred from the Concentration Account for application to Borrower's
indebtedness to Lender shall be applied to reduce the Loan balance, but for
purposes of calculating interest shall be subject to a five (5) Business Day
clearance period. If as the result of collections of Accounts pursuant to the
terms and
conditions of this Section 2.3 a credit balance exists with respect to the
Concentration Account, such credit balance shall not accrue interest in favor of
Borrower, but shall be available to Borrower upon written request at any time or
times for so long as no Event of Default exists and is continuing.
SECTION 2.4. FEES.
(a) Upon execution of this Agreement, Borrower shall
unconditionally pay to Lender the balance owing on a commitment fee equal to one
percent (1%) of the Maximum Loan Amount (the "Commitment Fee"), provided that
the aggregate Commitment Fees paid under this Agreement and the Affiliated Loan
Agreements shall not exceed one percent (1%) of the Overall Maximum Loan Amount.
(b) For so long as the Loan is available to Borrower, Borrower
shall pay to Lender a minimum usage fee (the "Usage Fee") equal to one-fortieth
of one percent (0.025%) of the average amount by which the Maximum Loan Amount
exceeds the average amount of the outstanding principal balance of the Revolving
Credit Loans during the preceding month. The Usage Fee shall be payable monthly
in arrears on the first Business Day of each successive calendar month.
(c) For so long as the Loan is available to Borrower, Borrower
unconditionally shall pay to Lender a monthly loan management fee (the "Loan
Management Fee") equal to one-sixteenth of one percent (0.0625%) of the average
amount of the outstanding principal balance of the Revolving Credit Loans during
the preceding month. The Loan Management Fee shall be payable monthly in arrears
on the first day of each successive calendar month.
(d) Borrower shall pay to Lender all reasonable out-of-pocket
audit fees in connection with audits of Borrower's books and records and such
other matters as Lender shall deem appropriate, which shall be due and payable
on the first Business Day of the month following the date of issuance by Lender
of a request for payment thereof to Borrower. So long as no Event of Default has
occurred and is continuing, such audits shall occur no more than four (4) times
in a calendar year.
(e) Borrower shall pay to Lender, on demand, any and all fees,
costs or expenses which Lender pays to a bank or other similar institution
arising out of or in connection with (i) the forwarding to Borrower or any other
Person on behalf of Borrower, by Lender, of proceeds of Revolving Credit Loans
made by Lender to Borrower pursuant to this Agreement, and (ii) the depositing
for collection, by Lender, of any check or item of payment received or delivered
to Lender on account of Obligations.
SECTION 2.5. PAYMENTS. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) subject to the provisions of Section 3.7, the receipt by Borrower of any
proceeds of any of the Collateral, to the extent of such proceeds, (ii) the
occurrence of an Event of Default in consequence of which the Loan and the
maturity of the payment of the Obligations are accelerated under Section 8.2, or
(iii) the termination of this Agreement pursuant to Section 2.8; PROVIDED,
HOWEVER, that if any advance made by Lender
in excess of the Borrowing Base shall exist at any time, Borrower shall,
immediately upon demand, repay such overadvance. Interest accrued on the
Revolving Credit Loans shall be due on the earliest of (i) the first Business
Day of each month (for the immediately preceding month), computed on the last
calendar day of the preceding month, (ii) the occurrence of an Event of Default
in consequence of which the Loan and the maturity of the payment of the
Obligations are accelerated under Section 8.2, or (iii) the termination of this
Agreement pursuant to Section 2.8 under this Agreement. Except to the extent
otherwise set forth in this Agreement, all payments of principal and of interest
on the Loan, all other charges and any other obligations of Borrower under this
Agreement, shall be made to Lender to the Concentration Account, in immediately
available funds.
SECTION 2.6. USE OF PROCEEDS. The proceeds of Lender's advances under
the Loan shall be used to make funds available to certain physicians that
provide services to Borrower on an independent contractor basis, and for other
general business purposes.
SECTION 2.7. INTEREST RATE LIMITATION. The parties intend to conform
strictly to the applicable usury laws in effect from time to time during the
term of the Loan. Accordingly, if any transaction contemplated hereby would be
usurious under such laws, then notwithstanding any other provision under this
Agreement: (i) the aggregate of all interest that is contracted for, charged, or
received under this Agreement or under any other Loan Document shall not exceed
the maximum amount of interest allowed by applicable law (the "Highest Lawful
Rate"), and any excess shall be promptly credited to Borrower by Lender (or, to
the extent that such consideration shall have been paid, such excess shall be
promptly refunded to Borrower by Lender); (ii) neither Borrower nor any other
Person now or hereafter liable under this Agreement shall be obligated to pay
the amount of such interest to the extent that it is in excess of the Highest
Lawful Rate; and (iii) the effective rate of interest shall be reduced to the
Highest Lawful Rate. All sums paid, or agreed to be paid, to Lender for the use,
forbearance, and detention of the debt of Borrower to Lender shall, to the
extent permitted by applicable law, be allocated throughout the full term of the
Note until payment is made in full so that the actual rate of interest does not
exceed the Highest Lawful Rate in effect at any particular time during the full
term thereof. If at any time the rate of interest under the Note exceeds the
Highest Lawful Rate, the rate of interest to accrue pursuant to this Agreement
shall be limited, notwithstanding anything to the contrary in this Agreement, to
the Highest Lawful Rate, but any subsequent reductions in the Base Rate shall
not reduce the interest to accrue pursuant to this Agreement below the Highest
Lawful Rate until the total amount of interest accrued equals the amount of
interest that would have accrued if a varying rate per annum equal to the
interest rate under the Note had at all times been in effect. If the total
amount of interest paid or accrued pursuant to this Agreement under the
foregoing provisions is less than the total amount of interest that would have
accrued if a varying rate per annum equal to the interest rate under the Note
had been in effect, then Borrower agrees to pay to Lender an amount equal to the
difference between (x) the lesser of (A) the amount of interest that would have
accrued if the Highest Lawful Rate had at all times been in effect, or (B) the
amount of interest that would have accrued if a varying rate per annum equal to
the interest rate under the Note had at all times been in effect, and (y) the
amount of interest accrued in accordance with the other provisions of this
Agreement.
SECTION 2.8. TERM.
(a) Subject to Lender's right to cease making Revolving Credit
Loans to Borrower upon or after any Event of Default, this Agreement shall be in
effect for a period of three (3) years from the Closing Date, unless terminated
as provided in Section 2.8(c) or Section 8.3(a) (the "Term"), and this Agreement
may be renewed for one-year periods thereafter upon the mutual written agreement
of the parties.
(b) Notwithstanding anything in this Agreement to the
contrary, Lender may terminate this Agreement upon and during the occurrence of
an Event of Default after giving five (5) Business Days' prior written notice to
Borrower.
(c) Upon at least sixty (60) days prior written notice to
Lender (the "Termination Notice Period"), Borrower may terminate this Agreement
during the Term, provided that, if the termination is due to an unaffiliated
third-party paying off the Obligations, then, at the effective date of such
termination, Borrower shall pay to Lender (in addition to the then outstanding
principal, accrued interest and other Obligations owing under the terms of this
Agreement and any other Loan Documents) as liquidated damages for the loss of
bargain and not as a penalty, an amount equal to (i) three percent (3%) of the
Maximum Loan Amount if the effective date of such termination by Borrower is on
or before the first annual anniversary of the Closing Date, (ii) two percent
(2%) of the Maximum Loan Amount if the effective date of such termination by
Borrower is after the first annual anniversary of the Closing Date and on or
before the second annual anniversary of the Closing Date, and (iii) one percent
(1%) of the Maximum Loan Amount if the effective date of such termination is
after the second annual anniversary of the Closing Date and before the date that
is thirty (30) days before the end of the Term.
(d) All of the Obligations shall be immediately due and
payable at the end of the Term (the "Termination Date"); provided, however,
that notwithstanding anything in Section 2.8(c) to the contrary, the
Termination Date shall be effective no earlier than the first Business Day of
the month following the expiration of the Termination Notice Period. All
undertakings, agreements, covenants, warranties, and representations of
Borrower contained in the Loan Documents shall survive any such termination,
and Lender shall retain its liens in the Collateral and all of its rights and
remedies under the Loan Documents notwithstanding any such termination until
Borrower has paid the Obligations to Lender, in full, in immediately
available funds. Notwithstanding the foregoing, Lender acknowledges that
certain items of Tangible Collateral may be released from Lender's liens from
time to time in accordance with the provisions of Section 3.7.
(e) Notwithstanding any provision of this Agreement which
makes reference to the continuance of an Event of Default, nothing in this
Agreement shall be construed to permit Borrower to cure an Event of Default
following the lapse of the applicable cure period, and Borrower shall have no
such right in any instance unless specifically granted in writing by Lender.
SECTION 2.9. JOINT AND SEVERAL LIABILITY; BINDING OBLIGATIONS.
Each entity comprising Borrower and executing this Agreement on behalf of
Borrower shall be jointly and severally liable for all of the Obligations. In
addition, each entity comprising Borrower hereby
acknowledges and agrees that all of the representations, warranties, covenants,
obligations, conditions, agreements and other terms contained in this Agreement
shall be applicable to and shall be binding upon each individual entity
comprising Borrower, and shall be binding upon all such entities when taken
together.
ARTICLE III
COLLATERAL
SECTION 3.1. GENERALLY. As security for the payment of all liabilities
of Borrower to Lender pursuant to the Loan Documents, including without
limitation: (i) indebtedness evidenced under the Note, repayment of Revolving
Credit Loans, advances and other extensions of credit, all fees and charges
owing by Borrower, and all other liabilities and obligations of every kind or
nature whatsoever of Borrower to Lender pursuant to the Loan Documents, whether
now existing or hereafter incurred, joint or several, matured or unmatured,
direct or indirect, primary or secondary, related or unrelated, due or to become
due, including but not limited to any extensions, modifications, substitutions,
increases and renewals thereof, all as may be due under or related to this
Agreement and the other Loan Documents, (ii) the payment of all amounts advanced
by Lender to preserve, protect, defend, and enforce its rights under this
Agreement and in the following property in accordance with the terms of this
Agreement, and (iii) the payment of all expenses incurred by Lender in
connection therewith (collectively, the "Obligations"), and as further security
for the payment and performance of the obligations of Affiliated Borrowers under
the Affiliated Loan Agreements, Borrower hereby assigns and grants to Lender a
continuing first priority lien on and security interest in, upon, and to the
following property (the "Collateral"):
(a) All of Borrower's now-owned and hereafter acquired or
arising Accounts and all accounts receivable and rights to payment of every kind
and description relating to Services, and all of Borrower's contract rights,
Chattel Paper, Documents and Instruments with respect thereto, and all of
Borrower's rights, remedies, security and liens, in, to and in respect of the
Accounts, including, without limitation, all rights and remedies of an unpaid
lienor or secured party, guaranties or other contracts of suretyship with
respect to the Accounts, deposits or other security for the obligation of any
Account Debtor, and credit and other insurance;
(b) All moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, in transit to, in possession of,
or under the control of Lender or a bailee or Affiliate of Lender, from or for
Borrower, whether for safekeeping, pledge, custody, transmission, collection or
otherwise, and all of Borrower's deposits (general or special), balances, sums
and credits with Lender at any time existing;
(c) All of Borrower's now or hereafter acquired deposit
accounts into which proceeds of Accounts are deposited, to the extent of such
proceeds, including the Lockbox;
(d) All of Borrower's now owned and hereafter acquired or
arising General Intangibles and other property of every kind and description
with respect to, evidencing or relating
to its Accounts, including, but not limited to, all existing and future customer
lists, choses in action, claims, books, records, ledger cards, contracts,
licenses, formulae, tax and other types of refunds, returned and unearned
insurance premiums, rights and claims under insurance policies, and computer
programs, information, software, records, and data, but solely as each of the
same relate to the Accounts;
(e) All of Borrower's other general intangibles (including,
without limitation, any proceeds from insurance policies after payment of prior
interests), patents, unpatented inventions, trade secrets, copyrights, contract
rights, goodwill, literary rights, rights to performance, rights under licenses,
choses-in-action, claims, information contained in computer media (such as data
bases, source and object codes, and information therein), things in action,
trademarks and trademarks applied for (together with the goodwill associated
therewith) and derivatives thereof, trade names, including the right to make,
use, and vend goods utilizing any of the foregoing, and permits, licenses,
certifications, authorizations and approvals, and the rights of Borrower
thereunder, issued by any governmental, regulatory, or private authority,
agency, or entity whether now owned or hereafter acquired, together with all
cash and non-cash proceeds and products thereof;
(f) All of Borrower's now owned or hereafter acquired
inventory of every description which is held by Borrower for sale or lease or is
furnished by Borrower under any contract of service or is held by Borrower as
raw materials, work in process or materials used or consumed in a business,
wherever located, and as the same may now and hereafter from time to time be
constituted, together with all cash and non-cash proceeds and products thereof;
(g) All of Borrower's now owned or hereafter acquired
machinery, equipment, computer equipment, tools, tooling, furniture, fixtures,
goods, supplies, materials, work in process, whether now owned or hereafter
acquired, together with all additions, parts, fittings, accessories, special
tools, attachments, and accessions now and hereafter affixed thereto and/or used
in connection therewith, all replacements thereof and substitutions therefor,
and all cash and non-cash proceeds and products thereof; and
(h) The proceeds (including, without limitation, insurance
proceeds) of all of the foregoing.
The Collateral as described above includes both the "Receivables-Related
Collateral" and the "Tangible Collateral."
SECTION 3.2. LIEN DOCUMENTS. At Closing and thereafter as Lender deems
necessary in its sole discretion, Borrower shall execute and deliver to Lender,
or have executed and delivered (all in form and substance satisfactory to Lender
in its reasonable discretion):
(a) UCC-1 Financing Statements pursuant to the Uniform
Commercial Code in effect in the jurisdiction(s) in which Borrower operates,
which Lender may file in any jurisdiction where any Collateral is or may be
located and in any other jurisdiction that Lender deems appropriate; PROVIDED
that a carbon, photographic, or other reproduction or other copy of this
Agreement is sufficient as and may be filed in lieu of a financing statement;
and
(b) Any other agreements, documents, instruments, and writings
deemed necessary by Lender or as Lender may otherwise reasonably request from
time to time to evidence, perfect, or protect Lender's lien and security
interest in the Collateral required under this Agreement.
SECTION 3.3. COLLATERAL ADMINISTRATION.
(a) All Collateral (except deposit accounts) will at all times
be kept by Borrower at its principal office(s) or at such other locations as
identified to Lender, all as set forth on SCHEDULE 4.15 and shall not, without
at least thirty (30) days notice to Lender, be moved therefrom.
(b) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit to Lender on
such periodic basis as Lender shall reasonably request a collections report for
the preceding period, in form reasonably satisfactory to Lender. In addition, if
Accounts in an aggregate face amount in excess of $50,000.00 become ineligible
because they fall within one of the specified categories of ineligibility set
forth in the definition of Qualified Accounts, Borrower shall notify Lender of
such occurrence on the first Business Day following the date on which Borrower
first becomes aware of such occurrence, and the Borrowing Base shall thereupon
be adjusted to reflect such occurrence. After the occurrence and during the
continuance of an Event of Default, if requested by Lender, Borrower shall
execute and deliver to Lender formal written assignments of all of its Accounts
weekly or daily, which shall include all Accounts that have been created since
the date of the last assignment, together with copies of claims, invoices or
other information related thereto.
(c) After an Event of Default has occurred, and while it is
continuing, any of Lender's officers, employees or agents shall have the right,
at any time or times thereafter, in the name of Lender, any designee of Lender
or Borrower, to verify the validity, amount or any other matter relating to any
Accounts by mail, telephone, telegraph or otherwise. Borrower shall cooperate
fully with Lender in an effort to facilitate and promptly conclude such
verification process.
(d) To expedite collection, Borrower shall endeavor in the
first instance to make collection of its Accounts for Lender. Lender retains the
right at all times after the occurrence of an Event of Default, to notify
Account Debtors that Accounts have been assigned to Lender and to collect
Accounts directly in its own name and to charge reasonable collection costs and
expenses, including reasonable attorneys' fees (including both outside and
in-house counsel), to Borrower.
SECTION 3.4. OTHER ACTIONS. In addition to the foregoing, Borrower (i)
shall provide prompt written notice to each entity that becomes an Account
Debtor at any time following the date of this Agreement that payments on
Accounts shall thereafter be made directly to the Lockbox, (ii) after an Event
of Default has occurred and is continuing, hereby authorizes Lender to provide
written notice to each entity that is then an Account Debtor or thereafter
becomes an Account Debtor that Lender has been granted a first priority lien and
security interest in, upon and to all Accounts applicable to such Account
Debtor, and (iii) shall do anything further that may be lawfully required by
Lender to secure Lender and effectuate the intentions and objects of this
Agreement, including but not limited to the execution and delivery of lockbox
agreements, continuation statements, amendments to financing statements,
terminations of financing statements, and any other documents required under
this Agreement. At Lender's request, Borrower shall also immediately deliver to
Lender all items
for which Lender must receive possession to obtain a perfected security
interest. Borrower shall, on Lender's demand, deliver to Lender all notes,
certificates, and documents of title, Chattel Paper, warehouse receipts,
Instruments, and any other similar instruments constituting Collateral.
SECTION 3.5. SEARCHES. Before Closing, and thereafter (as and when
determined by Lender in its reasonable discretion), Lender shall perform the
searches set forth in clauses (a) and (b) below against Borrower (the results of
which are to be consistent with Borrower's representations and warranties under
this Agreement), all at Borrower's expense:
(a) Uniform Commercial Code searches with the Secretary of
State and local filing offices of each jurisdiction where Borrower maintains its
executive offices, a place of business, or assets; and
(b) Judgment, federal tax lien and corporate and partnership
tax lien searches, in each jurisdiction searched under clause (a) above.
So long as no Event of Default has occurred and is continuing, Lender
agrees to perform such searches no more frequently than quarterly. Borrower
shall obtain and deliver to Lender prior to Closing Good Standing certificates
showing Borrower to be in good standing in its state of formation and in each
other state in which it is doing and currently intends to do business for which
qualification is required.
SECTION 3.6. POWER OF ATTORNEY. After an Event of Default and while it
is continuing, Borrower hereby makes, constitutes and appoints each of the
officers of Lender as the true and lawful attorney for Borrower (without
requiring any of them to act as such) with full power of substitution to do the
following: (i) endorse the name of Borrower upon any and all checks, drafts,
money orders, and other instruments for the payment of money that are payable to
Borrower and constitute collections on Borrower's Accounts; (ii) execute in the
name of Borrower any financing statements, schedules, assignments, instruments,
documents, and statements that Borrower is obligated to give Lender under this
Agreement; and (iii) after the occurrence of an Event of Default, do such other
and further acts and deeds in the name of Borrower that Lender may deem
necessary or reasonable to enforce any Account or other Collateral or perfect
Lender's security interest or lien in any Collateral.
SECTION 3.7. RELEASE OF SECURITY INTEREST AND LIENS. Lender shall
release its security interest and other liens in, on and to the Collateral when
all the Obligations have been paid in full, and Lender will reassign and
redeliver (or cause to be reassigned and redelivered) to Borrower, or to such
Person as Borrower designates, against receipt, such of the Collateral (if any)
assigned by Borrower to Lender (or otherwise held by Lender) as has not been
sold or otherwise applied by Lender under the terms of this Agreement and the
other Loan Documents and is still held by it under this Agreement of the other
Loan Documents, together with appropriate instruments of reassignment and
release. Notwithstanding the foregoing, upon the disposition for value by
Borrower of Tangible Collateral, Lender agrees, so long as no Event of Default
has occurred and is continuing, that it will release its lien(s) on such
Collateral and execute any necessary or desirable instruments in connection
therewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each entity comprising Borrower represents and warrants to Lender that:
SECTION 4.1. SUBSIDIARIES. Except as set forth in SCHEDULE 4.1, on the
Closing Date, Borrower has no subsidiaries.
SECTION 4.2. ORGANIZATION AND GOOD STANDING. Each entity comprising
Borrower is a corporation duly organized, validly existing, and in good standing
under the laws of its state of formation, is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties owned
or leased by it in such jurisdiction or the nature of its business makes such
qualification necessary (other than those jurisdictions where the failure to
qualify could not reasonably be likely to have a Material Adverse Effect), has
the corporate power and authority to own its assets and transact the business in
which it is engaged, and has obtained all certificates, licenses and
qualifications required under all laws, regulations, ordinances, or orders of
public authorities necessary for the ownership and operation of all of its
properties and transaction of all of its business, other than those where the
failure to so obtain could not reasonably be likely to have a Material Adverse
Effect.
SECTION 4.3. AUTHORITY. Borrower has full corporate power and authority
to enter into, execute, and deliver this Agreement and to perform its
obligations under this Agreement, to borrow the Loan, to execute and deliver the
Note, and to incur and perform the obligations provided for in the Loan
Documents, all of which have been duly authorized by all necessary corporate
action. No consent or approval of shareholders of, or lenders to, Borrower and
no consent, approval, filing or registration with any Governmental Authority is
required as a condition to the validity of the Loan Documents or the performance
by Borrower of its obligations under the Loan Documents other than those
previously obtained.
SECTION 4.4. BINDING AGREEMENT. This Agreement and all other Loan
Documents constitute, and the Note, when issued and delivered pursuant hereto
for value received, will constitute, the valid and legally binding obligations
of Borrower, enforceable against Borrower in accordance with their respective
terms other than (i) applicable bankruptcy, insolvency, reorganization, voidable
preference, moratorium or similar laws, and related judicial doctrines,
affecting creditors' rights and remedies generally, as in effect from time to
time, and (ii) general principles of equity, whether such principles are
considered in a proceeding at law or in equity.
SECTION 4.5. LITIGATION. Except as disclosed in SCHEDULE 4.5, there are
no actions, suits, proceedings or investigations pending or, to Borrower's
knowledge, threatened against Borrower before any court or arbitrator or before
or by any Governmental Authority which, in any one case
or in the aggregate, if determined adversely to the interests of Borrower, could
have a Material Adverse Effect. Borrower is not in default with respect to any
order of any court, arbitrator, or Governmental Authority applicable to Borrower
or its properties.
SECTION 4.6. NO CONFLICTS. The execution and delivery by Borrower of
this Agreement and the other Loan Documents do not, and the performance of its
obligations under the Loan Documents will not, violate, conflict with,
constitute a default under, or result in the creation of a lien or encumbrance
upon the property of Borrower under: (i) any provision of Borrower's charter
documents; (ii) any provision of any law, rule, or regulation applicable to
Borrower other than those provisions the violation of which could not reasonably
be likely to have a Material Adverse Effect, or (iii) any of the following: (A)
any indenture or other material agreement or instrument to which Borrower is a
party or by which Borrower or its property is bound; or (B) any judgment, order
or decree of any court, arbitration tribunal, or Governmental Authority having
jurisdiction over Borrower which is applicable to Borrower.
SECTION 4.7. FINANCIAL CONDITION. The annual consolidated financial
statements of PMC as of January 31, 1998 audited by PricewaterhouseCoopers and
the unaudited financial statements of PMC as of October 31, 1998, certified by
the chief financial officer of PMC, which have been delivered to Lender, fairly
present the financial condition of PMC and the results of its operations and
changes in financial condition as of the dates and for the periods referred to,
and have been prepared in accordance with GAAP. There are no material unrealized
or anticipated liabilities, direct or indirect, fixed or contingent, of PMC as
of the dates of such financial statements which are not reflected in such
financial statements or in the notes to such financial statements. Except as
previously disclosed by Borrower to Lender, there has been no event that could
reasonably be likely to have a Material Adverse Effect since October 31, 1998.
The federal tax identification number of each entity comprising Borrower is as
described on SCHEDULE 4.7.
SECTION 4.8. NO DEFAULT. Borrower is not in default under or with
respect to any material obligation in any respect which could reasonably be
likely to have a Material Adverse Effect. No Event of Default has occurred and
is continuing under this Agreement.
SECTION 4.9. TITLE TO PROPERTIES. Borrower has good and marketable
title to the Collateral, subject to no lien, pledge, encumbrance or charge of
any kind, other than Permitted Liens. Borrower has not agreed or consented to
cause any of the Collateral, whether owned now or hereafter acquired or created,
to be subject in the future (upon the happening of a contingency or otherwise)
to any lien, pledge, encumbrance or charge of any kind other than Permitted
Liens.
SECTION 4.10. TAXES. Borrower has filed, or has obtained extensions for
the filing of, all federal, state and other tax returns which are required to be
filed, and has paid all taxes shown as due on those returns and all assessments,
fees and other amounts due as of the date of this Agreement. All material tax
liabilities of Borrower were, as of October 31, 1998 adequately provided for on
Borrower's books. No material tax liability has been asserted by the Internal
Revenue Service or other taxing authority against Borrower for taxes in excess
of those already paid. Notwithstanding the foregoing, Borrower shall not be, and
shall not have been required to pay any tax (other than payroll taxes) so long
as the validity or amount of the tax shall be contested in good faith and by
appropriate proceedings, demonstrated to the reasonable satisfaction of Lender,
by Borrower, and Borrower shall have set aside on its books adequate reserve
therefor to the extent required by GAAP; PROVIDED, HOWEVER, that such deferment
of payment is permissible only so long as Borrower's title to, and its right to
use, the Collateral is not adversely affected thereby and Lender's lien and
priority on the Collateral are not adversely affected, altered or impaired
thereby.
SECTION 4.11. SECURITIES AND BANKING LAWS AND REGULATIONS.
(a) The use of the proceeds of the Loan and Borrower's
issuance of the Note will not directly or indirectly violate or result in a
violation of the Securities Act of 1933 or the Securities Exchange Act of 1934,
as amended, or any regulations issued pursuant thereto, including without
limitation Regulations U, T, or X of the Board of Governors of the Federal
Reserve System. Borrower is not engaged in the business of extending credit for
the purpose of the purchasing or carrying "margin stock" within the meaning of
those regulations. No part of the proceeds of the Loan under this Agreement will
be used to purchase or carry any margin stock or to extend credit to others for
such purpose.
(b) Borrower is not an investment company within the meaning
of the Investment Company Act of 1940, as amended, nor is it, directly or
indirectly, controlled by or acting on behalf of any Person which is an
investment company within the meaning of that Act.
SECTION 4.12. ERISA. No employee benefit plan (a "Plan") subject to the
Employee Retirement Income Security Act of 1974 ("ERISA") and regulations issued
pursuant thereto that is maintained by Borrower or under which Borrower could
have any material liability under ERISA (a) has failed to meet minimum funding
standards established in Section 302 of ERISA, (b) has failed to comply with all
applicable requirements of ERISA and of the Internal Revenue Code, including all
applicable rulings and regulations thereunder, (c) has engaged in or been
involved in a prohibited transaction (as defined in ERISA) under ERISA or under
the Internal Revenue Code, or (d) has been terminated. Borrower has not assumed,
or received notice of a claim asserted against Borrower for, withdrawal
liability (as defined in the Multi-Employer Pension Plan Amendments Act of 1980,
as amended) with respect to any multi-employer pension plan and is not a member
of any Controlled Group (as defined in ERISA). Borrower has timely made when due
all contributions with respect to any multi-employer pension plan in which it
participates and no event has occurred triggering a claim against Borrower for
withdrawal liability with respect to any multi-employer pension plan in which
Borrower participates.
SECTION 4.13. COMPLIANCE WITH LAW. Except as described in SCHEDULE
4.13, Borrower is not in material violation of any statute, rule or regulation
of any Governmental Authority (including, without limitation, any statute, rule
or regulation relating to employment practices or to environmental, occupational
and health standards and controls) where the failure to comply would have a
Material Adverse Effect. Borrower has obtained all licenses, permits,
franchises, and other governmental authorizations necessary for the ownership of
its properties and the conduct of its business where the failure to so obtain
such licenses, permits, franchises, and other governmental authorizations would
have a Material Adverse Effect. Borrower is current with all reports and
documents required to be filed with any state or federal securities commission
or similar Governmental Authority and is in full compliance with all applicable
rules and regulations of such
commissions to the extent noncompliance therewith could reasonably be likely to
have a Material Adverse Effect.
SECTION 4.14. ENVIRONMENTAL MATTERS. No use, exposure, release,
generation, manufacture, storage, treatment, transportation or disposal of
Hazardous Material has occurred or is occurring on or from any real property on
which the Collateral is located or which is owned, leased or otherwise occupied
by Borrower (the "Premises"), or off the Premises as a result of any action of
Borrower other than in material compliance with all laws and except as described
in SCHEDULE 4.14. All Hazardous Material used, treated, stored, transported to
or from, generated or handled on the Premises, or off the Premises by Borrower,
has been disposed of on or off the Premises by or on behalf of Borrower in
material compliance with all laws. There are no underground storage tanks
present on or under the Premises owned or leased by Borrower. To the best of
Borrower's knowledge, no other environmental, public health or safety hazards
exist with respect to the Premises.
SECTION 4.15. PLACES OF BUSINESS. The only places of business of
Borrower, and the places where it keeps and intends to keep the Collateral and
records concerning the Collateral, are at the addresses set forth in SCHEDULE
4.15.
SECTION 4.16. STOCK OWNERSHIP. The identity of each stockholder of
record of each entity comprising Borrower (other than PhyMatrix) at the Closing
Date, together with the respective ownership percentages held by each such
stockholder as of such date, are as set forth on SCHEDULE 4.16. The identity of
each current executive officer or director of PhyMatrix known to own five
percent (5%) or more of any outstanding class of stock of PhyMatrix, together
with the respective ownership percentages held by each such person as of such
date, are as set forth on SCHEDULE 4.16.
SECTION 4.17. BUSINESS INTERRUPTIONS. Within five years before the date
of this Agreement, neither the business, property or assets, or operations of
Borrower has been adversely affected in any way by any casualty, strike,
lockout, combination of workers, or order of the United States of America or
other Governmental Authority, directed against Borrower. There are no pending
or, to Borrower's knowledge, threatened labor disputes, strikes, lockouts, or
similar occurrences or grievances against Borrower or its business the effect of
which could reasonably be likely to have a Material Adverse Effect.
SECTION 4.18. NAMES. Within five years before the date of this
Agreement, Borrower has not conducted business under or used any other name
(whether corporate, partnership or assumed) other than as shown on SCHEDULE
4.18. Borrower is the sole owner of all names listed on that Schedule and any
and all business done and invoices issued in such names are Borrower's sales,
business, and invoices. Each trade name of Borrower represents a division or
trading style of Borrower and not a separate Person or independent Affiliate.
SECTION 4.19 ACCOUNTS. Lender may rely, in determining which Accounts
are Qualified Accounts, on all statements and representations made by Borrower
with respect to any Account or Accounts. Unless otherwise indicated in writing
to Lender, with respect to each Account:
(a) It is genuine and in all respects what it purports to be,
and is not evidenced by a judgment;
(b) It arises out of a completed, BONA FIDE rendition of
Services by Borrower in the ordinary course of their respective businesses and
in accordance with the terms and conditions of all contracts, certification, or
other documents relating thereto and forming a part of the contract between
Borrower and the Account Debtor;
(c) It is for a liquidated amount maturing as stated in a
duplicate claim or invoice covering such sale or rendition of Services, a copy
of which has been furnished or is available to Lender;
(d) Such Account, and Lender's security interest in such
Account is not, and will not (by voluntary act or omission by Borrower), be in
the future, subject to any offset, lien, deduction, defense, dispute,
counterclaim or any other adverse condition, and each such Account is absolutely
owing to Borrower and is not contingent in any respect or for any reason;
(e) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce the
amount payable under the Accounts from the face amount of the claim or invoice
and statements delivered to Lender with respect thereto;
(f) To the Borrower's knowledge, (i) the Account Debtor under
the Account had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (ii) such Account Debtor is
solvent;
(g) To the Borrower's knowledge, there are no proceedings or
actions which are threatened or pending against any Account Debtor under an
Account which might result in any material adverse change in such Account
Debtor's financial condition or the collectibility of such Account;
(h) It has been billed and forwarded to the Account Debtor for
payment in accordance with applicable laws and compliance and conformance with
any and all requisite procedures, requirements and regulations governing payment
by such Account Debtor with respect to such Account; and
(i) Borrower has obtained and currently has all licenses,
permits and authorizations as necessary in the generation of such Accounts.
SECTION 4.20. SOLVENCY. Both before and after giving effect to the
transactions contemplated by the terms and provisions of this Agreement, (i) PMC
owns property whose fair saleable value is greater than the amount required to
pay all of PMC's Indebtedness (including contingent debts), (ii) PMC was and is
able to pay all of its Indebtedness as such Indebtedness matures, and (iii) PMC
had and has capital sufficient to carry on its business and transactions and all
business and transactions in which it about to engage. For purposes of this
Section 4.20, the term "Indebtedness" means, without duplication (x) all items
which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such PMC
as of the date on which Indebtedness is to be determined, (y) all obligations of
any other person or entity which such PMC has guaranteed, and (z) the
Obligations.
SECTION 4.21. COMMISSIONS. The transaction contemplated by this
Agreement was brought about by Lender and Borrower acting as principals and
without any brokers, agents, or finders being the effective procuring cause.
Borrower represents that it has not committed Lender to the payment of any
brokerage fee, commission, or charge in connection with this transaction.
SECTION 4.22. INTELLECTUAL PROPERTY. Borrower exclusively owns or
possesses all the patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, franchises, licenses, and
rights with respect to the foregoing necessary for the current and planned
future conduct of its business, without any conflict with the rights of others.
A list of all such intellectual property (indicating the nature of Borrower's
interest), as well as all outstanding franchises and licenses given by or held
by Borrower, is attached as SCHEDULE 4.22. Borrower is not in default of any
obligation or undertaking with respect to such intellectual property or rights.
SECTION 4.23. MATERIAL FACTS. Neither this Agreement nor any other Loan
Document nor any other agreement, document, certificate, or statement furnished
to Lender by or on behalf of Borrower in connection with the transactions
contemplated hereby contains any untrue statement of material fact or omits to
state a material fact necessary to make the statements contained in this
Agreement or other Loan Document not misleading. There is no fact known to
Borrower that adversely affects or in the future may adversely affect the
business, operations, affairs or financial condition of Borrower, or any of its
properties or assets.
SECTION 4.24. INVESTMENTS, GUARANTEES, AND CERTAIN CONTRACTS. Borrower
does not own or hold any equity or long-term debt investments in, have any
outstanding advances to, have any outstanding guarantees for the obligations of,
or have any outstanding borrowings from, any Person, except as described on
SCHEDULE 4.24. Borrower is not a party to any contract or agreement, or subject
to any corporate restriction, which adversely affects its business.
SECTION 4.25 JOINT VENTURES. Borrower is not engaged in any joint
venture or partnership with any other Person, except as set forth on SCHEDULE
4.25.
SECTION 4.26. YEAR 2000 COMPLIANCE.
(a) All devices, systems, machinery, information technology, computer
software and hardware, and other date sensitive technology (jointly and
severally, the "Systems") necessary for Borrower to carry on its business as
currently conducted and as contemplated to be conducted in the future are Year
2000 Compliant or will be Year 2000 Compliant within a period of time calculated
to result in no material disruption of any of Borrower's business operations.
For purposes of these provisions, "Year 2000 Compliant" means that such Systems
are designed to be used before, during and after the Gregorian calendar year
2000 A.D. and will operate during each such time period without error related to
date data, specifically including any error relating to, or the product of, date
data that represents or refers to different centuries or more than one century.
(b) Borrower has: (i) undertaken a detailed inventory, review, and
assessment of all areas within its business and operations that could be
adversely affected by the failure of Borrower to be Year 2000 Compliant on a
timely basis; (ii) developed a detailed plan and time line for becoming Year
2000 Compliant on a timely basis; and (iii) to date, implemented that plan in
accordance with the timetable in all material respects.
ARTICLE V
CLOSING AND CONDITIONS OF LENDING
SECTION 5.1. CONDITIONS PRECEDENT TO AGREEMENT. The obligation of
Lender to enter into and perform this Agreement and to make Revolving Credit
Loans is subject to the following conditions precedent:
(a) Lender shall have received two (2) originals of this
Agreement and all other Loan Documents required to be executed and delivered at
or before Closing (other than the Note, as to which Lender shall receive only
one original), executed by Borrower and any other required Persons, as
applicable.
(b) Lender shall have received all searches and good standing
certificates required by Section 3.5.
(c) Borrower shall then be in compliance with all the terms,
covenants and conditions of the Loan Documents.
(d) There shall exist no Event of Default and no event which,
with the giving of notice or the lapse of time, or both, could constitute such
an Event of Default.
(e) The representations and warranties contained in Article IV
shall be true and correct in all material respects.
(f) Lender shall have received copies of all board of
directors resolutions of Borrower, and other corporate action taken by Borrower
to authorize the execution, delivery and performance of the Loan Documents and
the borrowing of the Loan under the Loan Documents, as well as the names and
signatures of the officers of Borrower authorized to execute documents on its
behalf in connection herewith, all as also certified as of the date of this
Agreement by Borrower's chief financial officer, and such other papers as Lender
may reasonably require.
(g) Lender shall have received a copy of the charter documents
of each Borrower, with any amendments to any of the foregoing, certified by the
Secretary of State of the state of each such entity's formation, and copies,
certified as true, correct and complete by a corporate officer of Borrower, of
Borrower's bylaws and all other documents necessary for performance of the
obligations of Borrower under this Agreement and the other Loan Documents.
(h) Lender shall have received a written opinion of counsel
for Borrower, dated the date of this Agreement, substantially in the form of
EXHIBIT C.
(i) Lender shall have received such financial statements,
reports, certifications, and other operational information required to be
delivered under this Agreement, including without limitation an initial
Borrowing Base Certificate calculating the Borrowing Base.
(j) Lender shall have received the remainder of the Commitment
Fee.
(k) The Lockbox and the Concentration Account shall have been
established.
(l) Lender shall have received a certificate of Borrower's
chief financial officer, dated the Closing Date, certifying that all of the
conditions specified in this Section have been fulfilled.
SECTION 5.2. CONDITIONS PRECEDENT TO ADVANCES. Notwithstanding any
other provision of this Agreement, no Loan proceeds, Revolving Credit Loans,
advances or other extensions of credit under the Loan shall be disbursed under
this Agreement unless the following conditions have been satisfied or waived
immediately prior to such disbursement:
(a) The representations and warranties on the part of Borrower
contained in Article IV of this Agreement shall be true and correct in all
material respects at and as of the date of disbursement or advance, as though
made on and as of such date (except to the extent that such representations and
warranties expressly relate solely to an earlier date and except that the
references in Section 4.7 to financial statements shall be deemed to be a
reference to the then most recent annual and interim financial statements of PMC
furnished to Lender pursuant to Section 6.1).
(b) No Event of Default or event which, with the giving of
notice of the lapse of time, or both, could become an Event of Default shall
have occurred and be continuing or would result from the making of the
disbursement or advance.
(c) Except as set forth in the Business Plan, no event shall
have occurred and be continuing with respect to PMC since the date of this
Agreement that has had or is likely to have a Material Adverse Effect.
SECTION 5.3. CLOSING. Subject to the conditions of this Article V, the
Loan shall be made available on the date as is mutually agreed by the parties
(the "Closing Date") at such time as may be mutually agreeable to the parties
upon the execution of this Agreement (the "Closing") at such place as may be
requested by Lender.
SECTION 5.4. WAIVER OF RIGHTS. By completing the Closing under this
Agreement, or by making advances under the Loan, Lender does not waive a breach
of any representation or warranty of Borrower under this Agreement or under any
other Loan Document, and all of Lender's claims and rights resulting from any
breach or misrepresentation by Borrower are specifically reserved by Lender.
SECTION 5.5. LENDER'S SATISFACTION. All instruments and legal documents
and proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory in form and substance to Lender and
its counsel, and Lender shall have received all documents, including records of
corporate proceedings and opinions of counsel, which Lender may have requested
in connection therewith.
ARTICLE VI
AFFIRMATIVE COVENANTS
Each entity comprising Borrower covenants and agrees that for so long
as Borrower may borrow under this Agreement and until payment in full of the
Note and performance of all other obligations of Borrower under the Loan
Documents:
SECTION 6.1. FINANCIAL STATEMENTS AND COLLATERAL REPORTS. PMC will
furnish to Lender (i) a collections report and accounts receivable aging
schedule on a form acceptable to Lender within fifteen (15) days after the end
of each calendar month, which shall include, but not be limited to, a report of
credits issued, and collections received; (ii) accounts payable aging schedules
within fifteen (15) days after the end of each calendar month; (iii) internally
prepared monthly financial statements for PMC, certified by the chief financial
officer of PMC, within forty-five (45) days of the end of each calendar month;
(iv) annual audited financial statements for PMC prepared by
PricewaterhouseCoopers, or another firm of independent public accountants
reasonably satisfactory to Lender, within one hundred thirty-five (135) days
after the end of each of PMC's fiscal years; (v) promptly upon receipt thereof,
copies of any reports submitted to PMC by the independent accountants in
connection with any interim audit of the books of PMC and copies of each
management control letter provided to PMC by independent accountants; (vi) as
soon as available, copies of all financial statements and notices provided by
PMC to all of its stockholders; and (vii) such additional information, reports
or statements as Lender may from time to time request. Annual financial
statements shall set forth in comparative form figures for the corresponding
periods in the prior fiscal year. All financial statements shall include a
balance sheet and statement of earnings and shall be prepared in accordance with
GAAP (except that unaudited financial statements need not include all necessary
notes to financials).
SECTION 6.2. PAYMENTS UNDER THIS AGREEMENT. Borrower will make all
payments of principal, interest, fees, and all other payments required under
this Agreement and under the Loan, as and when due.
SECTION 6.3. EXISTENCE, GOOD STANDING, AND COMPLIANCE WITH LAWS.
Borrower will do or cause to be done all things necessary (i) to obtain and keep
in full force and effect all corporate existence, rights, licenses, privileges,
and franchises of Borrower necessary to the ownership of its property or the
conduct of its business, and comply in all material respects with all applicable
current and future laws, ordinances, rules, regulations, orders and decrees of
any Governmental Authority having or claiming jurisdiction over Borrower; and
(ii) to maintain and protect the properties used in the conduct of the
operations of Borrower, in a prudent manner, including without limitation the
maintenance at all times of such insurance upon its insurable property and
operations as required by law or by Section 6.6.
SECTION 6.4. LEGALITY. The making of the Loan and each disbursement or
advance under the Loan shall not be subject to any penalty or special tax, shall
not be prohibited by any governmental order or regulation applicable to
Borrower, and shall not violate any rule or regulation of any Governmental
Authority, and all necessary consents, approvals and authorizations of any
Governmental Authority to or of any such disbursement or advance that are
obtainable by Borrower shall have been obtained.
SECTION 6.5. TAXES AND CHARGES. Borrower will timely file all tax
reports and pay and discharge all taxes, assessments and governmental charges or
levies imposed upon Borrower, or its income or profits or upon its properties or
any part thereof, before the same shall be in default and prior to the date on
which penalties attach thereto, as well as all lawful claims for labor,
material, supplies or otherwise which, if unpaid, might become a lien or charge
upon the properties or any part thereof of Borrower and could reasonably be
likely to have a Material Adverse Effect; PROVIDED, HOWEVER, that Borrower shall
not be required to pay and discharge or cause to be paid and discharged any such
tax, assessment, charge, levy or claim so long as the validity or amount thereof
shall be contested in good faith and by appropriate proceedings by Borrower, and
Borrower shall have set aside on their books adequate reserve therefor to the
extent required by GAAP; and PROVIDED FURTHER, that such deferment of payment is
permissible only so long as Borrower's title to, and its right to use, the
Collateral is not adversely affected thereby and Lender's lien and priority on
the Collateral are not adversely affected, altered or impaired thereby.
Notwithstanding the foregoing, Borrower shall timely file all payroll tax
reports and timely pay all payroll taxes imposed on Borrower.
SECTION 6.6. INSURANCE. Borrower will carry adequate public liability
and professional liability insurance with responsible companies reasonably
satisfactory to Lender in such amounts and against such risks as is customarily
maintained by similar businesses and by owners of similar property in the same
general area.
SECTION 6.7. GENERAL INFORMATION. Borrower will furnish to Lender such
information as Lender may, from time to time, reasonably request with respect to
the business or financial affairs of Borrower, and, from time to time, permit
any officer, employee or agent of Lender to visit and inspect any of the
properties, and to inspect, audit and make extracts from the minute books, books
of account and other records, including management letters prepared by
Borrower's auditors, of Borrower, and make copies thereof or extracts therefrom,
and to discuss its and their assets, liabilities, business prospects, results of
operation, business affairs, finances, and accounts with, and be advised as to
the same by, the independent accountants and the employees and officers of
Borrower, all at such reasonable times and as often as Lender may reasonably
require.
SECTION 6.8 NOTIFICATION OF EVENTS OF DEFAULT AND ADVERSE DEVELOPMENTS.
Borrower promptly will notify Lender upon the occurrence of: (i) any Event of
Default; (ii) any event which, with the giving of notice or lapse of time, or
both, could constitute an Event of Default; (iii) any material adverse event,
not reflected or reserved against in the latest set of financial statements that
were certified by Borrower's chief financial officer and furnished to Lender;
(iv) any judicial,
administrative or arbitration proceeding pending against Borrower, and any
judicial or administrative proceeding known by Borrower to be threatened against
it which, if adversely decided, could reasonably be likely to have a Material
Adverse Effect; (v) any material default claimed by any other creditor for
Borrowed Money of Borrower other than Lender; in each case describing the nature
of such default and (in the case of notification under clauses (i) and (ii)) the
action Borrower proposes to take with respect thereto.
SECTION 6.9. FINANCIAL RECORDS. Borrower shall keep current and
accurate books of records and accounts in which full and correct entries will be
made of all of its business transactions, and will reflect in its financial
statements adequate accruals and appropriations to reserves, all in accordance
with GAAP.
SECTION 6.10. COLLECTION OF ACCOUNTS. Borrower shall continue to
collect its Accounts in the ordinary course of business, with such changes in
collection procedure as are contemplated by this Agreement (e.g., the Lockbox).
SECTION 6.11. PLACES OF BUSINESS. Borrower shall give thirty (30) days'
prior written notice to Lender of any change in the location of any of its
places of business, of the places where its records concerning its Accounts are
kept, of the places where the Collateral is kept, or of the establishment of any
new, or the discontinuance of any existing, places of business.
SECTION 6.12. BUSINESS CONDUCTED. Borrower shall continue in the
business presently conducted by it using its best efforts to maintain its
customers and goodwill. Without at least thirty (30) days' prior written notice
to Lender, Borrower shall not engage, directly or indirectly, in any line of
business substantially different from the business conducted by it immediately
prior to the Closing Date, or engage in business or lines of business which are
not reasonably related thereto. Notwithstanding the foregoing, if PhyMatrix
determines to dispose of physician practices or other operating entities
pursuant to the terms of the Business Plan (which shall not include the
disposition of any entity engaged in the business of providing site management
or clinical research services), then, so long as (i) Borrower notifies Lender of
such disposition at least five (5) Business Days before the expected closing
date of such disposition, and (ii) no Event of Default has occurred and is
continuing under this Agreement or the Affiliated Loan Agreements, and (iii) the
proceeds of such disposition will be used to pay down the Obligations
attributable to the business being disposed of (as reflected on the most recent
Borrowing Base), then Lender shall take all reasonable steps necessary to
consent to such disposition(s) and to release its liens on any assets being
disposed of in connection with such disposition(s), upon receipt of the
disposition proceeds. If an Event of Default has occurred and is continuing,
then the proceeds of any such disposition, even if related to Tangible
Collateral, shall be used to pay down the Obligation.
SECTION 6.13. LITIGATION AND OTHER PROCEEDINGS. Borrower shall give
prompt notice to Lender of any litigation, arbitration or other proceeding
before any Governmental Authority against or affecting Borrower if a judgment,
award or decision against Borrower in such proceeding could have a Material
Adverse Effect on Borrower's financial condition or operations.
SECTION 6.14. SUBMISSION OF COLLATERAL DOCUMENTS. Borrower will, on
demand of Lender, make available to Lender copies of documents evidencing the
providing of Services giving rise to Accounts, a copy of the claim or invoice
for each Account and copies of any written contract or order from which the
Account arose.
SECTION 6.15. EMPLOYEE BENEFIT PLANS. Borrower will (i) comply in all
material respects with the funding requirements of ERISA with respect to the
Plans for its employees, or will promptly satisfy any accumulated funding
deficiency that arises under Section 302 of ERISA; (ii) furnish Lender, promptly
after filing the same, with copies of all reports or other statements filed with
the United States Department of Labor, the Pension Benefit Guaranty Corporation,
or the Internal Revenue Service with respect to all Plans, or which Borrower, or
any member of a Controlled Group, may receive from such Governmental Authority
with respect to any such Plans, and (iii) promptly advise Lender of the
occurrence of any Reportable Event or Prohibited Transaction with respect to any
such Plan and the action which Borrower proposes to take with respect thereto.
Borrower will make all contributions when due with respect to any multi-employer
pension plan in which it participates and will promptly advise Lender: (i) upon
its receipt of notice of the assertion against Borrower of a claim for
withdrawal liability; (ii) upon the occurrence of any event which could trigger
the assertion of a claim for withdrawal liability against Borrower; and (iii)
upon the occurrence of any event which would place Borrower in a Controlled
Group as a result of which any member of such Controlled Group (including
Borrower) may be subject to a claim for withdrawal liability, whether liquidated
or contingent.
SECTION 6.16. FINANCING STATEMENTS. Borrower shall provide to Lender
evidence satisfactory to Lender as to the due recording of termination
statements, releases of collateral, and Forms UCC-3, and shall cause to be
recorded financing statements on Form UCC-1, duly executed by Borrower and
Lender, in all places necessary to release all existing security interests and
other liens in the Collateral (other than as permitted hereby) and to perfect
and protect Lender's first priority lien and security interest in the
Collateral, as Lender may request.
SECTION 6.17. CASH COLLATERAL. At all times during the term of this
Agreement and the Affiliated Loan Agreements, PMC shall maintain aggregate
minimum cash collateral of Two Million and No/100 Dollars ($2,000,000.00),
unless a higher minimum amount is required pursuant to Section 7.7 (the "Minimum
Cash Collateral"). The Minimum Cash Collateral shall be held in one or more bank
accounts identified to and approved by Lender in the exercise of its reasonable
discretion. Borrower agrees to provide to Lender evidence of the maintenance of
the Minimum Cash Collateral at least monthly and more frequently upon Lender's
reasonable request. The Minimum Cash Collateral shall be the aggregate cash
collateral required by this Agreement and the Affiliated Loan Agreements taken
as a whole.
SECTION 6.18. OFFICER'S CERTIFICATES. Together with the monthly
financial statements delivered pursuant to clause (iii) of Section 6.1, and
together with the audited annual financial statements delivered pursuant to
clause (iv) of that Section, Borrower shall deliver to Lender a certificate of
its chief financial officer, in form and substance reasonably satisfactory to
Lender. The certificate shall state that the signer has reviewed the relevant
terms of this Agreement, and has made (or caused to be made under his
supervision) a review of the transactions and conditions of Borrower
from the beginning of the accounting period covered by the income statements
being delivered to the date of the certificate, and that such review has not
disclosed the existence during such period of any condition or event which
constitutes an Event of Default or which is then, or with the passage of time or
giving of notice or both, could become an Event of Default, and if any such
condition or event existed during such period or now exists, specifying the
nature and period of existence thereof and what action Borrower has taken or
proposes to take with respect thereto.
ARTICLE VII
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as Borrower may borrow under
this Agreement and until payment in full of the Note and performance of all
other obligations of Borrower under the Loan Documents:
SECTION 7.1. BORROWING. Borrower will not:
(a) create, incur, assume or suffer to exist any liability
for accounts payable to trade creditors and current operating expenses (other
than for borrowed money) which are aged more than one hundred eighty (180)
days from the billing date or more than sixty (60) days from the due date, in
each case incurred in the ordinary course of business and paid within such
time period, unless the same are being contested in good faith and by
appropriate and lawful proceedings, and Borrower shall have set aside such
reserves, if any, with respect thereto as are required by GAAP and deemed
adequate by Borrower and its independent accountants;
(b) create, incur, assume or suffer to exist any liability for
Borrowed Money ("Indebtedness") except
(i) liabilities created by or pursuant to this
Agreement;
(ii) existing Indebtedness on the date of this
Agreement, as set forth on SCHEDULE 7.1, including any extensions or renewals of
the Indebtedness (provided that there is no increase in the amount of such
Indebtedness or other significant change in the terms of such Indebtedness);
(iii) Indebtedness of (A) any direct or indirect
subsidiary of PMC to another subsidiary of PMC, and (B) of PMC to any such
subsidiary, in each case where such subsidiary is a Borrower under this
Agreement or under one of the Affiliated Loan Agreements;
(iv) Indebtedness (A) that is secured by purchase
money security interests not exceeding the lesser of $3,000,000.00 or two
percent (2%) of PMC's tangible assets on a consolidated basis, (B) that is
incurred in connection with interest rate protection agreements, (C) that is
incurred as a result of the assumption of liabilities in an acquisition, and (D)
that is expressly
subordinated to the Obligations pursuant to written terms reasonably acceptable
to Lender, but the aggregate of all such Indebtedness described in this
subparagraph shall not at any time exceed $25,000,000.00; PROVIDED, HOWEVER,
that so long as PMC's cash balance is and continues to be in excess of the
Overall Maximum Loan Amount, the $25,000,000.00 limit may be increased as
follows: for each one dollar ($1.00) of such excess, the maximum aggregate
Indebtedness may increase by fifty cents ($0.50).
(c) except as set forth on SCHEDULE 7.1, make prepayments over
$1,000,000 on any existing or future indebtedness for Borrowed Money to any
Person (other than Lender, to the extent permitted by this Agreement or any
subsequent agreement between Borrower and Lender).
Any permitted Indebtedness, prepayment or other exception set forth above shall
be permitted to be created only so long as no Event of Default has occurred and
is continuing under this Agreement at the time of such creation and shall be
prohibited after the occurrence and during the continuance of any Event of
Default.
SECTION 7.2 JOINT VENTURES. Borrower will not invest directly or
indirectly in any joint venture in which a Person other than an Affiliate of PMC
is a joint venturer for any purpose without compliance with the following
conditions: (i) if the amount of a single investment is less than or equal to
$2,500,000, then Borrower need not notify or obtain the prior consent of Lender;
(ii) if the amount of a single investment is more than $2,500,000 and Lender
will receive a first priority lien on all of the assets of the joint venture,
then Borrower shall notify Lender of the proposed investment within three (3)
Business Days before the effective date of the investment; (iii) if the amount
of a single investment is more than $2,500,000 and Lender will not receive a
first priority lien on the assets of the joint venture, then Borrower shall
obtain the prior written consent of Lender, which consent shall not be
unreasonably withheld; and (iv) if Borrower invests more than $5,000,000 in the
aggregate in joint ventures during the Term, then in all cases Borrower shall
obtain Lender's prior written consent for further investments, which consent
shall not be unreasonably withheld.
SECTION 7.3. LIENS AND ENCUMBRANCES. Borrower will not create, incur,
assume or suffer to exist any pledge, lien or other encumbrance of any kind
(including the charge upon property purchased under a conditional sale or other
title retention agreement) upon, or any security interest in, any of the
Receivables-Related Collateral, whether now owned or hereafter acquired, except
for Permitted Liens.
SECTION 7.4. FUNDAMENTAL CHANGES. Except as set forth in the Business
Plan, Borrower will not: (i) enter into any transaction of merger or
consolidation where Borrower is not the surviving entity or the surviving entity
does not expressly assume the Note and other Loan Documents; (ii) liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution); or (iii)
convey, sell, lease, sublease, transfer or otherwise dispose of, in one
transaction or a series of transactions, any of the Receivables-Related
Collateral, whether now owned or hereafter acquired, or any other substantial
portion of the assets and a business operation, without prior notice to, and the
prior written consent of, Lender, which consent shall not be unreasonably
withheld. Moreover, Borrower will not acquire by purchase or otherwise all or
any substantial part of the business or assets of, or stock or other evidence of
beneficial ownership of, any Person unless (x) Lender is granted a first
priority lien on such assets, (y) no Event of Default has occurred and is
continuing under this
Agreement, and (z) (A) for transactions greater than $1,000,000.00, Lender is
provided with prior written notice of such transaction, and (B) for transactions
aggregating more than $10,000,000 during the Term, Lender is provided with prior
notice of such transaction and gives its prior written consent to such
transaction, which consent shall not be unreasonably withheld. Borrower further
agrees that in addition to all other remedies available to Lender, Lender shall
be entitled to specific enforcement of the covenants in this Section 7.4,
including injunctive relief.
SECTION 7.5 SALE AND LEASEBACK. Borrower will not, directly or
indirectly, enter into any arrangement whereby Borrower sells or transfers all
or any part of its assets and within one year thereafter rents or leases the
assets so sold or transferred without prior written notice to, and the prior
written consent of, Lender, which consent shall not be unreasonably withheld.
SECTION 7.6. TRANSACTIONS WITH AFFILIATES. Other than as set forth in
SCHEDULE 7.6, Borrower will not enter into any material transaction, including
without limitation the purchase, sale, or exchange of property, or the loaning
or giving of a material amount of funds to any Affiliate or subsidiary, except
in the ordinary course of business and pursuant to the reasonable requirements
of Borrower's business and upon terms substantially the same and no less
favorable to Borrower as it would obtain in a comparable arm's length
transaction with any Person not an Affiliate or subsidiary, and so long as the
transaction does not impair the Collateral or Lender's interest in the
Collateral. For purposes of the foregoing, Lender consents to the transactions
described on SCHEDULE 7.6.
SECTION 7.7. LOANS. Borrower will not make loans or advances to any
Person, other than (i) trade credit extended in the ordinary course of its
business, and (ii) advances for business travel and similar temporary advances
in the ordinary course of business to officers, stockholders, directors, and
employees, (iii) loans or advances to direct or indirect subsidiaries of
PhyMatrix, or (iv) without the prior written consent of Lender, which consent
shall not be unreasonably withheld, loans or advances (A) which are not
otherwise specifically permitted under this Agreement, (B) which have been
presented to Lender by Borrower to determine if Lender will fund the loan or
advance under this Agreement or the Affiliated Loan Agreements, (C) which Lender
determines within ten (10) Business Days of such presentation that it will not
fund, and (D) which do not exceed an aggregate of $5,000,000 outstanding at any
time. If such a loan or advance is made by Borrower to any such Person, then
Borrower shall increase the amount of cash collateral required to be maintained
pursuant to the provisions of Section 6.17 by one dollar ($1.00) for each one
dollar ($1.00) being loaned or advanced by Borrower.
SECTION 7.8. CONTINGENT LIABILITIES. Borrower will not assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
upon the obligation of any Person, except with respect to (i) the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business, (ii) liabilities of direct or indirect subsidiaries
of PhyMatrix, (iii) those items set forth on SCHEDULE 7.8, or (iv) any liability
of a Person not otherwise permitted hereunder in the aggregate that when
combined, without duplication, with the new Indebtedness to be permitted under
Section 7.1 , does not exceed the maximum Indebtedness cap set forth in Section
7.1.
SECTION 7.9. COMPLIANCE WITH ERISA. Borrower will not permit with
respect to any Plan covered by Title IV of ERISA any Prohibited Transaction or
any Reportable Event.
SECTION 7.10. USE OF LENDER'S NAME. Borrower will not use Lender's name
(or the name of any of Lender's affiliates) in connection with any of its
business operations. Borrower may disclose to third parties that Borrower has a
borrowing relationship with Lender. Nothing contained in this Agreement is
intended to permit or authorize Borrower to make any contract on behalf of
Lender.
SECTION 7.11. CONTRACTS AND AGREEMENTS. Borrower will not become or be
a party to any contract or agreement which would breach this Agreement, or
breach in any material manner any other instrument, agreement, or document to
which Borrower is a party or by which it is or may be bound.
SECTION 7.12. DIVIDENDS AND DISTRIBUTION. PMC will not declare or pay
any dividends or other distributions with respect to, purchase, redeem or
otherwise acquire for value any of its outstanding stock now or hereafter
outstanding, or return any capital of its stockholders, where such payment,
purchase, redemption or acquisition would have a Material Adverse Effect,
without prior notice to and the prior written consent of Lender, which consent
will not be unreasonably withheld; provided, however, that so long as no Event
of Default has occurred and is continuing, no such consent shall be required for
(i) any stock dividend, or (ii) any repurchase of PMC's stock by PMC that does
not use the proceeds of a Loan to pay the purchase price therefor. After an
Event of Default has occurred and while it is continuing, Borrower shall make no
such declarations, payments, purchases, redemptions or acquisitions for value.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1. EVENTS OF DEFAULT. Each of the following (individually, an
"Event of Default" and collectively, the "Events of Default") shall constitute
an event of default under this Agreement:
(a) A default in the payment of any installment of principal
of, or interest upon, the Note when due and payable, whether at maturity or
otherwise, or any default in the due observation or performance by Borrower of
any term, covenant or agreement contained in Section 2.3 of this Agreement,
which default or breach, as applicable, shall have continued unremedied for a
period of five (5) days after written notice thereof from Lender to Borrower;
(b) A default in the payment of any other charges, fees, or
other monetary obligations owing to Lender arising out of or incurred in
connection with this Agreement when such payment is due and payable, which
default shall have continued unremedied for a period of five (5) days after
written notice from Lender;
(c) A default in the due observance or performance by Borrower
of any other term, covenant or agreement contained in any of the Loan Documents,
which default shall have continued unremedied for a period of thirty (30) days
after written notice from Lender;
(d) Any representation or warranty made by Borrower in this
Agreement or in any of the other Loan Documents, any financial statement, or any
statement or representation made in any other certificate, report or opinion
delivered in connection herewith or therewith proves to have been incorrect or
misleading in any material respect when made, which default shall have continued
unremedied for a period of thirty (30) days after written notice from Lender;
(e) Any material obligation of Borrower (other than its
Obligations under this Agreement) for the payment of Borrowed Money is not paid
when due or within any applicable grace period, or such obligation becomes or is
declared to be due and payable prior to the expressed maturity thereof;
(f) Borrower makes an assignment for the benefit of creditors,
offers a composition or extension to creditors, or makes or sends notice of an
intended bulk sale of any business or assets now or hereafter conducted by
Borrower;
(g) Borrower files a petition in bankruptcy, is adjudicated
insolvent or bankrupt, petitions or applies to any tribunal for any receiver of
or any trustee for itself or any substantial part of its property, commences any
proceeding relating to itself under any reorganization, arrangement,
readjustment or debt, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect, or there is commenced against
Borrower any such proceeding which remains undismissed for a period of sixty
(60) days, or any Borrower by any act indicates its consent to, approval of, or
acquiescence in, any such proceeding or the appointment of any receiver of or
any trustee for a Borrower or any substantial part of its property, or suffers
any such receivership or trusteeship to continue undischarged for a period of
sixty (60) days;
(h) One or more final judgments against Borrower or
attachments against its property not fully and unconditionally covered by
insurance or indemnity shall be rendered by a court of record and shall remain
unpaid, unstayed on appeal, undischarged, unbonded and undismissed for a period
of thirty (30) days where such judgment may have a Material Adverse Effect;
(i) A Reportable Event which might constitute grounds for
termination of any Plan covered by Title IV of ERISA or for the appointment by
the appropriate United States District Court of a trustee to administer any such
Plan or for the entry of a lien or encumbrance to secure any deficiency, has
occurred and is continuing thirty (30) days after its occurrence, or any such
Plan is terminated, or a trustee is appointed by an appropriate United States
District Court to administer any such Plan, or the Pension Benefit Guaranty
Corporation institutes proceedings to terminate any such Plan or to appoint a
trustee to administer any such Plan, or a lien or encumbrance is entered to
secure any deficiency or claim;
(j) A Change of Control has occurred;
(k) The Collateral is attached, seized, levied upon or
subjected to a writ or distress warrant, or comes within the possession of any
receiver, trustee, custodian or assignee for the benefit of creditors and the
same is not cured within sixty (60) days thereafter or a notice of lien, levy or
assessment is filed of record with respect to the Collateral by the United
States, or any department, agency or instrumentality thereof, or by any state,
county, municipal or other governmental agency, or if any taxes or debts owing
at any time or times hereafter to any one of these becomes a lien or encumbrance
upon the Collateral and the same is not released within thirty (30) days after
the same becomes a lien or encumbrance; PROVIDED, that Borrower shall have the
right to contest in good faith and by appropriate proceedings any such lien,
levy or assessment if Borrower provides Lender with a bond or indemnity
satisfactory to Lender assuring the payment of such lien, levy or assessment;
(l) Lender receives substantial credible evidence that
Borrower may have been involved in an activity that has a reasonable likelihood
of causing the forfeiture of all or any part of the Collateral to any
Governmental Authority, where Lender has notified Borrower in writing of the
receipt of such evidence, and Borrower has not provided assurance, satisfactory
to Lender in its reasonable discretion, that such activity will not result in
such forfeiture;
(m) Borrower or any Affiliate of Borrower, shall challenge or
contest, in any action, suit or proceeding, the validity or enforceability of
this Agreement, or any of the other Loan Documents, the legality or the
enforceability of any of the Obligations or the perfection or priority of any
Lien granted to Lender;
(n) Borrower shall be criminally indicted or convicted under
any law where the conviction has a reasonable likelihood of causing a forfeiture
of any Collateral;
(o) There shall occur an event that Lender has determined in
its reasonable discretion has a Material Adverse Effect and such event continues
unremedied for a period of thirty (30) days after written notice from Lender; or
(p) Borrower ceases any material portion of its business
operations as currently conducted except as set forth in the Business Plan.
(q) An Event of Default shall have occurred under either of
the Affiliated Loan Agreements.
SECTION 8.2. ACCELERATION. Upon the occurrence of any of the foregoing
Events of Default, the Note shall become and be immediately due and payable upon
declaration to that effect delivered by Lender to Borrower; provided that, upon
the happening of any event specified in Section 8.1(g), the Note shall be
immediately due and payable without declaration or other notice to Borrower.
SECTION 8.3. REMEDIES.
(a) In addition to all other rights, options, and remedies
granted to Lender under this Agreement or at law or in equity, upon the
occurrence of an Event of Default, Lender may (i) terminate the Loan, whereupon
all outstanding Obligations shall be immediately due and payable, (ii) exercise
all other rights and remedies granted to it under this Agreement and all rights
under the
Uniform Commercial Code in effect in the applicable jurisdiction(s) and under
any other applicable law, and (iii) exercise all rights and remedies under all
Loan Documents now or hereafter in effect, including but not limited to the
following rights and remedies:
(i) The right to take possession of, send notices
regarding, and collect directly the Collateral, with or without judicial
process; and
(ii) The right to reduce the Maximum Loan Amount or
to use the Collateral and/or funds in the Concentration Account in amounts up to
the Maximum Loan Amount for any reason related to the Loan;
(b) Borrower agrees that a notice received by it at least
thirty (30) days before the time of any intended public sale, or the time after
which any private sale or other disposition of the Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. At
any sale or disposition of Collateral, Lender may (to the extent permitted by
applicable law) purchase all or any part of the Collateral, free from any right
of redemption by Borrower, which right is hereby waived and released to the
extent permitted by applicable law. Borrower covenants and agrees not to
interfere with or impose any obstacle to Lender's exercise of its rights and
remedies with respect to the Collateral except to the extent required by
applicable law.
SECTION 8.4. NATURE OF REMEDIES. Lender shall have the right to proceed
against all or any portion of the Collateral to satisfy in any order, (i) the
liabilities and Obligations of Borrower to Lender or (ii) upon the occurrence of
an Event of Default under either of the Affiliated Loan Agreements, the
liabilities and obligations of Affiliated Borrowers under the Affiliated Loan
Agreements. To the extent permitted by applicable law, all rights and remedies
granted Lender under this Agreement and under any agreement referred to in this
Agreement, or otherwise available at law or in equity, shall be deemed
concurrent and cumulative, and not alternative remedies, and Lender may proceed
with any number of remedies at the same time until the Loans, and all other
existing and future liabilities and obligations of Borrower to Lender, are
satisfied in full. The exercise of any one right or remedy shall not be deemed a
waiver or release of any other right or remedy, and Lender, upon the occurrence
of an Event of Default, may proceed against Borrower, and/or the Collateral, at
any time, under any agreement, with any available remedy and in any order.
SECTION 8.5. LIMITATION ON REMEDIES. Notwithstanding anything to the
contrary elsewhere in this Agreement, Lender shall proceed against the Tangible
Collateral only upon an Event of Default identified in SECTION 8.1 (a), (b),
(f), (g) or (o).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EXPENSES AND TAXES.
(a) Borrower agrees to pay, whether or not the Closing occurs,
a reasonable documentation preparation fee, together with actual audit fees and
all other out-of-pocket charges and expenses incurred by Lender in connection
with the negotiation, preparation, legal review and execution of each of the
Loan Documents, including but not limited to UCC and judgment lien searches and
UCC filings and fees for post-Closing UCC and judgment lien searches. In
addition, Borrower shall pay all such fees associated with any amendments to the
Loan Documents following Closing.
(b) Borrower also agrees to pay all out-of-pocket charges and
expenses incurred by Lender (including the fees and expenses of Lender's
counsel) in connection with the enforcement, protection or preservation of any
right or claim of Lender and the collection of any amounts due under the Loan
Documents. If Lender uses in-house counsel for any of these purposes (i.e., for
any task in connection with the enforcement, protection or preservation of any
right or claim of Lender and the collection of any amounts due under its Loan
Documents), Borrower further agrees that its Obligations under the Loan
Documents include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by Lender for
the work performed.
(c) Borrower shall pay all taxes (other than taxes based upon
or measured by Lender's income or revenues or any personal property tax), if
any, in connection with the issuance of the Note and the recording of the
security documents therefor. The obligations of Borrower under this clause (c)
shall survive the payment of Borrower's indebtedness under this Agreement and
the termination of this Agreement.
SECTION 9.2. ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Loan Documents constitute the full and entire understanding and agreement among
the parties with regard to their subject matter and supersede all prior written
or oral agreements, understandings, representations and warranties made with
respect thereto. No amendment, supplement or modification of this Agreement nor
any waiver of any provision of this Agreement shall be made except in writing
executed by the party against whom enforcement is sought.
SECTION 9.3. NO WAIVER; CUMULATIVE RIGHTS. No waiver by any party
hereto of any one or more defaults by the other party in the performance of any
of the provisions of this Agreement shall operate or be construed as a waiver of
any future default or defaults, whether of a like or different nature. No
failure or delay on the part of any party in exercising any right, power or
remedy under this Agreement shall operate as a waiver of such right, power or
remedy, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise of such right, power or remedy or
the exercise of any other right, power or remedy. The remedies provided for in
this Agreement are cumulative and are not exclusive of any remedies that may be
available to any party hereto at law, in equity or otherwise.
SECTION 9.4. NOTICES. Any notice or other communication required or
permitted under this Agreement shall be in writing and personally delivered,
mailed by registered or certified mail (return receipt requested and postage
prepaid), sent by telecopier (with a confirming copy sent by regular mail), or
sent by prepaid overnight courier service, and addressed to the relevant party
at its address
set forth below, or at such other address as such party may, by written notice,
designate as its address for purposes of notice under this Agreement:
If to Lender, at:
HCFP Funding, Inc.
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower, at:
PhyMatrix Corp.
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Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Fish, LLP
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If mailed, notice shall be deemed to be given five (5) Business Days after being
sent, and if sent by personal delivery, telecopier, or prepaid courier, notice
shall be deemed to be given when delivered.
SECTION 9.5. SEVERABILITY. If any term, covenant or condition of this
Agreement, or the application of such term, covenant or condition to any party
or circumstance shall be found by a court of competent jurisdiction to be, to
any extent, invalid or unenforceable, the remainder of this Agreement and the
application of such term, covenant, or condition to parties or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition shall be valid and
enforced to the fullest extent permitted by law. Upon determination that any
such term is invalid, illegal or unenforceable, Lender may, but is not obligated
to, advance funds to Borrower under this Agreement until the parties shall amend
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner.
SECTION 9.6. SUCCESSORS AND ASSIGNS. This Agreement, the Note, and the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and Lender and their
respective successors and assigns. Notwithstanding the foregoing, Borrower may
not assign any of its rights or delegate any of its obligations under this
Agreement without the prior written consent of Lender, which may be withheld in
its sole discretion. Lender may sell, assign or transfer any or all of its
rights or obligations under this Agreement without notice to or consent of
Borrower, so long as the purchaser, assignee or transferee is a financial
institution or an entity engaged wholly or substantially in the business of
making commercial loans.
SECTION 9.7. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one instrument.
SECTION 9.8. INTERPRETATION. No provision of this Agreement or any
other Loan Document shall be interpreted or construed against any party because
that party or its legal representative drafted that provision. The titles of the
paragraphs of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. Any pronoun used in this
Agreement shall be deemed to include singular and plural and masculine, feminine
and neuter gender as the case may be. The words "herein," "hereof," and
"hereunder" shall be deemed to refer to this entire Agreement, except as the
context otherwise requires.
SECTION 9.9. SURVIVAL OF TERMS. All covenants, agreements,
representations and warranties made in this Agreement, any other Loan Document,
and in any certificates and other instruments delivered in connection therewith
shall be considered to have been relied upon by Lender and shall survive the
making by Lender of the Loans contemplated in this Agreement and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
until all liabilities and obligations of Borrower to Lender are satisfied in
full.
SECTION 9.10. TIME. Whenever Borrower is required to make any payment
or perform any act on a day that is not a Business Day, the payment may be made
or the act performed on the next Business Day. Time is of the essence in
Borrower's performance under this Agreement and all other Loan Documents.
SECTION 9.11. COMMISSIONS. If any claim for commission, brokerage fee
or charge is made on Lender by any broker, finder, or agent or other person,
Borrower will indemnify, defend, and hold Lender harmless from and against the
claim and will defend any action to recover on that claim, at Borrower's cost
and expense, including Lender's counsel fees. Borrower further agrees that until
any such claim or demand is adjudicated in Lender's favor, the amount demanded
will be deemed a liability of Borrower under this Agreement, secured by the
Collateral.
SECTION 9.12. THIRD PARTIES. No rights are intended to be created under
this Agreement or under any other Loan Document for the benefit of any third
party donee, creditor, or incidental beneficiary of Borrower. Nothing contained
in this Agreement shall be construed as a delegation to Lender of Borrower's
duty of performance, including without limitation Borrower's duties under any
account or contract in which Lender has a security interest.
SECTION 9.13. DISCHARGE OF BORROWER'S OBLIGATIONS. Lender, in its sole
discretion, shall have the right at any time, and from time to time, without
prior notice to Borrower if Borrower fails to do so, to: (i) obtain insurance
covering any of the Collateral as required under this Agreement; (ii) pay for
the performance of any of Borrower's obligations under this Agreement; (iii)
discharge taxes, liens, security interests, or other encumbrances at any time
levied or placed on any of the Collateral in violation of this Agreement unless
Borrower is in good faith with due diligence by appropriate proceedings
contesting those items. Expenses and advances shall be added to the Loan, until
reimbursed to Lender and shall be secured by the Collateral. Any such payments
and advances by Lender shall not be construed as a waiver by Lender of an Event
of Default.
SECTION 9.14. INFORMATION TO PARTICIPANTS. Lender may divulge to any
participant it may obtain in the Loan, or any portion of the Loan, all
information, and furnish to such participant copies of reports, financial
statements, certificates, and documents obtained under any provision of this
Agreement or any other Loan Document, subject to Section 9.16.
SECTION 9.15. CONFIDENTIALITY. Lender will take reasonable efforts to
keep all financial information, and all information acquired as a result of any
inspection conducted in accordance with Section 6.7 (and any other information
provided to Lender under any Loan Document), confidential, provided that Lender
may communicate such information (i) in accordance with Borrower's written
authorization, to any Person in accordance with the customary practices of
financial institutions or entities engaged wholly or substantially in the
business of making commercial loans relating to routine trade inquiries, (ii) to
any regulatory authority having jurisdiction over Lender to the extent required
by applicable laws or regulations or by any subpoena or similar legal process,
(iii) to any other Person in connection with Lender's sale of any assignments of
the Obligations, provided that the recipient of such Obligations agrees in
writing delivered to Borrower to hold such information confidential in
accordance with the terms of this Agreement, (iv) to any other Person in
connection with the exercise of Lender's rights under this Agreement or any
other Loan Document, (v) to any Person to the extent required in any litigation
in which Lender is a party; PROVIDED, that to the extent permitted by applicable
law, rule or regulation or response to a subpoena, under or other legal process
or legislative body or committee or other governmental authority.
Notwithstanding the foregoing, information will not be deemed to be confidential
to the extent such information (w) was already lawfully in the possession of
Lender prior to the Closing Date, (x) is available in the public domain, (y)
becomes available in the public domain other than as a result of unauthorized
disclosure by Lender, or (z) is acquired from a Person not known by Lender to be
in breach of any confidentiality agreement with respect to such information.
Notwithstanding anything to the contrary, Borrower hereby consents to Lender's
discussions and communications with Borrower's independent public accountants
and agrees that such discussion or communication is without liability to either
Lender or Borrower's independent certified public accountants.
SECTION 9.16. INDEMNITY. Borrower hereby agrees to indemnify and hold
harmless Lender, its partners, officers, agents and employees (collectively,
"Indemnitee") from and against any liability, loss, cost, expense, claim,
damage, suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys' fees and expenses) arising from Borrower's
failure to observe, perform or discharge any of its covenants, obligations,
agreements or duties under this Agreement, or from the breach of any of the
representations or warranties contained in Article IV.
In addition, Borrower shall defend Indemnitee against and save it harmless from
all claims of any Person with respect to the Collateral. Notwithstanding any
contrary provision in this Agreement, the obligation of Borrower under this
Section 9.17 shall survive the payment in full of the Obligations and the
termination of this Agreement.
SECTION 9.17. APPOINTMENT OF AGENT UNDER THIS AGREEMENT.
(a) Each of the entities comprising Borrower (other than
PhyMatrix) hereby irrevocably appoints and constitutes PhyMatrix as its agent to
request and receive Revolving Credit Loans (and to otherwise act on behalf of
each such entity pursuant to this Agreement and the other Loan Documents) from
Lender in the name or on behalf of each such entity. Lender may disburse the
Revolving Credit Loans to the bank account of any one or more of such entities
without notice to any of the other entities comprising Borrower or any other
Person at any time obligated on or in respect of the Obligations.
(b) Each of the entities comprising Borrower (other than
PhyMatrix) hereby irrevocably appoints and constitutes PhyMatrix as its agent to
receive statements of account and all other notices from Lender with respect to
the Obligations or otherwise under or in connection with this Agreement and the
other Loan Documents.
(c) No purported termination of the appointment of PhyMatrix
as agent shall be effective without the prior written consent of Lender.
SECTION 9.18. FURTHER ASSURANCES. The parties agree that the Maximum
Loan Amount on this Agreement and the Affiliated Loan Agreements shall be
adjusted as the business needs of PMC change, subject to the exercise of
Lender's reasonable credit judgment and discretion.
SECTION 9.19. CHOICE OF LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF MARYLAND, WITHOUT REGARD TO ANY OTHERWISE APPLICABLE PRINCIPLES OF
CONFLICTS OF LAWS. IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR THE NOTE IS
COMMENCED BY LENDER IN THE STATE COURTS OF THE STATE OF MARYLAND OR IN THE U.S.
DISTRICT COURT FOR THE DISTRICT OF MARYLAND, BORROWER HEREBY CONSENTS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN
THE STATE OF MARYLAND. ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY SERVED IF
MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER AT ITS ADDRESS DESCRIBED
IN SECTION 9.4.
SECTION 9.20. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER HEREBY (A)
COVENANT AND AGREE NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
A JURY, AND (B) WAIVE ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY
SUCH RIGHT SHALL NOW OR HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY
IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY EACH PARTY AND THIS WAIVER IS
INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH THE
RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. EACH PARTY IS HEREBY AUTHORIZED
AND REQUESTED TO SUBMIT THIS AGREEMENT TO ANY COURT HAVING JURISDICTION OVER THE
SUBJECT MATTER AND THE PARTIES HERETO, SO AS TO SERVE AS CONCLUSIVE EVIDENCE OF
EACH PARTY'S WAIVER OF THE RIGHT TO JURY TRIAL. FURTHER, BORROWER
HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER (INCLUDING LENDER'S
COUNSEL) HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO BORROWER THAT LENDER WILL
NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION.
[SIGNATURES FOLLOW]
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
LENDER:
HCFP FUNDING, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BORROWER:
PHYMATRIX CORP.
a Delaware corporation
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
CLINICAL STUDIES, LTD.
a Delaware corporation
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
CLINICAL MARKETING, LTD.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chief Financial Officer