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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement"), made and entered into as of March
23, 2005, by and between NEOGENOMICS, INC., a Florida corporation ("Borrower"),
ASPEN SELECT HEALTHCARE LP, a Delaware limited partnership (formerly known as
MVP 3, LP and hereinafter referred to as "ASPEN"), and NEOGENOMICS, INC., a
Nevada corporation and the parent of Borrower (the "Parent" or the "Guarantor").
RECITALS
A. ASPEN desires to lend up to $1.5 million to the Borrower to be used by
the Borrower for general working capital purposes.
B. Such new loans are intended to refinance the Borrower's existing credit
facility with MVP 3, LP and provide additional working capital for an additional
two year term.
C. Borrower is a wholly owned subsidiary of Guarantor.
D. Guarantor will receive a direct benefit from the loans made to Borrower,
inasmuch as it is the parent of Borrower.
E. ASPEN is willing to make the loans to Borrower described in this
Agreement upon and subject to the terms and conditions set forth herein.
PROVISIONS
NOW, THEREFORE, for and in consideration of the agreements herein
contained, the parties hereby agree as follows:
l. Incorporation of Recitals. The Recitals portion of this Agreement is
hereby incorporated by this reference as though it were fully set forth and
rewritten herein, and the affirmative statements therein contained shall be
deemed to be representations of Borrower, and Guarantor to ASPEN which are
hereby ratified and confirmed.
2. Loan Facilities. ASPEN hereby agrees to lend to Borrower up to the
maximum sum of One Million Five Hundred Thousand Dollars ($1,500,000.00)
(hereinafter referred to as the "Loan"), on and subject to the terms and
conditions hereinafter set forth. As used in this Agreement, the term
"Liabilities" or "Liability" shall mean the Loan and any and all other
indebtedness, advances, obligations, covenants, undertakings and liabilities of
Borrower and Guarantor (including amendments, restatements, modifications,
extensions and renewals thereof) to ASPEN or any affiliate of ASPEN under all
documents now or hereafter executed by Borrower and/or Guarantor in favor of (or
acquired by) ASPEN or any affiliate of ASPEN (the "Loan Documents") or however
created, direct or indirect, now existing or hereafter arising, due or to become
due, absolute or contingent, participated in whole or in part, whether evidenced
or created by promissory notes, agreements or otherwise, in any manner acquired
by or accruing to ASPEN or any affiliate of ASPEN, whether by agreement,
assignment or otherwise, as well as any and all obligations of Borrower or
Guarantors to ASPEN or any affiliate of ASPEN, whether absolute, contingent or
otherwise and howsoever and whensoever (whether now or hereafter) created,
including, without limitation, (a) obligations of another or others guaranteed
or endorsed by Borrower, and (b) whether or not presently contemplated by the
parties on the date hereof, including all costs and expenses incurred in the
collection of such indebtedness or the loan referred to herein, taxes levied,
insurance and repairs to or for the maintenance of the Collateral hereinafter
described. As used in this Agreement, an "Advance" shall mean a sum advanced by
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ASPEN from time to time under the Loan, and "Advances" shall mean all such sums
collectively.
3. Term of Loan. The specific provisions of the Loan, including, but not
limited to, the rate of interest, term, late charge, prepayment rights,
conditions for draws and default rate of interest, are contained in that certain
Note of even date herewith from Borrower to ASPEN (the "Note"), in the form
attached hereto as Exhibit A, as the same may be amended, restated, modified,
extended and/or replaced from time to time.
4. Evidence of Indebtedness and Security Interest. The Loan described in
paragraph 2 hereof shall be evidenced by the Note, as described in paragraph 3
hereof, executed by Borrower in favor of ASPEN. The Note shall be secured by:
(a) Security Agreement executed by Borrower in favor of ASPEN dated of
even date herewith (the "Security Agreement"), as the same may be amended,
modified, restated, replaced and extended from time to time, encumbering
all business assets of Borrower, to be delivered to ASPEN concurrent with
this Agreement;
(b) Guaranty executed by the Guarantor in favor of ASPEN dated of even
date herewith, as the same may be amended, modified, restated, replaced and
extended from time to time, to be delivered to ASPEN concurrent with this
Agreement;
(c) Stock Pledge Agreement executed by Guarantor in favor of ASPEN
dated of even date herewith, as the same may be amended, modified,
restated, replaced and extended from time to time, to be delivered to ASPEN
concurrent with this Agreement; and
(d) such other and additional instruments as may now or hereafter be
granted by Borrower or the Guarantor to ASPEN.
To secure the performance of this Agreement, and subject to Permitted
Liens, Borrower hereby grants in favor of ASPEN a continuing security interest
in all accounts, equipment, inventory, goods, equipment, trademarks and tangible
and intangible personal property of Borrower (as such terms are defined under
the Uniform Commercial Code enacted in the State of Florida, as amended from
time to time ("UCC")) listed in the Security Agreement executed on even date
herewith, regardless of whether the foregoing is now owned or existing or is
owned, acquired or arises hereafter and the proceeds and products of all of the
foregoing including, without limitation, proceeds from all eminent domain or
condemnation awards or insurance covering the described property. Borrower
hereby authorizes ASPEN to file any and all UCC financing statements,
amendments, continuations and/or modifications which ASPEN deems necessary or
desirable to create, maintain and/or perfect a valid second security interest
created herein in such property.
As used herein, the term "Collateral" shall include all documents,
instruments and property described in (a) through (d) above (sometimes referred
to as the "Loan Documents"), and all of Borrower's and/or Guarantor's right,
title and interest in any sums, documents or instruments at any time credited by
or due from ASPEN or any affiliate of ASPEN to Borrower or Guarantor or in the
possession of ASPEN or any affiliate of ASPEN, including, without limitation,
deposits. Upon the occurrence of any default by Borrower, Borrower and Guarantor
hereby authorize ASPEN to appropriate and use any of the Collateral or proceeds
of the Collateral referred to in this paragraph 4 in which ASPEN has a security
interest or of which ASPEN or any affiliate of ASPEN has possession and any of
the sums, documents or instruments referred to in this sentence or the proceeds
thereof for application against the Liabilities. Borrower shall not sell,
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assign, transfer or grant a security interest to any other person in, or
otherwise encumber, the Collateral and sums covered by this paragraph 4 except
in favor of ASPEN, except to Cornell Capital Partners, LP, or other lender
subject to an inter-creditor agreement acceptable to ASPEN, such acceptance
shall be reasonably granted. Guarantor shall not sell, assign, transfer or grant
a security interest to any other person in, or otherwise encumber, the
Collateral and sums covered by this paragraph 4 except in favor of ASPEN or in
favor of Borrower as collaterally assigned to ASPEN, except to Cornell Capital
Partners, LP, or other lender subject to an inter-creditor agreement acceptable
to ASPEN, such acceptance shall be reasonably granted, or as otherwise permitted
under any of the Loan Documents. As used herein the term "Person" includes
natural persons, corporations (which shall be deemed to include business
trusts), limited liability companies, associations and partnerships. As used
herein the phrase "Permitted Liens" means the following: (a) liens for taxes,
fees, assessments or other governmental charges or levies, either not yet due
and payable or being contested in good faith by appropriate proceedings with
appropriate reserves for full payment of the same; (b) liens (i) upon or in any
equipment acquired or held by Borrower or Guarantor to secure the purchase price
of such equipment or indebtedness incurred solely for the purpose of financing
the acquisition of such equipment, but not to exceed Fifty Thousand Dollars
($50,000.00) in the aggregate, or (ii) existing on such equipment at the time of
its acquisition, provided that the lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment, and
provided, further, that the same has been disclosed to ASPEN in writing prior to
the execution of this Agreement; (c) leases or subleases and licenses or
sublicenses granted to others in the ordinary course of Guarantor's business not
interfering in any material respect with the business or financial condition of
Guarantor and which do not, in the aggregate, require payments by Borrower or
Guarantor in excess of Fifty Thousand Dollars ($50,000.00), and any interest or
title of a lessor, licensor or under any lease or license provided that such
leases, subleases, licenses and sublicenses do not prohibit the grant of the
security interest granted hereunder; (d) liens incurred in connection with the
extension, renewal or refinancing of indebtedness secured by liens of the type
described in clauses (a) through (c) above, provided that any extension, renewal
or replacement lien shall be limited to the property encumbered by the existing
lien and provided that the principal amount of the indebtedness being extended,
renewed or refinanced does not increase; and (e) liens subordinate to the liens
of ASPEN in an amount not to exceed $300,000 to Cornell Capital Partners, LP or
one of its affiliates in connection with certain contemplated debt financing.
5. Financial Statements, Books and Records.
(a) Borrower shall furnish to ASPEN its opening balance sheet reflecting
the net worth of Borrower as of February 28, 2005, which shall be certified by
Borrower or otherwise in a manner satisfactory to ASPEN. Borrower shall also
furnish ASPEN with copies of all of its federal tax returns (with all schedules)
and all reports filed by it with any governmental entity or agency within ten
(10) days of filing. Notwithstanding the foregoing, ASPEN may, at its option,
upon the occurrence of any default by Borrower or Guarantor, require Borrower to
furnish updated financial statements during the term of the loan on a periodic
basis together with such other financial information as may from time to time be
reasonably required by ASPEN, all in form and detail reasonably satisfactory to
ASPEN.
(b) As soon as practicable and in any event within forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year
Guarantor shall furnish to ASPEN, either (i) a copy of a report on Form 10-QSB,
or any successor form, and any amendments thereto, filed by Guarantor with the
Securities and Exchange Commission with respect to the immediately preceding
fiscal quarter or (ii) an unaudited consolidated balance sheet of Guarantor as
of the close of such fiscal quarter and unaudited consolidated statements of
income, stockholders' equity and cash flows for the fiscal quarter then ended
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and that portion of the fiscal year then ended, including the notes thereto, all
in reasonable detail setting forth in comparative form the corresponding figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the preceding fiscal year and prepared in accordance
with GAAP and, if applicable, containing disclosure of the effect on the
financial position or results of operations of any change in the application of
accounting principles and practices during the period, and certified by a the
President or Chief Financial Officer of Guarantor to present fairly in all
material respects the financial condition of the Guarantor and Borrower as of
the respective date and the results of operations of Guarantor and Borrower for
the respective periods then ended, subject to normal year end adjustments.
(c) As soon as practicable and in any event within one hundred five (105)
days after the end of each fiscal year Guarantor shall furnish to ASPEN, either
(i) a copy of a report on Form 10-KSB, or any successor form, and any amendments
thereto, filed by Guarantor with the Securities and Exchange Commission with
respect to the immediately preceding fiscal year or (ii) an audited consolidated
balance sheet of the Borrower and Guarantor as of the close of such fiscal year
and audited consolidated statements of income, stockholders' equity and cash
flows for the fiscal year then ended, including the notes thereto, all in
reasonable detail setting forth in comparative form the corresponding figures
for the preceding fiscal year and prepared by an independent certified public
accounting firm in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operation of
any change in the application of accounting principles and practices during the
year.
(d) In addition to the foregoing, Borrower and Guarantor shall make or
cause to be made available to ASPEN or its representative(s) such books, records
and reports (including, but not limited to, income tax returns) that in any way
may reasonably pertain to said party's financial condition or the loan herein
made by ASPEN upon reasonable request therefor from time to time made by ASPEN.
6. Fees. Borrower shall also pay at Closing, or such other time as mutually
agreed upon, but in no event later than 30 days from the date hereof, all
out-of-pocket expenses incurred by ASPEN in connection with the origination of
the Loan, including, without limitation, all accounting fees and expenses,
attorneys' fees and expenses, documentary stamp taxes and recording fees;
provided that in no event shall such expenses in connection with the origination
of this Loan and any other transactions with the Company or any of the Company's
affiliates, entered into on even date herewith, exceed Seventeen Thousand Five
Hundred Dollars ($17,500).
7. Borrower's Representations, Warranties and Undertakings. Borrower hereby
(i) agrees that all of the following representations and warranties are true and
correct in all material respects as of the date hereof and that all of such
representations and warranties shall continue to be so until all liabilities are
paid in full and ASPEN has no obligation to make further Advances, and (ii)
agrees that all of the following covenants shall be adhered to until all
liabilities are paid in full and ASPEN has no obligation to make further
Advances:
(a) Borrower is duly organized and validly existing under the laws of
the State of Florida. Borrower is duly qualified and is authorized to do
business in all other states and jurisdictions where the character of its
property or the nature of its activities make such qualification necessary;
(b) Borrower has the right and power and is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and
each of the other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party have been duly authorized by all necessary
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action and do not and will not, to the best of Borrower's knowledge, after
reasonable inquiry, contravene, violate, result in a breach of or
constitute a default under any of Borrower's governing documents, any
applicable law, rule, regulation, order, writ, judgment, injunction, or
decree, or any indenture or loan or credit agreement of Borrower;
(c) This Agreement is, and each of the other Loan Documents to which
it is a party when delivered under this Agreement will be, a legal, valid
and binding obligation of Borrower enforceable against it in accordance
with their respective terms, and no notice to or consent of any
governmental body or any Person is needed in connection with this Agreement
or any Advance under the Loans;
(d) To the best of Borrower's knowledge, after reasonable inquiry,
Borrower has, and is in good standing with respect to, all governmental
consents, approvals, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore
and/or proposed to be conducted by it;
(e) Borrower is not a party or subject to any contract, agreement,
charter or other restriction, which materially adversely affects its
business. Borrower is not a party or subject to any contract or agreement
which restricts its right or ability to incur any indebtedness which would
prohibit the execution of or compliance with this Agreement by Borrower.
Borrower has not agreed or consented to cause, nor will Borrower permit in
the future (upon the happening of a contingency or otherwise) the
Collateral to be subject to a lien that is not permitted under this
Agreement;
(f) Except as set forth in Schedule 7(f) hereto, there are no actions,
suits, proceedings or investigations pending, or to the knowledge of
Borrower, threatened, against or affecting Borrower, or the business,
operations, properties, prospects, profits or condition of Borrower, in any
court or before any governmental authority or arbitration board or
tribunal. Borrower is not in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal;
(g) Neither the financial statements of Borrower, this Agreement nor
any other written statement of Borrower to ASPEN, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no material
fact which Borrower has failed to disclose to ASPEN in writing which
adversely affects or, so far as Borrower can now foresee, will adversely
affect the business, prospects, profits or condition (financial or
otherwise) of Borrower or Guarantor or the ability of Borrower or Guarantor
to perform this Agreement;
(h) To the best of Borrower's knowledge, Borrower and Guarantor have
duly complied with, and their respective property and business operations
are in compliance in all material respects with, and will maintain
compliance in all material respects with, the provisions of all federal,
state and local laws, rules and regulations applicable to Borrower and/or
Guarantor and their respective property or the conduct of their respective
business, including, without limitation, federal, state and local laws,
rules and regulations relating or pertaining to data protection,
confidentiality, safe working conditions, billing and collections,
referrals and laboratory practices, and the purchase, storage, movement,
use and disposal of hazardous or potentially hazardous substances used in
connection with research work and laboratory operations (including
radioactive compounds and infectious disease agents). There have been no
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citations, notices or orders of noncompliance issued to Borrower or
Guarantor under any such law, rule or regulation, including, without
limitation, any demand for reimbursement, recoupment and/or setoff from any
governmental entity or Private Third Party Payor rendering payment to
Borrower or Guarantor. As used herein, "Private Third Party Payor" includes
any insurance product, self-insured employer, or other source of payment
for health care services which is not paid directly by a governmental
entity under a governmental program covering the provision of health care
and/or laboratory services;
(i) Borrower shall use the loan proceeds solely for the purposes
described herein and as represented in Borrower's loan request;
(j) Borrower has not employed or engaged any broker, finder or agent
who may claim a commission or fee on the loan transaction described in this
Agreement and Borrower hereby agrees to indemnify and hold ASPEN harmless
from any such claim or demand and litigation resulting therefrom;
(k) Borrower shall, from time to time, upon request of ASPEN, furnish
ASPEN with such information and documents reasonably necessary to protect
ASPEN's interest in the Collateral and to effectuate the terms of this
Agreement and the other Loan Documents;
(l) No event has occurred and no condition exists which would, upon
the execution and delivery of this Agreement or Borrower's performance
hereunder, constitute an event of default as hereinafter described.
Borrower is not in default, and no event has occurred and no conditions
exist which constitute, or which with the passage of time or the giving of
notice or both would constitute, a default in the payment of any
indebtedness of Borrower to any person for money borrowed which could have
a material adverse effect on Borrower;
(m) Borrower has and will maintain good and marketable title in the
items of property described herein as Collateral owned by Borrower free and
clear of any liens, encumbrances or adverse claims, whether legal or
equitable, except for Permitted Liens or as agreed in writing by ASPEN.
Borrower shall at all times maintain such insurance, to such extent and
against such risks, including, fire, theft, workmen's compensation claims,
errors and omissions, general liability and property damage, as is
customary with companies in the same or similar business or as required by
ASPEN, providing a schedule of same to ASPEN;
(n) Borrower will not incur, create, assume or permit to exist any
indebtedness or liability for borrowed money which could constitute a lien
upon or create a security interest in its assets except (i) in favor of
ASPEN, or (ii) Permitted Liens;
(o) Borrower will not directly or indirectly guarantee or otherwise be
responsible for payment or performance of the obligations of any other
Person except in favor of ASPEN;
(p) Borrower will not sell, transfer or otherwise dispose of all or a
substantial part of its assets to any Person; will not consolidate or merge
with any other Person, or acquire all or substantially all of the
properties or assets of any other Person; will not enter into any
arrangement with any Person whereby it shall sell or transfer and then
lease back any kind of property used in its business, whether now owned or
hereafter acquired;
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(q) The financial statements and other information supplied by
Borrower, and/or Guarantor for the Loans were in all material respects
correct on the date supplied (subject to normal year end audit
adjustments), and since their dates no material adverse change in the
financial condition of Borrower, and/or Guarantor has occurred;
(r) Borrower will not sell or offer to sell or otherwise transfer or
encumber all or a part of the Collateral owned by Borrower without written
consent of ASPEN, except if the same is replaced by substitute Collateral
of at least equal value, or the sale of inventory in the ordinary course of
business, or as otherwise permitted under this Agreement; Borrower will
keep the Collateral owned by Borrower in good order and repair and will not
destroy the Collateral. ASPEN, at its option, may discharge taxes, liens or
other encumbrances placed on the Collateral and may pay for the
preservation of the Collateral. Borrower agrees to reimburse ASPEN, upon
demand, for any such expenditures;
(s) Borrower has not received notice from any governmental entity
(including federal, state or local) that Borrower has received a material
overpayment on receivables, which material overpayment (in excess of any
related provision for the same on that person's financial statements and
records) would decrease the overall value of the accounts receivable of the
Borrower by in excess of Twenty-Five Thousand Dollars ($25,000.00);
(t) Borrower will promptly and immediately notify ASPEN upon receipt
of any notice of overpayment of Twenty-Five Thousand Dollars ($25,000.00)
or more in excess of the related provision on the books of the affected
person ("Extraordinary Overpayment") and of any attempt by any governmental
entity or any Private Third Party Payor to recoup such Extraordinary
Overpayment. As used herein, "Private Third Party Payor" includes any
insurance product, self-insured employer, or other source of payment for
health care services which is not paid directly by a governmental entity
under a governmental program covering the provision of health care and/or
laboratory services.
(u) Borrower shall maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, and (iii) the
recorded amounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Each request for an Advance made by Borrower pursuant to this Agreement or
any of the other Loan Documents shall constitute: (i) an automatic
representation and warranty by Borrower to ASPEN that there does not then exist
any event of default; and (ii) a reaffirmation as of the date of said request
that all of the representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in all material
respects. The representations and warranties of Borrower contained in this
Agreement or any of the other Loan Documents shall survive the execution,
delivery and acceptance thereof by ASPEN and the parties thereof and the Closing
of the transactions described therein or related thereto.
8. Guarantor's Representations, Warranties and Undertakings. Guarantor
hereby (i) agrees that all of the following representations and warranties are
true and correct in all material respects as of the date hereof and that all of
such representations and warranties shall continue to be so until all
liabilities are paid in full and ASPEN has no obligation to make further
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Advances, and (ii) agrees that all of the following covenants shall be adhered
to until all liabilities are paid in full and ASPEN has no obligation to make
further Advances:
(a) Guarantor is duly organized and shall be validly existing under
the laws of the State of Nevada within twenty (20) days of the date hereof.
Guarantor is duly qualified and is authorized to do business in all other
states and jurisdictions where the character of its property or the nature
of its activities make such qualification necessary;
(b) Guarantor has the right and power and is duly authorized and
empowered to enter into, execute, deliver and perform this Agreement and
each of the other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party have been duly authorized by all necessary
action and do not and will not, to the best of Guarantor's knowledge, after
reasonable inquiry, contravene, violate, result in a breach of or
constitute a default under any of Guarantor's governing documents, any
applicable law, rule, regulation, order, writ, judgment, injunction, or
decree, or any indenture or loan or credit agreement of Guarantor;
(c) Since January 1, 2003, Guarantor has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
SEC under of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (all of the foregoing filed prior to the date hereof or amended after
the date hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein,
being hereinafter referred to as the "SEC Documents"). Guarantor has
delivered to ASPEN or its representatives, or made available through the
SEC's website at http://www.sec.gov, true and complete copies of the SEC
Documents. As of their respective dates, the financial statements of
Guarantor disclosed in the SEC Documents (the "Financial Statements")
complied in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto.
Such Financial Statements have been prepared in accordance with generally
accepted accounting principles, consistently applied, during the periods
involved (except (i) as may be otherwise indicated in such Financial
Statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and, fairly present in all material respects the
financial position of Guarantor as of the dates thereof and the results of
its operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). No
other information provided by or on behalf of Guarantor to ASPEN which is
not included in the SEC Documents, including, without limitation,
information referred to in this Agreement, contains any untrue statement of
a material fact or omits to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading as of the date such information was written.
(d) The authorized capital stock of Guarantor consists of 100,000,000
shares of common stock, par value $0.001 per share (the "Common Stock") and
10,000,000 shares of preferred stock (the "Preferred Stock"). As of the
date hereof, Guarantor has 21,803,371 shares of Common Stock issued and
outstanding and no shares of Preferred Stock outstanding. All of such
outstanding shares have been validly issued and are fully paid and
nonassessable. Except as disclosed in the SEC Documents and the Amended and
Restated Shareholders' Agreement of even date herewith, no shares of Common
Stock are subject to preemptive rights or any other similar rights or any
liens or encumbrances suffered or permitted by Guarantor. Except as
disclosed in the SEC Documents or as set forth on Schedule 8(d), as of the
date of this Agreement, (i) there are no outstanding options, warrants,
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scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of Guarantor or any of its subsidiaries, or
contracts, commitments, understandings or arrangements by which Guarantor
or any of its subsidiaries is or may become bound to issue additional
shares of capital stock of Guarantor or any of its subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of Guarantor or any of its subsidiaries, (ii)
there are no outstanding debt securities, (iii) there are no agreements or
arrangements under which Guarantor or any of its subsidiaries is obligated
to register the sale of any of their securities under the Securities Act,
(iv) there are no outstanding registration statements and there are no
outstanding comment letters from the SEC or any other regulatory agency,
and there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of the Note as
described in this Agreement. The Company has furnished to ASPEN true and
correct copies of Guarantor's Articles of Incorporation, as amended and as
in effect on the date hereof (the "Articles of Incorporation"), and
Guarantor's By-laws, as in effect on the date hereof (the "By-laws"), and
the terms of all securities convertible into or exercisable for Common
Stock and the material rights of the holders thereof in respect thereto
other than stock options issued to employees and consultants.
(e) Except as disclosed in the SEC Documents and or as set forth in
Schedule 8(e), the execution, delivery and performance of the Loan
Documents by Guarantor and the consummation by Guarantor of the
transactions contemplated hereby will not (i) result in a violation of the
Articles of Incorporation, any certificate of designations of any
outstanding series of preferred stock of Guarantor or the By-laws or (ii)
conflict with or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Guarantor or any of its
subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state
securities laws and regulations and the rules and regulations of The
National Association of Securities Dealers Inc.'s OTC Bulletin Board on
which the Common Stock is quoted) applicable to Guarantor or any of its
subsidiaries or by which any property or asset of Guarantor or any of its
subsidiaries is bound or affected. Except as disclosed in the SEC Documents
or as set forth on Schedule 8(e), neither Guarantor nor its subsidiaries is
in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to Guarantor or its subsidiaries. The business of
Guarantor and its subsidiaries is not being conducted, and shall not be
conducted in violation of any law, ordinance, or regulation of any
governmental entity which would have a material adverse effect on
Guarantor. Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws,
Guarantor is not required to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental agency
in order for it to execute, deliver or perform any of its obligations under
or contemplated by this Agreement in accordance with the terms hereof or
thereof. Except as disclosed in the SEC Documents, all consents,
authorizations, orders, filings and registrations which Guarantor is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its subsidiaries
are unaware of any facts or circumstance, which might give rise to any of
the foregoing.
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(f) This Agreement is, and each of the other Loan Documents to which
it is a party when delivered under this Agreement will be, a legal, valid
and binding obligation of Guarantor enforceable against it in accordance
with their respective terms, and no notice to or consent of any
governmental body or any Person is needed in connection with this Agreement
or any Advance under the Loans;
(g) To the best of Guarantor's knowledge, after reasonable inquiry,
Guarantor has, and is in good standing with respect to, all governmental
consents, approvals, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore
and/or proposed to be conducted by it;
(h) Guarantor is not a party or subject to any contract, agreement,
charter or other restriction, which materially adversely affects its
business. Guarantor is not a party or subject to any contract or agreement
which restricts its right or ability to incur any indebtedness which would
prohibit the execution of or compliance with this Agreement by Guarantor.
Guarantor has not agreed or consented to cause, nor will Guarantor permit
in the future (upon the happening of a contingency or otherwise) the
Collateral to be subject to a lien that is not permitted under this
Agreement;
(i) Except as set forth in Schedule 8(i) hereto, there are no actions,
suits, proceedings or investigations pending, or to the knowledge of
Guarantor, threatened, against or affecting Guarantor, or the business,
operations, properties, prospects, profits or condition of Guarantor, in
any court or before any governmental authority or arbitration board or
tribunal. Guarantor is not in default with respect to any order, writ,
injunction, judgment, decree or rule of any court, governmental authority
or arbitration board or tribunal;
(j) Neither the financial statements of Guarantor, this Agreement, the
SEC Documents, nor any other written statement of Guarantor to ASPEN,
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein or herein not
misleading. There is no material fact which Guarantor has failed to
disclose to ASPEN in writing which adversely affects or, so far as
Guarantor can now foresee, will adversely affect the business, prospects,
profits or condition (financial or otherwise) of Borrower or Guarantor or
the ability of Borrower or Guarantor to perform this Agreement;
(k) To the best of Guarantor's knowledge, Guarantor has duly complied
with, and its property and business operations are in compliance in all
material respects with, and will maintain compliance in all material
respects with, the provisions of all federal, state and local laws, rules
and regulations applicable to Guarantor and its property or the conduct of
its business, including, without limitation, federal, state and local laws,
rules and regulations relating or pertaining to data protection,
confidentiality, safe working conditions, billing and collections,
referrals and laboratory practices, and the purchase, storage, movement,
use and disposal of hazardous or potentially hazardous substances used in
connection with research work and laboratory operations (including
radioactive compounds and infectious disease agents). There have been no
citations, notices or orders of noncompliance issued to Guarantor under any
such law, rule or regulation, including, without limitation, any demand for
reimbursement, recoupment and/or setoff from any governmental entity or
Private Third Party Payor rendering payment to Guarantor. As used herein,
"Private Third Party Payor" includes any insurance product, self-insured
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employer, or other source of payment for health care services which is not
paid directly by a governmental entity under a governmental program
covering the provision of health care and/or laboratory services;
(l) Guarantor shall use the loan proceeds solely for the purposes
described herein and as represented in Borrower's loan request;
(m) Guarantor has not employed or engaged any broker, finder or agent
who may claim a commission or fee on the loan transaction described in this
Agreement and Guarantor hereby agrees to indemnify and hold ASPEN harmless
from any such claim or demand and litigation resulting therefrom;
(n) Guarantor and its subsidiaries own or possess adequate rights or
licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets
and rights necessary to conduct their respective businesses as now
conducted. Except as set forth on Schedule 8(n), Guarantor and its
subsidiaries do not have any knowledge of any infringement by Guarantor or
its subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, and, to
the knowledge of Guarantor there is no claim, action or proceeding being
made or brought against, or to Guarantor's knowledge, being threatened
against, Guarantor or its subsidiaries regarding trademark, trade name,
patents, patent rights, invention, copyright, license, service names,
service marks, service mark registrations, trade secret or other
infringement; and Guarantor and its subsidiaries are unaware of any facts
or circumstances which might give rise to any of the foregoing.
(o) Guarantor and its subsidiaries are (i) in compliance with any and
all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
(p) Any real property and facilities held under lease by Guarantor and
its subsidiaries are held by them under valid, subsisting and enforceable
leases with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by
Guarantor and its subsidiaries.
(q) Guarantor and each of its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as management of Guarantor believes to be prudent and
customary in the businesses in which Guarantor and its subsidiaries are
engaged. Neither Guarantor nor any such subsidiary has been refused any
insurance coverage sought or applied for and neither Guarantor nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition, financial or otherwise, or the earnings, business or operations
of Guarantor and its subsidiaries, taken as a whole.
(r) Guarantor and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, and
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(iii) the recorded amounts for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
(s) Except as set forth in the SEC Documents, neither Guarantor nor
any of its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in
the judgment of Guarantor's officers has or is expected in the future to
have a material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of Guarantor or its
subsidiaries. Except as set forth in the SEC Documents, neither Guarantor
nor any of its subsidiaries is in breach of any contract or agreement which
breach, in the judgment of Guarantor's officers, has or is expected to have
a material adverse effect on the business, properties, operations,
financial condition, results of operations or prospects of Guarantor or its
subsidiaries.
(t) Except as set forth in the SEC Documents, Guarantor and each of
its subsidiaries has made and filed all federal and state income and all
other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that Guarantor and
each of its subsidiaries has set aside on its books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) has paid all
taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the
officers of Guarantor know of no basis for any such claim.
(u) Except as set forth in the SEC Documents, and on schedule 8(u) and
except for arm's length transactions pursuant to which Guarantor makes
payments in the ordinary course of business upon terms no less favorable
than Guarantor could obtain from third parties and other than the grant of
stock options disclosed in the SEC Documents, none of the officers,
directors, or employees of Guarantor is presently a party to any
transaction with Guarantor (other than for services as consultants,
employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to
the knowledge of Guarantor, any corporation, partnership, trust or other
entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
(v) Guarantor shall, from time to time, upon request of ASPEN, furnish
ASPEN with such information and documents reasonably necessary to protect
ASPEN's interest in the Collateral and to effectuate the terms of this
Agreement and the other Loan Documents;
(w) No event has occurred and no condition exists which would, upon
the execution and delivery of this Agreement or Guarantor's performance
hereunder, constitute an event of default as hereinafter described.
Guarantor is not in default, and no event has occurred and no conditions
exist which constitute, or which with the passage of time or the giving of
notice or both would constitute, a default in the payment of any
indebtedness of Guarantor to any person for money borrowed which could have
a material adverse effect on Guarantor except as setforth on schedule 8(w);
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(x) Guarantor has and will maintain good and marketable title in the
items of property described herein as Collateral free and clear of any
liens, encumbrances or adverse claims, whether legal or equitable, except
for Permitted Liens or as agreed in writing by ASPEN.
(y) Guarantor will not incur, create, assume or permit to exist any
indebtedness or liability for borrowed money which could constitute a lien
upon or create a security interest in its assets except (i) in favor of
ASPEN or Borrower, (ii) Permitted Liens or (iii) for taxes and assessments
which may be a lien but are not due and payable;
(z) Guarantor will not directly or indirectly guarantee or otherwise
be responsible for payment or performance of the obligations of any other
Person except in favor of ASPEN;
(aa) Guarantor will not sell, transfer or otherwise dispose of all or
a substantial part of its assets to any Person; will not consolidate or
merge with any other Person, or acquire all or substantially all of the
properties or assets of any other Person unless, with respect to any
merger, (i) such Person is organized under the law of the United States or
one of its states, (ii) the Guarantor is the corporation surviving such
merger, and (iii) immediately prior to and after giving effect to such
merger, no Default or Event of Default exists or would exist; will not
enter into any arrangement with any Person whereby it shall sell or
transfer and then lease back any kind of property used in its business,
whether now owned or hereafter acquired; and will not, without the prior
written consent of ASPEN;
(bb) The financial statements and other information supplied by
Borrower and/or Guarantor for the Loans were in all material respects
correct on the date supplied (subject to normal year end audit
adjustments), and since their dates no material adverse change in the
financial condition of Borrower and/or Guarantor has occurred;
(cc) Guarantor will not sell or offer to sell or otherwise transfer or
encumber all or a part of the Collateral owned by Guarantor without written
consent of ASPEN or as otherwise permitted by this Agreement, except if the
same is replaced by substitute Collateral of at least equal value or is
sold in the ordinary course of business; Guarantor will keep the Collateral
owned by Guarantor in good order and repair and will not destroy the
Collateral. ASPEN, at its option, may discharge taxes, liens or other
encumbrances placed on the Collateral and may pay for the preservation of
the Collateral. Guarantor agrees to reimburse ASPEN, upon demand, for any
such expenditures;
(dd) Guarantor has not received notice from any governmental entity
(including federal, state or local) that Guarantor has received a material
overpayment on receivables, which material overpayment (in excess of any
related provision for the same on that person's financial statements and
records) would decrease the overall value of the accounts receivable of the
Guarantor by in excess of Twenty-Five Thousand Dollars ($25,000.00);
(ee) Guarantor will promptly and immediately notify ASPEN upon receipt
of any notice of overpayment of Twenty-Five Thousand Dollars ($25,000.00)
or more in excess of the related provision on the books of the affected
person ("Extraordinary Overpayment") and of any attempt by any governmental
entity or any Private Third Party Payor to recoup such Extraordinary
Overpayment. As used herein, "Private Third Party Payor" includes any
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insurance product, self-insured employer, or other source of payment for
health care services which is not paid directly by a governmental entity
under a governmental program covering the provision of health care and/or
laboratory services.
(ff) Guarantor shall continue to file on a timely basis all periodic
reports and other docuemts with the SEC required to be filed by it and
shall continue to qualify to have, and continue to actually have, its
common stock quoted upon the OTC Bulletin Board..
(gg) Guarantor shall maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, and (iii) the
recorded amounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Each request for an Advance made by Borrower pursuant to this Agreement or
any of the other Loan Documents shall constitute: (i) an automatic
representation and warranty by Guarantor to ASPEN that there does not then exist
any event of default; and (ii) a reaffirmation by Guarantor as of the date of
said request that all of the representations and warranties of Guarantor
contained in this Agreement and the other Loan Documents are true and correct in
all material respects. The representations and warranties of Guarantor contained
in this Agreement or any of the other Loan Documents shall survive the
execution, delivery and acceptance thereof by ASPEN and the parties thereof and
the Closing of the transactions described therein or related thereto.
9. Existence and Authority; Other Documents. At or prior to Closing or such
other date as mutually agreed upon, Borrower shall furnish to ASPEN:
(a) A true, correct and complete copy of all governing documents of
Borrower and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of formation, or by the
secretary of Borrower for unfiled documents;
(b) A true, correct and complete copy of all governing documents of
Guarantor and all amendments thereto, certified by the Secretary of State
or other appropriate official of its jurisdiction of incorporation, or by
the secretary of Guarantor for unfiled documents;
(c) Certified copy of resolutions and incumbency certificates from
Borrower authorizing the execution, delivery and consummation of the
transactions contemplated by this Agreement and all other documents or
instruments to be executed and delivered in conjunction herewith;
(d) Certified copy of resolutions and incumbency certificates from
Guarantor authorizing the execution, delivery and consummation of the
transactions contemplated by this Agreement and all other documents or
instruments to be executed and delivered in conjunction herewith;
(e) A certificate issued by the Secretary of State or other
appropriate official of Guarantor's jurisdiction of incorporation
evidencing Guarantor's good standing and authority to do business;
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(f) A certificate issued by the Secretary of State or other
appropriate official of Borrower's jurisdiction of incorporation evidencing
Borrower's good standing and authority to do business; and
(g) Such other documents, instruments, certificates, agreements or
information as ASPEN shall reasonably request in connection with the
matters and transactions contemplated by this Agreement and the other Loan
Documents.
10. Additional Conditions to Closing and/or Advances.
(a) No Advances will be made under the Note if such amount, together
with all outstanding and unpaid advances under the Note, would exceed the
Borrowing Base, as defined in the Note.
(b) Lockbox. At Closing and thereafter at all times until the
Liabilities are paid in full and ASPEN has no obligation to make any
Advances, Borrower shall maintain an agreement pursuant to which all
accounts receivable payable to Borrower are deposited into a lockbox
maintained by Fifth Third Bank, Florida or such other banking institution
as may be reasonably acceptable to ASPEN. Such agreement shall be
irrevocable as to all accounts receivable debtors other than governmental
agencies and/or payors until the Liabilities are paid in full.
11. Borrower's Affirmative Agreements. In addition to any other covenants
and agreements of Borrower hereunder and in the Security Agreement, Borrower
agrees that from the date hereof and until payment in full of all Liabilities
and termination of ASPEN's obligation to make Advances, unless ASPEN shall
otherwise consent in writing, it shall (a) cause to be done all things
reasonably needed to preserve its rights and franchises and make good faith
efforts to comply with all laws applicable to it; continue to conduct its
business substantially as it has during the present year or as it has
represented same to ASPEN; and, at all times, maintain such insurance, to such
extent and against such risks, including, fire, theft, workmen's compensation
claims, errors and omissions, general liability and property damage, as is
customary with companies in the same or similar business, providing a schedule
of same to ASPEN; (b) promptly pay all of its obligations, and all taxes,
assessments and governmental charges imposed upon it and its business operations
before they are in default, as well as all lawful claims for labor, materials
and supplies or otherwise which, if unpaid, might become a lien upon its
properties; (c) promptly notify ASPEN of any default by Borrower or Guarantor
relating to any material indebtedness of Borrower or Guarantor or any material,
contractual obligation of Borrower or Guarantor; (d) protect, indemnify, defend
and save harmless, ASPEN, any affiliate of ASPEN, and their respective
directors, officers, agents and employees from and against any and all
liability, expense or damage of any kind or nature and from any suits, claims or
demands, including reasonable legal fees and expenses on account of any matter
or thing or action or failure to act of Borrower or Gaurantor, whether in suit
or not, arising out of this Agreement or any Loan Documents or Security
Instrument (as defined in the Note) or in connection herewith or therewith
unless said suit, claim or damage is caused by the negligence or willful
malfeasance of ASPEN or such affiliate of ASPEN; and (e) at ASPEN's request,
promptly execute or cause to be executed and deliver to ASPEN any and all
documents, instruments, agreements and information deemed necessary by ASPEN, in
ASPEN's reasonable discretion, to perfect or to continue the perfection of
ASPEN's liens created hereunder, to facilitate the collection of the Collateral
or otherwise to give effect to or carry out the terms or intent of this
Agreement or any of the other Loan Documents, specifically excluding, however,
any patient records. The indemnification set forth herein shall survive the
Closing of the transaction and the repayment of all Liabilities incurred under
the Loan Documents.
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12. Guarantor's Affirmative Agreements. In addition to any other covenants
and agreements of Guarantor hereunder and in the Security Agreement, Guarantor
agrees that from the date hereof and until payment in full of all Liabilities
and termination of ASPEN's obligation to make Advances, unless ASPEN shall
otherwise consent in writing, it shall (a) cause to be done all things
reasonably needed to preserve its rights and franchises and make good faith
efforts to comply with all laws applicable to it; continue to conduct its
business substantially as it has during the present year or as it has
represented same to ASPEN; and, at all times, maintain such insurance, to such
extent and against such risks, including, fire, theft, workmen's compensation
claims, errors and omissions, general liability and property damage, as is
customary with companies in the same or similar business, providing a schedule
of same to ASPEN; (b) promptly pay all of its obligations, and all taxes,
assessments and governmental charges imposed upon it and its business operations
before they are in default, as well as all lawful claims for labor, materials
and supplies or otherwise which, if unpaid, might become a lien upon its
properties; (c) promptly notify ASPEN of any default by Borrower or Guarantor
relating to any material indebtedness of Borrower or Guarantor or any material,
contractual obligation of Borrower or Guarantor; (d) protect, indemnify, defend
and save harmless, Borrower or Guarantor, and their respective directors,
officers, agents and employees from and against any and all liability, expense
or damage of any kind or nature and from any suits, claims or demands, including
reasonable legal fees and expenses on account of any matter or thing or action
or failure to act of ASPEN or such affiliate of ASPEN, whether in suit or not,
arising out of this Agreement or any Loan Documents or Security Instrument (as
defined in either of the Notes) or in connection herewith or therewith unless
said suit, claim or damage is caused by the negligence or willful malfeasance of
ASPEN or such affiliate of ASPEN; and (e) at ASPEN's request, promptly execute
or cause to be executed and deliver to ASPEN any and all documents, instruments,
agreements and information deemed necessary by ASPEN, in ASPEN's reasonable
discretion, to perfect or to continue the perfection of ASPEN's liens created
hereunder, to facilitate the collection of the Collateral or otherwise to give
effect to or carry out the terms or intent of this Agreement or any of the other
Loan Documents, specifically excluding, however, any patient records. The
indemnification set forth herein shall survive the Closing of the transaction
and the repayment of all Liabilities incurred under the Loan Documents.
13. Borrower's Negative Covenants. In addition to any other covenants and
agreements of Borrower hereunder and in the Security Agreement, Borrower agrees
that from the date hereof and until payment in full of all Liabilities and
termination of ASPEN's obligation to make Advances, unless ASPEN shall otherwise
consent in writing, it shall not: (a) incur or permit to exist any indebtedness
or liability for borrowed money in excess of Fifty Thousand Dollars
($50,000.00), except for the Liabilities, or other indebtedness as approved by
ASPEN; (b) incur or permit to exist any lien or other encumbrance on the
Collateral other than in favor of ASPEN or as permitted hereunder; (c) guarantee
or otherwise be responsible for obligations of any other Person except in favor
of ASPEN or any affiliate of ASPEN; (d) permit the declaration, or payment of
any dividend in respect of, or its capital stock other than stock dividends; (e)
to the extent the following would cause a material adverse effect on Borrower's
ability to perform its obligations hereunder, make any substantial change in its
present business or engage in any activities apart from its present business;
dissolve, merge or consolidate with or into any other Person, or otherwise
change its identity or corporate structure, or sell or transfer all or a
substantial part of its assets (except for inventory in the ordinary course of
business) whether now owned or hereinafter acquired, change its corporate or
trade name, or change its chief executive and/or operating offices; and (f)
create, incur, assume or suffer to exist any lease obligation in excess of Fifty
Thousand Dollars ($50,000.00), other than Permitted Liens or lease obligations
incurred in the ordinary course of business, make any investment in, or make any
loan or advance to, any Person, or purchase or acquire obligations owned by
others.
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14. Guarantor's Negative Covenants. In addition to any other covenants and
agreements of Guarantor hereunder and in the Security Agreement, Guarantor
agrees that from the date hereof and until payment in full of all Liabilities
and termination of ASPEN's obligation to make Advances, unless ASPEN shall
otherwise consent in writing, it shall not: (a) incur or permit to exist any
indebtedness or liability for borrowed money in excess of Fifty Thousand Dollars
($50,000.00), except for the Liabilities, the indebtedness set forth on Schedule
14, which contemplates indebtedness to Cornell Capital Partners, LP, or other
indebtedness as approved by ASPEN; (b) incur or permit to exist any lien or
other encumbrance on the Collateral other than in favor of ASPEN or as permitted
hereunder; (c) guarantee or otherwise be responsible for obligations of any
other Person except in favor of ASPEN or any affiliate of ASPEN; (d) permit the
declaration of, or payment of any dividend in respect of, its capital stock
other than stock dividends; (e) to the extent the following would cause a
material adverse effect on Borrower's ability to perform its obligations
hereunder, make any substantial change in its present business or engage in any
activities apart from its present business; dissolve, merge or consolidate with
or into any other Person, or otherwise change its identity or corporate
structure, or sell or transfer all or a substantial part of its assets (except
for inventory in the ordinary course of business) whether now owned or
hereinafter acquired, change its corporate or trade name, or change its chief
executive and/or operating offices; and (f) create, incur, assume or suffer to
exist any lease obligation in excess of Fifty Thousand Dollars ($50,000.00),
other than Permitted Liens or lease obligations incurred in the ordinary course
of business, make any investment in, or make any loan or advance to, any Person,
or purchase or acquire obligations owned by others.
15. Events of Default by Borrower and ASPEN. The following are Events of
Default:
(a) Payment. Default in the payment of any Liability within ten (10)
days of when due; provided however, no Event of Default shall occur for
normally recurring interest payments if the Event of Default results from
ASPEN not having sufficient capital to make Advances that are otherwise
permitted or required hereunder;
(b) Breach of Representations or Warranties. The breach of any of
Borrower's or any of Guarantor's representations, covenants, agreements or
warranties contained in this Agreement (including, without limitation,
those set forth in Sections 7, 8, 11, 12, 13, and 14 of this Agreement) or
under the Loan Documents or any Security Instrument (as defined in either
of the Notes) in any material respect;
(c) Payment of Over-Advance. Refusal or failure to pay amounts in
excess of the Borrowing Base ("Over-Advance") within ten (10) days after
the occurrence of such Over-Advance;
(d) Other Terms, Covenants or Agreements. Default in the performance
of any other term, covenant, condition, obligation or agreement of this
Agreement, any Guaranty, any Security Instrument (as defined in either of
the Notes) or any Loan Document which continues unremedied for thirty (30)
days after (i) receipt by ASPEN of a Borrower Notice of Default (as defined
in section 16 herof) or (ii) the receipt by Borrower or Guarantor of
written notice by ASPEN to Borrower or Guarantor of non-payment of any
amount required to be paid under the Note, and after which, in either case,
such Event of Default remains uncured, or any material event of default on
the part of Borrower or any Guarantor due to non-performance under any
loan, agreement, document or instrument to which Borrower or any Guarantor
is now or hereafter a party, or by which any of Borrower's or Guarantor's
property is bound, which default or event of default is not cured within
the period of grace, if any, provided therein and results in remedies being
pursued against Borrower or Guarantor;
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(e) Liens, Sales, Conveyances, etc. Any sale, conveyance or transfer
of any rights in the Collateral securing the Liabilities, or any
destruction, loss or damage of or to the Collateral in any material respect
other than a Permitted Lien or as expressly permitted pursuant to this
Agreement, or the creation of any lien on the Collateral (except a
Permitted Lien, a lien to ASPEN or as expressly agreed by ASPEN in
writing;)
(f) Maintenance of Insurance. Failure of Borrower to maintain any
insurance required under the terms of this Agreement or any Security
Instrument;
(g) Voluntary Actions. Borrower shall apply for or consent to the
appointment of a receiver, trustee or liquidator for itself or for any of
its properties or assets, admit in writing the inability to pay debts, make
a general assignment for the benefit of creditors, be adjudicated bankrupt
or insolvent, or file a voluntary petition under any bankruptcy law, or a
petition or answer seeking reorganization or an arrangement with creditors
or to take advantage of any bankruptcy, reorganization, insolvency, or
liquidation law, or an answer admitting the material allegations of a
petition filed against it in any proceeding under any such law, or any of
the foregoing shall occur with respect to any Guarantor; and
(h) Involuntary Actions. An order shall be entered, without the
application or consent of Borrower, by any court approving a petition
seeking reorganization of Borrower or of all or a substantial part of the
properties or assets of Borrower or appointing a receiver, trustee or
liquidator of Borrower and such order shall continue unstayed and in effect
for a period of thirty (30) days or more, or the institution of any
garnishment proceedings by attachment, levy or otherwise, against any
deposit balance maintained or any property deposited with ASPEN by Borrower
and such proceeding is not discharged within ten (10) days of its
commencement, or any of the foregoing shall occur with respect to the
Guarantor.
(i) Event of Default by ASPEN The parties to this Agreement
acknowledge that at the first Closing of the Loan on the date hereof, ASPEN
will be advancing $850,000 to the Company, and that as of the date hereof,
ASPEN has not yet completed its fundraising activities in order to provide
the remaining amounts under the Borrowing Base. While ASPEN believes that
this fundraising activity will be completed by April 30, 2005, there can be
no assurance that ASPEN will be successful in raising such funds. If ASPEN
fails to have available the maximum amount under the latest Borrowing Base
Certificate (not to exceed $1,500,000) for Advances to Borrower by April
30, 2005, ASPEN shall be in default of its obligations under this
Agreement. ASPEN shall have thirty (30) days to cure such default. If such
default is not cured by May 31, 2005, Borrower and Guarantor shall be
permitted to obtain alternative financing and incur additional indebtedness
over and beyond the limitations imposed by Section 13a) at Borrower's
and/or Guarantor's discretion without need for approval from ASPEN up to
the amount of the shortfall and the Company will be able to secure a second
position on the assets if needed to do so. This will qualify as a Permitted
lien as defined herein.
16. Action Upon Default. Upon the discovery by the Borrower of any Event of
Default other than non-payment of the Note, the Borrower shall have an
affirmative duty to provide written notice to ASPEN of such Event of Default (a
"Borrower Notice of Default") within forty-eight (48) hours of any such
discovery. If at any time an Event of Default shall have occurred, and after (i)
the expiration of a thirty (30) day cure period following either (i) the
dispatch by Borrower of a Borrower Notice of Default, or (ii) the receipt by
Borrower of written notice by ASPEN to Borrower of non-payment of any amount
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required to be paid under the Note, and after which, in either case, such Event
of Default remains uncured, then, in addition to all rights and remedies
available to it at law or in equity (which rights and remedies are expressly
reserved by ASPEN) ASPEN may, upon notice to Borrower, at its election (but
without any obligation to do so), without further demand or notice of any kind
or any appraisal or evaluation, all of which are hereby expressly waived by
Borrower:
(a) Cease making any Advances under the Note;
(b) Pay any taxes, discharge any lien, procure any insurance, pay any
contractor, subcontractor, materialman or supplier or cure any default by
Borrower or Guarantor and the costs thereof shall be deemed Liabilities
bearing interest at the highest Default Rate under the Notes and secured by
the Security Instruments (as defined in either of the Notes), and/or the
Collateral;
(c) Declare the Note and any or all Liabilities due and payable
forthwith in full, both as to principal and interest, anything contained in
this Agreement or the Loan Documents to the contrary notwithstanding (which
shall be automatic and not subject to the 30 day cure period upon the
occurrence of any event described in 15(g) or 15(h) above).
ASPEN may proceed to the enforcement of this Agreement or any other Loan
Documents with its rights and remedies as provided by law or equity against any
Collateral in any combination or order as ASPEN shall choose.
(d) ASPEN may sell or deliver the Collateral or any part thereof, in
good faith at any broker's board, or at public or private sale, in whole at
any time or in part from time to time within Florida or elsewhere, for
cash, upon credit or for future delivery and at such place or prices as it
shall deem satisfactory exercising commercially reasonable discretion. In
case of any sale by ASPEN of any of the Collateral on credit or for future
delivery, the Collateral sold may be retained by ASPEN until the selling
price is paid by the purchaser, but ASPEN shall incur no liability in case
of a failure of the purchaser to take up or pay for the Collateral so sold.
In case of any such failure, such Collateral so sold may be again similarly
sold. In lieu of exercising a power of sale hereunder conferred upon it,
ASPEN may, in its sole discretion, proceed by suit or suits at law or in
equity to enforce the security interest and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of
competent jurisdiction. Borrower and Guarantors each authorize ASPEN, in
connection with any sale, assignment, transfer or delivery for the purpose
of enforcing this Agreement, to execute and deliver such bills of sale,
assignments and other instruments that the ASPEN shall consider necessary.
Nevertheless, Borrower and Guarantors each agree, if requested by ASPEN, to
ratify and confirm any such sale, assignment, transfer or delivery by
executing and delivering to ASPEN or any purchaser all bills of sale,
assignments, releases and other proper instruments or documents to effect
such ratification and confirmation as may be designated at any such
request. The proceeds of such sales may be applied to the Liabilities in
any manner or order ASPEN desires. ASPEN shall have all of the rights and
remedies of a secured party under the Uniform Commercial Code as adopted in
Florida and under any other applicable law.
17. No Waiver. The failure of ASPEN to insist upon strict compliance with
and performance of any of the terms and conditions of this Agreement shall not
constitute a waiver of any such term or condition. Any waiver granted hereunder
shall be in writing signed by ASPEN and shall apply only to the specific
instance referenced therein and only for that specific time. Any waiver granted
for one event shall not constitute a waiver of any same or similar condition or
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event occurring at a subsequent date. No waiver by ASPEN of any Event of Default
shall be held or construed to be a waiver of any other Event of Default whether
or not subsequently occurring. No Advances under this Agreement shall constitute
a waiver of any of the conditions of ASPEN's obligation to make further
Advances, nor, in the event Borrower is unable to satisfy any such condition,
shall any such failure to insist upon strict compliance have the effect of
precluding ASPEN from thereafter declaring such inability to be an Event of
Default as herein provided. The remedies set forth herein are cumulative and are
in addition to any other remedies available to ASPEN by law or equity or by any
other documents executed by Borrower or any Guarantor in connection with this
Loan, and ASPEN may pursue any one, several or all of said remedies upon the
occurrence of any Event of Default.
18. General Conditions.
(a) Indemnity. Each of Borrower and Guarantor hereby indemnifies and
agrees to defend and hold harmless each of ASPEN and any affiliate of ASPEN
and their respective directors, officers, agents and employees, from and
against any and all liabilities, claims, charges, losses, expenses
(including, without limitation, attorneys' fees and disbursements) or
damages of any kind or nature, or otherwise which may arise in connection
with this Agreement or any of the other Loan Documents or the consummation
of the transactions contemplated herein or therein, except to the extent
any such liabilities, claims, charges, losses, expenses or damages arise
out of the gross negligence or willful misconduct of ASPEN or any affiliate
of ASPEN or their respective directors, officers, agents or employees.
(b) Submission of Evidence. Any condition of this Agreement which
requires the submission of evidence of the existence or non-existence of a
specified fact or facts implies as a condition the existence or
non-existence, as the case may be, of such fact or facts, and ASPEN shall,
at all times, be free to independently establish to its satisfaction such
existence or non-existence.
(c) ASPEN Sole Beneficiary. All terms, provisions, covenants and other
conditions of the obligations of ASPEN to make Advances hereunder are
imposed solely and exclusively for the benefit of ASPEN and its successors
and assigns, and no other person shall have standing to require
satisfaction of such terms, covenants and other conditions in accordance
with their terms or be deemed to be a beneficiary of such terms, covenants
and other conditions, any or all of which may be freely waived, in whole or
in part, by ASPEN at any time if, in ASPEN's sole discretion, ASPEN deems
it advisable or desirable to do so.
(d) Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in the State of Florida or in any
jurisdiction in the United States shall, as to the State of Florida or such
jurisdiction in the United States, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(e) Headings. The headings and captions of various paragraphs of this
Agreement are for convenience of reference only and are not to be construed
as defining or limiting, in any way, the scope or intent of the provisions
hereof.
(f) No Joint Venture. Neither Borrower nor Guarantor are and shall not
be deemed to be a joint venturer with, or an agent of, ASPEN for any
purpose.
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(g) Incorporation By Reference. Borrower and Guarantors agree that
until this Agreement is terminated by the repayment to ASPEN and any
affiliate of ASPEN of all principal and interest due and owing on the Note,
any of the Liabilities, and other sums due and owing pursuant to the other
Loan Documents, the Note, the Security Instruments (as defined in the
Note), and the other Loan Documents shall be made subject to all the terms,
covenants, conditions, obligations, stipulations and agreements contained
in this Agreement to the same extent and effect as if fully set forth in
and made a part of the Note, such Security Instruments, and the other Loan
Documents. In the event of a direct conflict between any of the Loan
Documents and the provisions of this Agreement, this Agreement shall be
controlling.
(h) Further Assurances. Borrower and Guarantors hereby agree promptly
to execute and deliver such additional documents, agreements and
instruments and promptly to take such additional action as ASPEN may at any
time and from time to time reasonably request in writing in order for ASPEN
to obtain the full benefits and rights granted or purported to be granted
by this Agreement, including, but not limited to a finalization of the
Schedules to this Loan Agreement, if necessary, within five (5) business
days of the date hereof.
19. Inspections. ASPEN, through its officers, agents, employees or
designees, shall have the right at all reasonable times to examine the books,
records, accounting data and other documents of Borrower and/or Guarantor and to
make extracts therefrom or copies thereof. Said books, records and documents
shall be made available to ASPEN, its officers, agents and employees promptly
(and in any event within three (3) business days) upon written demand therefor.
Notwithstanding the foregoing or any other provision of this Agreement, ASPEN
acknowledges that at no time will it be permitted, or have a right to, access to
any private patient records.
20. Costs and Expenses. Borrower shall pay all reasonable out-of-pocket
third party expenses incidental to the making and administration of this loan,
including, but not limited to, pre-Closing, Closing and post-Closing expenses,
commitment fees, recording and filing fees, appraisal fees, accountants' fees,
attorneys' fees and any and all other out-of-pocket expenses or fees incurred in
connection with the negotiation, preparation, review, amendment or modification
of the documents relating to the Loans, the administration of the Loans, or the
enforcement of any of ASPEN's rights, subject to Borrower's receipt of an
itemization of such expenses and receipt of third party invoices where
practical. The maximum amount of Borrower's liability for the total costs and
expenses in conjunction with the origination of this Loan shall not exceed
$17,500. The parties agree that such limitation shall not apply to the amendment
or modification of the documents, the ongoing administration of the Loans or the
enforcement of any of ASPEN's rights, subject to the Borrower's receipt of an
itemization of such third party expenses and receipt of third party invoices
where practical. All expenses related to Steve Jones must be pre-approved by the
Board of Directors.
21. Notices. Any notices required to be given herein by any party to the
other shall be in writing and either personally delivered or sent registered or
certified mail, postage prepaid, return receipt requested, to:
Borrower: Neogenomics, Inc.
12701 Commonwealth Drive, Suite 9
Fort Myers, FL 33913
Attention: Robert P. Gasparini
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Guarantor: Neogenomics, Inc.
12701 Commonwealth Drive, Suite 9
Fort Myers, FL 33913
Attention: Robert P. Gasparini
ASPEN: Aspen Select Healthcare, LP
1740 Persimmon Drive
Naples, FL 34109
Attention: Steven Jones
With a copy (which copy shall not constitute notice) to:
M.M. Membrado & Associates, PLLC
115 E. 57th Street, Suite 1006
New York, NY 10022
Attention: Michael Membrado, Esq.
Facsimile: (646) 486-9771
or such other address as either party hereafter designates to the other in
writing as aforesaid.
22. Miscellaneous. No right, interest or benefit of Borrower hereunder
shall be assigned or otherwise transferred by it. This Agreement, the Note, the
Loan Documents and any other documents required to be executed and delivered by
Borrower or Guarantor in accordance with this Agreement, constitute the entire
and complete agreement by and between ASPEN and Borrower concerning the Loans
described in this Agreement. In the event of any conflict or inconsistency
between this Agreement and any of the other Loan Documents, the terms of this
Agreement shall govern. No change, amendment or modification of or to this
Agreement, the Notes, the Loan Documents and/or any of the other documents
executed and delivered by Borrower or any of the Guarantors shall be binding
unless in writing and signed by ASPEN. All representations, warranties and
agreements herein contained shall survive the Closing. This Agreement is made
and entered into for the sole protection and benefit of ASPEN, affiliates of
ASPEN, Borrower, Guarantor and their respective successors and assigns, and no
other person shall have any right of action hereon. Time is of the essence
hereof. Whenever used, the singular number shall include the plural, the plural
the singular, and the use of any gender shall include all genders. Upon
Borrower's payment in full of any loans now or hereafter issued by ASPEN or any
affiliate of ASPEN for the benefit of or at the request of Borrower or
Guarantor, under this Agreement or any other document, instrument or agreement
related to this Agreement, ASPEN shall release all liens on the Collateral.
23. Governing Law; Consent to Forum. This Agreement and all other Loan
Documents have been negotiated, executed and delivered at and shall be deemed to
have been made in the State of Florida. This Agreement and all other Loan
Documents shall be governed by and construed in accordance with the laws of the
State of Florida; provided, however, that if any of the Collateral shall be
located in any jurisdiction other than Florida, the laws of such jurisdiction
shall govern the method, manner and procedure for foreclosure of ASPEN's lien
upon such Collateral and the enforcement of ASPEN's other remedies with respect
to such Collateral to the extent that the laws of such jurisdiction are
different from or inconsistent with the laws of Florida. As part of the
consideration for new value this day received, Borrower and Guarantors each
hereby consent and submit to the personal jurisdiction of the Circuit Court for
Collier County, Florida and the United States District Court for the Middle
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District of Florida, and waive personal service of any and all process upon it
and consent that all such service of process be made by certified or registered
mail directed to such party at the address stated in paragraph 21, with service
so made deemed to be completed upon actual receipt thereof. Borrower and each of
the Guarantors waive any objection to jurisdiction and venue of any action
instituted against it as provided herein and agree not to assert any defense
based on lack of jurisdiction or venue.
24. Waiver of Right to Trial By Jury. Borrower, Guarantor, and ASPEN each
hereby unconditionally and irrevocably waive any and all right to trial by jury
in any action, suit, counterclaim or cross-claim arising in connection with, out
of or otherwise relating to this Agreement, the other Loan Documents, the
Liabilities, any Collateral or any transaction arising therefrom or related
thereto.
25. Closing. All references herein to the "Closing" shall be deemed to
refer to the actual date on which this Agreement is executed and delivered to
ASPEN, which is March 23, 2005 or such other date as is mutually agreed upon.
26. Assignment. No party may assign either this Agreement or any of his or
its rights, interests, or obligations hereunder without the prior written
approval of the other parties hereto; provided, however, that ASPEN may assign
any or all of its rights and interests hereunder to any affiliate of ASPEN.
[BALANCE OF THIS PAGE INTENTIONALLY BLANK.]
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IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
officers of Borrower, Guarantor and ASPEN as of the day and year first above
written.
Signed In the Presence of: ASPEN:
ASPEN SELECT HEALTHCARE, L.P., a Delaware limited
partnership
By MEDICAL VENTURES PARTNERS
LLC, a Delaware limited liability company,
its general partner,
___________________________________
Print Name By:/s/ Steven Jones
Name:Steven Jones
Its:Member
Borrower:
NEOGENOMICS, INC., a Florida corporation
___________________________________ By:/s/ Robert Gasparini
Print Name: Name:Robert Gasparini
Its:President
Guarantor:
NEOGENOMICS, INC., a Nevada corporation
___________________________________ By:/s/ Robert Gasparini
Print Name: Name:Robert Gasparini
Its:President
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SCHEDULES 7(f) AND 8(i)
Legal Proceedings
On January 12, 2005, the Borrower received a complaint filed in the Circuit
Court for Seminole County, Florida by its former Laboratory Director, Dr. Peter
Kohn. The complaint alleges that the Borrower owes Dr. Kohn approximately
$22,000 is back vacation pay and other unspecified damages. The Borrower
believes that it owes Dr. Kohn no more than approximately $12,000. The Borrower
has filed a motion to dismiss the complaint. Should such motion fail, the
Borrower and the Guarantor intend to vigorously pursue their defense of this
matter.
SCHEDULE 8(d)
Options, Warrants, and Registration Rights
As of the date hereof, the Guarantor has outstanding:
a) 1,782,329 stock options issued to employees under the Guarantor's 2003
Equity Plan;
In addition, the Guarantor has made commitments to issue:
b) 27,288 shares under the Guarantor's 2003 Equity Plan, subject to filing a
Registration Statement on Form S-8. Such shares have been included in the
number of shares of Common Stock listed in paragraph 8d.
c) 171,800 warrants with a strike price of $0.01/share to two consultants to
the Borrower in connection with services provided to the Borrower.
d) 250,000 warrants with a strike price of $0.25/share to one consultant to
the Borrower in connection with meeting certain performance milestones.
The Guarantor is also contemplating issuing:
e) 10,000 warrants with a strike price of $0.25/share to a consultant to the
Borrower who is providing services to the Borrow.
Effective as of the date of this Agreement, the Guarantor entered into an
Amended and Restated Registration Rights Agreement, which provides for the
following:
f) Up to three (3) demand registration rights issued to ASPEN, covering
9,903,279 shares of Common Stock.
g) Unlimited piggyback registration rights in favor of ASPEN, Dr. Michael T.
Dent, Mr. John E. Elliott, Mr. Steven C. Jones and Mr. Lawrence R. Kuhnert,
covering 15,651,030 shares of Common Stock.
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Effective as of the date of this Agreement, the Guarantor is also party to
agreements to register shares sold in recent private placements as follows:
h) During the period March 31, 2004 until the date hereof, the Guarantor sold
3,276,667 shares of its Common Stock in various private placements to
approximately 17 accredited investors. Pursuant to the terms of the Stock
Purchase Agreements, executed with each such investor, the Guarantor is
obligated to register such shares with the SEC. The Guarantor currently
contemplates filing such Registration Statement in April or May of 2005.
SCHEDULE 8(e)
Other Agreements
As discussed in Schedule 8(d), item h), the Guarantor is obligated to
register with the SEC certain shares purchased by accredited investors in
private placements. All of the Stock Purchase Agreements used to consummate such
transactions included a provision that obligated the Company to use its best
efforts to file such registration statement within six months (or in some cases,
less time) of the date of such Stock Purchase Agreements. The Company is
currently in breach of this obligation with most of such investors and intends
to correct such breach by filing the required registration statement in April or
May of 2005.
SCHEDULE 8(n)
Trademarks
In March 2003, the Company received a certified letter from the law firm of
McLeod, Moyne & Reilly, P.C., dated March 18, 2003, which stated that they
represented NeoGen Corporation, a Lansing, MI manufacturer of products dedicated
to food and animal safety, on intellectual Property Matters. This letter claimed
that the Company's use of the name NeoGenomics, Inc infringed upon their clients
rights in its trademark name, "Neogen" and demanded that the Company cease using
the name, "NeoGenomics". The Company believes that NeoGen's claims are too broad
reaching and that since NeoGen operates in a different industry, it is unlikely
that a court of competent jurisdiction would find that NeoGenomics has in anyway
damaged NeoGen Corporation. Thus the Company has not complied with the demands
of this letter and has heard nothing further on the matter since receiving the
initial letter. As of the date of this Agreement, the Company does not expect
there to be any legal action taken against the Company, but there can be no
assurance the NeoGen Corporation will take such action in the future.
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SCHEDULE 14
Other Contemplated Indebtedness
The Guarantor, subject to approval by its board of directors, is currently
contemplating and shall have the right to enter into a loan transaction for up
to $300,000 and to grant a second (subordinate) priority lien on all the
business assets of the Company to Cornell Capital Partners, LP, such loan
transaction and granting of a second (subordinate) priority lien being subject
to acceptable final loan documentation and an acceptable inter-creditor
agreement by ASPEN.
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EXHIBIT A
NOTE
$1,500,000.00 As of March 23, 2005
Fort Myers, Florida
FOR VALUE RECEIVED, the undersigned, NeoGenomics, Inc., a Florida corporation,
having its principal office at 12701 Commonwealth Drive, Suite 9, Fort Myers, FL
33913 (hereinafter referred to as "Borrower"), promises to pay to the order of
Aspen Select Healthcare, LP, a Delaware limited partnership, with an office at
1740 Persimmon Drive, Naples, FL 34109 (hereinafter referred to as "ASPEN"), or
holder, the principal sum of One Million Five Hundred Thousand Dollars
($1,500,000.00), or so much thereof as may be advanced by ASPEN to Borrower from
time to time pursuant to the terms hereof and of that certain Loan Agreement by
and between Borrower and ASPEN dated of even date herewith (as the same may be
amended, modified, restated, extended and/or replaced from time to time, the
"Loan Agreement"), together with any additional payments or sums provided for in
this Note, the Loan Agreement, and the Security Instruments (as hereinafter
defined), with interest from the date of advance, at the rate and in the manner
hereinafter specified. The principal amount of each loan made by ASPEN under
this Note and the amount of each prepayment made by Borrower under this Note
will be recorded by ASPEN in the regularly maintained financial records of
ASPEN. The aggregate unpaid principal amount of all loans set forth in such
schedule or in such records will be presumptive evidence of the principal amount
owing and unpaid on this Note. However, failure by ASPEN to make any such entry
will not limit or otherwise affect Borrower's obligations under this Note, the
Loan Agreement, or the Security Instruments. At no time will the total of all
Advances (as hereafter defined) exceed the lesser of the face amount of this
Note or the Borrowing Base (as hereinafter defined). If the total principal
amount of all Advances made hereunder at any time exceeds the face amount of
this Note or exceeds the Borrowing Base (as hereinafter defined), Borrower will
pay the amount of such excess to ASPEN within ten days from the date of notice.
Interest
Interest shall be at the rate per annum equal to the Prime Rate (as
hereinafter defined) plus six percent (6%). Interest shall be charged on the
outstanding principal balance of this Note from time to time owing from the date
such principal is advanced. During the term of this Note, the rate of interest
shall be based on the hereinafter defined Prime Rate from time to time in
effect. Said rate of interest shall increase and decrease automatically and
without notice in the same amount and on the same day that said Prime Rate
increases or decreases. Any reference herein to the "prime rate of interest" or
Prime Rate is hereby defined to mean the prime rate set forth in the Wall Street
Journal as the base rate posted by 75% of the nation's largest banks from time
to time. All Interest shall be calculated on the basis of a 360-day year for
actual days elapsed. Interest after maturity (whether as stated, by acceleration
or otherwise) on any and all portions of the principal amount and any unpaid
interest shall be at a rate per annum equal to six percent (6%) above the rate
otherwise then payable (hereinafter referred to as the "Default Rate of
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Interest"). Interest shall be payable monthly, in arrears, and shall accrue as
of the date of the first Advance hereunder.
Payments
Interest only on the unpaid principal balance of this Note shall be due and
payable monthly, in arrears, within 15 days of the end of any given calendar
month, commencing with the month ending March 31, 2005 (which shall be a partial
month's interest), with successive payments due on the last day of each
succeeding and consecutive month thereafter, and continuing until maturity (as
stated, by acceleration or otherwise), at which time the then outstanding
principal amount hereof, which is acknowledged by Borrower to be a balloon
payment, together with interest and any and all other amounts due hereunder or
under the hereinafter described Security Instruments shall be due and payable.
All payments under this Note shall be applied, at ASPEN's discretion, to payment
of accrued interest, late fees and any other amounts due and payable by Borrower
hereunder or under the Security Instruments with the balance to be applied
towards the principal amount owed hereunder.
Prepayments; Required Payments
Borrower may prepay this Note in whole or in part at any time without
premium or penalty. No prepayment or required payment made pursuant to this
section shall be deemed to relieve Borrower of its obligation to make other
payments hereunder, including, without limitation any scheduled and still owing
interest payment.
Term of Note
The entire unpaid principal balance of this Note, together with accrued
interest thereon, shall be due and payable unless earlier accelerated as
provided herein, on March 31, 2007, subject to extension by ASPEN in its sole
discretion ("Maturity Date").
Place of Payments
Payments shall be payable in lawful money of the United States to ASPEN at
its office at 1740 Persimmon Drive, Naples, FL 34109, or at such place as shall
hereafter be designated by written notice from the holder to the Borrower.
Monetary Default
Upon the failure to make any payment required hereunder or under any of the
other Security Instruments or under any other obligation of Borrower to ASPEN
when due, the entire unpaid principal of this Note, together with accrued
interest thereon and any other sums due to ASPEN by Borrower, shall become at
once due and collectible at the option of ASPEN or holder, upon thirty (30) days
written notice or demand and ASPEN or holder may proceed to foreclose all liens
and security interests securing this Note. Failure of ASPEN or holder to
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exercise this option shall not constitute a waiver of the right to exercise the
same in the event of any subsequent default. No monetary default will exist
based upon the exception as documented in section 15.a of the loan agreement.
"Security Instruments"
The payment of this Note is secured by valid and subsisting (a) Loan
Agreement, (b) Security Agreement of even date herewith executed by Borrower in
favor of ASPEN, as the same may be amended, modified, extended, replaced or
restated from time to time ("Borrower Security Agreement"), and (c) Stock Pledge
Agreement, even date herewith, executed by the Borrower's parent company,
NeoGenomics, Inc., a Nevada corporation ("Guarantor"), as the same may be
amended, modified, extended, replaced, or restated from time to time (the "Stock
Pledge Agreement"). The Loan Agreement, the Borrower Security Agreement, the
Stock Pledge Agreement, and all other instruments now or hereafter executed in
connection with or as security for this Note or any other obligations of
Borrower to ASPEN have heretofore and shall hereinafter be collectively referred
to as the "Security Instruments."
Security and Non-Monetary Default
All of the agreements, conditions, covenants, warranties, representations,
provisions and stipulations made by or imposed upon Borrower in the Security
Instruments are hereby made a part of this Note to the same extent, and with the
same force and effect, as if they were fully recited herein. Should there be an
Event of Default (as defined in the Loan Agreement), then ASPEN, or holder,
shall have (after the expiration of any applicable grace period and notice
expressly set forth in the Loan Agreement which provides for at least a thirty
(30) day cure period), in addition to any and all other rights, remedies and
recourses available to it, the right and option to declare the entire unpaid
principal balance and accrued interest on this Note and any other sums due to
ASPEN by Borrower at once due and payable without further demand or presentment
for payment to Borrower, and proceed to foreclose all liens and security
interests securing the payment of same and to invoke all rights, remedies and
recourses relating thereto. The notice of the exercise of the option to
accelerate contained in this paragraph is hereby expressly waived by Borrower.
Failure of ASPEN or holder to exercise the option contained in this paragraph
shall not constitute a waiver of the right to exercise the same in the event of
any subsequent default.
Late Charge
In the event that any payment herein provided for shall become overdue for
a period in excess of ten (10) days, a late charge of five percent (5%) of such
amount so overdue shall become immediately due to ASPEN or holder, not as a
penalty, but as agreed compensation to ASPEN or holder for the additional costs
and expenses incident to such default in making a payment or payments. Borrower
acknowledges that the exact amount of such costs and expenses may be difficult,
if not impossible, to determine with certainty, and further acknowledges and
confesses the amount of such charge to be a consciously considered, good faith
estimate of the actual damage to ASPEN or holder by reason of such default. Said
charge shall be payable in any event no later than the due date of the next
subsequent payment hereunder. Assessment of the late charge shall not in any
event be deemed to extend the date upon which such installment is due. The
assessment and/or collection of any late charge shall in no way impair ASPEN's
right to pursue any other remedies upon default hereunder, nor shall the
acceptance by ASPEN of any late payment or other performance which does not
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strictly comply with the terms of this Note or any of the Security Instruments,
be deemed to be a waiver of any rights of ASPEN arising as a result of any other
failure to comply.
Default Rate
In the event of any default hereunder or under any of the Security
Instruments, after the expiration of all applicable cure periods and such event
of default remains uncured, the unpaid principal balance of this Note and
accrued interest thereon and all other sums due to ASPEN or holder by Borrower,
shall bear interest at the Default Rate of Interest until all sums are paid in
full.
Right of Set-Off
Borrower grants to ASPEN a contractual possessory security interest in, and
hereby assigns, conveys, delivers, pledges and transfers to ASPEN all Borrower's
right, title and interest in and to, the accounts of Borrower with ASPEN
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding, however, all IRA and Keogh accounts. Borrower
authorizes ASPEN, to the extent permitted by applicable law and upon the
occurrence of any default hereunder or under any of the Security Instruments, to
charge or set-off all sums owing on this Note against any and all such accounts,
provided, however, without impairing or limiting ASPEN's security interest, that
ASPEN shall not set-off against any IRA or Keogh accounts.
Conditions for Advance
No Advance shall be made hereunder if ASPEN in its sole reasonable
discretion determines that the total amount of all outstanding and unpaid
Advances plus the requested Advance would exceed the Borrowing Base. No Advance
shall be made hereunder if Borrower is in default hereunder or under any of the
Security Instruments. No Advance shall be made hereunder without submission of a
current Borrowing Base Certificate evidencing that the total of such requested
Advance plus all outstanding and unpaid Advances will not exceed the Borrowing
Base.
Borrowing Base Covenant
At all times hereafter, and so long as any principal is outstanding
hereunder or ASPEN has any obligation to advance funds hereunder, Borrower shall
not permit the total of all unpaid Advances hereunder to exceed the Borrowing
Base.
Definitions
As used herein, the following terms shall have the following meaning:
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"Accounts" shall have the meaning ascribed thereto in the Uniform
Commercial Code in effect in the State of Florida from time to time, as the same
may be amended and/or modified.
"Advance" shall mean each principal amount advanced hereunder.
"Borrowing Base" shall mean the total of eighty percent (80%) of Eligible
Accounts plus fifty percent (50%) percent of the Book Value (determined pursuant
to GAAP) of all Equipment owned by Borrower plus Five Hundred Thousand Dollars
($500,000) during the period between the date of this Note and April 30, 2005
and plus One Million Dollars ($1,000,000) thereafter;
"Borrowing Base Certificate" shall mean a collateral report substantially
in the form of Schedule A attached hereto and incorporated herein by reference,
identifying the calculation of and basis for the Borrowing Base.
"Eligible Accounts" shall mean all of Borrower's Accounts minus (a) any of
Borrower's Accounts which are unpaid more than ninety (90) days from the earlier
of the date of invoice or billing, (b) Accounts for which Borrower has received
notice that the Account debtor is the subject of an action in bankruptcy court
or for receivership, or shall otherwise fail to meet the criteria for Eligible
Accounts, (c) contra accounts, i.e., Accounts owed by an Account Debtor to whom
Borrower is also a vendor, (d) Accounts owed by a foreign Account Debtor, and
(e) Accounts owed to Borrower by Parent or any other entity related to either
Borrower or Parent by common ownership.
"Equipment" shall have the meaning ascribed thereto in the Uniform
Commercial Code in effect in the State of Florida from time to time, as the same
may be amended and/or modified.
"GAAP" means generally accepted accounting principles, consistently
applied.
"Person" means any individual, entity or governmental agency, and shall be
construed in its broadest sense.
Additional Requirements
Borrower shall submit to ASPEN the following:
(a) upon (i) 10 days from the execution of this Note, (ii) with every request
for an Advance, and (iii) on or before the twentieth (20th) day of every
month starting in April 2005, a Borrowing Base Certificate evidencing that
the total of all outstanding Advances as of the execution of this Note (for
a Borrowing Base Certificate submitted pursuant to (i) above), upon making
of such additional Advance taking into account the Advance requested (for a
Borrowing Base Certificate submitted pursuant to (ii) above) or as of the
end of the preceding month (for a Borrowing Base Certificate submitted
pursuant to (iii) above) does not exceed the Borrowing Base and, for a
Borrowing Base Certificate submitted pursuant to (i) or (iii) above, also
containing a complete aging of NeoGenomics' Accounts and accounts payable;
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(b) within three (3) days of filing, complete copies of its federal tax
returns, with all schedules;
(c) such additional documents regarding Borrower's financial condition, assets
or ability to repay Advances as ASPEN may deem necessary or desirable.
Waiver of Right to Trial by Jury.
Borrower and ASPEN each hereby unconditionally and irrevocably waive any
and all right to trial by jury in any action, suit, counterclaim or cross-claim
arising in connection with, out of or otherwise relating to this Note, the
Security Instruments, the obligations evidenced hereby, and/or any collateral or
any transaction arising therefrom or related hereto.
Non-Waiver
The remedies of this Note and the aforementioned Security Instruments
securing the same, providing for the enforcement of the payment of the principal
sum thereby secured, together with the interest thereon, and for the performance
of the covenants, conditions and agreements, matters and things herein and
therein contained, are cumulative and concurrent and may be pursued singly or
successively or together, at the sole discretion of ASPEN or holder, and may be
exercised as often as occasion therefor shall occur. The waiver by ASPEN or any
holder hereof of, or failure to enforce any covenant or condition of this Note
or the Security Instruments, or to declare any default thereunder or hereunder,
shall not operate as a waiver of any subsequent default or affect the right of
the ASPEN or holder to exercise any right or remedy not expressly waived in
writing by ASPEN or holder.
Costs of Collection
Borrower hereby unconditionally agrees to pay the costs of collection of
this Note, including, but not limited to, reasonable attorney fees incurred by
ASPEN or holder, if collectible in the jurisdiction in which a judgment is
rendered or sought to be enforced.
Acknowledgment of Type of Debt and Use of Proceeds
Borrower hereby acknowledges, warrants and represents that this is not a
consumer transaction and that the principal sum evidenced hereby was not used
for any consumer purpose but was used solely in connection with a commercial,
business transaction. Borrower hereby acknowledges, warrants and represents that
it will use all Advances solely as and for its working capital purposes and to
repay existing indebtedness.
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Binding Effect
This obligation shall bind Borrower and Borrower's successors and permitted
assigns, as the case may be, and the benefits hereof shall inure to any holder
hereof and its successors and assigns.
Waiver of Presentment, Etc.
Borrower, and all sureties, endorsers and guarantors of this Note, if any,
hereby: (a) agree to any substitution, exchange, addition or release of any such
property or the addition or release of any party or Person primarily or
secondarily liable herein; (b) agree that ASPEN or holder shall not be required
first to institute any suit, or to exhaust its remedies against the Borrower or
any other Person or party in order to enforce payment of this Note; (c) consent
to any extension, rearrangement, renewal or postponement of time of payment of
this Note and to any other indulgence with respect hereto without notice,
consent or consideration to any of them; and (d) agree that, notwithstanding the
occurrence of any of the foregoing, except as to any such Person expressly
released in writing by ASPEN or holder, they shall be and remain jointly and
severally, directly and primarily, liable for all sums due hereunder and under
any and all of the Security Instruments.
Governing Law
This Note and the Security Instruments shall be governed and construed in
accordance with the laws of the State of Florida and of the United States.
Severability - Usury
The unenforceability or invalidity of any one or more provisions, clauses,
sentences and/or paragraphs of this Note shall not render any other provision,
clause, sentence and/or paragraph herein contained unenforceable or invalid.
It is the intention of ASPEN or holder, which is signified by acceptance of
this Note, that this Note shall comply with all applicable usury laws now or
hereafter in effect. Accordingly, to the extent that any rate of interest stated
in this Note exceeds the maximum rate of interest which may be charged on loans
of the type and nature evidenced by this Note, then said interest shall be
abated and reduced to the extent necessary to conform with the maximum
permissible rate.
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IN WITNESS WHEREOF, Borrower has executed this Note as of the date and year
first above written in Fort Myers, Florida.
ASPEN SELECT HEALTHCARE, LP, a Delaware limited
partnership
By MEDICAL VENTURES PARTNERS, LLC, a Delaware
limited liability company, its general partner,
By: /s/ Steven Jones
Name: Steven Jones, Member
NEOGENOMICS, INC., a Florida corporation
By:/s/ Robert Gasparini
Name: Robert P. Gasparini
Its: President and Chief Science Officer
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Schedule A
MVP 3, LP
BORROWING BASE CERTIFICATE
NEOGENOMICS, INC., a Florida corporation ("Company")
The undersigned, in accordance with and subject to the terms of the Loan
and Security Agreement dated March 23, 2005 between NeoGenomics, Inc, a Florida
Corporation ("Borrower") and Aspen Select Healthcare, LP, a Delaware Limited
Partnership "(ASPEN") (as the same may be hereafter amended, restated, extended,
revised, and/or modified from time to time, hereinafter referred to as the
"Agreement"), and the Note as defined therein ("Note"), hereby certifies that as
of the date indicated below that the following computations have been made in
accordance with the provisions of the Agreement and the Note and without
duplication or overlap:
As of ____________________:
1. Calculation of Eligible Accounts
A. Accounts $______________
B. Less
(a) Accounts that arose in the ordinary course of Company's business
from the performance (fully completed) of services or bona fide lease,
sale, manufacture, repair, processing or fabrication of personal property
which have been delivered to the Account Debtor, and more than
ninety (90) days have elapsed since the date on which the Account,
by its original terms, was invoiced $______________
(b) Accounts for which Company or Borrower has received notice that
the Account Debtor is the subject of an action in bankruptcy court
or for receivership, or otherwise fail to meet the criteria for Eligible
Accounts $______________
(c) Accounts owed by an Account Debtor to whom Company is also a vendor $______________
(d) Accounts that are an Account arising out of contracts with or orders
from an Account Debtor which does not have its principal place of
business located in the United States of America $______________
(e) Accounts that are an Account due from Borrower or any Affiliate,
subsidiary, shareholder or employee of Borrower or Company $______________
Total Non-Eligible (sum of (a) through (e)) $______________
C. Total Eligible Accounts (A minus B) $______________
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D. Advance Rate (80%) x .80
E. Accounts and Inventory Availability per Formula $______________
2. Calculation of Eligible Equipment
A. Book Value of Equipment $______________
B. Advance Rate (50%) x .50
C. Equipment Availability per Formula $______________
3. Total Amount of Availability not Subject to Specific Collateral Pursuant to
the Note $______________
4. Total Credit Availability per Formula (1E + 2C+3)
5. Less Outstanding collateralized debt under Note (amounts outstanding pursuant
to A+B above) $______________
6. Less Outstanding non-collateralized debt under Note (amounts outstanding
pursuant to C above) $______________
7. Total Amounts Outstanding prior to the current draw request $______________
8. Excess (Deficit) Availability $______________
9. Amount of Advance Requested with This Borrowing Base Certificate $______________
For the purposes of inducing ASPEN to grant Loans pursuant to the Note and
Agreement, we hereby certify that the foregoing Borrowing Base Certificate is
true and correct in all particulars and that there is no Event of Default or
event which, but for the passage of time or notice or both, would constitute an
Event of Default under the Agreement or the Note.
NEOGENOMICS, INC., a Florida corporation ("Company")
By:__________________________________________
Title:_________________________________________
Dated:________________________________________
Borrowing Base Certificate No.:____________
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NeoGenomics (NEO)
Filed: 30 Mar 05, 12:00am