AGREEMENT
This Agreement made this 2nd day of February, 1999 by and among IMPERIAL
LOAN MANAGEMENT CORPORATION, a California corporation ("Imperial"), CAMBIO INC.,
a Delaware corporation ("Cambio") and MEDBROOK HOME HEALTH, INC., a Colorado
corporation ("Medbrook").
R E C I T A L S
A. Imperial did heretofore on October 14, 1998 make a loan to Medbrook in
the amount of $800,000. Said loan was evidenced by a promissory note in the
amount of $800,000 payable by Medbrook to Imperial (the "Medbrook Note").
B. As security for the payment of the Medbrook Note, Medbrook granted
Imperial a security interest in all of its accounts and general intangibles.
C. Cambio is the owner of all the issued and outstanding stock of Medbrook,
and Medbrook loaned or distributed the proceeds of the Medbrook Note to Cambio.
Cambio guaranteed the payment of the Medbrook Note to Imperial. As security for
the guaranty, Cambio granted Imperial a security interest in all of its accounts
and general intangibles.
D. Cambio borrowed the sum of $100,000 from Imperial and in consideration
of the loan executed and delivered to Imperial its note in the amount of
$100,000 dated December 29, 1998 (the "Cambio Note").
E. Cambio, granted Imperial a security interest in its accounts and general
intangibles as security for the payment of the Cambio Note. In addition, Cambio
granted Imperial a security interest in all of the stock of Medbrook as security
for the performance of its obligations under the guaranty of the Medbrook Note
and as security for the repayment of the Cambio Note.
F. A portion of the Medbrook Note has been repaid, and the outstanding
principal balance of the Medbrook Note is currently $600,000.
G. Cambio is the owner of all of the issued and outstanding stock of
Medbrook, Medbrook Physical Therapy, Inc., Medbrook Home Health, Inc., South
Park Rehabilitation, Inc., Medbrook of Illinois, Inc., and Medbrook
Neurocare-Kansas City, Inc. (the "Subsidiaries").
H. Each of the Subsidiaries was engaged in the business of providing health
care and such subsidiaries have sold or are selling all of their assets in
terminating their health care operations.
I. The parties wish to enter into this Agreement for the purpose of
providing for the repayment of the Medbrook Note and the Cambio Note, and the
liquidation of the Subsidiaries and collection of the accounts and other assets
belonging to the Subsidiaries.
NOW, THEREFORE, the parties agree as follows:
1. Upon the execution of this Agreement, Cambio agrees to sell, assign and
transfer to Imperial all of the issued and outstanding stock of each of the
Subsidiaries.
2. Imperial shall use its best efforts to liquidate each of the
Subsidiaries, to pay the outstanding obligations of the Subsidiaries from the
proceeds of liquidation, and to collect all of the accounts of the Subsidiaries.
Imperial shall submit a report on a quarterly basis to Cambio on the first day
of each calendar quarter which shall include a schedule of collections for the
previous quarter, the application of the proceeds of the collections, the
outstanding balance of the Medbrook and Cambio Notes and the estimated remaining
accounts which are believed to be collectible.
Imperial shall have the right to make payments in settlement of liabilities
of the Subsidiaries and to receive less than the full amount of any claims of
the Subsidiaries subject to the following conditions and restrictions:
(a) Imperial may settle any single liability of a Subsidiary for an amount
of $10,000 or less, if it has in its possession sufficient funds to pay such a
settlement. In the event that funds are not available the settlement shall
require the prior written approval of Cambio.
(b) Any settlement of an obligation for an amount in excess of $10,000
shall require the prior written consent of Cambio. In the event that Imperial
requests consent to a settlement of a liability for which Imperial holds
sufficient funds to make payment, and Cambio withholds such consent, Cambio
shall indemnify and hold Imperial and its officers and directors harmless from
any liability asserted against them on account of such a liability.
(c) Imperial may settle any account receivable of a subsidiary so long as
the principal amount of the claim not collected is less than $10,000. Any claims
assigned to a collection agency shall require the prior written consent of
Cambio and thereafter may be settled in accordance with the standard policy of
the collection agency.
(d) A Medicare claim for which the Subsidiary must acknowledge payment in
full of an amount which is less than the full claim submitted shall not be
settled without the prior written consent of Cambio. In the event that an amount
is received for a Medicare claim which is sufficient to pay the Medbrook Note,
the Cambio Note and the liabilities of the Subsidiary which submitted the claim,
Imperial may accept the payment and divide the remaining funds in accordance
with this agreement. In the event that Cambio wishes to make a further appeal of
such a claim, and is willing to advance the costs, Imperial shall either process
the appeal, or convey the stock of such Subsidiary to Cambio or its nominee and
waive any further right to a portion of the proceeds.
3. The proceeds of the liquidation of Medbrook shall first be used to pay
principal of the Medbrook Note, and thereafter the principal of the Cambio Note.
The proceeds of the liquidation of the remaining Subsidiaries, after payment of
its liabilities, shall be used first to pay the remaining principal balance of
the Medbrook Note, and thereafter to pay the principal of the Cambio Note. If
any Subsidiary shall be determined to be insolvent, any proceeds from its
accounts shall be paid or set aside for its creditors. If it shall be determined
that Cambio is responsible for the debts of any such subsidiary, any excess
proceeds from the liquidation of the other Subsidiaries, after payment of the
Medbrook Note and the Cambio Note, shall be applied in payment of such
obligations.
4. The remaining principal of the Medbrook Note and the Cambio Note to the
extent not paid from the proceeds of liquidation shall be due and payable on
February 1, 2000. Until the Medbrook Note and the Cambio Note are paid in full,
Cambio agrees to pay to Imperial, all interest payable under the Medbrook Note
and the Cambio Note commencing February 1, 1999, and continuing until said Notes
have been paid in full.
5. Until the Cambio Note and the Medbrook Note have been paid in full,
Cambio agrees to pay to Imperial to be used by Imperial to pay the costs and
expenses incurred in connection with the collection of the accounts of the
Subsidiaries the sum of $5,000 per month. If the proceeds of the liquidation of
the Subsidiaries exceed the amounts necessaary to pay the Medbrook Note, the
Cambio Note and the other liabilities of the Subsidiaries, the amounts paid by
Cambio and any amounts paid by Imperial for the costs of collection shall be
reimbursed to them pari pasu prior to the payment to Cambio or retention by
Imperial of any such excess proceeds.
6. So long as Cambio shall perform its obligations hereunder, Imperial
agrees to subordinate its security interest in the accounts and general
intangibles of Cambio to a security interest to be granted to a third party
lender which shall be a bank, commercial loan company, factor or other
independent commercial lender which is engaged in the business of providing
accounts receivable financing. Provided, that the proceeds of any such loans to
Cambio shall be used exclusively for the payment of operating expenses for the
business of Cambio. No portion of such funds shall be used to pay principal or
interest on outstanding loans other than the commercial lender to whom the
subordination has been granted. In the event that Cambio defaults in the
performance of its obligations hereunder, Imperial may terminate its obligations
to subordinate to any further loans by such commercial lender.
7. As consideration for the sale and assignment of the stock of the
Subsidiaries, Imperial shall pay to Cambio, from the proceeds of liquidation,
one-half of such proceeds after the repayment of the Medbrook Note and the
Cambio Note, and after payment of all reasonable expenses of collection incurred
by Imperial, including compensation to its president, Peter Schneider, for
services rendered and for legal and accounting fees.
8. Nothing provided herein shall be deemed to relieve either Medbrook or
Cambio of its obligations to Imperial nor to release any of the security granted
by Medbrook and Cambio to Imperial for the performance of its obligations.
9. In the event that any party shall default in the performance of its
obligations hereunder, and any other party shall bring an action to enforce the
provisions of this Agreement, the party or parties prevailing in such action
shall be entitled to receive from the party or parties not prevailing in such
action all costs and expenses incurred including a reasonable attorneys fee.
10. This Agreement incorporates all the agreements of the parties with
respect to the matters set forth herein, and supercedes all prior
representations and negotiations. This Agreement may be modified only by a
writing signed by each of the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement upon the date
above written.
IMPERIAL LOAN MANAGEMENT
CORPORATION
By:/s/ Peter Snider
CAMBIO INC.
By:/s/ Ali Al-Dahwi
MEDBROOK HOME HEALTH, INC.
By: /s/ Harvey Wm. Glasser