Exhibit 10.51
CONSOLIDATING AMENDED AND RESTATED
SECURED TERM NOTE
$2,575,542.00 December 6, 2001
FOR VALUE RECEIVED, and intending to be legally bound, the undersigned, PHC OF
MICHIGAN, INC., a Massachusetts corporation ("Borrower"), promises to pay, in
lawful money of the United States, to the order of HELLER HEALTHCARE FINANCE,
INC. f/k/a HCFP FUNDING, INC., a Delaware corporation, its successors and
assigns ("Lender"), the principal sum of TWO MILLION FIVE HUNDRED SEVENTY-FIVE
THOUSAND FIVE HUNDRED FORTY-TWO AND 00/100 DOLLARS ($2,575,542.00) (the
"Principal Sum") together with interest, costs of collection and other fees as
further set forth in this Consolidating Amended and Restated Secured Term Note,
to be paid in accordance with the terms set forth below.
This Consolidating Amended and Restated Secured Term Note (as it may be amended,
modified or restated from time to time, this "Note") consolidates and combines
all of the following obligations to Lender:
(a) the obligations of Borrower under that certain Secured Term Note in the
original principal amount of One Million One Hundred Thousand and No/100 Dollars
($1,100,000.00) made by PHCMI in favor of Lender and dated March 12, 1997 (as
amended, modified or restated from time to time, the "March 1997 Term Note"),
under which March 1997 Term Note approximately $619,167 remains outstanding as
of the date hereof;
(b) the obligations of Borrower under that certain Secured Term Note in the
original principal amount of Five Hundred Thousand and No/100 Dollars
($500,000.00) made by PHCMI in favor of Lender and dated December 9, 1997 (as
amended, modified or restated from time to time, the "December 1997 Term Note"),
under which December 1997 Term Note approximately $353,875 remains outstanding
as of the date hereof;
(c) the obligations of Borrower under that certain Secured Term Note in the
original principal amount of One Million and No/100 Dollars ($1,000,000.00) made
by PHCMI in favor of Lender and dated November 23, 1999 (as amended, modified or
restated from time to time, the "November 1999 Term Note"), under which November
1999 Term Note approximately $860,000 remains outstanding as of the date hereof;
(d) the obligations of Borrower under that certain Secured Term Note in the
original principal amount of Five Hundred Thousand and No/100 Dollars
($500,000.00) made by PHCMI in favor of Lender and dated May 26, 2000 (as
amended, modified or restated from time to time, the "May 2000 Term Note"),
under which May 2000 Term Note approximately $500,000 remains outstanding as of
the date hereof;
(e) that portion of the obligations under that certain Revolving Credit
Note in the original principal amount of Four Million and No/100 Dollars
($4,000,000.00) made by the Borrower in favor of Lender and dated February 28,
1998 (as amended, modified or restated from time to time, the "Revolving Credit
Note") which is allocated to PHC of Virginia, Inc. ("PHCVA"), an affiliate of
Borrower, of which such allocated amount approximately $130,000 is outstanding
as of the date hereof; and
(f) the obligation of Borrower, PHCVA and PHC of Utah, Inc., an affiliate
of Borrower ("PHCU" and, collectively with Borrower and PHCVA, the "Revolver
Borrowers") in respect of that certain overline loan (the "Overline Loan") in
the original principal amount of Three Hundred Thousand and No/100 Dollars
($300,000.00) made by the Lender to the Revolver Borrowers pursuant to that
certain Letter Agreement dated as of August 9, 2001 (the "Letter Agreement"),
the outstanding amount of which Overline Loan is approximately $112,500 as of
the date hereof.
This Note further replaces and supercedes each of the secured term notes
referenced in subparagraphs (a) - (d) above (collectively with all documents
executed in connection with such secured term notes, the "Original Term Loan
Documents") and the Letter Agreement. Borrower represents and warrants to Lender
that Borrower will benefit by the consolidation in this Note of the various
obligations of each of it, PHCVA and PHCU described above, and that Borrower has
received good and valuable consideration for its agreement to assume the
obligations of each of PHCVA and PHCU under the Revolving Credit Note and the
Letter Agreement, as the case may be.
1. Principal and Interest.
(a) Beginning December 31, 2001, and on the last day of each month
thereafter through and including October 31, 2004, Borrower promises to pay to
Lender the Principal Sum by making a monthly installment payment equal to the
amount set forth on Schedule 1 attached hereto and incorporated herein by
reference, and by making a final balloon payment of all outstanding unpaid
Principal Sum, together with all accrued and unpaid interest, fees and charges
hereunder on November 30, 2004 (the "Maturity Date"). The term of this Note
shall not be further extended unless the term of the Loan and Security Agreement
dated as of February 20, 1998 by and among Borrower, the other entities
identified therein as a "Borrower" and Lender, pursuant to which, among other
things, the Revolving Borrowers and Lender entered into a revolving credit
arrangement in a principal amount not to exceed $3,000,000.00 (as the agreement
has been or may be amended, modified or restated from time to time, the "Loan
Agreement") is further extended to the same date.
(b) In addition to repayment of the Principal Sum, Borrower promises to pay
to Lender interest on the Principal Sum on a monthly basis from the date of this
Note until the Maturity Date. Interest shall be at a fluctuating rate per annum
compounded daily (on the basis of the actual number of days elapsed over a year
of 360 days) equal to the Prime Rate (as defined below) plus three and one-half
percent (3.5%) (the "Base Rate"), provided that after an Event of Default the
interest rate shall be equal to the Base Rate plus five percent (5%) (the
"Default Interest Rate"). For purposes of the foregoing, the term "Prime Rate"
means that rate of interest designated as such by Citibank, N.A. (the "Bank"),
or any successor to the Bank, as the rate may from time to time fluctuate. If
the Bank ceases to designate such a base lending rate, Lender shall reasonably
select an alternate, nationally recognized commercial bank as the designator of
such interest rate. Accrued interest shall be payable monthly in arrears on the
last Business Day (as defined below) of each month from the date of this Note
through and including the Maturity Date. After the Maturity Date, and until the
entire Principal Sum plus any other amount due and unpaid hereunder shall be
paid in full, without limiting any of Lender's other rights and remedies, all
outstanding amounts owed by Borrower hereunder shall bear interest, payable on
demand, at the Default Interest Rate; provided that in no event shall the
interest payable by Borrower hereunder exceed the maximum lawful rate.
(c) Repayment of Borrower's obligations under this Note is secured by,
among other things, the Collateral defined and described in Section 6 of this
Note.
2. Additional Payments. Borrower further promises to pay to Lender,
immediately upon demand any and all other sums and charges that may at the time
become due and payable under this Note, and all reasonable costs and
disbursements in connection with the preparation of this Note and in the
collection of any payments due under this Note and in any action, suit or
proceeding to protect, sustain or enforce the rights and remedies of Lender
under this Note.
3. Conditions Precedent; Prepayment.
(a) Borrower hereby acknowledges that the Principal Sum has previously been
made available to Borrower by Lender. This Consolidated Amended and Restated
Secured Term Note shall become effective only upon satisfaction, in Lender's
sole discretion, of all of the following conditions:
(i) Lender shall have received an original of this Note duly executed by
an authorized officer of Borrower;
(ii) Lender shall have received that certain Amendment No. 3 to Loan and
Security Agreement duly executed by an authorized officer of each
Revolver Borrower;
(iii)Lender shall have received that certain Amended and Restated
Consolidated Mortgage made by Borrower as mortgagor and Lender as
mortgagee (the "Amended Mortgage") covering the real property commonly
known as 35031 23 Mile Road, New Baltimore, Michigan 48047, which is
more particularly described on Exhibit "A" to the Amended Mortgage
(the "Real Property");
(iv) Lender shall have received that certain Third Amended And Restated
Cross-Co llateralization and Cross-Default Agreement duly executed by
an authorized officer of each Revolver Borrower;
(v) Lender shall have received all financing statements and other
documents, certificates and agreements reasonably deemed necessary or
appropriate by Lender to effectuate the transactions contemplated by
this Note;
(vi) all representations, warranties and covenants contained in the
Original Term Loan Documents, the Letter Agreement, the Loan Agreement
or otherwise in any document entered into or executed in connection
with the Loan Agreement (collectively with the Loan Agreement, the
"Revolving Loan Documents") or in this Note or otherwise made in
writing in connection with this Note or in any documents entered into
in connection with the transactions contemplated by this Note
(collectively, the "Loan Documents") of, by or on behalf of Borrower
shall be true and correct in all material respects; and
(vii) no Event of Default shall have occurred or be continuing under
this Note or the other Loan Documents, the Original Term Loan
Documents, the Letter Agreement, the Loan Agreement or the other
Revolving Loan Documents.
(b) All outstanding principal, interest, fees and other amounts due under
this Note shall be prepaid in full simultaneously with repayment of all
Obligations under the Loan Agreement and/or the termination of the Loan
Agreement.
(c) Borrower may prepay all or any part of the Principal Sum outstanding
without penalty, together with all interest accrued on the Principal Sum and all
other sums that are payable pursuant to this Note.
4. Payment Office. The Principal Sum, the interest on the Principal Sum,
and any other amounts payable under this Note are payable in lawful money of the
United States of America at the office of Lender, at 2 Wisconsin Circle, Fourth
Floor, Chevy Chase, Maryland 20815, Attention: Pascale Bissainthe, SVP & Chief
Counsel, or at such other place as Lender may specify in writing to Borrower.
Any payment by other than immediately available funds shall be subject to
collection. Interest shall continue to accrue until the funds by which payment
is made are available to Lender for its use. Any payment stated to be due on a
day on which banks in Maryland are required or permitted to be closed for
business shall be due and payable on the next business day (each such day, a
"Business Day") and such extension of time shall be included in the computation
of interest in connection with such payment.
5. No Presentment; Acceleration. On the Maturity Date or upon the
occurrence of an Event of Default (as defined in Section 10 below), the
outstanding Principal Sum, accrued and unpaid interest on the Principal Sum, and
all other sums owed by Borrower to Lender in connection with this Note or the
other Loan Documents shall immediately become due and payable. Borrower hereby
expressly waives any presentment for payment, demand for payment, notice of
nonpayment or dishonor, protest and notice of protest of any kind.
6. Security Agreement.
(a) This Note shall constitute a security agreement as that term is used in
the UCC and Borrower hereby grants to Lender, to secure Borrower's obligations
under this Note and the other Loan Documents, and under the Loan Agreement and
the Revolving Loan Documents, a security interest in the following
(collectively, the "Collateral"):
(i) all of Borrower's now-owned and hereafter acquired or arising
accounts, contract rights, general intangibles, chattel paper,
documents and instruments, as such terms are defined in the UCC,
including, without limitation, all obligations for the payment of
money arising out of Borrower's sale of goods or rendition of services
("Accounts"), accounts receivable and rights to payment of every kind
and description, and all of Borrower's contract rights, chattel paper,
documents and instruments with respect thereto, and all of Borrower's
rights, remedies, security and liens, in, to and in respect of the
Accounts, including, without limitation, rights of stoppage in
transit, replevin, repossession and reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party, guaranties or
other contracts of suretyship with respect to the Accounts, deposits
or other security for the obligation of any Account Debtor, and credit
and other insurance ("Account Debtor" means any person obligated on
any Account of Borrower, including without limitation, any Insurer and
any Medicaid/Medicare payor);
(ii) all moneys, securities and other property and the proceeds
thereof, now or hereafter held or received by, in transit to, in
possession of, or under the control of Lender or a bailee or Affiliate
of Lender, from or for Borrower, whether for safekeeping, pledge,
custody, transmission, collection or otherwise, and all of Borrower's
deposits (general or special), balances, sums and credits with Lender
at any time existing ("Affiliate" means, with respect to a specified
person, any person directly or indirectly controlling, controlled by,
or under common control with the specified person, including without
limitation its stockholders and any affiliates. A person shall be
deemed to control a corporation if the person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and business of the corporation whether through the
ownership of voting securities, by contract, or otherwise);
(iii) all of Borrower's right, title and interest in, to and in
respect of all goods relating to, or which by sale have resulted in,
Accounts, including, without limitation, all goods described in
invoices or other documents or instruments with respect to, or
otherwise representing or evidencing, any Account, and all returned,
reclaimed or repossessed goods;
(iv) all of Borrower's now or hereafter acquired deposit accounts into
which Accounts are deposited, including the Lockbox Account ("Lockbox
Account" means an account maintained by Borrower at Bank One Arizona,
N.A. or another bank acceptable to Lender (or a successor financial
institution), into which all collections of Accounts are paid
directly);
(v) all of Borrower's now owned and hereafter acquired or arising
general intangibles and other property of every kind and description
with respect to, evidencing or relating to its Accounts, accounts
receivable and other rights to payment, including, but not limited to,
all existing and future customer lists, choses in action, claims,
books, records, ledger cards, contracts, licenses, formulae, tax and
other types of refunds, returned and unearned insurance premiums,
rights and claims under insurance policies, and computer programs,
information, software, records, and data, as the same relates to the
Accounts;
(vi) all of Borrower's other general intangibles (including, without
limitation, any proceeds from insurance policies after payment of
prior interests), patents, unpatented inventions, trade secrets,
copyrights, contract rights, goodwill, literary rights, rights to
performance, rights under licenses, choses-in-action, claims,
information contained in computer media (such as data bases, source
and object codes, and information therein), things in action,
trademarks and trademarks applied for (together with the goodwill
associated therewith) and derivatives thereof, trade names, including
the right to make, use, and vend goods utilizing any of the foregoing,
and permits, licenses, certifications, authorizations and approvals,
and the rights of Borrower thereunder, issued by any governmental,
regulatory, or private authority, agency, or entity whether now owned
or hereafter acquired, together with all cash and non-cash proceeds
and products thereof;
(vii) all of Borrower's now owned or hereafter acquired inventory of
every description which is held by Borrower for sale or lease or is
furnished by Borrower under any contract of service or is held by
Borrower as raw materials, work in process or materials used or
consumed in a business, wherever located, and as the same may now and
hereafter from time to time be constituted, together with all cash and
non-cash proceeds and products thereof;
(viii) all of Borrower's now owned or hereafter acquired machinery,
equipment, computer equipment, tools, tooling, furniture, fixtures,
goods, supplies, materials, work in process, whether now owned or
hereafter acquired, together with all additions, parts, fittings,
accessories, special tools, attachments, and accessions now and
hereafter affixed thereto and/or used in connection therewith, all
replacements thereof and substitutions therefor, and all cash and
non-cash proceeds and products thereof;
(ix) the Real Property; and
(x) the proceeds (including, without limitation, insurance proceeds)
of all of the foregoing.
(b) Upon the occurrence of an Event of Default under this Note or the other
Loan Documents, or an Event of Default under any of the Revolving Loan
Documents, Lender, in addition to all other rights, options, and remedies
granted to Lender under this Note or at law or in equity, may take any of the
following steps:
(i) declare this Note, and all amounts owed to Lender hereunder, to be
immediately due and payable;
(ii) exercise all other rights granted to it under this Note and all
rights under the UCC in effect in the applicable jurisdiction(s) and
under any other applicable law; and
(iii) exercise all rights and remedies under all Loan Documents or
Revolving Loan Documents now or hereafter in effect, including but not
limited to:
(A) the right to take possession of, send notices regarding, and collect
directly the Collateral, with or without judicial process;
(B) the right to (by its own means or with judicial assistance) enter any
of Borrower's premises and take possession of the Collateral, or render it
unusable, or dispose of the Collateral on such premises in compliance with
subsection (c) below, without any liability for rent, storage, utilities, or
other sums, and Borrower shall not resist or interfere with such action; and
(c) the right to require Borrower at Borrower's expense to assemble all or
any part of the Collateral and make it available to Lender at any place
designated by Lender.
(c) Borrower agrees that a notice received by it at least five (5) days
before the time of any intended public sale, or the time after which any private
sale or other disposition of the Collateral is to be made, shall be deemed to be
reasonable notice of such sale or other disposition. If permitted by applicable
law, any perishable Collateral that threatens to decline rapidly in value or
that is sold on a recognized market may be sold immediately by Lender without
prior notice to Borrower. At any sale or disposition of Collateral, Lender may
(to the extent permitted by applicable law) purchase all or any part of the
Collateral, free from any right of redemption by Borrower, which right is hereby
waived and released. Borrower covenants and agrees not to interfere with or
impose any obstacle to Lender's exercise of its rights and remedies with respect
to the Collateral following an Event of Default.
(d) Lender shall have the right to proceed against all or any portion of
the Collateral to satisfy in any order (i) the liabilities and obligations of
Borrower to Lender under this Note and the other Loan Documents or (ii) upon the
occurrence of an Event of Default under the Loan Agreement or the Revolving Loan
Documents, the liabilities and obligations of Borrower under the Revolving Loan
Documents. All rights and remedies granted Lender under this Note or under any
of the other Loan Documents, or otherwise available at law or in equity, shall
be deemed concurrent and cumulative, and not alternative remedies, and Lender
may proceed with any number of remedies at the same time until the Principal
Sum, all interest, costs, expenses and other charges due under, and all other
existing and future liabilities and obligations of Borrower to Lender under,
this Note are satisfied in full. The exercise of any one right or remedy shall
not be deemed a waiver or release of any other right or remedy, and Lender, upon
the occurrence of an Event of Default, may proceed against Borrower, and/or the
Collateral, at any time, under any agreement, with any available remedy and in
any order.
7. Use of Funds. Borrower covenants and agrees that the loan of the
Principal Sum, or any portion of the Principal Sum, shall be used for working
capital or other commercial purposes of Borrower.
8. Representations. Each entity comprising Borrower hereby warrants and
represents to Lender that:
(a) Borrower is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Massachusetts, is in good standing as a
foreign corporation in the State of Michigan and in any other jurisdiction in
which the character of the properties owned or leased by it or the nature of its
business makes such qualification necessary, has the corporate power and
authority to own its assets and transact the business in which it is engaged,
and has obtained all certificates, licenses and qualifications required under
all laws, regulations, ordinances, or orders of public authorities necessary for
the ownership and operation of all of its properties and transaction of all of
its business.
(b) Borrower has full corporate power and authority to enter into, execute
and deliver this Note, and to incur and perform its obligations under this Note
and the other Loan Documents, all of which have been duly authorized by all
necessary corporate action. No consent or approval of shareholders of, or
lenders to, Borrower, and no consent, approval, filing or registration with any
governmental authority is required as a condition to the validity of this Note
or the other Loan Documents or the performance by Borrower of its obligations
under this Note or the other Loan Documents.
(c) This Note, when issued and delivered for value received, and all other
Loan Documents constitute the valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms.
(d) The execution and delivery by Borrower of this Note and the other Loan
Documents do not, and the performance of Borrower's obligations under this Note
and the other Loan Documents will not, violate, conflict with, constitute a
default under, or result in the creation of a lien or encumbrance (other than a
lien, security interest, charge or other encumbrance in favor of Lender) upon
the property of Borrower under (i) any provision of Borrower's certificate of
incorporation or bylaws, (ii) any provision of any law, rule or regulation
applicable to Borrower, or (iii) any of the following (A) any indenture or other
agreement or instrument to which Borrower is a party or by which Borrower or its
property is bound, or (B) any judgment, order or decree of any court,
arbitration tribunal, or governmental entity applicable to Borrower or
Borrower's properties or assets.
(e) There are no actions, suits, proceedings or investigations pending,
including, without limitation, any condemnation proceeding, or, to the knowledge
of Borrower, threatened, against or adversely affecting Borrower's properties or
assets or the validity or enforceability of this Note or the other Loan
Documents or the ability of Borrower to perform any obligations under this Note
or the other Loan Documents. Borrower is not in default with respect to any
order, writ, injunction, decree or demand of any court, arbitration tribunal or
governmental authority having jurisdiction over Borrower.
(f) The audited financial statements of Borrower previously delivered to
Lender are true, correct and complete and fairly present the financial condition
of Borrower and the results of Borrower's operations and changes in financial
condition as of the dates and for the periods referred to, and have been
prepared in accordance with generally accepted accounting principles. There are
no material unrealized or anticipated liabilities, direct or indirect, fixed or
contingent, of Borrower as of the dates of such financial statements that are
not reflected in the financial statements or the notes thereto. There has been
no material adverse change in the business, properties, condition (financial or
otherwise) of Borrower since the date of Borrower's last financial statements
delivered to Lender. Borrower's fiscal year ends on June 30.
(g) Borrower is not in default under or with respect to any obligation in
any respect that could be adverse to its business, operations, property or
financial condition, or that could adversely affect the ability of Borrower to
perform its obligations under this Note or the other Loan Documents. No Event of
Default or event that, with the giving of notice or lapse of time, or both,
could become an Event of Default, has occurred and is continuing:
(h) Borrower has good and marketable title to its properties and assets,
including the Collateral and the properties and assets reflected in the
financial statements in described in paragraph (f) above, subject to no lien,
mortgage, pledge, encumbrance or charge of any kind. Borrower has not agreed or
consented to cause any of its properties or assets, whether owned now or
hereafter acquired, to be subject in the future (upon the happening of a
contingency or otherwise) to any lien, mortgage, pledge, encumbrance or charge
of any kind.
(i) Borrower has filed, or has obtained extensions for the filing of, all
federal, state and other tax returns which are required to be filed, and has
paid all taxes shown as due on those returns and all assessments, fees and other
amounts due as of the date hereof. All tax liabilities of Borrower were, as of
October 31, 2001 and are now, adequately provided for on Borrower's books. No
tax liability has been asserted by the Internal Revenue Service or other taxing
authority against Borrower for taxes in excess of those already paid.
(j) The use of the proceeds of the Loan and Borrower's issuance of this
Note will not, directly or indirectly, violate or result in a violation of the
Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, or
any regulations issued pursuant thereto, including without limitation
Regulations U, T, or X of the Board of Governors of the Federal Reserve System.
Borrower is not engaged in the business of extending credit for the purpose of
the purchasing or carrying "margin stock" within the meaning of those
regulations. No part of the proceeds of the Loan will be used to purchase or
carry any margin stock or to extend credit to others for such purpose.
(k) Borrower is not an investment company within the meaning of the
Investment Company Act of 1940, as amended, nor is it, directly or indirectly,
controlled by or acting on behalf of any Person which is an investment company
within the meaning of that Act.
(l) Borrower is not in violation of any statute, rule or regulation of any
governmental authority (including, without limitation, any statute, rule or
regulation relating to employment practices or to environmental, occupational
and health standards and controls). Borrower has obtained all licenses, permits,
franchises, and other governmental authorizations necessary for the ownership of
its properties and the conduct of its business. Borrower is current with all
reports and documents required to be filed with any state or federal securities
commission or similar governmental authority and is in full compliance with all
applicable rules and regulations of such commissions.
(m) No use, exposure, release, generation, manufacture, storage,
treatment, transportation or disposal of hazardous material has occurred or is
occurring on or from the Real Property or any other real property on which the
Collateral is located (together with the Real Property, the "Premises") or which
is owned, leased or otherwise occupied by Borrower, or has occurred off the
Premises as a result of any action of Borrower. All hazardous material used,
treated, stored, transported to or from, generated or handled on the Premises,
or off the Premises by Borrower, has been disposed of on or off the Premises by
or on behalf of Borrower in a lawful manner. There are no underground storage
tanks present on or under the Premises owned or leased by Borrower. No other
environmental, public health or safety hazards exist with respect to the
Premises.
(n) The only places of business of Borrower, and the places where it
keeps and intends to keep the Collateral and records concerning the Collateral,
are at the addresses set forth in Schedule 8(n), which also lists the owner of
record of each such property.
(o) Borrower exclusively owns or possesses all the patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, franchises, licenses, and rights with respect to the foregoing
necessary for the current and planned future conduct of its business, without
any conflict with the rights of others. A list of all such intellectual property
(indicating the nature of Borrower's interest), as well as all outstanding
franchises and licenses given by or held by Borrower, is attached as Schedule
8(o). Borrower is not in default of any obligation or undertaking with respect
to such intellectual property or rights.
(p) The identity of the stockholders of record of all classes of the
outstanding stock of Borrower, together with the respective ownership
percentages held by such stockholders, are as set forth on Schedule 8(p).
(q) Neither this Note nor any other Loan Document nor any other agreement,
document, certificate, or statement furnished to Lender by or on behalf of
Borrower in connection with the transactions contemplated hereby contains any
untrue statement of material fact or omits to state a material fact necessary to
make the statements contained in this Note or in the other Loan Documents or
such other documents not misleading. There is no fact known to Borrower that
adversely affects or in the future may adversely affect the business,
operations, affairs or financial condition of Borrower, or any of its properties
or assets.
(r) Borrower does not own or hold any equity or long-term debt investments
in, have any outstanding advances to, have any outstanding guarantees for the
obligations of, or have any outstanding borrowings from, any Person. Borrower is
not a party to any contract or agreement, or subject to any corporate
restriction, which adversely affects its business.
(s) Within five (5) years before the date of this Note, neither the
business, property or assets, or operations of Borrower has been adversely
affected in any way by any casualty, strike, lockout, combination of workers, or
order of the United States of America or other governmental authority, directed
against Borrower. There are no pending or threatened labor disputes, strikes,
lockouts, or similar occurrences or grievances against Borrower or its business.
(t) Within five (5) years before the date of this Note, Borrower has not
conducted business under or used any other name (whether corporate, partnership
or assumed) except as listed on Schedule 8(t). Borrower is the sole owner of all
names listed on that Schedule and any and all business done and invoices issued
in such names are Borrower's sales, business, and invoices. Each trade name of
Borrower represents a division or trading style of Borrower and not a separate
Person or independent Affiliate.
(u) Borrower is not engaged in any joint venture or partnership with any
other Person.
10. Affirmative and Negative Covenants. Borrower covenants and agrees that
until this Note shall be repaid in full, it shall be bound by, and shall comply
fully with, all of the affirmative and negative covenants set forth in Article
VI and Article VII of the Loan Agreement, all of which covenants are hereby
incorporated by reference into this Note.
11. Events of Default. The following events are each an "Event of Default"
under this Note:
(a) Borrower fails to make any payment of principal when due or fails to
make any payment of interest, fees or other amounts owed to or for the account
of Lender under this Note and such payment remains unpaid for five (5) Business
Days after the date such payment is due; or
(b) Borrower has made any representations or warranties in this Note, the
other Loan Documents, any financial statement delivered to Lender or otherwise
in connection with this Note or the related transaction that contains any untrue
statement of a material fact or omits a material fact necessary to make the
statements contained in this Note or in such document or financial statement not
misleading; or
(c) Borrower shall fail to perform or observe, or cause to be performed or
observed, any other term, obligation, covenant, condition or agreement contained
in this Note or the other Loan Documents and any such failure shall have
continued for a period of thirty (30) days after written notice of such failure;
or
(d) Borrower shall (i) apply for, or consent in writing to, the appointment
of a receiver, trustee or liquidator; or (ii) file a voluntary petition seeking
relief under the Bankruptcy Code, or be unable, or admit in writing Borrower's
inability, to pay their debts as they become due; or (iii) make a general
assignment for the benefit of creditors; or (iv) file a petition or an answer
seeking reorganization or an arrangement or a readjustment of debt with
creditors, apply for, take advantage, permit or suffer to exist the commencement
of any insolvency, bankruptcy, suspension of payments, reorganization, debt
arrangement, liquidation, dissolution or similar event, under the law of the
United States or of any state in which Borrower is a resident; or (v) file an
answer admitting the material allegations of a petition filed against Borrower
in any such bankruptcy, reorganization or insolvency case or proceeding or (vi)
take any action authorizing, or in furtherance of, any of the foregoing; or
(e) Either (i) an involuntary case is commenced against Borrower and the
petition is not contested within ten (10) days or is not dismissed within sixty
(60) days after the commencement of the case or (ii) an order, judgment or
decree shall be entered by any court of competent jurisdiction on the
application of a creditor adjudicating Borrower bankrupt or insolvent, or
appointing a receiver, trustee or liquidator of Borrower or of all or
substantially all of the assets of Borrower and the order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days or shall
not be discharged within thirty (30) days after the expiration of any stay of
such order, judgment, or decree; or
(f) Any obligation of Borrower for the payment of borrowed money is not
paid when due or within any applicable grace period, or such obligation becomes
or is declared to be due and payable before the expressed maturity of the
obligation, or there shall have occurred an event that, with the giving of
notice or lapse of time, or both, would cause any such obligation to become, or
allow any such obligation to be declared to be, due and payable;
(g) One or more final judgments against Borrower or attachments against its
property not fully and unconditionally covered by insurance shall be rendered by
a court of record and shall remain unpaid, unstayed on appeal, undischarged,
unbonded and undismissed for a period of twenty (20) days;
(h) Borrower ceases any material portion of its business operations as
currently conducted;
(i) There shall occur a material adverse change in the financial condition
or business prospects of Borrower, or Lender in good faith shall deem itself
insecure as a result of acts or events bearing upon the financial condition of
Borrower or the repayment of this Note, which default shall have continued
unremedied for a period of ten (10) days after written notice from Lender; or
(j) An Event of Default occurs under the Loan Agreement or other Revolving
Loan Documents.
12. Lender's Rights.
(a) Upon the occurrence of an Event of Default, Lender may, in addition to
its rights and remedies set forth in Sections 5 and 6 above, proceed, to the
extent permitted by law, to protect and enforce its rights either by suit in
equity or by action at law, or both, whether for the specific performance of any
covenant, condition or agreement contained in this Note or in aid of the
exercise of any power granted in this Note, or proceed to enforce the payment of
this Note or to enforce any other legal or equitable right of Lender. No right
or remedy in this Note, the other Loan Documents or in other agreement or
instrument to the benefit of Lender is intended to be exclusive of any other
right or remedy, and each and every such right or remedy shall be cumulative and
shall be in addition to every other right and remedy given under this Note or
now or hereafter existing at law or in equity or by statute or otherwise.
Without limiting the generality of the foregoing, if the outstanding Principal
Sum, or any of the other obligations of Borrower to Lender shall not be paid
when due, Lender shall not be required to resort to any particular security,
right or remedy or to proceed in any particular order of priority, and Lender
shall have the right at any time and from time to time, in any commercially
reasonable manner and in any order, to enforce its security interests with
respect to the Collateral, liens, rights and remedies, or any of them, as it
deems appropriate in the circumstances, and apply the proceeds of any Collateral
to such obligations of Borrower as it determines in its sole discretion.
(b) If an Event of Default has occurred as provided above and Borrower has
not paid the all amounts outstanding, including all principal, together with
interest accrued on such amounts, upon demand by Lender, then Borrower shall pay
to Lender interest on such outstanding amounts at a rate per annum equal to the
Default Interest Rate from the date such outstanding amounts are due until the
date this Note is paid in full. Borrower promises to pay all costs of
collection, including reasonable attorneys' fees, if this Note is referred to an
attorney for collection after the Event of Default.
13. No Defenses. Borrower's obligations under this Note shall not be
subject to any set-off, counterclaim or defense to payment that Borrower now has
or may have in the future.
14. No Waiver. No failure or delay on the part of Lender in exercising any
right, power or privilege under this Note or the other Loan Documents, nor any
course of dealing between Borrower and Lender, shall operate as a waiver of the
right, power or privilege, nor shall a single or partial exercise of any right,
power or privilege preclude any other or further exercise of, or the exercise of
any other, right, power or privilege.
15. Writing Required. No modification or waiver of any provisions of this
Note or any other Loan Documents, and no consent to any departure by Borrower,
shall in any event be effective, without respect to any course of dealing
between the parties, unless the modification or waiver shall be in a writing
executed by Lender and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on Borrower in any case shall thereby entitle Borrower to any other or
further notice or demand in the same, similar or other circumstances.
16. Usury Limitation. Notwithstanding anything contained to the contrary in
this Note, Lender shall never be entitled to receive, collect or apply as
interest any amount in excess of the maximum rate of interest permitted to be
charged by applicable law. If Lender receives, collects or applies as interest
any such excess, the amount that would be excessive interest shall be applied to
the reduction of the Principal Sum; and if the Principal Sum is paid in full,
any remaining excess shall be paid to Borrower. In determining whether or not
the interest paid or payable in any specific case exceeds the highest lawful
rate, Lender and Borrower shall to the maximum extent permitted under applicable
law: (i) characterize any non-principal payment as an expense, fee or premium
rather than as interest; and (ii) "spread" the total amount of interest
throughout the entire term of the obligation so that the interest rate is deemed
to have been uniform throughout the entire term.
17. Notices. Any notice or demand given under this Note shall be given by
delivering it, sending by fax (with a confirming copy by regular mail), or by
mailing it by certified or registered mail, postage prepaid, return receipt
requested, or sent by prepaid overnight courier service addressed to Borrower at
200 Lake Street, Suite 102, Peabody, Massachusetts 01960 Attention: Paula Wurts,
Chief Financial Officer, telephone (978) 536-2777, fax (978) 536-2677. Any
notice to be given to Lender under this Note shall be given by personally
delivering it, sending it by fax (with a confirming copy by regular mail),
mailing it by certified mail, return receipt requested, or sending it by prepaid
overnight courier service, addressed to Lender at: 2 Wisconsin Circle, Fourth
Floor, Chevy Chase, Maryland 20815 Attention: Pascale Bissainthe, SVP & Chief
Counsel, telephone (301) 961-1640, fax (301) 664-9866, or at such other place as
Lender may specify in writing to Borrower. Each party may designate a change of
address by notice to the other given in accordance with this Section 16 at least
fifteen (15) days before such change of address is to become effective. A notice
given under this Note shall be deemed received upon receipt if it is personally
delivered or sent by telecopier or overnight courier service and five (5) days
after it is deposited in the U.S. mail if it is sent by regular mail.
18. Section Headings. The headings of the several paragraphs of this Note
are inserted solely for convenience of reference and are not a part of and are
not intended to govern, limit or aid in the construction of any term or
provision.
19. Severability. If any term, provision, covenant or condition of this
Note or the application of such term, provision, covenant or condition to any
party or circumstance shall be found by a court of competent jurisdiction to be,
to any extent, invalid or unenforceable, the remainder of this Note and the
application of such term, provision, covenant, or condition to parties or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, provision, covenant or condition
shall be valid and enforced to the fullest extent permitted by law. Upon
determination that any such term, provision, covenant or condition is invalid,
illegal or unenforceable, Lender may, but is not obligated to, advance funds to
Borrower under this Note until Borrower and Lender amend this Note so as to
effect the original intent of the parties as closely as possible in a valid and
enforceable manner.
20. Survival of Terms. All covenants, agreements, representations and
warranties made in this Note or in any financial statements delivered pursuant
to this Note shall survive Borrower's execution and delivery of this Note to
Lender and shall continue in full force and effect so long as this Note or any
other obligation under this Note shall be outstanding and unpaid or any other
obligation of Borrower to Lender or its affiliates under this Note shall remain
unperformed.
21. Indemnity. Borrower hereby agrees to indemnify and hold harmless
Lender, its partners, officers, agents and employees (collectively,
"Indemnitee") from and against any liability, loss, cost, expense, claim,
damage, suit, action or proceeding ever suffered or incurred by Lender
(including reasonable attorneys' fees and expenses) arising from Borrower's
failure to observe, perform or discharge any of its covenants, obligations,
agreements or duties under this Note or from the breach of any of the
representations or warranties contained in this Note. In addition, Borrower
shall defend Indemnitee against and save it harmless from all claims of any
Person with respect to the Collateral. Notwithstanding any contrary provision in
this Agreement, the obligations of Borrower under this Section 21 shall survive
the payment in full of the all obligations under this Note and the termination
of this Note.
22. Governing Law; Consent to Jurisdiction. THIS NOTE IS TO BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT
RESPECT TO ANY OTHERWISE APPLICABLE CONFLICTS-OF-LAWS PRINCIPLES, BOTH AS TO
INTERPRETATION AND PERFORMANCE, AND THE PARTIES EXPRESSLY CONSENT AND AGREE TO
THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF MARYLAND AND THE
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND AND TO THE LAYING OF
VENUE IN MARYLAND, WAIVING ALL CLAIMS OR DEFENSES BASED ON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE, INCONVENIENT FORUM OR THE LIKE. BORROWER HEREBY
CONSENTS TO SERVICE OF PROCESS BY MAILING A COPY OF THE SUMMONS TO BORROWER, BY
CERTIFIED OR REGISTERED MAIL, POSTAGE PREPAID, TO BORROWER'S ADDRESS SET FORTH
IN SECTION 17 ABOVE. BORROWER FURTHER WAIVES ANY CLAIM FOR CONSEQUENTIAL DAMAGES
IN RESPECT OF ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY LENDER IN GOOD FAITH.
23. Waiver of Trial by Jury. EACH OF BORROWER AND LENDER HEREBY (A)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUES TRIABLE OF RIGHT
BY A JURY, AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW HEREAFTER EXIST. THIS WAIVER OF RIGHT TO TRIAL BY JURY
IS SEPARATELY GIVEN, KNOWINGLY AND VOLUNTARILY, BY EACH OF BORROWER AND LENDER,
AND THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. EACH PARTY
IS HEREBY AUTHORIZED AND REQUESTED TO SUBMIT THIS NOTE TO ANY COURT HAVING
JURISDICTION OVER THE SUBJECT MATTER AND THE PARTIES TO THIS NOTE, SO AS TO
SERVE AS CONCLUSIVE EVIDENCE OF THE FOREGOING WAIVER OF THE RIGHT TO JURY TRIAL.
FURTHER, EACH OF BORROWER AND LENDER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR
AGENT OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WILL NOT SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION.
24. Confession of Judgment. BORROWER IRREVOCABLY AUTHORIZES AND EMPOWERS
ANY ATTORNEY OF RECORD, OR THE PROTHONOTARY, CLERK OR SIMILAR OFFICER OF ANY
COURT IN ANY COUNTY OF THE STATE OF MARYLAND OR OF BALTIMORE CITY, MARYLAND, OR
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND, AS ATTORNEY
FOR BORROWER, AS WELL AS FOR ANY PERSONS CLAIMING UNDER, BY OR THROUGH BORROWER,
TO APPEAR FOR BORROWER IN ANY SUCH COURT IN ANY SUCH ACTION BROUGHT AGAINST
BORROWER AT THE SUIT OF LENDER TO CONFESS JUDGMENT AGAINST BORROWER IN FAVOR OF
LENDER IN THE FULL AMOUNT DUE ON THIS NOTE (INCLUDING PRINCIPAL, ACCRUED
INTEREST AND ANY AND ALL CHARGES, FEES AND COSTS) PLUS ATTORNEYS FEES FOR
FIFTEEN PERCENT (15%) OF THE AMOUNT DUE, PLUS COURT COSTS, ALL WITHOUT PRIOR
NOTICE OR OPPORTUNITY OF BORROWER FOR PRIOR HEARING. BORROWER WAIVES THE BENEFIT
OF ANY AND EVERY STATUTE, ORDINANCE, OR RULE OF COURT WHICH MAY BE LAWFULLY
WAIVED CONFERRING UPON BORROWER ANY RIGHT OR PRIVILEGE OF EXEMPTION, HOMESTEAD
RIGHTS, STAY OF EXECUTION, OR SUPPLEMENTARY PROCEEDINGS, OR OTHER RELIEF FROM
THE ENFORCEMENT OR IMMEDIATE ENFORCEMENT OF A JUDGMENT OR RELATED PROCEEDINGS ON
A JUDGMENT. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST
BORROWER SHALL NOT BE EXHAUSTED BY ONE OR MORE EXERCISES THEREOF, OR BY ANY
IMPERFECT EXERCISE THEREOF, AND SHALL NOT BE EXTINGUISHED BY ANY JUDGMENT
ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY BE EXERCISED ON ONE OR
MORE OCCASIONS FROM TIME TO TIME, IN THE SAME OR DIFFERENT JURISDICTIONS, AS
OFTEN AS LENDER SHALL DEEM NECESSARY, CONVENIENT AND PROPER.
25. Reaffirmation of Guaranty. Each Guarantor, by its signature below as
such, for valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, hereby declares to and agrees with Lender that its guaranty
of Borrower's obligations under one or more of the Original Term Loan Documents
(the "Guaranty") is and shall continue in full force and effect for the benefit
of Lender with respect to the obligations of Borrower under this Note on the
terms and subject to the limitations set forth in the documents executed by each
such Guarantor in respect of such Guaranty, that there are no offsets, claims,
counterclaims, crossclaims or defenses of the Guarantor with respect to the
Guaranty nor, to the Guarantor's knowledge, with respect to the obligations of
Borrower under this Note, that the Guaranty is not released, diminished or
impaired in any way by this Note or the transactions contemplated hereby, and
that the Guaranty is hereby ratified and confirmed in all respects. Guaranty
hereby acknowledges that without the foregoing consent and reaffirmation, Lender
would not consent to the terms and provisions of this Note.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, intending to be legally bound, and intending that this
Consolidating Amended and Restated Secured Term Note constitutes an instrument
executed under seal, Borrower has caused this Consolidating Amended and Restated
Secured Term Note to be executed under seal as of the date first written above.
BORROWER:
PHC OF MICHIGAN, INC., a Massachusetts
corporation
By: /s/ Bruce A. Shear (SEAL)
Name: Bruce A. Shear
Title: President
GUARANTORS:
PHC, INC., a Massachusetts corporation
By: /s/ Bruce A. Shear (SEAL)
Name: Bruce A. Shear
Title: CEO
/s/ Bruce A. Shear (SEAL)
BRUCE A. SHEAR
Limited to $150,000 per previous guarantee
Exhibit A
Principal Amortization
Payment Date Amount of Principal Repayment
December 31, 2001 $45,000
January 31, 2002 $45,000
February 28, 2002 $45,000
March 31, 2002 $45,000
April 30, 2002 $45,000
May 31, 2002 $45,000
June 30, 2002 $45,000
July 31, 2002 $45,000
August 31, 2002 $45,000
September 30, 2002 $45,000
October 31, 2002 $45,000
November 30, 2002 $45,000
December 31, 2002 $50,000
January 31, 2003 $50,000
February 28, 2003 $50,000
March 31, 2003 $50,000
April 30, 2003 $50,000
May 31, 2003 $50,000
June 30, 2003 $50,000
July 31, 2003 $50,000
August 31, 2003 $50,000
September 30, 2003 $50,000
October 31, 2003 $50,000
November 30, 2003 $50,000
December 31, 2003 $55,000
January 31, 2004 $55,000
February 28, 2004 $55,000
March 31, 2004 $55,000
April 30, 2004 $55,000
May 31, 2004 $55,000
June 30, 2004 $55,000
July 31, 2004 $55,000
August 31, 2004 $55,000
September 30, 2004 $55,000
October 31, 2004 55,000
November 30, 2004 All then outstanding
Principal Sum, and accrued
and unpaid interest, fees
and charges