Exhibit 10.26
FIRST AMENDED CONSOLIDATING
AMENDED AND RESTATED SECURED TERM NOTE
$2,335,541.59 May 2, 2003
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 THREE HUNDRED THIRTY-FIVE
THOUSAND FIVE HUNDRED FORTY-ONE AND 59/100 DOLLARS ($2,335,541.59) (the
"Principal Sum") together with interest, costs of collection and other fees as
further set forth in this First Amended Consolidating Amended and Restated
Secured Term Note, to be paid in accordance with the terms set forth below. This
First Amended Consolidating Amended and Restated Secured Term Note (as it may be
amended, modified, restated or supplemented from time to time, this "Note")
amends and restates in its entirety that certain Consolidated Amended and
Restated Secured Term Note in the aggregate principal amount of Two Million Five
Hundred Seventy-Five Thousand Five Hundred Forty-Two and No/100 Dollars
($2,575,542.00) dated December 6, 2001 (the "December 2001 Note") previously
made by Borrower in favor of Lender.
1. Principal and Interest.
(a) Each of Lender and Borrower agrees that, as of the date
immediately prior to the date set forth above, the outstanding and unpaid
principal amount of the December 2001 Note was One Million Eight Hundred
Thirty-Five Thousand Five Hundred Forty-One and 59/100 Dollars
($1,835,541.59) (the "Outstanding Principal Amount"). Borrower has
requested that Lender agree to increase such outstanding principal amount
by, and to make an advance of new funds to Borrower hereunder in, an amount
equal to Five Hundred Thousand and No/100 Dollars ($500,000.00). Thus, as
of the Effective Date (as defined below), and after giving effect to the
Advance (as defined below), the outstanding Principal Sum hereunder shall
be Two Million Three Hundred Thirty-Five Thousand Five Hundred Forty-One
and 59/100 ($2,335,541.59).
(b) Beginning April 30, 2003, 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 opposite such date, 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 Outstanding Principal Amount
has previously been made available to Borrower by Lender. This Note, and
Lender's obligation to make an additional advance to Borrower hereunder in
a principal amount equal to Five Hundred Thousand and No/100 Dollars
($500,000.00) (the "Advance"), shall become effective only upon
satisfaction, in Lender's sole discretion, of all of the following
conditions (the date of satisfaction of all of such conditions, in Lender's
sole discretion, the "Effective Date"):
(i) Lender shall have received an original of this Note duly executed
by an authorized officer of Borrower;
(ii) Lender shall have received updated Schedules to this Note and the
Loan Agreement, which updated Schedules shall be satisfactory to
Lender;
(iii) Lender shall have received payment in full of the Fee (as
defined below);
(iv) Lender shall be satisfied that it has a perfected first priority
security interest in the Collateral, with only such exceptions
thereto as shall have been approved by it;
(v) Borrower shall have provided Lender with resolutions of the Board
of Directors, members or partners, as the case may be, of each
Borrower, authorizing the execution, delivery and performance of
this Note, the Amendment, the Fourth Amended and Restated
Revolving Credit Note and otherwise in such form as shall be
reasonably satisfactory to Lender;
(vi) all representations, warranties and covenants contained in 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 or under 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: Katherine R. Lofft, Senior
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
surety ship 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 March 31,
2003 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: Katherine R. Lofft, Senior
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 this Note (the "Guaranty") is and shall continue
in full force and effect for the benefit of Lender and that there are no
offsets, claims, counterclaims, crossclaims or defenses of the Guarantor with
respect to the Guaranty. The Guaranty, and Guarantor's obligations thereunder
for the benefit of Lender, are not released, diminished or impaired in any way
by this Note or the transactions contemplated hereby. Guarantor hereby ratifies
and confirms the Guaranty 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
First Amended Consolidating Amended and Restated Secured Term Note constitute an
instrument executed under seal, Borrower has caused this First Amended
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: President
By: /s/ Bruce A. Shear (SEAL)
______________________________________
BRUCE A. SHEAR This guarantee is subject to the
limitations of the Original guarantee dated May
26, 2000 in the amount of $150,000.
Exhibit A
Principal Amortization
Payment Date Amount of Principal Repayment
April 30, 2003 $55,000
May 31, 2003 $55,000
June 30, 2003 $55,000
July 31, 2003 $55,000
August 31, 2003 $55,000
September 30, 2003 $55,000
October 31, 2003 $55,000
November 30, 2003 $55,000
December 31, 2003 $60,000
January 31, 2004 $60,000
February 28, 2004 $60,000
March 31, 2004 $60,000
April 30, 2004 $60,000
May 31, 2004 $60,000
June 30, 2004 $60,000
July 31, 2004 $60,000
August 31, 2004 $60,000
September 30, 2004 $60,000
October 31, 2004 $60,000
November 30, 2004 All then outstanding
Principal Sum, and accrued
and unpaid interest, fees
and charges