Exhibit 10.39
TERM LOAN NOTE
U.S. $1,400,000.00 Dated: October 19, 2004
FOR VALUE RECEIVED, the undersigned, PHC, Inc., a Massachusetts
corporation, PHC of Michigan, Inc., a Massachusetts corporation, PHC of Nevada,
Inc., a Massachusetts corporation, PHC of Utah, Inc., a Massachusetts
corporation, PHC of Virginia, Inc., a Massachusetts corporation, NORTH POINT -
PIONEER, INC., a Massachusetts corporation, WELLPLACE, INC., a Massachusetts
corporation and DETROIT BEHAVIORAL INSTITUTE, INC., a Massachusetts corporation
(individually, collectively and jointly and severally, the "Borrower"), hereby
promises to pay to CapitalSource Finance LLC (the "Lender") the unpaid principal
amount, at any time outstanding, which shall not exceed ONE MILLION FOUR HUNDRED
THOUSAND AND NO/100 ($1,400,000.00) (the "Term Loan"), with interest thereon and
all other obligations due and payable in respect of Term Loan under the
Revolving Credit, Term Loan and Security Agreement dated as of October 19, 2004,
among the Borrower, each Guarantor a party thereto and Lender (as it may be
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"), on the Term Loan Maturity Date or otherwise at the times and in the
manner set forth in the Loan Agreement. Capitalized terms used but not defined
herein shall have the meanings given them in the Loan Agreement.
1. Interest Payments. (a) Borrower promises to pay interest on the
outstanding principal amount of the Term Loan from the date of funding of the
Term Loan until such principal amount is irrevocably paid in full in cash
pursuant to and as required by the terms of the Loan Agreement.
(b) Advances under the Revolving Facility shall be made automatically for
the payment of interest on the Term Loan and other obligations due and payable
in respect of Term Loan on the date when due to the extent available and as
provided for in the Loan Agreement. Any payments of principal or interest or
other amounts on or payments under this Term Loan Note not paid automatically
under the Revolving Facility as provided in the Loan Agreement shall be paid to
Lender only by wire transfer on the date when due, without any deduction
whatsoever, including any deduction for setoff or counterclaim, in U.S. Dollars
in immediately available funds as required in the Loan Agreement.
Notwithstanding and without limiting or being limited by any other provision of
this Term Loan Note, any payments or prepayments received under this Term Loan
Note shall be credited and applied in accordance with the provisions of the Loan
Agreement.
2. Principal Payment and Maturity.
Payment of principal outstanding under Term Loan shall be payable monthly
on the first day of each month commencing November 1, 2004 in thirty-six (36)
consecutive monthly installments, the first twelve (12) of such installments to
be in the amount of $25,000, the next twelve (12) of such installments to be in
the amount of $37,500, and the next eleven (11) installments to be in the amount
of $50,000, with the thirty-sixth (36th) and final installment in the then
unpaid principal amount of Term Loan, together with all other Obligations due
hereunder in respect of Term Loan, being due and payable in full, if not earlier
paid or demanded in accordance with this Agreement, on September 30, 2007 (the
"Term Loan Maturity Date").
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3. Default Rate.
Notwithstanding any other provision of this Term Loan Note, the Default
Rate set forth in the Loan Agreement shall apply to this Term Loan Note as and
when provided therein.
4. Loan Agreement and Security Documents.
(a) This Term Loan Note is referred to in, made pursuant to, and entitled
to the benefits of, the Loan Agreement. The Loan Agreement, among other things,
(i) provides for the making of the Term Loan by Lender to Borrower in the Dollar
amount first mentioned above, (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events upon the terms and
conditions therein specified, and (iii) contains provisions defining an Event of
Default and the rights and remedies of Lender upon the occurrence of an Event of
Default.
(b) This Term Loan Note is a secured note, entitled to the benefits of and
security interests granted in, among other things, the Loan Agreement and the
other Security Documents.
5. Prepayments. This Term Loan Note may be prepaid in whole or in part upon
notice to Lender and shall be prepaid in whole, in each case as provided or
required in the Loan Agreement. No payment or prepayment of any amount shall
entitle any Person to be subrogated to the rights of Lender hereunder or under
the Loan Agreement unless and until the Obligations have been performed in full
and paid irrevocably in full in cash and the Loan Agreement has been terminated.
6. Payments Due on a Day other than a Business Day. If any payment to be
made on or under this Term Loan Note is stated to be due or becomes due and
payable on a day other than a Business Day, the due date thereof shall be
extended to, and such payment shall be made on, the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of payment of any interest (at the interest rate then in effect
during such extension) and/or fees, as the case may be.
7. Waivers. Borrower hereby waives demand, presentment, protest, notice of
dishonor or non-payment, as well as all defenses with respect to this Term Loan
Note, the Loan Agreement and/or any Obligation, notice of acceptance hereof, and
all other demands and notices of any description, except such as are expressly
provided for herein or in the Loan Agreement. The pleading of any statute of
limitations as a defense to any demand against Borrower hereunder is expressly
waived by Borrower. No course of action or dealing, renewal, release or
extension of this Term Loan Note or any Loan Document or any rights hereunder or
thereunder, release of Borrower or any Guarantor, or delay, failure or omission
on Lender's part in enforcing this Term Loan Note or any other Loan Document or
in exercising or enforcing any right, remedy, option or power hereunder or under
any other Loan Document shall affect the liability of Borrower or any Guarantor
or operate as a waiver of such or any other right, remedy, power or option or of
any default, nor shall any single or partial exercise of any right, remedy,
option or power hereunder or under any other Loan Document affect the liability
of Borrower or any Guarantor or preclude any other or further exercise of such
or any other right, remedy, power or option. No waiver of any one or more
defaults in the performance of any of the provisions of this Term Loan Note
shall operate or be construed as a waiver of any future default or defaults,
whether of a like or different nature.
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8. Exercise of Rights.
(a) Lender shall have the right in its sole discretion to determine which
rights, powers, Liens, security interests or remedies Lender may at any time
pursue, relinquish, subordinate or modify or to take any other action with
respect thereto, and such determination will not in any way modify or affect any
of Lender's rights, powers, Liens, security interests or remedies hereunder or
under any of the Loan Documents, under applicable law or at equity.
(b) The enumeration of the foregoing rights and remedies is not intended to
be exhaustive. The rights and remedies of Lender described herein are cumulative
and are not alternative to or exclusive of any other rights or remedies which
Lender otherwise may have by contract or at law or in equity, and the partial or
complete exercise of any right or remedy shall not preclude any other further
exercise of such or any other right or remedy.
9. Lawful Limits. This Term Loan Note is expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration or otherwise,
shall the interest and other charges paid or agreed to be paid to Lender for the
use, forbearance or detention of money hereunder exceed the maximum rate
permissible under applicable law which a court of competent jurisdiction shall,
in a final determination, deem applicable hereto. If, due to any circumstance
whatsoever, fulfillment of any provision hereof, at the time performance of such
provision shall be due, shall exceed any such limit, then, the obligation to be
so fulfilled shall be reduced to such lawful limit, and, if Lender shall have
received interest or any other charges of any kind which might be deemed to be
interest under applicable law in excess of the maximum lawful rate, then such
excess shall be applied first to any unpaid fees and charges hereunder, then to
unpaid principal balance owed by Borrower hereunder, and if the then remaining
excess interest is greater than the previously unpaid principal balance
hereunder, Lender shall promptly refund such excess amount to Borrower and the
provisions hereof shall be deemed amended to provide for such permissible rate.
10. Governing Law. This Term Loan Note shall be governed by and construed
in accordance with the internal laws of the State of Maryland without giving
effect to its choice of laws provisions.
11. Conflicts. In the event of a conflict between the terms of this Note
and the Loan Agreement, the terms of the Loan Agreement shall govern.
[SIGNATURE PAGE NEXT FOLLOWS]
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IN WITNESS WHEREOF, Borrower has executed and delivered this Term Loan
Note as of the date first set forth above.
PHC, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
PHC OF MICHIGAN, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
PHC OF NEVADA, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
PHC OF UTAH, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
PHC OF VIRGINIA, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
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NORTH POINT - PIONEER, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
WELLPLACE, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
DETROIT BEHAVIORAL INSTITUTE, INC.
By: /s/ Bruce Shear
Name: Bruce Shear
Its: President
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