Exhibit 10.40
REVOLVING NOTE
U.S. $3,500,000.00 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
promise to pay to CapitalSource Finance LLC (the "Lender") the unpaid principal
amount of all Advances made by Lender to Borrower under the Revolving Facility
in lawful money of the United States of America in immediately available funds,
with interest thereon, and all other Obligations under the Revolving Credit,
Term Loan and Security Agreement, dated as of the date hereof, among Borrower,
each Guarantor a party thereto and Lender (as it may be amended, supplemented or
otherwise modified from time to time, the "Loan Agreement"), all 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 and Payments.
(a) Borrower promises to pay interest on the outstanding principal amount
of the Revolving Facility from the date of any Advance under the Revolving
Facility until such principal amount is irrevocably paid in full in cash
pursuant to and as required by the terms of the Loan Agreement.
(b) Payments of interest and other Obligations shall be made, when due, by
the application of funds advanced under the Revolving Facility in accordance
with the provisions of the Loan Agreement. Any payments of principal or interest
or other amounts on or payments under this Revolving Note not paid automatically
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 any 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 Revolving Note, any payments or
prepayments received under this Revolving Note shall be credited and applied in
accordance with the provisions of the Loan Agreement.
2. Maturity.
Unless earlier due and payable or accelerated under the Loan Agreement,
this Revolving Note shall mature, and the outstanding principal balance
hereunder and other Obligations, together with all other outstanding amounts due
hereunder and under the Loan Agreement, shall become due and payable in full on
the last day of the Term.
3. Default Rate.
Notwithstanding any other provision of this Revolving Note the Default Rate
set forth in the Loan Agreement shall apply to this Revolving Note as and when
provided therein.
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4. Loan Agreement and Security Documents.
(a) This Revolving 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 Advances under the Revolving Facility by Lender
to Borrower in the aggregate maximum 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 Revolving 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 Revolving 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 and upon payment of all fees and other
Obligations set forth therein. 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 Revolving 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 Revolving
Note, the Loan Agreement and/or any Obligation, notice of acceptance hereof,
notice of loans or Advances made, credit extended, collateral received or
delivered, or any other action taken in reliance hereon, 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
Revolving 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 Revolving 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 Revolving 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 Revolving 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 Revolving 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. Acknowledgement of Joint and Several Liability. Each Borrower
acknowledges that it is jointly and severally liable for all of the Obligations
under the Loan Documents. Each Borrower expressly understands, agrees and
acknowledges that (i) Borrowers are all Affiliated entities by common ownership,
(ii) each Borrower desires to have the availability of one common credit
facility instead of separate credit facilities, (iii) each Borrower has
requested that Lender extend such a common credit facility on the terms herein
provided, (iv) Lender will be lending against, and relying on a lien upon, all
of Borrowers' assets that are pledged as Collateral hereunder, even though the
proceeds of any particular loan made hereunder may not be advanced directly to a
particular Borrower, (v) each Borrower will nonetheless benefit by the making of
all such loans by Lender and the availability of a single credit facility of a
size greater than each could independently warrant, and (vi) all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in the Loan Documents shall be applicable to and shall be
binding upon each Borrower.
12. 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.
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IN WITNESS WHEREOF, Borrower has executed and delivered this Revolving 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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