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Exhibit 10.4
NOTE
Date of Note: April 16, 1997
Amount of Note: $1,600,000
Borrower: Robert V. Nagelhout
Interest Rate: the prime commercial lending rate as announced from time to
time by The Chase Manhattan Bank at its principal office in New York
City (any change in said rate shall effect an adjustment of interest
payable hereunder as of the day of such change) to be computed on an
actual/360-day basis (i.e., interest for each day during which any
of the Principal Amount is outstanding shall be computed at the
Interest Rate divided by 360).
1. Borrower's Promise to Pay. In return for a loan (the "Loan") that
I have received, I promise to pay, in one lump sum payment on the maturity date
(defined below), U.S. $1,600,000 (this amount is called "principal"), plus
interest, to the order of the Lender. The "Lender" is THE CHASE MANHATTAN BANK.
I understand that the Lender may transfer this Note. The Lender or anyone who
takes this Note by transfer and who is entitled to receive payments under this
Note is called the "Note Holder".
2. Interest. Interest will be charged on principal until the full
amount of principal has been paid. I will pay interest at a yearly rate as
described above.
The interest rate required by this Section 2 is the rate I will pay
both before and after any default described in Section 6(b) of this Note.
3. Payments.
Time and Place of Payments. I will pay interest by making payments
every month.
I will make my monthly payments of interest only on the last day of
each month beginning on April 30,1997. I will make these payments every month
until I have paid all of the principal and interest and any other charges
described below that I may owe under this Note. My monthly payments will be
applied to interest before principal. I will pay all of the unpaid principal of
the Loan along with
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any accrued and unpaid interest related thereto on April 16, 1999 (the "maturity
date").
4. Borrowers Right to Prepay. I have the right to make payments of
principal at any time before they are due. A payment of principal only is known
as "prepayment". When I make a prepayment, I will tell the Note Holder in
writing that I am doing so.
I may make a full prepayment or partial prepayments without paying
any prepayment charge. The Note Holder will use all of my prepayments to reduce
the amount of principal that I owe under this Note. If I make a partial
prepayment, there will be no changes in the due date of my monthly payment
unless the Note Holder agrees in writing to those changes. Any amounts of the
Loan prepaid may not be reborrowed.
5. Loan Charges. If a law, which applies to this loan and which sets
maximum loan charges, is finally interpreted so that the interest or other loan
charges collected or to be collected in connection with this loan exceed the
permitted limits, then: (i) any such loan charge shall be reduced by the amount
necessary to reduce the charge to the permitted limit; and (ii) any sums already
collected from me which exceeded permitted limits will be refunded to me. The
Note Holder may choose to make this refund by reducing the principal I owe under
this Note or by making a direct payment to me. If a refund reduces principal,
the reduction will be treated as a partial prepayment.
6. Borrower's Failure to Pay as Required.
(a) Late Charge for Overdue Payments. Any amount of principal or
interest which is not paid when due, whether at stated maturity, by
acceleration, or otherwise, shall bear interest from the date when due until
said principal or interest amount is paid in full, payable on demand, at the
prime commercial lending rate specified above.
(b) Default. If I do not pay the full amount of each monthly payment
on the date it is due, I will be in default.
(c) Notice of Default. If I am in default, the Note Holder may send
me a written notice telling me that if I do not pay the overdue amount, the Note
Holder may require me to pay immediately the full amount of principal which has
not been paid and all the interest that I owe on that amount. That date must be
at least fifteen (15) days after the date on which the notice is delivered or
mailed to me.
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(d) No Waiver By Note Holder. Even if, at a time when I am in
default, the Note Holder does not require me to pay immediately in full as
described above, the Note Holder will still have the right to do so if I am in
default at a later time.
(e) Payment of Note Holder's Costs and Expenses. If the Note Holder
has required me to pay immediately in full as described above, the Note Holder
will have the right to be paid back by me for all of its costs and expenses in
enforcing this Note to the extent not prohibited by applicable law. Those
expenses include, for example, reasonable attorneys' fees.
7. Giving of Notices. Unless applicable law requires a different
method, any notice that must be given to me under this Note will be given by
delivering it or by mailing it by first class mail to me at my address noted
below or at a different address if I give the Note Holder a notice of my
different address.
Any notice that must be given to the Note Holder under this Note
will be given by mailing it by first class mail to the Note Holder at: The Chase
Manhattan Bank, 1411 Broadway, Fifth Floor, New York, New York 10018 Attention:
Randy Berini, or at a different address if I am given a notice of that different
address.
8. Waivers. I and any other person who has obligations under this
Note waive the rights of presentment and notice of dishonor. "Presentment" means
the right to require the Note Holder to demand payment of amounts due. "Notice
of dishonor" means the right to require the Note Holder to give notice to other
persons that amounts due have not been paid.
9. Uniform Secured Note. This Note is a uniform instrument with
limited variations in some jurisdictions. In addition to the protections given
to the Note Holder under this Note, the guaranty from Health Management Systems,
Inc. ("HMS") to the Lender dated the date hereof (the "Guaranty"), protects the
Note Holder from possible losses which might result if I do not keep the
promises which I make in this Note.
10. Events of Default. Notwithstanding anything to the contrary
provided herein, the occurrence of any one or more of the following shall be an
"Event of Default" hereunder and upon the occurrence of an Event of Default, any
and all principal and interest due hereunder shall be immediately due and
payable:
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(a) if I shall fail to pay any obligations owing under this Note
when due and payable;
(b) if I cease to be actively involved in the daily operations of
HMS or any of its subsidiaries;
(c) if the Credit Agreement and Guaranty dated as of July 15, 1996
among HMS, the Guarantors named therein and Lender ceases to be in full
force and effect or the Commitment (as defined therein) has been cancelled
thereunder or there has been an acceleration of payments due thereunder;
(d) if any person or group of persons (within the meaning of Section
13 or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under said Act) of
20% or more of the outstanding shares of common stock of HMS; or, during
any period of 12 consecutive calendar months, individuals who were
directors of HMS on the first day of such period shall cease to constitute
a majority of the board of directors of HMS;
(e) if I shall file a petition in bankruptcy or for an arrangement
or for reorganization pursuant to the Federal Bankruptcy Act or any
similar law, federal or state, or if, by decree of a court of competent
jurisdiction, I shall be adjudicated a bankrupt, or be declared insolvent,
or shall make an assignment for the benefit of creditors, or shall admit
in writing my inability to pay my debts generally as they become due, or
shall consent to the appointment of a receiver or receivers of all or any
part of my property;
(f) if any of my creditors shall file a petition in bankruptcy
against me or for my reorganization pursuant to the Federal Bankruptcy Act
or any similar law, federal or state, and if such petition shall not be
discharged or dismissed within sixty (60) days after the date on which
such petition was filed;
(g) if I shall fail to observe or perform any covenant, condition or
agreement in this Note or in any other document that I shall have executed
or delivered in connection with the Loan;
(h) if any representation or warranty made by HMS in the Guaranty
shall prove to have been incorrect in any material respect on or as of the
date made;
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(i) if HMS shall fail to perform or observe any term, covenant, or
agreement contained in the Guaranty on its part to be performed or
observed; or
(j) if the Guaranty shall at any time and for any reason cease to be
in full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by HMS, or HMS shall
deny it has any further liability or obligation under the Guaranty, or HMS
shall fail to perform any of its obligations under the Guaranty.
IN WITNESS WHEREOF, I have executed and delivered this Note on the
day and year written.
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ROBERT V. NAGELHOUT
Address: _________________________________
_________________________________
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Sworn to before me this
16th day of April, 1997
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Notary Public
My commission expires:
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