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Exhibit 10.3
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is dated as of
August 23, 1996 by and between DVI BUSINESS CREDIT CORPORATION, a Delaware
corporation ("Lender") and RENEX CORPORATION, a Florida corporation, RENEX
DIALYSIS CLINIC OF MIAMI BEACH, INC., a Florida corporation, RENEX DIALYSIS
CLINIC OF TAMPA, INC., a Florida corporation, RENEX DIALYSIS HOMECARE OF TAMPA,
INC., a Florida corporation, RENEX DIALYSIS CLINIC OF PHILADELPHIA, INC., a
Pennsylvania corporation, RENEX DIALYSIS CLINIC OF PITTSBURGH, INC., a
Pennsylvania corporation, RENEX DIALYSIS HOMECARE OF GREATER PITTSBURGH, INC., a
Pennsylvania corporation, RENEX DIALYSIS CLINIC OF AMESBURY, INC., a
Massachusetts corporation, RENEX DIALYSIS CLINIC OF CREVE COUER, INC., a
Missouri corporation, RENEX DIALYSIS HOMECARE OF GREATER ST. LOUIS, INC., a
Missouri corporation, RENEX DIALYSIS CLINIC OF UNIVERSITY CITY, INC., a Missouri
corporation, RENEX DIALYSIS CLINIC OF BRIDGETON, INC., a Missouri corporation,
and RENEX DIALYSIS FACILITIES, INC., a Mississippi corporation (collectively
hereinafter referred to as "Borrower") .
SECTION 1
DEFINITIONS
SECTION 1.1. SPECIFIC DEFINITIONS The following definitions
shall apply:
(a) "Account Debtors" shall mean Borrower's customers and all
other persons who are obligated or indebted to Borrower in any manner, whether
directly or indirectly, primarily or secondarily, contingently or otherwise,
with respect to Accounts.
(b) "Accounts" shall mean all accounts, accounts receivable,
monies and debt obligations in any form owing to Borrower (whether arising in
connection with contracts, contract rights, instruments, general intangibles or
chattel paper) arising out of the rendition of services by Borrower whether or
not earned by performance; all deposit accounts. credit insurance, guaranties.
letters of credit, advises of credit and other security for any of the above;
Borrower's Books relating to any of the foregoing.
(c) "Advance" shall mean an advance of loan proceeds constituting
all or a part of the Loan.
(d) "Borrower's Books" shall mean all of Borrower's books and
records including but not limited to: minute books, ledgers; records indicating,
summarizing or evidencing Borrower's assets, liabilities and the Accounts; all
information relating to Borrower's business operations or financial condition;
and all computer programs, disk or tape files, printouts, runs and other
computer prepared information and the equipment containing such information;
provided, however, that confidential patient records shall not be included
therein, except to the extent otherwise provided by law.
(e) "Prime Rate" shall mean the rate of interest announced
publicly by Bank of America from time to time as its prime rate.
(f) "Borrowing Base" shall mean, on the date of determination
thereof, an amount equal to the sum of eighty percent (80%) of the Net
Collectible Value for each type of Eligible Account.
(g) "Closing Date" shall mean the date of the first Advance of
the Loan.
(h) "Collateral" shall have the meaning specified in Section 3.1
hereof.
(i) "Commitment Amount" shall have the meaning set forth in
Section 2.1.
(j) "Distribution" shall mean, with respect to any shares of
capital stock or any warrant or right to acquire shares of capital stock or any
other equity security, (i) the retirement, redemption, purchase or other
acquisition, directly or indirectly, for value by the issuer of any such
security, except to the extent that the consideration therefor consists of
shares of stock, (ii) the declaration or (without duplication) payment of
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any dividend in cash, directly or indirectly, on or with respect to any such
security, (iii) any investment in the holder of five percent (5%) or more of any
such security if a purpose of such investment is to avoid characterization of
the transaction as a Distribution, and (iv) any other cash payment constituting
a distribution under applicable laws with respect to such security.
(k) "Eligible Accounts" shall mean Borrower's accounts receivable
from commercial insurance, Medicare, Medicaid, and HMO/PPO payors (collectively
referred to as "Retail Accounts"), which have been due and payable for one
hundred eighty (180) or fewer days, and Borrower's account receivable under
contracts with hospitals and other similar health service providers (referred to
as "Institutional Accounts") which have been due and payable for one hundred
eighty (180) or fewer days.
(l) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all references to sections thereof shall include such
sections and any predecessor provisions thereto, including any rules or
regulations issued in connection therewith.
(m) "Event of Default" shall have the meaning specified in
Section 10 hereof.
(n) "Fair Value" means (i) with respect to Borrower's assets, if
Net Fair Value is being determined as of a date on or prior to the first
anniversary of the date hereof, the lower of (1) the value of such assets as
determined in accordance with Bankruptcy Code ss.5487 or (2) the value of such
assets as determined in accordance with the state fraudulent conveyance or
fraudulent transfer law that would be applicable to the determination whether
the obligations and/or the security interest relating thereto would constitute a
fraudulent conveyance or a fraudulent transfer (the "Applicable State Law"),
(ii) with respect to Borrower's assets, if Net Fair Value is being determined as
of a date after the first anniversary of the date hereof, the value of such
assets as determined in accordance with the Applicable State Law, (iii) with
respect to Borrower's liabilities, if Net Fair Value is being determined as of a
date on or prior to the first anniversary of the date hereof, the lower of (1)
the value of such liabilities as determined in accordance with Bankruptcy Code
ss.548 or (2) the value of such liabilities as determined in accordance with the
Applicable State Law, and (iv) with respect to Borrower's liabilities, if Net
Fair Value is being determined as of a date after the first anniversary of the
date hereof, the value of such liabilities as determined in accordance with the
Applicable State Law.
(o) "GAAP" means generally accepted accounting principles set
forth in the opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or in statements of the Financial
Accounting Standards Board, consistently applied.
(p) "Governmental Authority" shall mean any governmental or
political subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality thereof, or any court, tribunal, grand
jury or arbitrator, in any case whether foreign or domestic.
(q) "Health Care Laws" shall mean all federal, state and local
laws specifically relating to health care providers and healthcare services,
including, but not limited to, Section 1877(a) of the Social Security Act as
amended by the Omnibus Budget Reconciliation Act of 1993, 42 U.S.C. ss. 1395nn.
(r) "Indebtedness" of a Person shall mean (i) all items (except
items of capital stock, capital or paid-in surplus or of retained earnings)
which, in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of the balance sheet of such Person
as of the date as of which Indebtedness is to be determined, including any lease
which, in accordance with GAAP would constitute indebtedness; (ii) all
indebtedness secured by any mortgage, pledge, security, lien or conditional sale
or other title retention agreement to which any property or asset owned or held
by such Person is subject, whether or not the indebtedness secured thereby shall
have been assumed; and (iii) all indebtedness of others which such Person has
directly or indirectly guaranteed, endorsed (otherwise than for the collection
or deposit in the ordinary course of business), discounted or sold with recourse
or agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire, or in respect of which such Person has agreed to supply or
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advance funds (whether by way of loan, stock or equity purchase, capital
contribution or otherwise) or otherwise to become directly or indirectly liable.
(s) "Lender Expenses" shall mean (i) all costs or expenses
(including, without limitation, taxes and insurance premiums) required to be
paid by Borrower under this Agreement or under any of the other Loan Documents
that are paid or advanced by Lender; (ii) filing, recording, publication and
search fees paid or incurred by Lender in connection with Lender's transactions
with Borrower; (iii) costs and expenses incurred by Lender to correct any Event
of Default or enforce any provision of the Loan Documents or in gaining
possession of, maintaining, handling, preserving, storing, shipping, selling,
and preparing for sale or advertising to sell the Collateral, whether or not a
sale is consummated, after the occurrence of an Event of Default; (iv) costs and
expenses of suit incurred by Lender in enforcing or defending the Loan Documents
or any portion thereof, (v) reasonable costs and expenses incurred by Lender to
convert any data submitted to Lender by Borrower to an acceptable form; and (vi)
Lender's reasonable attorney fees and expenses incurred (before or after
execution of this Agreement) in advising Lender with respect to, or in
structuring, drafting, reviewing, negotiating, amending, terminating, enforcing,
defending or otherwise concerning, the Loan Documents or any portion thereof,
irrespective of whether suit is brought.
(t) "Lien" shall mean any security interest, mortgage, pledge,
assignment, lien or other encumbrance of any kind, including any interest of a
vendor under a conditional sale contract or consignment and any interest of a
lessor under a capital lease.
(u) "Loan" shall mean each loan or any other loan or loans made
by Lender to Borrower pursuant to this Agreement.
(v) "Loan Availability" shall mean the lesser of (a) the
Commitment Amount or (b) the Borrowing Base minus the aggregate Advances and
other Obligations outstanding under this Agreement.
(w) "Loan Documents" shall mean (i) this Agreement; (ii) the
Note; (iii) any other agreements or documents hereafter delivered to secure
repayment of the Loan; (iv) the Lock Box Agreement and (v) any other
certificates, documents, instruments, or financing statements delivered by
Borrower to Lender pursuant to the terms of this Agreement.
(w) "Lock Box Agreement" shall mean those certain Lock Box
Agreements between Borrower and any lock box servicer(s) ("servicer(s)") chosen
by Lender and Borrower and the letter of instructions with respect thereto among
Lender, Borrower and Servicer.
(y) "Net Collectible Percentage" shall mean the percentages
described on Exhibit A attached hereto. Based on a quarterly review of billings,
collections and adjustments, conducted by Lender in accordance with its standard
and consistently applied procedures, Lender reserves the right to amend the Net
Collectible Percentages from time to time, written notification of which shall
be given to Borrower by Lender.
(z) "Net Collectible Value" shall mean, for each type of Eligible
Account, the Net Collectible Percentage times the aggregate current outstanding
amount for such type of Eligible Account.
(aa) "Net Fair Value" the amount by which the Fair Value of
Borrower's assets exceeds the Fair Value of Borrower's liabilities (including
contingent liabilities).
(bb) "Note" shall mean the Secured Promissory Note executed by
Borrower pursuant to the terms of this Agreement.
(cc) "Obligations" means (i) all obligations (monetary or
otherwise) of Borrower arising under or in connection with this Agreement, the
Note and all other Loan Documents.
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(dd) "Permitted Liens" shall mean (i) Liens for property taxes
and assessments or governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided that payment thereof is not yet
due or is being contested as permitted in this Agreement; (ii) Liens of or
resulting from any judgment or award, the time for the appeal or petition for
rehearing of which has not expired, or in respect of which Borrower is in good
faith prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review has been secured;
(iii) Liens and priority claims incidental to the conduct of business or the
ownership of properties and assets (including warehouse's and attorney's Liens
and statutory landlord's Liens); deposits, pledges or Liens to secure the
performance of bids, tenders, or trade contracts, or to secure statutory
obligations; and surety or appeal bonds or other Liens of like general nature
incurred in the ordinary course of business and not in connection with the
borrowing of money; provided that in each case the obligation secured is not
overdue or, if overdue, is being contested in good faith by appropriate actions
or proceedings; and further provided that any such warehouse's or statutory
landlord's Liens have been subordinated to the Liens of Lender in a manner
satisfactory to Lender; and (iv) Liens existing on the date of this Agreement
that secure Indebtedness of Borrower outstanding on such date and that are
disclosed on Schedule 1.1 hereto;
(ee) "Person" shall mean an individual, corporation, partnership,
limited liability company, trust, unincorporated association, joint venture,
joint-stock company, government (including political subdivisions), Governmental
Authority or any other entity.
(ff) "Proceeds" shall mean all proceeds and products of
Collateral and documents covering Collateral; all property received wholly or
partly in trade or exchange for Collateral; all claims against third parties
arising out of damage, destruction or decrease in value of the Collateral; all
leases of Collateral; and all rents, revenues, issues, profits and proceeds
arising from the sale, lease, license, encumbrance, collection or any other
temporary or permanent disposition of the Collateral or any interest therein.
(gg) "Subordinate Obligations" shall mean all Indebtedness of
Borrower subordinated to the Obligations pursuant to subordination and/or
intercreditor agreements in form satisfactory to Lender.
(hh) "Termination Date" shall mean the last day of any term as to
which a written notice of nonrenewal pursuant to Section 2.7 has been received
or, in the case of a termination due to a prepayment under Section 2.7, the date
of such prepayment.
(ii) "Unmatured Default" shall mean any event or condition that,
with notice, passage of time, or a determination by Lender or any combination of
the foregoing would constitute an Event of Default.
SECTION 1.2. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND UNIFORM
COMMERCIAL CODE. All financial terms used in this Agreement, other than those
defined in this Section 1, have the meanings accorded to them under GAAP. All
other terms used in this Agreement, other than those defined in this Section 1,
have the meanings accorded to them in the Uniform Commercial Code as enacted in
any applicable jurisdiction.
SECTION 1.3. CONSTRUCTION
(a) Unless the context of this Agreement clearly requires
otherwise, the plural includes the singular, the singular includes the plural,
the part includes the whole, "including" is not limiting, and "or" has the
inclusive meaning of the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder" and other similar terms in this Agreement refer to this
Agreement as a whole and not exclusively to any particular provision of this
Agreement.
(b) Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against Lender or Borrower, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by each of the parties and its counsel and shall be construed and
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interpreted according to the ordinary meaning of the words used so as to
accomplish the purposes and intentions of all parties hereto fairly.
SECTION 2
LOAN
SECTION 2.1. THE LOAN Subject to the terms and conditions and
relying on the representations and warranties set forth herein, Lender agrees to
make Advances to Borrower from time to time in an aggregate amount not to exceed
the lesser of (i) Four Million Dollars ($4,000,000.00) (the "Commitment
Amount"), and (ii) the Borrowing Base. Within the limits of the Loan
Availability, Borrower may borrow, make repayments pursuant to Section 2.4 and
reborrow. If, at any time, the aggregate Advances and other Obligations
outstanding exceed the then Loan Availability, then Borrower shall pay to Lender
a sum sufficient to reduce the Advances and other Obligations outstanding to an
amount not greater than the Loan Availability. Lender's commitment to make
Advances shall expire, and the amount of the Loan then outstanding shall mature
and be repaid by Borrower, without further action on the part of Lender, on the
Termination Date.
SECTION 2.2. NOTE All Loans made by the Lender under this
Agreement shall be evidenced by, and repaid with interest in accordance with, a
single promissory note of Borrower in substantially the form of Exhibit 2.02
duty completed, in the original principal amount equal to the initial Commitment
Amount, dated the Closing Date, payable to the Lender and maturing as to
principal on the Termination Date (the "Note"). The amount of each Advance and
payment of principal amount received by the Lender shall be recorded in the
books and records of the Lender, which books and records shall, in the absence
of manifest error, be conclusive as to the outstanding balance of and other
information related to the Loan. Lender shall be entitled at any time to endorse
on a schedule attached to the Note the amount and type of each Advance and
information relating thereto.
SECTION 2.3. THE BORROWING BASE On no less than a monthly basis
the Borrowing Base will be recalculated by adding monthly billings to the prior
month's Eligible Accounts and subtracting deposits and adjustments, if
applicable, and then multiplying this amount by the Net Collectible Percentage.
The Borrowing Base shall be calculated on the basis of the reports delivered to
Lender pursuant to Section 5.4.
SECTION 2.4. NOTICE OF BORROWING Whenever Borrower desires to
borrow under Section 2.1, Borrower shall deliver to Lender a Drawdown Request
Form, in a form reasonably satisfactory to Lender, signed by an authorized
officer no later than 2:00 p.m. Pacific Standard Time at least one (1) business
day in advance of the proposed funding date. The Drawdown Request Form shall
specify (i) the funding date (which shall be a business day) with respect to the
requested Loan and (ii) the amount of the proposed Advance.
SECTION 2.5. USE OF PROCEEDS The proceeds of the Loan shall be
used by Borrower to provide working capital and new clinics under development.
SECTION 2.6. LOAN REPAYMENT VIA LOCK BOX/SERVICER ACCOUNT. Upon
the execution hereof, Borrower shall become a party to the Lock Box Agreement
which provides for the receipt and processing of Account payments. Borrower
shall irrevocably direct: (i) all non-government payors to remit payment to the
servicer's post office box in Lenders name and control, and (ii) all government
payors to remit payment to a second post office box of such servicer in
Borrower's name. Prior to funding and upon receipt of the lock box post office
box number(s), Borrower shall provide Lender re-direct letters (in a form
satisfactory to Lender) to all of Borrower's payors on Borrower's letterhead,
including envelopes for Lender to process and mail (Lender will add postage
which shall be charged to Borrower). The Lock Box Agreement provides for the
servicer to deposit daily all receipts of the post office boxes into deposit
accounts, with non-government payor receipts paid into an account subject to
Lender's control and, government payor receipts paid into an account in
Borrower's name; such accounts shall be (i) at a financial institution
acceptable to Lender, and (ii) governed by terms and conditions acceptable to
Lender. Borrower agrees and acknowledges that all government pavor
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receipts will be immediately transferred to an account in the name and control
of Lender. Deposits (net of fees) shall be applied to reduce the Loan balance
including Advances, interest charged monthly, fees, all applicable charges and
other payments, if applicable, within 24 hours. Any receipts (net of such
servicer's fees) remaining after all such payments to Lender will be paid to
Borrower within 24 hours of receipt. Borrower shall bear all charges for
establishing and maintaining the post office box accounts and all bank charges
for such deposit accounts. Lender shall deduct from the deposit accounts all
sums Borrower owes to it hereunder, including fees, interest, reimbursements and
principal payments. Any Obligations not paid by such deduction shall be
satisfied by direct payment to Lender at 4041 MacArthur Blvd., Suite 401,
Newport Beach, California 92660. Any amounts hereunder not paid as agreed shall
be assessed a late payment penalty of five percent (5%).
SECTION 2.7. TERM OF AGREEMENT; PREPAYMENT. The Tenn of this
Agreement is two (2) years. Provided that no Event of Default or any Unmatured
Event of Default exists, Borrower may terminate this Agreement provided that it
pays to Lender an amount equal to two and one half percent (2.5%) of the
Commitment Amount if canceled in year 1 of the initial term; and one half
percent (.5%) of the Commitment Amount if canceled in year 2. This Agreement
shall be renewed for consecutive one (1) year terms unless this Agreement is
terminated, effective as of the last day of a term. by written notice by Lender
or Borrower no later than thirty (30) days before the expiration of such term.
All of Lender's obligations, responsibilities and duties shall cease upon the
date of termination of this Agreement, except for its obligation to remit excess
receipts from the lock box deposit accounts in accordance with the terms of this
Agreement.
SECTION 2.8. LENDER'S FEES Upon execution hereof, Lender shall be
entitled to an origination fee equal to Thirty Five Thousand and 00/100 Dollars
($35,000), less Fifteen Thousand and 00/100 Dollars ($15,000) currently on
deposit. On or before the first day of each month Borrower shall pay Lender a
monthly maintenance fee of Two Thousand Five Hundred Ninety Five and 00/100
Dollars ($2,595). The monthly maintenance fee shall cover costs incurred by
Lender including but not limited to daily handling of the account/deposits,
interfacing with lock box processor, monthly tracking of Borrowing Base Report
and quarterly on-site due diligence. Lender's fees will be deducted, when due,
directly from receipts from accounts receivable deposited in accordance with
Section 2.6
SECTION 2.9. INTEREST ON THE LOANS All Advances shall bear
interest on the unpaid principal amount thereof from the date made until paid in
full at a fluctuating rate equal to the Prime Rate plus two percent (2%).
Interest shall be payable monthly in arrears on the first day of each month for
the preceding month. Interest shall be calculated on the basis of a year of 360
days, but for the actual number of days elapsed. Interest accrued but not paid
pursuant to Section 2.6 shall be treated as an Advance if not otherwise paid
within five (5) days of the end of the month in which it accrues. Unpaid
Interest charges being treated as an Advance shall not be considered an Event of
Default.
SECTION 2.10. CONDITIONS TO THE CLOSING Lender's obligation to
make the initial Advance hereunder on the Closing Date is subject to Lender's
determination that Borrower as of the date of the Advance has satisfied, and
continues to satisfy, the following conditions:
(a) The representations and warranties set forth in this
Agreement and in the other Loan Documents shall be true and correct on and as of
the date hereof and shall be true and correct in all material respects as of the
Closing Date and Borrower shall have performed all obligations which were to
have been performed by it hereunder.
(b) Borrower shall have executed and delivered to Lender (or
shall cause to be executed and delivered to Lender by the appropriate Persons)
the following:
(i) this Agreement;
(ii) the Note;
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(iii) UCC-I Financing Statements;
(iv) the Lock Box Agreement/Tri-Party Agreement;
(v) Subordination Agreement by Berkeley;
(vi) pay-off letters, UCC Termination Statements and
Lien Releases as required to grant Lender a first priority security interest
other than Permitted Liens in Collateral pledged as security for repayment of
the Loan;
(vii) certified copies of resolutions of the Board of
Directors of Borrower authorizing the execution and delivery of Loan Documents
to be executed by Borrower; and
(viii) copies of the Articles of Incorporation of
Borrower certified by the Secretary of State of the applicable issuing state.
(ix) a certificate from an officer of Borrower
indicating that the representations and warranties contained herein are true and
correct as of the Closing Date.
(c) Neither an Event of Default nor an Unmatured Default
shall have occurred and be continuing as of the Closing Date,
(d) Borrower shall not have suffered a material adverse
change in its business, operations or financial condition from that reflected
in the Financial Statements of Borrower delivered to Lender or otherwise.
(e) Lender shall have received such additional supporting
documents, certificates and assurances as Lender shall reasonably request which
shall be satisfactory to Lender in form and substance.
SECTION 2.11. If there is more than one Borrower, the obligations
hereunder are joint and several obligations of the Borrowers. Notwithstanding
any other provision hereof, a Borrower's liability for the obligations at any
time shall not exceed the greater of (1) the sum of (a) the total principal of
the obligations that such Borrower directly or indirectly received and (b) the
interest and expenses accrued with respect to such principal, and (2) the
greater of (a) ninety-five percent (95%) of such Borrower's Net Fair Value on
the date hereof, and (b) ninety-five percent (95%) of such Borrower's highest
Net Fair Value during the period commencing after such date and terminating on
the date of determination of liability hereunder
SECTION 3
SECURITY INTEREST
SECTION 3.1. GRANT OF SECURITY INTEREST In order to secure prompt
payment and performance of all Obligations, Borrower hereby grants to Lender a
continuing first-priority pledge and security interest in the following property
of Borrower (the "Collateral"), whether now owned or existing or hereafter
acquired or arising and regardless of where located, subject only to Permitted
Liens. This security interest in the Collateral shall attach to all Collateral
without further action on the part of Lender or Borrower. The Collateral shall
consist of the following, subject in each case only to Permitted Liens together
with such third-party consents, lien waivers and estoppel certificates as Lender
shall reasonably require: All of Borrower's present and future Accounts.
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SECTION 4
SPECIFIC REPRESENTATIONS
SECTION 4.1. NAME OF BORROWER
The exact names, state law under which Borrower was organized,
prior legal names, current or prior trade names are set forth on Schedule 4.1.
SECTION 4.2. MERGERS AND CONSOLIDATIONS Except as disclosed on
Schedule 4.2, no entity has merged into any of Borrower or been consolidated
with Borrower.
SECTION 4.3. PURCHASE OF ASSETS Except as disclosed on Schedule
4.3 no entity has sold substantially all of its assets to Borrower or sold
assets to Borrower outside the ordinary course of such seller's business at any
time in the past.
SECTION 4.4. CHANGE OF NAME OR IDENTITY Borrower shall not change
its name, business structure or identity or use a new trade name without prior
notification to Lender or merge into or consolidate with any other entity.
SECTION 5
PROVISIONS CONCERNING ACCOUNTS
SECTION 5.1. OFFICE AND RECORDS OF BORROWER Borrower's chief
executive offices are located at: 2222 Ponce De Leon Blvd., Suite 300, Coral
Gables, Florida 33134. Borrower maintains all of its records with respect to
Accounts at 2222 Ponce De Leon Blvd., Suite 300, Coral Gables. Florida 33134.
Borrower has not at any time within the past four (4) months maintained their
chief executive office or their records with respect to Accounts at any other
location and shall not do so hereafter except with the prior written consent of
Lender.
SECTION 5.2. REPRESENTATIONS Borrower represents and warrants
that each Account at the time of its assignment to Lender (a) will be owned
solely by Borrower, (b) will be for a liquidated amount maturing as stated in
Borrower's Books; (c) will be a bona fide existing obligation created by the
rendition of services to Account Debtors or their insured by Borrower in the
ordinary course of its business; and (d) will not be subject to any known
deduction, offset, counterclaim, return privilege, or other condition, except as
reflected on Borrower's Books. Borrower shall neither redate any invoices nor
reissue new invoices in full or partial satisfaction of old invoices.
Allowances, if any, as between Borrower and its customers will be on the same
basis and in accordance with the usual customary practices of Borrower as they
exist on the date of this Agreement.
SECTION 5.3. RETURNS AND REPOSSESSIONS Borrower shall notify
Lender within five (5) business days of occurrence of all material claims
asserted by Account Debtors.
SECTION 5.4. BORROWING BASE REPORTS Borrower shall on no less
than a monthly basis execute and deliver to Lender, in form and content
satisfactory to Lender, (i) a Borrowing Base report; (ii) a detailed aging of
Accounts; and (iii) a charges, collections and adjustment summary for the month.
Borrower shall, upon the request of Lender execute and deliver to Lender an
updated Borrowing Base report reflecting additional billings, write-offs and
deposits and all of Borrower's accounts receivable data in a computer disc or
tape fori-nat acceptable to Lender. Lender shall periodically review Borrower's
actual adjustments to cash receipts and write-offs, as well as Borrower's payor
profile. To the extent Borrower's adjustments, write-offs and payor profile
materially changes, Lender may, in its reasonable discretion, change the Net
Collectible Percentage attributable to each type of account by written notice to
Borrower of such change.
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SECTION 5.5. COMPLIANCE CERTIFICATE. With each final month-end
Borrowing Base report which Borrower delivers to Lender, Borrower also shall
deliver to Lender a Compliance Certificate in the form of Exhibit 5.5 attached
hereto, which Compliance Certificate shall be completed and signed by an officer
of Borrower.
SECTION 5.6. LENDER'S RIGHTS Any officer, employee or agent of
Lender shall have the right, in Lender's reasonable discretion, at any time or
times hereafter, in the name of Lender or its nominee (including Borrower), with
prior notice to Borrower, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone or otherwise; and all reasonable
out-of-pocket costs thereof shall be payable by Borrower to Lender. Lender, or
its designee may at any time after default by Borrower hereunder notify
customers or Account Debtors that Accounts have been assigned to Lender or of
Lender's security interest therein and after default by Borrower hereunder
collect the same directly and charge all reasonable collection costs and
expenses to Borrower's account.
SECTION 5.7. DISCLAIMER OF LIABILITY Lender shall not be liable
to Borrower or any third person for the correctness, validity or genuineness of
any instruments or documents released or endorsed to Borrower by Lender (which
shall automatically be deemed to be without recourse to Lender in any event) or
for the existence, character, quantity, quality, condition, value or delivery of
any goods purporting to be represented by any such documents; and Lender, by
accepting a Lien on the Collateral or by releasing any Collateral to Borrower,
shall not be deemed to have assumed any obligation or liability to any supplier
or creditor of Borrower or to any other third party. Borrower agrees to
indemnify and defend Lender and hold it harmless in respect to any claim or
proceeding arising out of any matter referred to in this Section 5.7.
SECTION 5.8. POST DEFAULT RIGHTS If an Event of Default has
occurred and is continuing hereunder, no discount, credit or allowance shall be
granted or permitted by Borrower to any Account Debtor; provided, however, that,
notwithstanding the existence of an Event of Default, (i) Borrower may continue
to invoice and bill Account Debtors under discount, credit and allowance
arrangements that Borrower maintained in the ordinary course of business prior
to such Event of Default occurring, and (ii) Account Debtors may, during the
continuance of an Event of Default, utilize discount, credit and allowance
arrangements that Borrower extended to them in the ordinary course of business.
Lender may, after default by Borrower, settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms that Lender considers
advisable, and in such cases, Lender will credit Borrower's account with only
the net amounts received by Lender in payment of such disputed Accounts, after
deducting all Lender Expenses incurred in connection therewith.
SECTION 5.9. ACCOUNTS OWED BY FEDERAL GOVERNMENT If any Accounts
shall arise out of a contract with the United States of America or any
department, agency, subdivision or instrumentality thereof, Borrower shall
promptly notify Lender thereof in writing and take all other action requested by
Lender to protect Lender's Lien on such Accounts under the provisions of the
federal laws on assignment of claims.
SECTION 5.10. BUSINESS ACTIVITY REPORTS Borrower has filed and
shall file all legally required notices and reports of its business activities
with all the appropriate taxing authorities and the appropriate Governmental
Authority of each jurisdiction in which Borrower is legally required to file
such a notice or report.
SECTION 6
PROVISIONS CONCERNING GENERAL INTANGIBLES
SECTION 6.1. CONTRACTS
(a) Schedule 6.1. is a true and complete list of all material
contracts and agreements pertaining to the Collateral to which Borrower is a
party.
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(b) Borrower shall not amend, modify or supplement any contract
or agreement included in the Collateral or waive any provision thereof other
than in accordance with Borrower's standard business practice, nor shall such
standard business practice be materially changed without Lender's consent, which
shall not be unreasonably withheld.
(c) Borrower shall remain liable to perform all of its duties and
obligations under any contracts and agreements included in the Collateral to the
same extent as if this Agreement had not been executed; and Lender shall not
have any obligation or liability under such contracts and agreements by reason
of this Agreement or otherwise.
(d) Borrower need not pay any amount due under any contract or
agreement listed on Schedule 6.1, nor otherwise perform any action required
under the terms of any such contract or agreement, if such payment or
performance is being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted, if Lender is notified in advance of such
contest, and if Borrower establishes any reserve or other appropriate provision
required by GAAP and deposits with Lender cash or an acceptable bond reasonably
requested by Lender.
SECTION 7
OTHER PROVISIONS CONCERNING COLLATERAL
SECTION 7.1. FURTHER ASSURANCES Borrower shall execute and
deliver to Lender, concurrent with Borrower's execution of this Agreement and at
any time or times hereafter at the request of Lender, all financing statements,
continuation financing statements, security agreements, chattel mortgages,
assignments, endorsements of certificates of title, applications for titles.
affidavits, reports, notices, schedules of Accounts, letters of authority and
all other documents Lender may reasonably request, in form satisfactory to
Lender, to perfect and maintain perfected Lender's Liens in the Collateral and
in order to consummate fully all of the transactions contemplated under the Loan
Documents. Borrower hereby irrevocably makes, constitutes and appoints Lender
(and any of Lender's officers, employees or agents designated by Lender) as
Borrower's true and lawful attorney with power to sign the name of Borrower on
any of the above-described documents or on any other similar documents that need
to be executed, recorded or filed in order to perfect or continue to be
perfected Lender's Liens in the Collateral.
SECTION 7.2. LENDER'S DUTY OF CARE Lender shall have no duty of
care with respect to the Collateral except that Lender shall exercise reasonable
care with respect to the Collateral in Lender's custody. Lender shall be deemed
to have exercised reasonable care if such property is accorded treatment
substantially equal to that which Lender accords its own property or if Lender
takes such action with respect to the Collateral as Borrower shall request or
agree to in writing provided that neither failure to comply with any such
request nor any omission to do any such act requested by Borrower shall be
deemed a failure to exercise reasonable care. Lender's failure to take steps to
preserve rights against any parties or property shall not be deemed to be
failure to exercise reasonable care with respect to the Collateral in Lender's
custody. A@11 risk, loss, damage or destruction of the Collateral shall be borne
by Borrower.
SECTION 7.3. REINSTATEMENT OF LIENS If, at any time after payment
in full by Borrower of all Obligations and termination of Lender's Liens, any
payments on Obligations previously made by Borrower or any other Person must be
disgorged by Lender for an reason whatsoever (including, without limitation, the
insolvency, bankruptcy, or reorganization of Borrower or such other Person),
this Agreement and Lender's Liens granted hereunder shall be reinstated as to
all disgorged payments as though such payments had not been made, and Borrower
shall sign and deliver to Lender all documents and other items necessary to
perfect all terminated Liens.
SECTION 7.4. LENDER EXPENSES To the extent Lender determines that
its interest in the Collateral might have been materially adversely affected by
Borrowers' failure, as required by the terms hereof (i) to pay any moneys
(whether taxes, assessments, insurance premiums or otherwise) due to third
persons or entities,
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11
(ii) to make any deposits or furnish any required proof of payment or deposit or
(iii) to discharge any Lien not permitted hereby, then Lender may, in its
reasonable discretion and without prior notice to Borrower, make payment of the
same or any part thereof. Any amounts paid or deposited by Lender shall
constitute Lender Expenses, shall become part of the Obligations, shall bear
interest at the rate of eighteen percent (I 8%) per annum, and shall be secured
by the Collateral. Any payments made by Lender shall not constitute (a) an
agreement by Lender to make similar payments in the future or (b) a waiver by
Lender of any Event of Default under this Agreement. Lender need not inquire as
to, or contest the validity of, any such expense, tax, security interest,
encumbrance or Lien and the receipt of the usual official notice for the payment
of moneys to a governmental entity shall be conclusive evidence that the same
was validly due and owing.
Borrower shall immediately and without demand reimburse Lender
for all sums expended by Lender that constitute Lender Expenses, and Borrower
hereby authorizes and approves all advances and payments by Lender for items
constituting Lender Expenses.
SECTION 7.5. INSPECTION OF RECORDS During usual business hours,
Lender shall have the right to inspect Borrower's Books and records in order to
verify the amount or condition of, or any other matter relating to, the
Collateral and Borrower's financial condition and to copy and make extracts
therefrom. Borrower waives the right to assert a confidential relationship, if
any, it may have with any accounting firm or service bureau in connection with
any information requested by Lender pursuant to this Agreement and agrees that
Lender may directly contact any such accounting firm or service bureau in order
to obtain such information.
SECTION 7.6. WAIVERS Except as specifically provided for herein,
Borrower waives demand, protest, notice of protest, notice of default or
dishonor, notice of payment and nonpayment, notice of any default, nonpayment at
maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable.
SECTION 8
REPRESENTATIONS AND WARRANTIES
As of the date hereof Borrower hereby warrants and represents to
Lender the following:
SECTION 8.1. CORPORATE STATUS Borrower is a corporation validly
existing and in good standing under the laws of the state of its incorporation;
and is qualified and licensed to do business and is in good standing in any
state in which the conduct of its business or its ownership of property requires
that it be so qualified or licensed, and has the power and authority (corporate
and otherwise) to execute and carry out the terms of the Loan Documents to which
it is a party, to own its assets and to carry on its business as currently
conducted.
SECTION 8.2. AUTHORIZATION The execution, delivery, and
performance by Borrower of this Agreement and each other Loan Document have been
duly authorized by all necessary corporate or partnership action. Borrower, has
duly executed and delivered this Agreement and each other Loan Document to which
it is a party, and each of them constitutes a valid and binding obligation of
Borrower, as applicable, enforceable according to its terms except as such
enforceability may be limited by equitable principles and by bankruptcy,
insolvency or similar laws affecting the rights of creditors generally.
SECTION 8.3. NO BREACH The execution, delivery and performance by
Borrower of this Agreement and each other Loan Document to which they are a
party (a) will not contravene any law or any governmental rule or order binding
on Collateral; (b) will not violate any provision of the articles of
incorporation, bylaws or partnership agreement, as applicable, of Borrower; (c)
will not violate any agreement or instrument by which Borrower, as applicable,
is bound; (d) do not require any notice to consent by any Governmental
Authority;
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and (e) will not result in the creation of a Lien on any assets of Borrower
except the Lien to Lender granted herein.
SECTION 8.4. TAXES All assessments and taxes, whether real,
personal or otherwise, due or payable by or imposed, levied or assessed against
Borrower or any of its property have been paid in full before delinquency or
before the expiration of any extension period; and Borrower has made due and
timely payment or deposit of all federal. state, and local taxes, assessments or
contributions required of it by law, except only for items that Borrower is
currently contesting diligently and in good faith and that have been fully
disclosed in writing to Lender.
SECTION 8.5. DEFERRED COMPENSATION PLANS Borrower has made all
required contributions to all deferred compensation plans to which it is
required to contribute, and Borrower has no liability for any unfunded benefits
of any single-employer or multi-employer plans. Borrower is not and at no time
has been a sponsor of, provided. or maintained for any employees any defined
benefit plan.
SECTION 8.6. LITIGATION AND PROCEEDINGS Except as set forth on
Schedule 8.6 attached hereto, there are no outstanding judgments against
Borrower or any of its assets and there are no material actions or proceedings
pending by or against Borrower before any court or administrative agency.
Borrower has no knowledge or belief of any material pending, threatened, or
imminent litigation, governmental investigations, or claims, complaints,
actions, or prosecutions involving Borrower, except for ongoing collection
matters in which Borrower is the plaintiff and except as set forth in Schedule
8.6 hereto.
SECTION 8.7. BUSINESS Borrower has all franchises,
authorizations, patents, trademarks, copyrights and other rights necessary to
advantageously conduct its business. They are all in full force and effect and
are not in known conflict with the rights of others. Borrower is not a party to
or subject to any agreement or restriction that is so unusual or burdensome that
it might have a material adverse effect on Borrower's business, properties or
prospects.
SECTION 8.8. LAWS AND AGREEMENTS Borrower is in compliance with
all material agreements applicable to it, including obligations to contribute to
any employee benefit plan or pension plan regulated by ERISA. Borrower is in
material compliance with all laws applicable to it.
SECTION 8.9. FINANCIAL CONDITION All financial statements and
information relating to Borrower that have been or may hereafter be delivered by
Borrower to Lender are accurate and complete and have been prepared in
accordance with GAAP. Borrower has no material obligations or liabilities of any
kind not disclosed in that financial information, and there has been no material
adverse change in the financial condition of Borrower since the date of the most
recent financial statements submitted to Lender.
SECTION 8.10. HEALTH CARE LAWS
(a) Borrower has obtained all permits, licenses and other
authorizations that are required under Health Care Laws applicable to Borrower
and it and is in compliance in all material respects with all terms and
conditions of the required pen-nits, licenses and authorizations, and is also in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in such Health Care Laws.
(b) Borrower is not aware of, and has not received notice of, any
past, present or future events, conditions, circumstances, activities,
practices, incidents, actions or plans that may interfere with or prevent
compliance or continued compliance in any material respect with Health Care
Laws.
(c) There is no civil, criminal or administrative action, suit,
demand. claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or threatened against Borrower, relating in
any way to Health Care Laws.
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SECTION 8.11. CUMULATIVE REPRESENTATIONS The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements that
Borrower shall give, or cause to be given. to Lender, either now or hereafter.
SECTION 9
COVENANTS
SECTION 9.1. ENCUMBRANCE OF COLLATERAL Borrower shall not create,
incur, assume or permit to exist any Lien on any Collateral now owned or
hereafter acquired by Borrower, except for Liens to Lender and Permitted Liens.
SECTION 9.2. BUSINESS Borrower shall engage primarily in business
of the same general character as that now conducted by Borrower.
SECTION 9.3. CONDITION AND REPAIR Borrower shall maintain in good
repair and working order all properties used in their business and from time to
time shall make all appropriate repairs and replacements thereof.
SECTION 9.4. TAXES Borrower shall pay all taxes, assessments and
other governmental charges imposed upon it or any of its assets or in respect of
any of its franchises, business. income or profits before any penalty or
interest accrues thereon, and all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or might become a Lien or charge upon any of its
assets, provided that (unless any material item or property would be lost,
forfeited or materially impaired as a result thereof) no such charge or claim
need be paid if it is being contested in good faith by appropriate proceedings
promptly initiated and diligently conducted, if Lender is notified in advance of
such contest, and if Borrower establishes any reserve or other appropriate
provision required by GAAP. Borrower shall make timely payment or deposit of all
FICA payments and withholding taxes required of it by applicable laws and will,
upon request, famish Lender with proof satisfactory to Lender indicating that
Borrower has made such payments or deposits.
SECTION 9.5. ACCOUNTING System Borrower at all times hereafter
shall maintain a standard and modem system of accounting in accordance with
GAAP, with ledger and account cards or computer tapes, disks, printouts and
records that contain information pertaining to the Collateral that may from time
to time be requested by Lender. Borrower shall not modify or change its method
of accounting or enter into any agreement hereafter with any third-party
accounting firm or service bureau for the preparation or storage of Borrower's
accounting records without said accounting firm's or service bureau's agreeing
to provide to Lender information regarding the Collateral and Borrower's
financial condition.
SECTION 9.6. QUARTERLY FINANCIAL STATEMENTS. Borrower shall
famish Lender as soon as practicable but in no event later than forty-five (45)
days after the end of each of the first three quarterly fiscal periods of each
fiscal year with unaudited quarterly financial statements in form and substance
as required by Lender, including a balance sheet and an income statement
prepared in accordance with GAAP together with a certificate executed by the
chief financial officer of Borrower stating that the financial statements fairly
present the financial condition of Borrower as of the date and for the periods
covered and that as of the date of such certificate there has not been any
violation of any provision of this Agreement or the happening of any Event of
Default or Unmatured Default hereunder.
SECTION 9.7. ANNUAL FINANCIAL STATEMENTS. Borrower shall famish
Lender as soon as practicable but in no event later than one hundred twenty
(120) days after the close of each fiscal year commencing with fiscal 1996 with
audited annual financial statements, which financial statements shall be
prepared in accordance with GAAP and shall be certified without qualification by
an independent national certified public accounting firm. With all financial
statements, Borrower will also deliver a certificate of its chief
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14
financial officer attesting that no Event of Default or Unmatured Default under
the Agreement has occurred and is continuing.
SECTION 9.8. FURTHER INFORMATION Borrower shall promptly supply
Lender with such other information concerning its affairs as Lender may
reasonably request from time to time hereafter and shall promptly notify Lender
of any material adverse change in Borrower's financial condition and any
condition or event that constitutes a breach of or event that constitutes an
Event of Default under this Agreement. In addition, Borrower authorizes Lender
to contact credit reporting agencies concerning, Borrower's credit standing.
Borrower also authorizes Lender to utilize Borrower's name in Lender's marketing
materials.
SECTION 9.9. ERISA COVENANTS Guarantor or Borrower shall comply
with all applicable provisions of ERISA and all other laws applicable to any
deferred compensation plans with which Guarantor or Borrower is associated, and
shall promptly notify Lender of the occurrence of any event that could result in
any material liability of Borrower to any person to any person whatsoever with
respect to any such plan.
SECTION 9.10. FINANCIAL COVENANTS, Borrower shall maintain at all
times during the term hereof the following financial covenants, measured in
accordance with GAAP: (i) not permit the sum of Subordinated Debt (not including
current maturities) plus Tangible Net Worth (defined as total equity
organization costs deferred loan costs goodwill) to be less than $6,000,000; and
(ii) not permit the ratio of Total Liabilities minus Subordinated Debt divided
by Tangible Net Worth plus Subordinated Debt to be greater than 1.2:1.
SECTION 9.11. REQUIRED CONSENTS ON MERGER, CONSOLIDATION, SALE OF
ASSETS, ISSUANCE OF STOCK, ETC Without prior written consent of Lender, Borrower
shall not:
(a) merge or consolidate with any Person in which Borrower is not
the surviving entity;
(b) sell, lease or otherwise dispose of its assets in any
transaction or series of related transactions (other than sales in the ordinary
course of business), however, the sale of the Miami Beach facility shall be
permitted;
(c) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction;
(d) acquire interests of any business in excess of Five Million
and 00/100 Dollars ($5,000,000.00) in the aggregate in any calendar year in any
business (whether by purchase of assets, purchase of stock, merger or
otherwise);
(e) become subject to any agreement or instrument which by its
terms would restrict Borrower's right or ability to perform any of its
obligations to Lender pursuant to the terms of the Loan Documents; or
SECTION 9.12. HEALTH CARE COVENANTS
(a) Borrower shall comply in all material respects with, and
shall obtain all permits required by, all Health Care Laws applicable to
Borrower.
(b) Borrower shall promptly furnish to Lender a copy of any
communication from any Governmental Authority concerning any possible violation
of any Health Care Laws or any occurrence of which Borrower would be required to
notify any Governmental Authority with jurisdiction over Health Care Laws.
SECTION 9.13. DISTRIBUTIONS Borrower shall not make any
Distributions except as (i) set forth on Schedule 9.13 hereto, and (ii)
authorized by Lender, upon Borrower's request, which authorization shall not be
unreasonably withheld and which authorization shall not be deemed to authorize
any Distributions while an Event of Default is continuing or if such
Distribution would cause an Event of Default to occur.
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SECTION 9.14. SUBORDINATE OBLIGATIONS Borrower shall not
voluntarily prepay any principal (including the making of any sinking fund
payment), interest or any other amount in respect of Subordinate Obligations.
SECTION 9.15. AMENDMENTS Borrower shall not amend any provision
of any Subordinate Obligation if such amendment would (i) affect any of the
subordination provisions thereof, (ii) advance the date of any required payment
or prepayment thereunder, (iii) make covenants therein more burdensome, when
considered in their entirety, to Borrower, (iv) reduce any default or grace
period therein provided, or (v) otherwise have a material adverse effect on the
interests of Lender.
SECTION 10
EVENTS OF DEFAULT
An Event of Default shall be deemed to exist if any of the
following events shall have occurred and be continuing:
(a) Borrower fails to make any payment of principal or interest
or any other payment on the Note or any other Obligation when due and payable,
by acceleration or otherwise, and such failure shall continue for five (5)
business days after the payment is due;
(b) Borrower fails to observe or perform any covenant condition
or agreement to be observed or performed pursuant to the terms hereof or any
other Loan Document to which it is a party and such failure is not cured as soon
as reasonably practicable and in any event within thirty (30) days after written
notice thereof by Lender;
(c) A court enters a decree or order for relief in respect of
Borrower in an involuntary case under any applicable bankruptcy, insolvency, or
other similar law then in effect, or appoints a receiver, liquidator, assignee,
custodian, trustee, or sequestrator (or other similar official) of Borrower or
for any substantial part of its property, or orders the windup or liquidation of
Borrower's affairs; or a petition initiating an involuntary case under any such
bankruptcy, insolvency, or similar law is filed against Borrower and is pending
for sixty (60) days without dismissal;
(d) Borrower commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law then in effect, makes any general
assignment for the benefit of creditors, fails generally to pay its debts as
such debts become due, or takes corporate action in furtherance of any of the
foregoing;
(e) Final judgment for the payment of money on any claim in
excess of $100,000 is rendered against Borrower and remains undischarged
(failure to comply) for twenty (20) days during which execution is not
effectively stayed;
(f) Any guarantor of the Obligations revokes or attempts to
revoke its guaranty of any of the Obligations, or becomes the subject of an
insolvency proceeding of the type described in clauses (c) or (d) above with
respect to Borrower or fails to observe or perform any covenant, condition or
agreement to be performed under any Loan Document to which it is a party;
(g) Borrower makes any payment on account of any Subordinate
Obligations, other than payments specifically permitted by the terms of such
subordination or this Agreement;
(h) Any Person holding any Subordinate Obligations becomes the
subject of any proceeding resulting in the termination of the subordination
arrangement, terminates the subordination arrangement or asserts that it is
terminated.
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16
(i) Any Collateral or any part thereof is sold, agreed to be
sold, conveyed or allocated by operation of law or otherwise;
(j) Borrower defaults under the terms of any Indebtedness or
lease involving total payment obligations of Borrower in excess of $100,000 and
such default is not cured within the time period permitted pursuant to the terms
and conditions of such Indebtedness or lease, or an event occurs that gives any
creditor or lessor the right to accelerate the maturity of any such indebtedness
or lease payments;
(k) Demand is made for payment of any Indebtedness in excess of
$100,000 that was not originally payable upon demand when incurred but the terms
of which were later changed to provide for payment upon demand;
(l) Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its business
affairs;
(m) A judgment or other claim in excess of $100,000 becomes a
Lien upon any or all of Borrower's assets, other than a Permitted Lien;
(n) A notice of Lien, levy or assessment in excess of $100,000 is
filed of record with respect to any or all of Borrower's assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal or other Government Authority; or any tax or debt
owing at any time hereafter to any one or more of such entities becomes a Lien
upon any or all of Borrower's assets and the same is not paid on the payment
date thereof, except to the extent such tax or debt is being contested by
Borrower as permitted in Section 8.4;
(o) There is a material impairment of the value of the Collateral
or priority of Lender's Liens on the Collateral;
(p) Any of Borrower's assets in excess of $100,000 or any
Collateral are seized, subjected to a distress warrant, levied upon or come into
the possession of any judicial officer;
(q) Any representation or warranty made in writing to Lender by
any officer of Borrower in connection with the transactions contemplated in this
Agreement is materially incorrect when made;
(r) If the aggregate dollar value of all judgments, defaults,
demands, claims and notices of Liens under clauses (e), (j), (k), (m) and (n)
hereof exceeds $200,000; or
(s) Borrower shall intentionally fail to direct all receipts for
Accounts to the Lock Box.
SECTION 11
REMEDIES
SECTION 11.1. SPECIFIC REMEDIES Upon the occurrence of any Event
of Default:
(a) Lender may cease advancing money or extending credit to or
for the benefit of Borrower under this Agreement, under any other Loan Document,
or under any other agreement between Borrower and Lender.
(b) Lender may declare all Obligations to be due and payable
immediately, whereupon they shall immediately become due and payable without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by Borrower.
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17
(c) Lender may set off against the Obligations all Collateral,
balances, credits, deposits, accounts, or moneys of Borrower then or thereafter
held with Lender, including amounts represented by certificates of deposit.
(d) Lender may pay, purchase, contest or compromise any
encumbrance, charge or Lien that, in the opinion of Lender, appears to be prior
or superior to its Lien and pay all reasonable expenses incurred in connection
therewith.
(e) Lender may (i) notify Account Debtors to make payment on
Accounts directly to Lender; (ii) settle, adjust, compromise, extend or renew
Accounts, whether before or after legal proceedings to collect such Accounts
have commenced; (iii) prepare and file any bankruptcy proofs of claim or similar
documents against any Account Debtor; (iv) prepare and file any notice,
assignment, satisfaction, or release of Lien, UCC termination statement or any
similar document; (v) sell or assign Accounts, individually or in bulk, upon
such terms, for such amounts, and at such time or times as Lender deems
advisable; and (vi) complete the performance required of Borrower under any
contract or agreement to which Borrower is a party and out of which Accounts
arise or may arise.
(f) Lender may (i) endorse Borrower's name on all checks, notes,
drafts, money orders or other forms of payment of or security for Accounts or
other Collateral; (ii) sign Borrower's name on drafts drawn on Account Debtors
or issuers of letters of credit; and (iii) notify the postal authorities in
Borrower's name to change the address for delivery of Borrower's mail to an
address designated by Lender, receive and open all mail addressed to Borrower,
copy all mail, return all mail relating to Collateral, and hold all other mail
available for pickup by Borrower.
SECTION 11.2. POWER OF ATTORNEY Borrower hereby appoints Lender
(and any of Lender's officers, employees, or agents designated by Lender) as
Borrower's attorney, with power whether before or after the occurrence of an
Event of Default: (a) to endorse Borrower's name on any checks, notes,
acceptances, money orders, drafts or other forms of payment or security that may
come into Lender's possession; (b) to sign Borrower's name on drafts against
Account Debtors, on schedules and assignments of Accounts, on verifications of
Accounts, and on notices to Account Debtors; (c) to notify the post office
authorities to change the address for delivery of Borrower's mail to an address
designated by Lender, to receive and open all mail addressed to Borrower and to
retain all mail relating to the Collateral and forward all other mail to
Borrower; (d) to send requests for verification of Accounts; (e) to execute UCC
Financing Statements; and (f) to do all things necessary to carry out this
Agreement. The appointment of Lender as Borrower's attorney and each and every
one of Lender's rights and powers, being coupled with an interest, are
irrevocable as long as any Obligations are outstanding. Lender agrees not to
exercise the power granted in clause 11.2(b) prior to the occurrence of an Event
of Default and agrees not to exercise the power granted in clause 11.2(d) prior
to notification of Borrower of its intent to do so, but such limitations do not
limit the effectiveness of such power of attorney at any time. Any person
dealing with Lender shall be entitled to rely conclusively on any written or
oral statement of Lender that this power of attorney is in effect. Lender may
also use Borrower's stationery in connection with exercising its rights and
remedies and performing the Obligations of Borrower.
SECTION 11.3. EXPENSES SECURED All expenses, including attorney
fees, incurred by Lender in the exercise of its rights and remedies provided in
this Agreement, in the other Loan Documents or by law shall be payable by
Borrower to Lender, shall be part of the Obligations, and shall be secured by
the Collateral.
SECTION 11.4. EQUITABLE RELIEF Borrower recognizes that in the
event Borrower fails to perform, observe, or discharge any of its Obligations or
liabilities under this Agreement, no remedy of law will provide adequate relief
to Lender, and Borrower agrees that Lender shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
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SECTION 11.5. REMEDIES ARE CUMULATIVE No remedy set forth herein
is exclusive of any other available remedy or remedies, but each is cumulative
and in addition to every other right or remedy given under this Agreement or
under any other agreement between Lender and Borrower or now or hereafter
existing at law or in equity or by statute. Lender may pursue its rights and
remedies concurrently or in any sequence, and no exercise of one right or remedy
shall be deemed to be an election. No delay by Lender shall constitute a waiver,
election or acquiescence by it.
SECTION 12
INDEMNITY
SECTION 12.1. GENERAL INDEMNITY Borrower shall protect, indemnify
and defend and save harmless Lender and its directors, officers, agents and
employees from and against any and all loss, cost, liability (including
negligence, tort and strict liability), expense, damage, suits or demands
(including fees and disbursements of counsel) on account of any suit or
proceeding before any Governmental Authority which arises from the transactions
contemplated in this Agreement or otherwise arising in connection with or
relating to the Loan and any security therefor, unless such suit, claim or
damages are caused by the negligence or intentional malfeasance of Lender or its
directors, officer, agents or employees. Upon receiving knowledge of any suit,
claim or demand asserted by A third-party that Lender believes is covered by
this indemnity, Lender shall give Borrower timely notice of the matter and an
opportunity to defend it, at Borrower's sole cost and expense, with legal
counsel acceptable to Lender. Lender may, at its option, also require Borrower
to so defend the matter. This obligation on the part of Borrower shall survive
the termination of this Agreement and the repayment of the Note.
SECTION 13
MISCELLANEOUS
SECTION 13.1. DELAY AND WAIVER No delay or omission to exercise
any right shall impair any such right or be a waiver thereof, but any such right
may be exercised from time to time and as often as may be deemed expedient. A
waiver on one occasion shall be limited to that particular occasion.
SECTION 13.2. COMPLETE AGREEMENT This Agreement and the Schedules
are the complete agreement of the parties hereto and supersede all previous
understandings relating to the subject matter hereof. This Agreement may be
amended only by an instrument in writing that explicitly states that it amends
this Agreement and is signed by the party against whom enforcement of the
amendment is sought. This Agreement may be executed in counterparts, each of
which will be an original and all of which will constitute a single agreement.
SECTION 13.3. SEVERABILITY; HEADINGS If any part of this
Agreement or the application thereof to any Person or circumstance is held
invalid, the remainder of this Agreement shall not be affected thereby. The
section headings herein are included for convenience only and shall not be
deemed to be a part of this Agreement.
SECTION 13.4. BINDING EFFECT This Agreement shall be binding upon
and inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto; however, Borrower may not assign any of its
rights or delegate any of its Obligations hereunder. Lender (and any subsequent
assignee) may transfer and assign this Agreement and deliver the Collateral to
the assignee, who shall thereupon have all of the rights of Lender; and Lender
(or such subsequent assignee who in turn assigns as aforesaid) shall then be
relieved and discharged of any responsibility or liability with respect to this
Agreement and said Collateral.
SECTION 13.5. NOTICES Any notices under or pursuant to this
Agreement shall be deemed duly sent when delivered in hand or when mailed by
registered or certified mail, return receipt requested, or when
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delivered by courier or when transmitted by telex, telecopy, or similar
electronic medium to the following addresses:
To Borrower: Renex Corporation
2222 Ponce de Leon Blvd., Suite 300
Coral Gables, FL 33134
Attention: Orestes Lugo, Chief
Financial Officer
Telephone: (305) 448-2044;
Telecopier: (305) 448-1154
To Lender: DVI Business Credit Corporation
4041 MacArthur Blvd., Suite 401
Newport Beach, CA 92660
Attention: Cynthia J. Cohn, Executive
Vice President
Telephone: (714) 474-6100;
Telecopier: (714) 474-6199
Copies to: DVI Business Credit Corporation
500 Hyde Park
Doylestown, PA 18901
Attention: Melvin C. Breaux, Esquire
General Counsel
Telephone: (215) 230-2931;
Telecopier: (215) 230-3537
Either party may change such address by sending notice of the
change to the other party; such change of address shall be effective only upon
actual receipt of the notice by the other party.
SECTION 13.6. GOVERNING LAW ALL ACTS AND TRANSACTIONS HEREUNDER
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED,
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF CALIFORNIA, WITHOUT
GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES.
SECTION 13.7. WAIVER OF TRIAL BY JURY LENDER AND BORROWER HEREBY
WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR THE RELATIONSHIP BETWEEN LENDER AND BORROWER.
SECTION 13.8. SUBMISSION TO JURISDICTION. (a) BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY CALIFORNIA OR FEDERAL COURT
SITTING IN ORANGE COUNTY, CALIFORNIA, OVER ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT. BORROWER HEREBY AGREES THAT SERVICE OF COPIES
OF SUMMONS AND COMPLAINTS AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY
ACTION OR PROCEEDING ARISING HEREUNDER MAY BE MADE BY MAILING OR DELIVERING A
COPY OF SUCH PROCESS BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
BORROWER AT ITS ADDRESS SET FORTH AT THE BEGINNING OF THIS AGREEMENT.
(b) NOTHING IN THIS PARAGRAPH 13.8 SHALL AFFECT THE RIGHT OF
LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE
RIGHT OF LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ANY OF ITS
PROPERTIES IN THE COURTS OF OTHER JURISDICTIONS TO THE EXTENT OTHERWISE
PERMITTED BY LAW.
(c) TO THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE (i)
ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF CALIFORNIA OR ANY FEDERAL COURT
SITTING IN ORANGE COUNTY, CALIFORNIA OR FROM ANY LEGAL PROCESS OUT OF ANY SUCH
COURT (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF
OR ITS PROPERTY,
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OR (ii) ANY OBJECTION TO THE LAYING OF THE VENUE OR OF AN INCONVENIENT FORUM OF
ANY SUIT, ACTION OR PROCEEDING, IF BROUGHT IN CALIFORNIA OR FEDERAL COURT
SITTING IN ORANGE COUNTY, CALIFORNIA UNDER PROCESS SERVED IN ACCORDANCE WITH
SUBPARAGRAPH (a) ABOVE, BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY OR
OBJECTION IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE LOANS.
IN WITNESS WHEREOF, Borrower and Lender have executed this
Agreement by their duly authorized officers as of the date first above written.
LENDER:
DVI BUSINESS CREDIT CORPORATION
By: /s/ Cynthia J. Cohn
------------------------------------------
Print Name: Cynthia J. Cohn
----------------------------------
Title: Executive Vice President
---------------------------------------
BORROWER:
RENEX DIALYSIS CLINIC OF MIAMI BEACH,
INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS HOMECARE OF TAMPA, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF PITTSBURGH,
INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF AMESBURY, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
BORROWER:
RENEX CORPORATION
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF TAMPA, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF PHILADELPHIA,
INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS HOMECARE OF GREATER
PITTSBURGH, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF CREVE COUER,
INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
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21
RENEX DIALYSIS HOMECARE OF GREATER
ST. LOUIS, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF BRIDGETON, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS CLINIC OF UNIVERSITY
CITY, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
RENEX DIALYSIS FACILITIES, INC.
By: /s/ James P. Shea
------------------------------------------
Print Name: James P. Shea
----------------------------------
Title: President
---------------------------------------
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