LINE OF CREDIT AGREEMENT
This Line of Credit Agreement
(this “Agreement”) is made and entered into effective
as of March 12, 2009 (the “Effective Date”) by and
among HC Innovations, Inc., a Delaware corporation (the
“Borrower”) and The Kenneth D. Lamé Living
Trust, Welwyn Management Company and Brahma Finance (BVI) Limited
(collectively, the “Lenders”).
1. Commitments to Lend
.
During
the Commitment Period each Lender severally agrees, on the terms
and conditions set forth in the Agreement, to make Advances to the
Borrower from time to time in amounts such that the aggregate
principal amount of Advances by such Lender at any one time
outstanding does not exceed the amount of its Commitment. Each
Advance under this Agreement shall be made ratably from the several
Lenders in proportion to their Commitments. The Borrower may, on
the terms and conditions set forth in the Agreement, borrow, repay
and reborrow at any time during the Commitment Period.
2. Borrowing Procedures
.
The
Borrower shall give the Lenders notice not later than 10:00 AM on
the date of each Advance specifying the date of such Advance, which
shall be a Business Day, and the aggregate amount of such Advance.
Each requested Advance shall be made available to the Borrower by
drawing on the Lenders’ deposit account maintained at a bank
or other financial institution to be designated by the Lenders.
Each Advance shall be made pursuant to procedures and timing agreed
to between the Borrower and such bank, and shall be subject to dual
signature control as follows:
One Signature from the Borrower:
Robert Scott Walker, CFO or Tina Bartelmay, President & COO;
and
One signature from specified
directors of the Borrower: Kenneth Lamé, Chairman of the
Board or Orlo Dietrich, Director.
The
Borrower shall not request any Advance if an Event of Default shall
have occurred and be continuing, or if an event has occurred, which
with the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
3. Purpose .
The
purpose and sole use of the Line of Credit shall be to satisfy the
Borrower’s bi-weekly payroll. Proceeds from Advances will
only be deposited into the Borrower’s primary payroll account
and will not be used for any other purpose.
4. Cleandown and Maturity
.
(a)
Advances must be repaid from time to time such that the Line of
Credit must be fully repaid with no amount outstanding for 8
consecutive Business Days in any 23 consecutive Business Day
period.
(b)
All Advances must be repaid in full on or before the Maturity Date.
The aggregate unpaid principal amount of all Advances shall not at
any time exceed the Maximum Amount. The Borrower shall make an
immediate prepayment in the event that the aggregate unpaid
principal amount of all Advances shall at any time exceed the
Maximum Amount.
5. Interest and Fees
.
The
Borrower shall pay to each Lender:
(a)
as commitment fees, an amount equal to five-twelfths of one percent
(5/12%) per calendar month or part thereof of the amount of such
Lender’s Commitment, minus such Lender’s pro rata share
of any amounts earned on any amounts on deposit in the account
referred to in Section 2 above; provided that such commitment fee
shall not thereby be reduced to less than zero;
(b)
as interest, an amount equal to five-twelfths of one percent
(5/12%) per calendar month of the principal amount of Advances
outstanding from time to time, based on the actual number of days
during which such Advances were outstanding; and
(c)
as additional interest, an amount equal to two-twelfths of one
percent (2/12%) per calendar month of the principal amount of
Advances outstanding, for such number of days as the provisions of
Section 4(a) are not satisfied.
All
amounts of commitment fees, interest and additional interest shall
be paid in full on a monthly basis, in arrears, no later than the
earlier of (i) the fifth Business Day following the end of the
month during which such amounts accrued and (ii) the Maturity Date.
Any overdue principal, interest or other amounts payable hereunder
shall bear interest, payable on demand, equal to an additional five
percent (5%) of the amount payable. Whenever any payment to be made
hereunder shall be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such
extension of time shall in each case be included in the computation
of the interest and other amounts payable hereunder.
6. Notes .
Prior
to any Advances being made, the Borrower shall execute and deliver
to each of the Lenders a Note for the principal amount of such
Advances. Each Note shall serve as a master note to evidence all
Advances made to such Lender. Lender shall record (a) the principal
amount of each Advance and the interest rate applicable thereto,
and (b) the amount of any principal, interest or other payment and
the applicable dates with respect thereto, by such method as such
Lender may generally employ; provided that failure to make any such
entry shall in no
2
way detract from Borrower’s
obligations hereunder or under the Notes. The aforesaid information
with respect to the Advances set forth on the records of each
Lender shall be rebuttably presumptive evidence of the principal,
interest and other amounts owing and unpaid on such
Note.
7. Guaranties and Security
.
This
Agreement and each Note are entitled to the ratable and pari passu
benefit of that certain Guarantee and Amended and Restated Security
Agreement referred to in the Senior Notes Agreement granted by the
Borrower and the Subsidiary Guarantors (as defined therein) in
favor of the Noteholders identified therein, pursuant to which the
Borrower and such Subsidiary Guarantors have guarantied the
Borrower’s obligations thereunder and pursuant to which the
Noteholders identified therein have been granted a security
interest in certain collateral. This Agreement and the Notes shall
be subject to the terms and conditions set forth in such Guarantee
and Amended and Restated Security Agreement.
8. Conversion Right
.
If
any amounts remain outstanding under this Agreement or the Notes on
or after the Maturity Date, each Lender shall have the option to
convert such outstanding amounts into shares of the
Borrower’s common stock, par value $0.001, upon the same
terms and subject to the same conditions applicable to
“Amended Notes” as set forth in the Senior Notes
Agreement.
9. Events of Default;
Remedies .
Upon
the occurrence of an Event of Default and at all times thereafter,
at the option of any Lender (but automatically with respect to any
Event of Default resulting from the insolvency or bankruptcy of
Borrower), all Obligations shall become immediately due and
payable, any Lender may terminate the Line of Credit and no further
Advances may be requested by the Borrower. In addition, each Lender
may apply or setoff any amounts owed by it to the Borrower against
all Obligations, all without any notice to or demand upon the
Borrower, in addition to any other rights and remedies such Lender
may have pursuant to law or equity, this Agreement, any Note and
any other instruments or agreements, which rights and remedies
shall be cumulative.
10. Costs and Expenses;
Indemnifi
