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REVOLVING CREDIT AND SECURITY AGREEMENT
THIS REVOLVING CREDIT AND SECURITY AGREEMENT
(the
“Agreement” )
dated as of February 1, 2008 is entered into between
NeoGenomics, Inc. ,
a Florida corporation (“
Borrower ”),
NeoGenomics, Inc. ,
a Nevada corporation (“
Guarantor ”,
together with Borrower, individually a “
Credit Party ”
and collectively, the “
Credit Parties ”)
and
CAPITALSOURCE FINANCE LLC ,
a Delaware limited liability company (the
“Lender” ).
WHEREAS,
the Credit Parties have requested that Lender make available
to Borrower a revolving credit facility (the
“Revolving Facility” )
in a maximum principal amount at any time outstanding of up to
Three Million
Dollars
($3,000,000) (the
“Facility Cap” ),
the proceeds of which shall be used by Borrower as a provider of
healthcare services and for the generation of receivables
and
for any other lawful purpose permitted under this Agreement and for
payments to Lender hereunder; and
WHEREAS,
Lender is willing to make the Revolving Facility available to
Borrower upon the terms and subject to the conditions set
forth herein.
NOW,
THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt and adequacy of
which hereby are acknowledged, and intending to be legally
bound, Credit Parties and Lender hereby agree as
follows:
1.1
General Terms
In
addition to the definitions above and elsewhere in this
Agreement, the terms listed in
Annex I hereto
shall have the meanings given such terms in
Annex I ,
which are incorporated herein and made a part hereof. All
capitalized terms used which are not specifically defined herein
shall have meanings provided in Article 9 of the UCC to the
extent the same are used or defined therein. Unless otherwise
specified herein or in
Annex I ,
any agreement, contract or instrument referred to herein or
in
Annex I shall
mean such agreement, contract or instrument as modified, amended,
restated or supplemented from time to time. Unless otherwise
specified, as used in the Loan Documents or in any certificate,
report, instrument or other document made or delivered pursuant to
any of the Loan Documents, all accounting terms not defined
in
Annex I or
elsewhere in this Agreement shall have the meanings given to such
terms in and shall be interpreted in accordance with GAAP.
References herein to “
Eastern Time ”
shall mean eastern standard time or eastern daylight savings time
as in effect on any date of determination in the eastern United
States of America. The terms “
herein ”,
“
hereof ”
and similar terms refer to this Agreement as a whole. In the
computation of periods of time from a specified date to a later
specified date in any Loan Document, the terms “
from ”
means “from and including” and the words “
to ”
and “
until ”
each mean “to but excluding” and the word
“
through ”
means “to and including.” In any other case, the term
“
including ”
when used in any Loan Document means “including without
limitation.” The term “
documents ”
means all writings, however evidenced and whether in physical or
electronic form, including all documents, instruments, agreements,
notices, demands, certificates, forms, financial statements,
opinions and reports. The term “
incur ”
means incur, create, make, issue, assume or otherwise become
directly or indirectly liable in respect of or responsible for, in
each case whether directly or indirectly, and the terms
"incurrence" and "incurred" and similar derivatives shall have
correlative meanings. Unless otherwise expressly indicated, the
meaning of any term defined (including by reference) in any Loan
Document shall be equally applicable to both the singular and
plural forms of such term.
In
the event that any Accounting Change (as defined below) shall
occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this
Agreement, then Borrower and Lender agree to enter into
good faith negotiations in order to amend such provisions of
this Agreement so as to equitably reflect such Accounting
Change with the desired result that the criteria for
evaluating Borrower’s financial condition shall be
the same after such Accounting Change
as
if such Accounting Change had not been made. Until such
time as such an amendment shall have been executed and
delivered by Borrower and Lender, all financial covenants,
standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Change had
not occurred.
1.2
Definitions
“
Acceptance Notice ”
shall have the meaning given such term in
Section 8.11 .
“
Accounting Change ”
refers to changes in accounting principles required by the
promulgation of any rule, regulation, pronouncement or opinion by
the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the U.S.
Securities and Exchange Commission.
“
Accounts ”
shall mean “accounts” as defined in Section 9-102 of
the UCC (including Health Care Insurance Receivables).
“
Account Debtor ”
shall mean “account debtor” as defined in Section 9-102
of the UCC.
“
Accumulated Distribution ”
shall have the meaning given to it in the definition of
“
Permitted Distribution ”.
“
Accumulated Distribution Fiscal Quarter ”
shall have the meaning given to it in the definition of
“
Permitted Distribution ”.
“
Advance ”
shall mean a borrowing under the Revolving Facility. Any amounts
paid by Lender on behalf of Borrower or Guarantor under any Loan
Document shall be an Advance for purposes of the
Agreement.
“
Affiliate ”
shall mean, as to any Person (a) any other Person that, directly or
indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, (b)
any other Person who is a director or officer (i) of such Person,
(ii) of any Subsidiary of such Person, or (iii) of any Person
described in clause (a) above with respect to such Person, (c) any
other Person which, directly or indirectly through one or more
intermediaries, is the beneficial or record owner (as defined in
Rule 13d-3 of the Securities Exchange Act of 1934, as amended, as
the same is in effect on the date hereof) of five percent (5%) or
more of any class of the outstanding voting stock, securities or
other equity or ownership interests of such Person and (d) in the
case such Person is an individual, any other Person who is an
immediate family member, spouse or lineal descendant of individuals
of such Person or any Affiliate of such Person. For purposes of
this definition, the term “control” (and the
correlative terms, “controlled by” and “under
common control with”) shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies, whether through ownership of securities or
other interests, by contract or otherwise. “Affiliate”
shall include any Subsidiary. Notwithstanding anything herein to
the contrary, in no event shall Lender be considered as
“Affiliate” of Borrower or Guarantor.
“
Applicable Rate ”
shall mean the interest rate applicable from time to time to Loans
under the Agreement.
“
Availability ”
shall mean the value, in U.S. Dollars of eighty-five percent (85%)
of the Borrowing Base minus, if applicable amounts reserved
pursuant to this Agreement.
“
Borrowing Base ”
shall mean, as of any date of determination, the net collectible
Dollar value of Eligible Accounts, as determined with reference to
the most recent Borrowing Certificate and otherwise in accordance
with the Agreement;
provided ,
however ,
that if as of such date the most recent Borrowing Certificate is of
a date more than four Business Days before or after such date, the
Borrowing Base shall be determined by Lender in its Permitted
Discretion. For purposes hereof, the net collectible Dollar value
of Eligible Accounts is the amount due to Borrower as a result of a
contractual right of payment from third-party payors less
deductible obligations and contractual allowances as determined and
approved by Lender in its Permitted Discretion.
“
Borrowing Certificate ”
shall mean a Borrowing Certificate substantially in the form
of
Exhibit A attached
hereto.
“
Borrowing Date ”
shall the mean the date requested for an Advance by Borrower
pursuant to
Section 2.3 .
“
Business Day ”
shall mean any day other than a Saturday, Sunday or other day on
which the Federal Reserve or Lender is closed.
“
Capital Expenditures ”
shall mean, for any Test Period, the sum (without duplication) of
all expenditures (whether paid in cash or accrued as liabilities)
during the Test Period that are or should be treated as capital
expenditures under GAAP.
“
Capital Lease ”
shall mean, as to any Person, a lease of any interest in any kind
of property or asset by that Person as lessee that is, should be or
should have been recorded as a “capital lease” in
accordance with GAAP.
“
Capital Stock ”
shall mean any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants, rights or options to
purchase any of the foregoing.
“
Capitalized Lease Obligations ”
shall mean all obligations of any Person under Capital Leases, in
each case, taken at the amount thereof accounted for as a liability
in accordance with GAAP.
“
Change of Control ”
shall mean, with respect to Borrower or Guarantor, the occurrence
of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange,
sale or transfer or any other transaction or series of transactions
in which its stockholders, managers, partners or interest holders
immediately prior to such transaction or series of transactions
receive, in exchange for the stock or interests owned by them,
cash, property or securities of the resulting or surviving entity
or any Affiliate thereof, and, as a result thereof, Persons who,
individually or in the aggregate, were holders of fifty percent
(50%) or more of its voting stock, securities or equity,
partnership or ownership interests immediately prior to such
transaction or series of transactions hold less than fifty percent
(50%) of the voting stock, securities or other equity, partnership
or ownership interests of the resulting or surviving entity or such
Affiliate thereof, calculated on a fully diluted basis, (ii) a
direct or indirect sale, transfer or other conveyance or
disposition, in any single transaction or series of transactions,
of all or substantially all of its assets, (iii) the initial public
offering of its securities, (iv) any “change in/of
control” or “sale” or “disposition”
or similar event as defined in any document governing indebtedness
of such Person which gives the holder of such indebtedness the
right to accelerate or otherwise require payment of such
indebtedness prior to the maturity date thereof, or (v) the
replacement of a majority of the board of directors of Borrower
over a one-year period from the directors who constituted the board
of directors of such Borrower at the beginning of such period and
such replacement shall not have been approved by a vote of at least
a majority of the board of directors of such Borrower then still in
office who either are members of such board of directors at the
beginning of such period or whose election as a member of such
board of directors was previously so approved.
“
Chattel Paper ”
shall mean “chattel paper” as defined in
Section 9-102 of the UCC, whether tangible or
electronic.
“
Closing ”
shall mean the satisfaction, or written waiver by Lender, of all of
the conditions precedent set forth in the Agreement required to be
satisfied prior to the consummation of the transactions
contemplated hereby.
“
Closing Date ”
shall mean the date upon which the Closing occurs.
“
Collateral ”
shall mean all of the property described below in, to, or under
which a Borrower now has or hereafter acquires any right, title or
interest, whether present, future, or contingent, including any
such property acquired by assignment:
(a)
All
of Borrower’s now-owned and hereafter acquired or
arising Accounts, accounts receivable and rights to payment of
every kind and description related to Accounts, and all of
Borrower’s contract rights, chattel paper, documents and
instruments with respect to such Accounts and accounts
receivable, and all of Borrower’s rights, remedies,
security and liens, in, to and in respect of the Accounts,
including, without limitation, rights of stoppage in transit,
replevin, repossession and reclamation and other rights and
remedies of an unpaid vendor, lienor or secured party,
guaranties or other contracts of suretyship with respect to
the Accounts, deposits, Letters of Credit, Supporting
Obligations or other security for the obligation of any
Account Debtor, and credit and other insurance relating to
such Accounts and accounts receivable;
(b)
All
of Borrower’s right, title and interest in, to and in
respect of all goods relating to, or which by sale have
resulted in, Accounts, including, without limitation, all
goods described in invoices or other documents or instruments
with respect to, or otherwise representing or evidencing, any
Account, and all returned, reclaimed or repossessed
goods;
(c)
All
of Borrower’s now owned or hereafter acquired (i)
Lockbox Accounts (and the funds contained therein) and (ii)
any deposit accounts (and the funds contained therein), other
than the Lockbox Accounts, into which Accounts are deposited,
to the extent Accounts are contained therein;
(d)
All
of Borrower’s now owned and hereafter acquired or
arising general intangibles and other property of every kind
and description with respect to, evidencing or relating to its
Accounts and other rights to payment, including, but not
limited to, all existing books and records, as the same relate
to the Accounts;
(e)
The
proceeds of all of the foregoing (including, without
limitation, insurance proceeds) related to losses with respect
to Collateral such as business interruption insurance or other
insurance proceeds related specifically to losses from the
Collateral.
“
Collateral Management Fee ”
shall mean a monthly fee to be paid by Borrower to Lender in an
amount equal to 0.025% per month calculated on the basis of the
daily average amount of the balances under the Revolving Facility
outstanding during the preceding month.
“
Commercial Tort Claims ”
shall mean “Commercial Tort Claims” as defined in
Section 9-102 of the UCC.
“
Compliance Certificate ”
shall mean a compliance certificate substantially in the form
of
Exhibit B attached
hereto.
“
Concentration Account ”
shall mean a depository account maintained by Lender or an
affiliate of Lender at such bank as Lender may communicate to
Borrower from time to time.
“
Credit Party ”
shall have the meaning set forth in the first paragraph of this
Agreement.
“
Debtor Relief Law ”
shall mean, collectively, the Bankruptcy Code of the United States
of America and all other applicable federal and state liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization or similar debtor relief
laws from time to time in effect affecting the rights of creditors
generally, as amended and in effect from time to time.
“
Default ”
shall mean any event, fact, circumstance or condition that, with
the giving of applicable notice or passage of time or both, would
constitute or be or result in an Event of Default.
“
Default Rate ”
shall mean at any time the Applicable Rate in effect at such time
plus three percent (3%) per annum.
“
Denial Disclosure ”
shall have the meaning given to it in Section 7.18.
“
Deposit Accounts ”
shall mean “deposit accounts” as defined in Section
9-102 of the UCC.
“
Distribution ”
shall mean any direct or indirect dividend, distribution or other
payment of any kind or character (whether in cash, securities or
other property) in respect of any equity interests.
“
Dollars ”
and the sign “
$ ”
each mean the lawful money of the United States of
America.
“
Documents ”
shall mean “documents” as defined in Section 9-102 of
the UCC.
“
Eligible Accounts ”
shall mean each Account arising in the ordinary course of
Borrower’s business from the sale or lease of goods or
rendering of Services which Lender, in its Permitted Discretion,
deems an Eligible Account unless:
(a)
such
Account is not subject to a valid perfected first priority
security interest in favor of Lender, subject to no other
Lien;
(b)
such
Account is not evidenced by an invoice, statement or other
documentary evidence satisfactory to Lender;
(c)
such
Account or any portion thereof (in which case only such
portion shall not be an Eligible Account) is payable by a
beneficiary, recipient or subscriber individually and not
directly by a Medicaid/Medicare Account Debtor or commercial
medical insurance carrier, or client acceptable to Lender in
its Permitted Discretion;
(d)
such
Account arises out of Services rendered or a sale or lease
made to, or out of any other transaction between Borrower or
any of its Subsidiaries and, one or more Affiliates of
Borrower;
(e)
such
Account remains unpaid for longer than (i) one hundred fifty
(150)
calendar
days
after the applicable Services were rendered with respect to
Accounts payable by a Medicaid/Medicare Account Debtor or
commercial medical insurance carrier acceptable to Lender and (ii)
one hundred twenty (120) calendar days after the applicable
Services were rendered with respect to all other Account
Debtors;
(f)
with
respect to all Accounts owed by any particular Account Debtor
(other than Accounts from Medicaid/Medicare Account Debtors)
or its Affiliates, if more than twenty five percent (25%) of
the aggregate balance of all such Accounts owing from such
Account Debtor and its Affiliates are ineligible due to the
requirements of clause (e) of this Section or such higher
threshold which may be agreed in writing by Lender for any
specific Account Debtor;
(g)
with
respect to all Accounts owed by any particular Account Debtor
or its Affiliates, twenty-five percent (25%) or more of all
such Accounts are deemed not to be Eligible Accounts for any
reason hereunder (which percentage may, in Lender’s
Permitted Discretion, be increased or decreased);
(h)
with
respect to all Accounts owed by any particular Account Debtor
or its Affiliates (other than Medicaid/Medicare Account
Debtors) if such Accounts exceed twenty percent (20%) of the
net collectible Dollar value of all Eligible Accounts at any
one time (including Accounts from Medicaid/Medicare Account
Debtors), then the amount by which such Accounts for that
particular Account Debtor or its Affiliates exceed twenty
percent (20%) of the net collectible Dollar value of all
Eligible Accounts shall not be included as Eligible
Accounts;
(i)
any
covenant, agreement, representation or warranty contained in
any Loan Document with respect to such Account has been
breached and remains uncured;
(j)
the
Account Debtor for such Account has commenced a voluntary case
under any Debtor Relief Law or has made an assignment for the
benefit of creditors, or a decree or order for relief has been
entered by a court having jurisdiction in respect of such
Account Debtor in an involuntary case under any Debtor Relief
Law, or any other petition or application for relief under any
Debtor Relief Law has been filed against such Account Debtor,
or such Account Debtor has failed, suspended business, ceased
to be solvent, called a meeting of its creditors, or has
consented to or suffered a receiver, trustee, liquidator or
custodian to be appointed for it or for all or a significant
portion of its assets or affairs;
(k)
such
Account arises from the sale or lease of property or Services
rendered to one or more Account Debtors outside the United
States (including any territory or possession of the United
States that has adopted Article 9 of the UCC) or that have
their principal place of business or chief executive offices
outside the United States (including any territory or
possession of the United States that has adopted Article 9 of
the UCC);
(l)
such
Account represents the sale or lease of goods or rendering of
Services to an Account Debtor on a bill-and-hold, guaranteed
sale, sale-and-return, sale on approval, consignment or any
other repurchase or return basis or is evidenced by Chattel
Paper or an Instrument of any kind or has been reduced to
judgment;
(m)
the
applicable Account Debtor for such Account is any Governmental
Authority (excluding Medicaid/Medicare Account Debtors),
unless rights to payment of such Account have been assigned to
Lender pursuant to the Assignment of Claims Act of 1940, as
amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C.
Section 15, et seq.), or otherwise only if all applicable
statutes or regulations respecting the assignment of
Government Accounts have been complied with as determined by
Lender in its Permitted Discretion;
(n)
such
Account is subject to any offset, credit (including any
resource or other income credit or offset) deduction, defense,
discount, chargeback, freight claim, allowance, adjustment,
dispute or counterclaim (each an “
Adjustment ”),
or is contingent in any respect or for any reason;
provided ,
that ,
the discounted amount of such Account after giving effect to such
Adjustment will be considered an Eligible Account;
(o)
there
is any agreement with an Account Debtor for any deduction from
such Account;
provided ,
that ,
the discounted amount of such Account after giving effect to such
discounts and allowances shall be considered an Eligible
Account;
(p)
any
return, rejection or repossession of goods or Services related
to it has occurred;
(q)
such
Account is not payable to Borrower;
(r)
a
Borrower has agreed to accept or has accepted any non-cash
payment for such Account;
(s)
with
respect to any Account arising from the sale of goods, the
goods have not been shipped to the Account Debtor or its
designee;
(t)
with
respect to any Account arising from the performance of
Services, the Services have not been actually performed or the
Services were undertaken in violation of any law;
or
(u)
such
Account fails to meet such other specifications and
requirements which may from time to time be established by
Lender or is not otherwise satisfactory to Lender, as
determined in Lender’s Permitted
Discretion.
“
EMTALA ”
shall mean the Emergency Medical Treatment and Active Labor Act, as
amended, and the regulations thereunder.
“
Environmental Laws ”
shall mean any and all laws, rules, orders, regulations, statutes,
ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common
law) of any international authority, foreign government, the United
States, or any state, local, municipal or other governmental
authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment, or
protection of human health or employee health and safety (as
affected by the environment or by any substance the exposure to
which is reasonably suspected of causing harm to human health), as
has been, is now, or may at any time hereafter be, in effect to
which the Borrower is subject.
“
Equipment ”
shall mean “equipment” as defined in Section 9-102 of
the UCC.
“
ERISA ”
shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.
“
Event of Default ”
shall mean the occurrence of any event set forth in
Article X .
“
Excess Cash Flow ”
shall mean, for any fiscal year (or for such other period as may be
specifically provided for herein), as calculated for Borrowers and
their Subsidiaries on a consolidated basis, without duplication, an
amount equal to the sum of (a) Net Income (as defined in Annex I)
for such period, plus (b) an amount equal to the amount of
depreciation expenses, amortization expense (including the
amortization of goodwill), accrued non-cash interest expense and
all other non-cash charges deducted in arriving at such Net Income,
plus (c) an amount equal to the aggregate Net Cash Proceeds of the
sale, lease, transfer or other disposition of assets by Borrowers
during such period to the extent not required to be applied to
mandatory prepayments or payments on the Loans, plus (d) an amount
equal to the net loss on the sale, lease, transfer or other
disposition of assets by Borrowers during such period to the extent
deducted in arriving at such Net Income, plus (e) an amount equal
to any tax refunds or credits received by Borrowers during such
period, plus (f) other extraordinary or non-recurring charges that
would not have otherwise been incurred in the ordinary course of
business, less (g) an amount equal to the unfinanced permitted
Capital Expenditures of Borrowers for such period, less (h) an
amount equal to the sum of all regularly scheduled payments (to the
extent such payments have not already been deducted in arriving at
Net Income) and optional and mandatory prepayments of principal on
Indebtedness for money borrowed actually made during such period to
the extent permitted hereunder, less (i) an amount equal to the net
gain on the sale, lease, transfer or other disposition of assets by
Borrowers during such period to the extent included in arriving at
such Net Income, less (j) other extraordinary or non-recurring
gains that would not have otherwise been incurred in the ordinary
course of business.
“
Facility Cap ”
shall have the meaning given the term in the Recitals of this
Agreement.
“
Federal Reserve ”
shall mean the Federal Reserve Bank of the United
States.
“
Fixtures ”
shall mean “fixtures” as defined in Section 9-102 of
the UCC.
“
GAAP ”
shall mean generally accepted accounting principles in the United
States as in effect on the Closing Date.
“
General Intangibles ”
shall mean “general intangibles” as defined in Section
9-102 of the UCC.
“
Goods ”
shall mean “goods” as defined in Section 9-102 of the
UCC.
“
Government Account ”
shall mean all Accounts arising out of or with respect to any
Government Contract.
“
Government Contract ”
shall mean all contracts with any Governmental
Authority.
“
Governmental Authority ”
shall mean any federal, state, municipal, national, local or other
governmental department, court, commission, board, bureau, agency
or instrumentality or political subdivision thereof, or any entity
or officer exercising executive, legislative or judicial,
regulatory or administrative functions of or pertaining to any
government or any court, in each case, whether of the United States
or a state, territory or possession thereof, a foreign sovereign
entity or country or jurisdiction or the District of
Columbia.
“
Guaranteed Obligations ”
shall have the meaning given such term in
Section 14.1 hereof.
“
Guarantor ”
shall have the meaning set forth in the first paragraph of this
Agreement.
“
Guaranty ”
shall mean, collectively and each individually, all guaranties
executed by Guarantor.
“
Hazardous Substances ”
shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials as defined in or subject to any
applicable Environmental Law.
“
Healthcare Laws ”
shall mean all applicable statutes, laws, ordinances, rules and
regulations of any Governmental Authority with respect to
regulatory matters primarily relating to patient healthcare,
healthcare providers and healthcare services (including without
limitation Section 1128B(b) of the Social Security Act, as amended,
42 U.S.C. Section 1320a-7(b) (Criminal Penalties Involving
Medicare or State Health Care Programs), commonly referred to as
the “Federal Anti-Kickback Statute,” and the Social
Security Act, as amended, Section 1877, 42 U.S.C. Section 1395nn
(Prohibition Against Certain Referrals), commonly referred to as
“Stark Statute”), and 31 U.S.C. Section 3279
et
seq .
(the False Claims Act) to which Borrower is subject.
“
HIPAA ”
shall mean the Health Insurance Portability and Accountability Act
of 1996 (Pub. L. No. 104-191) and the regulations promulgated
thereunder.
“
HUD Application ”
shall have the meaning given such term in
Section 8.11 .
“
Indebtedness ”
of any Person shall mean, without duplication, (a) all
obligations for borrowed money, (b) all obligations evidenced
by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit
or bankers acceptances, (c) all Capitalized Lease Obligations,
(d) all obligations or liabilities of others secured by a Lien
on any asset of such Person or its Subsidiaries, irrespective of
whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (other
than trade payables incurred in the ordinary course of business and
not outstanding more than one hundred twenty (120) calendar days
after the date such payable was created) or such longer period as
shall be agreed in writing by Lender and Borrower, (f) all net
obligations owing to counterparties under Hedging Agreements, (g)
all obligations with respect to redeemable Capital Stock or
repurchase obligations under any Capital Stock issued by such
Person, (h) the present value of future rental payments under all
synthetic leases (excluding specifically any operating leases or
real estate leases) and (i) any obligation guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed,
endorsed, co-made, discounted, or sold with recourse) any
obligation of any other Person that constitutes Indebtedness under
any of clauses (a) through (h) above.
“
Indemnified Person ”
shall have the meaning given such term in
Section 15.4 .
“
Initial Advance ”
shall mean the initial Advance.
“
Instrument ”
shall mean “instrument” as defined in Section 9-102 of
the UCC.
“
Insured Event ”
shall have the meaning given such term in
Section 15.4 .
“
Insurer ”
shall mean a Person that insures another Person against any costs
incurred in the receipt by such other Person of Services, or that
has an agreement with Borrower to compensate it for providing
Services to such Person.
“
Intellectual Property ”
shall mean all patents, patent applications, trademarks, trademark
applications, service marks, registered copyrights, copyright
applications, copyrights, trade names, trade secrets and software
and all rights in the foregoing.
“
Inventory ”
shall mean “inventory” as defined in Section 9-102 of
the UCC.
“
Investment Property ”
shall mean “investment property” as defined in Section
9-102 of the UCC.
“
Landlord Waiver and Consent ”
shall mean a waiver/consent from the owner/lessor/mortgagee of any
premises either owned or occupied by Borrower at which any of the
Collateral is now or hereafter located for the purpose of providing
Lender access to such Collateral, in each case as such may be
modified, amended or supplemented from time to time.
“
Letter of Credit Rights ”
shall mean “letter of credit rights” as defined in
Section 9-102 of the UCC, whether or not the letter of credit is
evidenced by a writing.
“
Liability Event ”
shall mean any event, fact, condition or circumstance (i) in or for
which Borrower becomes liable or otherwise responsible for any
amount over $50,000 owed or owing to any Medicaid, Medicare or
CHAMPUS/TRICARE program by a provider under common ownership with
such Borrower or any provider owned by such Borrower pursuant to
any applicable law, ordinance, rule, decree, order or regulation of
any Governmental Authority after the failure of any such provider
to pay any such amount when owed or owing, (ii) in which Medicaid,
Medicare or CHAMPUS/TRICARE payments to Borrower are lawfully
set-off against payments to such Borrower to satisfy any liability
of or for any amounts over $50,000 owed or owing to any Medicaid,
Medicare or CHAMPUS/TRICARE program by a provider under common
ownership with such Borrower or any provider owned by such Borrower
pursuant to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority, or (iii) any of the
foregoing under clauses (i) or (ii) in each case pursuant to
statutory or regulatory provisions that are similar to any
applicable law, ordinance, rule, decree, order or regulation of any
Governmental Authority referenced in clauses (i) and (ii) above or
successor provisions thereto.
“
LIBOR ”
shall mean a rate of interest equal to the rate per annum (rounded
upwards to the nearest 1/100th of 1%) at which Dollar deposits for
a period of one month are offered in the London interbank
eurodollar market as displayed in the Bloomberg Financial Markets
system (or as otherwise determined by Lender in its sole
discretion) as of 11:00 A.M. (London time) on the applicable date
of determination.
“
Lien ”
shall mean any mortgage, pledge, security interest, encumbrance,
restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof), or any
other arrangement pursuant to which title to the property is
retained by or vested in some other Person for security
purposes.
“
Liquidity Factors ”
shall mean percentages which Lender, in its credit judgment, may
apply to Eligible Accounts by payor class based upon
Borrower’s actual recent collection history for each such
payor class (i.e. Medicare, Medicaid, commercial insurance, etc.)
in a manner consistent with Lender’s underwriting practices
and procedures, including, without limitation, Lender’s
review and analysis of, among other things, Borrower’s
historical returns, rebates, discounts, credits and allowances, to
adjust the Availability.
“
Loan ”
or “
Loans ”
shall mean, individually and collectively, all
Advances.
“
Loan Documents ”
shall mean, collectively and each individually, this Agreement and
all other agreements, documents, instruments and certificates
heretofore or hereafter executed or delivered to, or on behalf of,
Lender in connection with this Agreement or the Loans, as the same
may be amended, modified or supplemented from time to
time.
Lockbox Accounts ”
shall mean, collectively and each individually, the Deposit
Accounts maintained by Borrower at the Lockbox Banks into which all
collections or payments on Borrower’s Accounts and other
Collateral are paid and which Accounts and other Collateral are
subject to Lender’s security interest granted by a
Borrower.
“
Lockbox Agreement ”
shall mean an agreement among Lender, Borrower who has granted a
security interest in a Deposit Account and any of the Lockbox Banks
governing the Lockbox Accounts, in form and substance satisfactory
to Lender.
“
Lockbox Banks ”
shall mean, collectively and each individually, the federally
insured banks acceptable to Lender where Borrower who have granted
security interests in a Lockbox Account shall maintain the Lockbox
Accounts.
“
Management or Service Fee ”
shall mean any management, service or related or similar fee paid
by Borrower to any Person with respect to any facility owned,
operated or leased by Borrower.
“
Material Adverse Change ”
shall mean any event, condition or circumstance or set of events,
conditions or circumstances or any change(s) which (i) has, had or
would reasonably be likely to have any material adverse effect upon
or change in the validity or enforceability of any Loan Document,
(ii) has been or would reasonably be expected to be adverse to the
value of any material portion of the Collateral, or to the priority
of Lender’s security interest in any portion of the
Collateral, (iii) has been or would reasonably be expected to be
materially adverse to the business, operations, prospects,
properties, assets, liabilities or financial condition of any
Credit Party, either individually or taken as a whole, or (iv) has
materially impaired or would reasonably be likely to materially
impair the ability of any Borrower to pay any portion of the
Obligations or otherwise perform the Obligations or to consummate
the transactions under the Loan Documents executed by such
Person.
“
Materials of Environmental Concern ”
shall mean any gasoline or petroleum (including crude oil or any
fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants,
radioactivity, and any other substances or forces of any kind,
whether or not any such substance or force is defined as hazardous
or toxic under any Environmental Law, that is regulated pursuant to
or would reasonably be expected to give rise to liability under any
Environmental Law.
“
Medicaid/Medicare Account Debtor ”
shall mean any Account Debtor which is (i) the United States of
America acting under the Medicaid or Medicare program established
pursuant to the Social Security Act or any other federal healthcare
program, including, without limitation, TRICARE (f/k/a CHAMPUS),
(ii) any state or the District of Columbia acting pursuant to a
health plan adopted pursuant to Title XIX of the Social Security
Act or any other state health care program, or (iii) any agent,
carrier, administrator or intermediary for any of the
foregoing.
“
Minimum Termination Fee ”
shall mean (for the time period indicated) the amount equal to (i)
7.5% of the Facility Cap, if the Revolver Termination is at any
time before the first anniversary of the Closing Date; (ii) 1% of
the Facility Cap, if the Revolver Termination is after the first
anniversary of the Closing Date but before the second
anniversary
of the Closing Date; and (iii) 0.5% of the Facility Cap, if the
Revolver Termination is on or after the second
anniversary
of the Closing Date but before the third anniversary of the Closing
Date. There shall be no Minimum Termination Fee if the Revolver
Termination occurs within five (5) days of the end of the
Term.
“
Net Cash Proceeds ”
shall mean, with respect to any sale, lease, transfer or other
disposition of assets by any Person, the amount of cash received
(directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred
consideration) by or on behalf of such Person in connection
therewith after deducting therefrom (A) the amount of any Permitted
Indebtedness secured by any Permitted Lien on such property which
is required to be, and is, repaid in connection with such
disposition, (B) reasonable expenses related thereto incurred by
such Person in connection therewith, (C) transfer taxes paid to any
taxing authorities by such Person in connection therewith, (D) net
income taxes to be paid in connection with such disposition and (E)
with respect to any lease, the cost of any tenant improvements paid
by Borrower in connection therewith.
“
Note ”
or “
Notes ”
shall mean any promissory note or notes issued pursuant to
Section 2.7 .
“
Obligations ”
shall mean all present and future obligations, Indebtedness and
liabilities of Borrower or Guarantor to Lender at any time and from
time to time of every kind, nature and description, direct or
indirect, secured or unsecured, joint and several, absolute or
contingent, due or to become due, matured or unmatured, now
existing or hereafter arising, contractual or tortious, liquidated
or unliquidated, (whether or not evidenced by a Note), including,
without limitation, all principal, interest, applicable fees,
charges and expenses and all amounts paid or advanced by Lender on
behalf of or for the benefit of Borrower or Guarantor for any
reason at any time, including in each case obligations of
performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor
Relief Law by or against any such Person.
“
OFAC ”
shall mean the U.S. Department of Treasury’s Office of
Foreign Asset Control.
“
Organizational and Good Standing Documents ”
shall mean, for any Person (i) a copy of the certificate of
incorporation or formation (or other like organizational document)
certified as of a date satisfactory to Lender before the Closing
Date by the applicable Governmental Authority of the jurisdiction
of incorporation or organization of such Person, (ii) a copy of the
bylaws or similar organizational documents of certified as of a
date satisfactory to Lender before the Closing Date by the
corporate secretary or assistant secretary of such Person,
(iii) an original certificate of good standing as of a date
acceptable to Lender issued by the applicable Governmental
Authority of the jurisdiction of incorporation or organization of
such Person and of every other jurisdiction in which such Person
has an office or conducts business or is otherwise required to be
in good standing, and (iv) copies of the resolutions of the
board of directors or managers (or other applicable governing body)
and, if required, stockholders, members or other equity owners
authorizing the execution, delivery and performance of the Loan
Documents to which such Person is a party, certified by an
authorized officer of such Person as of the Closing
Date.
“
Paid in Full ”
and “
Payment in Full ”
mean, with respect to the Obligations, all amounts owing with
respect thereto (including any interest accruing thereon after the
commencement of any proceeding under any Debtor Relief Law by or
against Borrower, whether or not allowed as a claim against such
Borrower in such proceeding, but excluding as yet unasserted
contingent obligations), have been fully, finally and completely
paid in cash.
“
Parent Indebtedness ”
shall mean Indebtedness incurred by Borrower from Guarantor,
provided ,
that ,
such Indebtedness shall be (i) up to $2,000,000 outstanding in the
aggregate at any time, (ii) on an unsecured basis, (iii)
subordinated in remedies to all of the Obligations and to all of
Lender’s rights in form and substance satisfactory to Lender
and (iv) be subordinate in right of payment to the Obligations and
shall only be repaid pursuant to a Permitted Distribution until the
Obligations are Paid in Full;
provided,
that ,
at the request of Lender, the terms of the provisions of (iii) and
(iv) shall be contained in a written subordination agreement
between Lender and Parent acknowledged and agreed by Borrower, in
form and substance satisfactory to Lender.
“
Patriot Act ”
shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, P.L. 107-56, as amended.
“
Payment Intangible ”
shall mean “payment intangible” as defined in Section
9-102 of the UCC.
“
Payment Office ”
shall mean initially the address set forth beneath Lender’s
name on the signature page of the Agreement, and thereafter, such
other office of Lender, if any, which it may designate by notice to
Borrower to be the Payment Office.
“
Permit ”
shall mean collectively all licenses, leases, powers, permits,
franchises, certificates, authorizations, approvals, certificates
of need, provider numbers and other rights.
“
Permitted Acquisition ”
shall mean any acquisition by Borrower, whether through a purchase
of stock, membership interests or otherwise or the purchase of
assets or through a merger, consolidation or amalgamation, of
another Person, or the assets constituting an entire or any portion
of any business or operating business unit or division of another
Person or securities of such other Person that satisfies the
requirements set forth in
Sections 8.14 and
9
.4 hereof.
“
Permitted Discretion ”
shall
mean a determination or judgment made by Lender in good faith in
the exercise of reasonable (from the perspective of a secured
lender) business judgment.
“
Permitted Distributions ”
shall mean Distributions to Guarantor for the purpose of making
principal payments on the Parent Indebtedness and/or as periodic
cash distributions to Guarantor as a shareholder of
Borrower,
provided ,
that (i)
such Permitted Distributions are made no more than once per fiscal
quarter thereafter and (ii) all of the following conditions are
satisfied with respect to each such Distribution: (a) no Default or
Event of Default has occurred and is continuing or would arise as a
result of such Distribution, (b) after giving effect to such
Distribution, Borrower is in compliance on a pro forma basis with
the financial covenants set forth in Annex 1 (recomputed for the
most recent three month period for which monthly financial
statements have been delivered in accordance with the terms hereof
after giving effect thereto); provided, however, that in situations
where there is an Accumulated Distribution (as defined below) being
made with respect to any Accumulated Distribution Fiscal Quarters,
only that portion of the Distribution that is not related to the
Accumulated Distributions shall be included in Fixed Charges for
the purpose of calculating the pro forma Fixed Charge Coverage
Ratio in Annex I for the most recent three-month period), (c) the
aggregate amount of such Distributions shall not exceed fifty
percent (50%) of undistributed Excess Cash Flow for the three month
period immediately preceding such distribution, as determined
pursuant to the Distribution Notice, (d) Lender shall have received
written notice (the “Distribution Notice”) from
Borrower, of Borrower’s intention to make such Distribution
at least five (5) Business Days prior to the date of such proposed
Distribution, which such notice shall include a detailed
calculation satisfactory to Lender in its Permitted Discretion
evidencing Excess Cash Flow for such three month period (except
that for any amounts included in such Distribution that are a
result of Accumulated Distributions, in which case, the Excess Cash
Flow so measured shall be applicable to the appropriate Accumulated
Distribution Fiscal Quarters to which they relate), as applicable,
(e) Lender shall have consented in writing to such Distribution
Notice prior to the making of such proposed Distribution, such
consent not to be unreasonably withheld, and (g) until such time as
the Parent Indebtedness is paid in full in cash, any such
Distribution payable to Guarantor shall be utilized by Guarantor
solely to repay the Parent Indebtedness;
provided ,
that ,
if Borrower chooses not to make a Permitted Distribution (the
“
Accumulated Distribution ”)
in any fiscal quarter (the “
Accumulated Distribution Fiscal Quarter ”)
Borrower may make such Accumulated Distribution in any of the
subsequent three consecutive fiscal quarters following the
Accumulated Distribution Fiscal Quarter;
provided,
that, Borrower
provides Lender with Evidence of Compliance with the criteria set
forth in the definition of Permitted Distribution for the
Accumulated Distribution as of the end of the Accumulated
Distribution Fiscal Quarter,
except ,
that ,
the Distribution Notice shall not have been made in the Accumulated
Distribution Fiscal Quarter but rather shall be made (5) Business
Days prior to the date the Accumulated Distribution is to be
distributed.
“
Permitted Indebtedness ”
shall mean any of the following: (i) Indebtedness under the Loan
Documents, (ii) any Indebtedness set forth on
Schedule 9.2 ,
(iii) Capitalized Lease Obligations incurred after the Closing Date
and Indebtedness incurred to purchase Goods and secured by purchase
money Liens constituting Permitted Liens: (A) in aggregate amount
outstanding at any time not to exceed $2,000,000
,
provided,
that ,
(1)
the debt service for such Indebtedness shall not exceed $600,000
for any twelve (12) month period and (2) upon the incurrence of
such Indebtedness and after giving effect thereto no Default or
Event of Default shall exist and be continuing and (B) in an
aggregate amount in excess of $2,000,000,
provided ,
that ,
(1) ten (10) Business Days prior to the incurrence of such
Indebtedness Borrower shall have provided pro forma financial
statements along with any other supporting documentation required
by Lender evidencing that Borrower would have been in compliance
with the financial covenants set forth on Annex 1 hereto for the
immediately preceding Test Period (as defined on Annex 1 hereto),
if such Indebtedness had been incurred on the first day of such
Test Period, (2) prior to the incurrence of such Indebtedness
Borrower shall have received Lender’s written confirmation of
its agreement with such pro forma financial statements; and (3)
upon the incurrence of such Indebtedness and after giving effect
thereto no Default or Event of Default shall exist and be
continuing, (iv) the accounts payable set forth on Schedule
1.2 and accounts payable to trade creditors and current operating
expenses (other than for borrowed money) which are not aged more
than one hundred twenty calendar days from the date such payable
was created or such longer period as shall be agreed in writing by
Lender, except, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are
being contested in good faith and by appropriate and lawful
proceedings and such reserves, if any, with respect thereto as are
required by GAAP shall have been reserved, (v) borrowings incurred
in the ordinary course of business and not exceeding $1,000,000
individually or in the aggregate outstanding at any one
time;
provided ,
however ,
that such Indebtedness (A) shall not be secured by Collateral, any
cash, money, Investment Property or Deposit Accounts; (B) the debt
service for such Indebtedness shall not exceed $200,000 for any
twelve (12) month period; (C) ten (10) Calendar Days prior to the
incurrence of such Indebtedness Borrower shall have provided pro
forma financial statements along with any other supporting
documentation required by Lender evidencing that Borrower would
have been in compliance with the financial covenants set forth on
Annex 1 hereto for the immediately preceding Test Period (as
defined on Annex 1 hereto), if such Indebtedness had been incurred
on the first day of such Test Period, (D) prior to the incurrence
of such Indebtedness Borrower shall have received Lender’s
written confirmation of its agreement with such pro forma financial
statements (which confirmation or denial shall be promptly provided
by Lender to Borrower within ten (10) calendar days of
Lender’s receipt of such financial statements); (E) upon the
incurrence of such Indebtedness and after giving effect thereto no
Default or Event of Default shall exist and be continuing, (F) such
Indebtedness shall be subordinated in right of repayment and
remedies to all of the Obligations and to all of Lender’s
rights pursuant to a written agreement among Lender, Borrower and
the lender with respect to such Indebtedness, in form and substance
satisfactory to Lender and (vi) Parent Indebtedness.
“
Permitted Liens ”
shall mean with respect to the Borrower any of the following: (i)
Liens under the Loan Documents or otherwise arising in favor of
Lender, (ii) Liens imposed by law for taxes (other than payroll
taxes), assessments or charges of any Governmental Authority for
claims not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
or other appropriate provisions are being maintained by such Person
in accordance with GAAP to the satisfaction of Lender in its
Permitted Discretion, (iii) (A) statutory Liens of landlords
(
provided,
that, with
respect to Required Locations any such landlord has executed a
Landlord Waiver and Consent in form and substance satisfactory to
Lender) and of carriers, warehousemen, mechanics, materialmen, and
(B) other Liens imposed by law or that arise by operation of
law in the ordinary course of business from the date of creation
thereof, in each case only for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate provisions
are being maintained by such Person in accordance with GAAP to the
satisfaction of Lender in its Permitted Discretion, (iv) Liens (A)
incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in
connection with workers’ compensation, unemployment insurance
and other types of social security benefits or to secure the
performance of tenders, bids, leases, contracts (other than for the
repayment of Indebtedness), statutory obligations and other similar
obligations, or (B) arising as a result of progress payments
under government contracts, (v) purchase money Liens (A)
securing the type of Permitted Indebtedness set forth under clause
(iii) of the definition of “Permitted Indebtedness”, or
(B) in connection with the purchase by such Person of
equipment in the normal course of business,
provided,
that ,
such payables shall not exceed any limits on Indebtedness provided
for herein and shall otherwise be Permitted Indebtedness hereunder;
(iv) liens securing the Indebtedness set forth in clause (v) of
Permitted Indebtedness on assets other than: (A) the Collateral,
(B) cash or other money of Borrower, (C) Deposit Accounts of
Borrower and (D) Investment Property of Borrower; and (vii) Liens
disclosed on
Schedule 7.4B and
Schedule 9.3 .
“
Person ”
shall mean an individual, a partnership, a corporation, a limited
liability company, a business trust, a joint stock company, a
trust, an unincorporated association, a joint venture, a
Governmental Authority or any other entity of whatever
nature.
“
Pledge Agreement ”
shall mean that certain negative Pledge Agreement by and between
Guarantor and Lender executed in connection herewith, as such may
be modified, amended, restated or supplemented from time to
time.
“
Receipt ”
shall have the meaning given such term in
Section 15.5 .
“
Required Locations ”
shall mean collectively: (a) the leased premises located at 12701
Commonwealth Drive, Suite 9, Fort Myers, Florida 33913, and (b) any
location leased by Borrowers at which books and records relating to
Accounts are kept of which duplicates are not kept at the location
identified in (a) above.
“
Released Parties ”
shall have the meaning given such term in
Section 15.11 .
“
Releasing Parties ”
shall have the meaning given such term in
Section 15.11 .
“
Revolver Termination ”
shall mean the termination of the Revolving Facility for any reason
whatsoever.
“
Revolving Loan Obligations ”
shall mean all of the Obligations related to the Revolving
Facility.
“
Services ”
shall mean medical and health care services provided to a Person,
including, but not limited to, medical and health care services
(including diagnostic testing and other testing services) which are
covered by a policy of insurance issued by an Insurer, physician
services, nurse and therapist services, dental services, hospital
services, skilled nursing facility services, comprehensive
outpatient rehabilitation services, home health care services,
residential and out-patient behavioral healthcare
services.
“
Software ”
shall mean “software” as defined in Section 9-102 of
the UCC.
“
Solvency Certificate ”
shall mean a Solvency Certificate substantially in the form
of
Exhibit C attached
hereto.
“
Subsidiary ”
shall mean, (i) as to Borrower, any Person in which more than fifty
percent (50%) of all equity, membership, partnership or other
ownership interests is owned directly or indirectly by such
Borrower or one or more of its Subsidiaries, and (ii) as to any
other Person, any Person in which more than fifty percent (50%) of
all equity, membership, partnership or other ownership interests is
owned directly or indirectly by such Person or by one or more of
such Person’s Subsidiaries.
“
Supporting Obligations ”
shall mean “supporting obligations” as defined in
Section 9-102 of the UCC.
“
Term ”
shall mean the period commencing on the Closing Date and ending on
the third anniversary of the Closing Date.
“
Termination Date ”
shall mean the date of termination of this Agreement set forth in
any notice of termination delivered by Borrower in accordance
with
Section 13.1(a) .
“
Transaction ”
shall have the meaning given such term in
Section 8.11 .
“
Transferee ”
shall have the meaning given such term in
Section 15.2 .
“
UCC ”
shall mean the Uniform Commercial Code as in effect in the State of
Maryland from time to time.
“
Unused Line Fee ”
shall mean a fee to be paid by Borrower to Lender on a monthly
basis in an amount equal to 0.025% (per month) of the difference
derived by subtracting (i) the daily average amount of the balances
under the Revolving Facility outstanding during the preceding
month, from (ii) the Facility Cap.
“
US Labs Award ”
shall mean any award in connection with the litigation between
Borrower and Accupath Diagnostic Laboratories, Inc. described
on
Schedule 7.6 .
|
II.
|
ADVANCES, PAYMENT AND INTEREST
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2.1
The Revolving Facility
(a)
Subject
to the provisions of this Agreement, Lender shall make
Advances to Borrower under the Revolving Facility from time to
time during the
Term ,
unless this Agreement is terminated earlier ,
provided that,
notwithstanding any other provision of this Agreement to the
contrary, the aggregate amount of all Advances at any one time
outstanding under the Revolving Facility shall not exceed the
lesser of (a) the Facility Cap, and (b) the Availability. The
Revolving Facility is a revolving credit facility, which may be
drawn, repaid and redrawn, from time to time as permitted under
this Agreement. Any determination as to whether there is
Availability for Advances shall be made by Lender in its Permitted
Discretion and is final and binding upon Borrower. Unless otherwise
permitted by Lender, each Advance shall be in an amount of at least
$1,000. Subject to the provisions of this Agreement, Borrower may
request Advances under the Revolving Facility up to and including
the value, in Dollars, of the Availability. Advances under the
Revolving Facility shall automatically be made for the payment of
interest on the Loans and other Obligations on the date when due to
the extent available and as provided for herein.
(b)
Lender
in its Permitted Discretion may further adjust the
Availability and the advance rate by applying Liquidity
Factors. The Liquidity Factors and the advance rate for
Availability may be adjusted by Lender throughout the Term as
warranted by Lender’s underwriting practices and
procedures in its credit judgment. Also, Lender shall have the
right to establish from time to time, in its Permitted
Discretion, reserves against the Borrowing Base, which
reserves shall have the effect of reducing the amounts
otherwise eligible to be advanced to Borrower under the
Revolving Facility pursuant to this Agreement. Borrower hereby
acknowledges and agrees that as of the Closing Date, Lender
shall establish a $250,000 reserve against the Borrowing Base,
of
Annex I ,
which reserve shall be eliminated upon the satisfaction by Borrower
of the conditions set forth in Section 3 of
Annex I for
the elimination of the testing of the Minimum Liquidity Covenant
set forth in Section 3 of
Annex I .
2.2
The Revolving
Loans; Maturity
All
of the Revolving Loan Obligations shall be due and payable in
full in cash, if not earlier in accordance with this
Agreement, on the last day of the Term.
2.3
Revolving Facility Disbursements
; Requirement to Deliver Borrowing
Certificate
So
long as no Default or Event of Default shall have occurred and
be continuing, Borrower may give Lender irrevocable written
notice requesting an Advance under the Revolving Facility by
delivering to Lender not later than 12:00 p.m. (Eastern Time)
at least one but not more than four Business Days before the
proposed Borrowing Date of such requested Advance, a completed
Borrowing Certificate and relevant supporting documentation
satisfactory to Lender. Each time a request for an Advance is
made, and, in any event and regardless of whether an Advance
is being requested, on Tuesday of each week during the
Term ( and
more frequently if Lender shall so request)
until the Obligations are Paid in Full and fully performed and this
Agreement is terminated, Borrower
shall deliver to Lender a Borrowing Certificate accompanied by a
separate detailed aging and categorizing of Borrower’s
accounts receivable and such other supporting documentation as
Lender shall reasonably request from time to time. On each
Borrowing Date, Borrower irrevocably authorizes Lender to disburse
the proceeds of the requested Advance to the appropriate
Borrower’s account(s) as set forth on
Schedule 2.3 ,
in all cases for credit to the appropriate Borrower (or to such
other account as to which the appropriate Borrower shall instruct
Lender in writing) via Federal funds wire transfer no later than
4:00 p.m. (Eastern Time).
2.4
Promise to Pay; Manner of Payment
The
Borrower absolutely and unconditionally promises to pay
principal, interest and all other Obligations payable
hereunder, or under any other Loan Document, without any
defense, right of rescission and without any deduction
whatsoever, including any deduction for any setoff,
counterclaim or recoupment, and notwithstanding any damage to,
defects in or destruction of the Collateral or any other
event, including obsolescence of any property or improvements.
All payments made by the Borrower (other than payments
automatically paid through Advances under the Revolving
Facility as provided herein), shall be made only by wire
transfer on the date when due in Dollars, in immediately
available funds to such account as may be indicated in writing
by Lender to the Borrower from time to time. Any such payments
received after 4:00 p.m. (Eastern Time) on the date when due
shall be deemed received on the following Business Day.
Whenever any payment hereunder shall be stated to be due or
shall become due and payable on a day other than a Business
Day, the due date thereof shall be extended to, and such
payment shall be made on, the next succeeding Business Day,
and such extension of time in such case shall be included in
the computation of payment of any interest (at the interest
rate then in effect during such extension) and fees, as the
case may be.
2.5
Repayment of Excess Advances
Any
balance of Advances under the Revolving Facility outstanding
at any time in excess of either the Facility Cap or the
Availability shall be immediately due and payable by Borrower
without the necessity of any demand, at the Payment
Office.
2.6
Payments by Lender
If
the Borrower fails to make any payment required under any Loan
Document as and when due and within any applicable grace
period, Lender may make such payment, which payment shall be
an Advance as of the date such payment is due notwithstanding
the Availability, and the Borrower irrevocably authorizes
disbursement of any such funds to Lender by way of direct
payment of the relevant amount. No payment or prepayment of
any amount by Lender or any other Person shall entitle any
Person to be subrogated to the rights of Lender under any Loan
Document unless and until all of the Obligations have been
fully performed Paid in Full and this Agreement has been
terminated. Any sums expended by Lender in its Permitted
Discretion as a result of Borrower’s or
Guarantor’s failure to pay, perform or comply with any
Loan Document or any of the Obligations may be charged to
Borrower’s account as an Advance under the Revolving
Facility.
2.7
Evidence of Loans
(a)
Lender
shall maintain, in accordance with its usual practice,
electronic or written records evidencing the Indebtedness and
Obligations to Lender resulting from each Loan made by Lender
from time to time, including without limitation, the amounts
of principal and interest payable and paid to Lender from time
to time under this Agreement.
(b)
The
entries made in the electronic or written records maintained
pursuant to subsection (a) of this
Section 2.7 (the
“
Register ”)
shall be prima facie evidence of the existence and amounts of the
Obligations and Indebtedness therein recorded;
provided ,
however ,
that the failure of Lender to maintain such records or any error
therein shall not in any manner affect obligations of the Borrower
to repay the Loans or Obligations in accordance with their
terms.
(c)
Lender
will account to Borrower monthly with a statement of Advances
under the Revolving Facility, and any charges and payments
made pursuant to this Agreement, and in the absence of
manifest error, such accounting rendered by Lender shall be
deemed final, binding and conclusive unless Lender is notified
by Borrower in writing to the contrary within fifteen calendar
days of Receipt of such accounting, which notice shall be
deemed an objection only to items specifically objected to
therein.
(d)
Borrower
agrees that:
(i)
upon
written notice by Lender to Borrower that a Note or other
evidence of Indebtedness is requested by Lender to evidence
the Loans and other Obligations owing or payable to, or to be
made by, Lender, Borrower shall promptly (and in any event
within three (3) Business Days of any such request) execute
and deliver to Lender an appropriate Note or Notes in form and
substance reasonably acceptable to Lender and
Borrower;
(ii)
all
references to Notes in the Loan Documents shall mean Notes, if
any, to the extent issued (and not returned to the Borrower
for cancellation) hereunder, as the same may be amended,
modified, divided, supplemented or restated from time to time;
and
(iii)
upon
Lender’s written request, and in any event within three
(3) Business Days of any such request, Borrower shall execute
and deliver to Lender new Notes and divide the Notes in
exchange for then existing Notes in such smaller amounts or
denominations as Lender shall specify in its sole and absolute
discretion;
provided ,
that ,
the aggregate principal amount of such new Notes shall not exceed
the aggregate principal amount of the Notes outstanding at the time
such request is made; and
provided ,
further ,
that such Notes that are to be replaced shall then be deemed no
longer outstanding hereunder and replaced by such new Notes and
returned to Borrower within a reasonable period of time after
Lender’s receipt of the replacement Notes.
3.1
Interest
on the Revolving Facility
Commencing
January 1, 2008, and continuing until the later of the
expiration of the Term and the Payment in Full and full
performance of all of the Obligations and termination of this
Agreement, interest on outstanding Advances under the
Revolving Facility shall be payable monthly in arrears on the
first day of each calendar month at an annual rate of LIBOR
plus 3.25% in accordance with the procedures provided for
in
Section 2.4 and
Section 5.1 ;
provided ,
however ,
that, notwithstanding any provision of any Loan Document, for the
purpose of calculating interest at any time hereunder, the LIBOR
shall be not less than 3.14%, in each case calculated on the basis
of a 360-day year and for the actual number of calendar days
elapsed in each interest calculation period.
3.2
Commitment Fee
On
or before the Closing Date, Borrower shall pay to Lender
$30,000 as a nonrefundable commitment fee which shall be fully
earned on the date paid. Lender hereby acknowledges receipt of
$15,000 of such commitment fee on November 19,
2007.
3.3
Unused Line Fee
Borrower
shall pay Lender the Unused Line Fee monthly in arrears on the
first day of each calendar month (starting with the calendar
month immediately following the calendar month in which the
Closing Date occurs).
3.4
Collateral Management Fee
Borrower
shall pay Lender as additional interest the Collateral
Management Fee. The Collateral Management Fee shall be payable
monthly in arrears on the first day of each calendar month
(starting with the calendar month immediately following the
calendar month in which the Closing Date occurs).
3.5
Computation of Fees; Lawful Limits
All
fees hereunder shall be computed on the basis of a year of
three hundred and sixty days and for the actual number of days
elapsed in each calculation period, as applicable. In no
contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other
charges paid or agreed to be paid to Lender for the use,
forbearance or detention of money hereunder exceed the maximum
rate permissible under applicable law which a court of
competent jurisdiction shall, in a final determination, deem
applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance
of such provision shall be due, shall exceed any such limit,
then, the obligation to be so fulfilled shall be reduced to
such lawful limit, and, if Lender shall have received interest
or any other charges of any kind which might be deemed to be
interest under applicable law in excess of the maximum lawful
rate, then such excess shall be applied first to any unpaid
fees and charges hereunder, then to unpaid principal balance
owed by Credit Parties hereunder, and if the then remaining
excess interest is greater than the previously unpaid
principal balance, Lender shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed
amended to provide for such permissible rate. The terms and
provisions of this
Section 3.6 shall
control to the extent any other provision of any Loan Document is
inconsistent herewith. All fees hereunder shall be non-refundable
and deemed fully earned when due and payable.
3.6
Default Rate of Interest
Upon
the occurrence and during the continuation of an Event of
Default, Lender may increase the Applicable Rate of interest
in effect at such time with respect to the Obligations,
without notice, to the Default Rate which Default Rate shall
continue post-judgment and subsequent to the date that the
provisions of any applicable Debtor Relief Law are exercised
by or against a Borrower unless the statutory post-judgment
rate of interest is higher in which case such statutory rate
shall apply.
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IV.
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GRANT OF SECURITY INTERESTS
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4.1
Security Interest; Collateral
(a)
To
secure the payment and performance in full of the Obligations,
Borrower (or if referring to another Person, such Person)
hereby grants to Lender a continuing security interest in and
Lien upon, and pledges and assigns to Lender, all of its
right, title and interest in and to the Collateral, wherever
located, whether now owned or hereafter acquired or
arising;
(b)
Borrower
hereby ratifies its authorization for Lender to have filed in
any UCC jurisdiction any initial financing statements or
amendments thereto indicating that those assets described in
the definition of “
Collateral ”
hereunder are pledged to the Lender.
(c)
If
Borrower shall at any time hold or acquire a Commercial Tort
Claim that arises out of Borrower’s Accounts or account
receivable or would otherwise become part of the collateral
under the definition of Collateral, Borrower shall immediately
notify Lender in a writing signed by Borrower of the
particulars thereof and grant to Lender in such a writing a
security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in
form and substance satisfactory to Lender.
4.2
Power of Attorney
(a)
Borrower
hereby irrevocably constitutes and appoints Lender and any
officer or agent thereof, with full power of substitution, as
its true and lawful attorneys-in-fact with full irrevocable
power and authority in the place and stead of such Borrower or
in Lender’s own name, for the purpose of carrying out
the terms of this Agreement and the grant of the security
interests hereunder and under the other Loan Documents, and
without limiting the generality of the foregoing, hereby gives
said attorneys the power and right, on behalf of such Borrower
(without requiring Lender to act as such, and without notice
to or assent by such Borrower) to do the following: (i) upon
the occurrence and during the continuance of an Event of
Default, to receive, open and dispose of all mail addressed to
any such Person and to endorse the name of any such Person
upon any and all checks, drafts, money orders, and other
instruments for the payment of money that are payable to such
Person and constitute collections on its or their Accounts;
(ii) execute in the name of such Person any financing
statements, schedules, assignments, instruments, documents,
and statements that it is or they or are obligated to give
Lender under any of the Loan Documents; and (iii) do such
other and further acts and deeds in the name of such Person
that Lender may deem necessary or desirable to enforce any
Account or other Collateral or to perfect Lender’s
security interest or Lien in any Collateral. In addition, if
any such Person breaches its obligation hereunder to direct
payments of Accounts or the proceeds of any other Collateral
to the appropriate Lockbox Account, Lender, as the irrevocably
made, constituted and appointed true and lawful attorney for
such Person pursuant to this paragraph, may, by the signature
or other act of any of Lender’s officers or authorized
signatories (without requiring any of them to do so), direct
any federal, state or private payor or fiscal intermediary to
pay proceeds of Accounts or any other Collateral to the
appropriate Lockbox Account.
(b)
To
the extent permitted by law, each Credit Party hereby ratifies
all that said attorneys shall lawfully do or cause to be done
by virtue hereof. This power of attorney is a power coupled
with an interest and is irrevocable.
(c)
The
powers conferred on Lender pursuant to this
Section 4.2 are
solely to protect its interests in the Collateral and shall not
impose any duty upon it to exercise any such powers. Lender shall
be accountable only for the amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible
to Credit Party for any act or failure to act, except for
Lender’s own gross negligence or willful
misconduct.
4.3
Further Assurances
Borrower
agrees, upon request of Lender, to take any and all other
actions as Lender may determine to be necessary or appropriate
for the attachment, perfection maintaining of the first
priority security interest of, and for the ability of Lender
to enforce, Lender’s security interest in any and all of
the Collateral, including, without limitation, (i) executing,
obtaining, delivering, filing, registering and recording any
and all financing statements, continuation statements, stock
powers, instruments and other documents, or causing the
execution, filing, registration, recording or delivery of any
and all of the foregoing, that are necessary or required under
law or otherwise or reasonably requested by Lender to be
executed, filed, registered, obtained, delivered or recorded
to create, maintain, perfect, preserve, validate or otherwise
protect the pledge of the Collateral to Lender and
Lender’s perfected first priority Lien on the Collateral
(and Borrower irrevocably grants Lender the right, at Lender's
option, to file any or all of the foregoing), (ii) immediately
upon learning thereof, report to Lender any reclamation,
return or repossession of goods in excess of $25,000.00 that
are part of the Collateral (individually or in the aggregate),
(iii) defend the Collateral and Lender’s perfected first
priority Lien thereon against all claims and demands of all
Persons at any time claiming the same or any interest therein
adverse to Lender, and pay all reasonable costs and expenses
(including, without limitation, allocable costs of staff
counsel, and diligence fees and reasonable attorneys’
fees and expenses,
provided ,
that ,
the payment of staff counsel and reasonable attorneys’ fees
shall be subject to the provisions of Section 15.7(b)) in
connection with such defense, which may at Lender’s
discretion be added to the Obligations, (iv) comply with any
provision of any statute, regulation or treaty of any Governmental
Authority as to any Collateral if compliance with such provision is
a condition to attachment, perfection or priority of, or ability of
Lender to enforce, Lender’s security interest in such
Collateral and (v) obtain governmental and other third party
waivers, consents and approvals in form and substance satisfactory
to Lender, including any consent of any licensor, lessor or other
Person obligated on Collateral and any party or parties whose
consent is required for the security interest of Lender to attach
under
Section 4.1 .
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V.
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ADMINISTRATION AND MAINTENANCE OF
COLLATERAL
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5.1
Revolving Facility Collections; Repayment;
Borrowing Availability and Lockbox
Borrower
shall maintain one or more Lockbox Accounts with the Lockbox
Banks, and shall execute with each of the Lockbox Banks a
Lockbox Agreement, and such other agreements related thereto
as Lender may require. Borrower shall ensure that all
collections of their respective Accounts and all other cash
payments received by Borrower are paid and delivered directly
from Account Debtors and other Persons into the appropriate
Lockbox Account. The Lockbox Agreements shall provide that the
Lockbox Banks immediately will transfer all funds paid into
the Lockbox Accounts into the Concentration Account.
Notwithstanding and without limiting any other provision of
any Loan Document, Lender shall apply, on a daily basis, all
funds transferred into the Concentration Account pursuant to
the Lockbox Agreement and this
Section 5.1 in
such order and manner as determined by Lender. To the extent that
any Accounts are collected by Borrower or any other cash payments
received by Borrower are not sent directly to the appropriate
Lockbox Account but are received by Borrower or any of their
Affiliates, such collections and proceeds shall be held in trust
for the benefit of Lender and immediately remitted (and in any
event within three (3) Business Days from receipt thereof), in the
form received, to the appropriate Lockbox Account for immediate
transfer to the Concentration Account. Borrower acknowledges and
agrees that compliance with the terms of this
Section 5.1 is
an essential term of this Agreement. All funds transferred to the
Concentration Account for application to the Obligations under the
Revolving Facility shall be applied to reduce the Obligations under
the Revolving Facility, but, for purposes of calculating interest
hereunder, shall be subject to a three Business Day clearance
period. If as the result of collections of Accounts and any other
cash payments received by Borrower pursuant to this
Section 5.1 a
credit balance exists with respect to the Concentration Account,
such credit balance shall not accrue interest in favor of a
Borrower. If at any time there is a credit balance in excess of
$100,000, in the Concentration Account, Lender agrees to
automatically wire transfer (without Borrower’s written
request) all of such credit balance to the Borrower’s
operating account specified on Schedule 2.3 within one Business Day
of such credit balance reaching $100,000,
provided ,
however ,
Lender shall not be required to make such “no-notice”
transfer more frequently than once per week. Notwithstanding the
foregoing, upon the written request of Borrower, Lender shall wire
transfer any credit balance in the Concentration Account to
Borrower’s operating account specified in Schedule
2.3.,
provided ,
that if
Lender receives the written request of Borrower no later than 12:00
p.m. (Eastern Time), then Lender shall make such transfer the
following Business Day and if Lender receives the written request
of Borrower after 12:00 p.m. (Eastern time), then Lender shall make
such transfer within two (2) Business Days from the date of receipt
of such written notice. If applicable, at any time prior to the
execution of all or any of the Lockbox Agreements and operation of
all or any of the Lockbox Accounts, Borrower and their Affiliates
shall direct all collections or proceeds it receives on Accounts or
from other Collateral to the Concentration Account.
5.2
Accounts
In
determining which Accounts are Eligible Accounts, Lender may
rely on all statements and representations made by Borrower
with respect to any Account. Unless otherwise indicated in
writing to Lender, each Account of Borrower (i) is genuine and
in all respects what it purports to be and is not evidenced by
a judgment, (ii) arises out of a completed, bona fide sale and
delivery of goods or rendering of Services by a Borrower in
the ordinary course of business and in accordance with the
terms and conditions of all purchase orders, contracts,
certifications, participations, certificates of need and other
documents relating thereto or forming a part of the contract
between a Borrower and the Account Debtor, (iii) is for a
liquidated amount (less any contractual allowances) maturing
as stated in a claim or invoice covering such sale of goods or
rendering of Services, a copy of which has been furnished or
is available to Lender, (iv) together with Lender’s
security interest therein, is not and will not be in the
future (by willful act or omission by Borrower), subject to
any offset, lien, deduction, defense, dispute, counterclaim or
other adverse condition, is absolutely owing to Borrower and
is not contingent in any respect or for any reason (except
Accounts owed or owing by Medicaid/Medicare Account Debtors
that may be subject to offset or deduction under applicable
law), and (v) has been billed and forwarded to the Account
Debtor for payment in accordance with applicable laws and is
in compliance and conformance with any requisite procedures,
requirements and regulations governing payment by such Account
Debtor with respect to such Account, and, if due from a
Medicaid/Medicare Account Debtor, is properly payable directly
to a Borrower.
5.3
Healthcare
(a)
Borrower
has obtained from (i) the Medicare program, approval to
receive the provider numbers which will permit Borrower to
bill the Medicare program with respect to covered services
rendered to patients insured under the Medicare program, (ii)
the applicable Medicaid programs, approval to receive the
provider numbers/in-patient service contracts which will
permit Borrower to bill the Medicaid program with respect to
covered services rendered to patients insured under the
Medicaid programs, and (iii) the CHAMPUS/TRICARE program,
approval to receive the provider numbers which will permit
Borrower to bill the CHAMPUS/TRICARE program with respect to
covered services rendered to patients insured under the
CHAMPUS/TRICARE program. Borrower is in compliance with the
conditions of participation in the Medicare, Medicaid and
CHAMPUS/TRICARE programs.
(b)
There
is no pending nor to the knowledge of Borrower, threatened,
proceeding or investigation of Borrower relative to EMTALA nor
are there any investigations or proceedings pending, or to the
knowledge of Borrower, threatened by any Governmental
Authority with respect to the Medicare, Medicaid or
CHAMPUS/TRICARE programs with respect to the operations of
Borrower, except as set forth on
Schedule 5.3A hereto.
Without limiting or being limited by any other provision of any
Loan Document, Borrower has timely filed or caused to be filed all
cost and other reports of every kind required by law, agreement or
otherwise. Subject to the last sentence of
Section 7.18 ,
there are no claims, actions or appeals pending (and Borrower has
not filed any claims or reports which could reasonably result in
any such claims, actions or appeals) before any commission, board
or agency or other Governmental Authority, including, without
limitation, any intermediary or carrier, the Provider Reimbursement
Review Board or the Administrator of the Centers of Medicare and
Medicaid Services, with respect to any state or federal Medicare or
Medicaid or CHAMPUS/TRICARE cost reports or claims filed by
Borrower, or any disallowance by any commission, board or agency or
other Governmental Authority in connection with any audit of such
cost reports or claims. No validation review or program integrity
review related to Borrower or the consummation of the transactions
contemplated herein or to the Collateral have been conducted by any
commission, board or agency or other Governmental Authority in
connection with the Medicare or Medicaid programs, and to the
knowledge of Borrower, no such reviews are scheduled, pending or
threatened against or affecting any of the providers, any of the
Collateral or the consummation of the transactions contemplated
hereby. Neither Credit Parties nor any of their respective
officers, directors, or managing employees, employees or agents
are, or while this Agreement shall remain in effect shall be,
excluded from participation in, or sanctioned or convicted of a
crime under or with respect to the Medicare, Medicaid or
CHAMPUS/TRICARE programs, nor to the best of Credit Parties’
knowledge, is any such exclusion threatened. Borrower has not
received any notice from any of the Medicare, Medicaid or
CHAMPUS/TRICARE programs, or any other third party payor programs,
of any pending or threatened investigations, reviews or surveys of
Borrower, its directors, officers or managing employees, and
Borrower has no actual knowledge that any such investigation,
reviews or surveys are pending or threatened.
(c)
As
of the Closing Date, Borrower has third party contracts with
each of the third-party payors listed on
Schedule 5.3B (unless
noted otherwise), which constitutes (as indicated) each of the
payors representing at least five percent (5%) of Borrower’s
historic third-party payor cash receipts for the twelve month
period ended December 31, 2007.
5.4
Medicare and Medicaid Account Debtors and Third-Party Payor
Information
Borrower (a) shall maintain applicable Medicare and Medicaid
provider numbers, (b) shall maintain applicable CHAMPUS/TRICARE
provider numbers, if applicable, and (d) to the extent Borrower
shall enter into any other arrangements with non-governmental
third-party payors, Borrower shall use commercially reasonable
efforts to enter into agreements with such third-party payors in
form and substance satisfactory to Lender.
5.5
Collateral Administration
(a)
All
Collateral (except proceeds of Accounts which shall be
deposited with the Lockbox Banks) and records supporting the
Collateral will at all times be kept by Borrower at the
locations set forth on
Schedule 7.18B hereto
and shall not, without thirty calendar days prior written notice to
Lender, be moved therefrom, and in any case shall not be moved
outside the continental United States.
(b)
Borrower
shall keep accurate and complete records of its Accounts and
all payments and collections thereon and shall submit such
records to Lender on such periodic bases as Lender may
request. In addition, if Accounts of Borrower in an aggregate
face amount in excess of $25,000.00 become ineligible because
they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible
Accounts, Borrower shall notify Lender of such occurrence
within two Business Days following the discovery of such
occurrence or upon any submission to Lender of a Borrowing
Certificate and the Borrowing Base shall thereupon be adjusted
to reflect such occurrence.
(c)
Whether
or not an Event of Default has occurred, any of Lender’s
officers, employees, representatives or agents shall have the
right, at any time during normal business hours upon
reasonable notice, in the name of Lender, any designee of
Lender or Borrower, to verify the validity, amount or any
other matter relating to any Collateral. Notwithstanding the
foregoing, so long as no Default or Event of Default has
occurred and is continuing, Lender agrees to give Borrower at
least seven (7) business days’ written notice of such
visit to Borrower’s offices. Borrower shall cooperate
fully with Lender in an effort to facilitate and promptly
conclude such verification process.
(d)
Borrower
shall endeavor in the first instance to make collection of its
Accounts for Lender. Lender shall have the right at all times
after the occurrence and during the continuance of an Event of
Default to notify (i) Account Debtors owing Accounts to
Borrower other than Medicaid/Medicare Account Debtors that
their Accounts have been assigned to Lender and to collect
such Accounts directly in its own name and to charge
collection costs and expenses, including reasonable
attorney’s fees, to Borrower, and
(ii) Medicaid/Medicare Account Debtors that Borrower has
waived any and all defenses and counterclaims they may have or
could interpose in any such action or procedure brought by
Lender to obtain a court order recognizing the collateral
assignment or security interest and Lien of Lender in and to
any Account or other Collateral and that Lender is seeking or
may seek to obtain a court order recognizing the collateral
assignment or security interest and Lien of Lender in and to
all Accounts and other Collateral payable by Medicaid/Medicare
Account Debtors.
(e)
As
and when determined by Lender in its Permitted Discretion,
Lender will perform the searches described in clauses (i),
(ii) and (iii) below against Borrower and Guarantor (the
results of which are to be consistent with Borrower’s
representations and warranties under this Agreement), all at
Borrower’s expense: (i) UCC searches with the Secretary
of State of the jurisdiction of organization of Borrower and
Guarantor and, if deemed necessary by Lender, the Secretary of
State and local filing offices of each jurisdiction where
Borrower or Guarantor maintain their respective executive
offices, a place of business or assets; (ii) Lien
searches with the United States Patent and Trademark Office
and the United States Copyright Office; and (iii) judgment,
federal, state and local tax lien searches, in each
jurisdiction searched under clause (i) above.
(f)
Borrower
(i) shall provide prompt written notice to its current bank to
transfer all items, collections and remittances to the
Concentration Account, (ii) shall direct each Account Debtor
to make payments to the appropriate Lockbox Account, and
Borrower hereby authorizes Lender, upon any failure to send
such notices and directions within ten calendar days after the
Closing Date (or ten calendar days after the Person becomes an
Account Debtor), to send any and all similar notices and
directions to such Account Debtors, and (iii) shall do
anything further that may be lawfully required by Lender to
create and perfect Lender’s Lien on any Collateral and
effectuate the intentions of the Loan Documents. At
Lender’s request, Borrower shall immediately deliver to
Lender all Collateral for which Lender must receive possession
to obtain a perfected security interest.
6.1
Conditions to Initial Advance
and Closing
The
obligations of Lender to consummate the transactions
contemplated herein and to make the Initial Advance are
subject to the satisfaction, in the sole judgment of Lender,
of the following:
(a)
Lender
shall have received information and responses to its due
diligence requests, and completed examinations related to the
Collateral, the financial statements and the books, records,
business, obligations, financial condition and operational
state of each Credit Party and any other information
reasonably requested by Lender, and all such information and
responses as well as the results of such examinations and each
Credit Party shall demonstrate to Lender’s satisfaction
that (i) its operations comply, in all respects deemed
material by Lender, in its sole judgment, with all applicable
federal, state, foreign and local laws, statutes and
regulations, (ii) its operations are not the subject of
any governmental investigation, evaluation or any remedial
action which could result in any expenditure or liability
deemed material by Lender, in its sole judgment, and
(iii) it has no liability (whether contingent or
otherwise) that is deemed material by Lender, in its sole
judgment;
(b)
(i)
Borrower shall have delivered to Lender (A) the Loan Documents
to which Borrower is a party, each duly executed by an
authorized officer of such Borrower and the other parties
thereto, (B) a Borrowing Certificate for the Initial Advance
under the Revolving Facility executed by an authorized officer
of Borrower and (C) (1) audited annual consolidated and
consolidating financial statements of Borrower for
Borrower’s most recently ended fiscal year, including
notes thereto, consisting of a balance sheet at the end of
such completed fiscal year and the related statements of
income, retained earnings, cash flows and owner's equity for
such completed fiscal year, which financial statements shall
be prepared and certified without qualification by an
independent certified public accounting firm reasonably
satisfactory to Lender/in accordance with GAAP consistently
applied with prior periods (except for changes in accounting
methodology specified in such financial statements); and (2)
unaudited consolidated and consolidating financial statements
of Borrower consisting of a balance sheet and statements
of income, retained earnings, cash flows and owner's equity
for the period from the beginning of the current fiscal year
through the end of the most recently ended calendar month,
which financial statements shall be prepared in accordance
with GAAP consistently applied with prior periods (except for
changes in accounting methodology which have been enacted
since such prior periods), (ii) Borrower shall have
established and maintained the Lockbox Accounts and have
entered into Lockbox Agreements, all as contemplated in
Section 5.1 ;
and (iii) Guarantor shall have delivered to Lender the Loan
Documents to which such Guarantor is a party, each duly executed
and delivered by such Guarantor or an authorized officer of such
Guarantor, as applicable, and the other parties
thereto;
(c)
all
in form and substance satisfactory to Lender in its Permitted
Discretion, Lender shall have received (i) a report of Uniform
Commercial Code financing statement, tax and judgment lien
searches performed with respect to Borrower and Guarantor in
each jurisdiction determined by Lender in its sole discretion,
and such report shall show no Liens on the Collateral (other
than Permitted Liens), (ii) each document (including, without
limitation, any Uniform Commercial Code financing statement)
required by any Loan Document or under law or requested by
Lender to be filed, registered or recorded to create in favor
of Lender, a perfected first priority security interest upon
the Collateral, and (iii) evidence of each such filing,
registration or recordation and of the payment by Borrower of
any necessary fee, tax or expense relating
thereto;
(d)
Lender
shall have received (i) the Organizational and Good Standing
Documents of each Credit Party, all in form and substance
acceptable to Lender, (ii) a certificate of the corporate
secretary or assistant secretary of each Credit Party dated
the Closing Date, as to the incumbency and signature of the
Persons executing the Loan Documents, in form and substance
acceptable to Lender, and (iii) the written legal opinion of
counsel for Credit Parties, in form and substance satisfactory
to Lender;
(e)
Lender
shall have received (i) a Solvency Certificate executed by the
chief financial officer (or, in the absence of a chief
financial officer, the chief executive officer)
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