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EXHIBIT 10.20
LOAN AGREEMENT
September 25, 1998
MedicalControl, Inc.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Ladies and Gentlemen:
This Loan Agreement (the "LOAN AGREEMENT") will serve to set forth the
terms of the financing transactions by and between MEDICAL CONTROL, INC., a
Delaware corporation ("BORROWER"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION
("BANK"):
1. CREDIT FACILITIES. Subject to the terms and conditions set forth in
this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "LOAN DOCUMENTS"), Bank hereby agrees to lend to Borrower (a)
the amount of $1,600,000 (the "TERM LOAN") in a single advance on the date
hereof, and (b) (the "LINE OF CREDIT"), on a revolving basis from time to time
during the period commencing on the date hereof and continuing through the
maturity date of the promissory note evidencing this credit facility from time
to time, such amounts as Borrower may request hereunder; provided, however, the
total principal amount outstanding at any time under the Line of Credit shall
not exceed $500,000 (the Line of Credit and the Term Loan are collectively
referred to herein as the "CREDIT FACILITIES"). Subject to the terms and
conditions hereof, Borrower may borrow, repay and reborrow hereunder. The sums
advanced under the Loans shall be used for acquisition of a subsidiary and used
for general working capital purposes.
All advances under the Credit Facilities shall be collectively called the
"LOANS". Bank reserves the right to require Borrower to give Bank not less than
one (1) business day prior notice of each requested advance under the Line of
Credit, specifying (i) the aggregate amount of such requested advance, (ii) the
requested date of such advance, and (iii) the purpose for such advance, with
such advances to be requested in a form satisfactory to Bank. Borrower shall pay
to Bank upon the execution of this Agreement a facility fee in the amount of
$16,000. In addition, Borrower shall pay to Bank during the term of the Line of
Credit an unused fee equal to .25% per annum quarterly in arrears, of an amount
equal to $500,000 less the average outstanding balance under the Line of Credit.
LOAN AGREEMENT - Page 1
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2. PROMISSORY NOTES. The Line of Credit and the Term Loan shall be
evidenced by one or more promissory notes (such promissory notes, together with
any renewals, extensions and increases thereof, the "Note") duly executed by
Borrower and payable to the order of Bank, in form and substance acceptable to
Bank. Interest on the Note shall accrue at the rate set forth therein. The
principal of and interest on the Note shall be due and payable in accordance
with the terms and conditions set forth in the Note and in this Loan Agreement.
3. COLLATERAL. As collateral and security for the indebtedness
evidenced by the Note and any and all other indebtedness or obligations from
time to time owing by Borrower to Bank, Borrower shall grant, and hereby grants,
to Bank, its successors and assigns, a first and prior lien and security
interest in and to the property described hereinbelow, together with any and all
PRODUCTS AND PROCEEDS thereof (the "COLLATERAL"):
(a) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any
right to payment for goods sold or services rendered arising out of the
sale or delivery of personal property or work done or labor performed
by Borrower), now or hereafter owned, held, or acquired by Borrower,
together with any and all books of account, customer lists and other
records relating in any way to the foregoing.
(b) All present and hereafter acquired inventory (including
without limitation, all raw materials, work in process and finished
goods) held, possessed, owned, held on consignment, or held for sale,
lease, return or to be furnished under contracts of service, in whole
or in part, by Borrower wherever located.
(c) All equipment and fixtures of whatsoever kind and
character now or hereafter possessed, held, acquired, leased or owned
by Borrower and used or usable in Borrower's business, together with
all replacements, accessories, additions, substitutions and accessions
to all of the foregoing.
(d) Any and all other assets, whether tangible or intangible,
of Borrower.
The term "COLLATERAL" shall also include all records and data relating to any of
the foregoing (including, without limitation, any computer software on which
such records and data may be located). Borrower agrees to execute such security
agreements, assignments, deeds of trust and other agreements and documents as
Bank shall deem appropriate and otherwise require from time to time to more
fully create and perfect Bank's lien and security interests in the Collateral.
LOAN AGREEMENT - Page 2
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5. GUARANTORS. As a condition precedent to the Bank's obligation to
make the Loans to Borrower, Borrower agrees to cause MedicalControl Network
Solutions, Inc., Diversified Group Administrators, Inc., and PPO Management
Solutions, Inc. (whether one or more, the "GUARANTORS") to each execute and
deliver to Bank contemporaneously herewith a guaranty agreement, in form and
substance satisfactory to Bank.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants, and upon each request for an advance under the Credit Facilities,
further represents and warrants, to Bank as follows:
(a) Existence. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and all other states where it is doing business, and has all
requisite power and authority to execute and deliver the Loan
Documents.
(b) Binding Obligations. The execution, delivery, and
performance of this Loan Agreement and all of the other Loan Documents
by Borrower have been duly authorized by all necessary action by
Borrower, and constitute legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, except
as limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except
to the extent specific remedies may generally be limited by equitable
principles.
(c) No Consent. The execution, delivery and performance of
this Loan Agreement and the other Loan Documents, and the consummation
of the transactions contemplated hereby and thereby, do not (i)
conflict with, result in a violation of, or constitute a default under
(A) any provision of its articles or certificate of incorporation or
bylaws, if Borrower is a corporation, or its partnership agreement, if
Borrower is a partnership, or any agreement or other instrument binding
upon Borrower, or (B) any law, governmental regulation, court decree or
order applicable to Borrower, or (ii) require the consent, approval or
authorization of any third party.
(d) Financial Condition. Each financial statement of Borrower
supplied to the Bank fully discloses and fairly presents Borrower's
financial condition as of the date of each such statement. There has
been no material adverse change in such financial condition or results
of operations of Borrower subsequent to the date of the most recent
financial statement supplied to the Bank.
(e) Litigation. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or the properties of Borrower, before any court or
governmental department, commission or board, which, if determined
adversely to Borrower, would have a material adverse effect on the
financial condition, properties, or operations of Borrower.
LOAN AGREEMENT - Page 3
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(f) Taxes; Governmental Charges. Borrower has filed all
federal, state and local tax reports and returns required by any law or
regulation to be filed by it and has either duly paid all taxes, duties
and charges indicated due on the basis of such returns and reports, or
made adequate provision for the payment thereof, and the assessment of
any material amount of additional taxes in excess of those paid and
reported is not reasonably expected.
(g) Year 2000 Changes. All devices, systems, machinery,
information technology, computer software and hardware, and other date
sensitive technology (jointly and severally the "SYSTEMS") necessary
for Borrower and its subsidiaries to carry on its business as presently
conducted and as contemplated to be conducted in the future are Year
2000 Compliant or will be Year 2000 Compliant within a period of time
calculated to result in no material disruption of any of Borrower's
business operations. For purposes of these provisions, "Year 2000
Compliant" means that such Systems are designed to be used prior to,
during and after the Gregorian calendar year 2000 A.D. and will operate
during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date
data which represents or references different centuries or more than
one century. Borrower will make written inquiry of each of its key
suppliers, vendors, and customers, and will obtain in writing
confirmations from all such persons, as to whether such persons have
initiated programs to become Year 2000 Compliant and Borrower
reasonably believes that all such persons will be or become so
compliant. For purposes hereof, "key suppliers, vendors, and customers"
refers to those suppliers, vendors, and customers of Borrower whose
business failure would, with reasonable probability, result in a
material adverse change in the business, properties, condition
(financial or otherwise), or prospects of Borrower. For purposes of
this paragraph, Bank, as a lender of funds under the terms of the
Credit Facility, confirms to Borrower that Bank has initiated its own
corporate-wide Year 2000 program with respect to its lending
activities.
7. CONDITIONS PRECEDENT TO ADVANCES. Bank's obligation to make any
advance under this Loan Agreement and the other Loan Documents shall be subject
to the conditions precedent that, as of the date of such advance and after
giving effect thereto (i) all representations and warranties made to Bank in
this Loan Agreement and the other Loan Documents shall be true and correct, as
of and as if made on such date, (ii) no material adverse change in the financial
condition of Borrower since the effective date of the most recent financial
statements furnished to Bank by Borrower shall have occurred and be continuing,
(iii) no event has occurred and is continuing, or would result from the
requested advance, which with notice or lapse of time, or both, would constitute
an Event of Default (as hereinafter defined), and (iv) Bank's receipt of all
Loan Documents appropriately executed by Borrower and all other proper parties.
8. AFFIRMATIVE COVENANTS. Until (i) the Note and all other obligations
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower agrees and covenants that it will, unless
Bank shall otherwise consent in writing:
LOAN AGREEMENT - Page 4
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(a) Accounts and Records. Maintain its books and records in
accordance with generally accepted accounting principles.
(b) Right of Inspection. Permit Bank to visit its properties
and installations and to examine, audit and make and take away copies
or reproductions of Borrower's books and records, at all reasonable
times.
(c) Right to Additional Information. Furnish Bank with such
additional information and statements, lists of assets and liabilities,
tax returns, and other reports with respect to Borrower's financial
condition and business operations as Bank may request from time to
time.
(d) Compliance with Laws. Conduct its business in an orderly
and efficient manner consistent with good business practices, and
perform and comply with all statutes, rules, regulations and/or
ordinances imposed by any governmental unit upon Borrower its
businesses, operations and properties (including, without limitation,
all applicable environmental statutes, rules, regulations and
ordinances).
(e) Taxes. Pay and discharge when due all of its indebtedness
and obligations, including, without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that,
if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits; provided, however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, xxxx,
xxxx or claim so long as (i) the legality of the same shall be
contested in good faith by appropriate judicial, administrative or
other legal proceedings, and (ii) Borrower shall have established on
its books adequate reserves with respect to such contested assessment,
tax, charge, xxxx, xxxx or claim in accordance with generally accepted
accounting principles, consistently applied.
(f) Insurance. Maintain insurance, including but not limited
to, fire insurance, comprehensive property damage, public liability and
worker's compensation, and, within ten (10) days after the date of this
Agreement will acquire business interruption and other insurance deemed
necessary or otherwise required by Bank.
(g) Notice of Indebtedness. Promptly inform Bank of the
creation, incurrence or assumption by Borrower of any actual or
contingent liabilities not permitted under this Loan Agreement.
(h) Notice of Litigation. Promptly after the commencement
thereof, notify Bank of all actions, suits and proceedings before any
court or any governmental department, commission or board affecting
Borrower or any of its properties.
(i) Notice of Material Adverse Change. Promptly inform Bank of
(i) any and all material adverse changes in Borrower's financial
condition, and (ii) all claims made against Borrower which could
reasonably be expected to materially affect the financial condition of
Borrower.
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(j) Additional Documentation. Execute and deliver, or cause to
be executed and delivered, any and all other agreements, instruments or
documents which Bank may reasonably request in order to give effect to
the transactions contemplated under this Loan Agreement and the other
Loan Documents.
(k) Maintain Control. The Answer Partnership, Ltd., a Texas
limited partnership, X. Xxxx Xxxx, or any entity owned or controlled by
X. Xxxx Xxxx shall maintain ownership of not less than 50% of the
outstanding voting stock of Borrower.
9. NEGATIVE COVENANTS. Until (i) the Note and all other obligations and
liabilities of Borrower under this Loan Agreement and the other Loan Documents
are fully paid and satisfied, and (ii) the Bank has no further commitment to
lend hereunder, Borrower will not, without the prior written consent of Bank:
(a) Nature of Business. Make any material change in the nature
of its business as carried on as of the date hereof.
(b) Liquidations, Mergers, Consolidations. Liquidate, merge or
consolidate with or into any other entity.
(c) Sale of Assets. Sell, transfer or otherwise dispose of any
of its assets or properties, other than (i) in the ordinary course of
business and (ii) transfers among Borrower and the Obligated Parties.
(d) Liens. Create or incur any lien or encumbrance on any of
its assets, other than (i) liens and security interests securing
indebtedness owing to Bank, (ii) liens for taxes, assessments or
similar charges either (1) not yet due or (2) being contested in good
faith by appropriate proceedings and for which Borrower has established
adequate reserves, (iii) liens and security interest existing as of the
date hereof which have been disclosed to and approved by the Bank in
writing and (iv) liens and security interests on equipment securing the
purchase price for such equipment.
(e) Indebtedness. Create, incur or assume any indebtedness for
borrowed money or issue or assume any other note, debenture, bond or
other evidences of indebtedness, or guarantee any such indebtedness or
such evidences of indebtedness of others, other than (i) borrowings
from Bank, (ii) borrowings outstanding on the date hereof and disclosed
in writing to Bank, and (iii) the Subordinated Debt evidenced by the
Convertible Subordinated Promissory Notes attached hereto as EXHIBIT
"A" incurred in connection with the acquisition of subsidiary BHC, Inc.
(f) Change in Management. Allow Xxxxxx Xxxxxx or X. Xxxx Xxxx
to cease active participation in the senior management of Borrower.
(g) Loans. Make any loans to any person or entity except
advances of business expenses to employees in the ordinary course of
business.
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(h) Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate (as
hereinafter defined) of Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon
fair and reasonable terms no less favorable to Borrower than would be
obtained in a comparable arm's-length transaction with a person or
entity not an Affiliate of Borrower. As used herein, the term
"AFFILIATE" means any individual or entity directly or indirectly
controlling, controlled by, or under common control with, another
individual or entity.
(i) Dividends. Borrower agrees not to declare or pay any cash
dividends on any shares of Borrower's capital stock, make any other
distributions with respect to any payment on account of the purchase,
redemption, or other acquisition or retirement of any shares of
Borrower's capital stock, or make any other distribution, sale,
transfer or lease of any of Borrower's assets other than in the
ordinary course of business, unless any such amounts are directly
utilized for the payment of principal or interest on indebtedness and
obligations owing from time to time by Borrower to Bank.
10. FINANCIAL COVENANTS. Until (i) the Note and all other obligations
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower and its subsidiaries, on a consolidated
basis, will maintain the following financial covenants:
(a) Minimum Income. Beginning January 1, 1999, Borrower will
maintain income of not less than $1.00 for each fiscal quarter.
(b) Net Worth. Borrower will maintain, at all times, its total
assets less its total liabilities at not less than $7,900,000.
(c) Debt Service. Borrower will maintain, as of the last day
of each fiscal quarter, a ratio of (i) consolidated net income after
taxes plus interest expense depreciation, amortization and other
non-cash expenses for the twelve (12) month period ending with such
fiscal quarter, less any capital expenditures during such twelve (12)
month period to (ii) total interest expense and current maturities of
long term debt and long term capital leases for such twelve (12) month
period, of not less than 1.25 to 1.0.
(d) Funded Debt to Cash Flow. Borrower will maintain, as of
the end of each fiscal quarter, a ratio of all outstanding debt of
Borrower at the end of such fiscal quarter, to (ii) earnings before
depreciation, amortization, and interest expense for the twelve (12)
month period ending with such fiscal quarter, of not more than 2.5 to
1.0.
(e) Capital Expenditures. Borrower will not make capital
expenditures in excess of $500,000 during any fiscal year.
(f) Current Ratio. At all times, a ratio of (a) current
assets, (excluding prepaid expenses) to (b) current liabilities of not
less than 1.5 to 1.0.
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(g) Maintain Contracts. Borrower shall not allow the net loss,
in any year (after taking into account revenues from new clients), of
clients which contributed more than an aggregate amount of $1,500,000
in revenue to Borrower or its subsidiaries in the previous year.
As used herein, the term "SUBORDINATED DEBT" means any indebtedness owing by
Borrower which has been subordinated by written agreement to all indebtedness
now or hereafter owing by Borrower to Lender, such agreement to be in form and
substance acceptable to Lender. As used herein, "DISTRIBUTIONS" shall mean all
cash or cash equivalent dividends and other distributions made by Borrower to
its shareholders or partners, as the case may be, other than salary, bonuses and
other compensation for services. Unless otherwise specified, all accounting and
financial terms and covenants set forth above are to be determined according to
generally accepted accounting principles, consistently applied.
11. REPORTING REQUIREMENTS. Until (i) the Note and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Bank has no further
commitment to lend hereunder, Borrower will, unless Bank shall otherwise consent
in writing, furnish to Bank:
(a) Interim Financial Statements. As soon as available, and in
any event within forty-five (45) days after the end of each quarter of
each fiscal year of Borrower, a consolidated and consolidating balance
sheet and income statement of Borrower as of the end of such fiscal
quarter, all in form and substance and in reasonable detail
satisfactory to Bank and duly certified (subject to year end review
adjustments) by the President and/or Chief Financial Officer of
Borrower (i) as being true and correct in all material aspects to the
best of his or her knowledge, (ii) as having been prepared in
accordance with generally accepted accounting principles, consistently
applied, and (iii) as being consistent in all material respects with
the information submitted by Borrower to the U.S. Securities and
Exchange Commission pursuant to its Quarterly Report on Form 10QSB.
(b) Annual Financial Statements. As soon as available and in
any event within one hundred twenty (120) days after the end of each
fiscal year of Borrower, a consolidated and consolidating balance sheet
and income statement of Borrower as of the end of such fiscal year, in
each case audited by independent public accountants of recognized
standing acceptable to Bank.
(c) Compliance Certificate. A certificate signed by Chairman,
President, or Vice President, Finance of Borrower, within forty-five
(45) days after the end of each quarter of each fiscal year, stating
that Borrower is in full compliance with all of its obligations under
this Loan Agreement and all other Loan Documents and is not in default
of any term or provisions hereof or thereof, and demonstrating
compliance with all financial ratios and covenants set forth in this
Loan Agreement.
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(d) Accounts Aging. An accounts receivable aging report within
thirty (30) days after the end of each month of each fiscal year, in
form and detail satisfactory to Bank.
(e) Audit Reports. True and complete copies of all audit
reports submitted to Borrower.
(f) Adverse Events. Immediate notice of any Event of Default
or any event which, with the passing of time or the giving of notice,
or both, could constitute an Event of Default, and any other event
which could reasonably be expected to have a material adverse effect
upon Borrower or any Guarantor.
(g) Year 2000 Information. Furnish such additional
information, statements and other reports with respect to Borrower's
activities, course of action and progress towards becoming Year 2000
Compliant as Bank may request from time to time. In the event of any
change in circumstances that causes or will likely cause any of
Borrower's representations and warranties with respect to Borrower or
its subsidiaries being or becoming Year 2000 Complaint to no longer be
true (hereinafter, referred to as a "CHANGE IN CIRCUMSTANCES") then
Borrower shall promptly, and in any event within ten (10) days of
receipt of information regarding a Change in Circumstances, provide
Bank with written notice (the "Notice") that describes in reasonable
detail the Change in Circumstances and how such Change in Circumstances
caused or will likely cause Borrower's representations and warranties
with respect to being or becoming Year 2000 Compliant to no longer be
true. Borrower shall, within ten (10) days of a request, also provide
Bank with any additional information Bank requests of Borrower in
connection with the Notice and/or a Change in Circumstances.
12. EVENTS OF DEFAULT. Each of the following shall constitute an "EVENT
OF DEFAULT" under this Loan Agreement:
(a) The failure, refusal or neglect of Borrower to pay when
due any part of the principal of, or interest on, the Note or any other
indebtedness or obligations owing to Bank by Borrower from time to
time.
(b) The failure of Borrower or any Obligated Party (as defined
below) to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other
Loan Documents, if such failure shall continue for thirty (30) days
after notice to Borrower of such failure.
(c) The occurrence of an event of default under any of the
other Loan Documents or under any other agreement now existing or
hereafter arising between Bank and Borrower.
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(d) Any representation contained herein or in any of the other
Loan Documents made by Borrower or any Obligated Party is false or
misleading in any material respect.
(e) The occurrence of any event which permits the acceleration
of the maturity of any indebtedness in excess of $50,000 owing by
Borrower to any third party under any agreement or understanding unless
such occurrence is rectified within five (5) days.
(f) If Borrower or any Obligated Party: (i) becomes insolvent,
or makes a transfer in fraud of creditors, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its
debts as they become due; (ii) generally is not paying its debts as
such debts become due; (iii) has a receiver, trustee or custodian
appointed for, or take possession of, all or substantially all of the
assets of such party, either in a proceeding brought by such party or
in a proceeding brought against such party and such appointment is not
discharged or such possession is not terminated within sixty (60) days
after the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a petition for
relief under the United States Bankruptcy Code or any other present or
future federal or state insolvency, bankruptcy or similar laws (all of
the foregoing hereinafter collectively called "APPLICABLE BANKRUPTCY
LAW") or an involuntary petition for relief is filed against such party
under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within sixty (60) days after the filing thereof, or an
order for relief naming such party is entered under any Applicable
Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged
within a period of thirty (30) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to
pay within thirty (30) days any final money judgment against such
party.
(g) The liquidation, dissolution, or, without the prior
written consent of Bank, which consent shall not be unreasonably
withheld, the merger or consolidation of Borrower or any Obligated
Party.
(h) Either Xxxxxx Xxxxxx or X. Xxxx Xxxx ceases active
participation in the management of Borrower.
(i) The entry of any judgment against Borrower or the issuance
or entry of any attachment or other lien against any of the property of
Borrower for an amount in excess of $50,000, if undischarged, unbonded
or undismissed within thirty (30) days after such entry.
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative. The term "OBLIGATED PARTY", as used herein, shall
mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Note.
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13. REMEDIES. Upon the occurrence of any one or more of the foregoing
Events of Default, (a) the entire unpaid balance of principal of the Note,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Bank by Borrower at such time shall, at the option of
Bank, become immediately due and payable without further notice, demand,
presentation, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Borrower, and (b) Bank may, at its option, cease further
advances under the Note provided, however, concurrently and automatically with
the occurrence of an Event of Default under SUBPARAGRAPH (F) in the immediately
preceding paragraph (i) further advances under the Note shall cease, and (ii)
the Note and all other indebtedness owing to Bank by Borrower at such time
shall, without any action by Bank, become due and payable, without further
notice, demand, presentation, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest or notice of protest of any kind, all of which
are expressly waived by Borrower. All rights and remedies of Bank set forth in
this Loan Agreement and in any of the other Loan Documents may also be exercised
by Bank, at its option to be exercised in its sole discretion, upon the
occurrence of an Event of Default.
14. RIGHTS CUMULATIVE. All rights of Bank under the terms of this Loan
Agreement shall be cumulative of, and in addition to, the rights of Bank under
any and all other agreements between Borrower and Bank (including, but not
limited to, the other Loan Documents), and not in substitution or diminution of
any rights now or hereafter held by Bank under the terms of any other agreement.
15. WAIVER AND AGREEMENT. Neither the failure nor any delay on the part
of Bank to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower therefrom shall be effective unless the
same shall be in writing and signed by Bank, and then shall be effective only in
the specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Loan Agreement
or to any of the other Loan Documents shall be valid or effective unless the
same is signed by the party against whom it is sought to be enforced.
16. BENEFITS. This Loan Agreement shall be binding upon and inure to
the benefit of Bank and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent of
Bank, assign any rights, powers, duties or obligations under this Loan Agreement
or any of the other Loan Documents.
17. NOTICES. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the signature page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal
delivery, in the case of expedited delivery service, as of the date of first
attempted delivery at the address and in the
LOAN AGREEMENT - Page 11
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manner provided herein, or in the case of mail, upon deposit in a depository
receptacle under the care and custody of the United States Postal Service.
Either party shall have the right to change its address for notice hereunder to
any other location within the continental United States by notice to the other
party of such new address at least thirty (30) days prior to the effective date
of such new address.
18. CONSTRUCTION. THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS HAVE
BEEN EXECUTED AND DELIVERED IN THE STATE OF TEXAS, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND SHALL BE
PERFORMABLE BY THE PARTIES HERETO IN THE COUNTY IN TEXAS WHERE THE BANK'S
ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF IS LOCATED.
19. INVALID PROVISIONS. If any provision of this Loan Agreement or any
of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
20. EXPENSES. Borrower shall pay all costs and expenses (including,
without limitation, reasonable attorneys' fees) in connection with (i) any
action required in the course of administration of the indebtedness and
obligations evidenced by the Loan Documents, and (ii) any action in the
enforcement of Bank's rights upon the occurrence of Event of Default.
21. PARTICIPATION OF THE LOANS. Borrower agrees that Bank may, at its
option, sell interests in the Loans and its rights under this Loan Agreement to
a financial institution or institutions and, in connection with each such sale,
Bank may disclose any financial and other information available to Bank
concerning Borrower to each perspective purchaser.
22. ENTIRE AGREEMENT. This Loan Agreement (together with the other Loan
Documents) contains the entire agreement among the parties regarding the subject
matter hereof and supersedes all prior written and oral agreements and
understandings among the parties hereto regarding same.
23. CONFLICTS. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions contained in this Loan Agreement shall be controlling.
24. COUNTERPARTS. This Loan Agreement may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
25. ARBITRATION. Bank and Borrower agree that upon the written demand
of either party, whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that proceeding, all
disputes, claims and controversies between
LOAN AGREEMENT - Page 12
13
them, whether individual, joint, or class in nature, arising from this Loan
Agreement, the Notes or any other Loan Document or otherwise, including, without
limitation, contract disputes and tort claims, shall be resolved by binding
arbitration pursuant to the Commercial Rules of the American Arbitration
Association. Any arbitration proceeding held pursuant to this arbitration
provision shall be conducted in the city nearest the Borrower's address having
an AAA regional office, or at any other place selected by mutual agreement of
the parties. No act to take or dispose of any Collateral shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. The arbitration provision shall not limit the right of either party
during any dispute, claim or controversy to seek, use, and employ ancillary, or
preliminary rights and/or remedies, judicial or otherwise, for the purposes of
realizing upon, preserving, protecting, foreclosing upon or proceeding under
forcible entry and detainer for possession of, any real or personal property,
and any such action shall not be deemed an election of remedies. Such remedies
include, without limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or mortgage,
obtaining a writ of attachment or imposition of a receivership, or exercising
any rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code or when applicable, a judgment by confession of judgment. Any
disputes, claims or controversies concerning the lawfulness or reasonableness of
an act, or exercise of any right or remedy concerning any Collateral, including
any claim to rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated; provided, however, that no arbitrator
shall have the right or the power to enjoin or restrain any act of either party.
Judgment upon any award rendered by any arbitrator may be entered in any court
having jurisdiction. Nothing in this arbitration provision shall preclude either
party from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of any action for these purposes.
The Federal Arbitration Act (Title 9 of the United States Code) shall apply to
the construction, interpretation, and enforcement of this arbitration provision.
26. JURY WAIVER. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW THE
UNDERSIGNED AND BANK (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN
OR AMONG THE UNDERSIGNED AND BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT OR ANY OTHER RELATED DOCUMENT. THIS PROVISION IS A MATERIAL INDUCEMENT
TO BANK TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN
DOCUMENTS.
LOAN AGREEMENT - Page 13
14
If the foregoing correctly sets forth our mutual agreement, please so
acknowledge by signing and returning this Loan Agreement to the undersigned.
Very truly yours,
BANK ONE, TEXAS, N.A.
By: /s/ XXXXXX XXXXXX
--------------------------------------
Xxxxxx Xxxxxx, Vice President
BANK'S ADDRESS:
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxx
ACCEPTED as of the date first written above.
BORROWER:
MEDICALCONTROL, INC.
By: /s/ X. XXXX XXXX
--------------------------------------
Name: X. Xxxx Xxxx
------------------------------------
Title: President and CEO
-----------------------------------
BORROWER'S ADDRESS:
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
LOAN AGREEMENT - Page 14
