1
LOAN AGREEMENT
This Loan Agreement (the "Agreement") dated as of August 18, 1998, by and
among Xxxx and Xxxxxx Xxxxxx ("Lender") the Borrower described below.
In consideration of the Loan or Loans described below and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, Lender and Borrower agree as follows:
1. DEFINITIONS AND REFERENCE TERMS. In addition to any other terms defined
herein, the following terms shall have the meaning set forth with respect
thereto:
A. Borrower(s): Medical Technology Systems, Inc.
B. Borrowers' Address: 00000 Xxxxxxxxxx Xxxxxxxxx Xxxxxxxxxx, Xxxxxxx
00000
C. Hazardous Materials. Hazardous Materials include all materials
defined as hazardous materials or substances under any local, state or
federal environmental laws, rules or regulations, and petroleum, petroleum
products, oil and asbestos.
D. Loan. Any loan described in Section 2 hereof and any subsequent
loan which states that it is subject to this Loan Agreement.
E. Loan Documents. Loan Documents means this Loan Agreement and any
and all promissory notes executed by the Borrower in favor of Lender and
all other documents, instruments (including, without limitation, warrants),
guarantees, certificates and agreements executed and/or delivered by the
Borrower in connection with the Loan.
F. Accounting Terms. All accounting terms not specifically defined or
specified herein shall have the meanings generally attributed to such terms
under generally accepted accounting principles ("GAAP"), as in effect from
time to time, consistently applied, with respect to the financial
statements referenced in Section 3.H. hereof.
2. LOANS.
A. Loan. Lender hereby agrees to make a term loan to Borrowers in the
principal amount of $100,000.00. The obligation to repay the loan is
evidenced by a promissory note of even date herewith (the promissory note
together with any and all renewals, extensions or rearrangements thereof
being hereafter collectively referred to as the "Note") having a maturity
date, repayment terms and interest rate as set forth in the Note.
B. Use of Proceeds. The Borrower agree that the proceeds of the Loan
shall be used solely for working capital purposes and shall not be used to
satisfy any obligations of the Borrower other than obligations incurred in
the normal course of business of the Borrower.
C. Extension of Loan. The maturity of the Note shall be automatically
extended from February 18, 1999 until May 16, 1999 provided that: (a) no
defaults exist under this Agreement; and (b) that the Loan is not subject
to any setoff, defense or counterclaim by the Borrower.
2
3. REPRESENTATIONS AND WARRANTIES OF BORROWERS. The Borrower hereby
represent and warrant to Lender as follows:
A. Good Standing. The Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the state of its
respective incorporation and has the power and authority to own its
property and to carry on its business in each jurisdiction in which
Borrower does business.
B. Authority and Compliance. The Borrower has full power and authority
to execute and deliver the Loan Documents and to incur and perform the
obligations provided for therein, all of which have been duly authorized by
all proper and necessary action of the appropriate governing body of such
Borrower. No consent or approval of any public authority or other third
party is required as a condition to the validity of any Loan Document, and
the Borrower is in compliance with all laws and regulatory requirements to
which it is subject.
C. Binding Agreement. This Agreement and the other Loan Documents
executed by the Borrower constitute valid and legally binding obligations
of the Borrower, enforceable in accordance with their terms.
D. Litigation. There is no proceeding involving the Borrower pending
or, to the knowledge of the Borrower, threatened before any court or
governmental authority, agency or arbitration authority, except as
disclosed to Lender in writing and acknowledged by Lender prior to the date
of this Agreement.
E. No Conflicting Agreements. There is no charter, bylaw, stock
provision, partnership agreement or other document pertaining to the
organization, power or authority of the Borrower and no provision of any
existing agreement, mortgage, indenture or contract binding on the Borrower
or affecting its respective properties, which would conflict with or in any
way prevent the execution, delivery or carrying out of the terms of this
Agreement and the other Loan Documents.
F. Ownership of Assets. The Borrower has good title to its assets, and
its assets are free and clear of liens, except those granted to Lender and
as disclosed to Lender prior to the date of this Agreement.
G. Taxes. All taxes and assessments due and payable by the Borrower
have been paid or are being contested in good faith by appropriate
proceedings and the Borrower has filed all tax returns which it is required
to file.
H. Financial Statements. The financial statements of Borrower
heretofore delivered to Lender have been prepared in accordance with GAAP
applied on a consistent basis throughout the period involved and fairly
present Borrowers' financial condition as of the date or dates thereof. All
factual information furnished by the Borrower to Lender in connection with
this Agreement and the other Loan Documents is and will be accurate and
complete on the date as of which such information is delivered to Lender
and is not and will not be incomplete by the omission of any material fact
necessary to make such information not misleading.
I. Place of Business. The Borrower's chief executive office is located
at 00000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000.
3
J. Environmental. The conduct of the Borrower's business operations
and the condition of the Borrower's property does not and will not violate
any federal laws, rules or ordinances for environmental protection,
regulations of the Environmental Protection Agency, any applicable local or
state law, rule, regulation or rule of common law or any judicial
interpretation thereof relating primarily to the environment or Hazardous
Materials.
K. Continuation of Representations and Warranties. All representations
and warranties made under this Agreement shall be deemed to be made at and
as of the date hereof and at and as of the date of any advance under any
Loan.
4. REPRESENTATIONS AND WARRANTIES OF LENDER. Lender hereby represents and
warrants to Borrowers that Lender: (a) is an "accredited investor," as that term
is defined in Exhibit "A" to this Agreement, (b) has such knowledge and
experience in financial and business matters rendering the Lender capable of
evaluating the merits and risks of an investment in securities of the Company (a
"sophisticated investor"), or (c) is not an accredited or sophisticated
investor, but has appointed a "purchaser representative," as that term is
defined in Exhibit "A" in connection with evaluating the merits and risks of an
investment in securities of the Company.
5. AFFIRMATIVE COVENANTS. Until full payment and performance of all
obligations of the Borrower under the Note, the Borrower will, unless Lender
consents otherwise in writing (and without limiting any requirement of any other
Loan Document):
A. Financial Statements and Other Information. Maintain a system of
accounting satisfactory to Lender and in accordance with GAAP applied on a
consistent basis throughout the period involved, permit Lender's officers
or authorized representatives to visit and inspect such Borrower's books of
account and other records at such reasonable times and as often as Lender
may desire, and pay the reasonable fees and disbursements of any
accountants or other agents of Lender selected by Lender for the foregoing
purposes. Unless written notice of another location is given to Lender, the
Borrower's books and records will be located at such Borrower's chief
executive office set forth above. All financial statements called for below
shall be prepared in form and content acceptable to Lender.
In addition, the Borrower will:
i. Furnish to Lender audited financial statements of such
Borrower for each fiscal year of such Borrower, within ninety (90)
days after the close of each such fiscal year.
ii. Furnish to Lender Borrower-prepared financial statements of
such Borrower for each quarter of each fiscal year of such Borrower,
within forty-five (45) days after the close of each such period.
iii. Furnish to Lender promptly such additional financial
information and reports with respect to the business operations and
financial condition of the Borrower as Lender may reasonably request.
B. Insurance. Maintain insurance with responsible insurance companies
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses operating in the same
vicinity, specifically to include fire and extended coverage insurance
covering all assets, business interruption insurance, workers compensation
insurance and liability insurance, all to be with such companies and in
such amounts as are satisfactory to Lender and providing for at least 30
days prior notice to Lender of any cancellation thereof. Satisfactory
evidence of such insurance will be supplied to Lender prior to funding
under the Loan(s) and 30 days prior to each policy renewal.
4
C. Existence and Compliance. Maintain its existence, good standing and
qualification to do business, where required and comply with all laws,
regulations and governmental requirements including, without limitation,
environmental laws applicable to it or to any of its property, business
operations and transactions.
D. Adverse Conditions or Events. Promptly advise Lender in writing of
(i) any condition, event or act which comes to its attention that would or
might materially adversely affect such Borrower's financial condition or
operations or Lender's rights under the Loan Documents, (ii) any litigation
filed by or against such Borrower, (iii) any event that has occurred that
would constitute an event of default under any Loan Documents and (iv) any
uninsured or partially uninsured loss through fire, theft, liability or
property damage in excess of an aggregate of $50,000.00.
E. Taxes and Other Obligations. Pay all of its taxes, assessments and
other obligations, including, but not limited to taxes, costs or other
expenses arising out of this transaction, as the same become due and
payable, except to the extent the same are being contested in good faith by
appropriate proceedings in a diligent manner.
F. Maintenance. Maintain all of its tangible property in good
condition and repair and make all necessary replacements thereof, and
preserve and maintain all licenses, trademarks, privileges, permits,
franchises, certificates and the like necessary for the operation of its
business.
G. Environmental. Immediately advise Lender in writing of (i) any and
all enforcement, cleanup, remedial, removal, or other governmental or
regulatory actions instituted, completed or threatened pursuant to any
applicable federal, state, or local laws, ordinances or regulations
relating to any Hazardous Materials affecting such Borrower's business
operations; and (ii) all claims made or threatened by any third party
against such Borrower relating to damages, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous Materials. The
Borrower shall immediately notify Lender of any remedial action taken by
Borrower with respect to such Borrower's business operations. Borrower will
not use or permit any other party to use any Hazardous Materials at any of
such Borrower's places of business or at any other property owned by such
Borrower except such materials as are incidental to such Borrower's normal
course of business, maintenance and repairs and which are handled in
compliance with all applicable environmental laws. The Borrower agrees to
permit Lender, its agents, contractors and employees to enter and inspect
any of such Borrower's places of business or any other property of such
Borrower at any reasonable times upon three (3) days prior notice for the
purposes of conducting an environmental investigation and audit (including
taking physical samples) to insure that such Borrower is complying with
this covenant and Borrower shall reimburse Lender on demand for the costs
of any such environmental investigation and audit. The Borrower shall
provide Lender, its agents, contractors, employees and representatives with
access to and copies of any and all data and documents relating to or
dealing with any Hazardous Materials used, generated, manufactured, stored
or disposed of by such Borrower's business operations within five (5) days
of the request therefore.
6. NEGATIVE COVENANTS. Until full payment and performance of all
obligations of the Borrower under the Note, the Borrower will not, without the
prior written consent of Lender (and without limiting any requirement of any
other Loan Documents):
5
A. Transfer of Assets or Control. Sell, lease, assign or otherwise
dispose of or transfer any assets, except in the normal course of its
business, or enter into any merger or consolidation, or transfer control or
ownership of the Borrower.
B. Character of Business. Change the general character of business as
conducted at the date hereof, or engage in any type of business not
reasonably related to its business as presently conducted.
C. Dividends and Distributions. Make any distribution or pay any
dividends (other than dividends payable in common stock of the Borrower) on
any shares of any class of its capital stock, or apply any of its property
or assets to the purchase, redemption or the retirement of any shares of
any class of its capital stock.
E. Management Change. Make any change in the president of the Borrower
or the chief executive officer of the Borrower, if applicable.
7. DEFAULT. Borrowers shall be in default under this Agreement and under
each of the other Loan Documents if they shall default in the payment of any
amounts due and owing under the Loan or should any of them fail to timely and
properly observe, keep or perform any term, covenant, agreement or condition in
any Loan Document or in any other loan agreement, promissory note, security
agreement, deed of trust, deed to secure debt, mortgage, assignment or other
contract securing or evidencing payment of any indebtedness of the Borrower to
Lender. Borrower shall also be in default under this Agreement if (a) any
Borrower defaults under the Second Amended and Restated Loan and Security
Agreement dated as of September 5, 1996, as amended, by and among SouthTrust,
certain of the Borrowers, Medical Technology Systems, Inc. ("MTS"), and certain
other parties, (b) if the Borrower or MTS defaults under or refuses to issue any
shares of stock pursuant to any stock warrant that is issued to Lender in
connection with the loan transaction contemplated by this Loan Agreement, or (c)
the Lender's attorney does not receive the original stock certificate or
certificates that are subject to the Pledge Agreement within ten (10) days from
the date of this Agreement.
8. REMEDIES UPON DEFAULT. If an event of default shall occur, Lender shall
have all rights, powers and remedies available under each of the Loan Documents
as well as all rights and remedies available at law or in equity.
9. NOTICES. All notices, requests or demands which any party is required or
may desire to give to any other party under any provision of this Agreement must
be in writing delivered to the other party at the following address:
Medical Technology Systems, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax. No. (000) 000-0000
Lender:
Xxxx and Xxxxxx Xxxxxx
00000 Xxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Fax No. (000) 000-0000
6
or to such other address as any party may designate by written notice to the
other party. Each such notice, request and demand shall be deemed given or made
as follows:
A. If sent by mail, upon the earlier of the date of receipt or five
(5) days after deposit in the U.S. Mail, first class postage prepaid;
B. If sent by any other means , upon delivery.
10. COSTS, EXPENSES AND ATTORNEYS' FEES. The Borrower shall pay to Lender
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees incurred by Lender in connection with (a) negotiation
and preparation of this Agreement and each of the Loan Documents, and (b) all
other costs and attorneys' fees incurred by Lender for which Borrowers are
obligated to reimburse Lender in accordance with the terms of the Loan
Documents.
11. MISCELLANEOUS. Borrowers and Lender further covenant and agree as
follows, without limiting any requirement of any other Loan Document:
A. Cumulative Rights and No Waiver. Each and every right granted to
Lender under any Loan Document, or allowed it by law or equity shall be
cumulative of each other and may be exercised in addition to any and all
other rights of Lender, and no delay in exercising any right shall operate
as a waiver thereof, nor shall any single or partial exercise by Lender of
any right preclude any other or future exercise thereof or the exercise of
any other right. The Borrower expressly waives any presentment, demand,
protest or other notice of any kind, including but not limited to notice of
intent to accelerate and notice of acceleration. No notice to or demand on
the Borrower in any case shall, of itself, entitle the Borrower to any
other or future notice or demand in similar or other circumstances.
B. Applicable Law. This Loan Agreement and the rights and obligations
of the parties hereunder shall be governed by and interpreted in accordance
with the laws of Florida and applicable United States federal law.
C. Amendment. No modification, consent, amendment or waiver of any
provision of this Loan Agreement, nor consent to any departure by the
Borrower therefrom, shall be effective unless the same shall be in writing
and signed by an officer of Lender, and then shall be effective only in the
specified instance and for the purpose for which given. This Loan Agreement
is binding upon the Borrower, their respective successors and assigns, and
inures to the benefit of Lender, its successors and assigns; however, no
assignment or other transfer of the Borrower's rights or obligations
hereunder shall be made or be effective without Lender's prior written
consent, nor shall it relieve the Borrower of any obligations hereunder.
There is no third party beneficiary of this Loan Agreement.
D. Documents. All documents, certificates and other items required
under this Loan Agreement to be executed and/or delivered to Lender shall
be in form and content satisfactory to Lender and its counsel.
E. Partial Invalidity. The unenforceability or invalidity of any
provision of this Loan Agreement shall not affect the enforceability or
validity of any other provision herein and the invalidity or
unenforceability of any provision of any Loan Document to any person or
circumstance shall not affect the enforceability or validity of such
provision as it may apply to other persons or circumstances.
7
F. Indemnification. Notwithstanding anything to the contrary contained
in Section 12(G), the Borrower shall indemnify, defend and hold Lender and
its successors and assigns harmless from and against any and all claims,
demands, suits, losses, damages, assessments, fines, penalties, costs or
other expenses (including reasonable attorneys' fees and court costs)
arising from or in any way related to any of the transactions contemplated
hereby, including but not limited to actual or threatened damage to the
environment, agency costs of investigation, personal injury or death, or
property damage, due to a release or alleged release of Hazardous
Materials, arising from the Borrower's business operations, any other
property owned by the Borrower or in the surface or ground water arising
from any of the Borrower's business operations, or gaseous emissions
arising from any such Borrower's business operations or any other condition
existing or arising from the Borrower's business operations resulting from
the use or existence of Hazardous Materials, whether such claim proves to
be true or false. The Borrower further agrees that its indemnity
obligations shall include, but are not limited to, liability for damages
resulting from the personal injury or death of an employee of the Borrower,
regardless of whether the Borrower has paid the employee under the workmen'
s compensation laws of any state or other similar federal or state
legislation for the protection of employees. The term "property damage" as
used in this paragraph includes, but is not limited to, damage to any real
or personal property of the Borrower, the Lender, and of any third parties.
The Borrower's obligations under this paragraph shall survive the repayment
of the Loan.
G. Survivability. All covenants, agreements, representations and
warranties made herein or in the other Loan Documents shall survive the
making of the Loan and shall continue in full force and effect so long as
the Loan is outstanding or the obligation of the Lender to make any
advances under the Line shall not have expired.
H. Counterparts. This Agreement may be executed in two or more
counterparts any by facsimile transmission of signed counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12. WAIVER OF JURY TRIAL. AFTER CONSULTING WITH COUNSEL AND CAREFUL
CONSIDERATION, THE BORROWER AND THE LENDER KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY LITIGATION ARISING OUT OF THIS AGREEMENT, THE NOTE, OR ANY OTHER
LOAN DOCUMENTS, OR OUT OF ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(ORAL OR WRITTEN), OR ACTIONS OF THE BORROWER OR LENDER. THIS WAIVER IS A
MATERIAL INDUCEMENT TO LENDER'S AGREEMENT TO MAKE THE LOAN TO THE BORROWER.
13. NO ORAL AGREEMENT. THIS WRITTEN LOAN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
14. JOINT VENTURE. Neither this Loan Agreement nor any other Loan Document
creates or evidences a partnership or joint venture between the Borrower and the
Lender. The relationship between Borrower and Lender is solely that of a debtor
and creditor.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their duly authorized representatives as of the date
first above written.
LENDER:
_______________________________
Xxxx and Xxxxxx Xxxxxx
BORROWER:
MEDICAL TECHNOLOGY SYSTEMS, INC.
By:___________________________
___________________, as its
___________________________
9
EXHIBIT "A"
With respect to individuals, an "accredited investor" is defined by Rule
501(a) of Regulation D, promulgated under the Securities Act of 1933, as amended
("Reg D"), as (i) "any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds
$1,000,000," (ii) "any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year," or (iii)
"any director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer or general
partner of a general partner of that issuer."
"Purchaser representative" is defined by Reg D as a person that is "not an
affiliate, director, officer or other employee of the issuer, or beneficial
owner of 10 percent or more of any class of the equity securities or 10 percent
or more of the equity interest in the issuer," unless the purchaser is (a) a
relative of the purchaser representative by blood, marriage, or adoption, and is
not more remote than a first cousin; (b) a trust or estate in which the
purchaser representative and any persons related to him as described in sections
(a) or (c) of this paragraph collectively have more than 50% of the beneficial
interest (excluding contingent interest) or of which the purchaser
representative serves as trustee, executor, or in any similar capacity; (c) a
corporation or other organization of which the purchaser representative and any
persons related to him as described in sections (a) or (b) of this paragraph
collectively are the beneficial owners of more than 50% of the equity securities
(excluding directors' qualifying shares) or equity interests. A "purchaser
representative" must have such knowledge and experience in financial and
business matters that he is capable of evaluating (together with the purchaser
or other purchaser representatives of the purchaser) the merits and risks of the
prospective investment. A "purchaser representative" must also meet certain
acknowledgement and disclosure requirements described in Reg D.
