Exhibit 10.1
EXHIBIT A
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") has been made this 30th
day of May, 2003, by and between Medical Billing Management, Inc. (hereafter
"Seller"), a Mississippi corporation in good standing, by and through Xxxxxxxx
Xxxxx, its President, and Xxxxxx Precision Health Information Services, Inc.
(hereafter "Buyer"), a Nevada corporation in good standing, by and through its
Chief Executive Officer, Xxxxxx X. Xxxxx.
Whereas, the purpose of this Agreement is to set forth the conditions
under which the Seller agrees to sell and the Buyer agrees to purchase the
Seller's tangible assets, personal and mixed, and regardless of where located,
including those at the business address of 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000-
X, Xxxxxxx, Xxxxxxxxxxx 00000, for the price and upon the terms set forth in
this agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
of the parties, and in consideration of the representations, warranties,
covenants and agreements contained herein, it is hereby agreed as follows:
ASSETS BEING SOLD AND PURCHASED:
Subject to the provisions of this Agreement, Buyer hereby agrees to
purchase, and Seller hereby agrees to sell, transfer and assign to Buyer, all
of Seller's right, title and interest in and to the tangible assets of
Seller's business described hereinbelow (the "Purchased Assets"), including,
without limitation, those tangible assets related to and used in the operation
of the business, and all existing contracts and proposals with all of Seller's
clients (e.g. hospitals, clinics, etc.), and as shown on Seller's March 31st,
2003 balance sheet, subject to changes occurring in the normal and ordinary
course of business that date and the date of closing, and excepting the
Seller's cash and certain accounts receivable further specifically described
hereinbelow, and excepting any and all accrued, contingent and existing
Company debts and liabilities associated with the Purchased Assets or Seller's
business prior to closing on this agreement, with the exception of Workers'
Compensation, General Liability and Errors and Omissions which are covered
under insurance.
The personal property, tangible and intangible, specifically listed on
Exhibit "A" and further generally described as follows:
a) All furniture, equipment, machinery, all computers and
computer software, office supplies, phone systems, existing
contracts and proposals with all clients of the Seller, and
all other personal property being at and used in connection
with carrying on the medical billing business;
b) Signage wherever now located;
c) Within ten (10) working days following closing of this
transaction Seller will change its name from Medical Billing
Management, Inc. to an unrelated name. Buyer, at its
discretion, may then form a corporation with the Secretary
of State's office with the State of Mississippi to obtain
such name.
d) The transfer of any existing municipal, state or federal
licenses of the business, and if any of the same requires
the approval of an issuing authority, then this agreement is
subject to the approval of the issuing authorities;
e) The use of Seller's accounts receivables on a "short-term"
basis as set out hereinbelow;
f) The sharing of Seller's accounts receivables that are
collected by Buyer after closing as set out hereinbelow; and
g) Any other contracts between the Seller and vendors or
service providers that are in existence and which Buyer
desires to obtain for the benefit of the ongoing medical
billing business, including customer list of prior and
current customers.
PURCHASE PRICE:
Consideration for Purchased Assets. In consideration for the Purchased
Assets and Seller's covenants herein, Buyer agrees to pay Seller Four Hundred
Fifty Thousand Dollars ($450,000.00) subject to the following conditions and
schedule:
1) Cash at closing: $ 150,000.00
2) Cash six months after closing: $ 75,000.00
3) A final payment of the balance owed
on May 31st, 2004, subject to the
earn-out provision as is defined
hereinbelow, and estimated herein $ 225,000.00
$ 450,000.00
Earn-out Provision. The parties agree that the "earn-out" provision
shall be calculated based upon the future net revenue of those client accounts
existing at the time of closing. The baseline revenue amount is $1,109.000
(2002 revenue less anticipated adjustments to 2003 revenue). The "payout
ratio" is a $1.00 adjustment upward or downward in the final $225,000.00
payment for every $4.00 in revenue change, either plus or minus, respectively.
This earn-out provision will be a one-time calculation as of the period
beginning on the date after closing and ending on May 31, 2004.
All consideration identified herein is hereafter referred to as the
"Purchase Price".
ACCOUNTS RECEIVABLES AND WORK IN PROCESS:
The parties further agree that Seller has acquired certain accounts
receivable and work in process. Accounts Receivable are defined as those
accounts where Seller has billed patients on behalf of its clients, the
patients have been paid such bills, and the clients now owe a payment to
Seller but such payment to Seller has not yet been made. Work in Process is
defined as those accounts where Seller has billed patients on behalf of its
clients but no payment has been received plus those accounts where it is
appropriate for Seller to send out bills on behalf of its clients, but no xxxx
has yet been sent. The parties agree to the following distribution of the
same, to-wit:
Obligation for Collection of Accounts Receivable and Work in Process.
The parties agree that the Buyer shall be responsible for the collection of
all accounts receivable and work in process of Seller, from and after the date
of closing. As set out hereinafter, Seller assigns half of the Work in
Process to the Buyer and retains half of the Work in Process and all of the
Accounts Receivable.
Loan to Buyer. Seller agrees that Buyer shall retain Seventy-Five
Thousand Dollars ($75,000.00) of Seller's first accounts receivable collected
by Buyer after the closing which shall be used by Buyer as working capital.
Buyer shall have the use of said borrowed funds until November 30, 2004,
interest free, when the borrowed funds will be due to be reimbursed to the
Seller.
Buyer's purchase of Seller's Accounts Receivable and Work in Process.
After 90 days have expired from the date of closing, Buyer will make a lump-
sum payment to Seller in an amount equal to the collections on accounts
receivable (accounts receivable being those identified on Exhibit "B" attached
hereto. However, of the amount of this payment, Buyer shall have the right to
retain $75,000.00 to fund the loan referred to in the preceding paragraph.
This payment shall be in addition to the amounts to be paid under
"Consideration for Purchased Assets." In the event that Accounts Receivable
(as they exist on the closing date) are collected more than 90 days after
closing, then such sums shall be paid to Seller on May 31, 2004, or when the
$75,000.00 loan in the preceding paragraph is paid, whichever is earlier. All
collections on Accounts Receivable shall be applied first to the oldest
account owed by the customer making such payment.
After 90 days have expired from the date of closing, Buyer will make a
lump-sum payment to Seller in an amount equal to one-half of the work in
process as identified on Exhibit "B" attached hereto. This payment shall be
in addition to the amounts to be paid under "Consideration for Purchased
Assets."
EXCLUDED LIABILITIES:
Except as expressly set forth herein, Buyer does not assume and shall
not be liable for any of the debts, obligations or liabilities of Seller or
Seller's business of any nature whatsoever. In particular, but without
limiting the foregoing, Buyer shall not assume, and shall not be deemed by
anything contained in this Agreement or any other related Agreement, to have
assumed, and shall not be liable for any debts, obligations or liabilities of
Seller or Seller's business, whether know or unknown, contingent, absolute or
otherwise, including without limitation debts, liabilities and obligations:
1) Under any contract or agreement to which Seller is bound excepting
the real estate lease being assigned to Buyer herein, the contract
for the copier used by Seller, the postage machine used by Seller,
and the contract with Time Warner Cable.
2) Buyer agrees to assume all responsibility for any accrued vacation
pay, severance pay or accrued sick pay. Buyer further agrees to
employ all employees of Seller as of the date of closing under the
same terms and conditions as such employees were employed by
Seller.
3) For any other payment or compensation to employees of Seller
including any severance pay liabilities under federal or state law
or under any welfare, compensation, pension or benefit plan or
agreement, or under the Consolidation Omnibus Budget
Reconciliation Act of 1985 ("COBRA") or under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), for
the period ending on the closing date. Buyer however agrees to
provide health insurance benefits and a cafeteria plan under such
terms as are comparable to the terms of the plans offered by
Seller prior to the closing.
4) For any foreign, federal, state or local income, franchise,
excise, value added, sales, use, payroll, worker's compensation,
property or other tax or taxes of any type, nature or description,
which such tax liability is base don Seller's actions or
operations prior to the closing date or as a result of this
transaction, and for any liability for local or state taxes, use
or transfer tax, which such tax liability is based on Seller's
actions or operations prior to the closing date or as a result of
this transaction or taxes that may be imposed upon the purchase
and sale of the assets pursuant to the Agreement,
5) For any damages or injuries to persons or property or for any tort
or strict liability arising from events, actions, or inaction or
the operation of Seller's business on or prior to the closing
date, except that Buyer will continue to maintain liability
insurance in amounts at least equal to that Seller was carrying
prior to the closing and such liability insurance will cover
Seller,
6) For any liability arising at any time from or relating to injuries
arising from events occurring on or prior to the closing date,
even if a claim for any such injury is first asserted after the
closing date, except that Buyer will continue to maintain
liability insurance in amounts at least equal to that Seller was
carrying prior to the closing and such liability insurance will
cover Seller,
7) For any liability or obligation (contingent or otherwise) of
Seller arising out of any litigation arising in any way on account
of the period prior to the closing date, whether or not now
threatened or pending, except that Buyer will continue to maintain
liability insurance in amounts at least equal to that Seller was
carrying prior to the closing and such liability insurance will
cover Seller,
8) Incurred by Seller or Seller's business for borrowed money,
9) Arising from any contract assigned to an assumed by Buyer
hereunder provided, however, that such exclusion shall be limited
to liabilities and obligations for all periods prior to and
including the closing date, whether arising before or after the
closing date, and
10) For any other liability or obligation of Seller that is not
expressly assumed by Buyer whether or not such liability or
obligation has been disclosed to or is known to Buyer.
Seller further warrants to Buyer that any known accrued liabilities of
the Seller will be paid at or within 15 days after closing or as such
liabilities come due, whichever is later. On or before the date of closing,
Seller will execute and provide to Buyer a statement of all known liabilities
of Seller's business. Seller agrees that it will pay the payroll due on June
13, 2003 for the two week period ending June 6, 2003. Of this amount, one
half will be considered an advance on the $75,000 loan referred to in Loan to
Buyer above.
ALLOCATION OF PURCHASE PRICE:
The purchase price shall be allocated as follows:
1) Equipment, Furniture and
other depreciable assets: $124,564.00
2) Accounts Receivable and Work in Process: $135,000.00
3) Covenant Not to Compete: $100,000.00
4) Goodwill: Balance of Purchase Price
Treasury Regulation 1.1060-1T Reporting Requirement. The parties hereby
agree that they shall each use the allocation made by them pursuant to Section
2.3 as an agreed allocation of the consideration paid for the Purchased Assets
in accordance with the provisions of Treasury Regulation Section 1-1060-1T,
etseq. The parties each covenant and agree to use such allocation to complete
and file Internal Revenue Service Form 8594, Asset Acquisition Statement Under
Section 1060, if applicable.
CLOSING DATE:
Closing. The closing date for the transactions contemplated by this
Agreement shall be May 30th, 2003 (the "Closing").
Obligations of Seller at Closing. At the Closing, Seller shall:
1) Execute and deliver to Buyer a Xxxx of Sale and other documents
necessary for transfer of title to all assets being purchased.
2) Execute and deliver to Buyer such other documents as may be
necessary to vest Seller's right, title and interest in and to any
location leased by Seller at the time of closing where it has done
business, all at Buyer's option.
Obligations of Buyer at Closing. At the Closing, Buyer shall deliver
all funds to be tendered at closing by a cashier's check to the Seller or the
closing agent agreed to by the parties. Buyer shall also execute the Security
Agreement and UCC-1 Financing Statement in the form attached hereto.
Post-Closing Acts, Deeds and Undertakings. Following the Closing, the
parties shall fully and faithfully undertake all such further acts, deeds and
undertakings as may be necessary or required to consummate the transactions
contemplated by this Agreement in accordance with the terms herein.
CONDITIONS PRECEDENT:
Contingencies.
In the event that any of the following events occur, the parties agree
that this agreement shall be null and void, ab-initio, to-wit:
1) In the event that the Seller does not obtain and provide to Seller
the written consent to assignment of any lease of Seller's
existing business locations that Buyer desires to maintain, or, in
the event that the remaining lease term is of such limited
duration that Buyer wishes to enter into a new lease agreement
with the Lessor of said location, and the Buyer is unable to
obtain said new lease agreement at such terms and conditions that
are substantially as the Seller's lease, or for such an extended
period of time as is required by Buyer;
2) In the event that Buyer and Seller do not consummate an employment
agreement between Buyer, as employer, and Xxxxxxxx Xxxxx, as
employee;
REPRESENTATIONS AND WARRANTIES:
Representations and Warranties of Seller: Seller represents and warrants
to, and covenants with, Buyer that the following statements are true, correct
and complete as of the date of this Agreement, and that the same shall be
true, correct and complete on the Closing.
1) Seller is a duly organized and validly existing corporation formed
under the laws of the State of Mississippi and is in good standing
in such jurisdiction.
2) Seller has the right, power, and authority to enter into this
Agreement.
3) The execution of this Agreement by Seller and the transactions
contemplated by this Agreement have been duly authorized by all
necessary action required for such authorization by the Seller
corporation.
4) Seller is not, nor at any time will be, a party to any contract or
other arrangement of any nature that will materially interfere
with its full, due, and complete performance of this Agreement,
and neither Seller nor Xxxxx will solicit or entertain any offer
from any other person and will not enter into any negotiations for
the sale of the business or assets of Seller's business with any
third party.
5) Seller is not, nor at any time will it be, in knowing violation of
any existing law, statute or regulation, by entering into and
undertaking the performance of this Agreement.
6) To the best knowledge and belief of Seller, there is no litigation
or proceeding pending, nor is any litigation pending, involving
Seller which could, if adversely determined, materially and
adversely affect the performance of its obligations under this
Agreement.
Representations and Warranties of Buyer. Buyer represents and warrants
to, and covenants with, Seller that the following statements are true, correct
and complete as of the date of this Agreement, and that the same shall be
true, correct and complete on the Closing:
1) Buyer has the right, power, and authority to enter into this
Agreement.
2) The execution of this Agreement by Buyer and the transactions
contemplated by this Agreement have been duly authorized by all
necessary action required for such authorization by the Buyer
corporation.
3) Buyer is not, nor at any time will be, a party to any contract or
other arrangement of any nature that will materially interfere
with its full, due, and complete performance of this Agreement.
4) Buyer is not, nor at any time will it be, in knowing violation of
any existing law, statute or regulation, by entering into and
undertaking the performance of this Agreement.
5) To Buyer's best knowledge and belief, there is no litigation or
proceeding pending, nor is any litigation threatened or pending,
involving Buyer which could, if adversely determined, materially
and adversely affect the performance of Buyer's obligations under
this Agreement.
6) As of the time of closing Buyer will be authorized to do business
within the State of Mississippi.
7) Buyer agrees at the time of closing that it will convey to Seller
a Security Agreement and UCC-1 Financing Statement in the forms
attached hereto as Exhibits "D" and "E". Buyer further represents
that such documents will grant unto Seller a priority position as
first lienholder in all assets and accounts receivable being
acquired by Buyer from Seller. This Security Agreement and UCC-1
Financing Statement will be cancelled by Seller immediately upon
receipt of the final payment due from Buyer under this Asset
Purchase Agreement.
8) Buyer will execute the employment agreement with Xxxxxxxx Xxxxx at
the time of closing.
REPRESENTATIONS AND WARRANTIES CONCERNING PURCHASED ASSETS:
Except as otherwise expressly provided herein, Seller makes no
representations or warranties, either expressed or implied, concerning the
Purchased Assets.
INDEMNIFICATION:
1) Seller shall indemnify, defend and hold Buyer harmless, from and
against, and reimburse Buyer with respect to any and all losses,
damages, liabilities, claims, judgments, costs and expenses
(including attorneys' fees and costs) of any nature whatsoever
that Buyer shall suffer as a result of a breach of any
representation, warranty, covenant or agreement contained herein.
2) Buyer shall indemnify, defend and hold Seller harmless from and
against, and reimburse Seller with respect to any and all losses,
damages, liabilities, claims, judgments, costs and expenses
(including attorneys' fees and costs) of any nature whatsoever
that Seller shall suffer as a result of a breach of any
representation, warranty, covenant or agreement contained herein.
AGREEMENT TO EMPLOY CERTAIN EMPLOYEES:
The Buyer agrees, as consideration for Seller's agreements made herein,
to enter into a 12 month employment agreement with Xxxxxxxx X. Xxxxx
("Xxxxx"), renewable annually, as long as terms and conditions are met that
are agreeable to both parties. During this period of employment, Xxxxx will
assist Buyer in the transition of the business along with certain management
and sales responsibilities. In consideration for these services, Xxxxx will
be compensated with an annual base salary of $50,000.00, plus a commission
based on sales, all as is more specifically defined in the separate Employment
Agreement to be entered into by Xxxxx and Buyer.
As further consideration from Buyer and Seller's agreements herein,
Buyer agrees to offer to retain Xx. Xxx Xxxx in his current position and
salary during the twelve month transition period immediately following the
closing.
DISPUTES:
Resolution of Disputes.
1) Arbitration. All disputes between or among parties relating to
this Agreement (a "Dispute"), which have not been otherwise
resolved (such unresolved Dispute hereafter referred to as an
"Arbitrable Matter"), shall be exclusively and finally resolved by
arbitration by a single arbitrator agreed upon by the parties to
the Arbitrable Matter (the "Arbitrator"). If the parties are
unable to agree upon a single arbitrator, each of the parties to
the Arbitrable Matter shall select an arbitrator, with a third
(3rd) arbitrator selected by the arbitrators chosen by the
parties. In this event, the third (3rd) arbitrator shall decide
the Arbitrable Matter by a his/her sole discretion. All
arbitration proceedings shall occur in Jackson, Mississippi.
2) Direct Negotiation and Mediation Prior to Undertaking Mandatory
Arbitration. Notwithstanding the provisions of the above section,
prior to arbitrating any Dispute, the parties agree that they
initially shall attempt to resolve the Dispute through direct
negotiation. If the Dispute is not resolved within fourteen (14)
days after written demand for direct negotiation, the parties
shall attempt to resolve the Dispute through mediation, with a
mediator jointly chosen by the parties, and the cost borne equally
by the parties. If the mediator is unable to facilitate a
settlement of the Dispute within a reasonable period of time, as
determined by the mediator, the mediator shall issue a written
statement to the parties to that effect and any unresolved Dispute
shall be resolved through binding arbitration in accordance with
the provisions of this Section.
3) Rules Governing Arbitration. Any arbitration (an "Arbitration")
shall be governed by the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then pertaining. The
existence and resolution of the Arbitration proceedings shall be
kept confidential by the parties and by the Arbitrator except as
required by law, regulation or a court of competent jurisdiction.
4) Notice of Arbitration. Any party to this Agreement may initiate
an Arbitration of any Arbitrable Matter. The initiating party
shall do so by providing written notice of the Arbitration to the
other party or parties to the Arbitrable Matter. The notice shall
bear a current date, shall state the name of the initiating party
and shall briefly state the matter to be arbitrated.
5) No Appeal, Etc. Except as otherwise permitted by the Commercial
Arbitration Rules of the AAA of Mississippi statutes, no party
shall appeal to any court an order of an Arbitrator, and the
decision of the Arbitrator, and the order entered, shall be the
final, binding and conclusive resolution fo the Arbitrable Matter.
Any party to the Arbitrable Matter may enter such order in any
court of competent jurisdiction.
6) Allocations of Costs, Fees, Etc. The Arbitrator may allocate
among the parties to the dispute the costs, fees and other
expenses relating to an Arbitration in any manner that the
Arbitrator shall determine to be appropriate in his/her absolute
discretion; provided, that if the Arbitrator determines that a
party has initiated an Arbitration without reasonable basis for
doing so, the Arbitrator shall assess against that party the costs
of the other parties relating to the Arbitration, including the
reasonable attorneys' fees of the parties.
MISCELLANEOUS:
1) Agreement Binding. This Agreement shall be binding upon and inure
to the benefit of the parties named herein and their respective
successors and assigns.
2) Title and Captions. All section titles or captions contained in
this Agreement are for convenience only and shall not be deemed
part of this context nor effect the interpretation of this
Agreement.
3) Incorporation of Exhibits. The exhibits identified in this
Agreement are incorporated herein by reference and made a part of
this Agreement.
4) Advice Concerning Legal, Tax and Accounting Consequences of
Transaction. Each of the parties to this Agreement represents and
warrants that prior to entering into this Agreement, that they
have had the opportunity to seek the advice of professional
advisors concerning the legal, tax and accounting consequences of
the transactions contemplated by this Agreement, that both have
had this agreement reviewed by legal counsel licensed to practice
law in the state of Mississippi, and Buyer further represents that
this agreement has been drafted by legal counsel licensed to
practice in the state of South Dakota, and the parties executed
this Agreement with full knowledge and understanding of all legal,
tax and accounting consequences. Regardless of whether or not the
transaction contemplated herein is consummated, each of the
parties are responsible for the payment of any and all expenses
that they incur as a result hereof, and that Seller shall be
solely responsible for any broker fees in connection with this
transaction.
5) Final, Complete and Exclusive Agreement. This Agreement contains
the final, complete and exclusive agreement between the parties
and supersedes any prior understandings and agreements among them
respecting the subject matter of this Agreement.
6) Governing Law/Jurisdiction. This Agreement has been executed by
Buyer in Mississippi and shall be governed by and shall be
construed in accordance with the State of Mississippi, excepting
that Mississippi shall apply the laws of Mississippi for issues
regarding the personal property being purchased herein. The
parties consent to the jurisdiction of the courts of the State of
Mississippi and agree that any action arising out of or to enforce
this Agreement must be brought and maintained in Mississippi.
7) Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given:
a) upon personal delivery to the party to be notified;
b) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient, if not, then on the
next business day;
c) five (5) days after having been sent by registered or
certified mail, return receipt, postage prepaid; or
d) two (2) days after deposit with a nationally recognized
overnight courier, specifying next day delivery, with
written verification of receipt.
All communications shall be sent to the parties hereto at the
respective addresses set forth below, or as notified by such party
from time to time at least ten (10) days prior to the
effectiveness of such notice:
If to Seller:
Xxxxxxxx X. Xxxxx
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000-X
Xxxxxxx, Xxxxxxxxxxx 00000
With a copy to:
Xxxxx X. Xxxxxx
Knight Law Offices, PLLC
000 Xxxxxxxx Xxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000
If to Buyer:
Xxxxxx X. Xxxxx, CEO
0000 Xxxxx Xxxx, Xxxxx X
Xxxxx Xxxx, XX 00000-0000
8) Waiver. No waiver by any party of any default, misrepresentation,
or breach of warranty hereunder, whether intentional or not, shall
be deemed to extend to any prior ro subsequent default,
misrepresentation, or breach of warranty hereunder or affect in
any way rights arising by virtue of any prior or subsequent such
occurrence.
9) Severability. Any term or provision of this Agreement that is
invalid or unenforceable shall not affect the validity or
enforceability of the remaining terms and provisions of this
Agreement.
10) Terms. Common nouns and pronouns shall be deemed to refer to the
masculine, feminine, neuter, singular and plural, as the identity
of the party may in the context require.
11) Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution
of this Agreement and, therefore, waive the application of any
law, regulation, holding or rule of construction providing that
ambiguities in an agreement or other document will be construed
against the party drafting such agreement or document.
12) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by the parties.
13) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts each of which shall be deemed an
original, and all of which, when taken together, constitute one
and the same document. The signature of any party to any
counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written above.
SELLER:
Medical Billing Management, Inc.
By:/s/Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
PURCHASER:
Xxxxxx Precision Health Information
Services
By:/S/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
State of Mississippi
County of Xxxxx
On this the 30th day of May, 2003, before me, the undersigned officer,
personally appeared Xxxxxxxx X. Xxxxx, who acknowledged herself to be the
President of Medical Billing Management, Inc., a Mississippi corporation, and
that she, as such President, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by herself as such President.
In witness whereof, I hereunto set my hand and official seal.
/s/_______________________
Notary Public
My Commission Expires:
April 28, 0000
Xxxxx xx Xxxxxxxxxxx
Xxxxxx xx Xxxxxxx
Xx this the 23 day of May, 2003, before me, the undersigned officer,
personally appeared Xxxxxx X. Xxxxx who acknowledged himself to be the Chief
Executive Officer of Xxxxxx Precision Health Information Services, Inc., a
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained, by signing the
name of the corporation by himself as such officer.
In witness whereof I hereunto set my hand and official seal.
/s/Xxxxxxxx Xxxxxxxx Xxxxx
Notary Public
My Commission Expires:
November 8, 2005
EXHIBIT A
All accounts receivable and all property located at 0000 Xxxxx Xxxxx Xxxxx,
Xxxxx 000-X, Xxxxxxx, Xxxxxxxxxxx 00000.
EXHIBIT B
MEDICAL BILLING MANAGEMENT, INC.
ACCOUNTS RECEIVABLE IN PROCESS (WORK IN PROCESS)
May 30, 2003
ANESTHESIA CONSULTANTS 1,352,275.01
XXXX XXXXXXXXXXX 264,201.47
XXXX X. XXXXXXX 271,197.17
XXXXXX XXXXX 13,352.46
XXXXXXX XXXXX 343,880.85
GREENWOOD ANESTHESIA 2,315.35 INACTIVE ACCOUNT
GREENWOOD PAIN MGT 2,020.81 INACTIVE ACCOUNT
XXXXXX XXXX GROUP 795,085.46
SURGICAL ANESTHESIA ASSOCIATES 1,505,540.98
XXXXXX X. XXXXX, PLLC 355,427.36
XXXXX XXXXX 23,487.88
XXXXXXX XXXX 103,810.03
FACES 28,985.76
SOUTH CENTRAL ANESTHESIA 100,095.00
XXXXX XXXXXXXX NEW CLIENT WILL
BEGIN NE
XXXXXXX XXXXXX 1,492.20
TOTAL 5,163,167.79
EXHIBIT C
EMPLOYMENT AGREEMENT
This agreement is made this 30th day of May, 2003, and is made by and
between Xxxxxxxx Xxxxx ("employee") and Xxxxxx Precision Health Information
Services, Inc., a South Dakota corporation DBA Medical Billing Management
("company").
Recitals.
The parties to this agreement acknowledge that said employee's talents
and services to the company are of a special, unique and extraordinary
character and are of particular and peculiar benefit and importance to the
company, and that the purpose of this agreement is for the company to employ
Xxxxxxxx Xxxxx, and as consideration for such employment, for Xxxxxxxx Xxxxx
to provide the company with assurances that she will carry out this agreement.
Therefore, the parties agree as follows:
1. Employment. The company agrees to employ employee in the capacity of
general manager as is stated with more specificity hereinbelow, and employee
agrees to be so employed by the company, for a period commencing June 1, 2003,
and continuing for a 12-month period ending on May 31, 2004, subject, however,
to prior termination as provided in this agreement.
2. Best Efforts of Employee.
(A) Employee agrees that she will at all time faithfully, industriously and
to the best of her ability, experience and talents, perform all of the duties
that may be required of an from her pursuant to the express and implicit terms
of this agreement, to the reasonable satisfaction of the company. The duties
shall be rendered at the Corporation's business location commonly known as
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000-X, Xxxxxxx, Xxxxxxxxxxx 00000, or as such
other place or places in said city and at such times as the needs of the
Corporation may from time-to-time dictate.
(B) Employee shall devote her normal and regular business time, attention,
knowledge and skill to the business and interests of the company, and the
company shall be entitled to all of the benefits, profits or other issue
arising from or incident to all work, services and advice of employee
performed for the company. It is acknowledged by company that the employee
has other for-profit interests, and employee agrees that she shall not allow
her other interests to materially interfere with her duties to employer.
3. Compensation.
As compensation for the services to be rendered by employee, the company
agrees to provide employee with the following:
A. Base Compensation. The Employee will receive a base salary of
$50,000.00 per year, payable in accordance with the Corporation's standard
payroll procedures.
B. Bonuses. The Employee is eligible for performance-based bonuses
on the medical billing business, which are to be paid upon attainment of the
following performance indices:
7.5% of gross revenue on new billing accounts acquired by Employee from
and after June 1, 2003 for the first 12 month period of that accounts;
then 5% for the next 12 month period; then 3% thereafter, all
conditioned upon Employee's continued employment and servicing of said
account.
The Employee is also eligible for a bonus on new medical transcription
business at the same rate Company currently pays on new medical transcription
business. Further, the Employee is eligible for other performance based
bonuses, but there is no assurance or expectation that bonuses will be paid.
Said other bonuses will be paid, if at all, in the sole discretion of the
Chief Executive Officer.
C. Benefits. The Employee shall receive medical and any other
insurance or fringe benefits that are currently offered to other full-time
employees of the company, which benefits may be modified from time to time for
the Employee just as such benefits provided to the other employees of the
company may be modified in the future.
D. Expenses. The Company shall reimburse the Employee for reasonable
out of pocket expenses incurred by the Employee in fulfilling her duties,
which shall be reviewed by the corporation officer assigned to this function.
The company shall, within its financial means and constraints, provide the
Employee with suitable office facilities, equipment, supplies, and staff.
4. Termination. This agreement may be terminated as follows:
(A) The company may terminate employee if either: 1) the business location
of the company shall be destroyed, the business shall decline and fail to make
operating expenses, or if the company shall fail to have funds to operate the
business, or if the company decides to close down in whole or in part for any
reason; or 2) the employee is terminated for cause. Employee shall be deemed
to have been terminated by the company for cause if she is terminated because
of her acts or conduct which would make it unreasonable to require the company
to retain employee in its employment, such as, but not limited to, improper
disclosure of any information concerning any matter affecting or relating to
the company or the business of the company, dishonesty, activities harmful to
the reputation of the company, refusal to perform or neglect of the
substantive duties assigned to her, or breach of any of the provisions of this
agreement; or 3) in the event of employee's total, permanent disability, or 4)
in the event of employee's death.
5. Duties. Employee shall be employed as General Manager of the Medical
Billing Management office. Employee will assist Company in the transition of
the business along with certain management and sales responsibilities, but at
all time shall be subject to the senior management of the company.
Employee's duties shall include supervision, direction and discretion as
to the termination of existing employees, and the hiring of new employees;
sales and sales management function; and to do all other acts and things which
she may consider necessary or conducive to the best interests of the company.
6. Covenant not to compete.
6.1 Covenant. For a period of one year from the Effective Date of this
Agreement, and for such period as the Employee continues to be employed by the
Company, and for a one year period after the Employee's employment with the
Corporation has been terminated by either party, the Employee will not
directly or indirectly:
(A) Enter into or attempt to enter into the "Restricted Business" as defined
below within the State of Mississippi;
(B) Induce or attempt to persuade any former, current or future employee,
agent, manager, consultant, director, or other participate in the Company's
business to terminate such employment or other relationship in order to enter
into any relationship with the Employee, any business organization in which
the Employee is a participant in any capacity whatsoever, or any other
business organization in competition with the Corporation's business; or
(C) Use contracts, proprietary information, trade secrets, confidential
information, customer lists, mailing lists, goodwill, or other intangible
property used or useful in connection with the Corporation's business.
6.2 Indirect Activity. The term "indirectly," as used in Section 6.1 above,
includes acting as a paid or unpaid director, officer, agent, representative,
employee of, or consultant to any enterprise, or acting as a proprietor of any
enterprises, or holding any direct or indirect participant in any enterprises
as an owner, partner, limited partner, joint venturer, shareholder, or
creditor.
6.3 Restricted Business. The term "Restricted Business" means the offering
of medical transcription, billing or related services or working for another
employer providing medical transcription, billing or related services.
Nevertheless, Employee may own not more than five percent of the outstanding
equity securities of a corporation that is engaged in the Restricted Business
if the equity securities are listed for trading on a national stock exchange
or are registered under the Securities Exchange Act of 1934.
7. Severability. The covenants set forth in Section 6 above shall be
construed as a series of separate covenants, one for each county in each of
the states of the United States to which such restriction applies. If, in any
judicial proceeding, a court of competent jurisdiction shall refuse to enforce
any of the separate covenants deemed included in this Agreement, or shall find
that the term or geographic scope of one or more of the separate covenants is
unreasonably broad, the parties shall use their best good faith efforts to
attempt to agree on a valid provision. The reasonableness of the substitute
provision shall be considered in light of the purpose of the covenants and the
reasonable protectable interests of the Corporation and the Employee. The
substitute provision shall incorporated in this Agreement. If the parties are
unable to agree on a substitute provision, then the invalid or unreasonable
broad provision shall be deemed deleted or modified to the minimum extend
necessary to permit enforcement.
8. Confidentiality. The Employee acknowledges that she will develop and be
exposed to information that is or will be confidential and proprietary to the
Company. The information includes customer lists, marketing plans, pricing
data, product plans, software, stored data on all forms of media, and other
intangible information. Such information shall be deemed confidential to the
extent not generally known within the trade. The Employee agrees to make use
of such information only in the performance of her duties under this
Agreement, to maintain such information in confidence and to disclose the
information only to persons with a need to know.
9. Remedies. The Employee acknowledges that monetary damages would be
inadequate to compensate the Company for any breach by the Employee of the
covenants set forth in Section 6 above. The Employee agrees that, in addition
to other remedies which may be available, the Company shall be entitled to
obtain injunctive relief against the threatened breach of this Agreement or
other continuance of any breach, or both, without the necessity of proving
actual damages.
10. Waiver. The waiver by the Company of the breach of any provision of
this Agreement by the Employee shall not operate or be construed as a waiver
of any subsequent breach by the Employee.
11. Notices. Any notices permitted ro required under this Agreement shall
be deemed given upon the date of personal delivery or forty-eight (48) hours
after deposit in the United States mail, postage prepaid, return receipt
requested, addressed to the Company at:
Xxxxxx Precision Health Information Services, Inc.
0000 Xxxxx Xxxx, Xxxxx X
Xxxxx Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxx
addressed to the Employee at:
Xxxxxxxx Xxxxx
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000-X
Xxxxxxx, XX 00000
or at any other address as any party may, from time to time, designate by
notice give in compliance with this section.
12. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Mississippi as regard
employer/employee and other related labor matters. The parties acknowledge
that this agreement has been drafted by the Corporate counsel licensed in the
State of South Dakota, and as the law of Mississippi shall dictate, each party
has been advised that they should obtain the advice of legal counsel licensed
to practice in the State of Mississippi, regarding the legality of this
agreement, and the effect of Mississippi law upon the rights and obligations
of the parties herein, prior to executing the same.
13. Title and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the
context nor effect the interpretation of this Agreement.
14. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersede any prior understandings and
agreements among them respecting the subject matter of this Agreement.
15. Agreement Binding. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
16. Attorneys Fees. In the event an arbitration, suit or action is brought
by any party under this Agreement to enforce any of its terms, or in any
appeal therefrom, it is agreed that the prevailing party shall be entitled to
reasonable attorneys fees to be fixed by the arbitrator, trial court, and/or
appellate court.
17. Computation of Time. In computing any period of time pursuant to this
Agreement, the day of the act, event of default from which the designated
period of time begins to rul shall be included, unless it is a Saturday,
Sunday, or a legal holiday, in which event the period shall begin to run on
the next day which is not a Saturday, Sunday, or legal holiday, in which event
the period shall run until the end of the next day thereafter which is not a
Saturday, Sunday, or legal holiday.
18. Pronouns and Plurals. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as the
identity of the person or persons require.
19. Arbitration. If any time during the term of this Agreement any dispute,
difference, or disagreement shall arise upon or in respect of the Agreement,
and the meaning and construction hereof, every such dispute, difference, and
disagreement shall be referred to a single arbiter agreed upon by the parties,
or if no single arbiter can be agreed upon, an arbiter or arbiters shall be
selected in accordance with the rules of the American Arbitration Association
and such dispute, difference, or disagreement shall be settled by arbitration
in accordance with the then prevailing commercial rules of the American
Arbitration Association, and judgment upon the award rendered by the arbiter
may be entered in any court having jurisdiction thereof. The parties hereby
waive their right to trial on the merits and the rights of appeal, and agree
to binding arbitration.
20. Presumption. This Agreement or any section thereof shall not be
construed against any party due to the fact that said Agreement or any section
thereof was drafted by said party.
21. Further Action. The parties hereto shall executed and deliver all
documents, provide all information and take or forbear from all such action as
may be necessary or appropriate to achieve the purposes of the Agreement.
22. Parties in Interest. Nothing herein shall be construed to be to the
benefit of any third party, nor is it intended that any provision shall be for
the benefit of any third party.
23. Saving Clause. If any provision of this Agreement, or the application
of such provision to any person or circumstance, shall be held invalid, the
remainder of this Agreement, or the application of such provision to persons
or circumstances other than those as to which it is held invalid, shall not be
affected thereby.
24. Separate Counsel. The parties acknowledge that the Corporation, as a
valid existing South Dakota corporation, has been represented in this
transaction in the State of South Dakota, and that it has been advised to have
this agreement reviewed by counsel licensed in the State of Mississippi, for
advice regarding Mississippi's state laws that may apply to the Corporation's
rights, obligations and enforcement of this agreement, and that the Employee
has not been represented in this transaction by the Corporation's attorneys,
and the Employee has been advised that it is important for the Employee to
seek separate legal advice and representation in this matter.
In Witness whereof, this agreement is entered into effective as of the date
set forth above.
Xxxxxx Precision Health Information Services, Inc.
By:/S/Xxxxxx X. Xxxxx
Its: Chief Executive Officer
By:/s/Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx, Employee
State of _______________________________ )
)
County of ______________________________ )
On this the _______ day of May, 2003, before me, the undersigned
officer, personally appeared Xxxxxx Xxxxx who acknowledged himself to be the
Chief Executive Officer of Xxxxxx Precision Health Information Services, Inc.,
a South Dakota corporation, and that he, as such
_____________________________________, being authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing the name
of the company by himself as such _______________________________.
In witness whereof I hereunto set my hand and official seal.
_______________________________________
Notary Public
(SEAL)
My Commission Expires:
_________________________
State of _______________________________ )
)
County of ______________________________ )
On this the _______ day of May, 2003, before me, the undersigned
officer, personally appeared Xxxxxxxx Xxxxx, known to me or satisfactorily
proven to be the person whose name is subscribed to the within instrument and
acknowledged that she executed the same for the proses therein contained.
In witness whereof I hereunto set my hand and official seal.
_______________________________________
Notary Public
(SEAL)
My Commission Expires:
_________________________
Exhibit D
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Security Agreement") is dated May 30,
2003, and is made and given by Xxxxxx Precision Health Information Services,
Inc., with an address of 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000-X, Xxxxxxx,
Xxxxxxxxxxx 00000, (hereinafter called "Debtor") with said address being
Debtor's only place of business in Mississippi and location of the Collateral
covered hereby, to and in favor of Medical Billing Management (hereinafter
called "Creditor") with an address of 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000-X,
Xxxxxxx, Xxxxxxxxxxx 00000.
PRELIMINARY STATEMENT. This Security Agreement is granted by the Debtor
in favor of the Creditor to secure any and all indebtedness due and owing from
the Debtor to the creditor, regardless of form or description, and including,
but not limited to, loans, promissory notes, accounts (whether open, written
mutual or stated), contracts, purchase and sale agreements, sales invoices,
and other advances of money or credit, and however evidenced and in whatever
form, together with any renewals or extensions, and including any future
advances, interest, collection costs and fees, attorneys fees and expenses,
court costs, and expenses of any kind incident to the collection of any such
indebtedness and the enforcement and protection of the security interest
created herein or the exercise of rights and remedies by the Creditor
hereunder. All of the foregoing indebtedness is referred to herein as the
"Indebtedness." The obligations and requirements to make payments of the
Indebtedness and to perform and comply with all of the representations, terms
and conditions under this Security Agreement, and any other documents or
instruments executed in connection therewith are collectively referred to as
the "Obligations."
NOW, THEREFORE, in consideration of the premises and the Indebtedness
referenced herein, the Debtor hereby agrees as follows:
SECTION 1. Grant of Security - The Debtor hereby grants, pledges and
assigns to the Creditor a security interest in all of the Debtor's right,
title and interest in and to the following, whether now in existence or
hereafter made, acquired, entered into, created or arising (collectively
called "Collateral"):
See Exhibit "A" attached hereto and incorporated herein by reference
together with all equipment, parts, accessories, attachments and replacements
thereof, additions thereto, and substitutions therefor and, all products,
proceeds, and issues of any and all of the foregoing Collateral and, to the
extent not otherwise included, all payments under insurance (whether or not
the Creditor is the loss payee thereof), including any unearned premiums,
refunds, or returns on premiums, or any indemnity, warranty or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing collateral.
SECTION 2. Security for Obligations. This Security Agreement secures
the payment of all Indebtedness and Obligations of the Debtor now or hereafter
owing to the Creditor, whether direct or indirect, absolute or contingent or
matured or unmatured, and includes, without limitation, (1) the Obligations
of the Debtor under any other agreements or instruments relating thereto, and
any amendments, renewals or extensions thereof, whether for principal,
interest, fees, court costs, attorneys' fees, and expenses, of whatever kind
incident to collection of the Indebtedness and Obligations and the enforcement
and protection of the security interest created hereby; (2) all future
advances made by the Creditor for taxes, levies, insurance and preservation of
the Collateral, together with interest thereon at the rate stipulated and
agreed upon or, if not agreed upon, at the legal rate as allowed by law; and
(3) all other monies heretofore or hereafter advanced by the Creditor to or
for the account or benefit of Debtor, and all other present or future, direct
or contingent liabilities or indebtedness of Debtor to the Creditor of any
nature whatsoever and any extensions or renewals thereof.
SECTION 3. Security Interest In Certain Collateral. Certain Collateral
subject to the security interest created herein may be subject to or stored or
possessed pursuant to contracts or agreements with warehousemen, bailees, or
such other third persons or entities charged or entrusted with the possession
of such Collateral and such warehousemen, bailees, or third persons or
entities may issue to Debtor warehouse receipts or other documents evidencing
title or a right to the possession of such Collateral or may enter into
contracts or agreements with Debtor evidencing Debtor's title or right to the
possession of such Collateral. Debtor hereby assigns to the Creditor as
security all of its right, title and interest in and to any and all of said
warehouse receipts and other documents of title and any and all contracts and
agreements for title or possession of such Collateral, and agrees to deliver
to the Creditor the originals of all such receipts, documents, contracts, and
agreements.
SECTION 4. Debtor Remains Liable Under Contracts. In the event any
Collateral covered by this Security Agreement arise under any now or hereafter
existing written, binding contracts or agreements between the Debtor and any
purchaser, contractor, customer or any other person or entity who owes money
or an obligation to the Debtor or who receives goods or inventory or the
performance and rendering of labor or services from the Debtor, then, anything
herein to the contrary notwithstanding, (a) the Debtor shall remain liable
under the contracts and agreements included in the Collateral to the extent
set forth therein to perform all of its duties and obligations thereunder to
the same extent as if this Security Agreement had not been executed, (b) the
exercise by the Creditor of any of the rights hereunder shall not release the
Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral, and (c) the Creditor shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Security Agreement, nor shall the Creditor be
obligated to do and perform any of the acts, obligations or duties of the
Debtor provided in the contracts and agreements or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 5. Terms, Representations and Warranties. The Debtor
represents, warrants and agrees as follows:
(1) The chief place of business and chief executive office of the
Debtor and the office where the Debtor keeps its records concerning the
Collateral are located at the address first specified above for the
Debtor. None of the Collateral is evidenced by a promissory note or
other instrument that has not been disclosed to the Creditor. Any
Collateral consisting of inventory is kept in such locations disclosed
to the Creditor on inventory schedules prepared by Debtor and furnished
to the Creditor.
(2) The Debtor owns the Collateral free and clear of any lien,
security interest, charge or encumbrance except for the security
interest created by this Security Agreement, and Debtor will defend the
Collateral against the claims and demands of all persons. No effective
financing statement or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office, except
such as may have been filed in favor of the Creditor relating to this
Security Agreement or as may have otherwise been disclosed to the
Creditor by the Debtor. The Debtor has no trade name.
(3) This Security Agreement creates a valid and perfected
security interest in the Collateral, which security interest is first
priority, securing the payment of the Obligations, and all filings and
other actions necessary or desirable to perfect and protect such
security interest have been duly taken.
(4) No authorization, approval or other action by, and no notice
to or filing with any governmental authority or regulatory body is
required either (i) for the grant by the Debtor of the security interest
granted hereby or for the execution, delivery or performance of this
Security Agreement by the Debtor or (ii) for the perfection of or the
exercise by the Creditor of its rights and remedies hereunder.
(5) The Debtor agrees that from time to time, at the expense of
the Debtor, the Debtor will promptly execute and deliver all further
instruments and documents, and take all further action that may be
necessary or desirable or that the Creditor may request, in order to
perfect and protect any security interest granted or purported to be
granted hereby or to enable the Creditor to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, the Debtor will: (i) xxxx
conspicuously all chattel paper, ledger sheets for accounts, and related
contracts and, at the request of the Creditor, each of its records
pertaining to the Collateral with a legend, in form and substance
satisfactory to the Creditor, indicating that such chattel paper,
accounts, related contracts, or Collateral are subject to the security
interest granted hereby; (ii) if any accounts shall be evidenced by a
promissory note or other instrument or chattel paper, deliver and pledge
to the Creditor hereunder such note, instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or
assignment, all in form and substance satisfactory to the Creditor; and
(iii) execute and file, or deliver to the Creditor, in the form and
substance satisfactory to the Creditor, such financing or continuation
statements, or amendments thereto, and such other instruments,
documents, notices and assurances as the Creditor may, from time to
time, deem or consider necessary or desirable, or as the Creditor may
request, in order to create, perfect and preserve the security interests
granted or purported to be granted hereby. The Creditor may cause such
instruments, documents, notices and assurances to be recorded and filed
at such times and places as may be required or permitted by law to
create, perfect and preserve such security interest.
(6) The Debtor hereby authorizes the Creditor to file one or more
financing or continuation statements, and amendments thereto, relative
to all or any part of the Collateral without the signature of the Debtor
where permitted by law. A carbon, photographic or other reproduction of
this Security Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.
(7) The Debtor will furnish to the Creditor from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
the Creditor may reasonably request, all in reasonable detail.
(8) Unless the Creditor notifies the Debtor in writing that it
dispenses with any one or more of the following requirements, the Debtor
will (a) give the Creditor assignments, in form acceptable to the
Creditor, of specific accounts or groups of accounts, of monies due and
to become due under specific contracts, and of chattel paper; (b)
furnish to the Creditor a copy, with such duplicate copies as Creditor
may request, of the invoice applicable to each account specifically
assigned to the Creditor or arising out of contract rights, bearing a
statement that such account has been assigned to the Creditor and such
additional statements as the Creditor may require, and of each chattel
paper instrument; (c) inform the Creditor immediately of the rejection
of goods, delay in delivery or performance, or claims made, in regard to
any account, contract rights or chattel paper specifically assigned to
the Creditor; (d) make no change in any specifically assigned chattel
paper or account or in any account arising out of contract rights
assigned to the Creditor and no material change in the terms of any such
contract; (e) furnish to the Creditor all information received by the
Debtor affecting the financial standing of any purchaser, customer or
account debtor whose account, contract rights or chattel paper has been
specifically assigned to the Creditor; (f) pay the Creditor the amount
loaned against any account, contract rights or chattel paper
specifically assigned to the Creditor where the contract is canceled or
terminated; (g) immediately notify the Creditor if any of its accounts
arise out of contracts with the United States or any department, agency
or instrumentality thereof, and execute any instruments and take any
steps required by the Creditor in order that all monies due and to
become due under any such contract shall be assigned to the Creditor and
notice thereof given to the Government under the Federal Assignment of
Claims Act; (h) keep returned goods segregated from Debtor's other
property, and hold such goods as trustee for the Creditor until it has
paid the Creditor the amount loaned against the related account or
chattel paper, and deliver such goods on demand to the Creditor, which
shall have a security interest in such goods; (i) furnish to the
Creditor satisfactory evidence of the shipment and receipt of any goods
specified by the Creditor and the performance of any services or
obligations covered by accounts in which the Creditor has a security
interest; (j) pay the Creditor the unpaid portion of any specifically
assigned chattel paper, account or contract rights (1) if such is not
paid promptly after its maturity, (2) if purchaser does not accept the
goods or services, or (3) if any petition under the Bankruptcy Act or
any similar Federal or State statute is filed by or against purchaser;
and (k) deliver to the Creditor, with appropriate endorsement or
assignment, any instruments or chattel paper representing an account or
contract right. Any permission granted to Debtor by the Creditor to
omit any of the requirements of this paragraph may be revoked by the
Creditor at any time.
(9) Upon the request of the Creditor, the Debtor will use a
chattel paper contract and an accounts receivable invoice form in its
dealings with account debtors which bars the latter from asserting
defenses against the Creditor. Debtor will notify the Creditor by the
fastest reasonable means when the collateral of any chattel paper is
returned to or repossessed by Debtor from the account debtor. Debtor
will, upon the request of the Creditor, stamp all contracts, chattel
paper and accounts receivable ledger sheets with the notation that they
have been assigned to the Creditor.
(10) Debtor will promptly notify the Creditor, in writing, of any
new place or places of business or any change in the location of the
Collateral. Debtor has no knowledge of any fact which would impair the
value or validity of the Collateral. The account debtors of the
Collateral have no defense, set-off or counterclaim effective against
the Debtor. Debtor will preserve all rights that it has against its
account debtors and all prior parties in the chattel paper.
(11) So long as Debtor is not in default hereunder, Debtor shall
have the right to process and sell Debtor's inventory in the regular
course of business. The Creditor's interest hereunder shall attach to
all proceeds of all sales or other dispositions of the inventory. If at
any time any such proceeds shall be represented by any instruments,
chattel paper or documents (including documents of title), then such
instruments, chattel paper or documents (including documents of title)
shall be promptly delivered to the Creditor and included in the security
interest granted hereby. If at any time any of Debtor's Inventory is
represented by any document (including documents of title), such
document (including documents of title) will be promptly delivered to
the Creditor and included in the security interest granted hereby.
(12) Debtor shall pay promptly when due all taxes, levies,
assessments, governmental charges and other impositions levied thereon,
and all claims (including claims for labor, materials and supplies)
against the Collateral, except to the extent the validity thereof is
being contested in good faith.
(13) The Debtor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning
the Collateral, and all originals of all chattel paper which evidence
Collateral, at the location designated in this Security Agreement or,
upon 30 days prior written notice to the Creditor, at such other
locations in a jurisdiction where all action required by this Section
shall have been taken with respect to the Collateral. The Debtor will
hold and preserve such records and chattel paper and will permit
representatives of the Creditor at any time during normal business hours
to inspect and make abstracts from such records and chattel paper. The
Debtor shall keep its inventory at such locations disclosed to the
Creditor in Debtor's inventory schedules. In the event inventory is
placed by Debtor at new or different locations, Debtor shall advise the
Creditor with 30 days prior written notice of such new or different
locations and shall timely execute and deliver to the Creditor financing
statements, continuation statements, or amendments thereto, in order for
the Creditor to create, perfect, and preserve its security interest
therein.
(14) The Creditor shall have the right, at any time, by its own
auditors, accountants or other agents, to examine or audit any of the
books and records of the Debtor, or the Collateral, which will be made
available upon request. Such accountants or other representatives of
the Creditor will be permitted to make any verification of the existence
of the Collateral or accuracy of the records which the Creditor deems
necessary or proper. Any reasonable expenses incurred by the Creditor
in making such examination, inspection, verification or audit shall be
paid by the Debtor promptly on demand and shall be secured by the
security interest granted hereby.
(15) So long as any liability to the Creditor is outstanding,
Debtor will not without the prior written consent of the Creditor pledge
or grant any security interest in any of the Collateral to anyone except
the Creditor or permit any lien or encumbrance to attach to any of the
foregoing, or any levy to be made thereon, or any financing statement
(except Creditor's statement) to be on file with respect thereto.
SECTION 6. Creditor Appointed Attorney-in-Fact. The Debtor hereby
irrevocably appoints the Creditor as the Debtor's attorney-in-fact, with full
authority in the place and stead of the Debtor and in the name of the Debtor,
the Creditor or otherwise, from time to time in the Creditor's discretion, to
take any action and to execute any instrument which the Creditor may deem
necessary or advisable to accomplish the purposes of this Security Agreement,
including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compound, receive,
and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral;
(b) to receive, endorse, and collect any checks, notes, drafts or
other instruments, documents and chattel paper in connection with clause
(a) above; and
(c) to file any claims or take any action or institute any
proceedings which the Creditor may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of the Creditor with respect to any of the Collateral.
The Debtor further agrees and consents to executing such other instruments,
including additional powers of attorney, as are deemed necessary or
appropriate by the Creditor in order to accomplish the purposes set forth
herein and to enable the Creditor to protect, preserve and realize upon the
Creditor's security interest herein.
SECTION 7. Creditor May Perform. If the Debtor fails to perform any
term or agreement contained herein, the Creditor may itself perform, or cause
performance of, such term or agreement, and the expenses incurred by the
Creditor in connection therewith shall be secured by the security interest
granted herein and payable by the Debtor.
SECTION 8. The Creditor's Duties. The powers conferred on the Creditor
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Collateral in its possession and the accounting for monies
actually received by it hereunder, the Creditor shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
SECTION 9. Default and Remedies. (a) The term "Default" or "Event of
Default", as used in this Security Agreement, shall mean the occurrence at any
time and from time to time, of any one or more of the following if such
Default of Event of Default is not cured within 30 days from occurrence:
(1) If any portion of the Indebtedness, or any other payment due
the Creditor, as and when the same shall become due and payable, shall
fail to be paid.
(2) If any of the Obligations, including warranties,
representations and covenants by the Debtor, shall fail to be discharged
fully and timely.
(3) If any representation, warranty or other information supplied
to the Creditor shall be false, misleading, incorrect or erroneous in
any material respect when made.
(4) If the Debtor shall: (A) voluntarily be adjudicated a
bankrupt or insolvent; (B) seek, consent to or not contest the
appointment of a receiver or trustee for itself or for all or any part
of its property; (C) file a petition seeking relief under bankruptcy,
arrangement, receivership, reorganization or other debtor relief laws of
the United States or any state or any other competent jurisdiction;
(D) make a general assignment for the benefit of its creditors; or
(E) admit in writing its inability to pay its debts as they mature.
(5) If: (A) a petition is filed against the Debtor seeking
relief under bankruptcy, arrangement, receivership, reorganization or
other debtor relief laws of the United States or any state or other
competent jurisdiction which is not dismissed within thirty (30) days
thereafter; or (B) a court of competent jurisdiction enters an order,
judgment or decree appointing a receiver or trustee for any part of the
Debtor's property which is not dismissed within thirty (30) days
thereafter.
(6) If a Default or an Event of Default shall occur and be
continuing.
(7) If the Collateral is abandoned, substantially damaged, or
threatened with substantial damage with the Debtor failing or refusing
to take reasonable measures to prevent such damage, so that in the
Creditor's judgment it cannot promptly be restored with available funds
to a profitable condition.
(8) If the holder of any lien or security interest on the
Collateral (notwithstanding that the creation of the same may constitute
a separate default hereunder) institutes foreclosure or other
proceedings for the enforcement of its remedies thereunder.
(9) If the Creditor, in its sole judgment, determines that the
ability of the Debtor to pay the Indebtedness or any part thereof, or
perform the Obligations or any part thereof, has significantly
deteriorated or been significantly impaired, or the Collateral is
materially insufficient as security for the Indebtedness.
(10) If any condemnation proceeding is instituted which would, in
the Creditor's sole judgment, materially impair the use or enjoyment of
the Collateral for its intended purposes.
(11) If any dissolution proceeding or other action or proceeding
to terminate or suspend the Debtor's existence is commenced by or
against the Debtor or, if Debtor is a natural person, on the death of
the Debtor.
(12) If the Debtor is in default under any other loan, contract,
agreement or transaction entered into with the Creditor, whether now
existing or hereafter arising.
(b) If any Default or Event of Default shall have occurred or be
continuing, the Creditor shall have the following remedies:
(1) The Creditor may, at its option, declare the entire unpaid
balance of the Indebtedness, including principal and interest, to be
immediately due and payable without notice or demand. The Creditor may
xxx to collect all or any part of such Indebtedness without having first
to resort to any of the Collateral, the Creditor having the right to
seek one or more remedies at the same time or at different times at its
discretion.
(2) The Creditor may exercise and enforce in respect of the
Collateral, in addition to other rights and remedies provided for in
this Security Agreement or otherwise available to or possessed by the
Creditor, all the rights and remedies of a secured party on default
under the Uniform Commercial Code (the "Code") of Mississippi or such
other applicable jurisdictions, or under other applicable laws (whether
or not the Code applies to the affected Collateral), and all such rights
and remedies shall be cumulative.
(3) The Creditor also may require the Debtor to, and the Debtor
hereby agrees that it will, at its expense and upon request of the
Creditor forthwith, assemble all or part of the Collateral as directed
by the Creditor and make it available to the Creditor at a place to be
designated by the Creditor which is reasonably convenient to both the
Creditor and the Debtor.
(4) The Creditor may, with written notice to the Debtor, notify
the customers and account debtors of the Debtor to make any and all
payments of monies due or to become due to the Debtor under and pursuant
to accounts, contracts, or agreements, written or unwritten, to the
Creditor at its address set forth herein, and shall have the right to
institute, prosecute, settle or compromise any legal proceedings for the
collection, recovery and payment of such monies, including costs,
expenses and attorneys' fees. The Creditor shall have the right to
retain and apply any surplus monies received or collected from Debtor's
customers or account debtors to the Indebtedness and to other costs and
expenses incurred by the Creditor in connection with the Indebtedness
(including, but not limited to, expenses, fees and disbursements set
forth in Section 10) and shall have no obligation to (but, at its
option, may) turn over any such surplus monies to the Debtor until such
time as the Indebtedness and costs and expenses, including attorneys'
fees, associated with default have been paid in full.
(5) The Creditor may, without notice except as specified below,
lease the Collateral or sell or otherwise dispose of the Collateral, or
any part thereof, in one or more parcels at public or private sale, at
any of the Creditor's offices or elsewhere, for cash, on credit, or for
future delivery, and upon such other terms as the Creditor may deem
commercially reasonable. The Debtor agrees that, to the extent notice
of sale shall be required by law, at least five (5) days' notice to the
Debtor at the Debtor's address specified in this Security Agreement of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.
The Creditor shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Creditor may
adjourn any public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(6) Any proceeds received by the Creditor in respect of any lease
of, sale of, collection from, or other realization upon all or any part
of the Collateral may, in the discretion of the Creditor be held by the
Creditor as collateral for, and/or then, or at any time thereafter
applied in the following orders of priority: (A) first, to the payment
of all costs and expenses of taking possession of and selling, leasing
or otherwise disposing of the Collateral, and of collecting and
recovering any monies due pursuant to accounts, contracts or agreements,
and of holding, leasing and collecting rents, operating, managing,
using, repairing, improving and selling the same, including, without
limitation, fees of the Creditor and attorneys retained by the Creditor,
fees of any receiver or accountant, recording and filing fees, court
costs, costs of advertisement, commissions to rental agents, and the
payment of any and all assessments, liens, security interests or other
rights, titles or interests equal or superior to the lien and security
interest of this Security Agreement (except those to which the
Collateral has been sold subject to and without in any way implying the
Creditor's consent to the creation thereof); (B) second, to payment of
the Indebtedness and the Obligations due the Creditor, including all
accrued and unpaid interest and unpaid principal due on the Note in such
order as the Creditor may elect; and (C) third, any remaining balance
or surplus remaining after payment in full of all of the Indebtedness
and the Obligations to whomsoever may be lawfully entitled to receive
such surplus.
(7) The Creditor shall be entitled and shall have the right to
set off any remaining balance of the Indebtedness due on the Note in
whole or in part against any deposits, accounts or monies credited or
owing by the Creditor to the Debtor.
(8) In the event the remedies of the Creditor set forth herein
shall not be sufficient to pay and satisfy in full the Indebtedness and
Obligations due the Creditor such that a deficiency arises or exists,
then the Debtor shall remain liable to the Creditor for any such
deficiency and the Creditor shall have the right and be entitled to
pursue collection and recovery of any such deficiency from the Debtor,
including the costs, expenses and attorneys fees incurred by the
Creditor in enforcing such right and pursuing such collection.
SECTION 10. Indemnity and Expenses. (a) The Debtor releases and
agrees to indemnify and hold harmless the Creditor from and against any and
all claims, losses and liabilities growing out of or resulting from the
failure of the Creditor to collect any account or chattel paper or to enforce
any contract right or by any act or omission on the part of the Creditor, its
officers, agents and employees, or growing out of or resulting from this
Security Agreement (including, without limitation, enforcement of this
Security Agreement), except claims, losses or liabilities resulting from the
Creditor's gross negligence or willful misconduct.
(b) The Debtor will, upon demand, pay to the Creditor the amount of any
and all reasonable expenses, including the reasonable fees, expenses, and
disbursements of attorneys and any experts and agents, which the Creditor may
incur in connection with (i) the administration of this Security Agreement,
(ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights and remedies of the Creditor
hereunder or (iv) the failure by the Debtor to perform or observe any of the
provisions hereof.
SECTION 11. Amendments, Waivers, Etc. (a) No amendment or waiver of
any provision of this Security Agreement nor consent to any departure by the
Debtor herefrom shall in any event be effective unless the same shall be in
writing and signed by the Creditor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
(b) The Debtor waives demand, presentment, and protest of all
commercial paper at any time held by the Creditor on which the Debtor is in
any way liable, notice of protest, notice of nonpayment at maturity of any and
all accounts, and except where required hereby or by law, notice of action
taken by the Creditor.
SECTION 12. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing and, as to either
party, mailed by certified mail or delivered to it, addressed to it at its
address specified in this Security Agreement, or as to either party at such
other address as shall be designated by such party in a written notice to each
other party complying as to delivery with the terms of this Section. All such
notices and other communications shall be effective when mailed or, when hand
delivered, on the receipt of the delivery addressed as aforesaid.
SECTION 13. Continuing Security Interest; Assignment. This Security
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect until payment in full of the
Indebtedness and the Obligations, (ii) be binding upon the Debtor, its heirs,
representatives, successors and assigns, and (iii) inure to the benefit of the
Creditor and its representatives, successors, transferees and assigns.
Without limiting the generality of the foregoing, the Creditor may assign or
otherwise transfer its rights under this Security Agreement, and in the
Indebtedness, or any interest therein held by it to any other person or
entity, and such other person or entity shall thereupon become vested with all
the benefits in respect thereof granted to the Creditor herein or otherwise.
The Debtor shall not assign or transfer any of its rights hereunder. Upon the
payment in full of the Indebtedness and the Obligations, the security interest
granted hereby shall terminate and all rights to the Collateral shall revert
to the Debtor. Upon any such termination, the Creditor will, at the Debtor's
expense, execute and deliver to the Debtor such documents as the Debtor shall
reasonably request to evidence such termination.
SECTION 14. Severability. If any term or provision of this Security
Agreement is held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining provisions of the Security Agreement.
SECTION 15. Governing Law; Terms; Submission to Jurisdiction. (a)
This Security Agreement shall be governed by and construed in accordance with
the laws of the State of Mississippi, except to the extent that the validity
or perfection of the security interest hereunder, or remedies hereunder, in
respect to any particular Collateral are held to be governed by the laws of a
jurisdiction other than the State of Mississippi. Unless otherwise defined
herein, terms used in Article 9 of the Uniform Commercial Code in the State of
Mississippi are used herein as therein defined.
(b) The Debtor (i) irrevocably submits to the jurisdiction of any
Mississippi state court or federal court sitting in Jackson, Mississippi, in
any action arising out of this Security Agreement or under any document or
instrument evidencing all or any part of the Indebtedness, (ii) agrees that
all claims in such action may be decided in such court, and (iii) waives, to
the fullest extent it may effectively do so, the defense of an inconvenient
forum and the right to a trial by jury. A final non-appealable judgment in
any such action shall be conclusive and may be enforced in other
jurisdictions. Nothing herein shall affect the right of the Creditor to serve
legal process in any manner permitted by law or affect its right to bring any
action against the Debtor or its property in any court.
IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first above written.
DEBTOR:
/s/Xxxxxx X. Xxxxx
XXXXXX PRECISION HEALTH INFORMATION
SERVICES, INC.
CREDITOR
/s/Xxxxxxxx X. Xxxxx
MEDICAL BILLING MANAGEMENT, INC.
EXHIBIT E
Mississippi UCC1 FINANCING STATEMENT
A. NAME & PHONE OF CONTACT AT XXXXX
Xxxxx X. Xxxxxx (000) 000-0000
B. SEND ACKNOWLEDGMENT TO: (name and address)
Xxxxx X. Xxxxxx
Knight Law Offices, PLLC
000 Xxxxxxxx Xxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000
1. DEBTOR'S EXACT FULL LEGAL NAME
Xxxxxx Precision Health Information Services, Inc.
0000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000 25
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME
N/A
3. SECURED PARTY'S NAME
Medical Billing Management, Inc.
0000 Xxxxx Xxxxx Xxxxx, Xxxxx #000-X
Xxxxxxx, XX 00000 XXX
4. This FINANCING STATEMENT covers the following collateral:
All accounts receivable located at 0000 Xxxxx Xxxxx Xxxxx, Xxxxx #000-X,
Xxxxxxx, Xxxxxxxxxxx 00000.
