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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 15, 1995 (May 31, 1995)
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C.I.S. TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15457 73-1199382
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification Number)
6100 SOUTH YALE, SUITE 1900, TULSA, OKLAHOMA 74136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 918/496-2451
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Page 1 of 133
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C.I.S. TECHNOLOGIES, INC.
INFORMATION TO BE INCLUDED IN REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On May 31, 1995, the Registrant ("CIS") closed the previously reported
(Form 8-K filed May 19, 1995) agreement (the "Agreement") to acquire 100% of the
outstanding capital stock of Hospital Cost Consultants, Inc. ("HCCI"), from
MicroBilt Corporation ("MicroBilt") a subsidiary of First Financial Management
Corporation ("FFMC") for cash consideration of $10 million. CIS also guaranteed
a $5 million short-term note from HCCI to FFMC and has assumed certain
contingent cash payment obligations of FFMC to the former shareholders of HCCI.
CIS will account for the acquisition as a purchase and accordingly the results
of operations of HCCI will be included from the acquisition date.
HCCI, headquartered in Pleasanton, California, develops, markets, installs
and provides technical support for healthcare information systems for hospitals
and other healthcare providers. CIS intends to continue such business. HCCI
currently offers three products: "Distinction," a managed care contract modeling
and management product; "Domain," a decision support product; and "Dividend," a
hospital cost accounting product. A fourth product, a managed care capitation
product, is scheduled for release in late 1995. HCCI has 80 client contracts
representing 100 hospitals throughout the United States. In addition, HCCI has
75 hospital clients in international marketplaces: 60 through distributorships
in England, 12 in Australia, 2 in Canada, and 1 in New Zealand.
In addition to HCCI's software products and the related goodwill resulting
from its established relationships with healthcare providers throughout the
United States and the world, the principal assets of HCCI consist of cash,
receivables, and property and equipment. In determining the amount of
consideration to be paid for HCCI, CIS considered HCCI's historical and
projected future revenues, earnings and cash flows, and the synergies and cross-
selling opportunities between CIS and HCCI.
There are no material relationships between FFMC or MicroBilt and CIS or
any of CIS' affiliates, any director or officer of CIS, or any associate of any
such director or officer.
The source of the $10 million cash consideration for the purchase of HCCI
was $8 million from CIS' cash reserves and borrowings of $2 million on CIS' line
of credit with General Electric Capital Corporation ("GE Capital"). The HCCI $5
million short-term note guaranteed by CIS bears interest at LIBOR + four percent
(4%) per annum and is due on August 31, 1995. CIS may extend the maturity date
until December 29,
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C.I.S. TECHNOLOGIES, INC.
INFORMATION TO BE INCLUDED IN REPORT
1995 at an interest rate of LIBOR + six percent (6%) per annum. The contingent
obligations of FFMC to the former shareholders of HCCI, which were assumed by
CIS pursuant to an Agreement Concerning Earn-out (a copy of which is attached as
an exhibit hereto and incorporated herein by reference), are obligations to pay
cash to such former shareholders if HCCI achieves certain levels of financial
performance for each year through its fiscal year ending December 31, 1998 (the
"Earn-out Obligations"). The Earn-out Obligations arose pursuant to Section 2.2
(b) and "Exhibit B" of the October, 1993 Agreement and Plan of Merger whereby
HCCI was acquired by MicroBilt. The amount of the Earn-out Obligation for each
HCCI fiscal year is based upon the amount of HCCI's "Net collected revenues"
above a "Threshold amount," as such terms are defined in the said Section 2.2
(b). A copy of the said Section 2.2 (b) and "Exhibit B" is included as an
exhibit hereto and incorporated herein by reference.
ITEM 5. OTHER EVENTS.
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On May 31, 1995, CIS amended its revolving credit facility agreement with
GE Capital dated as of October 15, 1994 (the "Credit Agreement"). The amendment
enabled CIS to complete the acquisition of HCCI within the terms, as amended, of
the Credit Agreement.
THE FOREGOING ITEMS 2 AND 5 ARE BRIEF SUMMARIES OF THE TRANSACTIONS
DESCRIBED THEREIN; THEY DO NOT PURPORT TO SET FORTH ALL OF THE TERMS THEREOF AND
ARE QUALIFIED IN THEIR ENTIRETY BY THE TERMS OF THE AGREEMENT, THE AMENDMENT TO
THE CREDIT AGREEMENT AND RELATED DOCUMENTS, COPIES OF WHICH ARE ATTACHED AS
EXHIBITS TO THIS REPORT AND ARE INCORPORATED HEREIN BY REFERENCE.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) and (b) Financial Statements and Pro Forma Financial Information.
It is impracticable to provide the required financial statements and pro
forma information at the time this report is filed. Such financial statements
and pro forma information will be filed under the cover of SEC Form 8-K/A on
approximately August 10, 1995, but in any event not later than 60 days after
this report must be filed.
(c) Exhibits.
See the Exhibit Index following the signature page hereto for a list of the
Exhibits filed as part of this Report.
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C.I.S. TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
C.I.S. TECHNOLOGIES, INC.
/s/ Rebecca L. Speight
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Rebecca L. Speight
Director, Finance and Accounting
(Principal Accounting Officer)
Date: June 15, 1995
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C.I.S. TECHNOLOGIES, INC.
EXHIBIT INDEX
Page(s) of
this Form or
Report Exhibit
previously
Number Description filed*
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10.c Credit Agreement and Annex A to Credit Form 10-K filed
Agreement between C.I.S. Technologies, April 14, 1995
Inc. and General Electric Capital
Corporation
10.j Stock Purchase and Sale Agreement Form 8-K filed
(Definitive Agreement by and between May 19, 1995
CIS Technologies, Inc., First Financial
Management Corporation, and MicroBilt
Corporation)
10.k First Amendment to Stock Purchase and 6
Sale Agreement
10.l Promissory Note 13
10.m Corporate Guaranty 17
10.n Pledge Agreement 22
10.o Accounts Security Agreement 35
10.p Agreement Concerning Earn-out 48
10.q Noncompete Agreement 55
10.r First Amendment to Credit Agreement 59
10.s Accounts Security Agreement 74
10.t Intercreditor Agreement 86
10.u Pledge Agreement 103
10.v Joinder Agreement 120
10.w Section 2.2 (b) and "Exhibit B" to 125
Agreement of Merger dated October 19,
1993 between, inter alia, First Financial
Management Corporation and Hospital Cost
Consultants Inc., setting out certain
"Earn-out Obligations" assumed by the
Registrant.
99.b Press release dated June 1, 1995 132
* Incorporated herein by reference
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EXHIBIT 10.k
FIRST AMENDMENT
TO
STOCK PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT, dated as of the 31st day of May, 1995, is entered
into by and between First Financial Management Corporation, a Georgia
corporation ("FFMC"), MicroBilt Corporation, a Georgia corporation wholly owned
by FFMC ("MicroBilt") (FFMC and MicroBilt are individually referred to as a
"Seller" and collectively referred to as "Sellers"), and C.I.S. Technologies,
Inc., a Delaware Corporation ("Purchaser"),
RECITALS:
Sellers and Purchaser are parties to that certain Stock Purchase and Sale
Agreement dated as of May 11, 1995 (the "Stock Purchase Agreement") pursuant to
which MicroBilt has agreed to sell to Purchaser and Purchaser has agreed to
purchase from MicroBilt all of MicroBilt's right, title and interest in the HCCI
Common Stock. All capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Stock Purchase Agreement. Purchaser and
Sellers desire to modify and amend the Stock Purchase Agreement to provide for
certain changes in the exhibits thereto, and for certain other purposes as are
set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties hereto, the parties hereto do hereby agree as follows:
1. Section 2 of the Stock Purchase Agreement is deleted in its entirety and the
following is inserted in lieu thereof:
2. CONSIDERATION. The consideration to be paid by the Purchaser to
Sellers for the HCCI Common Stock and the Noncompete Agreement referred to
in Section 3.2 below, shall consist of $10.0 million in cash (the "Cash
Consideration") which shall be paid by the Purchaser to FFMC at the Closing
(defined below) in immediately available funds, and Purchaser's guaranty of
the Company's intercompany payable to FFMC in the amount of $5.0 million,
which liability, upon Closing, shall be evidenced by the Company's
Promissory Note to FFMC in the form attached hereto as Exhibit "A-1;" said
note (the "HCCI Note") to be guaranteed by Purchaser and secured by a
pledge of the HCCI Common Stock and a second security interest (inferior to
a first and primary security interest in favor of General Electric Capital
Corporation ("GECC")) in the Company's accounts receivable, pursuant to a
Corporate Guaranty, a Pledge Agreement and an Accounts Security Agreement
in the forms attached hereto as Exhibits A-2, A-3 and A-4 respectively.
2. Exhibits A-1, A-3 and A-4 of the Stock Purchase Agreement are deleted in
their entirety, and Exhibits A-1, A-3 and A-4 attached hereto are inserted in
lieu thereof.
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3. Section 4.3 of the Stock Purchase Agreement is deleted in its entirety and
the following is inserted in lieu thereof:
"4.3 ACCOUNTING EFFECTIVE DATE. The effective date of the consummation of
the transactions contemplated in this Agreement for accounting purposes
shall be deemed to be the close of business on May 31, 1995 (the
"Accounting Effective Date").
4. Section 8.10 of the Stock Purchase Agreement is deleted in its entirety and
the following is inserted in lieu thereof:
8.10 TERMINATION OF RELATED PARTY ARRANGEMENTS AND TRANSACTIONS. Prior to
or concurrently with the Closing, the Sellers will (and will see to it that
their Affiliates) terminate all ongoing arrangements and transactions with
the Company, including intercompany receivables and payables and any other
amounts due the Sellers or them from, or payable by the Sellers or them to,
the Company; provided however that the arrangement pursuant to which
MicroBilt furnishes telecommunications services to the Company through MCI
shall continue through June 9, 1995 and the Company shall pay MicroBilt,
when invoiced, for such services for the period commencing on May 1, 1995.
Such ongoing arrangements and transaction may be so terminated by means of
any combination of payments of amounts owing to or from the Company,
contributions to the capital of the Company, mutual releases, lawful
dividends from the Company or otherwise, to the end that, as of May 1,
1995, the intercompany payable account shall equal $5.0 million, which
amount shall be evidenced by, and payable in accordance with the terms of,
the HCCI Note. Activity in the intercompany payable account from May 1,
1995 to the Effective Time will consist solely of cash receipts and payment
activity for the Company recorded and maintained in FFMC's master cash
accounts and billings for intercorporate services performed in the ordinary
course of business and in accordance with arrangements in existence as of
the date of this Agreement. Activity in the intercompany account after May
1, 1995 shall be settled as soon as practicable after closing by payments
between Purchaser and Seller.
5. Section 8.13 of the Stock Purchase Agreement is amended as follows:
a. Section 8.13(c) is deleted in its entirety and the following
Section 8.13(c) is inserted in lieu thereof:
The Company shall not grant any bonus to any employee or any increase in
the rates of salaries or compensation of its employees, except in
accordance with Purchaser's personnel practices.
b. The following language is added to Section 8.13, immediately
following Section 8.13(m):
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Notwithstanding anything to the contrary contained in this Section
8.13, nothing in this Section shall prohibit the (i) Company or
Purchaser from entering into and performing its obligations under the
Accounts Security Agreement or the Pledge Agreement in favor of GECC,
respectively (as each such term is defined in the Credit Agreement, as
amended, dated as of October 15, 1994, by and among Purchaser, C.I.S.,
Inc., Hospital Billing Analysis, Inc. and GECC (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement")) and the granting in favor of GECC of the liens on the
Company's accounts receivable, cash, bank accounts and proceeds
thereof as more fully described therein, (ii) Company from becoming a
party to and performing its obligations under the Concentration
Account Agreement and the Lockbox Account Agreement (as each such term
is defined in the Credit Agreement) pursuant to the Joinder Agreement
(as defined in the First Amendment to Credit Agreement dated May 31,
1995), (iii) Company from making intercompany loans and advances to
Purchaser or its subsidiaries (including, without limitation, as a
result of the daily sweep of the Company's cash and application to the
obligations under the Credit Agreement pursuant to the Lockbox Account
Agreement, the Concentration Account Agreement and the Credit
Agreement), or (iv) Company from otherwise abiding by the terms of the
Loan Documents (as defined in the Credit Agreement).
For the purposes of this Section 8.13, it is understood and agreed
that the phrase "in the ordinary course of its business" or "in the
ordinary course," as the case may be, shall be deemed to include the
ordinary course of business of Purchaser and its subsidiaries
(including, without limitation, the Company).
6. Section 9.2(e) of the Stock Purchase Agreement is deleted in its entirety
and the following is inserted in lieu thereof:
(e) The Sellers shall have been furnished with a certificate dated the
Closing Date executed by an officer of CIS to the effect that (i) he or she
is familiar with the provisions of this Agreement and (ii) to the best of
his knowledge the conditions specified in this Section 9.2 have been
satisfied.
7. Section 12 of the Stock Purchase Agreement is amended as follows:
a. Section 12.1 is deleted in its entirety and the following is
inserted in lieu thereof:
12.1 INDEMNIFICATION BY THE SELLERS. Subject to the provisions of
this Section 12, all representations, warranties, covenants and
agreements of the Sellers in this Agreement shall survive the Closing
and the Sellers shall, jointly and severally, defend, indemnify and
hold harmless the Purchaser in respect of any and all claims, losses,
damages, liabilities, demands, assessments, judgments, costs and
expenses, including, without limitation, settlement costs and any
legal or other expenses for
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investigating, bringing or defending any actions or threatened actions
(collectively the "Costs" which, for purposes of indemnification of
the Purchaser by the Sellers pursuant to this Section 12, and assuming
the Closing occurs, include all Costs which indirectly impact the
Purchaser as a result of their direct impact upon the Company),
incurred or suffered by the Seller (or the Company), to the extent not
covered by insurance, resulting from any breach of any representation,
warranty, covenant, agreement or obligation made by the Sellers in
this Agreement or in any schedule, exhibit, certificate or other
instrument pursuant hereto; or resulting from that certain judgment in
the amount of $224,939 filed January 10, 1990 in the Dallas, Texas
District Court, #8713560A, styled Libra Systems, Inc. v. Hospital Cost
Consultants, Inc. (the Libra Judgment").
b. Section 12.2 is deleted in its entirety and the following is
inserted in lieu thereof:
Subject to the provisions of this Section 12, all representations,
warranties, covenants and agreements of the Purchaser in this
Agreement shall survive the Closing and the Purchaser shall defend,
indemnify and hold harmless the Sellers in respect of any and all
Costs incurred or suffered by the Sellers resulting from any breach
of any representation, warranty, covenant, agreement or obligation
made by the Purchaser in this Agreement, or in any schedule,
exhibit, certificate or other instrument pursuant hereto. In
addition, Purchaser shall defend, indemnify and hold harmless FFMC
in respect of any and all Costs incurred or suffered by FFMC
pursuant to its guaranty of the Pleasanton lease (the "Lease
Guaranty").
c. Section 12.3(c) is deleted in its entirety and the following is
inserted in lieu thereof:
No claim shall be made against the Sellers for indemnification for
any breach of a representation or warranty contained in this
Agreement or in any schedule, exhibit, certificate or other
instrument delivered pursuant hereto unless and until the aggregate
Costs exceed $100,000 in which event the Indemnifying Party shall
be liable for all losses not previously included in such $100,000
cushion, up to the liability cap set forth in Section 12.3(d)
below; provided, however, that the $100,000 cushion shall not apply
to any breach of a representation or warranty contained in Sections
6.1 through 6.5, 6.7, 6.15 or 6.21, or any covenant contained in
Sections 11.1, 11.2, 11.3 or 11.7, to the Sellers' indemnification
in respect of the Libra Judgment, as set forth in Section 12.1 or
to Purchaser's indemnification in respect of the Lease Guaranty, as
set forth in Section 12.2; and provided further that no claim shall
be made against Sellers for breach of the representations and
warranties set forth in Section 6.11(b) unless and until the
aggregate Costs in respect of such breach exceed the sum of (i)
$150,000.00 plus (ii) the amount of the $100,000.00 cushion that
has not previously been applied to Costs for which Sellers are
liable pursuant to this Section 12.3.
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d. Section 12.4 is deleted in its entirety and the following is
inserted in lieu thereof:
The party seeking indemnification (the "Indemnified Party") shall give
the party from whom indemnification is sought (the "Indemnifying
Party") a written notice ("Notice of Claim") within sixty (60) days of
the discovery of any loss, liability, claim or expense in respect of
which the right to indemnification contained in this Section 12 may be
claimed; provided, however, that the failure to give such notice
within such sixty (60) day period shall not result in the waiver or
loss of any right to bring such claim hereunder after such period or
relieve the Indemnifying Party from any liability hereunder unless,
and only to the extent that, the Indemnifying Party is actually
prejudiced by such failure. In the event a claim is pending or
threatened or the Indemnified Party has a reasonable belief that there
is a valid basis for such claim, the Indemnified Party may give
written notice (a "Notice of Possible Claim") of such claim to the
Indemnifying Party, regardless of whether a loss has arisen from such
claim. A party shall have no liability under this Section 12 for
breach of a representation or warranty contained in Articles 6 or 7
unless a Notice of Claim or Notice of Possible Claim is delivered by
the Indemnified Party prior to the eighteen (18) month anniversary of
the Effective Time; provided, however, that as to any liability
arising pursuant to Sections 6.1 through 6.5, 6.7, 6.15, 6.21, 6.22 or
6.26 or any liability in respect of the Libra Judgment, any Notice of
Claim must be delivered by the Indemnified Party not later than ninety
(90) business days after the expiration of the applicable statute of
limitations, or, with respect to Taxes, any extensions or tolling
thereof; provided further that a Notice of Claim relating to
Purchaser's indemnification of FFMC in respect of the Lease Guaranty
may be given at any time. Any Notice of Claim or Notice of Possible
Claim shall set forth the representations, warranties, covenants and
agreements with respect to which the claim is made, the specific facts
giving rise to an alleged basis for the claim and the amount of
liability asserted or anticipated to be asserted by reason of the
claim.
8. Except as expressly modified by this Amendment, the Stock Purchase Agreement
remains unmodified and in full force and effect.
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EXECUTED AND DELIVERED as of the 31st day of May, 1995.
PURCHASER:
C.I.S. TECHNOLOGIES, INC.
By: /s/ Phillip D. Kurtz
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Name: Phillip D. Kurtz
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Title: Chairman and CEO
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SELLERS:
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Stephen D. Kane
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Name: Stephen D. Kane
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Title: Vice Chairman
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MICROBILT CORPORATION
By: /s/ Michael H. Pope
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Name: Michael H. Pope
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Title: Senior Vice President
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Exhibits to the First Amendment to Stock Purchase and Sale Agreement have been
deleted because they are substantially similar to documents filed herewith as
material contracts. All schedules to the amendment have been omitted as
immaterial.
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EXHIBIT 10.l
PROMISSORY NOTE
(NON-NEGOTIABLE)
$5,000,000 May 31, 1995
FOR VALUE RECEIVED, the undersigned, HOSPITAL COST CONSULTANTS, INC., a
California corporation ("Borrower"), hereby unconditionally promises to pay to
FIRST FINANCIAL MANAGEMENT CORPORATION, a Georgia corporation ("Lender"), at
Lender's office located at 3 Corporate Square, Suite 700, Atlanta, Georgia
30329, or at such other place as Lender of this Note may from time to time
designate in writing, in lawful money of the United States of America and in
immediately available funds, the principal sum of FIVE MILLION DOLLARS
($5,000,000), together with interest thereon as provided herein.
The principal amount hereof shall be due and payable in full on August 31,
1995 (the "Initial Maturity Date"); provided, however, that Borrower may extend
the maturity hereof until December 29, 1995 (the "Extended Maturity Date") by
delivering written notice of such extension to Lender not less than five (5)
days prior to the Initial Maturity Date. As a condition to such extension, no
Event of Default (as defined below) shall have occurred and been continuing as
of the effective date of such extension.
Borrower unconditionally promises to pay interest on the outstanding unpaid
principal amount hereof at the following rates:
(a) from the date hereof to, but not including, the Initial Maturity
Date, the outstanding unpaid principal amount hereof shall bear interest at
the rate per annum equal to LIBOR (as hereinafter defined) as in effect on
the date hereof, plus four percent (4%);
(b) from the Initial Maturity Date to, but not including, the Extended
Maturity Date, the outstanding unpaid principal amount hereof shall bear
interest at the rate per annum equal to LIBOR as in effect on the Initial
Maturity Date, plus six percent (6%).
Interest shall be due and payable on the last day of each of the periods
described in clauses (a) and (b) above, on the date of any partial prepayment of
the principal amount hereof and on the date of payment of this Note in full
(whether at maturity or by reason of prepayment in full or acceleration of the
principal amount hereof. Interest shall be computed on the daily outstanding
principal amount hereof on the basis of a 360-day year for the actual number of
days elapsed in the period during which it accrues.
As used herein, "LIBOR," as of any date of determination thereof, means the
rate published in the "MONEY RATES" column of The Wall Street Journal on such
date of determination (or if The Wall Street Journal is not published on such
date, then on the most recent date preceding such date of determination that The
Wall Street Journal is published) as the average
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of interbank offered rates for three month dollar deposits in the London market
based on quotations at five major banks, regardless of the stated effective date
thereof. In the event that The Wall Street Journal ceases to be published, then
Lender, by written notice to Borrower, shall specify an alternate, comparable
source for LIBOR.
Nothing contained in this Note shall be deemed to establish or require the
payment of a rate of interest in excess of the maximum rate permitted by any
applicable law. In the event that any rate of interest required to be paid
under this Note exceeds the maximum rate permitted by applicable law, such rate
shall automatically be reduced to the maximum rate permitted by such law and any
excess previously collected by Lender shall be, at Lender's option, either
applied to principal or returned to Borrower.
Payment of this Note is secured pursuant to the terms of that certain
Accounts Security Agreement of even date herewith between Borrower and Lender
(the "Security Agreement") and is guaranteed pursuant to the terms of that
certain Corporate Guaranty of even date herewith (the "Guaranty"), executed by
C.I.S. Technologies, Inc. ("C.I.S.") in favor of Lender, which Guaranty is
secured pursuant to the terms of that certain Pledge Agreement of even date
herewith (the "Pledge Agreement"), between C.I.S. and Lender.
Borrower may prepay the principal amount of this Note, in whole or in part,
at any time without penalty or premium. Upon any such prepayment, Borrower
shall pay all accrued but unpaid interest on the principal amount prepaid.
The occurrence of any of the following events shall constitute an "Event of
Default" hereunder:
(a) Borrower fails to pay any principal of or interest on this Note within
five (5) days after the due date thereof;
(b) Borrower fails to observe or perform any covenant or agreement
contained in this Note or in the Security Agreement, or C.I.S. fails to
observe or perform any covenant or agreement contained in that certain
Stock Purchase and Sale Agreement dated May 11, 1995 (the "Purchase
Agreement"), between Lender, MicroBilt Corporation and C.I.S., or in the
Guaranty or the Pledge Agreement and such default continues for thirty (30)
days after written notice from Lender;
(c) Any representation or warranty of Borrower in the Security
Agreement or of C.I.S. in the Purchase Agreement, the Guaranty or the
Pledge Agreement is inaccurate in any material respect as of the date made;
(d) Borrower or C.I.S. ceases to conduct its business as a going
concern;
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(e) A final judgment (after the expiration of all times to appeal
therefrom) for the payment of money in excess of $50,000 in the aggregate
not fully covered by insurance is entered against Borrower or C.I.S. or a
warrant of execution or similar process is issued or levied against
Borrower's or C.I.S.'s property, and within thirty (30) days thereafter,
such judgment, warrant or process shall not have been paid in full;
(f) A default shall occur under any other agreement, document or
instrument to which Borrower or C.I.S. is a party or by which Borrower or
C.I.S. or its property is bound, and such default (i) involves the failure
to make any payment (whether of principal, interest or otherwise) due
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise) in respect of any indebtedness of Borrower or C.I.S. in an
aggregate amount exceeding $100,000, except for payments lawfully withheld
by Borrower or C.I.S., as the case may be, as a setoff in connection with a
good faith dispute between Borrower or C.I.S., as the case may be, and the
holder of such indebtedness, or (ii) causes (or permits any holder of such
indebtedness or a trustee to cause) such indebtedness, or a portion thereof
in an aggregate amount exceeding $100,000, to become due prior to its
stated maturity or prior to its regularly scheduled dates of payment;
(g) Borrower or C.I.S. commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial
part of its property, or consents to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it, or makes a general assignment for
the benefit of creditors, or fails generally to pay its debts as they
become due, or takes any corporate action to authorize any of the
foregoing;
(h) Any involuntary case or other proceeding is commenced against
Borrower or C.I.S. seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding remains undismissed and unstayed for a period of sixty (60)
days; or an order for relief is entered against Borrower or C.I.S. under
the federal bankruptcy laws as now or hereafter in effect.
Upon the occurrence of an Event of Default, Lender may declare the entire
outstanding principal and interest evidenced by this Note immediately due and
payable and may pursue any and all actions to collect and enforce the collection
of such amounts; provided that upon the occurrence of an Event of Default
described in clause (g) or (h) above, the entire outstanding principal and
interest evidenced by this Note automatically shall become immediately due and
payable without any notice or other action whatsoever by Lender. The rights and
remedies of
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Lender are cumulative and not exclusive of any other right or remedy which such
holder may have by contract or at law or in equity.
No delay or failure on the part of Lender in the exercise of any right,
power or privilege granted under this Note or otherwise available by agreement,
at law or in equity, shall impair any right, power or privilege or be construed
as a waiver of any default or any acquiescence therein.
Borrower hereby waives demand, presentment, protest, notice of demand,
dishonor, presentment, protest, nonpayment and all other notices in connection
with this Note.
If this Note is collected by or through an attorney-at-law, all costs of
collection, including reasonable attorneys' fees, shall be payable by the
Borrower.
This Note shall be governed by and construed in accordance with the
internal laws (as opposed to conflicts of law provisions) of the State of New
York.
Whenever possible each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note.
Whenever in this Note reference is made to Lender or Borrower, such
reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Note shall be binding
upon and shall inure to the benefit of such successors and assigns. Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for Borrower.
WITNESS the hand and seal of the undersigned, as of the date first above
written.
HOSPITAL COST CONSULTANTS, INC.
By: /s/ Phillip D. Kurtz
---------------------------
Title: Vice President
------------------------
Attest: /s/ Kellie J. Watts
------------------------
Title: Secretary
------------------------
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EXHIBIT 10.m
CORPORATE GUARANTY
THIS CORPORATE GUARANTY ("Guaranty") is made and entered into as of the
thirty-first day of May, 1995, by C.I.S. Technologies, Inc., a Delaware
corporation ("Guarantor"), in favor of FIRST FINANCIAL MANAGEMENT CORPORATION, a
Georgia corporation ("Lender").
WHEREAS, Hospital Cost Consultants, Inc., a California corporation
("Borrower"), is indebted to Lender pursuant to the terms of that certain
Promissory Note of even date herewith in the principal amount of $5,000,000 (as
the same may be amended, supplemented, restated, extended or renewed from time
to time, the "Note"), made and executed by Borrower and payable to the order of
Lender;
WHEREAS, Guarantor is the sole shareholder of Borrower; and
WHEREAS, the financial accommodations to be extended to Borrower under the
Note will inure to the benefit of Guarantor; and
WHEREAS, Lender has required, as a condition to the continuation of
financial accommodations to be extended to Borrower under the Note that
Guarantor execute and deliver this Guaranty to Lender; and
NOW, THEREFORE, in consideration of the premises, the sum of Ten Dollars
($10.00), and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor hereby represents,
warrants and agrees as follows:
1. Guarantor unconditionally guarantees the due and punctual payment in
full of all principal of and interest on the Note (the "Guaranteed
Obligations"). This Guaranty constitutes a guaranty of payment and not of
collection and Guarantor waives any right to require that any resort be had by
Lender to (i) Borrower, (ii) any security held by Lender for payment of the
Guaranteed Obligations, (iii) any other monetary obligations of Borrower to
Lender or (iv) Lender's rights against any other guarantor of the Guaranteed
Obligations.
2. Guarantor agrees that the Guaranteed Obligations may be extended or
renewed, in whole or in part, without notice or further assent from Guarantor,
whether in its capacity as Guarantor of the Guaranteed Obligations or otherwise,
or from any other guarantor, and that Guarantor will remain bound upon this
Guaranty notwithstanding other extension or renewal of the Guaranteed
Obligations.
3. Guarantor waives presentation to, demand of payment from and protest to
Borrower of any of the Guaranteed Obligations and also waives notice of protest
for nonpayment. Guarantor further waives the benefit of all principles or
provisions of applicable law which are or might be
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in conflict with the terms of this Guaranty, including, without limitation,
Section 10-7-24 of the Official Code of Georgia Annotated. The obligations of
Guarantor hereunder shall not be affected by (i) the failure of Lender to assert
any claim or demand or to enforce any right or remedy against Borrower or any
collateral for the Guaranteed Obligations, (ii) any extension or renewal of the
Guaranteed Obligations, (iii) any rescission, waiver, amendment or modification
of any of the terms or provisions of the Note or any other agreement, document
or instrument evidencing or securing the Guaranteed Obligations (collectively,
the "Loan Documents") or (iv) the release of any security held by Lender for the
Guaranteed Obligations.
4. The obligations of Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the provisions of this Guaranty, the Note, any Loan
Documents or the Guaranteed Obligations. Without limiting the generality of the
foregoing, the obligations of Guarantor hereunder shall not be discharged or
impaired or otherwise affected by the failure of Lender to assert any claim or
demand or to enforce any remedy hereunder or under the Note or any of the Loan
Documents, by any default, failure or delay, wilful or otherwise, in the
performance of the terms and conditions of the Note or any of the Loan
Documents, or by any other act or thing or omission or delay to do any other act
or thing which may or might in any manner or to any extent vary the risk of
Guarantor, or which would otherwise operate as a discharge of Guarantor, as a
matter of law.
5. Guarantor further agrees that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, on the Guaranteed Obligations is rescinded or must otherwise be
restored by Lender upon the bankruptcy or reorganization of Borrower or
otherwise.
6. In furtherance of the foregoing and not in limitation of any other right
which Lender may have at law or in equity against Guarantor by virtue hereof,
upon failure of Borrower to make any payment on the Guaranteed Obligations when
and as the same shall become due, whether at maturity, by acceleration, after
notice of prepayment or otherwise, Guarantor hereby promises to, and will, upon
receipt of written demand by Lender, forthwith pay or cause to be paid to Lender
in immediately available funds, an amount equal to and to be applied in payment
of the unpaid amount of such portion of the Guaranteed Obligations and all other
monetary obligations of Guarantor to Lender under this Guaranty.
7. Guarantor shall not exercise any rights, by reason of any payment made
hereunder or otherwise, of subrogation to the rights of Lender or of
reimbursement from Borrower until all of the Guaranteed Obligations have been
paid in full.
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8. Guarantor agrees that, with or without notice or demand, it will
reimburse Lender, to the extent that such reimbursement is required to be made
but not made by Borrower, for all expenses (including reasonable attorneys'
fees) incurred by Lender in connection with any Guaranteed Obligations of
Borrower under the Note or any of the Loan Documents, or the collection thereof.
9. Each reference herein to Lender shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to Guarantor shall be deemed to include the
legal representatives, successors and assigns of Guarantor, all of whom shall be
bound by the provisions of this Guaranty.
10. No delay on the part of Lender in exercising any right hereunder or
failure to exercise the same shall operate as a waiver of such right; no notice
to or demand on Guarantor shall be deemed to be a waiver of the obligations of
Guarantor or of the right of Lender to take further action without notice or
demand as provided herein, nor in any event shall any modification or waiver of
the provisions of this Guaranty be effective unless in writing and signed by
Guarantor and Lender, nor shall any such waiver be applicable except in the
specific instance for which given.
11. (a) Guarantor agrees to indemnify Lender from and hold them harmless
against any documentary taxes, withholding taxes, assessments or charges made by
any governmental authority by reason of the execution, delivery and performance
of this Guaranty.
(b) Additionally, Guarantor agrees to reimburse Lender for all
expenses (including reasonable attorneys' fees) incurred by Lender in connection
with the enforcement of this Guaranty.
12. Guarantor represents and warrants to Lender as follows:
(a) Guarantor is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and is
qualified to do business in all jurisdictions where failure to so qualify would
have a material adverse effect on the Company.
(b) The execution, delivery and performance of this Agreement are
within Guarantor's corporate power, have been duly authorized by all necessary
or proper corporate action, are not in contravention of any provision of law or
of any agreement or indenture by which Guarantor is bound, or of Guarantor's
articles or certificate of incorporation or bylaws, and do not require the
consent or approval of any governmental body, agency, authority or other person
or entity, which has not been obtained and a copy thereof furnished to Lender.
(c) This Agreement constitutes Guarantor's valid and legally binding
obligation, enforceable in accordance with its terms.
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13. This Guaranty is, and shall be deemed to be, a contract entered into,
under and pursuant to the laws of the State of Georgia and shall be in all
respects governed, construed, applied and enforced in accordance with the laws
of said state; and no defense given or allowed by the laws of any other state
shall be interposed in any action hereon unless such defense is also given or
allowed by the laws of the State of Georgia.
14. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF FULTON, STATE OF GEORGIA AND IRREVOCABLY
AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS GUARANTY SHALL BE LITIGATED IN SUCH COURTS.
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY. GUARANTOR
HEREBY AGREES THAT SERVICE UPON IT BY MAIL AT THE ADDRESS SET FORTH BELOW ITS
SIGNATURE SHALL CONSTITUTE SUFFICIENT SERVICE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
15. In case any one or more of the provisions contained in this Guaranty
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed
as of the date first above written.
C.I.S. TECHNOLOGIES, INC.
By: /s/ Philip D. Kurtz
------------------------
Title: CEO
----------------------
Address:
C.I.S. Technologies, Inc.
One Warren Place, Suite 1900
6100 South Yale Avenue
Tulsa, Oklahoma 74136
Attention: Philip D. Kurtz,
Chief Executive Officer
Facsimile No.: (918) 481-4205
21
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EXHIBIT 10.n
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as of May
31, 1995 by C.I.S. Technologies, Inc., a Delaware corporation ("Pledgor), in
favor of First Financial Management Corporation, a Georgia corporation
("Lender").
SECTION 1. DEFINED TERMS. The following terms, as used herein, have the
meanings set forth below:
"Additional Shares" shall have the meaning assigned to such term in Section
2 hereof.
"Event of Default" shall have the meaning assigned to such term in the
Note.
"GECC" shall mean General Electric Capital Corporation, a New York
corporation.
"GECC Pledge Agreement" shall mean that certain Pledge Agreement dated of
even date herewith, made by Pledgor in favor of GECC.
"Guaranty" shall mean that certain Corporate Guaranty of even date
herewith, made by Pledgor in favor of Lender, as amended, supplemented and
restated from time to time.
"HCCI" shall mean Hospital Cost Consultants, Inc., a California
corporation.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement
of even date herewith, between Lender and GECC, as amended, supplemented or
restated from time to time.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Note" shall mean that certain Promissory Note of even date herewith, in
the principal amount of $5,000,000, made by HCCI and payable to the order of
Lender, as amended, supplemented and restated from time to time, and together
with all replacement notes issued in substitution therefor.
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"Note Payment Date" shall have the meaning assigned to such term in Section
6(c) hereof.
"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Pledge Agreement Supplement" shall have the meaning assigned to such term
in Section 6(b) hereof.
"Pledged Collateral" shall have the meaning assigned to such term in
Section 2 hereof.
"Pledged Shares" shall mean the outstanding shares of stock set forth on
Schedule I hereto and issued by HCCI.
"Secured Obligations" shall mean and include all indebtedness, liabilities
and obligations of Pledgor under the Guaranty.
SECTION 2. PLEDGE. Pledgor hereby pledges and grants to Lender, for its
benefit, a continuing security interest in all of the following (collectively,
the "Pledged Collateral"):
(a) the Pledged Shares of Pledgor; and
(b) all additional shares of stock of HCCI hereafter acquired, received or
owned by Pledgor (the "Additional Shares"); and
(c) the certificates representing the Pledged Shares and the Additional
Shares (all of which shall be deemed to be part of the Pledged Shares), and all
products and proceeds of any of such Pledged Shares, including, without
limitation, all dividends, cash, instruments, subscriptions, warrants and any
other rights and options and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Shares.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of the Secured
Obligations.
SECTION 4. DELIVERY OF PLEDGED COLLATERAL. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by Lender pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be
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accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants
to Lender as follows:
(a) All of the Pledged Shares of Pledgor have been duly authorized and
validly issued and are fully paid and non-assessable. There are no existing
options, warrants, calls or commitments of any character whatsoever relating to
any of the Pledged Shares of Pledgor. None of the Pledged Shares is subject to
any shareholder agreement, voting trust agreement or any other agreement in
respect of the rights of shareholders.
(b) Pledgor is the sole legal and beneficial owner of the Pledged
Collateral, free and clear of any Lien or claims of any Person except for the
security interest created by this Agreement and the security interest created by
the GECC Pledge Agreement.
(c) This Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of Pledgor
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or other similar laws affecting the rights of
creditors generally or by the application of general equity principles.
(d) The pledge and delivery of the Pledged Collateral pursuant to this
Agreement creates a valid first priority perfected security interest in the
Pledged Collateral pledged by Pledgor, securing the payment of the Secured
Obligations.
(e) 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 pledge by Pledgor of the Pledged Collateral of Pledgor pursuant to
this Agreement or for the execution, delivery or performance of this Agreement
by Pledgor or (ii) for the exercise by Lender of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral of Pledgor pursuant to this Agreement (except as may be required in
connection with the disposition of the Pledged Collateral by laws affecting the
offering and sale of securities generally).
(f) Pledgor has full power, authority and legal right to pledge all the
Pledged Collateral pledged by Pledgor pursuant to this Agreement.
(g) The Pledged Shares of Pledgor constitute the percentage of the
authorized, issued and outstanding capital stock of HCCI as set forth on
Schedule I hereto.
SECTION 6. FURTHER ASSURANCES; ADDITIONAL SHARES.
(a) Pledgor agrees that at any time and from time to time, at Pledgor's
expense, Pledgor will promptly execute and deliver, or cause to be executed and
delivered, all stock
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powers, proxies, assignments, instruments and documents and take all further
action, at Lender's request, that is reasonably necessary, in order to perfect,
or maintain perfection of, any security interest granted or purported to be
granted hereby or to enable Lender to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral pledged by Pledgor and
to carry out the provisions and purposes hereof.
(b) Pledgor further agrees that it will, upon obtaining any Additional
Shares, pledge such Additional Shares to Lender and promptly (and in any event
within three (3) business days) deliver to Lender a duly executed Pledge
Agreement Supplement in substantially the form of Schedule II hereto (a "Pledge
Agreement Supplement") identifying the Additional Shares which are pledged by
Pledgor pursuant to this Agreement. Pledgor hereby authorizes Lender to attach
each executed Pledge Agreement Supplement to this Agreement and agrees that all
Additional Shares listed on any Pledge Agreement Supplement delivered to Lender
shall for all purposes hereunder constitute Pledged Shares and Pledged
Collateral.
(c) Pledgor agrees to defend the title to the Pledged Collateral pledged by
Pledgor and the security interest therein of Lender under this Agreement against
the Lien or claim of any Person and to maintain and preserve such security
interest until the date of the payment in full of the Note (the "Note Payment
Date").
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) Subject to Section 7(d) hereof, Pledgor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Pledged Shares
or any part thereof for any purpose not inconsistent with the terms of this
Agreement; provided, however, that Pledgor shall not exercise or shall refrain
from exercising any such right if such action would have a material adverse
effect on the value of the Pledged Collateral or any part thereof or be
inconsistent with or violate any provisions of this Agreement. Lender shall
execute and deliver (or cause to be executed and delivered) to Pledgor all such
proxies and other instruments as Pledgor may reasonably request for the purpose
of enabling Pledgor to exercise the voting and other rights which it is entitled
to exercise pursuant to this Section 7(a).
(b) Subject to Section 7(d) hereof, Pledgor shall be entitled to receive
all cash dividends paid from time to time in respect of the Pledged Shares in
the normal course of business of HCCI and consistent with past practice.
(c) Any and all (i) dividends or other distributions paid or payable in the
form of instruments and other property (other than cash dividends permitted
under Section 7(b) hereof) received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral, (ii) dividends and other
distributions paid or payable in cash in respect of any Pledged Shares in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-surplus, and (iii) cash
paid, payable or otherwise distributed in redemption of, or in exchange for, any
Pledged Shares, shall be in each case forthwith delivered to Lender to hold as
Pledged Collateral and shall, if received by Pledgor, be
25
<PAGE>
received in trust for the benefit of Lender, be segregated from the other
property or funds of Pledgor, and be forthwith delivered to Lender as Pledged
Collateral in the same form as so received (with any necessary endorsements).
(d) Upon the occurrence and during the continuance of an Event of Default,
(i) all rights of Pledgor to exercise the voting and other consensual rights
which it would otherwise be entitled to exercise pursuant to Section 7(a) hereof
shall cease, and all such rights shall thereupon become vested in Lender which
shall thereupon have the sole right to exercise such voting and other consensual
rights and (ii) all cash dividends or other distributions payable in respect of
the Pledged Shares shall be paid to Lender and Pledgor's right to receive such
payments and distributions pursuant to Section 7(b) hereof shall immediately
cease.
(e) All dividends or other distributions which are received by Pledgor
contrary to the provisions of this Section 7 shall be received in trust for the
benefit of Lender, shall be segregated from other funds of Pledgor and shall be
forthwith paid over to Lender as Pledged Collateral in the same form as so
received (with any necessary endorsements).
SECTION 8. COVENANTS. Pledgor covenants and agrees with Lender from and
after the date of this Agreement until the Note Payment Date that Pledgor will
not (a) sell, transfer or otherwise dispose of, or grant any option with respect
to, any of the Pledged Collateral pledged by Pledgor without the prior written
consent of Lender, (b) create or permit to exist any Lien upon or with respect
to any of the Pledged Collateral pledged by Pledgor, except for the security
interest granted under this Agreement and the security interest granted under
the GECC Pledge Agreement and (c) enter into any agreement or understanding that
purports to or may restrict or inhibit Lender's rights or remedies hereunder,
including, without limitation, Lender's right to sell or otherwise dispose of
the Pledged Collateral pledged by Pledgor.
SECTION 9. LENDER APPOINTED ATTORNEY-IN-FACT. Pledgor hereby irrevocably
appoints Lender Pledgor's true and lawful attorney-in-fact, coupled with an
interest, with full authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, from time to time in Lender's discretion, for the
purpose of carrying out the terms of this Agreement, to take any action and to
execute any instrument which Lender may deem necessary or advisable to further
perfect and protect the security interest granted hereby, including, without
limitation, to receive, endorse and collect all instruments made payable to
Pledgor representing any dividend, interest or principal payment or other
distribution in respect of the Pledged Collateral pledged by Pledgor or any part
thereof and to give full discharge for the same.
SECTION 10. LENDER MAY PERFORM. If Pledgor fails to perform any agreement
contained herein, Lender may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Lender incurred in connection
therewith shall be payable by Pledgor.
SECTION 11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and powers
granted to Lender hereunder are being granted in order to preserve and protect
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Lender's security interest in and to the Pledged Collateral granted hereby and
shall not be interpreted to, and shall not, impose any duties on Lender in
connection therewith. Lender shall be deemed to have exercised reasonable care
in the custody and preservation of the Pledged Collateral in its possession if
the Pledged Collateral is accorded treatment substantially equal to that which
Lender accords its own property, it being understood that Lender shall not have
any responsibility for (a) ascertaining or taking action with respect to calls,
conversions, exchanges, tenders or other matters relative to any Pledged
Collateral, whether or not Lender has or is deemed to have knowledge of such
matters, or (b) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.
SECTION 12. SUBSEQUENT CHANGES AFFECTING COLLATERAL. Pledgor represents to
Lender that Pledgor has made its own arrangements for keeping informed of
changes or potential changes affecting the Pledged Collateral pledged by Pledgor
(including, but not limited to, rights to convert, rights to subscribe, payment
of dividends, reorganization or other exchanges, tender offers and voting
rights), and Pledgor agrees that Lender shall have no responsibility or
liability for informing Pledgor of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereto. Pledgor
covenants that it will not, without the prior written consent of Lender, vote to
enable, or take any other action to permit, HCCI to issue any capital stock or
to sell or otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral pledged by Pledgor or create or permit to exist any Lien upon
or with respect to any of the Pledged Collateral pledged by Pledgor, except for
the security interests granted under this Agreement and under the GECC Pledge
Agreement.
SECTION 13. DEFAULTS AND REMEDIES.
(a) Upon the occurrence of an Event of Default and during the continuation
of such Event of Default, then or at any time after such declaration (provided
that such declaration is not rescinded by Lender) and following written notice
to Pledgor, Lender (personally or through an agent) is hereby authorized and
empowered to transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral, to exchange certificates or
instruments representing or evidencing the Pledged Collateral for certificates
or instruments of smaller or larger denominations, to exercise the voting rights
with respect thereto, to collect and receive all cash dividends and other
distributions made thereon, to sell in one or more sales after five (5) days'
notice of the time and place of any public sale or of the time after which a
private sale is to take place (which notice Pledgor agrees is commercially
reasonable), but without any previous notice or advertisement, the whole or any
part of the Pledged Collateral and to otherwise act with respect to the Pledged
Collateral as though Lender were the outright owner thereof; provided, however,
Lender shall not have any duty to exercise any such right or to preserve the
same and shall not be liable for any failure to do so or for any delay in doing
so. Any sale shall be made at a public or private sale at Lender's place of
business or elsewhere to be named in the notice of sale, either for cash or upon
credit or for future delivery at such price as Lender may deem fair, and Lender
may be the purchaser of the whole or any part of the Pledged Collateral so sold
and hold the same thereafter in its own right free from any claim of Pledgor or
any right of redemption. Each sale shall be made to the highest bidder, but
Lender reserves the right to
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reject any and all bids at such sale which, in its discretion, it shall deem
inadequate. Demands of performance, except as otherwise herein specifically
provided for, notices of sale, advertisements and the presence of property at
sale are hereby waived and any sale hereunder may be conducted by an auctioneer
or any officer, employee or agent of Lender.
(b) If, at the original time or times appointed for the sale of the whole
or any part of the Pledged Collateral, the highest bid, if there be but one
sale, shall be inadequate to discharge in full all the Secured Obligations, or
the Pledged Collateral be offered for sale in lots, if at any of such sales, the
highest bid for the lot offered for sale would indicate to Lender, in its
discretion, the unlikelihood of the proceeds of the sales of the whole of the
Pledged Collateral being sufficient to discharge all the Secured Obligations,
Lender may, on one or more occasions and in its discretion, postpone any of said
sales by public announcement at the time of sale or the time of previous
postponement of sale, and no other notice of such postponement or postponements
of sale need be given, any other notice being hereby waived; provided, however,
that any sale or sales made after such postponement be after five (5) days'
notice to Pledgor.
(c) Pledgor further agrees that a breach of any of the covenants contained
in this Section 13 will cause irreparable injury to Lender, that Lender has no
adequate remedy at law in respect of such breach and, as a consequence, agrees
that each and every covenant contained in this Section 13 shall be specifically
enforceable against Pledgor, and Pledgor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that the Secured Obligations are not then due and payable in
accordance with the agreements and instruments governing and evidencing such
obligations. Pledgor further acknowledges the impossibility of ascertaining the
amount of damages which would be suffered by Lender by reason of a breach of any
of such covenants and, consequently, agrees that, if Lender shall sue for
damages for breach, it shall pay, as liquidated damages and not as a penalty, an
amount equal to the lesser of (i) the value of the Pledged Collateral pledged by
Pledgor on the date Lender shall demand compliance with this Section 13, and
(ii) the amount required to pay in full the Secured Obligations.
(d) In addition to remedies set forth in Section 13 above, Lender may, in
its discretion (subject only to applicable requirements of law), sell such
Pledged Collateral or a part thereof by private sale in such manner and under
such circumstances as Lender may deem necessary or advisable. Without limiting
the generality of the foregoing, in any such event, Lender may, in its
discretion, (x) in accordance with applicable securities laws, proceed to make
such private sales, (y) approach and negotiate with a single possible purchaser
to effect such sale, and (z) restrict such sale to a purchaser who will
represent and agree that such purchaser is purchasing for its own account, for
investment and not with a view to the distribution or sale of such Pledged
Collateral or part thereof. In addition to a private sale as provided above in
this Section 13, if any of the Pledged Collateral shall not be freely
distributable to the public without registration under the Securities Act of
1933, as amended (or similar statute) at the time of any proposed sale pursuant
to this Section 13, then Lender shall not be required to effect such
registration or cause the same to be effected but, in its discretion (subject
only to applicable requirements of law), may require that any sale hereunder
(including a sale at auction) be
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conducted subject to restrictions (i) as to the financial sophistication and
ability of any Person permitted to bid or purchase at any such sale, (ii) as to
the content of legends to be placed upon any certificates representing the
Pledged Collateral sold in such sale, including restrictions on future transfer
thereof, (iii) as to the representations required to be made by each Person,
bidding or purchasing at such sale relating to that Person's access to financial
information about Pledgor and such Person's intentions as to the holding of the
Pledged Collateral so sold for investment, for its own account, and not with a
view to the distribution thereof, and (iv) as to such other matters as Lender
may, in its discretion, deem necessary or appropriate in order that such sale
(notwithstanding any failure to so register) may be effected in compliance with
the Bankruptcy Code and other laws affecting the enforcement of creditors'
rights and the Securities Act of 1933, as amended, and all applicable state
securities laws.
SECTION 14. APPLICATION OF PROCEEDS. Any cash held by or on behalf of
Lender as Pledged Collateral and all cash proceeds received by or on behalf of
Lender in respect of any sale of, collection from, or other realization upon all
or any part of the Pledged Collateral shall be applied by Lender:
First, the payment in full of reasonable expenses of Lender in
connection with such sale, disposition or other realization, including all
expenses, liabilities and advances incurred or made by Lender in connection
therewith, including reasonable attorney's fees;
Second, to the payment of accrued but unpaid interest on the Secured
Obligations;
Third, to the payment of unpaid principal of the Secured Obligations;
Fourth, to the payment of all other Secured Obligations until all
other Obligations shall have been paid in full; and
Finally, subject to Lender's obligations under the Intercreditor
Agreement, to payment to Pledgor, or its successors or assigns, or as a
court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 15. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO HCCI. Pledgor
hereby authorizes and instructs HCCI to comply with any instruction received by
HCCI from Lender in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from Pledgor, and Pledgor agrees that
HCCI shall be fully protected in so complying.
SECTION 16. MISCELLANEOUS PROVISIONS.
SECTION 16.1 No Waiver; Cumulative Remedies. Except by a written instrument
pursuant to Section 16.5 hereof, Lender shall not, by any act, delay,
indulgence,
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omission or otherwise, be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Lender would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any rights or remedies provided by law.
SECTION 16.2 Notices. All notices, approvals, consents and other
communications to any party hereunder shall be in writing and sent by certified
or registered mail, return receipt requested, or by overnight delivery service,
with all charges prepaid, if to Pledgor addressed to it at C.I.S. Technologies,
Inc., One Warren Place, 6100 South Yale, Suite 1900, Tulsa, Oklahoma 74136-1903,
Attention: Richard A. Evans, Telecopy No. (918) 481-4281, or Lender, at First
Financial Management Corporation, 3 Corporate Square, Suite 700, Atlanta,
Georgia 30329, Attention: Legal Department, Telecopy No.: (404) 636-7632, or by
facsimile transmission, promptly confirmed in writing sent by first class mail,
to the telecopy number set forth above, or such other address or telecopy number
as such party may hereafter specify by notice to Lender and Pledgor. All such
notices, approvals, consents or other communications shall be deemed given (i)
if sent by certified or registered mail, (5) business days after being
postmarked, (ii) if sent by overnight delivery service, when received at the
address set forth above or when delivery is refused and (iii) if sent by
facsimile transmission, when receipt of such transmission is acknowledged.
SECTION 16.3 Headings. The headings in this Agreement are for purposes of
reference only and shall not affect the meaning or construction of any provision
of this Agreement.
SECTION 16.4 Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction, then such invalidity or unenforceability shall
affect in that jurisdiction only such clause or provision, or part thereof, and
shall not in any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Agreement in any
jurisdiction.
SECTION 16.5 Amendments, Waivers and Consents. Any amendment or waiver of
any provision of this Agreement and any consent to any departure by Pledgor from
any provision of this Agreement shall be effective only if made pursuant to a
written instrument executed by Pledgor and Lender (or if a waiver or a consent,
a written letter or agreement executed by Lender).
SECTION 16.6 Interpretation of Agreement. Time is of the essence in each
provision of this Agreement of which time is an element. All terms not defined
herein shall have the meaning set forth in the applicable Uniform Commercial
Code, except where the context
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otherwise requires. Acceptance of or acquiescence in a course of performance
rendered under this Agreement shall not be relevant to determine the meaning of
this Agreement even though the accepting or acquiescing party had knowledge of
the nature of the performance and opportunity for objection.
SECTION 16.7 Continuing Security Interest. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall (i) remain in
full force and effect until the Note Payment Date, (ii) be binding upon Pledgor,
its successors and assigns, and (iii) inure, together with the rights and
remedies of Lender hereunder, to the benefit of Lender and its respective
successors, transferees and assigns.
SECTION 16.8 Survival of Provisions. All representations, warranties and
covenants of Pledgor contained herein shall survive the execution and delivery
of this Agreement, and shall terminate only on the Note Payment Date.
SECTION 16.9 Lien Absolute. All rights of Lender hereunder, and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Note, the Guaranty or any
other agreement or instrument governing or evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any part of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from the Note, the Guaranty or any
other agreement or instrument governing or evidencing any Secured Obligations;
(c) any exchange, release or non-perfection of any other collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a defense
available to, or a discharge of, Pledgor.
SECTION 16.10 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Pledgor for liquidation or reorganization, should Pledgor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Pledgor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Secured Obligations, or any part thereof, is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Secured
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Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
SECTION 16.11 Waivers. Pledgor waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor or
default of any and all of the Secured Obligations, and all other notices to
which Pledgor might otherwise be entitled, except as otherwise expressly
provided herein.
SECTION 16.12 Authority of Lender. Lender shall have and be entitled to
exercise all powers hereunder which are specifically granted to Lender by the
terms hereof, together with such powers as are reasonably incident thereto.
Lender may exercise any of its duties hereunder or in connection with the
Pledged Collateral by or through agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of counsel concerning all
such matters. Neither Lender nor any director, officer, employee, attorney or
agent of Lender shall be liable to Pledgor for any action taken or omitted to be
taken by it or them hereunder, except for its or their own gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction, nor shall Lender be responsible for the validity, effectiveness or
sufficiency hereof or of any document or security furnished pursuant hereto.
Lender and its directors, officers, employees, attorneys and agents shall be
entitled to rely on any written communication, instrument or document believed
by it or them to be genuine and correct and to have been signed or sent by the
proper person or persons.
SECTION 16.13 Release; Termination of Agreement. This Agreement shall
terminate on the Note Payment Date. At such time, Lender shall, at the request
of Pledgor, but subject to Lender's obligations under the Intercreditor
Agreement, reassign and redeliver to Pledgor all of the Pledged Collateral
pledged by Pledgor hereunder which has not been sold, disposed of, retained or
applied by Lender in accordance with the terms hereof, and execute and deliver
to Pledgor such documents as may reasonably be requested by Pledgor to evidence
the same. Such reassignment and redelivery shall be without warranty by or
recourse to Lender, except as to the absence of any prior assignments by Lender
of its interest in the Pledged Collateral pledged by Pledgor, and shall be at
the expense of Pledgor.
SECTION 16.14 Final Expression. This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of this Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
SECTION 16.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same agreement.
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SECTION 16.16 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN PLEDGOR AND LENDER PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT,
PROVIDED, THAT LENDER AND PLEDGOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS
MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK CITY AND, PROVIDED,
FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
THE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION TO REALIZE ON THE PLEDGED COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGEMENT OR OTHER COURT ORDER IN FAVOR OF LENDER.
PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND PLEDGOR HEREBY WAIVES ANY
OBJECTION WHICH PLEDGOR MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. PLEDGOR
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINTS AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO PLEDGOR AT ITS ADDRESS SET FORTH IN THE SIGNATURE PAGE HEREOF AND
THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF PLEDGOR'S
ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID.
SECTION 16.17 Acknowledgments. Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) Lender has no fiduciary relationship to Pledgor, and the relationship
between Lender and Pledgor, on the other hand, is solely that of secured party
and debtor, respectively; and
(c) no joint venture exists between Lender and Pledgor.
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SECTION 16.18 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTIONS RELATED
HERETO.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
PLEDGOR:
C.I.S. TECHNOLOGIES, INC.
By: /s/ Phillip D. Kurtz
---------------------------
Name: Phillip D. Kurtz
Title: CEO
Accepted and Acknowledged by:
FIRST FINANCIAL MANAGEMENT
CORPORATION, as Lender
By: /s/ Stephen D. Kane
----------------------
Name:
Title: Vice Chairman
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EXHIBIT 10.o
ACCOUNTS SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 31, 1995, made by Hospital Cost
Consultants, Inc., a California corporation, having its chief executive offices
at 5000 Hopyard Road, #300, Pleasanton, California, 94588 ("Grantor"), in favor
of First Financial Management Corporation, a Georgia corporation having an
office at 3 Corporate Square, Suite 700, Atlanta, Georgia 30329 ("Lender").
1. DEFINED TERMS. The following terms, as used herein, have the meanings
set forth below:
"Account Debtor" shall mean any Person who may become obligated to Grantor
under, with respect to, or on account of, an Account or Chattel Paper.
"Accounts" shall mean, with respect to any Person, all "accounts," as such
term is defined in the Code, now owned or hereafter acquired by such Person and,
in any event, including: (a) all accounts receivable, other receivables, book
debts and other forms of obligations (other than forms of obligations evidenced
by Chattel Paper, Documents or Instruments) now owned or hereafter received or
acquired by or belonging or owing to such Person, whether arising out of goods
sold or services rendered by it or from any other transaction (including any
such obligations which may be characterized as an account or contract right
under the Code); (b) all of such Person's rights in, to and under all purchase
orders or receipts now owned or hereafter acquired by it for goods or services;
(c) all of such Person's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods); (d)
all monies due or to become due to such Person under all purchase orders and
contracts for the sale or lease of goods or the performance of services or both
by such Person or in connection with any other transaction (whether or not yet
earned by performance on the part of such Person) now or hereafter in existence,
including, without limitation, the right to receive the proceeds of said
purchase orders and contracts; and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.
"Chattel Paper" shall mean all "chattel paper," as such term is defined in
the Code, now owned or hereafter acquired and wherever located.
"Code" shall mean the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, that in the event that by
reason of mandatory provisions of law, any or all of the attachment, perfection
or priority of, or the remedies with respect to, Lender's security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
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the provisions hereof relating to such attachment, perfection, priority or
remedies and for purposes of definitions related to such provisions.
"Default Rate" shall mean, as of any date of determination thereof, the
interest rate then in effect under the Note, plus two percent (2%) per annum.
"Documents" shall mean, with respect to any Person, all "documents," as
such term is defined in the Code, now owned or hereafter acquired by such
Person, wherever located, and in any event any bills of lading, dock warrants,
dock receipts, warehouse receipts, or other documents of title.
"Event of Default" shall have the meaning assigned to such term in the
Note.
"GECC" shall mean General Electric Capital Corporation, a New York
corporation.
"GECC Security Agreement" shall mean that certain Accounts Security
Agreement dated of even date herewith, made by Debtor in favor of GECC.
"Instruments" shall mean, for any Person, all "instruments," as such term
is defined in the Code, now owned or hereafter acquired by such Person, wherever
located and in any event all certificated securities, certificates of deposit
and all notes and other evidences of indebtedness, other than instruments that
constitute, or are a part of a group of writings that constitute, Chattel Paper.
"Intercreditor Agreement" shall mean that certain Intercreditor Agreement
of even date herewith, between Lender and GECC, as amended, supplemented or
restated from time to time.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Note" shall mean that certain Promissory Note of even date herewith, in
the principal amount of $5,000,000, made by Debtor and payable to the order of
Lender, as amended, supplemented and restated from time to time, and together
with all replacement notes issued in substitution therefor.
"Obligations" shall mean all indebtedness, liabilities and obligations of
Debtor now or hereafter owing to Lender under the Note or this Agreement, and
all renewals, extensions, restructurings and refinancings thereof.
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"Person" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Proceeds" shall mean all "proceeds," as such term is defined in the Code.
2. GRANT OF SECURITY INTEREST. To secure the prompt and complete payment,
performance and observance of all of the Obligations, Grantor hereby grants to
Lender a security interest in all of Grantor's right, title and interest in, to
and under the following, whether now owned by or owing to, or hereafter acquired
by or arising in favor of Grantor (including, without limitation, under any
trade names, styles or divisions thereof), and whether owned, leased or
consigned by or to Grantor, and regardless of where located (all of which being
hereinafter collectively referred to as the "Collateral"):
(i) all Accounts;
(ii) all lockbox, deposit and other bank accounts of Grantor and all
deposits therein and investments made with the funds therein;
(iii) all money, cash or cash equivalents of Grantor; and
(iv) to the extent not otherwise included, all Proceeds of any of the
foregoing and all accessions to, substitutions and replacements for, and rents,
profits and products of, each of the foregoing.
3. RIGHTS OF LENDER. Subject to the limitations of the Intercreditor
Agreement:
(a) Lender may at any time after the occurrence of an Event of Default and
without prior notice to Grantor, notify Account Debtors, that the Accounts have
been assigned to Lender and that payments shall be made directly to Lender.
Upon the request of Lender, Grantor shall so notify such Account Debtors.
(b) Lender may at any time in Lender's own name or in the name of Grantor
communicate with Account Debtors to verify with such Person, to Lender's
satisfaction, the existence, amount and terms of any Accounts.
4. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and warrants
that:
(a) Grantor (i) is a corporation duly organized, validly existing and in
good standing under the laws of the State of California; (ii) is duly qualified
as a foreign corporation and in good standing under the laws of each
jurisdiction where qualification or licensing is
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required by the nature of its business except where the absence of such
qualification or licensing has no reasonable likelihood of having a materially
adverse effect (A) on the business, properties, assets or financial condition of
Grantor or (B) on the Collateral; (iii) has all requisite corporate power and
authority to operate its properties, and to conduct its business as now or
currently proposed to be conducted; (iv) is in compliance with its certificate
of incorporation and by-laws; and (v) is in compliance with all applicable laws
except if such non-compliance has no reasonable likelihood of having a material
adverse effect on the business, operations, properties, assets or financial
condition of Grantor or the ability of Grantor to perform its obligations under
this Agreement or on the Collateral.
(b) Grantor is the sole owner of each item of the Collateral in which it
purports to grant a security interest hereunder, having good and marketable
title thereto free and clear of any and all Liens except (i) the security
interest granted to Lender under this Security Agreement and (iii) the first
priority security interest granted to GECC under the GECC Security Agreement.
Grantor will warrant and defend such Collateral against all claims and demands
of all persons at any time claiming the same or any interest thereon.
(c) No effective security agreement, financing statement, equivalent
security or Lien instrument or continuation statement covering all or any part
of the Collateral is on file or of record in any public office, except (i) such
as have been filed in favor of Lender pursuant to this Security Agreement or
(ii) such as have been filed in favor of GECC pursuant to the GECC Security
Agreement.
(d) As a result of the filing of appropriate financing statements in the
jurisdictions listed on Schedule I hereto, this Security Agreement is effective
to create a valid and continuing Lien on and perfected security interest in
favor of Lender in the Collateral with respect to which a security interest may
be perfected by filing pursuant to the Code, which lien and security interest is
prior to all other Liens, except the first priority security interest granted to
GECC under the GECC Security Agreement, and is enforceable as such as against
creditors of and purchasers from Grantor. All action (including, without
limitation, all filings, registrations and recordings) necessary or desirable to
create, protect and perfect the security interest granted to Lender hereby in
respect of each item of the Collateral has been duly accomplished.
(e) Grantor's chief executive office, principal place of business,
corporate offices, and the locations of all of its records concerning the
Collateral are set forth on Schedule I. Grantor shall not change its chief
executive office, principal place of business, corporate offices, or the
location of its records concerning the Collateral without giving thirty (30)
days prior written notice thereof to Lender and taking all actions deemed by
Lender necessary or appropriate to protect and perfect Lender's interest in the
Collateral.
(f) Unless otherwise disclosed in writing to Lender by Grantor, each
Account represents a bona fide sale of services or Inventory to customers in the
ordinary course of Grantor's business completed in accordance with the terms and
provisions contained in the
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documents available to Lender with respect thereto, and no Account is evidenced
by a Document, Instrument or Chattel Paper.
5. COVENANTS. Grantor covenants and agrees with Lender that from and after
the date of this Security Agreement and until payment in full of the
Obligations:
(a) Further Assurances; Pledge of Instruments. At any time and from time to
time, upon the written request of Lender and at the sole expense of Grantor,
Grantor shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as Lender may reasonably
deem desirable to obtain the full benefits of this Security Agreement and of the
rights and powers herein granted, including filing any financing or continuation
statements under the Code with respect to the liens and security interests
granted hereunder. Grantor also hereby authorizes Lender to file any such
financing or continuation statement without the signature of Grantor to the
extent permitted by applicable law. If any amount payable under or in connection
with any of the Collateral is or shall become evidenced by any Instrument having
an outstanding principal balance of greater than $50,000, then, subject to the
prior rights of GECC with respect thereto, such Instrument, other than checks
and notes received in the ordinary course of business, shall be duly endorsed in
a manner satisfactory to Lender immediately upon Grantor's receipt thereof and
promptly delivered to Lender. Grantor will warrant and defend the Collateral
against all claims and demands of all persons at any time claiming the same or
any interest thereon.
(b) Maintenance of Records. Grantor shall keep and maintain, at its own
cost and expense, satisfactory and complete records of the Collateral, including
a record of any and all payments received and any and all credits granted with
respect to the Collateral and all other dealings with the Collateral. Grantor
shall mark its books and records pertaining to the Collateral to evidence this
Security Agreement and the security interests granted hereby. Upon the
occurrence and during the continuation of any Event of Default, subject to the
prior rights of GECC with respect thereto, Grantor shall deliver and turn over
all of Grantor's books and records pertaining to the Collateral to Lender or to
Lender's representatives at any time on demand of Lender. Prior to the
occurrence of an Event of Default, upon reasonable notice from Lender, Grantor
shall permit any representative of Lender to inspect such books and records and
shall provide photocopies thereof to Lender.
(c) Continuous Perfection. Grantor shall not change its name, identity or
corporate structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the meaning
of Section 9-402(7) of the Code or any other then applicable provision of the
Code unless Grantor shall have given Lender at least thirty (30) days' prior
written notice thereof and shall have taken all action (or made arrangements
satisfactory to Lender to take such action substantially simultaneously with
such change if it is impossible to take such action in advance) necessary or
reasonably requested by Lender to amend such financing statement or continuation
statement so that it is not seriously misleading.
6. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
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(a) Grantor hereby irrevocably constitutes and appoints Lender and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Grantor and in the name of Grantor or in its own name, from time to
time in Lender's reasonable discretion, for the purpose of carrying out the
terms of this Security Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
or desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby grants to Lender the power and
right, on behalf of Grantor, without notice to or assent by Grantor, and at any
time, to do the following:
(i) in the name of Grantor, in its own name or otherwise, take
possession of, endorse and receive payment of any checks, drafts, notes,
acceptances, or other Instruments for the payment of monies due under any
Collateral; and
(ii) receive payment of any and all monies, claims, and other amounts
due or to become due at any time arising out of or in respect of any
Collateral.
(b) Grantor hereby irrevocably constitutes and appoints Lender and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Grantor and in the name of Grantor or in its own name, from time to
time in Lender's discretion, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby grants to Lender the power and
right, on behalf of Grantor, without notice to or assent by Grantor, upon the
occurrence and during the continuation of an Event of Default, to do the
following:
(i) ask, demand, collect, receive and give acquittances and receipts
for any and all money due or to become due under any Collateral;
(ii) pay or discharge any taxes, Liens, security interests, or other
encumbrances levied or placed on or threatened against the Collateral;
(iii) direct any party liable for any payment under or in respect of
any of the Collateral to make payment of any and all monies due or to
become due thereunder, directly to Lender or as Lender shall direct;
(iv) sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against Account Debtors,
assignments, verifications, and notices in connection with accounts and
other documents constituting or related to the Collateral;
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(v) settle, compromise or adjust any suit, action, or proceeding
described above and, in connection therewith, give such discharges or
releases as Lender may deem appropriate;
(vi) file any claim or take or commence any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by Lender for
the purpose of collecting any and all such monies due under any Collateral
whenever payable;
(vii) commence and prosecute any suits, actions or proceedings at law
or in equity in any court to collect the Collateral or any part thereof and
to enforce any other right in respect of any Collateral;
(viii) defend any suit, action or proceeding brought against Grantor
with respect to any Collateral if Grantor does not defend such suit, action
or proceeding or if Lender believes that Grantor is not pursuing such
defense in a manner that will maximize the recovery with respect to such
Collateral; and
(ix) sell, transfer, pledge, make any agreement with respect to, or
otherwise deal with any of the Collateral as fully and completely as though
Lender were the absolute owner thereof for all purposes, and to do, at
Lender's option and Grantor's expense, at any time, or from time to time,
all acts and other things which Lender reasonably deems necessary to
perfect, preserve, or realize upon the Collateral and Lender's Lien therein
in order to effect the intent of this Security Agreement, all as fully and
effectively as Grantor might do.
(c) Grantor hereby ratifies, to the extent permitted by law, all that said
attorneys shall lawfully do or cause to be done by virtue hereof. The power of
attorney granted pursuant to this Section 6 is a power coupled with an interest
and shall be irrevocable until the payment in full of the Obligations.
(d) The powers conferred on Lender hereunder are solely to protect Lender's
security interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and none of its
officers, directors, employees, agents or representatives shall be responsible
to Grantor for any act or failure to act, except for their own gross negligence
or willful misconduct as determined by a final judgment of a court of competent
jurisdiction.
(e) Grantor also authorizes Lender, at any time and from time to time,
following the occurrence and during the continuance of an Event of Default, to
execute, in connection with the sale provided for in Section 8 hereof, any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
(f) All of the rights of Lender under this Section 6 are subject to the
limitations thereon set forth in the Intercreditor Agreement.
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7. PERFORMANCE BY LENDER OF GRANTOR'S OBLIGATIONS. If Grantor fails to
perform or comply with any of its agreements contained herein, and Lender, as
provided for by the terms of this Security Agreement, shall itself perform or
comply, or otherwise cause performance of or compliance with such agreement, the
reasonable expenses, including attorneys' fees, of Lender incurred in connection
with such performance or compliance, together with interest thereon at the
Default Rate shall be payable by Grantor to Lender on demand and shall
constitute part of the Obligations secured hereby.
8. REMEDIES; RIGHTS UPON AN EVENT OF DEFAULT. (a) If any Event of Default
shall occur and be continuing, Lender may exercise in addition to all other
rights and remedies granted to it under this Security Agreement and under any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, Grantor expressly agrees that in any
such event Lender without demand of performance or other demand, advertisement
or notice of any kind (except the notice specified below of time and place of
public or private sale) to or upon Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the Code and other applicable law), may forthwith
enter upon the premises of Grantor where any Collateral is located through self-
help, without judicial process, without first obtaining a final judgment or
giving Grantor notice and opportunity for a hearing on Lender's claim or action,
and without paying rent to Grantor, and collect, receive, assemble, process,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, give an option or options to purchase, or sell or
otherwise dispose of and deliver said Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales, to purchase for its benefit the whole or any part of
said Collateral so sold, free of any right or equity of redemption, which equity
of redemption Grantor hereby releases. Such sales may be adjourned or continued
from time to time with or without notice. Lender shall have the right to
conduct such sales on Grantor's premises or elsewhere and shall have the right
to use Grantor's premises without charge for such sales for such time or times
as Lender deems necessary or advisable except as otherwise provided in the
applicable landlord's waiver.
Grantor further agrees, at Lender's request, to assemble the Collateral and
make it available to Lender at places which Lender shall reasonably select,
whether at Grantor's premises or elsewhere. Until Lender is able to effect a
sale, lease, or other disposition of the Collateral, Lender shall have the right
to hold or use the Collateral on behalf of Lender, or any part thereof, to the
extent that it deems appropriate for the purpose of preserving the Collateral or
its value or for any other purpose deemed appropriate by Lender. Lender shall
have no obligation to Grantor to maintain or preserve the rights of Grantor as
against third parties with respect to the Collateral while the Collateral is in
the possession of Lender. Lender may, if it so elects, seek the appointment of
a receiver or keeper to take possession of the Collateral and to enforce any of
Lender's remedies with respect to such appointment without prior notice or
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hearing. Lender shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, as provided in Section 8(d) hereof,
and only after so paying over such net proceeds and after the payment by Lender
of any other amount required by any provision of law, including section
9504(1)(c) of the Code (but only after Lender has received what Lender considers
reasonable proof of a subordinate party's security interest), need Lender
account for the surplus, if any, to Grantor. To the maximum extent permitted by
applicable law, Grantor waives all claims, damages, and demands against Lender
arising out of the repossession, retention or sale of the Collateral except such
as arise out of the gross negligence or willful misconduct of such party.
Grantor agrees that ten (10) days' prior notice by Lender of the time and place
of any public sale or of the time after which a private sale may take place is
reasonable notification of such matters. Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which Lender is entitled, Grantor also being
liable for any and all costs and expenses incurred by Lender, including
reasonable attorneys' fees, to collect such deficiency.
(b) Grantor agrees to pay any and all costs of Lender, including, without
limitation, reasonable attorneys' fees, incurred in connection with the
enforcement of any of its rights and remedies hereunder.
(c) Except as otherwise specifically provided herein, to the maximum extent
permitted by applicable law, Grantor hereby waives presentment, demand, protest
or any notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon all or
any part of the Collateral shall be distributed by Lender upon receipt, in the
following order of priorities:
First, the payment in full of reasonable expenses of Lender in
connection with such sale, disposition or other realization, including all
expenses, liabilities and advances incurred or made by Lender in connection
therewith, including reasonable attorney's fees and any other Obligations
owed to Lender;
Second, to the payment of accrued but unpaid interest on the
Obligations;
Third, to the payment of unpaid principal of the Obligations;
Fourth, to the payment of all other Obligations until all other
Obligations shall have been paid in full; and
Finally, to payment to Grantor, or its successors or assigns, or as a
court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
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(e) All of the rights and remedies of Lender under this Section 8 are
subject to the limitations thereon set forth in the Intercreditor Agreement.
9. LIMITATION ON LENDER'S DUTY IN RESPECT OF COLLATERAL. Lender shall use
reasonable care with respect to the Collateral in its possession or under its
control. Lender shall not have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
Lender, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Upon request of Grantor, Lender
shall promptly account for any monies received by Lender in respect of any
foreclosure on or disposition of the Collateral.
10. REINSTATEMENT. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
11. NOTICES. All notices, approvals, consents and other communications to
any party hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, or by overnight delivery service, with all
charges prepaid, if to Grantor addressed to it at [c/o C.I.S. Technologies,
Inc., One Warren Place, 6100 South Yale, Suite 1900, Tulsa, Oklahoma 74136-
1903,] Attention: Richard A. Evans, Telecopy No. (918) 481-4281, or Lender, at
First Financial Management Corporation, 3 Corporate Square, Suite 700, Atlanta,
Georgia 30329, Attention: Legal Department, Telecopy No.: (404) 636-7632, or by
facsimile transmission, promptly confirmed in writing sent by first class mail,
to the telecopy number set forth above, or such other address or telecopy number
as such party may hereafter specify by notice to Lender and Grantor. All such
notices, approvals, consents or other communications shall be deemed given (i)
if sent by certified or registered mail, (5) business days after being
postmarked, (ii) if sent by overnight delivery service, when received at the
address set forth above or when delivery is refused and (iii) if sent by
facsimile transmission, when receipt of such transmission is acknowledged.
12. SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. This Security Agreement
sets forth
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the complete understanding and agreement of the Lender and Grantor with respect
to the matters referred to herein.
13. NO WAIVER; CUMULATIVE REMEDIES. Lender shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by Lender and
then only to the extent therein set forth. A waiver by Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Lender would otherwise have had on any future occasion.
No failure to exercise nor any delay in exercising on the part of Lender, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law. None of the terms or provisions of
this Security Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Lender and Grantor.
14. LIMITATION BY LAW. All rights remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they do not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered,
or filed under the provisions of any applicable law.
15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 10 hereof,
this Security Agreement shall terminate upon the payment in full of the
Obligations.
16. SUCCESSOR AND ASSIGNS. This Security Agreement and all obligations of
Grantor hereunder shall be binding upon the successors and assigns of Grantor,
and shall, together with the rights and remedies of Lender hereunder, inure to
the benefit of Lender, all future holders of any instrument evidencing any of
the Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Obligations or any portion
thereof or interest therein shall in any manner affect the security interest
granted to Lender hereunder. Grantor may not assign, sell or otherwise transfer
an interest in this Security Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE
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LAWS OF THE UNITED STATES OF AMERICA. GRANTOR HEREBY CONSENTS AND AGREES THAT
THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTOR AND
LENDER PERTAINING TO THIS SECURITY AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT OR THE NOTE, PROVIDED, THAT LENDER AND
GRANTOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK CITY AND, PROVIDED, FURTHER, THAT NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. GRANTOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND GRANTOR HEREBY WAIVES ANY OBJECTION WHICH GRANTOR MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO GRANTOR AT THE ADDRESS SET FORTH IN
SECTION 11 HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF GRANTOR'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.
18. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN
CONNECTION WITH, THIS SECURITY AGREEMENT OR THE NOTE OR THE TRANSACTIONS RELATED
THERETO.
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IN WITNESS WHEREOF, Grantor has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set
forth above.
HOSPITAL COSTS CONSULTANTS, INC.
By: /s/ Phillip D. Kurtz
-----------------------------
Name: Phillip D. Kurtz
Title: V.P.
ACCEPTED ON May 31, 1995:
FIRST FINANCIAL MANAGEMENT
CORPORATION
By: /s/ Stephen D. Kane
-------------------
Name:
Title: Vice Chairman
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EXHIBIT 10.p
AGREEMENT CONCERNING EARN-OUT
THIS AGREEMENT (this "Agreement") is made and entered into as of the 11th
day of May, 1995 by and among First Financial Management Corporation, a Georgia
corporation ("FFMC"), C.I.S. Technologies, Inc., a Delaware Corporation ("CIS"),
John A. Booth (the "Shareholders' Agent"), a resident of the State of
California, and each of the parties listed on the signature lines below as
Shareholders (the "Named Shareholders").
BACKGROUND STATEMENT
FFMC and the Shareholders' Agent are parties to an Agreement and Plan of
Merger, dated October 26, 1993, as amended, by and among FFMC, MicroBilt
Corporation, a wholly-owned subsidiary of FFMC ("MicroBilt"), Hillary
Acquisition Corporation, a wholly owned subsidiary of MicroBilt, Hospital Cost
Consultants, Inc., a California corporation ("HCCI"), the Shareholders' Agent
and Robert J. Dendall (the "Merger Agreement"). Pursuant to the Merger
Agreement, Hillary Acquisition Corporation merged with and into HCCI and the
former shareholders of HCCI (the "Shareholders") received an initial cash
payment together with the right to receive contingent future cash payments (as
defined in the Merger Agreement, "Additional Merger Consideration"; referred to
herein as the "Earn-out") and HCCI thereby became a wholly-owned subsidiary of
MicroBilt (the "Merger"). The Merger was consummated on December 17, 1993.
FFMC and MicroBilt have currently proposed to enter into an agreement with CIS
providing for the acquisition of HCCI by CIS (the "Proposed Acquisition"). In
connection therewith, CIS will assume certain obligations of FFMC and MicroBilt
under the Merger Agreement with respect to the Earn-out, subject to such
modifications to the Earn-out as are acceptable to the Named Shareholders and to
the Shareholders' Agent pursuant to the Shareholders' Agent's authority, under
Section 13 of the Merger Agreement and the authorizations executed by the
Shareholders in connection with the consummation of the Merger, to act on behalf
of the Shareholders and to modify the Earn-out. The parties hereto desire to
provide in this Agreement for the settlement of the amount of the Earn-out with
respect to HCCI's 1994 fiscal year, which is presently in dispute, for the
release of FFMC and MicroBilt from certain obligations of the Earn-out, and for
the assumption of certain Earn-out obligations by CIS. In connection therewith,
those Named Shareholders identified on the signature lines below as
"Noteholders" have agreed to repay in full the amounts advanced to them by FFMC,
together with accrued interest, evidenced by promissory notes (the "Notes")
executed in connection with the consummation of the Merger. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Merger Agreement.
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STATEMENT OF AGREEMENT
In consideration of the mutual agreements set forth below (the mutuality,
adequacy and sufficiency of which are hereby acknowledged), and effective upon
consummation of the Proposed Acquisition, the parties hereby agree as follows:
1. Settlement of 1994 Additional Merger Consideration.
a. In complete settlement of its obligations under Section 2.2 of the
Merger Agreement in respect of the amount of the Earn-out payable for
HCCI's 1994 fiscal year (the "1994 Earn-out") and in recognition that the
Shareholders are being given credit in advance for receivables qualifying
for carryover as 1995 Eligible Revenue, in the amount of $2,700,753 (the
"1995 Carryover Receivables"), FFMC, on behalf of MicroBilt, shall,
promptly following the consummation of the Proposed Transaction, pay to the
Shareholders the amount of $1,130,000, constituting full and final payment
of the 1994 Earn-out and payment of all Earn-out attributable to the 1995
Carryover Receivables in the manner set forth herein, including Section 3,
below.
b. Owing to the credit given by FFMC and MicroBilt described in Section
1(a), above, the parties agree that, for purposes of computing the Earn-out
for HCCI's 1995 fiscal year and CIS's assumption of the obligations of FFMC
and MicroBilt in respect thereof, as set forth below, 1995 Eligible
Revenues shall exclude the 1995 Carryover Receivables which have been
credited to 1994 Eligible Revenues for purposes of determining the payment
in Section 1(a), above.
2. Releases
a. The Shareholders' Agent, on behalf of the Shareholders, John A.
Booth, individually, and each of the Named Shareholders, upon receipt
thereof, hereby accept the amount set forth in Section 1(a) as full and
final settlement of the 1994 Earn-out as well as all Earn-out payable in
respect of the 1995 Carryover Receivables and hereby unconditionally
release FFMC and its subsidiaries and affiliates, including MicroBilt, and
the officers and directors of each and CIS and the officers and directors
of CIS (collectively, "Releasees"), from (i) any and all liabilities and
obligations that Releasees, or any of them, may have to the Shareholders
(or any permitted successor thereof) in respect of the 1994 Earn-out as
well as all Earn-out payable in respect of the 1995 Carryover Receivables
and (ii) any and all rights, claims, actions or causes of action accrued or
to accrue by reason of any action taken or not taken by Releasees, or any
of them, from the beginning of the world to the date of closing of the
Proposed Transaction in respect of the Earn-out, including, without
limitation any claim premised upon management of HCCI by FFMC and/or any of
its affiliated companies.
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b. Upon the consummation of the Proposed Transaction and effectiveness
of the assumption of obligations set forth in Section 4 below, John A.
Booth, individually, and each of the Named Shareholders hereby
unconditionally releases FFMC and its subsidiaries and affiliates,
including MicroBilt, and the officers and directors of each, from any and
all liabilities and obligations that any of them may have to John A. Booth
or any of the Named Shareholders (or any permitted successor of John A.
Booth or any of the Named Shareholders) in respect of the obligations of
FFMC and MicroBilt under the Earn-out for HCCI's fiscal years 1995 through
1998 (the "1995-1998 Earn-out Obligations").
3. Repayment of Loans By Noteholders. Each of the Noteholders hereby
agrees that the proceeds payable to him or her in respect of the 1994 Earn-out
shall be used first to satisfy the outstanding amounts due from the Noteholder
to FFMC as of the date of consummation of the Proposed Acquisition, pursuant to
such Noteholder's Note, including accrued interest, and that any balance of the
1994 Earn-out due to each of such Noteholders after satisfaction of such Note
shall be paid in the same manner as is paid to the other Shareholders. Upon
full payment, FFMC hereby agrees to mark each such Note "cancelled" and to
return each such Note so marked to the respective Noteholder. If any balance
remains due to FFMC under any Note after application of the allocable 1994 Earn-
out payable to the respective Noteholder, FFMC shall reduce the amount otherwise
payable to John A. Booth hereunder by the amount of such remaining balance and
shall endorse such note to John A. Booth, whereupon such balance shall remain
due and payable to John A. Booth under the terms of such Note.
4. Assumption by CIS of Fiscal Years 1995 through 1998 Earn-out. Effective
upon the consummation of the Proposed Transaction, CIS does hereby assume from
FFMC and MicroBilt and agree in their place and stead to become liable for and
pay to the Shareholders for the entirety of the 1995-1998 Earn-out Obligations,
which shall be computed, as provided in Section 1(b), without reference to the
1995 Carryover Receivables, and shall be subject to the releases set forth in
Section 2(a)(i) and (ii) (the "Assumed Earn-out Obligations").
5. Indemnification by CIS. CIS hereby further agrees to indemnify FFMC
from and against any and all claims, losses, damages, liabilities, demands,
assessments, judgments, costs and expenses, including, without limitation
settlement costs and any legal or other expenses for investigating, bringing or
defending any actions or threatened actions incurred or suffered by FFMC or
MicroBilt in respect of the Assumed Earn-out Obligations.
6. Effect on Merger Agreement. Except for the settlement, release and
assumption provided herein, upon consummation of the Proposed Transaction, the
rights and obligations of the parties under the Merger Agreement shall remain in
full force and effect (with CIS assuming all obligations of FFMC and MicroBilt
in respect of the Assumed Earn-out Obligations, as aforesaid, subject to any
modification thereof agreed to by CIS and the Shareholders' Agent). CIS
confirms its intention to negotiate, in good faith and without delay,
appropriate modifications to certain of the Assumed Earn-out Obligations or the
substitution therefor of other rights or securities.
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7. Further Assurances. Upon the execution of this Agreement and
thereafter, each party to this Agreement agrees to do such things as may be
reasonably requested by any other party to this Agreement in order more
effectively to consummate or document the transactions contemplated by this
Agreement.
8. Representations and Warranties of Named Shareholders. Each of the Named
Shareholders (including John A. Booth individually) hereby represent, warrant
and acknowledge on behalf of himself or herself (but not on behalf of the other
Named Shareholders) the following (the truth and accuracy of each item of which
is a material inducement to FFMC and CIS to enter into this Agreement):
a. In determining to enter into this Agreement, the Named Shareholders
were advised by FFMC and CIS to seek the advice of legal counsel. Further,
the Named Shareholders have relied on the advice and counsel of John A.
Booth who has served as their representative and who has, as their
representative and with the advice of said legal counsel, negotiated
directly with representatives of FFMC and CIS the terms and provisions of
this Agreement.
b. Each of the Named Shareholders has been afforded an opportunity to
review CIS's (i) most recent Annual Report to Shareholders, (ii) 1994 Form
10-K Annual Report, (iii) 1994 Annual Meeting Proxy Statement and (iv) Form
10-Q Quarterly Report for the quarter ended March 31, 1995. In addition,
John A. Booth, as representative of the other Named Shareholders has
obtained, and each of the other Named Shareholders has had an opportunity
to obtain, any information from representatives of FFMC and CIS necessary
to evaluate the merits and risks of this agreement and has/have been given
the opportunity to meet with officials of FFMC and CIS and to have said
officials answer any questions regarding the terms and conditions of this
Agreement and all such questions have been answered to their full
satisfaction.
c. In agreeing to the release of FFMC and its subsidiaries and
affiliates from the 1995-1998 Earn-out Obligation pursuant to Section 2(b),
above, the Named Shareholders recognize that CIS's concurrent assumption of
the 1995-1998 Earn-out Obligation pursuant to Section 4, above, and the
resulting fact that the Named Shareholders may hereafter look only to CIS
for satisfaction of the 19985-1998 Earn-out Obligation, involves materially
different considerations and risks from those which applied before the
entering into of this Agreement. In particular, in determining to enter
into this Agreement, the Named Shareholders have considered the relative
size, profitability and credit-worthiness of CIS as compared with FFMC.
d. Each Named Shareholder represents and warrants that he or she is
entering into this Agreement for his or her own account.
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e. Each of the Named Shareholders acknowledges that he or she has
received no representations from FFMC, CIS or their affiliates, employees
or agents in connection with this Agreement other than as set forth herein
or as previously set forth in that certain Consent Solicitation Statement
dated December 13, 1993, pursuant to which the Named Shareholders were
solicited to approve, inter alia, a merger involving HCC by virtue of which
the Named Shareholders originally acquired the Earn-out.
f. Each named Shareholder has been advised to seek the advice of his or
her tax counsel respecting the tax counsel respecting the tax impact on him
or her of entering into and consummating this Agreement and is not relying
upon FFMC or CIS for any information respecting such tax impact.
9. Notices. Each notice under this Agreement shall be in writing and shall
be given either in person or by a nationally recognized next business day
delivery service or first class mail, postage and any other costs prepaid, to
the address of the party being given notice set forth below his or its signature
or to such other address as a party may furnish to the other as provided in this
sentence.
10. Binding Nature. This Agreement is binding upon the parties and their
respective legal representatives, heirs, devisees, legatees or other successors
and assigns and shall inure to the benefit of the parties and their respective
legal representatives, heirs, devisees, legatees or other successors and
assigns.
11. No Waiver. The failure of any party at any time or times to require
performance of any provision of this Agreement shall in no manner affect the
right to enforce the same; and no waiver by any party of any provision (or of a
breach of any provision) of this Agreement, whether by conduct or otherwise, in
any one or more instances shall be deemed or construed either as a further or
continuing waiver of any such provision or breach or as a waiver of any other
provision (or as a breach of any other provision) of this Agreement.
12. Governing Law. This Agreement shall be governed by, construed and
enforced according to the laws of the State of Georgia, without giving effect to
the conflict of law principles thereof.
13. Captions. Captions in this Agreement are inserted only as a matter of
convenience and for reference and in no way define, limit, extend or describe
the scope of this Agreement or the intent of any of its provisions.
14. Counterparts. This Agreement may be executed by each party upon a
separate copy, and in such case one counterpart of this Agreement consists of
enough of such copies to reflect the signature of all of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, and it is not necessary in making proof of this Agreement or
its terms to produce or account for more than one of such counterparts.
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Duly executed and delivered by the parties as of the day and year first
above written, effective as set forth above.
FIRST FINANCIAL MANAGEMENT
CORPORATION
Address for Notice: By: /s/ Stephen D. Kane
3 Corporate Square ---------------------------
Suite 700 Name: Stephen D. Kane
Atlanta, GA 30329 -------------------------
Attn: Legal Department Title: Vice Chairman
Fax: (404) 636-7632 ------------------------
C.I.S. TECHNOLOGIES, INC.
Address for Notice: By: /s/ Phillip D. Kurtz
Suite 1900 ---------------------------
6100 South Yale Name: Phillip D. Kurtz
Tulsa, OK 74136-1930 ---------------------
Fax: (918) 481-4205 Title: Chairman and CEO
--------------------
SHAREHOLDERS' AGENT
Address: /s/ John A. Booth
2303 Gloria Ct ---------------------------
Pleasanton, CA 94588 John A. Booth
NAMED SHAREHOLDERS:
Address: /s/ John Booth
2303 Gloria Ct ---------------------------
Pleasanton, CA 94588 John Booth
Address: /s/ Terry Brandt
----------------------------
Terry Brandt*
- ---------------------
- ---------------------
- ---------------------
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<PAGE>
Address: /s/ Louise Bridges
11374 Bloomington Wy ----------------------------
Dublio, CA 94568 Louise Bridges*
Address: /s/ Walter Ellenberger
----------------------------
Walter Ellenberger*
- ---------------------
- ---------------------
- ---------------------
Address: /s/ Mark Emkjer
172 Victory Circle ----------------------------
San Ramon, CA 94583 Mark Emkjer*
Address: /s/ Tobyann Faingold
245 Stillcreek Rd ----------------------------
Danville, CA 94506 Tobyann Faingold*
Address: /s/ Greg King
- --------------------- ----------------------------
- --------------------- Greg King
- ---------------------
Address: /s/ John Murray
924 Lurline Dr. ----------------------------
Foster City, CA 94404 John Murray
Address: /s/ Robert J. Dendall
- --------------------- ----------------------------
- --------------------- Robert J. Dendall
- ---------------------
*/ Indicates Noteholder
54
<PAGE>
EXHIBIT 10.q
NONCOMPETE AGREEMENT
This Agreement dated May 31, 1995 is entered into by and between First
Financial Management Corporation, a Georgia corporation ("FFMC"), MicroBilt
Corporation, a Georgia corporation wholly owned by FFMC ("MicroBilt") (FFMC and
MicroBilt are individually referred to as a "Seller" and collectively referred
to as the "Sellers"), and C.I.S. Technologies, Inc., a Delaware Corporation (the
"Purchaser"),
RECITALS:
A. MicroBilt owns all of the issued and outstanding capital stock,
consisting of Class A common stock (the "HCCI Common Stock") of Hospital Cost
Consultants, Inc., a California Corporation (the "Company").
B. Concurrently herewith, the Purchaser is buying and MicroBilt is selling
the HCCI Common Stock upon the terms and conditions set forth in that certain
Stock Purchase and Sale Agreement dated May 11, 1995 (the "Agreement").
C. The consummation of the transactions contemplated by the Agreement will
result in a transfer to the Purchaser of the goodwill of the Company's business.
D. As a material inducement to the Purchaser to enter into the Agreement
and to acquire the outstanding capital stock of the Company, Sellers have agreed
to enter into an agreement by which they will agree not to engage in any
business which is competitive with the business of the Company or any of its
subsidiaries.
NOW, THEREFORE, in consideration of the Purchaser entering into and
consummating the Agreement and for other good and valuable consideration,
receipt of which is hereby acknowledged, the Sellers and the Purchaser agree as
follows:
1. NONCOMPETE. Subject to the last sentence of this Section 1, the
Sellers covenant and agree that, during the period commencing on the date hereof
and ending on the fifth anniversary of the date hereof (the "Noncompete
Period"), they will not, within the boundaries of the United States or of any
other countries in which the Company currently conducts its business (the
"Noncompete Territory"), directly or indirectly (through subsidiaries or
affiliates, as a partner or joint venturer, or otherwise) compete with or
conduct a business substantially similar to the business conducted by the
Company or its subsidiaries on the date hereof. Sellers further agree that,
during the Noncompete Period, they will neither directly nor indirectly call
upon, solicit, attempt to solicit, divert or take away, or interfere in any
other manner with any of the employees, customers, businesses or patrons of the
Company. Notwithstanding the foregoing, the Purchaser expressly acknowledges
that it is aware that certain of FFMC's present subsidiaries, including but not
limited to VIPS, Inc., are currently, and certain after-acquired subsidiaries of
FFMC may be, engaged in businesses that may, or may be deemed to, compete with,
or have certain products, programs or services which are similar to those of,
the Company and that such businesses,
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products, programs or services and the logical extensions thereof shall not be a
violation of any provision of the first sentence of this Section 1.
2. SELLERS' DEFAULT. In the event of a breach by the Sellers of their
obligations under this Agreement, the Purchaser shall give written notice
thereof specifying the breach of which it complains. The Sellers shall have ten
days from receipt of such notice to cure the breach. The Purchaser may
thereafter, if not so cured, obtain injunctive relief if appropriate; provided,
however, whether or not such relief is sought or obtained, the Purchaser shall
also be entitled to recover its actual consequential, direct, indirect and
punitive damages from the Sellers and shall be entitled to recover its
attorney's fees and costs, if successful.
3. NOTICES. All notices and other communications under this Agreement
shall be in writing and may be given by any of the following methods: (i)
personal delivery; (ii) facsimile transmission; (iii) registered or certified
mail, postage prepaid, return receipt requested; or (iv) overnight delivery
service requiring acknowledgment of receipt. Notices shall be sent to the
appropriate party at its address or facsimile number given below (or at such
other address or facsimile number for such party as shall be specified by notice
given hereunder).
If to the Purchaser:
C.I.S. Technologies, Inc.
One Warren Place, Suite 1900
6100 South Yale Avenue
Tulsa, Oklahoma 74136
Fax No. (918) 481-4205
Attention: Philip D. Kurtz, Chief Executive Officer
with a copy to:
Pray, Walker, Jackman, Williamson & Marlar
900 ONEOK Plaza
100 West Fifth Street
Tulsa, Oklahoma 74103
Fax No. (918) 581-5599
Attention: Thomas G. Noulles
If to the Sellers:
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
56
<PAGE>
Fax No. (404) 636-7632
Attention: Stephen D. Kane, Vice Chairman
with a copy to:
First Financial Management Corporation
3 Corporate Square, Suite 700
Atlanta, Georgia 30329
Fax No. (404) 636-7632
Attention: Legal Department
All such notices and communications shall be deemed received upon (i) actual
receipt thereof by the addressee, (ii) actual delivery thereof to the
appropriate address as evidenced by an acknowledged receipt, or (iii) in the
case of a facsimile transmission, upon transmission thereof by the sender and
telephonic confirmation of receipt. In the case of notices sent by facsimile
transmission, the sender shall contemporaneously mail a copy of the notice to
the addressee at the address provided for above. However, such mailing shall in
no way alter the time at which the facsimile notice is deemed received.
4. WAIVER OF BREACH. The waiver by either party hereto of a breach of any
provisions of this agreement by the other party hereto shall not operate nor be
construed as a waiver of any subsequent breach thereby. No waiver shall be
valid unless in writing and signed by the affected party hereto.
5. SUCCESSORS. The rights and obligations of the Sellers and the
Purchaser under this agreement shall inure to the respective benefit of and be
binding upon the successors and assigns of the Purchaser and the Sellers. This
agreement may not be assigned by either party without the express written
consent of the other.
6. ENTIRE AGREEMENT. This agreement contains the entire agreement between
the parties with respect to the subject matter herein. This agreement may not
be changed orally, but only by an agreement in writing signed by the parties
against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
7. CONSTRUCTION. This agreement and all questions relating to its
validity, interpretation, performance and enforcement shall be construed in
accordance with the laws of the State of Oklahoma. If for any reason any
paragraph, term or provision of this Agreement is held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall not
affect any other provisions hereof, and this agreement shall be construed and
enforced as if such other provisions hereof remain in full force and effect. If
for any reason the restrictions and covenants contained herein are held by a
court of competent jurisdiction to cover a geographical area or be
57
<PAGE>
for a length of time which is unreasonable or unenforceable, or in any other way
are construed to be too broad or to any extent invalid, then to the extent the
same are or would be valid or enforceable under applicable law, any court of
competent jurisdiction shall construe and interpret or reform this Agreement to
provide for a covenant having the maximum enforceable area, time, or other
provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law.
EXECUTED AND DELIVERED on the date first written above.
PURCHASER:
C.I.S. TECHNOLOGIES, INC.
By: /s/ Phillip D. Kurtz
---------------------------
Name: Phillip D. Kurtz
---------------------------
Title: Chairman and CEO
---------------------------
SELLERS:
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Stephen D. Kane
---------------------------
Name: Stephen D. Kane
---------------------------
Title: Vice Chairman
---------------------------
MICROBILT CORPORATION
By: /s/ Michael H. Pope
---------------------------
Name: Michael H. Pope
---------------------------
Title: Senior Vice President
---------------------------
58
<PAGE>
EXHIBIT 10.r
FIRST AMENDMENT TO CREDIT AGREEMENT
FIRST AMENDMENT, dated as of May 31, 1995 (this "Amendment"), to the
Credit Agreement referred to below by and among C.I.S., Inc., an Oklahoma
corporation ("CIS, Inc."), and Hospital Billing Analysis, Inc., a California
corporation ("HBA", and together with CIS, Inc., collectively, "Borrowers"),
C.I.S. Technologies, Inc., a Delaware corporation ("Parent"), and General
Electric Capital Corporation, a corporation organized under the banking laws of
the State of New York ("Lender"), and acknowledged and consented to by AMSC,
Inc., a Florida corporation ("AMSC"), and the Parent in its capacity as a
guarantor.
W I T N E S S E T H
WHEREAS, Borrowers, Parent and Lender are parties to that certain
Credit Agreement, dated as of October 15, 1994 (as amended, supplemented or
otherwise modified prior to the date hereof, the "Credit Agreement");
WHEREAS, Parent has executed and delivered a Guaranty dated as of
October 15, 1994 in favor of Lender (the "Parent Guaranty");
WHEREAS, AMSC has executed and delivered a Guaranty dated as of
November 26, 1994 in favor of Lender (the "Subsidiary Guaranty");
WHEREAS, pursuant to that certain Stock Purchase and Sale Agreement,
dated May 11, 1995, among First Financial Management Corporation, a Georgia
corporation ("FFMC"), MicroBilt Corporation, a Georgia corporation wholly owned
by FFMC ("MicroBilt"), and Parent, Parent is acquiring (the "HCCI Acquisition")
from MicroBilt all of the issued and outstanding capital stock of Hospital Cost
Consultants, Inc., a California corporation ("HCCI");
WHEREAS, in connection with the HCCI Acquisition, Borrowers and Parent
have requested that Lender agree to amend certain provisions of the Credit
Agreement;
WHEREAS, Borrowers, Parent and Lender have agreed to amend the Credit
Agreement in the manner, and on the terms and conditions, provided for herein;
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<PAGE>
WHEREAS, Parent, in its capacity as a guarantor, has also consented to
the amendments provided for herein and has agreed to confirm its obligations
under the Parent Guaranty; and
WHEREAS, AMSC has consented to the amendments provided for herein and
has agreed to confirm its obligations under the Subsidiary Guaranty;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, Borrowers, Parent and Lender hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement after giving
effect to this Agreement.
2. Amendment to Section 5.10 of the Credit Agreement. Section 5.10
of the Credit Agreement is hereby amended by inserting at the end of such
Section the following new sentence:
"Notwithstanding the foregoing, prior to the FFMC Note Maturity Date
(a) HCCI shall be permitted to be subject to Section 8.13 of the Stock
Purchase Agreement and (b) HCCI may enter into and perform its
obligations under the FFMC Security Agreement."
3. Amendment to Section 6.3 of the Credit Agreement. Section 6.3 of
the Credit Agreement is hereby amended by deleting in its entirety the portion
of such Section contained after the reference to "Schedule 6.3" therein and
inserting in lieu thereof the following:
"; (e) the Acquisition Notes; (f) the FFMC Note; (g) Indebtedness
(other than the FFMC Note) assumed in connection with Permitted
Acquisitions, including Indebtedness (other than the FFMC Note) of any
Acquired Subsidiary, in a maximum aggregate amount outstanding not to
exceed $500,000 outstanding at any time; (h) until the FFMC Note
Maturity Date, the FFMC Guarantee; and (i) unsecured subordinated
Indebtedness of Parent or HCCI constituting a renewal, extension,
refinancing or refunding of the FFMC Note, (i) for a principal amount
outstanding not in excess of
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$5,000,000, (ii) the payment of the principal of and interest on which
and other obligations of any Loan Party in respect thereof are
subordinated in a manner acceptable to Lender to the prior payment in
full of the Obligations, (iii) which is not secured by a Lien on any
property or assets of any Loan Party or any Subsidiary thereof, (iv)
which has a final maturity date after April 30, 1998, and (v)
otherwise having terms and conditions satisfactory in form and
substance to Lender."
4. Amendment to Section 6.4 of the Credit Agreement. Section 6.4 of
the Credit Agreement shall be amended and restated to read in its entirety as
follows:
"6.4 Affiliate Transactions. Except as otherwise expressly
permitted hereunder, no Loan Party shall enter into any lending,
borrowing or other commercial transaction with any of its Subsidiaries
or Affiliates, including payment of any management, consulting,
advisory or similar fee provided that such Loan Parties may make: (i)
intercompany advances by any Loan Party ("Lender Loan Party") to
another Loan Party at any time not in excess of $100,000 (net of any
intercompany loans made to such Lender Loan Party by such Loan Party)
in the aggregate for all Loan Parties; (ii) intercompany advances by
Borrowers to AMSC not in the aggregate at any time in excess of
$1,200,000 (net of any intercompany loans made by AMSC to Borrowers);
(iii) intercompany advances by any Loan Party (other than a Borrower)
to any Borrower; (iv) an advance by Borrowers to Parent in an amount
equal to $1,000,000 from proceeds of the Tranche B Loan to be used by
Parent in payment of the cash portion of the purchase price for the
AMSC Acquisition and an advance by Borrowers to Parent not to exceed
$2,000,000 from proceeds of Revolving Credit Advances to be used by
Parent in partial payment of the cash portion of the purchase price
for HCCI; and (v) redemption of the Parent's common stock from Philip
Kurtz in repayment of the loan referred to on Schedule 6.4. Set forth
in Schedule 6.4 is a list of all such lending, borrowing or other
commercial transactions existing or outstanding as of the Closing
Date."
5. Amendment to Section 6.6 of the Credit Agreement. Section 6.6 of
the Credit Agreement is hereby amended by (a) deleting the word "and" where it
appears immediately before the parenthetical "(c)" contained therein
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and (b) adding the following new clauses (d) and (e) at the end thereof to read
as follows:
"; (d) as permitted by clause (h) of Section 6.3; and (e) the
indemnities set forth in Section 12.2 of the Stock Purchase
Agreement."
6. Amendment to Section 6.7 of the Credit Agreement. Section 6.7 of
the Credit Agreement shall be amended and restated to read in its entirety as
follows:
"6.7 Liens. No Loan Party shall create or permit to exist any Lien
on any of its properties or assets except for: (a) presently existing
or hereafter created Liens in favor of Lender to secure the
Obligations; (b) Permitted Encumbrances; (c) until the FFMC Note
Maturity Date, Liens created in favor of FFMC pursuant to the FFMC
Pledge Agreement and the FFMC Security Agreement; (d) Liens in favor
of the holders of the Acquisition Notes as contemplated by Section
5.13 pursuant to documentation satisfactory to Lender; and (e)
purchase money Liens or purchase money security interests upon or in
Equipment acquired by such Loan Party in the ordinary course of
business to secure the purchase price of such Equipment or to secure
Capital Lease Obligations or Indebtedness permitted under clause (c)
of Section 6.3 incurred solely for the purpose of financing the
acquisition of such Equipment; provided that no Loan Party shall
create or permit any Lien to exist on any of the Collateral (other
than Liens described in clauses (a), (b) and (c) above)."
7. Amendment to Section 6.18 of the Credit Agreement. Section 6.18 of
the Credit Agreement is hereby amended by inserting the following proviso at the
end thereof:
"; provided, that (i) until the FFMC Note Maturity Date, HCCI shall be
permitted to be a party to the FFMC Security Agreement and Parent
shall be permitted to be a party to the FFMC Pledge Agreement and (ii)
Parent shall be permitted to be a party to the Stock Purchase
Agreement so long as Section 8.13 thereof shall have no force and
effect after the FFMC Note Maturity Date."
8. Amendment to Article 6 of the Credit Agreement. Article 6 of the
Credit Agreement is hereby
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amended by adding the following new Section 6.19 at the end thereof:
"6.19 Amendments to FFMC Documents. No Loan Party without the prior
written consent of Lender shall amend (or permit to be amended) the
FFMC Guaranty, the FFMC Pledge Agreement, the FFMC Security Agreement,
the FFMC Note, the Stock Purchase Agreement, the Earn Out Agreement to
increase the monetary obligations of HCCI thereunder or otherwise
adversely affect the interests of Lender, or any other HCCI
Acquisition Document."
9. Amendment to Section 8.1 of the Credit Agreement. Section 8.1 of
the Credit Agreement is hereby amended by adding the following new subparagraph
(n) at the end thereof:
"(n) Without limiting subparagraph (d) above, an "Event of Default"
under and as defined in the FFMC Note, or the FFMC Note shall not be
indefeasibly paid or refinanced in full in a manner acceptable to the
Lender on or prior to the FFMC Note Maturity Date."
10. Amendment to Annex A to the Credit Agreement. Annex A to the
Credit Agreement is hereby amended as of the Amendment Effective Date as
follows:
(a) The following new definitions shall be inserted in the proper
alphabetical order:
"'Accounts Security Agreement' shall mean the Accounts Security
Agreement, substantially in the form of Exhibit A to First Amendment,
to be made between HCCI and Lender.
'Earn Out Agreement' shall mean that certain agreement dated May
11, 1995 by and among FFMC, Parent, John A. Booth and each of the
parties listed on the signature lines thereto as Shareholders.
'FFMC' shall mean First Financial Management Corporation, a
Georgia corporation.
'FFMC Guaranty' shall mean that certain Corporate Guaranty made
and entered into as of the 31st day of May, 1995 by Parent in favor of
FFMC.
'FFMC Note' shall mean that certain promissory note in the
original aggregate
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principal amount of $5,000,000 made by HCCI in favor of FFMC.
'FFMC Note Maturity Date' shall mean the earlier of (i) February
29, 1996, (ii) the final maturity date of the FFMC Note, and (iii) the
date on which the FFMC Note is paid in full.
'FFMC Pledge Agreement' shall mean that certain Stock Pledge
Agreement made and entered into as of the 31st day of May, 1995,
between Parent and FFMC whereby Parent has pledged in favor of FFMC
all of the capital stock of HCCI.
'FFMC Security Agreement' shall mean that certain Security
Agreement dated May 31, 1995 made by HCCI in favor of FFMC, whereby
HCCI has granted in favor of FFMC a second priority security interest
in HCCI's accounts receivable.
'First Amendment' shall mean that certain First Amendment, dated
as of May 31, 1995, to this Agreement among CIS, Inc., HBA, Parent and
Lender.
'HCCI' shall mean Hospital Cost Consultants, Inc., a California
corporation.
'HCCI Acquisition' shall mean the acquisition by Parent of all
the capital stock of HCCI from MicroBilt Corporation pursuant to the
Stock Purchase Agreement and the other HCCI Acquisition Documents.
'HCCI Acquisition Documents' shall mean the Stock Purchase
Agreement, the Earn Out Agreement and any other document directly
related to the HCCI Acquisition.
"Intercreditor Agreement' shall mean the Intercreditor Agreement,
substantially in the form of Exhibit B to First Amendment, between
Lender and FFMC, and consented and agreed to by the Loan Parties.
'Pledge Agreement' shall mean the Pledge Agreement, substantially
in the form of Exhibit C to First Amendment, to be made by Parent in
favor of Lender, whereby Parent has granted in favor of Lender a
second priority security interest in all of the Stock of HCCI.
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'Stock Purchase Agreement' shall mean that certain Stock Purchase
and Sale Agreement dated the 11th day of May, 1995 by and among FFMC,
MicroBilt Corporation and Parent."
(b) The definition of "Collateral Documents" shall be amended and
restated to read in its entirety as follows:
"'Collateral Documents' shall mean the Security Agreement,
any Subsidiary Security Agreement, the Accounts Security Agreement,
the Pledge Agreement, the Intercreditor Agreement, the Concentration
Account Agreement, the Lock Box Account Agreements and the
Disbursement Account Agreement and all other instruments and
agreements now or hereafter securing the whole or any part of the
Obligations."
11. Amendment to Annex B to the Credit Agreement. Annex B to the
Credit Agreement is hereby amended by deleting the word "Borrowers" where it
appears in Section 1 of such Annex and inserting in lieu thereof the words "Loan
Parties".
12. Amendment to Schedules 3.2, 3.6, 3.8, 3.9, 3.14, 3.16 and 3.20.
Each of Schedules 3.2, 3.6, 3.8, 3.9, 3.14, 3.16 and 3.20 is hereby amended by
deleting such Schedule in its entirety and substituting in lieu thereof a new
Schedule 3.2, 3.6, 3.8, 3.9, 3.14, 3.16 and 3.20, respectively, reading in its
entirety as set forth in Exhibit E, F, G, H, I, J and K hereto, respectively.
13. HCCI Subsidiary Guaranty and Subsidiary Security Agreement. The
Parent hereby reconfirms its obligations contained in the last (prior to giving
effect to Section 2 of this Amendment) sentence of Section 5.10 of the Credit
Agreement, and acknowledges and agrees that on or after the FFMC Note Maturity
Date, Lender may require HCCI to deliver a Subsidiary Guaranty and a Subsidiary
Security Agreement in favor of Lender. Notwithstanding anything to the contrary
contained in such sentence, Lender shall not require HCCI to deliver such
Subsidiary Guaranty or Subsidiary Security Agreement prior to the FFMC Note
Maturity Date.
14. Representations and Warranties. To induce Lender to enter into
this Amendment, each of the Borrowers and Parent hereby represents and warrants
that:
(a) The execution, delivery and performance by such Loan Party of this
Amendment are within such Loan
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Party's corporate power and have been duly authorized by all necessary
corporate and shareholder action.
(b) This Amendment has been duly executed and delivered by or on
behalf of such Loan Party and AMSC.
(c) This Amendment constitutes a legal, valid and binding obligation
of such Loan Party enforceable against such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(d) No Default has occurred and is continuing both before and after
giving effect to this Amendment, other than prior to giving effect to this
Amendment a Default due to the Loan Parties making intercompany advances
(which advances did not exceed $1,000,000) to AMSC in an amount in excess
of that permitted by Section 6.4 of the Credit Agreement before giving
effect to this Amendment.
(e) No action, claim or proceeding is now pending or, to the knowledge
of such Loan Party threatened against any Loan Party (including HCCI) at
law, in equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or local government or of any agency
or subdivision thereof, or before any arbitrator or panel of arbitrators,
(i) which challenges, to the extent applicable, any Loan Party's (including
HCCI's) right, power, or competence to enter into this Amendment or, to the
extent applicable, perform any of its obligations under this Amendment, any
HCCI Acquisition Document, the Credit Agreement as amended hereby or any
other Loan Document, or the validity or enforceability of this Amendment,
any HCCI Acquisition Document, the Credit Agreement as amended hereby or
any other Loan Document or any action taken under this Amendment, the
Credit Agreement as amended hereby or any other Loan Document or (ii) which
if determined adversely, is reasonably likely to have or result in a
Material Adverse Effect after giving effect to this Amendment. To the
knowledge of such Loan Party, there does not exist a state of facts which
is reasonably likely to give rise to such proceedings.
15. No Other Amendments. Except as expressly amended herein, the
Credit Agreement shall be unmodified and
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shall continue to be in full force and effect in accordance with its terms.
16. Expenses. Each of the Borrowers hereby reconfirms its
obligations pursuant to Section 10.2 of the Credit Agreement to pay and
reimburse Lender for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred in connection with the
negotiation, preparation, execution and delivery of this Amendment and all other
documents and instruments delivered in connection herewith.
17. Effectiveness. This Amendment shall become effective on the date
(the "Amendment Effective Date") on which in the judgment of the Lender each of
the following conditions shall have been either satisfied or waived in writing
by Lender:
(a) Documents. Lender shall have received four original copies of each
of the following:
(i) This Amendment duly executed and delivered by Lender, each of
the Borrowers and Parent and consented and agreed to by AMSC and
Parent in its capacity as a guarantor.
(ii) The Accounts Security Agreement fully executed by HCCI
together with one set of acknowledgement copies of proper Financing
Statements (Form UCC-1) (the "Financing Statements") for filing under
the Uniform Commercial Code of all jurisdictions as may be necessary
or, in the opinion of Lender, desirable to perfect the Lien created
by the Accounts Security Agreement.
(iii) The Pledge Agreement duly executed by Parent together with
delivery to FFMC on behalf of Lender pursuant to the terms of the
Intercreditor Agreement of (A) certificates or other evidence of
ownership representing the Pledged Shares (as defined in the Pledge
Agreement) and appropriate undated stock powers executed in blank and
(B) evidence that all action necessary or, in the opinion of and at
the request of Lender, desirable to perfect and protect the security
interests created by the Pledge Agreement has been taken.
(iv) The Intercreditor Agreement duly executed by Lender and FFMC
and acknowledged and consented to by Parent, each of the Borrowers,
AMSC and HCCI.
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(v) A Joinder Agreement (the "Joinder Agreement"),
substantially in the form of Exhibit D hereto, executed by Liberty
Bank and Trust Company of Tulsa, National Association, Parent,
Borrowers, AMSC and HCCI, whereby, among other things, AMSC and HCCI
shall become parties to the Lock Box Account Agreement and the
Concentration Account Agreement.
(vi) A favorable opinion of Pray, Walker, Jackman, Williamson &
Marlar, counsel to the Loan Parties, in form and substance
satisfactory to Lender.
(b) Other Evidence of Filing and Perfection. Lender shall have
received certified copies of Requests for Information (Form UCC-11), or
other evidence satisfactory to Lender, listing the Financing Statements
referred to in paragraph (a)(ii) and all other effective financing
statements which name HCCI as debtor and which are filed in the
jurisdictions referred to in paragraph (a)(ii) above, together with copies
of such other financing statements (none of which (other than financing
statements acceptable to Lender relating to the security interest granted
in favor of FFMC pursuant to the FFMC Security Agreement) shall cover the
Collateral purported to be covered by the Accounts Security Agreement).
(c) Board Resolutions. Lender shall have received a certificate of the
Secretary or an Assistant Secretary of (i) Parent certifying (A) the
resolutions adopted by the Board of Directors of Parent approving this
Amendment, the Pledge Agreement, the Intercreditor Agreement, the HCCI
Acquisition, the Joinder Agreement, and the transactions contemplated
hereby and thereby and (B) all documents, if any, evidencing other
necessary corporate action by Parent and required governmental and third
party approvals with respect to this Amendment, the Pledge Agreement, the
Joinder Agreement and the Intercreditor Agreement, (ii) each Borrower
certifying (A) the resolutions adopted by the Board of Directors of such
Borrower approving this Amendment, the Joinder Agreement and the
Intercreditor Agreement and the transactions contemplated hereby and
thereby and (B) all documents evidencing other necessary corporate action
by such Borrower and required governmental and third party approvals with
respect to this Amendment, the Joinder Agreement and the Intercreditor
Agreement, (iii) HCCI certifying (A) the resolutions adopted by the Board
of Directors of HCCI approving the Intercreditor Agreement, the
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Accounts Security Agreement, the Joinder Agreement and the transactions
contemplated thereby, (B) all documents, if any, evidencing other necessary
corporate action by HCCI and required governmental and third party
approvals with respect to the Accounts Security Agreement, the Joinder
Agreement and the Intercreditor Agreement and (C) the names and true
signatures of the authorized officers of HCCI, and (iv) AMSC certifying (A)
the resolutions adopted by the Board of Directors of AMSC approving the
Joinder Agreement and (B) all documents, if any, evidencing other necessary
corporate action by AMSC and required governmental and third party
approvals with respect to the Joinder Agreement.
(d) Articles of Incorporation; By-Laws and Good Standing Certificates
of HCCI. Lender shall have received each of the following documents:
(i) the certificate of incorporation of HCCI and of its
Subsidiaries as in effect on the Amendment Effective Date, certified
by the Secretary of State or other appropriate authority of the State
or country of its incorporation as of a recent date, and the by-laws
of HCCI and each of its Subsidiaries as in effect on the Amendment
Effective Date, certified by the Secretary, Assistant Secretary or
other appropriate officer or director of HCCI and each of its
Subsidiaries; and
(ii) a good standing certificate for HCCI and each of its
Subsidiaries from the Secretary of State or other appropriate
authority of the State or country of its incorporation as of a recent
date.
(e) Consummation of HCCI Acquisition. Lender shall have received
evidence satisfactory to it that the HCCI Acquisition shall have been
consummated in a manner satisfactory to Lender and Lender shall have
received copies of the FFMC Note, the FFMC Guaranty, the FFMC Pledge
Agreement, the FFMC Security Agreement, the Stock Purchase Agreement, the
Earn Out Agreement and any other HCCI Acquisition Document, together with
all certificates, opinions, instruments and other documents relating
thereto, all of which shall be satisfactory to Lender in its discretion,
certified by an authorized officer of Parent as true, correct and complete
copies thereof. Without limiting the foregoing, it is understood that
Section 8.13 of the Stock Purchase Agreement shall be amended in a manner
satisfactory to Lender.
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(f) Payment of Expenses. Borrowers shall have paid to Lender all
costs, fees and expenses owing in connection with this Amendment and the
other Loan Documents and due to Lender (including, without limitation,
reasonable legal fees and expenses and the amendment fee referred to in
Section 18 hereof).
(g) Representations and Warranties. Lender shall have received a
certificate of the Secretary or an Assistant Secretary of Parent certifying
that all representations and warranties of or on behalf of the Loan Parties
in this Amendment and all the other Loan Documents are true and correct in
all material respects with the same effect as though such representations
and warranties had been made on and as of the date hereof (both before and
after giving effect to this Amendment) and on and as of the date that the
other conditions precedent in this Section 17 have been satisfied.
18. Amendment Fee. Each of the Borrowers jointly and severally
agrees to pay to Lender, for the account of Lender, a non refundable amendment
fee in an amount equal to $5,000, payable on the Amendment Effective Date.
19. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
20. Counterparts. This Amendment may be executed by the parties
hereto on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
Borrowers:
C.I.S., INC.
By /s/ Richard V. Souders
----------------------
Name: Richard Souders
Title:SR. Vice President
HOSPITAL BILLING ANALYSIS, INC.
By /s/ Phillip D. Kurtz
--------------------
Name: Phillip D. Kurtz
Title:Vice President
Parent:
C.I.S. TECHNOLOGIES, INC.
By /s/ Richard V. Souders
----------------------
Name: Richard Souders
Title:SR. Vice President
Lender:
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/ Dan Pengue
-----------------------
Name:
Title:
Each of the undersigned guarantors (i)
acknowledges and consents to each
of the amendments to the Credit
Agreement effected by this Amendment,
and (ii) hereby confirms and agrees that
its obligations under the Parent
Guaranty or the Subsidiary Guaranty, as
the case may be, shall continue without
any diminution thereof and shall remain
in full force and effect on and after
the effectiveness of this Amendment.
Acknowledged, consented and agreed to as
of this May 31, 1995.
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Guarantors:
C.I.S. TECHNOLOGIES, INC.
By /s/ Richard V. Souders
-------------------------
Name: Richard Souders
Title: SR. Vice President
AMSC, INC.
By /s/ Richard A. Evans
-------------------------
Name: Richard A. Evans
Title: Vice President
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
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Exhibits A through D of the First Amendment to Credit Agreement have been
deleted because they are substantially similar to documents filed herewith as
separate material contracts. Exhibits E through K and all schedules related to
the amendment have been omitted as immaterial.
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EXHIBIT 10.s
ACCOUNTS SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of May 31, 1995, made by Hospital Cost
Consultants, Inc., a California corporation, having its chief executive offices
at 5000 Hopyard Road, # 300, Pleasanton, California 94588 ("Grantor"), in favor
of GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation having an office
at 501 Merritt Seven, Norwalk, Connecticut 06851 ("Lender").
W I T N E S S E T H:
WHEREAS, pursuant to and subject to the terms and conditions of that
certain Credit Agreement dated as of October 15, 1994 by and among C.I.S., Inc.,
an Oklahoma corporation ("CIS, Inc."), Hospital Billing Analysis, Inc., a
California corporation (and together with CIS, Inc., collectively, "Borrowers"),
C.I.S. Technologies, Inc., a Delaware corporation ("Parent"), and Lender (as
amended by the First Amendment referred to below and as the same from time to
time may be further amended, restated, supplemented or otherwise modified, the
"Credit Agreement"), Lender has agreed, among other things, to make a Term Loan
and Revolving Credit Advances to Borrowers (except as otherwise defined herein,
all capitalized terms used in these recitals having the respective meanings
referred to in Section 1 hereof);
WHEREAS, Borrowers, Parent and Lender have entered into the First
Amendment to Credit Agreement (the "First Amendment"), dated as of May 31, 1995;
WHEREAS, Lender has required, as a condition to the effectiveness of
the First Amendment, that Grantor enter into this Security Agreement; and
WHEREAS, Grantor is a wholly-owned Subsidiary of Parent;
NOW, THEREFORE, in consideration of the premises and in order to
induce Lender to continue to extend credit under the Credit Agreement and to
enter into the First Amendment and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINED TERMS. Unless otherwise defined herein, all capitalized
terms used herein have the respective meanings set forth or referred to in the
Credit Agreement.
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2. GRANT OF SECURITY INTEREST. To secure the prompt and complete
payment, performance and observance of all of the Obligations, and to induce
Lender to enter into the First Amendment and to continue to make extensions of
credit under the Credit Agreement in accordance with the terms thereof, Grantor
hereby grants to Lender a security interest in all of Grantor's right, title and
interest in, to and under the following, whether now owned by or owing to, or
hereafter acquired by or arising in favor of Grantor (including, without
limitation, under any trade names, styles or divisions thereof), and whether
owned, leased or consigned by or to Grantor, and regardless of where located
(all of which being hereinafter collectively referred to as the "Collateral"):
(i) all Accounts;
(ii) all Lock Box Accounts, the Concentration Account, the
Disbursement Account and all other lockbox, deposit and other bank accounts
of Grantor and all deposits therein and investments made with the funds
therein;
(iii) all money, cash or cash equivalents of Grantor; and
(iv) to the extent not otherwise included, all Proceeds of any
of the foregoing and all accessions to, substitutions and replacements for,
and rents, profits and products of, each of the foregoing.
3. RIGHTS OF LENDER. (a) Lender may at any time after the
occurrence of an Event of Default and without prior notice to Grantor, notify
Account Debtors, that the Accounts have been assigned to Lender and that
payments shall be made directly to Lender. Upon the request of Lender, Grantor
shall so notify such Account Debtors.
(b) Lender may at any time in Lender's own name or in the name
of Grantor communicate with Account Debtors to verify with such Person, to
Lender's satisfaction, the existence, amount and terms of any Accounts.
4. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents
and warrants that:
(a) Grantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of California; (ii)
is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where qualification or licensing is required by the
nature of its business except where the absence of such qualification or
licensing has no reasonable likelihood of having a materially adverse effect
(A) on the business, properties, assets or financial condition of Grantor or
(B) on the Collateral; (iii) has all requisite corporate power and authority
to operate its properties, and to conduct its business as now or currently
proposed to be conducted; (iv) is in compliance with its certificate of
incorporation and by-laws; and (v) is in compliance with all applicable laws
except if such non-compliance has no reasonable likelihood of having a
material adverse effect on the business, operations, properties, assets or
financial condition of Grantor or the ability of Grantor to perform its
obligations under this Agreement or on the Collateral.
(b) Grantor is the sole owner of each item of the Collateral in
which it purports to grant a security interest hereunder, having good and
marketable title thereto free and clear of any and all Liens except (i) the
security interest granted to Lender under this Security Agreement, (ii)
Permitted Encumbrances and (iii) the second priority security interest
granted to FFMC under the FFMC Security Agreement. Grantor will warrant and
defend such Collateral against all claims and demands of all persons at any
time claiming the same or any interest thereon.
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(c) No effective security agreement, financing statement,
equivalent security or Lien instrument or continuation statement covering all or
any part of the Collateral is on file or of record in any public office, except
(i) such as have been filed in favor of Lender pursuant to this Security
Agreement, (ii) such as relate to Permitted Encumbrances or (iii) such as have
been filed in favor of FFMC pursuant to the FFMC Security Agreement.
(d) As a result of the filing of appropriate financing
statements in the jurisdictions listed on Schedule I hereto, this Security
Agreement is effective to create a valid and continuing Lien on and perfected
security interest in favor of Lender in the Collateral with respect to which a
security interest may be perfected by filing pursuant to the Code, which lien
and security interest is prior to all other Liens except those Liens
specifically designated on Schedule 6.7 to the Credit Agreement as being prior
to the Lien of this Security Agreement, and is enforceable as such as against
creditors of and purchasers from Grantor. All action (including, without
limitation, all filings, registrations and recordings) necessary or desirable to
create, protect and perfect the security interest granted to Lender hereby in
respect of each item of the Collateral has been duly accomplished.
(e) Grantor's chief executive office, principal place of
business, corporate offices, and the locations of all of its records concerning
the Collateral are set forth on Schedule I. Grantor shall not change its chief
executive office, principal place of business, corporate offices, or the
location of its records concerning the Collateral without giving thirty (30)
days prior written notice thereof to Lender and taking all actions deemed by
Lender necessary or appropriate to protect and perfect Lender's interest in the
Collateral.
(f) Unless otherwise disclosed in writing to Lender by Grantor
(i) each Account represents a bona fide sale of services or Inventory to
customers in the ordinary course of Grantor's business completed in accordance
with the terms and provisions contained in the documents available to Lender
with respect thereto; and no Account is evidenced by a Document, Instrument or
Chattel Paper; (ii) the amounts shown on any aged receivable trial balance
delivered by Grantor to Lender pursuant to the terms of this Security Agreement
or the Credit Agreement and on Grantor's books and records and all invoices and
statements which may be delivered to Lender with respect thereto are actually
and absolutely owing to Grantor and are not in any way contingent other than in
connection with Grantor's performance of its obligations under contracts
relating to its Accounts which obligations have been disclosed to Lender; (iii)
no payments have been or shall be made on any Account except payments pursuant
to the terms of Annex B to the Credit Agreement; (iv) there are no setoffs,
claims or disputes existing or asserted with respect to any Eligible Account and
Grantor represents and warrants that it has not made any agreement with any
Account Debtor for any deduction therefrom except a discount or allowance
allowed by Grantor in the ordinary course of its business for prompt payment;
(v) to the best of Grantor's knowledge, there are no facts, events or
occurrences which in any way impair the validity or enforceability of any
Account as shown on the respective aged receivable trial balances, Grantor's
books and records and all invoices and statements delivered to Lender with
respect thereto; (vi) to the best of Grantor's knowledge, all Account Debtors
have the capacity to contract; (vii) Grantor has received no notice of
proceedings or actions which are threatened or pending against any Account
Debtor which might result in any material adverse change in such Account
Debtor's financial condition; and (viii) Grantor has no knowledge that any
Account Debtor is unable generally to pay its debts as they become due.
5. COVENANTS. Grantor covenants and agrees with Lender that
from and after the date of this Security Agreement and until the Termination
Date:
(a) Further Assurances; Pledge of Instruments. At any time and
from time to time, upon the written request of Lender and at the sole expense of
Grantor, Grantor shall promptly and
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duly execute and deliver any and all such further instruments and documents
and take such further action as Lender may reasonably deem desirable to obtain
the full benefits of this Security Agreement and of the rights and powers herein
granted, including filing any financing or continuation statements under the
Code with respect to the liens and security interests granted hereunder or under
any other Loan Document. Grantor also hereby authorizes Lender to file any such
financing or continuation statement without the signature of Grantor to the
extent permitted by applicable law. If any amount payable under or in connection
with any of the Collateral is or shall become evidenced by any Instrument having
an outstanding principal balance of greater than $50,000, such Instrument, other
than checks and notes received in the ordinary course of business, shall be duly
endorsed in a manner satisfactory to Lender immediately upon Grantor's receipt
thereof and promptly delivered to Lender. Grantor will warrant and defend the
Collateral against all claims and demands of all persons at any time claiming
the same or any interest thereon.
(b) Maintenance of Records. Grantor shall keep and maintain,
at its own cost and expense, satisfactory and complete records of the
Collateral, including a record of any and all payments received and any and all
credits granted with respect to the Collateral and all other dealings with the
Collateral. Grantor shall mark its books and records pertaining to the
Collateral to evidence this Security Agreement and the security interests
granted hereby. Upon the occurrence and during the continuation of any Event of
Default, Grantor shall deliver and turn over all of Grantor's books and records
pertaining to the Collateral to Lender or to Lender's representatives at any
time on demand of Lender. Prior to the occurrence of an Event of Default, upon
reasonable notice from Lender, Grantor shall permit any representative of Lender
to inspect such books and records and shall provide photocopies thereof to
Lender as more specifically set forth in Section 1.13 of the Credit Agreement.
(c) Continuous Perfection. Grantor shall not change its name,
identity or corporate structure in any manner which might make any financing or
continuation statement filed in connection herewith seriously misleading within
the meaning of Section 9-402(7) of the Code or any other then applicable
provision of the Code unless Grantor shall have given Lender at least thirty
(30) days' prior written notice thereof and shall have taken all action (or made
arrangements satisfactory to Lender to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by Lender to amend such financing
statement or continuation statement so that it is not seriously misleading.
(d) Provisions Regarding Accounts.
(i) Grantor shall not re-date any invoice or sale or make
sales on extended dating beyond that customary in Grantor's business, or extend
or modify any Account (other than correction of errors in the ordinary course).
If Grantor becomes aware of any matter materially affecting any Account,
including information regarding such Account Debtor's creditworthiness, Grantor
will promptly so advise Lender.
(e) Except as provided in the Credit Agreement, Grantor shall
not grant any discount, credit or allowance to any Account Debtor without
Lender's consent, except for discounts, credits and allowances for returns,
rejections and damaged goods made or given in the ordinary course of Grantor's
business consistent with past practices.
6. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT. (a) Grantor hereby
irrevocably constitutes and appoints Lender and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of Grantor and in
the name of Grantor or in its own name, from time to time in Lender's
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reasonable discretion, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute and
deliver any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby grants to Lender the power and
right, on behalf of Grantor, without notice to or assent by Grantor, and at any
time, to do the following:
(i) in the name of Grantor, in its own name or otherwise,
take possession of, endorse and receive payment of any checks, drafts,
notes, acceptances, or other Instruments for the payment of monies due
under any Collateral;
(ii) if Grantor fails or refuses to do so, continue any
insurance existing pursuant to the terms of the Loan Documents, and pay
all or any part of the premiums therefor and the costs thereof; and
(iii) receive payment of any and all monies, claims, and
other amounts due or to become due at any time arising out of or in
respect of any Collateral.
(b) Grantor hereby irrevocably constitutes and appoints Lender
and any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in the
place and stead of Grantor and in the name of Grantor or in its own name, from
time to time in Lender's discretion, for the purpose of carrying out the terms
of this Security Agreement, to take any and all appropriate action and to
execute and deliver any and all documents and instruments which may be necessary
or desirable to accomplish the purposes of this Security Agreement and, without
limiting the generality of the foregoing, hereby grants to Lender the power and
right, on behalf of Grantor, without notice to or assent by Grantor, upon the
occurrence and during the continuation of a Default, to do the following:
(i) ask, demand, collect, receive and give acquittances and
receipts for any and all money due or to become due under any Collateral;
(ii) pay or discharge any taxes, Liens, security interests,
or other encumbrances levied or placed on or threatened against the
Collateral;
(iii) direct any party liable for any payment under or in
respect of any of the Collateral to make payment of any and all monies due
or to become due thereunder, directly to Lender or as Lender shall direct;
(iv) sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against Account
Debtors, assignments, verifications, and notices in connection with
accounts and other documents constituting or related to the Collateral;
(v) settle, compromise or adjust any suit, action, or
proceeding described above and, in connection therewith, give such
discharges or releases as Lender may deem appropriate;
(vi) file any claim or take or commence any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
Lender for the purpose of collecting any and all such monies due under any
Collateral whenever payable;
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(vii) commence and prosecute any suits, actions or
proceedings at law or in equity in any court to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral;
(viii) defend any suit, action or proceeding brought against
Grantor with respect to any Collateral if Grantor does not defend such
suit, action or proceeding or if Lender believes that Grantor is not
pursuing such defense in a manner that will maximize the recovery with
respect to such Collateral; and
(ix) sell, transfer, pledge, make any agreement with respect
to, or otherwise deal with any of the Collateral as fully and completely as
though Lender were the absolute owner thereof for all purposes, and to do,
at Lender's option and Grantor's expense, at any time, or from time to
time, all acts and other things which Lender reasonably deems necessary to
perfect, preserve, or realize upon the Collateral and Lender's Lien therein
in order to effect the intent of this Security Agreement, all as fully and
effectively as Grantor might do.
(c) Grantor hereby ratifies, to the extent permitted by law,
all that said attorneys shall lawfully do or cause to be done by virtue hereof.
The power of attorney granted pursuant to this Section 6 is a power coupled with
an interest and shall be irrevocable until the Termination Date.
(d) The powers conferred on Lender hereunder are solely to
protect Lender's security interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. Lender shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers and
none of its officers, directors, employees, agents or representatives shall be
responsible to Grantor for any act or failure to act, except for their own gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.
(e) Grantor also authorizes Lender, at any time and from time
to time, following the occurrence and during the continuance of an Event of
Default, to execute, in connection with the sale provided for in Section 8
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
7. PERFORMANCE BY LENDER OF GRANTOR'S OBLIGATIONS. If Grantor
fails to perform or comply with any of its agreements contained herein or in any
of the other Loan Documents, and Lender, as provided for by the terms of this
Security Agreement or any other Loan Documents, shall itself perform or comply,
or otherwise cause performance of or compliance with such agreement, the
reasonable expenses, including attorneys' fees, of Lender incurred in connection
with such performance or compliance, together with interest thereon at the
Default Rate shall be payable by Grantor to Lender on demand and shall
constitute part of the Obligations secured hereby.
8. REMEDIES; RIGHTS UPON AN EVENT OF DEFAULT. (a) If any Event
of Default shall occur and be continuing, Lender may exercise in addition to all
other rights and remedies granted to it under this Security Agreement, the
Credit Agreement, the other Loan Documents and under any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, Grantor expressly agrees that in any such event Lender without
demand of performance or other demand, advertisement or notice of any kind
(except the notice specified below of time and place of public or private sale)
to or upon Grantor or any other Person (all and each of which demands,
advertisements and notices are hereby expressly waived to the maximum extent
permitted by the Code and other applicable law), may forthwith enter upon the
premises of Grantor where any Collateral is
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located through self-help, without judicial process, without first obtaining a
final judgment or giving Grantor notice and opportunity for a hearing on
Lender's claim or action, and without paying rent to Grantor, and collect,
receive, assemble, process, appropriate and realize upon the Collateral, or any
part thereof, and may forthwith sell, lease, assign, give an option or options
to purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Lender shall have the right upon any such public sale or sales and, to the
extent permitted by law, upon any such private sale or sales, to purchase for
its benefit the whole or any part of said Collateral so sold, free of any right
or equity of redemption, which equity of redemption Grantor hereby releases.
Such sales may be adjourned or continued from time to time with or without
notice. Lender shall have the right to conduct such sales on Grantor's premises
or elsewhere and shall have the right to use Grantor's premises without charge
for such sales for such time or times as Lender deems necessary or advisable
except as otherwise provided in the applicable landlord's waiver.
Grantor further agrees, at Lender's request, to assemble the
Collateral and make it available to Lender at places which Lender shall
reasonably select, whether at Grantor's premises or elsewhere. Until Lender is
able to effect a sale, lease, or other disposition of the Collateral, Lender
shall have the right to hold or use the Collateral on behalf of Lender, or any
part thereof, to the extent that it deems appropriate for the purpose of
preserving the Collateral or its value or for any other purpose deemed
appropriate by Lender. Lender shall have no obligation to Grantor to maintain
or preserve the rights of Grantor as against third parties with respect to the
Collateral while the Collateral is in the possession of Lender. Lender may, if
it so elects, seek the appointment of a receiver or keeper to take possession of
the Collateral and to enforce any of Lender's remedies with respect to such
appointment without prior notice or hearing. Lender shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, as provided in Section 8(d) hereof, and only after so paying over such
net proceeds and after the payment by Lender of any other amount required by any
provision of law, including section 9504(1)(c) of the Code (but only after
Lender has received what Lender considers reasonable proof of a subordinate
party's security interest), need Lender account for the surplus, if any, to
Grantor. To the maximum extent permitted by applicable law, Grantor waives all
claims, damages, and demands against Lender arising out of the repossession,
retention or sale of the Collateral except such as arise out of the gross
negligence or willful misconduct of such party. Grantor agrees that ten (10)
days' prior notice by Lender of the time and place of any public sale or of the
time after which a private sale may take place is reasonable notification of
such matters. Grantor shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all amounts to
which Lender is entitled, Grantor also being liable for any and all costs and
expenses incurred by Lender, including reasonable attorneys' fees, to collect
such deficiency.
(b) Grantor agrees to pay any and all costs of Lender,
including, without limitation, reasonable attorneys' fees, incurred in
connection with the enforcement of any of its rights and remedies hereunder.
(c) Except as otherwise specifically provided herein, to the
maximum extent permitted by applicable law, Grantor hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable
law) of any kind in connection with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be distributed by Lender upon
receipt, in the following order of priorities:
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First, the payment in full of reasonable expenses of Lender in
connection with such sale, disposition or other realization, including all
expenses, liabilities and advances incurred or made by Lender in connection
therewith, including reasonable attorney's fees and any other Obligations
owed to Lender;
Second, to the payment of accrued but unpaid interest on the
Obligations;
Third, to the payment of unpaid principal of the Obligations;
Fourth, to the payment of all other Obligations until all other
Obligations shall have been paid in full; and
Finally, to payment to Grantor, or its successors or assigns, or as
a court of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
9. LIMITATION ON LENDER'S DUTY IN RESPECT OF COLLATERAL. Lender shall
use reasonable care with respect to the Collateral in its possession or under
its control. Lender shall not have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
Lender, or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Upon request of Grantor, Lender
shall promptly account for any monies received by Lender in respect of any
foreclosure on or disposition of the Collateral.
10. REINSTATEMENT. This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by or
against Grantor for liquidation or reorganization, should Grantor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Grantor's
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Obligations, or any part thereof,
is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment,
or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
11. NOTICES. All notices, approvals, consents and other communications
to any party hereunder shall be in writing and sent by certified or registered
mail, return receipt requested, or by overnight delivery service, with all
charges prepaid, if to Grantor addressed to it at c/o C.I.S. Technologies, Inc.,
One Warren Place, 6100 South Yale, Suite 1900, Tulsa, Oklahoma 74136-1903,
Attention: Richard A. Evans, Telecopy No. (918) 481-4205, or Lender, at its
address set forth in Section 10.9 of the Credit Agreement, or by facsimile
transmission, promptly confirmed in writing sent by first class mail, to the
telecopy number set forth above or in Section 10.9 of the Credit Agreement, as
applicable, or such other address or telecopy number as such party may hereafter
specify by notice to Lender and Grantor. All such notices, approvals, consents
or other communications shall be deemed given (i) if sent by certified or
registered mail, (5) Business Days after being postmarked, (ii) if sent by
overnight delivery service, when received at the address specified on Schedule
10.9 to the Credit Agreement or when delivery is refused and (iii) if sent by
facsimile transmission, when receipt of such transmission is acknowledged.
12. SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent
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of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Security Agreement is to be read, construed and applied
together with the Credit Agreement and the other Loan Documents, which, taken
together, set forth the complete understanding and agreement of the Lender and
Grantor with respect to the matters referred to herein and therein.
13. NO WAIVER; CUMULATIVE REMEDIES. Lender shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
Lender and then only to the extent therein set forth. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have had on any future
occasion. No failure to exercise nor any delay in exercising on the part of
Lender, any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law. None of the
terms or provisions of this Security Agreement may be waived, altered, modified
or amended except by an instrument in writing, duly executed by Lender and
Grantor.
14. LIMITATION BY LAW. All rights remedies and powers provided in this
Security Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Security Agreement are intended to be subject to all applicable mandatory
provisions of law that may be controlling and to be limited to the extent
necessary so that they do not render this Security Agreement invalid,
unenforceable, in whole or in part, or not entitled to be recorded, registered,
or filed under the provisions of any applicable law.
15. TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 10
hereof, this Security Agreement shall terminate upon the Termination Date.
16. SUCCESSOR AND ASSIGNS. This Security Agreement and all obligations
of Grantor hereunder shall be binding upon the successors and assigns of
Grantor, and shall, together with the rights and remedies of Lender hereunder,
inure to the benefit of Lender, all future holders of any instrument evidencing
any of the Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of any
agreement governing or instrument evidencing the Obligations or any portion
thereof or interest therein shall in any manner affect the security interest
granted to Lender hereunder. Grantor may not assign, sell or otherwise transfer
an interest in this Security Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS SECURITY
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. GRANTOR HEREBY CONSENTS AND AGREES THAT
THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN GRANTOR AND
LENDER PERTAINING TO THIS SECURITY AGREEMENT OR TO ANY MATTER ARISING OUT OF OR
RELATING TO THIS SECURITY AGREEMENT, THE
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CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT LENDER AND
GRANTOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A
COURT LOCATED OUTSIDE OF NEW YORK CITY AND, PROVIDED, FURTHER, THAT NOTHING IN
THIS SECURITY AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. GRANTOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY
SUCH COURT, AND GRANTOR HEREBY WAIVES ANY OBJECTION WHICH GRANTOR MAY HAVE BASED
UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO GRANTOR AT THE ADDRESS SET FORTH IN
SECTION 11 HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF GRANTOR'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN
THE U.S. MAILS, PROPER POSTAGE PREPAID.
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18. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH, THIS SECURITY AGREEMENT, THE CREDIT AGREEMENT
OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
IN WITNESS WHEREOF, Grantor has caused this Security Agreement to be
executed and delivered by its duly authorized officer on the date first set
forth above.
HOSPITAL COST CONSULTANTS, INC.
By: /s/ Phillip D. Kurtz
----------------------------------------------
Name: Phillip D. Kurtz
Title: Vice President
ACCEPTED ON May 31, 1995.
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Dan Pengue
------------------------------------------------
Name:
Title:
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THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
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EXHIBIT 10.t
INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT (this "Agreement"), dated as of May 31,
1995, between GENERAL ELECTRIC CAPITAL CORPORATION, a corporation organized
under the banking laws of the State of New York ("Lender"), and FIRST FINANCIAL
MANAGEMENT CORPORATION, a Georgia corporation ("Seller"). Capitalized terms
used herein and not otherwise defined herein have the meanings set forth or
referred to in Section 1 of this Agreement.
W I T N E S S E T H :
WHEREAS, pursuant to the Lender Documents, the Borrowers have incurred
and will incur from time to time the Lender Obligations;
WHEREAS, pursuant to the Lender Documents, as security for the Lender
Obligations, HCCI has granted to Lender a first priority Lien on the Account
Collateral, and Parent has granted to Lender, among other things, a second
priority Lien on the Stock Collateral;
WHEREAS, pursuant to the Seller Documents, HCCI and Parent have
incurred the Seller Obligations;
WHEREAS, pursuant to the Seller Documents, as security for the Seller
Obligations, Parent has granted to Seller a first priority Lien on the Stock
Collateral and HCCI has granted to Seller a second priority Lien on the Account
Collateral; and
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Stock Sale Agreement and to Lender's consent
thereto that Lender and Seller execute and deliver this Agreement in order to
provide for the relative priority of the Liens of Lender and of Seller in the
Collateral and to provide for certain other rights and interests among the
parties;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties agree as follows:
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Section 1. Definitions.
(a) As used herein, the following terms shall have the meanings
indicated:
"Account Collateral" shall mean all HCCI's Accounts, all deposit,
lockbox and other bank accounts of HCCI and all deposits therein and investments
made with the funds therein and all Proceeds of the foregoing, whether now owned
or hereafter acquired by or arising in favor of HCCI, regardless of where
located.
"Accounts" shall mean, with respect to any Person, all "accounts," as
such term is defined in the Code, now owned or hereafter acquired by such Person
and, in any event, including: (a) all accounts receivable, other receivables,
book debts and other forms of obligations (other than forms of obligations
evidenced by chattel paper, documents or instruments) now owned or hereafter
received or acquired by or belonging or owing to such Person, whether arising
out of goods sold or services rendered by it or from any other transaction
(including any such obligations which may be characterized as an account or
contract right under the Code); (b) all of such Person's rights in, to and under
all purchase orders or receipts now owned or hereafter acquired by it for goods
or services; (c) all of such Person's rights to any goods represented by any of
the foregoing (including unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transit and rights to returned, reclaimed or
repossessed goods); (d) all monies due or to become due to such Person under all
purchase orders and contracts for the sale or lease of goods or the performance
of services or both by such Person or in connection with any other transaction
(whether or not yet earned by performance on the part of such Person) now or
hereafter in existence, including, without limitation, the right to receive the
proceeds of said purchase orders and contracts; and (e) all collateral security
and guarantees of any kind, now or hereafter in existence, given by any Person
with respect to any of the foregoing.
"Accounts Security Agreement" shall mean the Accounts Security
Agreement dated as of May 31, 1995 made by HCCI in favor of Lender.
"Agreement" shall mean this Intercreditor Agreement.
"Borrowers" shall mean C.I.S., Inc., an Oklahoma corporation, and
Hospital Billing Analysis Corporation, a California corporation.
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"CIS Parties" shall mean Borrowers, HCCI and Parent, the subsidiaries
thereof, and their respective successors and assigns.
"Code" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of New York; provided, that in the event
that by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of, or the remedies with respect to, any Secured
Creditor's security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York,
the term "Code" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection, priority or remedies and for purposes of definitions
related to such provisions.
"Collateral" shall mean the Account Collateral and the Stock
Collateral.
"Credit Agreement" shall mean the Credit Agreement, dated as of
October 15, 1994, as amended by the First Amendment dated as of even date
herewith, among Lender, Borrowers and Parent.
"exercise of remedies" shall mean, with respect to any Collateral, any
of the following: (i) the application of such Collateral to the obligations
secured thereby; (ii) the repossession of, foreclosure on, or the exercise of
any other remedy (judicially or nonjudicially) with respect to such Collateral
or any Lien thereon; (iii) the taking of control or possession of such
Collateral or the sale or other disposition of any interest in such Collateral;
(iv) the exercise of any right of setoff or assertion of any claims or interests
in any such Collateral; (v) the taking of any action to interfere with any
rights in respect of such Collateral of any Person recognized as the holder of a
first priority Lien on such Collateral pursuant to this Agreement or such
holder's ability to realize upon or otherwise deal with such Collateral; or (vi)
the commencement or maintenance of any action, suit or other proceeding at law,
in equity or otherwise in furtherance of any of the foregoing or to otherwise
enforce rights in respect of a Lien on such Collateral or to direct the owner of
such Collateral to sell or otherwise dispose of any interest therein. To
"exercise remedies" shall mean to take or institute the taking of any exercise
of remedies.
"HCCI" shall mean Hospital Cost Consultants, Inc., a California
corporation, and its successors and assigns.
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"Lender Documents" shall mean the Credit Agreement and the other "Loan
Documents" as defined in the Credit Agreement.
"Lender Obligations" shall mean all "Obligations" as defined in the
Credit Agreement.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance, lien (statutory
or other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"paid in full" and "payment in full" shall mean (i) with respect to
the Lender Obligations, payment in full thereof in cash and termination of the
Lender Documents (excluding any provisions which expressly survive termination
thereof) and (ii) with respect to the Seller Obligations, payment in full
thereof in cash and the termination of the Seller Documents (excluding any
provisions which expressly survive termination thereof).
"Parent" shall mean C.I.S. Technologies, Inc., a Delaware corporation.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether Federal,
state, county, city, municipal or otherwise, including any instrumentality,
division, agency, body or department thereof).
"Proceeds" shall mean all "proceeds," as such term is defined in the
Code and, in any event, shall include, with respect to any Person: (a) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to such
Person from time to time with respect to any of its property or assets; (b) any
and all payments (in any form whatsoever) made or due and payable to such Person
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of such Person's property
or assets by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority); (c) any claim of such Person
against third parties for past, present or future infringement or dilution of
any intellectual property or for injury to the goodwill associated with any
intellectual property; (d) any recoveries by such Person against third parties
with respect to any litigation or dispute concerning any of such Person's
property or assets; and (e) any and all profits, rentals, receipts and other
amounts from time to
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time paid or payable under or in connection with any of such Person's property
or assets, upon disposition or otherwise.
"Secured Creditors" shall mean Lender and Seller.
"Secured Creditor Documents" shall mean the Lender Documents and the
Seller Documents.
"Seller Documents" shall mean the Seller Note, the Seller Guaranty,
the Seller Pledge Agreement and the Seller Security Agreement.
"Seller Guaranty" shall mean the Corporate Guaranty, dated as of even
date herewith, made by Parent in favor of Seller.
"Seller Note" shall mean the Promissory Note dated May 31, 1995 made
by HCCI to Seller in the principal amount of $5,000,000.
"Seller Obligations" shall mean the obligations of HCCI to pay
principal of and interest on the Seller Note and the obligations of the Parent
under the Seller Guaranty with respect thereto.
"Seller Pledge Agreement" shall mean the Pledge Agreement, dated as of
even date herewith, made by Parent in favor of Seller.
"Seller Security Agreement" shall mean the Accounts Security
Agreement, dated as of even date herewith, made by HCCI in favor of Seller.
"Stock Collateral" shall mean all of the issued and outstanding shares
of capital stock of HCCI owned or hereafter acquired by Parent, together with
all Proceeds thereof and all cash, dividends, additional securities and other
property at any time and from time to time receivable or otherwise distributed
in respect of or in exchange for any and all of the foregoing.
"Stock Sale Agreement" shall mean the Stock Purchase and Sale
Agreement dated May 31, 1995 among Seller, Microbilt Corporation and Parent,
providing for the sale of all of the capital stock of HCCI to Parent.
(b) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement and section references are to
this Agreement unless otherwise specified.
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(c) For purposes of this Agreement, the following additional rules of
construction shall apply: (i) wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular and
the plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, the feminine and the neuter; (ii) the term
"including" shall not be limiting or exclusive, unless specifically indicated to
the contrary; (iii) all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations; and
(iv) all references to any instruments or agreements, including references to
any of this Agreement and the Secured Creditor Documents, shall include any and
all modifications or amendments thereto and any and all extensions or renewals
thereof, in each case, made in accordance with the terms hereof.
(d) Terms not otherwise defined herein which are defined in or used in
Article 9 of the Code shall herein have the respective meanings given to them in
such Article 9.
Section 2. Account Collateral.
2.1 Subordination. Notwithstanding the order of filing of any
financing statements or the perfection or nonperfection of any Lien or the
physical possession of any of the property of any CIS Party by any Secured
Creditor or the date, manner or order of granting or attachment of any Lien in
favor of any Secured Creditor, and notwithstanding any applicable law,
including, without limitation, the Code, or any other circumstance, Secured
Creditors hereby agree that the Lien created in favor of Lender in respect of
the Account Collateral pursuant to the Lender Documents shall be prior and
superior to any Lien or other interests created in favor of or held by Seller in
respect of the Account Collateral, such priority, as between Lender and Seller,
to give Lender all the rights, powers and privileges of a first priority secured
creditor under the Code, other applicable law and otherwise in respect of the
Account Collateral, with the rights, powers and privileges of Seller in respect
of the Account Collateral being subject and subordinate in all respects to those
of Lender.
2.2 Exercise of Remedies. Until payment in full of the Lender
Obligations, Seller shall not exercise remedies with respect to the Account
Collateral. Without limiting the generality of the foregoing, unless and until
the Lender Obligations have been paid in full, the sole right of Seller with
respect to the Account Collateral is to hold a Lien on the Account Collateral
pursuant to the Seller Documents for the period and to the extent granted
therein
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and to receive the Proceeds thereof, if any, after payment in full of the Lender
Obligations. Lender shall have the exclusive right to exercise remedies in
respect of the Account Collateral and to apply all Proceeds of Account
Collateral to the Lender Obligations and, provided Lender has no actual
knowledge that the Seller Obligations have been accelerated, to make Proceeds of
Account Collateral available to the CIS Parties, in such order and manner as
Lender shall deem fit, with no duty or other obligations to account therefor to
Seller. Without limiting the foregoing, Seller acknowledges that Lender may have
"lock-box" and other cash collateral arrangements in place which will subject
all cash and other Account Collateral of the CIS Parties to the Lien under the
Lender Documents and which will result in collection of Proceeds of Account
Collateral and application thereof to the Lender Obligations.
2.3 Proceeds; Payments Over. If Seller receives any Proceeds of
Account Collateral in contravention of this Agreement, Seller shall promptly so
notify Lender and shall segregate and hold in trust and pay over to Lender such
Proceeds in the same form as received, with any necessary endorsements or as a
court of competent jurisdiction may otherwise direct. Lender is hereby
authorized to make any such endorsements as, and is hereby appointed in
connection therewith, the attorney-in-fact for Seller. This appointment is
coupled with an interest and is irrevocable. After all of the Lender
Obligations have been paid in full, Lender shall remit or deliver to Seller any
surplus or remaining Account Collateral which is collateral for the Seller
Obligations.
2.4 Collateral Releases. To the extent any Account Collateral is sold
or otherwise disposed of either by Lender, its agents, or any CIS Party, with
the consent of Lender, and provided that any surplus Proceeds of any such sale
or other disposition (after application of such Proceeds to the payment of the
Lender Obligations) are paid to Seller for application to the Seller
Obligations, Seller will, immediately upon the request of Lender, release or
otherwise terminate its Lien upon the Account Collateral, in accordance with
this Agreement and applicable law, and promptly following such request, Seller
will deliver such release documents as Lender may reasonably require in
connection therewith.
2.5 Seller's Right To Receive Payments. Anything herein to the
contrary notwithstanding, Seller (so long as Seller has not been notified that
an Event of Default has occurred under, and as defined in, any of the Lender
Documents) shall have the right to receive from HCCI or Parent, and to retain
free of any rights of Lender
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therein, payments and prepayments of the Seller Obligations regardless of
whether the source of any such payment or prepayment may be Proceeds of Account
Collateral, and Seller shall be under no duty to inquire into the source of any
such payment or prepayment. Nothing in the parenthetical contained in this
Section 2.5 shall be construed to impair the right of Seller to receive and
retain from HCCI and Parent payments and prepayments of the Seller Obligations
the source of which is not Proceeds of Account Collateral or subordinate the
Seller Obligations to the Lender Obligations.
Section 3. Stock Collateral
3.1 Subordination. Notwithstanding the order of filing of any
financing statements or the perfection or nonperfection of any Lien or the
physical possession of any of the property of any CIS Party by any Secured
Creditor or the date, manner or order of granting or attachment of any Lien in
favor of any Secured Creditor, and notwithstanding any applicable law,
including, without limitation, the Code, or any other circumstance, Secured
Creditors hereby agree that the Lien created in favor of Seller in respect of
the Stock Collateral pursuant to the Seller Documents shall be prior and
superior to any Lien or other interests created in favor of or held by Lender in
respect of the Stock Collateral, such priority, as between Lender and Seller, to
give Seller all the rights, powers and privileges of a first priority secured
creditor under the Code, other applicable law and otherwise in respect of the
Stock Collateral, with the rights, powers and privileges of Lender in respect of
the Stock Collateral being subject and subordinate in all respects to those of
Seller.
3.2 Exercise of Remedies. Until payment in full of the Seller
Obligations, Lender shall not exercise remedies with respect to the Stock
Collateral. Without limiting the generality of the foregoing, unless and until
the Seller Obligations have been paid in full, the sole right of Lender with
respect to the Stock Collateral is to hold a Lien on the Stock Collateral
pursuant to the Lender Documents for the period and to the extent granted
therein and to receive the Proceeds thereof, if any, after payment in full of
the Seller Obligations. Seller shall have the exclusive right to exercise
remedies in respect of the Stock Collateral and to apply all Proceeds of Stock
Collateral to the Seller Obligations.
3.3 Proceeds; Payments Over. Lender shall notify Seller if it receives
any Proceeds of Stock Collateral. If Lender receives any Proceeds of Stock
Collateral in contravention of this Agreement, Lender shall
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segregate and hold in trust and pay over to Seller such Proceeds in the same
form as received, with any necessary endorsements or as a court of competent
jurisdiction may otherwise direct. Seller is hereby authorized to make any such
endorsements as, and is hereby appointed in connection therewith, the attorney-
in-fact for Lender. This appointment is coupled with an interest and is
irrevocable. After all of the Seller Obligations have been paid in full, Seller
shall remit or deliver to Lender any surplus or remaining Stock Collateral which
is collateral for the Lender Obligations.
3.4 Collateral Releases. To the extent any Stock Collateral is sold or
otherwise disposed of either by Seller, its agents, or any CIS Party, with the
consent of Seller, and provided that any surplus Proceeds of any such sale or
other disposition (after application of such Proceeds to the payment of the
Seller Obligations) are paid to Lender for application to the Lender
Obligations, Lender will, immediately upon the request of Seller, release or
otherwise terminate its Lien upon the Stock Collateral, in accordance with this
Agreement and applicable law, and promptly following such request, Lender will
deliver such release documents as Seller may reasonably require in connection
therewith.
Section 4. Consent; Notice; Lien Priority; Waivers; Bailee For
Perfection; Other Matters.
4.1 Consent; Notice. Seller acknowledges and consents to the granting
by CIS Parties of a Lien on the Collateral in favor of Lender to secure the
Lender Obligations pursuant to the Lender Documents and Seller agrees that it
shall not (and hereby waives any right to) contest in any proceeding the
validity, priority or enforceability (as limited by this Agreement) of Lender's
Lien on the Collateral. Lender acknowledges and consents to the granting by CIS
Parties of a Lien on the Collateral in favor of Seller to secure the Seller
Obligations pursuant to the Seller Documents and Lender agrees that it shall not
(and hereby waives any right to) contest in any proceeding the validity,
priority or enforceability (as limited by this Agreement) of Seller's Lien on
the Collateral. Secured Creditors hereby agree that the execution and delivery
of this Agreement shall constitute written notice to each other of their
respective Liens on the Collateral.
4.2 Lien Priority. The Lien priorities provided in Sections 2.1 and
3.1 shall not be altered or otherwise affected by any modification, renewal,
restatement, extension or refinancing of any obligations owed to any Secured
Creditor or any Secured Creditor Document, nor by
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any action or inaction which any Secured Creditor may take or fail to take in
respect of the Collateral.
4.3 No Warranties or Liability. (a) Secured Creditors acknowledge and
agree that neither has made any representation or warranty with respect to the
execution, validity, legality, completeness, collectibility or enforceability of
any of the Secured Creditor Documents. No Secured Creditor shall have any duty
to the other to act or refrain from acting in a manner which allows, or results
in, the occurrence or continuance of an event of default or default under any of
their respective agreements with the CIS Parties (including any Secured Creditor
Document), regardless of any knowledge thereof which they may have or be charged
with. No Secured Creditor shall be liable to the other for any action or failure
to act or for any error of judgment, negligence, or mistake, or oversight
whatsoever on the part of any such Secured Creditor or such Secured Creditor's
agents, officers, employees or attorneys with respect to any transaction
relating to the Secured Creditor Documents. The preceding sentence shall not,
however, relieve a Secured Creditor from liability for a breach of the specific
terms and conditions of this Agreement by such Secured Creditor or a breach of
applicable law.
(b) Except as provided in Section 4.8 hereof, each Secured Creditor
shall be solely responsible for perfecting and maintaining the perfection of its
Lien on the Collateral in which such Secured Creditor has been granted a Lien.
The foregoing provisions of this Agreement are intended solely to govern the
respective Lien priorities as among Secured Creditors and shall not impose on
any Secured Creditor any obligations in respect of the disposition of Proceeds
of any exercise of remedies with respect to any Collateral which would conflict
with prior perfected claims therein in favor of any other Person.
4.4 No Waiver of Subordination and Lien Priority Provisions. No right
of any Secured Creditor to enforce the subordination and lien priority
provisions of this Agreement shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any CIS Party or by any act
or failure to act by such Secured Creditor, or by any noncompliance by any
Person with the terms, provisions and covenants of this Agreement or any of the
Secured Creditor Documents, regardless of any knowledge thereof which such
Secured Creditor may have or be otherwise charged with.
4.5. Waiver of Marshalling and Valuation. Seller hereby agrees that
any Proceeds of the Account Collateral or any other property or collateral
securing the Lender
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Obligations received by Lender may be applied, reversed, and reapplied, in whole
or in part, to any of the Lender Obligations, as Lender, in its sole discretion,
deems appropriate. Lender hereby agrees that any Proceeds of the Stock
Collateral received by Seller may be applied, reversed, and reapplied, in whole
or in part, to any of the Seller Obligations, as Seller, in its sole discretion,
deems appropriate. Each Secured Creditor with respect to its Lien on the
Collateral agrees not to assert and hereby waives, to the fullest extent
permitted by law, any right to demand, request, plead or otherwise assert or
otherwise claim the benefit of, any marshalling, appraisement, valuation or
other similar right of a secured creditor that may otherwise be available under
applicable law.
4.6. Amendments to Seller Documents. Without the prior written
consent of Lender, no Seller Document shall be amended, modified or
supplemented.
4.7. Rights As Unsecured Creditors. Notwithstanding anything to the
contrary in this Agreement, but subject to the limitations of Sections 2.2 and
3.2, Secured Creditors may exercise rights and remedies as an unsecured creditor
against the CIS Parties in accordance with the terms of the Secured Creditor
Documents, any other applicable agreements with any of the CIS Parties or any
applicable law.
4.8. Bailee for Lender Perfection. Seller agrees to continually hold
the shares representing the Stock Collateral in its possession as bailee for
Lender and any permitted assignee thereof solely for the purpose of perfecting
the security interest granted in the Stock Collateral pursuant to the Lender
Documents. Upon payment in full of the Seller Obligations, Seller shall deliver
possession of the shares representing the Stock Collateral then in its
possession to Lender or as otherwise ordered by a court. Nothing contained in
this Section 4.8 shall in any way impair the right of Seller to exercise
remedies in respect of the Stock Collateral or to apply Proceeds of the Stock
Collateral to the Seller Obligations.
4.9. Bailee for Seller Perfection. Lender agrees to hold the Proceeds
of any Account evidenced by any instrument, if any, in its possession and
delivered by HCCI to Lender pursuant to Section 5(a) of the Accounts Security
Agreement as bailee for Seller and any permitted assignee thereof solely for the
purpose of perfecting the security interest granted in the Account Collateral
pursuant to the Seller Documents. Upon payment in full of the Lender
Obligations, Lender shall deliver possession of any such instrument then in its
possession to Seller or as otherwise
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ordered by a court. Nothing contained in this Section 4.9 shall in any way
impair the right of Lender to exercise remedies in respect of the Account
Collateral or to apply Proceeds of the Account Collateral to the Lender
Obligations or to return any such instrument to HCCI upon payment or other
satisfaction thereof.
Section 5. Bankruptcy Matters.
5.1 Bankruptcy. (a) This Agreement shall be applicable both before and
after the commencement, whether voluntary or involuntary, of any case of any CIS
Party under the United States Bankruptcy Code and all references herein shall be
deemed to apply to any such CIS Party as a debtor-in-possession and to any
trustee in bankruptcy for the estate of such CIS Party.
(b) Notwithstanding anything to the contrary contained in this Section
5, in the event that any Secured Creditor is required under any bankruptcy or
other law to return to any CIS Party, the estate in bankruptcy thereof, any
third party or any trustee, receiver or other representative thereof any payment
or distribution of assets, whether in cash, property or securities, which
constitutes the Collateral and to the extent such Secured Creditor had or has a
Lien therein, including proceeds thereof, as contemplated by this Agreement (a
"Reinstatement Distribution"), then to the extent permitted by law, this
Agreement and the subordination with respect to such assets or proceeds thereof
pursuant hereto shall be reinstated with respect to any such Reinstatement
Distribution to the extent that the claim of such Secured Creditor resulting
from the return of such Reinstatement Distribution is entitled to a priority
under such bankruptcy or other law at least equal to the general unsecured
obligations of the debtor therein existing prior to the commencement of any such
bankruptcy case or other proceeding. No Secured Creditor shall be required to
contest its obligation to return such Reinstatement Distribution if such Secured
Creditor elects for any reason not to contest such obligation.
5.2 Filing of Claims. In the event of the commencement of any case
under the United States Bankruptcy Code or any similar proceeding in respect of
HCCI or Parent, each Secured Creditor may file proofs of claim and other
pleadings and motions with respect to the Collateral in which it holds a Lien,
so long as such proofs of claim and other pleadings and motions are not contrary
to the provisions of this Agreement.
Section 6. Miscellaneous.
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Section 6.1. Termination. This Agreement shall remain in full force
and effect and be enforceable against each party hereto according to its terms
and shall terminate upon the earlier of payment in full of all of the Seller
Obligations or the payment in full of all the Lender Obligations. This is a
continuing agreement of subordination and Lender may continue, at any time and
without notice to Seller to extend credit and other financial accommodations and
lend monies to or for the benefit of any CIS Party on the faith hereof. Each of
Seller and Lender hereby waives any right it may have under applicable law to
revoke this Agreement or any of the provisions of this Agreement.
Section 6.2. Notices. All notices, and other communications provided
for hereunder shall be in writing (including telecopy communication) and mailed,
telecopied, or delivered by hand, if to Lender to General Electric Capital
Corporation, 501 Merritt Seven, Norwalk, CT 06851 Attention: Daniel R. Pengue,
Telecopier: (203) 840-4580, with copies to Legal Counsel, Telecopier: (203) 840-
4520, or if to Seller to First Financial Management Corporation, 3 Corporate
Square, Suite 700, Atlanta, Georgia 30329, Attention: Legal Department,
Telecopier: (404) 636-7632 or as designated by a party in a written notice to
the other party complying as to delivery with the terms of this Section. All
such notices and other communications shall be effective as follows: (a) when
mailed, after five days of the date deposited in the mails, (b) when sent by
telecopy, upon confirmation of receipt, and (c) when delivered by hand, upon
delivery to the addressee.
Section 6.3. Governing Laws; Severability; Waiver of Jury Trial. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity and without invalidating the remaining provisions
of this Agreement. EACH OF LENDER AND SELLER IRREVOCABLY WAIVES TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT.
Section 6.4. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
permitted successors and assigns. Seller shall not assign its rights
hereunder, except to an affiliate, without the prior written consent of Lender.
Lender shall not assign its rights hereunder, except to an affiliate or as
contemplated by Section 9.2 of the Credit Agreement, without the prior
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written consent of Seller. If the Lender Obligations are assigned or
participated as contemplated by Section 9.2 of the Credit Agreement, then all
references to Lender herein shall be deemed to include any relevant assignee or
participant.
Section 6.5. Amendments, Modifications and Waivers. No amendment,
modification or waiver of any provision of this Agreement shall be effective
unless the same shall be in writing and signed by each of the parties hereto,
and then such amendment, modification or waiver shall be effective only in the
specific instance and for the specific purpose for which it is given.
Section 6.6. Headings. The section headings contained in this
Agreement are and shall be without meaning or content whatsoever and are not
part of this Agreement.
Section 6.7 Subordination and Lien Priority Provisions. The
subordination and lien priority provisions of this Agreement are and are
intended solely for the purpose of defining the relative rights of Lender and
Seller, and may not be relied upon or enforced by any party other than Lender
and Seller. Nothing contained in this Agreement is intended to or shall impair
the obligation of any CIS Party to pay the Lender Obligations and the Seller
Obligations as and when the same shall become due and payable in accordance with
their respective terms, or to affect the relative rights of the creditors of any
CIS Party, other than Lender and Seller as between themselves.
Section 6.8. Credit Analysis. Secured Creditors shall each be
responsible for keeping themselves informed of (i) the financial condition of
all endorsers and/or guarantors of the Lender Obligations and the Seller
Obligations and (ii) all other circumstances bearing upon the risk of nonpayment
of the Lender Obligations and the Seller Obligations. Secured Creditors shall
have no duty to advise the other of information known to it regarding such
condition or any such other circumstances.
Section 6.9. Conflicts. In the event of any conflict between the
provisions of this Agreement and the provisions of the Secured Creditor
Documents, the provisions of this Agreement shall govern.
Section 6.10. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be an original and all of which shall
together constitute one and the same document.
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Section 6.11. No Third Party Beneficiaries. This Agreement and the
rights and benefits hereof shall inure solely to the benefit of Lender and
Seller and their respective successors and permitted assigns and no other Person
(including, without limitation, the CIS Parties, any Person who refinances
either the Lender Obligations or the Seller Obligations or any trustee,
receiver, debtor-in-possession or bankruptcy estate in a bankruptcy or like
proceeding) shall have or be entitled to assert rights or benefits hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized
representatives as of the date first above written.
"SELLER"
FIRST FINANCIAL MANAGEMENT CORPORATION
By: /s/ Stephen D. Kane
--------------------------------
Name:
Title: Vice Chairman
"LENDER"
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Dan Pengue
--------------------------------
Title:
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CONSENT AND AGREEMENT
Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Intercreditor Agreement as of the date thereof and agrees to be bound
by the terms and provisions thereof and take no action which is inconsistent
with, or to contest or challenge the validity of, any term or provision thereof,
and agrees that its successors and assigns shall be bound by the foregoing.
C.I.S. TECHNOLOGIES, INC.
By: /s/ Richard V. Souders
--------------------------------
Title: Sr. Vice President
C.I.S., INC.
By: /s/ Richard V. Souders
--------------------------------
Title: Sr. Vice President
HOSPITAL BILLING ANALYSIS, INC.
By: /s/ Phillip D. Kurtz
--------------------------------
Title: Vice President
AMSC, INC.
By: /s/ Richard A. Evans
--------------------------------
Title: Vice President
HOSPITAL COST CONSULTANTS, INC.
By: /s/ Phillip D. Kurtz
---------------------------------
Title: Vice President
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THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
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EXHIBIT 10.u
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement") is made and entered into as
of May 31, 1995 by C.I.S. Technologies, Inc., a Delaware corporation ("Pledgor),
in favor of GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("Lender").
W I T N E S S E T H:
WHEREAS, Pledgor is the legal and beneficial owner of the outstanding
shares of stock set forth on Schedule I hereto (the "Pledged Shares") and issued
by Hospital Cost Consultants, Inc., a California corporation ("HCCI");
WHEREAS, C.I.S., Inc., an Oklahoma corporation ("CIS, Inc."), and
Hospital Billing Analysis Inc., a California corporation ("HBA", and together
with CIS, Inc., collectively, "Borrowers"), Pledgor and Lender have entered into
the Credit Agreement dated as of October 15, 1994 (as amended by the First
Amendment referred to below and as further amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"). Capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in the Credit Agreement;
WHEREAS, Borrowers, Pledgor and Lender have entered into the First
Amendment to Credit Agreement (the "First Amendment"), dated as of May 31, 1995;
and
WHEREAS, Lender has required, as a condition to the effectiveness of
the First Amendment, that Pledgor pledges and grants to Lender, a security
interest in the Pledged Collateral (as defined herein) to secure the payment and
performance by Pledgor of the Secured Obligations (as defined herein);
NOW, THEREFORE, in consideration of the premises and in order to
induce Lender to continue to extend credit under the Credit Agreement and to
enter into the First Amendment, Pledgor hereby agrees with Lender, for its
benefit as follows:
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SECTION 1. PLEDGE. Pledgor hereby pledges and grants to Lender, for
its benefit, a continuing security interest in all of the following
(collectively, the "Pledged Collateral"):
(a) the Pledged Shares of Pledgor; and
(b) all additional shares of Stock of HCCI hereafter acquired,
received or owned by Pledgor (the "Additional Shares"); and
(c) the certificates representing the Pledged Shares and the
Additional Shares (all of which shall be deemed to be part of the Pledged
Shares), and all products and proceeds of any of such Pledged Shares, including,
without limitation, all dividends, cash, instruments, subscriptions, warrants
and any other rights and options and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such Pledged Shares.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Pledged Collateral is security for, the prompt payment in full when due, whether
at stated maturity, by acceleration or otherwise, and performance of the
Obligations, whether now existing or hereafter incurred, whether arising under
the Credit Agreement, this Agreement, the other Loan Documents or otherwise
(collectively, the "Secured Obligations").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered
to and held by FFMC on behalf of Lender pursuant hereto and the terms of the
Intercreditor Agreement and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to Lender.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants to Lender as follows:
(a) All of the Pledged Shares of Pledgor have been duly authorized
and validly issued and are fully paid and non-assessable. There are no existing
options, warrants, calls or commitments of any character whatsoever relating to
any of the Pledged Shares of Pledgor. None of the Pledged Shares is subject to
any shareholder agreement, voting trust agreement or any other agreement in
respect of the rights of shareholders.
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(b) Pledgor is the sole legal and beneficial owner of the Pledged
Collateral, free and clear of any Lien or claims of any Person except for the
security interest created by this Agreement and the security interest created by
the FFMC Pledge Agreement. The transfer of the Pledged Shares from FFMC to
Pledgor pursuant to the HCCI Acquisition Documents was not in violation of the
securities registration, securities disclosure or similar laws of any applicable
jurisdiction.
(c) This Agreement has been duly authorized, executed and delivered by
Pledgor and constitutes a legal, valid and binding obligation of Pledgor
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or other similar laws affecting the rights of
creditors generally or by the application of general equity principles.
(d) The pledge and delivery of the Pledged Collateral pursuant to this
Agreement and the Intercreditor Agreement creates a valid second priority
perfected security interest in the Pledged Collateral pledged by Pledgor,
securing the payment of the Secured Obligations.
(e) 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 pledge by Pledgor of the Pledged Collateral of Pledgor pursuant to
this Agreement or for the execution, delivery or performance of this Agreement
by Pledgor or (ii) for the exercise by Lender of the voting or other rights
provided for in this Agreement or the remedies in respect of the Pledged
Collateral of Pledgor pursuant to this Agreement (except as may be required in
connection with the disposition of the Pledged Collateral by laws affecting the
offering and sale of securities generally).
(f) Pledgor has full power, authority and legal right to pledge all
the Pledged Collateral pledged by Pledgor pursuant to this Agreement.
(g) The Pledged Shares of Pledgor constitute the percentage of the
authorized, issued and outstanding capital stock of HCCI as set forth on
Schedule I hereto.
The foregoing representations and warranties shall be deemed to have
been made by Pledgor on each date of each extension of credit by Lender under
the Credit Agreement.
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SECTION 5. FURTHER ASSURANCES; ADDITIONAL SHARES.
(a) Pledgor agrees that at any time and from time to time, at
Pledgor's expense, Pledgor will, subject to the terms of the Intercreditor
Agreement, promptly execute and deliver, or cause to be executed and delivered,
all stock powers, proxies, assignments, instruments and documents and take all
further action, at Lender's request, that is reasonably necessary, in order to
perfect, or maintain perfection of, any security interest granted or purported
to be granted hereby or to enable Lender to exercise and enforce its rights and
remedies hereunder with respect to any Pledged Collateral pledged by Pledgor and
to carry out the provisions and purposes hereof.
(b) Pledgor further agrees that it will, upon obtaining any Additional
Shares pledge such Additional Shares to Lender and promptly (and in any event
within three (3) Business Days) deliver to Lender a duly executed Pledge
Agreement Supplement in substantially the form of Schedule II hereto (a "Pledge
Agreement Supplement") identifying the Additional Shares which are pledged by
Pledgor pursuant to this Agreement. Pledgor hereby authorizes Lender to attach
each executed Pledge Agreement Supplement to this Agreement and agrees that all
Additional Shares listed on any Pledge Agreement Supplement delivered to FFMC
for the benefit of FFMC and Lender pursuant to the terms of the Intercreditor
Agreement shall for all purposes hereunder constitute Pledged Shares and Pledged
Collateral.
(c) Pledgor agrees to defend the title to the Pledged Collateral
pledged by Pledgor and the security interest therein of Lender under this
Agreement against the Lien or claim of any Person and to maintain and preserve
such security interest until the date the FFMC Note is indefeasibly paid in full
(the "Note Payment Date").
SECTION 6. VOTING RIGHTS; DIVIDENDS; ETC.
(a) Subject to Section 6(d) hereof, Pledgor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Pledged Shares or any part thereof for any purpose not inconsistent with the
terms of this Agreement or the Credit Agreement; provided, however, that Pledgor
shall not exercise or shall refrain from exercising any such right if such
action would have a material adverse effect on the value of the Pledged
Collateral or any part thereof or be inconsistent with or violate any provisions
of this Agreement, the Credit Agreement or any of the other Loan Documents.
Lender shall execute and deliver (or cause to be executed and delivered)
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to Pledgor all such proxies and other instruments as Pledgor may reasonably
request for the purpose of enabling Pledgor to exercise the voting and other
rights which it is entitled to exercise pursuant to this Section 6(a).
(b) Subject to Section 6(d) hereof, and to the extent permitted by
the Credit Agreement, Pledgor shall be entitled to receive all cash dividends
paid from time to time in respect of the Pledged Shares in the normal course of
business of HCCI and consistent with past practice and which are permitted under
the Credit Agreement.
(c) Any and all (i) dividends or other distributions paid or payable
in the form of instruments and other property (other than cash dividends
permitted under Section 6(b) hereof) received, receivable or otherwise
distributed in respect of, or in exchange for, any Pledged Collateral, (ii)
dividends and other distributions paid or payable in cash in respect of any
Pledged Shares in connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in-
surplus, and (iii) cash paid, payable or otherwise distributed in redemption of,
or in exchange for, any Pledged Shares, shall be in each case forthwith
delivered to FFMC for the benefit of FFMC and Lender in accordance with the
terms of the Intercreditor Agreement to hold as Pledged Collateral and shall, if
received by Pledgor, be received in trust for the benefit of FFMC and Lender in
accordance with the terms of the Intercreditor Agreement, be segregated from the
other property or funds of Pledgor, and be forthwith delivered to FFMC for the
benefit of FFMC and Lender in accordance with the terms of the Intercreditor
Agreement as Pledged Collateral in the same form as so received (with any
necessary endorsements).
(d) Upon the occurrence and during the continuance of an Event of
Default, (i) all rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to Section 6(a)
hereof shall cease, and all such rights shall, subject to the terms of the
Intercreditor Agreement, thereupon become vested in Lender which shall thereupon
have the sole right to exercise such voting and other consensual rights and (ii)
all cash dividends or other distributions payable in respect of the Pledged
Shares shall be paid to FFMC for the benefit of FFMC and Lender in accordance
with the terms of the Intercreditor Agreement and Pledgor's right to receive
such payments and distributions pursuant to Section 6(b) hereof shall
immediately cease.
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(e) All dividends or other distributions which are received by
Pledgor contrary to the provisions of this Section 6 shall be received in trust
for the benefit of FFMC and Lender, shall be segregated from other funds of
Pledgor and shall be forthwith paid over to FFMC for the benefit of FFMC and
Lender in accordance with the terms of the Intercreditor Agreement as Pledged
Collateral in the same form as so received (with any necessary endorsements).
SECTION 7. COVENANTS. Pledgor covenants and agrees with Lender from
and after the date of this Agreement until the Note Payment Date that Pledgor
will not (a) sell, transfer or otherwise dispose of, or grant any option with
respect to, any of the Pledged Collateral pledged by Pledgor without the prior
written consent of Lender, (b) create or permit to exist any Lien upon or with
respect to any of the Pledged Collateral pledged by Pledgor, except for the
security interest granted under this Agreement and the security interest granted
under the FFMC Pledge Agreement, (c) enter into any agreement or understanding
(other than the Intercreditor Agreement) that purports to or may restrict or
inhibit Lender's rights or remedies hereunder, including, without limitation,
Lender's right to sell or otherwise dispose of the Pledged Collateral pledged by
Pledgor, and (d) renounce or modify its rights under Section 9-505 of the Code
without the prior written consent of Lender.
SECTION 8. LENDER APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Lender Pledgor's true and lawful attorney-in-fact, coupled
with an interest, with full authority in the place and stead of Pledgor and in
the name of Pledgor or otherwise, from time to time in Lender's discretion, for
the purpose of carrying out the terms of this Agreement, to take any action and
to execute any instrument which Lender may deem necessary or advisable to
further perfect and protect the security interest granted hereby, including,
without limitation, to receive, endorse and collect all instruments made payable
to Pledgor representing any dividend, interest or principal payment or other
distribution in respect of the Pledged Collateral pledged by Pledgor or any part
thereof and to give full discharge for the same.
SECTION 9. LENDER MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, Lender may itself perform, or cause performance of,
such agreement, and the reasonable expenses of Lender incurred in connection
therewith shall be payable by Pledgor.
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SECTION 10. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The rights and
powers granted to Lender hereunder are being granted in order to preserve and
protect Lender's security interest in and to the Pledged Collateral granted
hereby and shall not be interpreted to, and shall not, impose any duties on
Lender in connection therewith. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which Lender accords its own property, it being understood that Lender
shall not have any responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, tenders or other matters relative to
any Pledged Collateral, whether or not Lender has or is deemed to have knowledge
of such matters, or (b) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.
SECTION 11. SUBSEQUENT CHANGES AFFECTING COLLATERAL. Pledgor
represents to Lender that Pledgor has made its own arrangements for keeping
informed of changes or potential changes affecting the Pledged Collateral
pledged by Pledgor (including, but not limited to, rights to convert, rights to
subscribe, payment of dividends, reorganization or other exchanges, tender
offers and voting rights), and Pledgor agrees that Lender shall have no
responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto. Pledgor covenants that it will not, without the prior written
consent of Lender, vote to enable, or take any other action to permit, HCCI to
issue any capital stock or to sell or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral pledged by Pledgor or create or
permit to exist any Lien upon or with respect to any of the Pledged Collateral
pledged by Pledgor, except for the security interests granted under this
Agreement and under the FFMC Pledge Agreement.
SECTION 12. DEFAULTS AND REMEDIES.
(a) Upon the occurrence of an Event of Default and during the
continuation of such Event of Default, then or at any time after such
declaration (provided that such declaration is not rescinded by Lender) and
following written notice to Pledgor, Lender (personally or through an agent) is
hereby, subject in each case to the terms of the Intercreditor Agreement,
authorized and empowered to transfer and register in its name or in the name of
its nominee the whole or any part of the Pledged Collateral, to exchange
certificates or instruments representing or
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evidencing the Pledged Collateral for certificates or instruments of smaller or
larger denominations, to exercise the voting rights with respect thereto, to
collect and receive all cash dividends and other distributions made thereon, to
sell in one or more sales after five (5) days' notice of the time and place of
any public sale or of the time after which a private sale is to take place
(which notice Pledgor agrees is commercially reasonable), but without any
previous notice or advertisement, the whole or any part of the Pledged
Collateral and to otherwise act with respect to the Pledged Collateral as though
Lender were the outright owner thereof; provided, however, Lender shall not have
any duty to exercise any such right or to preserve the same and shall not be
liable for any failure to do so or for any delay in doing so. Any sale shall be
made at a public or private sale at Lender's place of business, or at any public
building in the City of New York or elsewhere to be named in the notice of sale,
either for cash or upon credit or for future delivery at such price as Lender
may deem fair, and Lender may be the purchaser of the whole or any part of the
Pledged Collateral so sold and hold the same thereafter in its own right free
from any claim of Pledgor or any right of redemption. Each sale shall be made to
the highest bidder, but Lender reserves the right to reject any and all bids at
such sale which, in its discretion, it shall deem inadequate. Demands of
performance, except as otherwise herein specifically provided for, notices of
sale, advertisements and the presence of property at sale are hereby waived and
any sale hereunder may be conducted by an auctioneer or any officer, employee or
agent of Lender.
(b) If, at the original time or times appointed for the sale of the
whole or any part of the Pledged Collateral, the highest bid, if there be but
one sale, shall be inadequate to discharge in full all the Secured Obligations,
or the Pledged Collateral be offered for sale in lots, if at any of such sales,
the highest bid for the lot offered for sale would indicate to Lender, in its
discretion, the unlikelihood of the proceeds of the sales of the whole of the
Pledged Collateral being sufficient to discharge all the Secured Obligations,
Lender may, on one or more occasions and in its discretion, postpone any of said
sales by public announcement at the time of sale or the time of previous
postponement of sale, and no other notice of such postponement or postponements
of sale need be given, any other notice being hereby waived; provided, however,
that any sale or sales made after such postponement be after five (5) days'
notice to Pledgor.
(c) Pledgor further agrees that a breach of any of the covenants
contained in this Section 12 will cause
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irreparable injury to Lender, that Lender has no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
covenant contained in this Section 12 shall be specifically enforceable against
Pledgor, and Pledgor hereby waives and agrees not to assert any defenses against
an action for specific performance of such covenants except for a defense that
the Secured Obligations are not then due and payable in accordance with the
agreements and instruments governing and evidencing such obligations. Pledgor
further acknowledges the impossibility of ascertaining the amount of damages
which would be suffered by Lender by reason of a breach of any of such covenants
and, consequently, agrees that, if Lender shall sue for damages for breach, it
shall pay, as liquidated damages and not as a penalty, an amount equal to the
lesser of (i) the value of the Pledged Collateral pledged by Pledgor on the date
Lender shall demand compliance with this Section 12, and (ii) the amount
required to pay in full the Secured Obligations.
(d) In addition to remedies set forth in Section 12 above, Lender
may, in its discretion (subject only to applicable requirements of law and the
terms of the Intercreditor Agreement), sell such Pledged Collateral or a part
thereof by private sale in such manner and under such circumstances as Lender
may deem necessary or advisable. Without limiting the generality of the
foregoing, in any such event, Lender may, in its discretion, (x) in accordance
with applicable securities laws, proceed to make such private sales, (y)
approach and negotiate with a single possible purchaser to effect such sale, and
(z) restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment and not with a view
to the distribution or sale of such Pledged Collateral or part thereof. In
addition to a private sale as provided above in this Section 12, if any of the
Pledged Collateral shall not be freely distributable to the public without
registration under the Securities Act of 1933, as amended (or similar statute)
at the time of any proposed sale pursuant to this Section 12, then Lender shall
not be required to effect such registration or cause the same to be effected
but, in its discretion (subject only to applicable requirements of law), may
require that any sale hereunder (including a sale at auction) be conducted
subject to restrictions (i) as to the financial sophistication and ability of
any Person permitted to bid or purchase at any such sale, (ii) as to the content
of legends to be placed upon any certificates representing the Pledged
Collateral sold in such sale, including restrictions on future transfer thereof
and (iii) as to the representations required to be made by each Person, bidding
or purchasing at such sale
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relating to that Person's access to financial information about Pledgor and such
Person's intentions as to the holding of the Pledged Collateral so sold for
investment, for its own account, and not with a view to the distribution
thereof. In addition, Lender may require that any sale hereunder (including a
sale at auction) be conducted subject to restrictions as to such other matters
as Lender may, in its discretion, deem necessary or appropriate in order that
such sale (notwithstanding any failure to so register) may be effected in
compliance with the Bankruptcy Code and other laws affecting the enforcement of
creditors' rights and the Securities Act of 1993, as amended, and all applicable
state securities laws.
SECTION 13. APPLICATION OF PROCEEDS. Any cash held by or on behalf of
Lender as Pledged Collateral and all cash proceeds received by or on behalf of
Lender in respect of any sale of, collection from, or other realization upon all
or any part of the Pledged Collateral shall (subject to the terms of the
Intercreditor Agreement) be applied by Lender:
First, the payment in full of reasonable expenses of Lender in
connection with such sale, disposition or other realization, including all
expenses, liabilities and advances incurred or made by Lender in connection
therewith, including reasonable attorney's fees and any other Obligations
owed to Lender;
Second, to the payment of accrued but unpaid interest on the
Obligations;
Third, to the payment of unpaid principal of the Obligations;
Fourth, to the payment of all other Obligations until all other
Obligations shall have been paid in full; and
Finally, to payment to Pledgor, or its successors or assigns, or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
SECTION 14. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO HCCI.
Pledgor hereby authorizes and instructs HCCI to comply with any instruction
received by HCCI from Lender in writing that (a) states that an Event of Default
has occurred and (b) is otherwise in accordance with the terms of this Agreement
and the Intercreditor Agreement,
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without any other or further instructions from Pledgor, and Pledgor agrees that
HCCI shall be fully protected in so complying.
SECTION 15. MISCELLANEOUS PROVISIONS.
SECTION 15.1 No Waiver; Cumulative Remedies. Except by a written
instrument pursuant to Section 15.5 hereof, Lender shall not, by any act, delay,
indulgence, omission or otherwise, be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by Lender of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Lender would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by law.
SECTION 15.2 Notices. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered, if to Pledgor, at its address as set forth on the
signature page hereof and, if to Lender, at its address as set forth in, and in
accordance with, Section 10.9 of the Credit Agreement.
SECTION 15.3 Headings. The headings in this Agreement are for purposes
of reference only and shall not affect the meaning or construction of any
provision of this Agreement.
SECTION 15.4 Severability. The provisions of this Agreement are
severable, and if any clause or provision shall be held invalid or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
SECTION 15.5 Amendments, Waivers and Consents. Any amendment or waiver
of any provision of this Agreement and any consent to any departure by Pledgor
from any
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provision of this Agreement shall be effective only if made pursuant to a
written instrument executed by Pledgor and Lender (or if a waiver or a consent,
a written letter or agreement executed by Lender).
SECTION 15.6 Interpretation of Agreement. Time is of the essence in
each provision of this Agreement of which time is an element. All terms not
defined herein or in the Credit Agreement shall have the meaning set forth in
the applicable Uniform Commercial Code, except where the context otherwise
requires. To the extent a term or provision of this Agreement conflicts with
the Credit Agreement and is not dealt with herein with more specificity, the
Credit Agreement shall control with respect to the subject matter of such term
or provision. Acceptance of or acquiescence in a course of performance rendered
under this Agreement shall not be relevant to determine the meaning of this
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
SECTION 15.7 Continuing Security Interest. This Agreement shall create
a continuing security interest in the Pledged Collateral and shall (i) remain in
full force and effect until the Note Payment Date, (ii) be binding upon Pledgor,
its successors and assigns, and (iii) inure, together with the rights and
remedies of Lender hereunder, to the benefit of Lender and its respective
successors, transferees and assigns.
SECTION 15.8 Survival of Provisions. All representations, warranties
and covenants of Pledgor contained herein shall survive the execution and
delivery of this Agreement, and shall terminate only on the Note Payment Date.
SECTION 15.9 Lien Absolute. All rights of Lender hereunder, and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement,
any other Loan Document or any other agreement or instrument governing or
evidencing any Secured Obligations;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any part of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or instrument
governing or evidencing any Secured Obligations;
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(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Secured Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor.
SECTION 15.10 Reinstatement. This Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against Pledgor for liquidation or reorganization, should Pledgor become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of Pledgor's
assets, and shall continue to be effective or be reinstated, as the case may be,
if at any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference," "fraudulent conveyance," or otherwise, all
as though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
SECTION 15.11 Waivers. Pledgor waives notice of acceptance of this
Agreement, and also presentment, demand, protest and notice of dishonor or
default of any and all of the Secured Obligations, and all other notices to
which Pledgor might otherwise be entitled, except as otherwise expressly
provided herein or in the Credit Agreement.
SECTION 15.12 Authority of Lender. Lender shall have and be entitled
to exercise all powers hereunder which are specifically granted to Lender by the
terms hereof, together with such powers as are reasonably incident thereto.
Lender may exercise any of its duties hereunder or in connection with the
Pledged Collateral by or through agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of counsel concerning all
such matters. Neither Lender nor any director, officer, employee, attorney or
agent of Lender shall be liable to Pledgor for any action taken or omitted to be
taken by it or them hereunder, except for its or their own gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction, nor shall Lender be responsible for the validity, effectiveness or
sufficiency
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hereof or of any document or security furnished pursuant hereto. Lender and its
directors, officers, employees, attorneys and agents shall be entitled to rely
on any written communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the proper person or
persons.
SECTION 15.13 Release; Termination of Agreement. This Agreement shall
terminate on the Note Payment Date. At such time, Lender shall, at the request
of Pledgor, reassign and redeliver to Pledgor all of the Pledged Collateral
pledged by Pledgor hereunder which has not been sold, disposed of, retained or
applied by Lender in accordance with the terms hereof, and execute and deliver
to Pledgor such documents as may reasonably be requested by Pledgor to evidence
the same. Such reassignment and redelivery shall be without warranty by or
recourse to Lender, except as to the absence of any prior assignments by Lender
of its interest in the Pledged Collateral pledged by Pledgor, and shall be at
the expense of Pledgor.
SECTION 15.14 Final Expression. This Agreement, together with any
other agreement executed in connection herewith (including, without limitation,
the Intercreditor Agreement), is intended by the parties as a final expression
of this Agreement and is intended as a complete and exclusive statement of the
terms and conditions thereof.
SECTION 15.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.
SECTION 15.16 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE. EXCEPT
AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT
AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR
FEDERAL COURTS LOCATED IN NEW YORK CITY SHALL HAVE EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN PLEDGOR AND LENDER PERTAINING
TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT LENDER
AND PLEDGOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD
BY A COURT LOCATED OUTSIDE OF NEW YORK CITY AND, PROVIDED, FURTHER,
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THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE LENDER
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO
REALIZE ON THE PLEDGED COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR
TO ENFORCE A JUDGEMENT OR OTHER COURT ORDER IN FAVOR OF LENDER. PLEDGOR
EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR
SUIT COMMENCED IN ANY SUCH COURT, AND PLEDGOR HEREBY WAIVES ANY OBJECTION WHICH
PLEDGOR MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. PLEDGOR HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINTS AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO PLEDGOR AT ITS
ADDRESS SET FORTH IN THE SIGNATURE PAGE HEREOF AND THAT SERVICE SO MADE SHALL BE
DEEMED COMPLETED UPON THE EARLIER OF PLEDGOR'S ACTUAL RECEIPT THEREOF OR THREE
(3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
SECTION 15.17 Acknowledgments. Pledgor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement;
(b) Lender has no fiduciary relationship to Pledgor, and the
relationship between Lender and Pledgor, on the other hand, is solely that of
secured party and debtor, respectively; and
(c) no joint venture exists between Lender and Pledgor except as
contemplated by the Limited Liability Company Agreement, the Services Agreement
and the Technology Agreement, each dated as of October 31, 1994 among Pledgor,
Borrowers, GE Capital Commercial Finance, Inc. and SA Services, L.L.C.
SECTION 15.18 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE
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PARTIES ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS AGREEMENT, THE
CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED
THERETO.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
PLEDGOR:
C.I.S. TECHNOLOGIES, INC.
By: /s/ Richard V. Souders
-------------------------
Name: Richard V. Souders
Title: SR. Vice President
Address:
-------
One Warren Place
6100 South Yale, Suite 1900
Tulsa, Oklahoma 74136-1903
Attention: Richard A. Evans
Telephone:
Telecopy: (918) 481-4281
Accepted and Acknowledged by:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Lender
By: /s/ Dan Pengue
--------------------
Name:
Title:
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KEPT AS THE LAST PAGE OF THE DOCUMENT.
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EXHIBIT 10.v
JOINDER AGREEMENT
Joinder Agreement, dated as of May 31, 1995, to that certain (i)
Blocked Account Agreement (Concentration Account) (the "Concentration Account
Agreement") dated October 31, 1994 among Liberty Bank and Trust Company of
Tulsa, National Association (the "Bank"), C.I.S. Technologies, Inc. (the
"Parent"), C.I.S., Inc. and Hospital Billing Analysis, Inc. (collectively, the
"Borrowers"), and General Electric Capital Corporation (the "Lender") and (ii)
Lockbox Account Agreement (the "Lockbox Account Agreement") dated October 31,
1994 among the Bank, the Parent, the Borrowers and the Lender.
W I T N E S S E T H:
WHEREAS, the Parent, the Borrowers and the Lender are parties to that
certain Credit Agreement, dated as of October 15, 1994, as amended by the First
Amendment referred to below (as further amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"; terms defined therein unless
otherwise defined herein being used herein as therein defined);
WHEREAS, in connection with the Credit Agreement and the requirements
thereof, the Parent, the Borrowers, the Bank and the Lender entered into the
Concentration Account Agreement and the Lockbox Account Agreement;
WHEREAS, the Borrowers, the Parent and the Lender have entered into
the First Amendment to Credit Agreement (the "First Amendment"), dated as of May
31, 1995;
WHEREAS, Lender has required as a condition to the effectiveness of
the First Amendment that AMSC, Inc. ("AMSC") and Hospital Cost Consultants, Inc.
("HCCI") join and become parties to the Concentration Account Agreement and the
Lockbox Account Agreement; and
WHEREAS, in connection with such joinder it is necessary that certain
modifications be made to the Concentration Account Agreement and the Lockbox
Account Agreement;
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NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. JOINDER. In accordance with the requirements of the First
Amendment, each of AMSC and HCCI by its signature below becomes one of the
entities comprising the "Company" as defined in, and under each of, the
Concentration Account Agreement and the Lockbox Account Agreement with the same
force and effect as if originally named therein as one of such entities and each
of AMSC and HCCI hereby agrees to all the terms and provisions of the
Concentration Account Agreement and the Lockbox Account Agreement applicable to
it as the Company thereunder. Each reference to the "Company" in the
Concentration Account Agreement and the Lockbox Account Agreement shall be
deemed to include AMSC and HCCI. The Concentration Account Agreement and the
Lockbox Account Agreement are hereby incorporated herein by reference.
SECTION 2. AMENDMENT TO SECTION 2(B) OF LOCKBOX ACCOUNT AGREEMENT.
Section 2(b) of the Lockbox Account Agreement is hereby amended by deleting the
portion of such Section contained after the colon therein and inserting in lieu
thereof the following:
"Description of Lockbox Agreement with
Lockbox the Bank
p.o. lockbox #94891
p.o. lockbox #94924
p.o. lockbox #94589
p.o. lockbox #94893 Lockbox Service Agreement dated May 23, 1995
p.o. lockbox #94210 Lockbox Service Agreement dated May 23, 1995
SECTION 3. AMENDMENT TO TERM SECURITY AGREEMENT. The term "Security
Agreement" contained in each of the Concentration Account Agreement and the
Lockbox Account Agreement is hereby deemed amended to include not only the
security agreement currently referred to therein but also the Subsidiary
Security Agreement executed by AMSC, the Accounts Security Agreement and any
other security agreement executed by HCCI in the future in accordance with the
requirements of the Credit Agreement. By execution of this Agreement, the
Parent, the Borrowers, HCCI, AMSC and the
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Lender hereby renotify the Bank of the information (after giving effect to the
modification of the term "Security Agreement" set forth above) set forth in the
first paragraph of Section 3 of each of the Concentration Account Agreement and
the Lockbox Account Agreement, and the Parent, the Borrowers, HCCI, AMSC and the
Bank hereby confirm and acknowledge and agree to such notice.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Each of the Parent, the
Borrowers, HCCI and AMSC represents and warrants to the Lender that this Joinder
Agreement has been duly authorized, executed and delivered by it and constitutes
its legal, valid and binding obligation, enforceable against it in accordance
with its terms, subject to the effects of applicable bankruptcy, insolvency or
similar laws effecting creditors' rights generally and equitable principles of
general applicability.
SECTION 5. Counterparts. This Joinder Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument. This Joinder
Agreement shall become effective when the Lender shall have received
counterparts of this Joinder Agreement that, when taken together, bear the
signatures of parties hereto.
SECTION 6. LIMITED EFFECT. Except as expressly supplemented and
amended hereby, each of the Concentration Account Agreement and the Lockbox
Account Agreement shall be unmodified and shall continue to be in full force and
effect in accordance with its terms.
SECTION 7. GOVERNING LAW. THIS JOINDER AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 8. SEVERABILITY. In case any one or more of the provisions
contained in this Joinder Agreement should be held invalid, illegal or
unenforceable in any respect, none of the parties hereto shall be required to
comply with such provision for so long as such provision is held to be invalid,
illegal or unenforceable, but the validity, legality and enforceability of the
remaining provisions contained herein and in the Lockbox Account Agreement and
the Concentration Account Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith to replace the
invalid, illegal or unenforceable provisions with valid provisions the
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economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties hereto have duly executed this Joinder
Agreement as of the day and year first above written.
LIBERTY BANK AND TRUST COMPANY OF
TULSA, NATIONAL ASSOCIATION
By /s/ Lloyd Stone
-------------------------------
Name: Lloyd Stone
Title:Vice President
C.I.S. TECHNOLOGIES, INC.
By /s/ Richard V. Souders
-------------------------------
Name: Richard V. Souders
Title: SR. Vice President
C.I.S., INC.
By /s/ Richard V. Souders
-------------------------------
Name: Richard V. Souders
Title: SR. Vice President
HOSPITAL BILLING ANALYSIS, INC.
By /s/ Phillip D. Kurtz
-------------------------------
Name: Phillip D. Kurtz
Title: Vice President
AMSC, INC.
By /s/ Richard A. Evans
-------------------------------
Name: Richard A. Evans
Title: Vice President
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HOSPITAL COST CONSULTANTS, INC.
By /s/ Phillip D. Kurtz
------------------------------
Name: Phillip D. Kurtz
Title: Vice President
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ Dan Pengue
------------------------------
Name:
Title:
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
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EXHIBIT 10.w
EARN-OUT OBLIGATIONS.
---------------------
Section 2.2.
(b) Additional Merger Consideration. The Shareholders shall be
-------------------------------
entitled to receive payment of possible additional consideration ( collectively
the "Additional Merger Consideration") with respect to shares of Class A Common
Stock and Class B Common Stock, up to a maximum aggregate amount of $24,600,000,
which Additional Merger Consideration will be divided between the Class A
Shareholders and Class B Shareholders in accordance with Section 2.2(b)(ii), to
be computed as follows:
(i) Definitions. For purposes hereof, the following terms shall have
-----------
the following meanings:
(A) "HCCI Year" shall mean, respectively, the fiscal year
beginning on the first day of the month in which the Closing Date occurs
and ending December 31, 1993 and each of the fiscal years ending December
31, 1994, 1995, 1996, 1997 and 1998.
(B) "Revenues" shall mean the revenues payable to HCCI from the
sources and from the sales of products and services listed on Exhibit B
---------
hereto, determined in accordance with MicroBilt's accounting policies.
(C) "Eligible Revenues" for any HCCI Year shall mean: (i) for the
first HCCI Year (commencing on the first day of the month in which the
Closing Date occurs), the Revenues actually collected by HCCI after June
30, 1993, not reflected on HCCI's June 30, 1993 Financial Statements
delivered to MicroBilt in accordance with Section 8.9 and recorded in the
first HCCI Year, together with Revenues for such HCCI Year recorded in such
HCCI Year and either collected inn such HCCI Year or collected within the
90 day period immediately following the end of such HCCI Year or collected
in such HCCI Year and recorded within the 90 day period immediately
following the end of such HCCI Year; (ii) for each of the second through
fifth HCCI Years, the Revenues recorded in the immediately preceding HCCI
Year but collected more than 90 days from the end of the preceding HCCI
Year, plus the Revenues recorded in such HCCI Year and either collected in
such HCCI Year or collected within the 90 day period immediately following
the end of such HCCI Year or collected in such HCCI Year and recorded
within the 90 day period immediately following the end of such HCCI Year;
and (iii) for the sixth HCCI Year, the Revenues recorded in the preceding
HCCI Year but collected more than 90 days after the end of such HCCI Year,
plus the Revenues recorded in the sixth HCCI Year and either collected in
such sixth HCCI Year or collected within the 180 day period following the
end of the sixth HCCI Year or collected in such sixth HCCI Year and
recorded within the 180 day period immediately following the end of such
HCCI Year. Notwithstanding the foregoing, no amount collected in any HCCI
Year and recorded in the subsequent year pursuant to the foregoing will be
included in Eligible Revenues for the earlier such HCCI
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Year if it is attributable to a software sale accounted for by the
percentage of completion method or a sale for which direct sales expenses
exceed 10% of the total Revenues attributable to such software sale.
(D) "Net Collected Revenues" for any HCCI Year shall mean the
Eligible Revenues for such HCCI Year, less all "direct" expenses incurred
by the Company in such HCCI Year attributable to such Revenues as described
on Exhibit B hereto. There shall be excluded from Net Collected Revenues
---------
any income or expense related to the assets or business of any corporation
or other entity acquired after the Closing Date by HCCI or any subsidiary
of HCCI from any third party or MicroBilt or any of its Affiliates (defined
below) (including expenses of acquisition of any such assets or business),
unless and except to the extent that the Shareholders' Agent and MicroBilt
agree to the inclusion of such income or expense and the percentages and
"Threshold Amounts" set forth on Exhibit B hereto are adjusted accordingly.
---------
For purposes of calculating Net Collected Revenues, there shall be no
adjustments to the value of assets or liabilities or other accounting
adjustments resulting from the application of purchase accounting
principles to the Merger.
(ii) Computation. For each HCCI Year, the Additional Merger
-----------
Consideration shall be an amount equal to the percentage of Net Collected
Revenues for such HCCI Year in excess of the Threshold Amount for such HCCI
Year, each as set forth on Exhibit B. Additional Merger Consideration shall
be payable to the Class A Shareholders and the Class B Shareholders in
accordance with the percentage allocations set forth on Exhibit B based
upon the aggregate Additional Merger Consideration paid or payable from
time to time.
(iii) Adjustments.
-----------
(A) Neither MicroBilt nor any Affiliate or successor thereto
shall be under any obligation to maintain the Company as a separate legal
entity for any particular length of time whatsoever. MicroBilt and any
successor thereto may at any time reorganize or merge or otherwise cause
the Company to cease to exist. Should the Company cease its separate legal
existence during an HCCI Year, MicroBilt or any successor thereto will
continue to compute Net Collected Revenues during such HCCI Year and the
following HCCI Years, if any, in such a manner as to enable the
Shareholders to continue to be eligible to earn Additional Merger
Consideration during such HCCI Years as though no such change to the
Company's separate corporate existence had occurred.
(B) In the event that MicroBilt fundamentally changes the
business of the Company during an HCCI Year (including moving the Company's
principal place of business from Pleasanton, California) or sells the
Company to an entity other than an Affiliate of MicroBilt (whether by
merger, sale of stock or sale of assets), in a manner that materially and
adversely affects the Shareholders with respect to the earning or
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computation of Additional Merger Consideration for purposes of this Section
2.2, MicroBilt will continue to compute Net Collected Revenues during such
HCCI Year and the following HCCI Years, if any, in such a manner as to
enable the Shareholders to be eligible to earn Additional Merger
Consideration during such HCCI Years as though no such change in the
business of the company or sale of the Company had occurred.
(C) In the event that MicroBilt changes its revenue recognition
policies applicable to the Company after the date of this Agreement and
during an HCCI Year in a manner that, taking into account any corresponding
change in expense recognition, adversely affects the Shareholders with
respect to the computation of additional Merger Consideration, for purposes
of this Section 2.2, MicroBilt will continue to account for Net Collected
Revenues during such HCCI Year and the following HCCI Years, if any, in
such a manner as to enable the Shareholders to be eligible to earn
Additional Merger Consideration during such HCCI Years as though no such
change in MicroBilt's revenue recognition policies had occurred.
(D) For purposes of Section 2.2(b)(iii)(A) and (B), MicroBilt may
make any appropriate adjustment, including without limitation including or
excluding items of income or expense and adjusting the percentages and
Threshold Amounts set forth on Exhibit B hereto, to appropriate reflect any
---------
such change. If the Shareholders' Agent disagrees with MicroBilt's
computation or accounting under Section 2.2(b)(iii)(A), (B) or (C),
including the need for or appropriateness of any adjustment described in
the first sentence of this Section 2.2(b)(iii)(D), he shall within thirty
days after he receives notice of such change send a written notice to
MicroBilt setting forth the basis for his disagreement. If within thirty
days after the receipt of such notice, MicroBilt and the Shareholders'
Agent shall not have resolved the dispute, the dispute shall be submitted
to and settled by arbitration in accordance with the then prevailing
commercial arbitration rules of the American Arbitration Association. Such
arbitration shall be held in the Atlanta, Georgia area before a panel of
three arbitrators, one selected by MicroBilt, on selected by the
Shareholders' Agent and the third selected by mutual agreement of the first
two. The decision of the arbitrators shall be final and binding as to any
matters submitted. Judgment upon any award rendered by the arbitrators may
be entered in any court of competent jurisdiction.
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"EXHIBIT B"
-----------
Applicable Products and Services
- --------------------------------
Applicable products and services for purposes of determining Revenues shall be
the Company's existing and planned product offering for hospitals, independent
physicians' associations ("IPA's"), hospital physicians' organizations ("HPO's")
and similar entities at the Closing Date which are described below:
Managed Competition: Managed Competition is a variety of products from
-------------------
software licensing to consulting services. Software products in production
include the HCCI Managed Care System comprised of five modules: Managed
Care Core, Profitability, Modeling, Government Logs, and Bill Audit Review.
HCCI Provides consulting services to its client base in conjunction with
HCCI-provided licenses or application programs. HCCI also provides
Retrospective Resolution Services for health care related services.
Retrospective Resolution Services are lost charge recovery services that
provide for the reconciliation of funds received for services rendered.
HCCI is in the process of developing a Trans-Industry Capitation System.
The initial product offering will include the following five base modules:
Claims Processing, Authorizations, Membership, Capitation and Utilization
Review. It is expected that this system will be suitable for and applicable
to the entire health care industry. Consulting services are being
established to support this product line.
Cost Containment: The Cost Containment product line is comprised of a set
----------------
of applications and services which assist HCCI's clients in understanding
their cost structure. HCCI has the following applications within this
category: Cost Accounting, Productivity, Resource Utilization and
Budgeting. Product Line Budgeting is in the development phase with a
scheduled market entry in the first half of 1994.
HCCI also offers consulting services in its Cost Containment offering.
Productivity studies, clinical pathways, cost accounting services and
budget process review are principal examples of these services.
Data Warehousing: HCCI has developed a software tool set which operates in
----------------
a client server mode that stores and accesses data. This product is called
the Enterprise Workstation. The Workstation allows data to be retrieved
from various legacy systems within HCCI's client and prospect base and
stored on a relational database in the HCCI data schema. HCCI has provided
a tool that allows users to interactively access data and view it on a
graphical, user friendly front-end. The user is also afforded the ability
to build
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screens or views into the database. This product is scheduled for
availability in all markets in March 1994.
Various starter sets are in development as part of the Enterprise
Workstation to augment particular functional areas within the health care
industry. These starter sets are being offered in a run time license
scenario as part of the Enterprise Workstation. For more advanced needs
HCCI is offering limited use and full use Executive Workstation licenses.
Consulting services will also be made available in support of Data
Warehousing. HCCI is developing standard consulting templates for broad
functional areas within HCCI's client and prospect base. The Company
envisions building a business process re-engineering service with the use
of the HCCI Data Warehouse software tools.
Time Share: The implementation and availability of the above-described
----------
products and services in a time sharing or service bureau form will also
qualify for purposes of determining Revenues.
Net Collected Revenues
- ----------------------
"Net Collected Revenues" means "Eligible Revenues" less the following
direct expenses:
1. cost of hardware
2. cost of third party software
3. all direct operating costs, including, without limitation:
(a) salaries and commissions
(b) travel and lodging expenses
(c) technical support
(d) employee benefits
(e) general and administrative expenses
(f) marketing and advertising expenses
(g) communications expenses
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(h) development costs (including purchased software) in excess of
amounts reflected below:
Year Amount
---- ----------
1993 $ 36,300
1994 685,000
1995 1,169,000
1996 1,346,000
1997 1,629,000
1998 1,799,000
but not less the following:
(a) depreciation
(b) amortization
(c) federal and state income taxes
(d) interest expense
(e) allocation of the overhead expenses of FFMC or MicroBilt
Percentages of Net Collected Revenue for Purposes of computing Additional Merger
- --------------------------------------------------------------------------------
Consideration under Section 2.2(b)(ii)
- --------------------------------------
Year Ended December 31,
-----------------------------------------------------------------
Effective Time through 1994 1995 1996 1997 1998
December 31, 1993
-----------------------------------------------------------------
60% 55% 50% 45% 36% 20%
-----------------------------------------------------------------
Threshold Amount for purposes of computing Additional Merger
- ------------------------------------------------------------
Consideration under Section 2.2(b)(ii)
- --------------------------------------
1993 1994 1995 1996 1997 1998
-------------------------------------------------------------------
$0 $694,000 $1,089,000 $2,177,000 $2,177,000 $2,690,000
-------------------------------------------------------------------
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Percentage of Additional Merger Consideration Allocated Between Class A and
- ---------------------------------------------------------------------------
Class B Shareholders for purposes of Section 2.2(b)(ii)
- -------------------------------------------------------
Aggregate Additional Class A Class B
Merger Consideration Merger Consideration Merger Consideration
- ---------------------------- --------------------- ---------------------
$ 0 to $ 1,600,000 80.0% 20.0%
$ 1,600,001 to $ 3,600,000 70.0% 30.0%
$ 3,600,001 to $ 6,100,000 60.0% 40.0%
$ 6,100,001 to $ 8,600,000 50.0% 50.0%
$ 8,600,001 to $11,600,000 40.0% 60.0%
$11,600,001 to $16,600,000 30.0% 70.0%
$16,600,001 to $24,600,000 20.0% 80.0%
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EXHIBIT 99.b
FOR IMMEDIATE RELEASE CONTACT: RICHARD A. EVANS
CHIEF FINANCIAL OFFICER
(918) 496-2451
CIS TECHNOLOGIES COMPLETES ACQUISITION OF
HOSPITAL COST CONSULTANTS
TULSA, Oklahoma (June 1, 1995) - CIS Technologies, Inc. (Nasdaq/NM:CISI) today
announced that it has completed the acquisition of California-based Hospital
Cost Consultants, Inc. ("HCC"), a second-tier subsidiary of First Financial
Management Corporation (NYSE:FFM) ("FFMC"), for cash consideration of $10
million. CIS also guaranteed a $5 million short-term note from HCC to FFMC and
has assumed certain contingent obligations of FFMC to the former shareholders of
HCC. HCC reported revenues of approximately $8 million for the 12 months ended
December 31, 1994.
Philip D. Kurtz, chairman and chief executive officer of CIS Technologies,
said, "We are pleased to have completed this acquisition which we expect will
have a positive impact on our revenues and earnings in 1995 and beyond. This
transaction demonstrates our commitment to add value to our company by
increasing the array of products and services we offer our healthcare clients.
HCC's managed care products are in increasing demand as the healthcare industry
develops integrated delivery systems and responds to increasing cost containment
pressures."
HCC currently offers three primary products to the provider marketplace,
all are based upon supporting managed care contracting: "Distinction," a
managed care contract modeling and management product; "Domain," a decision
support product; and "Dividend," a hospital cost accounting product. A fourth
product, a managed care capitation product, is scheduled for release in late
1995. HCC currently has 80 contracts representing 100 hospitals throughout the
United States. In addition, HCC has 75 hospital clients in international
marketplaces: 60 through distributorships in England, 12 in Australia, 1 in New
Zealand, and 2 in Canada.
Mr. James L. Hersma, president and chief operating officer of CIS
Technologies, said, "With the acquisition of HCC, our company has direct access
to the managed care marketplace which represents a rapidly expanding sector of
healthcare. In addition, HCC's managed care products complement CIS's products
now serving this market. This acquisition is another important milestone in the
execution of our growth strategy to provide comprehensive services to the
healthcare industry. With this broader foundation, we are now positioned to
become a major force in the emerging integrated delivery system marketplace.
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CIS Technologies, Inc., a full-service healthcare reimbursement and
business office management company, is a leading source of technology-based
products and services that enable healthcare organizations to realize their full
financial potential. Through proven methods to enhance business office
efficiency, creative financing alternatives, state-of-the-art clinical practice
management systems, and EDI tools to reduce paperwork and administrative costs,
all participants in a healthcare delivery system realize benefits. Currently,
CIS products and services are delivering value to over 220 third-party payers
and 900 healthcare organizations in 38 states.
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