Annual Report — Small Business — Form 10-KSB
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10KSB Annual Report -- Small Business 33 136K
2: EX-3.2 By-Laws of Mediware Information Systems, Inc. 16 60K
5: EX-10.15 Stock Opion Agreement 14 30K
6: EX-10.16.1 Form of Note 6 23K
7: EX-10.16.2 Form of Warrant 7 23K
3: EX-10.3.3 Amended and Restated Secured Promissory Note 17 55K
4: EX-10.7 Employment Letter 6 24K
8: EX-21 Subsidiaries of Registrant 1 4K
9: EX-23 Consent of Independent Auditors 1 6K
10: EX-24 Power of Attorney 1 8K
11: EX-27 Art. 5 FDS for Year End 10-Ksb 2 7K
EX-10.3.3 — Amended and Restated Secured Promissory Note
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Exhibit 10.3.3
AMENDED AND RESTATED SECURED PROMISSORY NOTE
$5,000,000 New York, New York
Issued June 17, 1996
Amended and Restated October 28, 1996
FOR VALUE RECEIVED, DIGIMEDICS CORPORATION , a California corporation
(the "Debtor"), promises to pay to the order of CONTINENTAL HEALTHCARE SYSTEMS,
INC. (the "Payee"), c/o Information Handling Services Group, Inc., 15 Inverness
Way East, Englewood, Colorado, or at such other place as the Payee or any holder
hereof may from time to time designate in writing, the principal sum of Five
Million Dollars and 00/100 cents ($5,000,000) in lawful money of the United
States, on the earlier to occur of (i) August 1, 1997 and (ii) the date of the
Refinancing (as hereinafter defined). The Debtor promises also to pay interest
on the unpaid principal amount hereof in like money at said office or place from
the date hereof until maturity (whether by passage of time, acceleration or
otherwise) (i) as to $1,236,987 of the principal amount owing hereunder (the
"Base Rate Amount"), at a rate equal to the rate of interest publicly announced
from time to time by Citibank, N.A. at its principal office in New York City as
its base rate and (ii) as to all principal amounts owing hereunder in excess of
the Base Rate Amount (such amounts, the "Fixed Rate Amount"), at a rate equal to
fifteen percent (15%) per annum. Any change in the rate of interest on the Base
Rate Amount due to a change in the aforementioned base rate shall become
effective as of the opening of business on the day on which such change in the
base rate shall be announced. Any interest hereunder shall be payable in arrears
on the last day of each month, commencing July 31, 1996, and at maturity. After
maturity (whether by declaration, acceleration or otherwise), interest on
overdue principal and accrued interest shall be payable on demand at a rate
("Default Rate") equal to four percent (4%) in excess of the rates set forth
above. Interest shall be calculated on the basis of a 360-day year and actual
days elapsed. In no event shall the interest payable hereunder exceed the
maximum amount permitted under applicable law.
This Note is an amendment and restatement of, and is being issued in
replacement and substitution for, the Secured Promissory Note dated June 17,
1996 (the "Original Note") by the Debtor to the Payee in the original principal
amount of $6,000,000. In addition to the indebtedness evidenced by this Note,
this Note shall also evidence any accrued and unpaid interest on the Original
Note.
SECTION 1. TERMS OF PAYMENT; PURPOSE OF LOAN
ss.1.1 Mandatory Payments. On the last day of each month, commencing
November 30, 1996, the Debtor shall pay $100,000 to the Payee to be applied by
the Payee in the following order: FIRST, to interest owing on the Base Rate
Amount, SECOND, to interest owing on the Fixed Rate Amount and THIRD, any
remaining amounts, to the reduction of the outstanding Fixed Rate Amount.
ss.1.2. Optional Prepayments. The Debtor may, at its option, at any
time and from time to time, prepay all or any part of the principal balance of
this Note, without penalty or premium, in multiples of $100,000, provided that
concurrently with each such prepayment the Debtor shall pay accrued interest on
the principal so prepaid to the date of such prepayment.
ss.1.3. Day of Payment. Whenever any payment to be made hereunder shall
become due and payable on a day which is not a Business Day (as defined below),
such payment may be made on the next succeeding Business Day and, in the case of
any payment of principal, such extension of time shall in such case be included
in computing interest on such payment. As used herein, "Business Day" shall mean
any day which is not a Saturday or Sunday and on which banks in the State of New
York are not authorized or required to close. Interest on past due principal and
accrued interest thereon shall be calculated as follows: The amount of principal
and interest past due multiplied by the Default Rate and multiplied by a
fraction, the numerator of which is the number of days such principal and
interest is past due and the denominator of which is 360.
ss.1.4. Use of Proceeds. This Note is the "Note" referred to in Section
2.04 of the Asset Purchase Agreement dated the date hereof (as amended, modified
or supplemented in accordance with its terms, the "Purchase Agreement") among
the Debtor, the Payee and Information Handling Services Group, Inc. and
evidences part of the "Purchase Price" as therein defined.
ss.1.5. Obligation to Pay. The Debtor shall make all payments hereunder
in full without offset, reduction or deduction of any kind or amount or for any
reason, including, without limitation, setoff by any amounts which Debtor may
claim or be entitled to claim under Section 6.02 of the Purchase Agreement.
SECTION 2. COLLATERAL
ss.2.1. Security Documents. This Note is secured by the following
(collectively, the "Security Documents") and is entitled to the benefits
thereof: (i) General Security Agreement dated today's date by Debtor in favor of
the Payee (as amended, modified or supplemented from time to time, the "Security
Agreement") covering all of the asset of Debtor therein described and (ii)
Charge dated today's date by Debtor in favor of the Payee (as amended, modified
or supplemented from time to time, the "Charge") with respect to certain shares
of JAC. The Debtor shall duly execute and deliver the Security Documents, all
consents of third parties necessary to permit the effective granting of the
Liens created in such agreements, financing statements pursuant to the Uniform
Commercial Code and other documents, all in form and substance satisfactory to
the Payee, as may be reasonably required by the Payee to grant to the Payee a
valid, perfected and enforceable first priority Lien on and security interest in
the Collateral.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Debtor represents and warrants (which representations and
warranties shall survive the execution and delivery of this Note) to the Payee
that:
ss.3.1. Organization; Corporate Power. The Debtor is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
organization,
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has the requisite power and authority to own its property and assets and to
carry on its business as now conducted and is qualified to do business in every
jurisdiction where such qualification is required except where the failure to
obtain such qualification would not have a Material Adverse Effect. The Debtor
has the power to execute, deliver and perform its obligations under this Note
and the other Loan Documents to which it is party.
ss.3.2. Authorization. The execution, delivery and performance by the
Debtor of this Note and the other Loan Documents to which it is party and the
grant of security interests in the Collateral created by the Security Documents
(a) have been duly authorized by all requisite action and (b) will not (i)
violate (A) any provision of law, statute, rule or regulation in any material
respect or the articles or certificate of incorporation of the Debtor, (B) any
order or decree of any court, or any rule, regulation or order of any other
agency of government, binding upon the Debtor, (C) any material provisions of
any indenture, agreement or other instrument to which the Debtor or any of its
properties or assets is or may be bound, (ii) be in material conflict with,
result in a breach of or constitute a default under any indenture, agreement or
other instrument referred to in (b)(i)(C) above or (iii) result in the creation
or imposition of any Lien (other than in favor of the Payee) upon any property
or assets of the Debtor.
ss.3.3. Governmental Approvals. No registration or filing with, or
consent or approval of, or other action by, any Federal, state or other
governmental agency, authority or regulatory body is or will be required on the
part of the Debtor in connection with the transactions contemplated hereby,
other than any which have been made or obtained.
ss.3.4. Binding Effect. This Note and the other Loan Documents when
duly executed and delivered will constitute legal, valid and binding obligations
of the Debtor enforceable in accordance with their respective terms except (i)
that enforceability may be subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of creditors
generally and (ii) the remedy of specific performance and other forms of
equitable relief may be subject to equitable defenses and the discretion of any
court before which any proceeding therefor may be brought.
ss.3.5. Litigation; Compliance with Laws; etc. (a) There are not any
actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now pending
or, to the knowledge of the Debtor, threatened against or affecting the Debtor
and which, if adversely determined, would have a Material Adverse Effect.
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(b) The Debtor is not in violation of any law, or in default with
respect to any judgment, writ, injunction, decree, rule or regulation of any
court or governmental agency or instrumentality, which violation or default
would have a Material Adverse Effect.
ss.3.6. Federal Reserve Regulations. The Debtor is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock (as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System
of the United States).
ss.3.7. Taxes. The Debtor has filed or caused to be filed (or filed or
caused to be filed extensions therefor) all Federal, state, local and foreign
tax returns which are required to be filed by it on or prior to the date hereof,
except tax returns in jurisdictions where the failure to file such returns would
not have a Material Adverse Effect. The Debtor has paid or caused to be paid all
taxes shown to be due and payable on such filed returns or on any assessments
received by it other than taxes that in the aggregate are not material and which
would not, if unpaid, result in the imposition of any Lien on any property or
assets of the Debtor.
ss.3.8. No Material Misstatements. Neither the most recent 10-K or 10-Q
reports of the Guarantor furnished by the Debtor to the Payee contains any
material misstatement of fact or omitted or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
ss.3.9. Investment Company Act; Public Utility Holding Company Act. The
Debtor is not an "investment company" as defined in, or is otherwise subject to
regulation under, the Investment Company Act of 1940. The Debtor is not a
"holding company" as that term is defined in or is otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935.
ss.3.10. Security Interest. The Security Documents create and grant to
the Payee a legal, valid and, upon filing of UCC financing statements in the
appropriate jurisdictions and the taking of the other actions contemplated by
the Security Documents and taking all other actions, if any, required by
applicable law, perfected first priority security interest in the Collateral,
subject only to Permitted Liens.
ss.3.11. Subsidiaries. The Debtor has no Subsidiaries other than JAC.
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ss.3.12. Title to Properties. The Debtor has good and valid title to
all of its properties and assets, free and clear of any pledge, security
interest, Lien or other encumbrance or claim of any kind, except in favor of the
Payee and except Permitted Liens.
SECTION 4. CONDITIONS OF LENDING
ss.4.1. Conditions Precedent. The obligation of the Payee to make the
loan evidenced by this Note shall be subject to the following conditions
precedent: The Payee shall have received
(a) the written opinion of Winthrop, Stimpson, Putnam & Roberts,
counsel to the Debtor and the Guarantor, in form and substance satisfactory to
Payee;
(b) (i) copies of the certificate of incorporation and by-laws of the
Loan Parties, certified as to such certificate as of a recent date by the
Secretary of State or other appropriate official of the state of its
organization, and (ii) such other charter documents and certificates as the
Payee may reasonably request;
(c) the Security Documents and such instruments and other documents as
shall be required thereunder (including, without limitation, Uniform Commercial
Code financing statements), and Uniform Commercial Code searches of each of the
Loan Parties;
(d) the Guaranty, in form and substance satisfactory to it, from the
Guarantor;
(e) copies of the Director Notes and the Subordination Agreement;
(f) evidence of compliance with the insurance provisions of the
Security Documents;
(g) executed original of the Purchase Agreement and of the Stock
Purchase Agreement dated the date hereof among the parties to the Purchase
Agreement, and each of the documents and instruments executed and delivered in
connection therewith; and
(h) evidence that all required third party consents, if any, to this
Note and the other Loan Documents have been obtained.
SECTION 5. AFFIRMATIVE COVENANTS
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The Debtor covenants and agrees with the Payee that, so long as this
Note shall remain in effect, or the principal of or interest of this Note or any
fee, expense or amount payable hereunder or with respect to this Note shall be
unpaid, it will:
ss.5.1. Existence. Do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence.
ss.5.2. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default unless the validity or amount thereof is being
contested in good faith by appropriate proceedings and the Debtor has maintained
adequate reserves with respect thereto in accordance with generally accepted
accounting principals.
ss.5.3. Litigation and Other Notices. Upon knowledge by the Debtor,
give the Payee prompt written notice of the following:
(a) the issuance by any court or governmental agency or authority of
any injunction, order, decision or other restraint prohibiting, or having the
effect of prohibiting, the making of the loan hereunder, or invalidating, or
having the effect of invalidating, any provision of this Note or any of other
Loan Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against the Debtor or any other Loan Party, whether at law or in equity or by or
before any court or any Federal, state, municipal or other governmental agency
or authority, which is brought by or on behalf of any governmental agency or
authority, or in which injunctive or other equitable relief is sought and such
relief, if obtained, would materially impair the right or ability of any Loan
Party to perform its obligations under this Note or the other Loan Documents;
and
(c) any Event of Default (as hereinafter defined) or event or condition
which, with the giving of notice or lapse of time or both, would constitute an
Event of Default, specifying the nature and extent thereof and the action (if
any) which is proposed to be taken with respect thereto.
ss.5.4. Other Information. Deliver to the Payee (a) promptly upon (i)
the filing thereof with the Securities and Exchange Commission, a copy of each
report, notice or other filing (including, without limitation 10Q and 10K
filings), with respect to the
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Debtor and the Guarantor and (ii) receipt thereof, all written communications
received by Debtor or Guarantor from the Securities and Exchange Commission; and
(b) such other information as the Payee shall reasonably request.
SECTION 6. NEGATIVE COVENANTS
The Debtor covenants and agrees with the Payee that, so long as this
Note shall remain in effect or the principal of or interest on this Note, any
fee, expense or amount payable hereunder or with respect to this Note shall be
unpaid, it will not:
ss.6.1. Liens. Incur, create, assume or permit to exist any Lien or
other encumbrance of any kind or nature on any of its property or assets
including, without limitation, the Collateral, whether owned at the date hereof
or hereafter acquired, except Liens created in favor of the Payee as
contemplated by this Note and the Security Documents and Permitted Liens.
ss.6.2. Indebtedness. Incur, create, assume or permit to exist any
indebtedness for borrowed money other than (i) indebtedness incurred hereunder,
(ii) indebtedness to trade creditors incurred in the ordinary course of
business, (iii) Indebtedness pursuant to a Refinancing, (iv) unsecured
indebtedness subordinated on terms reasonably acceptable to Payee the proceeds
of which are used to repay the obligations under this Note, (v) purchase money
indebtedness secured by Liens permitted under clause (e) of the definition
Permitted Liens and (vi) indebtedness in existence of the date hereof and listed
on Schedule II hereto.
ss.6.3. Dividends and Distributions. Declare or pay, directly and
indirectly, any cash dividends or make any other distribution, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value (or permit
any Subsidiary to purchase or acquire) any shares of any class of its capital
stock or set aside any amount for any such purpose or make any principal payment
or prepayment on account of, or purchase, redeem or defease any indebtedness for
borrowed money or make any payment of interest thereon (other than prepayments
and payments permitted or required hereunder), or agree to do any of the
foregoing, or permit any Subsidiary to do any of the foregoing or agree to do
any of the foregoing.
ss.6.4. Consolidations, Mergers and Sales of Assets. Consolidate with
or merge into any other person, or sell, lease, transfer or assign to any
persons or otherwise dispose of (whether in one transaction or a series of
transactions) all or any part of its properties or assets (whether now owned or
hereafter acquired) other
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than inventory sold in the ordinary course of business, or permit another person
to merge into it, or acquire any stock or assets of any other person (except
pursuant to the Purchase Agreement and Stock Purchase Agreement), except that
any Subsidiary of the Debtor may merge with and into Debtor with Debtor as the
surviving corporation.
ss.6.5. Investments. Own, purchase or acquire any stock, obligations,
assets or securities of, or any interest in, or make any capital contribution or
loan or advance of money, credit or property to, any other person, or make any
other investments whatsoever, in excess of $100,000 in the aggregate for all of
the foregoing during the term of this Note, except that Debtor may purchase (a)
certificates of deposit in dollars of any commercial banks registered to do
business in any state of the United States (i) having capital and surplus in
excess of $1,000,000,000 and (ii) whose long-term debt rating is at least
investment grade as determined by either Standard & Poor's Corporation or
Moody's Investor Service, Inc., (b) readily marketable direct obligations of the
United States government or any agency thereof which are backed by the full
faith and credit of the United States, (c) investments in money market mutual
funds having assets in excess of $2,500,000,000, (d) commercial paper at the
time of acquisition having the highest rating obtainable from either Standard &
Poor's Corporation or Moody's Investor Service, Inc. and (e) federally tax
exempt securities rated A or better by either Standard & Poor's Corporation or
Moody's Investor Service, Inc.
ss.6.6. Guarantees. Guarantee, endorse, become surety for, or otherwise
in any way become or be responsible for the obligations of any other person,
except the indorsement for collection or collections for deposit and other
guarantees issued in the ordinary course of business.
ss.6.7. Subsidiaries. Create any Subsidiaries which have a net worth at
any time in excess of $5,000.
SECTION 7. EVENTS OF DEFAULT; REMEDIES
ss.7.1. Defaults. If any one or more of the following events ("Events
of Default") shall occur:
(a) If the Debtor shall default in the payment of any of the principal
of or interest on this Note when due and, in the case of interest, such default
shall continue for two (2) or more Business Days; or
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(b) If any Loan Party shall default in the observance or performance of
any covenants or agreements contained in this Note or the other Loan Documents
other than those specified in clause (a) above, and such default shall continue
for 15 or more days; or
(c) If any representation or warranty made by or on behalf of any Loan
Party in this Note or any other Loan Document or in connection with any of the
transactions contemplated herein shall prove to have been false or incorrect in
any material respect when made; or
(d) If any Loan Party shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or shall file a voluntary petition in bankruptcy or shall be
adjudicated a bankrupt or insolvent, or shall file any petition or answer
seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future statute,
law or regulation, or shall file any answer admitting or not contesting the
material allegations of a petition filed against it in any such proceeding, or
shall seek or consent to or acquiesce in the appointment of any trustee,
receiver or liquidator of any Loan Party of all or any substantial part of the
properties of any Loan Party; or
(e) If, within sixty (60) days after the commencement of an action
against any Loan Party seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such action shall not have been dismissed or
stayed or if, within sixty (60) days after the appointment, without the consent
or acquiescence of any Loan Party, of any trustee, receiver, or liquidator of
any Loan Party or any substantial part of any Loan Parties' properties, such
appointment shall not have been vacated; or
(f) If any order, judgment, or decree shall be entered in any
proceeding against any Loan Party requiring such Loan Party to divest itself of
a substantial part of its assets, or awarding a money judgment or judgments
against any Loan Party aggregating more than $100,000, and if, within thirty
(30) days after entry thereof, such order, judgment or decree shall not have
been discharged or execution thereof stayed pending appeal; or if, within thirty
(30) days after the expiration of any such stay, such judgment, order or decree
shall not have been discharged; or
(g) Default shall be made with respect to any indebtedness for borrowed
money of any Loan Party in excess of $100,000 if the effect of any such default
shall be to accelerate or permit the acceleration of the maturity of such
9
indebtedness; or any amount of principal or interest in respect of such
indebtedness shall not be paid when and as due (after giving effect to any
period of grace specified for such payment in the instrument evidencing or
governing the same); provided, however that with respect to capitalized leases,
default of amounts of more than $100,000 but less than $250,000 shall not
constitute a default hereunder so long as the Debtor is contesting the default
under the capitalized lease in good faith and has set aside reserves therefore
in accordance with generally accepted accounting principles;
(h) This Note or any other Loan Document shall for any reason cease to
be, or shall be asserted by any Loan Party not to be, a legal, valid and binding
obligation of any Loan Party, enforceable in accordance with its terms, or the
security interest or Lien purported to be created by any of the Security
Documents shall for any reason cease to be, or be asserted by any Loan Party not
to be, a valid, first priority perfected security interest in any Collateral
(except to the extent otherwise permitted under this Agreement or any of the
Security Documents);
then in the case of an Event of Default described in Section 3.1(d) or 3.1(e)
above, the unpaid balance of this Note and all interest accrued hereon shall
automatically (without any action on the part of the Payee and without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived) forthwith become due and payable, and in the case of any other
Event of Default, then and in any such event, and at any time thereafter, if
such or any other Event of Default shall then be continuing, the Payee may, at
its option, declare this Note to be due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived,
anything contained herein to the contrary notwithstanding. The Payee shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code of the State of New York, under the Uniform Commercial Code of any other
state in which any Collateral may be situated and, additionally, all of the
rights and remedies set forth in this Note and the other Loan Documents and in
any instrument or document referred to herein or therein, and under any other
applicable law relating to this Note or the Collateral.
ss.7.2. Rights and Remedies Cumulative. No right or remedy herein
conferred upon the Payee is intended to be exclusive of any other right or
remedy contained herein or in any instrument or document delivered in connection
with or pursuant to this Note or the other Loan Documents, and every such right
or remedy shall be cumulative and shall be in addition to every other such right
or remedy contained herein and therein or now or hereafter existing at law or in
equity or by statute, or otherwise.
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ss.7.3. Rights and Remedies Not Waived. No course of dealing between
the Debtor and the Payee or any failure or delay on the part of the Payee in
exercising any rights or remedies of the Payee and no single or partial exercise
of any rights or remedies hereunder or under the other Loan Documents shall
operate as a waiver or preclude the exercise of any other rights or remedies
hereunder.
SECTION 8. CERTAIN DEFINITIONS
"Collateral" shall mean the collateral described in the
Security Documents.
"Director Notes" shall mean the 12% Secured Notes of Mediware
Information Systems, Inc. made to the order of each of Lawrence Auriana, Joseph
Delario and Peter Lerner, respectively, in each case as in effect on the date
hereof, as more specifically described on Schedule I to the Guaranty.
"Guarantor" shall mean Mediware Information Systems, Inc., a
New York corporation.
"Guaranty" shall mean the Guaranty dated the date hereof by
Guarantor in favor of Payee.
"JAC" shall mean JAC Computer Services Ltd., a corporation
organized in the United Kingdom.
"Lien" shall mean, with respect to any asset, (i) any
mortgage, lien, pledge, encumbrance, charge or security interest in or on such
asset, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset, (iii) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities or (iv) any other right
of or arrangement with any creditor to have such creditor's claim satisfied out
of such assets, or the proceeds therefrom, prior to the general creditors of the
owner thereof.
Loan Documents" shall mean this Note and any other instrument,
document or agreement executed and delivered at any time and from time to time
in connection herewith.
"Loan Party" shall mean the Debtor and its Subsidiaries and
the Guarantor and its Subsidiaries.
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"Material Adverse Effect" shall mean a material adverse effect
on (i) the businesses, assets, operations or financial or other condition of any
Loan Party, (ii) the ability of any Loan Party to perform or pay its respective
obligations under this Note or under the other Loan Documents, (iii) the rights
of, or benefits available to, the Payee under this Note or any of the other Loan
Documents or (iv) the Payee's Lien on any portion of the Collateral.
"Permitted Liens" shall mean such of the following as to which
no enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced: (a) Liens for taxes, assessments, governmental charges and
levies not yet due and payable; (b) Liens imposed by any Federal, state, local
or foreign statute, law, ordinance, regulation, rule, code, order or
requirement, such a materialmen's, mechanics', carriers', workmen's and
repairmen's Liens and other similar Liens arising in the ordinary course of
business that (i) are not overdue for a period of 30 or more days and (ii) are
not in excess of the cost of the assets to which such Lien relates; (c) pledges
or deposits to secure obligations under workers' compensation laws or similar
legislation to secure public or statutory obligations, (d) Liens in existence on
the date hereof and listed on Schedule I hereto and (e) Liens upon any equipment
acquired through the purchase or lease by Debtor which are created directly in
connection with such acquisition to secure or provide for the payment of any
part of the purchase price of, or lease payments on, such equipment (but no
other amounts and not in excess of the purchase price or lease payments),
providing, that such Lien shall not apply to any other property of the Debtor.
"Refinancing" shall mean the closing of a financing by
Guarantor and/or Debtor which yields not less than $5,000,000 in proceeds net of
fees and expenses.
"Subordination Agreement" shall mean the Subordination
Agreement dated the date hereof among the Payee and Lawrence Auriana, Peter
Lerner and Joseph Delario, each a holder of a Director Note.
"Subsidiary" shall mean with respect to any person, the parent
of such person, any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled, directly or indirectly, by the parent or one or more
subsidiaries of the parent.
SECTION 9. MISCELLANEOUS
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ss.9.1. Collection Costs. In the event the Payee or any holder of this
Note shall refer this Note to an attorney for collection, the Debtor agrees to
pay, in addition to unpaid principal and interest, all the costs and expenses
incurred in attempting or effecting collection hereunder, including reasonable
attorneys' fees, whether or not suit is instituted.
ss.9.2. Waivers. Presentment, demand, protest or other notice of any
kind, except as may be otherwise specifically provided herein, are all hereby
waived with respect to this Note.
ss.9.3. Modification. No modification or waiver of any provision of
this Note and no consent by the Payee to any departure therefrom by the Debtor
shall be effective unless such modification or waiver shall be in writing and
signed by the Payee, and the same shall then be effective only for the period
and on the conditions and for the specific instances and purposes specified in
such writing. No notice to or demand on the Debtor in any case shall entitle the
Debtor to any other or further notice or demand in similar or other
circumstances.
ss.9.4. Expenses; Indemnity. (a) The Debtor agrees to pay all
reasonable out-of-pocket expenses incurred by the Payee in connection with any
amendments, modifications or waivers of the provisions hereof or of the other
Loan Documents or incurred by the Payee in connection with the enforcement or
protection of its rights in connection with this Note or the other Loan
Documents or in connection with any pending or threatening action, proceeding,
or investigation relating to the foregoing, in each case including but not
limited to the reasonable fees and disbursements of counsel for the Payee. The
Debtor further agrees that it shall indemnify the Payee from and hold it
harmless against any documentary taxes, assessments or charges made by any
governmental authority by reason of the execution and delivery of this Note, but
not against any income or other tax attributable to the interest payable to the
Payee hereunder.
(b) The Debtor agrees to indemnify the Payee and its
respective directors, officers, employees and agents against, and to hold the
Payee and each such person harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against the Payee or any such person arising
out of, in any way connected with, or as a result of (i) this Note or the other
Loan Documents, the performance by the parties hereto and thereto of their
respective obligations hereunder and thereunder (including but not limited to
the making of the loan hereunder) and consummation of the transactions
contemplated hereby and thereby, or (ii) any claim, litigation, investigation or
proceedings relating to any of the foregoing,
13
whether or not the Payee or any such person is a party thereto; provided that
such indemnity shall not, as to the Payee and its respective directors,
officers, employees and agents, apply to any such losses, claims, damages,
liabilities or related expenses to the extent that they result from the gross
negligence or willful misconduct of the Payee; and, provided further, that in no
event shall the Debtor be liable for any special, exemplary, punitive or
consequential damages or any damages other than or in addition to actual
damages.
(c) The provisions of this Section 9.4 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Note, the consummation of the transactions contemplated hereby, the repayment of
the loan evidenced by this Note, the invalidity or unenforceability of any term
or provision of this Note, or any investigation made by or on behalf of the
Payee. All amounts due under this Section 9.4 shall be payable on written demand
therefor.
ss.9.5. Entire Agreement; Waiver of Jury Trial, etc. (a) This Note, the
Security Documents and the Guaranty constitute the entire contract between the
parties relative to the subject matter hereof. Any previous agreement among the
parties with respect to the transactions contemplated herein is superseded by
this Note and the other Loan Documents. Except as expressly provided herein or
in the other Loan Documents, nothing in this Note or the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Note or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby
waives any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this Note or
the other Loan Documents.
(c) Except as prohibited by law, each party hereto hereby
waives any right it may have to claim or recover in any litigation referred to
in paragraph (b) of this Section 9.5 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that neither any
representative, agent or attorney of the Payee has represented, expressly or
otherwise, that the Payee would not, in the event of litigation, seek to enforce
the foregoing waivers and (ii) acknowledges that it has been induced to enter
into this Note or the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
14
ss.9.6. Consent of Jurisdiction. The Debtor hereby irrevocably consents
to the jurisdiction of the Courts of the State of New York and of any Federal
Court located in such State in connection with any action or proceeding arising
out of or relating to this Note.
ss.9.7. Benefit of Agreement. This Note shall be binding upon the
successors and assigns of the Debtor and inure to the benefit of the Payee and
its successors, endorsees and assigns.
15
ss.9.8. Notices. Notices, consents and other communications provided
for herein shall be in writing and shall be delivered or mailed (or in the case
of telegraphic communication, delivered by telex, graphic scanning or other
telegraphic communications equipment, with receipt confirmed) addressed,
(a) if to the Debtor, to Digimedics Corp., 1600 Green Hills
Road, Scotts Valley, California 95066, Telecopy No. 408-438-8422, Attention: Mr.
Les Dace, with a copy to (i) Mediware Information Systems, Inc., 1121 Old Walt
Whitman Road, Melville, New York 11747-3005, Telecopy No. 516-423-0161,
Attention: President, (ii) Hackmyer & Nordlicht, Olympic Tower, 645 Fifth
Avenue, New York, NY 10022, Telecopy No. 212-42100499, Attention: Ira Nordlicht,
Esq. and (iii) Winthrop, Stimpson, Putnam & Roberts, One Battery Park Plaza, New
York, NY 10004-1490, Telecopy No. 212-858-1500, Jonathan M. Churchill, Esq.; and
(b) if to Payee, c/o TBG Services, Inc., at 565 Fifth Avenue,
New York, New York 10117, Attention: Stephen Green, Esq.
All notices and other communications given to any party hereto
in accordance with the provisions of this Note shall be deemed to have been
given on the date of receipt if hand delivered or three days after being sent by
registered or certified mail, postage prepaid, return receipt requested, if by
mail, or upon receipt if by any telegraphic or telex communications equipment,
in each case addressed to such party as provided in this Section 9.8 or in
accordance with the latest unrevoked direction from such party.
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ss.9.9. New York Law. THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LOCAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
EXECUTED AND TO BE PERFORMED IN SUCH STATE.
DIGIMEDICS CORPORATION.
By: /s/ Lawrence Auriana
_______________________
Name: Lawrence Auriana
Title: Secretary
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Dates Referenced Herein and Documents Incorporated by Reference
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