Exhibit 10.1

 

Silicon Valley Bank

 

Loan and Security Agreement

 

Borrower:   Essential Group, Inc.     AmericasDoctor.com Coordinator Services,
Inc. Address:   1325 Tri-State Parkway, Suite 300     Gurnee, IL 60031 Date:  
September 27, 2004

 

THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between
SILICON VALLEY BANK (“Silicon”), whose address is 3003 Tasman Drive, Santa
Clara, California 95054 and the borrower(s) named above (jointly and severally,
the “Borrower”), whose chief executive office is located at the above address
(“Borrower’s Address”). The Schedule to this Agreement (the “Schedule”) shall
for all purposes be deemed to be a part of this Agreement, and the same is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 8 below.)

 

1. LOANS.

 

1.1 Loans. Silicon will make loans to Borrower (the “Loans”) up to the amounts
(the “Credit Limit”) shown on the Schedule, provided no Default or Event of
Default has occurred and is continuing, and subject to deduction of Reserves for
accrued and unpaid interest and such other Reserves as Silicon deems proper from
time to time in its good faith business judgment.

 

1.2 Interest. All Loans and all other monetary Obligations shall bear interest
at the rate shown on the Schedule, except where expressly set forth to the
contrary in this Agreement. Interest shall be payable monthly, on the last
Business Day of the month. Interest may when due hereunder, in Silicon’s
discretion, be charged to Borrower’s loan account, and the same shall thereafter
bear interest at the same rate as the other Loans until paid. Silicon may, in
its discretion, charge interest when due hereunder to Borrower’s Deposit
Accounts maintained with Silicon. Regardless of the amount of Obligations that
may be outstanding from time to time, Borrower shall pay Silicon minimum monthly
interest during the term of this Agreement in the amount set forth on the
Schedule (the “Minimum Monthly Interest”).

 

1.3 Overadvances. If at any time or for any reason the total of all outstanding
Loans and all other monetary Obligations exceeds the Credit Limit (an
“Overadvance”), Borrower shall pay the amount of the excess to Silicon within
two days of any such Overadvance occurring, without notice or demand; provided,
however, that if the Overadvance results directly from a change by Silicon of
the amount of Reserves, the Minimum Eligibility Requirements or the Advance
Rate, then such Overadvance shall be due and payable from Borrower to Silicon
within two days of the earlier of (i) Borrower becoming aware of such
Overadvance or (ii) demand by Silicon. Without limiting Borrower’s obligation to
repay to Silicon the amount of any Overadvance, Borrower agrees to pay Silicon
interest on the outstanding amount of any Overadvance that is due and payable,
on demand, at the Default Rate.

 

1.4 Fees. Borrower shall pay Silicon the fees shown on the Schedule, which are
in addition to all interest and other sums payable to Silicon and are not
refundable.

 

1.5 Loan Requests. To obtain a Loan, Borrower shall make a request to Silicon by
facsimile or telephone. Loan requests received after 12:00 Noon Pacific time
will not be considered by Silicon until the next Business Day. Silicon may rely
on any telephone request for a Loan given by a person whom Silicon believes is
an authorized representative of Borrower, and Borrower will indemnify Silicon
for any loss Silicon suffers as a result of that reliance.

 

1.6 Letters of Credit. [Not Applicable].

 

2. SECURITY INTEREST. To secure the payment and performance of all of the
Obligations when due, Borrower hereby grants to Silicon a security interest in
all of the following (collectively, the “Collateral”): all right, title and
interest of Borrower in and to all of the following, whether now owned or
hereafter arising or acquired and wherever located: all

 

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Accounts; all Inventory; all Equipment; all Deposit Accounts; all General
Intangibles (including without limitation all Intellectual Property); all
Investment Property; all Other Property; and any and all claims, rights and
interests in any of the above, and all guaranties and security for any of the
above, and all substitutions and replacements for, additions, accessions,
attachments, accessories, and improvements to, and proceeds (including proceeds
of any insurance policies, proceeds of proceeds and claims against third
parties) of, any and all of the above, and all Borrower’s books relating to any
and all of the above.

 

3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.

 

To induce Silicon to enter into this Agreement and to make Loans, Borrower
represents and warrants to Silicon as follows, and Borrower covenants that the
following representations will continue to be true, and that Borrower will at
all times comply with all of the following covenants, throughout the term of
this Agreement and until all Obligations have been paid and performed in full:

 

3.1 Corporate Existence and Authority. Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would result in a Material Adverse Change. The execution, delivery and
performance by Borrower of this Agreement, and all other documents contemplated
hereby (i) have been duly and validly authorized, (ii) are enforceable against
Borrower in accordance with their terms (except as enforcement may be limited by
equitable principles and by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to creditors’ rights generally), and (iii) do not
violate Borrower’s articles or certificate of incorporation, or Borrower’s
by-laws, or any law or any material agreement or instrument which is binding
upon Borrower or its property, and (iv) do not constitute grounds for
acceleration of any material indebtedness or obligation under any agreement or
instrument which is binding upon Borrower or its property.

 

3.2 Name; Trade Names and Styles. The name of Borrower set forth in the heading
to this Agreement is its correct name. Listed in the Representations are all
prior names of Borrower used within the past six years and all of Borrower’s
present and prior trade names. Borrower shall give Silicon 30 days’ prior
written notice before changing its name and will provide Silicon with prior
written notice before doing business under any other name. Borrower has
complied, and will in the future comply, in all material respects, with all laws
relating to the conduct of business under a fictitious business name, except
where the failure to so comply would not reasonably be expected to result in a
Material Adverse Change.

 

3.3 Place of Business; Location of Collateral. The address set forth in the
heading to this Agreement is Borrower’s chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth in the Representations and Equipment and Inventory located at
physician offices and other employee, agent or representative locations.
Borrower will give Silicon at least 30 days prior written notice before opening
any additional place of business, changing its chief executive office, or moving
any of the Collateral other than (in the ordinary course of business) Equipment
and Inventory with an estimated book value not in excess of $25,000 to a
location other than Borrower’s Address or one of the locations set forth in the
Representations.

 

3.4 Title to Collateral; Perfection; Permitted Liens.

 

(a) Borrower is now, and will at all times in the future be, the sole owner of
all the Collateral, except for items of Equipment which are leased to Borrower.
The Collateral now is and will remain free and clear of any and all liens,
charges, security interests, encumbrances and adverse claims, except for
Permitted Liens. Silicon now has, and will continue to have, a first-priority
perfected and enforceable security interest in all of the Collateral, subject
only to the Permitted Liens and the need to enter into a control agreement with
Harris Bank regarding Borrower’s accounts at such institution, and Borrower will
at all times defend Silicon and the Collateral against all contrary claims of
others.

 

(b) Borrower has set forth in the Representations all of Borrower’s current
Deposit Accounts, and Borrower will give Silicon five Business Days advance
written notice before establishing any new Deposit Accounts and will cause the
institution where any such new Deposit Account is maintained to execute and
deliver to Silicon a control agreement in form sufficient to perfect Silicon’s
security interest in the Deposit Account and otherwise satisfactory to Silicon
in its good faith business judgment. Nothing herein limits any requirements
which may be set forth in the Schedule as to where Deposit Accounts will be
maintained.

 

(c) If Borrower shall at any time after the date hereof have any commercial tort
claims against others, which it is asserting or intends to assert, and in which
the potential recovery exceeds $100,000, Borrower shall promptly notify Silicon
thereof in writing and provide Silicon with such information regarding the same
as Silicon shall request (unless providing such information would waive the
Borrower’s attorney-client privilege). Such notification to Silicon shall
constitute a grant of a security interest in the commercial tort claim and all
proceeds thereof to Silicon, and Borrower shall execute and deliver all such
documents and take all such actions as Silicon shall reasonably request in
connection therewith.

 

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(d) None of the Collateral now is or will be affixed to any real property in
such a manner, or with such intent, as to become a fixture. Borrower is not and
will not become a lessee under any real property lease (other than any such
lease with respect to which Borrower has provided Silicon with a landlord waiver
and subordination as provided for below) pursuant to which the lessor may obtain
any rights in any of the Collateral with a book value in excess of $50,000, or
other than a Permitted Lien, and no such lease now prohibits, restrains, impairs
or will prohibit, restrain or impair Borrower’s right to remove any Collateral
with a book value in excess of $50,000 from the leased premises. Whenever any
Collateral is located upon premises leased or rented by Borrower in which any
third party has an interest, Borrower shall, whenever requested by Silicon, use
commercially reasonable efforts to cause such third party to execute and deliver
to Silicon, in form acceptable to Silicon, such waivers and subordinations as
Silicon shall specify in its good faith business judgment. Borrower will comply
with all material terms of, any lease by it of real property where any of the
Collateral now or in the future may be located. Any termination of a lease by
the Borrower shall be conducted in compliance with the terms of such lease and
will not result in a lien in favor of the landlord of such lease, or otherwise
allow the landlord to obtain rights, in any of the Collateral.

 

3.5 Maintenance of Collateral. Borrower will maintain the Collateral in good
working condition (ordinary wear and tear excepted), and Borrower will not use
the Collateral for any unlawful purpose. Borrower will promptly advise Silicon
in writing upon becoming aware of any material loss or damage to the Collateral.

 

3.6 Books and Records. Borrower has maintained and will maintain at Borrower’s
Address complete and accurate books and records, comprising an accounting system
in accordance with GAAP.

 

3.7 Financial Condition, Statements and Reports. All financial statements now or
in the future delivered to Silicon have been, and will be, prepared in
conformity with GAAP and now and in the future will fairly present the results
of operations and financial condition of Borrower, in accordance with GAAP, at
the times and for the periods therein stated. Between the last date covered by
any such statement provided to Silicon and the date hereof, there has been no
Material Adverse Change other than with respect to matters disclosed in business
and financial projections provided to Silicon.

 

3.8 Tax Returns and Payments; Pension Contributions. Subject to the following
sentence, Borrower has timely filed, and will timely file, all required tax
returns and reports, and Borrower has timely paid, and will timely pay, all
foreign, federal, state and local taxes, assessments, deposits and contributions
now or in the future owed by Borrower. Borrower may, however, defer payment of
any contested taxes, provided that Borrower (i) in good faith contests
Borrower’s obligation to pay the taxes by appropriate proceedings promptly and
diligently instituted and conducted, (ii) notifies Silicon in writing of the
commencement of, and any material development in, the proceedings, and (iii)
posts bonds or takes any other steps required to keep the contested taxes from
becoming a lien upon any of the Collateral. Borrower is unaware of any claims or
adjustments proposed for any of Borrower’s prior tax years which could result in
additional taxes becoming due and payable by Borrower. Borrower has paid, and
shall continue to pay, all amounts necessary to fund all present and future
pension, profit sharing and deferred compensation plans in accordance with their
terms, and Borrower has not and will not withdraw from participation in, permit
partial or complete termination of, or permit the occurrence of any other event
with respect to, any such plan which could reasonably be expected to result in
any liability of Borrower (other than the payment of benefits and contributions
in the ordinary course of business which Borrower represents and warrants it has
paid and shall continue to pay as provided for above), including any liability
to the Pension Benefit Guaranty Corporation or its successors or any other
governmental agency.

 

3.9 Compliance with Law. Borrower has, to its knowledge, complied, and will
comply, in all material respects, with all provisions of all foreign, federal,
state and local laws and regulations applicable to Borrower, including, but not
limited to, those relating to Borrower’s ownership of real or personal property,
the conduct and licensing of Borrower’s business, and all environmental matters.

 

3.10 Litigation. There is no claim, suit, litigation, proceeding or
investigation pending or (to Borrower’s knowledge) threatened against or
materially adversely affecting Borrower in any court or before any governmental
agency (or any basis therefor known to Borrower) which could reasonably be
expected to result, either separately or in the aggregate, in any Material
Adverse Change. Borrower will promptly inform Silicon in writing of any claim,
proceeding, litigation or investigation in the future threatened or instituted
against Borrower involving any single claim of $50,000 or more, or involving
$100,000 or more in the aggregate.

 

3.11 Use of Proceeds. All proceeds of all Loans shall be used solely for lawful
business purposes. Borrower is not purchasing or carrying any “margin stock” (as
defined in Regulation U of the Board of Governors of the Federal Reserve System)
and no part of the proceeds of any Loan will be used to purchase or carry any
“margin stock” or to extend credit to others for the purpose of purchasing or
carrying any “margin stock.”

 

4. Accounts.

 

4.1 Representations Relating to Accounts. Borrower represents and warrants to
Silicon as follows: Each Account identified by Borrower to Silicon as an
Eligible Account and shown by Borrower to meet the Minimum Eligibility

 

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Requirements set forth in the definition thereof in a report required hereunder
shall, at the time of such report, (i) represent an undisputed bona fide
existing unconditional obligation of the pertinent Account Debtor created by the
sale, delivery, and acceptance of goods or the rendition of services, or the
non-exclusive licensing of Intellectual Property, in the ordinary course of
Borrower’s business, and (ii) meet the Minimum Eligibility Requirements.

 

4.2 Representations Relating to Documents and Legal Compliance. Borrower
represents and warrants to Silicon as follows: All statements made and all
unpaid balances appearing in all invoices, instruments and other documents
evidencing the Accounts are and shall be true and correct and all such invoices,
instruments and other documents and all of Borrower’s books and records are and
shall be genuine and in all respects what they purport to be. All sales and
other transactions underlying or giving rise to each Account shall comply in all
material respects with all applicable laws and governmental rules and
regulations. To the best of Borrower’s knowledge, all signatures and
endorsements of Borrower on all documents, instruments, and agreements relating
to all Accounts are and shall be genuine, and all such documents, instruments
and agreements are and shall be legally enforceable in accordance with their
terms.

 

4.3 Schedules and Documents relating to Accounts. Borrower shall deliver to
Silicon transaction reports and schedules of collections, as provided in the
Schedule, on Silicon’s standard forms; provided, however, that Borrower’s
failure to execute and deliver the same shall not affect or limit Silicon’s
security interest and other rights in all of Borrower’s Accounts, nor shall
Silicon’s failure to advance or lend against a specific Account affect or limit
Silicon’s security interest and other rights therein. If requested by Silicon,
Borrower shall furnish Silicon with copies (or, at Silicon’s request, originals,
to the extent available to Borrower,) of all contracts, orders, invoices, and
other similar documents, and all shipping instructions, delivery receipts, bills
of lading, and other evidence of delivery, for any goods the sale or disposition
of which gave rise to such Accounts, and Borrower warrants the genuineness of
all of the foregoing. Borrower shall also furnish to Silicon an aged accounts
receivable trial balance as provided in the Schedule. In addition, Borrower
shall deliver to Silicon, on its request, the originals, to the extent available
to Borrower, of all instruments, chattel paper, security agreements, guarantees
and other documents and property evidencing or securing any Accounts, in the
same form as received, with all necessary indorsements, and copies of all credit
memos.

 

4.4 Collection of Accounts. Borrower shall have the right to collect all
Accounts, unless and until a Default or an Event of Default has occurred and is
continuing. Whether or not an Event of Default has occurred and is continuing,
Borrower shall hold all payments on, and proceeds of, Accounts in trust for
Silicon, and Borrower shall immediately deliver all such payments and proceeds
to Silicon in their original form, duly endorsed, to be applied to the
Obligations in such order as Silicon shall determine. Silicon may, in its good
faith business judgment, require that all proceeds of Collateral be deposited by
Borrower into a lockbox account, or such other “blocked account” as Silicon may
specify, pursuant to a blocked account agreement in such form as Silicon may
specify in its good faith business judgment. Any credit balance in such lockbox
account, or such other blocked account, shall be applied to the Obligations in
such order as Silicon shall determine, and the surplus, if any, will be directed
to Borrower’s operating account maintained with Silicon.

 

4.5. Remittance of Proceeds. All proceeds arising from the disposition of any
Collateral shall be delivered, in kind, by Borrower to Silicon in the original
form in which received by Borrower not later than the following Business Day
after receipt by Borrower, to be applied to the Obligations in such order as
Silicon shall determine; provided that, if no Default or Event of Default has
occurred and is continuing, Borrower shall not be obligated to remit to Silicon
the proceeds of the sale of worn out or obsolete Equipment disposed of by
Borrower in good faith in an arm’s length transaction for an aggregate purchase
price of $25,000 or less (for all such transactions in any fiscal year).
Borrower agrees that it will not commingle proceeds of Collateral with any of
Borrower’s other funds or property, but will hold such proceeds separate and
apart from such other funds and property and in an express trust for Silicon.
Nothing in this Section limits the restrictions on disposition of Collateral set
forth elsewhere in this Agreement.

 

4.6 Disputes. Borrower shall notify Silicon promptly of all disputes or claims
relating to Accounts in excess of $10,000. Borrower shall not forgive
(completely or partially), compromise or settle any Account for less than
payment in full, or agree to do any of the foregoing, except that Borrower may
do so, provided that: (i) Borrower does so in good faith, in a commercially
reasonable manner, in the ordinary course of business, and in arm’s length
transactions, which are reported to Silicon on the regular reports provided to
Silicon; (ii) no Default or Event of Default has occurred and is continuing; and
(iii) taking into account all such discounts, settlements and forgiveness, the
total outstanding Loans will not exceed the Credit Limit.

 

4.7 Returns. Provided no Event of Default has occurred and is continuing, if any
Account Debtor returns any Inventory to Borrower, Borrower shall promptly
determine the reason for such return and promptly issue a credit memorandum to
the Account Debtor in the appropriate amount. In the event any attempted return
occurs after the occurrence and during the continuance of any Event of Default,
Borrower shall hold the returned Inventory in trust for Silicon, and immediately
notify Silicon of the return of the Inventory.

 

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4.8 Verification. Silicon may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Accounts, by means of mail, telephone or otherwise, either in the name of
Borrower or Silicon or such other name as Silicon may choose. Silicon will use
commercially reasonable efforts to notify Borrower prior to any such
verification and will provide the Borrower with an opportunity to participate in
such verification; provided, however, that Silicon shall have no liability to
Borrower or anyone else for inadvertently or negligently failing to provide such
notice to Borrower (exclusive of any gross negligence or willful misconduct on
the part of Silicon), the Borrower shall not be able to prohibit or prevent
Silicon from proceeding with any verification, and if an Event of Default has
occurred and is continuing, Silicon shall have the right to verify in accordance
with the preceding sentence without regard to the terms of this sentence
(including the effort to provide notice).

 

4.9 No Liability. Silicon shall not be responsible or liable for any shortage or
discrepancy in, damage to, or loss or destruction of, any goods, the sale or
other disposition of which gives rise to an Account, or for any error, act,
omission, or delay of any kind occurring in the settlement, failure to settle,
collection or failure to collect any Account, or for settling any Account in
good faith for less than the full amount thereof, nor shall Silicon be deemed to
be responsible for any of Borrower’s obligations under any contract or agreement
giving rise to an Account. Nothing herein shall, however, relieve Silicon from
liability for its own gross negligence or willful misconduct.

 

5. ADDITIONAL DUTIES OF BORROWER.

 

5.1 Financial and Other Covenants. Borrower shall at all times comply with the
financial and other covenants set forth in the Schedule.

 

5.2 Insurance. Borrower shall, at all times insure all of the tangible personal
property Collateral and carry such other business insurance, with insurers
reasonably acceptable to Silicon, in such form and amounts as Silicon may
reasonably require and that are customary and in accordance with standard
practices for Borrower’s industry and locations, and Borrower shall provide
evidence of such insurance to Silicon. All such property insurance policies
shall name Silicon as an additional loss payee, and shall contain a lenders loss
payee endorsement in form reasonably acceptable to Silicon. Upon receipt of the
proceeds of any such insurance, Silicon shall apply such proceeds in reduction
of the Obligations as Silicon shall determine in its good faith business
judgment, except that, provided no Default or Event of Default has occurred and
is continuing, Silicon shall release to Borrower insurance proceeds with respect
to Equipment totaling less than $100,000, which shall be utilized by Borrower
for the replacement of the Equipment with respect to which the insurance
proceeds were paid. Silicon may require reasonable assurance that the insurance
proceeds so released will be so used. If Borrower fails to provide or pay for
any insurance, Silicon may, but is not obligated to, obtain the same at
Borrower’s expense. Borrower shall promptly deliver to Silicon copies of all
material reports made to insurance companies.

 

5.3 Reports. Borrower, at its expense, shall provide Silicon with the written
reports set forth in the Schedule, and such other written reports with respect
to Borrower (including budgets, sales projections, operating plans and other
financial documentation), as Silicon shall from time to time specify in its good
faith business judgment.

 

5.4 Access to Collateral, Books and Records. At reasonable times, and on one
full Business Day’s notice, Silicon, or its agents, shall have the right to
inspect the Collateral, and the right to audit and copy Borrower’s books and
records. The audits will be performed no more frequently than quarterly, unless
(i) Silicon believes that it is advisable to do conduct audits more frequently
in Silicon’s good faith business judgment, or (ii) a Default or Event of Default
has occurred and is continuing. Silicon shall take reasonable steps to keep
confidential all information obtained in any such inspection or audit, but
Silicon shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and to the extent required by any subpoena
or other legal process. The foregoing inspections and audits shall be at
Borrower’s expense and the charge therefor shall be $750 per person per day (or
such higher amount as shall represent Silicon’s then current standard charge for
the same), plus reasonable out-of-pocket expenses. If Borrower and Silicon
schedule an audit more than 10 days in advance, and Borrower seeks to
reschedules the audit with less than 10 days written notice to Silicon, then
(without limiting any of Silicon’s rights or remedies), Borrower shall pay
Silicon a cancellation fee of $1,000 plus any out-of-pocket expenses incurred by
Silicon, to compensate Silicon for the anticipated costs and expenses of the
cancellation.

 

5.5 Negative Covenants. Except as may be permitted in the Schedule, Borrower
shall not, without Silicon’s prior written consent (which shall be a matter of
its good faith business judgment), do any of the following: (i) merge or
consolidate with another corporation or entity other than another co-Borrower
under this Agreement; (ii) acquire assets with an estimated book value in excess
of $50,000 in any fiscal year outside of the ordinary course of business; (iii)
enter into any transaction outside the ordinary course of business except to the
extent permitted under another clause of this section; (iv) sell or transfer any
Collateral with a book value in excess of $25,000 in the aggregate in any fiscal
year, except for the sale of finished Inventory in the ordinary course of
Borrower’s business, and except for the sale of obsolete or unneeded Equipment
in the ordinary course of business; (v) store any Inventory or other Collateral
with any warehouseman or other third party; (vi) sell any Inventory on a
sale-or-return, guaranteed sale, consignment, or other contingent basis; (vii)
make any loans of any money or other assets except for advances to employees
made in the ordinary course of business and provided such advances do not

 

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exceed $15,000 for any single employee and $25,000 in the aggregate for all
employees in any fiscal year; (viii) incur any debts, outside the ordinary
course of business, which would result in a Material Adverse Change; (ix)
guarantee or otherwise become liable with respect to the obligations of another
party or entity other than another co-Borrower under this Agreement and only
with respect to obligations that would otherwise be permitted under this
Agreement; (x) pay or declare any dividends on Borrower’s stock (except for
dividends payable solely in stock of Borrower); (xi) redeem, retire, purchase or
otherwise acquire, directly or indirectly, any of Borrower’s stock or other
equity securities; (xii) make any change in Borrower’s capital structure which
would result in a Material Adverse Change; (xiii) engage, directly or
indirectly, in any business other than the businesses currently engaged in by
Borrower or reasonably related thereto; or (xiv) dissolve or elect to dissolve.
Transactions permitted by the foregoing provisions of this Section are only
permitted if no Default or Event of Default would occur as a result of such
transaction.

 

5.6 Litigation Cooperation. Should any third-party suit or proceeding be
instituted by or against Silicon with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Silicon, make available Borrower
and its officers, employees and agents and Borrower’s books and records, to the
extent that Silicon may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.

 

5.7 Further Assurances. Borrower agrees, at its expense, on request by Silicon,
to execute all documents and take all actions, as Silicon, may, in its good
faith business judgment, deem necessary or useful in order to perfect and
maintain Silicon’s perfected first-priority security interest in the Collateral
(subject to Permitted Liens), and in order to fully consummate the transactions
contemplated by this Agreement.

 

6. TERM.

 

6.1 Maturity Date. This Agreement shall continue in effect until the maturity
date set forth on the Schedule (the “Maturity Date”), subject to Section 6.2 and
Section 6.3 below.

 

6.2 Early Termination. This Agreement may be terminated prior to the Maturity
Date as follows: (i) by Borrower, effective three Business Days after written
notice of termination is given to Silicon; or (ii) by Silicon at any time after
the occurrence and during the continuance of an Event of Default, without
notice, effective immediately. If this Agreement is terminated by Borrower or by
Silicon under this Section 6.2, Borrower shall pay to Silicon a termination fee
in an amount equal to (i) one-half of one percent (0.50%) of the Maximum Credit
Limit if this Agreement is terminated by Borrower or (ii) one-quarter of one
percent (0.25%) of the Maximum Credit Limit if this Agreement is terminated by
Silicon, provided that no termination fee shall be charged if the credit
facility hereunder is replaced with a new facility from another division of
Silicon Valley Bank. The termination fee shall be due and payable on the
effective date of termination and thereafter shall bear interest at a rate equal
to the highest rate applicable to any of the Obligations.

 

6.3 Payment of Obligations. On the Maturity Date or on any earlier effective
date of termination, Borrower shall pay and perform in full all Obligations,
whether evidenced by installment notes or otherwise, and whether or not all or
any part of such Obligations are otherwise then due and payable. Without
limiting the generality of the foregoing, if on the Maturity Date, or on any
earlier effective date of termination, there are any outstanding Letters of
Credit issued by Silicon or issued by another institution based upon an
application, guarantee, indemnity or similar agreement on the part of Silicon,
then on such date Borrower shall provide to Silicon cash collateral in an amount
equal to 105% of the face amount of all such Letters of Credit plus all
interest, fees and cost due or to become due in connection therewith (as
estimated by Silicon in its good faith business judgment), to secure all of the
Obligations relating to said Letters of Credit, pursuant to Silicon’s then
standard form cash pledge agreement. Notwithstanding any termination of this
Agreement, all of Silicon’s security interests in all of the Collateral and all
of the terms and provisions of this Agreement shall continue in full force and
effect until all Obligations have been paid and performed in full (or, with
respect to Letters of Credit as provided for above, cash collateralized);
provided that Silicon may, in its sole discretion, refuse to make any further
Loans after termination. No termination shall in any way affect or impair any
right or remedy of Silicon, nor shall any such termination relieve Borrower of
any Obligation to Silicon, until all of the Obligations have been paid and
performed in full (or, with respect to Letters of Credit as provided for above,
cash collateralized). Upon payment and performance in full of all the
Obligations (and, with respect to Letters of Credit as provided for above, cash
collateralization thereof) and termination of this Agreement, Silicon shall
promptly terminate its financing statements with respect to the Borrower and
deliver to Borrower such other documents as may be required to fully terminate
Silicon’s security interests.

 

7. EVENTS OF DEFAULT AND REMEDIES.

 

7.1 Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default” under this Agreement, and Borrower shall give
Silicon immediate written notice thereof: (a) Any warranty, representation,
statement, report or certificate made or delivered to Silicon by Borrower or any
of Borrower’s officers, employees or agents, now or in the future, shall be
untrue or misleading in a material respect when made or deemed to be made; or
(b) Borrower shall fail to pay when due any Loan or any interest thereon or any
other monetary Obligation; or (c) the total Loans and other Obligations

 

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outstanding at any time shall exceed the Credit Limit and is not repaid in
accordance with Section 1.3 hereof; or (d) Borrower shall fail to comply with
any of the financial covenants set forth in the Schedule, or shall fail to
perform any other non-monetary Obligation which by its nature cannot be cured,
or shall fail to permit Silicon to conduct an inspection or audit as specified
in Section 5.4 hereof; or (e) Borrower shall fail to perform any other
non-monetary Obligation, which failure is not cured within five Business Days
after the date due; or (f) any levy, assessment, attachment, seizure, lien or
encumbrance (other than a Permitted Lien) is made on all or any part of the
Collateral which is not cured within 10 days after the occurrence of the same;
or (g) any default or event of default occurs under any obligation in excess of
$20,000 secured by a Permitted Lien, which is not cured within any applicable
cure period or waived in writing by the holder of the Permitted Lien; or (h)
Borrower breaches any material contract or obligation, which has resulted or may
reasonably be expected to result in a Material Adverse Change; or (i)
dissolution, termination of existence, insolvency or business failure of
Borrower; or appointment of a receiver, trustee or custodian, for all or any
part of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding by Borrower under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect; or (j) the
commencement of any proceeding against Borrower or any guarantor of any of the
Obligations under any reorganization, bankruptcy, insolvency, arrangement,
readjustment of debt, dissolution or liquidation law or statute of any
jurisdiction, now or in the future in effect, which is not cured by the
dismissal thereof within 60 days after the date commenced; or (k) revocation or
termination of, or limitation or denial of liability upon, any guaranty of the
Obligations or any attempt to do any of the foregoing, or commencement of
proceedings by any guarantor of any of the Obligations under any bankruptcy or
insolvency law; or (l) revocation or termination of, or limitation or denial of
liability upon, any pledge of any certificate of deposit, securities or other
property or asset of any kind pledged by any third party to secure any or all of
the Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or (m) Borrower makes any payment on account of any indebtedness
or obligation which has been subordinated to the Obligations other than as
permitted in the applicable subordination agreement, or if any Person who has
subordinated such indebtedness or obligations terminates or in any way limits
his subordination agreement; or (n) there shall be a change in the record or
beneficial ownership of an aggregate of more than 20% of the outstanding shares
of stock of Borrower in any single transaction (excluding transactions by and
between the existing shareholders of Borrower provided such transactions do not
result in a violation of the 50% limit described below) or if there shall be a
change in the record or beneficial ownership of the outstanding shares of stock
of Borrower (regardless of the percentage involved) that results in any Person
(other than another co-Borrower under this Agreement) owning 50% or more of the
outstanding shares of Borrower; or (o) Borrower shall generally not pay its
debts as they become due, or Borrower shall conceal, remove or transfer any part
of its property, with intent to hinder, delay or defraud its creditors, or make
or suffer any transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or (p) a Material Adverse
Change shall occur. Silicon may cease making any Loans hereunder during any of
the above cure periods, and thereafter if an Event of Default has occurred and
is continuing.

 

7.2 Remedies. Upon the occurrence and during the continuance of any Event of
Default, Silicon, at its option, and without notice or demand of any kind (all
of which are hereby expressly waived by Borrower), may do any one or more of the
following: (a) Cease making Loans or otherwise extending credit to Borrower
under this Agreement or any other Loan Document; (b) Accelerate and declare all
or any part of the Obligations to be immediately due, payable, and performable,
notwithstanding any deferred or installment payments allowed by any instrument
evidencing or relating to any Obligation; (c) Take possession of any or all of
the Collateral wherever it may be found, and for that purpose Borrower hereby
authorizes Silicon without judicial process to enter onto any of Borrower’s
premises without interference to search for, take possession of, keep, store, or
remove any of the Collateral, and remain on the premises or cause a custodian to
remain on the premises in exclusive control thereof, without charge for so long
as Silicon deems it necessary, in its good faith business judgment, in order to
complete the enforcement of its rights under this Agreement or any other
agreement; provided, however, that should Silicon seek to take possession of any
of the Collateral by court process, Borrower hereby irrevocably waives: (i) any
bond and any surety or security relating thereto required by any statute, court
rule or otherwise as an incident to such possession; (ii) any demand for
possession prior to the commencement of any suit or action to recover possession
thereof; and (iii) any requirement that Silicon retain possession of, and not
dispose of, any such Collateral until after trial or final judgment; (d) Require
Borrower to assemble any or all of the Collateral and make it available to
Silicon at places designated by Silicon which are reasonably convenient to
Silicon and Borrower, and to remove the Collateral to such locations as Silicon
may deem advisable; (e) Complete the processing, manufacturing or repair of any
Collateral prior to a disposition thereof and, for such purpose and for the
purpose of removal, Silicon shall have the right to use Borrower’s premises,
vehicles, hoists, lifts, cranes, and other Equipment and all other property
without charge; (f) Sell, lease or otherwise dispose of any of the Collateral,
in its condition at the time Silicon obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Silicon shall have the right to
conduct such disposition on Borrower’s premises without charge, for such time or
times as Silicon deems reasonable, or on Silicon’s premises, or elsewhere and
the Collateral need not be located at the place of disposition. Silicon may
directly or through any affiliated company purchase or lease any Collateral at
any such public disposition, and if

 

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permissible under applicable law, at any private disposition. Any sale or other
disposition of Collateral shall not relieve Borrower of any liability Borrower
may have if any Collateral is defective as to title or physical condition or
otherwise at the time of sale; (g) Demand payment of, and collect any Accounts
and General Intangibles comprising Collateral and, in connection therewith,
Borrower irrevocably, upon the occurrence and during the continuance of any
Event of Default, authorizes Silicon to endorse or sign Borrower’s name on all
collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Silicon’s
good faith business judgment, to grant extensions of time to pay, compromise
claims and settle Accounts and the like for less than face value; (h) Offset
against any sums in any of Borrower’s general, special or other Deposit Accounts
with Silicon against any or all of the Obligations; and (i) Demand and receive
possession of any of Borrower’s federal and state income tax returns and the
books and records utilized in the preparation thereof or referring thereto. All
reasonable attorneys’ fees, expenses, costs, liabilities and obligations
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be due on demand, and shall bear interest at a
rate equal to the highest interest rate applicable to any of the Obligations.
Without limiting any of Silicon’s rights and remedies, from and after the
occurrence and during the continuance of any Event of Default, the interest rate
applicable to the Obligations shall be increased by an additional four percent
per annum (the “Default Rate”).

 

7.3 Standards for Determining Commercial Reasonableness. Borrower and Silicon
agree that a sale or other disposition (collectively, “sale”) of any Collateral
which complies with the following standards will conclusively be deemed to be
commercially reasonable: (i) Notice of the sale is given to Borrower at least
ten days prior to the sale, and, in the case of a public sale, notice of the
sale is published at least five days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted; (ii) Notice of the
sale describes the collateral in general, non-specific terms; (iii) The sale is
conducted at a place designated by Silicon, with or without the Collateral being
present; (iv) The sale commences at any time between 8:00 a.m. and 6:00 p.m.
Pacific time; (v) Payment of the purchase price in cash or by cashier’s check or
wire transfer is required; (vi) With respect to any sale of any of the
Collateral, Silicon may (but is not obligated to) direct any prospective
purchaser to ascertain directly from Borrower any and all information concerning
the same. Silicon shall be free to employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.

 

7.4 Power of Attorney. Upon the occurrence and during the continuance of any
Event of Default, without limiting Silicon’s other rights and remedies, Borrower
grants to Silicon an irrevocable power of attorney coupled with an interest,
authorizing and permitting Silicon (acting through any of its employees,
attorneys or agents) at any time, at its option, but without obligation, with or
without notice to Borrower, and at Borrower’s expense, to do any or all of the
following, in Borrower’s name or otherwise, but Silicon agrees that if it
exercises any right hereunder, it will do so in good faith and in a commercially
reasonable manner: (a) Execute on behalf of Borrower any documents that Silicon
may, in its good faith business judgment, deem advisable in order to perfect and
maintain Silicon’s security interest in the Collateral, or in order to exercise
a right of Borrower or Silicon, or in order to fully consummate all the
transactions contemplated under this Agreement, and all other Loan Documents;
(b) Execute on behalf of Borrower, any invoices relating to any Account, any
draft against any Account Debtor and any notice to any Account Debtor, any proof
of claim in bankruptcy, any Notice of Lien, claim of mechanic’s, materialman’s
or other lien, or assignment or satisfaction of mechanic’s, materialman’s or
other lien; (c) Take control in any manner of any cash or non-cash items of
payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into
Silicon’s possession; (d) Endorse all checks and other forms of remittances
received by Silicon; (e) Pay, contest or settle any lien, charge, encumbrance,
security interest and adverse claim in or to any of the Collateral, or any
judgment based thereon, or otherwise take any action to terminate or discharge
the same; (f) Grant extensions of time to pay, compromise claims and settle
Accounts and General Intangibles for less than face value and execute all
releases and other documents in connection therewith; (g) Pay any sums required
on account of Borrower’s taxes or to secure the release of any liens therefor,
or both; (h) Settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor; (i) Instruct any
third party having custody or control of any books or records belonging to, or
relating to, Borrower to give Silicon the same rights of access and other rights
with respect thereto as Silicon has under this Agreement; and (j) Take any
action or pay any sum required of Borrower pursuant to this Agreement and any
other Loan Documents. Any and all reasonable sums paid and any and all
reasonable costs, expenses, liabilities, obligations and attorneys’ fees
incurred by Silicon with respect to the foregoing shall be added to and become
part of the Obligations, shall be payable on demand, and shall bear interest at
a rate equal to the highest interest rate applicable to any of the Obligations.
In no event shall Silicon’s rights under the foregoing power of attorney or any
of Silicon’s other rights under this Agreement be deemed to indicate that
Silicon is in control of the business, management or properties of Borrower.

 

7.5 Application of Proceeds. All proceeds realized as the result of any sale of
the Collateral shall be applied by Silicon first to the reasonable costs,
expenses, liabilities, obligations and attorneys’ fees incurred by Silicon in
the exercise of its rights under this Agreement, second to the interest due upon
any of the Obligations, and third to the principal of the Obligations, in such
order as Silicon shall determine in its sole discretion. Any surplus shall be
paid to Borrower or other persons legally entitled thereto; Borrower shall
remain liable to Silicon for any deficiency. If, Silicon, in its good faith

 

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business judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of Collateral, Silicon
shall have the option, exercisable at any time, in its good faith business
judgment, of either reducing the Obligations by the principal amount of purchase
price or deferring the reduction of the Obligations until the actual receipt by
Silicon of the cash therefor.

 

7.6 Remedies Cumulative. In addition to the rights and remedies set forth in
this Agreement, Silicon shall have all the other rights and remedies accorded a
secured party under the California Uniform Commercial Code and under all other
applicable laws, and under any other instrument or agreement now or in the
future entered into between Silicon and Borrower, and all of such rights and
remedies are cumulative and none is exclusive. Exercise or partial exercise by
Silicon of one or more of its rights or remedies shall not be deemed an
election, nor bar Silicon from subsequent exercise or partial exercise of any
other rights or remedies. The failure or delay of Silicon to exercise any rights
or remedies shall not operate as a waiver thereof, but all rights and remedies
shall continue in full force and effect until all of the Obligations have been
fully paid and performed.

 

8. Definitions. AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS HAVE THE
FOLLOWING MEANINGS:

 

“Account Debtor” means the obligor on an Account.

 

“Accounts” means all present and future “accounts” as defined in the California
Uniform Commercial Code in effect on the date hereof with such additions to such
term as may hereafter be made, and includes without limitation all accounts
receivable and other sums owing to Borrower.

 

“Affiliate” means, with respect to any Person, a relative, partner, shareholder
(provided, however, that with respect to any physicians who are shareholders of
Borrower and who provide services related to the clinical research business,
such physicians must own at least 2.5% of the outstanding stock of the Borrower
in order to be deemed an Affiliate), director, officer, or employee of such
Person, or any parent or subsidiary of such Person, or any Person controlling,
controlled by or under common control with such Person.

 

“Business Day” means any day other than a Saturday, Sunday or any other day on
which commercial banks are authorized to close under the laws of, or are in fact
generally closed in, the State of California; provided further that any day on
which Silicon is not open for business shall not be a Business Day.

 

“Code” means the Uniform Commercial Code as adopted and in effect in the State
of California from time to time.

 

“Collateral” has the meaning set forth in Section 2 above.

 

“continuing” and “during the continuance of” when used with reference to a
Default or Event of Default means that the Default or Event of Default has
occurred and has not been either waived in writing by Silicon or cured within
any applicable cure period.

 

“Default” means any event which with notice or passage of time or both, would
constitute an Event of Default.

 

“Default Rate” has the meaning set forth in Section 7.2 above.

 

“Deposit Accounts” means all present and future “deposit accounts” as defined in
the California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all general and special bank accounts, demand accounts, checking accounts,
savings accounts and certificates of deposit.

 

“Eligible Inventory” [Not Applicable]

 

“Eligible Accounts” means Accounts and General Intangibles arising in the
ordinary course of Borrower’s business from the sale of goods or the rendition
of services, or the non-exclusive licensing of Intellectual Property, which
Silicon, in its good faith business judgment, shall deem eligible for borrowing.
Without limiting the fact that the determination of which Accounts are eligible
for borrowing is a matter of Silicon’s good faith business judgment, the
following (the “Minimum Eligibility Requirements”) are the minimum requirements
for a Account to be an Eligible Account: (i) the Account must not be outstanding
for more than 120 days from its invoice date (the “Eligibility Period”), (ii)
the Account must not represent progress billings (for the purposes hereof,
invoices that are distributed with respect to work that has been performed and
earned pertaining to clinical research services shall not be deemed progress
billings hereunder), or be due under a fulfillment or requirements contract with
the Account Debtor, (iii) the Account must not be subject to any contingencies
(including Accounts arising from sales on consignment, guaranteed sale or other
terms pursuant to which payment by the Account Debtor may be conditional), (iv)
the Account must not be owing from an Account Debtor with whom Borrower has any
dispute (whether or not relating to the particular Account) provided that in
such case all Accounts owing from any such Account Debtor will be deemed not
eligible, in the aggregate, only to the extent of any such dispute(s), (v) the
Account must not be owing from an Affiliate of Borrower, (vi) the Account must
not be owing from an Account Debtor which is subject to

 

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any insolvency or bankruptcy proceeding, or whose financial condition is not
acceptable to Silicon in its good faith business judgment, or which fails or
goes out of a material portion of its business from which the Account arose,
(vii) the Account must not be owing from the United States or any department,
agency or instrumentality thereof (unless there has been compliance, to
Silicon’s satisfaction, with the United States Assignment of Claims Act), (viii)
the Account must not be owing from an Account Debtor located outside the United
States or Canada (unless pre-approved by Silicon in its discretion in writing,
or backed by a letter of credit satisfactory to Silicon, or FCIA insured
satisfactory to Silicon), (ix) the Account must not be owing from an Account
Debtor to whom Borrower is or may be liable other than with respect to Deferred
Revenue (as defined below) for goods purchased from such Account Debtor or
otherwise (but, in such case, the Account will be deemed not eligible only to
the extent of any amounts owed by Borrower to such Account Debtor) and (x) the
Account must not represent a credit balance outstanding more than 120 days. The
aggregate amount of Eligible Accounts shall be reduced by an amount equal to
forty percent (40%) of the amount of Deferred Revenue set forth in the most
recent Deferred Revenue Report, provided that if an audit of Borrower shows the
actual percentage amount of Deferred Revenue which is subject to offset against
Accounts owing from Account Debtors (calculated on a per Account Debtor basis)
is different from the percentage of Deferred Revenue then being used to
calculate the reduction of the aggregate amount of Eligible Receivables pursuant
to this sentence, such differing percentage shall as of such time be used in
such calculation. Accounts owing from one Account Debtor will not be deemed
Eligible Accounts to the extent they exceed 25% of the total Accounts
outstanding. In addition, if more than 50% of the Accounts owing from an Account
Debtor are outstanding for a period longer than their Eligibility Period
(without regard to unapplied credits) or are otherwise not eligible Accounts,
then all Accounts owing from that Account Debtor will be deemed ineligible for
borrowing. Silicon may, from time to time, in its good faith business judgment,
revise the Minimum Eligibility Requirements, upon written notice to Borrower.
For the purposes hereof, the term “Deferred Revenue” shall mean all amounts
received or invoiced, as appropriate, in advance of performance under contracts
and not yet recognized as revenue.

 

“Equipment” means all present and future “equipment” as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all machinery, fixtures, goods, vehicles (including motor vehicles and
trailers), and any interest in any of the foregoing.

 

“Event of Default” means any of the events set forth in Section 7.1 of this
Agreement.

 

“GAAP” means generally accepted accounting principles consistently applied.

 

“General Intangibles” means all present and future “general intangibles” as
defined in the California Uniform Commercial Code in effect on the date hereof
with such additions to such term as may hereafter be made, and includes without
limitation all Intellectual Property, payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders, customer lists, route
lists, telephone numbers, domain names, claims, income tax refunds, security and
other deposits, options to purchase or sell real or personal property, rights in
all litigation presently or hereafter pending (whether in contract, tort or
otherwise), insurance policies (including without limitation key man, property
damage, and business interruption insurance), payments of insurance and rights
to payment of any kind.

 

“good faith business judgment” means honesty in fact and good faith (as defined
in Section 1201 of the Code) in the exercise of Silicon’s business judgment.

 

“including” means including (but not limited to).

 

“Intellectual Property” means all present and future (a) copyrights, copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative work thereof, whether published or
unpublished, (b) trade secret rights, including all rights to unpatented
inventions and know-how, and confidential information; (c) mask work or similar
rights available for the protection of semiconductor chips; (d) patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade styles,
and trade names, whether or not any of the foregoing are registered, and all
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Borrower connected with and symbolized by
any such trademarks; (f) computer software and computer software products; (g)
designs and design rights; (h) technology; (i) all claims for damages by way of
past, present and future infringement of any of the rights included above; (j)
all licenses or other rights to use any property or rights of a type described
above.

 

“Inventory” means all present and future “inventory” as defined in the
California Uniform Commercial Code in effect on the date hereof with such
additions to such term as may hereafter be made, and includes without limitation
all merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products, including without limitation such
inventory as is temporarily out of Borrower’s custody or possession or in
transit and including any returned goods and any documents of title representing
any of the above.

 

“Investment Property” means all present and future investment property,
securities, stocks, bonds, debentures, debt securities, partnership interests,
limited liability company interests, options, security entitlements, securities
accounts,

 

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commodity contracts, commodity accounts, and all financial assets held in any
securities account or otherwise, and all options and warrants to purchase any of
the foregoing, wherever located, and all other securities of every kind, whether
certificated or uncertificated.

 

“Loan Documents” means, collectively, this Agreement, the Representations, and
all other present and future documents, instruments and agreements between
Silicon and Borrower, including, but not limited to, those relating to this
Agreement, and all amendments and modifications thereto and replacements
therefor.

 

“Material Adverse Change” means any of the following: (i) a material adverse
change in the business, operations, or financial or other condition of the
Borrower, or (ii) a material impairment of the prospect of repayment of any
portion of the Obligations; or (iii) a material impairment of the value or
priority of Silicon’s security interests in the Collateral.

 

“Obligations” means all present and future Loans, advances, debts, liabilities,
obligations, guaranties, covenants, duties and indebtedness at any time owing by
Borrower to Silicon, whether evidenced by this Agreement or any note or other
instrument or document, or otherwise, whether arising from an extension of
credit, opening of a letter of credit, banker’s acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Silicon in
Borrower’s debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorney’s
fees, expert witness fees, audit fees, letter of credit fees, collateral
monitoring fees, closing fees, facility fees, termination fees, minimum interest
charges and any other sums chargeable to Borrower under this Agreement or under
any other Loan Documents.

 

“Other Property” means the following as defined in the California Uniform
Commercial Code in effect on the date hereof with such additions to such term as
may hereafter be made, and all rights relating thereto: all present and future
“commercial tort claims” (including without limitation any commercial tort
claims identified in the Representations), “documents”, “instruments”,
“promissory notes”, “chattel paper”, “letters of credit”, “letter-of-credit
rights”, “fixtures”, “farm products” and “money”; and all other goods and
personal property of every kind, tangible and intangible, whether or not
governed by the California Uniform Commercial Code.

 

“Payment” means all checks, wire transfers and other items of payment received
by Silicon (including proceeds of Accounts and payment of the Obligations in
full) for credit to Borrower’s outstanding Loans or, if the balance of the Loans
have been reduced to zero, for credit to its Deposit Accounts.

 

“Permitted Liens” means the following: (i) purchase money security interests in
specific items of Equipment; (ii) leases of specific items of Equipment; (iii)
liens for taxes not yet payable or liens for taxes being contested in good faith
by appropriate proceedings for which adequate reserves have been established and
are maintained in accordance with generally accepted accounting principles
provided such liens do not have priority over any security interest of Silicon;
(iv) additional security interests and liens consented to in writing by Silicon,
which consent may be withheld in its good faith business judgment; (v) security
interests being terminated substantially concurrently with this Agreement; (vi)
liens of materialmen, mechanics, warehousemen, carriers, or other similar liens
arising in the ordinary course of business and securing obligations which are
not delinquent; (vii) liens incurred in connection with the extension, renewal
or refinancing of the indebtedness secured by liens of the type described above
in clauses (i) or (ii) above, provided that any extension, renewal or
replacement lien is limited to the property encumbered by the existing lien and
the principal amount of the indebtedness being extended, renewed or refinanced
does not increase; (viii) Liens in favor of customs and revenue authorities
which secure payment of customs duties in connection with the importation of
goods (ix) liens in favor of Silicon Valley Bank; and (x) liens to secure
worker’s compensation, unemployment insurance and social security legislation
(other than liens on Accounts). Silicon will have the right to require, as a
condition to its consent under subparagraph (iv) above, that the holder of the
additional security interest or lien sign an intercreditor agreement on
Silicon’s then standard form, with such changes thereto as are acceptable to
Silicon, acknowledge that the security interest is subordinate to the security
interest in favor of Silicon, and agree not to take any action to enforce its
subordinate security interest so long as any Obligations remain outstanding, and
that Borrower agree that any uncured default in any obligation secured by the
subordinate security interest shall also constitute an Event of Default under
this Agreement.

 

“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, government, or any
agency or political division thereof, or any other entity.

 

“Representations” means the written Representations and Warranties provided by
Borrower to Silicon referred to in the Schedule.

 

“Reserves” means, as of any date of determination, such amounts as Silicon may
from time to time establish and revise in its good faith business judgment,
reducing the amount of Loans, Letters of Credit and other financial
accommodations which would otherwise be available to Borrower under the lending
formula(s) provided in the Schedule: (a) to reflect events, conditions,
contingencies or risks which, as determined by Silicon in its good faith
business judgment, do or may adversely affect (i) the Collateral or any other
property which is security for the Obligations or its value (including without
limitation

 

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Silicon Valley BankLoan and Security Agreement

 

any increase in delinquencies of Accounts), (ii) the assets, business or
prospects of Borrower or any Guarantor, or (iii) the security interests and
other rights of Silicon in the Collateral (including the enforceability,
perfection and priority thereof); or (b) to reflect Silicon’s good faith belief
that any collateral report or financial information furnished by or on behalf of
Borrower or any Guarantor to Silicon is or may have been incomplete, inaccurate
or misleading in any material respect; or (c) in respect of any state of facts
which Silicon determines in good faith constitutes an Event of Default or may,
with notice or passage of time or both, constitute an Event of Default.

 

Other Terms. All accounting terms used in this Agreement, unless otherwise
indicated, shall have the meanings given to such terms in accordance with GAAP,
consistently applied. All other terms contained in this Agreement, unless
otherwise indicated, shall have the meanings provided by the Code, to the extent
such terms are defined therein.

 

9. GENERAL PROVISIONS.

 

9.1 Interest Computation; Float Charge. In computing interest on the
Obligations, all Payments received after 12:00 Noon Pacific time on any day
shall be deemed received on the next Business Day. In addition, Silicon shall be
entitled to charge Borrower a “float” charge in an amount equal to three
Business Days interest, at the interest rate applicable to the Loans, on all
Payments received by Silicon. Said float charge is not included in interest for
purposes of computing Minimum Monthly Interest (if any) under this Agreement.
The float charge for each month shall be payable on the last day of the month.
Silicon shall not be required to credit Borrower’s account for the amount of any
item of payment which is unsatisfactory to Silicon in its good faith business
judgment, and Silicon may charge Borrower’s loan account for the amount of any
item of payment credited to Borrower’s loan account which is returned to Silicon
unpaid.

 

9.2 Application of Payments. All payments with respect to the Obligations may be
applied, and in Silicon’s good faith business judgment reversed and re-applied,
to the Obligations, in such order and manner as Silicon shall determine in its
good faith business judgment.

 

9.3 Charges to Accounts. Silicon may, in its discretion, require that Borrower
pay monetary Obligations in cash to Silicon, or charge them to Borrower’s Loan
account, in which event they will bear interest at the same rate applicable to
the Loans. Silicon may also, in its discretion, charge any monetary Obligations
to Borrower’s Deposit Accounts maintained with Silicon.

 

9.4 Monthly Accountings. Silicon shall provide Borrower monthly with an account
of advances, charges, expenses and payments made pursuant to this Agreement.
Except for any manifest error, such account shall be deemed correct, accurate
and binding on Borrower and an account stated (except for reverses and
reapplications of payments made and corrections of errors discovered by
Silicon), unless Borrower notifies Silicon in writing to the contrary within 60
days after such account is rendered, describing the nature of any alleged errors
or omissions.

 

9.5 Notices. All notices to be given under this Agreement shall be in writing
and shall be given either personally or by reputable private delivery service or
by regular first-class mail, or certified mail return receipt requested,
addressed to Silicon or Borrower at the addresses shown in the heading to this
Agreement, or at any other address designated in writing by one party to the
other party or by facsimile (if to Borrower at (847) 856-6207 attn: Chief
Financial Officer, or if to Silicon to both (312) 704-1532 attn: Mr. Anthony
Clarkson and (408) 654-9589 attn: Ms. Sue Butler). Notices to Silicon shall be
directed to the Commercial Finance Division, to the attention of the Division
Manager or the Division Credit Manager. All notices shall be deemed to have been
given upon delivery in the case of notices personally delivered, or at the
expiration of one Business Day following delivery to the private delivery
service, or two Business Days following the deposit thereof in the United States
mail, with postage prepaid or on the date sent by confirmed facsimile, if sent
before 5:00 p.m. Pacific time, or, if so sent after 5:00 p.m. Pacific time, on
the next Business Day.

 

9.6 Severability. Should any provision of this Agreement be held by any court of
competent jurisdiction to be void or unenforceable, such defect shall not affect
the remainder of this Agreement, which shall continue in full force and effect.

 

9.7 Integration. This Agreement and such other written agreements, documents and
instruments as may be executed in connection herewith are the final, entire and
complete agreement between Borrower and Silicon and supersede all prior and
contemporaneous negotiations and oral representations and agreements, all of
which are merged and integrated in this Agreement. There are no oral
understandings, representations or agreements between the parties which are not
set forth in this Agreement or in other written agreements signed by the parties
in connection herewith.

 

9.8 Waivers; Indemnity. The failure of Silicon at any time or times to require
Borrower to strictly comply with any of the provisions of this Agreement or any
other Loan Document shall not waive or diminish any right of Silicon later to
demand and receive strict compliance therewith. Any waiver of any default shall
not waive or affect any other default, whether prior or subsequent, and whether
or not similar. None of the provisions of this Agreement or any other Loan
Document shall be deemed to have been waived by any act or knowledge of Silicon
or its agents or employees, but only by a specific written waiver signed by an
authorized officer of Silicon and delivered to Borrower. Borrower waives the
benefit of all statutes of

 

-12-

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Silicon Valley BankLoan and Security Agreement

 

limitations relating to any of the Obligations or this Agreement or any other
Loan Document, and Borrower waives demand, protest, notice of protest and notice
of default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by Silicon on which
Borrower is or may in any way be liable, and notice of any action taken by
Silicon, unless expressly required by this Agreement. Borrower hereby agrees to
indemnify Silicon and its affiliates, subsidiaries, parent, directors, officers,
employees, agents, and attorneys, and to hold them harmless from and against any
and all claims, debts, liabilities, demands, obligations, actions, causes of
action, penalties, costs and expenses (including reasonable attorneys’ fees), of
every kind, which they may sustain or incur based upon or arising out of any of
the Obligations, or any relationship or agreement between Silicon and Borrower,
or any other matter, relating to Borrower or the Obligations; provided that this
indemnity shall not extend to damages proximately caused by any such Person’s
own gross negligence or willful misconduct. Notwithstanding any provision in
this Agreement to the contrary, the indemnity agreement set forth in this
Section shall survive any termination of this Agreement and shall for all
purposes continue in full force and effect.

 

9.9 No Liability for Ordinary Negligence. Neither Silicon, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Silicon, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Silicon, but nothing herein shall relieve Silicon from
liability for its own gross negligence or willful misconduct.

 

9.10 Amendment. The terms and provisions of this Agreement may not be waived or
amended, except in a writing executed by Borrower and a duly authorized officer
of Silicon.

 

9.11 Time of Essence. Time is of the essence in the performance by Borrower of
each and every obligation under this Agreement.

 

9.12 Attorneys’ Fees and Costs. Borrower shall reimburse Silicon for all
reasonable attorneys’ fees and all filing, recording, search, title insurance,
appraisal, audit, and other reasonable costs incurred by Silicon, pursuant to,
or in connection with, or relating to this Agreement (whether or not a lawsuit
is filed), including, but not limited to, any reasonable attorneys’ fees and
costs Silicon incurs in order to do the following: prepare and negotiate this
Agreement and all present and future documents relating to this Agreement;
obtain legal advice in connection with this Agreement or Borrower; enforce, or
seek to enforce, any of its rights; prosecute actions against, or defend actions
by, Account Debtors; commence, intervene in, or defend any action or proceeding;
initiate any complaint to be relieved of the automatic stay in bankruptcy; file
or prosecute any probate claim, bankruptcy claim, third-party claim, or other
claim; examine, audit, copy, and inspect any of the Collateral or any of
Borrower’s books and records; protect, obtain possession of, lease, dispose of,
or otherwise enforce Silicon’s security interest in, the Collateral; and
otherwise represent Silicon in any litigation relating to Borrower. In
satisfying Borrower’s obligation hereunder to reimburse Silicon for attorneys’
fees, Borrower may, for convenience, issue checks directly to Silicon’s
attorneys, Levy, Small & Lallas, but Borrower acknowledges and agrees that Levy,
Small & Lallas is representing only Silicon and not Borrower in connection with
this Agreement. If either Silicon or Borrower files any lawsuit against the
other predicated on a breach of this Agreement, the prevailing party in such
action shall be entitled to recover its reasonable costs and attorneys’ fees,
including (but not limited to) reasonable attorneys’ fees and costs incurred in
the enforcement of, execution upon or defense of any order, decree, award or
judgment. All attorneys’ fees and costs to which Silicon may be entitled
pursuant to this Paragraph shall immediately become part of Borrower’s
Obligations, shall be due on demand, and shall bear interest at a rate equal to
the highest interest rate applicable to any of the Obligations.

 

9.13 Benefit of Agreement. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective successors, assigns, heirs,
beneficiaries and representatives of Borrower and Silicon; provided, however,
that Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Silicon, and any prohibited assignment
shall be void. No consent by Silicon to any assignment shall release Borrower
from its liability for the Obligations.

 

9.14 Joint and Several Liability. If Borrower consists of more than one Person,
their liability shall be joint and several, and the compromise of any claim
with, or the release of, any Borrower shall not constitute a compromise with, or
a release of, any other Borrower.

 

9.15 Limitation of Actions. Any claim or cause of action by Borrower against
Silicon, its directors, officers, employees, agents, accountants or attorneys,
based upon, arising from, or relating to this Loan Agreement, or any other Loan
Document, or any other transaction contemplated hereby or thereby or relating
hereto or thereto, or any other matter, cause or thing whatsoever, occurred,
done, omitted or suffered to be done by Silicon, its directors, officers,
employees, agents, accountants or attorneys, shall be barred unless asserted by
Borrower by the commencement of an action or proceeding in a court of competent
jurisdiction by the filing of a complaint within two years after the first date
Borrower knew (or in the exercise of reasonable diligence should have known) of
such claim or cause of action and the service of a summons and complaint on an
officer of Silicon, or on any other person authorized to accept service on
behalf of Silicon, within thirty (30) days thereafter.

 

-13-

--------------------------------------------------------------------------------

Silicon Valley BankLoan and Security Agreement

 

Borrower agrees that such two-year period is a reasonable and sufficient time
for Borrower to investigate and act upon any such claim or cause of action. The
two-year period provided herein shall not be waived, tolled, or extended except
by the written consent of Silicon in its sole discretion. This provision shall
survive any termination of this Loan Agreement or any other Loan Document.

 

9.16 Paragraph Headings; Construction. Paragraph headings are only used in this
Agreement for convenience. Borrower and Silicon acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. This Agreement has been fully
reviewed and negotiated between the parties and no uncertainty or ambiguity in
any term or provision of this Agreement shall be construed strictly against
Silicon or Borrower under any rule of construction or otherwise.

 

9.17 Governing Law; Jurisdiction; Venue. This Agreement and all acts and
transactions hereunder and all rights and obligations of Silicon and Borrower
shall be governed by the laws of the State of California. As a material part of
the consideration to Silicon to enter into this Agreement, Borrower (i) agrees
that all actions and proceedings relating directly or indirectly to this
Agreement shall, at Silicon’s option, be litigated in courts located within
California, and that the exclusive venue therefor shall be Santa Clara County;
(ii) consents to the jurisdiction and venue of any such court and consents to
service of process in any such action or proceeding by personal delivery or any
other method permitted by law; and (iii) waives any and all rights Borrower may
have to object to the jurisdiction of any such court, or to transfer or change
the venue of any such action or proceeding.

 

9.18 Mutual Waiver of Jury Trial. BORROWER AND SILICON EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN SILICON AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF SILICON OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH SILICON OR BORROWER, IN
ALL OF THE FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

 

Borrower:   Silicon:     ESSENTIAL GROUP, INC.   SILICON VALLEY BANK     By  

/s/ Essential Group, Inc.

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  By:  

/s/ Silicon Valley Bank

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    President or Vice President   Title  

 

--------------------------------------------------------------------------------

    By  

 

--------------------------------------------------------------------------------

            Secretary or Ass’t Secretary         Borrower:        
    AMERICASDOCTOR.COM COORDINATOR SERVICES, INC.             By  

/s/ AmericasDoctor.com Coordinator Services, Inc.

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            President or Vice President             By  

 

--------------------------------------------------------------------------------

            Secretary or Ass’t Secretary        

 

Form: -3 (3/7/02)

Version -5

 

-14-

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Silicon Valley Bank

 

Schedule to

 

Loan and Security Agreement

 

Borrower:   Essential Group, Inc.     AmericasDoctor.com Coordinator Services,
Inc. Address:   1325 Tri-State Parkway, Suite 300     Gurnee, IL 60031 Date:  
September 27, 2004

 

This Schedule forms an integral part of the Loan and Security Agreement between
Silicon Valley Bank and the above-borrower of even date.

 

1. CREDIT LIMIT     

    (Section 1.1):

   An amount not to exceed the lesser of: (i) $6,000,000 at any one time
outstanding (the “Maximum Credit Limit”), or (ii) 80% (an “Advance Rate”) of the
amount of Borrower’s Eligible Accounts (as defined in Section 8 above).     
Notwithstanding the foregoing, until January 1, 2005, Borrower agrees that the
Obligations shall not at any time exceed $2,500,000.      Silicon may, from time
to time, modify the Advance Rates, in its good faith business judgment, upon
notice to the Borrower, based on changes in collection experience with respect
to Accounts or other changes in circumstances with respect to the Accounts or
other Collateral.      Loans will be made to each Borrower based on the Eligible
Accounts of each Borrower, subject to the Maximum Credit Limit set forth above
for all Loans to all Borrowers combined. 2. INTEREST.     

Interest Rate (Section 1.2):

  

 

 

A rate equal to the “Prime Rate” in effect from time to time, plus 1.0% per
annum, provided that the interest rate in effect on any day shall not be less
than 5.5% per annum. Interest shall be calculated on the basis of a 360-day year
for the actual number of days elapsed. As used in this Agreement, “Prime Rate”
means the interest rate announced from time to time by Silicon as its “prime
rate” (which is a base rate upon which other rates charged by Silicon are based,
and it is not necessarily the best rate available at Silicon). The interest rate
applicable to the Obligations shall change on each date there is a change in the
Prime Rate.

Minimum Monthly

Interest (Section 1.2):

   $3,500 per month.

--------------------------------------------------------------------------------

3. FEES (Section 1.4):

    

Loan Fee:

   (i) $35,000, payable concurrently herewith and (ii) $30,000 payable on the
first anniversary of the date of this Agreement.

Collateral Monitoring

    

Fee:

   $1,500, per month, payable in arrears (prorated for any partial month at the
beginning and at termination of this Agreement). 4. MATURITY DATE     

    (Section 6.1):

   Two years from the date of this Agreement. 5. FINANCIAL COVENANTS     

    (Section 5.1):

   Borrower shall, on a consolidated basis, comply with each of the following
covenants. Compliance shall be determined as of the end of each month, except as
otherwise specifically provided below:

Adjusted

    

Quick Ratio:

   Borrower shall maintain an Adjusted Quick Ratio of not less than 0.75 to 1.0.

Minimum Tangible

    

Net Worth:

   Borrower shall maintain a Tangible Net Worth of not less than the following:
     For the month ending June 30, 2004: <$2,500,000>;      For each of the
months ending July 31, 2004, August 31, 2004 and September 30, 2004:
<$3,500,000>;      For each of the months ending October 31, 2004, November 30,
2004 and December 31, 2004: <$4,250,000>; and      For each month ending
thereafter: <$5,500,000>.

Definitions:

   For purposes of the foregoing financial covenants, the following terms shall
have the following meaning:      “< >“ shall mean a negative figure or loss, as
applicable.      “Adjusted Quick Ratio” shall mean, on any given date, the ratio
of (i) Borrower’s Quick Assets to (ii) Borrower’s current liabilities (including
the then outstanding principal balance of the Loans) less the current portion of
Borrower’s deferred revenues.      “Current assets”, “current liabilities” and
“liabilities” shall have the meaning ascribed thereto by GAAP.      “Quick
Assets” shall mean, on any given date, the Borrower’s unrestricted cash, cash
equivalents and net billed accounts receivable.

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         “Tangible Net Worth” shall mean the excess of total assets less total
liabilities, determined in accordance with GAAP, with the following adjustments:
        

(A) there shall be excluded from assets: (i) notes, accounts receivable and
other obligations owing to Borrower from its officers or other Affiliates, and
(ii) all assets which would be classified as intangible assets under GAAP,
including without limitation goodwill, licenses, patents, trademarks, trade
names, copyrights, capitalized software and organizational costs, licenses and
franchises, and (iii) minority investments in other Persons.

        

(B) there shall be excluded from liabilities: all indebtedness which is
subordinated to the Obligations under a subordination agreement in form
specified by Silicon, with such changes thereto as are acceptable to Silicon, or
by language in the instrument evidencing the indebtedness which Silicon agrees
in writing is acceptable to Silicon in its good faith business judgment.

6. REPORTING.

        

    (Section 5.3):

                  Borrower shall provide Silicon with the following:     

1.      

  Transaction reports and schedules of collections, each week and at the time of
each Loan request, on Silicon’s standard form     

2.      

  Monthly accounts receivable agings, aged by invoice date, within fifteen days
after the end of each month.     

3.      

  Monthly accounts payable agings, aged by invoice date, and outstanding or held
check registers, if any, within fifteen days after the end of each month.     

4.      

  Monthly reconciliations of accounts receivable agings (aged by invoice date),
transaction reports, and general ledger, within fifteen days after the end of
each month.     

5.      

  Monthly schedule listing, by Account Debtor, Borrower’s deferred revenue
accounts, within fifteen days after the end of each month.     

6.      

  Monthly unaudited financial statements, as soon as available, and in any event
within thirty days after the end of each month.     

7.      

  Monthly Compliance Certificates, within thirty days after the end of each
month, in such form as Silicon shall reasonably specify, signed by the Chief
Financial Officer of Borrower, certifying that as of the end of such month
Borrower was in full compliance with all of the terms and conditions of this
Agreement, and setting forth calculations showing compliance with the financial
covenants set forth in this Agreement and such other information as Silicon
shall reasonably request, including, without limitation, a statement that at the
end of such month there were no held checks or describing any such held checks.

--------------------------------------------------------------------------------

    

8.      

  Quarterly unaudited financial statements, as soon as available, and in any
event within forty-five days after the end of each fiscal quarter of Borrower.  
  

9.      

  Annual operating budgets (including income statements, balance sheets and cash
flow statements, by month) for the upcoming fiscal year of Borrower within
thirty days after the end of each fiscal year of Borrower.     

10.    

  Annual financial statements, as soon as available, and in any event within 120
days following the end of Borrower’s fiscal year, certified by, and with an
unqualified opinion of, independent certified public accountants acceptable to
Silicon in its good faith business judgment.     

11.    

  Monthly Deferred Revenue Reports, within fifteen days after the end of each
month, in form acceptable to Silicon. 7. BORROWER INFORMATION:                  
Borrower represents and warrants that the information set forth in the
Representations and Warranties of the Borrower dated August 26, 2004, previously
submitted to Silicon (the “Representations”) is true and correct as of the date
hereof. 8. ADDITIONAL PROVISIONS                       (1)   Banking
Relationship. Borrower shall, as of the forty-fifth (45th) day from the date of
this Agreement and at all times thereafter maintain its primary banking
relationship with Silicon. Without limiting the generality of the foregoing,
Borrower shall within forty-five (45) days of the date of this Agreement, and at
all times thereafter, maintain not less than 90% of its total cash and
investments on deposit with Silicon. As to any Deposit Accounts and investment
accounts maintained with another institution, Borrower shall cause such
institution, within 60 days after the date of this Agreement, to enter into a
control agreement in form acceptable to Silicon in its good faith business
judgment in order to perfect Silicon’s first-priority security interest in said
Deposit Accounts and investment accounts.          (2)   Subordination of Inside
Debt. All present and future indebtedness for borrowed money of Borrower to its
officers, directors and shareholders (“Inside Debt”) shall, at all times, be
subordinated to the Obligations pursuant to a subordination agreement on
Silicon’s standard form, with such changes thereto as are acceptable to Silicon.
Borrower represents and warrants

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            that there is no Inside Debt presently outstanding, except for the
following: None. Prior to incurring any Inside Debt in the future, Borrower
shall cause the person to whom such Inside Debt will be owed to execute and
deliver to Silicon a subordination agreement on Silicon’s standard form, with
such changes thereto as are acceptable to Silicon. For purposes of this
Agreement, Inside Debt shall not include reimbursement of or advances for out of
pocket expenses in the ordinary course of business.

 

Borrower:

 

Silicon:

    ESSENTIAL GROUP, INC.

 

SILICON VALLEY BANK

    By

 

/s/ Essential Group, Inc.

--------------------------------------------------------------------------------

 

By:

 

/s/ Silicon Valley Bank

--------------------------------------------------------------------------------

   

President or Vice President

 

Title

 

 

--------------------------------------------------------------------------------

    By

 

 

--------------------------------------------------------------------------------

           

Secretary or Ass’t Secretary

       

Borrower:

       

    AMERICASDOCTOR.COM COORDINATOR SERVICES, INC.

       

    By

 

/s/ AmericasDoctor.com Coordinator Services, Inc.

--------------------------------------------------------------------------------

           

President or Vice President

       

    By

 

 

--------------------------------------------------------------------------------

           

Secretary or Ass’t Secretary

       

 

Form: -3 (3/7/02)

Version -5