ex10-18



 



Exhibit 10.18


	Execution Copy                              









CREDIT AGREEMENT



BY AND AMONG



HELIX HEARING CARE OF AMERICA CORP.



AND



EACH OF ITS DIRECT AND INDIRECT SUBSIDIARIES



AND



HEARx LTD.



Executed and Effective as of April 30, 2002



	









 






 





TABLE OF CONTENTS




	 	 	 
	CREDIT AGREEMENT	 	
1
 
	ARTICLE 1: THE CREDIT FACILITY	 	
1
	   1.1          Term Loan Facility	 	
1
	         1.1.1          Establishment of Credit Facility	 	
1
	         1.1.2          Facility Maturity	 	
1
	         1.1.3          Use of Proceeds	 	
1
	         1.1.4          Term Loan Notes	 	
2
	         1.1.5          Interest	 	
2
	                  1.1.5.1.          Interest Rate Determination	 	
2
	                  1.1.5.2.          Calculation of Interest	 	
3
	         1.1.6          Repayment and Prepayment	 	
3
	                  1.1.6.1.          Payments — Excess Cash Flow	 	
3
	                  1.1.6.2.          Payments at Maturity	 	
3
	                  1.1.6.3.          Prepayments	 	
3
	                  1.1.6.4.          Availability for Reborrowing	 	
4
	   1.2          Commitment	 	
4
	   1.3          Advances	 	
4
	         1.3.1          Requesting Advances	 	
4
	         1.3.2          Funding Advances	 	
4
	         1.3.3          Obligation to Advance	 	
4
	         1.3.4          Indemnification for Revocation or Failure to Satisfy Conditions	 	
4
	   1.4          Payments in General	 	
5
	         1.4.1          Manner and Place of Payments	 	
5
	         1.4.2          Special Payment Timing Issues	 	
5
	         1.4.3          Application of Payments	 	
5
	         1.4.4          Payment of Expenses, Indemnities and Protective Advances	 	
5
	         1.4.5          Payments upon Termination	 	
5
	         1.4.6          Late Payments	 	
5
	         1.4.7          Default Interest	 	
6
	         1.4.8          Usury Savings Provision	 	
6
	   1.5          Release of Security
 	 	
6
	ARTICLE 2: CONDITIONS PRECEDENT	 	
6
	   2.1          Closing Conditions	 	
6
	         2.1.1          Compliance	 	
6
	                  2.1.1.1.          Representations	 	
6
	                  2.1.1.2.          No Default	 	
6
	                  2.1.1.3.          No Material Change	 	
7
	         2.1.2          Documents	 	
7
	                  2.1.2.1.          Credit Agreement	 	
7
	                  2.1.2.2.          Promissory Notes	 	
7
	                  2.1.2.3.          Security Agreements and Collateral Assignments	 	
7
	                  2.1.2.4.          Intellectual Property Security Agreements	 	
7
	                  2.1.2.5.          Assignment of Life Insurance Policy	 	
7
	                  2.1.2.6.          Real Estate Documents	 	
7
	                  2.1.2.7.          Owners’ Pledge and Security Agreements	 	
8
	                  2.1.2.8.          Insurance	 	
8
	                  2.1.2.9.          Compliance Certificates	 	
8
	                  2.1.2.10.        Opinions of Counsel	 	
8
	                  2.1.2.11.        Payoff Instructions for Prior Indebtedness	 	
8
	                  2.1.2.12.        Authorization Documents — Borrowers	 	
8



i






 




	 	 	 
	                  2.1.2.13.        Officer’s Certificates	 	
8
	                  2.1.2.14.        Other Documents
 	 	
9
	ARTICLE 3: REPRESENTATIONS AND WARRANTIES	 	
9
	3.1          Organization and Good Standing	 	
9
	3.2          Power and Authority	 	
9
	3.3          Validity and Legal Effect	 	
9
	3.4          No Violation of Laws or Agreements	 	
9
	3.5          Title to Assets; Existing Encumbrances; Identification of Intellectual and Real Property	 	
10
	3.6          Capital Structure and Equity Ownership	 	
10
	3.7          Subsidiaries, Affiliates and Investments	 	
11
	3.8          Material Contracts	 	
11
	3.9          Licenses and Authorizations	 	
11
	3.10        Taxes and Assessments	 	
11
	3.11        Litigation and Legal Proceedings	 	
11
	3.12        Accuracy of Financial Information	 	
11
	3.13        Accuracy of Other Information	 	
12
	3.14        Compliance with Laws Generally	 	
12
	3.15        ERISA Compliance	 	
12
	3.16        Environmental Compliance	 	
13
	3.17        Fees and Commissions	 	
13
	3.18        Solvency
 	 	
13
	ARTICLE 4: AFFIRMATIVE COVENANTS	 	
13
	   4.1          Periodic Financial Statements and Compliance Certificates	 	
13
	         4.1.1          Monthly Financial Statements	 	
13
	         4.1.2          Quarterly Financial Statements	 	
14
	         4.1.3          Annual Financial Statements	 	
14
	   4.2          Other Financial Information and Specialized Reports	 	
14
	         4.2.1          Financial Forecasts; Operating Budget	 	
14
	         4.2.2          Additional Material Contracts	 	
14
	         4.2.3          Tax Returns	 	
14
	         4.2.4          Filings and Press Releases	 	
14
	   4.3          Fiscal Year	 	
14
	   4.4          Books and Records; Maintenance of Properties	 	
15
	   4.5          Existence and Good Standing	 	
15
	   4.6          Insurance	 	
15
	         4.6.1          General Insurance Provisions	 	
15
	         4.6.2          Key-Person Life Insurance	 	
15
	   4.7          Loan Purpose	 	
15
	   4.8          Taxes	 	
15
	   4.9          Management Changes	 	
16
	   4.10        Litigation and Administrative Proceedings	 	
16
	   4.11        Monitoring Compliance; Occurrence of Certain Events	 	
16
	   4.12        Compliance with Laws	 	
16
	   4.13        Further Actions	 	
16
	         4.13.1         Additional Collateral	 	
16
	         4.13.2         Further Assurances	 	
16
	         4.13.3         Estoppel Certificates	 	
17
	         4.13.4         Waivers and Consents	 	
17
	         4.13.5         Access and Audits	 	
17
	         4.13.6         Attendance at Board of Directors Meetings	 	
17
	   4.14          Costs and Expenses	 	
17
	   4.15          Maintenance of Domain Names	 	
18
	   4.16          Other Information
 	 	
18
	ARTICLE 5: NEGATIVE COVENANTS	 	
18
	   5.1            Capital Expenditures	 	
18



ii






 




	 	 	 
	   5.2       Additional Indebtedness	 	
18
	   5.3       Guaranties	 	
18
	   5.4       Loans	 	
19
	   5.5       Liens and Encumbrances; Negative Pledge	 	
19
	   5.6       Transfer of Assets	 	
20
	   5.7       Acquisitions and Investments	 	
20
	   5.8       New Ventures; Mergers	 	
21
	   5.9       Transactions with Affiliates	 	
21
	   5.10      Distributions or Dividends	 	
21
	   5.11      Issuance of Additional Equity	 	
21
	   5.12      Removal of Assets	 	
22
	   5.13      Modifications to Organic Documents	 	
22
	   5.14      Terms of and Modifications to Material Relationships
 	 	
22
	ARTICLE 6: RIGHT OF SET OFF	 	
22
	   6.1       Right of Set Off	 	
22
	   6.2       Additional Rights
 	 	
22
	ARTICLE 7: DEFAULT AND REMEDIES	 	
22
	   7.1       Events of Default	 	
22
	      7.1.1       Payment Obligations	 	
22
	      7.1.2       Representations and Warranties	 	
22
	      7.1.3       Termination of Merger Agreement	 	
23
	      7.1.4       Other Covenants in Loan Documents	 	
23
	      7.1.5       Default Under Other Agreements with Lender	 	
23
	      7.1.6       Default Under Material Agreements with Other Parties	 	
23
	      7.1.7       Intentionally Blank	 	
23
	      7.1.8       Change of Control	 	
23
	      7.1.9       Government Action	 	
23
	      7.1.10      Insolvency	 	
24
	      7.1.11      Additional Liabilities	 	
24
	      7.1.12      Material Adverse Change	 	
24
	   7.2       Remedies	 	
24
	      7.2.1       Acceleration, Termination and Pursuit of Collateral	 	
24
	      7.2.2       Other Remedies
 	 	
25
	ARTICLE 8: DEFINITIONS AND RULES OF CONSTRUCTION	 	
25
	   8.1       Definitions	 	
25
	      8.1.1       “Account”	 	
25
	      8.1.2       “Advance”	 	
25
	      8.1.3       “Advance Request”	 	
25
	      8.1.4       “Affiliate”	 	
25
	      8.1.5       “Agreement”	 	
25
	      8.1.6       “Authorized Officer”	 	
25
	      8.1.7       “Authorization”	 	
25
	      8.1.8       “Business Day”	 	
26
	      8.1.9       “Capital Expenditures”	 	
26
	      8.1.10     “Capital Leases”	 	
26
	      8.1.11     “Closing Date”	 	
26
	      8.1.12     “CCQ”	 	
26
	      8.1.13     “Code”	 	
26
	      8.1.14     “Collateral”	 	
26
	      8.1.15     “Collateral Security Documents”	 	
26
	      8.1.16     “Commitment”	 	
26
	      8.1.17     “Default”	 	
26
	      8.1.18     “Dollar” or “$”	 	
26
	      8.1.19     “EBITDA”	 	
26
	      8.1.20     “Environmental Control Statutes”	 	
27



iii






 




	 	 	 
	      8.1.21     “EPA”	 	
27
	      8.1.22     “Equivalent Amount”	 	
27
	      8.1.23     “ERISA”	 	
27
	      8.1.24     “ERISA Affiliate”	 	
27
	      8.1.25     “Event of Default”	 	
27
	      8.1.26     “Excess Cash Flow”	 	
27
	      8.1.27     “Final Term Loan Draw Date”	 	
28
	      8.1.28     “Fixed Charges”	 	
28
	      8.1.29     “Funded Debt”	 	
28
	      8.1.30     “GAAP”	 	
29
	      8.1.31     “Hazardous Materials”	 	
29
	      8.1.32     “Interest Expense”	 	
29
	      8.1.33     “Lender”	 	
29
	      8.1.34     “License”	 	
29
	      8.1.35     “Lien”	 	
29
	      8.1.36     “LLC”	 	
29
	      8.1.37     “Loan”	 	
29
	      8.1.38     “Loan Documents”	 	
30
	      8.1.39     “Local Authorities”	 	
30
	      8.1.40     “Material Adverse Change”	 	
30
	      8.1.41     “Material Adverse Effect”	 	
30
	      8.1.42     “Material Contract”	 	
30
	      8.1.43     “Merger Agreement”	 	
30
	      8.1.44     “Notes”	 	
30
	      8.1.45     “Obligations”	 	
30
	      8.1.46     “Obligor”	 	
30
	      8.1.47     “Official Body”	 	
30
	      8.1.48     “Operating Agreement”	 	
31
	      8.1.49     “Organic Document”	 	
31
	      8.1.50     “PBGC”	 	
31
	      8.1.51     “Permitted Guaranties”	 	
31
	      8.1.52     “Permitted Indebtedness”	 	
31
	      8.1.53     “Permitted Investments”	 	
31
	      8.1.54     “Permitted Liens”	 	
31
	      8.1.55     “Permitted Loans”	 	
31
	      8.1.56     “Permitted Transfers”	 	
31
	      8.1.57     “Person”	 	
31
	      8.1.58     “Plan”	 	
31
	      8.1.59     “Pledge and Security Agreements”	 	
31
	      8.1.60     “PPSA”	 	
31
	      8.1.61     “Prime Rate”	 	
31
	      8.1.62     “Revenue”	 	
31
	      8.1.63     “SEC”	 	
32
	      8.1.64     “Securities Acts”	 	
32
	      8.1.65     “Security Agreements”	 	
32
	      8.1.66     “Settlement Date”	 	
32
	      8.1.67     “Subsidiary”	 	
32
	      8.1.68     “Term Loan Commitment”	 	
32
	      8.1.69     “Term Loan Facility”	 	
32
	      8.1.70     “Term Loan Maturity Date”	 	
32
	      8.1.71     “Term Loan Note”	 	
32
	      8.1.72     “Total Charges”	 	
32
	      8.1.73     “UCC”	 	
32
	8.2       Rules of Interpretation and Construction	 	
33
	      8.2.1       Plural; Gender	 	
33
	      8.2.2       Section and Schedule References	 	
33
	      8.2.3       Titles and Headings	 	
33
	      8.2.4       “Including” and “Among Other” References	 	
33



iv






 




	 	 	 
	      8.2.5    “Shall”, “Will”, “Must”, “Can” and “May” References	 	
33
	      8.2.6    Time of Day References	 	
33
	      8.2.7    “Knowledge” of a Person	 	
33
	      8.2.8    Successors and Assigns	 	
34
	      8.2.9    Modifications to Documents	 	
34
	      8.2.10     References to Laws and Regulations	 	
34
	      8.2.11     Financial and Accounting Terms	 	
34
	      8.2.12     Conflicts Among Loan Documents	 	
34
	      8.2.13     Independence of Covenants and Defaults	 	
34
	      8.2.14     Interest Calculations and Payments	 	
34
	      8.2.15     Interest Act (Canada)	 	
35
	      8.2.16     Equivalent Amount
 	 	
35
	ARTICLE 9: MISCELLANEOUS	 	
35
	   9.1       Indemnification, Reliance and Assumption of Risk	 	
35
	   9.2       Assignments and Participations	 	
35
	   9.3       No Waiver; Delay	 	
36
	   9.4       Modification and Amendment	 	
36
	   9.5       Disclosure of Information to Third Parties	 	
36
	   9.6       Binding Effect and Governing Law	 	
37
	   9.7       Notices	 	
37
	   9.8       Relationship with Prior Agreements	 	
38
	   9.9       Severability	 	
38
	   9.10     Termination and Survival	 	
39
	   9.11     Reinstatement	 	
39
	   9.12     Counterparts	 	
39
	   9.13     Waiver of Suretyship Defenses	 	
39
	   9.14     Waiver of Liability	 	
39
	   9.15     Forum Selection; Consent to Jurisdiction	 	
40
	   9.16     Waiver of Jury Trial	 	
40
	   9.17     Judgment Currency	 	
40
	   9.18     French/English Acknowledgment	 	
41



v






 



SCHEDULES:




	 	 	 	 	 
	Schedule	 	
A
	 	List of Borrowers
	Schedule	 	
1.1.6
	 	Assets to be Transferred
	Schedule	 	
1.3.2
	 	Funding Instructions
	Schedule	 	
3.1
	 	Good Standing / Foreign Qualification Jurisdictions
	Schedule	 	
3.5A
	 	Intellectual Property
	Schedule	 	
3.5B
	 	Real Property Interests
	Schedule	 	
3.5C
	 	Operating Names / Trade Names
	Schedule	 	
3.6
	 	Capital Structure / Equity Ownership
	Schedule	 	
3.7
	 	Subsidiaries, Affiliates & Investments
	Schedule	 	
3.8
	 	Material Contracts
	Schedule	 	
3.10
	 	Taxes and Assessments
	Schedule	 	
3.11
	 	Material Litigation
	Schedule	 	
3.12
	 	Deviations from GAAP
	Schedule	 	
5.2
	 	Permitted Additional Indebtedness
	Schedule	 	
5.3
	 	Permitted Additional Guaranties
	Schedule	 	
5.4
	 	Permitted Additional Loans
	Schedule	 	
5.5
	 	Permitted Additional Liens
	Schedule	 	
5.7
	 	Permitted Additional Investments 

	EXHIBITS:

 

	Exhibit	 	
1.3.1
	 	Form of Advance Request





vi






 




CREDIT AGREEMENT



     THIS CREDIT AGREEMENT (as defined in Article 8, along with all other
defined terms, this “Agreement”) is made and effective as of April 30, 2002, by
and among HELIX HEARING CARE OF AMERICA CORP.  (“Helix”) and each direct and
indirect Subsidiary of Helix (which either are listed on Schedule A with the
consent of Lender or are hereafter added as borrowing Subsidiaries pursuant to
the terms hereof) (as more fully defined in Article 8, Helix and each such
Subsidiary are referred to individually as a “Borrower” and collectively as the
“Borrowers”), and HEARx LTD. (as more fully defined in Article 8, “Lender”)


RECITALS



     WHEREAS, Borrowers desire and have requested from Lender a credit
facility consisting of a term loan pursuant to which $9.42 million can be
borrowed on a senior secured basis; and


     WHEREAS, Lender is willing to accommodate the request for credit upon and
subject to the terms, conditions and provisions of the Loan Documents;


     NOW, THEREFORE, for good and valuable consideration (receipt and
sufficiency of which are hereby acknowledged), and intending to be legally
bound hereby, Borrowers (jointly and severally) and Lender hereby agree as
follows:


ARTICLE 1: THE CREDIT FACILITY



     1.1      Term Loan Facility.





                1.1.1       Establishment of Credit Facility. Subject to the terms and
conditions of and in reliance upon the representations and warranties in the
Loan Documents, Lender will lend funds to Borrowers on a senior secured basis
through a total of up to six (6) Advances from time to time prior to June 30,
2002 (as may be extended from time to time in Lender’s sole and absolute
discretion, “Final Term Loan Draw Date”) in an aggregate principal amount
advanced not to exceed the Term Loan Commitment (as determined in accordance
with Section 1.2).



                1.1.2       Facility Maturity. The Term Loan Facility will mature on August 9,
2003 (as may be extended from time to time in Lender’s sole and absolute
discretion, “Term Loan Maturity Date”).



                1.1.3       Use of Proceeds. The funds advanced under this Term Loan Facility
shall be used exclusively as follows:



                               a.       Up to $5 million to repay and satisfy in full all indebtedness
(including principal, interest, fees, and expenses) under those certain
Convertible Secured Term Notes (four in number) each issued as of August 6,
1998, made by Helix in favor of payees named therein in the aggregate principal
amount of $5 million, and


 






 






                               b.       Up to $1.62 million to repay and satisfy in full all indebtedness
(including principal, interest, fees, and expenses) under that certain
Agreement dated May 23, 2000 between Helix and Starkey Laboratories, Inc., and



                               c.       Up to $650,000 to repay and satisfy in full all indebtedness (including
principal, interest, fees, and expenses) under that certain Convertible
Subordinated Debenture issued April 4, 1998, by Helix in favor of William
Demant Holding in the aggregate principal amount of $1.0 million, and




                               d.       To pay certain accounts receivable owed to Siemens Hearing Instruments,
Inc. in the aggregate amount of $1.15 million, and



                               e.       The balance of the Term Loan Commitment (if any) to pay in the
following order (i) $1.0 million for fees and expenses associated with
consummating and documenting the transactions contemplated by this Agreement
and the Merger Agreement, and (ii) then, the balance, if any, for such other
purposes as specifically authorized hereunder or in writing by Lender (in its
sole and absolute discretion).




                1.1.4       Term Loan Notes. The indebtedness under the Term Loan Facility and
the corresponding (joint and several) obligation of Borrowers to repay Lender
with interest in accordance with the terms hereof will be evidenced by one or
more Term Loan Notes (as amended, restated, replaced, supplemented, extended or
renewed from time to time, each, a “Term Loan Note”; collectively, the “Term
Loan Notes”) payable to the order of Lender. The Term Loan Notes will be due
and payable in full on the Term Loan Maturity Date. The aggregate stated
principal amount of the Term Loan Notes will be the Term Loan Commitment
established as of the Closing Date pursuant to Section 1.2; provided, however,
that the maximum liability under such Term Loan Notes will be limited at all
times to the actual amount of indebtedness (including principal, interest,
fees, expenses and indemnities) then outstanding under the Term Loan Facility.
Lender is authorized to note or endorse the date and amount of each Advance and
each payment under the Term Loan Facility on a schedule annexed to and
constituting a part of the Term Loan Notes. Such notations or endorsements, if
made, will constitute prima facie evidence of the information noted or endorsed
on such schedule, but the absence of any such notation or endorsement will not
limit or otherwise affect the obligations or liabilities of Borrowers
thereunder and hereunder.




                1.1.5       Interest. Interest under the Term Loan Facility (and with respect
to any other amounts advanced to or on behalf of Borrowers or otherwise
outstanding under the Loan Documents) will be determined and imposed in
accordance with the following provisions (and, as applicable, Section 1.4 ):


                               1.1.5.1.       Interest Rate Determination. The outstanding principal balance
of the Term Loan Facility will bear interest (computed daily until paid in
immediately available funds, whether prior to or after the Term Loan Maturity
Date) at the applicable Prime Rate plus 1% per annum. Each change in the Prime
Rate shall be effective from and including the date such change is publicly
announced. Notwithstanding the foregoing, the applicable interest rate for the
outstanding balance under the Term Loan Facility from the Closing Date until
the first date on which the Prime Rate is changed will be 5.75% per annum
(i.e., the Prime Rate as of the Closing Date plus 1% per annum).



2






 




                               1.1.5.2.       Calculation of Interest. Interest under the Term Loan Facility
will be calculated, accrued, imposed and payable on the basis of a 360-day year
for the actual number of days elapsed. Interest will begin to accrue on any
amounts advanced to or on behalf of Borrowers under the Loan Documents on and
as of the date such funds are advanced. Unless prohibited by applicable law,
interest will be compounded (and added to the outstanding balance under the
Loan Documents) only if not paid when and as due and payable.




                1.1.6       Repayment and Prepayment. Each Borrower (jointly and severally)
hereby promises to pay Lender the aggregate indebtedness under the Term Loan
Facility (and other Loan Documents) in accordance with the following provisions
(and, as applicable, Section 1.4):


                               1.1.6.1.       Payments — Excess Cash Flow. An annual principal payment equal
to 20% of Excess Cash Flow is due and payable in its entirety on the date that
is 120 days after the end of Borrower’s fiscal year, commencing with March 30,
2003.



                               1.1.6.2.       Payments at Maturity. The outstanding indebtedness under the
Term Loan Facility (including all principal, interest, fees, expenses and
indemnities) is due and payable in its entirety on the Term Loan Maturity Date.


                               1.1.6.3.       Prepayments.



                                                  a.       Voluntary Prepayments. At any time, upon prior written notice to
Lender of at least two (2) Business Days, the outstanding principal balance
under the Term Loan Facility may be prepaid in whole or in part without premium
or penalty. Any voluntary partial prepayment must be in an amount of not less
than $100,000 and in an integral multiple thereof.



                                                  b.       Mandatory Prepayments — Excessive Balance. If the outstanding
indebtedness under the Term Loan Facility at any time exceeds the Term Loan
Commitment, then such excess amount outstanding must be re-paid to Lender in
its entirety immediately upon the earlier of (1) awareness by any Borrower of
the advance or incurrence thereof or (2) demand by Lender for payment thereof.


                                                  c.       Mandatory Prepayments — Equity Issuances and Asset Sales. If any
Borrower issues any equity securities (other than to another Borrower) or if
Borrowers collectively sell, lease, license, transfer or otherwise dispose of
any assets (other than inventory or other assets either sold in the ordinary
course of business with the proceeds thereof promptly reinvested in similar
assets at similar locations or sold to another Borrower and other than the
assets to be transferred as set forth on Schedule 1.1.6) exceeding an aggregate
fair market value of $50,000 in any 12 consecutive calendar months, then a
prepayment must be immediately made on the outstanding indebtedness under the
Term Loan Facility, unless Lender otherwise consents. The amount of any such
mandatory prepayment will be the higher of 25% of the cash proceeds or the cash
equivalent of the fair market value of any such equity issuance or asset
dispositions net of (1) reasonable commissions and expenses actually paid to
unrelated third parties in connection with such transactions and (2) taxes
actually due as a direct result of such transactions (as such taxes are
estimated and certified to Lender by an acceptable certified public accountant
or the chief financial officer).



3






 




                                                  d.       In General. Any prepayments under the Term Loan Facility must include
all accrued but unpaid interest under the Term Loan Facility allocable to the
amount prepaid through the date of such prepayment.



                               1.1.6.4.       Availability for Reborrowing. Principal amounts repaid or
prepaid under the Term Loan Facility prior to the Term Loan Maturity Date will
not be available for reborrowing hereunder.


     1.2       Commitment. Upon the execution of this Agreement and satisfaction of
the conditions precedent set forth in Section 2.1, the Term Loan Commitment
established hereunder will be $9.42 million (“Term Loan Commitment”).


     1.3       Advances.






                1.3.1       Requesting Advances. To request an Advance (other than the initial
Advances on the Closing Date), Borrowers must give Lender written notice (or
oral notice by telephone with immediate written confirmation to follow) at
least 3 Business Days (but not more than 10 Business Days) prior to the
requested Settlement Date for such Advance (such notice, an “Advance Request”).
Each Advance Request, together with certain certifications, must be
substantially in the form of Exhibit 1.3.1 or such other form as Lender from
time to time may reasonably request. Each Advance pursuant to an Advance
Request (unless Lender otherwise consents) must be in an amount of at least
$250,000 or in a multiple of $10,000 in excess thereof and may not be greater
than the un-borrowed balance of the Term Loan Commitment.




                1.3.2       Funding Advances. Subject to the satisfaction of and compliance
with the terms and conditions hereof (including, as applicable, the conditions
precedent specified in Article 2), Lender will wire transfer all or any portion
of an Advance in accordance with the written instructions of Borrowers. By
executing this Agreement, each Borrower (jointly and severally) hereby requests
Lender to make and fund the initial Advances in accordance with the funding
instructions attached as Schedule 1.3.2.




                1.3.3       Obligation to Advance. Lender will not be obligated to make any
Advance under the following circumstances: (a) if the principal amount of such
Advance plus the aggregate amount outstanding under the Term Loan Facility
would exceed the Term Loan Commitment, or (b) during the existence of a
Default or an Event of Default hereunder, or (c) if such Advance would cause a
Default or Event of Default hereunder, or (d) after the Final Term Loan Draw
Date.




                1.3.4       Indemnification for Revocation or Failure to Satisfy Conditions.
Each Borrower (jointly and severally) will indemnify Lender against all losses
and costs incurred by Lender as a result of any revocation of any requested
Advance or any failure to fulfill the applicable conditions precedent to such
Advance on or before the requested Settlement Date specified in an Advance
Request. Such indemnification will include (among other things) all losses and
costs incurred by reason of the liquidation or reemployment of funds required
by Lender to fund the Advance when such Advance, as a result of such failure,
is not made on the requested Settlement Date.



4






 





     1.4       Payments in General.





                1.4.1       Manner and Place of Payments. All payments of principal, interest,
fees, expenses, indemnities and other amounts due under the Loan Documents must
be received by Lender by wire transfer in immediately available funds in U.S.
dollars (and without any deduction, offset, netting, counterclaim or
reservation of rights) on or before Two O’clock (2:00) p.m. Eastern Time (“ET”)
on the due date therefor at the principal office of Lender set forth in Notice
Section hereof or at such other place as Lender may designate from time to
time.




                1.4.2       Special Payment Timing Issues. Whenever any payment to be made
under any Loan Document is due on a day that is not a Business Day, then such
payment may be made on the next succeeding Business Day, and such extension of
time will be included in the computation of interest under such Loan Document.
Any funds received by Lender after 2:00 p.m. ET on any day will be deemed to be
received on the next succeeding Business Day.




                1.4.3       Application of Payments. All payments and other funds received by
Lender under the Loan Documents will be applied in the following order: (a)
first to the payment of any fees and charges due under the Loan Documents, and
(b) then to any obligations for the payment of expenses, costs and indemnities
due under the Loan Documents, and (c) then to the payment of interest due and
owing under the Loan Documents, and (d) then to the principal indebtedness due
under the Term Loan Facility, and (e) then to any other interest accrued under
the Loan Documents, and (f) then to any other indebtedness of any Borrower or
other Obligor to Lender.




                1.4.4       Payment of Expenses, Indemnities and Protective Advances. If any
funds are advanced or costs are incurred by Lender to or on behalf of Borrowers
or otherwise as permitted under the Loan Documents (including as protective
advances), other than Advances pursuant to Section 1.3, then such advances or
costs must be re-paid to Lender in their entirety immediately upon the earlier
of (a) awareness by Borrowers of the advance or incurrence thereof or (b)
demand by Lender for payment thereof.




                1.4.5       Payments upon Termination. Notwithstanding any other provision
hereof, the entire outstanding indebtedness under the Term Loan Facility
(including all principal, interest, fees, expenses and indemnities) is due and
payable in its entirety upon any termination of the Term Loan Facility, the
Commitment therefor, or this Agreement.



                1.4.6       Late Payments. If any payment (of principal, interest, fees,
expenses, indemnities or other amounts) due under any Loan Document is not
received by Lender in immediately available funds on or before the 7th calendar
day after the due date therefor, then each Borrower (jointly and severally)
hereby agrees (to the maximum extent not prohibited by applicable law) to pay
to Lender (upon Lender’s request) a late payment charge equal to 1% of the
amount of such late payment. Additional and separate late payment charges (to
the maximum extent not prohibited by applicable law) may be subsequently
imposed hereunder by Lender from time to time (a) if any late payment or late
payment charge is not received by Lender in immediately available funds on or
before the 30th calendar day after any demand therefor, and (b) if any other
payment due under any Loan Document is not received by Lender in immediately
available funds on or before the 7th calendar day after the due date therefor.
The late payment charges due under this Section are in addition to any other
interest, fees, charges, expenses or indemnities due under the Loan Documents.



5






 






                1.4.7       Default Interest. During the existence of an Event of Default
hereunder, each Borrower (jointly and severally) hereby agrees (to the maximum
extent not prohibited by applicable law) to pay to Lender (upon Lender’s
request, but commencing on the date of occurrence of such Default or Event of
Default) interest on any indebtedness outstanding hereunder at the rate of
Three Percent (3%) per annum in excess of the rate then otherwise applicable to
such indebtedness. Notwithstanding the foregoing, if the relevant Event of
Default is under Section 7.1.10, then such rate increase (to the maximum extent
not prohibited by applicable law) will occur automatically without any request
by Lender.



                1.4.8       Usury Savings Provision. Notwithstanding any provision of any Loan
Document, Borrowers (individually and collectively) are not and will not be
required to pay interest at a rate or any fee or charge in an amount prohibited
by applicable law. If interest or any fee or charge payable on any date would
be in a prohibited amount, then such interest, fee or charge will be
automatically reduced to the maximum amount that is not prohibited. To the
extent that any prohibited amount is actually received by Lender, then such
amount will be automatically deemed to constitute a repayment of principal
indebtedness hereunder.



     1.5       Release of Security. Upon termination of the Loan Documents in
accordance with Section 9.10, then Lender (at the written request and expense
of Borrowers) (i) will release the Obligors and the property serving as
Collateral under the Loan Documents (without representation, warranty,
recourse, liability or indemnification of any kind by or to Lender), and (ii)
will execute and deliver such UCC termination statements, mortgage releases,
deed of trust releases, discharges and other documentation and instruments (all
in form and substance reasonably acceptable to Lender) as may be reasonably
requested and provided to Lender to effect such releases, reconveyances and
terminations, and (iii) will terminate and cancel all Commitments and all
facilities under the Loan Documents.


ARTICLE 2: CONDITIONS PRECEDENT



     2.1       Closing Conditions. The obligation of Lender to execute and perform
the Loan Documents, and to establish the Term Loan Facility and to fund the
Advances are subject to the following conditions precedent (unless and except
to the extent expressly waived by Lender in its sole and absolute discretion):





                2.1.1       Compliance.



                               2.1.1.1.       Representations. Each, and all, representations and warranties
contained in this Agreement (including those in Article 3) and in each other
Loan Document, certificate or other writing delivered to Lender pursuant hereto
or thereto on or prior to the Closing Date must be true, correct and complete
in all material respects on and as of the Closing Date, except for such
deviations disclosed in writing and acceptable to Lender.



                               2.1.1.2.       No Default. There must not be any Default or Event of Default
hereunder or any default under any other Loan Document on the Closing Date, and
there must not be any such Default or Event of Default occurring as a result of
executing or advancing funds under the Loan Documents, except for such defaults
disclosed in writing and acceptable to Lender.



6






 




                               2.1.1.3.       No Material Change. There must not have been (in Lender’s
reasonable opinion) any Material Adverse Change between November 30, 2001
(i.e., the “as of” date for the most recent audited financial statements
delivered to Lender) and the Closing Date.




                2.1.2                Documents. Lender must have received the following documents,
agreements and certificates (together with all exhibits and schedules thereto),
each duly executed, in form, substance and amount satisfactory to Lender and,
when applicable, recorded or filed in the appropriate public office:



                               2.1.2.1.       Credit Agreement. This Agreement.



                               2.1.2.2.       Promissory Notes. The Term Loan Notes as described in Section
1.1.4.


                               2.1.2.3.       Security Agreements and Collateral Assignments. A master
security agreement and collateral assignment and deed of hypothec executed by
each Borrower in favor of Lender granting Lender a security interest in and
collaterally assigning to Lender all of such grantor’s tangible and intangible
personal property assets (including fixtures), whether now owned or hereafter
acquired, and the proceeds and products thereof, as collateral security for the
indebtedness and obligations hereunder, together with all necessary financing
statements and termination statements (each as filed), waivers and consents,
and evidence of any other recordations required by applicable law or by Lender
to perfect such security interests in a manner that will be subject only to
Permitted Liens.



                               2.1.2.4.       Intellectual Property Security Agreements. One or more separate
intellectual property security agreements by each Borrower in favor of Lender
encumbering all of such grantor’s copyrights, patents, trade names, trademarks,
service names, service marks and other intellectual property (including any and
all applications and licenses therefor), all as now owned or hereafter
acquired, and the proceeds and goodwill thereof, together with all appropriate
financing statements and termination statements (each as filed), waivers and
consents, and any other documents or recordations required by applicable law or
by Lender to perfect such interests.



                               2.1.2.5.       Assignment of Life Insurance Policy. One or more separate
assignments to Lender of the key-person life insurance policy (or policies)
insuring the life of Steve Forget for at least $500,000 and naming Helix as the
only other beneficiary thereof, which assignment (a) must be in form and
substance acceptable to Lender, and (b) must be executed or consented to by
each beneficiary, each insured and the relevant insurance company, and (c) must
indicate that the life insurance policy is fully paid for a period of at least
12 months beyond the Closing Date.



                               2.1.2.6.       Real Estate Documents. One or more deeds of trust, mortgages
and/or fixture filings by each Borrower in favor of Lender encumbering all of
such grantor’s real property and leasehold interests (including fixtures) as
collateral security for the indebtedness and obligations hereunder, together
with all necessary financing statements and termination statements, deeds of
release, estoppel certificates, waivers and consents, Lender title insurance,
surveys, environmental reports, appraisals, flood status certifications, and
any other documents or recordations required by applicable law or by Lender to
perfect such liens in a manner that will be subject only to Permitted Liens.


7






 



                               2.1.2.7.       Owners’ Pledge and Security Agreements. One or more equity
pledge and security agreements executed by Steve Forget in favor of Lender
pledging (among other things) all of his outstanding equity interests and
rights with respect to Cousineau, Doucet, Parent, Forget Audioprothésistes
s.e.n.c. or any successor or assign thereof (including any warrants, options or
convertible rights therefor) as collateral security for the indebtedness and
obligations hereunder, together with the certificates therefor (if any), powers
executed in blank, and all necessary financing statements, evidence of
registration and other documents required by applicable law or by Lender to
perfect such liens in a manner that will be subject only to Permitted Liens.


                               2.1.2.8.       Insurance. Current proof of insurance with an indication of loss
payee and additional insured endorsements in favor of Lender with respect to
all of the coverages required under Section 4.6. Such proof of insurance must
be indicated pursuant to one or more certificates on (a) an ACORD 27 form
(3/93) for property-related insurance coverages and (b) a modified version of
an ACORD 25-S form (3/93), in each instance permitting Lender reliance and
requiring cancellation notification.



                               2.1.2.9.       Compliance Certificates. A certificate from an Authorized
Officer of each Borrower dated as of the Closing Date and certifying as to
compliance with the matters described under Section 2.1.1.



                               2.1.2.10.       Opinions of Counsel. One or more written opinions from legal
counsel to Borrowers addressed to Lender and its counsel and dated as of the
Closing Date opining as to such matters as Lender may request.



                               2.1.2.11.       Payoff Instructions for Prior Indebtedness. Payoff and release
letters from each Person receiving any proceeds of any Advance.



                               2.1.2.12.       Authorization Documents — Borrowers. A certificate of an
Authorized Officer of each Borrower delivering true, accurate and complete
versions of (a) its Articles of Incorporation, Articles of Organization or
Certificate of Partnership (as applicable) and all amendments thereto, and (b)
its Bylaws, Operating Agreements or Partnership Agreements (as applicable) and
all amendments thereto, and (c) the resolutions authorizing its execution,
delivery and full performance of the Loan Documents and all other documents,
certificates and actions required hereunder or in connection herewith, and (d)
an incumbency certificate setting forth its officers (together with the
corresponding signatures), and (e) a long-form good standing and qualification
certificate (issued within 15 calendar days before the Closing Date) with
respect to each jurisdiction listed on Schedule 3.1.



                               2.1.2.13.       Officer’s Certificates. One or more certificates of an
Authorized Officer of each Borrower delivering true, accurate and complete
copies of the following documents (together with all amendments, exhibits and
schedules thereto):


                                                     a.       Lien Searches — Searches (conducted within 15 calendar days before
the Closing Date) satisfactory to Lender with respect to consensual liens, tax
liens, judgments and bankruptcy, listing respectively (1) all effective UCC and
PPSA financing statements and CCQ hypothec filings that name any Borrower
(including any predecessor thereto and any operating or tradenames thereof) as
“debtor” that are filed in each Borrower’s jurisdiction of incorporation, the
provinces of Alberta, Ontario and Quebec, or any other U.S. or Canadian
jurisdiction in which such debtor currently operates or has had assets at any
time within the


8






 




immediately preceding 12 calendar months (together with copies of such
financing statements), and (2) all tax liens against any Obligor (or the assets
thereof), and (3) all outstanding judgments against any Obligor (or the assets
thereof), and (4) whether any Obligor has filed bankruptcy within the preceding
5 years.



                                                    b.       Financial Statements — A set of (1) the quarterly financial statements
of Helix for fiscal quarter ending February 28, 2002 and (2) the audited
financial statements of Helix (with consolidating schedules thereto) for fiscal
year ending November 30, 2001.



                                                    c.       Equityholder Agreements — Each shareholder agreement, member
agreement, partner agreement, voting agreement, buy-sell agreement, option,
warrant, put, call, right of first refusal, and any other agreement or
instrument with conversion rights into equity of any Borrower either (1)
between any Borrower and any holder or prospective holder of any equity
interest of any Borrower (including interests convertible into such equity) or
(2) otherwise between any two or more such holders of equity interests.



                                                    d.       Other Agreement — Such other agreements and documents as Lender may
reasonably request, including a complete set of the agreements regarding
dissolution of 3319725 Canada Inc. and the reorganization of Cousineau, Doucet,
Parent, Forget Audioprothésistes s.e.n.c.



                               2.1.2.14.       Other Documents. Lender must have received all additional
agreements, documents and certificates as Lender or its counsel may reasonably
request.


ARTICLE 3: REPRESENTATIONS AND WARRANTIES



     Each Borrower, as of the Closing Date and the Settlement Date for each
Advance hereunder, hereby (jointly and severally) represents and warrants as
follows:


     3.1       Organization and Good Standing. Each Borrower (a) is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization, and (b) has all requisite power and authority (corporate,
partnership, LLC and otherwise) to own its properties and to conduct its
business as now conducted and as currently proposed to be conducted, and (c) is
duly qualified to conduct business as a foreign organization and is currently
in good standing in each state and jurisdiction in which it conducts business,
except where failure to be duly qualified and in good standing could not have a
Material Adverse Effect. Each state and jurisdiction in which any Borrower is
organized or is (or should be) qualified to conduct business under applicable
law is listed on Schedule 3.1.


     3.2       Power and Authority. Each Borrower has all requisite power and
authority under applicable law and under its Organic Documents, Authorizations
and Licenses to execute, deliver and perform the obligations under the Loan
Documents to which it is a party.


     3.3       Validity and Legal Effect. This Agreement constitutes, and the other
Loan Documents to which (any) Borrower is a party constitute (or will
constitute when executed and delivered), the legal, valid and binding
obligations of each Borrower in accordance with the terms thereof.


     3.4       No Violation of Laws or Agreements. The execution, delivery and
performance of the Loan Documents (a) will not violate or contravene any
material provision of any material law, rule,


9






 




 regulation, administrative order or judicial decree (federal, state,
provincial, or local), and (b) will not violate or contravene any provision of
the Organic Documents of any Borrower, and (c) will not result in any material
breach or violation of (or constitute a material default under) any material
agreement or instrument by which any Borrower or any of its property may be
bound, and (d) will not result in or require the creation of any Lien (other
than pursuant to the Loan Documents) upon or with respect to any properties of
any Borrower, whether such properties are now owned or hereafter acquired.


     3.5       Title to Assets; Existing Encumbrances; Identification of Intellectual
and Real Property.





                3.5.1       Each Borrower has good and marketable title to all of its owned real
and personal property assets and the right to possess and use all of its leased
or licensed real and personal property assets. All such property interests are
free and clear of any Liens, except for Permitted Liens (as defined in Section
5.5). Each such property and asset owned, leased or licensed by any Borrower
is titled, leased or licensed in the current legal name of such Borrower.




                3.5.2       Schedule 3.5A lists each trademark, service mark, copyright, patent,
database, customized application software and systems integration software,
trade secret and other intellectual property owned, licensed, leased,
controlled or applied for by any Borrower, whether or not such intellectual
property is recorded with the Copyright Office or the U.S. or Canadian Patent
and Trademark Office, together with relevant identifying information with
respect to such intellectual property describing (among other things) the date
of creation, the method of protection against adverse claims and the
registration number.




                3.5.3       Schedule 3.5B lists each real property interest owned, leased or
otherwise used by any Borrower, together with relevant identifying information
describing (among other things) the location and mailing address for each such
real property and a legal description for each such real property, an
indication of whether such interest is owned or leased (and, if leased, the
lessor and record owner thereof). Each such property and asset is in good
order and repair (ordinary wear and tear excepted) and is fully covered by the
insurance required under Section 4.7.




                3.5.4       Schedule 3.5C identifies each legal, operating and trade name that
any Borrower has used (or permitted the filing of a UCC or PPSA financing
statement or CCQ hypothec filing under) at any time during the twelve (12)
consecutive calendar years immediately preceding the Closing Date. Borrowers
have properly registered with Network Solutions, Inc. (or an appropriate
successor thereto) Internet domain names and URL’s that correspond with each
legal, operating and trade name of any Borrower.




     3.6       Capital Structure and Equity Ownership. Schedule 3.6 accurately and
completely discloses (a) the number of shares and classes of equity ownership
rights and interests of each Borrower authorized and/or outstanding (whether
existing as common or preferred stock, general or limited partnership
interests, or LLC membership interests, or warrants, options or other
instruments convertible into such equity), and (b) the ownership thereof.
Except as shown on Schedule 3.6, no Borrower owns any other equity ownership
rights or interests of any organization (whether existing as common or
preferred stock, general or limited partnership interests, or LLC membership
interests, or warrants, options or other instruments convertible into such
equity). All such shares and interests (with respect to each Borrower) are
validly existing, fully paid and non assessable.


10






 


     3.7       Subsidiaries, Affiliates and Investments. Schedule 3.7 accurately and
completely discloses (a) each Subsidiary and Affiliate of each Borrower (other
than its officers and directors) and (b) each investment in or loan to any
other Person by any Borrower in excess of $5,000.


     3.8       Material Contracts. Schedule 3.8 (a) accurately and completely
discloses each Material Contract (as defined below) of each Borrower, and (b)
also indicates the following information with respect to each such contract:
(1) the contract parties thereunder, and (2) the contract term and any options
or renewals thereto, and (3) the monthly payment required thereunder, and (4)
any restrictions on assignments, and (5) any restrictions on disclosure of the
terms thereof, and (6) the existence of any breaches or defaults thereunder.
Except as shown on Schedule 3.8, no Borrower has committed any unwaived breach
or default under any Material Contract (whether or not listed on Schedule 3.8),
and after due inquiry and investigation, no Borrower has any knowledge or
reason to believe that any other party to any such Material Contract (whether
or not listed on Schedule 3.8) has or might have committed any unwaived breach
or default thereof. For purposes of this Section 3.8, a “Material Contract” of
[a] Borrower includes the following types of agreements to which a Borrower is
a party: (1) any contract either with annual compensation, consideration or
payments in excess of $100,000 or with aggregate compensation, consideration or
payments in excess of $100,000, and (2) any other agreement or contract the
loss or breach of which could reasonably be expected to have or cause a
Material Adverse Effect.


     3.9       Licenses and Authorizations. Each Borrower possesses all Licenses and
other Authorizations necessary or required in the conduct of its businesses
and/or the operation of its properties. Each material Authorization is valid,
binding and enforceable on, against and by such Borrower. Each material
Authorization is subsisting without any defaults thereunder or enforceable
adverse limitations thereon, and no Authorization is subject to any proceedings
or claims opposing the issuance, continuance, renewal, development or use
thereof or contesting the validity or seeking the revocation thereof.


     3.10       Taxes and Assessments. Except as disclosed on Schedule 3.10, each
Borrower has timely filed all required tax returns and reports (federal, state
and local) or has properly and timely filed for extensions of the time for the
filing thereof. No Borrower has knowledge of any deficiency, penalty or
additional assessment due or appropriate in connection with any such taxes.
All taxes (federal, state, provincial, municipal and local) imposed upon any
Borrower or any of its properties, operations or income have been paid and
discharged prior to the date when any interest or penalty would accrue for the
nonpayment thereof, except for those taxes being contested in good faith by
appropriate proceedings diligently prosecuted and with adequate reserves
reflected on the financial statements in accordance with GAAP (all as also
disclosed on Schedule 3.10).


     3.11       Litigation and Legal Proceedings. Except as disclosed on Schedule
3.11, there is no litigation, claim, investigation, administrative proceeding,
labor controversy or similar action that is pending or (to the best of each
Borrower’s knowledge and information after due inquiry) threatened against any
Borrower or its properties that, if adversely resolved, could reasonably be
expected to have or cause a Material Adverse Effect.


     3.12       Accuracy of Financial Information. All financial statements
previously furnished to Lender concerning the financial condition and
operations of any one or more Borrowers (a) have been prepared in accordance
with GAAP consistently applied (except as disclosed on Schedule 3.12), and (b)
fairly present the financial condition of the organization covered thereby as
of the dates and for the periods covered thereby (but, with respect to interim
periodic financial statements, subject to


11






 




 normal and customary year end audit adjustments), and (c) disclose all
material liabilities (contingent and otherwise) of each Borrower. In addition,
all written information previously furnished to Lender concerning the financial
condition and operations of any Borrower are true, accurate and complete in all
material respects.


     3.13       Accuracy of Other Information. All written information contained in
any application, schedule, report, certificate, or any other document furnished
to Lender by any Borrower or any other Person (on behalf of any Borrower) in
connection with the Loan Documents is in all material respects true, accurate
and complete, and no such Person (including Borrowers) has omitted to state
therein (or failed to include in any such document) any material fact or any
fact necessary to make such information not misleading. All written
projections furnished to Lender by any Borrower or any other Person on behalf
of any Borrower have been prepared with a reasonable basis and in good faith,
making use of such information as was available at the date such projection was
made.


     3.14       Compliance with Laws Generally. Each Borrower is in compliance in all
material respects with all material laws, rules, regulations, administrative
orders and judicial decrees (federal, state, local and otherwise) applicable to
it, its operations and its properties.


     3.15       ERISA Compliance.





                3.15.1       Each Borrower is in compliance in all material respects with all
applicable provisions of ERISA.




                3.15.2       Neither any Borrower nor any ERISA Affiliate thereof maintains or
contributes to (or has maintained or contributed to) any multi-employer plan
(as defined in Section 4001 of ERISA) under which any Borrower or any ERISA
Affiliate thereof could reasonably be expected to have any withdrawal
liability.




                3.15.3       Neither any Borrower nor any ERISA Affiliate thereof sponsors or
maintains any defined benefit pension plan under which there is an accumulated
funding deficiency within the meaning of Section 412 of the Code, or other law
of a foreign jurisdiction, if applicable, whether or not waived.




                3.15.4       The liability for accrued benefits under each defined benefit
pension plan that will be sponsored or maintained by any Borrower or any ERISA
Affiliate thereof (determined on the basis of the actuarial assumptions
utilized by the PBGC) or other law of a foreign jurisdiction, if applicable,
does not exceed the aggregate fair market value of the assets under each such
defined benefit pension plan.




                3.15.5       The aggregate liability of each Borrower and each ERISA Affiliate
thereof arising out of or relating to a failure of any employee benefit plan
within the meaning of Section 3(2) of ERISA or other law of a foreign
jurisdiction, if applicable, to comply with provisions of ERISA or the Code
will not have a Material Adverse Effect.




                3.15.6       There does not exist any unfunded liability (determined on the
basis of actuarial assumptions utilized by the actuary for the plan in
preparing the most recent annual report) of any Borrower or any ERISA Affiliate
thereof under any plan, program or arrangement providing post retirement, life
or health benefits.



12






 





                3.15.7       No Reportable Event and no Prohibited Transaction (as defined in
ERISA) has occurred or is occurring with respect to any plan with which any
Borrower is associated.




     3.16       Environmental Compliance.





                3.16.1       Each Borrower has received all permits and filed all notifications
necessary under and is otherwise in compliance in all material respects with
the Environmental Control Statutes.





                3.16.2       No Borrower has given any written or oral notice to the EPA or any
state, provincial, or local agency with regard to any actual or imminently
threatened removal, storage, transportation, spill, release or discharge of
hazardous or toxic wastes, substances or petroleum products either (a) on
properties owned or leased by such Borrower or (b) otherwise in connection with
the conduct of its business and operations.




                3.16.3       No Borrower has received notice that it is potentially responsible
for costs of clean up of any actual or imminently threatened spill, release or
discharge of hazardous or toxic wastes or substances or petroleum products
pursuant to any Environmental Control Statute.




     3.17       Fees and Commissions. No Borrower owes any fees or commissions of
any kind in connection with this Agreement or the transactions contemplated
hereby, and no Borrower knows of any claim (or any basis for any claim) for any
fees or commissions in connection with this Agreement or the transactions
contemplated hereby.


     3.18       Solvency. No Borrower is “insolvent,” as such term is defined in
Section 101(32) of the Bankruptcy Code (11 U.S.C. § 101(32)) or any other
applicable law of any jurisdiction, including without limitation, the
Bankruptcy & Insolvency Act (Canada). No Borrower, by virtue of its
obligations and actions in connection with the Loan Documents, has engaged or
is engaging in any transaction that constitutes a fraudulent transfer or
fraudulent conveyance under applicable federal, provincial, or state law
(including without limitation under Section 548 of the Bankruptcy Code or under
the Uniform Fraudulent Transfer Act or the Uniform Fraudulent Conveyance Act).


ARTICLE 4: AFFIRMATIVE COVENANTS



     Each Borrower (jointly and severally) hereby covenants and agrees that, so
long as any indebtedness remains outstanding hereunder, each Borrower will
comply with the following affirmative covenants:


     4.1       Periodic Financial Statements and Compliance Certificates.





                4.1.1       Monthly Financial Statements. Within 45 calendar days after the end
of each calendar month (including the last calendar month of each year),
Borrowers must prepare and deliver to Lender a complete set of unaudited
internal monthly financial statements consisting of a balance sheet and an
income statement (profit and loss statement). Together with the monthly
financial statements, Lender must also receive a certificate executed by the
chief financial officer or such other senior executive officer of Helix as is
acceptable to Lender (a) stating that the financial statements fairly present
the financial condition of each Borrower as of the date thereof and for the
periods covered thereby, and (b) certifying that as of the date of such
certificate there is not any existing Default or Event of Default.



13






 






                4.1.2       Quarterly Financial Statements. Within 60 calendar days after the
end of each fiscal quarter (including the fourth fiscal quarter of each year),
Borrowers must prepare and deliver to Lender unaudited quarterly financial
statements, in form and substance reasonably acceptable to Lender. Such
financial statements must include a balance sheet and an income statement (with
appropriate notes and schedules). Such financial statements must be prepared
in accordance with GAAP consistently applied (except as approved by Lender in
its sole and absolute discretion). Together with the quarterly financial
statements, Lender must also receive a certificate executed by the chief
financial officer or such other senior executive officer of Helix as is
acceptable to Lender (a) stating that the financial statements fairly present
the financial condition of each Borrower as of the date thereof and for the
periods covered thereby, and (b) certifying that as of the date of such
certificate there is not any existing Default or Event of Default.




                4.1.3       Annual Financial Statements. Within 120 calendar days after the
close of each fiscal year, Borrowers must prepare and deliver to Lender a
complete set of audited annual consolidated financial statements (with
accompanying notes and consolidating schedules). Such financial statements (a)
must include the types of financial statements and information required on a
quarterly basis under this Section 4.1 as well as a cash flow statement and a
reconciliation of consolidated net worth and capital accounts, and (b) must be
prepared in accordance with GAAP consistently applied, and (c) must be
certified without qualification by Deloitte & Touche, LLP or another
independent certified public accounting firm satisfactory to Lender. Together
with the annual financial statements, Lender must also receive all related
management letters prepared by such accountants and a certificate signed by
such accountants, (a) stating that the financial statements fairly present the
consolidated financial condition of each Borrower as of the date thereof and
for the periods covered thereby, and (b) calculating, as of the end of such
fiscal year, the then-current amounts for the Excess Cash Flow, and (c)
certifying that as of the date of such certificate, to the best of such
accountant’s knowledge (after due inquiry), there is not any existing Default
or Event of Default.



     4.2       Other Financial Information and Specialized Reports.





                4.2.1       Financial Forecasts; Operating Budget. Within 10 Business Days
after receiving, preparing, materially revising or otherwise assembling any
periodic budgets or financial forecasts, Borrowers must deliver a complete copy
thereof to Lender.



                4.2.2       Additional Material Contracts. Each Borrower (a) will notify Lender
in writing within 90 calendar days after executing or becoming bound by any
contract or agreement that should have been listed on Schedule 3.5B or Schedule
3.8 if it had existed as of the Closing Date, and (b) will concurrently update
Schedule 3.5B or Schedule 3.8 (as appropriate).



                4.2.3       Tax Returns. Within 10 Business Days after the date that any
Borrower makes any filing with Revenue Canada or the Internal Revenue Service
relating to its liability for income taxes, such Borrower must deliver a
complete copy thereof to Lender.




                4.2.4       Filings and Press Releases. Within 10 Business Days after the date
that any Borrower or any organization that owns or controls at least 50% of any
class of equity interests of any Borrower makes any filing with any stock
exchange or securities commission or regulatory authority or issues any press
release, Borrowers must deliver a complete copy thereof to Lender.


     4.3       Fiscal Year. Helix will maintain a fiscal year that has a November 30
year end.


14






 


     4.4       Books and Records; Maintenance of Properties. Each Borrower will keep
and maintain satisfactory and adequate books and records of account in
accordance with GAAP. Each Borrower will also keep, maintain and preserve all
of its property and assets in good order and repair (ordinary wear and tear
excepted).



     4.5       Existence and Good Standing. Each Borrower will preserve and maintain
(a) its existence as a corporation under the laws of its jurisdiction of
organization, and (b) its good standing in all jurisdictions where it conducts
business, and (c) the validity of all its Authorizations and Licenses required
or otherwise appropriate in the conduct of its businesses.



     4.6       Insurance.





                4.6.1       General Insurance Provisions. Each Borrower will keep all of its
property and assets fully covered by insurance with reputable and financially
sound insurance companies (reasonably acceptable to Lender). Each Borrower
must also maintain such protection against such hazards and liability
(including casualty, liability, fire, flood, business interruption, earthquake,
workmen’s compensation, and other material risks to its property and business),
in such amounts and with such deductibles as is customary in the relevant
industry and appropriate under the relevant circumstances (and, in each
instance, as is reasonably acceptable to Lender). If any Borrower fails or
refuses to obtain or maintain any such insurance coverage, then Lender (at its
election) may (but is not obligated to) obtain and maintain such insurance
coverage on behalf of such Borrower, and the premiums and other costs thereof
(a) will be included in the indebtedness hereunder secured by the Collateral
and (b) will be due and payable by such Borrower to Lender immediately upon
demand. Each such policy for liability insurance must name Lender as loss
payee, and each such other policy for insurance must name Lender as loss payee
and as additional insured. Each such policy must also require the insurer to
furnish Lender with written notice at least 25 calendar days prior to any
termination, cancellation or lapse of coverage and must provide Lender with the
right (but not the obligation) to cure any non-payment of premium. Upon
Lender’s request, each Borrower (from time to time) will furnish Lender with
proof of such insurance (in form and substance acceptable to Lender) and a copy
of the related policy. Notwithstanding the foregoing, with respect to property
insurance coverage, Borrowers from time to time will be entitled to receive and
keep all proceeds and payments of less than $50,000 if and to the extent that
(i) no Event of Default exists at the time of receiving such proceeds or
payment and (ii) such proceeds or payment is promptly reinvested by Borrowers
to repair or replace the affected property.




                4.6.2       Key-Person Life Insurance. Borrowers must also maintain key-person
life insurance coverage (acceptable to Lender) that (a) insures the life of
Steve Forget for at least $500,000, and (b) names Helix as the only other
beneficiary thereof (together with Lender), and (c) is assigned to Lender as
additional collateral security for the indebtedness hereunder. At Closing and
on an annual basis thereafter for so long as such insurance is required to be
maintained hereunder, Borrowers must provide Lender (prior to the expiration of
any such coverage) with written evidence that such coverage is continued and
fully paid for a period of at least an additional year.



     4.7       Loan Purpose. Borrowers will use the proceeds of each Advance
hereunder exclusively as set forth in Section 1.1.3.


     4.8       Taxes. Each Borrower will pay and discharge all taxes, assessments or
other governmental charges or levies imposed on it or any of its property or
assets prior to the date upon which any penalty for non payment or late payment
is incurred, unless (a) the same are then being



15






 




 contested in good faith by appropriate proceedings diligently prosecuted,
and (b) adequate reserves therefor acceptable to Lender have been established,
and (c) Lender has been notified thereof in writing, and (d) the consequences
of such non-payment (in Lender’s reasonable judgment) will not have a Material
Adverse Effect.


     4.9       Management Changes. Borrowers will notify Lender in writing within
thirty (30) calendar days prior to any change (including any dismissal or
change in title or status) in the senior management personnel of any Borrower.


     4.10       Litigation and Administrative Proceedings. Each Borrower will notify
Lender in writing immediately upon the institution or commencement of any
litigation, legal or administrative proceeding, or labor controversy (a) with a
purported amount in controversy in excess of $100,000, or (b) that could
otherwise reasonably be expected to have or cause a Material Adverse Effect.


     4.11       Monitoring Compliance; Occurrence of Certain Events. Each Borrower
at all times will maintain (and comply with) commercially reasonable procedures
and systems designed to monitor compliance and to detect instances of
non-compliance with the Loan Documents. Each Borrower will notify Lender in
writing immediately upon (a) the occurrence of any Default or Event of Default
hereunder, or (b) the occurrence of any default under any other Loan Document,
or (c) the happening of any event or the assertion or threat of any claim that
could reasonably be expected to have or cause a Material Adverse Effect.


     4.12       Compliance with Laws. Each Borrower will comply in all material
respects (a) with all laws, rules, regulations and orders (U.S., Canadian,
federal, state, provincial, local and otherwise) applicable to its business,
and (b) with the provisions and requirements of all Authorizations. Each
Borrower will notify Lender immediately in detail of any actual or alleged
material failure to comply with or violation of any such laws, rules,
regulations or orders, or under the terms of any of such Authorizations, or of
the occurrence or existence of any facts or circumstances that with the passage
of time, the giving of notice or otherwise could create such a failure to
comply or violation or could reasonably be expected to occasion the termination
of any of such Authorization.


     4.13       Further Actions.




                4.13.1       Additional Collateral. Each Borrower will execute, deliver and
record (or, as appropriate, cause the execution, delivery and recordation) at
any time upon Lender’s request and in form and substance reasonably
satisfactory to Lender, any of the following instruments in favor of Lender as
additional Collateral hereunder: (a) mortgages, deeds of trust and/or
assignments on or of any real or personal property owned, leased or licensed by
it, and (b) certificates of title encumbrances against any of its titled
vehicles, and (c) any other like assignments or agreements specifically
covering any of its properties or assets (including assignments of any patents,
trademarks, copyrights, databases, trade secrets and other forms of
intellectual property and deposit account control agreements), and (d) any
financing or continuation statements requested by Lender.




                4.13.2       Further Assurances. From time to time, each Borrower will execute
and deliver (or will cause to be executed and delivered) such supplements,
amendments, modifications to and/or replacements of the Loan Documents and such
further instruments as may be reasonably required to effectuate the intention
of the parties to (or to otherwise facilitate the performance of) the Loan
Documents.



16






 





                4.13.3       Estoppel Certificates. Upon Lender’s request, each Borrower will
execute, acknowledge and deliver (or, as appropriate, cause the execution,
acknowledgment and delivery) to such Persons as Lender may request a statement
in writing certifying as follows (to the best of its knowledge, after diligent
inquiry): (a) that the Loan Documents (as amended, if applicable) are
unmodified and in full force and effect, and (b) that the payments under the
Loan Documents required to be paid by Borrowers have been paid, and (c) the
then unpaid principal balance of Facilities hereunder, and (d) whether or not
any Event of Default is then occurring under any of the Loan Documents and, if
so, specifying each such Event of Default of which the signer may have
knowledge, and (e) whether or not any Borrower is then entitled to assert any
claims, defenses or causes of action that would impose any liability upon
Lender or that would otherwise challenge the enforceability any Loan Document
or any provision thereof (including, the existence of any so-called “Lender
Liability” claims or defenses). Unless such Borrower otherwise consents (which
consent will not be unreasonably withheld, delayed or conditioned), Lender must
give such Borrower at least 10 Business Days to complete and deliver any such
certificate. Each Borrower understands and agrees that any such certificate
delivered pursuant to this Section may be relied upon by Lender and, if
different, by the recipient thereof.




                4.13.4       Waivers and Consents. At any time upon Lender’s request, each
Borrower will use its best efforts to obtain and deliver (in form and substance
reasonably satisfactory to Lender) a waiver or consent to the assignment to
Lender of any contract, lease, Authorization or other agreement to which it is
a party.




                4.13.5       Access and Audits. Lender (from time to time at its discretion)
may conduct audits of the Collateral and of the performance and operations of
any Borrower. Each Borrower (upon Lender’s request from time to time) will use
its best efforts to provide Lender (and its representatives and agents) with
reasonable access during normal business hours to such Borrower’s management
personnel, books and records, property and operations (including its financial
records), whether such property, books and records are in the possession of
such Borrower or are in the possession of a third party (including the
possession of such Borrower’s Affiliates, accountants and legal counsel). In
connection with any such audit, Lender may also make notes and copies of (and
extracts from) relevant records.




                4.13.6       Attendance at Board of Directors Meetings. Lender (from time to
time at its discretion) may attend any or all meetings of the board of
directors of any Borrower (including the meetings of any committees or
sub-committees thereof) as an observer only. Borrowers will provide Lender
with written notice thereof at least 3 Business Days prior to each such
meeting. Notwithstanding the foregoing, at the request of Borrowers,
representatives of Lender will temporarily leave a meeting of the board of
directors if such action is necessary to preserve the Borrowers’
attorney-client privilege with respect to such meetings or the information
disseminated therein.




     4.14       Costs and Expenses. Borrowers will pay or reimburse Lender for all
reasonable fees and costs (including all reasonable attorneys’ fees and
disbursements) that Lender may pay or incur in connection with (a) the initial
and continuing perfection or protection of Lender’s interest in any of the
Collateral, and (b) the collection or enforcement of any of the Loan Documents.
Borrowers will pay any and all recordation taxes or other fees due upon the
filing of the financing statements or documents of similar effect required to
be filed under the Loan Documents, and will provide Lender with a copy of any
receipt or other evidence reflecting such payments. All obligations provided
for


17






 




 in this Section shall survive the termination of this Agreement and/or the
repayment of indebtedness hereunder.


     4.15       Maintenance of Domain Names. Borrowers will properly register,
preserve and maintain with Network Solutions, Inc. (or an appropriate successor
thereto) Internet domain names and URL’s that correspond with each legal,
operating and trade name of any Borrower.


     4.16       Other Information. Each Borrower will provide Lender with any other
documents and information (financial or otherwise) reasonably requested by
Lender or its counsel from time to time.


ARTICLE 5: NEGATIVE COVENANTS



     Each Borrower (jointly and severally) hereby covenants and agrees that, so
long as any indebtedness remains outstanding hereunder, each Borrower will
comply with the following negative covenants (unless Lender otherwise consents
in writing, which consent will not be unreasonably withheld while no Event of
Default is occurring):


     5.1       Capital Expenditures. Borrowers (on a consolidated basis) will not
incur Capital Expenditures in any fiscal year in excess of $100,000.


Notwithstanding the foregoing, no Borrower may make any such Capital
Expenditure to acquire all or any substantial portion of the assets or equity
of another business enterprise.


     5.2       Additional Indebtedness. No Borrower will borrow any monies or
create, incur, assume or permit to exist any additional indebtedness,
obligations or liabilities (including monetary obligations evidenced by a
promissory note and monetary obligations under non-compete and consulting
arrangements) except as follows (collectively, the “Permitted Indebtedness”):





                 a.       Borrowings from Lender hereunder; and


                 b.       Trade indebtedness, if and to the extent (i) such indebtedness is
incurred in the normal and ordinary course of business for value received and
(ii) such indebtedness (to the extent it exceeds $10,000 to any single vendor)
is paid on a current basis or is less than 90 calendar days past due; and


                 c.       Indebtedness and obligations incurred under Capital Leases, consistent
with the restrictions in Section 5.1 and Section 5.5, provided, however, that
(1) the aggregate amount of such Capital Lease indebtedness outstanding at any
time may not exceed $150,000, and (2) such fixed or capital assets being leased
may not constitute any asset the loss of which could reasonably be expected to
have or cause a Material Adverse Effect; and


                 d.       Indebtedness in favor of another Borrower if and to the extent
permitted under Section 5.4(c); and


                 e.       Such indebtedness listed on Schedule 5.2 with the prior written consent
of Lender (which consent will not be unreasonably withheld by Lender while no
Event of Default is occurring).



     5.3       Guaranties. No Borrower will guarantee, assume or otherwise be or
agree to become liable in any way, either directly or indirectly, for any
additional indebtedness or liability of any other



18






 




 Person, except as follows (collectively, the “Permitted Guaranties”): (a)
in favor of Lender, or (b) to endorse checks, drafts and negotiable instruments
for collection in the ordinary course of business, or (c) as listed on Schedule
5.3 with the consent of Lender, or (d) to the extent that Lender otherwise
consents in writing.


     5.4       Loans. No Borrower will make any loans or advances to any other
Person, except as follows (collectively, the “Permitted Loans”): (a) loans to
employees that do not exceed $5,000 to any individual employee and do not at
any time in the aggregate outstanding exceed $25,000 among all such loans to
all such employees, and (b) as listed on Schedule 5.4 with the consent of
Lender, and (c) demand loans to other Borrowers that are appropriately
reflected on each Borrower’s financial records and evidenced by a written
promissory note assigned to Lender as additional Collateral.


     5.5       Liens and Encumbrances; Negative Pledge. No Borrower will create,
permit or suffer the creation or existence of any Liens on any of its property
or assets (real or personal, tangible or intangible), except as follows
(collectively, the “Permitted Liens”):





                 a.       Liens in favor of Lender as security for the Obligations under the Loan
Documents; and


                 b.       Liens for taxes, assessments or other governmental charges (federal,
state or local) that are not yet delinquent or that are then being currently
contested in good faith by appropriate proceedings diligently prosecuted,
provided, however, that (1) the existence of such Liens and challenge of such
charges must have been fully disclosed to Lender, and (2) adequate reserves
therefor in accordance with GAAP must have been established, and (3) such Liens
(in Lender’s reasonable opinion) could not reasonably be expected to have or
cause a Material Adverse Effect; and


                 c.       Deposits in the ordinary course of business to secure obligations under
workmen’s compensation, unemployment insurance or social security laws or
similar legislation; and


                 d.       Deposits to secure performance or payment bonds, bids, tenders,
contracts, leases, franchises or public and statutory obligations required in
the ordinary course of business; and


                 e.       Deposits to secure surety, appeal or custom bonds required in the
ordinary course of business; and


                 f.       Liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not past due or for sums
being currently contested in good faith by appropriate proceedings diligently
prosecuted, provided, however, that (1) the existence of such Liens and
challenge of such sums allegedly due must have been fully disclosed to Lender,
and (2) adequate reserves therefor in accordance with GAAP must have been
established, and (3) such Liens (in Lender’s reasonable opinion) could not
reasonably be expected to have or cause a Material Adverse Effect; and


                 g.       Easements, rights-of-way, restrictions and other similar encumbrances
on real property of a Borrower that, independently and in the aggregate, do not
(1) materially interfere with the occupation, use or enjoyment by such Borrower
of the property or assets encumbered thereby in the normal course of business
or (2) materially impair the value of the property subject thereto; and



19






 



                 h.       Liens listed on Schedule 5.5 with the consent of Lender (which consent
will not be unreasonably withheld by Lender while no Event of Default is
occurring).


No Borrower will similarly covenant to or in favor of any other Person that it
will not create, permit or suffer the creation or existence of any Liens on any
of its property or assets. In addition, no Borrower will purchase or otherwise
acquire any additional assets (including any leasehold interest therefor)
unless Lender’s interest in such property either (a) is already covered and
perfected pursuant to an existing and effective UCC-1 or PPSA financing
statement, CCQ hypothec filing, fixture filing, mortgage and/or leasehold
mortgage (as appropriate) in favor of Lender or (b) otherwise becomes properly
perfected within 5 calendar days after any such acquisition by such Borrower’s
filing (at its expense) all necessary UCC-1 or PPSA financing statements, CCQ
hypothec filing, fixture filings, mortgages and/or leasehold mortgages (as
appropriate, and in form and substance reasonably acceptable to Lender).
Moreover, no Borrower will establish or maintain any “securities account” with
any “securities intermediary” (as such terms are defined in Article 8 of the
UCC) except as permitted under Section 5.7.


     5.6       Transfer of Assets. No Borrower will sell, lease, license, transfer
or otherwise dispose of all or substantially all of its assets. In addition,
no Borrower will sell, lease, license, transfer or otherwise dispose of any of
its assets other than as follows (collectively, the “Permitted Transfers”):
(a) pursuant to a transaction with an unrelated third party in the normal and
ordinary course of business for value received and otherwise in accordance with
the terms hereof or (b) with respect to obsolete or replaced equipment no
longer useful in the operation of any Borrower’s business, pursuant to a
reasonable and customary transaction with an unrelated third party and
otherwise in accordance with the terms hereof, (c) pursuant to a reasonable and
customary transaction with another Borrower that is appropriately reflected on
each Borrower’s financial records, and (d) as set forth on Schedule 1.1.6.


     5.7       Acquisitions and Investments. No Borrower will purchase or otherwise
acquire (including by way of share exchange) any part or amount of the equity
ownership or assets of, or make any investments in, any other corporation,
partnership, limited liability company or other venture or enterprise.
Notwithstanding the foregoing, Borrowers may acquire or invest in the following
(collectively, the “Permitted Investments”):




                 a.       Government and agency securities backed by the full faith and credit of
the U.S. or Canadian federal government; and


                 b.       Commercial paper of a U.S. or Canadian domestic issuer rated A-1+ or
A-1 by Standard & Poor’s Ratings Group or P-1 by Moody’s Investor Services,
Inc. and maturing not more than 90 calendar days from the date of acquisition
thereof; and


                 c.       Certificates of deposit (maturing within 12 calendar months after the
date of issuance), time deposits, other deposits and bankers’ acceptances
issued by or established with U.S. or Canadian federally insured commercial
banks rated as “well capitalized” by their primary federal regulators, and
having unimpaired capital and unimpaired surplus (collectively) of at least
$250 million, and whose commercial paper (or commercial paper that is supported
by such bank’s letter of credit or commitment to lend) is rated as A-1+ or A-1
by Standard & Poor’s Ratings Group or P-1 by Moody’s Investor Services, Inc.;
and


20






 



                 d.       Assets acquired pursuant to transactions permitted under Section 5.1 or
Section 5.2; and


                 e.       Inventory, office equipment (not constituting Capital Expenditures),
and operating supplies acquired in the ordinary course of business; and


                 f.       Investments listed on Schedule 5.7 with the consent of Lender (which
consent will not be unreasonably withheld by Lender while no Event of Default
is occurring).


Notwithstanding the foregoing, unless and to the extent such investments are
certificated and separately collaterally assigned to Lender, then the amounts
of investments permitted under Clauses “a”, “b” and “c” of this Section may not
at any time exceed $1,000,000. In addition, no Borrower will establish or
maintain any “securities account” with any “securities intermediary” (as such
terms are defined in Article 8 of the UCC), unless a control agreement
acceptable in form and substance to Lender is first executed by such
“securities intermediary” securing Lender’s first priority interest and rights
in and to all “financial assets” and “security entitlements” associated with
such “securities account”.


     5.8       New Ventures; Mergers. No Borrower will (a) enter into any new
business activities or ventures not directly related to its current business,
or (b) except as contemplated by the Merger Agreement, merge or consolidate
with or into any other corporation, partnership, limited liability company or
other organization, or (c) create or acquire (or cause or permit the creation
or acquisition of) any Subsidiary or Affiliate (except the hiring of officers
and directors).


     5.9       Transactions with Affiliates. No Borrower will enter into any
transaction or agreement with any Subsidiary, Affiliate or other related Person
except as follows: (a) reasonable and customary compensation arrangements in
the ordinary course of business with its officers and directors, and (b)
guaranties (if any) to the extent permitted by Section 5.3, and (c) employee
loans (if any) to the extent permitted under Section 5.4, and (d) reasonable
and customary asset transfers among Borrowers (if any) to the extent permitted
under Section 5.6, and (e) transactions in the ordinary course of business
between Borrowers.


     5.10       Distributions or Dividends. No Borrower will declare or make
(directly or indirectly) any payment or distribution with respect to, or incur
any liability for the purchase, acquisition, redemption or retirement of, any
of its equity interests (including warrants therefor) or as a dividend, return
of capital or other payment or distribution of any kind to any holder of any
such equity interest.


     5.11       Issuance of Additional Equity. No Borrower will permit the issuance,
reissuance, conversion or exercise of any equity interests (common stock,
preferred stock, partnership interests, member interests or otherwise) or any
options, warrants, convertible securities or other rights to purchase such
beneficial or equity interest. Notwithstanding the foregoing, a Borrower may
issue additional equity interests as a result of the conversion of the options
and warrants outstanding on the Closing Date and described on Schedule 3.6,
provided that: (a) such Borrower has provided written notice thereof to Lender
at least 15 Business Days prior to such issuance (which notice must at least
describe the type and amount of equity interests being purchased, the
consideration to be received by such Borrower in exchange for such issuance,
and the identity of the purchaser), and (b) no Default or Event of Default then
exists under the Loan Documents or would otherwise result from the issuance of
such equity interest (including a Event of Default under the change in control
restrictions set forth in Section 7.1.8).


21






 


     5.12       Removal of Assets. No Borrower will remove or permit the removal of
any asset or group of assets (with a collective fair market value exceeding
$10,000) to a jurisdiction or a county in which no financing statement on Form
UCC-1 has been filed naming Lender as “secured party” with respect to such
assets.


     5.13       Modifications to Organic Documents. No Borrower will (a) amend or
otherwise modify any of its Organic Documents, or (b) change its official name,
its operating names or the names under which it executes contracts and conducts
business.


     5.14       Terms of and Modifications to Material Relationships. Each Borrower
will use its best efforts not to permit any other party to cancel, terminate,
amend, modify or otherwise alter any Material Contract listed (or contract that
should be listed) on Schedule 3.8. In addition, each Borrower will use its
best efforts to ensure that no Material Contract entered into by any Borrower
after the Closing Date (including the renewal or extension of any Material
Contract existing as of the Closing Date) will restrict any Borrower’s ability
to collaterally assign or encumber such Material Contract in favor of Lender.


ARTICLE 6: RIGHT OF SET OFF



     6.1       Right of Set Off. Lender is hereby authorized at any time and from
time to time during the existence of an Event of Default hereunder (unless
expressly prohibited by applicable law) to set off and apply any and all
deposits (general or special, time or demand, provisional or final) and other
indebtedness at any time held or owing by Lender (or any of its Affiliates) to
or for the credit or the account of any Borrower against any and all of the
indebtedness and monetary obligations of any Borrower now or hereafter existing
under the Loan Documents or any other evidence of indebtedness originated,
acquired or otherwise held by Lender, irrespective of whether Lender shall have
made any demand under the Loan Documents or other indebtedness and although
such obligations may be unmatured. Lender agrees to notify Borrowers within a
commercially reasonable time after any such set off and application made by
Lender; provided, however, that the failure to give such notice shall not in
any way affect the validity of such set off and application.


     6.2       Additional Rights. The rights of Lender under this Article 6 are in
addition to the other rights and remedies (including other rights of set off)
that Lender may have by contract, at law, or otherwise.


ARTICLE 7: DEFAULT AND REMEDIES



     7.1       Events of Default. Each of the following events separately
constitutes an independent Event of Default hereunder:





                7.1.1       Payment Obligations. If any payment of principal, interest, fees,
expenses, indemnities or other sums payable to Lender under any Loan Document
(including under any Note) is not received by Lender in immediately available
funds on the date such payment is due and payable and such failure to receive
payment in immediately available funds continues for a period of five (5)
Business Days after the due date therefor.




                7.1.2       Representations and Warranties. If any representation, warranty or
other statement made in any Loan Document, or in any written report, schedule,
exhibit, certificate, agreement, or other document given by or on behalf of any
Borrower or any other Obligor (or



22






 




otherwise furnished in connection herewith) when made was misleading or
incorrect in any material respect.




                7.1.3       Termination of Merger Agreement. If the Merger Agreement is
terminated without completion of the Plan of Arrangement contemplated
thereunder.




                7.1.4       Other Covenants in Loan Documents. If any Borrower or any other
Obligor defaults in the full and timely performance when due of any other
covenant or agreement contained in any Loan Document (or in any other document
or agreement now or hereafter executed or delivered in connection herewith),
and such default remains uncured for a period of twenty (20) Business Days
after the earlier of the date that Lender notifies any Borrower thereof or the
date that any Borrower otherwise acquires knowledge or should have acquired
knowledge thereof.




                7.1.5       Default Under Other Agreements with Lender. If any event of default
(as described or defined therein, which term shall include any notice and cure
periods provided therein) occurs or exists under the provisions of any other
credit agreement, security agreement, mortgage, deed of trust, indenture,
debenture, cash management or account agreement, contract, lease or other
agreement between any Borrower, any Affiliate of any Borrower or any other
Obligor and Lender (or any Affiliate of Lender), unless such default is waived
by Lender or cured to Lender’s satisfaction.




                7.1.6       Default Under Material Agreements with Other Parties. If any
Borrower fails or refuses to make any one or more required payments (whether
principal, interest or otherwise) aggregating in excess of $100,000 with
respect to any Funded Debt (or with respect to any guaranty or reimbursement
obligation of any such indebtedness) prior to the expiration of any applicable
grace period with respect to such payment, or if any such indebtedness for
borrowed money in excess of $100,000 is accelerated prior to its express
maturity as a result of any default thereunder, or if any event of default (as
described or defined therein, which term shall include any notice and cure
periods provided therein) occurs or exists under the provisions of any Material
Contract (including those listed on Schedule 3.8 or that should be listed on
Schedule 3.8 under the terms hereof).




                7.1.7       Intentionally Blank.




                7.1.8       Change of Control. Except as contemplated by the Merger Agreement,




                               a.       If there occurs any direct or indirect change in the ownership (i.e.
any change exceeding 25% of the voting or beneficial interest for such
structure as of the Closing Date) or in the control of any Borrower.


                               b.       If Steve Forget ceases to be chief executive officer of Helix, unless
(1) such event is by reason of his or her death or disability and (2)
replacement management arrangements satisfactory to Lender (in its sole and
absolute discretion) are made within 60 calendar days after such death or
within 120 calendar days after the commencement of such period of disability.



                7.1.9       Government Action.





                               a.       If custody or control of any substantial part of the property of any
Borrower is assumed by any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency.



23






 






                                 b.       If any governmental regulatory authority or judicial body makes any
other final non-appealable determination that (in Lender’s reasonable judgment)
could reasonably be expected to have or cause a Material Adverse Effect.




                7.1.10       Insolvency. If any Borrower or any holder of equity interests of
any Borrower (whether as common stock, preferred stock, partnership interest,
membership interest or otherwise) or any other Obligor that pledges Collateral
under the Loan Documents or that is directly or indirectly liable (in whole or
in part) to Lender for indebtedness hereunder (a) becomes insolvent, bankrupt
or generally fails to pay its, his or her debts as such debts become due; or
(b) is adjudicated insolvent or bankrupt in any proceeding; or (c) admits in
writing an inability to pay its, his or her debts; or (d) comes under the
authority of a custodian, receiver, administrator, monitor, or trustee (or one
is appointed for substantially all of its, his or her property); or (e) makes
an assignment for the benefit of creditors; or (f) has commenced against it,
him or her any proceedings under any law related to bankruptcy, insolvency,
liquidation, dissolution or the reorganization, readjustment or release of
debtors that is either not contested or if contested is not dismissed or stayed
within thirty (30) calendar days after the commencement thereof; or (g)
commences or institutes any proceedings under any law related to bankruptcy,
insolvency, liquidation, dissolution or the reorganization, readjustment or
release of debtors; or (h) calls a meeting of creditors with a view to
arranging a composition or adjustment of debt; or (i) by any act or failure to
act that indicates consent to, approval of or acquiescence in any of the
foregoing.



                7.1.11       Additional Liabilities. If any judgment, writ, warrant, attachment
or execution or similar process that calls for payment or presents liability in
excess of $100,000 is rendered, issued or levied against any Borrower or any of
its properties or assets and such liability is not paid, waived, stayed,
vacated, discharged, settled, satisfied or fully bonded within thirty (30)
calendar days after it is rendered, issued or levied.




                7.1.12       Material Adverse Change. If Lender determines in good faith that a
Material Adverse Change has occurred with respect to any Borrower from the
condition set forth in the financial statements furnished to Lender for the
fiscal year ended immediately prior to the Closing Date, or from the condition
of any Borrower most recently disclosed to Lender in any other manner.



     7.2       Remedies.





                7.2.1       Acceleration, Termination and Pursuit of Collateral. At any time
during the existence of any Event of Default, at the election of Lender but
with notice thereof to any Borrower (unless an Event of Default described in
Section 7.1.10 has occurred, in which case acceleration will occur
automatically with respect to the entire indebtedness and without any notice),
then Lender (a) may terminate any or all Commitments and/or facilities, and/or
(b) may accelerate the Term Loan Maturity Date, and/or (c) may declare all or
any portion of the indebtedness of any or all Borrowers to Lender (hereunder or
otherwise, and including all principal, interest, fees, expenses and
indemnities hereunder) to be immediately due and payable. At any time during
the existence of any Event of Default, Lender will also have the immediate
right to enforce and realize upon any collateral or security granted under any
Loan Document in any manner or order that Lender deems expedient without regard
to any equitable principles of marshalling or otherwise. Notwithstanding the
foregoing (unless an Event of Default described in Section 7.1.10 has occurred,
in which case acceleration will occur automatically with respect to the entire
indebtedness and without any notice), in the case of an Event of Default under
Section 7.1.3, Lender agrees not to exercise is rights under clauses (b) or (c)
above or to enforce or realize upon any collateral or security granted under
any


24






 



Loan Document until (i) if such Event of Default is caused by the
termination of the Merger Agreement for any reason other than the reasons set
forth in Sections 4.1(e) or (f) thereof, 180 days after such Event of Default;
and (ii) if such Event of Default is caused by the termination of the Merger
Agreement for the reasons set forth in Sections 4.1(e) or (f) thereof, 365 days
after such Event of Default; provided, however, that nothing in this Section
7.2.1 shall extend the Term Loan Maturity Date.




                7.2.2       Other Remedies. In addition to the rights and remedies expressly
granted in the Loan Documents, Lender also will have all other legal and
equitable rights and remedies granted by or available under all applicable law
(including the “self help” and other rights of a secured party under the UCC,
PPSA or CCQ, as applicable), and all rights and remedies will be cumulative.


ARTICLE 8: DEFINITIONS AND RULES OF CONSTRUCTION



     8.1       Definitions. When used in this Agreement, the following terms shall
have the respective meanings set forth below:





                8.1.1       “Account” means, at any relevant time, the designated account of
Borrowers at Lender for purposes of effecting transactions hereunder.




                8.1.2       “Advance” means any advance of funds under any Facility.




                8.1.3       “Advance Request” has the meaning set forth in Section 1.3.1.




                8.1.4       “Affiliate” of any Person means any other Person that directly or
indirectly controls, is controlled by or is under direct or indirect common
control with such Person. A Person shall be deemed to “control” another Person
if such first Person directly or indirectly possesses the power to direct (or
to cause the direction of or to materially influence) the management and
policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise. Without limiting the generality of the
foregoing, each of the following Persons will be deemed to be an Affiliate of a
Person: (a) each Person who owns or controls 5% or more of any class or series
of any equity interest of such Person, and (b) each member, manager, partner,
director and/or senior executive officer of such Person or any Affiliate
thereof, and (c) any family member or other relative of such Person or any
Affiliate thereof, and (d) any trust of which any Person or Affiliate thereof
is either a trustee or beneficiary. Notwithstanding the foregoing, Lender
shall not be deemed to be an Affiliate of any Obligor.




                8.1.5       “Agreement” means this Credit Agreement and all the exhibits and
schedules hereto, all as may be amended and otherwise modified from time to
time hereafter.




                8.1.6       “Authorized Officer” means any officer, employee or representative
of such organization who is expressly designated as such or is otherwise
authorized to borrow funds hereunder or, as appropriate, to sign loan documents
and/or deliver certificates on behalf of such organization pursuant to the
provisions of such organization’s most recent resolution on file with Lender.




                8.1.7       “Authorization“means any License or other governmental permit,
certificate and/or approval issued by any Official Body.



25






 





                8.1.8       “Business Day” means any day that is not a Saturday, a Sunday or a
day on which banks under the laws of the State of New York are authorized or
required to be closed.




                8.1.9       “Capital Expenditures” means expenditures (a) for any fixed assets
or improvements, replacements, substitutions or additions thereto that have a
useful life of more than one (1) year, including direct or indirect acquisition
of such assets or (b) for any Capital Leases.




                8.1.10       “Capital Leases” means capital leases and subleases as defined in
the Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 13 dated November 1976 (as amended and updated from time to
time).



                8.1.11       “Closing Date” means the date on which all conditions precedent to
the effectiveness of this Agreement under Section 2.1 have been satisfied or
waived by Lender.




                8.1.12       “CCQ” means the Civil Code (Quebec), and all regulations
thereunder, as amended from time to time, and any successor legislation.




                8.1.13       “Code” means the Internal Revenue Code of 1986, as amended.




                8.1.14       “Collateral” means the collateral security committed to Lender
under the Collateral Security Documents executed by any Borrower or any other
Obligor in favor of Lender pursuant to this Agreement from time to time and/or
pursuant to all similar or related documents and agreements from time to time,
all as amended from time to time.



                8.1.15       “Collateral Security Documents” means, individually and
collectively, (a) the Security Agreements and the financing statements filed
pursuant thereto, and (b) the Pledge and Security Agreements, and (c) any
additional documents guaranteeing indebtedness, assuring performance of
obligations, subordinating indebtedness, or granting security or Collateral to
Lender hereunder, all as amended from time to time.




                8.1.16       “Commitment” means any commitment for credit pursuant to a facility
established hereunder.



                8.1.17       “Default” means any event or circumstance that with the giving of
notice or the passage of time would constitute an Event of Default.




                8.1.18       “Dollar” or “$” means U.S. dollars.




                8.1.19       “EBITDA” means, at the time of any determination, the sum of the
following items (without duplication) for Borrowers during the relevant four
consecutive fiscal quarter period:



                                 a.       Net income from continuing operations (on a consolidated basis) during
such period — i.e., excluding extraordinary gains and income items and the
cumulative effect of accounting changes and income associated with transactions
with Affiliates or for which payment is received in a form other than cash or
cash equivalents — determined in accordance with GAAP, and



                                 b.       Plus Interest Expense during such period, but subtract interest income
accrued during such period, and


26






 




                                 c.       Plus federal and state income taxes paid or required to be paid / paid
and accrued in accordance with GAAP / all provisions for federal, state and
other taxes based upon income of Borrowers during such period, and



                                 d.       Plus depreciation permitted under GAAP during such period, and



                                 e.       Plus amortization expense permitted under GAAP during such period.


                                 f.       For purposes of this calculation, interest shall include interest
accrued under Capital Leases, determined in accordance with GAAP.




                8.1.20       “Environmental Control Statutes” means all federal, provincial,
state and local laws, rules, ordinances and regulations (as implemented and as
interpreted) governing the control, removal, storage, transportation, spill,
release or discharge of hazardous or toxic wastes, substances and petroleum
products, including, without limitation, as provided in the provisions of (a)
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendment and Reauthorization Act of 1986,
and (b) the Solid Waste Disposal Act, and (c) the Clean Water Act, and (d) the
Clean Air Act, and (e) the Hazardous Materials Transportation Act, and (f) the
Resource Conservation and Recovery Act of 1976, and (g) the Federal Water
Pollution Control Act Amendments of 1972, and (h) the rules, regulations and
ordinances of the EPA, and any provincial or state departments of health
services, regional water quality control boards, state water resources control
boards, provincial and/or cities in which any of such Borrower’s assets are
located.




                8.1.21       “EPA” means the United States Environmental Protection Agency or
any other entity that succeeds to its responsibilities and powers.




                8.1.22       “Equivalent Amount” means, on any date, the amount of U.S. dollars
into which an amount of Cdn. dollars may be converted or the amount of Cdn.
dollars into which an amount of U.S. dollars may be converted, in either case,
at Lender’s spot buying rate in Toronto as at approximately 12:00 noon (Local
Time) on such date.




                8.1.23       “ERISA” means the Employee Retirement Income Security Act of 1974
and any corresponding applicable law of federal, state, provincial or foreign
jurisdiction, or any corresponding or succeeding provisions or such other
applicable law, in each case, as amended, and as implemented and interpreted.




                8.1.24       “ERISA Affiliate” means any company, whether or not incorporated,
which is considered a single employer with Borrower under Titles I, II and IV
of ERISA.




                8.1.25       “Event of Default” means each of the events described in Section
7.1.




                8.1.26       “Excess Cash Flow” means, at the time of any determination, the sum
of the following items (without duplication) for Borrowers during the relevant
period:



                                 a.       EBITDA for such period, and




                                 b.       Minus Total Charges for such Period.


27






 





                8.1.27       “Final Term Loan Draw Date” has the meaning set forth in Section
1.1.1, as may be extended from time to time in Lender’s sole and absolute
discretion.




                8.1.28       “Fixed Charges” means, at the time of any determination, the sum of
the following items (without duplication) for Borrowers during the relevant
four consecutive fiscal quarter periods:



                                 a.       The amount of principal required to be paid under this Agreement during
such period, and



                                 b.       Plus the amount of principal paid or required to be paid and mandatory
commitment reductions on other Funded Debt (i.e., Funded Debt other than under
this Agreement) during such period, and



                                 c.       Plus Interest Expense during such period, and



                                 d.       Plus (to the extent not already included under one of the other
categories of Fixed Charges) the amount of payments made or required to be made
with respect to non-complete and consulting agreements during such period, and



                                 e.       Plus the amount of Capital Expenditures during such period.


For purposed of this calculation, interest includes interest accrued under
Capital Leases, and principal includes principal obligations under Capital
Leases.





                8.1.29       “Funded Debt” means, at the time of any determination, the
aggregate principal amount of indebtedness of all Borrowers (on a consolidated
basis) for the following (without duplication):



                                 a.       Borrowed money (including the indebtedness under the Loan Documents,
but not including trade indebtedness permitted under Section 5.2.b); and



                                 b.       Capital Leases; and



                                 c.       Deferred purchase price or installment purchases of real property,
personal property, and/or services (including any deferred purchase price
and/or non-compete obligations in connection with acquisitions); and


                                 d.       Reimbursement obligations under letters of credit (whether standby or
documentary); and



                                 e.       Obligations under interest rate protection or swap arrangements,
repurchase arrangements and other derivative transactions; and



                                 f.       Any indebtedness or contractual payment obligation that is not paid
within 60 calendar days of the due date therefor; and



                                 g.       Any indebtedness evidenced by a promissory note; and



28






 




                                 h.       Any obligation secured by a Lien on any asset of any Borrower; and



                                 i.       Guaranties of indebtedness and obligations that would constitute Funded
Debt hereunder if the primary obligor thereof were a Borrower; and



                                 j.       Indebtedness otherwise required to be included as part of “Funded Debt”
under Section 5.2.



                8.1.30       “GAAP” means generally accepted accounting principles applied on a
consistent basis set forth in the Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and similar Canadian entities, as
applicable, and/or in such other statements by such other entity as Lender may
reasonably approve, which are applicable in the circumstances as of the date in
question, and the requirement that such principles be applied on a consistent
basis shall mean that the accounting principles observed in a current period
are comparable in all material respects to those applied in preceding periods.




                8.1.31       “Hazardous Materials” includes (a) any “hazardous waste” as defined
by the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et
seq.), as amended from time to time, and regulations promulgated thereunder; or
(b) any “hazardous substance” as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), as
amended from time to time, and regulations promulgated thereunder; or (c) any
other substance the use or presence of which on, in, under or above any real
property ever owned, controlled or used by Borrower is similarly regulated or
prohibited by any federal, state, provincial, or local law, rule, ordinance,
regulation or decree of any court or governmental authority as a hazardous
material.




                8.1.32       “Interest Expense” means, at the time of any determination, the
amount of interest and other finance charges of Borrowers (on a consolidated
basis) required to be charged as an expense under GAAP during the relevant four
consecutive fiscal quarter period. For purposes of this calculation, interest
includes interest accrued under Capital Leases.




                8.1.33       “Lender” means HEARx Ltd., or any successor thereof, or any
assignee, participant, pledgee or other transferee of Lender hereunder.




                8.1.34       “License” means any authorization, construction or other permit,
consent, franchise, ordinance, registration, certificate, license, call sign,
frequency designation, agreement or other right filed with, granted by, issued
by or entered into with any Official Body.




                8.1.35       “Lien” means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise), reversionary or reclamation interest, charge against or interest in
property to secure payment of a debt or performance of an obligation or other
priority or preferential arrangement of any kind or nature whatsoever.



                8.1.36       “LLC” means a limited liability company.




                8.1.37       “Loan” means any loan or Advance of funds under any Facility as
well as any other credit extended by Lender to any Borrower under this
Agreement.


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                8.1.38       “Loan Documents” means this Agreement, any Notes, the Collateral
Security Documents and any other documents, agreements and certificates entered
into or delivered in connection herewith or therewith or pursuant hereto or
thereto, all as may be amended, modified and supplemented from time to time.




                8.1.39       “Local Authorities” means, individually and collectively, the
state, provincial, and local governmental authorities that govern the
activities of any Borrower.




                8.1.40       “Material Adverse Change” means any change that has or causes or
could reasonably be expected to have or cause a Material Adverse Effect.




                8.1.41       “Material Adverse Effect” means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration, or governmental investigation or proceeding), a material adverse
change to, or, as the case may be, a materially adverse effect on:



                                 a.       The business, assets, revenues, financial condition, operations,
Collateral or prospects of any Borrower or other Obligor; or


                                 b.       The ability of any Borrower to perform any of its payment obligations
when due or to perform any other material obligations under any Loan Document;
or



                                 c.       Any right, remedy or benefit of Lender under any Loan Document, except
for any such right, remedy or benefit that may be prohibited by applicable law.




                8.1.42       “Material Contract” has the meaning set forth in Section 3.8.




                8.1.43       “Merger Agreement” means the Amended and Restated Merger Agreement
dated as of November 6, 2001, by and between Helix and Lender (as may be
amended, modified, supplemented, restated, extended, renewed or replaced from
time to time).





                8.1.44       “Notes” means, individually and collectively, each promissory note
delivered to Lender pursuant to any Loan Document and evidencing any
indebtedness to Lender under the Loan Documents (each as may be amended,
modified, supplemented, restated, extended, renewed or replaced from time to
time).



                8.1.45       “Obligations” means all of the indebtedness and obligations
(monetary or otherwise) of any Borrower and any other Obligor arising under or
in connection with any Loan Document as well as all indebtedness and
obligations (monetary or otherwise) of any Affiliate of any Borrower or other
Obligor arising under or in connection with any agreement between any such
Affiliate and Lender or any Affiliate of Lender.




                8.1.46       “Obligor” means each Borrower or any other Person (other than
Lender) obligated under any Loan Document.




                8.1.47       “Official Body” means any federal, state, local, provincial, or
other government (or any political subdivision, agency, authority, bureau,
commission, department or instrumentality thereof) and any court, tribunal,
grand jury or arbitrator, in each instance whether foreign or domestic.


30






 







                8.1.48       “Operating Agreement” means any consulting agreement, management
agreement, employment agreement, cost allocation agreement, or other similar
agreement relating to the operations of any Borrower.




                8.1.49       “Organic Document” means, relative to any entity, its certificate
and articles of incorporation or organization, its by-laws or operating
agreements, and all equityholder agreements, voting agreements and similar
arrangements applicable to any of its authorized shares of capital stock, its
partnership interests or its member interests, and any other arrangements
relating to the control or management of any such entity (whether existing as a
corporation, a partnership, an LLC or otherwise).




                8.1.50       “PBGC” means the Pension Benefits Guaranty Corporation or any other
entity that succeeds to its responsibilities and powers under ERISA.




                8.1.51       “Permitted Guaranties” has the meaning set forth in Section 5.3.




                8.1.52       “Permitted Indebtedness” has the meaning set forth in Section 5.2.




                8.1.53       “Permitted Investments” has the meaning set forth in Section 5.7.




                8.1.54       “Permitted Liens” has the meaning set forth in Section 5.5.




                8.1.55       “Permitted Loans” has the meaning set forth in Section 5.4.




                8.1.56       “Permitted Transfers” has the meaning set forth in Section 5.6.




                8.1.57       “Person” means any natural person, corporation, LLC, partnership,
firm, association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.



                8.1.58       “Plan” means any employee pension benefit or welfare benefit plan
as defined in Sections 3(1), (2) or (3) of ERISA or as defined in the
applicable laws of any other jurisdiction covering employees of any Borrower or
any ERISA Affiliate of any Borrower.




                8.1.59       “Pledge and Security Agreements” means, individually and
collectively, each pledge and security agreement relating to a pledge of an
equity interest in an enterprise (all as may be amended, modified and
supplemented from time to time) required to be executed and delivered in favor
of Lender pursuant to the Loan Documents.




                8.1.60       “PPSA” means the Personal Property Security Act (Ontario) and all
regulations thereunder, as amended from time to time, and any successor
legislation.




                8.1.61       “Prime Rate” means the rate of interest per annum publicly
announced from time to time by Citibank, N.A. as its prime rate in effect at
its principal office in New York City.




                8.1.62       “Revenue” means revenue of Borrowers (on a consolidated basis) as
determined in accordance with GAAP.



31






 





                8.1.63       “SEC” means the Securities and Exchange Commission or any other
entity that succeeds to its responsibilities and powers.




                8.1.64       “Securities Acts” means, collectively, the Securities Act of 1933
and the Securities Exchange Act of 1934, each as amended, and as implemented by
the SEC and interpreted by the SEC or any court of competent jurisdiction.




                8.1.65       “Security Agreements” means, collectively, each security agreement
(as may be amended, modified and supplemented from time to time) required to be
executed and delivered in favor of Lender pursuant to Article 2, and any other
security agreement required or delivered in connection with the Loan Documents,
including any intellectual property assignments or security agreements required
to be delivered pursuant to Article 2.




                8.1.66       “Settlement Date” means, with respect to any Advance hereunder, the
date on which funds are advanced by Lender.




                8.1.67       “Subsidiary” of any Person or entity means any Person as to which
such other Person or entity (a) directly or indirectly owns, controls or holds
25% or more of the outstanding beneficial interest or (b) is otherwise required
in accordance with GAAP to be considered as part of a consolidated
organization.




                8.1.68       “Term Loan Commitment” means the Commitment established pursuant to
Section 1.2.




                8.1.69       “Term Loan Facility” means the term loan Facility as described in
Article 1.




                8.1.70       “Term Loan Maturity Date” has the meaning set forth in Section
1.1.2, as may be extended from time to time in Lender’s sole and absolute
discretion.




                8.1.71       “Term Loan Note” means any Note payable to the order of Lender
prepared in accordance with Section 1.1.4, as may be amended, modified,
restated, replaced, supplemented, extended or renewed from time to time
hereafter.



                8.1.72       “Total Charges” means, at the time of any determination, the sum of
the following items (without duplication) for Borrowers during the relevant
four consecutive fiscal quarter period:


                                a.       The amount of Fixed Charges during such period, and


                                b.       Plus the amount of all provision for federal, state and other taxes
based upon income of Borrowers during such period (but only to the extent not
already included under one of the other categories of Total Charges).


For purposes of this calculation, interest includes interest accrued under
Capital Leases, and principal includes principal obligations under Capital
Leases.





                8.1.73       “UCC” means the Uniform Commercial Code in effect in the applicable
jurisdiction.


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     8.2       Rules of Interpretation and Construction.





                8.2.1       Plural; Gender. Unless otherwise expressly stated or the context
clearly indicates a different intention, then (as may be appropriate in the
particular context) (a) a singular number or noun used in any Loan Document
includes the plural, and a plural number or noun includes the singular, and (b)
the use of the masculine, feminine or neuter gender pronouns in any Loan
Document includes each and all genders.




                8.2.2       Section and Schedule References. Unless otherwise expressly stated
or the context clearly indicates a different intention, then all references to
sections, paragraphs, clauses, schedules and exhibits in any Loan Document are
to be interpreted as references to sections, paragraphs, clauses, schedules and
exhibits of such Loan Document (rather than of some other Loan Document). In
addition, the words “herein”, “hereof”, “hereunder”, “hereto” and other words
of similar import in any Loan Document refer to such Loan Document as a whole,
and not to any particular section, paragraph or clause in such Loan Document.




                8.2.3       Titles and Headings. Unless otherwise expressly stated or the
context clearly indicates a different intention, then the various titles and
headings in the Loan Documents are inserted for convenience only and do not
affect the meaning or interpretation of such Loan Document or any provision
thereof.




                8.2.4       “Including” and “Among Other” References. Unless otherwise
expressly stated or the context clearly indicates a different intention, then
all references in the Loan Documents to phrases containing or list preceded by
the words “include”, “includes”, “including”, “among other”, “among other
things” or other words or phrases of similar import are to be interpreted to
mean such “without limitation” (whether or not such additional phrase is
actually added). In other words, such words and phrases connote an
illustrative example or list rather than an exclusive example or list.




                8.2.5       “Shall”, “Will”, “Must”, “Can” and “May” References. Unless
otherwise expressly stated or the context clearly indicates a different
intention, then all references in the Loan Documents to the words “shall”,
“will” and “must” (including, when modified by “not”) are to be interpreted to
indicate mandatory actions or restrictions (as applicable), and all references
in the Loan Documents to the words “may” and “can” (unless modified by “not”)
are to be interpreted to indicate permissive actions.




                8.2.6       Time of Day References. Unless otherwise expressly stated or the
context clearly indicates a different intention, then all time of day
references in and restrictions imposed under the Loan Documents are to be
calculated using Eastern Time.



                8.2.7       “Knowledge” of a Person. Unless otherwise expressly stated or the
context clearly indicates a different intention, then (a) all references to the
“knowledge,” “awareness” or “belief” of any Person that is not a natural person
are to be interpreted to mean the knowledge, awareness or belief of senior and
executive management of such Person (and including the knowledge or awareness
of managers of limited liability companies and general partners of
partnerships), and (b) all representations qualified by the “knowledge,”
“awareness” or “belief” of a Person are to be interpreted to mean (unless a
different standard is specified) that such Person has conducted a commercially
reasonable inquiry and investigation prior to making such representation.


33






 





                8.2.8       Successors and Assigns. Unless otherwise expressly stated or the
context clearly indicates a different intention, then all references to any
Person (including any Official Body) in any Loan Document are to be interpreted
as including (as applicable) such Person’s successors, assigns, estate, heirs,
executors, administrators and personal representatives. Notwithstanding the
foregoing, no Borrower or other Obligor may assign or delegate any Loan
Document (or any right or obligation thereunder) except to the extent expressly
permitted hereunder or under such other Loan Document.




                8.2.9       Modifications to Documents. Unless otherwise expressly stated or
the context clearly indicates a different intention, then all references to any
Loan Document or other agreement or instrument in any Loan Document are to be
interpreted as including all extensions, renewals, amendments, supplements,
substitutions, replacements and waivers thereto and thereof from time to time.




                8.2.10       References to Laws and Regulations. Unless otherwise expressly
stated or the context clearly indicates a different intention, then all
references to any law, regulation, rule, order or policy in any Loan Document
are to be interpreted references to such law, regulation, rule or policy (a) as
implemented and interpreted from time to time by Official Bodies with
appropriate jurisdiction therefor, and (b) as amended, modified, supplemented,
replaced and repealed from time to time.




                8.2.11       Financial and Accounting Terms. Unless otherwise expressly stated
or the context clearly indicates a different intention, financial and
accounting terms used in the foregoing definitions or elsewhere in the Loan
Documents shall be defined and determined in accordance with GAAP.




                8.2.12       Conflicts Among Loan Documents. Unless otherwise expressly stated
or the context clearly indicates a different intention, then any irreconcilable
conflict between the terms and conditions of this Agreement and the terms and
conditions of any other Loan Document (other than a Note or any warrant issued
to Lender) are to be resolved by having the terms and conditions of this
Agreement govern.




                8.2.13       Independence of Covenants and Defaults. All covenants and defaults
contained in the Loan Documents shall be given independent effect. If a
particular action or condition is not permitted by any covenant in the Loan
Documents, then the fact that such action or condition would be permitted by an
exception to (or would otherwise be within the limitations of) another covenant
in the Loan Documents shall not avoid the occurrence or existence of a Event of
Default if such action is taken or if such condition exists.




                8.2.14       Interest Calculations and Payments. Unless otherwise stated,
wherever in this Agreement reference is made to a rate of interest “per annum”
or a similar expression is used, such interest will be calculated on the basis
of three hundred and sixty-five (365) days and the actual number of days
elapsed in the period, and using the nominal rate method of calculation, and
will not be calculated using the effective rate method of calculation or on any
other basis that gives effect to the principle of deemed reinvestment of
interest. All payments of interest to be made hereunder will be paid both
before and after maturity and before and after default and/or judgment, if any,
until payment thereof, and interest will accrue on overdue interest, if any.


34






 





                8.2.15       Interest Act (Canada). For the purposes of this Agreement,
whenever interest to be paid hereunder is to be calculated on the basis of a
year of three hundred and sixty (360) days or any other period of time that is
less than a calendar year, the yearly rate of interest to which the rate
determined pursuant to such calculation is equivalent is the rate so determined
multiplied by the actual number of days in the calendar year in which the same
is to be ascertained and divided by three hundred and sixty (360).




                8.2.16       Equivalent Amount. For the purpose of determining compliance with
covenant and default limitations set forth in the Agreement, amounts expressed
in Canadian Dollars shall be measured by aggregating the applicable items
denominated in U.S. Dollars with the Equivalent Amounts of such items in
Canadian Dollars.


ARTICLE 9: MISCELLANEOUS



     9.1       Indemnification, Reliance and Assumption of Risk. Without limiting
any other indemnification in any Loan Document, each Borrower (jointly and
severally) hereby agrees to defend Lender (and its directors, officers,
employees, agents, counsels and Affiliates) from, and hold each of them
harmless against, any and all losses, liabilities, claims, damages, interests,
judgments, or costs (including fees and disbursements of counsel) incurred by
any of them arising out of or in any way connected with any Loan Document,
except for losses resulting directly and exclusively from Lender’s own gross
negligence, willful misconduct or fraud. In addition, each Borrower will
reimburse and (jointly and severally) indemnify Lender for all costs and losses
resulting from the following: (1) any failure or refusal by any Borrower or by
any Affiliate of any Borrower to provide any requested assistance or
cooperation in connection with any attempt by Lender to liquidate any
Collateral in the event of any Event of Default and/or any attempt by Lender to
otherwise exercise its rights hereunder, and (2) any misrepresentation, gross
negligence, fraud or willful misconduct by any Borrower (or any of its
employees or officers), or any other person or entity pledging Collateral
hereunder. Moreover, with respect to any Advance Request or other
communication between any Borrower and Lender hereunder and all other matters
and transactions in connection therewith, each Borrower hereby irrevocably
authorizes Lender to accept, rely upon, act upon and comply with any verbal or
written instructions, requests, confirmations and orders of any Authorized
Officer of any Borrower. Each Borrower acknowledges that the transmissions of
any such instruction, request, confirmation, order or other communication
involves the possibility of errors, omissions, mistakes and discrepancies, and
each Borrower agrees to adopt such internal measures and operational procedures
to protect its interest. By reason thereof, each Borrower hereby assumes all
risk of loss and responsibility for — and hereby releases and discharges
Lender from any and all risk of loss and responsibility for, and agrees to
indemnify, reimburse on demand and hold Lender harmless from — any and all
claims, actions, damages, losses, liability and costs by reason of or in any
way related to (a) Lender’s accepting, relying and acting upon, complying with
or observing any such instructions, requests, confirmations or orders from or
on behalf of any such Authorized Officer, and (b) any such errors, omissions,
mistakes and discrepancies by (or otherwise resulting from or attributable to
the actions or inactions of) any Authorized Officer or any Borrower; provided,
however, no Borrower assumes hereby the risk of any foreseeable actual loss
resulting from Lender’s own gross negligence, fraud or willful misconduct.
Each Borrower’s obligations provided for in this Section will survive any
termination of this Agreement, and the repayment of the outstanding balances
hereunder.


     9.2       Assignments and Participations. No Loan Document may be assigned (in
whole or in part) by any Borrower without the prior written consent of Lender.
Notwithstanding any other


35






 




 provision of any Loan Document, without receiving any consent of any
Borrower, Lender at any time and from time to time may syndicate, participate
or otherwise transfer, pledge or assign all (or any part of) its rights and
obligations under any of the Loan Documents (or any indebtedness evidenced
thereby) to any Person. Lender will make reasonable efforts to notify
Borrowers of any such absolute transfer or assignment within twenty (20)
Business Days thereafter; however, a failure to so notify will in no way impair
any rights of Lender or any transferee or assignee. Upon execution and
delivery of an appropriate instrument between any such participant, transferee
or assignee and Lender, then (at Lender’s request) such participant, transferee
or assignee will become a Lender party to this Agreement and will have all the
rights and obligations of a Lender as set forth in such instrument. At
Lender’s request, each Borrower will execute (or re-execute) and deliver (or
otherwise obtain) any documents necessary to reflect or implement any such
participation, transfer or assignment (including replacement promissory notes
and any requested letters authorizing such participant, transferee or assignee
to rely on existing certificates and opinions) and will otherwise fully
cooperate in any such syndication process. Notwithstanding the foregoing,
unless an Event of Default has occurred and is continuing and subject to any
grace periods specified in Section 7.2, without the prior written consent of
Helix, Lender may not transfer or assign all (or any part of) its rights and
obligations under any of the Loan Documents to any person that directly or
indirectly competes with the principal business of the Borrowers.


     9.3       No Waiver; Delay. To be effective, any waiver by Lender must be
expressed in a writing executed by Lender. Once an Event of Default occurs
under the Loan Documents, then such Event of Default will continue to exist
until it either is cured (to the extent specifically permitted) in accordance
with the Loan Documents or is otherwise expressly waived by Lender (in its sole
and absolute discretion) in writing. If Lender waives any power, right or
remedy arising hereunder or under any applicable law, then such waiver will not
be deemed to be a waiver (a) upon the later occurrence or recurrence of any
events giving rise to the earlier waiver or (b) as to any other Obligor. No
failure or delay by Lender to insist upon the strict performance of any term,
condition, covenant or agreement of any of the Loan Documents, or to exercise
any right, power or remedy hereunder, will constitute a waiver of compliance
with any such term, condition, covenant or agreement, or preclude Lender from
exercising any such right, power, or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Agreement
or any other Loan Document, Lender will not be deemed to waive the right either
to require prompt payment when due of all other amounts payable under this
Agreement or any other Loan Document or to declare an Event of Default for
failure to effect such prompt payment of any such other amount. The remedies
provided herein are cumulative and not exclusive of each other, the remedies
provided by law, and the remedies provided by the other Loan Documents.


     9.4       Modification and Amendment. Except as otherwise expressly provided in
this Agreement, no modification or amendment hereof will be effective unless
made in a writing signed by appropriate officers of the parties hereto.


     9.5       Disclosure of Information to Third Parties. Lender will employ
reasonable procedures to treat as confidential all written, non-public
information delivered to Lender pursuant to this Agreement concerning the
performance, operations, assets, structure and business plans of Borrowers that
is conspicuously designated by Borrowers as confidential information. While
other or different confidentiality procedures may be employed by Lender, the
actual procedures employed by Lender for this purpose will be conclusively
deemed to be reasonable if they are at least as protective of such information
as the procedures generally employed by Lender to safeguard the confidentiality
of


36






 


Lender’s own information that Lender generally considers to be
confidential. Notwithstanding the foregoing, Lender may disclose any
information concerning any Borrower in Lender’s possession from time to time
(a) to permitted participants, transferees, assignees, pledgees and investors
(including prospective participants, transferees, assignees, pledgees and
investors), but subject to a reasonable confidentiality agreement regarding any
non-public confidential information thereby disclosed, and (b) in response to
credit inquiries consistent with general banking practices, and (c) to any
federal or state regulator of Lender, and (d) to Lender’s Affiliates,
employees, legal counsel, appraisers, accountants, agents and investors, and
(e) to any Person pursuant to compulsory judicial process, and (f) to any
judicial or arbitration forum in connection with enforcing the Loan Documents
or defending any action based upon the Loan Documents or the relationship
between Lender and any Borrower, and (g) to any other Person with respect to
the public or non-confidential portions of any such information. Moreover,
Lender (without any compensation, remuneration or notice to Borrowers) may also
include operational, performance and structural information and data relating
to Borrowers in compilations, reports and data bases assembled by Lender (or
its Affiliates) and used to conduct, support, assist in and validate portfolio,
industry and credit research and analysis for itself and/or other Persons;
provided, however, that Lender may not thereby disclose to other Persons any
information relating to Borrowers in a manner that is attributable to Borrowers
unless (1) such disclosure is permitted under the standards outlined above in
this Section or (2) Borrowers otherwise separately consent thereto (which
consent may not be unreasonably withheld).


     9.6       Binding Effect and Governing Law. This Agreement and the other Loan
Documents have been delivered by Borrowers and the other Obligors and have been
received by Lender in the State of New York. This Agreement and all documents
executed hereunder are binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement and all
documents executed hereunder are governed as to their validity, interpretation,
construction and effect by the laws of the State of New York.


     9.7       Notices. Any notice, request, consent, waiver or other communication
required or permitted under or in connection with the Loan Documents will be
deemed satisfactorily given if it is in writing and is delivered either
personally to the addressee thereof, or by prepaid registered or certified U.S.
mail or Canada Post, as applicable (return receipt requested), or by a
nationally recognized commercial courier service with next-day delivery charges
prepaid, or by telegraph, or by facsimile (voice confirmed), or by any other
reasonable means of personal delivery to the party entitled thereto at its
respective address set forth below:






	 	 	 
	If to any Borrower	 	
Helix Hearing Care of America, Inc.
	or its Affiliates:	 	
7100 Jean-Talon East
	 	 	
Suite 610
	 	 	
Montreal, QC H1M 353
	 	 	
Attention: Steve Forget
	 	 	
Facsimile: (514) 353-0029
 

	 	 	
With a copy to the following listed counsel or such other
counsel as may be designated by Borrowers from time to time
(and which notice shall not constitute notice to Borrowers and
failure to give such notice shall not affect the effectiveness
of notice to Borrowers):



37






 




	 	 	 
	 	 	
Fraser Milner Casgrain LLP
	 	 	
1 Place Ville-Marie, 39th Floor
	 	 	
Montreal, QC H3B 4M7
	 	 	
Attention: Vitale Santoro, Esquire
	 	 	
Facsimile: (514) 866-2241
 

	If to Lender:	 	
HEARx Ltd.
	 	 	
1250 Northpoint Parkway
	 	 	
West Palm Beach, FL 33407
	 	 	
Attention: Steve Hansbrough
	 	 	
Facsimile: (561) 688-8893
 

	 	 	
With a copy to the following listed counsel or such other
counsel as may be designated by Lender from time to time (and
which notice shall not constitute notice to Lender and failure
to give such notice shall not affect the effectiveness of
notice to Lender):
 

	 	 	
Bryan Cave LLP
	 	 	
13th Street, N.W., Suite 700
	 	 	
Washington, D.C. 20005
	 	 	
Attention: LaDawn Naegle, Esquire
	 	 	
Facsimile: (202) 508-6200




Any party to a Loan Document may change its address or facsimile number for
notice purposes by giving notice thereof to the other parties to such Loan
Document in accordance with this Section, provided that such change shall not
be effective until 2 calendar days after notice of such change. All such
notices and other communications will be deemed given and effective (a) if by
mail, then upon actual receipt or 5 calendar days after mailing as provided
above (whichever is earlier), or (b) if by facsimile, then upon successful
transmittal to such party’s designated number, or (c) if by telegraph, then
upon actual receipt or 2 Business Days after delivery to the telegraph company
(whichever is earlier), or (d) if by nationally recognized commercial courier
service, then upon actual receipt or 2 Business Days after delivery to the
courier service (whichever is earlier), or (e) if otherwise delivered, then
upon actual receipt. For any and all purposes related to giving and receiving
notices and communications between any Borrower and Lender under any Loan
Document, each Borrower hereby irrevocably appoints Steve Forget (and each
other Authorized Officer) as its agent to whom Lender may give and from whom
Lender may receive all such notices and communications, and Lender is entitled
to rely upon (and treat as being properly authorized by Borrowers) any oral or
written notices or communications purportedly received from (or that Lender
believes in good faith to be received from) such Authorized Officer.


     9.8       Relationship with Prior Agreements. This Agreement completely and
fully supersedes all oral agreements and all other and prior written agreements
by and among Borrowers and Lender concerning the terms and conditions of this
credit arrangement.


     9.9       Severability. If fulfillment of any provision of or any transaction
related to any Loan Document at the time performance is due involves
transcending the limit of validity prescribed by applicable law, then ipso
facto, the obligation to be fulfilled shall be reduced to the limit of such
validity. If any clause or provision of this Agreement operates or would
prospectively operate to invalidate this Agreement or any other Loan Document
in whole or in part, then such clause or


38






 




 provision only shall be void (as though not contained herein or therein),
and the remainder of this Agreement or such other Loan Document shall remain
operative and in full force and effect; provided, however, if any such clause
or provision pertains to the repayment of any indebtedness hereunder, then the
occurrence of any such invalidity shall constitute an immediate Event of
Default hereunder.


     9.10       Termination and Survival. All representations, warranties, covenants
and other agreements of any Obligor contained in any Loan Document or any other
documentation required thereunder will survive the execution and delivery of
the Loan Documents and the funding of the Advances hereunder and will continue
in full force and effect until terminated in accordance with this Agreement.
Upon (a) indefeasible receipt by Lender of the entire indebtedness and all
other amounts then due or owing to Lender under the Loan Documents (without any
condition, deduction, offset, netting, counterclaim or reservation of rights),
and (b) receipt by Lender of an instruction from Borrowers to terminate and
cancel the Loan Documents, all Commitments and all Facilities thereunder
(together with an acknowledgment that Lender will have no further obligations
or liabilities under or in connection with any Loan Document), then Lender (at
the written request and expense of Borrowers) will terminate and cancel all
Loan Documents (other than the waivers, reinstatement rights, and reimbursement
and indemnification protections in favor of Lender under the Loan Documents,
which provisions shall survive any such termination of the Loan Documents).


     9.11       Reinstatement. To the maximum extent not prohibited by applicable
law, this Agreement and the other Loan Documents (and the indebtedness
hereunder and Collateral therefor) will be reinstated and the indebtedness
correspondingly increased (as though such payment(s) had not been made) if at
any time any amount received by Lender in respect of any Loan Document is
rescinded or must otherwise be restored, refunded or returned by Lender to
Borrower or any other Person (a) upon or as a result of the insolvency,
bankruptcy, dissolution, liquidation or reorganization of any Borrower or any
other Person, or (b) upon or as a result of the appointment of any receiver,
intervenor, conservator, trustee or similar official for any Borrower or any
other Person or for any substantial part of the assets of any Borrower or any
other Person, or (c) for any other reason.


     9.12       Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if all the signatures on such counterparts
appeared on one document. Each such counterpart will be deemed to be an
original but all counterparts together will constitute one and the same
instrument.


     9.13       Waiver of Suretyship Defenses. Each Borrower hereby waives any and
all defenses and rights of discharge based upon suretyship or impairment of
collateral (including lack of attachment or perfection with respect thereto)
that it may now have or may hereafter acquire with respect to Lender or any of
its obligations hereunder, under any Loan Document or under any other agreement
that it may have or may hereafter enter into with Lender.


     9.14       Waiver of Liability. Each Borrower (a) agrees that Lender (and its
directors, officers, employees and agents) shall have no liability to any
Borrower (whether sounding in tort, contract or otherwise) for losses or costs
suffered or incurred by any Borrower in connection with or in any way related
to the transactions contemplated or the relationship established by any Loan
Document, or any act, omission or event occurring in connection herewith or
therewith, except for foreseeable actual losses resulting from Lender’s own
gross negligence, willful misconduct or fraud and (b) waives, releases and
agrees not to sue upon any claim against Lender (or its directors, officers,
employees or agents) whether sounding in tort,


39






 




 contract or otherwise, except for claims for foreseeable actual losses
resulting from Lender’s own gross negligence, willful misconduct or fraud.
Moreover, whether or not such damages are related to a claim that is subject to
the waiver effected above and whether or not such waiver is effective, Lender
(and its directors, officers, employees and agents) shall have no liability
with respect to (and each Borrower hereby waives, releases and agrees not to
sue upon any claim for) any special, indirect, consequential, punitive or
non-foreseeable damages suffered by any Borrower in connection with or in any
way related to the transactions contemplated or the relationship established by
any Loan Document, or any act, omission or event occurring in connection
herewith or therewith.


     9.15       Forum Selection; Consent to Jurisdiction. Any litigation in
connection with or in any way related to any Loan Document, or any course of
conduct, course of dealing, statements (whether verbal or written), actions or
inactions of Lender or any Borrower will be brought and maintained exclusively
in the courts of the State of New York or in the United States District Court
for the Southern District of New York; provided, however, that any suit seeking
enforcement against any Borrower, any Collateral or any other property may also
be brought (at Lender’s option) in the courts of any other jurisdiction where
such Collateral or other property may be found or where Lender may otherwise
obtain personal jurisdiction over such Borrower. Each Borrower hereby
expressly and irrevocably submits to the jurisdiction of the courts of the
State of New York and of the United States District Court for the Southern
District of New York for the purpose of any such litigation as set forth above
and irrevocably agrees to be bound by any final and non-appealable judgment
rendered thereby in connection with such litigation. Each Borrower further
irrevocably consents to the service of process by registered or certified mail,
postage prepaid, or by personal service within or outside the State of New
York. Each Borrower hereby expressly and irrevocably waives, to the fullest
extent permitted by law, any objection which it may have or hereafter may have
to the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought in an
inconvenient forum. To the extent that any Borrower has or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution or otherwise) with respect to itself or its property, then
such Borrower hereby irrevocably waives such immunity in respect of its
obligations under this Agreement.


     9.16       Waiver of Jury Trial. Lender and each Borrower each hereby
knowingly, voluntarily and intentionally waives any rights it may have to a
trial by jury in respect of any litigation (whether as claim, counter-claim,
affirmative defense or otherwise) in connection with or in any way related to
any of the Loan Documents, or any course of conduct, course of dealing,
statements (whether verbal or written), actions or inactions of Lender or any
Borrower. Each Borrower acknowledges and agrees (a) that it has received full
and sufficient consideration for this provision (and each other provision of
each other Loan Document to which it is a party), and (b) that it has been
advised by legal counsel in connection herewith, and (c) that this provision is
a material inducement for Lender entering into the Loan Documents and funding
Advances thereunder.


     9.17       Judgment Currency. If for the purpose of obtaining judgment in any
court it is necessary to convert an amount due hereunder in the currency in
which it is due (the “Original Currency”) into another currency (the “Second
Currency”), the rate of exchange applied shall be that at which, in accordance
with normal banking procedures, the Lender could purchase in the Toronto


40






 




 foreign exchange market, the Original Currency with the Second Currency on
the date two (2) Business Days preceding that on which judgment is given. Each
Obligor agrees that its obligation in respect of any Original Currency due from
it hereunder shall, notwithstanding any judgment or payment in such other
currency, be discharged only to the extent that, on the Business Day following
the date the Lender receives payment of any sum so adjudged to be due hereunder
in the Second Currency, the Lender may, in accordance with normal banking
procedures, purchase, in the Toronto foreign exchange market, the Original
Currency with the amount of the Second Currency so paid; and if the amount of
the Original Currency so purchased or could have been so purchased is less than
the amount originally due in the Original Currency, each Obligor agrees as a
separate obligation and notwithstanding any such payment or judgment to
indemnify the Lender against such loss. The term “rate of exchange” in this
Section 9.17 means the spot rate at which the Lender, in accordance with normal
practices, is able on the relevant date to purchase the Original Currency with
the Second Currency and includes any premium and costs of exchange payable in
connection with such purchase.


     9.18       French/English Acknowledgment. It is the express wish of the parties
hereto that this Agreement and any related documents be drawn up and executed
in English. Il est la volonté expresse des parties que cette convention et
tous les documents s’y rattachant soient redigés et signés en anglais.



Balance of page intentionally left blank.


41






 



     IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have executed this Credit Facility Agreement, as an instrument under seal
(whether or not any such seals are physically attached hereto), as of the day
and year first above written.


 







	 	 	 
	ATTEST:	 	
HELIX HEARING CARE OF AMERICA CORP (Borrower)
 

	By: /s/ FRANCOIS TELLIER
 
	 	
By: /s/ STEVE FORGET
 

	Name: Francois Tellier
 
	 	
Name: Steve Forget
	Title: General Counsel
 
	 	
Title: President & Chief Executive Officer
 

	CORPORATE SEAL:	 	
Address: 7100, Jean-Talon East, Suite 610
	 	 	
Montreal, Quebec H1M 3S3
	 	 	
Facsimile: (514) 353-0029
 

	 	 	
HELIX HEARING CARE OF AMERICA (U.S.A.) CORP. (Borrower)
 

	 	 	
By: /s/ STEVE FORGET
 

	 	 	
Name: Steve Forget
 

	 	 	
Title: President & Chief Executive Officer
 

	 	 	
Address: 7100, Jean-Talon East, Suite 610
	 	 	
Montreal, Quebec H1M 3S3
	 	 	
Facsimile: (514) 353-0029
 

	 	 	
Les services de gestion Hearing Care of
	 	 	
America SGHCA Inc. (Borrower)
 

	 	 	
By: /s/ STEVE FORGET
 

	 	 	
Name: Steve Forget
 

	 	 	
Title: President & Chief Executive Officer
 

	 	 	
Address: 7100, Jean-Talon East, Suite 610
	 	 	
Montreal, Quebec H1M 3S3
	 	 	
Facsimile: (514) 353-0029
 








 






 







	 	Les services d’ approvsionement Hearing Care

of America SAHCA Inc. (Borrower)



	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Les services de location Hearing Care of

America SLHCA Inc. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	3371727 Canada Inc. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029







 






 






	 	Helix Hearing Care of America (Ohio) Corp.

(Borrower)



	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Helix Hearing Care of America (New York)

Corp. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Helix Hearing Care of America (Missouri)

Corp. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029







 






 









	 	Helix Hearing Care of America (Wisconsin)

Corp. (Borrower)



	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Helix Hearing Care of America (Minnesota)

Corp. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Helix Hearing Care of America (Indiana)

Corp. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029







 






 









	 	Helix Hearing Care of America (Pennsylvania)

Corp. (Borrower)



	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Helix Hearing Care of America (Arizona)

Corp. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Helix Hearing Care of America (Washington)

Corp. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029







 






 









	 	Helix Hearing Care of America (Michigan)

Corp. (Borrower)



	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	American Hearing Centers, Inc. (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029




	 	Auxiliary Health Benefits Corporation, d/b/a

National Ear Care Plan (Borrower)




	 	By: /s/ STEVE FORGET




	 	Name: Steve Forget




	 	Title: President & Chief Executive Officer




	 	Address: 7100, Jean-Talon East, Suite 610

Montreal, Quebec H1M 3S3

Facsimile: (514) 353-0029







 






 








	 	 	 
	 	 	
Thomas W. Fell Co., Inc. (Borrower)
 

	 	 	
        By: /s/ STEVE FORGET
	 
	 	 	
Name: Steve Forget
	 
	 	 	
Title: President & Chief Executive Officer
	 
	 	 	
Address: 7100, Jean-Talon East, Suite 610
	 	 	
Montreal, Quebec H1M 3S3
	 	 	
Facsimile: (514) 353-0029
	 
	ATTEST:	 	
HEARx LTD. (Lender)
	 
	By: /s/ BRYAN L. BURGETT	 	
        By: /s/ STEPHEN J. HANSBROUGH
	 
	Name: Bryan L. Burgett	 	
Name: Stephen J. Hansbrough
	 
	Title: Vice President & General Counsel	 	
Title: President and Chief Operating Officer
	 
	 	 	
Address: 1250 Northpoint Parkway
	 	 	
West Palm Beach, FL 33407
	 	 	
Facsimile: (561) 688-8893