Exhibit 10.14
SECURITY AGREEMENT
April 28, 2005
Synova Healthcare, Inc.
Rose Tree Corporate Center
0000 Xxxxx Xxxxxxxxxx Xxxx Xxxx XX, Xxxxx 0000
Media, Pennsylvania 19063
(Individually and collectively "Debtor")
Wachovia Bank, National Association
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
(Hereinafter referred to as "Bank")
For value received and to secure payment and performance of any and all
obligations of Debtor (also referred to herein as "Borrower") to Bank however
created, arising or evidenced, whether direct or indirect, absolute or
contingent, now existing or hereafter arising or acquired, including swap
agreements (as defined in 11 U.S.C. Section 101, as in effect from time to
time), future advances, and all costs and expenses incurred by Bank to obtain,
preserve, perfect and enforce the security interest granted herein and to
maintain, preserve and collect the property subject to the security interest
(collectively, "Obligations"), Debtor hereby grants to Bank a continuing
security interest in and lien upon, and for security purposes assigns and
transfers to Bank until all of the Obligations are repaid in full, the following
described property, whether now owned or hereafter acquired, and any additions,
replacements, accessions, or substitutions thereof and all cash and non-cash
proceeds and products thereof (collectively, "Collateral"):
All of Debtor's deposit accounts with Bank and affiliates of Bank, including
deposit account(s) number(s) XXXXXXXXXXX ("Assigned Deposits").
Debtor hereby represents and agrees that:
OWNERSHIP. Debtor owns the Collateral. The Collateral is free and clear of all
liens, security interests, and claims except those previously reported in
writing to and approved by Bank, and Debtor will keep the Collateral free and
clear from all liens, security interests and claims, other than those granted to
or approved by Bank. Until all of the Obligations are repaid in full, Bank shall
have the entire right and interest in and to the Assigned Deposits. By executing
this Security Agreement, Debtor has divested itself of all control over the
Assigned Deposits and Bank is entitled to and does possess sole dominion and
control over the Assigned Deposits and is entitled to receive the benefits
accruing with respect thereto. Debtor surrenders all authority or right to
withdraw, collect, receive the benefits of, or otherwise assign or encumber the
Assigned Deposits, and authorizes Bank (and each affiliate and branch office of
Bank or such affiliate) to treat Bank as the sole and exclusive owner of the
Assigned Deposits. Upon the maturity of the Assigned Deposits, other than
Assigned Deposits at Bank that automatically roll over at maturity, Bank shall
reinvest the Assigned Deposits in an investment of Bank's choice. Bank shall
have no liability to Debtor for any loss incurred in connection with or arising
out of any such reinvestment except for loss resulting from Bank's gross
negligence or willful misconduct.
The assignment evidenced by this Security Agreement is a continuing one and is
irrevocable so long as any of the Obligations are outstanding or the Bank shall
have any obligations under the Loan Documents and shall terminate only upon
payment or other satisfaction in full of all Obligations or Bank's
acknowledgment in writing that this Security Agreement has been terminated. Upon
termination of this Security Agreement, and to the extent the Assigned Deposits
have not been applied in satisfaction of the Obligations, Bank shall reassign
the Assigned Deposits to Debtor and return any passbooks, certificates, and
other documents in Bank's possession at Debtor's request.
NAME AND OFFICES; JURISDICTION OF ORGANIZATION. The name and address of Debtor
appearing at the beginning of this Agreement are Debtor's exact legal name and
the address of its chief executive office. There has been no change in the name
of Debtor, or the name under which Debtor conducts business, within the five
years preceding the date hereof except as previously reported in writing to
Bank. Debtor has not moved its chief executive office within the five years
preceding the date hereof except as previously reported in writing to Bank.
Debtor is organized under the laws of the State of Delaware and has not changed
the jurisdiction of its organization within the five years preceding the date
hereof except as previously reported in writing to Bank.
TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except as permitted herein). Debtor agrees to pay promptly all taxes
and assessments upon or for the use of Collateral and on this Security
Agreement. At its option, Bank may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on Collateral. Debtor agrees to
reimburse Bank, on demand, for any such payment made by Bank. Any amounts so
paid shall be added to the Obligations.
WAIVERS. Debtor agrees not to assert against Bank as a defense (legal or
equitable), as a set-off, as a counterclaim, or otherwise, any claims Debtor may
have against any seller or lessor that provided personal property or services
relating to any part of the Collateral or against any other party liable to Bank
for all or any part of the Obligations. Debtor waives all exemptions and
homestead rights with regard to the Collateral. Debtor waives any and all rights
to any bond or security which might be required by applicable law prior to the
exercise of any of Bank's remedies against any Collateral. All rights of Bank
and security interests hereunder, and all obligations of Debtor hereunder, shall
be absolute and unconditional, not discharged or impaired irrespective of (and
regardless of whether Debtor receives any notice of): (i) any lack of validity
or enforceability of any Loan Document; (ii) any change in the time, manner or
place of payment or performance, or in any term, of all or any of the
Obligations or the Loan Documents or any other amendment or waiver of or any
consent to any departure from any Loan Document; or (iii) any exchange,
insufficiency, unenforceability, enforcement, release, Impairment or
non-perfection of any collateral, or any release of or modifications to or
insufficiency, unenforceability or enforcement of the obligations of any
guarantor or other obligor. To the extent permitted by law, Debtor hereby waives
any rights under any valuation, stay, appraisement, extension or redemption laws
now existing or which may hereafter exist and which, but for this provision,
might be applicable to any sale or disposition of the Collateral by Bank; and
any other circumstance which might otherwise constitute a defense available to,
or a discharge of any party with respect to the Obligations.
2
NOTIFICATIONS; LOCATION OF COLLATERAL. Debtor will notify Bank in writing at
least 30 days prior to any change in: (i) Debtors chief place of business and/or
residence; (ii) Debtor's name or identity; (iii) Debtor's
corporate/organizational structure; or (iv) the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Bank of any claims or
alleged claims of any other person or entity to the Collateral or the
institution of any litigation, arbitration, governmental investigation or
administrative proceedings against or affecting the Collateral. Debtor will keep
Collateral at the location(s) previously provided to Bank until such time as
Bank provides written advance consent to a change of location. Debtor will bear
the cost of preparing and filing any documents necessary to protect Bank's
liens.
FINANCING STATEMENTS, CERTIFICATES OF TITLE, POWER OF ATTORNEY. No financing
statement (other than any filed or approved by Bank) covering any Collateral is
on file in any public filing office. Debtor authorizes the filing of one or more
financing statements covering the Collateral in form satisfactory to Bank, and
without Debtor's signature where authorized by law agrees to deliver
certificates of title on which Bank's lien has been indicated covering any
Collateral subject to a certificate of title statute, and will pay all costs and
expenses of filing or applying for the same or of tiling this Security Agreement
in all public filing offices, where filing is deemed by Bank to be desirable.
Debtor hereby constitutes and appoints Bank the true and lawful attorney of
Debtor with full power of substitution to take any and all appropriate action
and to execute any and all documents, instruments or applications that may be
necessary or desirable to accomplish the purpose and carry out the terms of this
Security Agreement, including, without limitation, to ask, demand, collect,
receive, receipt for, xxx for, compound and give acquaintance for any and all
amounts which may be or become due and payable under the Assigned Deposits; to
execute any and all withdrawal requests, receipts or other orders for the;
payment of money drawn on the Assigned Deposits and to endorse the name of Bank
on all instrument given in payment or in partial payment therefor. The foregoing
power of attorney is coupled with an interest and shall be irrevocable until all
of the Obligations have been paid in full. Neither Bank nor anyone acting on its
behalf shall be liable for acts, omissions, errors in judgment or mistakes in
fact in such capacity as attorney-in-fact. Debtor ratifies all acts of Bank as
attorney-in-fact. Debtor agrees to take such other actions, at Debtor's expense
as might be requested for the perfection, continuation and assignment, in whole
or in part, of the security interests granted herein and to assure and preserve
Bank's intended priority position. If certificates, passbooks, or other
documentation or evidence is/are issued or outstanding as to any of the
Collateral, Debtor will cause the security interests of Bank to be, properly
protected, including perfection by notation thereon or delivery thereof to Bank.
INSTRUMENTS, CHATTEL PAPER, DOCUMENTS. Any Collateral that is, or is evidenced
by, instruments, chattel paper or negotiable documents will be properly assigned
to and the originals of any such Collateral in tangible form deposited with and
held by Bank, unless Bank shall hereafter otherwise direct or consent in
writing. Bank may, without notice, before or after maturity of the Obligations,
exercise any or all rights of collection, conversion, or exchange and other
similar rights, privileges and options pertaining to such Collateral, but shall
have no duty to do so.
WITHDRAWAL OF ASSIGNED DEPOSITS. Debtor shall not be permitted to withdraw funds
from or exercise any authority of any kind with respect to the Assigned
Deposits. Bank shall have the exclusive authority to withdraw, or direct the
withdrawal of, funds from the
3
Assigned Deposits. So long as this Agreement remains in effect, the Assigned
Deposits will be titled as directed by Bank,
COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein: and by way of
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of Collateral (unless caused by its
willful misconduct or gross negligence), (ii) failure to present any paper for
payment or protest, to protest or give notice of nonpayment, or any other notice
with respect to any paper or Collateral Bank's sole duty with respect to the
custody, safekeeping and physical preservation of any certificate, passbook, or
other documentation evidencing the Assigned Deposits in its possession shall be
to deal with it in the same manner as it deals with similar property for its own
account. Neither Bank, nor any of its employees or agents shall be liable for
failure to demand, collect, or realize upon any of the Assigned Deposits or for
any delay in doing so.
TRANSFER OF COLLATERAL. Bank may assign its rights in Collateral or any part
thereof to any assignee who shall thereupon become vested with all the powers
and rights herein given to Bank with respect to the property so transferred and
delivered, and Bank shall thereafter be forever relieved and fully discharged
from any liability with respect to such property so transferred, but with
respect to any property not so transferred, Bank shall retain all rights and
powers hereby given.
INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, at Debtors expense, to
inspect, audit, and examine the Collateral and to make copies of and extracts
from the books, records, journals, orders, receipts, correspondence and other
data relating to Collateral, Debtors business or any other transaction between
the parties hereto. Debtor will at its expense furnish Bank copies thereof upon
request. For the further security of Bank, it is agreed that Bank has and is
hereby granted a security interest in all books and records of Debtor pertaining
to the Collateral.
COMPLIANCE WITH LAW. Debtor will comply with all federal, state and local laws
and regulations, applicable to it, including without limitation, environmental
and labor laws and regulations, in the creation, use, operation, manufacture and
storage of the Collateral and the conduct of its business.
REGULATION U. None of the proceeds of the credit secured hereby shall be used
directly or indirectly for the purpose of purchasing or carrying any margin
stock in violation of any of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System ("Regulation U"), or for the purpose of
reducing or retiring any indebtedness which was originally Incurred to purchase
or carry margin stock or for any other purchase which might render the Loan a
"Purpose Credit" within the meaning of Regulation U.
CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer
4
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Security Agreement and in
preserving and liquidating Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred with or without the commencement of a suit, trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: LOAN DOCUMENT DEFAULT. A default under any Loan
Document. COLLATERAL LOSS OR DESTRUCTION. Any loss, theft, substantial damage,
or destruction of Collateral not fully covered by Insurance, or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss.
COLLATERAL SALE, LEASE OR ENCUMBRANCE. Any sale, lease, or encumbrance of any
Collateral not specifically permitted herein without prior written consent of
Bank. LEVY, SEIZURE OR ATTACHMENT. The making of any levy, seizure, or
attachment on or of Collateral which is not removed within 10 days. UNAUTHORIZED
COLLECTION OF COLLATERAL. Any attempt to collect, cash in or otherwise recover
deposits that are Collateral. UNAUTHORIZED TERMINATION. Any attempt to
terminate, revoke, rescind, modify, or violate the terms of this Security
Agreement without the prior written consent of Bank.
REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the following rights and
remedies: (i) to take immediate possession of Collateral, without notice or
resort to legal process, and for such purpose, to enter upon any premises on
which Collateral or any part thereof may be situated and to remove the same
therefrom, or, at Its option, to render Collateral unusable or dispose of said
Collateral on Debtors premises; (ii) to require Debtor to assemble the
Collateral and make It available to Bank at a place to be designated by Bank;
(iii) to exercise its right of set-off or bank lien as to any monies of Debtor
deposited in accounts of any nature maintained by Debtor with Bank or affiliates
of Bank, without advance notice, regardless of whether such accounts are general
or special; (iv) to dispose of Collateral, as a unit or in parcels, separately
or with any real property interests also securing the Obligations, in any county
or place to be selected by Bank, at either private or public sale (at which
public sale Bank may be the purchaser) with or without having the Collateral
physically present at said sale; (v) to apply toward and set-off against and
apply to the then unpaid balance of the Obligations the Assigned Deposits
(accelerated to maturity if necessary), even if effecting such set-off results
in a loss or reduction of interest or the imposition of a penalty applicable to
the early withdrawal of time deposits; (vi) to receive any interest or payments
in respect of the Assigned Deposits and apply such amounts and the Assigned
Deposits to the Obligations in such manner as Bank, in its sole discretion, may
determine.
Any notice of sale, disposition or other action by Bank required by law and sent
to Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 5 days prior to
such action, shall constitute reasonable notice to Debtor. Notice shall be
deemed given or sent when mailed postage prepaid to Debtor's address as provided
herein. Bank shall be entitled to apply the proceeds of any sale or other
5
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to Obligations in such order and manner as Bank may
determine. Collateral that is subject to rapid declines in value and is
customarily sold in recognized markets may be disposed of by Bank in a
recognized market for such collateral without providing notice of sale. Debtor
waives any and all requirements that the Bank sell or dispose of all or any part
of the Collateral at any particular time, regardless of whether Debtor has
requested such sale or disposition.
REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.
INDEMNIFICATION. Debtor shall protect, indemnify and save harmless Bank from and
against all losses, liabilities obligations, claims, damages, penalties, causes
of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, "Damages") imposed upon, incurred
by or asserted against Bank on account of (i) the Loan Documents or any failure
or alleged failure of Debtor to comply with any of the terms or representations
of this Agreement; (ii) any claim of loss or damage to the Collateral or any
Injury or claim of injury to, or death of, any person or property that may be
occasioned by any cause whatsoever pertaining to the Collateral or the use,
occupancy or operation thereof, (iii) any failure or alleged failure of Debtor
to comply with any law, rule or regulation applicable to the Collateral or the
use, occupancy or operation of the Collateral (including, without limitation,
the failure to pay any taxes, fees or other charges), (iv) any Damages
whatsoever by reason of any alleged action, obligation or undertaking of Bank
relating in any way to or any matter contemplated by the Loan Documents, or (v)
any claim for brokerage fees or such other commissions relating to the
Collateral or any other Obligations; provided that such indemnity shall be
effective only to the extent of any Damages that may be sustained by Bank in
excess of any net proceeds received by it from any insurance of Debtor (other
than self-insurance) with respect to such Damages. Nothing contained herein
shall require Debtor to indemnify Bank for any Damages resulting from Bank's
gross negligence or its willful misconduct. The indemnity provided for herein
shall survive payment of the Obligations and shall extend So the officers,
directors, employees and duly authorized agents of Bank. In the event Bank
incurs any Damages arising out of or in any way relating to the transaction
contemplated by the Loan Documents (including any of the matters referred to in
this section), the amounts of such Damages shall be added to the Obligations,
shall bear interest, to the extent permitted by law, at the interest rate borne
by the Obligations from the date incurred until paid and shall be payable on
demand.
MISCELLANEOUS. (i) AMENDMENTS AND WAIVERS. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Bank. No waiver by Bank of any Default shall
operate as a waiver of any other Default or of the same Default on a future
occasion. (ii) ASSIGNMENT. All rights of Bank hereunder are freely assignable,
in whole or in part, and shall inure to the benefit of and be enforceable by
Bank, its successors, assigns and affiliates. Debtor shall not assign its rights
and interest hereunder without the prior written consent of Bank, and any
attempt by Debtor to assign without Bank's prior written consent is null and
void. Any assignment shall not release Debtor
6
from the Obligations. This Security Agreement shall be binding upon Debtor, and
the heirs, personal representatives, successors, and assigns of Debtor. (iii)
APPLICABLE LAW; CONFLICT BETWEEN DOCUMENTS. This Security Agreement shall be
governed by and construed under the law of the jurisdiction named in the address
of the Bank shown on the first page hereof (the "Jurisdiction") without regard
to that Jurisdiction's conflict of laws principles, except to the extent that
the UCC requires the application of the law of a different jurisdiction. If any
terms of this Security Agreement conflict with the terms of any commitment
letter or loan proposal, the terms of this Security Agreement shall control.
(iv) JURISDICTION. Debtor irrevocably agrees to non-exclusive personal
jurisdiction in the state identified as the Jurisdiction above. (v)
SEVERABILITY. If any provision of this Security Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective but only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Security Agreement (vi)
NOTICES. Any notices to Debtor shall be sufficiently given, if in writing and
mailed or delivered to the address of Debtor shown above or such other address
as provided hereunder; and to Bank, if in writing and mailed or delivered to
Wachovia Bank, National Association, Mail Code VA7628, P. 0. Xxx 00000, Xxxxxxx,
XX 00000 or Wachovia Bank, National Association, Mail Code VA7628, 00 Xxxxx
Xxxxxxxxx Xxxxxx, Xxxxxxx, XX 00000 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the
event that Debtor changes Debtor's mailing address at any time prior to the date
the Obligations are paid in full, Debtor agrees to promptly give written notice
of said change of address by registered or certified mail, return receipt
requested, all charges prepaid. (vii) CAPTIONS. The captions contained herein
are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof. The use of
the plural shall also mean the singular, and vice versa. (viii) JOINT AND
SEVERAL LIABILITY. If more than one party has signed this Security Agreement,
such parties are jointly and severally obligated hereunder. (ix) BINDING
CONTRACT. Debtor by execution and Bank by acceptance of this Security Agreement,
agree that each party is bound by all terms and provisions of this Security
Agreement. FINAL AGREEMENT. This Agreement and the other Loan Documents
represent the final agreement between the parties and may not be contradicted by
evidence of prior, contemporaneous or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
DEFINITIONS. LOAN DOCUMENTS. The term "Loan Documents" refers to all documents,
including this Agreement, whether now or hereafter existing, executed in
connection with or related to the Obligations, and may include, without
limitation and whether executed by Debtor or others, commitment letters that
survive closing, loan agreements, promissory notes, guaranty agreements, deposit
or other similar agreements, other security agreements, letters of credit and
applications for letters of credit, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. Section 101, as in effect from time to time). UCC. "UCC" means the
Uniform Commercial Code as presently and hereafter enacted in the Jurisdiction.
TERMS DEFINED IN THE UCC. Any term used in this Agreement and in any financing
statement filed in connection herewith which is defined in the UCC and not
otherwise defined in this Agreement or any other Loan Document has the meaning
given to the term in the UCC.
IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.
7
Synova Healthcare, Inc.
By: /s/ Xxxxxxx X. Xxxx (SEAL)
-----------------------------------
Xxxxxxx X. Xxxx, Chairman and Chief
Executive Officer
